Tan Chiong Sian vs. Inchausti and Co.

A common carrier by sea is not liable for the loss of goods caused by a fortuitous event or force majeure where it proves that the loss did not arise from its negligence or failure to take the precautions usually adopted by careful persons.

Tan Chiong Sian, also referred to as Tan Chinto, claimed ownership of 205 bundles or cases of general merchandise that Inchausti & Co., a shipping firm, received for carriage from Manila to Catarman, Samar, with transshipment at Gubat, Sorsogon. The shipment was covered by bills of lading and governed by the Civil Code provisions on carriers and the Code of Commerce provisions on maritime transportation and shipwreck. The dispute concerned the respective risks of shipper and carrier over goods lost during maritime carriage.

On January 11, 1909, Tan Chiong Sian, also called Tan Chinto, filed a complaint against Inchausti & Co., which he amended on January 28 and again on October 27, 1909. He alleged that on or about November 25, 1908, he delivered to the defendant 205 bundles or cases of general merchandise belonging to him; that Inchausti & Co. bound itself to deliver the merchandise in Catarman, Samar, to Ong Bieng Sip; and that he agreed to pay P250 upon delivery. The defendant, according to the complaint, neither carried nor delivered the merchandise to Ong Bieng Sip in Catarman but unjustly and negligently failed to do so, with the result that the merchandise was almost totally lost. Had the defendant complied, the merchandise would have been worth P20,000 in Catarman on the date it should have been delivered; the defendant owed that sum, plus legal interest from November 25, 1908, and costs.

In its answer, Inchausti & Co. admitted some allegations and denied others. As its first special defense, it alleged that on or about November 28, 1908, it received in Manila from Ong Bieng Sip 205 bundles, bales, or cases of merchandise to be placed on board the steamer Sorsogon, belonging to the defendant, for shipment to the port of Gubat, Sorsogon, and then transshipped to another of the defendant’s vessels for transportation to Catarman, Samar, and delivery to Ong Bieng Sip. The defendant claimed it did not know and was not notified that Tan Chiong Sian had any interest in the merchandise and had made no contract with him relative to its transportation. It issued three bills of lading, Nos. 38, 39, and 76, to Ong Bieng Sip, who accepted them and the contract printed on their backs. The merchandise was placed on the Sorsogon and carried to Gubat, arriving on November 28, 1908; because the lorcha Pilar was not yet at Gubat, the goods were unloaded and stored in the defendant’s warehouses. On December 4, the lorcha Pilar arrived, and after necessary work the goods received from Ong Bieng Sip were taken aboard, together with other merchandise belonging to the defendant, for transportation to Catarman. Before the lorcha could leave, a strong wind arose and increased until early the following morning; the lorcha was dragged and driven ashore despite the means employed and notwithstanding five anchors, and it was wrecked and completely destroyed, with the merchandise scattered on the shore. The defendant alleged that the lorcha was in good condition, properly equipped, and had a sufficient crew under a skillful patron, and that the wreck was due solely to the irresistible force of the storm. It gathered the salvaged goods, but because they could not be preserved, it sold them at public auction before a notary for P1,693.67, the reasonable value in their salvaged condition; expenses of P151.35 were paid by the defendant. It offered the amount realized, less expenses and the P250 freight, to Ong Bieng Sip or to any person establishing subrogation. As its second special defense, the defendant invoked a condition of the shipping contract that it should not be liable for more than P25 for any bundle or package unless the value of its contents was stated in the bill of lading, which the shipper did not do. It prayed for absolution from the complaint.

The Supreme Court found that on November 25, 1908, Inchausti & Co. received in Manila from Ong Bieng Sip 205 bundles, bales, or cases of goods to be conveyed by the steamer Sorsogon to Gubat, Sorsogon, where they were to be transshipped to another vessel belonging to the defendant and transported to Catarman, Samar, for delivery to the Chinese shipper with whom the defendant made the shipping contract. Three bills of lading, Nos. 38, 39, and 76, marked as Exhibits A, B, and C, were executed. The Sorsogon arrived at Gubat on November 28; because the lorcha Pilar was not yet there, the cargo was unloaded and stored in the defendant’s warehouses. Several days later, the lorcha arrived, and after its cargo was unloaded, Ong Bieng Sip’s merchandise, together with other goods owned by Inchausti & Co., was taken aboard for Catarman. On December 5, 1908, before the Pilar could leave for its destination, towed by the launch Texas, a strong wind and heavy sea arose; the lorcha was driven upon the shore and wrecked, and its cargo, including the 205 packages, was scattered on the beach. The defendant’s laborers gathered the merchandise, and because it was impossible to preserve it after salvage, it was sold at public auction before a notary for P1,693.67.

The contract between Ong Bieng Sip and Inchausti & Co. provided for transportation from Manila to Catarman, although the merchandise taken aboard the Sorsogon was to be transshipped at Gubat to another vessel for the final leg. It was not stipulated that the Sorsogon should convey the goods to their final destination, nor that the transshipment vessel should be a steamer. Ong Bieng Sip assented to these arrangements and made no protest when the goods were unloaded and stored at Gubat or when they were loaded onto the lorcha. He knew that the lorcha had to be towed by a vessel like the launch Texas, which the defendant had been using for similar operations. The record did not show that the defendant had any other means at Gubat for conveying merchandise to Catarman. A lorcha was not easily managed or steered; at sea it could move only by wind and sails, and along the coast and estuaries it could move only by poling, so it was usually towed by the launch Texas.

The record did not show that the patron of the lorcha received notice from the captain of the steamer Ton Yek, or from the Government observatory, of the approaching storm from the afternoon of December 4 until the morning of December 5. Captain Juan Domingo Alberdi did not testify that he gave such notice to the patron, and the patron, Mariano Gadvilao, did not testify that he received such notice from the captain of the Ton Yek or from the person in charge of the Government observatory. Gadvilao testified that only between 10 and 11 o’clock on Saturday morning, December 5, was he informed by Inchausti & Co.’s agent in Gubat that a baguio was approaching; he then dropped the four anchors on board and went ashore to get another anchor and a new cable. His testimony was corroborated by the defendant’s representative, Melchor Muñoz. The lorcha was held by five anchors and was well found and provided with proper equipment and a sufficient crew. The patron testified that at Gubat or its immediate vicinity there was no port adequate for shelter, and that even if advised between 10 and 11 o’clock of the approaching storm, it would have been impossible to spread sails or weigh anchor without being dragged or driven against the reefs; the craft had no steam or other motive power and could not change anchorage. The weather observer, Antonio Rocha, testified that the notice received from the Manila Observatory on the afternoon of December 4, regarding a storm travelling from the east of the Pelew Islands toward the northwest, was not made known to the people of Gubat; he merely left a memorandum on the desk of the station and did not apprise the public until he received another notice from Manila at 8:20 on Saturday morning, December 5, after which he made a public announcement and advised the authorities.

The patron was charged with gross negligence for not removing the lorcha to the Sabang River, about half a mile away. He testified that the weather during the night of December 4 was not threatening and he did not believe there would be a storm; that he knew the Sabang River; and that the loaded lorcha could not enter because there was insufficient water in the channel. An official chart of the port of Gubat showed that the bar of the Sabang River was covered by only one and a half feet of water at ordinary low tide, while the loaded lorcha Pilar drew six and a half feet. At 8:30 in the morning the tide was still low, and the condition of the sea would not have permitted the lorcha to take shelter in the river even with a towboat. The chart was exhibited in evidence and not rejected or assailed by the plaintiff; under section 275 of the Code of Civil Procedure, the natural phenomenon of the tides in the official hydrographic map, Exhibit 7, was prima facie evidence and judicially recognized without proof unless contrary facts were proven, which the plaintiff did not do. Under section 320, the chart was prima facie evidence of particulars of general notoriety and interest, such as the shoals in the bar and mouth of the Sabang River. The plaintiff’s oral evidence on the depth of the river could not overcome the chart. A Chinese witness, Antonio B. Yap Cunco, testified that larger vessels might have entered the Sabang River some seven or nine years before, but he did not state whether they did so at high tide, and changes could have occurred in the river bed, mouth, and bar since 1901. The patron, who was acquainted with the port and cove of Gubat, positively declared that the lorcha Pilar could not enter the Sabang River because of her draft and low water. He also testified that it was impossible to hoist sails or weigh anchors on the morning of December 5 because of the force of the wind and because the boat would immediately have been dragged or driven upon the shoals; although anchored in a channel some 300 brazas wide, the Pilar had no motive power and could not move without being dashed against the coast. His testimony was uncontradicted. He remained with the sailors on board during the hurricane from the morning of December 5 until early the following morning, December 6, without abandoning the boat, and kept to his post until after the wreck. He then solicited help from the captain of the steamer Ton Yek, reached land, reported the occurrence to Inchausti & Co.’s representative and to the public official from whom he obtained the document of protest, Exhibit 1.

The trial court rendered judgment in favor of Tan Chiong Sian, but the Supreme Court found that the loss was caused by a violent storm from the Pacific Ocean and that the carrier, its agents, and the patron had taken the precautions available to them. The record contained no proof that the loss or damage occurred through carelessness or negligence on the part of the defendant company, its agents, or the patron of the lorcha, or because they failed to take the precautions usually adopted by careful and diligent persons.

• Force Majeure: Appellant Inchausti & Co. argued that the loss of the merchandise was caused by a violent storm or force majeure, not by its fault or negligence, and that it should therefore be exempt from liability.
• No Contract with Plaintiff: Appellant maintained that it contracted with Ong Bieng Sip, not with Tan Chiong Sian, and that it did not know and was not notified that Tan Chiong Sian had any interest in the merchandise.
• Due Diligence: Appellant argued that the lorcha Pilar was in good condition, properly equipped, and manned by a sufficient crew under a skillful patron; that the patron dropped four anchors and procured an extra anchor and new cable when warned of the storm; and that its agent furnished the requested articles.
• Transshipment and Delay: Appellant argued that the contract contemplated transshipment at Gubat and did not require the Sorsogon or a steamer to carry the goods to Catarman; that the shipper assented to the use of the lorcha; and that there was no delay or abandonment.
• Limited Liability: Appellant invoked the contract condition limiting its liability to P25 per bundle or package unless the value was stated in the bill of lading, which the shipper did not do.

• Breach of Contract: Respondent Tan Chiong Sian alleged that Inchausti & Co. bound itself to deliver the merchandise in Catarman, Samar, to Ong Bieng Sip but failed to do so.
• Negligence: Respondent alleged that the defendant unjustly and negligently failed to carry and deliver the merchandise, causing it to be almost totally lost.
• Damages: Respondent claimed that had the defendant complied with its obligation, the merchandise would have been worth P20,000 in Catarman on the date of delivery, and that the defendant owed that amount plus legal interest from November 25, 1908.
• Gross Negligence in Storm Preparation: Respondent charged the patron of the lorcha with gross negligence for not removing the craft to the Sabang River, about half a mile away, and introduced oral evidence on the depth of the river and testimony that larger vessels had entered years before.

• Carrier’s Liability for Loss: Whether Inchausti & Co. is liable for the loss of the 205 bundles or cases of merchandise and its failure to deliver them at Catarman.
• Force Majeure: Whether the loss was caused by a fortuitous event or force majeure, exempting the carrier from liability.
• Negligence and Precautions: Whether the carrier, its agents, or the patron of the lorcha Pilar were negligent or failed to take the precautions usually adopted by careful persons.
• Transshipment and Delay: Whether the transshipment at Gubat and the use of the lorcha Pilar constituted negligence, abandonment, or delay.
• Sabang River and Storm Warnings: Whether the patron was grossly negligent in not moving the lorcha to the Sabang River or otherwise protecting it after storm warnings.

• Carrier’s Liability for Loss: No. The defendant was absolved because the loss and failure to deliver were caused by force majeure and no negligence was proven.
• Force Majeure: Yes. The loss was due to a violent storm or hurricane that wrecked the lorcha; under Code of Commerce articles 361, 362, 840, and 841, the carrier is exempt absent negligence.
• Negligence and Precautions: No. The carrier, its agents, and the patron took the precautions required of careful persons; no proof of negligence or failure to take usual precautions was presented.
• Transshipment and Delay: No. The contract contemplated transshipment; the shipper assented; no other means existed at Gubat; and there was no delay or abandonment.
• Sabang River and Storm Warnings: No. The loaded lorcha could not have entered the Sabang River because of low tide, shallow bar, and its draft; the patron remained aboard and performed his duties.

• Carrier’s Liability for Loss: The Court applied Civil Code articles 1601 and 1602 and Code of Commerce articles 361 and 362. Under article 1602, carriers are liable for loss of and damage to goods unless they prove that the loss or damage arose from a fortuitous event or force majeure. Under article 361, merchandise is transported at the risk and venture of the shipper unless the contrary was expressly stipulated; all damages by accident, force majeure, or the nature or defect of the articles are for the shipper’s account, and proof of the accident is incumbent on the carrier. Under article 362, the carrier remains liable if the loss or damage occurred through its negligence or because it did not take the precautions usually adopted by careful persons. The record showed that the loss was due to the violent storm that wrecked the lorcha Pilar, and the plaintiff admitted that the wreck occurred between the afternoon of December 5 and early morning of December 6, 1908. No stipulation contrary to article 361 appeared. The defendant was therefore not liable.
• Force Majeure: The Court cited Code of Commerce articles 840 and 841. Article 840 provides that losses and damages suffered by a vessel and her cargo by reason of shipwreck or stranding are individually for the account of the owners, with the part of the wreck saved belonging to them proportionally. Article 841 allows an owner or freighter to demand indemnity from the captain if the wreck or stranding arose through malice, negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and supplied. The general rule is that the loss of the vessel and cargo as a result of shipwreck falls upon the respective owners, save for the exceptions in article 841. The evidence established that the lorcha was well found, properly equipped, and had a sufficient crew under a skillful patron, and that the wreck was due solely to the irresistible force of the storm. Force majeure therefore exempted the defendant.
• Negligence and Precautions: No proof of negligence was presented. The patron was informed between 10 and 11 o’clock on the morning of December 5 that a baguio was approaching; he dropped four anchors, obtained an extra anchor and a new cable, and the lorcha was held by five anchors. The defendant’s agent furnished the articles requested by the patron. The patron remained on board during the hurricane until the wreck, then sought help and made the proper protest. The Court found that these measures were those a diligent and careful person would have taken. The defendant also had its own goods on board and lost them, showing an interest equal to the shipper’s in preserving the craft and cargo. There was no evidence of failure to take the precautions usually adopted by careful and diligent persons.
• Transshipment and Delay: The contract provided transportation from Manila to Catarman, with transshipment at Gubat. It did not stipulate that the Sorsogon should convey the goods to their final destination, nor that the transshipment vessel should be a steamer. Ong Bieng Sip assented to the arrangements and made no protest when the goods were unloaded and stored at Gubat or loaded onto the lorcha. He knew the lorcha had to be towed by the launch Texas. The record did not show that the defendant had any other means at Gubat for conveying merchandise to Catarman. No term was fixed for delivery, and there was no proof of delay in loading or transporting the goods. From November 28 until the wreck, no vessel carrying merchandise made the voyage from Gubat to Catarman, and the defendant’s own goods were on the same lorcha and suffered the same damage. There was therefore no negligence, abandonment, or delay.
• Sabang River and Storm Warnings: The patron’s testimony, corroborated by the official chart and unrebutted, showed that the loaded lorcha drew six and a half feet, while the Sabang River bar had only one and a half feet of water at ordinary low tide; at 8:30 in the morning the tide was still low, and the condition of the sea would not have permitted shelter. The chart was prima facie evidence under sections 275 and 320 of the Code of Civil Procedure, and the plaintiff’s oral evidence could not overcome it. The patron could not move the lorcha by its own power because it had no steam engine, and it could not be towed in time. Even if moved, Gubat was an open roadstead with no shelter from the winds. The storm warning was not made public until 8:20 on the morning of December 5, and the patron acted when informed. The Court therefore found no gross negligence on his part.

• Common Carrier’s Liability for Loss of Goods — Under Civil Code article 1602 and Code of Commerce articles 361 and 362, a carrier is liable for loss of or damage to goods unless it proves that the loss or damage arose from a fortuitous event or force majeure. Merchandise is transported at the risk and venture of the shipper unless the contrary was expressly stipulated, but the carrier remains liable if the loss occurred through its negligence or failure to take the precautions usually adopted by careful persons. The Court applied this rule by absolving the carrier because the loss was caused by a storm and no negligence was proven.
• Force Majeure as Exemption from Carrier Liability — A fortuitous event or force majeure exempts a common carrier from liability for loss of goods when it is the cause of the loss and the carrier is free from negligence. The carrier must prove the accident, but once force majeure is established and no negligence is shown, the loss falls on the shipper. The Court found that the violent storm that wrecked the lorcha Pilar was force majeure and that the carrier, its agents, and the patron had taken the necessary precautions.
• Shipwreck and Stranding — Under Code of Commerce articles 840 and 841, losses and damages suffered by a vessel and her cargo by reason of shipwreck or stranding are individually for the account of the owners, with the saved portion belonging to them proportionally. An owner or freighter may demand indemnity from the captain only if the wreck or stranding arose through malice, negligence, or lack of skill of the captain, or because the vessel was insufficiently repaired and supplied. The Court applied this rule because the lorcha was seaworthy and the patron was skillful, so the exception did not apply.
• Diligence Required of a Carrier — A carrier must take the precautions usually adopted by careful and diligent persons. If it does so, it is not liable for a loss caused by force majeure. The Court found that the patron dropped anchors, procured an extra anchor and cable, remained aboard during the hurricane, and that the defendant’s agent furnished the requested articles, all of which constituted the required diligence.
• Transshipment and Contract Terms — Where the contract of carriage contemplates transshipment and does not specify the type of vessel for the final leg, and the shipper assents to the arrangements, the carrier does not incur liability merely from using a lorcha or storing goods at an intermediate port. The Court found no negligence or delay because the shipper knew of and did not object to the transshipment and because no other means of conveyance existed at Gubat.

• "Carriers are also liable for the loss of and damage to the things which they receive, unless they prove that the loss or damage arose from a fortuitous event or force majeure." — This states the general rule of carrier liability and the force majeure exception under Civil Code article 1602, which the Court applied to absolve the carrier.
• "Merchandise shall be transported at the risk and venture of the shipper, unless the contrary was expressly stipulated." — This is the risk-allocation rule under Code of Commerce article 361, which the Court used to hold that the loss fell on the shipper absent an express stipulation to the contrary.
• "The carrier, however, shall be liable for the losses and damages arising from the causes mentioned in the foregoing article if it is proved that they occurred on account of his negligence or because he did not take the precautions usually adopted by careful persons, unless the shipper committed fraud in the bill of lading, stating that the goods were of a class or quality different from what they really were." — This is the exception to the force majeure exemption under Code of Commerce article 362, which the Court found inapplicable because no negligence was proven.
• "From all the foregoing it is concluded that the defendant is not liable for the loss and damage of the goods shipped on the lorcha Pilar by the Chinaman, Ong Bieng Sip, inasmuch as such loss and damage were the result of a fortuitous event or force majeure, and there was no negligence or lack of care and diligence on the part of the defendant company or its agents." — This is the ratio decidendi of the majority, summarizing the holding that the carrier was exempt from liability.

• Civil Code, Article 1601 — Provides that carriers of goods by land or by water are subject, with regard to the keeping and preservation of the things entrusted to them, to the same obligations as innkeepers under articles 1783 and 1784, without prejudice to the Code of Commerce on transportation by sea and land. The Court cited this as part of the governing law on carrier liability.
• Civil Code, Article 1602 — Provides that carriers are liable for the loss of and damage to the things they receive unless they prove that the loss or damage arose from a fortuitous event or force majeure. The Court applied this to hold that the carrier was exempt because the loss was caused by a storm.
• Civil Code, Article 1783 — Provides that the depositum of goods made by travelers in inns or hostelries is necessary and that keepers are liable as bailees, provided notice is given and travelers take advised precautions. The Court cited this in connection with article 1601.
• Civil Code, Article 1784 — Provides that the liability of innkeepers includes damages caused by their servants or employees or by strangers, but not those arising from robbery or force majeure. The Court cited this in connection with article 1601.
• Code of Commerce, Article 361 — Provides that merchandise shall be transported at the risk and venture of the shipper unless the contrary was expressly stipulated; all damages by accident, force majeure, or the nature or defect of the articles are for the shipper’s account; and proof of the accident is incumbent on the carrier. The Court applied this to place the risk of the storm loss on the shipper.
• Code of Commerce, Article 362 — Provides that the carrier is liable for losses and damages from the causes in article 361 if it is proved that they occurred through its negligence or failure to take the precautions usually adopted by careful persons, unless the shipper committed fraud in the bill of lading. The Court found no negligence and therefore no liability.
• Code of Commerce, Article 363 — Provides that the carrier must deliver the goods in the same condition as stated in the bill of lading, without detriment or impairment, and if it does not, it must pay the value at the place and time delivery should have been made; if part is delivered, the consignee may refuse when it cannot use the goods without the others. The Court cited this among the provisions on the carrier’s obligation to deliver.
• Code of Commerce, Article 840 — Provides that losses and damages suffered by a vessel and her cargo by reason of shipwreck or stranding are individually for the account of the owners, with the saved part belonging to them proportionally. The Court applied this to the loss of the lorcha and cargo.
• Code of Commerce, Article 841 — Provides that if the wreck or stranding arises through malice, negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and supplied, the owner or freighters may demand indemnity from the captain under articles 610, 612, 614, and 621. The Court found this exception inapplicable because the lorcha was seaworthy and the patron skillful.
• Code of Commerce, Article 612, Rules 14 and 15 — The Court noted that the patron was cognizant of the duties imposed by these rules and others in cases of shipwreck, and that he performed them by remaining aboard and making the proper protest.
• Code of Civil Procedure, Section 275 — Provides that the natural phenomenon of the tides, mentioned in an official hydrographic map, is prima facie evidence of the hours of its occurrence and the conditions of the port, and shall be judicially recognized without proof unless contrary facts are proven. The Court applied this to the official chart of the port of Gubat.
• Code of Civil Procedure, Section 320 — Provides that a chart is prima facie evidence of particulars of general notoriety and interest, such as the existence of shoals in the bar and mouth of the Sabang River. The Court used this to support the finding that the loaded lorcha could not enter the river.

Arellano, C.J., Mapa, and Johnson, JJ., concurred.

• Justice Moreland — The trial court’s decision should be affirmed. The carrier agreed to transport P14,000 worth of property from Manila to Catarman but never fulfilled its contract; instead, it left the goods on a lorcha at Gubat, where the lorcha foundered during a storm and the property was lost. The lorcha had no motive power of its own, was in waters directly exposed to the Pacific, at the height of typhoon season, and the tug Texas—its only means of locomotion and protection—was sent away. Although the Gubat observatory received notice of a baguio on December 4 and barometers dropped, the defendant’s agents did nothing to inform themselves or protect the goods until it was too late. Moreland argued that an act of God cannot excuse a carrier guilty of gross negligence; when the negligence of the carrier concurs with an act of God, the carrier remains liable; and the carrier must show that it did all that was necessary under the circumstances. He also disputed the shallow-river defense, noting that the water-logged lorcha was later poled to safety inside the river, and that common prudence required unloading the goods. He cited foreign authorities including Wing vs. New York, etc., Ry. Co., Philleo vs. Sanford, Mc-Graw vs. Baltimore and Ohio Ry. Co., Wolf vs. American Express Co., and Hart vs. Allen and Grant, as well as Manresa on Civil Code article 1105.
• Justices Carson and Trent — They dissented from the majority decision. The provided text does not set out a separate opinion for them.