Académique Documents
Professionnel Documents
Culture Documents
: INSURANCE
Absolute Timber Co. (ATC) has been engaged in the logging business in
Isabela. To secure one of its shipments of logs to be transported by
Andok Shipping Co., ATC purchased a marine policy with an all-risk
provision. Because of a strong typhoon then hitting Northern Luzon, the
vessel sank and the shipment of logs was totally lost. ATC filed its claim,
but the insurer denied the claim on several grounds, namely:
ATC now seeks your legal advice to know if its claim was sustainable.
What is your advice? Explain your answer. (3%)
John Alexander S. Belderol
Insurance Case Digests – Marine Insurance In the present case the entrance of the sea water into the ship's hold
through the defective pipe already described was not due to any
LA RAZON SOCIAL "GO TIAOCO Y HERMANOS," vs. UNION INSURANCE accident which happened during the voyage, but to the failure of the
SOCIETY OF CANTON, LTD. ship's owner properly to repair a defect of the existence of which he
G.R. No. 13983 September 1, 1919 (Perils of the Sea vs. was apprised. The loss was therefore more analogous to that which
Perils of the Ship) directly results from simple unseaworthiness than to that which results
from perils of the sea. As applied to the present case it results that the
Facts: Go Tiaoco Brothers, owner of certain rice cavans insured by owners of the damages rice must look to the shipowner for redress and
Union Insurance, transported these cavans on May, 1915, on the not to the insurer.
steamship Hondagua from the port of Saigon to Cebu. On discharging
the rice from one of the compartments in the after hold, upon arrival at
Cebu, it was discovered that one thousand four hundred seventy-three CATHAY INSURANCE CO. vs. HON. COURT OF APPEALS, and
sacks and been damages by sea water. The trial court found that the REMINGTON INDUSTRIAL SALES CORPORATION
inflow of the sea water during the voyage was due to a defect in one of G.R. No. 76145 June 30, 1987 (Perils of the Sea vs. Perils of
the drain pipes of the ship and concluded that the loss was not covered the Ship)
by the policy of insurance. The court found in effect that the opening
causing loss had resulted in course of time from ordinary wear and tear Facts: Private respondent sought to collect losses and damages
and not from the straining of the ship in rough weather on that voyage. incurred in a shipment of seamless steel pipes under an insurance
The court also found that the repairs that had been made on the pipe contract in favor of the said private respondent as the insured,
were slovenly and defective and that, by reason of the condition of this consignee or importer of aforesaid merchandise while in transit from
pipe, the ship was not properly equipped to receive the rice at the time Japan to the Philippines on board vessel SS "Eastern Mariner".
the voyage was begun. For this reason the court held that the ship was According to respondent, such consignment had earlier been damaged
unseaworthy. by heavy rusting while in transit. As a result, respondent caused the
notation “rusty” to be placed in the bill of lading covering the
The policy of insurance was signed upon a form long in use among consignment. Respondent now contends that placing of notation
companies engaged in maritime insurance. It purports to insure the "rusty" in the way bills is not only private respondent's right but a
cargo from the following among other risks: "Perils . . . of the seas, men natural and spontaneous reaction of whoever received the seamless
of war, fire, enemies, pirates, rovers, thieves, jettisons, . . . barratry of steel pipes in a rusty condition at private respondent's bodega.
the master and mariners, and of all other perils, losses, and misfortunes
that have or shall come to the hurt, detriment, or damage of the said Respondent in its comment on the petition, contends that “rust” is not
goods and merchandise or any part thereof." an inherent vice of the seamless steel pipes without interference of
external factors, while petitioner maintains that the insistence of
Issue: What is meant by the phrase “perils of the sea” as used in the private respondent that rusting is a peril of the sea is erroneous.
marine insurance contract between Go Tiaoco and Union Insurance?
Issue: Is “rusting” of the consignment steel pipes a peril of the sea, or
Held: It must be considered to be settled that a loss which, in the a peril of the ship?
ordinary course of events, results from the natural and inevitable action
of the sea, from the ordinary wear and tear of the ship, or from the Held: There is no question that the rusting of steel pipes in the
negligent failure of the ship's owner to provide the vessel with proper course of a voyage is a "peril of the sea" in view of the toll on the cargo
equipment to convey the cargo under ordinary conditions, is not a peril of wind, water, and salt conditions. At any rate if the insurer cannot be
of the sea. Such a loss is rather due to what has been aptly called the held accountable therefor, We would fail to observe a cardinal rule in
"peril of the ship." The insurer undertakes to insure against perils of the the interpretation of contracts, namely, that any ambiguity therein
sea and similar perils, not against perils of the ship. should be construed against the maker/issuer/drafter thereof, namely,
the insurer. Besides the precise purpose of insuring cargo during a
voyage would be rendered fruitless. An "all risks" provision of a marine policy creates a special type of
insurance which extends coverage to risks not usually contemplated
and avoids putting upon the insured the burden of establishing that the
CHOA TIEK SENG vs. HON. COURT OF APPEALS, FILIPINO MERCHANTS' loss was due to peril falling within the policy's coverage. The insurer can
INSURANCE COMPANY, et. al. avoid coverage upon demonstrating that a specific provision expressly
G.R. No. 84507 March 15, 1990 (“All Risks” Marine Insurance excludes the loss from coverage. In this case, the damage caused to the
Policy) Note: See Succeeding Case cargo has not been attributed to any of the exceptions provided for nor
is there any pretension to this effect. Thus, the liability of respondent
Facts: On November 4, 1976 petitioner imported some lactose insurance company is clear.
crystals from Holland. The goods were loaded at the port at Rotterdam
in sea vans on board the vessel "MS Benalder” as the mother vessel,
and thereafter aboard the feeder vessel "Wesser Broker V-25" of FILIPINO MERCHANTS INSURANCE CO., INC. vs. COURT OF APPEALS
respondent Ben Lines Container, Ltd. The goods were insured by the and CHOA TIEK SENG
respondent Filipino Merchants' Insurance Co., Inc. against “all risks” G.R. No. 85141 November 28, 1989 (“All Risks” Marine Insurance
under the terms of the insurance cargo policy. Upon arrival at the port Policy) Note: See Previous Case
of Manila, the cargo was discharged into the custody of the arrastre
operator respondent E. Razon, Inc. (broker for short), prior to the Facts: Choa Tiek Seng, consignee of the shipment of fishmeal loaded
delivery to petitioner through his broker. Of the 600 bags delivered to on board the vessel SS Bougainville and unloaded at the Port of Manila
petitioner, 403 were in bad order. on or about December 11, 1976, insured said shipment with defendant
insurance company against “all risks”. The fishmeal in 666 new gunny
Respondent insurance company rejected the claim alleging that bags were unloaded from the ship on December 11, 1976 at Manila
assuming that spillage took place while the goods were in transit, unto the arrastre contractor E. Razon, Inc. in bad order. Insurer
petitioner and his agent failed to avert or minimize the loss by failing to contends that the Court of Appeals erred in its interpretation and
recover spillage from the sea van, thus violating the terms of the application of the "all risks" clause of the marine insurance policy when
insurance policy sued upon; and that assuming that the spillage did not it held the petitioner liable to the private respondent for the partial loss
occur while the cargo was in transit, the said 400 bags were loaded in of the cargo, notwithstanding the clear absence of proof of some
bad order, and that in any case, the van did not carry any evidence of fortuitous event, casualty, or accidental cause to which the loss is
spillage. attributable. Petitioner further contends that an "all risks" marine policy
has a technical meaning in insurance in that before a claim can be
Issue: In an “all risks” marine insurance policy, does insured have to compensable it is essential that there must be "some fortuity, "
provide evidence of loss? "casualty" or "accidental cause" to which the alleged loss is attributable
and the failure of herein private respondent, upon whom lay the
Held: No. An “all risks” insurance policy insures against all causes of burden, to adduce evidence showing that the alleged loss to the cargo
conceivable loss or damage, except as otherwise excluded in the policy in question was due to a fortuitous event precludes his right to recover
or due to fraud or intentional misconduct on the part of the insured. It from the insurance policy.
covers all losses during the voyage whether arising from a marine peril
or not, including pilferage losses during the war. The terms of the policy Issue: Who has the duty of proving loss under an “all risks” policy, the
are so clear and require no interpretation. The insurance policy covers insured, or the insurer?
all loss or damage to the cargo except those caused by delay or
inherent vice or nature of the cargo insured. It is the duty of the Held: It depends on the stage of the proceedings for claiming
respondent insurance company to establish that said loss or damage reimbursement. Generally, the burden of proof is upon the insured to
falls within the exceptions provided for by law, otherwise it is liable show that a loss arose from a covered peril, but under an "all risks"
therefor. 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 shipment of corn grains. When NFA refused to pay the amount
"all risks insurance policy" has the initial burden of proving that the reflected in the billing, Hongfil brought an action against NFA and its
cargo was in good condition when the policy attached and that the officers for recovery of deadfreight and demurrage.
cargo was damaged when unloaded from the vessel; thereafter, the
burden then shifts to the insurer to show the exception to the Issue: Is petitioner liable for deadfreight and demurrage due to
coverage. The basic rule is that the insurance company has the burden delay?
of proving that the loss is caused by the risk excepted and for want of
such proof, the company is liable. Held: No. It bears stressing that subject Letter of Agreement is
considered a Charter Party. A charter party is classified into (1)
The burden of the insured, therefore, is to prove merely that the goods "bareboat" or "demise" charter and (2) contract of affreightment.
he transported have been lost, destroyed or deteriorated. Thereafter, Subject contract is one of affreightment, whereby the owner of the
the burden is shifted to the insurer to prove that the loss was due to vessel leases part or all of its space to haul goods for others. It is a
excepted perils. To impose on the insured the burden of proving the contract for special service to be rendered by the owner of the vessel.
precise cause of the loss or damage would be inconsistent with the Under such contract the ship owner retains the possession, command
broad protective purpose of "all risks" insurance. In the present case, and navigation of the ship, the charterer or freighter merely having use
there being no showing that the loss was caused by any of the excepted of the space in the vessel in return for his payment of the charter hire.
perils, the insurer is liable under the policy.
In a contract of affreightment, the shipper or charterer merely contracts
a vessel to carry its cargo with the corresponding duty to provide for
NATIONAL FOOD AUTHORITY, et. al. vs. COURT OF APPEALS AND the berthing space for the loading or unloading. Charterer is merely
HONGFIL SHIPPING CORPORATION required to exercise ordinary diligence in ensuring that a berthing space
G.R. No. 96453 August 4, 1999 (Charter Party is NOT a contract of be made available for the vessel. The charterer does not make itself an
absolute insurance against fortuitous events) absolute insurer against all events which cannot be foreseen or are
inevitable. The law only requires the exercise of due diligence on the
Facts: National Food Authority (NFA) entered into a "Letter of part of the charterer to scout or look for a berthing space. In the
Agreement for Vessel/Barge Hire" with Hongfil Shipping Corporation for present case, shipper, not NFA, had control of the vessel. Not being the
the shipment of 200,000 bags of corn grains from Cagayan de Oro City cause of delay, NFA is not liable for the accruing deadfreight and
to Manila. On February 10, 1987, loading on the vessel commenced and demurrage.
was terminated on March 4, 1987. As there was a strike staged by the
arrastre workers and in view of the refusal of the striking stevedores to
attend to their work, the loading of said corn grains took twenty-one
(21) days, fifteen hours (15) and eighteen (18) minutes to finish. On
March 11, 1987, the vessel M/V CHARLIE/DIANE arrived at the Port of
Manila and a certification of discharging rate was issued at the instance
of Hongfil, stating that it would take twelve (12) days, six (6) hours and
twenty-two (22) minutes to discharge the 200,000 bags of corn grains.
Morgan demanded that Dennis pay the value of the stolen equipment,
but the latter refused on the ground that he also had suffered from the
effects of the typhoon, and insisted that the cause of the loss was
fortuitous event or force majeure.
A.
Data Realty, Inc. (DRI) was engaged in realty development. The family of
Matteo owned 100% of the capital stock of DRI. Matteo was also the
President and Chairman of the Board of Directors. Other members of
Matteo’s family held the major positions in DRI. Because of a nasty
takeover fight with D&E Realty Co., Inc. (D&E), another realty
developer, for the control of a smaller realty company with vast
landholdings, DRI and D&E engaged in an expensive litigation that
eventually led to a money judgment being rendered in favor of D&E.
Meantime, DRI, facing inability to pay its liabilities as they fall due but
still holding substantial assets, filed a petition for voluntary
rehabilitation. Trying to beat the consequences of rehabilitation
proceedings, D&E moved in the trial court for the issuance of a writ of
execution. The trial court also happened to be the rehabilitation court.
The writ of execution was issued.
Serving the writ of execution, Merto, the court sheriff who had just
passed his Credit Transactions subject in law school, garnished Matteo’s
bank accounts, and levied his real properties, including his house and
lot in Makati.
Are the garnishment and levy of Matteo’s assets lawful and proper?
Explain your answer. (4%)
A) No. The garnishment and levy executed in the case were improper.
In voluntary rehabilitation, a rehabilitation recever is assigned by the
court to which its main function is to protect the stakeholders as well as
the assests of the petitioner-corporation from improper disposition and
all claims against the petitioner should be filed before him. Although
there was already money judgment against the petitioner, the same
should be filed before the appointed rehabilitation receiver and not
with another forum so that the court issuace of the writ of execution
which led to the garnishment and levy of some of the properties of the
petitioner asserted by D&E is improper and illegal.
B.
State under what conditions may Sid properly assert his right to inspect
the books and other corporate records of Excellent. Explain your
answer. (3%)
IV.
Procopio, a Director and the CEO of Parisian Hotel Co., Inc. (Parisian),
was charged along with other company officials with several counts
of estafa in connection with the non-remittance of SSS premiums the
company had collected from its employees. During the pendency of the
cases, Parisian filed a petition for rehabilitation. The court, finding the
petition to be sufficient in form and substance, issued a
commencement order together with a stay or suspension order.
Citing the commencement order, Procopio and the other officers facing
the criminal charges moved to suspend the proceedings in the estafa
cases.
b. Suppose you are the trial judge, will you grant the motion to suspend
of Procopio, et al.? Explain your answer. (4%)
V.
A.
When the loan application was about to be approved and the proceeds
released, BG Company, a keen competitor of Othello in the fishing
industry, wrote to the Board of Directors and the management of Lucky
questioning the loan on the ground of conflict of interest due to Samito
and Othello being brothers, citing the legal restriction against bank
exposure of directors, officers, stockholders or their related interests.
(DOSRI).
A.
Under said premises, my advice to him are: first, he can file with the
proper court a petition for suspension of payment of his loan. This
remedy fits to his situation since there are remaining assets of the
business, his debt is expected to become due and for that time he
cannot yet pay it. If not, he may file a petition for voluntary insolvency.
Here he needs to prove the following requirements: 1) the sending of
notice of insolvency to his creditors; 2) his assets is insufficient to pay
his creditors; and 3) his intention that he does not assert such remedy
in fraud of his creditors. After which he can start anew.
B.
Because of his ill-advised investments in the stock market and the fraud
perpetrated against him by his trusted confidante, Wyatt was already
drowning in debt, that is, he had far more liabilities than his entire
assets.
A.
Virtucio was a composer of Ilocano songs who has been quite popular
in the Ilocos Region. Pascuala is a professor of music in a local university
with special focus on indigenous music. When she heard the musical
works of Virtucio, she purchased a CD of his works. She copied thte CD
and sent the second copy to her Music class with instructions for the
class to listen to the CD and analyze the works of Virtucio.
Assuming you are asked your opinion as the legal consultant of DOH,
discuss how you will resolve the matter. (4%)
VIII.
A.
A.
Alfred issued a check for P1,000 to Benjamin, his friend, as payment for
an electronic gadget. The check was drawn against Alfred’s account
with Good Bank. Benjamin then indorsed the check specially in favor of
Cesar. However, Cesar misplaced the check. Dexter, a dormmate of
Cesar, found the check, altered its amount to P91,000 and forged
Cesar’s indorsement by way of a blank indorsement in favor of Felix, a
known jeweler. Felix then caused the deposit of the check in his
account with Solar Bank. As collecting bank, Solar Bank stamped “all
previous indorsements guaranteed” on the check. Seeing such stamp of
the collecting bank, Good Bank paid the amount of P91,000 on the
check.
During the trip, the bus collided with another bus coming from the
opposite direction. The three friends all suffered serious physical
injuries.
a. A conviction under the Trust Receipts Law shall bar a prosecution for
estafa under the Revised Penal Code. (2%)
b. The term capital in relation to public utilities under Sec. 11, Art. XII of
the 1987 Constitution refers to the total outstanding capital stock
comprising both common and non-voting preferred shares. (2%)
c. Forgery is a real defense but may only be raised against a holder not
in due course. (2%)