Filipino Merchants Insurance Co. Inc. vs. Court of Appeals (Insurance Law)

 

Filipino Merchants Insurance Co. Inc. vs. Court of Appeals

(Insurance Law)

179 SCRA 638 (G.R. No. 85141)

November 28, 1989

 

Petitioners:	Filipino Merchants Insurance Co., Inc.
Respondents:	Court of Appeals and Choa Tiek Seng

 

J. Regalado:

 

FACTS:

 

This is an action brought by Choa Tiek Seng the consignee of the shipment of fishmeal loaded on board the SS Bouganville and unloaded at the Port of Manila on or about December 11, 1976 and seeks to recover from defendant Filipino Merchants Inc., Co. the amount of ₱51,568.62 representing damages to said shipment which has been insured by the defendant insurance company.

 

ISSUE:

 

1.  Whether an “all risks” policy covers all losses other than those caused by the willful and fraudulent act of insured.

 

2.  Whether a perfected contract of sale ever without delivery vests in the vendee an existing interest over the goods sufficient to be subject of insurance.

 

HELD:

 

1.  No. 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. An “all risk” policy has been evolved to grant greater protection than that afforded by the “perils clause” in order to assure that no loss can happen through the incidence of a cause neither insured against nor creating liability in the ship; it is written against losses, that is, attributable to external causes.

 

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; thereafter, the burden then shifts to the insurer to show the exception to the coverage. As we held in Paris-Manila Perfumery Co., vs. Phoenix Assurance Co., Ltd the basic rule is that the insurance company has the burden of proving that the loss is caused by the risks excepted and for want of such proof, the company is liable.

 

2.  Yes. Herein private respondent, as vendee/consignee of the goods in transit has such existing interest therein as may be 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 the 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.

 

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, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, the exceptions to said rule not obtaining in the present case. 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.