G.R. No. 181163, 181262, 181319; July 24, 2013
ASIAN TERMINALS, INC., Petitioner, vs. PHILAM INSURANCE CO., INC. (now Chartis Philippines Insurance, Inc.), Respondent. (Consolidated with G.R. Nos. 181262 & 181319)

FACTS

Nichimen Corporation shipped 219 packages of vehicle parts to Universal Motors Corporation, insured by Philam Insurance. The shipment arrived in Manila aboard the vessel S/S “Calayan Iris,” operated by Westwind Shipping Corporation. During unloading by the stevedores of Asian Terminals, Inc. (ATI), a package marked 03-245-42K/1 was noted to be in “bad order.” The cargo was later delivered to the consignee’s warehouse, where a survey revealed one Frame Axle Sub without LWR was deeply dented and six Frame Assembly with Bush were deformed. Universal Motors declared a total loss, was paid by Philam as insurer, and Philam was subrogated to its rights.
Philam, as subrogee, filed a complaint for damages against Westwind (as common carrier) and ATI (as stevedore). The Regional Trial Court held Westwind and ATI jointly and severally liable, finding the cargo was damaged during unloading due to a short, taut cable while ATI staff performed the physical work under Westwind’s supervision. The Court of Appeals affirmed but modified the award, limiting liability to only the one damaged unit from Case No. 03-245-42K/1, as Philam’s complaint specifically alleged the six other damaged parts were from a different case number (03-245-51K).

ISSUE

Whether Westwind and ATI are jointly and severally liable for the damage to the shipment that occurred during the unloading operations.

RULING

Yes, Westwind and ATI are jointly and severally liable. The Supreme Court affirmed the CA’s finding that the damage occurred during the discharge of the cargo from the vessel, a phase where the common carrier’s duty of extraordinary diligence under the Civil Code and the Carriage of Goods by Sea Act (COGSA) remains applicable. Westwind, as the carrier, exercised supervision and control over ATI’s stevedores during unloading; thus, it is vicariously liable for their negligence. Westwind failed to rebut the presumption of negligence by proving it exercised extraordinary diligence in selecting and supervising ATI.
Concurrently, ATI is directly liable as an employer under Article 2180 of the Civil Code for the negligent acts of its employees who physically handled the cargo. The Court rejected ATI’s attempt to limit its liability under its contract, as the damage occurred before the cargo was officially turned over to its custody. The liability is solidary because the negligence of both parties contributed to the single, indivisible injury. However, the Court upheld the CA’s reduction of the award, as Philam’s evidence and pleadings only conclusively proved the damage to the one Frame Axle Sub from the specifically identified “bad order” package.