Case Digest: Coastwise Lighterage Corp. v. CA, G.R. No. 114167

 

Coastwise Lighterage Corp. v. CA, G.R. No. 114167, July 12, 1995

Subject: Transportation Law

FACTS

Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise.

Upon reaching Manila Bay, while approaching Pier 18, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole "two inches wide and twenty-two inches long". As consequence, the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a formal claim with the insurer of its lost cargo, herein private respondent, Philippine General Insurance Company (PhilGen, for short) and against the carrier, herein petitioner, Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee, Pag-asa Sales, Inc.

As subrogee, PhilGen then filed an action against Coastwise Lighterage before the RTC of Manila, seeking to recover the amount it paid to Pag-asa Sales, Inc.,

RTC awarded the amount prayed for by PhilGen. On appeal, CA affirmed RTC’s decision. Hence, this petition.

ISSUE

1. Whether or not petitioner Coastwise Lighterage was transformed into a private carrier, by virtue of the contract of affreightment which it entered with the consignee, Pag-asa Sales, Inc.

2. Whether or not, if it were in fact transformed into a private carrier, did it exercise the ordinary diligence to which a private carrier is in turn bound.

RULING

1. No, Coastwise Lighterage was not transformed into a private carrier.  

In Puromines case, a contract of affreightment is one in which the owner of the vessel lease part or all its space to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire.  An owner who retains possession of the ship though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as to the care, loading and unloading of the cargo. 

In this case, SC held that a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment on account of aforementioned definition. Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command and navigation of the vessels remained with petitioner Coastwise Lighterage. Pursuant to existing jurisprudence, Coastwise Lighterage was not converted to private carrier. Hence, the presumption of negligence remains to the common carrier.

2. No, it was not diligent in the exercise of its duties.

Under the law, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733.

In this case, petitioner’s contention that nothing could have prevented the event because of PCG’s failure to chart sunken derelicts in the Manila North Harbor, making it beyond the pale of even the exercise of extraordinary diligence because of uncharted sunken derelicts in the Manila harbor was the cause of the mishap was trashed by SC. Based on record, Coastwise Lighterage embarks on a voyage with an unlicensed patron, a clear violation of Article 609 of the Civil Code. It appeared that the carrier was culpably remiss in the observance of its duties.