FILIPINO MERCHANTS v.

CA

(179 SCRA 638)

FACTS:

In 1976, Choa Tiek Seng contracted Frota Oceanica Brasiliera for the latter to

deliver goods. Choa Tiek Seng insured the goods with Filipino Merchants

Insurnace Company. The goods left the port of Manila on December 13, 1976

and reached its point of destination on December 17, 1976. The goods were

however damaged.

Choa Tiek Seng then filed an insurance claim. Filipino Merchants refused to

pay so in August 1977, it was sued by Choa Tiek Seng. In January 1978,

Filipino Merchants filed a third party complaint against the carrier Frota

Oceanica Brasiliera as it alleged that it is the carrier who is liable to pay

damages to Choa Tiek Seng. Judge Jose Alejandro of the trial court ruled

against Filipino Merchants. The Court of Appeals affirmed the ruling of the

judge. The lower courts ruled that Filipino Merchants is already barred from

filing a claim because under the Carriage of Goods by Sea Act, the suit against

the carrier must be filed “within one year after delivery of the goods or the date

when the goods should have been delivered” or one year from December 17,

1976. The insurance company is already barred for it filed its third party

complaint only in January 1978.

ISSUE:

1. W/N Filipino Merchants is precluded by the said time-bar rule.

2. W/N the "all risks" clause of the marine insurance policy held the petitioner

liable to the private respondent for the partial loss of the cargo,

notwithstanding the clear absence of proof of some fortuitous event, casualty,

or accidental cause to which the loss is attributable.

3. W/N The Court of Appeals erred in not holding that the private respondent

had no insurable interest in the subject cargo, hence, the marine insurance

policy taken out by private respondent is null and void.

RULING:

1.YES. The pertinent provision of the Carriage of Goods by Sea Act does not

only apply to the shipper but also applies to the insurer. The coverage of the

Carriage of Goods by Sea Act includes the insurer of the goods. Otherwise,

what the Act intends to prohibit after the lapse of the one year prescriptive

period can be done indirectly by the shipper or owner of the goods by simply

filing a claim against the insurer even after the lapse of one year. This would

be the result if the insurer can, at any time, proceed against the carrier and

the ship since it is not bound by the time-bar provision. In this situation, the

one year limitation will be practically useless. This could not have been the

intention of the law which has also for its purpose the protection of the carrier

and the ship from fraudulent claims by having “matters affecting transportation

of goods by sea be decided in as short a time as possible” and by avoiding

incidents which would “unnecessarily extend the period and permit delays in

the settlement of questions affecting the transportation.”

2. The "all risks clause" of the Institute Cargo Clauses read 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 subjectmatter

insured. Claims recoverable hereunder shall be payable irrespective of

percentage.“

An "all risks policy" should be read literally as meaning all risks whatsoever

and covering all losses by an accidental cause of any kind. “Accident” is

construed by the courts in their ordinary and common acceptance.

The very nature of the term "all risks" must be given a broad and

comprehensive meaning as covering any loss other than a willful and

fraudulent