ABOITIZ SHIPPING CORPORATION, Petitioner, v.
GENERAL ACCIDENT On the other hand, other cases have resulted in findings
FIRE AND LIFE ASSURANCE CORPORATION, LTD., upholding the conclusion of the BMI that the vessel was
seaworthy at the time of the sinking, and that such
|G.R. No. 100446. January 21, 1993 |MELO, J.: sinking was due to force majeure. One such ruling was
Country Bankers Insurance Corporation v. Court of
Appeals. Part of the task resting upon this Court,
Petitioner is a corporation organized and operating under therefore, is to reconcile the resulting apparent contrary
Philippine laws and engaged in the business of maritime findings in cases originating out of a single set of facts.
trade as a carrier. As such, it owned and operated the ill-
fated "M/V P. ABOITIZ," a common carrier which sank on Due to these rulings, Aboitiz seeks a pronouncement as to the
a voyage from Hongkong to the Philippines applicability of the doctrine of limited liability on the
totality of the claims vis a vis the losses brought about
Private respondent General Accident Fire and Life by the sinking of the vessel MV P. ABOITIZ, as based on
Assurance Corporation, Ltd. (GAFLAC), on the other the real and hypothecary nature of maritime law.
hand, is a foreign insurance company pursuing its
remedies as a subrogee of several cargo consignees
whose respective cargo sank with the said vessel and for ISSUE. Whether or not limited liability rule arising out of real and
which it has priorly paid. hypothecary nature of maritime law should apply in this and
realated case.
The sinking of the vessel gave rise to the filing of suits for
recovery of lost cargo either by the shippers, their Held. YES
successor-in-interest, or the cargo insurers like GAFLAC We must stress that the matter of the Limited Liability
as subrogees. Rule as discussed was never in issue in all prior cases,
including those before the RTCs and the Court of
The sinking was initially investigated by the Board of Appeals. As discussed earlier, the "limited liability" in
Marine Inquiry (BMI) found that such sinking was due to issue before the trial courts referred to the package
force majeure and that subject vessel, at the time of the limitation clauses in the bills of lading and not the limited
sinking was seaworthy. liability doctrine arising from the real and hypothecary
nature of maritime trade. The latter rule was never made
However, the trial court found against the carrier on the a matter of defense in any of the cases a quo, as
basis that the loss subject matter therein did not occur properly it could not have been made so since it was not
as a result of force majeure and awardee plaintiff GAFLAC its relevant in said cases. The only time it could come into
claim.This was affirmed by the CA and ordered execution of full play is when any of the cases involving the mishap were
judgement award. The attempted execution of the judgment to be executed, as in this case. Then, and only then,
award in said case has given rise to the instant petition. could the matter have been raised, as it has now been
brought before the Court.
that: jgc:chanrobles.com.ph
The real and hypothecary nature of maritime law simply
means that the liability of the carrier in connection with ". . . Considering the foregoing reasons, the Court holds
losses related to maritime contracts is confined to the that the vessel M/V ‘Aboitiz’ and its cargo were not lost
vessel, which is hypothecated for such obligations or due to fortuitous event or force majeure."
which stands as the guaranty for their settlement. It has
its origin by reason of the conditions and risks attending Both merely affirmed the factual findings of the trial
maritime trade in its earliest years when such trade was court, that the cause of the sinking of the vessel was
replete with innumerable and unknown hazards since because of unseaworthiness due to the failure of the
vessels had to go through largely uncharted waters to ply crew and the master to exercise extraordinary diligence.
their trade. It was designed to offset such adverse
conditions and to encourage people and entities to Indeed, there appears to have been no evidence
venture into maritime commerce despite the risks and presented sufficient to form a conclusion that petitioner
the prohibitive cost of shipbuilding. Thus, the liability of shipowner itself was negligent, and no tribunal, including
the vessel owner and agent arising from the operation of this Court, will add or subtract to such evidence to justify
such vessel were confined to the vessel itself, its a conclusion to the contrary. chanrobles virtualawlibrary c
equipment, freight, and insurance, if any, which
limitation served to induce capitalists into effectively On this point, it should be stressed that unseaworthiness
wagering their resources against the consideration of the is not a fault that can be laid squarely on petitioner’s lap,
large profits attainable in the trade. absent a factual basis for such a conclusion. The
unseaworthiness found in some cases where the same
We now come to its applicability in the instant case. In has been ruled to exist is directly attributable to the
the few instances when the matter was considered by vessel’s crew and captain, more so on the part of the
this Court, we have been consistent in this jurisdiction in latter since Article 612 of the Code of Commerce
holding that the only time the Limited Liability Rule does provides that among the inherent duties of a captain is to
not apply is when there is an actual finding of negligence examine a vessel before sailing and to comply with the
on the part of the vessel owner or agent. laws of navigation.
The pivotal question, thus, is whether there is a finding
of such negligence on the part of the owner in the instant Finding of "unseaworthiness" clearly did not pertain to
case. the structural condition of the vessel which is the basis of
the BMI’s findings, but to the condition it was in at the
Issue: Whether the owner was negligent time of the sinking, which condition was a result of the
HELD. NO. acts of the captain and the crew.
There has been no actual finding of negligence on the The court ruled that in both insolvency of a corporation and
part of petitioner. The trial court, in its decision merely held the sinking of a vessel, the claimants or creditors are
limited in their recovery to the remaining value of
accessible assets. In the case of an insolvent corporation,
these are the residual assets of the corporation left over
from its operations. In the case of a lost vessel, these
are the insurance proceeds and pending freightage for
the particular voyage. chanrobles law library : red
Thus, execution of judgment in earlier completed cases,
even those already final and executory, must be stayed
pending completion of all cases occasioned by the
subject sinking. Then and only then can all such claims
be simultaneously settled, either completely or pro-rata
should the insurance proceeds and freightage be not
enough to satisfy all claims.
ACCORDINGLY, the petition is hereby GRANTED. The trial
court is hereby directed to desist from proceeding with
the execution of the judgment rendered in Civil Case No.
144425 pending determination of the totality of claims
recoverable from the petitioner as the owner of the M/V
P. Aboitiz. Petitioner is directed to institute the necessary
action and to deposit the proceeds of the insurance of
subject vessel as above-described within fifteen (15)
days from finality of this decision
