[CASE DIGEST] Filipino Merchants Insurance v. CA and Choa Tiek Seng (G.R. No. 85141)

November 28, 1989

FACTS:

As the consignee of goods in transit under the terms C&F Manila, Choa Tiek Seng insured a cargo of fishmeal from Bangkok to Manila against all risks under a policy from Filipino Merchants.

Arriving from SS Bougainville, the cargo came in bad condition.

Choa Tiek Seng filed a claim with Filipno Merchants Insurance to recover the amount of P51,000. The insurance company denied the claim, promptibg Chia Tiek Seng to file an action before the RTC.

The RTC, and subsequently the Court of Appeals, ruled in favor of Choa Tiek Seng. Hence, the instant petition.

ISSUE:

Whether Choa Tiek Seng has an insurable interest in the cargo. - YES.

Whether the arrival of the cargo in bad condition was covered by the "against all risks" clause of the insurance policy? - YES.

HELD:

Insurable interest is every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction whether he has or has not any title in, or lien upon or possession of the property.

Insurable interest in property may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arise.

In the instant case, Choa Tiek Seng’s interest over the goods is based on a perfected contract of sale, which vests in him an equitable title even before delivery of the objects of the sale.

Moreover, the Supreme Court held that the “all risks” nature of the insurance contract at hand does not need the claimant to show “some fortuity,” “casualty” or “accidental cause” in order to recover their loss. The terms accident and accidental do not acquire any technical meaning hence are interpreted as all damages/losses suffered by the insured except when: first, the loss or damage was caused by delay, and second, the loss or damage was caused by inherent defect of the thing insured.

Generally, the burden of proof belongs to the insured, but under an all risks policy, the burden is not on the insured to prove the precise cause of the damage. In these cases, the insured merely has the initial burden of proving that the cargo was in good condition and then subsequently damaged; thereafter burden of proof shifts to the insurer to show that the loss falls under the exceptions to the coverage.