Case Digest (G.R. No. 85141)
Facts:
In December 1976 Choa Tiek Seng, consignee of a shipment of fishmeal from Bangkok to Manila, insured the cargo under Policy No. M-2678 with Filipino Merchants Insurance Co., Inc. for P267,653.59; upon discharge at Manila on December 11, 1976 surveys reported a total of 227 bags damaged or short, and Choa Tiek Seng claimed P51,568.62 which the insurer refused to pay. The trial court awarded the claim and ordered third-party recovery against the carrier and arrastre contractor; the Court of Appeals affirmed the award to the consignee and modified the third-party adjudication, prompting this petition for review.
Issues:
- Did the Court of Appeals err in applying the all risks clause when it held the insurer liable absent proof of a specific fortuitous cause?
- Did the trial court and appellate court err in holding that Choa Tiek Seng had an insurable interest in the cargo?
- Was Choa Tiek Seng barred from recovery for alleged nondisclosure or fraud in procuring the policy?
Ruling:
The petition was DENIED and the decision of the Court of Appeals was AFFIRMED in toto. The Supreme Court held that under the all risks clause the insurer was liable because the consignee proved damage to the goods and the insurer failed to establish that the loss fell within the policy exceptions. The Court also held that Choa Tiek Seng possessed an insurable interest as vendee/consignee under the perfected contract of sale and that allegations of fraud or nondisclosure were not sustained and were procedurally barred when not raised below.
Ratio:
The Court construed the all risks clause broadly and held that the insured need only prove the goods were sound when the policy attached and damaged upon discharge; thereafter the burden shifted to the insurer to prove exclusion by an excepted peril such as delay or inherent vice, which the insurer did not do. The Court found that a perfected contract of sale under the C & F terms vested the consignee with an equitable title and an existing interest sufficient for insurance, relying on the Insurance Code definition of insurable interest and on Article 1523, Civil Code principles; moreover, defenses not raised in the court a quo could not be interposed for the first time on appeal.
Doctrine:
- The all risks clause is to be read broadly and covers losses except those proximately caused by expressly excepted perils, shifting to the insurer the burden of proving the exception.
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