Ramon Magsaysay Memorial Colleges

Bachelor of Science in Customs Administration

CASE STUDY
G.R. No. 147079
A.F. SANCHEZ BROKERAGE INC., PETITIONERS,
VS.
THE HON. COURT OF APPEALS AND FGU INSURANCE
CORPORATION, RESPONDENTS.

GROUP 4:
Jerriel Misoles
John Vincent Calinsawe
Jude Michael Sunga

Sheena Mae B. Tama, LCB

CM7 Instructor

Executive Summary
Introduction
The facts of this cases are on July 8, 1992, Wyeth-Pharma GMBH shipped on
board an aircraft of KLM Royal Dutch Airlines at Dusseldorf, Germany oral
contraceptives consisting of 86,800 Blisters Femenal tablets, 14,000 Blisters Nordiol
tablets and 42,000 Blisters Trinordiol tablets for delivery to Manila in favor of the
consignee, Wyeth-Suaco Laboratories, Inc. The Femenal tablets were placed in 124
cartons and the Nordiol tablets were placed in 20 cartons which were packed together
in one LD3 aluminum container, while the Trinordial tablets were packed in two pallets,
each of which contained 30 cartons. Wyeth-Suaco insured the shipment against all risks
with FGU insurance which issued Marine Risk Note No. 4995 pursuant to Marine Open
Policy No. 138
Main Issues
On July 11, 1992, a shipment arrived at Ninoy Aquino International Airport and
was discharged without exception. It was delivered to the Philippine Skylanders, Inc.
warehouse for safekeeping. Wyeth-Suaco hired Sanchez Brokerage, a licensed broker
since 1984, to secure cargo release from the PSI and Bureau of Customs. Sanchez
Brokerage calculated and paid customs duties, taxes, and storage fees, and delivered
the cargo to Wyeth-Suaco.
On July 29, 1992, Sanchez Brokerage representatives Mitzi Morales and Ernesto
Mendoza paid a PSI storage fee of P8,572.35, with Official Receipt No. 016992 issued.
M. Sison acknowledged receiving cargoes in good condition.
Wyeth-Suaco, a regular importer, failed to inspect cargoes from aluminum
containers and loaded into transport vehicles hired by Sanchez Brokerage. Ruben
Alonso and Tony Akas, employees of Elite Adjusters and Surveyors Inc., witnessed the
cargo release from the PSI warehouse. Elite Surveyors, engaged by Wyeth-Suaco on
behalf of FGU Insurance, was involved in the process. Wyeth-Suaco delivered cargoes
to Hizon Laboratories Inc. in Antipolo City for quality control check. The receipt indicated
a container with 144 cartons of Femenal and Nordiol and a pallet containing Trinordiol.
On July 31, 1992, Wyeth-Suaco representative Ronnie Likas acknowledged the
delivery. However, inspection revealed 44 cartons of oral contraceptives were in bad
order, and the remaining 160 cartons were accepted as complete and in good order.
FGU Insurance demanded payment of P181,431.49 for damaged goods, but Sanchez
Brokerage denied liability. The damage was due to improper export packaging. Sanchez
Brokerage's representative Morales informed Wyeth-Suaco's Import-Export Assistant
Ramir Calicdan about the cargoes' condition, but advised to deliver them to Hizon
Laboratories for an adjuster's assessment. The filing by FGU Insurance of a complaint
for damages before the Regional Trial Court of Makati City against the Sanchez
Brokerage.
Conclusion
The trial court, by Decision of July 29, 1996, dismissed the complaint, holding that the
Survey Report prepared by the Elite Surveyors is bereft of any evidentiary support and
a mere product of pure guesswork. On appeal, the appellate court reversed the decision
of the trial court, it holding that the Sanchez Brokerage engaged not only in the
business of customs brokerage but also in the transportation and delivery of the cargo
of its clients, hence, a common carrier within the context of Article 1732 of the New Civil
Code.
Sanchez Brokerage’s Motion for Reconsideration having been denied by the appellate
court’s Resolution of December 8, 2000 which was received by petitioner on January 5,
2001, it comes to this Court on petition for certiorari filed on March 6, 2001. In the main,
petitioner asserts that the appellate court committed grave and reversible error
tantamount to abuse of discretion when it found petitioner a common carrier within the
context of Article 1732 of the New Civil Code.
Respondent FGU Insurance avers in its Comment that the proper course of action
which petitioner should have taken was to file a petition for review on certiorari since the
sole office of a writ of certiorari is the correction of errors of jurisdiction including the
commission of grave abuse of discretion amounting to lack or excess of jurisdiction and
does not include correction of the appellate court’s evaluation of the evidence and
factual findings thereon.
On the merits, respondent FGU Insurance contends that petitioner, as a common
carrier, failed to overcome the presumption of negligence, it being documented that
petitioner withdrew from the warehouse of PSI the subject shipment entirely in good
order and condition.
The petition fails.
Rule 45 allows the Court of Appeals to appeal decisions, final orders, or resolutions by
filing a petition for review, continuing the appellate process over the original case. The
Court of Appeals denied the petitioner's motion for reconsideration on December 8,
2000, and received it on January 5, 2001. The decision became final and executory as
the petitioner failed to appeal within 15 days or before January 20, 2001. The
petitioner's March 6, 2001 petition cannot replace the lost remedy of appeal.
In a petition for certiorari, the petitioner must prove not only reversible error but also
grave abuse of discretion, resulting in lack or excess of jurisdiction. The petitioner
claims the appellate court erred in reversing and setting aside the trial court's decision,
claiming they are liable for cargo damage as a common carrier. This error of judgment is
an ordinary appeal, not a reversible error.
Recommendations
A petition for certiorari is not applicable when the issue affects the decision's wisdom or
legal soundness. The court's supervisory jurisdiction cannot be used to review lower
courts judgments based on law or facts. The supervisory jurisdiction of the court cannot
be exercised to review lower courts' judgments.
The appellate court deemed petitioner, a customs broker, a common carrier under
Article 1732 of the Civil Code. Common carriers are individuals, corporations, or
associations involved in transporting passengers or goods for compensation, offering
their services to the public. Anacleto F. Sanchez, Jr., the Manager and Principal Broker
of Sanchez Brokerage, himself testified that the services the firm offers include the
delivery of goods to the warehouse of the consignee or importer.
As customs broker, we calculate the taxes that has to be paid in cargos, and those upon
approval of the importer, we prepare the entry together for processing and claims from
customs and finally deliver the goods to the warehouse of the importer.
Article 1732 does not differentiate between a principal business activity involving goods
carrying and an ancillary activity. The petitioner's claim that it is a customs broker
preparing goods declarations and shipping documents is unfounded. The petitioner
must deliver goods for pecuniary consideration.
In this light, petitioner as a common carrier is mandated to observe, under Article
1733 of the Civil Code, extraordinary diligence in the vigilance over the goods it
transports according to all the circumstances of each case. In the event that the goods
are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted
negligently, unless it proves that it observed extraordinary diligence.
Implementations
Common carriers must exercise extraordinary diligence in vigilance over goods
sent for shipment, ensuring they know and follow necessary precautions to prevent
damage or destruction. They must render service with skill and foresight, ascertain the
nature and characteristics of goods, and exercise due care in handling and stowage,
using methods appropriate to their nature.
The petitioner received cargoes from PSI warehouse in NAIA in good order, but upon
delivery to Hizon Laboratories Inc., some were found to be in bad order, as indicated in
the Delivery Receipt and Survey Report of Elite Surveyors and Destruction Report of
Hizon Laboratories, Inc.
The petitioner argues that the goods' damage was caused by the shipper's negligence
and inherent characteristics, rather than the shipper's fault. They argue that Calicdan of
Wyeth-Suaco should not be blamed for following instructions despite being informed
that some cartons were wet.
Article 1734 of the Civil Code allows common carriers to be exempt from liability for loss
or damage due to goods' character or defects in packing or containers. However,
carriers cannot be relieved of liability if improper packing is known or apparent, but they
accept it without protest or exception. If the claim of petitioner that some of the cartons
were already damaged upon delivery to it were true, then it should naturally have
received the cargo under protest or with reservations duly noted on the receipt issued
by PSI. But it made no such protest or reservation.
The appellate court observed that if petitioner's employees found some wet cargoes
outside the PSI warehouse, they would have returned to the warehouse, showed the
damage, demanded Bad Order documents, or presented witnesses from PSI
employees to prove damage when the container was opened outside the warehouse.
Calicdan testified to receiving a purported call from Morales on July 29, 1992, but failed
to specify the time. The call may have been made at the PSI warehouse or in transit to
Antipolo. The petitioner admitted to having no documentary evidence to prove the
cargoes were wet, damaged, or in bad condition at the time of receipt.
Hizon Laboratories, Inc. found that oral contraceptives were damaged by rainwater
during transit to Antipolo City. Sanchez testified that a similar incident occurred when
Wyeth-Suaco's shipment was wet by rain.
We experienced, there was a time that we experienced that there was a cartoon wetted
up to the bottom are wet specially during rainy season.
Since petitioner received cargoes in good order at PSI warehouse, but upon delivery to
Hizon Laboratories, Inc., a portion was found to be in bad order. Petitioner failed to
prove extraordinary diligence in the carriage of the goods, leaving presumed negligence
under Article 1735 of the Civil Code unrebutted.

References
https://lawphil.net/judjuris/juri2004/dec2004/gr_147079_2004.html
G.R. 147079 A.F. Sanchez Brokerage Inc., Petitioners, vs The Hon. Court of Appeals
and FGU Insurance Corporation, Respondents.