A.F. Sanchez Brokerage Inc. vs. Court of Appeals

A customs broker that undertakes to transport and deliver goods to the consignee for compensation is a common carrier under Article 1732 of the Civil Code, regardless of whether transportation is its principal or merely ancillary business activity, and is bound to observe extraordinary diligence over the goods carried.

Sanchez Brokerage had served as the licensed customs broker of Wyeth-Suaco Laboratories, Inc. since 1984, calculating and paying customs duties, taxes, and storage fees for cargo and thereafter delivering it to Wyeth-Suaco. FGU Insurance Corporation (FGU Insurance) insured a shipment of oral contraceptives consigned to Wyeth-Suaco under Marine Risk Note No. 4995 pursuant to Marine Open Policy No. 138. After FGU Insurance paid Wyeth-Suaco's insurance claim for damaged goods, it was subrogated to Wyeth-Suaco's rights and sought reimbursement from Sanchez Brokerage.

On July 8, 1992, Wyeth-Pharma GMBH shipped oral contraceptives aboard a KLM Royal Dutch Airlines aircraft at Dusseldorf, Germany for delivery to Manila in favor of consignee Wyeth-Suaco Laboratories, Inc. The shipment consisted of 86,800 Blisters Femenal tablets, 14,000 Blisters Nordiol tablets, and 42,000 Blisters Trinordiol tablets. The Femenal and Nordiol tablets were packed in 144 cartons inside one LD3 aluminum container, while the Trinordiol tablets were packed in two pallets of 30 cartons each. Wyeth-Suaco insured the shipment against all risks with FGU Insurance under Marine Risk Note No. 4995 pursuant to Marine Open Policy No. 138.

Upon arrival at NAIA on July 11, 1992, the shipment was discharged "without exception" and delivered to the warehouse of Philippine Skylanders, Inc. (PSI) at NAIA for safekeeping. Wyeth-Suaco engaged Sanchez Brokerage, its licensed broker since 1984, to secure release of the cargoes from PSI and the Bureau of Customs. As customs broker, Sanchez Brokerage calculated and paid customs duties, taxes, and storage fees, and thereafter delivered the cargo to Wyeth-Suaco. On July 29, 1992, representatives of Sanchez Brokerage paid PSI a storage fee of P8,572.35 and received the cargoes — described as "three pieces" — in good condition, as acknowledged on Official Receipt No. 016992. Because Wyeth-Suaco was a regular importer, the customs examiner did not inspect the cargoes, which were then stripped from the aluminum containers and loaded onto two transport vehicles hired by Sanchez Brokerage. Employees of Elite Adjusters and Surveyors Inc. (Elite Surveyors), a marine and cargo surveyor firm engaged by Wyeth-Suaco on behalf of FGU Insurance, witnessed the release.

Upon instructions of Wyeth-Suaco, the cargoes were delivered to Hizon Laboratories Inc. in Antipolo City for quality control check. The delivery receipt, No. 07037 dated July 29, 1992, indicated the shipment consisted of one container with 144 cartons of Femenal and Nordiol and one pallet containing Trinordiol. On July 31, 1992, Ronnie Likas of Wyeth-Suaco acknowledged delivery by signing the receipt but noted above his signature that 44 cartons of oral contraceptives were in bad order; the remaining 160 cartons were accepted as complete and in good order. Ruben Alonzo of Elite Surveyors and Likas jointly prepared a survey report stating that 41 cartons of Femenal and 3 cartons of Nordiol were "wetted." Elite Surveyors later issued Certificate No. CS-0731-1538/92, which noted that prior to loading at NAIA the cargoes were in "apparent good condition," and that slight to heavy rains fell at the time of delivery to Hizon Laboratories, which could account for the wetting. Hizon Laboratories issued a Destruction Report on August 4, 1992 confirming that 38 cartons of Femenal and 3 cartons of Nordiol were heavily water-damaged and emitted a foul smell. Wyeth-Suaco issued a Notice of Materials Rejection on August 5, 1992 and thereafter demanded P191,384.25 from Sanchez Brokerage as the value of the loss.

Sanchez Brokerage refused to pay. Wyeth-Suaco filed an insurance claim with FGU Insurance, which paid P181,431.49 under the marine policy and was subrogated to Wyeth-Suaco's rights. FGU Insurance demanded reimbursement from Sanchez Brokerage, which by letter of January 7, 1993 disclaimed liability, positing that the damage was due to improper and insufficient export packaging and that when sealed containers were opened outside the PSI warehouse, some loose cartons were already wet — prompting its representative to inform Wyeth-Suaco's Import-Export Assistant, Ramir Calicdan, who allegedly advised to proceed with delivery to Hizon Laboratories for assessment. FGU Insurance then filed a complaint for damages against Sanchez Brokerage before the RTC of Makati City. The trial court dismissed the complaint, finding the Survey Report bereft of evidentiary support. The Court of Appeals reversed, holding Sanchez Brokerage a common carrier presumptively negligent for the damage.

• Common Carrier Classification: Petitioner asserted that the appellate court committed grave and reversible error tantamount to abuse of discretion in finding it a "common carrier" under Article 1732 of the Civil Code, contending that it is a customs broker whose principal function is to prepare customs declarations and shipping documents, not to transport goods.
• Exempting Causes: Petitioner posited that the damage was due to the fault or negligence of the shipper for failing to properly pack the goods and to the inherent characteristics of the goods, and that it should not be faulted for following Calicdan's instructions to proceed with delivery despite information that some cartons were wet.
• Weather Conditions: Petitioner asserted that contrary to the Elite Surveyors report, no rain fell that day, and that some cargoes were already wet upon delivery by PSI outside the PSI warehouse.

• Procedural Impropriety: Respondent FGU Insurance averred that the proper course of action was a petition for review on certiorari, not a petition for certiorari, since the sole office of the writ of certiorari is correction of errors of jurisdiction, not evaluation of evidence or factual findings.
• Presumption of Negligence: Respondent contended that petitioner, as a common carrier, failed to overcome the presumption of negligence, it being documented that petitioner withdrew the shipment from the PSI warehouse entirely in good order and condition.

• Remedy and Timeliness: Whether the petition for certiorari was the proper remedy and whether it was filed within the reglementary period.
• Common Carrier Status: Whether a customs broker that also transports and delivers goods to consignees for compensation is a common carrier under Article 1732 of the Civil Code.
• Presumption of Negligence: Whether petitioner rebutted the presumption of negligence for damage to goods received in good condition but delivered damaged.

• Remedy and Timeliness: No. The petition for certiorari was filed out of time and cannot substitute for the lost remedy of appeal; the CA decision had become final and executory. The proper remedy was a petition for review under Rule 45 within 15 days from receipt of the denial of the motion for reconsideration.
• Common Carrier Status: Yes. Article 1732 does not distinguish between one whose principal business is carrying goods and one who does so as an ancillary activity; it suffices that the entity undertakes to deliver goods for pecuniary consideration.
• Presumption of Negligence: No. Petitioner received the cargoes in good order and condition and delivered part of them damaged, triggering the presumption of negligence under Article 1735, which petitioner failed to rebut with proof of extraordinary diligence.

• Remedy and Timeliness: The resolution of the Court of Appeals denying the motion for reconsideration was received by petitioner on January 5, 2001. Petitioner had 15 days, or until January 20, 2001, to appeal by petition for review under Rule 45, but instead filed a petition for certiorari on March 6, 2001. The CA decision had thus become final and executory. Certiorari under Rule 65 cannot serve as a substitute for a lost appeal. Moreover, petitioner's allegation that the appellate court erred in its findings ascribes an error of judgment, not of jurisdiction, which is properly the subject of an ordinary appeal, not certiorari. The supervisory jurisdiction to issue a cert writ cannot be exercised to review the intrinsic correctness of a lower court's judgment on the law or facts.

• Common Carrier Status: Article 1732 defines common carriers as persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods by land, water, or air, for compensation, offering their services to the public. The Manager and Principal Broker of Sanchez Brokerage himself testified that the firm's services include delivery of goods to the warehouse of the importer. Article 1732 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's contention that it is merely a customs broker is therefore bereft of merit; it suffices that it undertakes to deliver goods for pecuniary consideration.

• Presumption of Negligence: As a common carrier, petitioner was mandated under Article 1733 to observe extraordinary diligence in the vigilance over goods transported. It was established that petitioner received the cargoes from PSI in good order and condition, as acknowledged on the official receipt, and that upon delivery to Hizon Laboratories, 44 cartons were in bad order, as noted on the delivery receipt, the survey report, and the destruction report. Under Article 1735, petitioner was presumed to have been at fault or negligent unless it proved extraordinary diligence. Petitioner's defenses failed: while Article 1734(4) exempts carriers for damage due to the character of goods or defects in packing, the rule is that if improper packing is known to the carrier or apparent upon ordinary observation but accepted without protest, the carrier is not relieved of liability. Petitioner made no protest or reservation on the PSI receipt. If some cartons were already wet when the container was opened outside the warehouse, petitioner's employees would naturally have returned to PSI to demand bad order documents, or petitioner would have presented PSI employees as witnesses — neither of which it did. The PAGASA weather data was uncorroborated, no witness having identified or interpreted it. The possibility that rainwater damaged the goods in transit was supported by Elite Surveyors' notation of slight to heavy rains at delivery and by Sanchez's own testimony that there was a prior instance of Wyeth-Suaco shipment being wetted during the rainy season. Petitioner thus failed to rebut the presumption of negligence.

• Definition of Common Carrier (Article 1732) — Common carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods, by land, water, or air, for compensation, offering their services to the public. The definition does not distinguish between one whose principal business activity is carrying goods and one who does so as an ancillary activity. A customs broker that undertakes to deliver goods to the consignee for compensation falls within this definition.

• Extraordinary Diligence in the Vigilance over Goods (Articles 1733 and 1735) — Common carriers are bound to observe extraordinary diligence in the vigilance over goods according to all circumstances of each case. If goods are lost, destroyed, or deteriorated, the carrier is presumed to have been at fault or negligent unless it proves it observed extraordinary diligence. Extraordinary diligence requires the carrier to know and follow required precautions for avoiding damage, to render service with the greatest skill and foresight, and to use all reasonable means to ascertain the nature and characteristics of goods and to exercise due care in handling and stowage.

• Effect of Accepting Defectively Packed Goods Without Protest — While Article 1734(4) exempts a carrier from liability for damage due to the character of the goods or defects in packing or containers, if the improper packing is known to the carrier or apparent upon ordinary observation but the carrier accepts the goods without protest or exception, the carrier is not relieved of liability for resulting damage.

• Certiorari Not a Substitute for Lost Appeal — A petition for certiorari under Rule 65 cannot serve as a substitute for a lost remedy of appeal. Where the issue involves the wisdom or legal soundness of a decision — not the jurisdiction of the court to render it — the same is beyond the province of certiorari. Errors of judgment are properly addressed by ordinary appeal, not by certiorari.

• "Article 1732 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." — This passage articulates the ratio decidendi on the common carrier issue, establishing that ancillary transportation activity suffices to bring an entity within Article 1732's definition.

• "The filing by petitioner of a petition for certiorari on March 6, 2001 cannot serve as a substitute for the lost remedy of appeal." — This states the procedural bar: certiorari cannot cure the failure to appeal within the reglementary period, rendering the lower court's decision final and executory.

• "Since petitioner received all the cargoes in good order and condition at the time they were turned over by the PSI warehouseman, and upon their delivery to Hizon Laboratories, Inc. a portion thereof was found to be in bad order, it was incumbent on petitioner to prove that it exercised extraordinary diligence in the carriage of the goods. It did not, however. Hence, its presumed negligence under Article 1735 of the Civil Code remains unrebutted." — This passage summarizes the application of the presumption of negligence and the carrier's burden of proof, forming the core of the liability finding.

• De Guzman vs. Court of Appeals, 168 SCRA 612 (1988) — Cited for the proposition that Article 1732 does not distinguish between one whose principal business is carrying goods and one who does so as an ancillary activity; followed in this case.

• Compania Maritima vs. Court of Appeals, 164 SCRA 685 (1988) — Cited for the definition and scope of "extraordinary diligence" required of common carriers in the vigilance over goods; followed and applied to the facts.

• Calvo vs. UCPB General Insurance Co. Inc., 379 SCRA 510 (2002) — Cited for the rule that a carrier accepting defectively packed goods without protest is not relieved of liability; applied to reject petitioner's defense.

• Heirs of Marcelino Pagobo vs. Court of Appeals, 280 SCRA 870 (1997) — Cited for the rule that CA decisions may be appealed to the Supreme Court by petition for review under Rule 45.

• Land Bank of the Philippines vs. Court of Appeals, 409 SCRA 455 (2003) — Cited for the distinction between errors of jurisdiction and errors of judgment in certiorari proceedings.

• Article 1732, Civil Code — Defines common carriers as persons, corporations, firms, or associations engaged in the business of carrying or transporting goods for compensation, offering services to the public. Applied to hold that a customs broker delivering goods for compensation is a common carrier.

• Article 1733, Civil Code — Requires common carriers to observe extraordinary diligence in the vigilance over goods according to all circumstances of each case. Applied as the standard against which petitioner's conduct was measured.

• Article 1734, Civil Code — Lists causes exempting common carriers from liability for loss, destruction, or deterioration of goods, including paragraph (4): the character of the goods or defects in packing or containers. Applied with the qualification that acceptance without protest negates the exemption.

• Article 1735, Civil Code — Establishes the presumption of negligence: in all cases other than those enumerated in Article 1734, if goods are lost, destroyed, or deteriorated, common carriers are presumed at fault unless they prove extraordinary diligence. Applied to hold petitioner presumptively negligent.

• Rule 45, Rules of Court — Governs appeals from the Court of Appeals to the Supreme Court by petition for review. Applied to determine that petitioner's proper remedy was Rule 45, not Rule 65 certiorari, and that the petition was filed out of time.

Panganiban (Chairman), Sandoval-Gutierrez, and Garcia, JJ., concurred. Corona, J., was on leave.