G.R. No. 85141 November 28, 1989
FILIPINO MERCHANTS INSURANCE CO., INC., petitioner, vs. COURT OF APPEALS and CHOA TIEK SENG, respondents.

FACTS

Private respondent Choa Tiek Seng insured a shipment of 59.940 metric tons of fishmeal from Bangkok to Manila with petitioner Filipino Merchants Insurance Co., Inc. under an “all risks” marine cargo policy. Upon discharge at the Port of Manila on December 11, 1976, a joint survey by the ship’s agent and the arrastre contractor revealed 105 bags in bad order. A subsequent survey by the arrastre contractor before delivery to the consignee showed the damaged bags increased to 227. Petitioner’s own surveyor conducted a final survey and confirmed a loss of 12,148 kilos, valued at P51,568.62. The consignee filed a formal claim, which the insurer refused to pay, leading to a collection suit.
The insurer, as defendant, filed a third-party complaint against the carrier, Compagnie Maritime Des Chargeurs Reunis, and the arrastre contractor, E. Razon, Inc. The trial court ruled in favor of the consignee, ordering the insurer to pay the claim. It also held the carrier and the arrastre contractor jointly and severally liable for reimbursement to the insurer. On appeal, the Court of Appeals affirmed the liability of the insurer but modified the third-party complaint, holding only the arrastre contractor liable for reimbursement and dismissing the complaint against the carrier.

ISSUE

The primary issues were: (1) whether the insurer is liable under the “all risks” policy despite the consignee’s alleged failure to prove the loss was due to a fortuitous event; and (2) whether the consignee had an insurable interest in the cargo.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. On the first issue, the Court held that an “all risks” insurance policy covers all losses except those caused by delay, inherent vice, or nature of the goods. The insurer’s defense that the loss must be shown to be due to a fortuitous event is incorrect. Under an “all risks” clause, the burden is on the insured to prove merely that the loss occurred, and then the burden shifts to the insurer to prove that the loss arose from an excepted cause. The consignee satisfactorily proved the loss through the survey reports. The insurer failed to discharge its burden of proving the loss fell within an exception.
On the second issue, the Court ruled that the consignee had an insurable interest. The insured was the buyer of the goods under a C&F (Cost and Freight) Manila contract. Under such terms, the risk of loss passes to the buyer upon shipment, and the buyer retains an insurable interest even if not yet the owner, based on the expectation of profit from the resale of the goods. Furthermore, the defense of lack of insurable interest was not raised in the trial court and cannot be raised for the first time on appeal, as it violates basic rules of fair play and due process. The third assignment of error, alleging fraud for non-disclosure of insurable interest, was consequently deemed without merit.