G.R. No. L-10019; March 29, 1916
THOMAS A. WALLACE, plaintiff-appellant, vs. PUJALTE & CO. and MIGUEL PUJALTE, defendants-appellees.

FACTS:
The schooner Kodiak, owned by Thomas A. Wallace, capsized and was abandoned by its crew off the coast of Mindoro, becoming a derelict. The Collector of Customs declared it a danger to navigation. Defendants Miguel Pujalte and Miguel Ossorio, upon learning of the derelict, chartered a cutter, located the vessel, and, facing heavy seas, towed it to Pola Bay. They then organized a salvage operation with additional vessels, equipment, and men. On August 12, 1913, Wallace’s agent sent a letter to Pujalte offering to pay for services rendered up to that point, to take possession of the vessel, and to submit any compensation dispute to arbitration or court, but refusing to pay for any future expenses. The agent demanded an immediate response, which Pujalte found impossible as the full expenses were not yet known. The defendants continued salvage work. Wallace filed a replevin action to recover possession of the vessel. The trial court ordered the vessel delivered to Wallace but conditioned the delivery upon his payment of P5,500 to Pujalte and Ossorio by a specified date, failing which the defendants could take possession to satisfy their salvage lien. Wallace appealed.

ISSUE:
Whether the defendants (salvors) are entitled to retain possession of the derelict vessel and/or to compensation for salvage services and expenses incurred, notwithstanding the owner’s subsequent offer to pay for services rendered and take possession.

RULING:
The Supreme Court affirmed the trial court’s judgment. The Court held:
1. The Kodiak was a true derelictabandoned, deserted, and a menace to navigationmaking it a proper subject for salvage.
2. The salvors (Pujalte and Ossorio) acted in good faith, with reasonable dispatch and competence, and their incurred expenses were not excessive or padded.
3. The owner’s letter of August 12, 1913, did not effectively terminate the salvors’ right to continue operations or their possessory lien. The agent’s demand for an immediate, detailed accounting of expenses and compensation rendered compliance impossible, thereby nullifying the practical effect of the offer.
4. The compensation of P5,500 (which included reimbursement for expenses nearing P5,000) was not excessive, considering the perilous condition of the vessel, the risk and effort undertaken by the salvors, and the vessel’s value (between P10,000 to P12,000).
5. The trial court correctly allowed the salvors a lien on the vessel to secure their compensation and expenses, ordering delivery of the vessel to the owner only upon payment of the awarded sum.