ILLUSTRATIVE CASES:

1) A. MAGSAYSAY INC., vs. ANASTACIO AGAN

(G.R. No. L-6393 January 31, 1955)

Facts: The S S “San Antonio” vessel (plaintiff) with general cargo for different ship owners left Manila and
was bound for Basco, Batanes, vis Aparri, Cagayan. It reached Aparri, had a stopover, and as it would
proceed to Basco but still in port, it accidentally ran aground at the mouth of the Cagayan River. Plaintiff
have it refloated by the Luzon Stevedoring Co.. The vessel returned to Manila to refuel and then
proceeded to Basco, where the cargoes were delivered to their respective owners or consignees, who,
with the exception of defendant, made a deposit or signed a bond to answer for their contribution to the
average. Thus, the plaintiff brought an action to make defendant pay his contribution. Defendant denies
liability. The lower court decided against the defendant, thus the appeal.

Issue: Whether the expenses incurred in floating a vessel so stranded should be considered general
average and shared by the cargo owners.

Held: The expenses should not be considered as general average.

The said expenses do not fit into any of the specific cases of general average enumerated in article 811.
No. 6 of this article does mention “expenses caused in order to float a vessel,” but it specifically refers to
“a vessel intentionally stranded for the purpose of saving it.” In the present case, the stranding was not
intentional.
The expenses also lack the requisites of general average. First, the expenses sought to be recovered
from defendant were not incurred to save vessel and cargo from a common danger. The vessel ran
aground in fine weather inside the port at the mouth of a river, a place described as “very shallow”. There
was no imminent danger. It is, of course, conceivable that, if left indefinitely at the mercy of the elements,
they would run the risk of being destroyed. But as stated at the above quotation, “this last requirement
excludes measures undertaken against a distant peril.” What does appear from the testimony of plaintiff’s
manager is that the vessel had to be salvaged in order to enable it “to proceed to its port of destination.”
But as was said in the case just cited it is the safety of the property, and not of the voyage, which
constitutes the true foundation of the general average. Second, the cargo could, without need of
expensive salvage operation, have been unloaded by the owners if they had been required to do so.
Third, the sacrifice was for the benefit of the vessel and not for the purpose of saving the cargo, the cargo
owners are not in law bound to contribute to the expenses. And fourth, the procedure was not followed.

2) Philippine Home Assurance Corp. v. CA and Eastern Shipping Lines, Inc.

Facts: Eastern Shipping Lines, Inc (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan,
shipment for carriage to Manila and Cebu, freight pre-paid and in good order and condition. While the
vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder located in the
accommodation area near the engine room on the main deck. The acetylene cylinder exploded sending
flame throughout the accommodation area, thus causing death and severe injuries to the crew and
instantly setting fire to the whole superstructure of the vessel. The ship was abandoned by the master
and the crew.
The vessel was towed by Fukuda Salvage Co. to the port of Naha, Japan. The fire was eventually
extinguished at the said port and the cargoes which were saved were loaded to another vessel for
delivery to their original ports of destination. ESLI charged the consignees several amounts
corresponding to additional freight and salvage charges, which were paid by Philippine Home Assurance
Corp (PHAC)under protest for and in behalf of the consignees. PHAC filed an action for recovery of sum
paid. The trial court ruled in favor of ESLI which was affirm on appeal by the CA.

Issue: Whether or not the expenses incurred in saving the cargo are considered general average.
Held: There was no general average.
The goods subject of the controversy were neither lost nor damaged in transit by the fire that razed the
carrier. Thus the issue is who among the carrier, consignee or insurer is liable for the additional charges
or expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the
goods via a different carrier.
Moreover, fire is not considered a natural disaster or calamity since it almost always arises from some act
of man or by human means. It cannot be an act of God unless caused by lightning.
General averages include all damages and expenses which are deliberately caused in order to save the
vessel, its cargo, or both at the same time, from real and known risk. The formalities prescribed under the
law were not complied with. ESLI must return to PHAC the amount paid under protest in behalf of the
consignees.

3) PACIFIC FREIGHTERS CO. v. ST. PAUL FIRE & MARINE INS. CO. January 31, 1940.

Appellant was the owner of the schooner "Rosamond" and chartered her to Comyn, Mackall & Co., the
charter providing for the carriage of a full cargo of lumber from Port Blakeley, Washington to Cape Town,
South Africa, freight to be considered earned, vessel or cargo lost at any stage of the voyage, and general
average, if any, to be payable under the York-Antwerp Rules of 1890. Rule I of such rules provides: "No
jettison of deck cargo shall be made good as general average". The charterer shipped the cargo of lumber,
paid the freight, took bills of lading which provided for general average under the York-Antwerp Rules of
1890, sold the cargo to Smith, Kirkpatrick & Co., appellee's assignor.
The vessel embarked, and on March 27, 1920, encountered heavy weather which damaged the vessel,
causing the master thereof to change course and seek a port of refuge for the safety of the ship and cargo.
A hurricane was encountered on April 16, 1920, which caused the master to thereafter jettison the deck
load. The vessel reached San Francisco on May 15, 1920, and thereafter discharged its underdeck cargo,
and was repaired at a cost of $8,317.62. The vessel then reloaded the underdeck cargo, and took on a new
deck cargo, and completed the voyage. Appellee agreed to assume its assignor's responsibility for any
general average contribution due from the underdeck cargo.

The adjuster agreed upon by the parties fixed a total value of vessel and underdeck cargo, without the
value of the freight on the new deck cargo, at $109,258, the separate values being $47,596 on the vessel
and $61,662 on the underdeck cargo. He fixed the general average at $3,623.40 for the vessel, and
$4,694.22 for the underdeck cargo. On July 13, 1921, appellee filed this suit on the theory that the freight
on the new deck cargo was a part of the venture, and the general average expense should be deducted
therefrom and the balance apportioned between appellant and appellee. The court below so held. The
gross new freight was $21,191.15. After deducting the general average expense, the balance was
apportioned: $5,674.35 to appellant and $7,199.18 to appellee. This appeal followed.

"General average contribution is defined to be a contribution by all the parties in a sea adventure to make
good the loss sustained by one of their number on account of sacrifices voluntarily made of part of the ship
or cargo to save the residue and the lives of those on board from an impending peril, or for extraordinary
expenses necessarily incurred by one or more of the parties for the general benefit of all the interests
embarked in the enterprise. * * *

"Where expenses are incurred or sacrifices made on account of the ship, freight, and cargo, by the owner
of either, the owners of the other interests are bound to make contribution in the proportion of the value of
their several interests. * *

The mechanics of apportionment are: the value of each of the contributing interests is multiplied by a fraction
which has as its numerator the sum of the general average expense and has as its denominator the sum
of the contributing values. 2 Arnould on Marine Insurance and Average, 11th Ed., 1261, § 975, 1285, § 991.
We think the method followed below is erroneous in any event because such method amounts to a
distribution of profits to which the underdeck cargo has no claim. General average relates to contributions
for losses, not distribution of profits. Likewise, if the new freight is to be considered at all, we think only the
"net" new freight should be considered. We think the principle, applicable to freight subject to general
average, is applicable to the new freight here involved.

In arriving at a fair result, the equitable principle that "equity implies equality; equal fairness and honesty on
both sides" (United States v. St. Paul, M. & M. Ry. Co., 247 U.S. 310, 320, 38 S.Ct. 525, 529, 62 L.Ed.
1130) should control. We think fairness requires a holding in such a case as this with its peculiar facts that:
if the "net" new freight exceeds the general average expense, then there has in fact been no loss and no
contribution due from anyone; if the general average expense exceeds the amount of the "net" new freight,
then only the amount of the excess should be apportioned among the contributing interests. We arrive at
this result because the event causing the loss also enabled the ship to carry new cargo. Were it not for the
event, such new cargo would not have been obtained. It is only right, we think, that the ship's profit be
restricted to the amount of the excess of the "net" new freight over the general average expense.

4) COMPAGNIE DE COMMERCE ET DE NAVIGATION D'EXTREME ORIENTvs. THE HAMBURG

AMERIKA PACKETFACHT ACTIEN GESELLSCHAFT (G.R. No. L-10986 March 31, 1917)

FACTS:

COMPAGNIE DE COMMERCE ET DE NAVIGATION D'EXTREME ORIENT (Compagnie) is a

corporation duly organized and existing under and by virtue of the laws of France, with its principal office
in Paris and a branch office in Saigon, Vietnam. THE HAMBURG AMERIKA PACKETFACHT ACTIEN
GESELLSCHAFT(Hamburg) is a corporation organized under the laws of Germany with its principal office
in Hamburg and represented in Manila by Behn, Meyer & Company (Limited), a corporation. 2.
HAMBURG owned a steamship named SAMBIA, which proceeded to the port of Saigon and on board
was the cargo belonging to COMPAGNIE. There were rumors of impending war between Germany and
France and other nations of Europe. The master of the steamship was told to take refuge at a neutral port
(because Saigon was a French port). COMPAGNIE asked for compulsory detention of its vessel to
prevent its property from leaving Saigon. However, the Governor of Saigon refused to issue an order
because he had not been officially notified of the declaration of the war. The steamship sailed from
Saigon, and was bound for Manila, because it was issued a bill of health by the US consul in Saigon. The
steamship stayed continuously in Manila and where it contends it will be compelled to stay until the war
ceases. No attempt was made on the part of the defendants to transfer and deliver the cargo to the
destinations as stipulated in the charter party. BEHN, MEYER and COMPANY (agent of HAMBURG in
Manila) offered to purchase the cargo from COMPAGNIE, but the latter never received the cable
messages so they never answered. When a survey was done on the ship, it was found that the cargo was
infested with beetles, so BEHN asked for court authority to sell the cargo and the balance to be dumped
at sea. The proceeds of the sale were deposited in the court, waiting for orders as to what to do with it.
BEHN wrote COMPAGNIE again informing the latter of the disposition which it made upon the cargo.
COMPAGNIE answered that it was still waiting for orders as to what to do. COMPAGNIE wanted all the
proceeds of the sale to be given to them (damages, for the defendants’ failure to deliver the cargo to the
destinations Dunkirk and Hamburg), while defendants contended that they have a lien on the proceeds of
the sale (amount due to them because of the upkeep and maintenance of the ship crew and for
commissions for the sale of the cargo). 6. The trial court ruled in favor of the plaintiffs. On appeal, the
defendants made the following assignments on appeal (that the court had no jurisdiction, that the fear of
capture was not force majeure, that the court erred in concluding that defendant is liable for damages for
non-delivery of cargo, and the value of the award of damages). On appeal, the plaintiffs also contended
that the court erred in not giving the full value of damages

ISSUE: WON the master of the steamship was justified in taking refuge in Manila (therefore being the
cause of the non-delivery of the cargo belonging to the plaintiffs
HELD:
A shipmaster must be allowed a reasonable time in which to decide what course he will adopt as to the
disposition of his cargo, after entering a port of refuge; and though he must act promptly thereafter, when
the cargo is a perishable one, neither he nor the shipowner is responsible for loss or damage suffered by
the cargo as a result of its detention aboard the vessel during such time as may reasonably necessary to
come to a decision in this regard. Under the circumstances set out in the opinion, the master of the
Sambia proceeded with all reasonable dispatch and did all that could be required of a prudent man to
protect the interests of the owner of the cargo aboard is vessel; so that any losses which resulted from
the detention of the cargo aboard the Sambia must be attributed to the act of the “Enemy of the King”
which compelled the Sambia to flee to a port of refuge, and made necessary the retention of the cargo
aboard the vessel at anchor under a tropical sun and without proper ventilation until it could be
ascertained that the interests of the absent owner would be consulted by the sale of this perishable cargo
in the local market. In fleeing from the port of Saigon, and taking refuge in Manila Bay the master of the
Sambia 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 in Saigon, and
the flight of the vessel was a measure of precaution adopted solely and exclusively for the preservation
of the vessel from the danger of seizure or capture. Dispositive: So much of the judgment as provides for
the delivery to the plaintiff of the net proceeds of the sale of the cargo (P128,977.71) affirmed; but so
much thereof as allowed damages for a breach of the charter party (P60,841.32) reversed