CEBU SHIPYARD AND ENGINEERING WORKS, INC., petitioner, vs. WILLIAM LINES, INC.

and PRUDENTIAL GUARANTEE

and ASSURANCE COMPANY, INC., respondents.

Facts: William Lines is a shipping business which owns a luxury passenger-cargo vessel M/V Manila City. M/V Manila
City was insured with Prudential Guarantee for 45 Million pesos. The insurance policy includes clause covering loss of or
damage to the vessel through the negligence of ship repairmen. William Lines hired the services of Cebu Shipyard and
Engineering Works (CSEW) to repair the vessel of the former.

On 1991, M/V vessel caught fire and sank. Prudential Guaranteed paid William lines of the value of the hull and
machinery insurance on the M/V Manila City. As a result of such payment Prudential was subrogated to the claim of P45
million, representing the value of the said insurance it paid. Prudential Guarantee now claims from CSEW the amount it
paid to William Lines.

RTC:Held in favor of Prudential (insurer); CSEW to pay Prudential as the subrogee the amount of 45 million pesos.

CA: Same with RTC

ISSUE: (re: Insurance) CSEW contends that Prudential is not entitled to be subrogated to the rights of William Lines,
Inc., theorizing that (1) the fire which gutted M/V Manila City was an excluded risk and (2) it is a co-assured under the
Marine Hull Insurance Policy.

CSEW theorizes further that there can be no right of subrogation as it is deemed a co-assured under the subject
insurance policy. To buttress its stance that it is a co-assured, petitioner placed reliance on Clause 20 of the
Work Order which states:

20 The insurance on the vessel should be maintained by the customer and/or owner of the vessel during
the period the contract is in effect.

According to petitioner, under the aforecited clause, William Lines, Inc., agreed to assume the risk of loss of the
vessel while under dry-dock or repair and to such extent, it is benefited and effectively constituted as a co-
assured under the policy.

Held: 1. Re: Excluded risk

Again, this theory of CSEW is bereft of any factual or legal basis. It proceeds from a wrong premise that the fire
which gutted subject vessel was caused by the negligence of the employees of William Lines, Inc. To repeat, the issue of
who between the parties was negligent has already been resolved against Cebu Shipyard and Engineering Works, Inc.
Upon proof of payment by Prudential to William Lines, Inc. the former was subrogated to the right of the latter to
indemnification from CSEW. As aptly ruled by the Court of Appeals, the law on the manner is succinct and clear, to wit:

Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of the
insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract. If the amount paid by the insurance company does not fully cover the
injury or loss the aggrieved party shall be entitled to recover the deficiency from the person causing the
loss or injury.

2. Re: Co-assured

SC held against CSEW

 Clause 20 of the Work Order in question is clear in the sense that it requires William Lines to maintain insurance
on the vessel during the period of dry-docking or repair. Concededly, such a stipulation works to the benefit of CSEW as
the ship repairer. However, the fact that CSEW benefits from the said stipulation does not automatically make it as a co-
assured of William Lines. The intention of the parties to make each other a co-assured under an insurance policy is to be
gleaned principally from the insurance contract or policy itself and not from any other contract or agreement because
the insurance policy denominates the assured and the beneficiaries of the insurance. The hull and machinery insurance
procured by William Lines, Inc. from Prudential named only "William Lines, Inc." as the assured. There was no
manifestation of any intention of William Lines, Inc. to constitute CSEW as a co-assured under subject policy. It is
axiomatic that when the terms of a contract are clear its stipulations control. 14 Thus, when the insurance policy
involved named only William Lines, Inc. as the assured thereunder, the claim of CSEW that it is a co-assured is
unfounded.

*** Re: Perils of the sea

, in the Additional Perils Clause of the same Marine Insurance Policy, it is provided that:

Subject to the conditions of this Policy, this insurance also covers loss of or damage to vessel directly
caused by the following:

xxx xxx xxx

Negligence of Charterers and/or Repairers, provided such Charterers and/or Repairers are not an
Assured hereunder 15 (emphasis supplied).

As correctly pointed out by Prudential, if CSEW were deemed a co-assured under the policy, it would nullify any claim of
William Lines, Inc. from Prudential for any loss or damage caused by the negligence of CSEW. Certainly, no shipowner
would agree to make a shiprepairer a co-assured under such insurance policy; otherwise, any claim for loss or damage
under the policy would be invalidated. Such result could not have been intended by William Lines, Inc.

ISABELA ROQUE, doing busines under the name and style of Isabela Roque Timber Enterprises and ONG CHIONG,
petitioners, vs. HON. INTERMEDIATE APPELATE COURT and PIONEER INSURANCE AND SURETY CORPORATION,
respondent.

Facts: Manila Bay Lighterage Corporation (MBLC), a common carrier, entered into a contract with Roque whereby the
MBLC would load and carry on board its barge/vessel Mable 10 about 422.18 cubic meters of logs from Palawan to
Manila. Roque insured the logs against loss for P100k with respondent Pioneer Insurance and Surety Corp. (Pioneer).

Mable 10 with its shipment of logs sank and never reached its destination. Lower court 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 waves brought more water inside the barge. Roque demanded to MBLC for
the payment of loss of the shipment, but the latter ignored the demand. Roque also demanded Pioneer under its
insurance policy, but Pioneer 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.

RTC: Held in favor of Roque

CA: Held in favor of Pioneer, 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.
Roque argued 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.

Issue: 1. Whether 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.

2. Whether the loss of cargo was caused by the perils of the sea or perils of the ship.

Held: SC in favor of Pioneer Insurance

Held #1. 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, ...

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.

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.

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.

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 for coverage of perils of the ship.

HELD #2. 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 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.

Re: Perils of the sea

In marine cases, the risks insured against are "perils of the sea" 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 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.

Re: Perils of the ship

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. 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.

**Additional info.

Issue: Whether petitioners can allege barratry on the basis of the findings showing negligence on the part of
the vessel's crew.

Held: No. 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." 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. 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.

LA RAZON SOCIAL "GO TIAOCO Y HERMANOS," plaintiff-appellant, vs. UNION INSURANCE SOCIETY OF CANTON, LTD.,
defendant-appellee.

Facts: Union Insurance Society of Canton (UISOC) issued an insurance upon a cargo of rice belonging to Go Tiaco
Brothers which was transported in a steamship Hondagua from Saigon to Cebu. On discharging the rice from one of the
compartments in the after hold, upon arrival at Cebu, it was discovered that one thousand four hundred seventy-three
sacks and been damages by sea water. The trial court found that the inflow of the sea water during the voyage was due
to a defect in one of the drain pipes of the ship, which had become corroded. This hole had been in existence before the
voyage had begun and an attempt had been made to repair it by filling it with cement. The trial 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. For this reason, the court held that the ship was unseaworthy.

The policy of insurance was signed upon a form long in use among companies engaged in maritime insurance. It
purports to insure the cargo from the following among other risks: "Perils . . . of the seas, men of war, fire, enemies,
pirates, rovers, thieves, jettisons, . . . barratry of the master and mariners, and of all other perils, losses, and misfortunes
that have or shall come to the hurt, detriment, or damage of the said goods and merchandise or any part thereof."
Issue: Whether the insurer is liable on this policy. One has reference to the meaning of the expression "perils of the
seas and all other perils, losses, and misfortunes," as used in the policy; the other has reference to the implied warranty,
on the part of the insured, as to the seaworthiness of the ship.

Held: No. SC in favor of Insurer UISOC. The loss and damage are attributable to the shipowner.

Re: Perils of the sea v. Perils of the ship

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."

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."

The SC found in this case that 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 not to that which results from perils of the sea.

Whether the injury occurred through negligence or accidentally without negligence, it was not covered by the policy,
since the loss did not fall either under the words "perils of the seas" or under the more general words "all other perils,
losses, and misfortunes." In a sea-worthy ship damage to goods caused by the action of the sea during transit not
attributable to the fault of anybody, is a damage from a peril of the sea.

Thu the SC held that the loss and liability is on the shipowner, and the insurer is not liable. Generally speaking, the
shipowner excepts the perils of the sea from his engagement under the bill of lading, while this is the very peril against
which the insurer intends to give protection. As applied to the present case it results that the owners of the damages
rice must look to the shipowner for redress and not to the insurer.

Re: Marine Insurance

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). 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 (Act No. 2427, sec. 106).

CATHAY INSURANCE CO., petitioner, vs. HON. COURT OF APPEALS, and REMINGTON INDUSTRIAL SALES
CORPORATION, respondents.

Facts: Remington Industrial Sales Corp (RISC) seeks to collect the sum of P868k representing the loss and damage it
incurred on its merchandise of steel pipes on board “Easter Mariner”. The steel pipes are insured by Cathay Insurance
while the merchandise were in transit from Japan to Philippines.

RISC argues that rust is not an inherent vice of the seamless steel pipes without interference of external factors and that
the heavy rusting of the steel pipes did occur during the voyage of 7 days.

Cathay Insurance on the other hand argues that the insistence of private respondent that rusting is a peril of the sea is
erroneous and that 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; and that 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.

RTC: in favor of the insured (RISC)

Issue: Whether RISC argument is correct.

Held: Yes. The SC held that 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.

FILIPINO MERCHANTS INSURANCE CO., INC., petitioner, vs. COURT OF APPEALS and CHOA TIEK SENG, respondents.

Facts: In December 1976, Choa Tiek Seng insured said shipment with Filipino Merchants Insurance Company (FMICI)
under cargo Policy M-2678 for the sum of P267,653.59 for the goods described as 600 metric tons of fishmeal in new
gunny bags of 90 kilos each from Bangkok, Thailand to Manila against all risks under warehouse to warehouse terms.
The fishmeal in 666 new gunny bags were unloaded from the ship on 11 December 1976 at Manila unto the arrastre
contractor E. Razon, Inc. and FMICI's surveyor ascertained and certified that in such discharge 105 bags were in bad
order condition as jointly surveyed by the ship's agent and the arrastre contractor. The condition of the bad order was
reflected in the turn over survey report of Bad Order cargoes. The cargo was also surveyed by the arrastre contractor
before delivery of the cargo to the consignee and the condition of the cargo on such delivery was reflected in E. Razon's
Bad Order Certificates covering a total of 227 bags in bad order condition.

Based on said computation, Choa made a formal claim against FMICI for P51,568.62 the computation of which claim is
contained therein. A formal claim statement was also presented by the Choa against the vessel, but FMICI refused to pay
the claim.

Consequently, an action was brought by the consignee (Choa Tiek Seng) of the shipment of fishmeal loaded on board
the vessel SS Bougainville and unloaded at the Port of Manila and seeks to recover from FMICI the amount of P51,568.62
representing damages to said shipment which has been insured by FMICI under Policy M-2678. FMICI brought a third
party complaint against third party defendants Compagnie Maritime Des Chargeurs Reunis and/or E. Razon, Inc. seeking
judgment against the third party defendants in case judgment is rendered against FMICI.

RTC: In favor of Choa. FMICI to pay Choa.

CA: Same with RTC.

Issue 1: Whether an "all risks" marine policy has a technical meaning in insurance in that before a claim can be
compensable it is essential that there must be "some fortuity," "casualty" or "accidental cause" to which the alleged loss
is attributable.

Held: No. “All risk policy” must be read literally which means all risks whatsoever and covering all losses by an
accidental cause of any kind. The terms "accident" and "accidental", as used in insurance contracts, have not acquired
any technical meaning. They are construed by the courts in their ordinary and common acceptance. Thus, the terms
have been taken to mean that which happens by chance or fortuitously, without intention and design, and which is
unexpected, unusual and unforeseen. An accident is an event that takes place without one's foresight or expectation; an
event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not expected.

The very nature of the term "all risks" must be given a broad and comprehensive meaning as covering any loss other
than a willful and fraudulent act of the insured. This is pursuant to the very purpose of an "all risks" insurance to give
protection to the insured in those cases where difficulties of logical explanation or some mystery surround the loss or
damage to property. 8 An "all asks" policy has been evolved to grant greater protection than that afforded by the "perils
clause," in order to assure that no loss can happen through the incidence of a cause neither insured against nor creating
liability in the ship; it is written against all losses, that is, attributable to external causes.

The term "all risks" cannot be given a strained technical meaning, the language of the clause under the Institute Cargo
Clauses being unequivocal and clear, to the effect that it extends to all damages/losses suffered by the insured cargo
except (a) loss or damage or expense proximately caused by delay, and (b) loss or damage or expense proximately
caused by the inherent vice or nature of the subject matter insured.

Issue 2: Whether the failure of Choa to adduce evidence, showing that the alleged loss to the cargo in question
was due to a fortuitous event, precludes his right to recover from the insurance policy.

Held: NO. Although generally, the burden of proof is upon the insured to show that a loss arose from a
covered peril, under an "all risks" policy the burden is not on the insured to prove the precise cause of loss or damage
for which it seeks compensation. The insured under an "all risks insurance policy" has the initial burden of proving that
the cargo was in good condition when the policy attached and that the cargo was damaged when unloaded from the
vessel; thereafter, the burden then shifts to the insurer to show the exception to the coverage. As held in Paris-Manila
Perfumery Co. vs. Phoenix Assurance Co., Ltd. the basic rule is that the insurance company has the burden of proving
that the loss is caused by the risks excepted and for want of such proof, the company is liable. Coverage under an "all
risks" provision of a marine insurance policy creates a special type of insurance which extends coverage to risks not
usually contemplated and avoids putting upon the insured the burden of establishing that the loss was due to the peril
falling within the policy's coverage; the insurer can avoid coverage upon demonstrating that a specific provision
expressly excludes the loss from coverage. A marine insurance policy providing that the insurance was to be "against all
risks" must be construed as creating a special insurance and extending to other risks than are usually contemplated, and
covers all losses except such as arise from the fraud of the insured. The burden of the insured, therefore, is to prove
merely that the goods he transported have been lost, destroyed or deteriorated.

Thereafter, the burden is shifted to the insurer to prove that the loss was due to excepted perils. To impose on the
insured the burden of proving the precise cause of the loss or damage would be inconsistent with the broad protective
purpose of "all risks" insurance.

Issue 3: Whether the insurer is liable

Held: There being no showing that the loss was caused by any of the excepted perils, the insurer is liable
under the policy. It is believed that in the absence of any showing that the losses/damages were caused by an excepted
peril, i.e. delay or the inherent vice or nature of the subject matter insured, and there is no such showing, the loss was
covered by the policy. Herein, there is no evidence presented to show that the condition of the gunny bags in which the
fishmeal was packed was such that they could not hold their contents in the course of the necessary transit, much less
any evidence that the bags of cargo had burst as the result of the weakness of the bags themselves. Had there been such
a showing that spillage would have been a certainty, there may have been good reason to plead that there was no risk
covered by the policy.

Under an “all risks” policy, it was sufficient to show that there was damage occasioned by some accidental cause of any
kind, and there is no necessity to point to any particular cause. Contracts of insurance are contracts of indemnity upon
the terms and conditions specified in the policy. The agreement has the force of law between the parties. The terms of
the policy constitute the measure of the insurer's liability. If such terms are clear and unambiguous, they must be taken
and understood in their plain, ordinary and popular sense.

ORIENTAL ASSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS AND PANAMA SAW MILL CO., INC.,
respondents. MELENCIO-HERRERA, J:

Facts: Panama Sawmill Co., Inc. (Panama) bought, in Palawan, 1,208 pieces of apitong logs, with a total
volume of 2,000 cubic meters. It hired Transpacific Towage, Inc., to transport the logs by sea to Manila and insured it
against loss for PIM with Oriental Assurance Corporation (Oriental Assurance). There is a claim by Panama, however,
that the insurance coverage should have been for P3M were it not for the fraudulent act of one Benito Sy Yee Long to
whom it had entrusted the amount of P6,000.00 for the payment of the premium for a P3M policy. Oriental Assurance
issued Marine Insurance Policy OACM-86/002. The logs were loaded on 2 barges: (1) on barge PCT7000,610 pieces of
logs with a volume f 1,000 cubic meters; and (2) on Barge TPAC-1000, 598 pieces of logs, also with a volume of 1,000
cubic meters. On 28 January 1986, the two barges were towed by one tugboat, the MT "Seminole." But, during the
voyage, rough seas and strong winds caused damage to Barge TPAC-1000 resulting in the loss of 497 pieces of logs out of
the 598 pieces loaded thereon.

Panama demanded payment for the loss but Oriental Assurance refuse on the ground that its contracted liability was for
"TOTAL LOSS ONLY." The rejection was upon the recommendation of the Tan Gatue Adjustment Company. Unable to
convince Oriental Assurance to pay its claim, Panama filed a Complaint for Damages against Ever Insurance Agency
(allegedly, also liable), Benito Sy Lee Yong and Oriental Assurance, before the RTC.

RTC: in favor of Panama.

CA: Same with RTC

Both Courts shared the view that the insurance contract should be liberally construed in order to avoid a denial of
substantial justice; and that the logs loaded in the two barges should be treated separately such that the loss sustained
by the shipment in one of them may be considered as "constructive total loss" and correspondingly compensable.

Issue: Whether Oriental Assurance can be held liable under its marine insurance policy based on the theory of
a divisible contract of insurance and, consequently, a constructive total loss.

Held: No. SC in favor of Oriental Assurance.

No liability attaches. The terms of the contract constitute the measure of the insurer's liability and
compliance therewith is a condition precedent to the insured's right to recovery from the insurer (Perla Compania de
Seguros, Inc. v. Court of Appeals). Whether a contract is entire or severable is a question of intention to be determined
by the language employed by the parties. The policy in question shows that the subject matter insured was the entire
shipment of 2,000 cubic meters of apitong logs. The fact that the logs were loaded on two different barges did not make
the contract several and divisible as to the items insured. The logs on the two barges were not separately valued or
separately insured. Only one premium was paid for the entire shipment, making for only one cause or consideration. The
insurance contract must, therefore, be considered indivisible. More importantly, the insurer's liability was for "total loss
only." A total loss may be either actual or constructive (Sec. 129, Insurance Code).

Re: Total loss (actual or constructive)

A total loss may be either actual or constructive (Sec. 129, Insurance Code). An actual total loss is caused by: (a) A total
destruction of the thing insured; (b) The irretrievable loss of the thing by sinking, or by being broken up; (c) Any damage
to the thing which renders it valueless to the owner for the purpose for which he held it; or (d) Any other event which
effectively deprives the owner of the possession, at the port of destination, of the thing insured." (Section 130,
Insurance Code).

A constructive total loss is one which gives to a person insured a right to abandon, under Section 139 of the Insurance
Code, which reads "A person insured by a contract of marine insurance may abandon the thing insured, or any particular
portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof,
when the cause of the loss is a peril insured against. (a) If more than three-fourths thereof in value is actually lost, or
would have to be expended to recover it from the peril; (b) If it is
injured to such an extent as to reduce its value more than three-fourths; xxx"

SC held there was no constructive loss.

The logs involved, although placed in two barges, were not separately valued by the policy, nor separately insured.
Resultantly, the logs lost in barge TPAC-1000 in relation to the total number of logs loaded on the same barge can not be
made the basis for determining constructive total loss. The logs having been insured as one inseparable unit, the correct
basis for determining the existence of constructive total loss is the totality of the shipment of logs. Of the entirety of
1,208, pieces of logs, only 497 pieces thereof were lost or 41.45% of the entire shipment. Since the cost of those 497
pieces does not exceed 75% of the value of all 1,208 pieces of logs, the shipment can not be said to have sustained a
constructive total loss under Section 139(a) of the Insurance Code.

In the absence of either actual or constructive total loss, there can be no recovery by the insured Panama against the
insurer, Oriental Assurance.