001 G.R. No.

L-6393 January AUTHOR:

31, 1955 Note the 2 classification of Averages in this case.
A. MAGSAYSAY INC., NO GENERAL AVERAGE EXISTS IN THIS CASE. eneral averages
vs. ANASTACIO AGAN contemplate that the stranding of the vessel is intentionally done in order to
TOPIC: save the vessel itself from a certain and imminent danger. Here, the stranding
PONENTE: Reyes, A J. was accidental and it was made afloat for the purpose of saving the voyage and
not the vessel. Note that this happened on a fine weather day. Also, it cannot be
said that the towing was made to save the cargos, for the cargos were not in
danger imminent danger.
FACTS:
1. OCT 6, 1949: S S "San Antonio", vessel owned and operated by plaintiff, left Manila, bound for Basco,
Batanes, vis Aparri, Cagayan, with general cargo belonging to different shippers, among them the defendant.
2. OCT 10, 1949: The vessel reached Aparri, and after a day's stopover in that port, weighed anchor to proceed to
Basco. But while still in port, it ran aground at the mouth of the Cagayan river, and, attempts to refloat it under its
own power having failed, plaintiff have it refloated by the Luzon Stevedoring Co. at an agreed compensation.
3. Once afloat the vessel returned to Manila to refuel and then proceeded to Basco, the port of destination. There 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.
4. CFI: On the theory that the expenses incurred in floating the vessel constitute general average to which both
ship and cargo should contribute, plaintiff brought the present action in the CFI Manila to make defendant pay
his contribution, which, as determined by the average adjuster, amounts to P841.40.
- Defendant, in his answer, denies liability to his amount, alleging, among other things, that the stranding of the
vessel was due to the fault, negligence and lack of skill of its master, that the expenses incurred in putting it
afloat did not constitute general average, and that the liquidation of the average was not made in accordance
with law.
- After trial, the lower court found for plaintiff and rendered judgment against the defendant for the amount of
the claim, with legal interests.
5. From this judgment defendant had appealed directly to this Court. (Issue being questioned by the defendant)
Although appellant assigns various errors, under our view of the case only the
following need be considered: The trial court erred in allowing the general average
for floating a vessel unintentionally stranded inside a port and at the mouth of a
river during a fine weather
ISSUE: WON the expenses incurred in floating the vessel so stranded should be considered general average and shared by
the cargo owners? NO.
HELD: It is accepted that the stranding of the vessel was due to sudden shifting of the sandbars at the mouth of the river
which the pilot did not anticipate and may therefore be regarded as accidental.
RATIO:
SC finds that the stranding of plaintiff's vessel was due to the sudden shifting of the sandbars at the mouth of the river
which the port pilot did not anticipate. The standing may, therefore, be regarded as accidental, and the question is whether
the expenses incurred in floating a vessel so stranded should be considered general average and shared by the cargo
owners.
Law on averages, as contained in the Code of Commerce, can be classified into two (2): [CLASSIFICATION]
Simple or Particulargenerally speaking, includes-
a. all expenses and damages caused to the vessel or cargo which have not inured to the common benefit (Art
809), and
b. are therefore to be borne only by the owner of the property which gave rise to the same (Art 810).
General or Gross
a. include all damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at
the same time, form a real and unknown risk (Art 811) and
b. being for the common benefit, gross averages are to be borne by the owners of the articles saved (Art 812)
While the expenses incurred in putting plaintiff's vessel afloat may well come under number 2 of article 809-which
refers to expenses suffered by the vessel "by reason of an accident of the sea of the force majuere" and should
therefore be classified as particular 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" and would have no application where, as in
 the present case, the stranding was not intentional.
In classifying averages into simple/particular or general/gross and defining each class, the Code at the same time
enumerates specific cases as coming specially under one or the other denomination.
In determining whether the expenses could come within the legal concept of general average, Tolentino gives the
following requisites for general average:
o That there must be a common danger;
o That for the common safety part of the vessel or of the cargo or both is sacrificed deliberately;
o That from the expenses or damages caused follows the successful saving of the vessel and cargo; and
o That the expenses or damages should have been incurred or inflicted after taking proper legal steps and authority
The plaintiff has not made out a case for general average
o With respect to the first requisite, the evidence does not disclose that the expenses sought to be recovered
from defendant were 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". It would thus
appear that vessel and cargo were at the time in no imminent danger or a danger which might "rationally
be sought to be certain and imminent." 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." It is the deliverance from an
immediate, impending peril, by a common sacrifice, that constitutes the essence of general average. (The
Columbian Insurance Company of Alexandria vs. Ashby & Stribling et al., 13 Peters 331; 10 L. Ed., 186).
In the present case there is no proof that the vessel had to be put afloat to save it from imminent danger.
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.
o As to the second requisite, we need only repeat that the expenses in question were not incurred for the
common safety of vessel and cargo, since they, or at least the cargo, were not in imminent peril. The cargo
could, without need of expensive salvage operation, have been unloaded by the owners if they had been
required to do so.
o With respect to the third requisite, the salvage operation, it is true, was a success. But as the sacrifice was
for the benefit of the vessel to enable it to proceed to destination and not for the purpose of saving
the cargo, the cargo owners are not in law bound to contribute to the expenses.
o The final requisite has not been proved, for it does not appear that the expenses here in question were
incurred after following the procedure laid down in article 813 et seq.

In conclusion we found that plaintiff not made out a case for general average, with the result that its claim for
contribution against the defendant cannot be granted. Wherefore, the decision appealed from is REVERSED and
plaintiff's complaint ordered dismissed with costs.
002 INTERNATIONAL HARVESTER COMPANY IN RUSSIA, AUTHOR:
vs. HAMBURG-AMERICAN LINE
G.R. No. 11515 July 29, 1918
TOPIC: Averages
PONENTE: Reyes, A J.

FACTS:
1. International Harvester Company in Russia (IHCR), an American Company, contracted
Hamburg American Line (HAL) to transport 852 crates of agricultural machinery from
Baltimore, MD to Hamburg, Germany and that after it reached Hamburg, the crates were to be
delivered, at the order of the consignor, to Vladivostock, Russia.

2. The crates were delivered via the vessel Bulgaria to Hamburg, at the expense of HAL. It was
transferred to the German ship Suevia to resume journey from Hamburg to Russia. During
Suevias journey, war broke out between Russia and Germany. Suevias captain ordered the ship
to be placed on neutral ground, which happened to be the nearest port of Manila. IHCR
demanded HAL to continue the journey by transferring the cargoes to a non-German ship (as
agreed upon in the Bill of Lading in case of war).

3. HAL declined. IHCR sued HAL in Manila. RTC Manila issued a writ of replevin hence IHCR
recovered its cargoes, it then contracted a separate ship to continue the transport. HAL claimed
that IHCR is liable for general averages for the expenses of the Suevia while at the port of
Manila. IHCR claimed that HAL is liable for the expenses incurred by ICHR in contracting a
different shipping line.
ISSUE: Whether IHCR is liable for general averages.
HELD: No

RATIO:
- The cargoes were not contraband and are not in danger at war. Suevias captain merely thought about the safety of
the ship, not of the cargos hence there is no common benefit here between the ship and the cargo; therefore,
general averages do not exist. HAL is liable for the expenses incurred by IHCR in contracting a different shipper.
By the terms of the contract of affreightment HAL was bound to forward the cargo to Vladivostock at the
steamers expense, not necessarily by a steamer belonging to HAL; and it does not by any means follow that it is
not liable for the expense incurred by IHCR in completing the unfinished portion of the voyage in another ship.
003 and 007 National Devt Company v. CA AUTHOR: De Guzman, Bien
G.R. No. L-49407 August 19, 1988 NOTES:
TOPIC: Collision
PONENTE: PARAS, J.
FACTS:
Defendants NDC and MCP entered into a memorandum agreement on September 13, 1962, defendant NDC as the first
preferred mortgagee of three ocean going vessels including one with the name 'Dona Nati' appointed defendant MCP as its
agent to manage and operate said vessel for and in its behalf and account.

Thus, on February 28, 1964 the E. Philipp Corporation of New York loaded on board the vessel "Dona Nati" at San
Francisco, California, a total of 1,200 bales of American raw cotton consigned to the order of Manila Banking Corporation,
Manila and the People's Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc.,
who represents Riverside Mills Corporation. Also loaded on the same vessel at Tokyo, Japan, were the cargo of Kyokuto
Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation consisting of 200 cartons of sodium lauryl
sulfate and 10 cases of aluminum foil.

En route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m. on April 15, 1964 at Ise Bay, Japan with a
Japanese vessel 'SS Yasushima Maru' as a result of which 550 bales of aforesaid cargo of American raw cotton were lost
and/or destroyed, of which 535 bales as damaged were landed and sold on the authority of the General Average Surveyor
for Yen 6,045,-500 and 15 bales were not landed and deemed lost. The damaged and lost cargoes was worth P344,977.86
which amount, the plaintiff as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of lading
duly endorsed. Also considered totally lost were the aforesaid shipment of Kyokuto, Boekui Kaisa Ltd., consigned to the
order of Manila Banking Corporation, Manila, acting for Guilcon, Manila, The total loss was P19,938.00 which the
plaintiff as insurer paid to Guilcon as holder of the duly endorsed bill of lading. Thus, the plaintiff had paid as insurer the
total amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost or damaged cargoes. Hence,
plaintiff filed this complaint to recover said amount from the defendants-NDC and MCP as owner and ship agent
respectively, of the said 'Dofia Nati' vessel.

On April 22, 1965, the Development Insurance and Surety Corporation (DISC) filed before the then Court of First Instance
of Manila an action for the recovery of the sum of P364,915.86 plus attorney's fees of P10,000.00 against NDC and MCP.

Interposing the defense that the complaint states no cause of action and even if it does, the action has prescribed, MCP
filed on May 12, 1965 a motion to dismiss. DISC filed an Opposition on May 21, 1965 to which MCP filed a reply on May
27, 1965. On June 29, 1965, the trial court deferred the resolution of the motion to dismiss till after the trial on the merits.
On June 8, 1965, MCP filed its answer with counterclaim and cross-claim against NDC. NDC, for its part, filed its answer
to DISC's complaint on May 27, 1965. It also filed an answer to MCP's cross-claim on July 16, 1965.

On November 12, 1969, after DISC and MCP presented their respective evidence, the trial court rendered a decision
ordering the defendants MCP and NDC to pay jointly and solidarity to DISC.

MCP interposed its appeal on December 20, 1969, while NDC filed its appeal on February 17, 1970 after its motion to set
aside the decision was denied by the trial court in its order dated February 13,1970. On November 17,1978, the Court of
Appeals promulgated its decision affirming in toto the decision of the trial court. Hence these appeals by certiorari.

The main thrust of NDC's argument is to the effect that the Carriage of Goods by Sea Act should apply to the case at bar
and not the Civil Code or the Code of Commerce. Under Section 4 (2) of said Act, the carrier is not responsible for the loss
or damage resulting from the "act, neglect or default of the master, mariner, pilot or the servants of the carrier in the
navigation or in the management of the ship." Thus, NDC insists that based on the findings of the trial court which were
adopted by the Court of Appeals, both pilots of the colliding vessels were at fault and negligent, NDC would have been
relieved of liability under the Carriage of Goods by Sea Act. Instead, Article 287 of the Code of Commerce was applied
and both NDC and MCP were ordered to reimburse the insurance company for the amount the latter paid to the consignee
as earlier stated.
ISSUE(S): RESPONDENT COURT OF APPEALS ERRED IN HOLDING THE PETITIONERS NATIONAL
DEVELOPMENT COMPANY AND COMPANY OF THE PHILIPPINES TO PAY JOINTLY AND SEVERALLY.
HELD: No, owner and agent of the offending vessel are liable for the damage done where both are impleaded; that in case
of collision, both the owner and the agent are civilly responsible for the acts of the captain
RATIO:
RE: Code of Commerce should apply
This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (1 50 SCRA 469-470 [1987])
where it was held under similar circumstance "that the law of the country to which the goods are to be transported governs
the liability of the common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the
rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is
governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common
carrier shall be governed by the Code of commerce and by laws (Article 1766, Civil Code). Hence, the Carriage of Goods
by Sea Act, a special law, is merely suppletory to the provision of the Civil Code.

In the case at bar, it has been established that the goods in question are transported from San Francisco, California and
Tokyo, Japan to the Philippines and that they were lost or due to a collision which was found to have been caused by the
negligence or fault of both captains of the colliding vessels. Under the above ruling, it is evident that the laws of the
Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

Under Article 1733 of the Civil Code, common carriers from the nature of their business and for reasons of public policy
are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all circumstances of each case. Accordingly, under Article 1735 of the same Code, in all
other than those mentioned is Article 1734 thereof, the common carrier shall be presumed to have been at fault or to have
acted negigently, unless it proves that it has observed the extraordinary diligence required by law.

It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible
error can be found in respondent courses application to the case at bar of Articles 826 to 839, Book Three of the
Code of Commerce, which deal exclusively with collision of vessels.

More specifically, Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a
vessel, the owner of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. But more
in point to the instant case is Article 827 of the same Code, which provides that if the collision is imputable to both vessels,
each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their
cargoes.

Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the shipowner or carrier, is
not exempt from liability for damages arising from collision due to the fault or negligence of the captain. Primary liability
is imposed on the shipowner or carrier in recognition of the universally accepted doctrine that the shipmaster or captain is
merely the representative of the owner who has the actual or constructive control over the conduct of the voyage.

There is, therefore, no room for NDC's interpretation that the Code of Commerce should apply only to domestic trade and
not to foreign trade. Aside from the fact that the Carriage of Goods by Sea Act (Com. Act No. 65) does not specifically
provide for the subject of collision, said Act in no uncertain terms, restricts its application "to all contracts for the carriage
of goods by sea to and from Philippine ports in foreign trade." Under Section I thereof, it is explicitly provided that
"nothing in this Act shall be construed as repealing any existing provision of the Code of Commerce which is now in force,
or as limiting its application." By such incorporation, it is obvious that said law not only recognizes the existence of the
Code of Commerce, but more importantly does not repeal nor limit its application.

RE: No Cause of Action

On the other hand, Maritime Company of the Philippines claims that Development Insurance and Surety Corporation, has
no cause of action against it because the latter did not prove that its alleged subrogers have either the ownership or special
property right or beneficial interest in the cargo in question; neither was it proved that the bills of lading were transferred
or assigned to the alleged subrogers; thus, they could not possibly have transferred any right of action to said plaintiff-
appellee in this case. (Brief for the Maritime Company of the Philippines, p. 16).

The records show that the Riverside Mills Corporation and Guilcon, Manila are the holders of the duly endorsed bills of
lading covering the shipments in question and an examination of the invoices in particular, shows that the actual
consignees of the said goods are the aforementioned companies. Moreover, no less than MCP itself issued a certification
attesting to this fact. Accordingly, as it is undisputed that the insurer, plaintiff appellee paid the total amount of
P364,915.86 to said consignees for the loss or damage of the insured cargo, it is evident that said plaintiff-appellee has a
cause of action to recover (what it has paid) from defendant-appellant MCP.
RE: Liability of the owner of a vessel
MCP next contends that it can not be liable solidarity with NDC because it is merely the manager and operator of the
vessel Dona Nati not a ship agent. As the general managing agent, according to MCP, it can only be liable if it acted in
excess of its authority.

As found by the trial court and by the Court of Appeals, the Memorandum Agreement of September 13, 1962 (Exhibit 6,
Maritime) shows that NDC appointed MCP as Agent, a term broad enough to include the concept of Ship-agent in
Maritime Law. In fact, MCP was even conferred all the powers of the owner of the vessel, including the power to contract
in the name of the NDC (Decision, CA G.R. No. 46513, p. 12; Rollo, p. 40). Consequently, under the circumstances, MCP
cannot escape liability.

It is well settled that both the owner and agent of the offending vessel are liable for the damage done where both are
impleaded; that in case of collision, both the owner and the agent are civilly responsible for the acts of the captain;
that while it is true that the liability of the naviero in the sense of charterer or agent, is not expressly provided in
Article 826 of the Code of Commerce, it is clearly deducible from the general doctrine of jurisprudence under the
Civil Code but more specially as regards contractual obligations in Article 586 of the Code of Commerce. Moreover,
the Court held that both the owner and agent (Naviero) should be declared jointly and severally liable, since the
obligation which is the subject of the action had its origin in a tortious act and did not arise from contract.
Consequently, the agent, even though he may not be the owner of the vessel, is liable to the shippers and owners of
the cargo transported by it, for losses and damages occasioned to such cargo, without prejudice, however, to his
rights against the owner of the ship, to the extent of the value of the vessel, its equipment, and the freight.

RE: Extent of Liability

As to the extent of their liability, MCP insists that their liability should be limited to P200.00 per package or per bale of
raw cotton as stated in paragraph 17 of the bills of lading. Also the MCP argues that the law on averages should be applied
in determining their liability.

MCP's contention is devoid of merit. The declared value of the goods was stated in the bills of lading and corroborated no
less by invoices offered as evidence ' during the trial. Besides, common carriers, in the language of the court in Juan
Ysmael & Co., Inc. v. Barrette et al., (51 Phil. 90 [1927]) "cannot limit its liability for injury to a loss of goods where such
injury or loss was caused by its own negligence." Negligence of the captains of the colliding vessel being the cause of the
collision, and the cargoes not being jettisoned to save some of the cargoes and the vessel, the trial court and the Court of
Appeals acted correctly in not applying the law on averages (Articles 806 to 818, Code of Commerce).

MCP's claim that the fault or negligence can only be attributed to the pilot of the vessel SS Yasushima Maru and not to the
Japanese Coast pilot navigating the vessel Dona Nati need not be discussed lengthily as said claim is not only at variance
with NDC's posture, but also contrary to the factual findings of the trial court affirmed no less by the Court of Appeals, that
both pilots were at fault for not changing their excessive speed despite the thick fog obstructing their visibility.

Finally on the issue of prescription, the trial court correctly found that the bills of lading issued allow trans-shipment of the
cargo, which simply means that the date of arrival of the ship Dona Nati on April 18,1964 was merely tentative to give
allowances for such contingencies that said vessel might not arrive on schedule at Manila and therefore, would necessitate
the trans-shipment of cargo, resulting in consequent delay of their arrival. In fact, because of the collision, the cargo which
was supposed to arrive in Manila on April 18, 1964 arrived only on June 12, 13, 18, 20 and July 10, 13 and 15, 1964.
Hence, had the cargoes in question been saved, they could have arrived in Manila on the above-mentioned dates.
Accordingly, the complaint in the instant case was filed on April 22, 1965, that is, long before the lapse of one (1) year
from the date the lost or damaged cargo "should have been delivered" in the light of Section 3, sub-paragraph (6) of the
Carriage of Goods by Sea Act.
004 Standard Oil Co. of NY (plaintiff appellee) v. AUTHOR: JANNA || I only included discussions that were
Manuel Lopez Castelo (defendant appellant) somehow related to the topic of liquidation of the gross average.
[G.R. No. L-13695; October 18, 1921] Headings on ratio discussion based on Berne Guerreros Haystacks,
TOPIC: Liquidation Art. 846-869 but contents are more or less the exact wordings of the SC.
PONENTE: STREET, J.
FACTS:
1. Manuel LOPEZ Castelo is the owner of a small interisland Steamer called Batangueo.
2. LOPEZ entered into a contract of charter (dated Feb.8, 1915) with Jose Lim CHUMBUQUE, for the of the latter in
conveying cargo between certain ports of the Philippines.
3. In the contract, the officers and crew of Batangueo should be supplied by LOPEZ, and that the charterer
(CHUMBUQUE) should have no other control over the captain, pilot, and engineers, other than: (a) to specify the voyages
that they should make; and (b) to require the LOPEZto discipline or relieve them (the crew) as soon as possible in case of
failure to perform duties respectively assigned to them.
4. While the boat was being thus used by the charterer CHUMBUQUE in the interisland trade, STANDARD OIL delivered
to the agent of the boat in Manila a quantity of petroleum to be conveyed to the port of Casiguran, Sorsogon.
5. A usual form of bill of lading delivered for this consignment, w/ stipulation that freight should be paid at the destination.
6. No provision with respect to storage of the petroleum was indicated in the bill of lading, but it was in fact placed on the
deck of the ship and not in the hold.
7. On the way to Port of Casiguran, and off the western coast of Sorsogon, a violent typhoon passed over that region.
8. For the safety of all in the ship during the height of the storm, the captain was compelled to jettison the entire
STANDARD OIL consignment consisting of 200 cases of petroleum.
9. The ship made it to the port when the storm abated, and 13 cases of petroleum were recovered; the rest were wholly lost.
10. Present action was filed by STANDARD OIL against LOPEZ in CFI of Manila; judgment was rendered in its favor.
11. From this judgment, the defendant LOPEZ appealed.
12. LOPEZ ARGUES: (1)The liquidation of the general average is, under article 852 and related provisions, a condition
precedent to his liability, and that at any rate, as owner of the ship, should only be held liable for his proportion of the
general average; (2) It is also suggested that if STANDARD OIL has any right of action at all upon the state of facts here
presented, it is against the captain, who has been delinquent in performing the duty which the law imposes on him.

For further understanding, we need to be familiar with the ff. terms:

**AVERAGE (Art. 806): (a) An extraordinary or accidental expense incurred during the voyage in order to preserve the
cargo, vessel or both, and all damages or deterioration suffered by the vessel from departure to the port of destination, and
to the cargo from the port of loading to the port of consignment.; (b) Any damages or deteriorations which the vessel may
suffer from the time it puts to sea from the port of departure until it casts anchor in the port of destination, and those
suffered by the merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of
their consignment.

**General or Gross averages (Art. 811): 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 []

Related provision: LIQUIDATION OF GROSS AVERAGES

ARTICLE 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 person 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 it shall 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 Republic of
the Phil. should there be one, and should there be none, to the local authority when they are to be held in a foreign port.

ARTICLE 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.
ISSUE(S):
(1) Whether the general average must first be liquidated before the owner of the ship can be held liable; NO.
(2) Whether STANDARD OILs right of action, if any, is imputable against the captain, only. NO.
(3) Whether LOPEZ should only be held liable for his proportion of the general average; NO.
RATIO:
Liquidation not a condition precedent to liability of shipowner to shipper, whose property has been jettisoned.

1. [Article 852 and related] provisions are intended to supply the shipowner, acting in the person of the captain, with a
means whereby he may escape bearing the entire burden of the loss and may distribute it among all the persons who
ought to participate in sharing it;

2. However, the making of the liquidation is not a condition precedent to the liability of the shipowner of the shipper
whose property has been jettisoned.

Duty of the captain to initiate proceedings as to gross average; Captain remiss in duty in present case

1. In Art. 852 of the Code of Commerce the captain is required to initiate the proceedings for the adjustment, liquidation,
and distribution of any gross average to which the circumstances of the voyage may have given origin; It is his duty to
take the proper steps to protect any shipper whose goods may have been jettisoned for the general safety.

2. Ordinarily, this would be primarily accomplished by requiring the consignees of other cargo, as a condition precedent
to the delivery of their goods to them, to give a sufficient bond to respond for their proportion of the general average.
But it is not necessary here to inquire into details. It is sufficient to say that the captain is required to take the necessary
steps to effect the adjustment, liquidation, and distribution of the general average.

3. In the present case, the captain of the vessel did not take those steps; and we are of the opinion that the failure of the
captain to take those steps gave rise to a liability for which the owner of the ship must answer.

Right of shipowner or shipper to maintain action against the captain; Shipper may go at once upon the owner

1. It is true that if the captain does not comply with the article relating to the adjustment, liquidation, and distribution of
the general average, the next article (852) gives to those concerned whether shipowner (naviero) or shipper the
right to maintain an action against the captain for indemnification for the loss;

2. However, the recognition of this right of action does not by any means involve the suppression of the right of action
which is elsewhere recognized in the shipper against the ship's owner.

3. The shipper may in our opinion go at once upon the owner and the latter, if so minded, may have his recourse for
indemnization against his captain.

Owner of the vessel is civilly liable for the acts of the captain
1. It is universally recognized that the captain is primarily the representative of the owner; and article 586 of the Code of
Commerce expressly declares that both the owner of the vessel and the naviero, or charterer, shall be civil liable for the
acts of the master. In this connection, it may be noted that there is a discrepancy between the meaning of naviero, in
articles 586 of the Code of Commerce, where the word is used in contradistinction to the term "owner of the vessel"
( propietario), and in article 587 where it is used alone, and apparently in a sense broad enough to include the owner.
2. Fundamentally the word "naviero" must be understood to refer to the person undertaking the voyage, who in one case
may be the owner and in another the charterer. But this is not vital to the present discussion.
3. The real point to which we direct attention is that, by the express provision of the Code, the owner of the vessel is
civilly liable for the acts of the captain; and he can only escape from this civil liability by abandoning his property in
the ship and any freight that he may have earned on the voyage (arts. 587, 588, Code of Comm.).

Shipper may go at once upon the owner

1. It is important to remember that the owner of the ship ordinarily has vastly more capital embarked upon a voyage than
has any individual shipper of cargo. The owner of the ship, in the person of the captain, has complete and exclusive
control of the crew and of the navigation of the ship, as well as of the disposition of the cargo at the end of the voyage.

2. It is therefore proper that any person whose property may have been cast overboard by order of the captain should
 have a right of action directly against the ship's owner for the breach of any duty which the law may have imposed on
the captain with respect to such cargo. To adopt the interpretation of the law for which the appellant contends would
place the shipowner in a position to escape all responsibility for a general average of this character by means of the
delinquency of his own captain. This cannot be permitted.

3. The evident intention of the Code, taken in all of its provisions, is to place the primary liability upon the person who
has actual control over the conduct of the voyage and who has most capital embarked in the venture, namely, the
owner of the ship, leaving him to obtain recourse, as it is very easy to do, from other individuals who have been drawn
into the venture as shippers.

4. The total value of the jettisoned cargo, belonging partly to Standard Oil and partly to another shipper, was P880.35, of
which P719.95 represented the value of Standard Oils petroleum. Upon the apportionment of this total loss among the
different interests involved, to wit, value of ship, value of cargo, and the earned but lost freight, it appears that the
amount of the loss apportionable to Standard Oil is P11.28. Deducting this from the value of the petroleum, the result,
is the amount of P708.67, which is the amount for which judgment should be given.
005 EASTERN SHIPPING LINES, INC., petitioner, AUTHOR: Krystelle
vs. MARGARINE-VERKAUFS-UNION, respondent NOTES: (if applicable)
G.R. No. L-31087 September 27, 1979
TOPIC: Averages: York- Antwerp Rule
PONENTE: Teehankee,J.

FACTS: (chronological order)

1. Respondent corporation, a West German corporation not engaged in business in the Philippines, was the consignee
of 500 long tons of Philippine copra in bulk with a total value of US$ 108,750.00 shipped from Cebu City on
board petitioner's (a Philippine corporation) vessel, the SS "EASTERN PLANET" for discharge at Hamburg,
Germany. Petitioner's bill of lading for the cargo provided as follows:
... Except as otherwise stated herein and in - the Charter Party, this contract shag be governed by
the laws of the Flag of the Ship carrying the goods. In case of average, same shall be adjusted
according to York-Antwerp Rules of 1950.
2. While the vessel was off Gibraltar, a fire broke out aboard and caused water damage to the copra shipment in the
amount of US$ 591.38. Petitioner corporation rejected respondent's claim for payment of the and respondent filed
on June 18, 1966 in the Manila court of first instance its complaint against petitioner as defendant for recovery of
the same and US$ 250.00 - attorney's fees and expenses of litigation.
3. After trial, the lower court rejected petitioner's defense that did not exceed 5% of respondent's interest in the cargo
it was not liable under Philippine Law for the damage.
ISSUE(S): Whether or not Article 848 of the Code of Commerce, which would bar claims for averages not exceeding 5%
of the claimant's interest, should be applied rather than the lower court's ruling that petitioner's bill of lading expressly
contained "an agreement to the contrary.
HELD: NO
RATIO:
The Court finds no error and upholds the lower court's ruling sustaining respondent's damage claim although the amount
thereof did not exceed 5% of respondent's interest in the cargo and would have been barred by the cited article of the
Commerce Code. We hold that the lower court correctly ruled the cited codal article to be "not applicable in this particular
case for the reason that the bill of lading contains "an agreement to the contrary" for it is expressly provided in the last
sentence of the first paragraph that "In case of average, same shall be adjusted according to York-Antwerp Rules of 1950."

The insertion of said condition is expressly authorized by Commonwealth Act No. 65 which has adopted in toto the U.S.
Carriage of Goods by Sea Act. Now, it has not been shown that said rules limit the recovery of damage to cases within a
certain percentage or proportion that said damage may bear to claimant's interest either in the vessel or cargo as provided
in Article 848 of the Code of Commerce On the contrary, Rule 3 of said York-Antwerp Rules expressly states that
"Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by breaching or scuttling a
burning ship, in extinguishing a fire on board the ship, shall be made good as general average. ... "

There is a clear and irreconcilable inconsistency between the York-Antwerp Rules expressly adopted by the parties as their
contract under the bill of lading which sustains respondent's claim and the codal article cited by petitioner which would bar
the same. Furthermore, as correctly contended by respondent, what is here involved is a contract of adhesion as embodied
in the printed bill of lading issued by petitioner for the shipment to which respondent as the consignee merely adhered,
having no choice in the matter, and consequently, any ambiguity therein must be construed against petitioner as the author.

ACCORDINGLY, the appealed judgment is hereby affirmed with the modification that the award of attorney's fees is set
aside. With costs against petitioner.
006 URRUTIA VS. BACO RIVER PLANTATION AUTHOR: CARAG, J.R.
[G.R. NUMBER L-7675; DATE: MARCH 25, 1913 ] NOTES: (if applicable)
TOPIC: ARTICLE 831, CODE OF COMMERCE
PONENTE: MORELAND, J.

FACTS: (chronological order)

1. The case stems from a collision between the steamship Nuestra Seora del Pilar, owned by the plaintiff Urrutia,
and the schooner Mangyan owned by the defendant Baco River Plantation .
2. Defendant, prior to the collision, saw the steamship of Plaintiff sailing erratically. Defendant kept its course
steadily until just before actual contact, where the helmsman of Defendant tried to avoid a head on collision. The
maneuver failed, and the Mangyan collided with the steamships starboard quarter, which resulted in the sinking of
the steamship and the death of eight people.
3. Plaintiffs filed a case to recover the value of the steamship and for damages, alleging the negligence of Mangyan.
The defendant denied the material allegations of the complaint and set up a counterclaim for damages, alleging as
grounds therefor that the injuries sustained by the said vessel were due to the gross negligence of those handling
plaintiff's steamer. Defendants filed a counterclaim, stating the cause of the collision was the gross negligence of
Plaintiff.
4. The trial court held in favor of the defendants, having found plaintiff to be the one who was grossly negligent.
However, the trial court held that Defendant could not recover against Plaintiff, due to his concurring negligence
(continuing on its path, when it already saw that the steamship was sailing erratically)

ISSUE(S): Whether or not Defendant can recover damages.

HELD: YES, We are satisfied from the authorities that, under the facts stated in the opinion of the trial court, the
defendant is entitled to recover such damages as reasonably and naturally flowed from the collision.

RATIO:
1. Article 20 of the International Rules for the Prevention of Collission at Sea is as follows: "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."
2. Article 21 is as follows: "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."
3. Generally speaking, in collisions between vessels there exist three divisions of time, or zones; The first division
covers all the time up to the moment when the risk of collision may be said to have begun. Within this zone no rule
is applicable because none is necessary. Each vessel is free to direct its course as it deems best without reference to
the movements of the other vessel. The second division covers the time between the moment when the risk of
collision begins and the moment when it has become a practical certainty. The third division covers the time
between the moment when collision has become a practical certainty and the moment of actual contact.
4. It was during the time when the sail vessel was passing through the third zone that it changed its course to port in
order to avoid, if possible, the collision. This act may be said to have been done in extremis, and, even if wrong,
the sailing vessel is not responsible for the result.
5. Subject to the general rules of evidence in collision cases as to the burden of proof, in the case of a collision
between a steam vessel and a sail vessel, the presumption is against the steam vessel, and she must show that she
took the proper measures to avoid a collision.
6. Article 21 . . . renders it obligatory on the vessel which has the right of way to pursue her course. . . . She must rely
on the other vessel to avoid the collision and not embarrass her by any maneuver. All she need do is to do nothing.
Then the other vessel knows to expect and navigates accordingly. . . . In collisions between steam and sail vessels
the steamer's defense is almost invariably that the sail vessel changed her course.
7. This case exemplifies the three zone theory already referred to. In the first zone no rules apply. In the second the
burden is on the vessel required to keep away and avoid the danger. The third zone covers the period in which
errors in extremis occur; and the rule is that the vessel which has forced the privileged vessel into danger is
responsible even if the privileged vessel has committed an error within that zone.
007 THE GOVERNMENT OF THE PHILIPPINE
ISLANDS, plaintiff-appellee, vs. PHILIPPINE
STEAMSHIP CO., INC., and FERNANDEZ HERMANOS,
G.R. No. L-18957 January 16, 1923
TOPIC: 6. Collisions
Article 831, Code of Commerce
FACTS:

1. The Government of the Philippine Islands seeks to recover the sum of P14,648.25, the alleged value of 911 sacks
of rice which were lost at sea as a result of a collision between the steamer Antipolo, owned by the defendant
company, and the vessel Isabel, upon which said rice was embarked.
2. At about 10 o'clock at night on February 10, 1920, the coastwise Isabel, left the port of Manila to Balayan,
Batangas, carrying, 911 sacks of rice belonging to the plaintiff and consigned to points in the south.

3. As it passed the San Nicolas Light near the entrance into Manila Bay, the watch and the mate of the Isabel
discerned the light of another vessel, which proved to be the Antipolo, on its way to Manila and coming towards
the Isabel. The two vessels being then about 1.5-2 miles apart. Each vessel was going approximately at the speed
of 6 miles an hour, and in about ten minutes they were in close proximity to each other.

4. When the mate of the Antipolo, who was then at the wheel, awoke to the danger of the situation and saw the
Isabel "almost on top of him," to use the words of the committee on marine accidents reporting the incident, he
put his helm hard to the starboard. However, the mate on the Isabel lost his wits and, in disregard of the
regulations and of common prudence, at once placed his own helm hard to port, with the result that his boat
veered around directly in the path of the other vessel and a collision became inevitable. Upon this the mate
on the Antipolo fortunately stopped his engines, but the Isabel continued with full speed ahead, and the two
vessels came together near the bows. The Isabel immediately sank, with total loss of vessel and cargo, though the
members of her crew were picked up from the water and saved.

CFI: rendered judgment for full recovery of the amount claimed by the plaintiff from the Philippine Steamship Company,
with interest from the date of the filing of the complaint. Hence this appeal.

ISSUE: WON full recovery was valid

HELD: yes, The judgment appealed from must be affirmed; and it is so ordered with costs against the appellant

RATIO:
1. The trial judge was entirely right in finding that negligence was imputable to both vessels, though differing
somewhat in character and decree with respect to each. The mate of the Antipolo was clearly negligent in having
permitted that vessel to approach directly towards the Isabel until the two were in dangerous proximity. For this
there was no excuse whatever, since the navigable sea at this point is wide and the incoming steamer could easily
have given the outgoing vessel a wide berth. On the other hand it is not clear that the Isabel was chargeable with
negligence in keeping on its course; for this boat had its jib sail hoisted, and may for that reason be considered to
have had the right of way. (G. Urrutia & Co. vs. Baco River Plantation Co., 26 Phil., 632.)

2. Negligence shortly preceding the moment of collision is, however, undoubtedly chargeable to the Isabel, for
the incorrect and incompetent way in which this vessel was then handled. The negligence may be contributed
to the fact that the mate on the Isabel had been on continuous duty during the whole preceding day and night; and
being almost absolutely exhausted, he probably was either dozing or inattentive to duty at the time the other
vessel approached.

3. Both vessels were at fault; and although the negligence on the part of the mate of the incoming vessel preceded
the negligence on the part of the mate of the outgoing vessel by an appreciable interval of time, the first vessel
cannot on that account be absolved from responsibility.
4. In G. Urrutia & Co. vs. Baco River Plantation Co., supra, this court found reason for holding that the
responsibility rested exclusively on a steamer which had allowed dangerous proximity to a sailing vessel to be
brought about under somewhat similar conditions.

5. It is there declared that where both vessels are to blame, both shall be solidarily responsible for the damage
occasioned to their cargoes. As the Isabel was a total loss and cannot sustain any part of this liability, the
burden of responding to the Government of the Philippine Islands, as owner of the rice embarked on the
Isabel, must fall wholly upon the owner of the other ship, that is, upon the defendant, the Philippine
Steamship Company, Inc.

6. Only one observation will be added, in response to one of the contentions of the appellant's attorneys, which is,
that the application of article 827 of the Code of Commerce is not limited by article 828 to the case where it
cannot be determined which of the two vessels was the cause of the collision.

7. On the contrary article 828 must be considered as an extension of article combined the rule of liability announced
in article 827 is applicable not only to the case where both vessels may be shown to be actually blameworthy
but also to the case where it is obvious that only one was at fault but the proof does not show which.
008 SARASOLA v YU BIAO SONTUA AUTHOR: Jade
G.R. No. L-22630 JANUARY 31, 1925
TOPIC: Collisions
PONENTE: Johns, J.
FACTS:

1. At 12 on 3 March 1922 motorboat Mercedes entered the Manila Bay though the Boca Grande.

2. At 6pm Mercedes navigated with motor and sail in the direction of the lighthouse which indicates the entrance to the
Pasig River.

3. After several minutes, it was struck by the steamship Y. Sontua.

4. As a result of the collision, the Mercedes suffered damages which cause its sinking within half an hour.

5. 20 December 1924 the Court rendered an opinion affirming the judgment of the lower court in favor of the plaintiff
against defendant for P27, 106.89 with legal interest for date of filing of the complaint.

6. In that opinion, it was concluded that it was already a closed case and the Court would not disturb the findings of fact
made in the lower court.

The collision between the 2 vessels was caused by an improper maneuver by the captain of the Y. Sontua.

As a consequence, the owner of Y. Sontua must be held responsible to the owner of the Mercedes for the
damage caused to the Mercedes by the collision.

7. After said decision, counsel for the defendant filed a motion for reconsideration where they vigorously contended that
the plaintiff was guilty of contributory negligence and for such reason, he must not recover.

8. The opinion in that Decision was founded upon Article 826 of the Code of Commerce: If a vessel should collide with
another through the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the
complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert
appraisal.

9. As a defense, defendant now cites Article 827 of the Code of Commerce: If both vessels may be blamed for the
collision, each one shall be liable for his own damages, and both shall be jointly responsible for the losses and
damages suffered by their cargoes.

10. The testimony is conclusive that the negligence of the Y. Sontua was the primary cause of the collision. If it remained
to its true course, the collision would never happen.

11. It is equally true that if even after the Y. Sontua changed its course, if Mercedes remained to its true course, there
would be no collision.

12. It was contended that due to the actions and false maneuver of the Y. Sontua, the Mercedes was put into an emergency.
What was done by Mercedes was due to such emergency, hence it was not negligent.

ISSUE(S): Whether or not Mercedes is guilty of contributory negligence

HELD Yes. Mercedes is guilty of contributory negligence and not entitled to recover damages.
RATIO:
1. The lower court found that the collision took place on 3 March 1922 at 6:43 pm.

2. It is of common knowledge that at 6:30pm on the present date, in ordinary weather, a person on the Luneta can plainly
see a vessel on the Manila Bay anywhere within the breakwater.
3. It is fair to assume that 6 weeks back, a person could also see a vessel anywhere within the breakwater, 13 minutes
later or at 6:43pm.

4. The officers on 1 vessel at a distance of 2 or 3 miles could clearly see the course and maneuvers of the other vessel.

5. The Y Sontua changed its course, which caused the collision.

6. If the collision had taken place after dark, there would be much force in plaintiffs (Mercedes) contention that it acted
on an emergency, therefore not to be held responsible for an error of judgment.

7. But by the aid of natural light, at the time of and prior to the collision, either vessel could be clearly and distinctly seen
for a considerable distance. Hence, it is right to assume that the officers of Y. Sontua saw the Mercedes and the course
of the vessel without the aid of artificial light.

8. The officers of the Mercedes also saw the Y. Sontua and its course and the maneuver which it made. Under such facts,
the Mercedes knew or should have known that it did not change its course, there would have been any collision.

9. It now follows that the primary cause of the accident was the negligence of Y. Sontua and the Mercedes was guilty of
contributory negligence in failing to maintain its course.

10. Contributory negligence of the Mercedes comes under the provisions of Article 827, such case was not presented to or
considered by the trial court.