and Proof of Loss

FGU INSURANCE CORPORATION., Petitioner, -versus- THE COURT OF APPEALS, SAN

MIGUEL
CORPORATION, and ESTATE OF ANG GUI, represented by LUCIO, JULIAN, and JAIME, all
surnamed ANG, and CO TO, Respondent.
G.R. No. 137775, SECOND DIVISION, March 31, 2005, CHICO-NAZARIO, J.
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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. However, 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.
FACTS:
Anco Enterprises Company owned the M/T ANCO tugboat and the D/B Lucio barge which were
operated as common carriers. San Miguel Corporation entered into agreement with ANCO wherein
the latter will shipped its cargoes on board the D/B Lucio, for towage by M/T ANCO. They further
agreed that SMC will insure the cargoes in order to recover indemnity in case of loss, hence the
cargoes was insured with FGU Insurance Corporation.
ANCO failed to deliver to SMC’s consignee the cargoes. As a consequence of the incident, SMC filed a
complaint for Breach of Contract of Carriage and Damages against ANCO.
Subsequently, ANCO, with leave of court, filed a Third-Party Complaint against FGU on the ground
that 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. ANCO went on to assert that in case the
court will order ANCO to pay SMC’s claim, FGU should be held liable to indemnify or reimburse
ANCO
whatever amounts, or damages, it may be required to pay to SMC.
The trial court found ANCO liable to pay SMC and consequently FGU is liable to bear the 53% of the
amount of the lost cargoes because the risk insured against was the cause of the loss. The appellate
court affirmed in toto the decision of the lower court. Hence, the petition.
ISSUE
Whether or not FGU can be held liable under the insurance policy to reimburse ANCO for the loss of
the Cargoes? (NO)
RULING
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.
However, 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.
In the case at bar, ANCO’s representatives had failed to exercise extraordinary diligence required of
common carriers in the shipment of SMC’s cargoes. Such blatant negligence being the proximate
cause of the loss of the cargoes and is of such gross character that it amounts to a wrongful act
which
must exonerate FGU from liability under the insurance contract.
DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL LAW