Asian Terminals, Inc. vs. PHILAM Insurance Co., Inc.

G.R. No. 181163 July 24, 2013

VILLARAMA, J.

Facts:
Universal Motors Corporation purchased from Nichimen Corporation in Japan 219 units
of packages, 120 of which contain chassis Nissan Pickup Trucks. The shipment was on-board the
S/S Calayan Iris bound for Manila, PHILAM Insurance Co., Inc. insured the shipment in favor of
Universal Motors. On April 20, 1995 the vessel arrived in the port of Manila, Asian Terminals.
Inc. handled the unloading of the cargo of the said packages, supervised by Westwind Shipping
Corporation; the unloaded cargo was brought to the custody of ATI for inspection.

ATI released a Bad Order Survey Report stating that 7 of the 120 chassis delivered were
damaged. R.F. Revilla Customs Brokerages, Inc., the authorized broker of Universal Motors
withdrew the said chassis from ATI for its own survey, subsequently confirming the damages to
the products. PHILAM gave the insurance of Universal Motors, the latter issued a Subrogation
Receipt thereby vesting PHILAM the rights to claim damages for the products. PHILAM thus
filed before the regional trial court a complaint against Westwind and ATI to compensate for the
damages to the products on the grounds that they failed to exercise extraordinary diligence to
care for the said merchandise. The RTC ruled in favor of PHILAM and the Court of Appeals
affirmed the same; hence, this petition for certiorari.

Issue:
Whether or not Westwind Shipping Corporation and Asian Terminals, Inc. incurred any
liability for the damaged chassis

Ruling:
Yes, because both Westwind and ATI must observe the extraordinary diligence to handle
the said merchandise on account to their value and difficulty and acquisition. Section 3 (6) of
Public Act No. 521, or the Carriage of Goods by Sea Act (COGSA) of the 74 US Congress as
referenced by Commonwealth Act No. 65 contemplated that the removal of the goods to the
custody of the person entitled to the delivery is the prima facie evidence of the consummation of
the delivery unless a report of damages or general nature of damages is issued in writing before
the delivery was said consummated.

The trial and appellate court found that ATI employees were the ones handling the
unloading of the cargo, they erroneously chose the inappropriate equipment, a sling, to secure the
cargo as it was too taut and short hence crushing the subject cargo. Westwind was supervising the
entire operation of ATI. These facts collectively glean that both petitioners have solidary liability
over the damages, for failure to exercise extraordinary diligence, where slight negligence is
enough to incur any liability. PHILAM, as authorized by the veracity of the Subrogation Receipt,
is thus, entitled to recover from the petitioners indemnity over the damaged cargo. The Supreme
Court affirms the trial and appellate courts decisions.