New World International Development vs. NYK-FilJapan Shipping Corp.

An insurer that imposes unreasonable requirements not found in the policy and refuses to settle a claim without just cause, thereby causing the insured's right of action against the common carrier to prescribe, is liable for the insurance proceeds, double legal interest for unreasonable delay, and attorney's fees.

Petitioner New World International Development (Phils.), Inc. purchased three emergency generator sets from DMT Corporation, shipped from Wisconsin to Manila via carrier NYK-Filjapan Shipping Corporation. The shipment was transshipped in Hong Kong and encountered Typhoon Kadiang en route to Manila, resulting in total damage to the generator sets. New World filed a formal claim with its insurer, Seaboard-Eastern Insurance Company, under a marine open policy. Seaboard refused to process the claim unless New World submitted an itemized list of damaged units, parts, and accessories with corresponding values—a requirement New World resisted as it was not stipulated in the policy. By the time New World filed suit against the carrier and other respondents on October 11, 1994, the one-year prescriptive period under the COGSA, reckoned from the date of delivery to the arrastre operator on October 7, 1993, had already lapsed.

• Purchase and Shipment: New World bought three emergency generator sets from DMT Corporation through its agent, Advatech Industries, Inc. The goods were shipped from Wisconsin to Chicago, then to Oakland, and finally to Manila via NYK's vessels, S/S California Luna and S/S ACX Ruby.
• Damage in Transit: The S/S ACX Ruby encountered Typhoon Kadiang while en route to Manila. The captain filed a sea protest upon arrival on October 5, 1993. Inspection revealed that two container vans showed external damage, and upon later examination, all three generator sets suffered total damage beyond repair.
• Arrastre and Delivery: Marina Port Services, Inc., the arrastre operator, received the shipment on October 7, 1993. The goods remained under Marina's care pending customs clearance until October 20, 1993, when New World's customs broker, Serbros Carrier Corporation, withdrew them.
• Claim Against Carrier: New World demanded recompense from NYK and other parties, but liability was denied. New World filed suit on October 11, 1994, which was beyond the one-year prescriptive period reckoned from the October 7, 1993 delivery to the arrastre.
• Claim Against Insurer: New World filed a formal claim with Seaboard on November 16, 1993. Seaboard required an itemized list of damaged units, parts, and accessories with corresponding values on February 14, 1994. New World refused, citing the absence of such a requirement in the insurance policy. Seaboard consequently refused to process the claim.

• Solidary Liability of Other Respondents: Petitioner argued that respondents DMT, Advatech, LEP, LEP Profit, Marina, and Serbros were solidarily liable for the damage due to their respective roles in handling and transporting the shipment.
• Unreasonable Imposition: Petitioner maintained that Seaboard's demand for an itemized list was an unreasonable imposition and violated the terms of their insurance contract.
• Inapplicability of COGSA Prescription: Petitioner argued that the one-year COGSA prescriptive period for maritime claims did not apply to the prosecution of its claim against Seaboard, as the Insurance Code governed the insurer-insured relationship.

• Reasonable Requirement: Respondent Seaboard countered that its request for an itemized list of damaged units, parts, and accessories was a reasonable requirement necessary to assess and process the insurance claim.
• COGSA Prescription Bars Subrogation: Respondent argued that the one-year COGSA prescriptive period applied to Seaboard as the subrogee of New World's rights against the vessel owner, and New World's failure to comply promptly with the requirement prejudiced Seaboard's right of subrogation.

• Factual Findings on Negligence: Whether the lower courts erred in absolving respondents DMT, Advatech, LEP, LEP Profit, Marina, and Serbros from liability.
• Reasonableness of Itemized List: Whether Seaboard's request for an itemized list was a reasonable imposition or a violation of the insurance contract.
• Applicability of COGSA Prescription: Whether the one-year COGSA prescriptive period barred New World's claim against Seaboard.

• Factual Findings on Negligence: The issue of which parties incurred negligence is factual and not a proper subject of a petition for review on certiorari. The lower courts' findings that only NYK was negligent—having failed to exercise due diligence to prevent or minimize loss during the typhoon—were affirmed.
• Reasonableness of Itemized List: The demand for an itemized list was an unreasonable imposition. The marine policy was an all-risk policy, and Seaboard failed to show that the loss fell under any enumerated exception. The documents already submitted by New World were precisely those listed in the policy. As a contract of adhesion, the insurance policy is construed strongly against the insurer, and requirements not found in the policy cannot be read into it.
• Applicability of COGSA Prescription: The fault for the delayed court suit against the carrier lay with Seaboard. Seaboard unreasonably refused to process the claim, which if settled, would have allowed Seaboard to file a subrogation suit within the prescriptive period. Because Seaboard refused without just cause, it cannot use the prescription of the subrogated claim to escape liability. Seaboard was thus liable for the policy proceeds, double legal interest for unreasonable delay under the Insurance Code, and attorney's fees.

• All-Risk Marine Insurance Policy — An all-risk policy insures against all causes of conceivable loss or damage except when otherwise excluded or when the loss is due to fraud or intentional misconduct by the insured. The insurer cannot impose requirements for claims that are not stipulated in the policy; being a contract of adhesion, any ambiguity or omission is construed against the insurer.
• Forte Majore and Carrier Diligence — A typhoon does not automatically relieve a common carrier of liability. The carrier bears the burden of proving that the typhoon was the proximate and only cause of loss and that it exercised due diligence to prevent or minimize the loss before, during, and after the occurrence.
• Unreasonable Delay in Insurance Settlement — Under Sections 243 and 244 of the Insurance Code, an insurer that refuses without just cause to pay a claim within the prescribed periods is liable for double interest (twice the ceiling prescribed by the Monetary Board) and attorney's fees. A prima facie case of unreasonable delay arises from failure to pay within the statutory timeframe.

• "That the loss was occasioned by a typhoon, an exempting cause under Article 1734 of the Civil Code, does not automatically relieve the common carrier of liability. The latter had the burden of proving that the typhoon was the proximate and only cause of loss and that it exercised due diligence to prevent or minimize such loss before, during, and after the disastrous typhoon."
• "Being a contract of adhesion, an insurance policy is construed strongly against the insurer who prepared it. The Court cannot read a requirement in the policy that was not there."
• "Ultimately, the fault for the delayed court suit could be brought to Seaboard’s doorstep."

• Union Carbide Philippines, Inc. v. Manila Railroad Co., 168 Phil. 22 (1977) — Followed regarding the reckoning of the one-year prescriptive period under the COGSA from the date the goods were delivered to the arrastre operator.
• Choa Tiek Seng v. Court of Appeals, 262 Phil. 245 (1990) — Followed regarding the nature of an all-risk policy, which covers all losses during the voyage whether or not arising from a marine peril, except those expressly excluded.
• Prudential Guarantee and Assurance, Inc. v. Trans-Asia Shipping Lines, Inc., G.R. Nos. 151890 & 151991, June 20, 2006 — Followed as basis for awarding attorney's fees equivalent to 10% of the insurance proceeds.
• Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994 — Followed regarding the imposition of a 12% interest per annum from the finality of judgment until full satisfaction, the interim period being equivalent to a forbearance of credit.

• Article 1734, Civil Code — Enumerates fortuitous events, including typhoons, that exempt common carriers from liability, subject to the diligence requirement under Article 1739.
• Article 1739, Civil Code — Requires common carriers to exercise due diligence to prevent or minimize loss during fortuitous events.
• Section 3(6), Carriage of Goods by Sea Act (COGSA) — Provides that the carrier and the ship shall be discharged from all liability unless suit is brought within one year after delivery of the goods.
• Section 241, Insurance Code — Prohibits insurance companies from refusing without just cause to pay or settle claims arising under their policies.
• Section 243, Insurance Code — Prescribes the periods within which an insurer must pay a claim (30 days after proof of loss, or 90 days if ascertainment takes longer) and entitles the insured to double interest for delay.
• Section 244, Insurance Code — Creates a prima facie presumption of unreasonable delay from failure to pay within the time fixed in Section 243 and authorizes the award of attorney's fees.
• Central Bank Circular No. 416 / Presidential Decree No. 116 — Sets the legal rate of interest at 12% per annum, serving as the "ceiling prescribed by the Monetary Board" for purposes of computing double interest under Section 243 of the Insurance Code.

Velasco, Jr., Leonardo-De Castro, Peralta, Mendoza