G. URRUTIA & CO. vs BACO RIVER PLANTATION CO.

FACTS:

The steamship Nuestra Señora del Pilar, owned by Urrutia and Co., and the schooner Mangyan
owned by Baco River Plantation Co. collided on April 8, 1910, in Verde Island North Passage.
The steamer was seen sailing erratically. The sail ship maintained its course but was thrown hard
to port by its helmsman a few moments before the actual collision. The steamer sank leaving
eight persons dead. The sail ship on the other hand was heavily destroyed. The plaintiff filed a
case of damages to recover the value of the lost steamship. The defendant filed a counterclaim
alleging that it was the gross negligence of those handling the steamship that caused the event.
Civilian M. Garza was allowed to intervene as he was the owner of the merchandise on board the
steamship which was also lost. In the trial court, the decision was in favor of the defendant.

Issue: Whether or not the sail vessel was negligent in continuing its course without variation up
to the moment that it found itself in extremis?

RULING:

It was the gross negligent handling of the steamer that caused the collision and the thus the
defendant could claim for damages. Based on Article 20 of the International Rules for the
Prevention of Collission at Sea "If two ships, one of which is a sailing ship and the other a steam
ship, are proceeding in such directions as to involve risk of collision, the steam ship shall keep
out of the way, of the sailing ship." Further, Article 21 states the "where by any of these rules
one of two vessels is to keep out of the way, the other shall keep her course and speed." The
intervention case filed by intervenor M. Garza is dismissed for lack of basis. In accordance with
articles 837 and 826 of the Code of Commerce, the defendant in an action such as the one at bar
cannot be held responsible in damages when the ship causing the injury was wholly lost by
reason of the accident. But we do not apply it in this case for the reason that the vessel lost was
insured and that the defendant collected the insurance. That being the case, the insurance money
substitutes the vessel and must be used, so far as necessary, to pay the judgment rendered in this
case.