7. Cathay Insurance v. CA (P 7.
Arguments of Remington:
30 June 1987 | J. Paras | Marine Insurance - Perils of the sea or ship risks
PETITIONER: ​Cathay Insurance Co.
RESPONDENTS:​ Court of Appeals and Remington Industrial Sales
Corp.
SUMMARY:
Remington’s imported steel pipes heavily rusted while in transit from
Japan. Because of the damage, it filed a claim with its insurer Cathay, but
Cathay refused to pay. Cathay argues that rust is not a peril of the sea
because it is an inherent vice of the shipment which cannot be insured
against. Both RTC and CA ruled in favor of Remington. The issue is
whether rusting is a peril of the sea. SC held that it is a peril of the sea in
view of the toll on the cargo of wind, water, and salt conditions. (That’s
literally the only sentence in the case resolving the peril of the sea issue.)
DOCTRINE:
Rust is a peril of the sea which can be insured against, in view of the toll
on the cargo of the wind, water, and salt conditions.
FACTS:
1. Characters:
a. Remington Industrial Sales Corporation → Insured /
Consignee / Importer
b. Cathay Insurance Co → Insurer
2. Remington imported seamless steel pipes from Japan (to
Philippines) and insured this shipment with Cathay.
3. While in transit, the steel pipes were damaged because of heavy
rusting.
4. Remington filed a claim for loss/damage with Cathay, but Cathay
refused to pay.
5. Trial Court ruled in favor of Remington and ordered Cathay to pay.
6. CA affirmed RTC. Hence, this petition.
a. The loss is covered by the insurance policy under the
implied coverage from the phrase “perils of the sea”
mentioned in the opening sentence of the policy
b. The limitations in the policy should be strictly construed
against the insurer (since insurer drafted the policy)
c. Rust is not an inherent vice of the steel pipes without
interference of external factors
8. Arguments of Cathay:
a. Rusting is not a peril of the sea
b. Remington erroneously invoked rule on strict construction
c. Rust is an inherent vice or in the nature of the steel pipes,
and therefore (rusting) cannot be insured against since it
is not a casualty
ISSUE​: Whether rusting is a peril of the sea covered by the policy - Yaz
RULING:​ Petition denied; CA decision affirmed
RATIO: ​[eto lang talaga yung sinabi ng court]
1. There is no question that the rusting of steel pipes in the course of
a voyage is a "peril of the sea" in view of the toll on the cargo of
wind, water, and salt conditions.
2. At any rate if the insurer cannot be held accountable therefor, We
(the Court) would fail to observe a cardinal rule in the
interpretation of contracts, namely, that any ambiguity therein
should be construed against the maker/issuer/drafter thereof,
namely, the insurer.
3. Besides the precise purpose of insuring cargo during a voyage
would be rendered fruitless.
4. SC is bound by findings of facts of the lower tribunals, save for
exceptions, which are not present in this case.
SEPARATE OPINIONS​: None