Aboitiz Shipping Corporation v New India Assurance Company LTD.

GR No. 156978
Quisumbing, J.

FACTS:

On October 31, 1980 M/V P. Aboitiz sank on her voyage from Hong Kong to Malaysia. New India Assurance
Company (NIAC) is the insurer of the lost cargoes of the M/V P Aboitiz and consigned to General Textile
Inc (GTI). GTI, after indeminification by NIAC, was subrogated to its rights, interests and actions against
Aboitiz Shipping Corporation.

NIAC filed for recovery of damages against Aboitiz Shipping Corporation in the RTC, Manila. RTC found in
favor of NIAC making Aboitiz Shipping Corporation liable for total value of lost cargoes instead of applying
the doctrine of limited liability. CA confirmed in toto the decision of the RTC, denied motion for
reconsideration. SC confirmed CA decision, hence this MR.

ISSUE: WON the doctrine of limited liability was violated where Aboitiz Shipping Corporations liability is
only limited to claimants pro rata shares in the insurance proceeds.

HELD: NO.

RATIO:

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. In
the event of loss, destruction or deterioration of the insured goods, common carriers are responsible,
unless they can prove that the loss, destruction or deterioration was brought about by causes specified
under Art. 1734 of the Civil Code. M/V P Aboitiz was found to unseaworthy and the ship-owner failed to
overcome the presumption of negligence hence the doctrine of limited liability cannot be applied.