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FGU INSURANCE CORPORATION v. ANG

FACTS:

The case involves two separate petitions for review filed by the Estate of Ang Gui, represented by Lucio, Julian, and Jaime Ang, and Co To, as well as FGU Insurance Corporation (FGU), against San Miguel Corporation (SMC). SMC filed a complaint for breach of contract of carriage and damages against ANCO Enterprises Company (ANCO), a partnership between Ang Gui and Co To, for failing to deliver a shipment of beer to its designated consignees. ANCO admitted that the cases of beer were indeed loaded on their vessel but claimed that they should not be held liable for the loss of the cargo as it was due to a fortuitous event, namely a storm that battered and sunk the vessel. ANCO also argued that there was an agreement between them and SMC to insure the cargo, and a portion of it was insured with FGU. The Regional Trial Court ruled in favor of SMC and ordered ANCO to pay damages to SMC. The Court of Appeals affirmed the decision of the trial court, prompting ANCO and FGU to file separate petitions for review before the Supreme Court.

Ang Gui and Co To (ANCO) served as the broker and representative of San Miguel Corporation (SMC) in the shipment of several cases of beer from Manila to San Jose, Antique. Prior to the departure of ANCO's vessel, the cargoes were insured with FGU Insurance Corporation (FGU) under Marine Insurance Policy No. 29591. However, the vessel encountered strong winds and heavy waves brought about by a passing typhoon, causing it to run aground near San Jose, Antique and resulting in the total wreck of the vessel and the loss of the cargoes.

ANCO filed a third-party complaint against FGU, asserting that the loss of the cargoes occurred due to risks insured against in the insurance policy. FGU, in its answer, admitted the existence of the insurance policy but maintained that the loss cannot be attributed to any of the insured risks and that ANCO and SMC failed to exercise ordinary diligence in the care and supervision of the insured cargoes.

The trial court held ANCO liable to SMC for the lost shipment due to their failure to observe the required degree of diligence. As for the third-party complaint, the court found FGU liable for 53% of the amount of the lost cargoes, considering that the policy only covered a portion of the entire cargo. The Court of Appeals affirmed the decision of the trial court, prompting FGU and the Estate of Ang Gui and Co To to file separate petitions for review.

The primary issue raised in both petitions is whether the doctrine of res judicata applies. ANCO argues that the decision in a previous case, Civil Case No. R-19341, which was decided in their favor, should be considered res judicata. However, the court ruled that the doctrine does not apply because there is no identity of parties, subject matter, and causes of action between the two cases.

In Civil Case No. R-19341, the parties involved were ANCO as the plaintiff and FGU as the defendant. In contrast, in the current case, SMC is the plaintiff and the Estate of Ang Gui, represented by Lucio, Julian, and Jaime Ang and Co To, are the defendants, with the latter only adding FGU as a third-party defendant.

The subject matter of Civil Case No. R-19341 revolved around an insurance contract between ANCO, the owner of the vessel D/B Lucio, and FGU, which covered the vessel. On the other hand, the subject matter of the present case is the loss of SMC's cargoes, as the shipper, loaded in the D/B Lucio, and the resulting failure of ANCO to deliver the lost cargo to SMC's consignees. In other words, the first case dealt with the rights and liabilities of the shipowner and the insurer, while the current case focuses on the rights and liabilities of the shipper and the shipowner. Civil Case No. R-19341 was specifically an action for Specific Performance and Damages based on FGU Marine Hull Insurance Policy No. VMF-MH-13519, while the current 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. In this case, ANCO seeks reimbursement from FGU under Insurance Policy No. MA-58486 if found liable to pay SMC.

Furthermore, the current case includes a third-party complaint against FGU.

ISSUES:

  1. Whether ANCO is liable to San Miguel Corporation (SMC) for the loss of cargo.

  2. Whether Fortuitous Event (Storm) exempts ANCO from liability.

  3. Whether FGU Insurance Corporation is liable to indemnify or reimburse ANCO for the loss of cargo under the Marine Insurance Policy.

RULING:

  1. The Supreme Court ruled that ANCO is liable to SMC for the loss of cargo amounting to P1,346,197.00 plus interest, attorney's fees, and litigation expenses.

  2. The Supreme Court found that the storm, categorized as a fortuitous event, did not exempt ANCO from liability as it was established that ANCO failed to exercise extraordinary diligence required of common carriers.

  3. The Supreme Court ruled that FGU Insurance Corporation is liable to ANCO for reimbursement under the Marine Insurance Policy to the extent of P632,700.00.

PRINCIPLES:

  1. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them, according to Article 1733 of the Civil Code.

  2. The liability of common carriers for loss or damage to the goods transported is primarily presumed to be due to their fault or negligence unless proven otherwise (Article 1735 of the Civil Code).

  3. Fortuitous events or acts of God do not exempt carriers from liability if it is proven that they failed to exercise the diligence required by law (Article 1734 of the Civil Code).

  4. The insurer’s liability under an insurance policy is determined by the specific risks covered and provisions stipulated within the policy contract.