1. ABOITIZ SHIPPING CORPORATION V NEW INDIA ASSURANCE LTD.

(2006) Facts:

1. Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on a vessel owned
by Franco-Belgian Services Inc (FBSI). Cargo was consigned to General Textile Inc. In Manila and insured by (R) New India Assurance Ltd. 2. In Hongkong, the cargo was transferred to M/V P. Aboitiz for transhipment to Manila. 3. Before departing, the Japanese Meteorological Center advised that it was safe to travel but while at sea, a report said that a typhoon was moving to the ships general path. The vessel changed its course however, its hull leaked. The vessel sank but the captain and crew were saved. 4. (P) Aboitiz Shipping Corp. notified General Textile of the total loss of the cargo. General textile lodged a claim with New India for the amount of its loss. 5. New India paid General Textile and was subrogated to its rights. 6. After the surveyor hired by New India reported that the cause of the sinking was the vessels questionable seaworthiness, New India filed a complaint for damages against FBSI (and its local agent FB Zuellig) and Aboitiz. 7. New India: breach of contract of carriage a. Proximate cause: fault or negligence of the master and the crew or vessel b. Unseaworthiness c. Failure to exercise extraordinary diligence in the transport of goods 8. FBSI and Zuellig: exercised extraordinary diligence, seaworthy, proximate cause of loss is fortuitous event Filed cross-claim against Aboitiz 9. Aboitiz: raised same defenses and added that in accordance with the real and hypothecary nature of maritime law, the sinking of M/V Aboitiz extinguished its liability for the loss of the cargoes. 10. Board of Marine Inquiry (BMI) conducted an investigation to determine the administrative liability of the captain and crew. They were exonerated but the findings were not presented in court. 11. TC: liable for total loss of cargo with interest. CA: Affirmed. 12. Aboitiz: share should be only against the insurance proceeds and limited to its pro-rata share applying the doctrine of limited liability. 13. New India: because Aboitiz was found to be negligent, the doctrine of real and hypothecary nature of maritime law cannot be applied thus Aboitiz must pay the total value of the cargo. ISSUE: Whether the limited liability doctrine, which limits respondents award of damages to its pro-rata share in the insurance proceeds, applies in this case HELD: Aboitiz failed to overcome the presumption of negligence thus the doctrine of limited liability cannot be applied. a. Exception to the limited liability doctrine: when the shipowner is concurrently negligent with the captain and crew = liability: full extent of damage b. From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport according to all the circumstances of each case. c. GR: responsible for loss, destruction or deterioration of insured goods XPN: causes under Art. 1734, CC. (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act of omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. d. (presumption of negligence) When the vessel is unseaworthy, the shipowners are found to be negligent because they failed to maintain the vessel. e. Facts established by the RTC and CA show that the weather was moderate during the voyage and that the vessel was unseaworthy. Digest by: Justa Aurea G. Bautista (A2015)