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Filipino Merchants Insurance Co. v.

CA (1989)


Choa Tiek Seng, consignee of the shipment of fishmeal loaded, insured in "all risks
policy" 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 but only 59.940 metric tons was imported
When it was unloaded unto the arrastre contractor E. Razon, Inc. and Filipino
Merchants's surveyor ascertained and certified that in such discharge 105
bags were in bad order condition which was reflected in the survey report of
Bad Order cargoes
Before delivery to Choa, E. Razon's Bad Order Certificate showed that a total of
227 bags in bad order condition
Choa brought an action against Filipino Merchants Insurance Co. who brought a
third party complaint against Compagnie Maritime Des Chargeurs Reunis
and/or E. Razon, Inc.
RTC: Ordered Filipino Merchants to pay Choa and reimbursefrom Compagnie
Maritime Des Chargeurs Reunis and third party defendant E. Razon, Inc.
CA: Affirmed but modified by adjudicating the third party complaint
Filipino Merchants contended that Chao has no insurable interest and
therefore the policy should be void and that it was fraud that it did not
disclose of such fact
ISSUE: W/N Choa Tiek Seng as consignee of the shipment has insurable interest

HELD: YES. CA affirmed.

GR: 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. - none was
shown = liable
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.
As vendee/consignee of the goods in transit has such existing interest. 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 be 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.
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
C & F contracts are shipment contracts. The term means that the price fixed
includes in a lump sum the cost of the goods and freight to the named
destination. It simply means that the seller must pay the costs and freight
necessary to bring the goods to the named destination but the risk of loss or
damage to the goods is transferred from the seller to the buyer when the
goods pass the ship's rail in the port of shipment.
Moreover, the issue of lack of insurable interest was not among the defenses
averred in petitioners answer.

Gaisano Cagayan, Inc. v. Insurance Company of North America (2006)


Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans.
while Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing
trademarks owned by Levi Strauss & Co
IMC and LSPI separately obtained from Insurance Company of North America fire
insurance policies for their book debt endorsements related to their ready-
made clothing materials which have been sold or delivered to various
customers and dealers of the Insured anywhere in the Philippines which are
unpaid 45 days after the time of the loss
February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned
by Gaisano Cagayan, Inc., containing the ready-made clothing materials sold
and delivered by IMC and LSPI was consumed by fire.
February 4, 1992: Insurance Company of North America filed a complaint for
damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their
claims under their respective fire insurance policies which it paid thus it was
subrogated to their rights
Gaisano Cagayan, Inc: not be held liable because it was destroyed due to
fortuities event or force majeure
RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it
must bear the loss (res perit domino)
CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil
Code to res perit domino

ISSUE: W/N Insurance Company of North America can claim against Gaisano
Cagayan for the debt that was isnured

HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED

insurance policy is clear that the subject of the insurance is the book debts and
NOT goods sold and delivered to the customers and dealers of the insured
ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but when the ownership therein
is transferred to the buyer the goods are at the buyer's risk whether actual
delivery has been made or not, except that:
(1) Where delivery of the goods has been made to the buyer or to a bailee for the
buyer, in pursuance of the contract and the ownership in the goods has been
retained by the seller merely to secure performance by the buyer of his
obligations under the contract, the goods are at the buyer's risk from the time
of such delivery;
IMC and LSPI did not lose complete interest over the goods. They have an
insurable interest until full payment of the value of the delivered goods. Unlike
the civil law concept of res perit domino, where ownership is the basis for
consideration of who bears the risk of loss, in property insurance, one's
interest is not determined by concept of title, but whether insured has
substantial economic interest in the property
Section 13 of our Insurance Code defines insurable interest 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." Parenthetically, under Section 14 of the same Code, an insurable
interest in property may consist in: (a) an existing interest; (b) an inchoate
interest founded on existing interest; or (c) an expectancy, coupled with an
existing interest in that out of which the expectancy arises.
Anyone has an insurable interest in property who derives a benefit from its
existence or would suffer loss from its destruction.
it is sufficient that the insured is so situated with reference to the property
that he would be liable to loss should it be injured or destroyed by the
peril against which it is insured
an insurable interest in property does not necessarily imply a property
interest in, or a lien upon, or possession of, the subject
matter of the insurance, and neither the title nor a beneficial interest is
requisite to the existence of such an interest
insurance in this case is not for loss of goods by fire but for petitioner's accounts
with IMC and LSPI that remained unpaid 45 days after the fire - obligation is
pecuniary in nature
obligor should be held exempt from liability when the loss occurs thru a
fortuitous event only holds true when the obligation consists in the
delivery of a determinate thing and there is no stipulation holding him
liable even in case of fortuitous event
Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation
(Genus nunquan perit)
The subrogation receipt, by itself, is sufficient to establish not only the relationship
of respondent as insurer and IMC as the insured, but also the amount paid to
settle the insurance claim
Art. 2207. If the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the
wrong or breach of contract complained of, the insurance company shall be
subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract.
As to LSPI, no subrogation receipt was offered in evidence.
Failure to substantiate the claim of subrogation is fatal to petitioner's case for
recovery of the amount of P535,613