Apportionment

After the amount of the gross average has been determined, it shall be
distributed pro rata among the goods which are to cover the same.
"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." 1

A. Magsaysay, Inc. v. Agan, G.R. No. L-6393

The vessel of petitioner containing general cargo belonging to different
shippers, ran aground while still in port. Attempts to refloat it under its own
power failed so it had Luzon Stevedoring Co. refloat it at an agreed
compensation. 

Should the expenses incurred in floating a vessel so stranded be

considered general average shared by the cargo owners? NO.

Requisites for general average: 

1. there must be a common danger; 
2. for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately;
3. from the expenses or damages caused follows the successful saving of
the vessel and cargo; and
4. he expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority.

As to first requisite- the evidence does not disclose that the expenses
sought to be recovered from defendant were incurred to save the vessel
and cargo from common danger because the vessel ran aground in fine
weather inside the port at the mouth of a river, which was “very shallow”.
Second requisite- the expenses in question were not incurred for the
common safety of the vessel and cargo because it could have been
unloaded by the owners if they had been required to do so without need of
expensive salvage operation.
Third requisite- the salvage operation was a success but the sacrifice was
for the benefit of the vessel and not for the purpose of saving the cargo.

1
Pacific Freighters Co. v. St. Paul Fire & Marine Insurance Co., 109 F.2d 310
(1940)
Fourth requisite- not proved because it does not appear that the expenses
were incurred after following the procedures in Article 813.
Proof and Liquidation of Average: Code of Commerce
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 agreement:
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. 846, Code of Commerce)
 If averages are liquidated privately by agreement/if a judicial authority
intervenes at the request of any of the parties involved who do not agree
– all of them will be cited and heard if they have not renounced this right.
 If they are not present or have no legal representative – the liquidation
will be carried out by the Consul in a foreign port
 if there is none, by the competent judge or court, in accordance
with the laws of the country and for the benefit of the proper
party.
 When the representative is a well-known figure in the area where the
liquidation is being carried out, his intervention is permitted. (Art. 847)
Claims for averages shall not be admitted if:
o they do not exceed 5% of the interest which the claimant may
have in the vessel or in the cargo if it be gross average and
o 1% of the goods damaged if particular average,
**in both cases the expense of appraisal is deducted unless there is an
agreement to the contrary. (Art. 848)
Damages, averages, loans on bottomry and respondentia and their
premiums and any other losses, shall not earn interest by reason of delay
until after the lapse of the period of three-days*.
*counted from the day the liquidation may have been concluded and
communicated to the persons interested in the vessel, in the cargo, or both
at the same time (Art. 849)
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 are discharged, sold, or utilized.
The captains are required to demand of
 the expert appraisers and contractors performing the repairs
 as well as those appraising and participating in the unloading, repair,
sale, or utilization of the merchandise
that the expenses and damages pertaining to each average, and those
corresponding to the vessel and the cargo, be set down separately and
accurately in their appraisements, estimates, and accounts.
If there are expenses common to the different averages and to the vessel
and its cargo – amounts for each is estimated and stated distinctly. (Art.
850)
Liquidation Of Gross Averages.
The adjustment, liquidation, and distribution of gross averages shall be held
privately, with the consent of all the parties in interest, and at the instance
of the captain.
The captain shall convene all interested parties within 48 hours of the
vessel's arrival at the port to decide whether the gross average adjustment
or liquidation is to be made by experts and liquidators appointed by
themselves, in which case it will be 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 Republic of the Philippines should there be one
o and should there be none, to the local authority when they are
to be held in a foreign port. (Art. 851)
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. (Art.
852)
After the experts are appointed by the parties involved or by the court, and
after their acceptance, they shall:
 examine the vessel and the repairs that are required
 appraise the cost of those repairs
 determine whether the repairs can be completed immediately or if the
vessel must be unloaded in order to inspect and repair it.
As to the merchandise:
 if the average can be seen at a glance, it must be examined before it
is delivered
 If it is not visible at the time of unloading, the examination may be
conducted after delivery within 48hrs of unloading and without
prejudice to other proofs that experts may deem appropriate. (Art.
853)
Rules on the valuation of the objects which are to contribute to the
gross average, and that of those which constitute the average:
1. The merchandise shall be valued at the current price at the port of
unloading, deducting the freightage, customs duties, and expenses of
unloading, as may appear from a material inspection of the same.
Bills of lading not taken into consideration unless there is an
agreement to.
2. If liquidation to be made in the port of departure, the value of the
merchandise loaded shall be determined by the purchase price,
including the expenses until they are placed on board. Insurance
premium excluded.
3. If the merchandise is damaged, appraised at their true value.
4. If the voyage having been interrupted, the merchandise should have
been sold in a foreign port, and the average cannot be estimated, the
value of the merchandise in the port of arrival, or the net proceeds
obtained at the sale thereof, shall be taken as the contributing capital.
5. Merchandise lost, which constitute the gross average, shall be
appraised at the value which merchandise of its kind may have in the
port of unloading
6. The masts cut down, the sails, cables, and other equipment of the
vessel rendered useless for the purpose of saying it, shall be
appraised at the current value, deducting one-third* by reason of the
difference between new and old.
*This deduction shall not be made with respect to anchors and
chains.
 7. The vessel shall be appraised at its true value in the condition in
which it is found.
8. Freight shall represent 50% by way of contributing capital (Art. 854)
The merchandise loaded on the upper deck of the vessel shall contribute to
the gross average should they be saved.
Exc: there shall be no right to indemnity if lost by reason of having been
jettisoned for common safety, except when the marine ordinances allow
their shipment in this manner in coastwise navigation.
The same shall take place with that which is on board and is. not included
in the bills of lading or inventories, according to the cases.
In any case the shipowner and the captain shall be liable to the shippers for
the damages from the jettison if the storage on the upper deck was made
without the consent of the latter. (Art. 855)
Provisions and munitions of war which the vessel may have on board, and
the clothing used by the captain, officers, and crew, shall not contribute to
the gross average. (Art. 856)
After the appraisement of the goods saved and of those lost which
constitute the gross average, has been concluded by the experts, the
repairs made on the vessel, and the accounts of the same approved by the
persons interested or by the judge or court, the entire record shall be
turned over to the liquidator appointed, in order that he may proceed with
the distribution of the average. (Art. 857)
To Effect Liquidation
 the liquidator shall examine the protest of the captain, comparing it, if
necessary, with the logbook, and all the contracts which may have
been made among the persons interested in the average, the
appraisements, expert examinations, and accounts of repairs made.
 If, as a result of this examination, he should find any defect in the
procedure which might injure the rights of the person interested or
affect the liability of the captain, he shall call attention thereof in order
that it may be corrected, if possible, and otherwise he shall include it
in the exordial of the liquidation.
Distribution of the Amount of the Average; What Needs To Be Fixed:
1. The contributing capital, in accordance with Article 854.
2. That of the vessel in her actual condition, according to the statement of
experts.
3. The 50% of the amount of the freightage, deducting the remaining 50%
for wages and maintenance of the crew.
After the amount of the gross average has been determined in accordance
with the provisions of this Code, it shall be distributed pro rata among the
goods which are to cover the same.
The insurers of the vessel of the freightage and of the cargo shall be
obliged to pay for the indemnification of the gross average, insofar as
is required of each one of the objects respectively. (Art 859)
 If, notwithstanding the jettison of merchandise, breakage of masts,
ropes, and equipment, the vessel shall be lost running the same risk,
no contribution whatsoever by jettison of gross average shall be
proper.
o The owners of the goods saved shall not be liable for the
indemnification of those jettisoned, lost, or damaged. (Art. 860)
 If, after the vessel has been saved from the risk which gave rise to
the jettison, it should be lost through another accident taking place
during the voyage, the goods saved and existing from the first risk
shall continue liable to contribution by reason of the gross average
according to their value in the condition in which they may be found,
deducting the expenses incurred in saving them. (Art. 861)
 If, in spite of having saved the vessel and the cargo in consequence
of the cutting down of masts or of any other damage deliberately
done to the vessel for said purpose, the merchandise should
subsequently be lost or stolen, the captain cannot demand of the
shippers or consignees that they contribute to the indemnity for the
average, unless the loss should occur by reason of an act of the
owner or consignee himself. (Art. 862)
 If the owner of the jettisoned goods should recover them after having
received the indemnity for gross average, he shall be obliged to
return to the captain and to the other persons interested in the cargo
the amount he may have received, deducting the amount of the
damage caused by the jettison and of the expenses incurred in their
recovery.
In this case, the amount returned shall be distributed among the
vessel and the persons interested in the cargo in the same proportion
in which they contributed to the payment of the average. (Art. 863)
 If the owner of the goods jettisoned should recover them without
having demanded any indemnity, he shall not be obliged to contribute
to the payment of the gross average which may have been suffered
by the rest of the cargo after the jettison. (Art. 864)
 The distribution of the gross average shall not be final until it has been
agreed to, or until it has been approved by the judge or court. (Art. 865)
 After the liquidation has been approved, it shall be the duty of the captain to
collect the amount of the contributions, and he shall be liable to the owners
of the goods averaged for the damages they may suffer through his delay
or negligence. (Art. 866)
 If the person contributing should not pay the amount of the contribution at
the end of the third day after having been required to do so, the goods
saved shall be proceeded against, in the request of the captain, until
payment has been made from their proceeds. (Art. 867)
 If the person interested in receiving the goods saved should not give
security sufficient to answer for the amount corresponding to the gross
average, the captain may defer the delivery until payment has been made.
(Art. 868)
Liquidation of Ordinary Averages
The experts whom the court or the person interested may appoint, as the
case may be, shall proceed with the examination and appraisement of the
averages in the manner prescribed in Articles 853 and 854, Rules 2 to 7,
insofar as they are applicable. (Art. 869)
Standard Oil Co of New York v. Castelo
By contract of charter, Castelo, as owner, let the small interisland steamer
Batangueño for the term of 1 year for use in the conveying of cargo
between certain ports of the Philippine Islands. While the boat was on her
way to the port, and off the western coast of Sorsogon, a violent typhoon
passed over that region, and while the storm was at its height the captain
was compelled for the safety of all to jettison the entire consignment of
petroleum consisting of 200 cases. When the storm abated the ship made
port, 13 cases of the petroleum were recovered but the remainder was
wholly lost.
Issues:
1. Was the loss of the petroleum a general average loss or a particular loss
to be borne solely by the owner of the cargo?
2. Is the shipowner liable for the loss of the cargoes?
Held:
1. General Average Loss. It is a general rule that ordinarily the loss of
cargo carried on deck shall not be considered a general average loss. The
reason for this rule is found in the fact that deck cargo is in an extra-
hazardous position and, if on a sailing vessel, its presence is likely to
obstruct the free action of the crew in managing the ship. However, with the
advent of the steamship as the principal conveyer of cargo by sea, it has
been felt that the reason for the rule has become less weighty, especially
with reference to coastwise trade. Hence, plaintiff is entitled to recover in
some way and from somebody an amount bearing such proportion to its
total loss as the value of both the ship and the saved cargo bears to the
value of the ship and entire cargo before the jettison was effected.
2. Under Article 852 of the Code of Commerce, the captain has the duty to
take the proper steps to protect any shipper whose goods may have been
jettisoned for the general safety. In this case, the Captain of the vessel did
not take those steps; and the failure of the Captain to take those steps
gave rise to a liability for which the owner of the ship must answer. In view
thereof, the Owner of the Ship/vessel is a person to whom the Plaintiff may
immediately look for reimbursement to the value of the Cargo pursuance to
the provisions of the Code of Commerce applicable to this case. It is also
universally recognized, that the Captain is primarily the Representative of
the owner, thus the Owner of the vessel is civilly liable for the act of the
captain. The Plaintiff therefore is entitled to recover the amount lost