G.R. No. 84507 March 15, 1990
Choa Tiek Seng, doing business under the name and style of Seng’s Commercial Enterprises, petitioner, vs. Hon. Court of Appeals, Filipino Merchants’ Insurance Company, Inc., Ben Lines Container, Ltd. and E. Razon, Inc., respondents.

FACTS

Petitioner Choa Tiek Seng imported 600 bags of lactose crystals from Holland, insured against “all risks” by respondent Filipino Merchants’ Insurance Company. The cargo was shipped via respondent Ben Lines Container, Ltd. and, upon arrival in Manila, was discharged into the custody of arrastre operator respondent E. Razon, Inc. before delivery to the petitioner. Upon delivery, 403 bags were found in bad order, with spillage and loss valued at P33,117.63. The petitioner filed a claim with the insurer, which was denied. The insurer argued that the petitioner failed to minimize the loss by not recovering spillage from the container van, and alternatively, that the bags were already in bad order upon loading or that the van showed no evidence of spillage.
The petitioner filed a complaint against the insurer in the Regional Trial Court, which dismissed the case. The Court of Appeals affirmed the dismissal, agreeing with the trial court’s finding that the cargo sustained no damage during transit. The appellate court gave weight to the clean tally sheet issued by the arrastre operator upon receipt of the cargo and the intact seal and lock of the container van, concluding the goods were delivered in good condition. It also held that the petitioner’s survey reports were not properly authenticated, as the witness identifying them was not present during the devanning.

ISSUE

Whether the respondent insurance company is liable under the “all risks” marine insurance policy for the loss and damage sustained by the petitioner’s cargo.

RULING

Yes, the Supreme Court reversed the Court of Appeals and held the insurer liable. The legal logic centers on the nature of an “all risks” insurance policy and the burden of proof. An “all risks” policy provides coverage for all loss or damage to the insured cargo except those specifically excluded by the policy terms. The exceptions must be expressly stated, such as loss due to delay or inherent vice of the goods. The insurer bears the burden of proving that a loss falls within an exception to avoid liability.
In this case, the insurance policy explicitly covered “all risks of loss or damage” and excluded only loss proximately caused by delay or the inherent vice or nature of the cargo. The insurer failed to present any evidence demonstrating that the damage to the 403 bags was attributable to these excluded causes. The Court found that the lower courts erroneously required the petitioner to prove the specific cause of the loss, which is not the obligation of the insured under an “all risks” policy. The clean tally sheet and intact van seal do not conclusively prove the absence of damage during the voyage, as the policy covers concealed damages not apparent upon external inspection. Since the insurer did not successfully prove an applicable exclusion, its liability under the policy is clear. The Court ordered the insurer to pay the petitioner the claimed amount with interest and attorney’s fees.