Loss and Notice of Loss
1. United Merchants Merchants Corporation v. Country Bankers Bankers Insurance Corporation, G.R. No. No. 198588, 198588, 11 July July 2012 2. Country Bankers Bankers Insurance Insurance Corporation v. Lianga Bay Bay and Community Community Multi-Purpose Multi-Purpose Cooperative, Inc., Inc., G.R. No. 136914, 25 January 2002 3. FGU Insurance Insurance Corporation Corporation v. v. Court of of Appeals, G.R. No. 137775, 137775, 31 March March 2005 2005 4. Travellers Insurance & Surety Corporation Corporation v. v. CA, G.R. No. 82036, 22 22 May 1997 1997 5. Su Sun n Ins Insur uran ance ce O"ce, Ltd. v. Court of Appeals, G.R. No. 92383, 17 July 1992 Claims Settlement & Subrogat Subrogation ion
1. Finman General General Assurance Corporation v. v. Court of Appeals, Appeals, G.R. No. 138737, 138737, 12 12 July 2001 2001 2. Cebu Shipyard Shipyard & Engineering Engineering Works, Works, Inc. v. v. William Lines, Lines, Inc., G.R. No. No. 132607, 132607, 5 May 1999 1999 3. Ve Vector ctor Shipping Corporation Corporation v. v. American Home Assurance Assurance Company, Company, G.R. No. 159213, 159213, 3 July 2013 Double Insurance
1. Geag Geagonia onia v. v. Court of Appeal Appeals, s, G.R. No. 1144 114427, 27, 6 February February 1995 1995 2. Malayan Insurance Insurance Co., Inc. Inc. v. v. Philippines First Insurance Co., Inc., G.R. No. 184300, 184300, 11 July July 2012 Reinsurance
1. The Philippine Philippine American Life Insurance Insurance Company v. v. The Auditor Auditor General, G.R. No. No. L-19255, L-19255, 18 January January 1968 2. Communication and Information Information Systems Corporation Corporation v. v. Mark Sensing Sensing Australia Pty Pty.. Ltd., G.R. No. 192159, 25 January 2017
United Merchants Corporation vs Country Bankers Insurance Corporati Corporation on G.R. No. 198588 July 11, 2012
Facts: Petitioner United Merchants Corporation (UMC) is engaged in the business of buying, selling, and manufacturing Christmas lights. UMC leased a warehouse at 19-B Dagot Street, San Jose Subdivision, Barrio Manresa, Quezon City, City, where UMC assembled and stored its products. products. On 6 September 1995, UMCs General Manager Alfredo Tan Tan insured UMCs stocks in trade of Christmas lights against fire with defendant Country Bankers Insurance Corporation (CBIC) for P 15,000,00 15,000,000.00. 0.00. The Fire Insurance Policy No. F-HO/95-576 (Insurance Policy) and Fire Invoice No. 12959A, valid until 6 September 1996. On 7 May 1996, UMC and CBIC executed Endorsement F/96-154 and Fire Invoice No. 16583A to form part of the Insurance Policy. Policy. Endorsement F/96-154 provides that UMCs stocks in trade were insured against additional perils, to wit: typhoon, flood, ext. cover, and full earthquake. The sum insured was also increased to P50,000,000.00 e $ective 7 May 1996 to 10 January 1997. On 9 May 1996, CBIC issued Endorsement F/ 96-157 where the name of the assured was changed from Alfredo Tan to UMC. On 3 July 1996, a fire gutted the warehouse rented by UMC. CBIC designated CRM Adjustment Corporation (CRM) to investigate and evaluate UMCs loss by reason of the fire. CBICs reinsurer, Central Surety, likewise requested the National Bureau of Investigation (NBI) to conduct a parallel investigation. On 6 July 1996, UMC, through CRM, submitted to CBIC its Sworn Statement of Formal Claim, with proofs of its loss. Issue: Whether or not UMC is entitled to claim from CBIC the full coverage of its fire insurance policy. policy. Held: No. Burden of proof is the duty of any party to present evidence to establish his claim or defense by the amount of evidence required by law, which is preponderance of evidence in civil cases. The party, whether plainti$ or defendant, who asserts the a "rmative of the issue has the burden of proof to obtain a favorable judgment. Particularly, Particularly, in insurance cases, once an insured makes out a prima facie case in its favor,, the burden of evidence shifts to the insurer to controvert the insureds prima facie case. In the present favor case, UMC established a prima facie case against CBIC. CBIC does not dispute that UMCs stocks in trade were insured against fire under the Insurance Policy and that the warehouse, where UMCs stocks in trade were stored, was gutted by fire on 3 July 1996, within the duration of the fire insurance. However, However, since CBIC alleged an excepted risk, then the burden of evidence shifted to CBIC to prove such exception.
An insurer who seeks to defeat a claim because of an exception or limitation in the policy has the burden of establishing that the loss comes within the purview of the exception or limitation. If loss is proved apparently within a contract of insurance, the burden is upon the insurer to establish that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a cause which limits its liability. In Uy Hu & Co. v. The Prudential Assurance Co., Ltd., the Court held that where a fire insurance policy provides that if the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy, and the evidence is conclusive that the proof of claim which the insured submitted was false and fraudulent both as to the kind, quality and amount of the goods and their value destroyed by the fire, such a proof of claim is a bar against the insured from recovering on the policy even for the amount of his actual loss. In the present case, as proof of its loss of stocks in trade amounting to P 50,000,000.00, UMC submitted its Sworn Statement of Formal Claim together with the following documents: (1) letters of credit and invoices for raw materials, Christmas lights and cartons purchased; (2) charges for assembling the Christmas lights; and (3) delivery receipts of the raw materials. However, the charges for assembling the Christmas lights and delivery receipts could not support its insurance claim. The Insurance Policy provides that CBIC agreed to insure UMCs stocks in trade. UMC defined stock in trade as tangible personal property kept for sale or tra"c. Applying UMCs definition, only the letters of credit and invoices for raw materials, Christmas lights and cartons may be considered. It has long been settled that a false and material statement made with an intent to deceive or defraud voids an insurance policy. The most liberal human judgment cannot attribute such di$erence to mere innocent error in estimating or counting but to a deliberate intent to demand from insurance companies payment for indemnity of goods not existing at the time of the fire. This constitutes the so-called fraudulent claim which, by express agreement between the insurers and the insured, is a ground for the exemption of insurers from civil liability.
EXEMPTION SHOULD BE PROVEN IN ORDER TO QUALIFY UNDEREXCEPTION CLAUSE OF INSURANCE POLICY COUNTRY BANKERS INSURANCE CORP. VS. LIANGA BAY & COMMUNITY MULTI-PURPOSE COOPERATIVE, INC. G.R. No.136914, January 25, 2002
Facts: Country Banker’s Insurance Corp. (CBIC) insured the building of respondent Lianga Bay and Community Multi-Purpose Corp., Inc. against fire, loss, damage, or liability during the period starting June 20, 1990 for the sum of Php.200,000.00. On July 1, 1989 at about 12:40 in the morning a fire occurred. The respondent filed the insurance claim but the petition denied the same on the ground that the building was set on fire by two NPA rebels and that such loss was an excepted risk under par.6 of the conditions of the insurance policy that the insurance does not cover any loss or damage occasioned by among others, mutiny, riot, military or any uprising. Respondent filed an action for recovery of loss, damage or liability against petitioner and the Trial Court ordered the petition to pay the full value of the insurance. Issue: Whether or not the insurance corporation is exempted to pay based on the exception clause in the insurance policy. Held: The Supreme Court held that the insurance corporation has the burden of proof to show that the loss comes within the purview of the exception or limitation set-up. But the insurance corporation cannot use a witness to prove that the fire was caused by the NPA rebels on the basis that the witness learned this from others. Such testimony is considered hearsay and may not be received as proof of the tr uth of what he has learned. The petitioner, failing to prove the exception, cannot rely upon on exemption or exception clause in the fire insurance policy. The petition was granted.
FGU Insurance Corporation V. CA (2005)
G.R.No. 137775 March 31, 2005 Lessons Applicable: Loss caused by negligence of the insured (Insurance) Facts: •
Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged in the shipping business operating two common carriers M/T ANCO tugboat D/B Lucio barge - no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another. September 23 1979: San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T ANCO: 25,000 cases Pale Pilsen and 350 cases Cerveza Negra - consignee SMC’s Beer Marketing Division (BMD)-Estancia Beer Sales O"ce, Estancia, Iloilo 15,000 cases Pale Pilsen and 200 cases Cerveza Negra - consignee SMC’s BMD-San Jose Beer Sales O"ce, San Jose, Antique September 30, 1979: D/B Lucio was towed by the M/T ANCO arrived and M/T ANCO left the barge immediately The clouds were dark and the waves were big so SMC’s District Sales Supervisor, Fernando Macabuag, requested ANCO’s representative to transfer the barge to a safer place but it refused so around the midnight, the barge sunk along with 29,210 cases of Pale Pilsen and 500 cases of Cerveza Negra totalling to P1,346,197 When SMC claimed against ANCO it stated that they agreed that it would not be liable for any losses or damages resulting to the cargoes by reason of fortuitous event and it was agreed to be insured with FGU for 20,000 cases or P858,500 ANCO filed against FGU FGU alleged that ANCO and SMC failed to exercise ordinary diligence or the diligence of a good father of the family in the care and supervision of the cargoes RTC: ANCO liable to SMC and FGU liable for 53% of the lost cargoes CA a"rmed • •
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Issue: W/N FGU should be exempted from liability to ANCO for the lost cargoes because of a fortuitous event and negligence of ANCO Held: YES. A "rmed with modification. Third-party complainant is dismissed. Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and 1745 Nos. 5, 6, and 7 . . . •
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Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:
Flood, storm, earthquake, lightning, or other natural disaster or calamity;
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Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods . . .
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Caso fortuito or force majeure extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen, were inevitable not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid - not in this case other vessels in the port of San Jose, Antique, managed to transfer to another place To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. There must have been no contributory negligence on the part of the common carrier. there was blatant negligence on the part of M/T ANCO’s crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMC’s representatives to have the barge transferred to a safer place When evidence show that the insured’s negligence or recklessness is so gross as to be su"cient to constitute a willful act, the insurer must be exonerated. ANCO’s employees is of such gross character that it amounts to a wrongful act which must exonerate FGU from liability under the insurance contract both the D/B Lucio and the M/T ANCO were blatantly negligent •
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Travellers Insurance & Surety Corporation vs. Hon.Court of Appeals & Vicente Mendoza G.R. No. 82036. May 22, 1997
Facts: Vicente Mendoza, Jr. as heir of his mother (Feliza Vineza de Mendoza) who was killed in a vehicular accident, filed an action for damages against the erring taxicab driver (Rodrigo Dumlao), the owner (Armando Abellon) of the taxicab (Lady Love Taxi with Plate No. 438-HA Pilipinas Taxi 1980) and the alleged insurer of the vehicle which featured in the vehicular accident. The erring taxicab was allegedly covered by a third-party liability insurance policy issued by petitioner Travellers Insurance & Surety Corporation. Petitioner was included in the complaint as the compulsory insurer of the said taxicab under Certificate of Cover No. 1447785-3. The trial court rendered judgment in favor of private respondent and ordered Rodrigo Dumlao, Armando Abellon and petitioner to pay private respondent death indemnity, moral damages, exemplary damages, attorney’s fees and other litigation expenses, jointly and severally. The decision was a"rmed by the CA and the subsequent MR was denied. Hence this petition. Issue: Whether petitioner is liable to private respondent? Held: NO. I. The right of the person injured to sue the insurer of the party at fault (insured), depends on whether the contract of insurance is intended to benefit third persons also or on the insured. And the test applied has been this: Where the contract provides for indemnity against liability to third persons, then third persons to whom the insured is liable can sue the insurer. Where the contract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged by him thru payment to third persons, said third persons’ recourse being thus limited to the insured alone.” The trial court did not distinguish between the private respondent’s cause of action against the owner and the driver of the Lady Love taxicab and his cause of action against petitioner. The former is based on torts and quasi-delicts while the latter is based on contract. Confusing these two sources of obligations as they arise from the same act of the taxicab fatally hitting private respondent’s mother, and in the face of overwhelming evidence of the reckless imprudence of the driver of the Lady Love taxicab, the trial court brushed aside its ignorance of the terms and conditions of the insurance contract and forthwith found all three - the driver of the taxicab, the owner of the taxicab, and the alleged insurer of the taxicab - jointly and severally liable for actual, moral and exemplary damages as well as attorney’s fees and litigation expenses. This present to the insurance company concerned a written notice of claim setting forth the amount of his loss. no cause of action accrues under such insurance contract.P. Notice of claim must be filed within six months from date of the accident. however. and/or the nature. extent and duration of the injuries sustained as certified by a duly licensed physician. Blg. 874 to categorically provide that “action or suit for recovery of damage due to loss or injury must be brought in proper cases. considering that it is the rejection of that claim that triggers the running of the one-year prescriptive period to bring suit in court. “While it is true that
where the insurance contract provides for indemnity against liability to third persons. Section 384 provided as follows: “Any person having any claim upon the policy issued pursuant to this chapter shall. with the indispensable requirement of having filed the written claim mandated by Section 384 of the Insurance Code before and after its amendment. during which time the Insurance Code had not yet been amended by Batas Pambansa (B.” II. the direct liability of the insurer under indemnity contracts against third-party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault.P.) Blg. without any unnecessary delay. otherwise the claimant’s right of action shall prescribe” [emphasis ours]. The liability of the insurer is based on contract. At the time of the vehicular incident which resulted in the death of private respondent’s mother. and there can be no opportunity for the insurer to even reject a claim if none has been filed in the first place. as in the instant case. otherwise the claimant’s right of action shall prescribe” [emphasis and underscoring supplied]. the claim shall be deemed waived. Absent such written claim filed by the person suing under an insurance contract. WHEREFORE. with the Commission or the Courts within one year from date of accident. such third persons can directly sue the insurer. with the Commissioner or the Courts within one year from denial of the claim. We have certainly ruled with consistency that the prescriptive period to bring suit in court under an insurance policy. the beneficiary or any person claiming under an insurance contract.is clearly a misapplication of the law by the trial court. begins to run from the date of the insurer’s rejection of the claim filed by the insured. 874. the instant petition is HEREBY GRANTED. Action or suit for recovery of damage due to loss or injury must be brought in proper cases. otherwise. This ruling is premised upon the compliance by the persons suing under an insurance contract. that of the insured is based on tort. . and respondent appellate court grievously erred in not having reversed the trial court on this ground. It is significant to note that the aforecited Section 384 was amended by B.
Sun v CA G.R. No. 92383 July 17, 1992
J. Cruz Facts: Lim accidentally killed himself with his gun after removing the magazine, showing o $, pointing the gun at his secretary, and pointing the gun at his temple. The widow, the beneficiary, sued the petitioner and won 200,000 as indemnity with additional amounts for other damages and attorney’s fees. This was sustained in the Court of Appeals then sent to the Supreme court by the insurance company. Issue: 1. Was Lim’s widow eligible to receive the benefits? 2. Were the other damages valid? Held: 1. Yes 2. No Ratio: 1. There was an accident. De la Cruz v. Capital Insurance says that "there is no accident when a deliberate act is performed unless some additional, unexpected, independent and unforeseen happening occurs which produces or brings about their injury or death." This was true when he fired the gun. Under the insurance contract, the company wasn’t liable for bodily injury caused by attempted suicide or by one needlessly exposing himself to danger except to save another’s life. Lim wasn’t thought to needlessly expose himself to danger due to the witness testimony that he took steps to ensure that the gun wasn’t loaded. He even assured his secretary that the gun was not loaded. There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. 2. “In order that a person may be made liable to the payment of moral damages, the law requires that his act be wrongful. The adverse result of an action does not per se make the act wrongful and subject the act or to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages may not be charged on those who may exercise it erroneously. For these the law taxes costs.” If a party wins, he cannot, as a rule, recover attorney's fees and litigation expenses, since it is not the fact of winning alone that entitles him to recover such damages of the exceptional circumstances enumerated in Art. 2208. Otherwise, every time a defendant wins, automatically the plainti$ must pay attorney's fees
thereby putting a premium on the right to litigate which should not be so. For those expenses, the law deems the award of costs as su"cient.”
FINMAN GENERAL ASSURANCE CORPORATION vs. CA and SURPOSA G.R. No. 100970 September 2, 1992
Facts: On October 22, 1986, deceased, Carlie Surposa was insured with under Finman General Teachers Protection Plan (an accident insurance) and Individual Policy with his parents, spouses Julia and Carlos Surposa, and brothers Christopher, Charles, Chester and Clifton, all surnamed, Surposa, as beneficiaries. The insured died on October 18, 1988 as a result of a stab wound inflicted by one of the 3 unidentified men as he and his cousin, Winston Surposa, were waiting for a ride on their way home along Rizal-Locsin Streets, Bacolod City. Private respondent and the other beneficiaries of said insurance policy filed a written notice of claim with the insurance company which denied said claim contending that murder and assault are not within the scope of the coverage of the insurance policy. The Insurance Commission rendered a decision holding the insurer is liable to pay the proceeds of the policy which was a"rmed by the CA. Issue: Whether the death of the insured was committed with deliberate intent which, by the very nature of a personal accident insurance policy, cannot be indemnified
Ruling: No, the death of the insured was no commited with deliberate intent. The generally accepted rule is that, death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act, unaccompanied by anything unforeseen except the death or injury. The happening, on the part of the insured is a pure accident. The insured died from an event that took place without his foresight or expectation, an event that proceeded from an unusual e$ect of a known cause and, therefore, not expected. Neither can it be said that where was a capricious desire on the part of the accused to expose his life to danger considering that he was just going home after attending a festival. Furthermore, the personal accident insurance policy involved herein specifically enumerated only ten (10) circumstances wherein no liability attaches to insurance company for any injury, disability or loss su$ered by the insured as a result of any of the stipulated causes. The principle of " expresso unius exclusio alterius" is therefore applicable in the instant case since murder and assault, not having been expressly included in the enumeration of the circumstances that would negate liability in said insurance policy, cannot be considered by implication to discharge the petitioner insurance company from liability for, any injury, disability or loss su$ered by the insured. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity (NCC 1377). Moreover,it is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary.
FINMAN GENERAL ASSURANCE CORPORATION, petitioner , vs. THE HONORABLE COURT OF APPEALS and JULIA SURPOSA, respondents. Aquino and Associates for petitioner. Public Attorney’s O! ce for private respondent. Ponente: NOCON
Facts: [P]etitioner filed this petition alleging grove abuse of discretion on the part of the appellate court in applying the principle of “expresso unius exclusio alterius” in a personal accident insurance policy since death resulting from murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the assailant in killing the former as indicated by the location of the lone stab wound on the insured. Therefore, said death was committed with deliberate intent which, by the very nature of a personal accident insurance policy, cannot be indemnified. Issue: Whether or not death petitioner is correct that results from assault or murder deemed are not included in the terms “accident” and “accidental” Held: NO. Petition for certiorari with restraining order and preliminary injunction was denied for lack of merit. Ratio: The terms “accident” and “accidental” as used in insurance contracts have not acquired any technical meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms have been taken to mean that which happen 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 e $ect of a known cause and, therefore, not expected. [I]t is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary.
Cebu Shipyard v William G.R. No. 132607 May 5, 1999
J. Purisima Facts: Cebu Shipyard and Engineering Works, Inc. repaired marine vessels while the Prudential is in the non-life insurance business. William Lines, Inc., the owner of M/V Manila City, a luxury passenger-cargo vessel, which caught fire and sank. At the time of the incident, subject vessel was insured with Prudential for P45M for hull and machinery. CSEW was insured for only Php 10 million for the shiprepairer’s liability policy. They entered into a contract where negligence was the only factor that could make CSEW liable for damages. Moreover, liability of CSEW was limited to only Php 1million for damages. The Hull Policy included an “Additional Perils (INCHMAREE)” Clause covering loss of or damage to the vessel through the negligence of, among others, ship repairmen. William brought Manila City to the dry dock of CSEW for repairs. The o "cers and cabin crew stayed at the ship while it was being repaired. After the vessel was transferred to the docking quay, it caught fire and sank, resulting to its total loss. William brought suit against CSEW alleging that it was through the latter’s negligence that the ship caught fire and sank. Prudential was impleaded as co-plainti$ after it had paid the value of insured items. It was subrogated to 45 million, or the value it claimed to indemnify. The trial court brought judgment against CSEW 45 million for the ship indemnity, 65 million for loss of income, and more than 13 million in other damages. The CA a "rmed the TC decision. CSEW contended that the cause of the fire was due to William’s hotworks on the said portion of the ship which they didn’t ask CSEW permission for. Prudential, on the other hand, blamed the negligence of the CSEW workers in the instance when they didn’t mind rubber insulation wire coming out of the air-conditioning unit that was already burning. Hence this MFR. Issue:
1. WON CSEW had “management and supervisory control“ of the ship at the time the fire broke out 2. WON the doctrine of res ipsa loquitur applies against the crew 3. WON Prudential has the right of subrogation against its own insured 4. WON the provisions limiting CSEW’s liability for negligence to a maximum of Php 1 million are valid Held: Yes. Yes. Yes. No. Petition denied. Ratio: 1. The that factual findings by the CA are conclusive on the parties and are not reviewable by this Court. They are entitled to great weight and respect when the CA a"rmed the factual findings arrived at by the trial court. The CA and the Cebu RTC are agreed that the fire which caused the total loss of subject M/V Manila City was due to the negligence of the employees and workers of CSEW. Furthermore, in petitions for review on certiorari, only questions of law may be put into issue. Questions of fact cannot be entertained. 2. For the doctrine of res ipsa loquitur to apply to a given situation, the following conditions must concur: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; and (2) that the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence. The facts and evidence reveal the presence of these conditions. First, the fire would not have happened in the ordinary course of things if reasonable care and diligence had been exercised. Second, the agency charged with negligence, as found by the trial court and the CA and as shown by the records, is CSEW, which had control over subject vessel when it was docked for annual repairs. What is more, in the present case the trial court found direct evidence to prove that the workers didn’t exercise due diligence in the care of subject vessel. The direct evidence substantiates the conclusion that CSEW was really negligent even without applying such doctrine. 3. Petitioner 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. This was wrong. The one who caused the fire has already been adjudicated by the courts as CSEW. Upon proof of payment by Prudential to William Lines, Inc., the former was subrogated to the r ight of the latter to indemnification from CSEW. As aptly ruled by the Court of Appeals, the law says: Art. 2207. If the plainti$’s 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. When Prudential paid the latter the total amount covered by its insurance policy, it was subrogated to the right of the latter to recover the insured loss from the liable party, CSEW. Petitioner theorizes further that there can be no right of subrogation as it is deemed a co-assured under the subject insurance policy with 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 e $ect. 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. 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 read from the insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates 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. The claim of CSEW that it is a co-assured is unfounded.
Then too, in the Additional Perils Clause of the same Marine Insurance Policy, it is provided that this insurance also covers loss of or damage to vessel directly caused by the negligence of charterers and repairers who are not assured. As correctly pointed out by respondent 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. 4. Although in this jurisdiction, contracts of adhesion have been consistently upheld as valid per se; as binding as an ordinary contract, the Court recognizes instances when reliance on such contracts cannot be favored especially where the facts and circumstances warrant that subject stipulations be disregarded. Thus, in ruling on the validity and applicability of the stipulation limiting the liability of CSEW for negligence to P1M only, the facts and circumstances vis-a-vis the nature of the provision sought to be enforced should be considered, bearing in mind the principles of equity and fair play. It is worthy to note that M/V Manila City was insured with Prudential for P45M. Upon thorough investigation by its hull surveyor, M/V Manila City was found to be beyond economical salvage and repair. The evaluation of the average adjuster also reported a constructive total loss. The said claim of William Lines, Inc., was then found to be valid and compensable such that Prudential paid the latter the total value of its insurance claim. Furthermore, it was ascertained that the replacement cost of the vessel, amounts to P55M. Considering the circumstances, it would unfair to limit the liability of petitioner to One Million Pesos only. To allow CSEW to limit its liability to P1M notwithstanding the fact that the total loss su$ered by the assured and paid for by Prudential amounted to P45M would sanction the exercise of a degree of diligence short of what is ordinarily required because, then, it would not be di"cult for petitioner to escape liability by the simple expedient of paying an amount very much lower than the actual damage su $ered by William.
Geagonia v CA G.R. No. 114427 February 6, 1995
Facts: Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1 year policy and covered thestock trading of dry goods. The policy noted the requirement that "3. The insured shall give notice to the Company of any insurance or insurances already e$ected, or which may subsequently be e$ected, covering any of the property or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured, and unless notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this policy shall be deemed forfeited, provided however, that this condition shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200,000.00." The petitioners’ stocks were destroyed by fire. He then filed a claim which was subsequently denied because the petitioner’s stocks were covered by two other fire insurance policies for Php 200,000 issued by PFIC. The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy. Geagonia then filed a complaint against the private respondent in the Insurance Commission for the recovery of P100,000.00 under fire insurance policy and damages. He claimed that he knew the existence of the other two policies. But, he said that he had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies and this requirement was not mentioned to him by the private respondent's agent. The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his creditor, had insurable interest on the stocks.
The Insurance Commission then ordered the respondent company to pay complainant the sum of P100,000.00 with interest and attorney’s fees. CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of the two other policies issued by the PFIC. Issues: 1. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance and thereby violated Condition 3 of the policy. 2. WON he is prohibited from recovering Held: Yes. No. Petition Granted Ratio: 1. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. His letter of 18 January 1991 to the private respondent conclusively proves this knowledge. His testimony to the contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a written admission made ante litem motam. It was, indeed, incredible that he did not know about the prior policies since these policies were not new or original. 2. Stated di$erently, provisions, conditions or exceptions in policies which tend to work a forfeiture of insurance policies should be construed most strictly against those for whose benefits they are inserted, and most favorably toward those against whom they are intended to operate. With these principles in mind, Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance, and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies obtained. Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200,000.00. What it had in mind was to discourage overinsurance. Indeed, the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may have an inducement to destroy the property for the purpose of collecting the insurance. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured.
Malayan Insurance Co., Inc. vs. Arnaldo (1987) G.R. No. L-67835 October 12, 1987
Lessons Applicable: Authority to Receive Payment/E$ect of Payment (Insurance) Laws Applicable: Article 64, Article 65, Section 77, Section 306 of the Insurance Code Facts: •
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June 7, 1981: Malayan insurance co., inc. (MICO) issued to Coronacion Pinca, Fire Insurance Policy for her property e$ective July 22, 1981, until July 22, 1982 October 15,1981: MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca December 24, 1981: payment of the premium for Pinca was received by Domingo Adora, agent of MICO January 15, 1982: Adora remitted this payment to MICO,together with other payments January 18, 1982: Pinca's property was completely burned February 5, 1982: Pinca's payment was returned by MICO to Adora on the ground that her policy had been cancelled earlier but Adora refused to accept it and instead demanded for payment Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein
petition was filed on July 2, 1981, or nineteen days later, there is no question that it is tardy by four days. Insurance Commission: favored Pinca MICO appealed Issue: W/N MICO should be liable because its agent Adora was authorized to receive it • •
Held: YES. petition is DENIED
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SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies. SEC. 306. xxx xxx xxx
Any insurance company which delivers to an insurance agant or insurance broker a policy or contract of insurance shall be demmed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon. Payment to an agent having authority to receive or collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal. SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be e $ective unless it is based on the occurrence, after the e$ective date of the policy, of one or more of the following: •
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(a)
non-payment of premium;
(b)
conviction of a crime arising out of acts increasing the hazard insured against;
(c)
discovery of fraud or material misrepresentation;
(d)
discovery of willful, or reckless acts or commissions increasing the hazard insured against;
(e)
physical changes in the property insured which result in the property becoming uninsurable;or
(f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code. As for the method of cancellation, Section 65 provides as follows:
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(1)
SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based. A valid cancellation must, therefore, require concurrence of the following conditions:
There must be prior notice of cancellation to the insured;
(2) The notice must be based on the occurrence, after the e $ective date of the policy, of one or more of the grounds mentioned; (3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy;
(4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based. All MICO's o$ers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section." without more It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981. Instead, she would have asked for a new insurance, e$ective on that date and until one year later, and so taken advantage of the extended period. Incidentally, Adora had not been informed of the cancellation either and saw no reason not to accept the said payment Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO sought to return it to Adora only on February 5, 1982, after it presumably had learned of the occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly suspicious
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Malayan Insurance Co, Inc. V CA (1986) G.R. No. L-59919 November 26, 1986
Lessons Applicable: Motor Vehicle Liability Insurance - Authorized Driver Cause (Insurance) Laws Applicable: Facts: •
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Aurelio Lacson ,owner of a Toyota NP Land Cruiser, Model 1972, bearing Plate No. NY-362 and with engine Number F-374325 insured with Malayan Insurance Co Dec. 1, 1975: Aurelio brought it to the shop of Carlos Jamelo for repair Dec. 2, 1975: Rogelio Mahinay, together with Johnny Mahinay, Rogelio Macapagong and Rogelio Francisco took and drove the Toyota Land Cruiser and it met an accident with Bo Carlos reported the incident to the police and instituted a criminal case for Qualified Theft against his employees Rogelio Mahinay pleaded guilty and was convicted of theft Aurelio was not allowed to claim on the ground that the claim is not covered by the policy inasmuch as the driver of the insured vehicle at the time of the accident was not a duly licensed driver Trial Court: favored Aurelio CA: A "rmed •
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Issue: W/N the taking of the vehicle by another person without permission or authority from the owner or person-in-charge thereof is su"cient to place it within the ambit of the word theft in the policy
Held: YES. • •
The damages therefore were sustained in the course of the unlawful taking Bacolod IFCs interest in the insured vehicle was in the amount of P2,000.00 only compared to plainti$'s P26,000.00 it is well to presume that Bacolod IFC did not deem it wise to be impleaded as party-plainti$ in this case. This inaction on the part of BIFC will only show that it was not really interested to intervene.
Philamlife vs. Auditor General G.R. 19255 January 18, 1968
Facts: On January 1950, Philippine American Life Insurance Co. (PHILAM) and, foreign corporation, American International Reinsurance Co.(AIRCO) entered into a reinsurance treaty where PHILAM agreed to reinsure with AIRCO the excess of life insurance on the lives of persons written by PHILAM. In their agreement it is also stipulated that even though PHILAM is already on a risk for its maximum retention under policies previously issued, when new policies are applied for and issued they can cede automatically any amount, within the limits specified.
No question ever arose with respect to the remittances made by Philamlife to Airco before July 16, 1959, the date of approval of the Margin Law. Subsequently, the Central Bank of the Philippines collected the sum of P268,747.48 as foreign exchange margin on Philamlife remittances to Airco made subsequent to July 16, 1959. PHILAM then filed with the CB a claim for refund for the same amount arguing that the reinsurance premiums remitted were paid on January 1950 and is therefore exempt from the 25% foreign exchange margin fee. The Acting legal counsel of the Monetary board resolved that reinsurance contracts entered into and approved by the Central Bank before July 17, 1959 are exempt from the payment of the 25% foreign exchange margin, even if remittances thereof are made after July 17, 1959. Still the Auditor of the CB denied PHILAM’s claim for refund and reconsideration was denied, hence the petition. Issue: Whether PHILAM’s claim was covered by the exemption Held: The Court held in the negative stating that for an exemption to come into play, there must be a reinsurance policy or, as in the reinsurance treaty provided, a “reinsurance cession” which may be automatic or facultative. To distinguish, a reinsurance policy is a contract of indemnity one insurer makes with another to protect the first insurer from a risk it has already assumed. On the other hand, a reinsurance treaty is merely an agreement between two insurance companies whereby one agrees to surrender and the other to accept reinsurance business pursuant to provisions specified in the treaty. Treaties are contracts for insurance; reinsurance policies or cessions are contracts of insurance. Although the reinsurance treaty precedes the Margin Law by over nine years nothing in that treaty obligates PHILAM to remit to AIRCO a fixed, certain, and obligatory sum by way of reinsurance premiums. All that the reinsurance treaty provides on this point is that PHILAM “agrees to reinsure.” The treaty speaks of a probability; not a reality. PHILAM’s obligation to remit reinsurance premiums becomes fixed and definite upon the execution of the reinsurance cession. Because, for every life insurance policy surrendered to AIRCO, PHILAM agrees to pay premium. It is only after a reinsurance cession is made that payment of reinsurance premium may be exacted, as it is only after PHILAM seeks to remit that reinsurance premium that the obligation to pay the margin fee arises.
