Narrow Channel
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Forwarder vs Common Carrier
IS a freight forwarder a common carrier?
Yes. And this is the story.
Sometime in 1992, SP Corp of New York delivered to freight forwarder BTI-New York (BTI) a shipment of various raw materials for the manufacture of pharmaceuticals for transportation and delivery to consignee Metro Laboratories, Manila (ML). BTI issued its own bill of lading.
The shipment was loaded in a sealed 1 x 40’ container van which was subsequently loaded onto the ocean-going vessel M/V “Pres. Jackson”.
The shipment arrived at the Port of Manila. But when the container was opened at the premises of ML, some of the raw materials were found to have sustained damages.
ML filed a formal claim with BTI through its agent in the Philippines. BTI denied the claim of ML, prompting ML to file a claim with its insurer, P Insurance Co. (PIC). PIC paid the claim of ML. As the insurer-subrogee, PIC filed a complaint for damages with the Regional Trial Court of Makati against BTI and the ocean-going vessel.
After trial on the merits, the trial court rendered a decision adverse to BTI and the ocean-going vessel. The Court of Appeals affirmed the decision of the trial court. The CA rejected the defense of BTI that it was merely a freight forwarder.
BTI elevated the case to the Supreme Court, which ruled:
“Admittedly, petitioner [BTI] is a freight forwarder. The term “freight forwarder” 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; (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 carrier subject to the federal law pertaining to common carriers.
A freight forwarder’s liability is limited to damages arising from its own negligence, including negligence in choosing the carrier; however, when the forwarder contracts to deliver the goods to their destination instead of merely arranging for their trans-portation, it becomes liable as a common carrier for loss or damage to goods. A freight forwarder assumes the responsibility of a carrier, which actually executes the transport, even though the forwarder does not carry the merchandise itself.
x x x”
Under the Civil Code (of the Philippines), common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them. But a freight forwarder does not actually and physically transport the goods so it cannot exercise the extraordinary diligence required by law. Hence, in my humble opinion, a freight forwarder may not be considered a common carrier.
For questions or comments, email the writer at jtb@pac-atlantic.com.ph.
COGSA’s Period of Prescription
HOW will the one-year period of prescription under Carriage of Goods by Sea Act (COGSA) apply to the newly impleaded party?
On 15 April 1992, the MV “HA YA” completely discharged her cargo of Indian soya bean meal into the custody of receiving barges at the Port of Manila, Pier 7, South Harbor.
One of the consignees, SB Farms, Inc (SB), subsequently claimed the cargo was short by 80.467 metric tons and filed a complaint for damages against the owner of the MV HA YA and ship agent CRS Shipping Agencies (CSA) with the Regional Trial Court of Manila. SB later filed an amended complaint impleading Walden Shipping, Inc as the real ship agent, not CRS.
After trial on the merits, the trial court dismissed the complaint on the ground of prescription. But the Court of Appeals reversed the decision of the trial court.
Walden elevated the case to the Supreme Court, which ruled in the following tenor:
“With respect to the prescriptive period involving claims arising from shortage, loss or damage to cargoes sustained during transit, the law that governs the instant case is the Carriage of Goods by Sea Act (COGSA), Section 3 (6) of which provides:
x x x
In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered; x x x
x x x
There is no dispute that the vessel carrying the shipment arrived at the port of Manila on April 11, 1992 and that the cargo was completely discharged therefrom on April 15, 1992. However, respondent (SB) erred in arguing that the complaint for damages, insofar as the petitioner (Walden) is concerned, was filed on March 11, 1993.
As the records would show, petitioner was not impleaded as a defendant in the original complaint filed on March 11, 1993. It was only June 7, 1993 that the Amended Complaint, impleading petitioner as defendant, was filed.
Respondent cannot argue that the filing of the Amended Complaint against petitioner should retroact to the date of the filing of the original complaint.
The settled rule is that the filing of an amended pleading does not retroact to the date of the filing of the original; hence, the statute of limitation runs until the submission of the amendment. x x x
x x x
In the instant case, petitioner was only impleaded in the amended Complaint of June 7, 1993, or one (1) year, one (1) month and twenty-three (23) days from April 15, 1992, the date when the subject cargo was fully unloaded from the vessel. Hence, reckoned from April 15, 1992, the one-year prescriptive period had already elapsed.”
x x x”.
It must be emphasized that should there be a need to amend the complaint in order to implead the real ship agent, the same must be done within one year from the complete discharge of the cargo from the vessel. Otherwise, the action shall be dismissible on the ground of prescription.
For comments of questions, please email the writer at jtb@pac-atlantic.com.ph.
