Case Summary (G.R. No. 114167)
Factual Background
Coastwise was contracted to transport molasses from the province of Negros to Manila using dumb barges towed by its tugboat, MT Marica. Upon nearing Pier 18 in Manila Bay, the barge "Coastwise 9" struck a submerged object, resulting in severe damage to the vessel and contamination of the cargo. Pag-asa Sales, the consignee, rejected the shipment as a total loss and filed a claim with its insurer, PhilGen. Coastwise denied the claim and, as a result, PhilGen paid Pag-asa the amount of P700,000. Subsequently, PhilGen sought to recover this amount from Coastwise through a legal action in the Regional Trial Court (RTC) of Manila.
Court Decisions
The RTC ruled in favor of PhilGen, determining that Coastwise was liable for the damages incurred. The Court of Appeals subsequently upheld this ruling, leading to the filing of the present petition by Coastwise.
Issues Presented
The case primarily involves two issues: First, whether Coastwise was classified as a common carrier or a private carrier due to the nature of its contract with Pag-asa Sales, and second, whether PhilGen was subrogated to the rights of Pag-asa Sales against Coastwise upon indemnifying the consignee.
Classification of Carrier
Coastwise argued that it qualified as a private carrier because it engaged in a "charter agreement" with Pag-asa. However, the court clarified that a charter party does not automatically convert a common carrier into a private carrier, especially when the contract is identified as a contract of affreightment. The court cited prior cases establishing that a common carrier retains liability for damages if they do not completely relinquish possession and control of the vessel to the charterer. In this case, as Coastwise maintained navigational control and command over the vessel, it remained classified as a common carrier and was thus subject to the presumption of negligence inherent in such classification.
Presumption of Negligence
As a common carrier, Coastwise was presumed negligent since damage occurred to the goods during transit. To overcome this presumption, Coastwise had to demonstrate that it exercised extraordinary diligence. However, evidence presented indicated a failure to comply with required standards, notably that the vessel was captained by a person without the requisite license, violating Article 609 of the Code of Commerce. This lack of qualified manpower was detrimental to Coastwise's assertion of extraordinary diligence and contributed to the accident.
Subrogation Rights of the Insurer
On the matter of subrogation, the court referenced Article 2207 of the Civil Code, affirming that PhilGen, upon compensating Pag-asa for the damaged cargo, was subrogated to the rights of the consig
...continue readingCase Syllabus (G.R. No. 114167)
Case Overview
- Court: Supreme Court of the Philippines
- Division: Third Division
- G.R. No.: 114167
- Date: July 12, 1995
- Petitioner: Coastwise Lighterage Corporation
- Respondents: Court of Appeals and Philippine General Insurance Company
- Decision: Petition denied; the lower court's ruling affirmed.
Factual Background
- Pag-asa Sales, Inc. contracted Coastwise Lighterage Corporation to transport molasses from Negros to Manila using dumb barges towed by the tugboat MT Marica.
- Upon nearing Pier 18, the barge "Coastwise 9" struck a submerged object, damaging its buoyancy compartment, resulting in contamination of the molasses cargo.
- The consignee, Pag-asa Sales, Inc., rejected the shipment declaring it a total loss and filed a claim with PhilGen, the insurer.
- PhilGen compensated Pag-asa Sales, Inc. with P700,000.00 for the damaged cargo and subsequently sought recovery from Coastwise Lighterage, asserting subrogation rights.
Legal Issues
- First Issue: Whether Coastwise Lighterage was transformed into a private carrier due to its contract with Pag-asa Sales, Inc. and if so, whether it exercised ordinary diligence as a private carrier.
- Second Issue: Whether PhilGen was subrogated to the rights of Pag-asa Sale