G.R. No. 137775 & 140704. March 31, 2005.
FGU INSURANCE CORPORATION, Petitioner, vs. THE COURT OF APPEALS, SAN MIGUEL CORPORATION, and ESTATE OF ANG GUI, represented by LUCIO, JULIAN, and JAIME, all surnamed ANG, and CO TO, Respondents. (Consolidated with G.R. No. 140704).

FACTS

Anco Enterprises Company (ANCO), a partnership, operated the M/T ANCO tugboat and D/B Lucio barge as common carriers. On September 23, 1979, San Miguel Corporation (SMC) shipped 40,550 cases of beer on the barge, to be towed to Antique. The vessels arrived on September 30, 1979. Weather conditions deteriorated, with dark clouds and big waves. SMC’s representative requested ANCO to move the barge to a safer place, but ANCO’s representative refused, confident the barge could withstand the waves. By October 1, 1979, the barge’s rope to the wharf was cut by the waves, the crew abandoned ship, and the barge ran aground and broke apart, resulting in the loss of 29,760 cases of beer valued at P1,346,197.00.
SMC filed a complaint for breach of contract of carriage against ANCO. ANCO argued the loss was due to a fortuitous event (storm) and that there was an agreement with SMC to insure the cargoes. ANCO also filed a third-party complaint against FGU Insurance Corporation, claiming the lost cargo was covered under Marine Insurance Policy No. 29591. The trial court held ANCO liable to SMC and ordered FGU to reimburse ANCO. The Court of Appeals affirmed the decision.

ISSUE

The primary issue is whether ANCO, as a common carrier, is liable for the loss of the cargo despite the occurrence of a storm, and whether FGU is liable to reimburse ANCO under the insurance policy.

RULING

The Supreme Court affirmed ANCO’s liability but dismissed the third-party complaint against FGU. As a common carrier, ANCO is bound to observe extraordinary diligence. The loss was not due to a fortuitous event. A fortuitous event must be the proximate and sole cause of the loss. Here, the storm was not an “act of God” as it was already manifest upon the vessel’s arrival. ANCO’s negligence was the proximate cause: it unreasonably refused SMC’s request to move the barge to safety despite the evident peril, and it left the barge unattended after the tugboat departed. This failure to take necessary precautions constituted a breach of its duty of extraordinary diligence.
Regarding FGU’s liability, the insurance policy was procured by ANCO for its own benefit as the assured, not for SMC. The policy contained a “loss payable” clause in favor of SMC, but this merely designated SMC as the beneficiary in case of loss; it did not make SMC a party to the contract or confer upon ANCO the right to sue for SMC’s benefit. The right to sue on the policy belongs exclusively to the party in whom the legal title to the policy is vested—the assured, ANCO. Since ANCO suffered no proprietary loss (the lost cargo belonged to SMC), it had no insurable interest in the cargo for that loss. Therefore, ANCO had no cause of action against FGU under the policy for the value of SMC’s lost goods. The third-party complaint was correctly dismissed.