G.R. No. L-10051; March 9, 1916
ERLANGER & GALINGER, Plaintiffs-Appellants, vs. THE SWEDISH EAST ASIATIC CO., (LTD.) ET AL., Defendants. THE “OELWERKE TEUTONIA” and NEW ZEALAND INSURANCE CO. (LTD.), Appellants.

FACTS:
The steamship Nippon, carrying a cargo of copra and general merchandise, sailed from Manila on May 7, 1913, and ran aground on Scarborough Reef on May 8, 1913. Part of the crew reached Luzon and reported the stranding. The government cutter Mindoro and the steamship Manchuria were dispatched. The Manchuria rescued the remaining captain and crew, who abandoned the vessel, taking key ship documents. The captain sent a message stating the ship was “full of water,” “badly ashore,” and “abandoned.” Subsequently, the plaintiffs, Erlanger & Galinger, chartered the Mindoro, took possession of the stranded Nippon, and successfully salvaged the vessel and its cargo. The salvaged cargo, including copra and agar-agar, was sold. The plaintiffs settled their salvage claim for the ship itself with the shipowners for £15,000. They then filed this action against the cargo insurers to determine the salvage award for the cargo. The trial court awarded the plaintiffs one-half of the net proceeds of the salved property. Both the cargo claimants (Oelwerke Teutonia and New Zealand Insurance Co.) and the salvors (Erlanger & Galinger) appealed.

ISSUE:
1. Whether the ship was legally abandoned, making the plaintiffs finders/salvors of the cargo.
2. Whether the salvage operation was conducted with skill, diligence, and efficiency.
3. Whether the salvage award granted by the trial court was justified.

RULING:
The Supreme Court modified the trial court’s judgment.
1. On Abandonment: The Court found the vessel was legally abandoned. The captain and crew left with the ship’s vital documents, a message declared the ship “abandoned,” and no protest was made when the Mindoro removed remaining crew baggage. This abandonment vested possession of the cargo in the salvors upon their taking possession of the wreck.
2. On Conduct of Salvage: The Court found the salvage services were rendered meritoriously, with skill and efficiency, justifying a salvage reward.
3. On the Salvage Award: The Court held the trial court’s award of a flat 50% of the cargo’s value was excessive. Following established maritime law principles, salvage awards should be graduated based on the difficulty and condition of the property salved. The Court considered the settlement received for salving the ship (P145,800) and set the following awards for the cargo:
40% of the net value of the wet copra salved.
25% of the net value of the dry copra salved.
* 20% of the net value of the agar-agar salved.
The judgment was modified accordingly, ordering the Oelwerke Teutonia to pay P41,721.55 and the New Zealand Insurance Co. to pay P1,127 to the plaintiffs, to be paid from the funds held by the trial court. No costs were awarded.