CHAPTER 16  2.
Gross or general average
AVERAGES
Bar Question: What are averages in
maritime commerce?
Answer: An average is an extraordinary or
accidental expense incurred during the
voyage in order to preserve the cargo, the
vessel or both, and all damages or
deterioration suffered by the vessel from the
departure to the port of destination, and to
the cargo from the port or loading to the
port of consignment.
*pilotage of coasts and ports, lighterage
and towage, anchorage, inspection, health,
quarantine shall be considered ordinary
expenses to be defrayed by the shipowner.
 Averages are classified into:
1. Simple or particular average
2. General or gross average
 1. Simple or particular average:
Simple or particular average includes
expenses and damages caused to the vessel
or cargo which have not inured to the
common benefit, and borne by their
respective owners.
Bar Question: M/V Ilog de Manila with a
cargo of 500 tons of iron ore left the Port of
Zamboanga City bound for Manila. For one
reason or another, M/V Ilog de Manila hit a
submerged obstacle causing it to sink along
with its cargo. A salvor, Salvador,Inc., was
contracted to refloat the vessel for 1Million.
What kind of average was the refloating fee
of 1Million, and for whose account should it
be? Why? (2003 Bar)
Answer: The refloating fee is a particular
average and should be borne by the owner
of M/V Ilog de Manila, since the refloating
was a consequence of a maritime accident.
In addition, nowhere in the case at bar was
it indicated that there was deliberate
sacrifice on the part of the ship owner to
save the ship and/or cargo and succeeded in
doing so, for the said refloating to be
considered as a general average.
 Since simple or particular averages
do not inure to the common benefit,
the owner of the goods that
suffered the damage shall bear the
loss
As a rule, general or gross 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 a real and known risk.
Requisites of General Average:
1. Common danger;
2. Deliberate sacrifice;
3. Success; and
4. Proper formalities and legal
steps.
Bar Question: An importer of textiles loads
20 bales aboard a ship in Hongkong bound
for Manila. With the intention of smuggling
one-half of his cargo, he takes a bill of
lading for only 10 bales. On the voyage to
Manila all the 20 bales are jettisoned to
save the more precios cargo. How much is
the shipper entitled to receive as average?
Answer: He can only claim for the value of
the 10bales which are included in the bill of
lading. Only that cargo included in the bill of
lading which is jettisoned can be claimed as
a general average.
Bar Question: “A” loaded on SS Liverpool
belonging to “B” 300 cases of kerosene for
consignment to Tacloban, placing them on
the deck and not in the hold of the vessel.
While in transit, a strong storm occurred
and the captain, as a means of avoiding the
danger of shipwreck, jettisoned the entire
shipment of kerosene belonging to “A”.
Because of his precaution, the vessel was
saved, but only 50 cases of kerosene
jettisoned were recovered. Under what kind
of average does the loss come? Who pays
for it? Give reasons for your answer.
Answer: The loss of the 250 cases of
kerosene is a general as the sacrifice was
deliberately made to save the vessel and the
rest of the cargo.
The loss, being general average, is borne by
all who benefited from the sacrifice, the
owners of the cargo, including A, and of the
vessel.
COMMON DANGER:
Both the ship and the cargo, after
has been loaded, are subject to the same
danger, whether during the voyage, or in
the port of loading or unloading; that the
danger arises from the accidents of the sea,
dispositions of the authority, or faults of
men, provided that the circumstances
producing the peril should be ascertained
and imminent or may rationally be said to
be certain and imminent.
Note: No danger at all, no general average.
Note: No common danger if the measure
was undertaken against a distant peril
Deliberate Sacrifice: There must be a
voluntary sacrifice of a part for the benefit
of the whole in order to justify general
average contribution.
PROOF AND LIQUIDATION OF AVERAGE:
Proof is made at the port of repairs,
if any is made, or in the port of unloading.
Liquidation is done in the port of unloading
if in the Philippines; or in the port of arrival,
if in the foreign country.
Common carriers cannot limit their
liability for injury or loss of goods where
such injury or loss was caused by its
negligence. Otherwise stated, the law on
averages under the code of commerce
cannot be applied where there is negligence
(American vs. CA).
HOW DONE:
Liquidation is done by private
agreement, or if the parties cannot agree,
then by judicial authority.

Note: Normally, the sacrifice is made

through the jettison of the cargo or part of
the ship is thrown overboard during the
voyage.

ORDER OF JETTISON:
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 of the vessel, preferring,
if possible, the heaviest ones
with the least utility in 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.

WHO IS ENTITLED TO INDEMNITY?

The owner of the goods which were
sacrificed is entitled to receive the general
average contribution. However, the
following goods are not covered:
1. Goods carried on deck unless the
rule, special law or customs of
the place allow the same
2. Goods that are not recorded in
the books or records of the
vessel
3. Fuel for the vessel if there is
more than sufficient fuel for the
voyage.