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
o When 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
o Petitioner 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
FEDEX vs. AHAC and PHILAM INSURANCE
COMPANY, INC
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.
Keppel Cebu Shipyard, Inc. vs. Pioneer Insurance and
Surety Corporation, 601 SCRA 96, September 25, 2009
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&A’s 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.
Insurance Case Digest: Malayan Insurance Co., Inc. V.
Arnaldo (1987)
Lessons Applicable: Authority to Receive Payment/Effect of
Payment (Insurance)
Laws Applicable: Article 64, Article 65, Section 77, Section
306 of the Insurance Code
FACTS:
 June 7, 1981: Malayan insurance co., inc. (MICO) issued
to Coronacion Pinca, Fire Insurance Policy for her
property effective July 22, 1981, until July 22, 1982
 October 15,1981: MICO allegedly cancelled the policy for
non-payment, of the premium and sent the corresponding
notice to Pinca
 December 24, 1981: payment of the premium for Pinca
was received by Domingo Adora, agent of MICO
 January 15, 1982: Adora remitted this payment to
MICO,together with other payments
 January 18, 1982: Pinca's property was completely burned
 February 5, 1982: Pinca's payment was returned by MICO
to Adora on the ground that her policy had been cancelled
earlier but Adora refused to accept it and instead
demanded for payment
 Under Section 416 of the Insurance Code, the period for
appeal is thirty days from notice of the decision of the
Insurance Commission. The petitioner filed its motion for
reconsideration on April 25, 1981, or fifteen days such
notice, and the reglementary period began to run again
after June 13, 1981, date of its receipt of notice of the
denial of the said motion for reconsideration. As the
herein petition was filed on July 2, 1981, or nineteen days
later, there is no question that it is tardy by four days.
 Insurance Commission: favored Pinca
 MICO appealed
ISSUE: W/N MICO should be liable because its agent Adora
was authorized to receive it
HELD: YES. petition is DENIED
 SEC. 77. An insurer is entitled to payment of the
premium as soon as the thing is exposed to the peril
insured against. Notwithstanding any agreement to the
contrary, no policy or contract of insurance issued by an
insurance company is valid and binding unless and until
the premium thereof has been paid, except in the case of a
life or an industrial life policy whenever the grace period
provision applies.
 SEC. 306. xxx xxx xxx
Any insurance company which delivers to an insurance agant
or insurance broker a policy or contract of insurance shall be
demmed to have authorized such agent or broker to receive on
its behalf payment of any premium which is due on such policy
or contract of insurance at the time of its issuance or delivery
or which becomes due thereon.
 Payment to an agent having authority to receive or collect
payment is equivalent to payment to the principal himself;
such payment is complete when the money delivered is
into the agent's hands and is a discharge of the
indebtedness owing to the principal.
 SEC. 64. No policy of insurance other than life shall be
cancelled by the insurer except upon prior notice thereof
to the insured, and no notice of cancellation shall be
effective unless it is based on the occurrence, after the
effective date of the policy, of one or more of the following:
(a) non-payment of premium;
(b) conviction of a crime arising out of acts increasing the
hazard insured against;
(c) discovery of fraud or material misrepresentation;
(d) discovery of willful, or reckless acts or commissions
increasing the hazard insured against;
(e) physical changes in the property insured which result in
the property becoming uninsurable;or
(f) a determination by the Commissioner that the
continuation of the policy would violate or would place the
insurer in violation of this Code.
As for the method of cancellation, Section 65 provides as
follows:
 SEC. 65. All notices of cancellation mentioned in the
preceding section shall be in writing, mailed or delivered
to the named insured at the address shown in the policy,
and shall state (a) which of the grounds set forth in section
sixty-four is relied upon and (b) that, upon written request
of the named insured, the insurer will furnish the facts on
which the cancellation is based.
 A valid cancellation must, therefore, require concurrence
of the following conditions:
(1) There must be prior notice of cancellation to the insured;
(2) The notice must be based on the occurrence, after the
effective date of the policy, of one or more of the grounds
mentioned;

(3) The notice must be (a) in writing, (b) mailed, or delivered

to the named insured, (c) at the address shown in the policy;

(4) It must state (a) which of the grounds mentioned in

Section 64 is relied upon and (b) that upon written request of
the insured, the insurer will furnish the facts on which the
cancellation is based.
 All MICO's offers to show that the cancellation was
communicated to the insured is its employee's testimony
that the said cancellation was sent "by mail through our
mailing section." without more
 It stands to reason that if Pinca had really received the
said notice, she would not have made payment on the
original policy on December 24, 1981. Instead, she would
have asked for a new insurance, effective on that date and
until one year later, and so taken advantage of the
extended period.
 Incidentally, Adora had not been informed of the
cancellation either and saw no reason not to accept the
said payment
 Although Pinca's payment was remitted to MICO's by its
agent on January 15, 1982, MICO sought to return it to
Adora only on February 5, 1982, after it presumably had
learned of the occurrence of the loss insured against on
January 18, 1982 make the motives of MICO highly
suspicious