Foreseen and avoidable

This is a case explaining the meaning of fortuitous event and the effect of the insured’s gross negligence on its right to recover under an insurance contract.

ANCO was a partnership engaged in shipping business. It owned a barge (D/B Lucio) and a tugboat M/T Anco. D/B Lucio had no engine of its own so it could not maneuver by itself and had to be towed by M/T Anco for it to move from one place to another.

On September 23, 1979, SMC shipped from Mandaue City, Cebu, on board the D/B/ Lucio towed by M/T Anco 40,550 cases of assorted beers to Estancia, Iloilo and San Jose, Antique. 20,000 cases of the cargoes were insured by FGU Insurance Corp for P858,500. The vessels arrived at San Jose Antique at about 1 o’clock in the afternoon of September 30, 1979. The tugboat left the barge immediately after reaching San Jose, Antique. At that time, the clouds over the area were dark and the waves were already big because of Typhoon Sisang. The arrastre workers unloading the cargoes began to complain about their difficulty in unloading the cargoes so SMC’s sales supervisor requested ANCO’s representative to transfer the barge to a safer place as it may not withstand the big waves.

ANCO’s representative however did not heed the request because he was confident that the barge could withstand the waves despite the fact that at that time it was the only vessel left at the wharf as other vessels already left to seek shelter at Malandong, five kilometers away which was a safer place. At about 10 to 11 p.m. of October 1, 1979, the crew of D/B Lucio abandoned the vessel because the barge’s rope attached to the wharf was cut off by the big waves. At about midnight the barge ran aground and 29,760 cases of beer valued at P1,346,197 were swept away and lost.

When SMC filed a complaint against ANCO to recover said amount for Breach of Contract of Carriage, ANCO denied liability because the losses were not due to its fault but by reason of a storm, a fortuitous event. ANCO also claimed that the loss of said cargoes occurred as a result of a risk insured against in the insurance policy issued by FGU and during the lifetime of the policy. So ANCO asserted that if it would be held liable to SMC, FGU should reimburse it of said amounts and damages. Was ANCO correct?

No. Fortuitous events or force majeure are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen were inevitable. It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or avoid.

In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact the other vessels in the port managed to transfer to another place, a circumstance which prompted the SMC supervisor to request that the barge be likewise transferred, but to no avail. Even if ANCO’s representative wanted to transfer it, they no longer had any means to do so as the tugboat had already departed, leaving the barge to its own devices. The tugboat captain should have had the foresight not to leave the barge alone considering the pending storm.

While the loss of the cargoes was admittedly due to Typhoon Sisang, a natural disaster, ANCO could not escape liability to SMC for the failure of its representative to exercise the extraordinary degree of diligence mandated by law. To be exempt from liability the natural disaster should have been the proximate and only cause of the loss. There must have been no contributory negligence on the part of the common carrier.

While the carelessness and negligence of the insured or his agents constitute no defense on the part of the insurer, this rule presupposes that such negligence or recklessness must not be of so gross as to amount to misconduct or wrongful acts; otherwise the insurer shall be released from liability under the insurance contract. In this case, there was blatant negligence on the part of ANCO as shown by the fact that on October 1, 1979, the only single vessel left at the wharf in San Jose was its barge, the D/B Lucio. This blatant negligence of ANCO’s employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from liability under the insurance contract (FGU Insurance Corp. vs. Court of Appeals et. al., G.R. 137775, March 31, 2005. 454 SCRA 337)

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