V. SUBROGATION AND CLAIMS SETTLEMENT
The
-CLAIMS SETTLEMENT AND SUBROGATION
-NOTICE AND PROOF OF LOSS
WELLAM???---
FINMAN GENERAL ASSURANCE CORPORATION vs. CA and SURPOSA
G.R. No. 100970 September 2, 1992
FACTS:
On 聽 October 22, 1986, deceased, Carlie Surposa was insured with under
Finman General Teachers Protection Plan (an accident insurance) and
Individual Policy with his parents, spouses Julia and Carlos Surposa, and
brothers Christopher, Charles, Chester and Clifton, all surnamed, Surposa,
as beneficiaries.
The insured died on October 18, 1988 as a result of a stab wound inflicted
by one of the 3 unidentified men as he and his cousin, Winston Surposa,
were waiting for a ride on their way home along Rizal-Locsin Streets,
Bacolod City.
Private respondent and the other beneficiaries of said insurance policy filed
a written notice of claim with the insurance company which denied said
claim contending that murder and assault are not within the scope of the
coverage of the insurance policy. The Insurance Commission rendered a
decision holding the 聽 insurer is liable to pay the proceeds of the policy
which was affirmed by the CA.
ISSUE:
Whether the death of the insured was committed with deliberate intent
which, by the very nature of a personal accident insurance policy, cannot be
indemnified
RULING:
No, the death of the insured was no commited with deliberate intent.
generally accepted rule is that, death or injury does not result from accident
or accidental means within the terms of an accident-policy if it is the natural
result of the insured's voluntary act, unaccompanied by anything unforeseen
except the death or injury. The happening, on the part of the insured is a
pure accident. The insured died from an event that took place without his
foresight or expectation, an event that proceeded from an unusual effect of a
known cause and, therefore, not expected. Neither can it be said that where
was a capricious desire on the part of the accused to expose his life to
danger considering that he was just going home after attending a festival.
Furthermore, the personal accident insurance policy involved herein
specifically enumerated only ten (10) circumstances wherein no liability
attaches to insurance company for any injury, disability or loss suffered by
the insured as a result of any of the stipulated causes. The principle of "
expresso unius exclusio alterius" is therefore applicable in the instant case
since murder and assault, not having been expressly included in the
enumeration of the circumstances that would negate liability in said
insurance policy, cannot be considered by implication to discharge the
petitioner insurance company from liability for, any injury, disability or loss
suffered by the insured.聽
The interpretation of obscure words or stipulations in a contract shall not
favor the party who caused the obscurity (NCC 1377). Moreover,it is well
settled that contracts of insurance are to be construed liberally in favor of
the insured and strictly against the insurer. Thus ambiguity in the words of
an insurance contract should be interpreted in favor of its beneficiary.
DELSAN TRANSPORT LINES, INC. vs. CA
G.R. No. 127897, November 15, 2001
Common Carriers; Liability
CASE:
Caltex entered into a contract of affreightment with Delsan where the latter
agreed to transport fuel oil from Batangas-Bataan Refinery to different parts
of the country. Petitioner took on board its vessel, MT Maysun 2,277.314
kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil
Terminal in Zamboanga City. The shipment was insured with American
Home Assurance Corporation. The vessel sank. Insurance company paid
the insured value and now claims against Delsan. The issue (on Transpo) is
whether or not Delsan is liable. YES, It is liable. (read with issue number 2
on seaworthiness). Common carriers are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of passengers
transported by them, according to all the circumstance of each case. In the
event of loss, destruction or deterioration of the insured goods, common
carriers shall be responsible unless the same is brought about, among
others, by flood, storm, earthquake, lightning or other natural disaster or
calamity. In all other cases, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence. In
this case, the Court rejected the report of the captain and the chief mate’s
tale of strong winds during the voyage. Instead, it gave more credence to
the report of PAGASA that the weather was normal. Since the sinking of the
ship cannot be attributed to bad weather conditions (fortuitious event), it
shall be presumed that the vessel was not seaworthy.
FACTS:
Caltex entered into a contract of affreightment with the petitioner, Delsan
Transport Lines, Inc., for a period of one year whereby the said common
carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-
Bataan Refinery to different parts of the country. Under the contract,
petitioner took on board its vessel, MT Maysun 2,277.314 kiloliters of
industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in
Zamboanga City. The shipment was insured with the private respondent,
American Home Assurance Corporation. The vessel sank in the early
morning of August 16, 1986 near Panay Gulf in the Visayas taking with it the
entire cargo of fuel oil. Insurance company paid Caltex the sum of
P5,096,635.67 representing the insured value of the lost cargo. Exercising
its right of it demanded of the petitioner the same amount it paid to Caltex.
Due to failure to collect, American Home Assurance filed this complaint.
Trial court dismissed the complaint and found that the vessel, MT
Maysum, was seaworthy to undertake the voyage and that the incident was
caused by unexpected inclement weather condition or force majeure, thus
exempting the common carrier (herein petitioner) from liability for the loss of
its cargo. CA reversed. It gave credence to the weather report issued by
PAGASA which showed that the weather was normal during those times. In
the absence of any explanation as to what may have caused the sinking of
the vessel coupled with the finding that the same was improperly manned,
the appellate court ruled that the petitioner is liable on its obligation as
common carrier to herein private respondent insurance company as
subrogee of Caltex. Petitioner contends that there is an implied warranty
by the shipper that the ship is seaworthy. Consequently, the insurer will not
be liable to the assured for any loss under the policy in case the vessel
would later on be found as not seaworthy at the inception of the insurance. It
theorized that when private respondent paid Caltex the value of its lost
cargo, the act of the private respondent is equivalent to a tacit recognition
that the ill-fated vessel was seaworthy. Furthermore, petitioner avers that
private respondent failed, for unknown reason, to present in evidence during
the trial of the instant case the subject marine cargo insurance policy it
entered into with Caltex. the failure of the private respondent to present the
insurance policy in evidence is allegedly fatal to its claim inasmuch as there
is no way to determine the rights of the parties thereto.
ISSUE:
1)Whether or not Delsan, as a common carrier is liable. (not explicit in the
case, but for purposes of Transpo issue, this is the important issue)
2)Whether or not the payment made by the private respondent to Caltex for
the insured value of the lost cargo amounted to an admission that the vessel
was seaworthy, thus precluding any action for recovery against the
petitioner.
3)Whether or not the non-presentation of the marine insurance policy bars
the complaint for recovery of sum of money for lack of cause of action.
HELD & RATIO:
1)YES.
Applicable Provisions:
Arts. 1733, 1734, 1735 of the Civil Code
From the nature of their business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence in the vigilance over
the goods and for the safety of passengers transported by them, according
to all the circumstance of each case. In the event of loss, destruction or
deterioration of the insured goods, common carriers shall be responsible
unless the same is brought about, among others, by flood, storm,
earthquake, lightning or other natural disaster or calamity. In all other cases,
if the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence.
The Court weighed the testimonies and evidnce presented and gave more
credence to the weather bulleting report from PAGASA saying that the
weather was normal rather than the testimony of the captain and the chief
mate. Thus, petitioner’s vessel, MT Maysun, sank with its entire cargo for
the reason that it was not seaworthy. There was no squall or bad weather or
extremely poor sea condition in the vicinity when the said vessel sank.
of contract or upon written assignment of claim. It accrues simply upon
payment by the insurance company of the insurance claim. Consequently,
the payment made by the private respondent (insurer) to Caltex (assured)
operates as an equitable assignment to the former of all the remedies which
the latter may have against the petitioner.
3)NO.
The presentation in evidence of the marine insurance policy is not
indispensable in this case before the insurer may recover from the common
carrier the insured value of the lost cargo in the exercise of its subrogatory
right. The subrogation receipt, by itself, is sufficient to establish not only the
relationship of herein private respondent as insurer and Caltex, as the
assured shipper of the lost cargo of industrial fuel oil, but also the amount
paid to settle the insurance claim. The right of subrogation accrues simply
upon payment by the insurance company of the insurance claim.
SHERMAN SHAFER????------
SUBROGATION

2)NO.
The payment made by the private respondent for the insured value of the
lost cargo operates as waiver of its (private respondent) right to enforce the
term of the implied warranty against Caltex under the marine insurance
policy. However, the same cannot be validly interpreted as an automatic
admission of the vessel’s seaworthiness by the private respondent as to
foreclose recourse against the petitioner for any liability under its contractual
obligation as a common carrier. The fact of payment grants the private
respondent subrogatory right which enables it to exercise legal remedies
that would otherwise be available to Caltex as owner of the lost cargo.
The right of subrogation has its roots in equity. 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 and good conscience
ought to pay.9 It is not dependent upon, nor does it grow out of, any privity

MANILA MAHOGANY MFG CORP V CA & ZENITH INSURANCE
OCT 12, 1997; PADILLA, J
FACTS:
From March 6, 1970 – 1971, petitioner insured its Mercedes Benz 4-door
sedan w/ respondent insurance company. On May 4, 1970, vehicle was
bumped and damaged by a truck owned by San Miguel Corp
(SMC).Zenith paid P5K to petitioner in amicable settlement. Petitioner’s
general manager executed a Release Claim, subrogating respondent
company to all its right to action against SMC Dec. 11, 1972 – respondent
co. wrote Insurance Adjusters Inc. To demand reimbursement from SMC.
Insurance Adjusters refused saying that SMC had already paid petitioner
P4,500 for the damages to petitioner’s vehicle, as evidenced by a cash
voucher and Release of Claim executed by the GM of petitioner discharging
SMC from “all actions, claims, demands the rights of action that now exist or
hereafter develop arising out of or as a consequence of the accident
Respondent demanded the P4.5K amount from petitioner. Petitioner
refused. Suit filed for recovery. City Court ordered petitioner to pay
respondent. CFI affirmed. CA affirmed with modification that petitioner was
to pay respondent the total amount of 5K it had received from respondent
co.Petitioner’s argument: Since the total damages were valued at P9,486.43
and only 5K was received by petitioner from respondent, petitioner argues
that it was entitled to go after SMC to claim the additional which was
eventually paid to it
Respondent’s argument: No qualification to its right of subrogation
ISUE: WON petitioner should pay respondent despite the subrogation in the
Release of Claim was conditioned on recovery of the total amount of
damages petitioner has sustained?
HELD/RATIO: NO.
SC: no other evidence to support its allegation that a gentleman’s
agreement existed between the parties, not embodied in the Release of
Claim, such Release of Claim must be taken as the best evidence of the
intent and purpose of the parties
CA correct in holding petitioner should reimburse respondent 5K
oWhen Manila Mahogany executed another release claim discharging SMC
from all rights of action after the insurer had paid the proceeds of the policy
– the compromise agreement of 5K- the insurer is entitled to recover from
the insured the amount of insurance money paid
oPetitioner by its own acts released SMC, thereby defeating respondent’s
right of subrogation, the right of action against the insurer was also nullified
Since the insurer can be subrogated to only such rights as the insured
may have, should the insured, after receiving payment from the insurer,
release the wrongdoer who caused the loss, the insurer losses his rights
against the latter. But in such a case, the insurer will be entitled to recover
from the insured whatever it has paid to the latter, unless the release was
made w/ the consent of the insurer
DISPOSITIVE: PETITION DENIED
Aboitiz Shipping Corp. V. Insurance Co. Of North America (2008)
G.R. No. 168402 August 6, 2008
Lessons Applicable: Insurer's right of subrogration (Insurance)
FACTS:
June 20, 1993: MSAS Cargo International Limited and/or Associated and/or
Subsidiary Companies (MSAS) procured an "all-risk" marine insurance
policy from ICNA UK Limited of London for wooden work tools and
workbenches purchased by consignee Science Teaching Improvement
Project (STIP), Ecotech Center, Sudlon Lahug, Cebu City.
July 26, 1993: the cargo was received by Aboitiz Shipping Corporation
(Aboitiz) through its duly authorized booking representative, Aboitiz
Transport System
August 1, 1993: container van was loaded on board MV Super Concarrier I
The vessel left Manila en route to Cebu City
August 3, 1993: shipment arrived in Cebu City
August 5, 1993: Stripping Report, checker noted that the crates were slightly
broken or cracked at the bottom
August 11, 1993: cargo was withdrawn by the representative of the
consignee, Science Teaching Improvement Project (STIP) and delivered to
Don Bosco Technical High School, Punta Princesa, Cebu City
August 13, 1993: Mayo B. Perez, Head of Aboiti received a call from the
receiver Mr. Bernhard Willig that the cargo sustained water damage so he
checked the other cargo but they were dry
In a letter dated August 15, 1993, Willig informed Aboitiz that the damage
was caused by water entering through the broken bottom parts of the crate
Consignee filed a claim against ICNA
CAC reported to ICNA that the shipment was placed outside the warehouse
when it was delivered on July 26, 1993 and it was only on July 31, 1993
when the shipment was stuffed inside another container van for shipment to
Cebu. Weather report shows that the heavy rains on July 28 and 29, 1993
caused the damages.
Aboitiz refused to settle the claim
ICNA paid the amount of P280,176.92 to consignee and a subrogation
receipt was duly signed by Willig.
ICNA then advised Aboitiz of the receipt signed in its favor but received no
reply so it filed for collection at the RTC.
RTC: against ICNA - subrogation Form is self-serving and has no probative
value since Wellig was not presented to the witness stand
CA: reversed RTC ruling - right of subrogation accrues simply upon payment
by the insurance company of the insurance claim even assuming that it is an
unlicensed foreign corporation
ISSUE: W/N ICNA can claim under the right of subrogation
HELD: YES. CA affirmed.
Only when that foreign corporation is "transacting" or "doing business" in the
country will a license be necessary before it can institute suits. It may,
however, bring suits on isolated business transactions, which is not
prohibited under Philippine law
The policy benefits any subsequent assignee, or holder, including the
consignee, who may file claims on behalf of the assured.
Insurance Code
Sec. 57
Sec. 57. A policy may be so framed that it will inure to the benefit of
whomsoever, during the continuance of the risk, may become the owner of
the interest insured.
Civil Code
Art. 2207
Art. 2207. If the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of
the wrong or breach of contract complained of, the insurance company shall
be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. If the amount paid by the insurance
company does not fully cover the injury or loss, the aggrieved party shall be
entitled to recover the deficiency from the person causing the loss or injury.
This right of subrogation, however, has its limitations.
First, both the insurer and the consignee are bound by the contractual
stipulations under the bill of lading
Second, the insurer can be subrogated only to the rights as the insured may
have against the wrongdoer. If by its own acts after receiving payment from
the insurer, the insured releases the wrongdoer who caused the loss from
liability, the insurer loses its claim against the latter.
Civil Code
Art. 366
Article 366. Within twenty four hours following the receipt of the
merchandise, the claim against the carrier for damages or average which
may be found therein upon opening the packages, may be made, provided
that the indications of the damage or average which give rise to the claim
cannot be ascertained from the outside part of such packages, in which
case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges
have been paid, no claim shall be admitted against the carrier with regard to
the condition in which the goods transported were delivered.
The call was made 2 from delivery, a reasonable period considering that the
goods could not have corroded instantly overnight such that it could only
have sustained the damage during transit.
Civil Code
Art. 1735
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of
the preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as
required in Article 1733.
the shipment delivered to the consignee sustained water damage. We agree
with the findings of the CA that petitioner failed to overturn this presumption
CLAIMS SETTLEMENT
Pacific Timber v CA G.R. No. L-38613 February 25, 1982
J. De Castro
Facts:
The plaintiff secured temporary insurance from the defendant for its
exportation of 1,250,000 board feet of Philippine Lauan and Apitong logs to
be shipped from Quezon Province to Okinawa and Tokyo, Japan.
Workmen’s Insurance issued a cover note insuring the cargo of the plaintiff
subject to its terms and conditions.
The two marine policies bore the numbers 53 HO 1032 and 53 HO 1033.
Policy No. 53 H0 1033 was for 542 pieces of logs equivalent to 499,950
board feet. Policy No. 53 H0 1033 was for 853 pieces of logs equivalent to
695,548 board feet. The total cargo insured under the two marine policies
consisted of 1,395 logs, or the equivalent of 1,195.498 bd. ft.
After the issuance of the cover note, but before the issuance of the two
marine policies Nos. 53 HO 1032 and 53 HO 1033, some of the logs
intended to be exported were lost during loading operations in the Diapitan
Bay.
While the logs were alongside the vessel, bad weather developed resulting
in 75 pieces of logs which were rafted together co break loose from each
other. 45 pieces of logs were salvaged, but 30 pieces were verified to have
been lost or washed away as a result of the accident.
Pacific Timber informed Workmen’s about the loss of 32 pieces of logs
during loading of SS woodlock.
Although dated April 4, 1963, the letter was received in the office of the
defendant only on April 15, 1963. The plaintiff claimed for insurance to the
value of P19,286.79.
Woodmen’s requested an adjustment company to assess the damage. It
submitted its report, where it found that the loss of 30 pieces of logs is not
covered by Policies Nos. 53 HO 1032 and 1033 but within the 1,250,000 bd.
ft. covered by Cover Note 1010 insured for $70,000.00.
The adjustment company submitted a computation of the defendant's
probable liability on the loss sustained by the shipment, in the total amount
of P11,042.04.
Woodmen’s wrote the plaintiff denying the latter's claim on the ground they
defendant's investigation revealed that the entire shipment of logs covered
by the two marine policies were received in good order at their point of
destination. It was further stated that the said loss may be considered as
covered under Cover Note No. 1010 because the said Note had become
null and void by virtue of the issuance of Marine Policy Nos. 53 HO 1032
and 1033.
The denial of the claim by the defendant was brought by the plaintiff to the
attention of the Insurance Commissioner. The Insurance Commissioner
ruled in favor of indemnifying Pacific Timber. The company added that the
cover note is null and void for lack of valuable consideration. The trial court
ruled in petitioner’s favor while the CA dismissed the case. Hence this
appeal.
Issues:
WON the cover note was null and void for lack of valuable consideration
WON the Insurance company was absolved from responsibility due to
unreasonable delay in giving notice of loss.
Held: No. No. Judgment reversed.
Ratio:
1. The fact that no separate premium was paid on the Cover Note before the
loss occurred does not militate against the validity of the contention even if
no such premium was paid. All Cover Notes do not contain particulars of the
shipment that would serve as basis for the computation of the premiums.
Also, no separate premiums are required to be paid on a Cover Note.
The petitioner paid in full all the premiums, hence there was no account
unpaid on the insurance coverage and the cover note. If the note is to be
treated as a separate policy instead of integrating it to the regular policies,
the purpose of the note would be meaningless. It is a contract, not a mere
application for insurance.
It may be true that the marine insurance policies issued were for logs no
longer including those which had been lost during loading operations. This
had to be so because the risk insured against is for loss during transit,
because the logs were safely placed aboard.
The non-payment of premium on the Cover Note is, therefore, no cause for
the petitioner to lose what is due it as if there had been payment of
premium, for non-payment by it was not chargeable against its fault. Had all
the logs been lost during the loading operations, but after the issuance of
the Cover Note, liability on the note would have already arisen even before
payment of premium. Otherwise, the note would serve no practical purpose
in the realm of commerce, and is supported by the doctrine that where a
policy is delivered without requiring payment of the premium, the
presumption is that a credit was intended and policy is valid.
2. The defense of delay can’t be sustained. The facts show that instead of
invoking the ground of delay in objecting to petitioner's claim of recovery on
the cover note, the insurer never had this in its mind. It has a duty to inquire
when the loss took place, so that it could determine whether delay would be
a valid ground of objection.
There was enough time for insurer to determine if petitioner was guilty of
delay in communicating the loss to respondent company. It never did in the
Insurance Commission. Waiver can be raised against it under Section 84 of
the Insurance Act.
Federal Express Corporation vs American Home Insurance Corp and
Philam Insurance Company
(GR No 150094, Aug 18, 2004)
Facts:
Smithklein caused the transportation of 109 cartons of veterinary biologicals.
The Shipment was initially loaded to Burlington Air Express and then later
on forwarded to the petitioner for delivery to the consignee. When the
consignee received the same it was found out that goods was damaged and
decided to abandon the shipment and declared a total loss and then claimed
against the insurance company. The insurance company paid the loss.
Issue:
Is there legal subrogation on the part of the Insurance Company?
Held:Yes. Upon payment, the insurer’s entitlement to subrogation pro tanto
equips the insurance company with a cause of action in case of a
contractual breach or negligence. The insurance company stands in the
same footing or in substitution of the insured party.
FEDEX vs. AHAC and PHILAM INSURANCE COMPANY, INC
G.R. No. 150094 FACTS: Shipper SMITHKLINE USA delivered to carrier
Burlington Air Express (BURLINGTON), an agent of [Petitioner] Federal
Express Corporation, a shipment of 109 cartons of veterinary biologicals for
delivery to consignee SMITHKLINE and French Overseas Company in
Makati City. The shipment was covered by Burlington Airway Bill No.
11263825 with the words, ‘REFRIGERATE WHEN NOT IN TRANSIT’ and
‘PERISHABLE’ stamp marked on its face. That same day, Burlington
insured the cargoes with American Home Assurance Company (AHAC).
The following day, Burlington turned over the custody of said cargoes to
FEDEX which transported the same to Manila.
The shipments arrived in Manila and was immediately stored at [Cargohaus
Inc.’s] warehouse. Prior to the arrival of the cargoes, FEDEX informed
GETC Cargo International Corporation, the customs broker hired by the
consignee to facilitate the release of its cargoes from the Bureau of
Customs, of the impending arrival of its client’s cargoes.
12 days after the cargoes arrived in Manila, DIONEDA, a non-licensed
custom’s broker who was assigned by GETC, found out, while he was about
to cause the release of the said cargoes, that the same [were] stored only in
a room with 2 air conditioners running, to cool the place instead of a
refrigerator. DIONEDA, upon instructions from GETC, did not proceed with
the withdrawal of the vaccines and instead, samples of the same were taken
and brought to the Bureau of Animal Industry of the Department of
Agriculture in the Philippines by SMITHKLINE for examination wherein it
was discovered that the ‘ELISA reading of vaccinates sera are below the
positive reference serum.’
As a consequence of the foregoing result of the veterinary biologics test,
SMITHKLINE abandoned the shipment and, declaring ‘total loss’ for the
unusable shipment, filed a claim with AHAC through its representative in the
Philippines, the Philam Insurance Co., Inc. (PHILAM) which recompensed
SMITHKLINE for the whole insured amount. Thereafter, PHILAM filed an
action for damages against the FEDEX imputing negligence on either or
both of them in the handling of the cargo.
Trial ensued and ultimately concluded with the FEDEX being held solidarily
liable for the loss. Aggrieved, petitioner appealed to the CA. The appellate
court ruled in favor of PHILAM and held that the shipping Receipts were a
prima facie proof that the goods had indeed been delivered to the carrier in
good condition.
ISSUE: Is FEDEX liable for damage to or loss of the insured goods
HELD: petition granted. Assailed decision reversed insofar as it pertains to
FEDEX
Prescription of Claim
From the initial proceedings in the trial court up to the present, petitioner has
tirelessly pointed out that respondents’ claim and right of action are already
barred. Indeed, this fact has never been denied by respondents and is
plainly evident from the records.
Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:
“6. No action shall be maintained in the case of damage to or partial loss
of the shipment unless a written notice, sufficiently describing the goods
concerned, the approximate date of the damage or loss, and the details of
the claim, is presented by shipper or consignee to an office of Burlington
within (14) days from the date the goods are placed at the disposal of the
person entitled to delivery, or in the case of total loss (including non-
delivery) unless presented within (120) days from the date of issue of the
[Airway Bill]. xxx
Relevantly, petitioner’s airway bill states:
“12./12.1 The person entitled to delivery must make a complaint to the
carrier in writing in the case:
12.1.1 of visible damage to the goods, immediately after discovery of the
damage and at the latest within fourteen (14) days from receipt of the
goods; xxx
Article 26 of the Warsaw Convention, on the other hand, provides:
Xxx (2) In case of damage, the person entitled to delivery must complain
to the carrier forthwith after the discovery of the damage, and, at the latest,
within 3 days from the date of receipt in the case of baggage and 7 days
from the date of receipt in the case of goods. xx
(3) Every complaint must be made in writing upon the document of
transportation or by separate notice in writing dispatched within the times
aforesaid.
(4) Failing complaint within the times aforesaid, no action shall lie against
the carrier, save in the case of fraud on his part.” xxx
Condition Precedent
In this jurisdiction, the filing of a claim with the carrier within the time
limitation therefor actually constitutes a condition precedent to the accrual of
a right of action against a carrier for loss of or damage to the goods. The
shipper or consignee must allege and prove the fulfillment of the condition.
If it fails to do so, no right of action against the carrier can accrue in favor of
the former. The aforementioned requirement is a reasonable condition
precedent; it does not constitute a limitation of action.
The requirement of giving notice of loss of or injury to the goods is not an
empty formalism. The fundamental reasons for such a stipulation are (1) to
inform the carrier that the cargo has been damaged, and that it is being
charged with liability therefor; and (2) to give it an opportunity to examine
the nature and extent of the injury. “This protects the carrier by affording it
an opportunity to make an investigation of a claim while the matter is fresh
and easily investigated so as to safeguard itself from false and fraudulent
claims.
NOTES: as to proper payee:
The Certificate specifies that loss of or damage to the insured cargo is
“payable to order x x x upon surrender of this Certificate.” Such wording
conveys the right of collecting on any such damage or loss, as fully as if the
property were covered by a special policy in the name of the holder itself. At
the back of the Certificate appears the signature of the representative of
Burlington. This document has thus been duly indorsed in blank and is
deemed a bearer instrument.
Since the Certificate was in the possession of Smithkline, the latter had the
right of collecting or of being indemnified for loss of or damage to the
insured shipment, as fully as if the property were covered by a special policy
in the name of the holder. Hence, being the holder of the Certificate and
having an insurable interest in the goods, Smithkline was the proper payee
of the insurance proceeds.

Subrogation

Upon receipt of the insurance proceeds, the consignee (Smithkline)

executed a subrogation Receipt in favor of respondents. The latter were
thus authorized “to file claims and begin suit against any such carrier,
vessel, person, corporation or government.” Undeniably, the consignee had
a legal right to receive the goods in the same condition it was delivered for
transport to petitioner. If that right was violated, the consignee would have a
cause of action against the person responsible therefor.

MARINE INSURANCE

OF RESPONDENT INSURANCE IS CLEAR
Malayan Insurance Co., Inc. v. Philippine First Insurance Co., Inc., G.R. No. 184300
(July 11, 2012)
Facts:
1. Since 1989, Wyeth Philippines, Inc. (Wyeth) and respondent Reputable
Forwarder Services, Inc. (Reputable) had been annually executing a
contract of carriage, whereby the latter undertook to transport and deliver
the former’s products to its customers, dealers or salesmen.
2. Wyeth procured Marine Policy from respondent Philippines First Insurance
Co., Inc. (Philippines First) to secure its interest over its own products.
3. Wyeth executed its annual contract of carriage with Reputable. It turned
out, however, that the contract was not signed by Wyeth’s
representative/s.
4. Under the contract, Reputable undertook to answer for "all risks with
respect to the goods and shall be liable to the COMPANY (Wyeth), for the
loss, destruction, or damage of the goods/products due to any and all
causes whatsoever, including theft, robbery, flood, storm, earthquakes,
lightning, and other force majeure while the goods/products are in transit
and until actual delivery to the customers, salesmen, and dealers of the
COMPANY".
5. The contract also required Reputable to secure an insurance policy on
Wyeth’s goods. Thus, Reputable signed a Special Risk Insurance Policy (SR
Policy) with petitioner Malayan for the amount of P1 million.
6. On October 6, 1994, during the effectivity of the Marine Policy and SR
Policy, Reputable received from Wyeth 1,000 boxes of Promil infant
formula to be delivered by Reputable to Mercury Drug Corporation in
Quezon City. Unfortunately, on the same date, the truck carrying
Wyeth’s products was hijacked by about 10 armed men.
7. Philippines First then demanded reimbursement from Reputable, having
been subrogated to the rights of Wyeth by virtue of the payment. The
latter, however, ignored the demand.
8. Philippines First instituted an action for sum of money against Reputable.
In its complaint, Philippines First stated that Reputable is a "private
corporation engaged in the business of a common carrier." In its answer.
Reputable claimed that it is a private carrier.
9. Disclaiming any liability, Malayan argued, among others, that under
Section 5 of the SR Policy, the insurance does not cover any loss or
damage to property which at the time of the happening of such loss or
damage is insured by any marine policy and that the SR Policy expressly
excluded third-party liability
10. RTC - Reputable liable to Philippines First for the amount of indemnity it
paid to Wyeth, among others. In turn, Malayan was found by the RTC to
be liable to Reputable to the extent of the policy coverage.
They now filed the present petition.
11. Malayan also contends that the CA erred when it held that Reputable is a
private carrier and should be bound by the contractual stipulations in the
contract of carriage.
 12. Reputable, meanwhile, contends that it is exempt from liability for acts
committed by thieves/robbers who act with grave or irresistible threat
whether it is a common carrier or a private/special carrier.
Issue:
1) Whether Reputable is a private carrier; YES
2) Whether Reputable is strictly bound by the stipulations in its
contract of carriage with Wyeth, such that it should be liable for any
risk of loss or damage, for any cause whatsoever, including that due
to theft or robbery and other force majeure; YES
Held: As to issue no. 1
The rule on judicial admission, however, also states that such allegation, statement,
or admission is conclusive as against the pleader and that the facts alleged in the
complaint are deemed admissions of the plaintiff and binding upon him. In this
case, the pleader or the plaintiff who alleged that Reputable is a common carrier
was Philippines First. It cannot, by any stretch of imagination, be made conclusive
as against Reputable whose nature of business is in question.
Philippines First is not in any position to make any admission, much more a
definitive pronouncement, as to the nature of Reputable’s business and there
appears no other connection between Philippines First and Reputable which
suggests mutual familiarity between them.
Moreover, records show that the alleged judicial admission of Philippines First was
essentially disputed by Reputable when it stated in paragraphs 2, 4, and 11 of its
answer that it is actually a private or special carrier. 23 In addition, Reputable stated
in paragraph 2 of its third-party complaint that it is "a private carrier engaged in the
carriage of goods."
Under Article 1732 of the Civil Code, common carriers are persons, corporations,
firms, or associations engaged in the business of carrying or transporting
passenger or goods, or both by land, water or air for compensation, offering their
services to the public. On the other hand, a private carrier is one wherein the
carriage is generally undertaken by special agreement and it does not hold itself
out to carry goods for the general public. A common carrier becomes a private
carrier when it undertakes to carry a special cargo or chartered to a special
person only.
2. On the second issue – Reputable is bound by the terms of the contract of
carriage.
The extent of a private carrier’s obligation is dictated by the stipulations of a
contract it entered into, provided its stipulations, clauses, terms and conditions
are not contrary to law, morals, good customs, public order, or public policy. "The
Civil Code provisions on common carriers should not be applied where the carrier
is not acting as such but as a private carrier. Public policy governing common
carriers has no force where the public at large is not involved."
Thus, being a private carrier, the extent of Reputable’s liability is fully governed by
the stipulations of the contract of carriage, one of which is that it shall be liable to
Wyeth for the loss of the goods/products due to any and all causes whatsoever,
including theft, robbery and other force majeure while the goods/products are in
transit and until actual delivery to Wyeth’s customers, salesmen and dealers.
Oriental v CA G.R. No. 94052 August
9, 1991
J. Melencio-Herrera
Facts:
Panama Sawmill shipped 1208 pieces of apitog logs to Manila
and insured the logs with Oriental for the value of Php 1 million.
Two barges were loaded with 610 and 598 logs. At sea, typhoons
ravaged one of the barges, resulting in the loss of 497 of 598 of the
logs.
The Insurance contract provided for indemnity under the following
conditions:
Warranted that this Insurance is against TOTAL LOSS ONLY. Subject to
the following clauses:
— Civil Code Article 1250 Waiver clause
— Typhoon warranty clause
— Omnibus clause.
Oriental didn’t give an indemnity because there wasn’t total loss of the
shipment.
The sawmill filed a civil case against Oriental and the court ordered it to
pay 410,000 as value for the missing logs. The CA affirmed the lower
court judgment but reduced the legal interest. Hence this appeal by
Oriental.
Issue:
Whether or not Oriental Assurance can be held liable under its
marine insurance policy based on the theory of a divisiblecontract of
insurance and, consequently, a constructive total loss.
Held: No. Petition granted.
Ratio:
Perla v CA- The terms of the contract constitute the measure of the
insurer liability and compliance therewith is a condition precedent to the
insured's right to recovery from the insurer.
“Whether a contract is entire or severable is a question of intention to be
determined by the language employed by the parties. The policy in
question shows that the subject matter insured was the entire shipment
of 2,000 cubic meters of apitong logs. The fact that the logs were loaded
on two different barges did not make the contract several
and divisible as to the items insured. The logs on the two barges were
not separately valued or separately insured. Only one premium was paid
for the entire shipment, making for only one cause or consideration. The
insurance contract must, therefore, be considered indivisible.”
Also, the insurer's liability was for "total loss only" as stipulated. A total
loss may be either actual or constructive. An actual total loss under Sec
130 of the Insurance Code is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for
the purpose for which he held it; or
(d) Any other event which effectively deprives the owner of the
possession, at the port of destination, of the thing insured.
A constructive total loss, gives to a person insured a right to abandon
and it means:
SECTION 139. A person insured by a contract of marine insurance
may abandon the thing insured, or any particular portion thereof
separately valued by the policy, or otherwise separately insured, and
recover for a total loss thereof, when the cause of the loss is a
peril injured against,
(a) If more than three-fourths thereof in value is actually lost, or would
have to be expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than
three-fourths
The appellate court considered the cargo in one barge as separate from
the other and ruled that 497 of 598 was more than ¾ of the amount lost,
showing a constructive total loss.
The SC, however, said that although the logs were placed in two barges,
they were not separately valued by the policy, nor separately insured. Of
the entirety of 1,208, pieces of logs, only 497 pieces thereof were lost or
41.45% of the entire shipment. Since the cost of those 497 pieces does
not exceed 75% of the value of all 1,208 pieces of logs, the shipment
can not be said to have sustained a constructive total loss under Section
139(a) of the Insurance Code.

FILIPINO MERCHANTS INSURANCE CO., Inc. v. CA

GR No. 85141 Nov. 28, 1989 Second Division [Regalado]

Nature: Petition for review on certiorari challenging a CA decision finding
FilMerchant liable to pay plaintiff.
Facts:
This is a story about a consignee/buyer who bought
fishmeal products from Bangkok and had it delivered to the port
of Manila. He entered into an insurance contract with defendant
insurance company (FilMerchant) under policy no. M-2678 for
P267,653.59 and for goods described as 600 metric tons of
fishmeal in new gunny bags of 90 kilos each. What was actually
imported was 59.940mtons in 666 gunny bags. Upon arrival at
Manila, arrastre and defendant’s surveyor found 227 bags in bad
order condition. Because of this loss, buyer formally claimed
from FilMerchant but the said insurance company refused to pay.
He brought suit. Trial court ruled for him and against
FilMerchant, CA affirmed trial court hence this petition.
FilMerchant argues: (1) CA erred in the interpretation and application of the
“all risk” clause of maritime insurance policy. It says it
should not be held liable for partial loss notwithstanding
the clear absence of proof of some fortuitous event,
casualty, or accidental cause to which the loss is
attributable.
(2) Respondent had no insurable interest in the subject
cargo. The shipment reveals that it is a “C & F” contract
of shipment. The seller, not the consignee, paid for the
shipment. As there was yet no delivery to the consignee,
ownership (and interest) does not yet pass to him.
Issues: W/N CA was correct in its interpretation of the “all risk”
clause in the maritime insurance contract.
W/N the insured had insurable interest over the property
insured.
Ruling:
a) “All risks policy” has no technical meaning.
The clause in question reproduced:
“5. This insurance is against all risks of loss or damage to the
subject-matter insured but shall in no case be deemed to extend
to cover loss, damage, or expense proximately caused by delay
or inherent vice or nature of the subject-matter insured. Claims
recoverable hereunder shall be payable irrespective of
percentage “
An "all risks policy" should be read literally as meaning all risks whatsoever and
covering all losses by an accidental cause of any kind. The very nature of the term
"all risks" must be given a broad and comprehensive meaning as covering any loss
other than a willful and fraudulent act of the insured. 7 This is pursuant to the very
purpose of an "all risks" insurance to give protection to the insured in those cases
where difficulties of logical explanation or some mystery surround the loss or
damage to property.
Burden of proof shifts to the insurer.
Generally, the burden of proof is upon the insured to show that a loss arose from a
covered peril, but under an "all risks" policy the burden is not on the insured to
prove the precise cause of loss or damage for which it seeks compensation. The
insured under an "all risks insurance policy" has the initial burden of proving that
the cargo was in good condition when the policy attached and that the cargo was
damaged when unloaded from the vessel; thereafter, the burden then shifts to the
insurer to show the exception to the coverage.
b) Vendee/Consignee has insurable interest
SC: The shipment contract being that of cost and freight (C&F) is immaterial
in the determination of insurable interest. The perfected contract of sale vests
in the vendee an equitable title, an interest sufficient enough to be insurable.
Further, Art. 1523 NCC provides that where, in pursuance of a contract of sale,
the seller is authorized or required to send the goods to the buyer, delivery of
the goods to a carrier, whether named by the buyer or not, for, the purpose of
transmission to the buyer is deemed to be a delivery of the goods to the buyer,
the exceptions to said rule not obtaining in the present case. The Court has
heretofore ruled that the delivery of the goods on board the carrying vessels
partake of the nature of actual delivery since, from that time, the foreign
buyers assumed the risks of loss of the goods and paid the insurance premium
covering them.
WHEREFORE, the instant petition is DENIED and the assailed decision of the
respondent Court of Appeals is AFFIRMED in toto.

FIRE INSURANCE
SUN INSURANCE OFFICE, LTD. vs. CA and NERISSA LIM G.R. No.
92383 July 17, 1992
FACTS:
The petitoner issued personal accident insurance policy to Felix Lim Jr with
face value of P200,000. Lim died two months later. It was on October 6,
1982, Lim, on a happy mood, was playing with his handgun from which he
had previously removed the magazine. He pointed the gun to his secretary
who pushes it aside saying that it might be loaded. Lim assured her its not
and pointed to his temple. The next moment there was an explosion and Lim
slumped to the floor. He was dead before he fell. As beneficiary, his wife
Nerissa Lim sought payment on the policy but her claim was rejected. The
petitioner agreed that there was no suicide. It argued, however that there
was no accident either.
The widow sued the petitioner in the Regional Trial Court of Zamboanga
City and was sustained. The trial court rendered a decision in favor of
private respondent.
ISSUE:
Whether the insurer is liable to the insured under the insurance contract
HELD:
YES. An accident is an event that takes place without one's foresight or
expectation — an event that proceeds from an unknown cause, or is an
unusual effect of a known case, and therefore not expected. An accident is
an event which happens without any human agency or, if happening through
human agency, an event which, under the circumstances, is unusual to and
not expected by the person to whom it happens. It has also been defined as
an injury which happens by reason of some violence or casualty to the
injured without his design, consent, or voluntary co-operation. In light of
these definitions, the Court is convinced that the incident that resulted in
Lim's death was indeed an accident.
Lim was unquestionably negligent and that negligence cost him his own life.
But it should not prevent his widow from recovering from the insurance
policy he obtained precisely against accident. There is nothing in the policy
that relieves the insurer of the responsibility to pay the indemnity agreed
upon if the insured is shown to have contributed to his own accident.
Indeed, most accidents are caused by negligence. It bears noting that
insurance contracts are as a rule supposed to be interpreted liberally in
favor of the assured.
CALANOC vs CA and THE PHILIPPINE AMERICAN LIFE INSURANCE
CO. G.R. No. L-8151 December 16, 1955
FACTS
Basilio was a watchman of the Manila Auto Supply, secured a life insurance
policy from the Philippine American Life Insurance Company in the amount
of P2,000 to which was attached a supplementary contract covering death
by accident. On January 25, 1951, he died of a gunshot wound on the victim. In any event, the fact remains that the happening was a pure
occasion of a robbery committed in the house of Atty. Ojeda (he was on the accident on the part of the victim.
site, few blocks away from the premises of the Manila Auto Supply because
of the policeman’s invitation to accompany them in checking the lawyers The terms and phraseology of the exception clause be clearly expressed so
house which the lawyer suspected of being robbed). Virginia, the widow, as to be within the easy grasp and understanding of the insured, for if the
was paid the sum of P2,000, face value of the policy, but when she terms are doubtful or obscure the same must of necessity be interpreted or
demanded the payment of the additional sum of P2,000 representing the resolved against the one who has caused the obscurity.
value of the supplemental policy, the company refused alleging that the
deceased died because he was murdered by a person who took part in the
commission of the robbery and while making an arrest as an officer of the
law which contingencies were expressly excluded in the contract and have
the effect of exempting the company from liability.

ISSUE:
Whether the insurer is liable to the insured under the supplementary
contract

HELD:

Yes the insurer is liable under the supplementary contract .The

circumstance that he was a mere watchman and had no duty to heed the
call of Atty. Ojeda should not be taken as a capricious desire on his part to
expose his life to danger considering the fact that the place he was in duty-
bound to guard was only a block away. In volunteering to extend help under
the situation, he might have thought, rightly or wrongly, that to know the truth
was in the interest of his employer it being a matter that affects the security
of the neighborhood. He cannot therefore be blamed solely for doing what
he believed was in keeping with his duty as a watchman and as a citizen.
And he cannot be considered as making an arrest as an officer of the law for
certainly he did not go there for that purpose nor was he asked to do so by
the policeman. Much less can it be pretended that Basilio died in the course
of an assault or murder considering the very nature of these crimes. It
cannot be said be said that the killing was intentional for there is the
possibility that the malefactor had fired the shot merely to scare away the
people around for his own protection and not necessarily to kill or hit the