Filipino Merchants Insurance v CA G.R. No. 85141 November 28, 1989

J. Regalado

Facts:

Choa insured 600 tons of fishmeal for the sum of P267,653.59 from Bangkok, Thailand to Manila against all risks under warehouse to warehouse terms. What was imported in the SS Bougainville was 59.940 metric tons at $395.42 a ton. The cargo was unloaded from the ship and 227 bags were found to be in bad condition by the arrastre.

Choa made a formal claim against the defendant Filipino Merchants Insurance Company for P51,568.62 He also presented a claim against the ship,  but the defendant Filipino Merchants Insurance Company refused to pay the claim. The plaintiff brought an action against the company and presented a third party complaint against the vessel and the arrastre contractor.

The court below, after trial on the merits, rendered judgment in favor of private respondent, for the sum of P51,568.62 with interest at legal rate.

The common carrier, Compagnie, was ordered to pay as a joint debtor.

On appeal, the respondent court affirmed the decision of the lower court insofar as the award on the complaint is concerned and modified the same with regard to the adjudication of the third-party complaint. A motion for reconsideration of the aforesaid decision was denied. The AC made Filipino Merchants pay but absolved the common carrier, Compagnie. Hence this petition.

Issues:

1. WON the "all risks" clause of the marine insurance policy held the petitioner liable to the private respondent for the partial loss of the cargo, notwithstanding the clear absence of proof of some fortuitous event, casualty, or accidental cause to which the loss is attributable.

2. WON                The Court of Appeals erred in not holding that the private respondent had no insurable interest in the subject cargo, hence, the marine insurance policy taken out by private respondent is null and void.

Held: No. No. Petition denied.

Ratio:

1. The "all risks clause" of the Institute Cargo Clauses read as follows:

“5. This insurance is against all risks of loss or damage to the subject-matter insured but shall in no case be deemed to extend to cover loss, damage, or expense proximately caused by delay or inherent vice or nature of the subject-matter insured. Claims recoverable hereunder shall be payable irrespective of percentage.“

An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses by an accidental cause of any kind. “Accident” is construed by the courts in their ordinary and common acceptance.

The very nature of the term "all risks" must be given a broad and comprehensive meaning as covering any loss other than a willful and fraudulent act of the insured. This is pursuant to the very purpose of an "all risks" insurance to give protection to the insured in those cases where difficulties of logical explanation or some mystery surround the loss or damage to property.  

Institute Cargo Clauses extends to all damages/losses suffered by the insured cargo except (a) loss or damage or expense proximately caused by delay, and (b) loss or damage or expense proximately caused by the inherent vice or nature of the subject matter insured.

Generally, the burden of proof is upon the insured to show that a loss arose from a covered peril, but under an "all risks" policy the burden is not on the insured to prove the precise cause of loss or damage for which it seeks compensation. The insured under an "all risks insurance policy" has the initial burden of proving that the cargo was in good condition when the policy attached and that the cargo was damaged when unloaded from the vessel. The burden then shifts to the insurer to show the exception to the coverage. This creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the burden of establishing that the loss was due to the peril falling within the policy's coverage; the insurer can avoid coverage upon demonstrating that a specific provision expressly excludes the loss from coverage.

Under an 'all risks' policy, it was sufficient to show that there was damage occasioned by some accidental cause of any kind, and there is no necessity to point to any particular cause.

2. Section 13 of the Insurance Code- anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction

Insurable interest in property may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises.

Choa, as vendee/consignee of the goods in transit, has such existing interest as may be the subject of a valid contract of insurance. His interest over the goods is based on the perfected contract of sale. The perfected contract of sale between him and the shipper of the goods operates to vest in him an equitable title even before delivery or before conditions have been performed.

Further, Article 1523 of the Civil Code provides that where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer. The Court has heretofore ruled that the delivery of the goods on board the carrying vessels partake of the nature of actual delivery since, from that time, the foreign buyers assumed the risks of loss of the goods and paid the insurance premium covering them.