G.R. No. 200289 & G.R. No. 200314, November 25, 2013
WESTWIND SHIPPING CORPORATION and ORIENT FREIGHT INTERNATIONAL INC., Petitioners, vs. UCPB GENERAL INSURANCE CO., INC. and ASIAN TERMINALS INC., Respondents.

FACTS

On August 23, 1993, Kinsho-Mataichi Corporation shipped 197 containers/skids of tin-free steel from Kobe, Japan, to consignee San Miguel Corporation (SMC) via M/V Golden Harvest, owned by Westwind Shipping Corporation (Westwind). SMC insured the cargo with UCPB General Insurance Co., Inc. (UCPB). The shipment arrived in Manila on August 31, 1993, and was discharged into the custody of arrastre operator Asian Terminals, Inc. (ATI). During unloading, six containers/skids, valued at ₱117,093.12, were damaged by the forklift operations of stevedores from Ocean Terminal Services, Inc. (OTSI), evidenced by Bad Order Cargo Receipts.
On September 7, 1993, Orient Freight International, Inc. (OFII), SMC’s customs broker, withdrew the shipment from ATI and engaged J.B. Limcaoco Trucking (JBL) to deliver it to SMC’s warehouse in Calamba, Laguna. Upon delivery, nine additional containers/skids, valued at ₱175,639.68, were found damaged, bringing the total to 15 damaged units.
SMC filed a claim against UCPB, Westwind, ATI, and OFII. UCPB paid SMC ₱292,732.80 and, by subrogation, filed a complaint for damages against Westwind, ATI, and OFII. The Regional Trial Court (RTC) dismissed the complaint, ruling that the claim against ATI had prescribed, Westwind was not liable as the damage occurred during ATI’s stevedoring operations, and OFII was merely a customs broker not responsible for the physical handling. The Court of Appeals (CA) reversed the RTC, holding Westwind liable for the six containers damaged during unloading and OFII liable for the nine containers damaged during land transport. Westwind and OFII filed separate petitions for review.

ISSUE

1. Whether Westwind, as a common carrier, is liable for the damage to the six containers/skids that occurred during unloading operations conducted by ATI’s stevedores.
2. Whether OFII, acting as a customs broker and cargo forwarder, is a common carrier liable for the damage to the nine containers/skids that occurred during delivery to the consignee’s warehouse.

RULING

1. On Westwind’s Liability: YES. The Supreme Court affirmed the CA’s decision holding Westwind liable. A common carrier’s duty to exercise extraordinary diligence in the vigilance over goods under its custody extends to the entire period of transport, from receipt until delivery to the consignee. This duty includes the unloading of cargo from the vessel. The fact that the actual stevedoring was performed by ATI, an independent contractor, does not absolve Westwind. As the party responsible for the safe carriage and delivery of the goods, Westwind is liable for the negligence of the arrastre operator (ATI/OTSI) during the unloading process, which is part of the carrier’s contract of carriage. The carrier’s responsibility does not cease until proper delivery is made to the consignee or its authorized agent.
2. On OFII’s Liability: YES. The Supreme Court affirmed the CA’s decision holding OFII liable. OFII is considered a common carrier. Article 1732 of the Civil Code does not distinguish between entities whose primary business is carriage and those for whom it is ancillary. By undertaking, through its witness’s testimony, to deliver the shipment from the port to the consignee’s warehouse as part of its service as a cargo forwarder, OFII engaged in the business of carriage for compensation. As a common carrier, it is bound to observe extraordinary diligence. The damage to the nine containers occurred while the goods were in its custody for delivery. The presumption of fault or negligence under Article 1735 of the Civil Code applies, and OFII failed to rebut this presumption. Its argument that JBL performed the actual trucking does not exonerate it, as the delivery receipts indicated the goods were received from OFII, making it responsible for the safe transport.
DISPOSITIVE:
The Supreme Court DENIED the petitions. The Decision of the Court of Appeals dated September 13, 2011, was AFFIRMED. Westwind Shipping Corporation is ORDERED to pay UCPB General Insurance Co., Inc. ₱117,093.12, and Orient Freight International Inc. is ORDERED to pay ₱175,639.68. Both sums shall bear interest at 6% per annum from the filing of the complaint on August 30, 1994, until finality of judgment, and 12% per annum from finality until full payment.