G.R. No. L-23222. June 10, 1971.
THE AMERICAN INSURANCE CO., INC., plaintiff-appellee, vs. MACONDRAY & CO., INC., defendant-appellant.

FACTS

Atlas Consolidated Mining imported cargo from New York to Cebu City via Manila, covered by a bill of lading issued by the S/S “Toledo,” represented in the Philippines by its agent, Macondray & Co., Inc. The freight was prepaid to Cebu. The cargo was insured by American Insurance Company. The S/S “Toledo” discharged the cargo in Manila for transshipment to Cebu on the M/S “Bohol.” Upon the M/S “Bohol’s” arrival in Cebu, one skid of truck parts was missing. It was stipulated that this skid was never loaded onto the transshipping vessel in Manila. The consignee claimed against Macondray, which denied liability, asserting full discharge in Manila. The insurer paid the consignee and, by subrogation, sued Macondray for recovery.
Macondray raised several defenses: it disclaimed liability, citing a bill of lading clause exempting it from loss after discharge; argued any liability was limited to P500; challenged the trial court’s jurisdiction over the amount; and contended the loss occurred under the Manila Port Service’s custody, for which it was not responsible. The trial court held Macondray liable for the cargo’s value, prompting this appeal.

ISSUE

The primary issue is whether Macondray & Co., Inc., as the carrier’s agent, is liable for the loss of cargo that was not transshipped from Manila to its final destination, Cebu City, despite clauses in the bill of lading purporting to limit such liability.

RULING

The Supreme Court affirmed the lower court’s decision, holding Macondray liable. The Court rejected the jurisdictional challenge, noting the case involved admiralty matters within the exclusive original jurisdiction of the Court of First Instance, regardless of the amount. On substantive liability, the Court ruled that the carriage contract, evidenced by the bill of lading, obligated the carrier to deliver the goods to Cebu City. Discharge in Manila was merely an intermediate step; the carrier’s responsibility included ensuring transshipment to the final port. The failure to load the skid onto the M/S “Bohol” constituted a breach of this duty.
The Court dismissed Macondray’s reliance on bill of lading clauses. Paragraph 22, exempting liability for loss after discharge, was inapplicable because discharge in Manila did not terminate the contract when delivery to Cebu was incomplete. Paragraph 11, which could make the carrier a forwarding agent, actually reinforced its duty to arrange transshipment. Since the shipper had fulfilled its obligation by delivering the cargo in New York, the liability for the failure in the onward carriage fell on the carrier’s agent. The Court also noted Macondray’s admission that, under general principles, a carrier’s agent can be liable to the consignee for undelivered cargo. Thus, Macondray’s liability was unavoidable.