LOSSG.R. No. L-20853 May 29, 1967BONIFACIO BROS., INC., ET AL.,plaintiffs-appellants,vs.ENRIQUE MORA, ET AL.,defendants-appellees.G. Magsaysay for plaintiffs-appellants.Abad Santos and Pablo for defendant-appellee H. E. Reyes, Inc.J. P. Santilla and A. D. Hidalgo, Jr. for other defendant-appellee.CASTRO,J.:This is an appeal from the decision of the Court of First Instance of Manila, Branch XV, in civil case 48823, affirming the decision of the Municipal Court of Manila, declaring the H.S. Reyes, Inc. as having a better right than the Bonifacio Bros., Inc. and the Ayala Auto Parts Company, appellants herein, to the proceeds of motor insurance policy A-0615, in the sum of P2,002.73, issued by the State Bonding & Insurance Co. Inc., and directing payment of the said amount to the H. Reyes, Inc.Enrique Mora, owner of Oldsmobile sedan model 1956, bearing plate No. QC- mortgaged the same to the H.S. Reyes, Inc., with the condition that the former would insure the automobile with the latter as beneficiary. The automobile was thereafter insured on June 23, 1959 with the State Bonding & Insurance Co., Inc., and motor car insurance policy A-0615 was issued to Enrique Mora, the pertinent provisions of which read:1. The Company (referring to the State Bonding & Insurance Co., Inc.) will, subject to the Limits of Liability, indemnify the Insured against loss of or damages to the Motor Vehicle and its accessories and spare parts whilst thereon; (a) by accidental collision or overturning or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear,x x x x x x x x x2. At its own option the Company may pay in cash the amount of the loss or damage or may repair, reinstate, or replace the Motor Vehicle or any part thereof or its accessories or spare parts. The liability of the Company shall not exceed the value of the parts whichever is the less. The Insured's estimate of value stated in the schedule will be the maximum amount payable by the Company in respect of any claim for loss or damage.1wph1.tx x x x x x x x x4. The Insured may authorize the repair of the Motor Vehicle necessitated by damage for which the Company may be liable under this Policy provided that: (a) The estimated cost of such repair does not exceed the Authorized Repair Limit, (b) A detailed estimate of the cost is forwarded to the Company without delay, subject to the condition that "Loss, if any is payable to H.S. Reyes, Inc.," by virtue of the fact that said Oldsmobile sedan was mortgaged in favor of the said H.S. Reyes, Inc. and that under a clause in said insurance policy, any loss was made payable to the H.S. Reyes, Inc. as Mortgagee;x x x x x x x x xDuring the effectivity of the insurance contract, the car met with an accident. The insurance company then assigned the accident to the Bayne Adjustment Co. for investigation and appraisal of the damage. Enrique Mora, without the knowledge and consent of the H.S. Reyes, Inc., authorized the Bonifacio Bros. Inc. to furnish the labor and materials, some of which were supplied by the Ayala Auto Parts Co. For the cost of labor and materials, Enrique Mora was billed at P2,102.73 through the H.H. Bayne Adjustment Co. The insurance company after claiming a franchise in the amount of P100, drew a check in the amount of P2,002.73, as proceeds of the insurance policy, payable to the order of Enrique Mora or H.S. Reyes,. Inc., and entrusted the check to the H.H. Bayne Adjustment Co. for disposition and delivery to the proper party. In the meantime, the car was delivered to Enrique Mora without the consent of the H.S. Reyes, Inc., and without payment to the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. of the cost of repairs and materials.Upon the theory that the insurance proceeds should be paid directly to them, the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. filed on May 8, 1961 a complaint with the Municipal Court of Manila against Enrique Mora and the State Bonding & Insurance Co., Inc. for the collection of the sum of P2,002.73 The insurance company filed its answer with a counterclaim for interpleader, requiring the Bonifacio Bros. Inc. and the H.S. Reyes, Inc. to interplead in order to determine who has better right to the insurance proceeds in question. Enrique Mora was declared in default for failure to appear at the hearing, and evidence against him was receivedex parte. However, the counsel for the Bonifacio Bros. Inc., Ayala Auto Parts Co. and State Bonding & Insurance Co. Inc. submitted a stipulation of facts, on the basis of which are Municipal Court rendered a decision declaring the H.S. Reyes, Inc. as having a better right to the disputed amount and ordering State Bonding & Insurance Co. Inc. to pay to the H. S. Reyes, Inc. the said sum of P2,002.73. From this decision, the appellants elevated the case to the Court of First Instance of Manila which the stipulation of facts was reproduced. On October 19, 1962 the latter court rendered a decision, affirming the decision of the Municipal Court. The Bonifacio Bros. Inc. and the Ayala Auto Parts Co. moved for reconsideration of the decision, but the trial court denied the motion. Hence, this appeal.The main issue raised is whether there is privity of contract between the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. on the one hand and the insurance company on the other. The appellants argue that the insurance company and Enrique Mora are parties to the repair of the car as well as the towage thereof performed. The authority for this assertion is to be found, it is alleged, in paragraph 4 of the insurance contract which provides that "the insured may authorize the repair of the Motor Vehicle necessitated by damage for which the company may be liable under the policy provided that (a) the estimated cost of such repair does not exceed the Authorized Repair Limit, and (b) a detailed estimate of the cost is forwarded to the company without delay." It is stressed that the H.H. Bayne Adjustment Company's recommendation of payment of the appellants' bill for materials and repairs for which the latter drew a check for P2,002.73 indicates that Mora and the H.H. Bayne Adjustment Co. acted for and in representation of the insurance company.This argument is, in our view, beside the point, because from the undisputed facts and from the pleadings it will be seen that the appellants' alleged cause of action rests exclusively upon the terms of the insurance contract. The appellants seek to recover the insurance proceeds, and for this purpose, they rely upon paragraph 4 of the insurance contract document executed by and between the State Bonding & Insurance Company, Inc. and Enrique Mora. The appellants are not mentioned in the contract as parties thereto nor is there any clause or provision thereof from which we can infer that there is an obligation on the part of the insurance company to pay the cost of repairs directly to them. It is fundamental that contracts take effect only between the parties thereto, except in some specific instances provided by law where the contract contains some stipulation in favor of a third person.1Such stipulation is known as stipulationpour autruior a provision in favor of a third person not a pay to the contract. Under this doctrine, a third person is allowed to avail himself of a benefit granted to him by the terms of the contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such person.2Consequently, a third person not a party to the contract has no action against the parties thereto, and cannot generally demand the enforcement of the same.3The question of whether a third person has an enforcible interest in a contract, must be settled by determining whether the contracting parties intended to tender him such an interest by deliberately inserting terms in their agreement with the avowed purpose of conferring a favor upon such third person. In this connection, this Court has laid down the rule that the fairest test to determine whether the interest of a third person in a contract is a stipulationpour autruior merely an incidental interest, is to rely upon the intention of the parties as disclosed by their contract.4In the instant case the insurance contract does not contain any words or clauses to disclose an intent to give any benefit to any repairmen or materialmen in case of repair of the car in question. The parties to the insurance contract omitted such stipulation, which is a circumstance that supports the said conclusion. On the other hand, the "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.We likewise observe from the brief of the State Bonding & Insurance Company that it has vehemently opposed the assertion or pretension of the appellants that they are privy to the contract. If it were the intention of the insurance company to make itself liable to the repair shop or materialmen, it could have easily inserted in the contract a stipulation to that effect. To hold now that the original parties to the insurance contract intended to confer upon the appellants the benefit claimed by them would require us to ignore the indespensable requisite that a stipulationpour autruimust be clearly expressed by the parties, which we cannot do.As regards paragraph 4 of the insurance contract, a perusal thereof would show that instead of establishingprivity betweenthe appellants and the insurance company, such stipulation merely establishes the procedure that the insured has to follow in order to be entitled to indemnity for repair. This paragraph therefore should not be construed as bringing into existence in favor of the appellants a right of action against the insurance company as such intention can never be inferred therefrom.Another cogent reason for not recognizing a right of action by the appellants against the insurance company is that "a policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract of trust, expressed or implied between the insured and third person."5In this case, no contract of trust, expressed or implied exists. We, therefore, agree with the trial court that no cause of action exists in favor of the appellants in so far as the proceeds of insurance are concerned. The appellants' claim, if at all, is merely equitable in nature and must be made effective through Enrique Mora who entered into a contract with the Bonifacio Bros. Inc. This conclusion is deducible not only from the principle governing the operation and effect of insurance contracts in general, but is clearly covered by the express provisions of section 50 of the Insurance Act which read:The insurance shall be applied exclusively to the proper interests of the person in whose name it is made unless otherwise specified in the policy.The policy in question has been so framed that "Loss, if any, is payable to H.S. Reyes, Inc.," which unmistakably shows the intention of the parties.The final contention of the appellants is that the right of the H.S. Reyes, Inc. to the insurance proceeds arises only if there was loss and not where there is mere damage as in the instant case. Suffice it to say that any attempt to draw a distinction between "loss" and "damage" is uncalled for, because the word "loss" in insurance law embraces injury or damage.Loss in insurance, defined. The injury or damage sustained by the insured in consequence of the happening of one or more of the accidents or misfortune against which the insurer, in consideration of the premium, has undertaken to indemnify the insured. (1 Bouv. Ins. No. 1215; Black's Law Dictionary; Cyclopedic Law Dictionary, cited in Martin's Phil. Commercial Laws, Vol. 1, 1961 ed. p. 608).Indeed, according to sec. 120 of the Insurance Act, a loss may be either total or partial.Accordingly, the judgment appealed from is hereby affirmed, at appellants' cost.

LOSS (EFFECT OF GROSS NEGLIGENCE)G.R. No. 137775. March 31, 2005FGU INSURANCE CORPORATION,Petitioners,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.G.R. No. 140704. March 31, 2005ESTATE OF ANG GUI, Represented by LUCIO, JULIAN and JAIME, all surnamed ANG, and CO TO,Petitioners,vs.THE HONORABLE COURT OF APPEALS, SAN MIGUEL CORP., and FGU INSURANCE CORP.,Respondents.D E C I S I O NCHICO-NAZARIO,J.:Before Us are two separate Petitions for review assailing the Decision1of the Court of Appeals in CA-G.R. CV No. 49624 entitled, "San Miguel Corporation, Plaintiff-Appellee versus Estate of Ang Gui, represented by Lucio, Julian and Jaime, all surnamed Ang, and Co To, Defendants-Appellants, ThirdParty Plaintiffs versus FGU Insurance Corporation, Third-Party Defendant-Appellant," which affirmedin totothe decision2of the Regional Trial Court of Cebu City, Branch 22. The dispositive portion of the Court of Appeals decision reads:WHEREFORE, for all the foregoing, judgment is hereby rendered as follows:1) Ordering defendants to pay plaintiff the sum of P1,346,197.00 and an interest of 6% per annum to be reckoned from the filing of this case on October 2, 1990;2) Ordering defendants to pay plaintiff the sum of P25,000.00 for attorneys fees and an additional sum of P10,000.00 as litigation expenses;3) With cost against defendants.For the Third-Party Complaint:1) Ordering third-party defendant FGU Insurance Company to pay and reimburse defendants the amount of P632,700.00.3The FactsEvidence shows that Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another.On 23 September 1979, San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T ANCO, the following cargoes:Bill of Lading No. Shipment Destination1 25,000 cases Pale Pilsen Estancia, Iloilo350 cases Cerveza Negra Estancia, Iloilo2 15,000 cases Pale Pilsen San Jose, Antique200 cases Cerveza Negra San Jose, AntiqueThe consignee for the cargoes covered by Bill of Lading No. 1 was SMCs Beer Marketing Division (BMD)-Estancia Beer Sales Office, Estancia, Iloilo, while the consignee for the cargoes covered by Bill of Lading No. 2 was SMCs BMD-San Jose Beer Sales Office, San Jose, Antique.The D/B Lucio was towed by the M/T ANCO all the way from Mandaue City to San Jose, Antique. The vessels arrived at San Jose, Antique, at about one oclock in the afternoon of 30 September 1979. The tugboat M/T ANCO left the barge immediately after reaching San Jose, Antique.When the barge and tugboat arrived at San Jose, Antique, in the afternoon of 30 September 1979, the clouds over the area were dark and the waves were already big. The arrastre workers unloading the cargoes of SMC on board the D/B Lucio began to complain about their difficulty in unloading the cargoes. SMCs District Sales Supervisor, Fernando Macabuag, requested ANCOs representative to transfer the barge to a safer place because the vessel might not be able to withstand the big waves.ANCOs representative did not heed the request because he was confident that the barge could withstand the waves. This, notwithstanding the fact that at that time, only the M/T ANCO was left at the wharf of San Jose, Antique, as all other vessels already left the wharf to seek shelter. With the waves growing bigger and bigger, only Ten Thousand Seven Hundred Ninety (10,790) cases of beer were discharged into the custody of the arrastre operator.At about ten to eleven oclock in the evening of 01 October 1979, the crew of D/B Lucio abandoned the vessel because the barges rope attached to the wharf was cut off by the big waves. At around midnight, the barge run aground and was broken and the cargoes of beer in the barge were swept away.As a result, ANCO failed to deliver to SMCs consignee Twenty-Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra. The value per case of Pale Pilsen was Forty-Five Pesos and Twenty Centavos (P45.20). The value of a case of Cerveza Negra was Forty-Seven Pesos and Ten Centavos (P47.10), hence, SMCs claim against ANCO amounted to One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00).As a consequence of the incident, SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO for the amount of One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00) plus interest, litigation expenses and Twenty-Five Percent (25%) of the total claim as attorneys fees.Upon Ang Guis death, ANCO, as a partnership, was dissolved hence, on 26 January 1993, SMC filed a second amended complaint which was admitted by the Court impleading the surviving partner, Co To and the Estate of Ang Gui represented by Lucio, Julian and Jaime, all surnamed Ang. The substituted defendants adopted the original answer with counterclaim of ANCO "since the substantial allegations of the original complaint and the amended complaint are practically the same."ANCO admitted that the cases of beer Pale Pilsen and Cerveza Negra mentioned in the complaint were indeed loaded on the vessel belonging to ANCO. It claimed however that it had an agreement with SMC that ANCO would not be liable for any losses or damages resulting to the cargoes by reason of fortuitous event. Since the cases of beer Pale Pilsen and Cerveza Negra were lost by reason of a storm, a fortuitous event which battered and sunk the vessel in which they were loaded, they should not be held liable. ANCO further asserted that there was an agreement between them and SMC to insure the cargoes in order to recover indemnity in case of loss. Pursuant to that agreement, the cargoes to the extent of Twenty Thousand (20,000) cases was insured with FGU Insurance Corporation (FGU) for the total amount of Eight Hundred Fifty-Eight Thousand Five Hundred Pesos (P858,500.00) per Marine Insurance Policy No. 29591.Subsequently, ANCO, with leave of court, filed a Third-Party Complaint against FGU, alleging that before the vessel of ANCO left for San Jose, Antique with the cargoes owned by SMC, the cargoes, to the extent of Twenty Thousand (20,000) cases, were insured with FGU for a total amount of Eight Hundred Fifty-Eight Thousand Five Hundred Pesos (P858,500.00) under Marine Insurance Policy No. 29591. ANCO further alleged that on or about 02 October 1979, by reason of very strong winds and heavy waves brought about by a passing typhoon, the vessel run aground near the vicinity of San Jose, Antique, as a result of which, the vessel was totally wrecked and its cargoes owned by SMC were lost and/or destroyed. According to ANCO, the loss of said cargoes occurred as a result of risks insured against in the insurance policy and during the existence and lifetime of said insurance policy. ANCO went on to assert that in the remote possibility that the court will order ANCO to pay SMCs claim, the third-party defendant corporation should be held liable to indemnify or reimburse ANCO whatever amounts, or damages, it may be required to pay to SMC.In its answer to the Third-Party complaint, third-party defendant FGU admitted the existence of the Insurance Policy under Marine Cover Note No. 29591 but maintained that the alleged loss of the cargoes covered by the said insurance policy cannot be attributed directly or indirectly to any of the risks insured against in the said insurance policy. According to FGU, it is only liable under the policy to Third-party Plaintiff ANCO and/or Plaintiff SMC in case of any of the following:a) total loss of the entire shipment;b) loss of any case as a result of the sinking of the vessel; orc) loss as a result of the vessel being on fire.Furthermore, FGU alleged that the Third-Party Plaintiff ANCO and Plaintiff SMC failed to exercise ordinary diligence or the diligence of a good father of the family in the care and supervision of the cargoes insured to prevent its loss and/or destruction.Third-Party defendant FGU prayed for the dismissal of the Third-Party Complaint and asked for actual, moral, and exemplary damages and attorneys fees.The trial court found that while the cargoes were indeed lost due to fortuitous event, there was failure on ANCOs part, through their representatives, to observe the degree of diligence required that would exonerate them from liability. The trial court thus held the Estate of Ang Gui and Co To liable to SMC for the amount of the lost shipment. With respect to the Third-Party complaint, the court a quo found FGU liable to bear Fifty-Three Percent (53%) of the amount of the lost cargoes. According to the trial court:. . . Evidence is to the effect that the D/B Lucio, on which the cargo insured, run-aground and was broken and the beer cargoes on the said barge were swept away.It is the sense of this Court that the risk insured against was the cause of the loss.. . .Since the total cargo was 40,550 cases which had a total amount of P1,833,905.00 and the amount of the policy was only for P858,500.00,defendants as assured, therefore, were considered co-insurers of third-party defendant FGU Insurance Corporation to the extent of 975,405.00 value of the cargo.Consequently, inasmuch as there was partial loss of only P1,346,197.00, the assured shall bear 53% of the loss4[Emphasis ours]The appellate court affirmedin totothe decision of the lower court and denied the motion for reconsideration and the supplemental motion for reconsideration.Hence, the petitions.The IssuesIn G.R. No. 137775, the grounds for review raised by petitioner FGU can be summarized into two: 1) Whether or not respondent Court of Appeals committed grave abuse of discretion in holding FGU liable under the insurance contract considering the circumstances surrounding the loss of the cargoes; and 2) Whether or not the Court of Appeals committed an error of law in holding that the doctrine ofres judicataapplies in the instant case.In G.R. No. 140704, petitioner Estate of Ang Gui and Co To assail the decision of the appellate court based on the following assignments of error: 1) The Court of Appeals committed grave abuse of discretion in affirming the findings of the lower court that the negligence of the crewmembers of the D/B Lucio was the proximate cause of the loss of the cargoes; and 2) The respondent court acted with grave abuse of discretion when it ruled that the appeal was without merit despite the fact that said court had accepted the decision in Civil Case No. R-19341, as affirmed by the Court of Appeals and the Supreme Court, asres judicata.Ruling of the CourtFirst, we shall endeavor to dispose of the common issue raised by both petitioners in their respective petitions for review, that is, whether or not the doctrine ofres judicataapplies in the instant case.It is ANCOs contention that the decision in Civil Case No. R-19341,5which was decided in its favor, constitutesres judicatawith respect to the issues raised in the case at bar.The contention is without merit. There can be nores judicataas between Civil Case No. R-19341 and the case at bar. In order forres judicatato be made applicable in a case, the following essential requisites must be present: 1) the former judgment must be final; 2) the former judgment must have been rendered by a court having jurisdiction over the subject matter and the parties; 3) the former judgment must be a judgment or order on the merits; and 4)there must be between the first and second action identity of parties, identity of subject matter, and identity of causes of action.6There is no question that the first three elements of res judicata as enumerated above are indeed satisfied by the decision in Civil Case No. R-19341. However, the doctrine is still inapplicable due to the absence of the last essential requisite of identity of parties, subject matter and causes of action.The parties in Civil Case No. R-19341 were ANCO as plaintiff and FGU as defendant while in the instant case, SMC is the plaintiff and the Estate of Ang Gui represented by Lucio, Julian and Jaime, all surnamed Ang and Co To as defendants, with the latter merely impleading FGU as third-party defendant.The subject matter of Civil Case No. R-19341 was the insurance contract entered into by ANCO, the owner of the vessel, with FGU covering the vessel D/B Lucio, while in the instant case, the subject matter of litigation is the loss of the cargoes of SMC, as shipper, loaded in the D/B Lucio and the resulting failure of ANCO to deliver to SMCs consignees the lost cargo. Otherwise stated, the controversy in the first case involved the rights and liabilities of the shipownervis--visthat of the insurer, while the present case involves the rights and liabilities of the shippervis--visthat of the shipowner. Specifically, Civil Case No. R-19341 was an action for Specific Performance and Damages based on FGU Marine Hull Insurance Policy No. VMF-MH-13519 covering the vessel D/B Lucio, while the instant case is an action for Breach of Contract of Carriage and Damages filed by SMC against ANCO based on Bill of Lading No. 1 and No. 2, with defendant ANCO seeking reimbursement from FGU under Insurance Policy No. MA-58486, should the former be held liable to pay SMC.Moreover, the subject matter of the third-party complaint against FGU in this case is different from that in Civil Case No. R-19341. In the latter, ANCO was suing FGU for the insurance contract over the vessel while in the former, the third-party complaint arose from the insurance contract covering the cargoes on board the D/B Lucio.The doctrine ofres judicataprecludes the re-litigation of a particular fact or issue already passed upon by a court of competent jurisdiction in a former judgment, in another action between the same parties based on a different claim or cause of action. The judgment in the prior action operates as estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or judgment was rendered.7If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit.8Since the case at bar arose from the same incident as that involved in Civil Case No. R-19341, only findings with respect to matters passed upon by the court in the former judgment are conclusive in the disposition of the instant case. A careful perusal of the decision in Civil Case No. R-19341 will reveal that the pivotal issues resolved by the lower court, as affirmed by both the Court of Appeals and the Supreme Court, can be summarized into three legal conclusions: 1) that the D/B Lucio before and during the voyage was seaworthy; 2) that there was proper notice of loss made by ANCO within the reglementary period; and 3) that the vessel D/B Lucio was a constructive total loss.Said decision, however, did not pass upon the issues raised in the instant case. Absent therein was any discussion regarding the liability of ANCO for the loss of the cargoes. Neither did the lower court pass upon the issue of the alleged negligence of the crewmembers of the D/B Lucio being the cause of the loss of the cargoes owned by SMC.Therefore, based on the foregoing discussion, we are reversing the findings of the Court of Appeals that there isres judicata.Anent ANCOs first assignment of error,i.e., the appellate court committed error in concluding that the negligence of ANCOs representatives was the proximate cause of the loss, said issue is a question of fact assailing the lower courts appreciation of evidence on the negligence or lack thereof of the crewmembers of the D/B Lucio. As a rule, findings of fact of lower courts, particularly when affirmed by the appellate court, are deemed final and conclusive. The Supreme Court cannot review such findings on appeal, especially when they are borne out by the records or are based on substantial evidence.9As held in the case ofDonato v. Court of Appeals,10in this jurisdiction, it is a fundamental and settled rule that findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case.11It is not the function of this Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.12A careful study of the records shows no cogent reason to fault the findings of the lower court, as sustained by the appellate court, that ANCOs representatives failed to exercise the extraordinary degree of diligence required by the law to exculpate them from liability for the loss of the cargoes.First, ANCO admitted that they failed to deliver to the designated consignee the Twenty Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra.Second, it is borne out in the testimony of the witnesses on record that the barge D/B Lucio had no engine of its own and could not maneuver by itself. Yet, the patron of ANCOs tugboat M/T ANCO left it to fend for itself notwithstanding the fact that as the two vessels arrived at the port of San Jose, Antique, signs of the impending storm were already manifest. As stated by the lower court, witness Mr. Anastacio Manilag testified that the captain or patron of the tugboat M/T ANCO left the barge D/B Lucio immediately after it reached San Jose, Antique, despite the fact that there were already big waves and the area was already dark. This is corroborated by defendants own witness, Mr. Fernando Macabueg.13The trial court continued:At that precise moment, since it is the duty of the defendant to exercise and observe extraordinary diligence in the vigilance over the cargo of the plaintiff, the patron or captain of M/T ANCO, representing the defendant could have placed D/B Lucio in a very safe location before they left knowing or sensing at that time the coming of a typhoon. The presence of big waves and dark clouds could have warned the patron or captain of M/T ANCO to insure the safety of D/B Lucio including its cargo. D/B Lucio being a barge, without its engine, as the patron or captain of M/T ANCO knew, could not possibly maneuver by itself. Had the patron or captain of M/T ANCO, the representative of the defendants observed extraordinary diligence in placing the D/B Lucio in a safe place, the loss to the cargo of the plaintiff could not have occurred. In short, therefore, defendants through their representatives, failed to observe the degree of diligence required of them under the provision of Art. 1733 of the Civil Code of the Philippines.14Petitioners Estate of Ang Gui and Co To, in theirMemorandum, asserted that the contention of respondents SMC and FGU that "the crewmembers of D/B Lucio should have left port at the onset of the typhoon is like advising the fish to jump from the frying pan into the fire and an advice that borders on madness."15The argument does not persuade. The records show that the D/B Lucio was the only vessel left at San Jose, Antique, during the time in question. The other vessels were transferred and temporarily moved to Malandong, 5 kilometers from wharf where the barge remained.16Clearly, the transferred vessels were definitely safer in Malandong than at the port of San Jose, Antique, at that particular time, a fact which petitioners failed to disputeANCOs arguments boil down to the claim that the loss of the cargoes was caused by the typhoonSisang, a fortuitous event (caso fortuito), and there was no fault or negligence on their part. In fact, ANCO claims that their crewmembers exercised due diligence to prevent or minimize the loss of the cargoes but their efforts proved no match to the forces unleashed by the typhoon which, in petitioners own words was, by any yardstick, a natural calamity, a fortuitous event, an act of God, the consequences of which petitioners could not be held liable for.17The Civil Code provides:Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and 1745 Nos. 5, 6, and 7 . . .Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;. . .Art. 1739.In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods . . . (Emphasis supplied)Caso fortuitoorforce majeure(which in law are identical insofar as they exempt an obligor from liability)18by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen, were inevitable. It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid.19In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMCs District Sales Supervisor to request that the D/B Lucio be likewise transferred, but to no avail. The D/B Lucio had no engine and could not maneuver by itself. Even if ANCOs representatives wanted to transfer it, they no longer had any means to do so as the tugboat M/T ANCO had already departed, leaving the barge to its own devices. The captain of the tugboat should have had the foresight not to leave the barge alone considering the pending storm.While the loss of the cargoes was admittedly caused by the typhoonSisang, a natural disaster, ANCO could not escape liability to respondent SMC. The records clearly show the failure of petitioners representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss.20There must have been no contributory negligence on the part of the common carrier. As held in the case ofLimpangco Sons v. Yangco Steamship Co.:21. . . To be exempt from liability because of an act of God, the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. For, although the immediate or proximate cause of the loss in any given instance may have been what is termed an act of God, yet, if the tug unnecessarily exposed the two to such accident by any culpable act or omission of its own, it is not excused.22Therefore, as correctly pointed out by the appellate court, there was blatant negligence on the part of M/T ANCOs crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMCs representatives to have the barge transferred to a safer place, as was done by the other vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes.We now come to the issue of whether or not FGU can be held liable under the insurance policy to reimburse ANCO for the loss of the cargoes despite the findings of the respondent court that such loss was occasioned by the blatant negligence of the latters employees.One of the purposes for taking out insurance is to protect the insured against the consequences of his own negligence and that of his agents. Thus, it is a basic rule in insurance that the carelessness and negligence of the insured or his agents constitute no defense on the part of the insurer.23This rule however presupposes that the loss has occurred due to causes which could not have been prevented by the insured, despite the exercise of due diligence.The question now is whether there is a certain degree of negligence on the part of the insured or his agents that will deprive him the right to recover under the insurance contract. We say there is. However, to what extent such negligence must go in order to exonerate the insurer from liability must be evaluated in light of the circumstances surrounding each case. When evidence show that the insureds negligence or recklessness is so gross as to be sufficient to constitute a willful act, the insurer must be exonerated.In the case ofStandard Marine Ins. Co. v. Nome Beach L. & T. Co.,24the United States Supreme Court held that:The ordinary negligence of the insured and his agents has long been held as a part of the risk which the insurer takes upon himself, and the existence of which, where it is the proximate cause of the loss, does not absolve the insurer from liability.But willful exposure, gross negligence, negligence amounting to misconduct, etc., have often been held to release the insurer from such liability.25[Emphasis ours]. . .In the case of Williams v. New England Insurance Co., 3 Cliff. 244, Fed. Cas. No. 17,731, the owners of an insured vessel attempted to put her across the bar at Hatteras Inlet. She struck on the bar and was wrecked. The master knew that the depth of water on the bar was such as to make the attempted passage dangerous. Judge Clifford held that, under the circumstances, the loss was not within the protection of the policy, saying:Authorities to prove that persons insured cannot recover for a loss occasioned by their own wrongful acts are hardly necessary, as the proposition involves an elementary principle of universal application. Losses may be recovered by the insured, though remotely occasioned by the negligence or misconduct of the master or crew, if proximately caused by the perils insured against, because such mistakes and negligence are incident to navigation and constitute a part of the perils which those who engage in such adventures are obliged to incur;but it was never supposed that the insured could recover indemnity for a loss occasioned by his own wrongful act or by that of any agent for whose conduct he was responsible.26[Emphasis ours]From the above-mentioned decision, the United States Supreme Court has made a distinction between ordinary negligence and gross negligence or negligence amounting to misconduct and its effect on the insureds right to recover under the insurance contract. According to the Court, while mistake and negligence of the master or crew are incident to navigation and constitute a part of the perils that the insurer is obliged to incur, such negligence or recklessness must not be of such gross character as to amount to misconduct or wrongful acts; otherwise, such negligence shall release the insurer from liability under the insurance contract.In the case at bar, both the trial court and the appellate court had concluded from the evidence that the crewmembers of both the D/B Lucio and the M/T ANCO were blatantly negligent. To wit:There wasblatant negligenceon the part of the employees of defendants-appellants when the patron (operator) of the tug boat immediately left the barge at the San Jose, Antique wharf despite the looming bad weather. Negligence was likewise exhibited by the defendants-appellants representative who did not heed Macabuags request that the barge be moved to a more secure place. The prudent thing to do, as was done by the other sea vessels at San Jose, Antique during the time in question, was to transfer the vessel to a safer wharf.The negligence of the defendants-appellants is proved by the fact that on 01 October 1979, the only simple vessel left at the wharf in San Jose was the D/B Lucio.27[Emphasis ours]As stated earlier, this Court does not find any reason to deviate from the conclusion drawn by the lower court, as sustained by the Court of Appeals, that ANCOs representatives had failed to exercise extraordinary diligence required of common carriers in the shipment of SMCs cargoes. Such blatant negligence being the proximate cause of the loss of the cargoes amounting to One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00)This Court, taking into account the circumstances present in the instant case, concludes that the blatant negligence of ANCOs employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from liability under the insurance contract.WHEREFORE, premises considered, the Decision of the Court of Appeals dated 24 February 1999 is hereby AFFIRMED with MODIFICATION dismissing the third-party complaint.

PROOF OF LOSSRepublic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 138737July 12, 2001FINMAN GENERAL ASSURANCE CORPORATION,petitioner,vs.COURT OF APPEALS and USIPHIL INCORPORATED,respondents.KAPUNAN,J.:Through this petition for review on certiorari Finman General Assurance Corporation (petitioner) seeks to reverse and set aside the Decision, dated January 14, 1999, of the Court of Appeals (CA) in CA-G.R. CV No. 46721 directing petitioner to pay the insurance claim of Usiphil Incorporated (private respondent). The appellate courts Resolution, dated May 13, 1999, which denied petitioners motion for reconsideration, is likewise sought to be reversed and set aside.The antecedent facts, as culled from the decision of the trial court and the CA, are as follows:On September 15, 1981, private respondent obtained a fire insurance policy from petitioner (then doing business under the name Summa Insurance Corporation) covering certain properties, e.g., office, furniture, fixtures, shop machinery and other trade equipment. Under Policy No. F3100 issued to private respondent, petitioner undertook to indemnify private respondent for any damage to or loss of said properties arising from fire.Sometime in 1982, private respondent filed with petitioner an insurance claim amounting to P987,126.11 for the loss of the insured properties due to fire. Acting thereon, petitioner appointed Adjuster H.H. Bayne to undertake the valuation and adjustment of the loss. H.H. Bayne then required private respondent to file a formal claim and submit proof of loss. In compliance therewith, private respondent submitted its Sworn Statement of Loss and Formal Claim, dated July 22, 1982, signed by Reynaldo Cayetano, private respondents Manager. Respondent likewise submitted Proof of Loss signed by its Accounting Manager Pedro Palallos and countersigned by H.H. Baynes Adjuster F.C. Medina.Palallos personally followed-up private respondents claim with petitioners President Joaquin Ortega. During their meeting, Ortega instructed their Finance Manager, Rosauro Maghirang, to reconcile the records. Thereafter, Maghirang and Palallos signed a Statement/Agreement, dated February 28, 1985, which indicated that the amount due respondent was P842,683.40.Despite repeated demands by private respondent, petitioner refused to pay the insurance claim. Thus, private respondent was constrained to file a complaint against petitioner for the unpaid insurance claim. In its Answer, petitioner maintained that the claim of private respondent could not be allowed because it failed to comply with Policy Condition No. 13 regarding the submission of certain documents to prove the loss.Trial ensued. On July 6, 1994, the trial court rendered judgment in favor of private respondent. The dispositive portion of the decision reads:WHEREFORE, in view of the above observations and findings, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter:1. To pay the plaintiff the sum of P842,683.40 and to pay 24% interest per annum from February 28, 1985 until fully paid (par. 29 of Exh. K);2. To pay the plaintiff the sum equivalent to 10% of the principal obligation as and for attorneys fees, plus P1,500.00 per court appearance of counsel;3. To pay the plaintiff the amount of P30,000.00 as exemplary damages in addition to the actual and compensatory damages awarded;4. Dismissing the claim of P30,000.00 for actual damages under par. 4 of the prayer, since the actual damages has been awarded under par. 1 of the decisions dispositive portion;5. Dismissing the claim of interest under par. 2 of the prayer, there being no agreement to such effect;6. Dismissing the counter-claim for lack of merit;7. Ordering the defendant to pay the cost of suit.SO ORDERED.1On appeal, the CA substantially affirmed the decision of the trial court. The dispositive portion of the CA decision reads:WHEREFORE, the appealed decision is hereby AFFIRMED with the modification that defendant-appellant is ordered to pay plaintiff-appellee the sum of P842,683.40 and to pay 24% interest per annum from 03 May 1985 until fully paid. In all other respects, the appealed decision is AFFIRMEDIN TOTO.SO ORDERED.2Petitioner now comes to this Court assailing the decision of the appellate court. Petitioner alleges that:Respondent Court of Appeals erred in finding that there is evidence sufficient to justify the Decision of the lower court;Respondent Court of Appeals erred in failing to consider the fact that Private Respondent committed a violation of the Insurance Policy which justifies the denial of the claim by Petitioner;Respondent Court of Appeals further erred in finding that Petitioner is liable to pay the respondent, Usiphil, Inc., an interest of 24% per annum in addition to the principal amount of P842,683.40.3Essentially, petitioner argues that the disallowance of private respondents claim is justified by its failure to submit the required documents in accordance with Policy Condition No. 13. Said requirements were allegedly communicated to private respondent in the two letters of H.H. Bayne to private respondent. The first letter stated:To be able to expedite adjustment of this case, please submit to us without delay the following documents and/or particulars:For FFF, Machineries/Equipment Claims1. Your formal claim (which may be accomplished in the enclosed form) accompanied by a detailed inventory of the documents submitted.2. Certification from the appropriate government office indicating the date of the occurrence of the fire, the property involved, its location and possible point of origin.3. Proof of premium payment.4. Three color photographs of the debris properly captioned/identified/dated and initiated by the claimant at the back.4.1 Close-up (not more than 2 meters away) of themostseverely damaged.4.2 Close-up (not more than 2 meters away) of theleastdamaged.4.3. Original view of the debris (may be from farther than 2 meters away); splice two or more frames if necessary.Though our adjusters will also take photographs in the manner prescribed above, please do not rely on his photographs in the preservations of your evidence of loss thru pictures.5. Copies of purchase invoices.6. In the absence of No. 5, suppliers certificates of sales and delivery.7. Appraisal report, if any.8. Where initial estimated loss is exceeding P20,000.00, submit estimate by at least 2 contractors/suppliers.9. Others (to be specified)1. Repairs cost of the affected items including quotation orinvoices in support thereof;2. Complete lists of furniture, fixtures & fittings including date and cost of acquisition, and;3. Statement of salvage on burneditems.Your preferential attention to this request will be fully appreciated.4While the other letter stated:Please submit to us without delay the following documents and/or particulars.For Stock Claim1. Your formal claim (which may be accomplished in the enclosed), accompanied by a detailed inventory of the documents submitted.2. Certification from the appropriate government office showing that the Insureds property was involved in the fire as a consequence of which the claim is being filed.3. Proof of premium payment.4. Three colored photographs of the debris, property captioned/identified/dated and initiated by the claimant at the back; in a floor plan, indicate the point from where the picture was taken and by an arrow where the camera was facing.4.1. Close-up (not more than 2 meters away) of themost severely damaged.4.2. Close-up (not more than 2 meters away) of the least damaged.4.3. Overall view of the debris (may be from farther than 2 meters away); splice two or more frames if necessary.Our adjuster will also take photographs.5. Books of accounts bill, invoices and other vouchers, or certified copies thereof if originals be lost. This requirement includes, but is not limited to, purchase and sales invoices, delivery6. Certified copies of income tax returns for the last three years and the accompanying financial statements.7. Latest inventory of merchandise filed with a financial institution, the Bureau of Internal Revenue or any government entity prior to the loss.8. A detailed inventory of the articles damaged or destroyed, showing the cost price of each, extent of loss, if any, if the risk sustained partial or water damaged.9. Certificates of registration.10. Bank Statements.11. For losses where the estimated value of stocks claimed which are burned out of sight and/or which may no longer be subject to actual physical count exceeds P50,000.00, a CPAs detailed computations in support of such estimated value.12. In the absence of purchase invoices/delivery receipts (state reason for absence), submit suppliers certificate of sales and delivery.13. Others (to be specified).Statement of salvage of the affected stocks in trade.Your compliance with this request will enable us to expedite adjustment of the loss in caption.5According to petitioner, in complete disregard of the foregoing requirements, private respondent never submitted any of the documents mentioned therein. Further, petitioner assails the award in favor of private respondent of an interest rate of 24% per annum. Since there was allegedly no express finding that petitioner unreasonably denied or withheld the payment of the subject insurance claim, then the award of 24% per annum is not proper. Petitioner opines that the judgment should only bear the legal interest rate of 12% per annum for the delay in the payment of the claim.The petition is bereft of merit.Well-settled is the rule that factual findings and conclusions of the trial court and the CA are entitled to great weight and respect, and will not be disturbed on appeal in the absence of any clear showing that the trial court overlooked certain facts or circumstances which would substantially affect the disposition of the case.6There is no cogent reason to deviate from this salutary rule in the present case.Both the trial court and the CA concur in holding that private respondent had substantially complied with Policy Condition No. 13 which reads:13. The insured shall give immediate written notice to the Company of any loss, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged, and undamaged property, showing in detail quantities, costs, actual cash value and the amount of loss claimed; AND WITHIN SIXTY DAYS AFTER THE LOSS, UNLESS SUCH TIME IS EXTENDED IN WRITING BY THE COMPANY, THE INSURED SHALL RENDER TO THE COMPANY A PROOF OF LOSS, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy by whom and for what purpose any buildings herein described and the several parts thereof were occupied at the time of loss and whether or not it then stood on leased ground, and shall furnish a copy of all the descriptions and schedules in all policies, and if required verified plans and specifications of any building, fixtures, or machinery destroyed or damaged. The insured, as often as may be reasonably required, shall exhibit to any person designated by the company all that remains of any property herein described, and submit to examination under oath by any person named by the Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices, and other vouchers or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by the Company or its representative and shall permit extracts and copies thereof to be made.No claim under this policy shall be payable unless the terms of this condition have been complied with.7A perusal of the records shows that private respondent, after the occurrence of the fire, immediately notified petitioner thereof. Thereafter, private respondent submitted the following documents: (1) Sworn Statement of Loss and Formal Claim (Exhibit C) and; (2) Proof of Loss (Exhibit D). The submission of these documents, to the Courts mind, constitutes substantial compliance with the above provision. Indeed, as regards the submission of documents to prove loss, substantial, not strict as urged by petitioner, compliance with the requirements will always be deemed sufficient.8In any case, petitioner itself acknowledged its liability when through its Finance Manager, Rosauro Maghirang, it signed the document indicating that the amount due private respondent is P842,683.40 (Exhibit E). As correctly held by the appellate court:Under the aforequoted provision of the insurance policy, the insured was required to submit to the insurer written notice of the loss; and a complete inventory of the properties damaged within 60 days after the fire, as well as a signed and sworn statement of Proof of Loss. It is admitted by all parties that plaintiff-appellee notified the insurer Summa Corporation of the fire which occurred on 27 May 1982. It is likewise admitted by all parties that plaintiff-appellee submitted the following documents in support of its claim: (1) Sworn Statement of Loss (Exhibit C); (2) formal claim dated 22 July 1982; (3) unnotarized sworn statement of proof of loss (Exhibit D). There was, therefore, sufficient compliance with the requirements in Section 13 of the policy. But, even assuming that plaintiff-appellee indeed failed to submit certain required documents as proof of loss per Section 13, such violation was waived by the insurer Summa when it signed the document marked Exhibit E, a breakdown of the amount due to plaintiff-appellee as of February 1985 on the insurance claim. By such act, defendant-appellant acknowledged its liability under the insurance policy.Antecedent to the execution of Exhibit E, there was a conference between Pallalos, representing plaintiff-appellee and Ortega representing Summa Insurance. There is no evidence that in that meeting, Summa Insurance questioned plaintiff-appellees submission of the required documents. What happened was that Ortega summoned Maghirang so that he could settle with Pallalos regarding the amount due to plaintiff-appellee from insurance claim. The result is a reconciliation of claim in Exhibit E which shows that as of February 1985, the net due sum is P842,683.49.Defendant-appellant alleges that Maghirang was without authority to sign Exhibit E, and therefore without authority to bind defendant-appellant corporation. We do not agree. The evidence indicate that at a meeting between plaintiff-appellees corporate president Pedro Pallalos and his counterpart in defendant-appellant corporation, Joaquin Ortega, the latter summoned Rosauro Maghirang to reconcile the claims of plaintiff-appellee. One who clothes another with apparent authority as his agent and holds him to the public as such, cannot later be allowed to deny the authority of such person to act as his agent when such third person entered into the contract in good faith and in an honest belief that he is such agent. Witness for defendant-appellant Luis Manapats testimony that Maghirang was without authority to bind the defendant-appellant cannot be given credence because, as he himself testified, he was not yet part of the Summa Corporation at the time the negotiations in question were going on.9Anent the payment of 24% interest per annum computed from May 3, 1985 until fully paid, suffice it to say that the same is authorized by Sections 243 and 244 of the Insurance Code:Sec. 243. The amount of any loss or damage for which an insurer may be liable, under any policy other than life insurance policy, shall be paid within thirty days after proof of loss is received by the insurer and ascertainment of the loss or damage is made either by agreement between the insured and the insurer or by arbitration; but if such ascertainment is not had or made within sixty days after such receipt by the insurer of the proof of loss, then the loss or damage shall be paid within ninety days after such receipt. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the ground that the claim is fraudulent.Sec. 244. In case of any litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the Commissioner or the Court, as the case may be, to make a finding as to whether the payment of the claim of the insured has been unreasonably denied or withheld; and in the affirmative case, the insurance company shall be adjudged to pay damages which shall consist of attorneys fees and other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of the claim due the insured, from the date following the time prescribed in section two hundred forty-two or in section two hundred forty-three, as the case may be, until the claim is fully satisfied:Provided, That the failure to pay any such claim within the time prescribed in said sections shall be consideredprima facieevidence of reasonable delay in payment.Notably, under Section 244, aprima facieevidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within the time fixed in both Sections 243 and 244.10Further, Section 29 of the policy itself provides for the payment of such interest:29. Settlement of claim clause. The amount of any loss or damage for which the company may be liable, under this policyshall be paid within thirty days after proof of loss is received by the company and ascertainment of the loss or damage is made either in an agreement between the insured and the company or by arbitration; but if such ascertainment is not had or made within sixty days after such receipt by the company of the proof of loss, then the loss or damage shall be paid within ninety days after such receipt.Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the grounds (sic) that the claim is fraudulent.11The policy itself obliges petitioner to pay the insurance claim within thirty days after proof of loss and ascertainment of the loss made in an agreement between private respondent and petitioner. In this case, as found by the CA, petitioner and private respondent signed the agreement (Exhibit E) indicating that the amount due private respondent was P842,683.40 on April 2, 1985. Petitioner thus had until May 2, 1985 to pay private respondents insurance.12For its failure to do so, the CA and the trial court rightfully directed petitioner to pay,inter alia, 24% interest per annum in accordance with the above quoted provisions.1wphi1.ntWHEREFORE, the instant petition is herebyDENIEDfor lack of merit. The Decision, dated January 14, 1999, of the Court of Appeals in CA-G.R. CV No. 46721 and its Resolution, dated May 13, 1999, areAFFIRMEDIN TOTO.SO ORDERED.Davide, Jr., C.J., Puno, Pardo, Ynares-Santiago, JJ.,c

EFFECT OF DELAY OF INSURERG.R. No. 76101-02 September 30, 1991TIO KHE CHIO,petitioner,vs.THE HONORABLE COURT OF APPEALS and EASTERN ASSURANCE AND SURETY CORPORATION,respondents.Rodolfo M. Morelos for petitioner.Ferrer, Mariano, Sangalang & Gatdula for private respondent.FERNAN,C.J.:pThe issue in this petition forcertiorariand prohibition is the legal rate of interest to be imposed in actions for damages arising from unpaid insurance claims. Petitioner Tio Khe Chio claims that it should be twelve (12%) per cent pursuant to Articles 243 and 244 of the Insurance Code while private respondent Eastern Assurance and Surety Corporation (EASCO) claims that it should be six (6%) per cent under Article 2209 of the Civil Code.The facts are as follows: On December 18, 1978, petitioner Tio Khe Chio imported one thousand (1,000) bags of fishmeal valued at $36,000.30 from Agro Impex, U.S.A. Dallas, Texas, U.S.A. The goods were insured with respondent EASCO and shipped on board the M/V Peskov, a vessel owned by Far Eastern Shipping Company. When the goods reached Manila on January 28, 1979, they were found to have been damaged by sea water which rendered the fishmeal useless. Petitioner filed a claim with EASCO and Far Eastern Shipping. Both refused to pay. Whereupon, petitioner sued them before the then Court of First Instance of Cebu, Branch II for damages. EASCO, as the insurer, filed a counterclaim against the petitioner for the recovery of P18,387.86 representing the unpaid insurance premiums.On June 30, 1982, the trial court rendered judgment ordering EASCO and Far Eastern Shipping to pay petitioner solidarily the sum of P105,986.68 less the amount of P18,387.86 for unpaid premiums with interest at the legal rate from the filing of the complaint, the sum of P15,000.00 as attorney's fees and the costs.1The judgment became final as to EASCO but the shipping company appealed to the Court of Appeals and was absolved from liability by the said court in AC-G.R. No. 00161, entitled"Tio Khe Chio vs. Eastern Assurance and Surety Corporation."The trial court, upon motion by petitioner, issued a writ of execution against EASCO. The sheriff enforcing the writ reportedly fixed the legal rate of interest at twelve (12%). Respondent EASCO moved to quash the writ alleging that the legal interest to be computed should be six (6%) per cent per annum in accordance with Article 2209 of the Civil Code and not twelve (12%) per cent as insisted upon by petitioner's counsel. In its order of July 30, 1986, the trial court denied EASCO's motion. EASCO then filed a petition for certiorari and prohibition before the Court of Appeals.On July 30, 1986, the Appellate Court rendered the assailed judgment, the dispositive part of which states:WHEREFORE, the order dated July 30, 1986 is hereby SET ASIDE in so far as it fixes the interest at 12% on the principal amount of P87,598.82 from the date of filing of the complaint until the full payment of the amount, and the interest that the private respondent is entitled to collect from the petitioner is hereby reduced to 6% per annum.No pronouncement as to costs.2

MARINE INSURANCEG.R. No. 84507 March 15, 1990CHOA 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.Lapuz Law Office for petitioner.De Santos, Balgoz & Perez for respondent Filipino Merchants' Insurance Company, Inc.Marilyn Cacho-Noe for respondent Ben Lines Container, Ltd.GANCAYCO,J.:This is an appeal from a decision of the Court of Appeals dated February 18, 1988 in CA-G.R. CV No. 09627 which affirmed the decision of the Regional Trial Court (RTC) of Manila which in turn dismissed the complaint.1On November 4, 1976 petitioner imported some lactose crystals from Holland. The importation involved fifteen (15) metric tons packed in 600 6-ply paper bags with polythelene inner bags, each bag at 25 kilos net. The goods were loaded at the port at Rotterdam in sea vans on board the vessel "MS Benalder' as the mother vessel, and thereafter aboard the feeder vessel "Wesser Broker V-25" of respondent Ben Lines Container, Ltd. (Ben Lines for short). The goods were insured by the respondent Filipino Merchants' Insurance Co., Inc. (insurance company for short) for the sum of P98,882.35, the equivalent of US$8,765.00 plus 50% mark-up or US$13,147.50, against all risks under the terms of the insurance cargo policy. Upon arrival at the port of Manila, the cargo was discharged into the custody of the arrastre operator respondent E. Razon, Inc. (broker for short), prior to the delivery to petitioner through his broker. Of the 600 bags delivered to petitioner, 403 were in bad order. The surveys showed that the bad order bags suffered spillage and loss later valued at P33,117.63.Petitioner filed a claim for said loss dated February 16, 1977 against respondent insurance company in the amount of P33,117.63 as the insured value of the loss.Respondent insurance company rejected the claim alleging that assuming that spillage took place while the goods were in transit, petitioner and his agent failed to avert or minimize the loss by failing to recover spillage from the sea van, thus violating the terms of the insurance policy sued upon; and that assuming that the spillage did not occur while the cargo was in transit, the said 400 bags were loaded in bad order, and that in any case, the van did not carry any evidence of spillage.Hence, petitioner filed the complaint dated August 2, 1977 in the Regional Trial Court of Manila against respondent insurance company seeking payment of the sum of P33,117.63 as damages plus attorney's fees and expenses of litigation. In its answer, respondent insurance company denied all the material allegations of the complaint and raised several special defenses as well as a compulsory counterclaim. On February 24, 1978, respondent insurance company filed a third-party complaint against respondents Ben Lines and broker. Respondent broker filed its answer to the third-party complaint denying liability and arguing, among others, that the petitioner has no valid cause of action against it. Similarly, Ben Lines filed its answer denying any liability and a special defense arguing that respondent insurance company was not the proper party in interest and has no connection whatsoever with Ben Lines Containers, Ltd. and that the third-party complaint has prescribed under the applicable provisions of the Carriage of Goods by Sea Act.On November 6, 1979, respondent Ben Lines filed a motion for preliminary hearing on the affirmative defense of prescription. In an order dated February 28, 1980, the trial court deferred resolution of the aforesaid motion after trial on the ground that the defense of prescription did not appear to be indubitable.After the pre-trial conference and trial on the merits, on March 31, 1986, the courta quorendered a judgment dismissing the complaint, the counterclaim and the third-party complaint with costs against the petitioner.Hence, the appeal to the Court of Appeals by petitioner which, in due course, as aforestated, affirmed the judgment of the trial court.A motion for reconsideration of said judgment was denied by the appellate court in a resolution dated August 1, 1988.Petitioner now filed this petition for review oncertiorariin this Court predicated on the following grounds:IRESPONDENT COURT ERRED IN HOLDING THAT THE INSURED SHIPMENT DID NOT SUSTAIN ANY DAMAGE/LOSS DESPITE ADMISSION THEREOF ON THE PART OF RESPONDENT INSURANCE COMPANY AND THE FINDING OF THE LATTER'S SURVEYORS.IIRESPONDENT COURT ERRED IN HOLDING THAT AN "ALL RISKS" COVERAGE COVERS ONLY LOSSES OCCASIONED BY OR RESULTING FROM "EXTRA AND FORTUITOUS EVENTS" DESPITE THE CLEAR AND UNEQUIVOCAL DEFINITION OF THE TERM MADE AND CONTAINED IN THE POLICY SUED UPON.IIITHE HOLDING OF RESPONDENT COURT THAT AN "ALL RISKS" COVERAGE COVERS LOSSES OCCASIONED BY AND RESULTING FROM "EXTRA AND FORTUITOUS EVENTS" CONTRADICTS THE RULING OF THE SAME COURT IN ANOTHER CASE WHERE THE DEFINITION OF THE TERM "ALL RISKS"/ STATED IN THE POLICY WAS MADE TO CONTROL HENCE THE NEED FOR REVIEW.2The petition is impressed with merit.The appellate court, in arriving at the conclusion that there was no damage suffered by the cargo at the time of the devanning thereof, held as follows:Appellant argued that the cargo in question sustained damages while still in the possession of the carrying vessel, because as his appointed surveyor reported, Worldwide Marine Survey Corporation, at the time of devanning at the pier, 403 bags were already in bad order and condition. Appellant found support to this contention on the basis of the survey report of Worldwide Marine Survey Corporation of the Philippines and of the Adjustment Corporation of the Philippines which were identified by his sole witness, Jose See. It must be pointed out, however, that witness Jose See was incompetent to identify the two survey reports because he was not actually present during the actual devanning of the cargo, which fact was admitted by him, hence, he failed to prove the authenticity of the aforesaid survey reports.On the other hand, the evidence submitted by the appellee would conclusively establish the fact that there was no damage suffered by the subject cargo at the time of the devanning thereof. The cargo, upon discharge from the vessel, was delivered to the custody of the arrastre operator (E. Razon) under clean tally sheet (Exh. 6-FMIC). Moreover, the container van containing the cargo was found with both its seal and lock intact. Article IV, paragraph 4 of the Management Contract (Exh. 5) signed between the Bureau of Customs and the Arrastre Operator provides:4. Tally Sheets for Cargo Vans or Containers The contractor shall give a clean tally sheet for cargo vans received by it in good order and condition with locks, and seals intact.The same cargo was in turn delivered into the possession of the appellant by the arrastre operator at the pier in good order and condition as shown by the clean gate passes (Exhs. 2 and 3) and the delivery permit (Exh. 4). The clean gate passes were issued by appellee arrastre operator covering the shipment in question, with the conformity of the appellant's representative. The clean gate passes provide in part:. . . issuance of this Gate Pass constitutes delivery to and receipt by consignee of the goods as described above, in good order and condition, unless an accompanying B.O. (Bad Order) Certificate duly issued and noted on the face of this Gate Pass appears.These clean gate passes are undoubtedly important and vital pieces of evidence. They are noted in the dorsal side of another important piece of document which is the permit to deliver (Exh. 4) issued by the Bureau of Customs to effect delivery of the cargo to the consignee. The significance and value of these documents is that they bind the shipping company and the arrastre operator whenever a cargo sustains damage while in their respective custody. It is worthy of note that there was no turn over survey executed between the vessel and the arrastre operator, indicating any damage to the cargo upon discharge from the custody of the vessel. There was no bad order certificate issued by the appellee arrastre operator, indicating likewise that there was no damage to the cargo while in its custody.It is surprising to the point that one could not believe that if indeed there was really damage affecting the 403 bags out of the 600, with an alleged estimated spillage of 240%, this purportedly big quantity of spillage was never recovered which could have been easily done considering that the shipment was in a container van which was found to be sealed and intact.3However, in the same decision of the appellate court, the following evidence of the petitioner on this aspect was summarized as follows:The 600 bags which the original carrier received in apparent good order condition and certified to by the vessel's agent to be weighing 15,300 kg. gross, were unloaded from the transhipment vessel "Wesser Broker" stuffed in one container and turned over to the arrastre operator, third party defendant-appellee E. Razon, Inc. A shipboard surveyor, the Worldwide Marine Cargo Surveyor, as well as a representative of the vessel "Wesser Broker" and a representative of the arrastre operator attended the devanning of the shipment and the said shipboard surveyor certified that 403 bags were in bad order condition with estimated spillage as follows:65 P/bags each of 20%78 P/bags each of 35%79 P/bags each of 45%87 P/bags each of 65%94 P/bags each of 75%(Exh. F-1)Defendant and third-party plaintiff-appellee's protective surveyor determined the exact spillage from the bad order bags as found by the shipboard surveyor at the consignee's warehouse by weighing the bad order bags. Said protective surveyor found after weighing the 403 bags in bad order condition that an aggregate of 5,173 kilos were missing therefrom (Exh. F).4The assertion of the appellate court that the authenticity of the survey reports of the Worldwide Marine Cargo Survey Corporation and the Adjustment Corporation of the Philippines were not established as Jose See who identified the same was incompetent as he was not actually present during the actual devanning of the cargo is not well taken.In the first place it was respondent insurance company which undertook the protective survey aforestated relating to the goods from the time of discharge up to the time of delivery thereof to the consignee's warehouse, so that it is bound by the report of its surveyor which is the Adjustment Corporation of the Philippines.5The Worldwide Marine Cargo Survey Corporation of the Philippines was the vessel's surveyor. The survey report of the said Adjustment Corporation of the Philippines reads as follows:During the turn-over of the contents delivery from the cargo sea van by the representative of the shipping agent to consignee's representative/ Broker (Saint Rose Forwarders), 403 bags were bursted and/or torn, opened on one end contents partly spilled. The same were inspected by thevessel's surveyor (Worldwide Marine & Cargo Survey Corporation), findings as follows:One (1) Container No. 2987789Property locked and secured with Seal No. 18880.FOUND:197-Paper Bags (6-Ply each with One inner Plastic Lining Machine Stitched with cotton Twine on Both ends. Containing Lactose Crystal 25 mesh Sep 061-09-03 in good order.403-Bags, 6-ply torn and/or opened on one end, contents partly spilled, estimated spillages as follows:65 P/bags each of 20%78 P/bags each of 35%79 P/bags each of 45%87 P/bags each of 65%94 P/bags each of 75%(emphasis supplied)6The authenticity of the said survey report need not be established in evidence as it is binding on respondent insurance company who caused said protective survey.Secondly, contrary to the findings of the appellate court that petitioner's witness Jose See was not present at the time of the actual devanning of the cargo, what the record shows is that he was present when the cargo was unloaded and received in the warehouse of the consignee. He saw 403 bags to be in bad order. Present then was the surveyor, Adjustment Corporation of the Philippines, who surveyed the cargo by segregating the bad order cargo from the good order and determined the amount of loss.7Thus, said witness was indeed competent to identify the survey report aforestated.Thirdly, in its letter dated May 26, 1977 to petitioner, respondent insurance company admitted in no uncertain terms, the damages as indicated in the survey report in this manner:We do not question the fact that out of the 600 bags shipment 403 bags appeared to be in bad order or in damaged condition as indicated in the survey report of the vessel surveyor. . . .8This admission even standing alone is sufficient proof of loss or damage to the cargo.The appellate court observed that the cargo was discharged from the vessel and delivered to the custody of the broker under the clean tally sheet, that the container van containing the cargo was found with both its seal and lock intact; and that the cargo was delivered to the possession of the petitioner by the broker in good order and condition as shown by the clean gate passes and delivery permit.The clean tally sheet referred to by the appellate court covers the van container and not the cargo stuffed therein.9The appellate court clearly stated that the clean tally sheet issued by the broker covers the cargo vans received by it in good order and condition with lock and seal intact. Said tally sheet is no evidence of the condition of the cargo therein contained. Even the witness of the respondent insurance company, Sergio Icasiano, stated that the clean gate passes do not reflect the actual condition of the cargo when released by the broker as it was not physically examined by the broker.10There is no question, therefore, that there were 403 bags in damaged condition delivered and received by petitioner.Nevertheless, on the assumption that the cargo suffered damages, the appellate court ruled:Even assuming that the cargo indeed sustained damage, still the appellant cannot hold the appellee insurance company liable on the insurance policy. In the case at bar, appellant failed to prove that the alleged damage was due to risks connected with navigation. A distinction should be made between "perils of the sea" which render the insurer liable on account of the loss and/or damage brought about thereof and "perils of the ship" which do not render the insurer liable for any loss or damage. Perils of the sea or perils of navigation embrace all kinds of marine casualties, such as shipwreck, foundering, stranding, collision and every specie of damage done to the ship or goods at sea by the violent action of the winds or waves. They do not embrace all loses happening on the sea. A peril whose only connection with the sea is that it arises aboard ship is not necessarily a peril of the sea; the peril must be of the sea and not merely one accruing on the sea (The Phil. Insurance Law, by Guevarra, 4th ed., 1961, p. 143). InWilson, Sons and Co.vs.Owners of Cargo per the Xantho(1887) A.C. 503, 508, it was held:There must, in order to make the insurer liable be "some casualty," something which could not be foreseen as one of the necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen.Moreover, the cargo in question was insured in an "against all risk policy." Insurance "against all risk" has a technical meaning in marine insurance. Under an "all risk" marine policy, there must be a general rule be afortuitouseventin order to impose liability on the insurer; losses occasioned by ordinary circumstances or wear and tear are not covered, thus, while an "all risk" marine policy purports to cover losses from casualties at sea, it does not cover losses occasioned by the ordinary circumstances of a voyage, but only those resulting from extra and fortuitous events.It has been held that damage to a cargo by high seas and other weather is not covered by an "all risk" marine policy, since it is not fortuitous, particularly where the bad weather occurs at a place where it could be expected at the time in question. (44 Am. Jur. 2d. 216) InGo Tiaoco y Hermanas vs.Union Insurance Society of Canto, 40 Phil. 40, it was held: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. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that whose results, from perils of the sea.11The Court disagrees.InGloren Inc.vs.Filipinas Cia.de Seguros,12it was held that anall riskinsurance policy insures against all causes of conceivable loss or damage, except as otherwise excluded in the policy or due to fraud or intentional misconduct on the part of the insured. It covers all losses during the voyage whether arising from a marine peril or not, including pilferage losses during the war.In the present case, the "all risks" clause of the policy sued upon reads as follows:5. This insurance is against all risks of loss or damage to the subject matter insured but shall in no case be deemed to extend to cover loss, damage, or expense proximately caused by delay or inherent vice or nature of the subject matter insured. Claims recoverable hereunder shall be payable irrespective of percentage.13The terms of the policy are so clear and require no interpretation. The insurance policy covers all loss or damage to the cargo except those caused by delay or inherent vice or nature of the cargo insured. It is the duty of the respondent insurance company to establish that said loss or damage falls within the exceptions provided for by law, otherwise it is liable therefor.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.14In this case, the damage caused to the cargo has not been attributed to any of the exceptions provided for nor is there any pretension to this effect. Thus, the liability of respondent insurance company is clear.WHEREFORE, the decision appealed from is hereby REVERSED AND SET ASIDE and another judgment is hereby rendered ordering the respondent Filipinas Merchants Insurance Company, Inc. to pay the sum of P33,117.63 as damages to petitioner with legal interest from the filing of the complaint, plus attorney's fees and expenses of litigation in the amount of P10,000.00 as well as the costs of the suit.SO ORDERED.

PERILS OF THE SEA vs. PERILS OF THE SHIPG.R. No. L-66935 November 11, 1985ISABELA ROQUE, doing busines under the name and style of Isabela Roque Timber Enterprises and ONG CHIONG,petitioners,vs.HON. INTERMEDIATE APPELATE COURT and PIONEER INSURANCE AND SURETY CORPORATION,respondent.GUTIERREZ, JR.,J.:This petition for certiorari asks for the review of the decision of the Intermediate Appellate Court which absolved the respondent insurance company from liability on the grounds that the vessel carrying the insured cargo was unseaworthy and the loss of said cargo was caused not by the perils of the sea but by the perils of the ship.On February 19, 1972, the Manila Bay Lighterage Corporation (Manila Bay), a common carrier, entered into a contract with the petitioners whereby the former would load and carry on board its barge Mable 10 about 422.18 cubic meters of logs from Malampaya Sound, Palawan to North Harbor, Manila. The petitioners insured the logs against loss for P100,000.00 with respondent Pioneer Insurance and Surety Corporation (Pioneer).On February 29, 1972, the petitioners loaded on the barge, 811 pieces of logs at Malampaya Sound, Palawan for carriage and delivery to North Harbor, Port of Manila, but the shipment never reached its destination because Mable 10 sank with the 811 pieces of logs somewhere off Cabuli Point in Palawan on its way to Manila. As alleged by the petitioners in their complaint and as found by both the trial and appellate courts, the barge where the logs were loaded was not seaworthy such that it developed a leak. The appellate court further found that one of the hatches was left open causing water to enter the barge and because the barge was not provided with the necessary cover or tarpaulin, the ordinary splash of sea waves brought more water inside the barge.On March 8, 1972, the petitioners wrote a letter to Manila Bay demanding payment of P150,000.00 for the loss of the shipment plus P100,000.00 as unrealized profits but the latter ignored the demand. Another letter was sent to respondent Pioneer claiming the full amount of P100,000.00 under the insurance policy but respondent refused to pay on the ground that its hability depended upon the "Total loss by Total Loss of Vessel only". Hence, petitioners commenced Civil Case No. 86599 against Manila Bay and respondent Pioneer.After hearing, the trial court found in favor of the petitioners. The dispositive portion of the decision reads:FOR ALL THE FOREGOING, the Court hereby rendered judgment as follows:(a) Condemning defendants Manila Bay Lighterage Corporation and Pioneer Insurance and Surety Corporation to pay plaintiffs, jointly and severally, the sum of P100,000.00;(b) Sentencing defendant Manila Bay Lighterage Corporation to pay plaintiff, in addition, the sum of P50,000.00, plus P12,500.00, that the latter advanced to the former as down payment for transporting the logs in question;(c) Ordering the counterclaim of defendant Insurance against plaintiffs, dismissed, for lack of merit, but as to its cross-claim against its co-defendant Manila Bay Lighterage Corporation, the latter is ordered to reimburse the former for whatever amount it may pay the plaintiffs as such surety;(d) Ordering the counterclaim of defendant Lighterage against plaintiffs, dismissed for lack of merit;(e) Plaintiffs' claim of not less than P100,000.00 and P75,000.00 as exemplary damages are ordered dismissed, for lack of merits; plaintiffs' claim for attorney's fees in the sum of P10,000.00 is hereby granted, against both defendants, who are, moreover ordered to pay the costs; and(f) The sum of P150,000.00 award to plaintiffs, shall bear interest of six per cent (6%) from March 25, 1975, until amount is fully paid.Respondent Pioneer appealed to the Intermediate Appellate Court. Manila Bay did not appeal. According to the petitioners, the transportation company is no longer doing business and is without funds.During the initial stages of the hearing, Manila Bay informed the trial court that it had salvaged part of the logs. The court ordered them to be sold to the highest bidder with the funds to be deposited in a bank in the name of Civil Case No. 86599.On January 30, 1984, the appellate court modified the trial court's decision and absolved Pioneer from liability 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". It ruled that the loss is not covered by the marine insurance policy.After the appellate court denied their motion for reconsideration, the petitioners filed this petition with the following assignments of errors:ITHE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT IN CASES OF MARINE CARGO INSURANCE, THERE IS A WARRANTY OF SEAWORTHINESS BY THE CARGO OWNER.IITHE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE LOSS OF THE CARGO IN THIS CASE WAS CAUSED BY "PERILS OF THE SHIP" AND NOT BY "PERILS OF THE SEA."IIITHE INTERMEDIATE APPELLATE COURT ERRED IN NOT ORDERING THE RETURN TO PETITIONER OF THE AMOUNT OF P8,000.00 WHICH WAS DEPOSITED IN THE TRIAL COURT AS SALVAGE VALUE OF THE LOGS THAT WERE RECOVERED.In their first assignment of error, the petitioners contend that the implied warranty of seaworthiness provided for in the Insurance Code refers only to the responsibility of the shipowner who must see to it that his ship is reasonably fit to make in safety the contemplated voyage.The petitioners state that a mere shipper of cargo, having no control over the ship, has nothing to do with its seaworthiness. They argue that a cargo owner has no control over the structure of the ship, its cables, anchors, fuel and provisions, the manner of l