10. A.F. SANCHEZ BROKERAGE INC., vs.

CA

1. Wyeth-Pharma shipped on board an aircraft an oral contraceptives for delivery to Manila in favor of the consignee,
Wyeth-Suaco Laboratories, Inc. Wyeth-Suaco insured the shipment against all risks with FGU Insurance.
2. In order to secure the release of the cargoes from the PSI and the Bureau of Customs, Wyeth-Suaco engaged the
services of Sanchez Brokerage. It then calculated and payed the customs duties, taxes and storage fees for the cargo
and thereafter delivers it to Wyeth-Suaco. The representatives of Sanchez Brokerage, paid PSI storage fee and
acknowledged that he received the cargoes consisting of three pieces in good condition.
3. Wyeth-Suaco being a regular importer, the customs examiner did not inspect the cargoes which were thereupon
stripped from the aluminum containers and loaded inside two transport vehicles hired by Sanchez Brokerage. The
cargoes were delivered to Hizon Laboratories Inc.
4. However, other cartons of contraceptives delivered to Wyeth- Suaco were in bad order. Hizon Laboratories Inc. issued
a Destruction Report confirming that other oral contraceptives tablets were heavily damaged with water and emitted
foul smell. Wyeth-Suaco later demanded from Sanchez Brokerage the payment of its loss arising from the damaged
tablets. As Sanchez Brokerage refused to heed the demand, Wyeth-Suaco filed an insurance claim against FGU
Insurance.
5. Respondent FGU Insurance brought an action for reimbursement against petitioner Sanchez Brokerage to collect the
amount it paid Wyeth-Suaco Laboratories Inc. as insurance payment for the goods delivered in bad condition. Sanchez
Brokerage refused to admit liability for the damaged goods which it delivered from PSI (Phil. Skylanders Inc.) to Wyeth-
Suaco as it maintained that the damage was due to improper and insufficient export packaging, discovered when the
sealed containers were opened outside the PSI warehouse.
6. RTC dismissed the said complaint; however, the decision was subsequently reversed and set aside by the Court of
Appeals, finding that Sanchez Brokerage is liable for the carriage of cargo as a ―common carrier by definition of the
New Civil Code. Hence this petition, contending that it is not a common carrier but customs broker whose principal
function is to prepare the correct customs declaration and proper shipping documents as required by law.

ISSUE:

Whether or not Sanchez Brokerage Inc. is a common carrier and is liable for the delivery of the damaged goods.

HELD:

As defined under Article 1732 of the Civil Code, common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both by land, water or air for compensation, offering their services to the
public. It does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying
only as an ancillary activity.
petitioner undertakes to deliver the goods for pecuniary consideration.

In this light, Sanchez Brokerage as a common carrier is mandated to observe, under Article 1733 of the Civil Code, extraordinary
diligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event that the goods are
lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed
extraordinary diligence.

The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow
the required precaution for avoiding damage to or destruction of the goods entrusted to it for sale, carriage and delivery. It requires
common carriers to render service with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature and
characteristics of goods tendered for shipment and to exercise due care in the handling and storage including such methods as their
nature requires.

It was established that Sanchez Brokerage received the cargoes from the PSI warehouse in good order and condition and that upon
delivery by petitioner some of the cargoes were found to be in bad order as noted in the Delivery Receipt and as indicated in the
Survey and Destruction Report.

While paragraph no. 4 of Article 1734 of the Civil Code exempts a common carrier from liability if the loss or damage is due to the
character of the goods or defects in the packaging or in the containers, the rule is that if the improper packaging is known to the
carrier or his employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for the resulting damage. If the claim of Sanchez Brokerage that some
of the cartons were already damaged upon delivery to it were true, then it should naturally have received the cargo under protest or
with reservation duly noted on the receipt issued by PSI but it made no such protest or reservation.
31. Coastwise Lighterage Corporation v. CA

Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage
Corp., 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.

Issue:

Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with Pag-asa, and
whether it exercised the required degree of diligence

Held:

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 transports 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.

The records show that the damage to the barge which carried the cargo of molasses was caused by its hitting an unknown sunken
object as it was heading for Pier 18. Moreover, 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. ad 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.