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HomeOpinionNarrow ChannelIf A Forwarder Subcontracts with Another Forwarder, Will Their Liability Be Solidary?

If A Forwarder Subcontracts with Another Forwarder, Will Their Liability Be Solidary?

No. And this is the story.

 

Before the Covid-19 pandemic, HTP Trading Phils. imported a 20-foot container of aluminum alloy ingots from Indonesia.

 

The shipment arrived via seafreight in Manila and was temporarily stored at the container yard of the Manila International Port Services pending its release by HTP. KE Forwarding Co cleared and withdrew the cargo from the pier for delivery to the Laguna warehouse of HTP. But KE engaged the services of another forwarder—Sun Forwarders, Inc. (SFI)—to transport the goods to Laguna.

 

Enroute to the warehouse, the truck carrying the container was hijacked and the cargo never reached the warehouse, prompting HTP to file a claim with KE for the loss of the cargo.

 

But KE denied the claim, posturing that the loss occurred while the shipment was in the possession of its subcontractor SFI.

 

HTP then filed a complaint for damages against KE with the Regional Trial Court (RTC). KE filed a third-party complaint against SFI, but the latter also denied liability on the grounds that it was not privy to the contract between KE and HTP.

 

The trial court rendered a decision finding KE and SFI jointly and severally liable to pay HTP. The RTC ruled that SFI is liable for the loss of the cargo with KE being a common carrier. But KE has a right of reimbursement from SFI.

 

But the Court of Appeals (CA) modified the ruling of the RTC on the solidary liability of KE and SFI. It held that because of the lack of privity between HTP and SFI, the latter cannot simply be held jointly and severally liable with KE.

 

Then, the Supreme Court ruled in the following tenor:

 

“x x x.

We likewise agree with the CA that the liability of KE and SFI is not solidary.  There is solidary liability only when the obligation expressly so states, when the law so provides, or when the nature of the obligation so requires.  Thus, under Article 2194 of the Civil Code, liability of two or more persons is solidary in quasi-delicts.  But in this case, KEs liability to HTP stemmed not from quasi-delict, but from its breach of contract of carriage.  SFI was only impleaded in the case when KE filed a third-party complaint against it.   x x x  there was no direct contractual relationship between SFI and HTP.  Accordingly, there was no basis to directly hold SFI liable to HTP for breach of contract.

 

x x x.

 

It is undisputed that the cargo was lost when it was in the custody of SFI.  Hence, (under) Article 1735 of the Civil Code, the presumption of fault on the part of SFI (as a common carrier) arose.  Since SFI failed to prove that it observed extraordinary diligence in the performance of its obligation to KE, it is liable to the latter for breach of contract. x x x.”

 

Please note that even if the cargoes were lost in the possession and custody of the subcon forwarder, the primary forwarder is not absolved from its liability as a common carrier.

 

Next story, please.  And stay safe.

 

Email the writer at atty.joeytbanday@gmail.com for comments or questions.

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