JOHN ALEXANDER S.

BELDEROL INSURANCE CASE DIGESTS POST-MTX PART I

ALLIED BANKING CORPORATION vs. LIM SIO WAN

G.R. No. 133179 March 27, 2008

DOCTRINE​: ​Proximate Cause (Note: NOT an INSURANCE case!)

FACTS​: On November 14, 1983, Lim Sio Wan deposited with petitioner Allied Banking Corporation a money market placement of PhP 1,152,597.35 for a term of 31
days to mature on December 15, 1983. On December 5, 1983, a person claiming to be Lim Sio Wan called up Cristina So, an officer of Allied, and instructed the latter
to pre-terminate Lim Sio Wan’s money market placement, to issue a manager’s check representing the proceeds of the placement, and to give the check to one
Deborah Dee Santos who would pick up the check.

Santos arrived at the bank, which issued Manager’s Check for PhP 1,158,648.49, representing the proceeds of Lim Sio Wan’s money market placement. Said
manager’s check was deposited in the account of Filipinas Cement Corporation at Metropolitan Bank and Trust Co. with the forged signature of Lim Sio Wan as
indorser. Upon the maturity date of the money market placement, Lim Sio Wan went to Allied to withdraw it. She was then informed that the placement had been
pre-terminated upon her instructions. She denied giving any instructions and receiving the proceeds thereof. She desisted from further complaints when she was
assured by the bank’s manager that her money would be recovered.

On January 24, 1984, Lim Sio Wan, realizing that the promise that her money would be recovered would not materialize, sent a demand letter to Allied asking for the
payment of the first placement. Allied refused to pay Lim Sio Wan, claiming that the latter had authorized the pre-termination of the placement and its subsequent
release to Santos. Consequently, Lim Sio Wan filed with the RTC a Complaint dated February 13, 1984 against Allied to recover the proceeds of her first money market
placement.

Allied claims that Metrobank is the proximate cause of the loss of Lim Sio Wan’s money. It points out that Metrobank guaranteed all prior indorsements inscribed on
the manager’s check, and without Metrobank’s guarantee, the present controversy would never have occurred.

ISSUE: Is Allied Bank liable along with Metrobank for the conversion of Lim Sio Wan’s funds?

RULING: Yes. ​Proximate cause is "that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and
without which the result would not have occurred." ​Thus, there is an efficient supervening event if the event breaks the sequence leading from the cause to the
ultimate result. To determine the proximate cause of a controversy, the question that needs to be asked is: If the event did not happen, would the injury have resulted?
If the answer is NO, then the event is the proximate cause.

In the instant case, the trial court correctly found Allied negligent in issuing the manager’s check and in transmitting it to Santos without even a written authorization.
In fact, Allied did not even ask for the certificate evidencing the money market placement or call up Lim Sio Wan at her residence or office to confirm her instructions.
Both actions could have prevented the whole fraudulent transaction from unfolding. Allied’s negligence must be considered as the proximate cause of the resulting
loss.
Petition PARTLY GRANTED. CA and RTC Decisions AFFIRMED with MODIFICATION for both Banks to equitably bear the injury in proportion to their degree of
negligence.

PARIS-MANILA PERFUMERY CO. vs. PHOENIX ASSURANCE CO., LTD.

G.R. No. L-25845 December 17, 1926

DOCTRINE: ​Burden of Proof in case of LOSS by EXCEPTED RISKS

FACTS: On May 22, 1924, defendant issued to plaintiff a fire insurance policy in the sum of P13,000 upon the property of the plaintiff at No. 1 Calle Cisneros,
Cavite. With the knowledge of the defendant, the property was also insured in two other companies, one for P1,200, and the other for P5,000. On July 4, 1924, the
property covered by the insurance was completely destroyed by fire for the total loss to the plaintiff of P38.025.56. According to plaintiff, defendant wrongfully and
unjustly refused to pay it.

As a special defense, defendant alleged that "the policy of insurance did not cover any loss or damage occasioned by explosion," and that the loss was occasioned by
an explosion, and was not covered by the policy.

ISSUE: Is the loss an excepted risk, and therefore defendant is not liable?

RULING: In the absence of proof, NO. The real cause of the fire is more or less a matter of conjecture, upon which there is little, if any, evidence. There is no
evidence as to whether the fire was started before or after the explosion. Neither is there any competent testimony as to the cause of the explosion. The fire may
have started from any one of a number of reasons. But in the final analysis, the fact remains that there was a fire, and that the plaintiffs property was destroyed. It is
true that it may be that the explosion was the primary cause of the fire, but that is only a matter of conjecture, and upon that point, the burden of proof was upon
the defendant.

Section 6 of the policy excludes only the damages which are the direct result of the explosion itself, and that it does not except damages which occurred from the fire
occuring after the explosion, even though the explosion may have been the primary cause of the fire. But assuming, without deciding, that if it be a fact that the fire
resulted from an explosion that fact, if proven, would be a complete defense, the burden of the proof of that fact is upon the defendant, and upon that point, there is
a failure of proof. There is no competent evidence as to whether the explosion caused the fire or the fire caused the explosion.

The defendant having issued its policy which was in legal force and effect at the time of the fire, it is bound by its terms and conditions, and the property having been
destroyed, the burden of proof was upon the defendant to show that it was exempt from liability under the terms and conditions of the policy, and upon that point,
there is a failure of proof.

Judgment of lower court AFFIRMED.

PRATS & COMPANY vs. PHOENIX INSURANCE COMPANY

G.R. No. L-28607 February 21, 1929

DOCTRINE: ​LOSS by WILLFUL ACT or CONNIVANCE by INSURED

FACTS: Plaintiff sued defendant for the purpose of recovering the sum of P117,800.60, with interest, by reason of a loss alleged to have been sustained by the
plaintiff, on August 21, 1924, from a fire, it being alleged that said loss was covered by policy for the sum of P200,000, issued by the defendant company to the
plaintiff. For answer, the defendant, Phoenix Insurance Co., admitted the insurance of the policy of insurance but, by way of special defense, alleged, among other
things, that the fire in question had been set by the plaintiff, or with its connivance, and that the plaintiff had submitted under oath to the defendant a fraudulent
claim of loss, in contravention of the express terms of the policy.

With respect to the insurance upon this stock at the time of the fire, the following facts appear: In the month of June preceeding the fire, nine policies aggregating
P160,000 were taken out by Prats in the name of Hanna, Bejar & Co. on merchandise stored at 95 Plaza Gardenia. At the time these policies were taken out the
valuation of the goods then in said store could not have been more than P68,753. Total insurance of P410,000 were on the contents of the store at 95 Plaza Gardenia.
At the time, according to Prats himself, the evaluation of the merchandise then in the place was not in excess of P230,000. Furthermore, Prats, about this time,
caused the first nine policies which had been taken out in the name of Hanna, Bejar & Co. to be indorsed to Prats & Co., thereby making this firm the sole insured firm
with respect to this stock of merchandise. This fact was offered in evidence by the defendant, as tending to reveal a scheme by which, if a destructive fire should
occur, the plaintiff would be able to mislead the defendant as to the quantity of goods stored in the bodega. This item of proof, though circumstantial in its nature,
was undoubtedly competent and should have been admitted by the trial court.

ISSUE: Is the policy avoided by fraud on part of the plaintiff?

RULING: Yes. The proof submitted by the defendant tends to show that obscure manipulations were used by the plaintiff in the storing of merchandise at 95 Plaza
Gardenia and in the removal of part of the contents of the bodega before the fire. If overinsurance and the assemblage of goods at inflated values in the bodega at
95 Plaza Gardenia, together with the surreptitious abstraction of goods therefrom by the insured, have suggested a possible intention on the part of its manager to
realize improperly on its insurance policies, this inference is, in our opinion, but beyond reach of reasonable doubt by facts relative to the destruction of the place.
After the fire that a special investigation was made by the police department with the result that Deputy Chief Lorenzo came to the conclusion that the fire had
originated from an intentional act. Reflection upon the proof before the court engenders in us the same belief and conducts us to the further conclusion that Prats &
Co. was not alien to the deed.

Decision AFFIRMED.

EAST FURNITURE INC. vs. GLOBE & RUTGERS FIRE INSURANCE CO. OF NEW YORK
G.R. No. L-35848, G.R. No. L-35849, and G.R. No. L-35850 November 22, 1932

DOCTRINE: ​LOSS by WILLFUL ACT or CONNIVANCE by INSURED

FACTS: On March 2, 1929, a fire broke out in plaintiff's establishment, as a result of which the insured articles therein found were destroyed by the fire, within
the period marked in the policies the plaintiff presented to the insurance companies an inventory of the insured furniture which was destroyed by the fire, the value
of which, before or at the time of the fire, amounted to P52,061.99. ​Three actions were instituted in the Court of First Instance of Manila on March 25, 1929, to
recover the full amount of three fire insurance police aggregating P20,000.

The defendants interposed a general denial and as special defenses alleged in substance (1) that the fire in question was of intentional origin; and (2) that the claims
of loss presented by the plaintiff were false and fraudulent. After the trial, the lower court found that the claims presented by the plaintiff were notoriously
fraudulent, and, accordingly, sustained defendant's second special defense and dismissed the complaint in each of the three cases, with costs against the plaintiff.

ISSUE: Should the special defense of non-recovery on the policy due to wilful acts of the insured be sustained?

RULING: Yes. It appears from the record that at the time of the fire the plaintiff was heavily indebted to the Manila Finance & Discount Corporation, to the Bank of
the Philippine Islands, and to Attorney Alfonso E. Mendoza. This thus led to the conclusion that defendants' first special defense is well founded — that the fire in
question was of intentional origin and was caused with the connivance of the plaintiff. Neither the interest of the justice nor public policy would be promoted by an
omission of the courts to expose and condemn incendiarism once the same is established by competent evidence. It would tend to encourage rather than suppress
that great public menace if the courts do not expose the crime to public condemnation when the evidence in a case like the present shows that it has really been
committed.

Condition 12 of each of the insurance policies sued upon 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; or, if the loss or
damage be occasioned by the wilful act, or with the connivance of the Insured, — all benefit under this policy shall be forfeited."

Judgment appealed from AFFIRMED.

FGU INSURANCE CORPORATION vs. CA

G.R. No. 137775 and G.R. No. 140704 March 31, 2005

DOCTRINE: ​LOSS caused by NEGLIGENCE of the INSURED

FACTS: Anco Enterprises Company, a partnership between Ang Gui and Co To, owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as
common carriers. On 23 September 1979, San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T ANCO,
certain cargoes. The D/B Lucio was towed by the M/T ANCO all the way from Mandaue City to San Jose, Antique. When the barge and tugboat arrived at San Jose,
Antique, in the afternoon of 30 September 1979, the clouds over the area were dark and the waves were already big. SMC’s District Sales Supervisor, Fernando
Macabuag, requested ANCO’s representative to transfer the barge to a safer place because the vessel might not be able to withstand the big waves. ANCO’s
representative did not heed the request because he was confident that the barge could withstand the waves. At about ten to eleven o’clock in the evening of 01
October 1979, the crew of D/B Lucio abandoned the vessel because the barge’s rope attached to the wharf was cut off by the big waves. At around midnight, the
barge run aground and was broken and the cargoes of beer in the barge were swept away.

As a consequence of the incident, SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO. ANCO, in turn, impleaded insurer of cargo
FGU. According to ANCO, the loss of said cargoes occurred as a result of risks insured against in the insurance policy and during the existence and lifetime of said
insurance policy. FGU alleged that the Third-Party Plaintiff ANCO and Plaintiff SMC failed to exercise ordinary diligence or the diligence of a good father of the family
in the care and supervision of the cargoes insured to prevent its loss and/or destruction.

ISSUE: Is the insurer absolved by the (gross, not ordinary) negligence of the carrier?

RULING: Yes. One of the purposes for taking out insurance is to protect the insured against the consequences of his own negligence and that of his agents. Thus, it
is a basic rule in insurance that the carelessness and negligence of the insured or his agents constitute no defense on the part of the insurer. This rule however
presupposes that the loss has occurred due to causes which could not have been prevented by the insured, despite the exercise of due diligence.

The question now is whether there is a certain degree of negligence on the part of the insured or his agents that will deprive him the right to recover under the
insurance contract. We say there is. However, to what extent such negligence must go in order to exonerate the insurer from liability must be evaluated in light of
the circumstances surrounding each case. When evidence show that the insured’s negligence or recklessness is so gross as to be sufficient to constitute a willful act,
the insurer must be exonerated. The ordinary negligence of the insured and his agents has long been held as a part of the risk which the insurer takes upon himself,
and the existence of which, where it is the proximate cause of the loss, does not absolve the insurer from liability. But willful exposure, gross negligence, negligence
amounting to misconduct, etc., have often been held to release the insurer from such liability.

In the case at bar, both the trial court and the appellate court had concluded from the evidence that the crewmembers of both the D/B Lucio and the M/T ANCO were
blatantly negligent​. Such blatant negligence being the proximate cause of the loss of the cargoes amounting to One Million Three Hundred Forty-Six Thousand One
Hundred Ninety-Seven Pesos (P1,346,197.00)

This Court, taking into account the circumstances present in the instant case, concludes that the blatant negligence of 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.

CA Decision AFFIRMED with MODIFICATION