G.R. No. L-6092, March 8, 1912
TAN CHIONG SIAN, plaintiff-appellee, vs. INCHAUSTI AND CO., defendant-appellant.

FACTS

Tan Chiong Sian (plaintiff) delivered 205 bundles of merchandise to Inchausti & Co. (defendant), a shipping firm, for transport from Manila to Catarman, Samar, for a freight fee of P250. The goods were to be delivered to Ong Bieng Sip. The defendant issued bills of lading to Ong Bieng Sip, which contained a clause limiting liability to P25 per package unless a higher value was declared. No higher value was declared. The goods were shipped on the steamer Sorsogon to Gubat, Sorsogon, for transshipment to the lorcha Pilar bound for Catarman. Due to the Pilar’s absence in Gubat, the goods were stored in the defendant’s warehouse. When the Pilar arrived, the goods were loaded, but a storm subsequently drove the vessel ashore, causing wreckage and damage to the cargo. The defendant salvaged and auctioned the goods, netting P1,693.67, and offered this sum (minus expenses and freight) to Ong Bieng Sip. Tan Chiong Sian sued for the full value of the goods (P20,000), alleging negligence and breach of contract. The trial court ruled in favor of the plaintiff, awarding P14,642.63. The defendant appealed, arguing that the loss was due to a fortuitous event (the storm) and that its liability was limited by the bills of lading.

ISSUE

1. Whether the defendant carrier is liable for the loss of the goods.
2. Whether the liability limitation clause in the bills of lading is valid and applicable.

RULING

1. Yes, the defendant carrier is liable. The Court found that the defendant was negligent. The goods were unnecessarily stored in Gubat and then loaded onto the Pilar despite known storm risks. Evidence showed that the defendant’s agents could have moved the vessel to safety or unloaded the cargo before the storm intensified. The loss was not solely due to a fortuitous event but to the defendant’s failure to exercise due diligence. Under Article 1101 of the Civil Code, a debtor (carrier) is liable for damages arising from negligence in fulfilling an obligation.

2. The liability limitation clause is invalid under the circumstances. The Court held that such clauses, which limit a carrier’s liability to a nominal amount (P25 per package), are contrary to public policy and the carrier’s duty of extraordinary diligence. A carrier cannot contract away its liability for negligence. The clause was deemed unreasonable and unenforceable, as it would allow the carrier to evade responsibility for its own fault.

DISPOSITION: The Supreme Court affirmed the trial court’s judgment, holding Inchausti & Co. liable for the actual damages suffered by Tan Chiong Sian. The award of P14,642.63 with legal interest was upheld. Costs against the defendant.