Facts:

The case centers around Aboitiz Shipping Corporation (Petitioner) and the General Accident Fire and Life Assurance Corporation, Ltd. (GAFLAC, Respondent). The events occurred following the sinking of the vessel M/V "P. Aboitiz" on October 31, 1980, while en route from Hong Kong to Manila with cargo that included two containers: one carrying 271 rolls of apparel goods (valued at US$39,885.85) and the other containing 447 rolls along with bulk goods and cartons (valued at US$94,190.55). Both consignments were destined for Philippine Apparel, Inc. and were insured with GAFLAC. Following the vessel's sinking and the resulting loss of cargo, GAFLAC settled the claims with the consignee and was subrogated to exert legal claims against Aboitiz due to negligence. The Regional Trial Court of Manila ruled in favor of GAFLAC on June 29, 1985, ordering Aboitiz to pay damages amounting to P1,072,611.20, along with interest, attorney’s fees, and costs. Aboitiz appealed the decis

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Facts:

Cargo and Vessel Information

• On October 28, 1980, the vessel M/V "P. Aboitiz" embarked on a shipment from Hong Kong to Manila carrying two cargo consignments:
• A twenty-foot container holding 271 rolls of apparel goods covered by Bill of Lading No. 515-M, valued at US$39,885.85 (including invoice value, freightage, customs duties, taxes, etc.).
• A forty-foot container holding 447 rolls, 10 bulk items, and 95 cartons of apparel goods covered by Bill of Lading No. 505-M, valued at US$94,190.55.
• The total shipment, insured by General Accident Fire and Life Assurance Corporation, Ltd. (GAFLAC), was consigned to Philippine Apparel, Inc.
• Aboitiz Shipping Corporation owned and operated the vessel M/V "P. Aboitiz".

Sinking of the Vessel and Subsequent Insurance Claims

• On October 31, 1980, while en route to Manila, the vessel sank and was declared a total loss along with its cargoes.
• GAFLAC disbursed payments corresponding to the insured amounts, i.e., US$39,885.85 and US$94,190.55, to the consignee.
• As subrogated to the consignee’s rights, GAFLAC initiated an action for damages against Aboitiz for alleged negligence and failure to observe the extraordinary diligence required of a common carrier.

Proceedings in Lower Courts

• The Regional Trial Court of Manila rendered a decision on June 29, 1985 in favor of GAFLAC, awarding actual damages of P1,072,611.20, legal interest from October 28, 1981, attorney’s fees (20% of the claim), and costs.
• Aboitiz appealed the decision to the Court of Appeals which affirmed, in toto, the trial court’s ruling on March 9, 1989.
• A motion for reconsideration by Aboitiz was denied on August 15, 1989.

Key Evidence and Controversial Issues Raised

• The petitioner (Aboitiz) raised the issue of an administrative investigation by the Board of Marine Inquiry (BMI):
• The BMI, in its December 26, 1984 decision, attributed the sinking to force majeure—specifically a typhoon.
• Aboitiz contended that the BMI’s findings were conclusive and should bind the courts.
• The trial and appellate courts rejected the BMI’s findings due to its non-adversary nature and the absence of GAFLAC’s participation.
• Aboitiz questioned the basis for fixing its liability on the actual value of the lost cargo instead of the stipulated US$500 per package/container as described in the bills of lading.
• The petitioner also challenged the trial court’s grant of execution pending appeal, arguing that factors such as the posting of a supersedeas bond and its potential insolvency should have precluded such an order.

Issue:

• Whether the findings of the Board of Marine Inquiry, which attributed the sinking to force majeure (typhoon), are binding on the courts even though GAFLAC was not a party and the proceedings were not adversarial.

• Whether Aboitiz Shipping Corporation’s liability should be limited to US$500 per package/container as stipulated in the bills of lading, or whether the liability should be measured by the actual declared value of the cargo.

• Whether the trial court erred in granting GAFLAC’s motion for execution pending appeal, despite the arguments regarding posting a supersedeas bond and potential insolvency issues affecting the effectiveness of the judgment.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)