CHOA TIEK SENG v. CA (FILIPINO MERCHANTS INSURANCE) resulting from extra and fortuitous events.

resulting from extra and fortuitous events. So that Filipino Merchants is absolved from
183 SCRA 223 liability.
Associate Justice EMILIO A. GANCAYCO; March 15, 1990

NATURE
Appeal from a decision of the Court of Appeals (and RTC’s adverse to Choa Tiek Seng)
FACTS
- (1976) Petitioner imported some lactose crystals from Holland.
- The importation involved fifteen (15) metric tons packed in 600 6-ply paper bags with
polythelene inner bags, each bag at 25 kilos net.
- The goods were loaded at the port at Rotterdam (Holland) in sea vans on board the vessel
"MS Benalder' as the mother vessel, and thereafter aboard the feeder vessel "Wesser Broker
V-25" of respondent Ben Lines Container, Ltd. (Ben Lines for short).
- The goods were insured by the respondent Filipino Merchants' Insurance Co., Inc.
(insurance company for short) for the sum of P98,882.35, the equivalent of US$8,765.00 plus
50% mark-up or US $13,147.50, against all risks under the terms of the insurance cargo
policy.
- Upon arrival at the port of Manila, the cargo was discharged into the custody of the arrastre
operator respondent E. Razon, Inc. (broker for short), prior to the delivery to petitioner
through his broker.
- Of the 600 bags delivered to petitioner, 403 were in bad order. The surveys showed that the
bad order bags suffered spillage and loss later valued at P33,117.63.
- Petitioner filed a claim for said loss dated February 16, 1977 against respondent insurance
company in the amount of P33,117.63 as the insured value of the loss.
- Respondent insurance company rejected the claim
Why??1. Assuming that spillage took place while the goods were in transit, petitioner
and his agent failed to avert or minimize the loss by failing to recover spillage from
the sea van, thus violating the terms of the insurance policy sued upon;
2. and that assuming that the spillage did not occur while the cargo was in transit, the
said 400 bags were loaded in bad order, and that in any case, the van did not carry
any evidence of spillage.
- Petitioner filed a complaint in the RTC against the insurance company seeking payment of
the sum of P33,117.63 as damages plus attorney's fees and expenses of litigation.
- Insurance company denied all the material allegations of the complaint and raised several
special defenses as well as a compulsory counterclaim.
- Insurance company filed a third-party complaint against respondents Ben Lines and broker.
RTC:
- Dismissed the complaint, the counterclaim and the third-party complaint with costs against
the petitioner.
CA
Appealed in CA but denied. MFR was denied as well.
1. The insured goods did not sustain damage and so it cannot be held covered and even
assuming that it did, still there’s no liability, because the insurance is against “all risk”.
2. An "all risk" marine policy purports to cover losses from casualties at sea, it does not
cover losses occasioned by the ordinary circumstances of a voyage, but only those
ISSUE
1. WON the goods sustained damage
2. WON insurance company should be held liable even if the technical meaning in
marine insurance of an “insurance against all risk" is applied
HELD
1. YES.
- In the first place it was respondent insurance company which undertook the
protective survey aforestated relating to the goods from the time of discharge up to
the time of delivery thereof to the consignee's warehouse, so that it is bound by the
report of its surveyor which is the Adjustment Corporation of the Philippines. Said
report is binding upon the respondent insurance who caused the same survey.
-Secondly, contrary to the findings of the appellate court that petitioner's witness
Jose See was not present at the time of the actual devanning of the cargo, what the
record shows is that he was present when the cargo was unloaded and received in
the warehouse of the consignee. He saw 403 bags to be in bad order. Present then
was the surveyor, Adjustment Corporation of the Philippines, who surveyed the cargo
by segregating the bad order cargo from the good order and determined the amount
of loss. 7 Thus, said witness was indeed competent to identify the survey report
aforestated.
- Thirdly, in its letter dated May 26, 1977 to petitioner, respondent insurance
company admitted in no uncertain terms that there were 403 bags in damaged
condition.
2. In Gloren Inc. vs. Filipinas Cia. de Seguros, it was held that an all risk insurance policy
insures against all causes of conceivable loss or damage, except as otherwise
excluded in the policy or due to fraud or intentional misconduct on the part of the
insured. It covers all losses during the voyage whether arising from a marine peril or
not, including pilferage losses during the war.
- In the present case, the "all risks" clause of the policy sued upon reads as follows:
"5. This insurance is against all risks of loss or damage to the subject matter
insured but shall in no case be deemed to extend to cover loss, damage, or expense
proximately caused by delay or inherent vice or nature of the subject matter
insured. Claims recoverable hereunder shall be payable irrespective of percentage."
- The terms of the policy are so clear and require no interpretation. The insurance
policy covers all loss or damage to the cargo except those caused by delay or inherent
vice or nature of the cargo insured. It is the duty of the respondent insurance
company to establish that said loss or damage falls within the exceptions provided
for by law, otherwise it is liable therefor.
- An "all risks" provision of a marine 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 peril falling within the policy's coverage. The insurer can
avoid coverage upon demonstrating that a specific provision expressly excludes the loss from
coverage.
- In this case, the damage caused to the cargo has not been attributed to any of the exceptions
provided for nor is there any pretension to this effect. Thus, the liability of respondent
insurance company is clear.

Disposition the decision appealed from is hereby REVERSED AND SET ASIDE and another
judgment is hereby rendered ordering the respondent Filipinas Merchants Insurance Company,
Inc. to pay the sum of P33,117.63 as damages to petitioner with legal interest from the filing of
the complaint, plus attorney's fees and expenses of litigation in the
amount of P10,000.00 as well as the costs of the suit.