CATHAY INSURANCE v.
CA FACTS:
FACTS: Remington Industrial filed a complaint against the
insurance company, seeking to collect the losses incurred in
the shipment of seamless steal files while in transit from
Japan to the PH. This was granted by the lower court. On
appeal, insurance company argued that the rusting is not a
peril of the sea, and therefore not covered under the policy.
HELD: The rusting of steel pipes in the course of a voyage is a
"peril of the sea" in view of the toll on the cargo of wind,
water, and salt conditions. It is therefore covered by the
policy.
ROQUE v. IAC
FACTS:
1. Manila Bay Lighterage, a common carrier entered into a
contract with the Roque and Chong, where it was agreed
that the former would load and carry on board its barge
the logs of the latter’s company. Roque and One insured
the logs against loss with Pioneer Insurance and Surety
Corporation.
2. In 1972, the barge sank while it’s in Palawan. As found by
the lower court, the barge where the logs were loaded was
not sea worthy as it developed a leak and that one of the
hatches was left open causing the water to enter the
barge. It was also noted that the barge was not provided
with the necessary cover of tarpaulin, hence the splash of
waves that brought more water into the barge.
3. Due to refusal of the company to pay, petitioners filed a
complaint against Manila Bay and the insurance company
which was granted by the TC. Modified by CA and
absolved Pioneer after finding that there was a breach of
implied warranty of seaworthiness on the part of the
petitioners and that the loss of the insured cargo was
caused by the "perils of the ship" and not by the "perils of
the sea”.
4. Pet. argued that being a mere shipper of the cargo, they
had no control over the structure and manning of the ship.
HELD: CA ruling affirmed. Under Sec. 99 of IC, the term
"cargo" can be the subject of marine insurance and that once
it is so made, the implied warranty of seaworthiness
immediately attaches to whoever is insuring the cargo
whether he be the shipowner or not. While shipper has no
control over the ship, they had the control in the choice of the
common carrier. It is incumbent upon the shipper to look for
a reliable common carrier. In marine insurance, the risks
insured against are perils of the sea which extends only to
losses caused by sea damage of extraordinary occurrence but
not the ordinary wear and tear of the voyage, and distinct
from injuries suffered by the vessel in consequence of her not
being seaworthy at the outset of her voyage.
LA RAZON v. UNION INSURANCE SOCIETY OF CANTON
1. Go Tiaco bothers inured a cargo of rice which was
transported from Saigon to Cebu. Upon arrival at Cebu, it
was discovered that the 1,473 sacks have been damaged
by sea water. Former filed complaint to claim proceeds.
2. The TC found that the inflow of sea water was due to a
defect in one of the drain pipes of the ship that passed
down thru the compartment where the rice in question was
kept. It was also found that the repairs made on the pipe
were defective and by this reason, the ship was not
seaworthy.
HELD: In the policy, it was stated that the risks covered
against were “Perils . . . of the seas, of all other perils, losses,
and misfortunes that have or shall come to the hurt,
detriment, or damage of the said goods and merchandise or
any part thereof." "All other perils, losses, and misfortunes"
are to be interpreted as covering risks which are of like kind
(ejusdem generis) with the particular risks which are
enumerated in the preceding part of the same clause of the
contract. Taking that into consideration, a loss which, in the
ordinary course of events, results from the natural and
inevitable action of the sea, from the ordinary wear and tear
of the ship, or from the negligent failure of the ship's owner
to provide the vessel with proper equipment to convey the
cargo under ordinary conditions, is not a peril of the sea. In
the present case the entrance of the sea water into the ship's
hold through the defective pipe already described was not due
to any accident which happened during the voyage, but to the
failure of the ship's owner properly to repair a defect of the
existence of which he was apprised.
MEYER STEEL v. CA
FACTS:
1. Hong kong Government Supplies Dept contracted Meyer
Steel Pipe to manufacture and supply steel pipes and
fittings. Meyer the insured the said goods against all risks
with South Sea Surety and Insurance Co. and Charter
Insurance Corp.
2. Industrial Inspection was appointed as third-party
inspector to examine whether the pipes and fittings are
manufactured in accordance with the specifications in the
contract. All the pipes and fittings were certified to be in
good order condition before they were loaded in the
vessel, but when the goods reached Hongkong, it was
discovered that a substantial portion thereof was
damaged.
3. Meyer Steel filed a claim for indemnity. The insurance
companies paid the loss but refused to cover the cost of
repair of the damaged pipes as it was allegedly a factory
defect.
4. Granted, but reversed by CA on ground of prescription
pursuant to Sec. 3(6) of the Carriage of Goods by Sea Act
 provides that "the carrier and the ship shall be discharged
from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the
date when the goods should have been delivered.” Case
was filed more than 2 years after unloading.
HELD: Reversed. Under this provision, only the carrier's
liability is extinguished if no suit is brought within one year.
But the liability of the insurer is not extinguished because the
insurer's liability is based not on the contract of carriage but
on the contract of insurance. An "all risks" insurance policy
covers all kinds of loss other than those due to willful and
fraudulent act of the insured. Thus, when private respondents
issued the "all risks" policies to petitioner Mayer, they bound
themselves to indemnify the latter in case of loss or damage
to the goods insured. Such obligation prescribes in ten years,
in accordance with Article 1144 of the New Civil Code.
COASTWISE v. CA
FACTS:
1. Pagasa Sales, Inc. entered into a contract to transport
molasses from the province of Negros to Manila with
Coastwise Lighterage Corporation. Upon reaching Manila
Bay, while approaching Pier 18, one of the barges,
"Coastwise 9,” struck an unknown sunken object. The
forward buoyancy compartment was damaged, and water
gushed in through a hole. Consequently, the molasses at
the cargo tanks were contaminated and rendered unfit for
the use it was intended.
2. Pag-asa Sales, Inc. filed a formal claim with the insurer of
its lost cargo, Philippine General Insurance Company and
against the carrier, Coastwise Lighterage. The latter denied
the claim and it was PhilGen which paid the consignee,
Pag-asa Sales, Inc.
3. The insurance company then filed an action against
Coastwise Lighterage, claiming to be subrogated to all the
contractual rights and claims which the consignee may
have against the carrier, which is presumed to have
violated the contract of carriage.
4. Coastwise argued that its contract was a charter
agreement and they are therefore a private carrier.
HELD: There are two kinds of charter parties: a demise or
bareboat charter of the vessel, where the charterer will
generally be regarded as the owner for the voyage or service
stipulated and would be subject to liability to others for
damages caused by negligence; and a contract of
affreightment in which the owner of the vessel leases part or
all of its space to haul goods for others and the owner who
retains possession of the ship though the hold is the property
of the charterer, remains liable as carrier. While a charter
party may transform a common carrier into a private one, it
cannot be done with contract of affreightment as in this case.
For common carriers, once the goods it transports are lost,
destroyed, or deteriorated, it gives rise to the presumption of
negligence, which may only overcome by proof of exercise of
extraordinary diligence. In this case, presumption was not
rebutted as the patron of the vessel was not licensed.
LEA MER v. MALAYAN
FACTS:
1. Ilian Silica Mining entered into a contract of carriage with
Lea Mer Industries, Inc., for the shipment of 900 metric
tons of silica sand. Consigned to Vulcan Industrial and
Mining Corporation, the cargo was to be transported from
Palawan to Manila. However, during the voyage, the vessel
sank, resulting to loss of cargo.
2. Malayan Insurance Co., Inc., as insurer, paid Vulcan the
value of the lost cargo. It then demanded reimbursement
from Lea Mer, which refused to comply. Malayan then
instituted a complaint.
3. This was dismissed upon finding that the loss was a
fortuitous event, this was reversed by the CA on the
ground that it was not seaworthy.
HELD: Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods, or both—by land, water, or
air—when this service is offered to the public for
compensation. The contract in a present case was one of
affreightment as shown by the fact that it was the petitioner’s
crew that manned the tugboat and controlled the barge.
Therefore it’s a common carrier. For common carriers, once
the goods it transports are lost, destroyed, or deteriorated, it
gives rise to the presumption of negligence, which may only
overcome by proof of exercise of extraordinary diligence or
the loss or damage caused by: (1) Flood, storm, earthquake,
lightning, or other natural disaster or calamity; (2) Act of the
public enemy in war, whether international or civil; (3) Act or
omission of the shipper or owner of the goods; (4) The
character of the goods or defects in the packing or in the
containers; (5) Order or act of competent public authority.
Fortuitous event is not a defence was the evidence was
insufficient as no proof that there was an attempt tp minimise
or prevent loss. There is also preponderance of evidence that
barge was not seaworthy as there were holes. The person ho
testified that the barge was in a good condition did not
personally inspect it.
LOADSTAR v. PIONEER
FACTS:
1. Loadstar entered into a voyage-charter with Northern
Mindanao Transport Company, Inc. for the carriage of
65,000 bags of cement. The shipper was Iligan Cement
Corporation, while the consignee in Manila was Market
Developers, Inc. Prior to voyage, the consignee insured the
shipment of cement with Pioneer Asia Insurance
 Corporation covering all shipments on or after 30 Sept
1980.
2. During the voyage, Captain Vicente C. Montera, master of
M/V Weasel, ordered the vessel to be forced aground.
Consequently, the entire shipment of cement was good as
gone due to exposure to sea water.
3. The consignee demanded from petitioner full
reimbursement of the cost of the lost shipment. Petitioner,
however, refused to reimburse the consignee despite
repeated demands. Insurance company paid the consignee
and filed a complaint against petitioner on the ground that
vessel was not seaworthy. Granted.
4. Petitioner alleged that at the time of voyage the carrier was
a voyage-charter with the shipper thereby converting it
into a primate carrier.
HELD: Petitioner is a corporation engaged in the business of
transporting cargo by water and for compensation, offering
its services indiscriminately to the public. Thus, without
doubt, it is a common carrier. The voyage-charter agreement
between petitioner and Northern Mindanao Transport
Company, Inc. did not in any way convert the common carrier
into a private carrier. It is only when th charter includes the
vessel and its crew, as in a bareboat or demise, that a
common carrier becomes private. The claim of fortuitous
event is untenable. Records show that the sea and weather
conditions in the vicinity of Negros Occidental were calm. The
records reveal that petitioner took a shortcut route, instead of
the usual route, which exposed the voyage to unexpected
hazard. Petitioner has only itself to blame for its
misjudgment.
CEBU SALVAGE CORP v. PHILIPPINE HOME ASSURANCE
CORPORATION
FACTS:
1. Cebu Salvage Corporation (as carrier) and Maria Cristina
Chemicals Industries, Inc. [MCCII] (as charterer) entered
into a voyage-charter, wherein the former was to load 800
to 1,100 metric tons of silica quartz on board the M/T
Espiritu for transport to consignee Ferrochrome Phils., Inc.
2. However, the shipment never reached the destination
because the vessel sank resulting to total loss. MCII filed a
claim for the loss of shipment with its insurer, Philippine
Home Assurance Corp. Insurance company paid the claims
and filed against petitioner for reimbursement. Granted.
3. Petitioner argued that they did not have the control over
the vessel and its crew and that it only hired the vessel
from ALS Timber enterprises.
HELD: A contract of carriage of goods was shown to exist;
the cargo was loaded on board the vessel; loss or nondelivery
of the cargo was proven; and petitioner failed to prove that it
exercised extraordinary diligence to prevent such loss or that
it was due to some casualty or force. The fact that it did not
own the vessel it decided to use to consummate the contract
of carriage did not negate its character and duties as a
common carrier. The MCCII (respondent’s subrogor) could not
be reasonably expected to inquire about the ownership of the
vessels which petitioner carrier offered to utilize majeure. The
voyage charter here being a contract of affreightment, the
carrier was answerable for the loss of the goods received for
transportation.
CHOA v. CA
FACTS:
1. Choa imported some lactose crystals from Holland. the
goods were losses in sea vans on board the vessel “MS
Benalder” as the mother vessel and thereafter aboard a
feeder vessel. The goods were insured by Filipino
Merchants’ insurance Co against all risks under the terms
of the policy.
2. Upon arrival at the port of Manila, the cargo was
discharged into the custody of the arrester operator Razon
prior to delivery to Choa. Of the 600 bags, 403 were in
bad order.
3. Choa filed a claim for the said loss but was rejected
alleging that the spillage took place while it was in transit
and that the petitioner failed to avert or minimise loss by
failing to recover spillage from the sea van, there violating
the terms of the insurance policy. Insurance company in
turn filed a third-party complaint against the Ben Lines
and broker. Dismissed.
HELD: The findings of the CA with respect to the authenticity
of the survey reports are unfounded. In the first place it was
the insurance company which undertook the protective survey
relating to the goods from the time of discharge up to the
time of delivery to the consignee's warehouse, so that it is
bound by the report of its surveyor which is the Adjustment
Corporation of the Philippines. It was also shown in the record
that See, the sole witness, was present when the cargo was
unloaded and received. This admission even standing alone is
sufficient proof of loss or damage to the cargo. An "all risks"
provision of a marine policy creates a special type of
insurance which extends coverage to risks not usually
contemplated and avoids putting upon the insured the burden
of establishing that the loss was due to peril falling within the
policy's coverage. The insurer can avoid coverage upon
demonstrating that a specific provision expressly excludes the
loss from coverage.
PAN MALAYAN v. CA
FACTS:
1. FAO received a formal offer from the Luzon Stevedoring
Corporation where the latter offered to ship the former's
cargo, consisting of 3,000 metric petitions in two lots of
rice seeds, to Vietnam Ocean Shipping Industry. FAO then
 secured an insurance coverage from Pan Malayan
Insurance Corporation.
2. FAO gave instructions to LUZTEVECO to leave for Vaung
Tau, Vietnam to deliver the cargo which, by its nature,
could not withstand delay because of the inherent risks of
termination and/or spoilage.
3. Later on FAO was informed that the shipment returned to
Manila and that it left again but with a different tugboat.
Due to deviation, FAO demanded an explanation.
4. The following day, FAO was advised of the sinking of the
barge in the China Sea, hence it informed petitioner
thereof and, later, formally filed its claim under the marine
insurance policy, but petitioner failed to pay due to
inability to recover value of shipment from LUZTEVECO.

HELD: SEC. 130. An actual total loss is caused by: (a) A total
destruction of the thing insured; (b) The irretrievable loss of
the thing by sinking, or by being broken up; (c) Any damage
to the thing which renders it valueless to the owner for the
purpose for which he held it; or (d) Any other event which
effectively deprives the owner of the possession, at the port of
destination of the thing insured. The complete physical
destruction of the subject matter is not essential to constitute
an actual total loss. Such a loss may exist where the form and
specie of the thing is destroyed, although the materials of
which it consisted still exist. 27,922 damaged and lost bags
were rendered valueless to FAO for planting or seeding
purposes in Kampuchea since the wetting or contact with
water had definitely activated their tendency to terminate.
Moreover, no longer available for reshipment to Vietnam
because the same was disposed by LUZTEVECO without
auhtorization.