Aboitiz Shipping v CA,(Geronimo) Does the doctrine of limited liability(Real and hypothecay nature) apply to
Octover 17, 2008 | Tinga, J| G.R. No. 121833 this case? (No)
Implied Warranties; Sea Worthiness
PETITIONERS: Aboitiz Shipping Corporation
RESPONDENTS: Malayan Insurance Company, Inc., Compagnie
Maritime Des Chargeurs Reunis, And F.E. Zuellig; Asia Traders Insurance
Corporation, And Allied Guarantee Insurance Corporation;Equitable
Insurance Corporation
SUMMARY:
Present case are consolidated cases of Insurer’s exercising their right of
subrogation. And attempting to claim from Aboitiz Shipping corporation for
losses incurred due to the sinking of M/V P. Aboitiz on October 1980 due
to a typhoon.
Malayan Insurance(G.R. No. 121833)
Respondent Malayan Insurance Company, Inc. (Malayan) filed five
separate actions against collection of the amounts of the cargoes allegedly
paid by Malayan under various marine cargo policies 2 issued to the
insurance claimants. Total amount was P639,862.02. Both the Trial court
and CA ruled in favor of Malayan.
Asia Traders Insurance(G.R. No. 130752)
Respondents Asia Traders Insurance Corporation (Asia Traders) and
Allied Guarantee Insurance Corporation (Allied) filed separate actions for
damages against Aboitiz to recover the amount of P646,926.30. Trial court
and Ca ruled in favor of Asia traders et al.
Equitable Insurance (G.R. No. 137801)
Equitable Insurance Corporation (Equitable) filed an action for damages
against Aboitiz to recover the amount it insured. Both RTC and CA ruled in
favor of Equitable insurance
Aboitiz Defense for the 3
Against the 3 cases Aboitiz raised a defense that, First there was a lack of
cause of action and prescription.
Second, It also claimed that M/V P. Aboitiz was seaworthy, that it
exercised extraordinary diligence and that the loss was caused by a
FACTS:
fortuitous event.
Third, the the limited liability doctrine should have applied limiting the
monetary award in favor of the claimants.
G.R. No. 121833
Issue:
Held:
No, the doctrine of Limited liability does not apply to this case.
In this case, the instant petitions provide another occasion for the Court to
reiterate the well-settled doctrine of the real and hypothecary nature of
maritime law(limited liability rule).
As a general rule, a ship owner's liability is merely co-extensive with his
interest in the vessel, except where actual fault is attributable to the
shipowner.
Thus, as an exception to the limited liability doctrine, a shipowner or ship
agent may be held liable for damages when the sinking of the vessel is
attributable to the actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel.
The instant petitions cannot be spared from the application of the
exception to the doctrine of limited liability in view of the unanimous
findings of the courts below that both Aboitiz and the crew failed to ensure
the seaworthiness of the M/V P. Aboitiz.
This is evidenced by a previous case of Monarch Insurance, the Court
deemed it fit to settle once and for all this factual issue by declaring that
the sinking of M/V P. Aboitiz was caused by the concurrence of the
unseaworthiness of the vessel and the negligence of both Aboitiz and the
vessel's crew and master and not because of force majeure.
Therefore, the doctrine of Limited liability does not apply to this case.
Aboitiz is liable to pay more than what was insured
DOCTRINE:
The limited liability rule provides that the shipowner or agent's liability is
merely coextensive with his interest in the vessel such that a total loss
thereof results in its extinction. "No vessel, no liability" expresses in a
nutshell the limited liability rule.
1. Present case are consolidated cases of Insurer’s exercising their
right of subrogation. And attempting to claim from Aboitiz Shipping
corporation for losses incurred due to the sinking of M/V P. Aboitiz on
October 1980 due to a typhoon.
 1. Respondent Malayan Insurance Company, Inc. (Malayan) filed five
separate actions against several defendants for the collection of the
amounts of the cargoes allegedly paid by Malayan under various
marine cargo policies 2 issued to the insurance claimants.
2. The shipments were supported by their respective bills of lading and
insured separately by Malayan against the risk of loss or damage. In
the five consolidated cases, Malayan sought the recovery of amounts
totaling P639,862.02.
3. Aboitiz raised the defenses of lack of jurisdiction, lack of cause of
action and prescription. It also claimed that M/V P. Aboitiz was
seaworthy, that it exercised extraordinary diligence and that the loss
was caused by a fortuitous event.
4. RTC of Manila rendered a decision adjudging Aboitiz liable on the
money claims.
5. The Court of Appeals (Ninth Division) affirmed the RTC decision. It
disregarded Aboitiz's argument that the sinking of the vessel was
caused by a force majeure.
G.R. No. 130752
1. Respondents Asia Traders Insurance Corporation (Asia Traders) and
Allied Guarantee Insurance Corporation (Allied) filed separate
actions for damages against Aboitiz to recover by way of subrogation
the value of the cargoes insured by them and lost in the sinking of
the vessel M/V P. Aboitiz.
2. Aboitiz reiterated the defense of force majeure. The trial court
rendered a decision on 25 April 1990 ordering Aboitiz to pay
damages in the amount of P646,926.30.
3. Aboitiz sought reconsideration, arguing that the trial court should
have considered the findings of the Board of Marine Inquiry that the
sinking of the M/V P. Aboitiz was caused by a typhoon and should
have applied the real and hypothecary doctrine in limiting the
monetary award in favor of the claimants.
4. The trial court denied Aboitiz's motion for reconsideration.
5. The court of appeals affirmed the decisions of the RTC. Based on
the trial court's finding that Aboitiz was actually negligent in ensuring
the seaworthiness of M/V P. Aboitiz, the appellate court held that the
real and hypothecary doctrine enunciated in the 1993 GAFLAC case
may not be applied in the case.
G.R. No. 137801
1. Equitable Insurance Corporation (Equitable) filed an action for
damages against Aboitiz to recover by way of subrogation the value
of the cargoes insured by Equitable that were lost in the sinking of
M/V P. Aboitiz
2. The RTC rendered judgment ordering Aboitiz to pay Equitable the
amount of P87,633.81, plus legal interest and attorney's fees. It
found that Aboitiz was guilty of contributory negligence and,
therefore, liable for the loss.
3. The Court of Appeals rendered a decision, affirming the RTC
decision.
4. The Court of Appeals (Fifteenth Division) ruled that the loss of the
cargoes and the sinking of the vessel were due to its
unseaworthiness and the failure of the crew to exercise extraordinary
diligence. Said findings were anchored on the 1990 GAFLAC case
and on this Court's resolution dated November 13, 1989 in G.R. No.
88159, dismissing Aboitiz's petition and affirming the findings of the
appellate court on the vessel's unseaworthiness and the crew's
negligence.
ISSUES:
1. Does the doctrine of limited liability(Real and hypothecay nature)
apply to this case? (No)
RULING: WHEREFORE, the petitions in G.R. Nos. 121833, 130752 and
137801 are DENIED. The decisions of the Court of Appeals in CA-G.R. SP
No. 35975- CV, CA-G.R. SP No. 41696 and CA-G.R. CV No. 43458 are
hereby AFFIRMED. Costs against petitioner.
RATIO:
First Issue
1. No, the doctrine of Limited liability does not apply to this case.
2. As provided by Jurisprudence, the limited liability rule provides that
the shipowner or agent's liability is merely coextensive with his
interest in the vessel such that a total loss thereof results in its
extinction. "No vessel, no liability" expresses in a nutshell the limited
liability rule.
3. In this jurisdiction, the limited liability rule is embodied in Articles 587,
590 and 837 under Book III of the Code of Commerce
4. In this case, the instant petitions provide another occasion for the
Court to reiterate the well-settled doctrine of the real and
hypothecary nature of maritime law(limited liability rule).
5. As a general rule, a ship owner's liability is merely co-extensive with
his interest in the vessel, except where actual fault is attributable to
the shipowner.
6. Thus, as an exception to the limited liability doctrine, a shipowner or
ship agent may be held liable for damages when the sinking of the
vessel is attributable to the actual fault or negligence of the
shipowner or its failure to ensure the seaworthiness of the vessel.
7. The instant petitions cannot be spared from the application of the
exception to the doctrine of limited liability in view of the unanimous
findings of the courts below that both Aboitiz and the crew failed to
ensure the seaworthiness of the M/V P. Aboitiz.
8. This is evidenced by a previous case of Monarch Insurance, the
Court deemed it fit to settle once and for all this factual issue by
declaring that the sinking of M/V P. Aboitiz was caused by the
concurrence of the unseaworthiness of the vessel and the
negligence of both Aboitiz and the vessel's crew and master and not
because of force majeure.
9. Therefore, the doctrine of Limited liability does not apply to this case.
Aboitiz is liable to pay more than what was insured