What is the Doctrine of Limited Liability?

Also called the “no vessel, no liability doctrine,” it provides that liability of ship owner is limited to ship owner’s interest over the vessel. Consequently, in case of loss, the ship owner’s liability is also extinguished. Limited liability likewise extends to ship’s appurtenances, equipment, freightage, and insurance proceeds. The ship owner’s or agent’s liability is merely co-extensive with his interest in the vessel, such that a total loss of the vessel results in the liability’s extinction. The vessel’s total destruction extinguishes maritime liens because there is no longer any res to which they can attach. (Monarch Insurance v. CA, G.R. No. 92735, June 8, 2000)

What are the exceptions to the doctrine of limited liability?

1. Repairs and provisioning of the vessel before the loss of the vessel; (Art. 586)

2. Insurance proceeds. If the vessel is insured, the proceeds will go to the persons entitled to claim from the shipowner; (Vasquez v. CA, G.R. No. L-42926, Sept. 13, 1985)

3. Workmen’s Compensation cases (now Employees’ Compensation under the Labor Code); (Oching v. San Diego, G.R. No. 775, Dec. 17, 1946)

4. When the shipowner is guilty of fault or negligence; Note: But if the captain is the one who is guilty, doctrine may still be invoked, hence, abandonment is still an option.

5. Private carrier; or

6. Voyage is not maritime in character.