G.R. No. 159108 - Gold Line Tours, Inc. vs. Heirs of Lacsa

Case Summary (G.R. No. 159108)

Factual Background

Petitioner imported 15 metric tons of lactose crystals from Holland on November 4, 1976, packed in 600 paper bags of 25 kilos net each and stowed in a container van transshipped aboard the feeder vessel "Wesser Broker V-25" under Ben Lines Container, Ltd. The cargo was insured with Filipino Merchants Insurance Company, Inc. for P98,882.35 (equivalent to US$8,765.00 plus a fifty percent mark-up). Upon arrival at the Port of Manila the container was discharged and placed in the custody of arrastre operator E. Razon, Inc., and later delivered to petitioner through his broker. Of the 600 bags, 403 were found in bad order with spillage and loss later valued at P33,117.63.

Procedural History

Petitioner submitted a claim to Filipino Merchants Insurance Company, Inc. on February 16, 1977 for P33,117.63, which the insurer denied. Petitioner filed suit on August 2, 1977 in the Regional Trial Court of Manila for recovery of P33,117.63 with attorney’s fees and litigation expenses. The insurer answered, raised special defenses, and filed a compulsory counterclaim. The insurer in turn filed a third-party complaint against Ben Lines and E. Razon, Inc. Trial proceeded, with a preliminary hearing on prescription deferred. The trial court dismissed the complaint, counterclaim, and third-party complaint on March 31, 1986. Petitioner appealed to the Court of Appeals, which affirmed by decision dated February 18, 1988 and denied reconsideration on August 1, 1988. Petitioner then invoked this Court’s certiorari jurisdiction.

Trial and Appellate Findings

At trial petitioner relied on survey reports by the vessel’s surveyor, Worldwide Marine Cargo Survey Corporation, and the insurer’s protective surveyor, Adjustment Corporation of the Philippines, showing 403 bags in bad order with specified estimated spillages and an aggregate missing weight of 5,173 kilos. The Court of Appeals found that the petitioner’s identifying witness, Jose See, was incompetent to authenticate the vessel survey reports because he was not present at devanning; the appellate court emphasized documentary evidence that the container van bore a clean tally sheet and intact seal and lock on discharge, and that clean gate passes and delivery permit issued by the arrastre operator recorded delivery in good order and condition. On the merits the Court of Appeals further held that, even assuming damage, the insurer was not liable under the all risks policy unless petitioner proved that the loss was caused by an extra and fortuitous event or a peril of navigation rather than by ordinary wear, inherent vice, or perils of the ship.

The Parties' Contentions

Petitioner contended that 403 bags were delivered in bad order and that survey reports and the insurer’s own correspondence admitted the damage, thus establishing liability under the all risks insurance. The insurer contended that the survey reports were not properly authenticated, that the clean tally sheet and gate passes demonstrated delivery in good order, that the container was sealed and intact, and that petitioner failed to prove that the loss arose from perils covered by the policy rather than from unseaworthiness, inherent vice, or ordinary circumstances excluded from an all risks coverage.

Supreme Court’s Assessment of the Evidence

The Court observed that Filipino Merchants Insurance Company, Inc. itself had caused and relied upon a protective survey by the Adjustment Corporation of the Philippines and was therefore bound by that survey report. The Court noted that the protective survey corroborated the vessel surveyor’s findings and that petitioner’s witness, Jose See, had been present when the goods were unloaded and received at the consignee’s warehouse and had seen the 403 damaged bags. The insurer’s letter dated May 26, 1977 expressly acknowledged that 403 bags appeared in bad order as indicated in the vessel surveyor’s report; the Court treated that admission as sufficient proof of loss or damage.

Legal Basis and Reasoning

The Court examined the all risks clause of the policy, which provided that the insurance was "against all risks of loss or damage to the subject matter insured" but expressly excluded loss proximately caused by delay or inherent vice or nature of the subject matter insured, and stated that claims were payable irrespective of percentage (Exh. B). The Court held that the clause was clear and admitted of no restrictive construction; it created a special insurance that placed the burden on the insurer to prove that any loss fell within an expressly enumerated exception. The Court rejected the Court of Appeals’ narrower view that an all risks marine policy covered only losses resulting from extra and fortuitous events connected with navigation and that ordinary circumstances or

Case Syllabus (G.R. No. 159108)

Parties and Procedural Posture

CHOA TIEK SENG, DOING BUSINESS UNDER THE NAME AND STYLE OF SENG'S COMMERCIAL ENTERPRISES was the consignee and petitioner who sued for loss sustained by imported cargo.
FILIPINO MERCHANTS INSURANCE COMPANY, INC. was the respondent insurer that issued an all risks cargo policy and denied liability.
BEN LINES CONTAINER, LTD. was the respondent carrier involved in transshipment and devanning of the container.
E. RAZON, INC. was the respondent arrastre operator and broker who took custody of the container and issued gate passes.
The Regional Trial Court of Manila dismissed the complaint, counterclaim, and third-party complaint and entered judgment for respondents.
The Court of Appeals in CA-G.R. CV No. 09627 affirmed the RTC decision by opinion dated February 18, 1988.
The petitioner filed a petition for review on certiorari to the Supreme Court, which rendered the decision under review.

Key Factual Allegations

The petitioner imported fifteen metric tons of lactose crystals from Holland packed in six hundred 6-ply paper bags with polyethylene inner bags, each bag weighing 25 kilos net.
The goods were loaded at Rotterdam aboard the mother vessel MS Benalder and transshipped on feeder vessel Wesser Broker V-25 of Ben Lines.
The shipment was insured by Filipino Merchants Insurance Company, Inc. for P98,882.35 equivalent to US$8,765.00 plus fifty percent mark-up under an all risks cargo policy.
Upon arrival in Manila the container was discharged and delivered to the custody of E. Razon, Inc., the arrastre operator, before delivery to the petitioner.
Of the six hundred bags delivered to the consignee, four hundred three bags were found in bad order with spillage and an assessed loss later valued at P33,117.63.
The petitioner filed a claim dated February 16, 1977 for P33,117.63 which the insurer denied on grounds that the insured failed to avert or minimize loss and that the van showed no evidence of spillage.

Claims and Defenses

The petitioner sought payment of P33,117.63 as damages under the insurance policy, plus attorney's fees and litigation expenses.
Filipino Merchants Insurance Company, Inc. denied material allegations, asserted special defenses, and filed a compulsory counterclaim.
The insurer filed a third-party complaint against Ben Lines and E. Razon, Inc. asserting indemnity and shifting liability.
Ben Lines pleaded lack of privity with the insurer and raised prescription under the Carriage of Goods by Sea Act as a defense.
E. Razon, Inc. denied liability and contended that the petitioner had no valid cause of action against it.

Evidence and Findings Below

The petitioner introduced the survey report of the vessel surveyor, Worldwide Marine Cargo Survey Corporation, and the insurer's protective survey by Adjustment Corporation of the Philippines indicating four hundred three bags were torn with specified percentage spillage by batch.
The insurer prod