La Razon Social v Union Insurance Society of

Canton
GR No. 13983, Sept. 1, 1919
Topic: Marine Insurance
Ponente: Street
Author: Keith Meridores
Link:
http://www.lawphil.net/judjuris/juri1919/sep1919/gr_1
3983_1919.html

FACTS:
1. The Go Tiaoco Brothers owned a shipment of rice from Saigon to Cebu.
2. During the transit, it was discovered that 1,473 sacks of rice was damaged by sea water.
3. It was later found out that the damage was caused b y a corroded pipe, the purpose of which was to drain
from the water closet.
3.1 The court found in effect that the opening above described had resulted in course of time from ordinary
wear and tear and not from the straining of the ship in rough weather on that voyage.
(Bear with me, since this is an old case, the procedure we have come to learn may be different form the one
effective during the pendency of this case.)
4. Trial Court: ruled in favor of Union Insurance. The cause of the loss was due to the defect in one of the drain
pipes thus, the loss is not covered.
5. The case was brought up to the SC.

ISSUE:
Whether or not the reason for the loss of the cargo is covered by the insurance?

HELD:
No. What is covered is "peril of the sea" and not "peril of the ship".

RATIO:
1. Peril of the sea vs. peril of the ship
1.1 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.
1.2 Wilson, Sons, and Co. v. Owners of the Cargo per the Xantho: 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."

2. Implied warranty as to seaworthiness of the ship.

2.1 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.
2.2 It is also well settled that a ship which is seaworthy for the purpose of insurance upon the ship may yet be
unseaworthy for the purpose of insurance upon the cargo.

DOCTRINE
In order to make the insurer liable, it must be "some casualty, something which could not be foreseen as one of
the necessary incidents of the adventure.

SEPARATE OPINION:
Torres: (dissenting)
Judgment appealed from should be reversed.