You are on page 1of 1


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


In Monarch, it was held that the sinking of the vessel was not due
to force majeure, but to its unseaworthy condition. Aboitiz was