Coastwise Lighterage Corporation v.

CA
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, 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 a consequence, the
molasses at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine General Insurance
Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost.
Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to the
claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals ruled
against Coastwise.
Issues:
(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with Pagasa, and whether it exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the carrier
Held:
(1) 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 mid navigation of the vessels remained with petitioner Coastwise Lighterage.
Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier, but remained a
common carrier and was still liable as such. The law and jurisprudence on common carriers both hold that the
mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the
place of destination in bad order makes for a prima facie case against the carrier. It follows then that the
presumption of negligence that attaches to common carriers, once the goods it is sports are lost, destroyed or
deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of
extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel
"Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised
extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel
which eventually met the fateful accident. It may also logically, follow that a person without license to navigate,
lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned
and legally authorized ones. Had the patron been licensed he could be presumed to have both the skill and the
knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18.
As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the
presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of
extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property
is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon

payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent
that the insurer has been obligated to pay. Payment by the insurer to the assured operated as an equitable
assignment to the former of all remedies which the latter may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any private
of contract or upon written assignment of, claim. It accrues simply upon payment of the insurance claim by the
insurer.

Benito Macam v. CA, China Ocean Shipping Co. and/or Wallem Phils.,
Shipping Inc.
Facts: Benito Macam, doing business under name Ben-Mac Enterprises, shipped on board
vessel Nen-Jiang, owned and operated by respondent China Ocean Shipping Co. through
local agent Wallem Philippines Shipping Inc., 3,500 boxes of watermelon covered by Bill of
Lading No. HKG 99012, and 1,611 boxes of fresh mangoes covered by Bill of Lading No. HKG
99013. The shipment was bound for Hongkong with PAKISTAN BANK as consignee and
Great Prospect Company of Rowloon (GPC) as notify party.
Upon arrival in Hongkong, shipment was delivered by respondent WALLEM directly to GPC,
not to PAKISTAN BANK and without the required bill of lading having been surrendered.
Subsequently, GPC failed to payPAKISTAN BANK, such that the latter, still in possession of
original bill of lading, refused to pay petitioner thru SOLIDBANK. Since SOLIDBANK
already pre-paid the value of shipment, it demanded payment from respondent WALLEM but
was refused. MACAM constrained to return the amount paid by SOLIDBANK and demanded
payment from WALLEM but to no avail.
WALLEM submitted in evidence a telex dated 5 April 1989 as basis for delivering the
cargoes to GPC without the bills of lading and bank guarantee. The telex instructed delivery
of various shipments to the respective consignees without need of presenting the bill of
lading and bank guarantee per the respective shippers request since for prepaid shipt
ofrt charges already fully paid. MACAM, however, argued that, assuming there was such
an instruction, the consignee referred to was PAKISTAN BANK and not GPC.
The RTC ruled for MACAM and ordered value of shipment. CA reversedRTCs decision.
Issue: Are the respondents liable to the petitioner for releasing the goods to GPC without
the bills of lading or bank guarantee?
Held: It is a standard maritime practice when immediate delivery is of the essence, for
shipper to request or instruct the carrier to deliver the goods to the buyer upon arrival at the

port of destination without requiring presentation of bill of lading as that usually takes
time. Thus, taking into account that subject shipment consisted of perishable goods and
SOLIDBANK pre-paid the full amount of value thereof, it is not hard to believe the claim of
respondent WALLEM that petitioner indeed requested the release of the goods to GPC
without presentation of the bills of lading and bank guarantee.
To implement the said telex instruction, the delivery of the shipment must be to GPC, the
notify party or real importer/buyer of the goods and not the PAKISTANI BANK since the latter
can very well present the original Bills of Lading in its possession. Likewise, if it were the
PAKISTANI BANK to whom the cargoes were to be strictly delivered, it will no longer be
proper torequire a bank guarantee as a substitute for the Bill of Lading. To construe
otherwise will render meaningless the telex instruction. After all, the cargoes consist of
perishable fresh fruits and immediate delivery thereof the buyer/importer is essentially a

factor to reckon with.

We emphasize that the extraordinary responsibility of the common carriers lasts until
actual or constructive delivery of the cargoes to the consignee or to the person who has a
right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee
whereas GPC was the notify party. However, in the export invoices GPC was clearly named
as buyer/importer. Petitioner also referred to GPC as such in his demand letter to
respondent WALLEM and in his complaint before the trial court. This premise draws us to
conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably
with Art. 1736 had, other than the consignee, the right to receive them was proper.