G.R. No. 147079 - A.F. Sanchez Brokerage, Inc. vs. Court of Appeals

Case Summary (G.R. No. 147079)

Summary of Facts

In July 1992, Wyeth-Pharma GMBH shipped oral contraceptive tablets from Dusseldorf, Germany, to Wyeth-Suaco Laboratories in Manila. The cargo, insured against all risks by FGU Insurance, arrived at Ninoy Aquino International Airport (NAIA) and was delivered to the warehouse of Philippine Skylanders Inc. (PSI) for safekeeping. Sanchez Brokerage, engaged by Wyeth-Suaco as its licensed customs broker, was tasked to secure the release of the shipment from customs and PSI, paying customs duties and storage fees before delivering the goods to the consignee.

On July 29, 1992, Sanchez Brokerage representatives paid PSI the storage fees and took delivery of the cargo—which was acknowledged to be in good condition in the official receipt. However, upon delivery to Hizon Laboratories for quality control, 44 cartons were found to be wet and damaged. A survey report and certificate by Elite Surveyors confirmed the damage, stating that prior to loading onto transport vehicles, the cargo appeared to be in good condition but noting heavy rains during delivery which could explain the wetting of the cartons. Hizon Laboratories issued a destruction report concluding that 44 cartons were heavily damaged with water and emitted a foul smell.

Wyeth-Suaco then rejected the damaged materials and demanded compensation from Sanchez Brokerage for P191,384.25. Upon denial, FGU Insurance paid Wyeth-Suaco P181,431.49 under the marine risk insurance and sought reimbursement from Sanchez Brokerage through subrogation. Sanchez Brokerage denied liability, claiming that the damage was due to improper packaging by the shipper and asserted that any wetting occurred before it accepted delivery of the cargo, but failed to protest or issue a reservation upon receipt.

Proceedings and Issues

FGU Insurance filed a complaint against Sanchez Brokerage for damages. The Regional Trial Court of Makati dismissed the complaint, finding the survey report unsupported and speculative. The Court of Appeals reversed this decision, ruling that Sanchez Brokerage was not merely a customs broker but also a common carrier under Article 1732 of the New Civil Code because it undertook delivery services for compensation. Accordingly, Sanchez Brokerage was presumed negligent for the damage incurred, and the burden shifted to it to prove that extraordinary diligence was exercised, which it failed to do.

Sanchez Brokerage filed a motion for reconsideration, which was denied. It then elevated the case to the Supreme Court via a petition for certiorari, contending that the appellate court erred in classifying it as a common carrier, thereby committing grave abuse of discretion amounting to lack of jurisdiction.

Jurisdictional and Procedural Findings

The Supreme Court emphasized that the appeal to the Court of Appeals was final and executory as Sanchez Brokerage failed to file a timely petition for review within 15 days after denial of reconsideration. A petition for certiorari is an improper remedy to correct errors of judgment or factual findings, which should have been challenged through the appellate process. The Court ruled that the appellate court’s error, if any, was an error of judgment and not jurisdictional, and thus not amenable to certiorari.

Legal Analysis on Common Carrier Liability

Under Article 1732 of the Civil Code, a common carrier includes any person or entity engaged in carrying goods for compensation and offering services to the public. It does not require that carrying goods be the principal business; ancillary carriage for remuneration also qualifies. Sanchez Brokerage’s engagement in delivering goods to the importer’s warehouse for compensation fell within this definition.

As a common carrier, Sanchez Brokerage was bound to observe extraordinary diligence (Article 1733) over the cargo. Under Article 1735, loss or damage to goods is presumed to be due to the carrier’s negligence unless they prove they exercised extraordinary diligence. The Court defined extraordinary diligence as the highest degree of care and forethought reasonably required by the nature of the service and circumstances.

Evidence of Damage and Carrier's Presumption of Negligence

Records showed the cargo was received by Sanchez Brokerage from PSI in good order but was delivered to the consignee damaged. The damage was confirmed by independent sur

Case Syllabus (G.R. No. 147079)

Procedural History and Nature of the Petition

The case involves a petition for certiorari filed by A.F. Sanchez Brokerage, Inc. (Sanchez Brokerage) before the Supreme Court to challenge the August 10, 2000 decision of the Court of Appeals.
The Court of Appeals had reversed the dismissal by Branch 133, Regional Trial Court (RTC) of Makati City, Civil Case No. 93-76B, which had dismissed the complaint of FGU Insurance Corporation (FGU Insurance) against Sanchez Brokerage.
The Supreme Court examined the propriety of classifying Sanchez Brokerage as a common carrier under Article 1732 of the Civil Code and whether the appellate court’s ruling involved grave abuse of discretion warranting certiorari.
The Supreme Court ruled that the proper remedy was a petition for review on certiorari, not a petition for certiorari, because the issue involved evaluation of evidence and factual findings, not jurisdictional error.
It was further held that the appellate court’s decision had become final and executory due to the petitioner’s failure to timely appeal the denial of its motion for reconsideration.

Factual Background of the Shipment and Insurance

On July 8, 1992, Wyeth-Pharma GMBH shipped oral contraceptives via KLM Royal Dutch Airlines from Dusseldorf, Germany to Manila addressed to Wyeth-Suaco Laboratories, Inc.
The shipment consisted of 86,800 blisters of Femenal tablets, 14,000 blisters of Nordiol tablets, and 42,000 blisters of Trinordiol tablets, packed in multiple cartons and containers, including an aluminum LD3 container and pallets.
Wyeth-Suaco insured the shipment with FGU Insurance under Marine Risk Note No. 4995 as part of a Marine Open Policy.
Upon arrival at Ninoy Aquino International Airport (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.
Sanchez Brokerage, serving as the licensed customs broker since 1984 for Wyeth-Suaco, was engaged to facilitate customs duties payment, storage fees, and delivery of the cargo.

Customs Brokerage Services and Delivery Process

Representatives of Sanchez Brokerage, including Mitzi Morales and Ernesto Mendoza, paid the storage fee to PSI on July 29, 1992, for which they received an official receipt.
Another representative, M. Sison, acknowledged receipt of the cargo consisting of three pieces in good condition at that time.
Wyeth-Suaco cargo, being a regular importer, was not inspected by customs examiners and was stripped from the aluminum containers.
The goods were then loaded inside two transport vehicles hired by Sanchez Brokerage for delivery.
Employees from Elite Adjusters and Surveyors Inc., a survey and insurance adjustment firm engaged by Wyeth-Suaco for FGU Insurance, witnessed the release.
The cargo was delivered to Hizon Laboratories, Inc. in Antipolo City for quality control inspection, as confirmed by delivery receipt dated July 29, 1992.

Discovery of Cargo Damage and Initial Findings

On July 31, 1992, a Wyeth-Suaco representative acknowledged delivery but noted that 44 cartons of the Femenal and Nordiol tablets were in bad order.
A survey report signed by both Wyeth-Suaco and Elite Surveyors representatives indicated 41 cartons of Femenal and 3 cartons of Nordiol tablets were wet.
Elite Surveyors issued a certificate confirming