G.R. No.

162467 May 8, 2009

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. Petitioner,
vs.
PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC., Respondent.
DECISION
TINGA, J.:

Before us is a petition for review on certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure of the 29 October 2003 2 Decision of the Court of
Appeals and the 26 February 2004 Resolution3 of the same court denying petitioner’s motion for reconsideration.

The facts of the case are not disputed.

Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao Terminal and Brokerage Service, Inc. (Mindanao Terminal), a stevedoring
company, to load and stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202 cartons of fresh pineapples belonging to
Del Monte Fresh Produce International, Inc. (Del Monte Produce) into the cargo hold of the vessel M/V Mistrau. The vessel was docked at the port
of Davao City and the goods were to be transported by it to the port of Inchon, Korea in favor of consignee Taegu Industries, Inc. Del Monte
Produce insured the shipment under an "open cargo policy" with private respondent Phoenix Assurance Company of New York (Phoenix), a non-life
insurance company, and private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix. 4

Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from the port of Davao City and arrived at the port
of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad condition. The Marine Cargo Damage Surveyor of Incok
Loss and Average Adjuster of Korea, through its representative Byeong Yong Ahn (Byeong), surveyed the extent of the damage of the shipment. In
a survey report, it was stated that 16,069 cartons of the banana shipment and 2,185 cartons of the pineapple shipment were so damaged that they
no longer had commercial value.5

Del Monte Produce filed a claim under the open cargo policy for the damages to its shipment. McGee’s Marine Claims Insurance Adjuster evaluated
the claim and recommended that payment in the amount of $210,266.43 be made. A check for the recommended amount was sent to Del Monte
Produce; the latter then issued a subrogation receipt6 to Phoenix and McGee.

Phoenix and McGee instituted an action for damages 7 against Mindanao Terminal in the Regional Trial Court (RTC) of Davao City, Branch 12. After
trial, the RTC,8 in a decision dated 20 October 1999, held that the only participation of Mindanao Terminal was to load the cargoes on board
the M/V Mistrau under the direction and supervision of the ship’s officers, who would not have accepted the cargoes on board the vessel and
signed the foreman’s report unless they were properly arranged and tightly secured to withstand voyage across the open seas. Accordingly,
Mindanao Terminal cannot be held liable for whatever happened to the cargoes after it had loaded and stowed them. Moreover, citing the survey
report, it was found by the RTC that the cargoes were damaged on account of a typhoon which M/V Mistrau had encountered during the voyage. It
was further held that Phoenix and McGee had no cause of action against Mindanao Terminal because the latter, whose services were contracted by
Del Monte, a distinct corporation from Del Monte Produce, had no contract with the assured Del Monte Produce. The RTC dismissed the complaint
and awarded the counterclaim of Mindanao Terminal in the amount of ₱83,945.80 as actual damages and ₱100,000.00 as attorney’s fees.9 The
actual damages were awarded as reimbursement for the expenses incurred by Mindanao Terminal’s lawyer in attending the hearings in the case
wherein he had to travel all the way from Metro Manila to Davao City.

Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed and set aside 10 the decision of the RTC in its 29 October 2003
decision. The same court ordered Mindanao Terminal to pay Phoenix and McGee "the total amount of $210,265.45 plus legal interest from the
filing of the complaint until fully paid and attorney’s fees of 20% of the claim." 11 It sustained Phoenix’s and McGee’s argument that the damage in
the cargoes was the result of improper stowage by Mindanao Terminal. It imposed on Mindanao Terminal, as the stevedore of the cargo, the duty
to exercise extraordinary diligence in loading and stowing the cargoes. It further held that even with the absence of a contractual relationship
between Mindanao Terminal and Del Monte Produce, the cause of action of Phoenix and McGee could be based on quasi-delict under Article 2176
of the Civil Code.12

Mindanao Terminal filed a motion for reconsideration,13 which the Court of Appeals denied in its 26 February 200414 resolution. Hence, the present
petition for review.

Mindanao Terminal raises two issues in the case at bar, namely: whether it was careless and negligent in the loading and stowage of the cargoes
onboard M/V Mistrau making it liable for damages; and, whether Phoenix and McGee has a cause of action against Mindanao Terminal under
Article 2176 of the Civil Code on quasi-delict. To resolve the petition, three questions have to be answered: first, whether Phoenix and McGee have
a cause of action against Mindanao Terminal; second, whether Mindanao Terminal, as a stevedoring company, is under obligation to observe the
same extraordinary degree of diligence in the conduct of its business as required by law for common carriers 15 and warehousemen;16 and third,
whether Mindanao Terminal observed the degree of diligence required by law of a stevedoring company.

We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against Mindanao Terminal, from which the present case has
arisen, states a cause of action. The present action is based on quasi-delict, arising from the negligent and careless loading and stowing of the
cargoes belonging to Del Monte Produce. Even assuming that both Phoenix and McGee have only been subrogated in the rights of Del Monte
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Produce, who is not a party to the contract of service between Mindanao Terminal and Del Monte, still the insurance carriers may have a cause of
action in light of the Court’s consistent ruling that the act that breaks the contract may be also a tort. 17In fine, a liability for tort may arise even
under a contract, where tort is that which breaches the contract18 . In the present case, Phoenix and McGee are not suing for damages for injuries
arising from the breach of the contract of service but from the alleged negligent manner by which Mindanao Terminal handled the cargoes
belonging to Del Monte Produce. Despite the absence of contractual relationship between Del Monte Produce and Mindanao Terminal, the
allegation of negligence on the part of the defendant should be sufficient to establish a cause of action arising from quasi-delict.19

The resolution of the two remaining issues is determinative of the ultimate result of this case.

Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of diligence which is to be observed in the
performance of an obligation then that which is expected of a good father of a family or ordinary diligence shall be required. Mindanao Terminal, a
stevedoring company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely
as a labor provider in the case at bar. There is no specific provision of law that imposes a higher degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with the loading and stowing of cargoes. It was neither alleged nor proven by Phoenix and McGee
that Mindanao Terminal was bound by contractual stipulation to observe a higher degree of diligence than that required of a good father of a
family. We therefore conclude that following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading and
stowing the cargoes of Del Monte Produce aboard M/V Mistrau.

imposing a higher degree of diligence,21 on Mindanao Terminal in loading and stowing the cargoes. The case ofSumma Insurance Corporation v. CA,
which involved the issue of whether an arrastre operator is legally liable for the loss of a shipment in its custody and the extent of its liability, is
inapplicable to the factual circumstances of the case at bar. Therein, a vessel owned by the National Galleon Shipping Corporation (NGSC) arrived
at Pier 3, South Harbor, Manila, carrying a shipment consigned to the order of Caterpillar Far East Ltd. with Semirara Coal Corporation (Semirara) as
"notify party." The shipment, including a bundle of PC 8 U blades, was discharged from the vessel to the custody of the private respondent, the
exclusive arrastre operator at the South Harbor. Accordingly, three good-order cargo receipts were issued by NGSC, duly signed by the ship's
checker and a representative of private respondent. When Semirara inspected the shipment at house, it discovered that the bundle of PC8U blades
was missing. From those facts, the Court observed:

x x x The relationship therefore between the consignee and the arrastre operator must be examined. This relationship is much akin to that existing
between the consignee or owner of shipped goods and the common carrier, or that between a depositor and a warehouseman [22 ]. In the
performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a
warehouseman as enunciated under Article 1733 of the Civil Code and Section 3(b) of the Warehouse Receipts Law, respectively. Being the
custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party
entitled to their possession. (Emphasis supplied)23

There is a distinction between an arrastre and a stevedore.24 Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling
of cargo on the wharf or between the establishment of the consignee or shipper and the ship's tackle. The responsibility of the arrastre operator
lasts until the delivery of the cargo to the consignee. The service is usually performed by longshoremen. On the other hand, stevedoring refers to
the handling of the cargo in the holds of the vessel or between the ship's tackle and the holds of the vessel. The responsibility of the stevedore
ends upon the loading and stowing of the cargo in the vessel.1avvphi1

It is not disputed that Mindanao Terminal was performing purely stevedoring function while the private respondent in the Summa case was
performing arrastre function. In the present case, Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the
cargoes from the pier to the ship’s cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore is not a common
carrier for it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for profit. The loading and
stowing of cargoes would not have a far reaching public ramification as that of a common carrier and a warehouseman; the public is adequately
protected by our laws on contract and on quasi-delict. The public policy considerations in legally imposing upon a common carrier or a
warehouseman a higher degree of diligence is not present in a stevedoring outfit which mainly provides labor in loading and stowing of cargoes for
its clients.

In the third issue, Phoenix and McGee failed to prove by preponderance of evidence25 that Mindanao Terminal had acted negligently. Where the
evidence on an issue of fact is in equipoise or there is any doubt on which side the evidence preponderates the party having the burden of proof
fails upon that issue. That is to say, if the evidence touching a disputed fact is equally balanced, or if it does not produce a just, rational belief of its
existence, or if it leaves the mind in a state of perplexity, the party holding the affirmative as to such fact must fail.261avvphi1

We adopt the findings27 of the RTC,28 which are not disputed by Phoenix and McGee. The Court of Appeals did not make any new findings of fact
when it reversed the decision of the trial court. The only participation of Mindanao Terminal was to load the cargoes on board M/V Mistrau.29 It
was not disputed by Phoenix and McGee that the materials, such as ropes, pallets, and cardboards, used in lashing and rigging the cargoes were all
provided by M/V Mistrau and these materials meets industry standard.30

It was further established that Mindanao Terminal loaded and stowed the cargoes of Del Monte Produce aboard the M/V Mistrau in accordance
with the stowage plan, a guide for the area assignments of the goods in the vessel’s hold, prepared by Del Monte Produce and the officers of M/V
Mistrau.31 The loading and stowing was done under the direction and supervision of the ship officers. The vessel’s officer would order the closing of

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the hatches only if the loading was done correctly after a final inspection. 32 The said ship officers would not have accepted the cargoes on board
the vessel if they were not properly arranged and tightly secured to withstand the voyage in open seas. They would order the stevedore to rectify
any error in its loading and stowing. A foreman’s report, as proof of work done on board the vessel, was prepared by the checkers of Mindanao
Terminal and concurred in by the Chief Officer of M/V Mistrau after they were satisfied that the cargoes were properly loaded.33

Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn 34 and on the survey report35 of the damage to the cargoes. Byeong,
whose testimony was refreshed by the survey report,36 found that the cause of the damage was improper stowage37 due to the manner the
cargoes were arranged such that there were no spaces between cartons, the use of cardboards as support system, and the use of small rope to tie
the cartons together but not by the negligent conduct of Mindanao Terminal in loading and stowing the cargoes. As admitted by Phoenix and
McGee in their Comment38 before us, the latter is merely a stevedoring company which was tasked by Del Monte to load and stow the shipments
of fresh banana and pineapple of Del Monte Produce aboard the M/V Mistrau. How and where it should load and stow a shipment in a vessel is
wholly dependent on the shipper and the officers of the vessel. In other words, the work of the stevedore was under the supervision of the shipper
and officers of the vessel. Even the materials used for stowage, such as ropes, pallets, and cardboards, are provided for by the vessel. Even the
survey report found that it was because of the boisterous stormy weather due to the typhoon Seth, as encountered by M/V Mistrau during its
voyage, which caused the shipments in the cargo hold to collapse, shift and bruise in extensive extent. 39 Even the deposition of Byeong was not
supported by the conclusion in the survey report that:

CAUSE OF DAMAGE

xxx

From the above facts and our survey results, we are of the opinion that damage occurred aboard the carrying vessel during sea transit, being
caused by ship’s heavy rolling and pitching under boisterous weather while proceeding from 1600 hrs on 7th October to 0700 hrs on 12th October,
1994 as described in the sea protest.40

As it is clear that Mindanao Terminal had duly exercised the required degree of diligence in loading and stowing the cargoes, which is the ordinary
diligence of a good father of a family, the grant of the petition is in order.

However, the Court finds no basis for the award of attorney’s fees in favor of petitioner.lawphil.net None of the circumstances enumerated in
Article 2208 of the Civil Code exists. The present case is clearly not an unfounded civil action against the plaintiff as there is no showing that it was
instituted for the mere purpose of vexation or injury. It is not sound public policy to set a premium to the right to litigate where such right is
exercised in good faith, even if erroneously. 41 Likewise, the RTC erred in awarding ₱83,945.80 actual damages to Mindanao Terminal. Although
actual expenses were incurred by Mindanao Terminal in relation to the trial of this case in Davao City, the lawyer of Mindanao Terminal incurred
expenses for plane fare, hotel accommodations and food, as well as other miscellaneous expenses, as he attended the trials coming all the way
from Manila. But there is no showing that Phoenix and McGee made a false claim against Mindanao Terminal resulting in the protracted trial of the
case necessitating the incurrence of expenditures.42

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 66121 is SET ASIDE and the decision of the Regional
Trial Court of Davao City, Branch 12 in Civil Case No. 25,311.97 is herebyREINSTATED MINUS the awards of ₱100,000.00 as attorney’s fees and
₱83,945.80 as actual damages.

SO ORDERED.
G.R. No. 157481 January 24, 2006
LOADSTAR SHIPPING CO., INC., Petitioner,
vs.
PIONEER ASIA INSURANCE CORP., Respondent.
DECISION
QUISUMBING, J.:

For review on certiorari are (1) the Decision1 dated October 15, 2002 and (2) the Resolution2 dated February 27, 2003, of the Court of Appeals in
CA-G.R. CV No. 40999, which affirmed with modification the Decision3 dated February 15, 1993 of the Regional Trial Court of Manila, Branch 8 in
Civil Case No. 86-37957.

The pertinent facts are as follows:

Petitioner Loadstar Shipping Co., Inc. (Loadstar for brevity) is the registered owner and operator of the vessel M/V Weasel. It holds office at 1294
Romualdez St., Paco, Manila.

On June 6, 1984, Loadstar entered into a voyage-charter with Northern Mindanao Transport Company, Inc. for the carriage of 65,000 bags of
cement from Iligan City to Manila. The shipper was Iligan Cement Corporation, while the consignee in Manila was Market Developers, Inc.

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On June 24, 1984, 67,500 bags of cement were loaded on board M/V Weasel and stowed in the cargo holds for delivery to the consignee. The
shipment was covered by petitioner’s Bill of Lading4 dated June 23, 1984.

Prior to the voyage, the consignee insured the shipment of cement with respondent Pioneer Asia Insurance Corporation for P1,400,000, for which
respondent issued Marine Open Policy No. MOP-006 dated September 17, 1980, covering all shipments made on or after September 30, 1980.5

At 12:50 in the afternoon of June 24, 1984, M/V Weasel left Iligan City for Manila in good weather. However, at 4:31 in the morning of June 25,
1984, Captain Vicente C. Montera, master of M/V Weasel, ordered the vessel to be forced aground. Consequently, the entire shipment of cement
was good as gone due to exposure to sea water. Petitioner thus failed to deliver the goods to the consignee in Manila.

The consignee demanded from petitioner full reimbursement of the cost of the lost shipment. Petitioner, however, refused to reimburse the
consignee despite repeated demands.

Nonetheless, on March 11, 1985, respondent insurance company paid the consignee P1,400,000 plus an additional amount of P500,000, the value
of the lost shipment of cement. In return, the consignee executed a Loss and Subrogation Receipt in favor of respondent concerning the latter’s
subrogation rights against petitioner.

Hence, on October 15, 1986, respondent filed a complaint docketed as Civil Case No. 86-37957, against petitioner with the Regional Trial Court of
Manila, Branch 8. It alleged that: (1) the M/V Weasel was not seaworthy at the commencement of the voyage; (2) the weather and sea conditions
then prevailing were usual and expected for that time of the year and as such, was an ordinary peril of the voyage for which the M/V
Weasel should have been normally able to cope with; and (3) petitioner was negligent in the selection and supervision of its agents and employees
then manning the M/V Weasel.

In its Answer, petitioner alleged that no fault nor negligence could be attributed to it because it exercised due diligence to make the ship
seaworthy, as well as properly manned and equipped. Petitioner insisted that the failure to deliver the subject cargo to the consignee was due
to force majeure. Petitioner claimed it could not be held liable for an act or omission not directly attributable to it.

On February 15, 1993, the RTC rendered a Decision in favor of respondent, to wit:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff and against defendant Loadstar Shipping Co., Inc. ordering
the latter to pay as follows:

1. To pay plaintiff the sum of P1,900,000.00 with legal rate of interest per annum from date of complaint until fully paid;

2. To pay the sum equal to 25% of the claim as and for attorney’s fees and litigation expenses; and,

3. To pay the costs of suit.

IT IS SO ORDERED.6

The RTC reasoned that petitioner, as a common carrier, bears the burden of proving that it exercised extraordinary diligence in its vigilance over
the goods it transported. The trial court explained that in case of loss or destruction of the goods, a statutory presumption arises that the common
carrier was negligent unless it could prove that it had observed extraordinary diligence.

Petitioner’s defense of force majeure was found bereft of factual basis. The RTC called attention to the PAG-ASA report that at the time of the
incident, tropical storm "Asiang" had moved away from the Philippines. Further, records showed that the sea and weather conditions in the area of
Hinubaan, Negros Occidental from 8:00 p.m. of June 24, 1984 to 8:00 a.m. the next day were slight and smooth. Thus, the trial court concluded that
the cause of the loss was not tropical storm "Asiang" or any other force majeure, but gross negligence of petitioner.

Petitioner appealed to the Court of Appeals.

In its Decision dated October 15, 2002, the Court of Appeals affirmed the RTC Decision with modification that Loadstar shall only pay the sum of
10% of the total claim for attorney’s fees and litigation expenses. It ruled,

WHEREFORE, premises considered, the Decision dated February 15, 1993, of the Regional Trial Court of Manila, National Capital Judicial Region,
Branch 8, in Civil Case No. 86-37957 is hereby AFFIRMED with the MODIFICATION that the appellant shall only pay the sum of 10% of the total
claim as and for attorney’s fees and litigation expenses. Costs against the appellant.

SO ORDERED.7

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Petitioner’s Motion for Reconsideration was denied.8

The instant petition is anchored now on the following assignments of error:

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS A COMMON CARRIER UNDER ARTICLE 1732 OF THE CIVIL CODE.

II

ASSUMING ARGUENDO THAT PETITIONER IS A COMMON CARRIER, THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PROXIMATE CAUSE OF THE LOSS OF CARGO WAS NOT A FORTUITOUS EVENT BUT WAS ALLEGEDLY DUE TO THE FAILURE OF PETITIONER TO
EXERCISE EXTRAORDINARY DILIGENCE.

III

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD BY THE TRIAL COURT OF ATTORNEY’S FEES AND LITIGATION EXPENSES IN
FAVOR OF HEREIN RESPONDENT.9

On the first and second issues, petitioner contends that at the time of the voyage the carrier’s voyage-charter with the shipper converted it into a
private carrier. Thus, the presumption of negligence against common carriers could not apply. Petitioner further avers that the stipulation in the
voyage-charter holding it free from liability is valid and binds the respondent. In any event, petitioner insists that it had exercised extraordinary
diligence and that the proximate cause of the loss of the cargo was a fortuitous event.

With regard to the third issue, petitioner points out that the award of attorney’s fees and litigation expenses appeared only in the dispositive
portion of the RTC Decision with nary a justification. Petitioner maintains that the Court of Appeals thus erred in affirming the award.

For its part, respondent dismisses as factual issues the inquiry on (1) whether the loss of the cargo was due toforce majeure or due to petitioner’s
failure to exercise extraordinary diligence; and (2) whether respondent is entitled to recover attorney’s fees and expenses of litigation.

Respondent further counters that the Court of Appeals was correct when it held that petitioner was a common carrier despite the charter of the
whole vessel, since the charter was limited to the ship only.

Prefatorily, we stress that the finding of fact by the trial court, when affirmed by the Court of Appeals, is not reviewable by this Court in a petition
for review on certiorari. However, the conclusions derived from such factual finding are not necessarily pure issues of fact when they are
inextricably intertwined with the determination of a legal issue. In such instances, the conclusions made may be raised in a petition for review
before this Court.10

The threshold issues in this case are: (1) Given the circumstances of this case, is petitioner a common or a private carrier? and (2) In either case, did
petitioner exercise the required diligence i.e., the extraordinary diligence of a common carrier or the ordinary diligence of a private carrier?

Article 1732 of the Civil Code defines a "common carrier" as follows:

Article 1732. 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.

Petitioner is a corporation engaged in the business of transporting cargo by water and for compensation, offering its services indiscriminately to
the public. Thus, without doubt, it is a common carrier. However, petitioner entered into a voyage-charter with the Northern Mindanao Transport
Company, Inc. Now, had the voyage-charter converted petitioner into a private carrier?

We think not. The voyage-charter agreement between petitioner and Northern Mindanao Transport Company, Inc. did not in any way convert the
common carrier into a private carrier. We have already resolved this issue with finality in Planters Products, Inc. v. Court of Appeals11 where we
ruled that:

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the charter includes both
the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer.12

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Conformably, petitioner remains a common carrier notwithstanding the existence of the charter agreement with the Northern Mindanao Transport
Company, Inc. since the said charter is limited to the ship only and does not involve both the vessel and its crew. As elucidated in Planters Products,
its charter is only a voyage-charter, not a bareboat charter.

As a common carrier, petitioner is required to observe extraordinary diligence in the vigilance over the goods it transports. 13 When the goods
placed in its care are lost, petitioner is presumed to have been at fault or to have acted negligently. Petitioner therefore has the burden of proving
that it observed extraordinary diligence in order to avoid responsibility for the lost cargo.14

In Compania Maritima v. Court of Appeals,15 we said:

… it is incumbent upon the common carrier to prove that the loss, deterioration or destruction was due to accident or some other circumstances
inconsistent with its liability.

...

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 safe 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 stowage, including such methods as their nature requires." 16

Article 1734 enumerates the instances when a carrier might be exempt from liability for the loss of the goods. These are:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers; and

(5) Order or act of competent public authority.17

Petitioner claims that the loss of the goods was due to a fortuitous event under paragraph 1. Yet, its claim is not substantiated. On the contrary, we
find supported by evidence on record the conclusion of the trial court and the Court of Appeals that the loss of the entire shipment of cement was
due to the gross negligence of petitioner.

Records show that in the evening of June 24, 1984, the sea and weather conditions in the vicinity of Negros Occidental were calm. The records
reveal that petitioner took a shortcut route, instead of the usual route, which exposed the voyage to unexpected hazard. Petitioner has only itself
to blame for its misjudgment.

Petitioner heavily relies on Home Insurance Co. v. American Steamship Agencies, Inc.18 and Valenzuela Hardwood and Industrial Supply, Inc. v. Court
of Appeals.19 The said cases involved a private carrier, not a common carrier. Moreover, the issue in both cases is not the effect of a voyage-charter
on a common carrier, but the validity of a stipulation absolving the private carrier from liability in case of loss of the cargo attributable to the
negligence of the private carrier.

Lastly, on the third issue, we find consistent with law and prevailing jurisprudence the Court of Appeals’ award of attorney’s fees and expenses of
litigation equivalent to ten percent (10%) of the total claim. The contract between the parties in this case contained a stipulation that in case of
suit, attorney’s fees and expenses of litigation shall be limited to only ten percent (10%) of the total monetary award. Given the circumstances of
this case, we deem the said amount just and equitable.

WHEREFORE, the petition is DENIED. The assailed Decision dated October 15, 2002 and the Resolution dated February 27, 2003, of the Court of
Appeals in CA-G.R. CV No. 40999, are AFFIRMED.

Costs against petitioner.

SO ORDERED.

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 G.R. No. 179446 January 10, 2011
LOADMASTERS CUSTOMS SERVICES, INC., Petitioner,
vs.
GLODEL BROKERAGE CORPORATION and R&B INSURANCE CORPORATION, Respondents.
DECISION
MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the August 24, 2007 Decision1 of the Court of Appeals
(CA) in CA-G.R. CV No. 82822, entitled "R&B Insurance Corporation v. Glodel Brokerage Corporation and Loadmasters Customs Services, Inc.," which
held petitioner Loadmasters Customs Services, Inc. (Loadmasters) liable to respondent Glodel Brokerage Corporation (Glodel) in the amount of
₱1,896,789.62 representing the insurance indemnity which R&B Insurance Corporation (R&B Insurance) paid to the insured-consignee, Columbia
Wire and Cable Corporation (Columbia).

THE FACTS:

On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor of Columbia to insure the shipment of 132 bundles of
electric copper cathodes against All Risks. On August 28, 2001, the cargoes were shipped on board the vessel "Richard Rey" from Isabela, Leyte, to
Pier 10, North Harbor, Manila. They arrived on the same date.

Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the subsequent delivery to its
warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the cargoes to Columbia’s
warehouses/plants in Bulacan and Valenzuela City.

The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by its employed drivers and accompanied by its employed truck
helpers. Six (6) truckloads of copper cathodes were to be delivered to Balagtas, Bulacan, while the other six (6) truckloads were destined for
Lawang Bato, Valenzuela City. The cargoes in six truckloads for Lawang Bato were duly delivered in Columbia’s warehouses there. Of the six (6)
trucks en route to Balagtas, Bulacan, however, only five (5) reached the destination. One (1) truck, loaded with 11 bundles or 232 pieces of copper
cathodes, failed to deliver its cargo.

Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the copper cathodes. Because of this incident, Columbia filed
with R&B Insurance a claim for insurance indemnity in the amount of ₱1,903,335.39. After the requisite investigation and adjustment, R&B
Insurance paid Columbia the amount of ₱1,896,789.62 as insurance indemnity.

R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the Regional Trial Court, Branch 14, Manila
(RTC), docketed as Civil Case No. 02-103040. It sought reimbursement of the amount it had paid to Columbia for the loss of the subject cargo. It
claimed that it had been subrogated "to the right of the consignee to recover from the party/parties who may be held legally liable for the loss."2

On November 19, 2003, the RTC rendered a decision3 holding Glodel liable for damages for the loss of the subject cargo and dismissing
Loadmasters’ counterclaim for damages and attorney’s fees against R&B Insurance. The dispositive portion of the decision reads:

WHEREFORE, all premises considered, the plaintiff having established by preponderance of evidence its claims against defendant Glodel Brokerage
Corporation, judgment is hereby rendered ordering the latter:

1. To pay plaintiff R&B Insurance Corporation the sum of ₱1,896,789.62 as actual and compensatory damages, with interest from the
date of complaint until fully paid;

2. To pay plaintiff R&B Insurance Corporation the amount equivalent to 10% of the principal amount recovered as and for attorney’s fees
plus ₱1,500.00 per appearance in Court;

3. To pay plaintiff R&B Insurance Corporation the sum of ₱22,427.18 as litigation expenses.

WHEREAS, the defendant Loadmasters Customs Services, Inc.’s counterclaim for damages and attorney’s fees against plaintiff are hereby
dismissed.

With costs against defendant Glodel Brokerage Corporation.

SO ORDERED.4

Both R&B Insurance and Glodel appealed the RTC decision to the CA.

7|Page
On August 24, 2007, the CA rendered the assailed decision which reads in part:

Considering that appellee is an agent of appellant Glodel, whatever liability the latter owes to appellant R&B Insurance Corporation as insurance
indemnity must likewise be the amount it shall be paid by appellee Loadmasters.

WHEREFORE, the foregoing considered, the appeal is PARTLY GRANTED in that the appellee Loadmasters is likewise held liable to appellant Glodel
in the amount of ₱1,896,789.62 representing the insurance indemnity appellant Glodel has been held liable to appellant R&B Insurance
Corporation.

Appellant Glodel’s appeal to absolve it from any liability is herein DISMISSED.

SO ORDERED.5

Hence, Loadmasters filed the present petition for review on certiorari before this Court presenting the following

ISSUES

1. Can Petitioner Loadmasters be held liable to Respondent Glodel in spite of the fact that the latter respondent Glodel did not file a
cross-claim against it (Loadmasters)?

2. Under the set of facts established and undisputed in the case, can petitioner Loadmasters be legally considered as an Agent of
respondent Glodel?6

To totally exculpate itself from responsibility for the lost goods, Loadmasters argues that it cannot be considered an agent of Glodel because it
never represented the latter in its dealings with the consignee. At any rate, it further contends that Glodel has no recourse against it for its
(Glodel’s) failure to file a cross-claim pursuant to Section 2, Rule 9 of the 1997 Rules of Civil Procedure.

Glodel, in its Comment,7 counters that Loadmasters is liable to it under its cross-claim because the latter was grossly negligent in the transportation
of the subject cargo. With respect to Loadmasters’ claim that it is already estopped from filing a cross-claim, Glodel insists that it can still do so
even for the first time on appeal because there is no rule that provides otherwise. Finally, Glodel argues that its relationship with Loadmasters is
that of Charter wherein the transporter (Loadmasters) is only hired for the specific job of delivering the merchandise. Thus, the diligence required
in this case is merely ordinary diligence or that of a good father of the family, not the extraordinary diligence required of common carriers.

R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-claim against Loadmasters because it was not prevented from
presenting evidence to prove its position even without amending its Answer. As to the relationship between Loadmasters and Glodel, it contends
that a contract of agency existed between the two corporations.8

Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right, so that he who is substituted
succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities.9 Doubtless, R&B Insurance is subrogated to the
rights of the insured to the extent of the amount it paid the consignee under the marine insurance, as provided under Article 2207 of the Civil
Code, which reads:

ART. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out
of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrong-doer
or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved
party shall be entitled to recover the deficiency from the person causing the loss or injury.

As subrogee of the rights and interest of the consignee, R&B Insurance has the right to seek reimbursement from either Loadmasters or Glodel or
both for breach of contract and/or tort.

The issue now is who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of the indemnity it paid Columbia.

At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are common carriers to determine their liability for the loss of the
subject cargo. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of
carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public.

Based on the aforecited definition, Loadmasters is a common carrier because it is engaged in the business of transporting goods by land, through
its trucking service. It is a common carrier as distinguished from a private carrier wherein the carriage is generally undertaken by special agreement
and it does not hold itself out to carry goods for the general public.10 The distinction is significant in the sense that "the rights and obligations of the
parties to a contract of private carriage are governed principally by their stipulations, not by the law on common carriers."11
8|Page
In the present case, there is no indication that the undertaking in the contract between Loadmasters and Glodel was private in character. There is
no showing that Loadmasters solely and exclusively rendered services to Glodel.

In fact, Loadmasters admitted that it is a common carrier.12

In the same vein, Glodel is also considered a common carrier within the context of Article 1732. In its Memorandum, 13 it states that it "is a
corporation duly organized and existing under the laws of the Republic of the Philippines and is engaged in the business of customs brokering." It
cannot be considered otherwise because as held by this Court in Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc.,14 a customs
broker is also regarded as a common carrier, the transportation of goods being an integral part of its business.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of public policy, to observe
the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such case, as required by
Article 1733 of the Civil Code. When the Court speaks of extraordinary diligence, it is that extreme measure of care and caution which persons of
unusual prudence and circumspection observe for securing and preserving their own property or rights.15 This exacting standard imposed on
common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier
once the goods have been lodged for shipment. 16 Thus, in case of loss of the goods, the common carrier is presumed to have been at fault or to
have acted negligently.17This presumption of fault or negligence, however, may be rebutted by proof that the common carrier has observed
extraordinary diligence over the goods.

With respect to the time frame of this extraordinary responsibility, the Civil Code provides that the exercise of extraordinary diligence lasts from
the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. 18

Premises considered, the Court is of the view that both Loadmasters and Glodel are jointly and severally liable to R & B Insurance for the loss of the
subject cargo. Under Article 2194 of the New Civil Code, "the responsibility of two or more persons who are liable for a quasi-delict is solidary."

Loadmasters’ claim that it was never privy to the contract entered into by Glodel with the consignee Columbia or R&B Insurance as subrogee, is not
a valid defense. It may not have a direct contractual relation with Columbia, but it is liable for tort under the provisions of Article 2176 of the Civil
Code on quasi-delicts which expressly provide:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of
this Chapter.

Pertinent is the ruling enunciated in the case of Mindanao Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New York,/McGee
& Co., Inc.19 where this Court held that a tort may arise despite the absence of a contractual relationship, to wit:

We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against Mindanao Terminal, from which the present case has
arisen, states a cause of action. The present action is based on quasi-delict, arising from the negligent and careless loading and stowing of the
cargoes belonging to Del Monte Produce. Even assuming that both Phoenix and McGee have only been subrogated in the rights of Del Monte
Produce, who is not a party to the contract of service between Mindanao Terminal and Del Monte, still the insurance carriers may have a cause of
action in light of the Court’s consistent ruling that the act that breaks the contract may be also a tort.In fine, a liability for tort may arise even
under a contract, where tort is that which breaches the contract. In the present case, Phoenix and McGee are not suing for damages for injuries
arising from the breach of the contract of service but from the alleged negligent manner by which Mindanao Terminal handled the cargoes
belonging to Del Monte Produce. Despite the absence of contractual relationship between Del Monte Produce and Mindanao Terminal, the
allegation of negligence on the part of the defendant should be sufficient to establish a cause of action arising from quasi-delict. [Emphases
supplied]

In connection therewith, Article 2180 provides:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom
one is responsible.

xxxx

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.

It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver and helper) were instrumental
in the hijacking or robbery of the shipment. As employer, Loadmasters should be made answerable for the damages caused by its employees who
acted within the scope of their assigned task of delivering the goods safely to the warehouse.
9|Page
Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed
to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.20 To avoid liability
for a quasi-delict committed by its employee, an employer must overcome the presumption by presenting convincing proof that he exercised the
care and diligence of a good father of a family in the selection and supervision of his employee.21 In this regard, Loadmasters failed.

Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters would fully comply with the
undertaking to safely transport the subject cargo to the designated destination. It should have been more prudent in entrusting the goods to
Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in delivering the cargoes. Glodel should,
therefore, be held liable with Loadmasters. Its defense of force majeure is unavailing.

At this juncture, the Court clarifies that there exists no principal-agent relationship between Glodel and Loadmasters, as erroneously found by the
CA. Article 1868 of the Civil Code provides: "By the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter." The elements of a contract of agency are: (1) consent, express
or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts
as a representative and not for himself; (4) the agent acts within the scope of his authority.22

Accordingly, there can be no contract of agency between the parties. Loadmasters never represented Glodel. Neither was it ever authorized to
make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for and on behalf of the principal on
matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. On the part
of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the
agent, there must be an intention to accept the appointment and act on it.23 Such mutual intent is not obtaining in this case.

What then is the extent of the respective liabilities of Loadmasters and Glodel? Each wrongdoer is liable for the total damage suffered by R&B
Insurance. Where there are several causes for the resulting damages, a party is not relieved from liability, even partially. It is sufficient that the
negligence of a party is an efficient cause without which the damage would not have resulted. It is no defense to one of the concurrent tortfeasors
that the damage would not have resulted from his negligence alone, without the negligence or wrongful acts of the other concurrent tortfeasor. As
stated in the case of Far Eastern Shipping v. Court of Appeals,24

X x x. Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have happened,
the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons although under the
circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the injured person was not the
same. No actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as though his acts were the sole cause of the injury.

There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage. Where the
concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination the direct and
proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of
them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint
tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the Civil Code. [Emphasis supplied]

The Court now resolves the issue of whether Glodel can collect from Loadmasters, it having failed to file a cross-claim against the latter.1avvphi1

Undoubtedly, Glodel has a definite cause of action against Loadmasters for breach of contract of service as the latter is primarily liable for the loss
of the subject cargo. In this case, however, it cannot succeed in seeking judicial sanction against Loadmasters because the records disclose that it
did not properly interpose a cross-claim against the latter. Glodel did not even pray that Loadmasters be liable for any and all claims that it may be
adjudged liable in favor of R&B Insurance. Under the Rules, a compulsory counterclaim, or a cross-claim, not set up shall be barred.25 Thus, a cross-
claim cannot be set up for the first time on appeal.

For the consequence, Glodel has no one to blame but itself. The Court cannot come to its aid on equitable grounds. "Equity, which has been aptly
described as ‘a justice outside legality,’ is applied only in the absence of, and never against, statutory law or judicial rules of procedure."26 The
Court cannot be a lawyer and take the cudgels for a party who has been at fault or negligent.

WHEREFORE, the petition is PARTIALLY GRANTED. The August 24, 2007 Decision of the Court of Appeals isMODIFIED to read as follows:

WHEREFORE, judgment is rendered declaring petitioner Loadmasters Customs Services, Inc. and respondent Glodel Brokerage Corporation jointly
and severally liable to respondent R&B Insurance Corporation for the insurance indemnity it paid to consignee Columbia Wire & Cable Corporation
and ordering both parties to pay, jointly and severally, R&B Insurance Corporation a] the amount of ₱1,896,789.62 representing the insurance
indemnity; b] the amount equivalent to ten (10%) percent thereof for attorney’s fees; and c] the amount of ₱22,427.18 for litigation expenses.

The cross-claim belatedly prayed for by respondent Glodel Brokerage Corporation against petitioner Loadmasters Customs Services, Inc. is DENIED.

10 | P a g e
SO ORDERED.
G.R. No. 194121
TORRES-MADRID BROKERAGE, INC., Petitioner
vs.
FEB MITSUI MARINE INSURANCE CO., INC. and BENJAMIN P. MANALAST AS, doing business under the name of BMT TRUCKING SERVICES,
Respondents
DECISION
BRION, J.:

We resolve the petition for review on certiorari challenging the Court of Appeals' (CA) October 14, 2010 decision in CA-G.R. CV No. 91829.1

The CA affirmed the Regional Trial Court's (RTC) decision in Civil Case No. 01-1596, and found petitioner Torres-Madrid Brokerage, Inc. (TMBI) and
respondent Benjamin P. Manalastas jointly and solidarily liable to respondent FEB Mitsui Marine Insurance Co., Inc. (Mitsui) for damages from the
loss of transported cargo.

Antecedents

On October 7, 2000, a shipment of various electronic goods from Thailand and Malaysia arrived at the Port of Manila for Sony Philippines,
Inc. (Sony). Previous to the arrival, Sony had engaged the services of TMBI tofacilitate, process, withdraw, and deliver the shipment from the port to
its warehouse in Biñan, Laguna.2

TMBI – who did not own any delivery trucks – subcontracted the services of Benjamin Manalastas’ company, BMT Trucking Services (BMT), to
transport the shipment from the port to the Biñan warehouse. 3 Incidentally, TMBI notified Sony who had no objections to the arrangement.4

Four BMT trucks picked up the shipment from the port at about 11:00 a.m. of October 7, 2000. However, BMT could not immediately undertake
the delivery because of the truck ban and because the following day was a Sunday. Thus, BMT scheduled the delivery on October 9, 2000.

In the early morning of October 9, 2000, the four trucks left BMT’s garage for Laguna.5 However, only three trucks arrived at Sony’s Biñan
warehouse.

At around 12:00 noon, the truck driven by Rufo Reynaldo Lapesura (NSF-391) was found abandoned along the Diversion Road in Filinvest, Alabang,
Muntinlupa City.6 Both the driver and the shipment were missing.

Later that evening, BMT’s Operations Manager Melchor Manalastas informed Victor Torres, TMBI’s General Manager, of the development. 7 They
went to Muntinlupa together to inspect the truck and to report the matter to the police.8

Victor Torres also filed a complaint with the National Bureau of Investigation (NBI) against Lapesura for "hijacking."9 The complaint resulted in a
recommendation by the NBI to the Manila City Prosecutor’s Office to prosecute Lapesura for qualified theft. 10

TMBI notified Sony of the loss through a letter dated October 10, 2000.11 It also sent BMT a letter dated March 29, 2001, demanding payment for
the lost shipment. BMT refused to pay, insisting that the goods were "hijacked."

In the meantime, Sony filed an insurance claim with the Mitsui, the insurer of the goods. After evaluating the merits of the claim, Mitsui paid
Sony PHP7,293,386.23 corresponding to the value of the lost goods.12

After being subrogated to Sony’s rights, Mitsui sent TMBI a demand letter dated August 30, 2001 for payment of the lost goods. TMBI refused to
pay Mitsui’s claim. As a result, Mitsui filed a complaint against TMBI on November 6, 2001,

TMBI, in turn, impleaded Benjamin Manalastas, the proprietor of BMT, as a third-party defendant. TMBI alleged that BMT’s driver, Lapesura, was
responsible for the theft/hijacking of the lost cargo and claimed BMT’s negligence as the proximate cause of the loss. TMBI prayed that in the event
it is held liable to Mitsui for the loss, it should be reimbursed by BMT.

At the trial, it was revealed that BMT and TMBI have been doing business with each other since the early 80’s. It also came out that there had been
a previous hijacking incident involving Sony’s cargo in 1997, but neither Sony nor its insurer filed a complaint against BMT or TMBI.13

On August 5, 2008, the RTC found TMBI and Benjamin Manalastas jointly and solidarily liable to pay Mitsui PHP 7,293,386.23 as actual damages,
attorney’s fees equivalent to 25% of the amount claimed, and the costs of the suit. 14 The RTC held that TMBI and Manalastas were common
carriers and had acted negligently.

Both TMBI and BMT appealed the RTC’s verdict.

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TMBI denied that it was a common carrier required to exercise extraordinary diligence. It maintains that it exercised the diligence of a good father
of a family and should be absolved of liability because the truck was "hijacked" and this was a fortuitous event.

BMT claimed that it had exercised extraordinary diligence over the lost shipment, and argued as well that the loss resulted from a fortuitous event.

On October 14, 2010, the CA affirmed the RTC’s decision but reduced the award of attorney’s fees to PHP 200,000.

The CA held: (1) that "hijacking" is not necessarily a fortuitous event because the term refers to the general stealing of cargo during transit;15 (2)
that TMBI is a common carrier engaged in the business of transporting goods for the general public for a fee; 16 (3) even if the "hijacking" were a
fortuitous event, TMBI’s failure to observe extraordinary diligence in overseeing the cargo and adopting security measures rendered it liable for the
loss;17and (4) even if TMBI had not been negligent in the handling, transport and the delivery of the shipment, TMBI still breached its contractual
obligation to Sony when it failed to deliver the shipment.18

TMBI disagreed with the CA’s ruling and filed the present petition on December 3, 2010.

The Arguments

TMBI’s Petition

TMBI insists that the hijacking of the truck was a fortuitous event. It contests the CA’s finding that neither force nor intimidation was used in the
taking of the cargo. Considering Lapesura was never found, the Court should not discount the possibility that he was a victim rather than a
perpetrator.19

TMBI denies being a common carrier because it does not own a single truck to transport its shipment and it does not offer transport services to the
public for compensation.20 It emphasizes that Sony knew TMBI did not have its own vehicles and would subcontract the delivery to a third-party.

Further, TMBI now insists that the service it offered was limited to the processing of paperwork attendant to the entry of Sony’s goods. It denies
that delivery of the shipment was a part of its obligation.21

TMBI solely blames BMT as it had full control and custody of the cargo when it was lost. 22 BMT, as a common carrier, is presumed negligent and
should be responsible for the loss.

BMT’s Comment

BMT insists that it observed the required standard of care.23 Like the petitioner, BMT maintains that the hijacking was a fortuitous event – a force
majeure – that exonerates it from liability.24 It points out that Lapesura has never been seen again and his fate remains a mystery. BMT likewise
argues that the loss of the cargo necessarily showed that the taking was with the use of force or intimidation. 25

If there was any attendant negligence, BMT points the finger on TMBI who failed to send a representative to accompany the shipment.26 BMT
further blamed TMBI for the latter’s failure to adopt security measures to protect Sony’s cargo.27

Mitsui’s Comment

Mitsui counters that neither TMBI nor BMT alleged or proved during the trial that the taking of the cargo was accompanied with grave or
irresistible threat, violence, or force.28 Hence, the incident cannot be considered "force majeure" and TMBI remains liable for breach of contract.

Mitsui emphasizes that TMBI’s theory – that force or intimidation must have been used because Lapesura was never found – was only raised for
the first time before this Court.29 It also discredits the theory as a mere conjecture for lack of supporting evidence.

Mitsui adopts the CA’s reasons to conclude that TMBI is a common carrier. It also points out Victor Torres’ admission during the trial that TMBI’s
brokerage service includes the eventual delivery of the cargo to the consignee.30

Mitsui invokes as well the legal presumption of negligence against TMBI, pointing out that TMBI simply entrusted the cargo to BMT without
adopting any security measures despite: (1) a previous hijacking incident when TMBI lost Sony’s cargo; and (2) TMBI’s knowledge that the cargo
was worth more than 10 million pesos.31

Mitsui affirms that TMBI breached the contract of carriage through its negligent handling of the cargo, resulting in its loss.

The Court’s Ruling

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A brokerage may be considered a
common carrier if it also undertakes to
deliver the goods for its customers

Common carriers are persons, corporations, firms or associations engaged in the business of transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public. 32 By the nature of their business and for reasons of public policy, they are
bound to observe extraordinary diligence in the vigilance over the goods and in the safety of their passengers. 33

In A.F. Sanchez Brokerage Inc. v. Court of Appeals,34we held that a customs broker – whose principal business is the preparation of the correct
customs declaration and the proper shipping documents – is still considered a common carrier if it also undertakes to deliver the goods for its
customers. The law does not distinguish between one whose principal business activity is the carrying of goods and one who undertakes this task
only as an ancillary activity.35 This ruling has been reiterated in Schmitz Transport & Brokerage Corp. v. Transport Venture, Inc.,36 Loadmasters
Customs Services, Inc. v. Glodel Brokerage Corporation,37and Westwind Shipping Corporation v. UCPB General Insurance Co., Inc.38

Despite TMBI’s present denials, we find that the delivery of the goods is an integral, albeit ancillary, part of its brokerage services. TMBI admitted
that it was contracted to facilitate, process, and clear the shipments from the customs authorities, withdraw them from the pier, then transport
and deliver them to Sony’s warehouse in Laguna.39

Further, TMBI’s General Manager Victor Torres described the nature of its services as follows:

ATTY. VIRTUDAZO: Could you please tell the court what is the nature of the business of [TMBI]?

Witness MR. Victor Torres of Torres Madrid: We are engaged in customs brokerage business. We acquire the release documents from the Bureau
of Customs and eventually deliver the cargoes to the consignee’s warehouse and we are engaged in that kind of business, sir.40

That TMBI does not own trucks and has to subcontract the delivery of its clients’ goods, is immaterial. As long as an entity holds itself to the public
for the transport of goods as a business, it is considered a common carrier regardless of whether it owns the vehicle used or has to actually hire
one.41

Lastly, TMBI’s customs brokerage services – including the transport/delivery of the cargo – are available to anyone willing to pay its fees. Given
these circumstances, we find it undeniable that TMBI is a common carrier.

Consequently, TMBI should be held responsible for the loss, destruction, or deterioration of the goods it transports unless it results from:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act of omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority. 42

For all other cases - such as theft or robbery – a common carrier is presumed to have been at fault or to have acted negligently, unless it can prove
that it observed extraordinary diligence.43

Simply put, the theft or the robbery of the goods is not considered a fortuitous event or a force majeure. Nevertheless, a common carrier may
absolve itself of liability for a resulting loss: (1) if it proves that it exercisedextraordinary diligence in transporting and safekeeping the goods; 44 or
(2) if it stipulated with the shipper/owner of the goods to limit its liability for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence.45

However, a stipulation diminishing or dispensing with the common carrier’s liability for acts committed by thieves or robbers who do not act with
grave or irresistible threat, violence, or force is void under Article 1745 of the Civil Code for being contrary to public policy.46 Jurisprudence, too,
has expanded Article 1734’s five exemptions.De Guzman v. Court of Appeals47 interpreted Article 1745 to mean that a robbery attended by "grave
or irresistible threat, violence or force" is a fortuitous event that absolves the common carrier from liability.

In the present case, the shipper, Sony, engaged the services of TMBI, a common carrier, to facilitate the release of its shipment and deliver the
goods to its warehouse. In turn, TMBI subcontracted a portion of its obligation – the delivery of the cargo – to another common carrier, BMT.

13 | P a g e
Despite the subcontract, TMBI remained responsible for the cargo. Under Article 1736, a common carrier’s extraordinary responsibility over the
shipper’s goods lasts from the time these goods are unconditionally placed in the possession of, and received by, the carrier for
transportation, until they are delivered, actually or constructively, by the carrier to the consignee.48

That the cargo disappeared during transit while under the custody of BMT – TMBI’s subcontractor – did not diminish nor terminate TMBI’s
responsibility over the cargo. Article 1735 of the Civil Code presumes that it was at fault.

Instead of showing that it had acted with extraordinary diligence, TMBI simply argued that it was not a common carrier bound to observe
extraordinary diligence. Its failure to successfully establish this premise carries with it the presumption of fault or negligence, thus rendering it
liable to Sony/Mitsui for breach of contract.

Specifically, TMBI’s current theory – that the hijacking was attended by force or intimidation – is untenable.

First, TMBI alleged in its Third Party Complaint against BMT that Lapesura was responsible for hijacking the shipment.49 Further, Victor Torres filed
a criminal complaint against Lapesura with the NBI.50 These actions constitute direct and binding admissions that Lapesura stole the cargo. Justice
and fair play dictate that TMBI should not be allowed to change its legal theory on appeal.

Second, neither TMBI nor BMT succeeded in substantiating this theory through evidence. Thus, the theory remained an unsupported allegation no
better than speculations and conjectures. The CA therefore correctly disregarded the defense of force majeure.

TMBI and BMT are not solidarily liable

to Mitsui

We disagree with the lower courts’ ruling that TMBI and BMT are solidarily liable to Mitsui for the loss as joint tortfeasors. The ruling was based on
Article 2194 of the Civil Code:

Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.

Notably, TMBI’s liability to Mitsui does not stem from a quasi-delict (culpa aquiliana) but from its breach of contract (culpa contractual). The tie
that binds TMBI with Mitsui is contractual, albeit one that passed on to Mitsui as a result of TMBI’s contract of carriage with Sony to which Mitsui
had been subrogated as an insurer who had paid Sony’s insurance claim. The legal reality that results from this contractual tie precludes the
application of quasi-delict based Article 2194.

A third party may recover from a

common carrier for quasi-delict but must
prove actual negligence

We likewise disagree with the finding that BMT is directly liable to Sony/Mitsui for the loss of the cargo. While it is undisputed that the cargo was
lost under the actual custody of BMT (whose employee is the primary suspect in the hijacking or robbery of the shipment), no direct contractual
relationship existed between Sony/Mitsui and BMT. If at all, Sony/Mitsui’s cause of action against BMT could only arise from quasi-delict, as a third
party suffering damage from the action of another due to the latter’s fault or negligence, pursuant to Article 2176 of the Civil Code.51

We have repeatedly distinguished between an action for breach of contract (culpa contractual) and an action for quasi-delict (culpa aquiliana).

In culpa contractual, the plaintiff only needs to establish the existence of the contract and the obligor’s failure to perform his obligation. It is not
necessary for the plaintiff to prove or even allege that the obligor’s non-compliance was due to fault or negligence because Article 1735 already
presumes that the common carrier is negligent. The common carrier can only free itself from liability by proving that it observed extraordinary
diligence. It cannot discharge this liability by shifting the blame on its agents or servants.52

On the other hand, the plaintiff in culpa aquiliana must clearly establish the defendant’s fault or negligence because this is the very basis of the
action.53 Moreover, if the injury to the plaintiff resulted from the act or omission of the defendant’s employee or servant, the defendant may
absolve himself by proving that he observed the diligence of a good father of a family to prevent the damage.54

In the present case, Mitsui’s action is solely premised on TMBI’s breach of contract. Mitsui did not even sue BMT,much less prove any negligence on
its part. If BMT has entered the picture at all, it is because TMBI sued it for reimbursement for the liability that TMBI might incur from its contract
of carriage with Sony/Mitsui. Accordingly, there is no basis to directly hold BMT liable to Mitsui for quasi-delict.

BMT is liable to TMBI for breach of their

contract of carriage

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We do not hereby say that TMBI must absorb the loss. By subcontracting the cargo delivery to BMT, TMBI entered into its own contract of carriage
with a fellow common carrier.

The cargo was lost after its transfer to BMT' s custody based on its contract of carriage with TMBI. Following Article 1735, BMT is presumed to be at
fault. Since BMT failed to prove that it observed extraordinary diligence in the performance of its obligation to TMBI, it is liable to TMBI for breach
of their contract of carriage.

In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching the contract of carriage. In tum, TMBI is entitled to reimbursement from
BMT due to the latter's own breach of its contract of carriage with TMBI. The proverbial buck stops with BMT who may either: (a) absorb the loss,
or (b) proceed after its missing driver, the suspected culprit, pursuant to Article 2181.55

WHEREFORE, the Court hereby ORDERS petitioner TorresMadrid Brokerage, Inc. to pay the respondent FEB Mitsui Marine Insurance Co", Inc. the
following:

a. Actual damages in the amount of PHP 7,293,386.23 plus legal interest from the time the complaint was filed until it is fully paid;

b. Attorney's foes in the amount of PHP 200,000.00; and

c. Costs of suit.

Respondent Benjamin P. Manalastas is in turn ORDERED to REIMBURSE Torres-Madrid Brokerage, Inc. of the above-mentioned amounts.

SO ORDERED.

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