MINDANAO TERMINAL VS.

PHOENIX ASSURANCE
COMPANY & MCGEE
FACTS:
Del Monte Philippines contracted Mindanao Terminal, a stevedoring company, to load and stow
bananas and pineapples owned by Del Monte Produce (note: not by Del Monte Philippines) into
the cargo hold of a vessel. Del Monte Produce insured the shipment of fruits under an “open cargo
policy” with Phoenix (insurer) and McGee & Co (underwriting manager/agent of Phoenix). The
cargo was damaged so Del Monte Produce filed a claim against Phoenix and McGee. Phoenix and
McGee paid del Monte Produce and was issued a subrogation receipt. So Phoenix and McGee filed
an action for damages against Mindanao Terminal in the RTC of Davao. The RTC ruled against
Phoenix and McGee stating, among others, that they did not have a cause of action against
Mindanao because Mindanao was contracted by Del Monte Philippines, and not with the insured
Del Monte Produce. On appeal, the CA reversed, stating that there was a cause of action based on
Article 2176 (Quasidelict).

ISSUE:
Whether or not Phoenix and McGee have a cause of action against Mindanao Terminal?

HELD:
Yes, there was 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.