CATHAY INSURANCE CO., PETITIONER, VS. HON. COURT OF APPEALS, AND REMINGTON INDUSTRIAL SALES CORPORATION, RESPONDENTS.

This petition seeks the review of the decision of the Court of
Appeals^[1]
in CA-G.R. CV No. 06559 affirming the decision of the Regional Trial Court
(RTC)^[2],
National Capitol Region (NCR) Manila, Branch 38 and the Resolution of the said
appellate court denying petitioner’s motion for reconsideration.

Originally, this was a complaint filed by private res­pondent
corporation against petitioner (then defendant) company seeking collection of
the sum of P868,339.15 representing private respondent’s losses and damages
incurred in a shipment of seamless steel pipes under an insurance con­tract in
favor of the said private respondent as the insured, consignee or importer of
aforesaid merchandise while in transit
from Japan to the Philippines on board vessel SS “Eastern Mariner.”
The total value of the shipment was P2,894,463.83
at the prevailing rate of P7.95 to
a dollar in June and July 1984, when
the shipment was made.

The trial court decided in favor of private respondent
corporation by ordering petitioner to pay it the sum of P868,339.15 as
its recoverable insured loss equivalent to 30% of the value of the seamless
steel pipes; ordering petitioner to pay private respondent interest on the aforecited
amount at the rate of 34% or double the ceiling prescribed by the
Monetary Board per annum from February 3,
1982 or 90 days from private
respondent’s submission of proof of loss to petitioner until paid as provided
in the settlement of claim provision of the policy; and ordering petitioner to
pay pri­vate respondent certain amounts for Marine Surveyor’s fee, attorney’s fees and costs of the suit.

Respondent in its comment on the petition, contends that:

1. Coverage of private respondent’s loss under the insurance
policy issued by petitioner is unmistakable.

2. Alleged contractual limitations contained in insurance
policies are regarded with extreme caution by courts and are to be strictly
construed against the insurer; obscure phrases and exceptions should not be
allowed to defeat the very purpose for which the policy was procured.

3. Rust is not an inherent vice of the seamless steel pipes without
interference of external factors.

4. No matter how petitioner might want it otherwise, the 15-day
clause of the policy had been foreclosed in the pre-trial order and it was not
even raised in petitioner’s answer to private respondent’s complaint.

5. The decision was correct in not holding that the heavy rusting
of the seamless steel pipes did not occur during the voyage of 7 days from July
1 to July 7, 1981.

6. The alleged lack of supposed bad order survey from the arrastre capitalized on by petitioner was more than clari­fied
by no less than 2 witnesses.

7. The placing of notation “rusty” in the way bills is
not only private respondent’s right but a natural and spon­taneous reaction of
whoever received the seamless steel pipes in a rusty condition at private respondent’s
bodega.

8. The Court of Appeals did not engage in any guesswork or
speculation in concluding a loss allowance of 30% in the amount of P868,339.15.

9. The rate of 34 per annum double the ceiling prescribed by the
Monetary Board is the rate of interest fixed by the Insurance Policy itself and
the Insurance Code.

The petitioner however maintains that:

(1) Private respondent does not dispute the fact that, contrary
to the finding of the respondent Court (that petitioner has failed “to
present any evidence of any viable exception to the application of the
policy”) there is in fact an express exception to the application of the
policy.

(2) As adverted to in the Petition for Review, private respondent
has admitted that the questioned shipment is not covered by a
“square provision of the contract.” But private respondent claims
implied coverage from the phrase “perils of the sea” mentioned in the
opening sentence of the policy.

(3) The insistence of private respondent that rusting is a peril
of the sea is erroneous.

(4) Private respondent inaccurately invokes the rule of strict construction
against insurer under the guise of cons­truction in order to impart
a non-existing ambiguity or doubt into the policy so as to resolve it against
the insurer.

(5) Private respondent while impliedly admitting that a loss
occasioned by an inherent defect or vice in the insured article is not within
the terms of the policy, erro­neously insists that rusting is not an inherent
vice or in the nature of steel pipes.

(6) Rusting is not a risk insured against, since a risk to be
insured against should be a casualty or some casualty, something which could
not be foreseen as one of the necessary incidents of adventure.

(7) A fact capable of unquestionable demonstration or of public
knowledge needs no evidence.  This fact
of unquestionable demonstration or of public knowledge is that heavy rusting of
steel or iron pipes cannot occur within a period of a seven (7) day
voyage.  Besides, petitioner had
introduced the clear cargo receipts or tally sheets indicating that there was
no damage on the steel pipes during the voyage.

(8) The evidence of private respondent betrays the fact that the
account of P868,339.15 awarded by the respondent Court is founded on
speculation, surmises or conjectures and the amount of less has not been proven
by competent, satisfactory and clear evidence.

We find no merit in this petition.

There is no question that the rusting of steel pipes in the
course of a voyage is a “peril of the sea” in view of the toll on the
cargo of wind, water, and salt conditions. 
At any rate if the insurer cannot be held accountable therefor, We would fail to observe a cardinal rule in the
interpretation of contracts, namely, that any
ambiguity therein should be construed against the maker/issuer/drafter
thereof, namely, the insurer.  Besides
the precise purpose of in­suring cargo during a voyage would be rendered
fruitless.  Be it noted that any attack
of the 15-day clause in the policy was foreclosed right in the pre-trial
conference.

Finally, it is a cardinal rule that save for certain exceptions,
findings of facts of the appellate tribunal are binding on Us.  Not one of said exceptions can apply to this
case.

WHEREFORE, this petition is hereby DENIED, and the
assailed decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

Fernan, (Chairman), Gutierrez, Jr., and Cortes, JJ., concur.

Padilla, J., no part: senior
partner of petitioner’s counsel is related to me.

Bidin, J., no part. I participated in the appealed decision of the Court of
Appeals.

^[1] PENNED by CA. Justices,
Marcelino R. Veloso, ponente, Porfirio
V. Sison, Abdulwahid A. Bidin, Ramon B. Britanico and Josue N. Bellosillo, concurring.

^[2]
PENNED by RTC judge Natividad G. Adduru-Santillan.