Case Digest: Schmitz v. Transportation Venture, 456 SCRA 557, G.R. No. 150255

Schmitz v. Transportation Venture, 456 SCRA 557, G.R. No. 150255, April 22, 2005.

Subject: Transportation Law

FACTS

On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V "Alexander Saveliev" (a vessel of Russian registry and owned by Black Sea) 545 hot rolled steel sheets in coil weighing 6,992,450 metric tons.

The cargoes, which were to be discharged at the port of Manila in favor of the consignee, Little Giant Steel Pipe Corporation (Little Giant), were insured against all risks with Industrial Insurance Company Ltd. (Industrial Insurance).

The vessel arrived at the port of Manila on October 24, 1991 and the Philippine Ports Authority (PPA) assigned it a place of berth at the outside breakwater at the Manila South Harbor.

Schmitz Transport, whose services the consignee engaged to secure the requisite clearances, to receive the cargoes from the shipside, and to deliver them to its (the consignee’s) warehouse at Cainta, Rizal, in turn engaged the services of TVI to send a barge and tugboat at shipside.

By 12:30 a.m. of October 27, 1991 during which the weather condition had become inclement due to an approaching storm, the unloading unto the barge of the 37 coils was accomplished. No tugboat pulled the barge back to the pier, however. Due to strong waves, the crew of the barge abandoned it and transferred to the vessel. The barge pitched and rolled with the waves and eventually capsized, washing the 37 coils into the sea.

Little Giant thus filed a formal claim against Industrial Insurance. Little Giant thereupon executed a subrogation receipt in favor of Industrial Insurance. As subrogee, Industrial Insurance, later filed a complaint against Schmitz Transport, TVI, and Black Sea through its representative Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it paid to Little Giant plus adjustment fees, attorney’s fees, and litigation expenses.

RTC held all the defendants negligent for unloading the cargoes outside of the breakwater notwithstanding the storm signal. CA affirmed in toto the decision of the trial court, finding that all the defendants were common carriers — Black Sea and TVI for engaging in the transport of goods and cargoes over the seas as a regular business and not as an isolated transaction, and Schmitz Transport for entering into a contract with Little Giant to transport the cargoes from ship to port for a fee.

Hence this petition for review.

ISSUE

Whether or not the petitioner, a custom broker, is a common carrier and is liable for the loss goods.

RULING

Yes, the petitioner, a custom broker, is a common carrier, enshrined in Article 1732 of the Civil Code.

Under the law, 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. In addition, Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only as an ancillary activity.

In this case, the contention of petitioner that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration. In effecting the transportation of the cargoes from the shipside and into Little Giant’s warehouse, however, petitioner was discharging its own personal obligation under a contact of carriage.