You are on page 1of 5

5. EASTERN SHIPPING LINES INC. vs. BPI/MS INSURANCE CORP.

and MITSUI
SUM TOMO INSURANCE CO. LTD., G.R. No. 193986, 15 January 2014

FACTS:

Through vessels owned by petitioner Eastern Shipping Lines, Inc. there were three s
hipments of steel sheets in coil from Japan for delivery in favor of the consignee Cal
amba Steel. However, upon arrival at the port of Manila, there were coils observed t
o be in bad condition as evidenced by the Turn Over Survey of Bad Order Cargo. The
cargo was then turned over to Asian Terminals, Inc. (ATI) for stevedoring, storage an
d safekeeping pending Calamba Steels withdrawal of the goods. When ATI delivered
the cargo to Calamba Steel, the latter rejected its damaged portion, on each shipme
nt.

Calamba Steel filed an insurance claim with Mitsui through the latters settling agen
t, respondent BPI/MS Insurance Corporation (BPI/MS), and the former was paid the s
um of US$30,210.32 for the damage suffered by all three shipments. Correlatively, a
s insurer and subrogee of Calamba Steel, Mitsui and BPI/MS filed a Complaint for Da
mages against petitioner and ATI. Petitioner prayed to be absolved; that it had no pa
rticipation whatsoever in the discharging operations and that petitioner did not have
a choice in selecting the stevedore since ATI is the only arrastre operator mandated
to conduct discharging operations in the South Harbor.

The RTC ruled in favor of Mitsui and BPI/MS. On appeal, the CA affirmed the RTCs fa
ctual findings that both petitioner and ATI were both negligent in handling the goods
pointing to the affidavit of the Cargo Surveyor.

ISSUE: Whether or not the carrier is responsible for the damage of certain goods con
sidering it did not participate in the discharging operations.

HELD: Yes. In the case at bar, the Supreme Court said that it is settled in maritime la
w jurisprudence that cargoes while being unloaded generally remain under the cust
ody of the carrier. As found by the RTC and affirmed by the CA based on the evidenc
e presented, the goods were damaged even before they were turned over to ATI. Su
ch damage was even compounded by the negligent acts of petitioner and ATI which
both mishandled the goods during the discharging operations. Thus, it bears stressi
ng unto petitioner that common carriers, from the nature of their business and for re
asons of public policy, are bound to observe extraordinary diligence in the vigilance
over the goods transported by them.

Subject to certain exceptions enumerated under Article 1734 of the Civil Code, com
mon carriers are responsible for the loss, destruction, or deterioration of the goods.
The extraordinary responsibility of the common carrier lasts from the time the good
s are unconditionally placed in the possession of, and received by the carrier for tra
nsportation until the same are delivered, actually or constructively, by the carrier to
the consignee, or to the person who has a right to receive them. Owing to this high
degree of diligence requiredof them, common carriers, as a general rule, are presu
med to have been at fault or negligent if the goods they transported deteriorated or
got lost or destroyed. That is, unless
they prove that they exercised extraordinary diligence in transporting the goods. In
order to avoid responsibility for any loss or damage, therefore, they have the burde
n of proving that they observed such high level of diligence. In this case, petitioner f
ailed to hurdle such burden.

6. ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR

FACTS:

Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DLX
DSL with Alpha Insurance and Surety Co (Alpha). The contract of insurance obligates
the petitioner to pay the respondent the amount of P630,000 in case of loss or
damage to said vehicle during the period covered.

On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to
bring the vehicle to nearby auto-shop for a tune up. However, Lanuza no longer
returned the motor vehicle and despite diligent efforts to locate the same, said
efforts proved futile. Resultantly, respondent promptly reported the incident to the
police and concomitantly notified petitioner of the said loss and demanded payment
of the insurance proceeds.

Alpha, however, denied the demand of Castor claiming that they are not liable since
the culprit who stole the vehicle is employed with Castor. Under the Exceptions to
Section III of the Policy, the Company shall not be liable for (4) any malicious
damage caused by the insured, any member of his family or by A PERSON IN THE
INSUREDS SERVICE.

Castor filed a Complaint for Sum of Money with Damages against Alpha before the
Regional Trial Court of Quezon City. The trial court rendered its decision in favor of
Castor which decision is affirmed in toto by the Court of Appeals. Hence, this
Petition for Review on Certiorari.

ISSUE:

Whether or not the loss of respondents vehicle is excluded under the insurance
policy

HELD:

NO. The words loss and damage mean different things in common ordinary
usage. The word loss refers to the act or fact of losing, or failure to keep
possession, while the word damage means deterioration or injury to property.
Therefore, petitioner cannot exclude the loss of Castors vehicle under the insurance
policy under paragraph 4 of Exceptions to Section III, since the same refers only to
malicious damage, or more specifically, injury to the motor vehicle caused by a
person under the insureds service. Paragraph 4 clearly does not contemplate loss
of property.

A contract of insurance is a contract of adhesion. So, when the terms of the


insurance contract contain limitations on liability, courts should construe them in
such a way as to preclude the insurer from non-compliance with his obligation.
Thus, in Eternal Gardens Memorial Park Corporation vs. Philippine American Life
Insurance Company, this Court ruled that it must be remembered that an insurance
contract is a contract of adhesion which must be construed liberally in favor of the
insured and strictly against the insurer in order to safeguard the latters interest.

7. Insurance Case #048 Malayan Insurance Co. Inc. vs. PAP Ltd. Co.

(Phil. Br.)

Facts:

1. 13 May 1996- Malayan Insurance Company (Malayan) issued Fire Insurance


Policy to PAP Co., Ltd. (PAP Co) for the latters machineries and equipment
located at Sanyo Precision Phils, Bldg., Phase III, Lot 4, Block 15, PEZA,
Rosario, Cavite (Sanyo Building).
2. Insurance was worth P15M and effective for 1 year. It was procured by PAP
Co for RCBC, the mortgagee of the insured machineries and equipment.
3. Prior to expiration of the insurance coverage, PAP Co. renewed policy on an
as is basis. This was for 13 May 1997 to 13 May 1998.
4. 12 October 1997 and during the subsistence of the renewal policy, the
insured machineries and equipment were totally lost by fir.
5. PAP Co. filed a fire insurance claim with Malayan in the amount insured.
6. 15 December 1997- Malayan denied since at the time of loss, the insured
machineries and equipment were transferred by PAP Co. to a location
different from that indicated in the policy.
7. PAP Co. argued that Malayan cannot avoid liability since it was informed of
the transfer by RCBC, the mortgage and the party dutybound to relay such
information.
8. 17 September 2009- RTC ordered Malayan to pay PAP an indemnity for the
loss.
9. 27 October 2011- CA affirmed RTC decision. Hence this case.

Issue: Is Malayan liable under the insurance contract?

Ruling: No. Under the policy and when it was renewed, it forbade the removal of the
insured properties unless sanctioned/consented by Malayan. PAP failed to notify and
to obtain consent of Malayan regarding the removal. The transfer also increased the
risk. With the transfer of location of the
subject properties, without notice to and consent of Malayan, PAP committed
concealment, misrepresentation and breach of a material warranty. Under the
Insurance Code, Malayan can rescind the insurance contract.
It can also be said that with the transfer of the location of the subject properties, without notice and
without Malayans consent, after the renewal of the policy, PAP clearly committed
concealment, misrepresentation and a breach of a material warranty. Section 26 of the Insurance Code
provides:

Section 26. A neglect to communicate that which a party knows and ought to communicate, is called a
concealment.

Under Section 27 of the Insurance Code, a concealment entitles the injured party to rescind a contract of
insurance.

Moreover, under Section 168 of the Insurance Code, the insurer is entitled to rescind the insurance
contract in case of an alteration in the use or condition of the thing insured. Section 168 of the Insurance
Code provides, as follows:

Section 68. An alteration in the use or condition of a thing insured from that to which it is limited by the
policy made without the consent of the insurer, by means within the control of the insured, and increasing
the risks, entitles an insurer to rescind a contract of fire insurance

Accordingly, an insurer can exercise its right to rescind an insurance contract when the following
conditions are present, to wit:

1) the policy limits the use or condition ofthe thing insured;

2) there is an alteration in said use or condition;

3) the alteration is without the consent of the insurer;

4) the alteration is made by means within the insureds control; and

5) the alteration increases the risk of loss. 20

In the case at bench, all these circumstances are present. It was clearly established that the renewal policy
stipulated that the insured properties were located at the Sanyo factory; that PAP removed the properties
without the consent of Malayan; and that the alteration of the location increased the risk of loss.

Dispositive: WHEREFORE, the October 27, 2011 Decision of the Court of

Appeals is hereby REVERSED and SET ASIDE. Petitioner Malayan Insurance

Company, Inc. is hereby declared NOT liable for the loss of the insured

machineries and equipment suffered by PAP Co., Ltd.

You might also like