Transportation and maritime law

Art. 811. As a general rule, general or gross averages shall include all the damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk, and particularly the following:

1. The goods or cash invested in the redemption of the vessel or of the cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the settlement or redemption is being made.

2. The goods jettisoned to lighten the vessel, whether they belong to the cargo, to the vessel, or to the crew, and the damage suffered through said act by the goods which are kept on board.

3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned, in order to save the cargo, the vessel, or both.

4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place it in condi­tion to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred.

5. The damage suffered by the goods of the cargo by the opening made in the vessel in order to drain it and prevent its sinking.

6. The expenses caused in order to float a vessel inten­tionally stranded for the purpose of saving it.

7. The damage caused to the vessel which had to be opened, scuttled or broken in order to save the cargo.

8. The expenses for the treatment and subsistence of the members of the crew who may have been wounded or crippled in defending or saving the vessel.

9. The wages of any member of the crew held as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it.

10. The wages and victuals of the crew of a vessel char­tered by the month, during the time that it is embargoed or detained by force majeure or by order of the Government, or in order to repair the damage caused for the common benefit.

11. The depreciation resulting in the value of the goods sold at arrivals under stress in order to repair the vessel by reason of gross average.

12. The expenses of the liquidation of the average.

Art. 817. If in the lightening a vessel on account of a storm, in order to facilitate its entry into a port or roadstead, part of her cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss had originated from a gross average, the amount thereof being distributed between the vessel and cargo from which it came.

If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability may be demanded of the salvage.

Art. 818. If, as a necessary measure to extinguish a fire in port, roadstead, creek, or bay, it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute.

Distinguishing feature: Expense or damage suffered deliberately in order to save the vessel, its cargo or both from a real and known risk --> it is the deliverance from an immediate peril, by a common sacrifice, that constitutes the essence of general average

Requisites for general average:
1. there must be a common danger --> the ship and cargo are subject to the same danger and that the danger arises from accidents of the sea, dispositions of the authorities or faults of men, provided that the circumstances producing the peril should be ascertained and imminent

2. for the common safety, part of the vessel or the cargo or both is sacrificed deliberately

3. from the expenses or damages caused follows the successful saving of the vessel and cargo

4. the expenses or damages should have been incurred or inflicted after taking legal steps and authority

(b) Essential Requisites
Art. 813. In order to incur the expenses and cause the damages corresponding to gross average, there must be a resolu­tion of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and after hearing the persons interested in the cargo who may be present.

If the latter should object, and the captain and officers or a majority of them, or the captain, if opposed to the majority, should consider certain measures necessary, they may be executed under his responsibility, without prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they can prove that he acted with malice, lack of skill, or negligence.

If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not contribute to the gross average, their share being chargeable against the captain, unless the urgency of the case should be such that the time necessary for previous deliberation was wanting.

Art. 814. The resolution adopted to cause the damages which constitute general average must necessarily be entered in the log book, stating the motives and reasons on which it is based, the votes against it and the reason for the dissent, should there be any, and the irresistible and urgent causes which impelled the captain if he acted of his own accord.

In the first case the minutes shall be signed by all the persons present who could do so before taking action, if possi­ble; and if not, at the first opportunity. In the second case, it shall be signed by the captain and by the officers of the vessel.

In the minutes, and after the resolution, shall be stated in detail all the goods jettisoned, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these minutes to the maritime judicial authority of the first port he may make, within twenty- four hours after his arrival, and to ratify it immediately under oath.

Formalities for incurring gross average :

1. there must be an assembly of the sailing mate and other officers with the captain including those with interests in the cargo

2. there must be a resolution of the captain

3. the resolution shall be entered in the log book, with the reasons and motives and the votes for and against the resolution

4. the minutes shall be signed by the parties

5. within 24 hours upon arrival at the first port the captain makes, he shall deliver one copy of these minutes to the maritime judicial authority thereat

Art. 860. If, notwithstanding the jettison of the merchandise, breakage of masts, ropes, and equipment, the vessel should be lost running same risk, no contribution whatsoever by reason of gross average shall be proper.

The owners of the goods saved shall not be liable for the indemnification of those jettisoned, lost or damaged.
The goods that were not sacrificed shall not be liable for the indemnification of those sacrificed - One of the requisites of general average is lacking, that is, success in saving the vessel and remaining cargo

Magsaysay Inc. vs Agan 96 Phil. 504
F: Plaintiff's vessel SS Antonio left for Manila for Basco, Batanes with general cargo owned by the different shippers including that of the defendant. Upon reaching Aparri, it accidentally ran aground. Plaintiff had it refloated by Luzteveco for compensation. After refueling, the vessel proceeded to Basco where the cargoes were delivered. On the theory that the expenses incurred in floating the vessel constituted a general average to which both the ship and cargo should contribute, plaintiff asked from the shippers a deposit or bond to answer for contribution to the average. All shippers acceded except the defendant. In action to recover said contribution, the Manila CFI decided for the plaintiff. Defendant appealed contending that the floating of a vessel, unintentionally stranded inside a port and at the mouth of a river during a fine weather, does not constitute general average expenses.
Held: In classifying averages into simple or particular and general or gross and defining each class, the Code of Commerce at the same time enumerate certain specific cases as coming specially under one or the other class. While the expenses incurred in putting the vessel afloat may well come under No. 2 of Art. 809 - referring to expenses suffered by the vessel due to an accident of the sea or force majeure- said expenses do not fit into any of the specific cases of general average enumerated in ART. 811. No. 6 of Art. 811 mentions expenses caused to afloat a vessel, but it specifically refers to a vessel intentionally stranded for the purpose of saving it, and would have no application where the stranding was unintentional.

The following are the requisites for a general average: 1) there must be common danger, 2) for the common safety part of the vessel or cargo or both is sacrificed deliberately, 3) from the expenses or damages caused follows the successful saving of the vessel and cargo, and 4) the expenses or damages should have been incurred or inflicted after taking the proper legal steps and authority.

It is the deliverance from an immediate peril, by reason of a common sacrifice, that constitutes the essence of a general average. Where there is no proof that the stranded vessel had to be put afloat to save it from imminent danger, and what does appear is that the vessel had to be salvaged in order to enable it to proceed to its port of destination, the expenses incurred in floating the vessel do not constitute general average. It is the safety of the property, and not of the voyage which constitutes the true foundation of general average.

The expenses incurred for the common safety of the vessel and cargo in this case did not arise from the imminent peril of both. The cargo could have been unloaded by the owners had they been required to do so. The refloating was a success, but as the sacrifice was for the vessel's benefit -- to enable it to proceed to its destination -- and not for the purpose of saving the cargo, the cargo owners are not in law bound to contribute to expenses. The final requisite has not been proved for it does not appear that the expenses in question were incurred after following the procedure laid down in Art. 913.

Decision reversed.


International Harvester vs Hamburg American Line 42 Phil 845
F: In the spring of 1917, defendant undertook to carry agricultural machineries, belonging to the plaintiff, from Hamburg to Vladivostok, Russia. Freight charges were prepaid to ultimate destination and defendant reserved the right to forward the machineries at its own expense by some other means in case of its inability to effect discharge at the port of destination. When the voyage was almost completed at the China Sea, war broke out between Germany and Russia, and the ship put in to the port of Manila, where it was interned. Captain of the vessel refused to surrender the machineries to the owner's agent unless the latter would agree to subject said cargo to liability upon general average to satisfy the cost and expenses of the vessel incident to its stay in Manila. Plaintiff did not assent and brought an action for recovery of the machineries plus damages. The plaintiff later obtained said cargo by a writ of replevin and forwarded it to Vladivostok by another streamer. Defendant denied liability asserting its lien on the cargo for general average. Trial court awarded the plaintiff damages. Defendant appealed.
Held: It is clear that the cargo in question is not liable to a general average. It is not claimed that said cargo was contraband of war and being neutral goods, they were not liable to forfeiture in the event of capture by the enemies of the ship's flag. It follows that when the master of the vessel decided to take refuge in Manila, he acted exclusively with a view to the vessel's protection. There was no common danger to the ship and cargo; and, therefore, it was not a case for a general average.

The outbreak of the war between Germany and Russia absolved the defendant from conveying the cargo to Russia, and no damage could be recovered by the plaintiff from the defendant for the latter's failure to convey the cargo to the port of destination on that ship. But by the terms of the contract of affreightment, the defendant was bound to forward the cargo to Vladivostok at its expense, not necessarily by a streamer of defendant. It does not by any means follow that it is not liable for the expenses incurred by the plaintiff in completing the unfinished portion of the voyage in another ship. Defendant is, therefore, liable for the cost of forwarding the cargo by another line, the full freight having been received by the ship at the commencement of the voyage.

Judgment affirmed.

Compagnie de Commerce vs Hamburg 36 Phil 590
F: In July 1914, defendant's vessel undertook to carry a cargo of rice meal in the French port of Saigon for delivery to Dunkirk under a contract of affreightment with a French shipper. While the loading of the cargo was made, rumors of the outbreak of war between French and Germany spread. The master of the German vessel, after completion of the loading of the cargo and after being refused by the French Governor at Saigon for a pass of safe-conduct, fled with his vessel and her cargo and took refuge in Manila. Considering the nature of the cargo and its impossibility of being delivered to its destination within reasonable time, the master of the vessel consulted the shipper's instruction as to the disposition of the cargo, but the shipper's agent refused to assume responsibility. Defendant's agent in Manila, upon the court's authority secured by the master of the vessel, sold said rice meal and deposited the proceeds thereof with the court minus the expenses incident to the sale. Plaintiff filed an action for recovery of the proceeds of the sale and the resulting damages. Defendant also claimed, in a cross-complaint, contribution from plaintiff for general average for the expenses incurred by the vessel's stay in Manila. Trial court decided for the plaintiff including damages for the defendant's breach of the charter party. Both parties appealed.
Held: The danger from which the master of the vessel fled was a real and not merely an imaginary one. Seizure at the hands of the enemy, though not inevitable, was a possible outcome of a failure to leave the port of Saigon; and it cannot be said that under the conditions existing at the time when the master elected to flee from that port, there were no grounds for a reasonable apprehension of danger from seizure by French authorities, and therefore no necessity for flight. The deviation of the vessel therefore, from the route prescribed in her charter party, and the subsequent abandonment by the master of the voyage contemplated in the contract of affreightment, must be held to have been justified by the necessity under which the master was placed to elect that course which would remove and preserve the vessel from danger of seizure by the public enemy of the flag which the vessel sailed; and that neither the vessel nor her owners are liable for the resultant damages suffered by the owner of the cargo.

The claim for general average by the shipowner, however, cannot be sustained under the provisions of the York-Antwerp Rules. An examination of the entire body of these rules discloses that general average is never allowed thereunder unless the loss or damage sought to be made good as general average has been incurred for the `common safety'. It is very clear that in fleeing from the port of Saigon and taking refuge in Manila, the master of the vessel was not acting for the common safety of the vessel and her cargo. The French cargo was absolutely secure from danger of seizure or confiscation so long as it remained in the port of Saigon, and there can be no question that the flight of the vessel was a measure of precaution adopted solely and exclusively for the preservation of the vessel from danger of seizure or capture. Delivery of the net proceeds of the sale to plaintiff should be affirmed, but recovery of damages by plaintiff should be reversed. Defendant cannot claim for general average.

Judgment modified.

(c) Effects

Art. 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute.
(d) Jettison
Art. 815. The captain shall direct the jettison, and shall order the goods cast overboard in the following order:

1. Those which are on deck, beginning with those which embarrass the maneuver or damage the vessel, preferring, if possible, the heaviest ones with the least utility and value.

2. Those which are below the upper deck, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable.

Art. 816. In order that the goods jettisoned may be includ­ed in the gross average and the owners thereof be entitled to indemnity, it shall be necessary in so far as the cargo is con­cerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory prepared before the departure, in accordance with the first paragraph of Article 612.

(e) Jason Clause

Jason Clause, Rule D, York-Antwerp Rules
Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure; but this shall not prejudice any remedies which may be open against that party for such fault.

(b) Proof and Liquidation of Averages

(1) Modes
Art. 846. Those interested in the proof and liquidation of averages may mutually agree and bind themselves at any time with regard to the liability, liquidation and payment thereof.

In the absence of agreements, the following rules shall be observed:

1. The proof of the average shall take place in the port where the repairs are made, should any be necessary, or in the port of unloading.

2. The liquidation shall be made in the port of unloading, if it is a Philippine port.

3. If the average occurred outside of the jurisdictional waters of the Philippines, or the cargo has been sold in a foreign port by reason of an arrival under stress, the liquidation shall be made in the port of arrival.

4. If the average has occurred near the port of destination, so that said port can be made, the proceedings mentioned in rules 1 and 2 shall be held there.

Art. 847. In the case where the liquidation of the averages is made privately by virtue of agreement, as well as when a judicial authority intervenes at the request of any of the parties interested who do not agree thereto, all of them shall be cited and heard, should they not have renounced this right.

Should they not be present or should they have no legal representative, the liquidation shall be made by the consul in a foreign port, and where there is none, by the competent judge or court, according to the laws of the country and for the account of the proper party.

When the representative is a person well known in the place where the liquidation is made, his intervention shall be admitted and shall produce legal effects, even though he be authorized only by a letter of the ship agent, the shipper, or the insurer.

Art. 848. Claims for averages shall not be admitted if they do not exceed 5 per cent of the interest which the claimant may have in the vessel or in the cargo if it be gross average, and 1 per cent of the goods damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an agreement to the contrary.

(2) Appraisal of general average

Art. 850. If by reason of one or more accidents of the sea, particular and gross averages of the vessel, of the cargo, or of both, should take place on the same voyage, the expenses and damages corresponding to each average shall be determined separately in the port where the repairs are made, or where the merchandise is discharged, sold, or utilized.

For this purpose the captains shall be obliged to demand of the expert appraisers and of the contractors making the repairs, as well as of those appraising and taking part in the unloading, repair, sale, or utilization of the merchandise, that in their appraisements or estimates and accounts they set down separately and accurately the expenses and damages pertaining to each average, and in those of each average those corresponding to the vessel and to the cargo, also stating separately whether or not there are damages proceeding from inherent defect of the thing and not from accident of the sea; and in case there should be expenses common to the different averages and to the vessel and its cargo, the amount corresponding to each must be estimated and stated distinctly.

Art. 851. At the instance of the captain, the adjustment, liquidation, and distribution of gross averages shall be held privately, with the consent of all the parties in interest.

For this purpose, within forty-eight hours, following the arrival of the vessel at the port, the captain shall convene all the persons interested in order that they may decide as to whether the adjustment or liquidation of the gross average is to be made by experts and liquidators appointed by themselves, in which case did shall be so done if the interested parties agree.

If an agreement is not possible, the captain shall apply to the competent judge or court, who shall be the one in the port where these proceedings are to be held in accordance with the provisions of this Code, or to the consul of the Philippines should there be one, and should there be none, to the local authority when they are to be held in a foreign port.

Art. 852. If the captain does not comply with the provisions of the preceding article, the ship agent or the shippers shall demand the liquidation, without prejudice to the action they may bring to demand indemnity from him.

Under Art. 851, the captain is required to initiate the proceedings for the adjustment, liquidation and distribution of any gross average; it is his duty to take the proper steps to protect any shipper whose goods may have been jettisoned for the general safety ==> if the captain does not comply with his duty under 851, the shipowner or shipper has the right to maintain an action against the captain for indemnification for the loss --> this does not involve the suppression of the right of action of the shipper against the shipowner

Art. 853. After the experts have been appointed by the persons interested, or by the court, and after the acceptance, they shall proceed to the examination of the vessel and of the repairs required and to the appraisal of their cost, separating these losses and damages from those arising from the inherent defect of the things.

The experts shall also declare whether the repairs may be made immediately, or whether it is necessary to unload the vessel in order to examine and repair it.

With regard to the merchandise, if the average should be visible at a mere glance, the examination thereof must be made before they are delivered. Should it not be visible at the time of unloading, said examination may be made after the delivery, provided that it is done within forty-eight hours from the unloading, and without prejudice to the other proofs which the experts may deem proper.