UCPB General Insurance Co. Inc. v.

Masagana
Telemart, Inc.
G.R. No. 137172, 4 April 2001, 356 SCRA 307

FACTS:

On April 15, 1991, petitioner issued five (5) insurance policies covering respondent’s
various property described therein against fire, for the period from May 22, 1991 to May
22, 1992. In March 1992, petitioner evaluated the policies and decided not to renew them
upon expiration of their terms on May 22, 1992. Petitioner advised respondent’s broker,
Zuellig Insurance Brokers, Inc. of its intention not to renew the policies. On April 6, 1992,
petitioner gave written notice to respondent of the non-renewal of the policies at the
address stated in the policies. On June 13, 1992, fire razed respondent’s property covered
by three of the insurance policies petitioner issued. On July 13, 1992, respondent
presented to petitioner’s cashier at its head office five (5) manager’s checks in the total
amount of P225,753.95, representing premium for the renewal of the policies from May 22,
1992 to May 22, 1993. No notice of loss was filed by respondent under the policies prior to
July 14, 1992. On July 14, 1992, respondent filed with petitioner its formal claim for
indemnification of the insured property razed by fire. On the same day, July 14, 1992,
petitioner returned to respondent the five (5) manager’s checks that it tendered, and at the
same time rejected respondent’s claim for the reasons (a) that the policies had expired
and were not renewed, and (b) that the fire occurred on June 13, 1992, before
respondent’s tender of premium payment.

ISSUE:

Whether or not respondent is entitled to compensation despite the renewal of the

insurance policy after the occurrence of the event insured.

RULING:

No. An insurance policy, other than life, issued originally or on renewal, is not valid and
binding until actual payment of the premium. Any agreement to the contrary is void. 11
The parties may not agree expressly or impliedly on the extension of creditor time to pay
the premium and consider the policy binding before actual payment.
Here, the payment of the premium for renewal of the policies was tendered on July 13,
1992, a month after the fire occurred on June 13, 1992. The assured did not even give the
insurer a notice of loss within a reasonable time after occurrence of the fire.

Grepalife v. CA

89 SCRA 543
Facts:

> On March 14, 1957, respondent Ngo Hing filed an application with
Grepalife for a 20-yr endowment policy for 50T on the life of his one year
old daughter Helen Go.

> All the essential data regarding Helen was supplied by Ngo to
Lapu-Lapu Mondragon, the branch manager of
Grepalife-Cebu. Mondragon then typed the data on the application form
which was later signed by Ngo.

> Ngo then paid the insurance premium and a binding deposit receipt was
issued to him. The binding receipt contained the following provision: “If
the applicant shall not have been insurable xxx and the Company declines to
approve the application, the insurance applied for shall not have been in
force at any time and the sum paid shall be returned to the applicant upon
the surrender of this receipt.”

> Mondragon wrote on the bottom of the application form his strong
recommendation for the approval of the insurance application.

> On Apr 30, 1957, Mondragon received a letter from Grepalife Main
office disapproving the insurance application of Ngo for the simple reason
that the 20yr endowment plan is not available for minors below 7 yrs old.

> Mondragon wrote back the main office again strongly recommending the
approval of the endowment plan on the life of Helen, adding that Grepalife
was the only insurance company NOT selling endowment plans to children.

> On may 1957, Helen died of influenza with complication of broncho

pneumonia. Ngo filed a claim with Gepalife, but the latter denied liability
on the ground that there was no contract between the insurer and the insured
and a binding receipt is NOT evidence of such contract.

Issue:

Whether or not the binding deposit receipt, constituted a temporary contract

of life insurance.
Held:

NO.

The binding receipt in question was merely an acknowledgement on behalf

of the company, that the latter’s branch office had received from the
applicant, the insurance premium and had accepted the application subject
for processing by the insurance company, and that the latter will either
approve or reject the same on the basis of whether or not the applicant is
insurable on standard rates.

Since Grepalife disapproved the insurance application of Ngo, the binding

deposit receipt had never became on force at any time, pursuant to par. E of
the said receipt. A binding receipt is manifestly merely conditional and
does NOT insure outright. Where an agreement is made between the
applicant and the agent, NO liability shall attach until the principal approves
the risk and a receipt is given by the agent.

The acceptance is merely conditional, and is subordinated to the act of the

company in approving or rejecting the application. Thus in life insurance, a
binding slip or binding receipt does NOT insure by itself.

MALAYAN VS PHILIPPINES FIRST

(G.R. NO. 184300 JULY
11, 2012)
Malayan Insurance Co., Inc vs Philippines First Insurance Co., Inc
G.R. No. 184300 July 11, 2012

Facts: 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. On November 18, 1993, Wyeth procured Marine Policy No. MAR 13797 (Marine
Policy) from respondent Philippines First Insurance Co., Inc. (Philippines First) to secure its
interest over its own products. Philippines First thereby insured Wyeth’s nutritional,
pharmaceutical and other products usual or incidental to the insured’s business while the
same were being transported or shipped in the Philippines. The policy covers all risks of
direct physical loss or damage from any external cause, if by land, and provides a limit of
P6,000,000.00 per any one land vehicle. On December 1, 1993, Wyeth executed its annual
contract of carriage with Reputable. It turned out, however, that the contract was not
signed by Wyeth’s representative/s. Nevertheless, it was admittedly signed by Reputable’s
representatives, the terms thereof faithfully observed by the parties and, as previously
stated, the same contract of carriage had been annually executed by the parties every year
since 1989. 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”. The contract also required Reputable to secure an insurance policy on Wyeth’s
goods. Thus, on February 11, 1994, Reputable signed a Special Risk Insurance Policy (SR
Policy) with petitioner Malayan for the amount of P1,000,000.00. 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 worth P2,357,582.70 to be delivered by Reputable to
Mercury Drug Corporation in Libis, Quezon City. Unfortunately, on the same date, the truck
carrying Wyeth’s products was hijacked by about 10 armed men. They threatened to kill the
truck driver and two of his helpers should they refuse to turn over the truck and its contents
to the said highway robbers. The hijacked truck was recovered two weeks later without its
cargo. Malayan questions its liability based on sections 5 and 12 of the SR Policy.

Issue: Whether or not there is double insurance in this case such that either Section 5 or
Section 12 of the SR Policy may be applied.

Held: No. By the express provision of Section 93 of the Insurance Code, double insurance
exists where the same person is insured by several insurers separately in respect to the
same subject and interest. The requisites in order for double insurance to arise are as
follows:

1. The person insured is the same;

2. Two or more insurers insuring separately;
3. There is identity of subject matter;
4. There is identity of interest insured; and
5. There is identity of the risk or peril insured against.

In the present case, while it is true that the Marine Policy and the SR Policy were both issued
over the same subject matter, i.e. goods belonging to Wyeth, and both covered the same
peril insured against, it is, however, beyond cavil that the said policies were issued to two
different persons or entities. It is undisputed that Wyeth is the recognized insured of
Philippines First under its Marine Policy, while Reputable is the recognized insured of
Malayan under the SR Policy. The fact that Reputable procured Malayan’s SR Policy over the
goods of Wyeth pursuant merely to the stipulated requirement under its contract of
carriage with the latter does not make Reputable a mere agent of Wyeth in obtaining the
said SR Policy.

The interest of Wyeth over the property subject matter of both insurance contracts is also
different and distinct from that of Reputable’s. The policy issued by Philippines First was in
consideration of the legal and/or equitable interest of Wyeth over its own goods. On the
other hand, what was issued by Malayan to Reputable was over the latter’s insurable
interest over the safety of the goods, which may become the basis of the latter’s liability in
case of loss or damage to the property and falls within the contemplation of Section 15 of
the Insurance Code.

Therefore, even though the two concerned insurance policies were issued over the same
goods and cover the same risk, there arises no double insurance since they were issued to
two different persons/entities having distinct insurable interests. Necessarily, over
insurance by double insurance cannot likewise exist. Hence, as correctly ruled by the RTC
and CA, neither Section 5 nor Section 12 of the SR Policy can be applied.

UNITED MERCHANTS CORPORATION v. COUNTRY BANKERS INSURANCE

CORPORATION, GR No. 198588, 2012-07-11
Facts:
Petitioner United Merchants Corporation (UMC) is engaged in the business of buying,
selling, and manufacturing Christmas lights. UMC leased a warehouse at 19-B Dagot
Street, San Jose Subdivision, Barrio Manresa, Quezon City, where UMC assembled
and stored its products.
n 6 September 1995, UMC's General Manager Alfredo Tan insured UMC's stocks in
trade of Christmas lights against fire with defendant Country Bankers Insurance
Corporation (CBIC) for P15,000,000.00.
On 7 May 1996, UMC and CBIC executed Endorsement F/96-154 and Fire Invoice No.
16583A to form part of the Insurance Policy. Endorsement F/96-154 provides that
UMC's stocks in trade were insured against additional perils, to wit: "typhoon, flood, ext.
cover, and full earthquake."
The sum insured was also increased to P50,000,000.00 effective 7 May 1996 to 10
January 1997. On 9 May 1996, CBIC issued Endorsement F/96-157 where the name
of the assured was changed from Alfredo Tan to UMC.
On 3 July 1996, a fire gutted the warehouse rented by UMC.
UMC demanded for at least fifty percent (50%) payment of its claim from CBIC.
10 January 1997, rejecting UMC's claim due to breach of Condition No. 15 of the
Insurance Policy. Condition No. 15... states:
If the claim be in any respect fraudulent, or if any false declaration be made or used in
support thereof, or if any fraudulent means or devices are used by the Insured or
anyone acting in his behalf to obtain any benefit under this Policy; or if the loss or
damage... be occasioned by the willful act, or with the connivance of the Insured, all
the benefits under this Policy shall be forfeited
The Bureau further certifies that no evidence was gathered to prove that the
establishment was willfully, feloniously and intentionally set on fire.
That the investigation of the fire incident is already closed being ACCIDENTAL in
nature.
In its Answer with Compulsory Counterclaim[9] dated 4 March 1998, CBIC admitted
the issuance of the Insurance Policy to UMC but raised the following defenses: (1) that
the Complaint states no cause of action; (2) that UMC's claim has already...
prescribed; and (3) that UMC's fire claim is tainted with fraud.
BIC alleged that UMC's claim was fraudulent because UMC's Statement of Inventory
showed that it had no stocks in trade as of 31 December 1995, and that UMC's
suspicious purchases for the year 1996 did... not even amount to P25,000,000.00.
CB
Issues:
WHETHER THE COURT OF APPEALS MADE A RULING INCO[N]SISTENT WITH
LAW, APPLICABLE JURISPRUDENCE AND EVIDENCE AS TO THE EXISTENCE
OF ARSON AND FRAUD IN THE ABSENCE OF "MATERIALLY CONVINCING
EVIDENCE."
II.
WHETHER THE COURT OF APPEALS MADE A RULING INCONSISTENT WITH
LAW, APPLICABLE JURISPRUDENCE AND EVIDENCE WHEN IT FOUND THAT
PETITIONER BREACHED ITS WARRANTY.[16]
Ruling:
n insurer who seeks to defeat a claim because of an exception or limitation in the policy
has the burden of establishing that the loss comes within the purview of the exception
or limitatio
An insurer who seeks to defeat a claim because of an exception or limitation in the
policy has the burden of establishing that the loss comes within the purview of the
exception or limitation.
In the present case, CBIC failed to discharge its primordial burden of... establishing
that the damage or loss was caused by arson, a limitation in the policy.
n prosecutions for arson, proof of the crime charged is complete where the evidence
establishes: (1) the corpus delicti, that is, a fire caused by a criminal act; and (2) the
identity of the defendants as the one responsible for the crime.[25]
Corpus delicti means the substance of the crime, the fact that a crime has actually
been committed.[26] This is satisfied by proof of the bare occurrence of the fire and of
its having been inten
In prosecutions for arson, proof of the crime charged is complete where the evidence
establishes: (1) the corpus delicti, that is, a fire caused by a criminal act; and (2) the
identity of the defendants as the one responsible for the crime.[25]
Corpus delicti means the substance of the crime, the fact that a crime has actually
been committed.[26] This is satisfied by proof of the bare occurrence of the fire and of
its having been intentionally caused.
CBIC's failure to prove arson does not mean that it also failed to prove fraud.
In the present case, arson and fraud are two separate grounds based on two different
sets of evidence, either of which can void the insurance claim of UMC.
on the allegation of fraud, we affirm the... findings of the Court of Appeals.
Condition No. 15

1. If the claim be in any respect fraudulent, or if any false declaration be made or

used in support thereof, or if any fraudulent means or devices are used by the
Insured or anyone acting in his behalf to obtain any benefit under this Policy; or
if the loss or... damage be occasioned by the willful act, or with the connivance
of the Insured, all the benefits under this Policy shall be forfeited.

either amount in UMC's Income Statement or Financial Reports is twenty-five times the
claim UMC seeks to enforce.
It has long been settled that a false and material statement made with an intent to
deceive or defraud voids an insurance policy.
in fire insurance policies, which contain provisions such as Condition No. 15 of the
Insurance Policy, a fraudulent discrepancy between the actual loss and that claimed in
the proof of loss voids the insurance policy. Mere filing of such a... claim will exonerate
the insurer.
WHEREFORE, we DENY the petition.
Principles:
Burden of Proof

An insurer who seeks to defeat a claim because of an exception or limitation in the

policy has the burden of establishing that the loss comes within the purview of the
exception or limitation.
Arson

In prosecutions for arson, proof of the crime charged is complete where the evidence
establishes: (1) the corpus delicti, that is, a fire caused by a criminal act; and (2) the
identity of the defendants as the one responsible for the crime.[25]
Corpus delicti means the substance of the crime, the fact that a crime has actually
been committed.[26] This is satisfied by proof of the bare occurrence of the fire and of
its having been intentionally caused.
Effect of Fraud

It has long been settled that a false and material statement made with an intent to
deceive or defraud voids an insurance policy.
Transportation Case Digest: Mayer Steel
Pipe Corp. V. CA (1997)
G.R. No. 124050 June 19, 1997
Lessons Applicable: Ancillary Contracts (transportation)

FACTS:

 1983: Hongkong Government Supplies Department (Hongkong)

contracted Mayer Steel Pipe Corporation (Mayer) to manufacture and supply
various steel pipes and fittings
 August to October, 1983: Mayer shipped the pipes and fittings to
Hongkong as evidenced by Invoice Nos. MSPC-1014, MSPC-1015,
MSPC-1025, MSPC-1020, MSPC-1017 and MSPC-1022
 Prior to the shipping, Mayer insured the pipes and fittings against all risks
with South Sea Surety and Insurance Co., Inc. (South Sea) and Charter
Insurance Corp. (Charter)
 South Sea:Invoice Nos. MSPC-1014, 1015 and 1025 for
US$212,772.09
 Charter: Invoice Nos. 1020, 1017 and 1022 for US$149,470.00
 Mayer and Hongkong jointly appointed Industrial Inspection
(International) Inc. as third-party inspector to examine whether the pipes
and fittings are manufactured in accordance with the specifications in the
contract
 Industrial Inspection certified all the pipes and fittings to be in
good order condition before they were loaded in the vessel
 When the goods reached Hongkong, it was discovered that a
substantial portion thereof was damaged
 Mayer and Hongkong a claim against private respondents for indemnity
under the insurance contract
 Charter paid petitioner Hongkong the amount of HK$64,904.75
 demanded payment of the balance of HK$299,345.30 which was
refused
 April 17, 1986: filed an action to recover HK$299,345.30
 Defense: insurance surveyor's report allegedly showed that the
damage is a factory defect
 Trial Court: in favor of Mayer and Hongkong
 CA: reversed
 affirmed the finding of the trial court that the damage is not due to
factory defect and that it was covered by the "all risks" insurance policies
 BUT held that Section 3(6) of the Carriage of Goods by Sea Act
provides that "the carrier and the ship shall be discharged from all liability in
respect of loss or damage unless suit is brought within one year after
delivery of the goods or the date when the goods should have been delivered
 applies not only to the carrier but also to the insurer
ISSUE: W/N Section 3(6) of the Carriage of Goods by Sea also applies to insurer

HELD: NO. Petition is granted. CA reversed. RTC reinstated

 Section 3(6) of the Carriage of Goods by Sea Act states that the carrier
and the ship shall be discharged from all liability for loss or damage to the
goods if no suit is filed within one year after delivery of the goods or the date
when they should have been delivered. Under this provision, only the
carrier's liability is extinguished if no suit is brought within one year. But
the liability of the insurer is not extinguished because the insurer's liability is
based not on the contract of carriage but on the contract of insurance
- governed by the Insurance Code
 An insurance contract is a contract whereby one party, for a
consideration known as the premium, agrees to indemnify another for loss
or damage which he may suffer from a specified peril
 "all risks" insurance policy covers all kinds of loss other than those
due to willful and fraudulent act of the insured
 prescribes in ten years, in accordance with Article 1144 of the New
Civil Code
Labels: 1997, Ancillary Contracts, Case Digest, G.R. No. 124050, June 19, Juris
Doctor, transportation,transportation case digest

Federal Express Corporation v. American

Home Assurance Company
G.R. No. 150094, 18 August 18 2004, 437 SCRA 50

FACTS:

Shipper SMITHKLINE USA delivered to carrier Burlington Air Express, an agent of herein
petitioner, a cargo shipment, insured with respondent which consist of 109 cartons of
veterinary biological for delivery to consignee SMITHKLINE and French Overseas
Company in Makati City with the words, “REFRIGERATE WHEN NOT IN TRANSIT” and
“PERISHABLE” stamp marked on its face. However, 12 days after the cargoes arrived in
Manila, it was found out that the same were stored only in a room with 2 air conditioners
running in the warehouse of Cargohaus Inc., to cool the place instead of a refrigerator.

As a consequence of the result of the veterinary biological 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 FEDEX imputing negligence on either or both of them
in the handling of the cargo where it was decided that FEDEX is solidarily liable with
Cargohaus Inc.

ISSUE:

Whether or not FEDEX is liable for damage to or loss of the insured goods?

RULING:

No. Upon receipt of the insurance proceeds, the consignee (SMITHKLINE) executed a
subrogation receipt in favor of respondents authorizing them “to file claims and begin suit
against any such carrier, person, vessel, 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 and if that right was violated, the consignee would have a cause of
action against the person responsible therefor.

In the exercise of its subrogatory right, an insurer may proceed against an erring carrier
and to all intents and purposes, it stands in the place and in substitution of the consignee.

Delsan vs CA

Facts:

Caltex entered into a contract of affreightment with 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.

On August 14, 1986, MT Maysun set sail from Batangas for Zamboanga
City. Unfortunately, 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.

The Respondent (insurance) paid the Caltex the amount of P5,096,635.57

representing the amount of the value of the lost cargo.

Issue:
1. 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.

2. 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:

No, under the law, extra ordinary diligence is required by the common
carrier in taking good care of the goods. The common carrier is presumed
negligent unless the contrary provides otherwise. 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. It is not
dependent upon, nor does it grow out of, any privity of contract or upon
written assignment of claim. It accrues simply upon payment by the
insurance company of the insurance claim.

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.