G.R. No. 166250 ; July 26, 2010
Unsworth Transport International (Phils.), Inc., Petitioner, vs. Court of Appeals and Pioneer Insurance and Surety Corporation, Respondents.

FACTS

Sylvex Purchasing Corporation delivered a shipment of 27 drums of raw materials to petitioner Unsworth Transport International (UTI), which issued a bill of lading. The shipment, insured by respondent Pioneer Insurance, was transported via APL vessels to Manila. Petitioner received the sealed container at its warehouse on October 6, 1992. A stripping survey on October 9 noted one drum with a cut. On October 15, Jardine Davies issued a gate pass stating 22 drums were loaded for final delivery to consignee Unilab in “good order.” Upon Unilab’s receipt, a survey revealed shortages and damage, including a punctured drum and a torn bag. Unilab’s claim was paid by Pioneer, which was subrogated to Unilab’s rights.
Pioneer sued UTI and APL for damages. The Regional Trial Court ruled against the carriers, holding them jointly and severally liable. The Court of Appeals affirmed, ruling UTI was a common carrier that failed to exercise the required diligence over the goods while in its custody as a depositary. It also rejected UTI’s plea to limit liability under the Carriage of Goods by Sea Act (COGSA).

ISSUE

The core issues were: (1) whether petitioner UTI was a common carrier; (2) whether it exercised the required diligence; and (3) whether its liability could be limited under COGSA.

RULING

The Supreme Court partially granted the petition. It affirmed that UTI was a common carrier. By issuing a bill of lading and undertaking to deliver the goods for a fee, it held itself out as offering transportation services to the public, irrespective of its primary business as a freight forwarder. The Court also upheld the finding that UTI failed to exercise the required extraordinary diligence. The damage was discovered after the goods were in UTI’s custody but before final delivery, and the “clean” gate pass from Jardine Davies did not absolve UTI, as it was not conclusive proof of the goods’ condition upon receipt by the consignee.
However, the Court modified the monetary award, applying the $500 per package limitation under COGSA. The bill of lading incorporated COGSA by reference, making its provisions binding. The shipper did not declare a higher value on the bill of lading itself; the declared value appeared only in ancillary documents like the letter of credit and pro forma invoice. Consequently, the liability limit applied. The principal award was reduced to $500, with legal interest and attorney’s fees.