Filipino Merchants v.
CA- Insurable Interest
179 SCRA 638
Facts:
> The Chao Tiek Seng a consignee of the shipment of fishmeal loaded on board the vessel SS Bougainville and
unloaded at the Port of Manila on or about December 11, 1976 and seeks to recover from Filipino the amount of
P51,568.62 representing damages to said shipment which has been insured by Filipino.
> Filipino brought a third party complaint against Compagnie Maritime Des Chargeurs Reunis and/or E. Razon,
Inc. seeking judgment against the third party defendants in case judgment is rendered against it.
> It appears from the evidence presented that Chao insured said shipment with Filipino for the sum of P267,653.59
for the goods described as 600 metric tons of fishmeal in gunny bags of 90 kilos each from Bangkok, Thailand to
Manila against all risks under warehouse to warehouse terms.
> Actually, what was imported was 59.940 metric tons not 600 tons at $395.42 a ton.
> The fishmeal in 666 gunny bags were unloaded from the ship on December 11, 1976 at Manila unto the arrastre
contractor E. Razon, Inc. and Filipinos surveyor ascertained and certified that in such discharge 105 bags were in
bad order condition as jointly surveyed by the ship's agent and the arrastre contractor.
> Based on said computation the Chao made a formal claim against the Filipino for P51,568.62. A formal claim
statement was also presented by the plaintiff against the vessel, but the Filipino refused to pay the claim.
Issues & Resolutions:
Filipino contends that an "all risks" marine policy has a technical meaning in insurance in that before a claim can
be compensable it is essential that there must be "some fortuity," "casualty" or "accidental cause" to which the
alleged loss is attributable and the failure of herein private respondent, upon whom lay the burden, to adduce
evidence showing that the alleged loss to the cargo in question was due to a fortuitous event precludes his right to
recover from the insurance policy.
SC did not uphold this contention. An "all risks policy" should be read literally as meaning all risks whatsoever and
covering all losses by an accidental cause of any kind. The terms "accident" and "accidental", as used in insurance
contracts, have not acquired any technical meaning. They are construed by the courts in their ordinary and common
acceptance. Thus, the terms have been taken to mean that which happens by chance or fortuitously, without intention
and design, and which is unexpected, unusual and unforeseen. An accident is an event that takes place without one's
foresight or expectation; an event that proceeds from an unknown cause, or is an unusual effect of a known cause
and, therefore, not expected.
Coverage under an "all risks" provision of a marine insurance policy 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. A marine insurance policy
providing that the insurance was to be "against all risks" must be construed as creating a special insurance and
extending to other risks than are usually contemplated, and covers all losses except such as arise from the fraud of
the insured. The burden of the insured, therefore, is to prove merely that the goods he transported have been lost,
destroyed or deteriorated. Thereafter, the burden is shifted to the insurer to prove that the loss was due to excepted
perils. To impose on the insured the burden of proving the precise cause of the loss or damage would be inconsistent
with the broad protective purpose of "all risks" insurance.
In the present case, there being no showing that the loss was caused by any of the excepted perils, the insurer is
liable under the policy
Filipino contends that Chao does not have insurable interest, being only a consignee of the goods.
Anent the issue of insurable interest, SC upheld the ruling of the CA that Chao, as consignee of the goods in transit
under an invoice containing the terms under "C & F Manila," has insurable interest in said goods.
Section 13 of the Insurance Code defines insurable interest in property as every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might
directly damnify the insured. In principle, anyone has an insurable interest in property who derives a benefit from its
existence or would suffer loss from its destruction whether he has or has not any title in, or lien upon or possession
of the property. 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.
Chao, as vendee/consignee of the goods in transit has such existing interest therein 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 he performed the conditions of the sale. The contract of shipment, whether under F.O.B., C.I.F., or C. & F.
as in this case, is immaterial in the determination of whether the vendee has an insurable interest or not in the goods
in transit. The perfected contract of sale even without delivery vests in the vendee an equitable title, an existing
interest over the goods sufficient to be the subject of insurance
