GR 80936; (October, 1990) (Digest)
G.R. No. 80936 October 17, 1990
EASTERN SHIPPING LINES, INC., petitioner, vs. COURT OF APPEALS, HONGKONG & SHANGHAI BANKING CORPORATION, AND CONSOLIDATED MINES, INC., respondents.
FACTS
Petitioner Eastern Shipping Lines, Inc. (ESLI), a common carrier, transported cargo from Japan to Manila. The bill of lading was consigned “To Shipper’s Order,” with an arrival notice to be sent to respondent Consolidated Mines, Inc. (CMI). Upon the vessel’s arrival, ESLI released the cargo to CMI based on an “Undertaking for Delivery of Cargo” or guaranty, but without requiring the surrender of the original bill of lading. Respondent Hongkong & Shanghai Banking Corporation (HSBC), which held the original bills of lading as security for a loan, later demanded the cargo’s value from ESLI, alleging misdelivery. CMI admitted receipt but failed to pay HSBC. HSBC then sued ESLI for damages.
ISSUE
Whether the carrier, ESLI, is liable to the bank, HSBC, for releasing the cargo to the named notify party (CMI) without requiring the surrender of the original bill of lading.
RULING
The Supreme Court ruled in favor of the carrier, ESLI, and absolved it from liability. The legal logic centered on the interpretation of the bill of lading and the equitable allocation of fault. The bill of lading was consigned “To Shipper’s Order,” not directly to HSBC. Critically, HSBC allowed CMI to be designated as the party to be notified on the bill of lading and as the consignee on the commercial invoice, thereby clothing CMI with apparent authority to receive the goods. This constituted negligence on HSBC’s part. Furthermore, HSBC failed to notify the carrier of its interest for nearly six months after the cargo’s arrival. Under these exceptional circumstances, the carrier’s release of the goods to the entity HSBC itself held out as the proper recipient, albeit upon a guaranty, was not the proximate cause of the bank’s loss. The Court emphasized considerations of equity, finding that HSBC and CMI, not the carrier, were in bad faith. The real cause of loss was CMI’s failure to pay, for which HSBC’s proper recourse is against CMI directly. Thus, the complaint against the carrier was dismissed for lack of merit.