Case Digest: Chua Yek Hong v. IAC, G.R. No. 74811

 

Chua Yek Hong v. IAC, G.R. No. 74811, September 30, 1988

Subject: Transportation Law

FACTS

Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to the Port of Manila.

In October 1977, petitioner loaded 1,000 sacks of copra, on board the vessel "M/V Luzviminda I" for shipment from Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however, did not reach Manila because somewhere between Cape Santiago and Calatagan, Batangas, the vessel capsized and sank with all its cargo.

On 30 March 1979, petitioner instituted before the then Court of First Instance of Oriental Mindoro, a Complaint for damages based on breach of contract of carriage against private respondents.

In their Answer, private respondents averred that even assuming that the alleged cargo was truly loaded aboard their vessel, their liability had been extinguished by reason of the total loss of said vessel.

The Trial Court rendered its Decision in favor of the petitioner and ordered private respondents jointly and severally, to pay the petitioner.

On appeal, respondent Appellate Court reversed the lower court decision and ruled that private respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction.

ISSUE

Whether or not the private respondents as common carrier can invoke doctrine of limited liability under Article 587 of the Code of Commerce.

RULING

Yes, common carrier can invoke doctrine of limited liability under Article 587 of the Code of Commerce.

Art. 587 of the code of commerce provides that the ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipment and the freight it may have earned during the voyage.

In this case, respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction and none of the exceptions to the rule on limited liability being present, the liability of private respondents for the loss of the cargo of copra must be deemed to have been extinguished.