20) Unsworth Transport V CA

G.R. No. 166250 July 26, 2010 care of the goods.
CA also rejected the contention of UTI regarding

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., Petitioner, vs. its limited liability under the COGSA.
COURT OF APPEALS and PIONEER INSURANCE AND SURETY 8. Hence, this petition for review on certiorari.
CORPORATION, Respondents.
Topic: Carriage of Goods by Sea Act Issue: (1) W/N UTI was a common carrier. (2) W/N its liability is limited to
$500 per package.
Doctrine: A freight forwarders liability is limited to damages arising from its
own negligence, including negligence in choosing the carrier; however, Held: (1) Yes. UTI was a common carrier. (2) Yes. UTIs liability is limited in
where the forwarder contracts to deliver goods to their destination instead of accordance with the COGSA.
merely arranging for their transportation, it becomes liable as a common
carrier for loss or damage to goods. UTI was a common carrier
1. UTI is a freight forwarder1. A freight forwarders liability is limited
Facts: to damages arising from its own negligence, including
1. Sylvex Purchasing Corp delivered to Unsworth Transport negligence in choosing the carrier; however, where the
International (UTI) a shipment of 27 drums of various raw materials forwarder contracts to deliver goods to their destination instead
for pharmaceutical manufacturing (includes banana flavoring, of merely arranging for their transportation, it becomes liable as
turpentine oil, dried yeast and Vitamin B Complex Extract). a common carrier for loss or damage to goods.
2. UTI issued a bill of lading for the shipment, and the shipment was 2. It is undisputed that UTI issued a bill of lading in favor of Unilab.
insured with Pioneer Insurance in favor of Unilab against all risks. Pursuant thereto, UTI undertook to transport, and deliver the 27
3. Shipment was loaded in a sealed 1x40 container van, boarded on drums of raw materials to the consignee. Hence, UTI was liable as a
American President Lines (APL) vessel M/V Pres. Jackson and common carrier. As such, UTI failed to rebut the prima facie
transshipped to M/V Pres. Taft for delivery to consignee Unilab. presumption of negligence of the shipment.
4. The shipment arrived in UTIs warehouse, and was then subjected to 3. It was shown that UTI received the shipment in good order and
an inspection by the surveyors of Unilab. Their report found that the condition, but after three days in the warehouse, the goods incurred
goods were complete and in good order when UTI received them, damage while in UTIs possession.
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 UTIs liability as a common carrier is limited under the COGSA
spilling. 1. The Package Limitation Rule under the COGSA applies in this case. The
5. Unilab then filed a formal claim for damage against UTI and Pioneer Civil Code does not limit the liability of the common carrier to a fixed
Insurance. When UTI failed to pay, Pioneer Insurance paid Unilab, amount per package. In all matters not regulated by the Civil Code,
and was subrogated the rights of UTI. Hence, Pioneer Insurance the rights and obligations of common carriers are governed by the
filed a complaint for damages against APL and UTI. Code of Commerce and special laws. Thus, the COGSA
6. UTI argued that it was merely a forwarder, and not a common supplements the Civil Code by establishing a provision limiting the
carrier. Also, it argued that its liability should be limited to $500 per carriers liability in the absence of a shippers declaration of a
package pursuant to COGSA considering that the value of the higher value in the bill of lading. Sec. 4(5) of the COGSA provides
shipment was declared. that:
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 (5) Neither the carrier nor the ship shall in any event be or become
of lading, which in effect it acknowledged the receipt of the goods liable for any loss or damage to or in connection with the transportation of
and agreed to transport such to a specific place. Also, when UTI goods in an amount exceeding $500 per package of lawful money of the
stored the goods in its warehouse, its liability became similar to a 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
depositary; hence, it should have exercised ordinary diligence in the and value of such goods have been declared by the shipper before shipment
1
refers to a firm holding itself out to the general public (other than as a pipeline, rail, motor, or (2) to assume responsibility for the transportation of goods from the place of receipt to the place
water carrier) to provide transportation of property for compensation and, in the ordinary course of destination; and (3) to use for any part of the transportation a carrier subject to the federal law
of its business, (1) to assemble and consolidate, or to provide for assembling and consolidating, pertaining to common carriers.
shipments, and to perform or provide for break-bulk and distribution operations of the shipments;
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.

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G.R. No. 166250 July 26, 2010 care of the goods.

CA also rejected the contention of UTI regarding

WHEREFORE, petition is PARTIALLY GRANTED. Payment of UTI to

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