This action might not be possible to undo. Are you sure you want to continue?
v Court of Appeals 89 SCRA 543 April 30, 1979 Facts: Respondent Ngo Hing filed an application with petitioner Great Pacific Life Assurance Company (Pacific Life) for a twenty-year endowment policy in the life of Helen Go, his one year old daughter. Petitioner Lapulapu D. Mondragon, the branch manager, prepared application form using the essential data supplied by respondent. The latter paid the annual premium and Mondragon retained a portion of it as his commission. The binding deposit receipt was issued to respondent. Mondragon wrote his strong recommendation for the approval of the insurance application. However, Pacific Life disapproved the application since the plan was not available for minors below 7 years old but it can consider the same under another plan. The non-acceptance of the insurance plan was allegedly not communicated by Mondragon to respondent. Mondragon again asserted his strong recommendation. Helen Go died of influenza. Thereupon, respondent sought the payment of the proceeds of the insurance, but having failed in his effort, he filed an action for the recovery of the same. Hence the case at bar. Issue: Whether or not the insurance contract has been perfected on the ground that a binding receipt has been issued? Held: NO, it was not perfected. The binding deposit receipt is merely an acknowledgement, on behalf of the company, that the latter¶s branch office had received from the applicant the insurance premium and had accepted the application subject for processing by the insurance company; and that the latter will either approve or reject the same on the basis of whether or not the applicant is insurable on standard rates. The binding deposit receipt is merely conditional and does not insure outright. Where an agreement is made between the applicant and the agent, no liability shall attach until the principal approves the risk and a receipt is given by the agent. The acceptance is merely conditional, and is subordinated to the act of the company in approving or rejecting the application. Thus, in life insurance, a µbinding slip¶ or µbinding receipt¶ does not insure by itself.
G.R. No. 119599 March 20, 1997 MALAYAN INSURANCE CORPORATION, petitioner, vs. THE HON. COURT OF APPEALS and TKC MARKETING CORPORATION, respondents.
ROMERO, J.: Assailed in this petition for review on certiorari is the decision of the Court of Appeals in CA-G. R. No. 43023 1 which affirmed, with slight modification, the decision of the Regional Trial Court of Cebu, Branch 15. Private respondent TKC Marketing Corp. was the owner/consignee of some 3,189.171 metric tons of soya bean meal which was loaded on board the ship MV Al Kaziemah on or about September 8, 1989 for carriage from the port of Rio del Grande, Brazil, to the port of Manila. Said cargo was insured against the risk of loss by petitioner Malayan Insurance Corporation for which it issued two (2) Marine Cargo policy Nos. M/LP 97800305 amounting to P18,986,902.45 and M/LP 97800306 amounting to P1,195,005.45, both dated September 1989. While the vessel was docked in Durban, South Africa on September 11, 1989 enroute to Manila, the civil authorities arrested and detained it because of a lawsuit on a question of ownership and possession. As a result, private respondent notified petitioner on October 4, 1989 of the arrest of the vessel and made a formal claim for the amount of US$916,886.66, representing the dollar equivalent on the policies, for nondelivery of the cargo. Private respondent likewise sought the assistance of petitioner on what to do with the cargo. Petitioner replied that the arrest of the vessel by civil authority was not a peril covered by the policies. Private respondent, accordingly, advised petitioner that it might tranship the cargo and requested an
extension of the insurance coverage until actual transhipment, which extension was approved upon payment of additional premium. The insurance coverage was extended under the same terms and conditions embodied in the original policies while in the process of making arrangements for the transhipment of the cargo from Durban to Manila, covering the period October 4 - December 19, 1989. However, on December 11, 1989, the cargo was sold in Durban, South Africa, for US$154.40 per metric ton or a total of P10,304,231.75 due to its perishable nature which could no longer stand a voyage of twenty days to Manila and another twenty days for the discharge thereof. On January 5, 1990, private respondent forthwith reduced its claim to US$448,806.09 (or its peso equivalent of P9,879,928.89 at the exchange rate of P22.0138 per $1.00) representing private respondent's loss after the proceeds of the sale were deducted from the original claim of $916,886.66 or P20,184,159.55. Petitioner maintained its position that the arrest of the vessel by civil authorities on a question of ownership was an excepted risk under the marine insurance policies. This prompted private respondent to file a complaint for damages praying that aside from its claim, it be reimbursed the amount of P128,770.88 as legal expenses and the interest it paid for the loan it obtained to finance the shipment totalling P942,269.30. In addition, private respondent asked for moral damages amounting to P200,000.00, exemplary damages amounting to P200,000.00 and attorney's fees equivalent to 30% of what will be awarded by the court. The lower court decided in favor of private respondent and required petitioner to pay, aside from the insurance claim, consequential and liquidated damages amounting to P1,024,233.88, exemplary damages amounting to P100,000.00, reimbursement in the amount equivalent to 10% of whatever is recovered as attorney's fees as well as the costs of the suit. On private respondent's motion for reconsideration, petitioner was also required to further pay interest at the rate of 12% per annum on all amounts due and owing to the private respondent by virtue of the lower court decision counted from the inception of this case until the same is paid. On appeal, the Court of Appeals affirmed the decision of the lower court stating that with the deletion of Clause 12 of the policies issued to private respondent, the same became automatically covered under subsection 1.1 of Section 1 of the Institute War Clauses. The arrests, restraints or detainments contemplated in the former clause were those effected by political or executive acts. Losses occasioned by riot or ordinary judicial processes were not covered therein. In other words, arrest, restraint or detainment within the meaning of Clause 12 (or F.C. & S. Clause) rules out detention by ordinary legal processes. Hence, arrests by civil authorities, such as what happened in the instant case, is an excepted risk under Clause 12 of the Institute Cargo Clause or the F.C. & S. Clause. However, with the deletion of Clause 12 of the Institute Cargo Clause and the consequent adoption or institution of the Institute War Clauses (Cargo), the arrest and seizure by judicial processes which were excluded under the former policy became one of the covered risks. The appellate court added that the failure to deliver the consigned goods in the port of destination is a loss compensable, not only under the Institute War Clause but also under the Theft, Pilferage, and Nondelivery Clause (TNPD) of the insurance policies, as read in relation to Section 130 of the Insurance Code and as held in Williams v. Cole. 2 Furthermore, the appellate court contended that since the vessel was prevented at an intermediate port from completing the voyage due to its seizure by civil authorities, a peril insured against, the liability of petitioner continued until the goods could have been transhipped. But due to the perishable nature of the goods, it had to be promptly sold to minimize loss. Accordingly, the sale of the goods being reasonable and justified, it should not operate to discharge petitioner from its contractual liability. Hence this petition, claiming that the Court of Appeals erred: 1. In ruling that the arrest of the vessel was a risk covered under the subject insurance policies. 2. In ruling that there was constructive total loss over the cargo. 3. In ruling that petitioner was in bad faith in declining private respondent's claim. 4. In giving undue reliance to the doctrine that insurance policies are strictly construed against the insurer. In assigning the first error, petitioner submits the following: (a) an arrest by civil authority is not compensable since the term "arrest" refers to "political or executive acts" and does not include a loss caused by riot or by ordinary judicial process as in this case; (b) the deletion of the Free from capture or Seizure Clause would leave the assured covered solely for the perils specified by the wording of the policy itself; (c) the rationale for the exclusion of an arrest pursuant to judicial authorities is to eliminate collusion between unscrupulous assured and civil authorities. As to the second assigned error, petitioner submits that any loss which private respondent may have incurred was in the nature and form of unrecovered acquisition value brought about by a voluntary sacrifice sale and not by arrest, detention or seizure of the ship.
or Assigns. petitioner cannot submit for the first time on appeal its argument that it was wrong for the Court of Appeals to have ruled the way it did based on facts that would need inquiry into the evidence. or preserving the Property insured shall be considered as a Waiver. that this writing or Policy of INSURANCE shall be of as much Force and Effect as the surest Writing or policy of INSURANCE made in LONDON. C. Said clause reads: Touching the adventures which the said MALAYAN INSURANCE CO. any other vessel involved therein is performing) by a hostile act by or against a belligerent power and for the purpose of this warranty "power" includes any authorities maintaining naval. Thieves. his or their Executors. Losses. seizure. (Emphasis supplied) The exception or limitation to the "Perils" clause and the "All other perils" clause in the subject policies is specifically referred to as Clause 12 called the "Free from Capture & Seizure Clause" or the F. using the phrase 3 "perils of the sea" to encompass the wide and varied range of risks that were covered. will contribute according to the rate and quantity of the sum herein INSURED. thus: Warranted free of capture. but this warranty shall not exclude collision. In fact. in subsection 1. in the case of a collision.. Takings of the Sea. It also argued that petitioner. or quality soever.. petitioner did not raise as an issue the award of exemplary damages. It added that the policies clearly stipulate that they cover the risks of non-delivery of an entire package and that it was petitioner itself that invited and granted the extensions and collected premiums thereon. and Misfortunes. And it is agreed by the said COMPANY.C. are content to bear. being the sole author of the policies.As to the third issue. stranding. Restraints and Detainments of all Kings. and recovery of the said goods and merchandises. "arrests" should be strictly interpreted against it because the rule is that any ambiguity is to be taken contra proferentum. petitioner supported private respondent by accommodating the latter's request for an extension of the insurance coverage. Princess and Peoples. safeguards. without prejudice to this INSURANCE. Rovers. Consequently. to the charges whereof the said COMPANY. INC. of what Nation. Men-of-War. Even if inquiry into the facts were possible. arrest. detriment. to sue. By way of a historical background. and of all other Perils. Executors. Suprisals. and travel for. The subject policies contain the "Perils" clause which is a standard form in any marine insurance policy. It cannot now. their Heirs. are contented. and ship. Barratry of the Master and Mariners. Enemies. & S. raise the same before this Court. Jettisons.1 of Section 1. & S. restraint or detainment. Likewise. And so the said MALAYAN INSURANCE COMPANY. petitioner alleges that its act of rejecting the claim was a result of its honest belief that the arrest of the vessel was not a compensable risk under the policies issued. saving. their factors. and the consequences thereof or of any attempt thereat. or damage of the said goods and merchandise or any part thereof . the F. AND in case of any loss or misfortune it shall be lawful to the ASSURED. Arrests. also from the consequences of hostilities and warlike operations. insurrection. Administrators. in and about the defence. Pirates. heavy weather or fire unless caused directly (and independently of the nature of the voyage or service which the vessel concerned or. (Emphasis supplied) However. servants and assigns. notwithstanding that it was then under no legal obligation to do so. Risk policies should be construed reasonably and in a manner as to make effective the intentions and expectations of the parties. or any part thereof. confessing themselves paid the Consideration due unto them for this INSURANCE at and after the rate arranged. to the ASSURED. they are of the Seas. The resolution of this controversy hinges on the interpretation of the "Perils" clause of the subject policies in relation to the excluded risks or warranty specifically stated therein. revolution. and to take upon them in this voyage. Letters of Mart and Counter Mart. the Institute War Clauses (Cargo) was deemed incorporated which. argued that when it appealed its case to the Court of Appeals. Further warranted free from the consequences of civil war. Fire. Should Clause 12 be deleted. provides: . the relevant current institute war clauses shall be deemed to form part of this insurance. Private respondent. for the first time. & c. contact with any fixed or floating object (other than a mine or torpedo). marine insurance developed as an all-risk coverage. such was not necessary because the coverage as ruled upon by the Court of Appeals is evident from the very terms of the policies. Clause which reads. military or air forces in association with power. Condition. for the true Performance of the Premises. or Acceptance of Abandonment. whether there be a declaration of war or not... that have come to hurt. AND it is expressly declared and agreed that no acts of the Insurer or Insured in recovering. and do hereby promise and bind themselves. Goods and Chattel. or civil strike arising therefrom or piracy. Clause was deleted from the policies. labour. on the other hand.
This Court finds it pointless for petitioner to maintain its position that it only insures risks of "arrest" occasioned by executive or political acts of government which is interpreted as not referring to those caused by ordinary legal processes as contained in the "Perils" Clause. or piracy.C.C. contact with any fixed or floating object (other than a mine or torpedo). revolution. & S. concluding that whether private respondent's claim is anchored on subsection 1. Clause may have originally been inserted in marine policies to protect against risks of war. Petitioner itself seems to be confused about the application of the F. it assumed the risk of arrest caused solely by executive or political acts of the government of the seizing state and thereby excludes "arrests" caused by ordinary legal processes. etc. at 71-73 [2d Ed. logically. seizure. It stated that "the F. . the arrest of the vessel by judicial authorities is an excluded risk. It has been held that a strained interpretation which is unnatural and forced. . Jurisprudentially." 7 In the same vein.1 of Section 1 of the Institute War Clauses. should. This interpretation becomes inevitable when subsection 1. etc. . & S. Black." This Court agrees with the Court of Appeals when it held that ". means that any "capture.C. such "arrest" would now become a covered risk under subsection 1. be avoided. 8 etc. . Clause was "arrest" occasioned by ordinary judicial process. & S. and the consequences thereof of hostilities or warlike operations. 4 This Court cannot agree with petitioner's assertions. the automatic incorporation of subsection 1.1 of Section 1 of the Institute War Clauses (Cargo) "pertained exclusively to warlike operations" and yet it also stated that "the deletion of the F. or civil strike arising therefrom. deletes the F. and for the purpose of this warranty "power" includes any authority maintaining naval. Although the F. This insurance covers: 1.1 of Section 1 of the Institute War Clauses which now includes in the coverage risks of arrest due to executive or political acts of a government but then still excludes "arrests" occasioned by ordinary legal processes when subsection 1." or the F. & S. 5 . and. insurrection.C. It further claims that on the strength of jurisprudence on the matter. Clause was "originally incorporated in insurance policies to eliminate the risks of warlike operations". etc.C.C.1 of Section 1 of the Institute War Clauses included "arrest" even if it were not a result of hostilities or warlike operations.C. its interpretation in recent years to include seizure or detention by civil authorities seems consistent with the general purposes of the clause. With the incorporation of subsection 1. Clause and the consequent incorporation of subsection 1. . even if were not a result of hostilities or warlike operations. as to lead to an absurd conclusion or to render the policy nonsensical. this Court agrees with the Court of Appeals and the private respondent that "arrest" caused by ordinary judicial process is deemed included among the covered risks. by all means. regardless of whether or not said "arrest" by civil authorities occurred in a state of war. However. but this warranty shall not exclude collision. seizure. since what was also excluded in the deleted F. Clause. arrest. "arrests" caused by ordinary judicial process is also a risk excluded from the Standard Form of English Marine Policy by the F. arrest. & S.C. This Court cannot help the impression that petitioner is overly straining its interpretation of the provisions of the policy in order to avoid being liable for private respondent's claim. it also claims that the parties intended to include arrests." In fact. stranding. Clause under the Institute War Clauses can only be operative in case of hostilities or warlike operations on account of its heading "Institute War Clauses.1 of Section 1 of the Institute War Clauses (Cargo) was to include "arrest. however. arrest.C.1 of Section 1 of the Institute War Clauses (Cargo). 6 In this regard. Clause.1 The risks excluded from the standard form of English Marine Policy by the clause warranted free of capture. it contended that subsection 1. . & S. thereafter incorporates subsection 1.C. & S.C. Gilmore & C.1 of Section 1 of the Institute War Clauses. It also averred that the F.C. 1975]).1 of Section 1 of the Institute War Clauses provided that "this insurance covers the risks excluded from the Standard Form of English Marine Policy by the clause "Warranted free of capture. .1." pertained exclusively to warlike operations if this Court strictly construes the heading of the said clauses. . Clause. Further warranted free from the consequences of civil war. Clause as well as that of subsection 1.1 of Section 1 of the Institute War Clauses (Cargo) or the F. petitioner itself averred that subsection 1. & S. heavy weather or fire unless caused directly (and independently of the nature on voyage or service which the vessel concerned or. whether there be a declaration of war or not. among others. particularly when it alleges that in the "Perils" Clause. detention.1 of section 1 of the Institute War Clauses (Cargo). Clause applies even if there be no war or warlike operations . it must be . . restraint or detainment. According to petitioner. & S. Petitioner cannot adopt the argument that the "arrest" caused by ordinary judicial process is not included in the covered risk simply because the F. (see generally G. rebellion. such as in the instant case. The Law of Admiralty Section 2-9. . military or air forces in association with a power. & S. . the term "arrests" would only cover those arising from political or executive acts. & S.1 of Section 1 of said Clauses should also have included "arrests" previously excluded from the coverage of the F. Clause which excludes risks of arrest occasioned by executive or political acts of the government and naturally. in the case of a collision any other vessel involved therein is performing) by a hostile act by or against a belligerent power. 9 Likewise. & S. . even if it were not the result of hostilities or warlike operations. Clause. also those caused by ordinary legal processes.
. "MV Asilda" left the port of Zamboanga in fine weather at eight o'clock in the evening of the same day. Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to preclude the insurer from noncompliance with its obligations. Clause and the consequent incorporation of subsection 1. and for whose benefit the exception is introduced. WHEREFORE.1 of Section 1 of the Institute War Clauses (Cargo) gave rise to ambiguity. If the risk of arrest occasioned by ordinary judicial process was expressly indicated as an exception in the subject policies. Cebu. 116940 June 11." a vessel owned and operated by respondent Felman Shipping Lines (FELMAN for brevity). 100367-PAG. this Court sees no need to discuss the other issues presented.R.500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu City for consignee Coca-Cola Bottlers 1 Philippines. J. under Marine Open Policy No. No. or exemption. BELLOSILLO. that which is most favorable to the insured is adopted. 1997 THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY. of a shipowner for loss of cargo due to its failure to observe the extraordinary diligence required by Art. Inc. the petition for review is DENIED and the decision of the Court of Appeals is AFFIRMED. Where restrictive provisions are open to two interpretations. Such interpretation 16 should result from the natural and reasonable meaning of language in the policy.: This case deals with the liability. 19 In view of the foregoing.. therefore. in other words. & S. 7. 15 An insurance contract should be so interpreted as to carry out the purpose for which the parties entered into the contract which is. unless no other result is possible from the language used.500 cases of 1-liter Coca-Cola softdrink bottles. par excellence. If a marine insurance company desires to limit or restrict the operation of the general provisions of its contract by special proviso. 1733 of the Civil Code as well as the right of the insurer to be subrogated to the rights of the insured upon payment of the insurance claim. to insure against risks of loss or damage to the goods. 17 Indemnity and liability insurance policies are construed in accordance with the general rule of resolving 18 any ambiguity therein in favor of the insured. there would have been no controversy with respect to the interpretation of the subject clauses.. G..borne in mind that such contracts are invariably prepared by the companies and must be accepted by the 10 insured in the form in which they are written. SO ORDERED. Inc. it should be construed liberally in favor of the insured and strictly against the insurer. 13 Obviously. petitioner. At around eight forty-five the following morning. being a contract of adhesion. any ambiguity therein should be resolved against the insurer. 7 July 1983. Any construction of a marine policy rendering it void 11 should be avoided. Be that as it may. the deletion of the F. the vessel sank in the waters of Zamboanga del Norte bringing down her entire cargo with her including the subject 7. respondents. exceptions to the general coverage are construed most strongly against the company. exception. Inc. Such policies will. 14 Even an express exception in a policy is to be construed against the underwriters by whom the policy is framed. The shipment was insured with petitioner Philippine American General Insurance Co. be construed strictly against the company in order to 12 avoid a forfeiture. INC.. A contract of insurance. it should express such limitation in clear and unmistakable language. COURT OF APPEALS and FELMAN SHIPPING LINES. loaded on board "MV Asilda. vs.C. where the contract or policy is prepared by the insurer. (PHILAMGEN for brevity). if any. On 6 July 1983 Coca-Cola Bottlers Philippines.
500 cases of Coca-Cola softdrink bottles were improperly stowed on deck. some of the cargo on deck were thrown overboard and seawater entered the engine room and cargo holds of the vessel. The ship captain stated that around four o'clock in the morning of 7 July 1983 he was awakened by the officer on duty to inform him that the vessel had hit a floating log. while the vessel possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the structure of the ship itself. the vessel was carrying 7. still PHILAMGEN could not recover from FELMAN since the assured (Coca-Cola Bottlers Philippines. In other words. The shifting of cargo took about an hour afterwhich he rang the engine room to resume full speed. 300 sacks of seaweeds. (b) whether the limited liability under Art. or to the negligence of the captain and his crew. 587 of the Code of Commerce should apply. Furthermore. in which case." Respondent denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN which paid its claim of P755. Thus the loss of the vessel and its entire shipment could only be attributed to either a fortuitous event. Nonetheless. "MV Asilda" was unseaworthy when it left the port of Zamboanga. 200 empty CO2 cylinders and an undetermined quantity of empty boxes for fresh eggs. Cebu plant. Consequently. He then ordered his crew to shift the cargo from starboard to portside until the vessel was balanced. After thirty minutes he observed that the vessel was listing slightly to starboard and would not correct itself despite the heavy rolling and pitching. it did not give PHILAMGEN the right of subrogation so as to permit it to bring an action in court as a subrogee. At that instance. 5 3 . and that.) had breached its implied warranty on the vessel's seaworthiness. In its complaint PHILAMGEN alleged that the sinking and total loss of "MV Asilda" and its cargo were due to the vessel's unseaworthiness as she was put to sea in an unstable condition. Inc. It further alleged that the vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list. At around eight forty-five. He ascribed the sinking to the entry of seawater through a hole in the hull caused by the vessel's collision with a partially submerged log. The lower court further ruled that assuming "MV Asilda" was unseaworthy. In a joint statement.. in which case. Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which disclaimed any liability for the loss. no liability should attach unless there was a stipulation to the contrary. He ordered his crew to shift the cargo back to starboard. (c) whether PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN. Shortly thereafter. "MV Asilda" capsized and sank. According to them. Art. respondent court held that the filing of notice of abandonment had absolved the shipowner/agent from liability under the limited liability rule. the payment made by PHILAMGEN to the assured was an undue. On 18 March 1992 PHILAMGEN appealed the decision to the Court of Appeals. The issues for resolution in this petition are: (a) whether "MV Asilda" was seaworthy when it left the port of Zamboanga. At that time he noticed that the weather had deteriorated with strong southeast winds inducing big waves. 587 of the Code of 2 Commerce. Resultantly. On appeal the Court of Appeals set aside the dismissal and remanded the case to the lower court for trial on the merits. in any event. 587 of the Code of Commerce should apply. On 29 August 1994 respondent appellate court rendered judgment finding "MV Asilda" unseaworthy for being top-heavy as 2. Perfunctorily.250. it was not seaworthy with respect to the cargo. and. FELMAN filed a petition for certiorari with this Court but it was subsequently denied on 13 February 1989. PHILAMGEN was not properly subrogated to the rights and interests of the shipper. the vessel suddenly listed to portside and before the captain could decide on his next move. On 28 February 1992 the trial court rendered judgment in favor of FELMAN. On 15 February 1985 FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor of PHILAMGEN was transmitted by the shipper. the shipowner. interests and ownership over "MV Asilda" together with her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art. the captain as well as the chief mate of the vessel confirmed that the weather was fine when they left the port of Zamboanga. on 29 November 1983 PHILAMGEN sued the shipowner for sum of money and damages. Since it was not legally owing. It ruled that "MV Asilda" was seaworthy when it left the port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the shipowner's surveyor attesting to its seaworthiness.00.500 cases of 1-liter Coca-Cola softdrink bottles.On 15 July 1983 the consignee Coca-Cola Bottlers Philippines. 4 They loaded the empty boxes for eggs and about 500 cases of Coca-Cola bottles on deck. On 17 February 1986 the trial court dismissed the complaint of PHILAMGEN. At about seven o'clock in the morning. wrong and mistaken payment. the appellate court denied the claim of PHILAMGEN on the ground that the assured's implied warranty of seaworthiness was not complied with. Inc. the master of the vessel ordered his crew to abandon ship. filed a claim with respondent FELMAN for recovery of damages it sustained as a result of the loss of its softdrink bottles that sank with "MV Asilda. FELMAN had abandoned all its rights. the master of the vessel stopped the engine because the vessel was listing dangerously to portside.
Several days after "MV Asilda" sank. Inc. its equipment and freightage as provided in Art. The strong winds and waves encountered by the vessel are but the ordinary vicissitudes of a sea voyage and as such merely contributed to its already unstable and unseaworthy condition. 587. the ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel. Considering that the ship's hatches were properly secured. The international rule is to the effect that the right of abandonment of vessels. Her having capsized and eventually sunk was bound to happen and was therefore in the category of an inevitable occurrence 6 (emphasis supplied). Art. the empty Coca-Cola cases recovered could have come only from the vessel's deck cargo. from the nature of their business and for reasons of public policy." The report. Art. It was top-heavy as an excessive amount of cargo was loaded on deck. Simply put. It cannot therefore escape liability through the expedient of filing a notice of abandonment of the vessel by virtue of Art. an estimated 2. Inc. submitted a report regarding the sinking of "MV Asilda. . This liability however can be limited through abandonment of the vessel. her stability would not have been affected and the vessel would not have been in any danger of capsizing. It is settled that carrying a deck cargo raises the presumption of unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the ship. was not able to rebut this presumption. FELMAN was equally negligent.The Elite Adjusters. On the second issue. Where the shipowner is likewise to be blamed. the shipowner. "(c)ommon carriers. . But from the moment that the vessel was utilized to load heavy cargo on its deck. we believe strongly that had her cargo been confined to those that could have been accommodated under deck. However. We subscribe to the findings of the Elite Adjusters. there are exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment. therefore. yet the distribution or stowage of the cargo on board was done in such a manner that the vessel was in top-heavy condition at the time of her departure and which condition rendered her unstable and unseaworthy for that particular voyage. and the Court of Appeals that the proximate cause of the sinking of "MV Asilda" was its being top-heavy. . does not apply to cases where the injury or average was occasioned by the shipowner's own fault.. . and it was not designed to carry a substantial amount or quantity of cargo on deck. we wish to call attention to the fact that this vessel was designed as a fishing vessel . as a legal limitation of a shipowner's liability. Therefore.500 cases of softdrink bottles were stowed on deck. 8 . was that the vessel was top-heavy which is to say that while the vessel may not have been overloaded. Finally." In the event of loss of goods. . which was adopted by the Court of Appeals. reads ² We found in the course of our investigation that a reasonable explanation for the series of lists experienced by the vessel that eventually led to her capsizing and sinking. . . the sinking of ship during heavy weather is not a frequent occurrence and is not likely to occur unless they are inherently unstable and unseaworthy . even given the prevailing weather conditions at that time of sinking. As such. 10 It must be stressed at this point that Art. We believe. 587 will not apply. and so hold that the proximate cause of the sinking of the M/V "Asilda" was her condition of unseaworthiness arising from her having been top-heavy when she departed from the Port of Zamboanga. 587 of the Code of Commerce. The inordinate loading of cargo deck resulted in the decrease of the vessel's metacentric height 7 thus making it unstable. it must be pointed out that ships are precisely designed to be able to navigate safely even during heavy weather and frequently we hear of ships safely and successfully weathering encounters with typhoons and although they may sustain some amount of damage. Nonetheless.500 empty Coca-Cola plastic cases were recovered near the vicinity of the sinking. Under Art 1733 of the Civil Code. Closer supervision on the part of the shipowner could have prevented this fatal miscalculation. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. In this connection. with regard to the allegation that the vessel encountered big waves. as where the loss or injury was due to the fault of the 9 shipowner and the captain. FELMAN. common carriers are presumed to have acted negligently. Contrary to the ship captain's allegations. and such situation will be covered by the provisions of the 11 Civil Code on common carrier. It was already established at the outset that the sinking of "MV Asilda" was due to its unseaworthiness even at the time of its departure from the port of Zamboanga. the vessel was rendered unseaworthy for the purpose of carrying the type of cargo because the weight of the deck cargo so decreased the vessel's metacentric height as to cause it to become unstable. 587 of the Code of Commerce is not applicable to the case at bar. 587 speaks only of situations where the fault or negligence is committed solely by the captain.. according to all the circumstances of each case . in this case it was established that "MV Asilda" was not designed to carry substantial amount of cargo on deck. evidence shows that approximately 2.
500 cases of 1liter Coca-Cola softdrink bottles is inevitable. Hence. or upon anything which is the subject of marine insurance. If the amount paid by the insurance company does not fully cover the injury or loss.00) plus legal interest thereon counted from 29 November 1983. 2212 and 2213 of the Civil Code. He also has full discretion in the choice of assurer that will underwrite a particular venture. Therefore. Inc. WHEREFORE. Having failed to rebut the presumption of fault. 100367PAG reads "(t)he liberties as per Contract of Affreightment the presence of the Negligence Clause and/or Latent Defect Clause in the Bill of Lading and/or Charter Party and/or Contract of Affreightment as between the Assured and the Company shall not prejudice the insurance.. 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. as what occurred in this case. If the plaintiff's property has been insured. when PHILAMGEN paid the claim of the bottling firm there was in effect a "voluntary payment" and no right of subrogation accrued in its favor. In Pan Malayan Insurance Corporation v." 16 The result of the admission of seaworthiness by the assurer PHILAMGEN may mean one or two things: (a) that the warranty of the seaworthiness is to be taken as fulfilled. Court of Appeals. the petition is GRANTED. or freightage.A.. 113 of the Insurance Code provides that "(i)n every marine insurance upon a ship or freight. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. or. The insertion of such waiver clauses in cargo policies is in recognition of the realistic fact that cargo owners cannot control the state of the vessel. 8 of the Institute Cargo Clauses (F. Thus it can be said that with such categorical waiver. . a warranty is implied that the ship is seaworthy." 15 The same clause is present in par. It is generally held that in every marine insurance policy the assured impliedly warrants to the assurer that the vessel is seaworthy and such warranty is as much a term of the contract as if expressly written on the 12 face of the policy. nor does it grow out of any privity of contract or upon payment by the insurance company of the insurance claim. pursuant to Arts. 14 The marine policy issued by PHILAMGEN to the Coca-Cola bottling firm in at least two (2) instances has dispensed with the usual warranty of worthiness. Seven Hundred Fifty-five Thousand Two Hundred and Fifty Pesos (P755. a ship is "seaworthy when reasonably fit to perform the service.. The seaworthiness of the vessel as between the Assured and the Assurers is hereby admitted. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. The right of subrogation is not dependent upon. In other words. the date of judicial demand. . The doctrine of subrogation has its roots in equity. PHILAMGEN is liable. and to encounter the ordinary perils of the voyage. equity 19 and good conscience ought to pay. 2207. the question of seaworthiness cannot be raised by the assurer without showing concealment or misrepresentation by the assured. . the liability of FELMAN for the loss of the 7. when PHILAMGEN paid it did so at its own risk. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO. And where the policy stipulates that the seaworthiness of the vessel as between the assured and the assurer is admitted. . 18 we said that payment by the assurer to the assured operates as an equitable assignment to the assurer of all the remedies which the assured may have against the third party whose negligence or wrongful act caused the loss. It accrues simply upon payment by the insurance company of the insurance claim. Thus Sec.In relation to the question of subrogation. Having disposed of this matter. INC.250. 20 SO ORDERED.) of the policy which states "(t)he seaworthiness of the vessel as between the Assured and Underwriters in hereby admitted . We need not belabor the alleged breach of warranty of seaworthiness by the assured as painstakingly pointed out by FELMAN to stress that subrogation will not work in this case. the payment made by PHILAMGEN to Coca-Cola Bottlers Philippines. contemplated by the parties to the policy." Thus it becomes the obligation of the cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition. gave the former the right to bring an action as subrogee against FELMAN. respondent appellate court found "MV Asilda" unseaworthy with reference to the cargo and therefore ruled that there was breach of warranty of seaworthiness that rendered the assured not entitled to the payment of is claim under the policy. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice. we move on to the legal basis for subrogation.P. PHILAMGEN's action against FELMAN is squarely sanctioned by Art. 114. Paragraph 15 of the Marine Open Policy No. In policies where the law will generally imply a warranty of seaworthiness. PHILAMGEN has accepted the risk of unseaworthiness so that if the ship should sink by unseaworthiness. He may have no control over the vessel but he has full control in the selection of the common carrier that will transport his goods. 2207 of the Civil Code which provides: Art. (b) that the risk of 17 unseaworthiness is assumed by the insurance company. it can only be excluded by terms in writing in the policy in the 13 clearest language." Under Sec.
L-30685 May 30. appellee should be paid the full face value of the policy. name company and date. approved the application and issued the corresponding policy. with his wife. The lower court rejected the appellant's theory and ordered the latter to pay appellee "the amount of P 20. with interest at the legal rate from July 24. appellant rationalized its thesis thus: . Ltd. 1964. Kwong Nam died of cancer of the liver with metastasis.virtualawlibrary virtual law library Appellant alleged that the insured was guilty of misrepresentation when he answered "No" to the following question appearing in the application for life insuranceHas any life insurance company ever refused your application for insurance or for reinstatement of a lapsed policy or offered you a policy different from that applied for? If. until paid. Kwong Nam applied for a 20-year endowment insurance on his life for the sum of P20.000. J.virtualawlibrary virtual law library Appellee brought the matter to the attention of the Insurance Commissioner.00. ever refused any application of Kwong Nam for insurance. the insured had in January. appellant. " virtual law library The Court of Appeals certified this appeal to Us. In its brief. 1963. This opinion of the Insurance Commissioner notwithstanding. 1962. On the same date. but this was declined by the insurance company. Thus notwithstanding the said insured answered 'No' to the [above] question propounded to him. On the same date. she submitted the required proof of death of the insured. On December 6. applied for reinstatement of his lapsed life insurance policy with the Insular Life Insurance Co.: virtual law library This is an appeal from the judgment of the Court of First Instance of Manila. As pointed out in the foregoing summary of the essential facts in this case. . and the latter. so.virtualawlibrary virtual law library . ESCOLIN. upon receipt of the required premium from the insured.. although later on approved for reinstatement with a very high premium as a result of his medical examination. Ltd. Appellant denied the claim on the ground that the answers given by the insured to the questions appealing in his application for life insurance were untrue.virtualawlibrary virtual law library On January 10.. his widow Ng Gan Zee presented a claim in due form to appellant for payment of the face value of the policy. Misrepresentation and concealment of material facts in obtaining the policy were pleaded to avoid the policy.00. 1962..G. ordering the appellant Asian-Crusader Life Assurance Corporation to pay the face value of an insurance policy issued on the life of Kwong Nam the deceased husband of appellee Ng Gan Zee. 1964. ASIAN CRUSADER LIFE ASSURANCE CORPORATION. DefendantAppellant. appellant refused to settle its obligation. after conducting an investigation. Mandamus. Neither is there any evidence that any other insurance company has refused any application of Kwong Nam for insurance.R.. 1 virtual law library The lower court found the argument bereft of factual basis. vs.000.virtualawlibrary virtual law library On May 12. 1983 NG GAN ZEE. appellee Ng Gan Zee as beneficiary. Francisco Y. as the same involves solely a question of law. the Hon. the date of the filing of the complaint. Plaintiff-Appellee.. and We quote with approval its disquisition on the matterOn the first question there is no evidence that the Insular Life Assurance Co. wrote the appellant that he had found no material concealment on the part of the insured and that.. No. All premiums had been religiously paid at the time of his death. therefore. and the costs.
"concealment exists where the assured had knowledge of a fact material to the risk. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant. nevertheless requires that fraudulent intent on the part of the insured be established to entitle the insurer to rescind the contract. but he designedly and intentionally withholds the same. and 19 cm. and which the other has not the means of ascertaining. Pacifico Yap. Claims that Tumor has been associated with ulcer of stomach. 'L'.. L-2 Stipulation of Facts. The Insular Life Assurance Co. The evidence before the Court does not clearly and satisfactorily establish that defense. known as a 'sub-total gastric resection was performed on the patient by Dr. to Kwong Nam in connection with said application for reinstatement and amendment. Tumor taken out was hard and of a hen's egg size. but fraudulent. 27 of the Insurance Law.e." 4 virtual law library It has also been held "that the concealment must..00 as it was in the lapsed policy. It results. misled or deceived into entering the contract or in accepting the risk at the rate of premium agreed upon? virtual law library The lower court answered this question in the negative. Ltd. good faith. his statement that said . in the absence of inquiries. approved the said application on April 24. According to said report. and virtual law library  The Surgical Pathology Report of Dr. and as to which he makes no warranty.. The alleged false statements given by Kwong Nam are as follows: Operated on for a Tumor [mayoma] of the stomach. 1962. Ltd. The evidence shows that the Insular Life Assurance Co. appellant argues that the insured's statement in his application that a tumor. Fu Sun Yuan the physician who treated Kwong Nam at the Chinese General Hospital on May 22. Elias Pantangco showing that the specimen removed from the patient's body was 'a portion of the stomach measuring 12 cm. constituted material concealment. was for the reinstatement and amendment of his lapsed insurance policy-Policy No. 1965). Dr. the Court finds that there is no misrepresentation on this matter. an operation. Sec." In the absence of evidence that the insured had sufficient medical knowledge as to enable him to distinguish between "peptic ulcer" and "a tumor". Sept. 1960." was removed during said operation. claims he is completely recovered.. Policy No. Exh. he gave the appellant's medical examiner false and misleading information as to his ailment and previous operation. be not only material.. therefore. or the fact must have been intentionally withheld.000.virtualawlibrary virtual law library On the bases of the above undisputed medical data showing that the insured was operated on for peptic ulcer".. Fu Sun Yuan had diagnosed the patient's ailment as 'peptic ulcer' for which. approved Kwong Nam's request for reinstatement and amendment of his lapsed insurance policy on April 24. No new policy was issued by the Insular Life Assurance Co. in good faith. To demonstrate the insured's misrepresentation. and honesty. 369531 was reinstated for the amount of P20. because of insured's aforesaid representation.virtualawlibrary virtual law library The question to be resolved may be propounded thus: Was appellant. as claimed by the appellant. involving the excision of a portion of the stomach. 1962. along the greatest dimension.. and We agree. Ltd. 'L'.virtualawlibrary virtual law library Section 27 of the Insurance Law [Act 2427] provides: Sec. 1962 [Exh. 27.00.." 5 virtual law library Assuming that the aforesaid answer given by the insured is false. about 2 years before he applied for an insurance policy on May 12.. 3 Thus. Such party a contract of insurance must communicate to the other. And as correctly observed by the lower court. the evidence shows that the application of Kwong Nam with the Insular Life Assurance Co. 369531 not an application for a 'new insurance policy. appellant directs Our attention to: virtual law library  The report of Dr.000. Yap. i.virtualawlibrary virtual law library . and fair dealing requires that he should communicate it to the assurer. The amount of the reinstated and amended policy was also for P20. 'L-l' and 'L-2']. 22.. along the lesser curvature with a diameter of 15 cm.00 only and not for P50. Now. The Court notes from said application for reinstatement and amendment. all facts within his knowledge which are material to the contract.00 as applied for by Kwong Nam [Exhs. Ltd. "hard and of a hen's egg size. 2 Appellant further maintains that when the insured was examined in connection with his application for life insurance.000. "misrepresentation as a defense of the insurer to avoid liability is an 'affirmative' defense. Such being the case. above-quoted. that the amount applied for was P20." virtual law library It bears emphasis that Kwong Nam had informed the appellant's medical examiner that the tumor for which he was operated on was "associated with ulcer of the stomach. that when on May 12. 1962 Kwong Nam answered 'No' to the question whether any life insurance company ever refused his application for reinstatement of a lapsed policy he did not misrepresent any fact.000. Operation was two  years ago in Chinese General Hospital by Dr.
COURT OF APPEALS and CKS DEVELOPMENT CORPORATION. as lessor. such statement must be presumed to have been made by him without knowledge of its incorrectness and without any deliberate intent on his part to mislead the appellant. . upon the face of the application. G.virtualawlibrary virtual law library SO ORDERED. The right to information of material facts maybe waived either by the terms of insurance or by neglect to make inquiries as to such facts where they are distinctly implied in other facts of which information is communicated. It would be inequitable now to allow the defendant to avoid liability under the circumstances. they waive the imperfection of the answer and render the omission to answer more fully immaterial. vs.: This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside a decision of respondent Court of Appeals.tumor was "associated with ulcer of the stomach. " should be construed as an expression made in good faith of his belief as to the nature of his ailment and operation. The undisputed facts of the case are as follows: 1. 1997 Spouses NILO CHA and STELLA UY CHA. textiles. . a question appears to be not answered at all or to be imperfectly answered. the court cannot understand why the defendant or its medical examiner did not make any further inquiries on such matters from the Chinese General Hospital or require copies of the hospital records from the appellant before acting on the application for insurance. respondents.virtualawlibrary virtual law library While it may be conceded that." virtual law library Finding no reversible error committed by the trial court. . 24271 provides as follows: Section 32. If the LESSEE obtain(s) the insurance thereof without the consent of the LESSOR then the policy is deemed assigned and transferred to the LESSOR for its own benefit. 6 virtual law library As aptly noted by the lower court. Indeed. on 5 October 1988. The fact of the matter is that the defendant was too eager to accept the application and receive the insured's premium.R. 124520 August 18. 2. petitioners. . . PADILLA.virtualawlibrary virtual law library Section 32 of Insurance Law [Act No. . One of the stipulations of the one (1) year lease contract states: 18. from the viewpoint of a medical expert. the information communicated was imperfect. as lessees.. J. 1 . goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the LESSOR. The LESSEE shall not insure against fire the chattels. entered into a lease contract with private respondent CKS Development Corporation (hereinafter CKS). No. INC. and the insurers issue a policy without any further inquiry. It has been held that where. the judgment appealed from is hereby affirmed. Petitioner-spouses Nilo Cha and Stella Uy-Cha. merchandise. the same was nevertheless sufficient to have induced appellant to make further inquiries about the ailment and operation of the insured.. and UNITED INSURANCE CO. "if the ailment and operation of Kwong Nam had such an important bearing on the question of whether the defendant would undertake the insurance or not. with costs against appellant Asian-Crusader life Assurance Corporation.
deleting however the awards for exemplary damages and attorney's fees. 7.. which provides: . the Regional Trial Court.00 as exemplary damages. fire broke out inside the leased premises.000.00) with the United Insurance Co. United refused to pay CKS. 4 The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. Insurable interest in the property insured must exist at the time the insurance takes effect and at the time the loss occurs. the latter filed a complaint against the Cha spouses and United. the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code. affirming the trial court decision.00 as attorney's fees and costs of suit. (hereinafter United) without the written consent of private respondent CKS. Manila. 3 Sec. it wrote the insurer (United) a demand letter asking that the proceeds of the insurance contract (between the Cha spouses and United) be paid directly to CKS. the following errors are assigned by petitioners to the Court of Appeals: I THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO DECLARE THAT THE STIPULATION IN THE CONTRACT OF LEASE TRANSFERRING THE PROCEEDS OF THE INSURANCE TO RESPONDENT IS NULL AND VOID FOR BEING CONTRARY TO LAW. 39328 rendered a decision ** dated 11 January 1996. morals. Hence. MORALS AND PUBLIC POLICY II THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO DECLARE THE CONTRACT OF LEASE ENTERED INTO AS A CONTRACT OF ADHESION AND THEREFORE THE QUESTIONABLE PROVISION THEREIN TRANSFERRING THE PROCEEDS OF THE INSURANCE TO RESPONDENT MUST BE RULED OUT IN FAVOR OF PETITIONER III THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PROCEEDS OF AN INSURANCE POLICY TO APPELLEE WHICH IS NOT PRIVY TO THE SAID POLICY IN CONTRAVENTION OF THE INSURANCE LAW IV THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PROCEEDS OF AN INSURANCE POLICY ON THE BASIS OF A STIPULATION WHICH IS VOID FOR BEING WITHOUT CONSIDERATION AND FOR BEING TOTALLY DEPENDENT ON THE WILL OF THE RESPONDENT CORPORATION. On appeal. 2 The core issue to be resolved in this case is whether or not the aforequoted paragraph 18 of the lease contract entered into between CKS and the Cha spouses is valid insofar as it provides that any fire insurance policy obtained by the lessee (Cha spouses) over their merchandise inside the leased premises is deemed assigned or transferred to the lessor (CKS) if said policy is obtained without the prior written consent of the latter.3. basic in the law on contracts that the stipulations contained in a contract cannot be contrary to law. In the present petition. Notwithstanding the above stipulation in the lease contract.000. respondent Court of Appeals in CA GR CV No. 6. It is. When CKS learned of the insurance earlier procured by the Cha spouses (without its consent).000. rendered a decision * ordering therein defendant United to pay CKS the amount of P335. On the day that the lease contract was to expire. Inc. 5. On 2 June 1992. Branch 6. In such a case. 4. of course.11 and defendant Cha spouses to pay P50. P20. 8. No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured. the Cha spouses insured against loss by fire the merchandise inside the leased premises for Five Hundred Thousand (P500. good customs. A motion for reconsideration by United was denied on 29 March 1996. based on its lease contract with the Cha spouses. 18.063. 18 of the Insurance Code provides: Sec. A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their merchandise is primarily a contract of indemnity. public order or public policy.
under the Insurance Code ² a special law ² be validly a beneficiary of the fire insurance policy taken by the petitioner-spouses over their merchandise. On 21 October 1969. representing the face value of the policy in the amount of P5. the Cha spouses. minus the unpaid premiums and interest thereon due for January and February. Ebrado filed with the insurer a claim for the proceeds of the policy as the designated beneficiary therein. Pascuala Vda. it cannot be denied that CKS has no insurable interest in the goods and merchandise inside the leased premises under the provisions of Section 17 of the Insurance Code which provide: Sec. Matters not . and every policy executed by way of gaming or wagering. On 25 September 1972. Buenaventura Cristor Ebrado was issued by the Insular Life Assurance Co. as amended) or even the new Insurance Code (PD 612. She asserts that she is the one entitled to the insurance proceeds. Insular Life stands liable to pay the coverage of the policy in an amount of P11. As the insurance policy was in force. Buenaventura C. in the sum of P36. Ebrado designated Carponia T. Policy 009929 on a whole-life plan for P5. 17. the trial court rendered judgment declaring. whether the person insured has or has not any interest in the property insured. vs. respondent CKS cannot. The word "interest" highly suggests that the provision refers only to the insured and not to the beneficiary. 1969.745. 28 October 1977] First Division.882. the Appellate Court certified the case to the Supreme Court as involving only questions of law. CV No. 1969. among others. Issue : Whether a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds thereof in case of death of the latter.R. Therefore. Rather. Carponia T. The insurer (United) cannot be compelled to pay the proceeds of the fire insurance policy to a person (CKS) who has no insurable interest in the property insured. although she admits that she and the insured Buenaventura C. Ebrado were merely living as husband and wife without the benefit of marriage. not the commonlaw wife. 28 October 1977) The Insular Life Assurance Company Ltd. awarding the proceeds of the fire insurance policy to petitioners Nilo Cha and Stella Uy-Cha. Martin (J): 5 concur Facts: On 1 September 1968. Ebrado as the revocable beneficiary in his policy. Article 2011 of the New Civil Code states: "The contract of insurance is governed by special laws. without the consent of CKS. From this judgment. Ebrado appealed to the Court of Appeals. The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for being contrary to law and/or public policy. This insurable interest over said merchandise remains with the insured. as the same could easily be circumvented by modes of insurance.882.27. Ebrado [GR L-44059. Every stipulation in a policy of Insurance for the payment of loss. Ebrado (GR L-44059.882. or that the policy shall be received as proof of such interest. is a separate and distinct issue which we do not resolve in this case. The proceeds of the fire insurance policy thus rightfully belong to the spouses Nilo Cha and Stella Uy-Cha (herein co-petitioners). the insurer commenced an action for Interpleader before the Court of First Instance of Rizal on 29 April 1970. In doubt as to whom the insurance proceeds shall be paid. SO ORDERED. but on 11 July 1976. the general rules of civil law should be applied to resolve this void in the Insurance Law. It is quite unfortunate that the Insurance Act (RA 2327. In the present case. de Ebrado also filed her claim as the widow of the deceased insured. as amended) does not contain any specific provision grossly resolutory of the prime question at hand. Ebrado disqualified from becoming beneficiary of the insured Buenaventura Cristor Ebrado and directing the payment of the insurance proceeds to the estate of the deceased insured. is void. Ebrado died as a result of an accident when he was hit by a falling branch of a tree. Buenventura C. The liability of the Cha spouses to CKS for violating their lease contract in that the Cha spouses obtained a fire insurance policy over their own merchandise. the prohibitory laws against illicit relationships especially on property and descent will be rendered nugatory. WHEREFORE.73. Ltd.00 and the refund of P18. Carponia T.00 plus the additional benefits for accidental death also in the amount of P5. 25. Otherwise. Section 50 of the Insurance Act which provides that "(t)he insurance shall be applied exclusively to the proper interest of the person in whose name it is made" cannot be validly seized upon to hold that the same includes the beneficiary.Sec. since a contract of insurance is personal in character.00 with a rider for Accidental Death Benefits for the same amount. Carponia T. He referred to her as his wife.. Summary: The Insular Life Assurance Company Ltd. Held: NO. vs. Carponia T.. Ebrado. 39328 is SET ASIDE and a new decision is hereby entered.00 paid for the premium due November. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof. the decision of the Court of Appeals in CA-G.
and the guilt of the donee may be proved by preponderance of evidence in the same action. the law plainly states that the guilt of the party may be proved "in the same action" for declaration of nullity of donation. with whom he has two children. (3) Those made to a public officer or his wife. Under American law. There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. The quantum of proof in criminal cases is not demanded. Policy considerations and dictates of morality rightly justify the institution of a barrier between common-law spouses in regard to property relations since such relationship ultimately encroaches upon the nuptial and filial rights of the legitimate family. A beneficiary is like a donee. descendants or ascendants by reason of his office. a beneficiary in a life insurance policy is no different from a donee. Article 739 of the new Civil Code provides that "the following donations shall be void: (1) Those made between persons who were guilty of adultery or concubinage at the time of donation. If legitimate relationship is circumscribed by these legal disabilities. These stipulations are nothing less than judicial admissions which. reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship. it would be sufficient if evidence preponderates upon the guilt of the consort for the offense indicated.expressly provided for in such special laws shall be regulated by this Code. the action for declaration of nullity may be brought by the spouse of the donor or donee. and the guilt of the donee may be proved by preponderance of evidence in the same action. no longer require proof and cannot be contradicted. the requisite proof of common-law relationship between the insured and the beneficiary has been conveniently supplied by the stipulations between the parties in the pre-trial conference of the case. 1. a policy of life insurance is considered as a testament and in construing it. the action for declaration of nullity may be brought by the spouse of the donor or donee. "any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make a donation to him. that during his lifetime." In essence. On the contrary. because from the premiums of the policy which the insured pays out of liberality. on the basis of these admissions. a judgment may be validly rendered without going through the rigors of a trial for the sole purpose of proving the illicit liaison between the insured and the beneficiary. So long as marriage remains the threshold of family laws. A conviction for adultery or concubinage is not exacted before the disabilities mentioned in Article 739 may effectuate. In the case referred to in No. in consideration thereof. definitely. Held : NO. the beneficiary will receive the proceeds or profits of said insurance. More specifically." When not otherwise specifically provided for by the Insurance Law. barred from receiving donations from each other. (2) Those made between persons found guilty of the same criminal offense. with more reason should an illicit relationship be restricted by these disabilities. it cannot even be gleaned from the aforequoted provision that a criminal prosecution is needed. Both the recipients of pure beneficence. And. . Issue : Whether a conviction for adultery or concubinage is exacted before the disabilities mentioned in Article 739 may effectuate. And under Article 2012 of the same Code. with regard to the disability on "persons who were guilty of adultery or concubinage at the time of the donation. As pointed out. In fact. It was agreed upon and stipulated therein that the deceased insured Buenaventura C. so far as possible treat it as a will and determine the effect of a clause designating the beneficiary by rules under which wills are interpreted. a life insurance policy is no different from a civil donation insofar as the beneficiary is concerned. As a consequence." Article 739 itself provides that "In the case referred to in No. A fortiori. as a consequence. Ebrado was married to Pascuala Ebrado with whom she has six legitimate children. 1. The mandate of Article 2012 cannot be laid aside: any person who cannot receive a donation cannot be named as beneficiary in the life insurance policy of the person who cannot make the donation. the proscription in Article 739 of the new Civil Code should equally operate in life insurance contracts. Both are founded upon the same consideration: liberality. the contract of life insurance is governed by the general rules of the civil law regulating contracts. Carponia Ebrado." Common-law spouses are." The underscored clause neatly conveys that no criminal conviction for the disqualifying offense is a condition precedent. the courts will. Herein. the deceased insured was living with his common-law wife.
Fighting his way out of the factory. Ty suffered a temporary total disability of his left hand which prevented hi from performing his work or labor necessary in the pursuance of his occupation. and the CHARTER INSURANCE CORPORATION. Ty¶s employer. an interpretation that would include the mere fracture or other temporary disability not covered by the policies would certainly be unwarranted. WHEREFORE. Ty was injured on the left hand by a heavy object. ³That loss of a hand shall mean the loss by amputation through the bones of the wrist.00. COURT OF APPEALS. all of which defined partial disability as loss of either hand byamp utatio n through the bones of the wrist. L-16138.Insurance Law case digests SY 2010-2011 Interpretation of insurance contracts DIOSDADO C. INC.. Issue: Whether or not the insurer is liable Held: The insurer was not liable. . the insurer shall be liable for P650. with costs against the plaintiff-appellant G. the decision appealed from is hereby affirmed. TY vs. 1997 MAYER STEEL PIPE CORPORATION and HONGKONG GOVERNMENT SUPPLIES DEPARTMENT. There was no such amputation. among others. express and specific that only amputation of the left hand should be considered as a loss thereof. We might add that the agreement contained in the insurance policies are clear. April 29. respondents. As a result. No. NO. FIRST NATIONAL SURETY & ASSURANCE CO.R. All that was found was that the physical injuries caused temporary total disability of Ty¶s left hand. petitioners. that for partial disability resulting to the loss of either hand. vs. 124050 June 19. G. It was further stated in the policies that. SOUTH SEA SURETY AND INSURANCE CO.R.´ A fire broke out which totally destroyed Broadway Cotton Factory. INC. 961 1 SCRA 1324 Facts: Petitioner obtained personal accident policies which stipulated. We can not go beyond the clear and express conditions of the insurance policies.
MSPC-1020. The trial court ruled in favor of petitioners. It held that the action is barred under Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17. J. costs of suit. 5 Private respondents elevated the case to respondent Court of Appeals.R. petitioner Hongkong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel Pipe Corporation (Mayer) to manufacture and supply various steel pipes and fittings. Inc. Petitioners filed a claim against private respondents for indemnity under the insurance contract. judgment is hereby rendered ordering the defendants jointly and severally. Mayer shipped the pipes and fittings to Hongkong as evidenced by Invoice Nos. (Charter). 1986. From August to October. and The Charter Insurance Corporation. It also noted that the insurance contracts executed by petitioner Mayer and private respondents are "all risks" policies which insure against all causes of conceivable loss or damage. citing Filipino Merchants Insurance Co.PUNO.. 1020. 1017 and 1022 with a total amount of US$149. and 3. petitioner Mayer insured the pipes and fittings against all risks with private respondents South Sea Surety and Insurance Co. when the goods reached Hongkong. while those covered by Invoice Nos. 1995 and its Resolution dated February 22. 1983. Inc.: This is a petition for review on certiorari to annul and set aside the Decision of respondent Court of 1 2 Appeals dated December 14. Inc. For their defense. Respondent Charter paid petitioner Hongkong the amount of HK$64. or those sustained due to fraud or intentional misconduct on the part of the insured. Private respondents refused to pay because the insurance surveyor's report allegedly showed that the damage is a factory defect. The only exceptions are those excluded in the policy. MSPC-1025. Nonetheless. 1986. It found that the damage to the goods is not due to manufacturing defects. Industrial Inspection certified all the pipes and fittings to be in good order condition before they were loaded in the vessel. as third-party inspector to examine whether the pipes and fittings are manufactured in accordance with the specifications in the contract. MSPC-1017 and MSPC-1022. more than two years from the time the goods were unloaded from the vessel. Alejandro (145 SCRA 42).00 were insured with respondent Charter. The pipes and fittings covered by Invoice Nos.30.904.000. it set aside the decision of the trial court and dismissed the complaint on the ground of prescription. petitioners filed an action against private respondents to recover the sum of HK$299. CV No.470. with legal rate of interest as of the filing of the complaint.30 representing the cost of repair of the damaged pipes.09 were insured with respondent South Sea.345.345. MSPC1014.75.. Section 3(6) of the Carriage of Goods by Sea Act provides that "the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. 45805 entitled Mayer Steel Pipe Corporation and Hongkong Government Supplies Department v. Petitioners Mayer and Hongkong jointly appointed Industrial Inspection (International) Inc. The respondent Court of Appeals erred in holding that petitioners' cause of action had already prescribed on the mistaken application of the Carriage of Goods by Sea Act and the doctrine of Filipino Merchants Co. 3 In 1983. Petitioners demanded payment of the balance of HK$299.. (South Sea) and Charter Insurance Corp. Inc. The dispositive portion of the decision states: WHEREFORE. MSPC-1014.772.30." Respondent court ruled that this provision applies not only to the carrier but also to the insurer. P100. MSPC-1015. Respondent court affirmed the finding of the trial court that the damage is not due to factory defect and that it was covered by the "all risks" insurance policies issued by private respondents to petitioner Mayer. private respondents averred that they have no obligation to pay the amount claimed by petitioners because the damage to the goods is due to factory defects which are not covered by the insurance policies. 4 Prior to the shipping.. 1015 and 1025 with a total amount of US$212. Alejandro. However. the sum equivalent in Philippine currency of HK$299. v. to pay the plaintiffs the following: 1. 2. it was discovered that a substantial portion thereof was damaged. On April 17.00 as and for attorney's fees. and .345. South Sea Surety Insurance Co. SO ORDERED. v. 1996 in CA-G. 6 Hence this petition with the following assignments of error: 1.
Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. agrees to indemnify another for loss or damage which he may suffer from a specified peril. the petition is GRANTED. the consignee or the insurer. Respondent court erred in applying Section 3(6) of the Carriage of Goods by Sea Act. It defines the obligations of the carrier under the contract of carriage.2. only the carrier's liability is extinguished if no suit is brought within one year. The ruling in Filipino Merchants should apply only to suits against the carrier filed either by the shipper. The latter case is governed by the Insurance Code.. The insurer filed the third-party complaint on January 9. 1995 and its Resolution dated February 22. 1978. the shipper filed a complaint against the insurer for recovery of a sum of money as indemnity for the loss and damage sustained by the insured goods. Thus. In Filipino Merchants. it was the shipper which filed a claim against the insurer. In that case. The court said that "the coverage of the Act includes the insurer of the goods. It does not. Such obligation prescribes in ten years. But it does not mean that the shipper may no longer file a claim against the insurer because the basis of the insurer's liability is the insurance contract. An insurance contract is a contract whereby one party. Under this provision. when private respondents issued the "all risks" policies to petitioner Mayer. it was the insurer which filed a claim against the carrier for reimbursement of the amount it paid to the shipper. The court held that the insurer was already barred from filing a claim against the carrier because under the Carriage of Goods by Sea Act. for a consideration known as the premium. In the case at bar. 1996 are hereby SET ASIDE and the Decision of the Regional Trial Court is hereby REINSTATED. When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by Sea Act applies to the insurer. the suit against the carrier must be filed within one year after delivery of the goods or the date when the goods should have been delivered. in accordance with Article 1144 of the New Civil Code. The basis of the shipper's claim is the "all risks" insurance policies issued by private respondents to petitioner Mayer." 10 The Filipino Merchants case is different from the case at bar. The insurer. The respondent Court of Appeals committed an error in dismissing the complaint. 11 An "all risks" insurance policy covers all kinds of loss other than those due to willful and fraudulent act 12 of the insured. more than one year after delivery of the goods on December 17. may no longer file a claim against the carrier beyond the one-year period provided in the law. filed a third-party complaint against the carrier for reimbursement of the amount it paid to the shipper. however. the consignee and/or the insurer on the other hand. v. A close reading of the law reveals that the Carriage of Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper. it meant that the insurer. SO ORDERED . Our ruling in Filipino Merchants Insurance Co. 7 The petition is impressed with merit. affect the relationship between the shipper and the insurer. 1977. in turn. No costs. like the shipper. But the liability of the insurer is not extinguished because the insurer's liability is based not on the contract of carriage but on the contract of insurance. Inc. 13 IN VIEW WHEREOF. Alejandro 8 and the other cases 9 cited therein does not support respondent court's view that the insurer's liability prescribes after one year if no action for indemnity is filed against the carrier or the insurer. The Decision of respondent Court of Appeals dated December 14. they bound themselves to indemnify the latter in case of loss or damage to the goods insured.
No. or which may subsequently be effected...000.)" with a mortgage clause reading: . 114427 February 6. GA-28146 and No. 31916. The petitioner is the owner of Norman's Mart located in the public market of San Francisco. he obtained from the private respondent fire insurance policy No. JR. COURT OF APPEALS and COUNTRY BANKERS INSURANCE CORPORATION." The petitioner declared in the policy under the subheading entitled CO-INSURANCE that Mercantile Insurance Co. 3 These policies indicate that the insured was "Messrs. J.C. On 22 December 1989. Agusan del Sur. 1995 ARMANDO GEAGONIA. for P100. F. fire of accidental origin broke out at around 7:30 p.00 86.00. vs. entitled "Country Bankers Insurance Corporation versus Armando Geagonia.130. was the co-insurer for P50.R. Discount Mart (Mr. Inc. all benefits under this policy shall be deemed forfeited. 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. the petitioner had in his inventory stocks amounting to P392. goods in process and/or inventories only hereby insured. 3340 which awarded the claim of petitioner Armando Geagonia against private respondent Country Bankers Insurance Corporation.00 (on credit) ²²²²² P392.m." reversing the decision of the Insurance Commission in I. by or on behalf of the Company before the occurrence of any loss or damage. Armando Geagonia. (hereinafter PFIC). F-14622 for P100. issued by the Cebu Branch of the Philippines First Insurance Co. The insured shall give notice to the Company of any insurance or insurances already affected.130. The period of the policy was from 22 December 1989 to 22 December 1990 and covered the following: "Stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business.00 each. On 27 May 1990. itemized as follows: Zenco Sales.000. GA-28144. Case No. DAVIDE. at the public market of San Francisco. Legaspi Gen. petitioner. covering any of the property or properties consisting of stocks in trade.50 1 The policy contained the following condition: 3. Inc.: Four our review under Rule 45 of the Rules of Court is the decision of the Court of Appeals in CA-G. Prop.000.000.G. The petitioner's insured stock-in-trade were completely destroyed prompting him to file with the private respondent a claim under the policy. respondents. Merchandise Cebu Tesing Textiles P55. Agusan del 2 Sur. and unless such 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..432. the private respondent denied the claim because it found that at the time of the loss the petitioner's stocks-in-trade were likewise covered by fire insurance policies No. On 28 December 1990. provided however. SP No.50.00.698. Inc.R. From 1989 to 1990.00.50 250.
These findings were based on the petitioner's testimony that he came to know of the PFIC policies only when he filed his claim with the private respondent and that Cebu Tesing Textile obtained them and paid for their premiums without informing him thereof. Cebu Tesing Textiles.00 as attorney's fees. 3340) for the recovery of P100. . and had it been mentioned.] xxx xxx xxx Please be informed that I have no knowledge of the provision requiring me to inform your office about my prior insurance under FGA-28146 and F-CEB-24758. ARMANDO GEAGONIA. He further asserted that the total of the amounts claimed under the three policies was below the actual value of his stocks at the time of loss.000.00.MORTGAGE: Loss. He admitted in the said letter that at the time he obtained the private respondent's fire insurance policy he knew that the two policies issued by the PFIC were already in existence. ² Phils. Tesing Textiles is indicated to be only the mortgagee of the goods insured but the party to which they were issued were the "DISCOUNT MART (MR. as his creditor.000. The policy states that "DISCOUNT MART (MR. Your representative did not mention about said requirement at the time he was convincing me to insure with you.00 with legal interest from the time the complaint was filed until fully satisfied plus the amount of P10. With costs. F-14622 and for 6 attorney's fees and costs of litigation. . You will note that at the time he talked to me until I decided to insure 11 9 7 . The Insurance Commission then decreed: WHEREFORE.00 under fire insurance policy No. not by the Tesing Textiles which is alleged to have taken out the other insurance without the knowledge of private respondent. the private respondent appealed to the Court of Appeals by way of a petition for review. he would not have withheld such information. 8 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. The petition was docketed as CA-G. which was P1. The body of the letter reads as follows. that it was Cebu Tesing Textiles which procured the PFIC policies without informing him or securing his consent. In its answer. I would have told him so. judgment is hereby rendered ordering the respondent company to pay complainant the sum of P100. (Annexes M and N). this requirement was not mentioned to him by the private respondent's agent. and that Cebu Tesing Textile. In its decision of 21 June 1993. SP No.000. 1462. He attached as Annex "AM" thereof his letter of 18 January 1991 which asked for the reconsideration of the denial. In its decision of 29 December 1993. In both invoices. CO-INSURANCE 4 DECLARED: P100. if any shall be payable to Messrs.000. Hence. Its motion for the reconsideration of the decision having been denied by the Insurance Commission in its 10 resolution of 20 August 1993. ." In is clear that it was the private respondent [petitioner herein] who took out the policies on the same property subject of the insurance with petitioner.000. 3 of Fire Policy No.000. In addition. he had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies. PROP)" was the assured and that "TESING TEXTILES" [was] only the mortgagee of the goods. The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy. The compulsory counterclaim of respondent is hereby dismissed. 31916. First CEB/F 24758. in failing to disclose the existence of these insurances private respondent violated Condition No. This is shown by Premium Invoices nos. the Court of Appeals 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. 46632 and 46630. If he only die or even inquired if I had other existing policies covering my establishment. Indeed private respondent's allegation of lack of knowledge of the provisions insurances is belied by his letter to petitioner [of 18 January 1991. 28144 that the insurance was taken in the name of private respondent [petitioner herein]. had insurable interest on the stocks. the premiums on both policies were paid for by private respondent.R. ARMANDO GEAGONIA). the private respondent specifically denied the allegations in the complaint and set up as its principal defense the violation of Condition 3 of the policy. however. The petitioner then filed a complaint 5 against the private respondent with the Insurance Commission (Case No. Cebu City as their interest may appear subject to the terms of this policy. It said: It is apparent from the face of Fire Policy GA 28146/Fire Policy No.
It has attained the status of a judicial admission and since its due execution and authenticity was not denied by the other party. 16 However. The petitioner claims that the said letter was not offered in evidence and thus should not have been considered in deciding the case. It is commonly known as the additional or "other insurance" clause and has been upheld as valid and as a warranty that no other insurance exists. whether he is precluded from recovering therefrom. a copy of this letter was attached to the petitioner's 12 complaint in I. and the same risk. and (b) if he had. otherwise the breach of an immaterial provision does not avoid the policy. Case No. The actual value of my stocks damaged by the fire was estimated by the Police Department to be P1." Such a condition is a provision which invariably appears in fire insurance policies and is intended to prevent an increase in the moral hazard. 1989 or five months before the fire. . the other insurance must be upon same subject 17 matter. is without merit. while Policy No.00 (Please see xerox copy of Police Report Annex "A"). violating Condition 3 of the policy. as correctly pointed out by the Court of Appeals.75. These divergent findings of fact constitute an exception to the general rule that in petitions for review under Rule 45. only questions of law are involved and findings of fact by the Court of Appeals are conclusive and binding upon this Court. . . shows my merchandise inventory was already some P595. . F-14622 is a condition which is not proscribed by law.000. WHEN IT DISMISSED THE CLAIM OF THE PETITIONER HEREIN AGAINST THE PRIVATE RESPONDENT. indeed. It was. incredible that he did not know about the prior policies since these policies were not new or original. the previous policy being F-24792.455. the same interest therein.with your company the two policies aforementioned were already in effect. The Court of Appeals disagreed and found otherwise in view of the explicit admission by the petitioner in his letter to the private respondent of 18 January 1991. GA-28144 was a renewal of Policy No. the Insurance Commission found that the petitioner had no knowledge of the previous two policies. WHEN IT REVERSED THE FINDINGS OF FACTS OF THE INSURANCE COMMISSION. 13 As to the first issue. the petitioner is bound by it even if it were not introduced as an independent evidence. 3440 as Annex "M" thereof and made integral part of the complaint. WHEN IT CONSIDERED AS EVIDENCE MATTERS WHICH WERE NOT PRESENTED AS EVIDENCE DURING THE HEARING OR TRIAL. 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. . Its incorporation in the policy is allowed by Section 75 of the Insurance Code 15 which provides that "[a] policy may declare that a violation of specified provisions thereof shall avoid it. the petitioner filed the instant petition. Its violation would thus avoid the policy. Sir. GA-28146 had been renewed twice. However. thereby. in order to constitute a violation. He contends therein that the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction: A ² . B ² . . Condition 3 of the private respondent's Policy No. . which was quoted in the challenged decision of the Court of Appeals. The second ground. for not disclosing such fact. . 14 We agree with the Court of Appeals that the petitioner knew of the prior policies issued by the PFIC. AND C ² .000. His motion to reconsider the adverse decision having been denied. xxx xxx xxx The letter contradicts private respondent's pretension that he did not know that there were other insurances taken on the stock-in-trade and seriously puts in question his credibility. His letter of 18 January 1991 to the private respondent conclusively proves this knowledge. I am only an ordinary businessman interested in protecting my investments. F-24758. . Therefore I would have no reason to withhold such information and I would have desisted to part with my hard earned peso to pay the insurance premiums [if] I know I could not recover anything. Policy No. A QUASI-JUDICIAL BODY CHARGED WITH THE DUTY OF DETERMINING INSURANCE CLAIM AND WHOSE DECISION IS ACCORDED RESPECT AND EVEN FINALITY BY THE COURTS. . The chief issues that crop up from the first and third grounds are (a) whether the petitioner had prior knowledge of the two insurance policies issued by the PFIC when he obtained the fire insurance policy from the private respondent. which is based on the Court of Appeals' reliance on the petitioner's letter of reconsideration of 18 January 1991.C. These will support my claim that the amount claimed under the three policies are much below the value of my stocks lost. My Income Statement as of December 31.
Cebu City as their interest may appear subject to the terms of this policy. to afford the greatest protection which the insured was endeavoring to secure when he applied for insurance. It must. the reason being. It is also a cardinal principle of law that forfeitures are not favored and that any construction which would result in the forfeiture of the policy benefits for the person claiming thereunder. may have been procured by a mortgagor under a contract duty to insure for the mortgagee's benefit." containing a collateral independent contract between the mortgagee and insurer. all benefits under this Policy shall be forfeited. or a rider making the policy payable to the mortgagee "as his interest may appear" may be attached. if it is possible to construe the policy in a manner which would permit recovery. and the insured will not be entitled to indemnity in case of loss. The mortgagee's insurable interest is to the extent of the debt. The mortgagee may be made the beneficial payee in several ways. He may become the assignee of the policy with the consent of the insurer. the policy is in fact in the form used to insure a mortgagor with loss payable clause. or in the 1930 case of Santa Ana vs. since the property is relied upon as security thereof. fully informs the authorized agent of his interest. will be avoided. provisions. even though the mortgage debt is equivalent to the full value of the property. Yap. and recognized as such by the insurer but not made a party to the contract himself. that although the mortgagee is himself the insured. vs. The reason for this is that. In the policy obtained by the mortgagor with loss payable clause in favor of the mortgagee as his interest may appear. 29 Stated differently. if any. which is the usual practice. Thus. and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage. It has been noted. or which may subsequently be effected covering any of the property hereby insured. and most favorably toward those against whom they are intended to operate. the mortgagee is only a beneficiary under the contract. . in which case the mortgagee acquires an equitable lien upon 21 the proceeds. without which such policy shall be null and void. however. separate insurances covering different insurable interests may be obtained by the mortgagor and the mortgagee. however.000. or the policy. It expressly provides that the 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. 25 The fire insurance policies issued by the PFIC name the petitioner as the assured and contain a mortgage clause which reads: Loss. or a "standard mortgage clause. however. the language of the contract was carefully chosen and deliberated upon by experts and legal advisers who had acted exclusively in the interest of the insurers and the technical language employed 31 therein is rarely understood by ordinary laymen. except for riders which may later be inserted. the mortgagor and the mortgagee have each an independent insurable interest therein and both interests may be one policy. 18 The mortgagor's insurable interest covers the full value 19 of the mortgaged property.00. as where he applies for a policy. 22 This kind of policy covers only such interest as the 23 mortgagee has at the issuing of the policy. On the other hand. not 20 exceeding the value of the mortgaged property. as. take out insurance for the benefit of the mortgagee. TESING TEXTILES." Condition 3 in the private respondent's policy No. A mortgagor may. shall be payable to MESSRS. Commercial Union Assurance Co. not a standard mortgage clause. be underscored that unlike the "other insurance" clauses involved in General Insurance and Surety Corp.As to a mortgaged property. 27 which read: The insured shall give notice to the company of any insurance or insurances already effected. F14622 does not absolutely declare void any violation thereof. On the other hand. pays the premiums. or the mere pledgee without such consent. undoubtedly. and obtains on the assurance that it insures him. or each may take out a separate policy covering his interest. and in insuring he is not insuring the property but his interest or lien thereon. may be attached. His insurable interest is prima facie the value mortgaged and extends only to the amount of the debt. either at the same or at separate times. Ng Hua 26 or in Pioneer Insurance & Surety Corp. Hence. vs. or the original policy may contain a mortgage clause. any act of the mortgagor which defeats his right will also defeat the right of the mortgagee. a mortgagee may also procure a policy as a contracting party in accordance with the 24 terms of an agreement by which the mortgagor is to pay the premiums upon such insurance. 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 30 inserted. by finding a waiver for such forfeiture. 28 which provided "that any outstanding insurance upon the whole or a portion of the objects thereby assured must be declared by the insured in writing and he must cause the company to add or insert it in the policy. for example." It is a cardinal rule on insurance that a policy or insurance contract is to be interpreted liberally in favor of the insured and strictly against the company. the insured sees the contract already in its final form and has had no voice in the selection or arrangement of the words employed therein. This is clearly a simple loss payable clause. though by its terms payable absolutely to the mortgagor.
. It rejected the theory that nationality of private corporation is determine by the character or citizenship of its controlling stockholders. respondent. and that the payment made by the petitioner to the respondent corporation during the Japanese military occupation was under pressure. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance. vs. 3340 is REINSTATED. PARAS. SO ORDERED.00. The present action was filed on August 6. Ramirez and Ortigas for petitioner. 1946. obtained from the petitioner .650 above mentioned. 1941. no double insurance exists. . dated April 9." and the portion regarding the insured's declaration on the subheading CO-INSURANCE that the co-insurer is Mercantile Insurance Co. in the Court of First Instance of Manila for the purpose of recovering from the respondent the sum of P92. The Court of Appeals overruled the contention of the petitioner that the respondent corporation became an enemy when the United States declared war against Germany. be meticulously analyzed. Costs against private respondent Country Bankers Insurance Corporation. The decision of the Court of Appeals in CA-G.000.000. Inc. A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. 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. 1942.. 1951 FILIPINAS COMPAÑIA DE SEGUROS. The theory of the petitioner is that the insured merchandise were burned up after the policy issued in 1941 in favor of the respondent corporation has ceased to be effective because of the outbreak of the war between the United States and Germany on December 10. C. 1941. After trial. after deducting their value. the total loss suffered by the respondent was fixed at P92. the respondent Corporation (though organized under and by virtue of the laws of the Philippines) being controlled by the German subjects and the petitioner being a company under American jurisdiction when said policy was issued on October 1.Filipinas Cia. Upon appeal to the Court of Appeals. Binondo Manila. 29333 in the sum of P1000. On February 27. in pursuance of the order of the Director of Bureau of Financing.R. perforce..650 on April 19. In due time the respondent submitted to the petitioner its claim under the policy. the insured may have an inducement to destroy the property for the purpose of collecting the insurance. & Co. The case is now before us on appeal by certiorari from the decision of the Court of Appeals. L-2294 May 25. G. 1941. 1943. The salvage goods were sold at public auction and. 1943. the building and insured merchandise were burned.. Inc. with costs.R. The petitioner refused to pay the claim on the ground that the policy in favor of the respondent had ceased to be in force on the date the United States declared war against Germany. goods in process and/or inventories only hereby insured. 31916 is SET ASIDE and the decision of the Insurance Commission in Case No. the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. HUENEFELD and CO. de Seguros. Philippine Executive Commission.: On October 1. the respondent corporation.J. Since the two policies of the PFIC do not cover the same interest as that covered by the policy of the private respondent. INC. CHRISTERN. or during the Japanese military occupation. The first conclusion is supported by the portion of the condition referring to other insurance "covering any of the property or properties consisting of stocks in trade. 711 Roman Street. The petitioner. Ewald Huenefeld for respondent.000. petitioner. and (b) the nullity of the policy shall only be to the extent exceeding P200.000. the Court of First Instance of Manila dismissed the action without pronouncement as to costs.. Indeed. relying on English and American cases which held that a corporation is a citizen of the country or state by and under the laws of which it was created or organized.00 of the total policies obtained. Furthermore.With these principles in mind. No. however. The non-disclosure then of the former policies was not fatal to the petitioner's right to recover on the private respondent's policy. covering merchandise contained in a building located at No. As earlier stated. the instant petition is hereby GRANTED. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value. Christern Huenefeld. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the 32 insured. paid to the respondent the sum of P92.650. the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200. the insurable interests of a mortgagor and a mortgagee on the mortgaged property are distinct and separate.00. fire policy No. we are of the opinion that Condition 3 of the subject policy is not totally free from ambiguity and must.000. in the sum of P50. WHEREFORE. SP No. What it had in mind was to discourage over-insurance. after payment of corresponding premium. the judgment of the Court of First Instance of Manila was affirmed.00.
Ed. we may add that. It was known that German and other enemy interests were cloaked by domestic corporation structure. to dwell at length on the authorities cited in support of the appealed decision. For that reason. in the amendments of the Trading with the Enemy Act during the last war. . all trading intercourse with the enemy. upon the life or lives of aliens engaged in service with the enemy. 9) 299. World War II revived the problem again. (6 Couch. Measures of blocking foreign funds. all acts which will increase. or receiving its protection. Court decisions were rendered on the basis of such newly enacted statutory provisions in determining enemy character of domestic corporation.. and it is inconsistent that one country should destroy its enemy's property and repay in insurance the value of what has been so destroyed. or that it should in such manner increase the resources of the enemy. include as did other legislations the applications of the control test and again. provides that "anyone except a public enemy may be insured. Court decisions sanctioned such administrative practice enacted under the First War Powers Act of 1941. The English and American cases relied upon by the Court of Appeals have lost their force in view of the latest decision of the Supreme Court of the United States in Clark vs. namely managed under the influence of individuals or corporations. It further prohibits insurance upon trade with or by the enemy. on December 8. 2427. 4. A corporation was subject to enemy legislation when it was controlled by enemies. or tend to increase. It was the English courts which first the Daimler case applied this new concept of "piercing the corporate veil." It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy. belligerent and neutral. exist. 5352-5353. In "Enemy Corporation" by Martin Domke. China Banking Corporation. of Ins. Effect of war. The United States did not. which prior thereto may have been lawful. A. and the commencement of war determines.) in section 8. commerce.) . decided on December 8. in Haw Pia vs. Cyc. (Supp. The purpose of war is to cripple the power and exhaust the resources of the enemy." It becomes unnecessary. as amended. or to do anything detrimental too their country's interest. Law. we already held that China Banking Corporation came within the meaning of the word "enemy" as used in the Trading with the Enemy Acts of civilized countries not only because it was incorporated under the laws of an enemy country but because it was controlled by enemies. alien subjects. the so called freezing regulations.* 45 Off Gaz. No. It was not only by legal ownership of shares that a material influence could be exercised on the management of the corporation but also by long term loans and other factual situations. and more recently. the incidents of control. in a state of utter exclusion. pp. or render it aid. and other administrative practice in the treatment of foreign-owned property in the United States allowed to large degree the determination of enemy interest in domestic corporations and thus the application of the control test. its income or resources. 92 Law. as to each other. the Court: "The property of all foreign interest was placed within the reach of the vesting power (of the Alien Property Custodian) not to appropriate friendly or neutral assets but to reach enemy interest which masqueraded under those innocent fronts. Uebersee Finanz Korporation. also all acts concerning the transmission of money or goods. Such prohibition includes all negotiations. a paper presented to the Second International Conference of the Legal Profession held at the Hague (Netherlands) in August. as in World War I. we have to rule that said respondent became an enemy corporation upon the outbreak of the war between the United States and Germany." which was adopted by the peace of Treaties of 1919 and the Mixed Arbitral established after the First World War. However. and all contracts relating thereto are thereby nullified. courts refused to apply this concept whereby the enemy character of an American or neutral-registered corporation is determined by the enemy nationality of the controlling stockholders. In Clark vs. 1947. therefore. Uebersee Finanz Korporation.. G. The Philippine Insurance Law (Act No. to various degrees. Advance Opinions. themselves considered as enemies. All individuals therefore. the Supreme Court of the United States definitely approved of the control theory. dealing with a Swiss corporation allegedly controlled by German interest. This being so. The United States of America did not adopt the control test during the First World War. . 148-153. The power of seizure and vesting was extended to all property of any foreign country or national so that no innocent appearing device could become a Trojan horse. this for the reason that the subjects of one country cannot be permitted to lend their assistance to protect by insurance the commerce or property of belligerent. or trading with the enemy. for like reasons. 1948 the following enlightening passages appear: Since World War I. all acts of voluntary submission to it. 1947. in which the controls test has been adopted. Courts refused to recognized the concept whereby American-registered corporations could be considered as enemies and thus subject to domestic legislation and administrative measures regarding enemy property. pp.There is no question that majority of the stockholders of the respondent corporation were German subjects. and are public enemies. . the determination of enemy nationality of corporations has been discussion in many countries. generally. who compose the belligerent powers. ² All intercourse between citizens of belligerent powers which is inconsistent with a state of war is prohibited by the law of nations. legislation on enemy property enacted in various countries during World War II adopted by statutory provisions to the control test and determined.
1981 covering Rafael (Rex) Verendia's residential building located at Tulip Drive. and during the war.. No. less the amount of the premium. Petitioner. the respondent was not entitled to any indemnity under said policy from the petitioner. F-18876 effective between June 23. 1993 FIDELITY & SURETY CO. beginning December 11. or for some other specified term it is plain that when the parties become alien enemies. 44. that should be returned by the petitioner for the unexpired term of the policy in question. INC. vs. the appealed decision is hereby reversed and the respondent corporation is ordered to pay to the petitioner the sum of P77. The . The Court of Appeals. the contractual tie is broken and the contractual rights of the parties. 1941. Sec. As a matter of fact. which grants insurance only from year. lost. elementary rules of justice (in the absence of specific provision in the Insurance Law) require that the premium paid by the respondent for the period covered by its policy from December 11. should be returned by the petitioner. even if the payment by the petitioner to the respondent was involuntary. 1943 copy of which was sent to your office and the concurrence therein of the Financial Department of the Japanese Military Administration. the Law on Insurance. Beverly Hills. vs.) The respondent having become an enemy corporation on December 10.208. so far as not vested. Petitioner. Verendia also insured the same building with two other companies. however. The payment of said claim.000.In the case of an ordinary fire policy. OF THE PHILIPPINES. p. MELO. So ordered. namely. in actual Philippines currency of P92. Philippine currency. Inc. COURT OF APPEALS and FIDELITY & SURETY CO. and since the insured goods were burned after December 10. merely obeyed the instruction of the Japanese Military Administration.R. Rizal in the amount of P385. 1941. the Court of Appeals held that "any intimidation resorted to by the appellee was not unjust but the exercise of its lawful right to claim for and received the payment of the insurance policy.) It results that the petitioner is entitled to recover what paid to the respondent under the circumstances on this case. 1941. However. and its judgment in favor of the respondent corporation was predicated on its conclusion that the policy did not cease to be in force. The Court of Appeals necessarily assumed that.00. Respondents. the insurance policy issued in its favor on October 1. well founded. 1941.33. by the petitioner (a Philippine corporation) had ceased to be valid and enforcible. Antipolo. However. Designated as beneficiary was the Monte de Piedad & Savings Bank. RAFAEL VERENDIA and THE COURT OF APPEALS. you are hereby ordered to pay the claim of Messrs. the petitioner will be entitled to recover only the equivalent. Huenefeld & Co. its action is not tenable in view of the ruling on the validity of the policy. and following the instruction of said authority. there can be no doubt that the Director of the Bureau of Financing. 1941. J. should be made by means of crossed check. Wherefore.650 paid on April 19." (Emphasis supplied. respondents. in ordering the petitioner to pay the claim of the respondent.: The two consolidated cases involved herein stemmed from the issuance by Fidelity and Surety Insurance Company of the Philippines (Fidelity for short) of its Fire Insurance Policy No. 1943. in deciding the case. 1941. Christern. (Vance. 1980 and June 23. 1993 RAFAEL (REX) VERENDIA." and that the ruling of the Bureau of Financing to the effect that "the appellee was entitled to payment from the appellant was. 75605 January 22.. in accordance with the rate fixed in the Ballantyne scale. 76399 January 22. OF THE PHILIPPINES. No.R. Without costs. as may be seen from the following: "In view of the findings and conclusion of this office contained in its decision on Administrative Case dated February 9." Factually. 112. stated that the main issue hinges on the question of whether the policy in question became null and void upon the declaration of war between the United States and Germany on December 10. G. in Philippine currency. G.
198l. the petition herein docketed as G. and The Development Insurance for P400. The complaint was later amended to include Monte de Piedad as an "unwilling defendant" (P. magistrates. the following day was a Sunday (p. 30. the petition for review on certiorari now docketed as G. Japson (142 SCRA ).chanroblesvirtualawlibrary chanrobles virtual law library Verendia appealed to the then Intermediate Appellate Court and in a decision promulgated on March 31. Zosa.) and after a motion for reconsideration was similarly brushed aside on July 22. but Fidelity had in the meantime filed its motion for reconsideration on April 24.R. 1986 (p. 16. To the same effect were the rulings in Gibbs vs. that Verendia maliciously represented that the building at the time of the fire was leased under a contract executed on June 25.chanroblesvirtualawlibrary chanrobles virtual law library On May 24.). Rollo of G. 611 ).chanroblesvirtualawlibrary chanrobles virtual law library The above cases notwithstanding and because the Rules of Court do not expressly prohibit the filing of a motion for extension of time to file a motion for reconsideration in regard to a final order or judgment. Inc. but instead of directly filing a motion for reconsideration within 15 days therefrom.chanroblesvirtualawlibrary chanrobles virtual law library Fidelity received a copy of the appellate court's decision on April 4.R. PDB-80-1913 expiring on May 12. we must first determine whether the decision of the appellate court may still be reviewed.00 under Policy No. and Joe vs. 1986. vs. Coquia.000. 75605 was initiated. The two petitions.).00. 76399) and thereafter given due course. 1981. The motion for extension was not filed on April 19. were consolidated (p. In sustaining the defenses set up by Fidelity. this Court through Justice Ozaeta already pronounced the doctrine that the pendency of a motion for extension of time to perfect an appeal does not suspend the running of the period sought to be extended (Garcia vs. the trial court rendered a decision. Fidelity. Fernando (4 SCRA 138 ). ibid. 32-33. F-48867 expiring on June 30. declaring that beginning one month from the promulgation of the resolution on May 30. No. King (20 SCRA 1120 ). JJ.).chanroblesvirtualawlibrary chanrobles virtual law library As early as 1944. 15. including those in the Court of Appeals. 160 ) Bello vs. refused payment under its policy. per Judge Rodolfo A. No. 1980. plus attorney's fees and litigation expenses. the appellate court reversed for the following reasons: (a) there was no misrepresentation concerning the lease for the contract was signed by Marcelo Garcia in the name of Roberto Garcia. 1986. inter-related as they are.Country Bankers Insurance for P56. 1986. legal interest thereon. 1986.000. 02895. and Ejercito (P). Fidelity filed on April 21. the Intermediate Appellate Court has personnel receiving pleadings even on Saturdays.chanroblesvirtualawlibrary chanrobles virtual law library Verendia filed a motion to expunge from the record Fidelity's motion for reconsideration on the ground that the motion for extension was filed out of time because the 15th day from receipt of the decision which fell on a Saturday was ignored by Fidelity.R. Rollo of G. or whether the same is beyond further judicial scrutiny. among other things. praying for payment of P385. The motion for extension was granted by the appellate court on April 30. when actually it was a Marcelo Garcia who was the lessee. 1986 - . Bartolome. Stated otherwise.. inquiry must be made into the issue of whether Fidelity could have legally asked for an extension of the 15-day reglementary period for appealing or for moving for reconsideration. Ortiz. 1986 which was the 15th day after receipt of the decision because said 15th day was a Saturday and of course. 54. for indeed.). CFI of Manila (80 Phil. No. (CA-G. 1986 (p.chanroblesvirtualawlibrary chanrobles virtual law library The motion to expunge was denied on June 17. Rollo of G. a motion for extension of 3 days within which to file a motion for reconsideration. 1980 to a certain Roberto Garcia. CV No. the appellate court denied Fidelity's motion for reconsideration and account thereof. 1986. 76399).chanroblesvirtualawlibrary chanrobles virtual law library While the three fire insurance policies were in force. Buenaventura 74 Phil. held sharply divided opinions on whether the period for appealing which also includes the period for moving to reconsider may be extended. and (b) Paragraph 3 of the policy contract requiring Verendia to give notice to Fidelity of other contracts of insurance was waived by Fidelity as shown by its conduct in attempting to settle the claim of Verendia (pp. the trial court ruled that Paragraph 3 of the policy was also violated by Verendia in that the insured failed to inform Fidelity of his other insurance coverages with Country Bankers Insurance and Development Insurance. 14.chanroblesvirtualawlibrary chanrobles virtual law library Answering the complaint. Subsequently. 27. 1986 (p. No. 16.R. ibid. No. the insured property was completely destroyed by fire on the early morning of December 28.R. 76399. ruling in favor of Fidelity. Record). Fidelity filed on March 31.chanroblesvirtualawlibrary chanrobles virtual law library Before we can even begin to look into the merits of the main case which is the petition for review on certiorari. ibid. thus prompting Verendia to file a complaint with the then Court of First Instance of Quezon City. 75605).000. or more specifically on October 21. before anything else. 1986 (p. so Verendia contended. 1983.R. ibid .00 under Policy No. The matter was not definitely settled until this Court issued its Resolution in Habaluyas Enterprises. No. Fidelity was accordingly informed of the loss and despite demands. averred that the policy was avoided by reason of over-insurance.
chanroblesvirtualawlibrary chanrobles virtual law library Basically a contract of indemnity. 1980. vs. These pieces of evidence belie Verendia's uncorroborated testimony that Marcelo Garcia. 195 SCRA 433 ). p. that all benefits under the policy shall be forfeited "If the claim be in any respect fraudulent. In view of the conflicting findings of the trial court and the appellate court on important issues in these consolidated cases and it appearing that the appellate court judgment is based on a misapprehension of facts. having presented a false declaration to support his claim for benefits . However. . for which reason we now turn our attention to G.300. or after the dictum in Habaluyas had taken effect. July 27. "1"). 187 SCRA 652 ).chanroblesvirtualawlibrary chanrobles virtual law library Ironically. who had been paying the rentals all the while. the issues Fidelity raises therein are: (a) whether or not the contract of lease submitted by Verendia to support his claim on the fire insurance policy constitutes a false declaration which would forfeit his benefits under Section 13 of the policy and (b) whether or not. the adjuster submitted a report dated December 4. in submitting the subrogation receipt in evidence. Robert Garcia then executed an affidavit before the National Intelligence and Security Authority (NISA) to the effect that he was not the lessee of Verendia's house and that his signature on the contract of lease was a complete forgery. or if any false declaration be made or used in support thereof. it appears that Robert Garcia (or Roberto Garcia) was still within the premises. (at p. 185 SCRA 741 ). It was only on October 9.chanroblesvirtualawlibrary chanrobles virtual law library The contract of lease upon which Verendia relies to support his claim for insurance benefits.) In the instant case.. Fidelity's conclusions on these proven facts appear. The appellate court's findings of fact are. surmises. conclusive upon this Court except in the following cases: (1) when the conclusion is a finding grounded entirely on speculation. this Court shall review the evidence on record. (3) when there is grave abuse of discretion in the appreciation of facts. an insurance contract is the law between the parties (Pacific Banking Corporation vs. the motion for extension was filed and granted before June 30. 76399.R. citing Perla Compania de Seguros. Verendia's motion to expunge the motion for reconsideration was not finally disposed until July 22. on the strength of these facts. Fidelity had in effect agreed to settle Verendia's claim in the amount stated in said receipt. the issue of the veracity or falsity of the lease contract could have been better resolved by the appellate court for. of course. Its terms and conditions 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 (Oriental Assurance Corporation vs. As it is also a contract of adhesion. Court of Appeals. the building appeared to have "no occupant" and that Mr. the rule shall be strictly enforced that no motion for extension of time to file a motion for new trial or reconsideration shall be filed . F-18876. (2) when the inference made is manifestly absurd. to have sufficient bases. inflated the value of the property by the alleged monthly rental of P6.chanroblesvirtualawlibrary chanrobles virtual law library Considering. 1986. was entered into between him and one Robert Garcia. 212. Verendia. or conjectures. Verendia failed to live by the terms of the policy. allowed such a ruse. or if any fraudulent means or devises are used by the Insured or anyone acting in his behalf to obtain any benefit under the policy". 200 SCRA 459 . Verendia concocted the lease contract to deflect responsibility for the fire towards an alleged "lessee". or impossible. in a petition for review on certiorari under Rule 45.500 when in fact. was occupying the building when it was burned (TSN. a couple of days after the effectivity of the insurance policy. an insurance contract should be liberally construed in favor of the insured and strictly against the insurer company which usually prepares it (Western Guaranty Corporation vs. the foregoing discussion pointing to the fact that Verendia used a false lease contract to support his claim under Fire Insurance Policy No. 1 chanrobles virtual law library Verging on the factual. the filing of the motion for extension came before its formal proscription under Habaluyas. (5) when the findings of fact are conflicting. the Provincial Assessor of Rizal had assessed the property's fair market value to be only P40. on June 25. cousin of Robert. "E"). Thus. the terms of the policy should be strictly construed against the insured. Seemingly. it was signed by Marcelo Garcia. therefore. 1986. No. insured the same property with two other insurance companies for a total coverage of around P900. . Eleuterio M.000. however. therefore. however. according to the investigation report prepared by Pat. Court of Appeals. although. "2").10). specifically Section 13 thereof which is expressed in terms that are clear and unambiguous. 1981 recommending the denial of Verendia's claim (Exh. Buenviaje of the Antipolo police. the jurisdiction of this Court is limited to the review of errors of law. mistaken. failed to explain why Marcelo had to sign his cousin's name when he in fact was paying for the rent and why he (Verendia) himself. Verendia. 1982. whom he considered as the real lessee. during the trial. 1981 that an adjuster was able to locate him. and (6) when the Court of Appeals in making its findings went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee (Ronquillo v. Inc. . (4) when the judgment is premised on a misapprehension of facts. Roberto Garcia was "renting on the otherside (sic) portion of said compound" (Exh. Court of Appeals.chanroblesvirtualawlibrary chanrobles virtual law library Reduced to bare essentials. Court of Appeals. Court of Appeals 168 SCRA 1 ). therefore. the lessor. married to Helen Cawinian. Verendia admitted that it was not Robert Garcia who signed the lease contract. and created a dead-end for the adjuster by the disappearance of Robert Garcia. According to Verendia.chanroblesvirtualawlibrary chanrobles virtual law library Robert Garcia disappeared after the fire.00. . When the rented residential building was razed to the ground on December 28. 1980 (Exh.
supra). the petition in G. to interpret Fidelity's presentation of the subrogation receipt in evidence as indicative of its accession to its "terms" is not only wanting in rational basis but would be substituting the will of the Court for that of the parties.in the form of a fraudulent lease contract. that Verendia had not received the amount stated therein. Thus. by presenting a false lease contract. but surely. The petition in G.000.77. More significantly. the same receipt states that Verendia had received the aforesaid amount. No. Fidelity bound itself to a "mutual agreement" to settle Verendia's claims in consideration of the amount of P142.R. 173 SCRA 228 ). No. is proven by the fact that Verendia himself filed the complaint for the full amount of P385. the subrogation receipt by itself does not prove that a settlement had been arrived at and enforced.chanroblesvirtualawlibrary chanrobles virtual law library SO ORDERED. It might be that there had been efforts to settle Verendia's claims. Apostol. Court of Appeals. Verendia.685. It is even incomplete as the blank spaces for a witness and his address are not filled up. Worse yet. 75605 is DISMISSED.R. However. no representative of Fidelity had signed it. . he forfeited all benefits therein by virtue of Section 13 of the policy in the absence of proof that Fidelity waived such provision (Pacific Banking Corporation vs.chanroblesvirtualawlibrary chanrobles virtual law library WHEREFORE. 76399 is GRANTED and the decision of the then Intermediate Appellate Court under review is REVERSED and SET ASIDE and that of the trial court is hereby REINSTATED and UPHELD. While the said receipt appears to have been a filled-up form of Fidelity.00 stated in the policy. reprehensibly disregarded the principle that insurance contracts are uberrimae fidae and demand the most abundant good faith (Velasco vs.chanroblesvirtualawlibrary chanrobles virtual law library There is also no reason to conclude that by submitting the subrogation receipt as evidence in court.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.