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13. Keppel Cebu Shipyard, Inc. vs.

Pioneer Insurance and Surety Corporation, 601 SCRA 96, September 25, 2009

KEPPEL CEBU SHIPYARD, INC.


vs.
PIONEER INSURANCE AND SURETY CORPORATION

x - - - - - - - - - - - - - - - - - - - - - - -x

PIONEER INSURANCE AND SURETY CORPORATION


vs.
KEPPEL CEBU SHIPYARD, INC.

G.R. Nos. 180880-81 | September 25, 2009 | Nachura, J.

In marine insurance, a constructive total loss occurs under any of the conditions set forth in Section 139 of the Insurance Code,
which provides: a person insured by a contract of marine insurance may abandon the thing insured, or any particular portion hereof
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
insured 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.

FACTS:

KCSI and WG&A executed a Shiprepair Agreement wherein KCSI would renovate and reconstruct WG&As M/V Superferry 3
using its dry docking facilities pursuant to its restrictive safety and security rules and regulations. Prior to the execution of the Shiprepair
Agreement, Superferry 3 was already insured by WG&A with Pioneer. In the course of its repair, M/V Superferry 3 was gutted by fire.
Claiming that the extent of the damage was pervasive, WG&A declared the vessels damage as a total constructive loss and, hence, filed
an insurance claim with Pioneer. Pioneer paid the insurance claim of WG&A in turn, executed a Loss and Subrogation Receipt in favor of
Pioneer. Pioneer claimed for reimbursement armed by the receipt but KSCI did not hid to such demand.

Pioneer asseverates that there existed a total constructive loss so that it had to pay WG&A the full amount of the insurance
coverage and, by operation of law, it was entitled to be subrogated to the rights of WG&A to claim the amount of the loss. KCSI counters
that a total constructive loss was not adequately proven by Pioneer, and that there is no proof of payment of the insurance proceeds.

ISSUE: Whether or not there was total constructive loss

RULING:

Yes, there was total constructive loss.

In marine insurance, a constructive total loss occurs under any of the conditions set forth in Section 139 of the Insurance Code, which
provides: a person insured by a contract of marine insurance may abandon the thing insured, or any particular portion hereof 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 insured
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; x x x.