Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 85141 November 28, 1989
FILIPINO MERCHANTS INSURANCE CO., INC., petitioner,
vs.
COURT OF APPEALS and CHOA TIEK SENG, respondents.
Balgos & Perez Law Offices for petitioner.
Lapuz Law office for private respondent.

REGALADO, J.:
This is a review of the decision of the Court of Appeals, promulgated on July 19,1988, the dispositive
part of which reads:
WHEREFORE, the judgment appealed from is affirmed insofar as it orders defendant
Filipino Merchants Insurance Company to pay the plaintiff the sum of P51,568.62
with interest at legal rate from the date of filing of the complaint, and is modified with
respect to the third party complaint in that (1) third party defendant E. Razon, Inc. is
ordered to reimburse third party plaintiff the sum of P25,471.80 with legal interest
from the date of payment until the date of reimbursement, and (2) the third-party
complaint against third party defendant Compagnie Maritime Des Chargeurs Reunis
is dismissed. 1
The facts as found by the trial court and adopted by the Court of Appeals are as follows:
This is an action brought by the consignee of the shipment of fishmeal loaded on
board the vessel SS Bougainville and unloaded at the Port of Manila on or about
December 11, 1976 and seeks to recover from the defendant insurance company the
amount of P51,568.62 representing damages to said shipment which has been
insured by the defendant insurance company under Policy No. M-2678. The
defendant brought a third party complaint against third party defendants Compagnie
Maritime Des Chargeurs Reunis and/or E. Razon, Inc. seeking judgment against the
third (sic) defendants in case Judgment is rendered against the third party plaintiff. It
appears from the evidence presented that in December 1976, plaintiff insured said
shipment with defendant insurance company under said cargo Policy No. M-2678 for
the sum of P267,653.59 for the goods described as 600 metric tons of fishmeal in
new gunny bags of 90 kilos each from Bangkok, Thailand to Manila against all risks
under warehouse to warehouse terms. Actually, what was imported was 59.940
metric tons not 600 tons at $395.42 a ton CNF Manila. The fishmeal in 666 new
gunny bags were unloaded from the ship on December 11, 1976 at Manila unto the
arrastre contractor E. Razon, Inc. and defendant's surveyor ascertained and certified
that in such discharge 105 bags were in bad order condition as jointly surveyed by

the ship's agent and the arrastre contractor. The condition of the bad order was
reflected in the turn over survey report of Bad Order cargoes Nos. 120320 to 120322,
as Exhibit C-4 consisting of three (3) pages which are also Exhibits 4, 5 and 6Razon. The cargo was also surveyed by the arrastre contractor before delivery of the
cargo to the consignee and the condition of the cargo on such delivery was reflected
in E. Razon's Bad Order Certificate No. 14859, 14863 and 14869 covering a total of
227 bags in bad order condition. Defendant's surveyor has conducted a final and
detailed survey of the cargo in the warehouse for which he prepared a survey report
Exhibit F with the findings on the extent of shortage or loss on the bad order bags
totalling 227 bags amounting to 12,148 kilos, Exhibit F-1. Based on said computation
the plaintiff made a formal claim against the defendant Filipino Merchants Insurance
Company for P51,568.62 (Exhibit C) the computation of which claim is contained
therein. A formal claim statement was also presented by the plaintiff against the
vessel dated December 21, 1976, Exhibit B, but the defendant Filipino Merchants
Insurance Company refused to pay the claim. Consequently, the plaintiff brought an
action against said defendant as adverted to above and defendant presented a third
party complaint against the vessel and the arrastre contractor. 2
The court below, after trial on the merits, rendered judgment in favor of private respondent, the
decretal portion whereof reads:
WHEREFORE, on the main complaint, judgment is hereby rendered in favor of the
plaintiff and against the defendant Filipino Merchant's (sic) Insurance Co., ordering
the defendants to pay the plaintiff the following amount:
The sum of P51,568.62 with interest at legal rate from the date of the filing of the
complaint;
On the third party complaint, the third party defendant Compagnie Maritime Des
Chargeurs Reunis and third party defendant E. Razon, Inc. are ordered to pay to the
third party plaintiff jointly and severally reimbursement of the amounts paid by the
third party plaintiff with legal interest from the date of such payment until the date of
such reimbursement.
Without pronouncement as to costs. 3
On appeal, the respondent court affirmed the decision of the lower court insofar as the award on the
complaint is concerned and modified the same with regard to the adjudication of the third-party
complaint. A motion for reconsideration of the aforesaid decision was denied, hence this petition with
the following assignment of errors:
1. The Court of Appeals erred in its interpretation and application of the "all risks"
clause of the marine insurance policy when it held the petitioner liable to the private
respondent for the partial loss of the cargo, notwithstanding the clear absence of
proof of some fortuitous event, casualty, or accidental cause to which the loss is
attributable, thereby contradicting the very precedents cited by it in its decision as
well as a prior decision of the same Division of the said court (then composed of
Justices Cacdac, Castro-Bartolome, and Pronove);
2. The Court of Appeals erred in not holding that the private respondent had no
insurable interest in the subject cargo, hence, the marine insurance policy taken out
by private respondent is null and void;

3. The Court of Appeals erred in not holding that the private respondent was guilty of
fraud in not disclosing the fact, it being bound out of utmost good faith to do so, that it
had no insurable interest in the subject cargo, which bars its recovery on the policy. 4
On the first assignment of error, petitioner contends that an "all risks" marine policy has a technical
meaning in insurance in that before a claim can be compensable it is essential that there must be
"some fortuity, " "casualty" or "accidental cause" to which the alleged loss is attributable and the
failure of herein private respondent, upon whom lay the burden, to adduce evidence showing that
the alleged loss to the cargo in question was due to a fortuitous event precludes his right to recover
from the insurance policy. We find said contention untenable.
The "all risks clause" of the Institute Cargo Clauses read 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. 5
An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses
by an accidental cause of any kind. The terms "accident" and "accidental", as used in insurance
contracts, have not acquired any technical meaning. They are construed by the courts in their
ordinary and common acceptance. Thus, the terms have been taken to mean that which happens by
chance or fortuitously, without intention and design, and which is unexpected, unusual and
unforeseen. An accident is an event that takes place without one's foresight or expectation; an event
that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not
expected. 6
The very nature of the term "all risks" must be given a broad and comprehensive meaning as
covering any loss other than a willful and fraudulent act of the insured. 7 This is pursuant to the very
purpose of an "all risks" insurance to give protection to the insured in those cases where difficulties of
logical explanation or some mystery surround the loss or damage to property. 8 An "all asks" policy has
been evolved to grant greater protection than that afforded by the "perils clause," in order to assure that
no loss can happen through the incidence of a cause neither insured against nor creating liability in the
ship; it is written against all losses, that is, attributable to external causes. 9

The term "all risks" cannot be given a strained technical meaning, the language of the clause under
the Institute Cargo Clauses being unequivocal and clear, to the effect that it extends to all
damages/losses suffered by the insured cargo except (a) loss or damage or expense proximately
caused by delay, and (b) loss or damage or expense proximately caused by the inherent vice or
nature of the subject matter insured.
Generally, the burden of proof is upon the insured to show that a loss arose from a covered peril, but
under an "all risks" policy the burden is not on the insured to prove the precise cause of loss or
damage for which it seeks compensation. The insured under an "all risks insurance policy" has the
initial burden of proving that the cargo was in good condition when the policy attached and that the
cargo was damaged when unloaded from the vessel; thereafter, the burden then shifts to the insurer
to show the exception to the coverage. 10 As we held in Paris-Manila Perfumery Co. vs. Phoenix
Assurance Co., Ltd. 11 the basic rule is that the insurance company has the burden of proving that the
loss is caused by the risk excepted and for want of such proof, the company is liable.

Coverage under an "all risks" provision of a marine insurance 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 the peril falling within the policy's
coverage; the insurer can avoid coverage upon demonstrating that a specific provision expressly
excludes the loss from coverage. 12 A marine insurance policy providing that the insurance was to be
"against all risks" must be construed as creating a special insurance and extending to other risks than are
usually contemplated, and covers all losses except such as arise from the fraud of the insured. 13 The
burden of the insured, therefore, is to prove merely that the goods he transported have been lost,
destroyed or deteriorated. Thereafter, the burden is shifted to the insurer to prove that the loss was due to
excepted perils. To impose on the insured the burden of proving the precise cause of the loss or damage
would be inconsistent with the broad protective purpose of "all risks" insurance.

In the present case, there being no showing that the loss was caused by any of the excepted perils,
the insurer is liable under the policy. As aptly stated by the respondent Court of Appeals, upon due
consideration of the authorities and jurisprudence it discussed
... it is believed that in the absence of any showing that the losses/damages were
caused by an excepted peril, i.e. delay or the inherent vice or nature of the subject
matter insured, and there is no such showing, the lower court did not err in holding
that the loss was covered by the policy.
There is no evidence presented to show that the condition of the gunny bags in
which the fishmeal was packed was such that they could not hold their contents in
the course of the necessary transit, much less any evidence that the bags of cargo
had burst as the result of the weakness of the bags themselves. Had there been
such a showing that spillage would have been a certainty, there may have been good
reason to plead that there was no risk covered by the policy (See Berk vs. Style
[1956] cited in Marine Insurance Claims, Ibid, p. 125). Under an 'all risks' policy, it
was sufficient to show that there was damage occasioned by some accidental cause
of any kind, and there is no necessity to point to any particular cause. 14
Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the
policy. The agreement has the force of law between the parties. The terms of the policy constitute
the measure of the insurer's liability. If such terms are clear and unambiguous, they must be taken
and understood in their plain, ordinary and popular sense. 15
Anent the issue of insurable interest, we uphold the ruling of the respondent court that private
respondent, as consignee of the goods in transit under an invoice containing the terms under "C & F
Manila," has insurable interest in said goods.
Section 13 of the Insurance Code defines insurable interest in property as every interest in property,
whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a
contemplated peril might directly damnify the insured. In principle, anyone has an insurable interest
in property who derives a benefit from its existence or would suffer loss from its destruction whether
he has or has not any title in, or lien upon or possession of the property y. 16 Insurable interest in
property may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or
(c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. 17

Herein private respondent, as vendee/consignee of the goods in transit has such existing interest
therein as may be the subject of a valid contract of insurance. His interest over the goods is based
on the perfected contract of sale. 18 The perfected contract of sale between him and the shipper of the
goods operates to vest in him an equitable title even before delivery or before be performed the
conditions of the sale. 19 The contract of shipment, whether under F.O.B., C.I.F., or C. & F. as in this case,
is immaterial in the determination of whether the vendee has an insurable interest or not in the goods in

transit. The perfected contract of sale even without delivery vests in the vendee an equitable title, an
existing interest over the goods sufficient to be the subject of insurance.

Further, Article 1523 of the Civil Code provides that where, in pursuance of a contract of sale, the
seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for, the purpose of transmission to the buyer is deemed to be a
delivery of the goods to the buyer, the exceptions to said rule not obtaining in the present case. The
Court has heretofore ruled that the delivery of the goods on board the carrying vessels partake of the
nature of actual delivery since, from that time, the foreign buyers assumed the risks of loss of the
goods and paid the insurance premium covering them. 20
C & F contracts are shipment contracts. The term means that the price fixed includes in a lump sum
the cost of the goods and freight to the named destination. 21 It simply means that the seller must pay
the costs and freight necessary to bring the goods to the named destination but the risk of loss or damage
to the goods is transferred from the seller to the buyer when the goods pass the ship's rail in the port of
shipment. 22

Moreover, the issue of lack of insurable interest was not among the defenses averred in petitioners
answer. It was neither an issue agreed upon by the parties at the pre-trial conference nor was it
raised during the trial in the court below. It is a settled rule that an issue which has not been raised in
the court a quo cannot be raised for the first time on appeal as it would be offensive to the basic
rules of fair play, justice and due process. 23 This is but a permuted restatement of the long settled rule
that when a party deliberately adopts a certain theory, and the case is tried and decided upon that theory
in the court below, he will not be permitted to change his theory on appeal because, to permit him to do
so, would be unfair to the adverse party. 24

If despite the fundamental doctrines just stated, we nevertheless decided to indite a disquisition on
the issue of insurable interest raised by petitioner, it was to put at rest all doubts on the matter under
the facts in this case and also to dispose of petitioner's third assignment of error which consequently
needs no further discussion.
WHEREFORE, the instant petition is DENIED and the assailed decision of the respondent Court of
Appeals is AFFIRMED in toto.
SO ORDERED.
Paras, Padilla and Sarmiento, JJ., concur.
Melencio-Herrera (Chairperson), J., is on leave.

Footnotes
1 Rollo, 41; Justice Gonzaga-Reyes, ponente, with Justices Serafin E. Camilon and
Pedro A. Ramirez concurring.
2 Rollo, 26-28.
3 Ibid., 8-29.

4 Ibid., 10-11.
5 Original Record, Civil Case No. (112091) R-81-750, 26.
6 29A Am. Jur., 308-309.
7 Phoenix Ins. Co. vs. Branch (Fla. App) 234 So 2d 396.
8 Morrison Grain Co. vs. Utica Mut. Ins. Co. (.1 980, CA S Fla.) 632 F. 2d 424
9 Gilmore and Black, The Law of Admiralty, 68,169.
10 See Footnote 8, ante.
11 49 Phil. 753 (1926).
12 Walker vs. Traveller's Indemnity Co., (La. App.) 289 So. 2nd 864,869.
13 Goix vs. Knox, 1 Johns. Cas. 337, cited in Words and Phrases, Permanent Ed.,
Vol. 3, (1953 ed.) 310.
14 Rollo, 32.
15 Pacific Banking Corp. vs. Court of Appeals, G.R. No. 41014, Nov. 28,1988.
16 43 Am. Jur. 2d, 507-508.
17 Sec. 14, Insurance Code.
18 Original Record, Folder of Exhibits, Exh. C-2, 6.
19 43 Am. Jur. 2d, 522; Vance on Insurance, 164-168.
20 Rattan Arts & Decorations, Inc. vs. Collector of Internal Revenue, et al., 13 SCRA
626 (1965).
21 Business Law Principles and Cases by Harold Luck, Charles M. Hewitt, John D.
Donnel, and A. James Barns, Second Uniform Commercial Code Edition, 751-752.
22 Guide to INCO Terms, 1980 Ed., 48-50.
23 De Los Santos vs. Court of Appeals, et al., 140 SCRA 44 (1985); Dulos Realty &
Development Corp. vs. Court of Appeals, et al., 157 SCRA 425 (1988); Ramos, et al.
vs. Intermediate Appellate Court, et. al. G.R. No. 78282, July 5,1989.
24 Molina vs. Somes, 24 Phil. 49 (1913); Agoncillo, et al. vs. Javier, 38 Phil, 424
(1918).

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19189

November 27, 1922

FROILAN LOPEZ, plaintiff-appellant,

vs.
SALVADOR V. DEL ROSARIO and BENITA QUIOGUE DE V. DEL ROSARIO, defendantsappellants.
Araneta and Zaragoza for plaintiff-appellant.
Jose Espiritu and Gibbs, McDonough and Johnson for defendants-appellants.

MALCOLM, J.:
Both parties to this action appeal from the judgment of Judge Simplicio del Rosario of the Court of
First Instance of Manila awarding the plaintiff the sum of 88,495.21 with legal interest from May 13,
1921, without special finding as to costs.
The many points pressed by contending counsel can be best disposed of by, first, making a
statement of the facts; next, considering plaintiff's appeal; next, considering defendant's appeal; and,
lastly, rendering judgment.
STATEMENT OF THE FACTS
On and prior to June 6, 1920, Benita Quiogue de V. del Rosario, whom we will hereafter call Mrs.
Del Rosario, was the owner of a bonded warehouse situated in the City of Manila. She was engaged
in the business of a warehouse keeper, and stored copra and other merchandise in the said building.
Among the persons who had copra deposited in the Del Rosario warehouse was Froilan Lopez, the
holder of fourteen warehouse receipts in his own name, and the name of Elias T. Zamora. (Exhibits
C, D, and R.)
The warehouse receipts, or negotiable warrants, or quedans (as they are variously termed) of Lopez
named a declared value of P107,990.40 (Exhibits L-1 to L-13). The warehouse receipts provided: (1)
For insurance at the rate of 1 per cent per month on the declared value; (2) the company reserves to
itself the right to raise and/or lower the rates of storage and/or of insurance on giving one calendar
month's notice in writing; (3) this warrant carries no insurance unless so noted on the face hereof,
cost of which is in addition to storage; (4) the time for which storage and/or insurance is charged is
thirty (30) days; (5) payment for storage and/or insurance, etc., shall be made in advance, and/or
within five (5) days after presentation of bill. It is admitted that insurance was paid by Lopez to May
18, 1920, but not thereafter.
Mrs. Del Rosario secured insurance on the warehouse and its contents with the National Insurance
Co., Inc., the Commercial Union Insurance Company, the Alliance Insurance Company, the South
British Insurance Co., Ltd., and the British Traders Insurance Co., Ltd., in the amount of P404,800.
All the policies were in the name of Sra. Benita Quiogue de V. del Rosario, with the exception of one

of the National Insurance Company, Inc., for P40,000, in favor of the Compaia Coprera de
Tayabas. (Exhibits N, O, P, R-1 to R-4.)
The warehouse of Mrs. Del Rosario and its contents were destroyed by fire on June 6, 1920. The
warehouse was a total loss, while of the copra stored therein, only an amount equal to P49,985 was
salvaged.
Following an unsuccessful attempt by Henry Hunter Bayne, Fire Loss Adjuster, to effect a settlement
between the insurance companies and Mrs. Del Rosario, the latter, on August 24, 1920, authorized
Attorney F. C. Fisher to negotiate with the various insurance companies. (Exhibit A.) As a result, an
agreement between Mrs. Del Rosario and the insurance companies to submit the matter to
administration was executed in September, 1920. (Exhibit B.) Mrs. Del Rosario laid claim before the
arbitrators, Messrs. Muir and Campbell, to P419,683.95, and the proceeds of the salvage sale. The
arbitrators in their report allowed Mrs. Del Rosario P363,610, which, with the addition of the money
received from the salvaged copra amounting to P49,985, and interest, made a total of P414,258,
collected by her from the companies. (Exhibits E, F, G, H, and Q.)
Mrs. Del Rosario seems to have satisfied all of the persons who had copra stored in her warehouse,
including the stockholders in the Compaia Coprera de Tayabas (whose stock she took over), with
the exception of Froilan Lopez, the plaintiff. Ineffectual attempts by Mrs. Del Rosario to effect a
compromise with Lopez first for P71,994, later raised to P72,724, and finally reduced to P17,000,
were made. (Exhibits Y, 1, 3, 4, 6, 7, 8, 12.) But Lopez stubbornly contended, or, at least, his
attorney contended for him, that he should receive not a centavo less than P88,595.43. (Exhibits 4,
5.)
PLAINTIFF'S APPEAL
Plaintiff, by means of his assignment of error, lays claim to P88,595.43 in lieu of P88,495.21 allowed
by the trial court. The slight difference of P100.22 is asked for so that plaintiff can participate in the
interest money which accrued on the amount received for the salvaged copra. (Exhibits EE and FF.)
Defendant makes no specific denial of this claim. We think the additional sum should accrue to the
plaintiff.
Plaintiff's second and third assignment of error present the point that the defendant has fraudulently
and even criminally refrained from paying the plaintiff, and that the plaintiff should recover
interest at the rate of 12 per cent per annum. We fail to grasp plaintiff's point of view. The defendant
has not sought to elude her moral and legal obligations. The controversy is merely one which
unfortunately all too often arises between litigious persons. Plaintiff has exactly the rights of any
litigant, equally situated, and no more.
It has been the constant practice of the court to make article 1108 of the Civil Code the basis for the
calculation of interest. Damages in the form of interest at the rate of 12 per cent, as claimed by the
plaintiff, are too remote and speculative to be allowed. The deprivation of an opportunity for making
money which might have proved beneficial or might have been ruinous is of too uncertain character
to be weighed in the even balances of the law. (Civil Code, art. 1108; Gonzales Quiros vs. Palanca
Tan-Guinlay [1906], 5 Phil., 675; Tin Fian vs. Tan [1909], 14 Phil., 126; Sun Life Insurance Co. of
Canada vs. Rueda Hermanos & Co. and Delgado [1918], 37 Phil., 844; Scvola, Codigo Civil, vol.
19, p. 576; 8 R. C. L., 463; 17 C. J., 864.)
DEFENDANT'S APPEAL

Counsel for defendant have adroitly and ingeniously attempted to avoid all liability. However, we
remain unimpressed by many of these arguments.
lawph!l.net

Much time has been spent by counsel for both parties in discussing the question, of whether the
defendant acted as the agent of the plaintiff, in taking out insurance on the contents of the bodega,
or whether the defendant acted as a reinsurer of the copra. Giving a natural expression to the terms
of the warehouse receipts, the first hypothesis is the correct one. The agency can be deduced from
the warehouse receipts, the insurance policies, and the circumstances surrounding the transaction.
After all, however, this is not so vitally important, for it might well be although we do not have to
decide that under any aspect of the case, the defendant would be liable. The law is that a policy
effected by bailee and covering by its terms his own property and property held in trust; inures, in the
event of a loss, equally and proportionately to the benefit of all the owners of the property insured.
Even if one secured insurance covering his own goods and goods stored with him, and even if the
owner of the stored goods did not request or know of the insurance, and did not ratify it before the
payment of the loss, yet it has been held by a reputable court that the warehouseman is liable to the
owner of such stored goods for his share. (Snow vs. Carr [1878], 61 Ala., 363; 32 Am. Rep., 3;
Broussard vs. South Texas Rice Co., [1910], 103 Tex., 535; Ann. Cas., 1913-A, 142, and note;
Home Insurance Co. of New York vs. Baltimore Warehouse Co. [1876], 93 U. S., 527.)
Moreover, it has not escaped our notice that in two documents, one the agreement for arbitration,
and the other the statement of claim of Mrs. Del Rosario, against the insurance companies, she
acknowledged her responsibility to the owners of the stored merchandise, against risk of loss by fire.
(Exhibits B and C-3.) The award of the arbitrators covered not alone Mrs. Del Rosario's warehouse
but the products stored in the warehouse by Lopez and others.
Plaintiff's rights to the insurance money have not been forfeited by failure to pay the insurance
provided for in the warehouse receipts. A preponderance of the proof does not demonstrate that the
plaintiff ever ordered the cancellation of his insurance with the defendant. Nor is it shown that the
plaintiff ever refused to pay the insurance when the bills were presented to him, and that notice of an
intention to cancel the insurance was ever given the plaintiff.
The record of the proceedings before the board of arbitrators, and its report and findings, were
properly taken into consideration by the trial court as a basis for the determination of the amount due
from the defendant to the plaintiff. In a case of contributing policies, adjustments of loss made by an
expert or by a board of arbitrators may be submitted to the court not as evidence of the facts stated
therein, or as obligatory, but for the purpose of assisting the court in calculating the amount of
liability. (Home Insurance Co. vs. Baltimore Warehouse Co.,supra.)
Counsel for the defendant have dwelt at length on the phraseology of the policies of the National
Insurance Company, Inc. Special emphasis has been laid upon one policy (Exhibit 9) in the name of
the Compaia Coprera de Tayabas. In this connection it may be said that three members of the
court, including the writer of this opinion, have been favorable impressed by this argument, and
would have preferred at least to eliminate the policy for which premiums were paid, not by Mrs. Del
Rosario on behalf of Lopez and others, but by Compaia Coprera de Tayabas. A majority of the
court, however, believe that all the assets should be marshalled and that the plaintiff should receive
the benefit accruing from the gross amount realized from all the policies. Consequently, no
deduction for this claim can be made.
The remaining contention of the defendant that the plaintiff cannot claim the benefits of the agency
without sharing in the expenses, is well taken. Although the plaintiff did not expressly authorize the
agreement to submit the matter to arbitration, yet on his own theory of the case, Mrs. Del Rosario

was acting as his agent in securing insurance, while he benefits from the amicable adjustment of the
insurance claims. As no intimation is made that the expenses were exorbitant, we necessarily accept
the statement of the same appearing in Exhibits Q and 8.
Of the insurance money, totalling P414,258, P382,558 was for copra and the remainder for
buildings, corn, etc. The expenses for collecting the P414,258 totalled P33,600. 382,558/414,258 of
33,600 equals P31,028.85, the proportionate part of the expenses with reference to the copra. Of the
expenses amounting, as we have said, to P31,028.85, plaintiff would be liable for his proportionate
share or 88,595.43/382,558.00 of P31,028.85 or P7,185.875.
The parties finally agree that the plaintiff at the time of the fire was indebted to the defendant for
storage and insurance in the sum of P315.90.
JUDGMENT
In resume, the result is to sustain plaintiff's first assignment of error and to overrule his second and
third assignments of error, to overrule defendant's assignment of error 1, 2, 3, and 4 in toto and to
accede to defendant's assignments of error, 5, 6, and 7 in part. If our mathematics are correct, and
the amounts can be figured in several different ways, plaintiff is entitled to P88,595.43 minus
P7,185.88, his share of the expenses, minus P315.90, due for insurance and storage, or
approximately a net amount of P81,093.65, with legal interest. This sum the defendant must
disgorge.
Wherefore, judgment is modified and the plaintiff shall have and recover from the defendants the
sum of P81,093.65, with interest at 6 per cent per annum from May 13, 1921, until paid. Without
special finding as to costs in either instance, it is so ordered.
Araullo, C. J., Street, Avancea, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.
Johnson, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19189

November 27, 1922

FROILAN LOPEZ, plaintiff-appellant,

vs.
SALVADOR V. DEL ROSARIO and BENITA QUIOGUE DE V. DEL ROSARIO, defendantsappellants.
Araneta and Zaragoza for plaintiff-appellant.
Jose Espiritu and Gibbs, McDonough and Johnson for defendants-appellants.

MALCOLM, J.:

Both parties to this action appeal from the judgment of Judge Simplicio del Rosario of the Court of
First Instance of Manila awarding the plaintiff the sum of 88,495.21 with legal interest from May 13,
1921, without special finding as to costs.
The many points pressed by contending counsel can be best disposed of by, first, making a
statement of the facts; next, considering plaintiff's appeal; next, considering defendant's appeal; and,
lastly, rendering judgment.
STATEMENT OF THE FACTS
On and prior to June 6, 1920, Benita Quiogue de V. del Rosario, whom we will hereafter call Mrs.
Del Rosario, was the owner of a bonded warehouse situated in the City of Manila. She was engaged
in the business of a warehouse keeper, and stored copra and other merchandise in the said building.
Among the persons who had copra deposited in the Del Rosario warehouse was Froilan Lopez, the
holder of fourteen warehouse receipts in his own name, and the name of Elias T. Zamora. (Exhibits
C, D, and R.)
The warehouse receipts, or negotiable warrants, or quedans (as they are variously termed) of Lopez
named a declared value of P107,990.40 (Exhibits L-1 to L-13). The warehouse receipts provided: (1)
For insurance at the rate of 1 per cent per month on the declared value; (2) the company reserves to
itself the right to raise and/or lower the rates of storage and/or of insurance on giving one calendar
month's notice in writing; (3) this warrant carries no insurance unless so noted on the face hereof,
cost of which is in addition to storage; (4) the time for which storage and/or insurance is charged is
thirty (30) days; (5) payment for storage and/or insurance, etc., shall be made in advance, and/or
within five (5) days after presentation of bill. It is admitted that insurance was paid by Lopez to May
18, 1920, but not thereafter.
Mrs. Del Rosario secured insurance on the warehouse and its contents with the National Insurance
Co., Inc., the Commercial Union Insurance Company, the Alliance Insurance Company, the South
British Insurance Co., Ltd., and the British Traders Insurance Co., Ltd., in the amount of P404,800.
All the policies were in the name of Sra. Benita Quiogue de V. del Rosario, with the exception of one
of the National Insurance Company, Inc., for P40,000, in favor of the Compaia Coprera de
Tayabas. (Exhibits N, O, P, R-1 to R-4.)
The warehouse of Mrs. Del Rosario and its contents were destroyed by fire on June 6, 1920. The
warehouse was a total loss, while of the copra stored therein, only an amount equal to P49,985 was
salvaged.
Following an unsuccessful attempt by Henry Hunter Bayne, Fire Loss Adjuster, to effect a settlement
between the insurance companies and Mrs. Del Rosario, the latter, on August 24, 1920, authorized
Attorney F. C. Fisher to negotiate with the various insurance companies. (Exhibit A.) As a result, an
agreement between Mrs. Del Rosario and the insurance companies to submit the matter to
administration was executed in September, 1920. (Exhibit B.) Mrs. Del Rosario laid claim before the
arbitrators, Messrs. Muir and Campbell, to P419,683.95, and the proceeds of the salvage sale. The
arbitrators in their report allowed Mrs. Del Rosario P363,610, which, with the addition of the money
received from the salvaged copra amounting to P49,985, and interest, made a total of P414,258,
collected by her from the companies. (Exhibits E, F, G, H, and Q.)
Mrs. Del Rosario seems to have satisfied all of the persons who had copra stored in her warehouse,
including the stockholders in the Compaia Coprera de Tayabas (whose stock she took over), with
the exception of Froilan Lopez, the plaintiff. Ineffectual attempts by Mrs. Del Rosario to effect a
compromise with Lopez first for P71,994, later raised to P72,724, and finally reduced to P17,000,

were made. (Exhibits Y, 1, 3, 4, 6, 7, 8, 12.) But Lopez stubbornly contended, or, at least, his
attorney contended for him, that he should receive not a centavo less than P88,595.43. (Exhibits 4,
5.)
PLAINTIFF'S APPEAL
Plaintiff, by means of his assignment of error, lays claim to P88,595.43 in lieu of P88,495.21 allowed
by the trial court. The slight difference of P100.22 is asked for so that plaintiff can participate in the
interest money which accrued on the amount received for the salvaged copra. (Exhibits EE and FF.)
Defendant makes no specific denial of this claim. We think the additional sum should accrue to the
plaintiff.
Plaintiff's second and third assignment of error present the point that the defendant has fraudulently
and even criminally refrained from paying the plaintiff, and that the plaintiff should recover
interest at the rate of 12 per cent per annum. We fail to grasp plaintiff's point of view. The defendant
has not sought to elude her moral and legal obligations. The controversy is merely one which
unfortunately all too often arises between litigious persons. Plaintiff has exactly the rights of any
litigant, equally situated, and no more.
It has been the constant practice of the court to make article 1108 of the Civil Code the basis for the
calculation of interest. Damages in the form of interest at the rate of 12 per cent, as claimed by the
plaintiff, are too remote and speculative to be allowed. The deprivation of an opportunity for making
money which might have proved beneficial or might have been ruinous is of too uncertain character
to be weighed in the even balances of the law. (Civil Code, art. 1108; Gonzales Quiros vs. Palanca
Tan-Guinlay [1906], 5 Phil., 675; Tin Fian vs. Tan [1909], 14 Phil., 126; Sun Life Insurance Co. of
Canada vs. Rueda Hermanos & Co. and Delgado [1918], 37 Phil., 844; Scvola, Codigo Civil, vol.
19, p. 576; 8 R. C. L., 463; 17 C. J., 864.)
DEFENDANT'S APPEAL
Counsel for defendant have adroitly and ingeniously attempted to avoid all liability. However, we
remain unimpressed by many of these arguments.
lawph!l.net

Much time has been spent by counsel for both parties in discussing the question, of whether the
defendant acted as the agent of the plaintiff, in taking out insurance on the contents of the bodega,
or whether the defendant acted as a reinsurer of the copra. Giving a natural expression to the terms
of the warehouse receipts, the first hypothesis is the correct one. The agency can be deduced from
the warehouse receipts, the insurance policies, and the circumstances surrounding the transaction.
After all, however, this is not so vitally important, for it might well be although we do not have to
decide that under any aspect of the case, the defendant would be liable. The law is that a policy
effected by bailee and covering by its terms his own property and property held in trust; inures, in the
event of a loss, equally and proportionately to the benefit of all the owners of the property insured.
Even if one secured insurance covering his own goods and goods stored with him, and even if the
owner of the stored goods did not request or know of the insurance, and did not ratify it before the
payment of the loss, yet it has been held by a reputable court that the warehouseman is liable to the
owner of such stored goods for his share. (Snow vs. Carr [1878], 61 Ala., 363; 32 Am. Rep., 3;
Broussard vs. South Texas Rice Co., [1910], 103 Tex., 535; Ann. Cas., 1913-A, 142, and note;
Home Insurance Co. of New York vs. Baltimore Warehouse Co. [1876], 93 U. S., 527.)
Moreover, it has not escaped our notice that in two documents, one the agreement for arbitration,
and the other the statement of claim of Mrs. Del Rosario, against the insurance companies, she

acknowledged her responsibility to the owners of the stored merchandise, against risk of loss by fire.
(Exhibits B and C-3.) The award of the arbitrators covered not alone Mrs. Del Rosario's warehouse
but the products stored in the warehouse by Lopez and others.
Plaintiff's rights to the insurance money have not been forfeited by failure to pay the insurance
provided for in the warehouse receipts. A preponderance of the proof does not demonstrate that the
plaintiff ever ordered the cancellation of his insurance with the defendant. Nor is it shown that the
plaintiff ever refused to pay the insurance when the bills were presented to him, and that notice of an
intention to cancel the insurance was ever given the plaintiff.
The record of the proceedings before the board of arbitrators, and its report and findings, were
properly taken into consideration by the trial court as a basis for the determination of the amount due
from the defendant to the plaintiff. In a case of contributing policies, adjustments of loss made by an
expert or by a board of arbitrators may be submitted to the court not as evidence of the facts stated
therein, or as obligatory, but for the purpose of assisting the court in calculating the amount of
liability. (Home Insurance Co. vs. Baltimore Warehouse Co.,supra.)
Counsel for the defendant have dwelt at length on the phraseology of the policies of the National
Insurance Company, Inc. Special emphasis has been laid upon one policy (Exhibit 9) in the name of
the Compaia Coprera de Tayabas. In this connection it may be said that three members of the
court, including the writer of this opinion, have been favorable impressed by this argument, and
would have preferred at least to eliminate the policy for which premiums were paid, not by Mrs. Del
Rosario on behalf of Lopez and others, but by Compaia Coprera de Tayabas. A majority of the
court, however, believe that all the assets should be marshalled and that the plaintiff should receive
the benefit accruing from the gross amount realized from all the policies. Consequently, no
deduction for this claim can be made.
The remaining contention of the defendant that the plaintiff cannot claim the benefits of the agency
without sharing in the expenses, is well taken. Although the plaintiff did not expressly authorize the
agreement to submit the matter to arbitration, yet on his own theory of the case, Mrs. Del Rosario
was acting as his agent in securing insurance, while he benefits from the amicable adjustment of the
insurance claims. As no intimation is made that the expenses were exorbitant, we necessarily accept
the statement of the same appearing in Exhibits Q and 8.
Of the insurance money, totalling P414,258, P382,558 was for copra and the remainder for
buildings, corn, etc. The expenses for collecting the P414,258 totalled P33,600. 382,558/414,258 of
33,600 equals P31,028.85, the proportionate part of the expenses with reference to the copra. Of the
expenses amounting, as we have said, to P31,028.85, plaintiff would be liable for his proportionate
share or 88,595.43/382,558.00 of P31,028.85 or P7,185.875.
The parties finally agree that the plaintiff at the time of the fire was indebted to the defendant for
storage and insurance in the sum of P315.90.
JUDGMENT
In resume, the result is to sustain plaintiff's first assignment of error and to overrule his second and
third assignments of error, to overrule defendant's assignment of error 1, 2, 3, and 4 in toto and to
accede to defendant's assignments of error, 5, 6, and 7 in part. If our mathematics are correct, and
the amounts can be figured in several different ways, plaintiff is entitled to P88,595.43 minus
P7,185.88, his share of the expenses, minus P315.90, due for insurance and storage, or
approximately a net amount of P81,093.65, with legal interest. This sum the defendant must
disgorge.

Wherefore, judgment is modified and the plaintiff shall have and recover from the defendants the
sum of P81,093.65, with interest at 6 per cent per annum from May 13, 1921, until paid. Without
special finding as to costs in either instance, it is so ordered.
Araullo, C. J., Street, Avancea, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.
Johnson, J., took no part.