126.
G.R. No. 85141 November 28, 1989
FILIPINO MERCHANTS INSURANCE CO., INC., petitioner,
vs.
COURT OF APPEALS and CHOA TIEK SENG, respondents.
Legal Concepts:
1. An "all risks policy" should be read literally as meaning all risks whatsoever and covering
all losses by an accidental cause of any kind.
2. 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.
3. 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.
4. 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
5. As we held in Paris-Manila Perfumery Co. vs. Phoenix Assurance Co., Ltd. 11 the basic rule
is that the insurance company has the burden of proving that the loss is caused by the
risk excepted and for want of such proof, the company is liable.
Issue:
Whether or not Choa Tiek Seng, as consignee, has an insurable interest in shipped goods
Facts:
It appears from the evidence presented that in December 1976, plaintiff as consignee insured
shipped goods with defendant insurance company under said cargo Policy No. M-2678 for the
sum of P267,653.59 for the goods described as 600 metric tons of fishmeal in new gunny bags
of 90 kilos each from Bangkok, Thailand to Manila against all risks under warehouse to
warehouse terms.
The fishmeal in 666 new gunny bags were unloaded from the ship on December 11, 1976 at
Manila unto the arrastre contractor E. Razon, Inc. and defendant's surveyor ascertained and
certified that in such discharge 227 bags were in bad order condition as jointly surveyed by the
ship's agent and the arrastre contractor.
Based on said computation the plaintiff made a formal claim against the defendant Filipino
Merchants Insurance Company for P51,568.62 (Exhibit C) the computation of which claim is
contained therein. A formal claim statement was also presented by the plaintiff against the
vessel dated December 21, 1976, but the defendant Filipino Merchants Insurance Company
refused to pay the claim.
It is the contention of the petitioner has no insurable interest.
Held:YES
Anent the issue of insurable interest, we uphold the ruling of the respondent court that private
respondent, 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 y. 16 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. 17
Herein private respondent, 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. 18 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 be performed the conditions of the sale. 19 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.
