Case Summary (G.R. No. 166250)
Trial Court Ruling
The RTC of Makati, Branch 134, held UTI and APL jointly and severally liable as common carriers, awarding Pioneer Insurance ₱76,231.27 plus 6% legal interest from September 30, 1993, attorney’s fees equivalent to 25% of the award, and litigation costs.
Court of Appeals Ruling
The CA affirmed, finding that by issuing the bill of lading, UTI assumed common-carrier status and failed to exercise ordinary diligence. It rejected UTI’s contention of being merely a forwarder and declined to apply COGSA’s $500 package limitation, since cargo value was declared under letter of credit and pro forma invoice. APL was likewise deemed a common carrier despite lack of bill of lading.
Issues on Review
- Alleged grave abuse of discretion by the CA in upholding the damages award and attorney’s fees
- Whether UTI is a common carrier or a freight forwarder
- Whether UTI exercised the required diligence
- Whether Pioneer Insurance sufficiently proved the cargo damage
Freight Forwarder vs. Common Carrier Liability
A freight forwarder generally owes liability only for its own negligence, including selection of carriers. If it contracts to deliver goods rather than merely arranging transport, it becomes liable as a common carrier. By issuing the bill of lading, UTI acknowledged receipt and agreed to transport and deliver, invoking common-carrier obligations.
Presumption of Carrier’s Negligence and Burden of Proof
Common carriers are presumed negligent if goods arrive damaged. They bear the burden to prove they exercised extraordinary diligence. Mere proof of delivery in good order and arrival in bad order establishes a prima facie case of carrier negligence.
Evidence of Damage and Failure to Rebut Presumption
Records show:
- Bill of lading receipt in “good order and condition” in New York
- OCMSC survey detecting a punctured drum with spillage
- Gate pass discrepancies (22 drums noted instead of 27)
- Independent surveys confirming puncture, content loss, and shortage of five drums
UTI did not adequately explain or rebut these findings or demonstrate extraordinary diligence.
Package Limitation under the COGSA
Section 4(5) of the COGSA limits carrier liability to US$500 per package unless the shipper declares a highe
...continue readingCase Syllabus (G.R. No. 166250)
Facts of the Case
- On August 31, 1992, Sylvex Purchasing Corporation delivered to Unsworth Transport International (UTI) a shipment consisting of:
- 3 drums of flammable banana flavoring extract
- 2 drums of turpentine oil
- 40 bags of dried yeast (2 pallets)
- 20 drums of Vitamin B Complex Extract (Vitabs)
- UTI issued Bill of Lading No. C320/C15991-2 covering 27 drums of raw materials for pharmaceutical manufacturing.
- The shipment was insured with Pioneer Insurance and Surety Corporation for ₱1,779,664.77 under Marine Risk Note MC RM UL 0627 92 and Open Cargo Policy HO-022-RIU in favor of United Laboratories, Inc. (Unilab).
- The goods were loaded in a sealed 1×40 container (no. APLU-982012) on APL’s M/V “Pres. Jackson,” transshipped to M/V “Pres. Taft,” and arrived in Manila on September 30, 1992.
- UTI received the cargo on October 6, 1992, after stamping the Permit to Deliver Imported Goods obtained by Champs Customs Brokerage.
- Oceanica Cargo Marine Surveyors Corporation (OCMSC) conducted a stripping survey on October 9, 1992, noting one steel drum with a cut/hole and approximately 1% spillage.
- On October 15, 1992, Jardine Davies Transport Services, Inc. issued Gate Pass No. 7614, recording 22 drums in good order for delivery to Unilab’s warehouse.
- An independent surveyor, J.G. Bernas Adjusters & Surveyors, found on the same day one torn paper bag, one punctured drum #7 with missing contents, and a short delivery of five drums.
- Final surveys on October 23 and 28, 1992, confirmed these discrepancies; Unilab rejected one bag and one drum as unfit.
- Unilab filed a formal claim on November 7, 1992. UTI denied liability on November 20, citing the gate pass. Pioneer paid the claim on March 23, 1993, and was subrogated under a Loss and Subrogation Receipt.
Procedural History
- Pioneer sued APL, UTI, and Unsworth in RTC Makati (Civil Case No. 93-3473, Branch 134).
- On February 22, 2001, the RTC rendered judgment for Pioneer against APL and UTI for actual damages of ₱76,231.27, plus 6% interest from September 30, 1993, and 25% attorney’s fees.
- The Court of Appeals affirmed the RTC decision on April 29, 2004, and denied reconsideration on November 26, 2004.
- UTI filed a petition for review on certiorari before the Supreme Court, raising issues of jurisdiction, carrier