596 SUPREME COURT REPORTS ANNOTATED

Roque vs. Intermediate Appellate Court

*
No. L-66935. November 11, 1985.

ISABELA ROQUE, doing business under the name and style of

Isabela Roque Timber Enterprises and ONG CHIONG, petitioners,
vs. HON. INTERMEDIATE APPELLATE COURT and PIONEER
INSURANCE AND SURETY CORPORATION, respondents.

Insurance; In marine insurance (which includes cargo), the implied

warranty of seaworthiness attaches to the shipper whether shipowner or
not.—From the above-quoted provisions, there can be no mistaking the fact
that the term "cargo" can be the subject of marine insurance and that once it
is so made, the implied warranty of seaworthiness immediately attaches to
whoever is insuring the cargo whether he be the shipowner or not.

__________________

* FIRST DIVISION.

597

VOL. 139, NOVEMBER 11, 1985 597

Roque vs. Intermediate Appellate Court

Same; Same.—Moreover, the fact that the unseaworthiness of the ship

was unknown to the insured is immaterial in ordinary marine insurance and
may not be used by him as a defense in order to recover on the marine
insurance policy.
Same; The cargo owner is required to look for a common carrier that
keeps its vessels seaworthy. In the absence of stipulation that insurer
answers for perils of the ship, insurance cannot be recovered on losses from
perils of the ship.—Since the law provides for an implied warranty of
seaworthiness in every contract of ordinary marine insurance, it becomes the
obligation of a cargo owner to look for a reliable common carrier which
keeps its vessels in seaworthy condition. The shipper of cargo may have no
control over the vessel but he has full control in the choice of the common
carrier that will transport his goods. Or the cargo owner may enter into a
contract of insurance which specifically provides that the insurer answers
not only for the perils of the sea but also provides for coverage of perils of
the ship.
Same; Words and Phrases; "Perils of the sea," defined.—There is no
doubt that the term 'perils of the sea' extends only to losses caused by sea
damage, or by the violence of the elements, and does not embrace all losses
happening at sea. They insure against losses from extraordinary occurrences
only, such as stress of weather, winds and waves, lightning, tempests, rocks
and the like. These are understood to be the 'perils of the sea' referred in the
policy, and not those ordinary perils which every vessel must encounter.
'Perils of the sea' has been said to include only such losses as are of
extraordinary nature, or arise from some overwhelming power, which cannot
be guarded against by the ordinary exertion of human skill and prudence.
Damage done to a vessel by perils of the sea includes every species of
damages done to a vessel at sea, as distinguished from the ordinary wear
and tear of the voyage, and distinct from injuries suffered by the vessel in
consequence of her not being seaworthy at the outset of her voyage (as in
this case). It is also the general rule that everything which happens thru the
inherent vice of the thing, or by the act of the owners, master or shipper,
shall not be reputed a peril, if not otherwise borne in the policy.
 Same; Loss of cargo is not due to perils of the sea where there was no
typhoon, but ordinary strong wind and waves and where cargo was
negligently handled by ship's crew.—On the contention of the petitioners
that the trial court found that the loss was occasioned

598

598 SUPREME COURT REPORTS ANNOTATED

Roque vs. Intermediate Appellate Court

by the perils of the sea characterized by the "storm and waves" which
buffeted the vessel, the records show that the court ruled otherwise. It stated:
"x x x The other affirmative defense of defendant Lighterage, That the
supposed loss of the logs was occasioned by force majeure was not
supported by the evidence. At the time Mable 10 sank, there was no typhoon
but ordinary strong wind and waves, a condition which is natural and
normal in the open sea. The evidence shows that the sinking of Mable 10
was due to improper loading of the logs on one side so that the barge was
tilting on one side and for that it did not navigate on even keel; that it was
no longer seaworthy that was why it developed leak; that the personnel of
the tugboat and the barge committed a mistake when it turned loose the
barge from the tugboat east of Cabuli point where it was buffeted by storm
and waves, while the tugboat proceeded to west of Cabuli point where it
was protected by the mountain side from the storm and waves coming from
the east direction. x x x"
Same; Words and Phrases; "Perils of the ship" defined.—lt must be
considered to be settled, furthermore, that a loss which, in the ordinary
course of events, results from the natural and inevitable action of the sea,
from the ordinary wear and tear of the ship, or from the negligent failure of
the ship's owner to provide the vessel with proper equipment to convey the
cargo under ordinary conditions, is not a peril of the sea. Such a loss is
rather due to what has been aptly called the 'peril of the ship.' 'The insurer
undertakes to insure against perils of the sea and similar perils, not against
perils of the ship. As was well said by Lord Herschell in Wilson, Sons &
Co. v. Owners of Cargo per the Xantho ([1887], 12 A. C., 503, 509), 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.
Same; Same; "Barratry" defined.—Barratry as defined in American
Insurance Law is "any willful misconduct on the part of master or crew in
pursuance of some unlawful or fraudulent purpose without the consent of
the owners, and to the prejudice of the owner's interest," (Sec. 171, U.S.
Insurance Law, quoted in Vance, Handbook on Law of Insurance, 1951, p.
929.) Barratry necessarily requires a willful and intentional act in its
commission. No honest error of judgment or mere negligence, unless
criminally gross, can be barratry. (See Vance on Law of Insurance, p. 929
and cases cited therein.)

599

VOL. 139, NOVEMBER 11, 1985 599

Roque vs. Intermediate Appellate Court

Same; There is no barratry as will enable a cargo shipper to recover

on a marine cargo insurance where ship's crew's acts constitute only simple
negligence or lack of skill.—In the case at bar, there is no finding that the
loss was occasioned by the willful or fraudulent acts of the vessel's crew.
There was only simple negligence or lack of skill. Hence, the second
assignment of error must likewise be dismissed.

PETITTON for certiorari to review the decision of the Intermediate

Appellate Court.

The facts are stated in the opinion of the Court.

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 OR 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

600

600 SUPREME COURT REPORTS ANNOTATED

Roque vs. Intermediate Appellate Court

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 liability 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 peti-

601

VOL. 139, NOVEMBER 11, 1985 601

Roque vs. Intermediate Appellate Court

tioners, 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:

THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING

THAT IN CASES OF MARINE CARGO INSURANCE, THERE IS A
WARRANTY OF SEAWORTHINESS BY THE CARGO OWNER.

II

THE 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'

III

THE 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

602

602 SUPREME COURT REPORTS ANNOTATED

Roque vs. Intermediate Appellate Court

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 loading
his cargo and the cargo of other shippers, and the hiring of a
sufficient number of competent officers and seamen.
The petitioners' arguments have no merit.
There is no dispute over the liability of the common carrier
Manila Bay. In fact, it did not bother to appeal the questioned
decision. However, the petitioners state that Manila Bay has ceased
operating as a firm and nothing may be recovered from it. They are,
therefore, trying to recover their losses from the insurer.
The liability of the insurance company is governed by law.
Section 113 of the Insurance Code provides:

"In every marine insurance upon a ship or freight, or freightage, or upon any
thing which is the subject of marine insurance, a warranty is implied that the
ship is seaworthy."

Section 99 of the same Code also provides in part.

"Marine insurance includes:

"(1) Insurance against loss of or damage to:
(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes,
merchandise, x x x."

From the above-quoted provisions, there can be no mistaking the

fact that the term "cargo" can be the subject of marine insurance and
that once it is so made, the implied warranty of seaworthiness
immediately attaches to whoever is insuring the cargo whether he be
the shipowner or not.
As we have ruled in the case of Go Tiaoco y Hermanos v. Union
Insurance Society of Canton (40 Phil. 40):

603

VOL. 139, NOVEMBER 11, 1985 603

Roque vs. Intermediate Appellate Court

"The same conclusion must be reached if the question be discussed with

reference to the seaworthiness of the ship. It is universally accepted that in
every contract of insurance upon anything which is the subject of marine
insurance, a warranty is implied that the ship shall be seaworthy at the time
of the inception of the voyage, This rule is accepted in our own Insurance
Law (Act No. 2427, sec. 106). x x x"

Moreover, the fact that the unseaworthiness of the ship was

unknown to the insured is immaterial in ordinary marine insurance
and may not be used by him as a defense in order to recover on the
marine insurance policy. As was held in Richelieu and Ontario Nav.
Co. v. Boston Marine, Inc., Co. (136 U.S. 406):

"There was no lookout, and both that and the rate of speed were contrary to
the Canadian Statute. The exception of losses occasioned by
unseaworthiness was in effect a warranty that a loss should not be so
occasioned, and whether the fact of unseaworthiness were known or
unknown would be immaterial."

Since the law provides for an implied warranty of seaworthiness in

every contract of ordinary marine insurance, it becomes the
obligation of a cargo owner to look for a reliable common carrier
which keeps its vessels in seaworthy condition. The shipper of cargo
may have no control over the vessel but he has full control in the
choice of the common carrier that will transport his goods. Or the
cargo owner may enter into a contract of insurance which
specifically provides that the insurer answers not only for the perils
of the sea but also provides f or coverage of perils of the ship.
We are constrained to apply Section 113 of the Insurance Code to
the facts of this case. As stated by the private respondents:

"In marine cases, the risks insured against are 'perils of the sea' (Chute v.
North River Ins. Co., Minn—214 NW 472, 55 ALR 933). The purpose of
such insurance is protection against contingencies and against possible
damages and such a policy does not cover a loss or injury which must
inevitably take place in the ordinary course of things. There is no doubt that
the term 'perils of the sea' extends on

604

604 SUPREME COURT REPORTS ANNOTATED

Roque vs, Intermediate Appellate Court

ly to losses caused by sea damage, or by the violence of the elements, and

does not embrace all losses happening at sea. They insure against losses
from extraordinary occurrences only, such as stress of weather, winds and
waves, lightning, tempests, rocks and the like. These are understood to be
the 'perils of the sea' referred in the policy, and not those ordinary perils
which every vessel must encounter. 'Perils of the sea' has been said to
include only such losses as are of extraordinary nature, or arise from some
overwhelming power, which cannot be guarded against by the ordinary
exertion of human skill and prudence. Damage done to a vessel by perils of
the sea includes every species of damages done to a vessel at sea, as
distinguished from the ordinary wear and tear of the voyage, and distinct
from injuries suffered by the vessel in consequence of her not being
seaworthy at the outset of her voyage (as in this case). It is also the general
rule that everything which happens thru the inherent vice of the thing, or by
the act of the owners, master or shipper, shall not be reputed a peril, if not
otherwise borne in the policy. (14 RCL on 'lnsurance', Sec. 384, pp. 1203-
1204; Cia. de Navegacion v. Firemen's Fund Ins. Co., 277 US 66, 72 L. ed.
787, 48 S. Ct 459)."

With regard to the second assignment of error, petitioners maintain,

that the loss of the cargo was caused by the perils of the sea, not by
the perils of the ship because as found by the trial court, the barge
was turned loose from the tugboat east of Cabuli Point "where it was
buffeted by storm and waves." Moreover, petitioners also maintain
that barratry, against which the cargo was also insured, existed when
the personnel of the tugboat and the barge committed a mistake by
turning loose the barge from the tugboat east of Cabuli Point. The
trial court also found that the stranding and foundering of Mable 10
was due to improper loading of the logs as well as to a leak in the
barge which constituted negligence.
On the contention of the petitioners that the trial court found that
the loss was occasioned by the perils of the sea characterized by the
"storm and waves" which buffeted the vessel, the records show that
the court ruled otherwise. It stated:

x x x                x x x                x x x
"x x x The other affirmative defense of defendant Lighterage, That the
supposed loss of the logs was occasioned by force ma

605

VOL. 139, NOVEMBER 11, 1985 605

Roque vs. Intermediate Appellate Court

jeure was not supported by the evidence, At the time Mable 10 sank, there
was no typhoon but ordinary strong wind and waves, a condition which is
natural and normal in the open sea, The evidence shows that the sinking of
Mable 10 was due to improper loading of the logs on one side so that the
barge was tilting on one side and for that it did not navigate on even keel;
that it was no longer seaworthy that was why it developed leak; that the
personnel of the tugboat and the barge committed a mistake when it turned
loose the barge from the tugboat east of Cabuli point where it was buffeted
by storm and waves, while the tugboat proceeded to west of Cabuli point
where it was protected by the mountain side from the storm and waves
coming from the east direction. x x x"

In fact, in the petitioners' complaint, it is alleged that "the barge

Mable 10 of defendant carrier developed a leak which allowed water
to come in and that one of the hatches of said barge was negligently
left open by the person in charge thereof causing more water to
come in", and that "the loss of said plaintiffs' cargo was due to the
fault, negligence, and/or lack of skill of defendant carrier and/or
defendant carrier's representatives on barge Mable 10."
It is quite unmistakable that the loss of the cargo was due to the
perils of the ship rather than the perils of the sea. The facts clearly
negate the petitioners' claim under the insurance policy. In the case
of Go Tiaoco y Hermanos v. Union Ins. Society of Canton, supra, we
had occasion to elaborate on the term "perils of the ship." We ruled:

"It must be considered to be settled, furthermore, that a loss which, in the

ordinary course of events, results from the natural and inevitable action of
the sea, from the ordinary wear and tear of the ship, or from the negligent
failure of the ship's owner to provide the vessel with proper equipment to
convey the cargo under ordinary conditions, is not a peril of the sea. Such a
loss is rather due to what has been aptly called the 'peril of the ship.' The
insurer undertakes to insure against perils of the sea and similar perils, not
against perils of the ship. As was well said by Lord Herschell in Wilson,
Sons & Co. v. Owners of Cargo per the Xantho ([1887], 12 A. C., 503, 509),
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

606

606 SUPREME COURT REPORTS ANNOTATED

Roque vs. Intermediate Appellate Court

happen.
"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 which results f rom perils of the sea.
x x x                x x x                x x x
"Suffice it to say that upon the authority of those cases there is no room
to doubt the liability of the shipowner for such a loss as occurred in this
case. By parity of reasoning the insurer is not liable; for generally speaking,
the shipowner excepts the perils of the sea from his engagement under the
bill of lading, while this is the very perils against which the insurer intends
to give protection. As applied to the present case it results that the owners of
the damaged rice must look to the shipowner for redress and not to the
insurer."

Neither can petitioners allege barratry on the basis of the findings

showing negligence on the part of the vessel's crew.
Barratry as defined in American Insurance Law is "any willful
misconduct on the part of master or crew in pursuance of some
unlawful or fraudulent purpose without the consent of the owners,
and to the prejudice of the owner's interest." (Sec. 171, U.S.
Insurance Law, quoted in Vance, Handbook on Law of Insurance,
1951, p. 929.)
Barratry necessarily requires a willful and intentional act in its
commission. No honest error of judgment or mere negligence,
unless criminally gross, can be barratry. (See Vance on Law of
Insurance, p. 929 and cases cited therein.)
In the case at bar, there is no finding that the loss was occasioned
by the willful or fraudulent acts of the vessel's crew. There was only
simple negligence or lack of skill. Hence, the second assignment of
error must likewise be dismissed.
Anent the third assignment of error, we agree with the petitioners
that the amount of P8,000.00 representing the amount of the
salvaged logs should have been awarded to them, However, this
should be deducted from the amounts which have been adjudicated
against Manila Bay Lighterage Corporation by the trial court.

607

VOL. 139, NOVEMBER 11, 1985 607

Roque vs. Intermediate Appellate Court

WHEREFORE, the decision appealed from is AFFIRMED with the

modification that the amount of P8,000.00 representing the value of
the salvaged logs which was ordered to be deposited in the Manila
Banking Corporation in the name of Civil Case No. 86599 is hereby
awarded and ordered paid to the petitioners. The liability adjudged
against Manila Bay Lighterage Corporation in the decision of the
trial court is accordingly reduced by the same amount.
SO ORDERED.

          Teehankee (Chairman), Melencio-Herrera, Plana, De la

Fuente and Patajo, JJ., concur.
     Relova, J., on leave.
 Decision affirmed with modification.

Notes.—In marine insurance, the following are implied

warranties: (a) Seaworthiness of the ship; (b) No deviation of the
ship; and (c) That the ship will not engage in illegal ventures,
(Gopengco: Mercantile Law Compendium, 1983 Edition, pp. 427-
428.)
Where a ship agent does not dispute its liabilities arising from
loss or damage of the goods and no proof was adduced to exempt it
from liability, it is liable for the loss suffered. (Switzerland General
Insurance Company, Ltd. vs. Ramirez, 96 SCRA 297.)

———o0o———

608

© Copyright 2018 Central Book Supply, Inc. All rights reserved.