Case Summary (G.R. No. 138810)
Factual Background
On May 22, 1980, the Luzon Stevedoring Corporation (LUZTEVECO) offered to ship the FAO's rice seeds to Vietnam. Following formal acceptance of the offer by FAO on May 28, 1980, the cargo was loaded onto LUZTEVECO Barge No. LC-3000, and a marine cargo insurance policy was issued by Pan Malayan Insurance Corporation on June 16, 1980, covering the shipment for P5,250,000.00. The shipment was dispatched for Vaung Tau, Vietnam, on June 16, but returned to Manila before leaving again on June 21, raising concerns about unauthorized deviation from the intended route.
Incident of Loss
On June 26, 1980, FAO was informed that the barge had sunk in the China Sea. After the sinking, FAO filed a claim under the marine insurance policy for the lost shipment. Although LUZTEVECO later reported the recovery of some shipment, compensation for the losses was not provided.
Survey and Claim Denial
A survey conducted by Pan Asiatic Adjustment and Marine Surveying Corporation concluded with partial findings which led to the denial of FAO's claim. Subsequent surveys revealed extensive damage to the rice seeds, with reports indicating that a significant majority of the shipment was rendered valueless for the intended use due to wetting and mismanagement by LUZTEVECO.
Legal Proceedings
FAO initiated Civil Case No. 41716 against LUZTEVECO and Pan Malayan Insurance Corporation, resulting in a judgment rendered on December 14, 1987, where both defendants were ordered to jointly indemnify FAO for the full insured value of the rice seeds, along with attorney's fees and litigation costs. The case was later appealed by Pan Malayan Insurance Corporation, which was primarily contesting the finding of total loss.
Court of Appeals Decision
On July 20, 1990, the Court of Appeals affirmed the trial court’s decision, only modifying the amount awarded for attorney’s fees. The appellate court upheld that there was a total loss of the shipment based on substantial evidence, highlighting that the primary intention of FAO was not fulfilled due to the extensive damage to the cargo.
Issues on Appeal
The central issues raised by the petitioner included the claim that the decision of the appellate court was erroneous regarding the actual loss classification and the obligation to pay the full insured amount. Petitioner contended that not every bag was lost and thus claimed only a partial loss.
Findings on Total Loss
The respondent court clarified the nature of total loss as defined under the Insurance Code, explicating that both actual loss and constructive loss apply. It was determined that FAO experienced actua
...continue readingCase Syllabus (G.R. No. 138810)
Case Background
- The case originated from a shipment of 1,500 metric tons of IR-36 certified rice seeds intended for Kampuchea by the Food and Agricultural Organization of the United Nations (FAO).
- FAO arranged for the shipment through Luzon Stevedoring Corporation (LUZTEVECO) on May 22, 1980, agreeing to pay freight fees of $55.50 per metric ton, totaling US$83,325.92 for one lot.
- The cargo was loaded on LUZTEVECO Barge No. LC-3000, consisting of 34,122 bags of rice seeds purchased for P4,602,270.00.
- A marine cargo insurance policy was secured from Pan Malayan Insurance Corporation (petitioner) for P5,250,000.00 on June 16, 1980.
Shipment Incident
- FAO instructed LUZTEVECO to deliver the cargo to Vaung Tau, Vietnam, noting the shipment’s sensitivity to delays due to germination risks.
- On June 23, 1980, FAO learned of an unauthorized deviation when LUZTEVECO’s tugboat and barge returned to Manila after initially departing.
- The barge sank in the China Sea on June 26, 1980, leading FAO to file a claim under the marine insurance policy.
Recovery Efforts and Claim Filing
- FAO was later informed of the recovery of the lost shipment but faced delays in compensation from both LUZTEVECO and Pan Malayan Insurance.
- A survey by Pan Asiatic Adjustment and Marine Surveying Corporatio