G.R. No. 166250 July 26, 2010
CA also rejected the contention of UTI regarding
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., Petitioner, vs.
COURT OF APPEALS and PIONEER INSURANCE AND SURETY
CORPORATION, Respondents.
Topic: Carriage of Goods by Sea Act
Doctrine: A freight forwarders liability is limited to damages arising from its
own negligence, including negligence in choosing the carrier; however,
where the forwarder contracts to deliver goods to their destination instead of
merely arranging for their transportation, it becomes liable as a common
carrier for loss or damage to goods.
Facts:
1. Sylvex Purchasing Corp delivered to Unsworth Transport
International (UTI) a shipment of 27 drums of various raw materials
for pharmaceutical manufacturing (includes banana flavoring,
turpentine oil, dried yeast and Vitamin B Complex Extract).
2. UTI issued a bill of lading for the shipment, and the shipment was
insured with Pioneer Insurance in favor of Unilab against all risks.
3. Shipment was loaded in a sealed 1x40 container van, boarded on
American President Lines (APL) vessel M/V Pres. Jackson and
transshipped to M/V Pres. Taft for delivery to consignee Unilab.
4. The shipment arrived in UTIs warehouse, and was then subjected to
an inspection by the surveyors of Unilab. Their report found that the
goods were complete and in good order when UTI received them,
but then found one bag of yeast to have partly spilled, one drum of
Vitamin B Extract to have had a hole on the side which caused
spilling.
5. Unilab then filed a formal claim for damage against UTI and Pioneer
Insurance. When UTI failed to pay, Pioneer Insurance paid Unilab,
and was subrogated the rights of UTI. Hence, Pioneer Insurance
filed a complaint for damages against APL and UTI.
6. UTI argued that it was merely a forwarder, and not a common
carrier. Also, it argued that its liability should be limited to $500 per
package pursuant to COGSA considering that the value of the
shipment was declared.
7. RTC held in favor of Pioneer Insurance. CA affirmed the RTC
decision, stating that UTI was a common carrier as UTI issued a bill
of lading, which in effect it acknowledged the receipt of the goods
and agreed to transport such to a specific place. Also, when UTI
stored the goods in its warehouse, its liability became similar to a
depositary; hence, it should have exercised ordinary diligence in the
1
refers to a firm holding itself out to the general public (other than as a pipeline, rail, motor, or
water carrier) to provide transportation of property for compensation and, in the ordinary course
of its business, (1) to assemble and consolidate, or to provide for assembling and consolidating,
shipments, and to perform or provide for break-bulk and distribution operations of the shipments;
care of the goods.
its limited liability under the COGSA.
8. Hence, this petition for review on certiorari.
Issue: (1) W/N UTI was a common carrier. (2) W/N its liability is limited to
$500 per package.
Held: (1) Yes. UTI was a common carrier. (2) Yes. UTIs liability is limited in
accordance with the COGSA.
UTI was a common carrier
1. UTI is a freight forwarder1. A freight forwarders liability is limited
to damages arising from its own negligence, including
negligence in choosing the carrier; however, where the
forwarder contracts to deliver goods to their destination instead
of merely arranging for their transportation, it becomes liable as
a common carrier for loss or damage to goods.
2. It is undisputed that UTI issued a bill of lading in favor of Unilab.
Pursuant thereto, UTI undertook to transport, and deliver the 27
drums of raw materials to the consignee. Hence, UTI was liable as a
common carrier. As such, UTI failed to rebut the prima facie
presumption of negligence of the shipment.
3. It was shown that UTI received the shipment in good order and
condition, but after three days in the warehouse, the goods incurred
damage while in UTIs possession.
UTIs liability as a common carrier is limited under the COGSA
1. The Package Limitation Rule under the COGSA applies in this case. The
Civil Code does not limit the liability of the common carrier to a fixed
amount per package. In all matters not regulated by the Civil Code,
the rights and obligations of common carriers are governed by the
Code of Commerce and special laws. Thus, the COGSA
supplements the Civil Code by establishing a provision limiting the
carriers liability in the absence of a shippers declaration of a
higher value in the bill of lading. Sec. 4(5) of the COGSA provides
that:
(5) Neither the carrier nor the ship shall in any event be or become
liable for any loss or damage to or in connection with the transportation of
goods in an amount exceeding $500 per package of lawful money of the
United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the nature
and value of such goods have been declared by the shipper before shipment
(2) to assume responsibility for the transportation of goods from the place of receipt to the place
of destination; and (3) to use for any part of the transportation a carrier subject to the federal law
pertaining to common carriers.
 and inserted in the bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be conclusive on the
carrier.

2. In the present case, the shipper Sylvex did not declare a higher valuation
of the goods to be shipped. Contrary to the CAs conclusion, the insertion
of the words "L/C No. LC No. 1-187-008394/ NY 69867 covering
shipment of raw materials for pharmaceutical Mfg. x x x" cannot be the
basis of UTIs liability. Furthermore, the insertion of an invoice number
does not in itself sufficiently and convincingly show that UTI had
knowledge of the value of the cargo.
3. In light of the foregoing, UTIs liability should be limited to $500 per steel
drum. In this case, as there was only one drum lost, Pioneer Insurance is
entitled to receive only $500 as damages for the loss.

WHEREFORE, petition is PARTIALLY GRANTED. Payment of UTI to

Pioneer must be reduced and limited in accordance with the COGSA.