1 DE LA SALLE UNIVERSITY – COLLEGE OF LAW | INSURANCE LAW | ATTY.

SERGE CENIZA
[78] Aboitiz. v. CA based on the declared calue of the shipment in
G.R. 121833, Oct. 17, 2008 consonance with the exceptional rule under Sec
Petitioner: ABOITIZ 4(5) of COGSA.
Respondent: CA  Aboitiz moved for reconsideration, arguing that the
Topic: Maritime Insurance limited liability doctrine should be applied in the
Digested by: Raul M. Coralde, Jr. computation of its liability.
Doctrine:
2nd
 Asia Traders Insurance, and Allied Guarantee
FACTS:
Insurance filed separate actions for damages
 Malayan filed 5 separate actions against several against Aboitiz to recover by way of subrogation
defendants for the collection of the amounts of the the value of the cargoes insured by them and lost
cargoes allegedly paid by Malayan under various in the sinking of the vessel MV P. Aboitiz.
marine cargo policies.  RTC: Aboitiz is liable.
 Compagnie Maritime des Chargeurs Reunis (CMCR)  Aboitiz sought reconsideration, arguing that the
and FE Zuellig, 2 of the defendants, filed a 3rd- findings of the Board of Marine Inquiry that the
party complaint against Aboitiz, another sinking was caused by a typhoon should have been
defendant. considered and the real and hypothecary doctrine
 Aboitiz raised the defenses of lack of jurisdiction, limiting the monetary award should have applied.
lack of cause of action, and prescription. It also  The 1993 GAFLAC case was decided.
claimed that MV P. Aboitiz was seaworthy, that it  CA: Affirmed the RTC decision. Based on the trial
exercised extraordinary diligence, and that the loss court’s finding that Aboitiz was actually negligent
was caused by a fortuitous event. in ensuring the seaworthiness of MV P. Aboitiz, the
 RTC: Aboitiz is liable. real and hypothecary doctrine enunciated in the
 Aboitiz, CMCR, and Zuellig appealed. During the 1993 GAFLAC case may not be applied.
pendency of the appeal, the Court promulgated the
3rd
decision in the 1993 GAFLAC case.
 CA: Affirmed the RTC decision. Disregarded Aboitiz’  Equitable Insurance filed an action for damages
argument of force majeure in view of the 1990 against Aboitiz to recover by way of subrogation
GAFLAC case where it was found that the sinking the value of the cargoes insured by Equitable that
was caused by the negligence of its officers and were lost in the sinking of MV P. Aboitiz.
crew. The computation of the liability should be
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2 DE LA SALLE UNIVERSITY – COLLEGE OF LAW | INSURANCE LAW | ATTY. SERGE CENIZA
 RTC:Aboitiz was guilty of contributory negligence the value of the vessel with all its appurtenances and
and is therefore liable for the loss. freightage served during the voyage.

 Aboitiz appealed and invoked the doctrine of These intend to limit the liability of the shipowner or
limited liablity. It also claimed that the typhoon agent to the value of the vessel, it appurtenances, and
was the proximate cause of the loss. freightage earned in the voyage, provided that the owner
 CA: Affirmed the RTC decision. The loss of the or agent abandons the vessel. Due to the total loss, the
cargoes and the sinking of the vessel were due to liability of the shipowner or agent for damages is
its inseaworthiness and failure of the crew to extinguished. However, despite the total loss of the
exercise extraordinary diligence. vessel, its insurance answers for the damages for which
a shipowner or agent may be held liable.

ISSUE: Whether or Not Aboitiz can avail the limited Nonetheless, there are still exceptions wherein the ship
liability on the basis of the real and hypothecary doctrine agent could still be held answerable despite the
of maritime law abandonment of the vessel. The international rule is to
the effect that the right of abandonment of vessels, as a
RULING: NO, The limited liability rule is embodied in legal limitation of a shipowner’s liability, does not apply
Arts 587, 590, and 837 under Book III of the Code of to cases where the injury or average was occassioned by
Commerce: the shipowner’s own fault. Likewise, the shipowner may
Art. 587. The ship agent shall also be civilly liable for the be held liable for injuries to passengers notwithstanding
indemnities in favor of third persons which may arise from the exclusively real and hypothecary nature od maritime
the conduct of the captain in the care of the goods which he law if fault can be atributed to the shipowner.
loaded on the vessel; but he may exempt himself therefrom
by abandoning the vessel with all her equipment and the
freight it may have earned during the voyage.
The 1993 GAFLAC case applied the doctrine of limited
Art. 590. The co-owners of the vessel shall be civilly liable in liability in view of the absence of an express finding that
the proportion of their interests in the common fund for the
Aboitiz’ negligence was the direct cause of the sinking of
results of the acts of the captain referred to in Art. 587.
the vessel. However, this is not applicable in the case at
Each co-owner may exempt himself from this liability by the bar.
abandonment, before a notary, of the part of the vessel
belonging to him. A perusal of the decisions of the court below, as approved
Art. 837. The civil liability incurred by shipowners in the case by the CA, show that there is a categorical finding of
prescribed in this section, shall be understood as limited to negligence on the part of Aboitiz.

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3 DE LA SALLE UNIVERSITY – COLLEGE OF LAW | INSURANCE LAW | ATTY. SERGE CENIZA
a. The captain was negligent in failing to take a
course of action that would prevent the
vessel from sailing into the typhoon
b. Aboitiz failed to show that it had exercised
the required extraordinary diligence in
steering the vessel before, during, and after
the storm
c. The sinking of the vessel was attributable to
the negligence or fault of Aboitiz
Aboitiz’ contention that its liability should be limited only
to the insurance proceeds of the vessel is not supported
by the record. Thus, Aboitiz is not entitled to the limited
liability rule and is, therefore, liable for the value of the
lost cargoes.

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