Philippine American General Insurance Co. Inc. vs.

MGG Marine Services Inc

(G.R. No. 135645 March 8, 2002)

Facts: San Miguel Corporation insured several beer bottle cases with Philippine
American General Insurance Co. The cargo were loaded on board the M/V Peatheray
Patrick-G to be transported from Mandaue to Bisig, Surigao del Sur. After having
been cleared in Cebu, the vessel left the port of Mandaue. The weather was calm
when the vessel started its voyage. The following day, M/V Peatheray Patrick-G listed
and subsequently sunk off Cawit Point resulting to the loss of the cargo. Petitioner
paid San Miguel the full amount of the cargo pursuance to the insurance contract.
The Board of Marine Inquiry conducted its own investigation and found that the cause
of the sinking of the vessel was the existence of strong winds and enormous waves in
Surigao del Sur, a fortuitous event that could not have been for seen at the time the M/
V Peatheray Patrick-G left the port of Mandaue City. It was further held by the Board
that said fortuitous event was the proximate and only cause of the vessel's sinking.

Issue: Whether or not the loss of the cargo can be considered due to a peril of the sea?

Ruling: YES. In the case at bar, the loss was due to a fortuitous accident or casualties
of the seas. The existence of strong winds and enormous waves was declared to be the
proximate and only cause of the loss and there was "an entire exclusion of human
agency from the cause of the injury of the loss." It was also highlighted that in cases
where loss was due to a natural disaster or calamity and when exercise of due
diligence was present, insurer must be relieved of their responsibility and should not
be held liable.
It must be noted that the term perils of the sea embrace all kinds of marine casualty
such as shipwreck, foundering, stranding, collision, and every specie of damage done
to the ship or goods at sea by the violent action of the wind or waves. "Perils of the
sea" has been said to include only such losses as are of extraordinary nature, or arise
from some overwhelming power, which cannot be guarded against by the ordinary
exertion of human skill and prudence.