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Can a Customs Broker Be Held Liable In A Freight Collect Shipment?

No. And this is the story.

 

On 27 February 2001, America Freight Corp, acting on behalf of Stik Laboratories, loaded on board Japan Airlines (JAL) two boxes of jar adhesives, “freight collect,” for transport to Manila.

 

The consignee was PIC Corporation, and the goods were insured with BI Insurance Co (BII) against all risks.

 

The goods arrived at the Ninoy Aquino International Airport on 1 March 2001 and were subsequently stored at the PairCargo Warehouse.

 

On 2 March 2001, PIC notified CBI 100 as its customs broker that its shipment had arrived on 1 March. PIC sent to CBI “shipment handling instructions” stating “Shipments containing dry ice are perishable and must deliver to our customer within 72 hours. Do not delay.”

 

The freight charges were paid by PIC to JAL only on 5 March. And on 6 March or five days after the shipment arrived, CBI withdrew the cargo and delivered it to PIC. But the cargo was already in damaged condition upon inspection by the consignee.

 

PIC filed a claim against CBI for the value of the shipment. But CBI refused to pay, contending that the delay in the delivery of the goods was due to PIC’s failure to pay the freight charges on time.

 

PIC then filed a claim with BII, which, after survey and investigation, paid the insurance claim of PIC.

 

Thereafter, BII filed a claim for reimbursement against CBI, which rejected the claim, prompting BII to file a complaint for damages with the Regional Trial Court.

 

The trial court held that as a customs broker, CBI was regarded as a common carrier, and was mandated by law to exercise extraordinary diligence in handling PIC’s shipment.

 

The Court of Appeals affirmed the ruling of the RTC, holding that CBI failed to exercise extraordinarily diligence as it did not take precautionary measures to avoid damage to the cargo.

 

But the Supreme Court ruled in the following tenor:

 

“ xxx, We find that CBI was not negligent in handling the shipment of PIC.

It must be pointed out that the arrangement for payment of the freight charges is on a “Freight Collect” basis which means that the consignee or receiver of the goods will be responsible for paying the freight and other charges.

x xx

x xx, it is clear that there is no need to rely on the presumption of the law that a common carrier is presumed to have been at fault or have acted negligently in case of damaged goods. This is because the delay in the release of the goods was through no fault of CBI. The damage was caused by the late payment of the funds needed for the release of the goods from the custody of BOC which was originally PIC’s responsibility. It must be noted that while waiting for the freight charges to be settled, CBI did not have custody over the shipment.

x xx

x xx. It would be physically impossible and unreasonable for CBI to implement any control or handling instructions over the goods not in its custody.  Based on the evidence presented, BII failed to establish that negligence in handling of the shipment could be attributed to CBI from the time the BOC released the goods to the custody of CBI until they were delivered to PIC.

 

Hence, in a “freight collect” shipment, the consignee or receiver should always see to it that the freight and other charges be promptly paid to the carrier.

 

For inquiries, email the writer at jtb@pac-atlantic.com.ph.

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