13.
ABOITIZ SHIPPING CORPORATION v NEW INDIA
ASSURANCE COMPANY, LTD., G.R. No. 156978 May 2, 2006
Topic: overland transportation; vessels; real and hypothecary nature
of maritime law
Doctrine: An exception to the limited liability doctrine is when the
damage is due to the fault of the shipowner or to the concurrent
negligence of the shipowner and the captain.
Facts:
1. Societe Francaise Des Colloides (French Company) loaded a
cargo of textiles in M/V P. Aboitiz (same ship as in the
previous cases) The shipment was consigned to General
Textile. However, the ship sank due to a typhoon which
resulted to the loss of all its cargo.
2. General Textile lodged a claim with Aboitiz for the value of the
loss. However, since it was denied, General Textile claimed
from New India Assurance, which was subrogated to its rights.
The insurance company then sued Aboitiz. Aboitiz alleged that
the ship was seaworthy, and that in accordance with the real
and hypothecary nature of maritime law, the sinking of the ship
extinguished its liability.
3. The TC ruled in favor of New India, citing the CA decision in
General Accident and Life Assurance v. Aboitiz. Thus, Aboitiz
was held to be liable for the total value of the cargo.
4. Aboitiz appealed, arguing that Monarch should apply and thus,
the claim for damages must only be against the insurance
proceeds and limited to the claimants pro-rata share, in view
of the doctrine of limited liability.
5. Respondent counters that the doctrine of real and hypothecary
nature of maritime law is not applicable in the present case
because petitioner was found to have been negligent. Hence,
according to respondent, petitioner should be held liable for
the total value of the lost cargo.
Issue: Whether the Monarch case is applicable in the present case?
[NO]
Held:
In Monarch, it was held that the sinking of the vessel was not due
to force majeure, but to its unseaworthy condition. Aboitiz was
found concurrently negligent with the captain and crew but the
Court stressed that the peculiar circumstances therein still made
the doctrine of limited liability applicable.
The ruling of the Supreme Court in Monarch may appear
inconsistent with the exception of the limited liability doctrine, as
explicitly stated in the earlier part of the Monarch decision. An
exception to the limited liability doctrine is when the damage
is due to the fault of the shipowner or to the concurrent
negligence of the shipowner and the captain. In which case,
the shipowner shall be liable to the full-extent of the damage.
Thus, the SC sought to clarify such ruling to wit:
o In the present case, Aboitiz, in accordance with Art 1734 (Civil
Code provisions) has the burden of showing that it exercised
extraordinary diligence in the transport of the goods it had on
board in order to invoke the limited liability doctrine. Differently
put, to limit its liability to the amount of the insurance proceeds,
Aboitiz has the burden of proving that the unseaworthiness of its
vessel was not due to its fault or negligence. Considering the
evidence presented and the circumstances obtaining in this
case, Aboitiz failed to discharge this burden.
It initially attributed the sinking to the typhoon and relied on the
BMI findings that it was not at fault. However, both the trial and the
appellate courts, in this case, found that the sinking was not due
to the typhoon but to its unseaworthiness. Evidence on record
showed that the weather was moderate when the vessel sank.
These factual findings of the Court of Appeals, affirming those of
the trial court are not to be disturbed on appeal, but must be
accorded great weight. These findings are conclusive not only on
the parties but on this Court as well.