G.R. No. 16598 - H. E. Heacock Co. vs. Macondray and Co., Inc.

The action was commenced by Heacock Company (plaintiff) in the Court of First Instance of Manila to recover the sum of P420 together with interest.
The case arose from a shipment delivered on or about June 5, 1919, aboard the steamship Bolton Castle from New York destined for Manila.

The plaintiff sent four cases of merchandise, one of which contained twelve (12) 8-day Edmond clocks, properly boxed and marked for transportation to Manila.
Freight was paid in advance from New York to Manila.
The steamship arrived in Manila on or about September 10, 1919, with the clocks consigned to the defendant as its agent.
Despite demand for delivery, neither the ship's master nor the defendant released the clocks to the plaintiff.

The invoice value of the clocks in New York was P22, but their market value in Manila was P420 at the time delivery was expected.
The bill of lading issued by the ship’s master contained two key clauses:

Clause 1 stated, “It is mutually agreed that the value of the goods receipted for above does not exceed $500 per freight ton, or, in proportion for any part of a ton, unless the value be expressly stated herein and ad valorem freight paid thereon.”
Clause 9 stated, “Also, that in the event of claims for short delivery of, or damage to, cargo being made, the carrier shall not be liable for more than the net invoice price plus freight and insurance less all charges saved, and any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis.”

The clocks occupied a space measuring 3 cubic feet, and their freight ton value was set at $1,480 (U.S. currency).
No higher value than $500 per freight ton was declared, and no ad valorem freight was paid by the plaintiff.

On or about October 9, 1919, the defendant tendered P76.36, representing the proportionate freight ton value of the clocks, which the plaintiff rejected.
The lower court rendered judgment in favor of the plaintiff for P226.02, corresponding to the invoice value of the clocks plus freight and insurance, with legal interest accruing from November 20, 1919.
Both parties appealed the decision to the Supreme Court.

The plaintiff contended that it was entitled to recover the market value of the clocks (P420) arguing that the limiting clauses in the bill of lading were contrary to public order and therefore invalid.
The defendant argued that under clause 1, the plaintiff was restricted to recovering only P76.36, the proportionate freight ton value, and maintained that both clauses were valid.
The legal issue also centered on whether the carrier, by stipulations in the bill of lading, could limit its liability for loss or damage to an agreed valuation.

Can a common carrier, through stipulations in the bill of lading, limit its liability for loss or damage of cargo to an agreed valuation?
Are the clauses in question (Clause 1 and Clause 9) contrary to public order, and if so, do they violate settled principles of law?

Should liability be measured according to the stipulated value of $500 per freight ton (Clause 1) or based on the net invoice price plus freight and insurance (Clause 9)?
How should the conflict between the two clauses be resolved, particularly in light of the principle that ambiguities in a contract are construed against the party who drafted it?