Malayan Insurance Co., Inc. vs. CA [G.R. No. L-36413, 26 Sepe!

"er 1#$$%
Post under case digests, Commercial Law at Tuesday, February 21, 2012 Posted by Schizophrenic ind
&acs'
alayan !nsurance Co" !nc" #$L$%$&' issued a Pri(ate Car Comprehensi(e Policy co(ering a )illys *eep" The insurance co(erage was +or
,own damage, not to e-ceed P.00"00 and ,third/party liability, in the amount o+ P20,000"00"
0uring the e++ecti(ity o+ the insurance policy, , the insured *eep, while being dri(en by one 1uan P" Campollo an employee o+ the respondent San
Leon 2ice ill, !nc", #S$& L34&' collided with a passenger bus belonging to the respondent Pangasinan Transportation Co", !nc"
#P$&T2$&C4' at the national highway in 5arrio San Pedro, 2osales, Pangasinan, causing damage to the insured (ehicle and in*uries to the
dri(er, 1uan P" Campollo, and the respondent artin C" 6alle*os, who was riding in the ill/+ated *eep"
artin C" 6alle*os +iled an action +or damages against Sio Choy, alayan !nsurance Co", !nc" and the P$&T2$&C4 be+ore the Court o+ First
!nstance o+ Pangasinan" The trial court rendered *udgment holding Sio Choy, S$& L34&, and $L$%$& *ointly and se(erally liable" 7owe(er,
$L$%$&8s liability will only be up to P20,000"
4n appeal, C$ a++irmed the decision o+ the trial court" 7owe(er, it ruled that S$& L34& has no obligation to indemni+y or reimburse the petitioner
insurance company +or whate(er amount it has been ordered to pay on its policy, since the San Leon 2ice ill, !nc" is not a pri(y to the contract
o+ insurance between Sio Choy and the insurance company"
$L$%$& appealed to the SC by way o+ re(iew on certiorari"
Issues'
#1' )hether or not $L$%$& is solidarily liable to 6alle*os, along with Sio Choy and S$& L34&
#2' )hether or not $L$%$& is entitled to be reimbursed by S$& L34& +or whate(er amount petitioner has been ad*udged to pay respondent
6alle*os on its insurance policy"
(el)'
#1' 4nly Sio Choy and S$& L34& are solidarily liable to 6alle*os +or the award o+ damages" Sio Choy is liable as owner o+ the *eep pursuant to
$rticle 219:, while S$& L34& is liable as the employer o+ the dri(er o+ the *eep at the time o+ the accident pursuant to $rt 2190"
$L$%$&8s liability, howe(er, arose only out o+ the insurance policy with Sio Choy" Petitioner as insurer o+ Sio Choy, is liable to respondent
6alle*os, but it cannot, as incorrectly held by the trial court, be made ,solidarily, liable with the two principal tort+easors namely respondents Sio
Choy and S$& L34&"
#2' $L$%$& is entitled to be reimbursed" ;pon payment o+ the loss, the insurer is entitled to be subrogated pro tanto to any right o+ action
which the insured may ha(e against the third person whose negligence or wrong+ul act caused the loss" )hen the insurance company pays +or
the loss, such payment operates as an e<uitable assignment to the insurer o+ the property and all remedies which the insured may ha(e +or the
reco(ery thereo+" That right is not dependent upon , nor does it grow out o+ any pri(ity o+ contract or upon written assignment o+ claim, and
payment to the insured ma=es the insurer assignee in e<uity"
MANILA MA(*GAN+ MAN,&AC-,RING C*R.*RA-I*N vs. C*,R- *& A../ALS AN01/NI-(INS,RANC/ C*R.*RA-I*N 2G.R. No.
L-32436 2*co"er 12, 1#$45
&AC-S'
Petitioner anila ahogany anu+acturing Corporation insured its ercedes 5enz :/door sedan withrespondent >enith !nsurance Corporation"
The insured (ehicle was bumped and damaged by a truc=owned by San iguel Corporation" For the damage caused, respondent company paid
petitioner +i(ethousand pesos #P?,000"00' in amicable settlement" Petitioner@s general manager e-ecuted a 2elease o+ Claim, subrogating
respondent company to all its right to action against San iguel Corporation"Therea+ter, respondent company wrote !nsurance $d*usters, !nc" to
demand reimbursement +rom Saniguel Corporation o+ the amount it had paid petitioner" !nsurance $d*usters, !nc" re+usedreimbursement,
alleging that San iguel Corporation had already paid petitioner P:,?00"00 +or thedamages to petitioner@s motor (ehicle, as e(idenced by a cash
(oucher and a 2elease o+ Claim e-ecutedby the Aeneral anager o+ petitioner discharging San iguel Corporation +rom ,all actions,
claims,demands the rights o+ action that now e-ist or herea+ter de(elop arising out o+ or as a conse<uence o+ the accident" ,2espondent
insurance company thus demanded +rom petitioner reimbursement o+ thesum o+ P:,?00"00 paid by San iguel Corporation" Petitioner re+usedB
hence, the instant case"
ISS,/'
)hether or not the respondent insurance company is subrogated to the rights o+ the petitioner againstSan iguel Corporation"
(/L0'
%3S
R,LING'
The Supreme Court held that i+ a property is insured and the owner recei(es the indemnity +rom theinsurer, it is pro(ided in C$rticle 220D o+ the
&ew Ci(il CodeE that the insurer is deemed subrogated tothe rights o+ the insured against the wrongdoer and i+ the amount paid by the insurer
does not +ullyco(er the loss, then the aggrie(ed party is the one entitled to reco(er the de+iciency" ;nder this legalpro(ision, the real party in
interest with regard to the portion o+ the indemnity paid is the insurer andnot the insured"7ence, petitioner is entitled to =eep the sum o+
P:,?00"00 paid by San iguel Corporation under itsclear right to +ile a de+iciency claim +or damages incurred, against the wrongdoer, should the
insurancecompany not +ully pay +or the in*ury caused #$rticle 220D, &ew Ci(il Code'"7owe(er, when petitioner released San iguel Corporation
+rom any liability, petitioner@s right to retainthe sum o+ P?,000"00 no longer e-isted, thereby entitling pri(ate respondent to reco(er the same"
Theright o+ subrogation can only e-ist a+ter the insurer has paid the insured otherwise the insured will bedepri(ed o+ his right to +ull indemnity" !+
the insurance proceeds are not su++icient to co(er the damages su++ered by the insured, then he may sue the party responsible +or the damage
+or the remainder" To thee-tent o+ the amount he has already recei(ed +rom, the insurer en*oys the right o+ subrogation" Sincethe insurer can be
subrogated to only such rights as the insured may ha(e, should the insured, a+terrecei(ing payment +rom the insurer, release the wrongdoer who
caused the loss, the insurer loses hisrights against the latter" 5ut in such a case, the insurer will be entitled to reco(er +rom the insuredwhate(er
it has paid to the latter, unless the release was made with the consent o+ the insurer"
.an Malayan Ins. Corp. v. Cour o6 Appeals1$4 SCRA 34C*R-/S,
1"F
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4n 0ecember 10, 1G9?, P$&$L$% +iled a complaint +or damages with the 2TC o+ a=ati against pri(ate respondents 3rlindaFabie and her
dri(er" P$&$L$% a(erred the +ollowingF that itinsured a itsubishi Colt Lancer car with plate &o" 00>/:H1 andregistered in the name o+
Canlubang $utomoti(e 2esourcesCorporation CC$&L;5$&AEB that on ay 2., 1G9?, due to the,carelessness, rec=lessness, and imprudence, o+
the un=nown dri(er o+ a pic=/up with plate no" PC2/220, the insured car was hit andsu++ered damages in the amount o+ P:2,0?2"00B that
P$&$L$%de+rayed the cost o+ repair o+ the insured car and, there+ore, wassubrogated to the rights o+ C$&L;5$&A against the dri(er o+ the
pic=/up and his employer, 3rlinda FabieB and that, despite repeateddemands, de+endants, +ailed and re+used to pay the claim o+ P$&$L$%"4n
February 12, 1G9., pri(ate respondents +iled a otion to 0ismissalleging that P$&$L$% had no cause o+ action against them"They argued that
payment under the ,own damage, clause o+ theinsurance policy precluded subrogation under $rticle 220D o+ theCi(il Code, since indemni+ication
thereunder was made on theassumption that there was no wrongdoer or no third party at +ault"
Issue'
)hether or not the insurer P$&$L$% may institute anaction to reco(er the amount it had paid its assured in settlement o+ an insurance claim
against pri(ate respondents as the partiesallegedly responsible +or the damage caused to the insured (ehicle"
(el)'
!t cannot be said that the meaning gi(en by P$&$L$% andC$&L;5$&A to the phrase ,by accidental collision or o(erturning,+ound in the +irst
paint o+ sub/paragraph #a' is untenable" $lthoughthe terms ,accident, or ,accidental, as used in insurance contractsha(e not ac<uired a technical
meaning, the Court has on se(eraloccasions de+ined these terms to mean that which ta=es place,without one@s +oresight or e-pectation, an e(ent
that proceeds +roman un=nown cause, or is an unusual e++ect o+ a =nown cause and,there+ore, not e-pected, C0e la Cruz (" The Capital
!nsurance ISurety Co", !nc",E" Certainly, it cannot be in+erred +rom *urisprudencethat these terms, without <uali+ication, e-clude e(ents resulting
indamage or loss due to the +ault, rec=lessness or negligence o+ third parties" The concept ,accident, is not necessarily synonymous withthe
concept o+ ,no +ault," !t may be utilized simply to distinguishintentional or malicious acts +rom negligent or careless acts o+ man"!t must be
reiterated that in this present case, the insurer P$&$L$% as subrogee merely prays that it be allowed to institutean action to reco(er +rom third
parties who allegedly caused damageto the insured (ehicle, the amount which it had paid its assured under the insurance policy" 7a(ing thus
shown +rom the abo(e discussionthat P$&$L$% has a cause o+ action against third parties whosenegligence may ha(e caused damage to
C$&L;5$&A@s car, theCourt holds that there is no legal obstacle to the +iling byP$&$L$% o+ a complaint +or damages against
pri(aterespondents as the third parties allegedly responsible +or the damage"2espondent Court o+ $ppeals there+ore committed re(ersible error
insustaining the lower court@s order which dismissed P$&$L$%@scomplaint against pri(ate respondents +or no cause o+ action" 7ence,it is now
+or the trial court to determine i+ in +act the damage causedto the insured (ehicle was due to the ,carelessness, rec=lessness andimprudence, o+
the dri(er o+ pri(ate respondent 3rlinda Fabie")7323F423, in (iew o+ the +oregoing, the present petition isA2$&T30" Petitioner@s complaint +or
damages against pri(aterespondents is hereby 23!&ST$T30" Let the case be remanded tothe lower court +or trial on the merits"
Ce"u S78pyar) v 98ll8a! G.R. No. 1326:4. May 3, 1###
;. .ur8s8!a
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Cebu Shipyard and 3ngineering )or=s, !nc" repaired marine (essels while the Prudential is in the non/li+e insurance business" )illiam Lines,
!nc", the owner o+ J6 anila City, a lu-ury passenger/cargo (essel, which caught +ire and san=" $t the time o+ the incident, sub*ect (essel was
insured with Prudential +or P:? +or hull and machinery" CS3) was insured +or only Php 10 million +or the shiprepairer8s liability policy" They
entered into a contract where negligence was the only +actor that could ma=e CS3) liable +or damages" oreo(er, liability o+ CS3) was limited
to only Php 1million +or damages" The 7ull Policy included an K$dditional Perils #!&C7$233'L Clause co(ering loss o+ or damage to the (essel
through the negligence o+, among others, ship repairmen"
)illiam brought anila City to the dry doc= o+ CS3) +or repairs" The o++icers and cabin crew stayed at the ship while it was being repaired" $+ter
the (essel was trans+erred to the doc=ing <uay, it caught +ire and san=, resulting to its total loss"
)illiam brought suit against CS3) alleging that it was through the latter8s negligence that the ship caught +ire and san=" Prudential was
impleaded as co/plainti++ a+ter it had paid the (alue o+ insured items" !t was subrogated to :? million, or the (alue it claimed to indemni+y"
The trial court brought *udgment against CS3) :? million +or the ship indemnity, .? million +or loss o+ income, and more than 1H million in other
damages" The C$ a++irmed the TC decision"
CS3) contended that the cause o+ the +ire was due to )illiam8s hotwor=s on the said portion o+ the ship which they didn8t as= CS3) permission
+or"
Prudential, on the other hand, blamed the negligence o+ the CS3) wor=ers in the instance when they didn8t mind rubber insulation wire coming
out o+ the air/conditioning unit that was already burning"
7ence this F2"
Issue'
1" )4& CS3) had Kmanagement and super(isory controlK o+ the ship at the time the +ire bro=e out
2" )4& the doctrine o+ res ipsa lo<uitur applies against the crew
H" )4& Prudential has the right o+ subrogation against its own insured
:" )4& the pro(isions limiting CS3)8s liability +or negligence to a ma-imum o+ Php 1 million are (alid
(el)'
%es" %es" %es" &o" Petition denied"
Ra8o'
1" The that +actual +indings by the C$ are conclusi(e on the parties and are not re(iewable by this Court" They are entitled to great weight and
respect when the C$ a++irmed the +actual +indings arri(ed at by the trial court"
The C$ and the Cebu 2TC are agreed that the +ire which caused the total loss o+ sub*ect J6 anila City was due to the negligence o+ the
employees and wor=ers o+ CS3)"
Furthermore, in petitions +or re(iew on certiorari, only <uestions o+ law may be put into issue" Muestions o+ +act cannot be entertained"
2" For the doctrine o+ res ipsa lo<uitur to apply to a gi(en situation, the +ollowing conditions must concurF #1' the accident was o+ a =ind which
does not ordinarily occur unless someone is negligentB and #2' that the instrumentality or agency which caused the in*ury was under the
e-clusi(e control o+ the person charged with negligence"
The +acts and e(idence re(eal the presence o+ these conditions" First, the +ire would not ha(e happened in the ordinary course o+ things i+
reasonable care and diligence had been e-ercised"
Second, the agency charged with negligence, as +ound by the trial court and the C$ and as shown by the records, is CS3), which had control
o(er sub*ect (essel when it was doc=ed +or annual repairs"
)hat is more, in the present case the trial court +ound direct e(idence to pro(e that the wor=ers didn8t e-ercise due diligence in the care o+
sub*ect (essel" The direct e(idence substantiates the conclusion that CS3) was really negligent e(en without applying such doctrine"
H" Petitioner contends that Prudential is not entitled to be subrogated to the rights o+ )illiam Lines, !nc", theorizing that #1' the +ire which gutted
J6 anila City was an e-cluded ris= and #2' it is a co/assured under the arine 7ull !nsurance Policy" This was wrong" The one who caused
the +ire has already been ad*udicated by the courts as CS3)"
;pon proo+ o+ payment by Prudential to )illiam Lines, !nc", the +ormer was subrogated to the right o+ the latter to indemni+ication +rom CS3)" $s
aptly ruled by the Court o+ $ppeals, the law saysF
$rt" 220D" !+ the plainti++8s property has been insured, and he has recei(ed indemnity +rom the insurance company +or the in*ury or loss arising out
o+ the wrong or breach o+ contract complained o+, the insurance company shall be subrogated to the rights o+ the insured against the wrongdoer
or the person who has (iolated the contract" !+ the amount paid by the insurance company does not +ully co(er the in*ury or loss, the aggrie(ed
party shall be entitled to reco(er the de+iciency +rom the person causing the loss or in*ury"
)hen Prudential paid the latter the total amount co(ered by its insurance policy, it was subrogated to the right o+ the latter to reco(er the insured
loss +rom the liable party, CS3)"
Petitioner theorizes +urther that there can be no right o+ subrogation as it is deemed a co/assured under the sub*ect insurance policy with reliance
on Clause 20 o+ the )or= 4rder which statesF
20" The insurance on the (essel should be maintained by the customer andJor owner o+ the (essel during the period the contract is in e++ect"
Clause 20 o+ the )or= 4rder in <uestion is clear in the sense that it re<uires )illiam Lines to maintain insurance on the (essel during the period
o+ dry/doc=ing or repair" 7owe(er, the +act that CS3) bene+its +rom the said stipulation does not automatically ma=e it as a co/assured o+
)illiam Lines" The intention o+ the parties to ma=e each other a co/assured under an insurance policy is to be read +rom the insurance contract
or policy itsel+ and not +rom any other contract or agreement because the insurance policy denominates the bene+iciaries o+ the insurance" The
hull and machinery insurance procured by )illiam Lines, !nc" +rom Prudential named only K)illiam Lines, !nc"L as the assured" There was no
mani+estation o+ any intention o+ )illiam Lines, !nc" to constitute CS3) as a co/assured under sub*ect policy" The claim o+ CS3) that it is a co/
assured is un+ounded"
Then too, in the $dditional Perils Clause o+ the same arine !nsurance Policy, it is pro(ided that this insurance also co(ers loss o+ or damage to
(essel directly caused by the negligence o+ charterers and repairers who are not assured"
$s correctly pointed out by respondent Prudential, i+ CS3) were deemed a co/assured under the policy, it would nulli+y any claim o+ )illiam
Lines, !nc" +rom Prudential +or any loss or damage caused by the negligence o+ CS3)" Certainly, no shipowner would agree to ma=e a
shiprepairer a co/assured under such insurance policyB otherwise, any claim +or loss or damage under the policy would be in(alidated"
:" $lthough in this *urisdiction, contracts o+ adhesion ha(e been consistently upheld as (alid per seB as binding as an ordinary contract, the Court
recognizes instances when reliance on such contracts cannot be +a(ored especially where the +acts and circumstances warrant that sub*ect
stipulations be disregarded" Thus, in ruling on the (alidity and applicability o+ the stipulation limiting the liability o+ CS3) +or negligence to P1
only, the +acts and circumstances (is/a/(is the nature o+ the pro(ision sought to be en+orced should be considered, bearing in mind the principles
o+ e<uity and +air play"
!t is worthy to note that J6 anila City was insured with Prudential +or P:?" ;pon thorough in(estigation by its hull sur(eyor, J6 anila City
was +ound to be beyond economical sal(age and repair" The e(aluation o+ the a(erage ad*uster also reported a constructi(e total loss" The said
claim o+ )illiam Lines, !nc", was then +ound to be (alid and compensable such that Prudential paid the latter the total (alue o+ its insurance claim"
Furthermore, it was ascertained that the replacement cost o+ the (essel, amounts to P??"
Considering the circumstances, it would un+air to limit the liability o+ petitioner to 4ne illion Pesos only" To allow CS3) to limit its liability to
P1 notwithstanding the +act that the total loss su++ered by the assured and paid +or by Prudential amounted to P:? would sanction the
e-ercise o+ a degree o+ diligence short o+ what is ordinarily re<uired because, then, it would not be di++icult +or petitioner to escape liability by the
simple e-pedient o+ paying an amount (ery much lower than the actual damage su++ered by )illiam"
0/LSAN -RANS.*R- LIN/S, INC., vs. -(/ (*N. C*,R- *& A../ALS, /- AL. G.R. No. 124$#4. AN INS,RANC/ LA9 CAS/. <+ C +.
<elo= 78s )8>es 8s 7e 6ull case.
&AC-S.
1" Calte- Philippines entered into a contract o+ a++reightment with the petitioner, 0elsan Transport Lines, !nc", +or a period o+ one year whereby
the said common carrier agreed to transport Calte-8s industrial +uel oil +rom the 5atangas/5ataan 2e+inery to di++erent parts o+ the country"
2" petitioner too= on board its (essel, T aysun 2,2DD"H1: =iloliters o+ industrial +uel oil o+ Calte- +rom 5atangas to be deli(ered
to the Calte- 4il Terminal in >amboanga City" The shipment was insured with the pri(ate respondent, $merican 7ome $ssurance Corporation"
;n+ortunately, the (essel san= near Panay Aul+ in the 6isayas ta=ing with it the entire cargo o+ +uel oil"
H" pri(ate respondent paid Calte- the sum o+ P?,0G.,.H?".D' representing the insured (alue o+ the lost cargo" 3-ercising its right o+ subrogation
under $rticle 220D o+ the &ew Ci(il Code, the pri(ate respondent demanded o+ the petitioner the same amount it paid to Calte-"
:" 0ue to its +ailure to collect +rom the petitioner despite prior demand, pri(ate respondent +iled a complaint with the 2egional Trial Court o+
a=ati City, 5ranch 1HD, +or collection o+ a sum o+ money who dismiss the case on the ground that the (essel was seaworthy to ta=e the (oyage
and that the cause o+ the sin=ing was due to a +orce ma*eure"
?" The court o+ appeals re(ersed the decision o+ the trial court stating that the weather condition at the time o+ the incidents was good as reported
by the P$A/$S$ so the sin=ing was not due to a +orce ma*eure and that the (essel was improperly manned so the petitioner was liable to the
pri(ate respondent"
." !n its petition to the supreme court, Petitioner 0elsan Transport Lines, !nc" in(o=es the pro(ision o+ Section 11H o+ the !nsurance Code o+ the
Philippines, which states that in e(ery marine insurance upon a ship or +reight, or +reightage, or upon any thin which is the sub*ect o+ marine
insurance there is an implied warranty by the shipper that the ship is seaworthy" Conse<uently, the insurer will not be liable to the assured +or any
loss under the policy in case the (essel would later on be +ound as not seaworthy at the inception o+ the insurance" !t theorized that when pri(ate
respondent paid Calte- the (alue o+ its lost cargo, the act o+ the pri(ate respondent is e<ui(alent to a tacit recognition that the ill/+ated (essel was
seaworthyB otherwise, pri(ate respondent was not legally liable to Calte- due to the latter8s breach o+ implied warranty under the marine
insurance policy that the (essel was seaworthy"
The +ailure o+ the pri(ate respondent to present the insurance policy in e(idence is allegedly +atal to its claim inasmuch as there is no way to
determine the rights o+ the parties thereto"
ISS,/S.
)hether or not the payment made by the pri(ate respondent to Calte- +or the insured (alue o+ the lost cargo amounted to an admission that the
(essel was seaworthy, thus precluding any action +or reco(ery against the petitioner"
)hether or not the non/presentation o+ the marine insurance policy bars the complaint +or reco(ery o+ sum o+ money +or lac= o+ cause o+ action"
Accor)8n> o 7e Supre!e Cour,
The payment made by the pri(ate respondent +or the insured (alue o+ the lost cargo operates as wai(er o+ its right to en+orce the term
o+ the implied warranty against Calte- under the marine insurance policy but the same cannot be (alidly interpreted as an automatic admission o+
the (essel8s seaworthiness by the pri(ate respondent as to +oreclose recourse against the petitioner +or any liability under its contractual
obligation as a common carrier" The +act o+ payment grants the pri(ate respondent subrogatory right which enables it to e-ercise legal remedies
that would otherwise be a(ailable to Calte- as owner o+ the lost cargo against the petitioner common carrier"
$nd in the second issue, the SC said that the presentation in e(idence o+ the marine insurance policy is not indispensable in this case be+ore the
insurer may reco(er +rom the common carrier the insured (alue o+ the lost cargo in the e-ercise o+ its subrogatory right" The subrogation
receipt,by itsel+, is su++icient to establish not only the relationship o+ pri(ate respondent as insurer and Calte-, as the assured shipper o+ the lost
cargo o+ industrial +uel oil, but also the amount paid to settle the insurance claim" The right o+ subrogation accrues simply upon payment by the
insurance company o+ the insurance claim"
So the petition was dismissed"
&/0/? vs. A(AC an) .(ILAM INS,RANC/ C*M.AN+, INC
G.R. No. 13::#4
Au>us 1$, 2::4
&AC-S'
Shipper S!T7NL!&3 ;S$ deli(ered to carrier 5urlington $ir 3-press #5;2L!&AT4&', an agent o+ CPetitionerE Federal 3-press Corporation, a
shipment o+ 10G cartons o+ (eterinary biologicals +or deli(ery to consignee S!T7NL!&3 and French 4(erseas Company in a=ati City" The
shipment was co(ered by 5urlington $irway 5ill &o" 112.H92? with the words, O23F2!A32$T3 )73& &4T !& T2$&S!T8 and OP32!S7$5L38
stamp mar=ed on its +ace" That same day, 5urlington insured the cargoes with $merican 7ome $ssurance Company #$7$C'" The +ollowing
day, 5urlington turned o(er the custody o+ said cargoes to F303P which transported the same to anila"
The shipments arri(ed in anila and was immediately stored at CCargohaus !nc"8sE warehouse" Prior to the arri(al o+ the cargoes, F303P
in+ormed A3TC Cargo !nternational Corporation, the customs bro=er hired by the consignee to +acilitate the release o+ its cargoes +rom the
5ureau o+ Customs, o+ the impending arri(al o+ its client8s cargoes"
12 days a+ter the cargoes arri(ed in anila, 0!4&30$, a non/licensed custom8s bro=er who was assigned by A3TC, +ound out, while he was
about to cause the release o+ the said cargoes, that the same CwereE stored only in a room with 2 air conditioners running, to cool the place
instead o+ a re+rigerator" 0!4&30$, upon instructions +rom A3TC, did not proceed with the withdrawal o+ the (accines and instead, samples o+
the same were ta=en and brought to the 5ureau o+ $nimal !ndustry o+ the 0epartment o+ $griculture in the Philippines by S!T7NL!&3 +or
e-amination wherein it was disco(ered that the O3L!S$ reading o+ (accinates sera are below the positi(e re+erence serum"8
$s a conse<uence o+ the +oregoing result o+ the (eterinary biologics test, S!T7NL!&3 abandoned the shipment and, declaring Ototal loss8 +or the
unusable shipment, +iled a claim with $7$C through its representati(e in the Philippines, the Philam !nsurance Co", !nc" #P7!L$' which
recompensed S!T7NL!&3 +or the whole insured amount" Therea+ter, P7!L$ +iled an action +or damages against the F303P imputing
negligence on either or both o+ them in the handling o+ the cargo"
Trial ensued and ultimately concluded with the F303P being held solidarily liable +or the loss" $ggrie(ed, petitioner appealed to the C$" The
appellate court ruled in +a(or o+ P7!L$ and held that the shipping 2eceipts were a prima +acie proo+ that the goods had indeed been deli(ered
to the carrier in good condition"
ISS,/'
!s F303P liable +or damage to or loss o+ the insured goods
(/L0'
Petition granted" $ssailed decision re(ersed inso+ar as it pertains to F303P
Prescription o+ Claim
From the initial proceedings in the trial court up to the present, petitioner has tirelessly pointed out that respondents8 claim and right o+ action are
already barred" !ndeed, this +act has ne(er been denied by respondents and is plainly e(ident +rom the records"
$irway 5ill &o" 112.H92?, issued by 5urlington as agent o+ petitioner, statesF
K." &o action shall be maintained in the case o+ damage to or partial loss o+ the shipment unless a written notice, su++iciently describing the
goods concerned, the appro-imate date o+ the damage or loss, and the details o+ the claim, is presented by shipper or consignee to an o++ice o+
5urlington within #1:' days +rom the date the goods are placed at the disposal o+ the person entitled to deli(ery, or in the case o+ total loss
#including non/deli(ery' unless presented within #120' days +rom the date o+ issue o+ the C$irway 5illE" ---
2ele(antly, petitioner8s airway bill statesF
K12"J12"1 The person entitled to deli(ery must ma=e a complaint to the carrier in writing in the caseF
12"1"1 o+ (isible damage to the goods, immediately a+ter disco(ery o+ the damage and at the latest within +ourteen #1:' days +rom receipt o+ the
goodsB ---
$rticle 2. o+ the )arsaw Con(ention, on the other hand, pro(idesF
P-- #2' !n case o+ damage, the person entitled to deli(ery must complain to the carrier +orthwith a+ter the disco(ery o+ the damage, and, at the
latest, within H days +rom the date o+ receipt in the case o+ baggage and D days +rom the date o+ receipt in the case o+ goods" --
#H' 3(ery complaint must be made in writing upon the document o+ transportation or by separate notice in writing dispatched within the times
a+oresaid"
#:' Failing complaint within the times a+oresaid, no action shall lie against the carrier, sa(e in the case o+ +raud on his part"L ---
Condition Precedent
!n this *urisdiction, the +iling o+ a claim with the carrier within the time limitation there+or actually constitutes a condition precedent to the accrual o+
a right o+ action against a carrier +or loss o+ or damage to the goods" The shipper or consignee must allege and pro(e the +ul+illment o+ the
condition" !+ it +ails to do so, no right o+ action against the carrier can accrue in +a(or o+ the +ormer" The a+orementioned re<uirement is a
reasonable condition precedentB it does not constitute a limitation o+ action"
The re<uirement o+ gi(ing notice o+ loss o+ or in*ury to the goods is not an empty +ormalism" The +undamental reasons +or such a stipulation are
#1' to in+orm the carrier that the cargo has been damaged, and that it is being charged with liability there+orB and #2' to gi(e it an opportunity to
e-amine the nature and e-tent o+ the in*ury" KThis protects the carrier by a++ording it an opportunity to ma=e an in(estigation o+ a claim while the
matter is +resh and easily in(estigated so as to sa+eguard itsel+ +rom +alse and +raudulent claims"
&4T3SF as to proper payeeF
The Certi+icate speci+ies that loss o+ or damage to the insured cargo is Kpayable to order - - - upon surrender o+ this Certi+icate"L Such wording
con(eys the right o+ collecting on any such damage or loss, as +ully as i+ the property were co(ered by a special policy in the name o+ the holder
itsel+" $t the bac= o+ the Certi+icate appears the signature o+ the representati(e o+ 5urlington" This document has thus been duly indorsed in
blan= and is deemed a bearer instrument"
Since the Certi+icate was in the possession o+ Smith=line, the latter had the right o+ collecting or o+ being indemni+ied +or loss o+ or damage to the
insured shipment, as +ully as i+ the property were co(ered by a special policy in the name o+ the holder" 7ence, being the holder o+ the Certi+icate
and ha(ing an insurable interest in the goods, Smith=line was the proper payee o+ the insurance proceeds"
Su"ro>a8on
,pon rece8p o6 7e 8nsurance procee)s, 7e cons8>nee 2S!87@l8ne5 eAecue) a su"ro>a8on Rece8p 8n 6avor o6 respon)ens. -7e
laer =ere 7us au7or8Be) Co 68le cla8!s an) "e>8n su8 a>a8ns any suc7 carr8er, vessel, person, corpora8on or >overn!en.D
,n)en8a"ly, 7e cons8>nee 7a) a le>al r8>7 o rece8ve 7e >oo)s 8n 7e sa!e con)88on 8 =as )el8vere) 6or ranspor o pe88oner. I6
7a r8>7 =as v8olae), 7e cons8>nee =oul) 7ave a cause o6 ac8on a>a8ns 7e person respons8"le 7ere6or.
CIR vs.LINC*LN .(ILI..IN/ LI&/ INS,RANC/ C*M.AN+
&AC-S'
Prior to 1G9:, Lincoln Philippine Li+e !nsurance Company, !nc" #now called 1ardine/C$ Li+e !nsurance Company, !nc"' used to issue policies
called K1unior 3state 5uilder PolicyL" $ clause therein pro(ides +or an automatic increase in the amount o+ li+e insurance co(erage upon
attainment o+ a certain age by the insured without the need o+ issuing a new policy" The clause was to ta=e e++ect in the year 1G9:" 0ocumentary
stamp ta-es due on the policy were paid by Lincoln Philippine only on the initial sum assured"
)hen the clause became e++ecti(e in 1G9:, the Commissioner o+ !nternal 2e(enue assessed an additional ta- on the increased amount o+ the
co(erage o+ the said policies" Said ta- was to co(er the de+iciency documentary stamps ta- +or said year" The Court o+ $ppeals ruled that there is
only one policy and the automatic increase is not a separate policyB that said increase o+ co(erage is not co(ered by another documentary stamp
ta-"
ISS,/'
)hether or not there is only one policy"
(/L0'
%es" Section :G, Title 6! o+ the !nsurance Code de+ines an insurance policy as the written instrument in which a contract o+ insurance is set +orth"
Section ?0 o+ the same Code pro(ides that the policy, which is re<uired to be in printed +orm, may contain any word, phrase, clause, mar=, sign,
symbol, signature, number, or word necessary to complete the contract o+ insurance" !t is thus clear that any rider, clause, warranty or
endorsement pasted or attached to the policy is considered part o+ such policy or contract o+ insurance"
The sub*ect insurance policy at the time it was issued contained an Kautomatic increase clause"L $lthough the clause was to ta=e e++ect only in
1G9:, it was written into the policy at the time o+ its issuance" The distincti(e +eature o+ the K*unior estate builder policyL called the Kautomatic
increase clauseL already +ormed part and parcel o+ the insurance contract, hence, there was no need +or an e-ecution o+ a separate agreement
+or the increase in the co(erage that too= e++ect in 1G9: when the assured reached a certain age"
The said increase howe(er is imposable with documentary stamp ta-es" The original documentary stamps ta- paid by Lincoln Philippine co(ers
the original amount o+ the policies without the pro*ected increase" The said increase was already de+inite at the time o+ the issuance o+ the policy"
Thus, the amount insured by the policy at the time o+ its issuance necessarily included the additional sum co(ered by the automatic increase
clause because it was already determinable at the time the transaction was entered into and +ormed part o+ the policy"
)hile ta- a(oidance schemes and arrangements are not prohibited, ta- laws cannot be circum(ented in order to e(ade the payment o+ *ust
ta-es" !n the case at bar, to claim that the increase in the amount insured #by (irtue o+ the automatic increase clause incorporated into the policy
at the time o+ issuance' should not be included in the computation o+ the documentary stamp ta-es due on the policy would be a clear e(asion o+
the law re<uiring that the ta- be computed on the basis o+ the amount insured by the policy"
0/E/L*.M/N- INS,RANC/ C*R. E. IAC AN0 .(IL ,NI*N R/AL-+ 0/E-, 143 SCRA 62 21#$65
&AC-S'
$ +ire occurred in the building o+ pri(ate respondent Phil ;nion 2ealty 0e(t and it sued +or reco(ery o+ damages +rom petitioner 0e(t !nsurance
Corp", on the basis o+ an insurance contract between them" 1"

The petitioner allegedly +ailed to answer on time and was declared in de+ault by the trial court" $s such, petitioner appealed be+ore !$C, in(o=ing
e-cusable negligence but was denied by !$C" 2"

Petitioner <uestioned the amount o+ indemnity due to pri(ate respondent under its insurance contract" Petitioner argued that since at the time o+
the +ire the building was word P?"9 million, Phil ;nion 2ealty 0e(t should be considered its own insurer +or the di++erence between the amount
and the +ace (alue o+ the policy and should share pro rata in the loss sustained"
ISS,/'
)4& the sustention o+ the petitioner is correct
(/L0'
&o" First, there is no e(idence on record that the building was worth P?"9 million at the time o+ the loss and the petitioner did not present any
e(idence to support its claim" 4n the contrary, the building was isnured +or P2"? million and this must be considered, by agreement o+ the insurer
and the insured, as the actual (alue o+ the property insured on the day the +ire occurred"
The court noted that the policy in <uestion is an open policy, which is de+ined under Sec .0 !CP as Kone
in which the (alue o+ the thing insured is not agreed upon but is le+t to be ascertained in
case o+ loss"L
This means that the actual loss, as determined, will represent the total indemnity due the insured +rom the insurer e-cept that only the total
indemnity shall not e-ceed the +ace (alue o+ the policy" C$5F The actual loss has been ascertained and as such, the court will respect such
+actual determination in the absence o+ proo+ that it was arri(ed at arbitrarily" There is no such showing" 7ence, applying the open policy clause
e-pressly agreed upon by the parties in their contract, the pri(ate respondent is entitled to the payment o+ indemnity in the amount o+
P?09,9.D"00