Geagonia v CA G.R. No.

114427 February 6, 1995

Facts:
Geagonia, owner of a store, obtained from Country Bankers 1 year fire insurance covering the stock trading of dry goods. The
policy noted the requirement that
3. The insured shall give notice to the Company of any insurance or insurances already effected, or which may
subsequently be effected, covering any of the property or properties consisting of stocks in trade, goods in process
and/or inventories only hereby insured, xxx”

The petitioners’ stocks were destroyed by fire. He then filed a claim which was subsequently denied because the petitioner’s
stocks were covered by two other fire insurance policies issued by PFIC. The basis of the private respondent's denial was the
petitioner's alleged violation of Condition 3 of the policy. The Insurance Commission found that the petitioner did not violate
Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC; that it was Cebu
Tesing Textiles which procured the PFIC policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his
creditor, had insurable interest on the stocks.

Issue:
Whether or not Geagonia is prohibited from recovering from the Country Bankers?

Held:
A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise, the breach of an immaterial
provision does not avoid the policy. To constitute a violation of the “other insurance” clause, the other insurance must be upon
the same subject matter, the same interest therein, and the same risk.

Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture of insurance policies should
be construed most strictly against those for whose benefits they are inserted, and most favorably toward those against whom
they are intended to operate. With these principles in mind, Condition 3 of the subject policy is not totally free from ambiguity
and must be meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance,
and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies obtained. Furthermore, by
stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not
exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding
P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the rationale behind the incorporation of "other
insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner
obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may have
an inducement to destroy the property for the purpose of collecting the insurance. The public as well as the insurer is
interested in preventing a situation in which a fire would be profitable to the insured.
GAISANO CAGAYAN v. INSURANCE CO. OF NORTH AMERICA

FACTS:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.) Inc. (LSPI) is the local
distributor of products bearing trademarks owned by Levi Strauss & Co.

IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt
endorsements related to their ready-made clothing materials which have been sold or delivered to various customers and
dealers of the Insured anywhere in the Philippines which are unpaid 45 days after the time of the loss

February 25, 1991: Petitioner Gaisano Cagayan, Inc. is a customer and dealer of IMC and LSPI products. It owns Gaisano
Superstore Complex containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire.

February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano Cagayan, Inc. alleges
that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it was subrogated to their
rights

Gaisano Cagayan, Inc: Averred that it is not liable because it was destroyed due to fortuities event or force majeure

RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res perit domino)
CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino. Ordered petitioner to
pay respondent Php 2,119,205.60 and Php 535,613.00 the amount paid by the latter to IMC and LSPI, respectively.

ISSUE:
W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that was insured

HELD:
Yes, but the order to pay Php 535,613 is deleted for lack of factual basis.
The insurance policy is clear that the subject of the insurance is the book debts and not goods sold and delivered to the
customers and dealers of the insured.

Under Art. 1504 of the Civil code, unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether
actual delivery has been made or not; except where delivery of the goods has been made to the buyer or to a bailee for the
buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery.

IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value of
the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for consideration of who
bears the risk of loss, in property insurance, one's interest is not determined by concept of title, but whether insured has
substantial economic interest in the property.

Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or personal, or any
relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured."
Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b)
an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of which
the expectancy arises.

Anyone who derives a benefit from its existence or would suffer loss from its destruction has an insurable interest in the said
property. The rationale that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only
holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even
in case of fortuitous event. It does not apply when the obligation is pecuniary in nature.

Re: deletion of Php 535,613.00

The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer and IMC as the
insured, but also the amount paid to settle the insurance claim. However, LSPI failed to offer any subrogation receipt as
evidence. Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of
P535,613.00.
1)
New World International Philippines Inc. vs Nyk-FilJapan Shipping Corp.
G.R. No. 171468 August 24, 2011

Facts:
Petitioner New World International Development (Phils.), Inc. (New World) bought from DMT Corporation (DMT) through its
agent, Advatech Industries, Inc. (Advatech) three emergency generator sets worth US$721,500.00. DMT shipped the generator
sets by truck from Wisconsin, United States, to LEP Profit International, Inc. (LEP Profit) in Chicago, Illinois. From there, the
shipment went by train to Oakland, California, where it was loaded on S/S California Luna V59, owned and operated by NYK Fil-
Japan Shipping Corporation (NYK) for delivery to petitioner New World in Manila. NYK issued a bill of lading, declaring that it
received the goods in good condition. NYK unloaded the shipment in Hong Kong and transshipped it to S/S ACX Ruby V/72 that
it also owned and operated. On its journey to Manila, however, ACX Ruby encountered typhoon Kadiang whose captain filed a
sea protest on arrival at the Manila South Harbor on October 5, 1993 respecting the loss and damage that the goods on board
his vessel suffered. Marina Port Services, Inc. (Marina), the Manila South Harbor arrastre or cargo-handling operator, received
the shipment on October 7, 1993. Upon inspection of the three container vans separately carrying the generator sets, two vans
bore signs of external damage while the third van appeared unscathed. The shipment remained at Pier 3s Container Yard under
Marinas care pending clearance from the Bureau of Customs. Eventually, on October 20, 1993 customs authorities allowed
petitioners customs broker, Serbros Carrier Corporation (Serbros), to withdraw the shipment and deliver the same to petitioner
New Worlds job site in Makati City. An examination of the three generator sets in the presence of petitioner New Worlds
representatives, Federal Builders (the project contractor) and surveyors of petitioner New Worlds insurer, SeaboardEastern
Insurance Company (Seaboard), revealed that all three sets suffered extensive damage and could no longer be repaired. For
these reasons, New World demanded recompense for its loss from respondents NYK, DMT, Advatech, LEP Profit, LEP
International Philippines, Inc. (LEP), Marina, and Serbros. While LEP and NYK acknowledged receipt of the demand, both denied
liability for the loss.

Issue: Whether or not petitioner is entitled to the claim based from the insurance policy including interests in the delay of the
release of such claim.

Held:
Yes. The marine open policy that Seaboard issued to New World was an all-risk policy. Such a policy insured against all causes of
conceivable loss or damage except when otherwise excluded or when the loss or damage was due to fraud or intentional
misconduct committed by the insured. The policy covered all losses during the voyage whether or not arising from a marine
peril.

Here, the policy enumerated certain exceptions like unsuitable packaging, inherent vice, delay in voyage, or vessels
unseaworthiness, among others. But Seaboard had been unable to show that petitioner New Worlds loss or damage fell within
some or one of the enumerated exceptions.

Seaboard cannot pretend that the above documents are inadequate since they were precisely the documents listed in its
insurance policy. Being a contract of adhesion, an insurance policy is construed strongly against the insurer who prepared it.
The Court cannot read a requirement in the policy that was not there.

Section 241 of the Insurance Code provides that no insurance company doing business in the Philippines shall refuse without
just cause to pay or settle claims arising under coverages provided by its policies. And, under Section 243, the insurer has 30
days after proof of loss is received and ascertainment of the loss or damage within which to pay the claim. If such
ascertainment is not had within 60 days from receipt of evidence of loss, the insurer has 90 days to pay or settle the claim. And,
in case the insurer refuses or fails to pay within the prescribed time, the insured shall be entitled to interest on the proceeds of
the policy for the duration of delay at the rate of twice the ceiling prescribed by the Monetary Board.

Notably, Seaboard already incurred delay when it failed to settle petitioner New Worlds claim as Section 243 required. Under
Section 244, a prima facie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay
the claim within the time fixed in Section 243.

Consequently, Seaboard should pay interest on the proceeds of the policy for the duration of the delay until the claim is fully
satisfied at the rate of twice the ceiling prescribed by the Monetary Board. The term ceiling prescribed by the Monetary Board
means the legal rate of interest of 12% per annum provided in Central Bank Circular 416, pursuant to Presidential Decree 116.
Section 244 of the Insurance Code also provides for an award of attorneys fees and other expenses incurred by the assured due
to the unreasonable withholding of payment of his claim.
2)
Eastern Shipping Lines, Inc. vs. Prudential Guarantee

SUMMARY:
Prudential Guarantee paid Nissan, allegedly on a marine open policy, for damage to the cargo shipped on a vessel owned by
Eastern Shipping. Prudential Guarantee sued Eastern Shipping, but during trial it presented, in lieu of the marine open policy, a
marine risk note and a subrogation receipt.

[DIVINA, p. 112] The insurer, upon happening of the risk “insured” against and after payment to the insured, is subrogated to
the rights and cause of action of the latter. As such, the insurer has the right to seek reimbursement for all the expenses paid.
However, in a contract of carriage involving he shipment of knock-down auto parts of Nissan motor vehicles which were
allegedly lost and destroyed, the insurer was not properly subrogated because of the non-presentation of any marine insurance
policy. The submission of a marine risk note instead of the insurance policy doesn’t satisfy the requirement for subrogation. The
marine risk note is not an insurance policy. It is only an acknowledgement or declaration of the insurer confirming the specific
shipment covered by its marine open policy, the evaluation of the cargo, and the chargeable premium.

FACTS:
 56 cases of completely knock-down auto parts of Nissan motor vehicles were loaded on board the M/V Apollo Tujuh at
Nagoya, Japan to be shipped to Manila.
 Nissan was the consignee; Eastern Shipping owned and operated the M/V Apollo Tujuh.
 At Nissan’s warehouse, the surveyor t found missing items as well as broken items, the result of pilferage and improper
handling while in the custody of the vessel and/or the arrastre contractors.
 Prudential Guarantee, as insurer of the shipment against all risks, paid Nissan the total amount it had demanded from
Eastern Shipping and the arrastre operator.
 Prudential Guarantee sued Eastern Shipping and the arrastre operator for reimbursement
 RTC: decided in favor of Prudential Guarantee.
 CA: GRANTED the appeal of the arrastre operator and held Eastern Shipping solely liable – the CA ruled that the right of
subrogation accrues upon payment by the insurer of the insurance claim and that the presentation of the insurance policy
was NOT indispensable before the insurer could recover in the exercise of its subrogatory right.

ISSUES:
Was Prudential Guarantee properly subrogated, notwithstanding the non-presentation of the marine insurance policy? (Note:
the documents submitted in lieu of the marine insurance policy were a marine cargo risk note and a subrogation receipt.)

HELD:
(Petition GRANTED)
NO. Eastern Shipping was not remiss when it openly objected to the non-presentation of the Marine Insurance Policy.
 SEE: Summary – the contract of insurance must be presented in evidence to indicate the extent of its coverage. It is the
marine open policy which is the main insurance contract.
 The cargoes were already on board the carrier as early as November 8, 1995 and that the same arrived at the port of
Manila on November 16, 1995 – the Marine Cargo Risk Note was, however, issued only on November 16, 1995.
 That the date on the Marine Cargo Risk Note bears the same date as that of the arrival of the vessel at the port of Manila
means that the cargoes had not been specifically covered by any particular insurance at the time of transit.
 In sum, without the marine insurance policy, it would be impossible to know the following:
o first, the specifics of the "Institute Cargo Clauses A and other terms and conditions per Marine Open Policy-86-168" as
alluded to in the Marine Risk Note;
o second, if the said terms and conditions were actually complied with before respondent paid Nissan's claim.
3)
LORENZO SHIPPING CORP vs. CHUBB AND SONS, INC.

Facts:
Mayer Steel Pipe Corp. loaded 581 bundles of ERW black steel pipes on board the vessel M/V Lorcon IV, owned by Lorenzo
Shipping, for shipment to Davao City. Lorenzo Shipping issued a clean bill of lading designated as Bill of Lading No. T-3 for the
account of the consignee, Sumitomo Corp. of San Francisco, California, USA, which in turn, insured the goods with Chubb and
Sons, Inc.

M/V Lorcon IV arrived at the Sasa Wharf in Davao City. Transmarine Carriers received the subject shipment. It discovered
seawater in the hatch of M/V Lorcon IV, and found the steel pipes submerged in it. Sumitomo then hired the services of a
surveyor to inspect the shipment prior to and subsequent to discharge. The report showed that the subject shipment was no
longer in good condition, as in fact, the pipes were found with rust formation on top and/or at the sides.
After the survey, Gearbulk loaded the shipment on board its vessel M/V San Mateo Victory, for carriage to the US. All bills of
lading it issued were marked “ALL UNITS HEAVILY RUSTED.” M/V San Mateo Victory arrived at the U.S.A., where it unloaded the
subject steel pipes. The steel pipes were surveyed, and it was discovered that they are heavily rusted.

Due to its condition, Sumitomo rejected the damaged steel pipes and declared them unfit for the purpose they were intended.
It then filed a marine insurance claim with respondent Chubb and Sons, Inc. which the latter settled in the amount of
US$104,151.00.

Chubb and Sons, Inc. filed a complaint for collection of a sum of money, against Lorenzo Shipping, Gearbulk, and Transmarine.
Lorenzo Shipping denied its liability. The RTC ruled in favor of Chubb and Sons, Inc. It appealed to the CA, but was denied.

Issue:
1. Whether respondent Chubb and Sons has capacity to sue before the Philippine courts.

Ruling:
Yes. Lorenzo Shipping failed to raise the defense that Sumitomo is a foreign corporation doing business in the Philippines
without a license. It is therefore estopped from litigating the issue on appeal... Secondly, assuming arguendo that Sumitomo
cannot sue in the Philippines, it does not follow that Chubb and Sons, as subrogee, has also no capacity to sue in our
jurisdiction.

The rights to which the subrogee succeeds are the same as, but not greater than, those of the person for whom he is
substituted – he cannot acquire any claim, security, or remedy the subrogor did not have. In other words, a subrogee cannot
succeed to a right not possessed by the subrogor. A subrogee in effect steps into the shoes of the insured and can recover only
if insured likewise could have recovered.

However, when the insurer succeeds to the rights of the insured, he does so only in relation to the debt.

The law does not prohibit foreign corporations from performing single acts of business. A foreign corporation needs no license
to sue before Philippine courts on an isolated transaction

…Where an insurance company as subrogee pays the insured of the entire loss it suffered, the insurer-subrogee is the only real
party in interest and must sue in its own name to enforce its right of subrogation against the third party which caused the loss
4)
MANILA MAHOGANY V. COURT OF APPEALS
G.R. NO. L-52756, 12 OCTOBER 1987, 154 SCRA 650

FACTS:

Petitioner insured its Mercedes Benz 4-door sedan with respondent insurance company . The insured vehicle was bumped and
damaged by a truck owned by San Miguel Corporation (SMC). For the damage caused, respondent company paid petitioner ₱
5,000.00 in amicable settlement. Petitioner’s general manager executed a Release of Claim, subrogating respondent company
to all its right to action against San Miguel Corp. Respondent company wrote the Insurer Adjusters, Inc. to demand
reimbursements from San Miguel Corporation of the amount it had paid petitioner. Insurer Adjusters, Inc. refused
reimbursement alleging that SMC had already paid petitioner ₱ 4,500.00 for the damages to petitioner’s motor vehicle, as
evidenced by a cash voucher and Release of Claim executed by the General Manager of petitioner discharging SMC from “ all
actions, claims, demands the right of action that now exist or hereafter develop arising out of or as a consequence of the
accident.

Respondent demanded the ₱ 4,500.00 amount from petitioner. Petitioner refused. Suit was 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 ₱ 5,000.00 it had received from respondent.

Petitioner’s argument: Since the total damages were valued at P9,486.43 and only ₱ 5,000.00 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.

ISSUE:

Whether or not the insured should pay the insurer despite that the subrogation in the Release of Claim was conditioned on
recovery of the total amount of damages that the insured has sustained.

RULING:

NO. Supreme Court said there being 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 was correct in holding petitioner should reimburse respondent ₱ 5,000.00.

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 ₱ 5,000.00– the insurer is entitled to recover from the insured the
amount of insurance money paid. 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 with the
consent of the insurer.
5)
Roque v. Intermediate Appellate Court
G.R. No. L-66935 Nov. 11, 1985

Facts:
Isabela Roque (Roque of Isabela Roque Timber Enterprises) hired the Manila Bay Lighterage Corp. (Manila Bay) to load and
carry its logs from Palawan to North Harbor, Manila. The logs were insured with Pioneer Insurance and Surety Corp. (Pioneer).
The logs never reached Manila due to certain circumstances (as alleged by Roque and found by the appellate court), such as the
fact that the barge was not seaworthy that it developed a leak, that one of the hatches were left open causing water to enter,
and the absence of the necessary cover of tarpaulin causing more water to enter the barge. When Roque demanded payment
from Pioneer, but the latter refused on the ground that its liability depended upon the “Total Loss by Total Loss of Vessel Only.”
The trial court ruled in favor of Roque in the civil complaint filed by the latter against Pioneer, but the decision was reversed by
the appellate court.

Issue:
WON in cases of marine insurance, there is a warranty of seaworthiness by the cargo owner; WON the loss of the cargo was
due to perils of the sea, not perils of the ship.

Held:
Yes, there is. The liability of the insurance company is governed by law. Section 113 of the Insurance Code provides that “In
every marine insurance upon a ship or freight, or freightage, or upon anything which is the subject of marine insurance, a
warranty is implied that the ship is seaworthy.” Hence, there can be no mistaking the fact that the term "cargo" can be the
subject of marine insurance and that once it is so made, the implied warranty of seaworthiness immediately attaches to
whoever is insuring the cargo whether he be the shipowner or not. Moreover, the fact that the unseaworthiness of the ship
was unknown to the insured is immaterial in ordinary marine insurance and may not be used by him as a defense in order to
recover on the marine insurance policy.

As to the second issue, by applying Sec. 113 of the Insurance Code, there is no doubt that the term 'perils of the sea' extends
only to losses caused by sea damage, or by the violence of the elements, and does not embrace all losses happening at sea; it is
said to include only such losses as are of extraordinary nature, or arise from some overwhelming power, which cannot be
guarded against by the ordinary exertion of human skill and prudence. It is also the general rule that everything which happens
thru the inherent vice of the thing, or by the act of the owners, master or shipper, shall not be reputed a peril, if not otherwise
borne in the policy. It must be considered to be settled, furthermore, that a loss which, in the 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 negligent failure of
the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions, is not a peril of
the sea. Such a loss is rather due to what has been aptly called the "peril of the ship."

The insurer undertakes to insure against perils of the sea and similar perils, not against perils of the ship. Neither barratry can
be used as a ground by Roque. Barratry as defined in American Insurance Law is "any willful misconduct on the part of master
or crew in pursuance of some unlawful or fraudulent purpose without the consent of the owners, and to the prejudice of the
owner's interest." Barratry necessarily requires a willful and intentional act in its commission. No honest error of judgment or
mere negligence, unless criminally gross, can be barratry. In the case at bar, there is no finding that the loss was occasioned by
the willful or fraudulent acts of the vessel's crew. There was only simple negligence or lack of skill.
6)
United Merchants Corporation vs Country Bankers Insurance Corporation
G.R. No. 198588 July 11, 2012

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. On 6 September 1995, UMCs General Manager Alfredo Tan insured UMCs stocks in trade of
Christmas lights against fire with defendant Country Bankers Insurance Corporation (CBIC) for P 15,000,000.00. The Fire
Insurance Policy No. F-HO/95-576 (Insurance Policy) and Fire Invoice No. 12959A, valid until 6 September 1996. 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 UMCs 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. CBIC designated CRM Adjustment Corporation (CRM) to investigate and evaluate
UMCs loss by reason of the fire. CBICs reinsurer, Central Surety, likewise requested the National Bureau of Investigation (NBI) to
conduct a parallel investigation. On 6 July 1996, UMC, through CRM, submitted to CBIC its Sworn Statement of Formal Claim,
with proofs of its loss.

Issue:
Whether or not UMC is entitled to claim from CBIC the full coverage of its fire insurance policy.

Held:
No. Burden of proof is the duty of any party to present evidence to establish his claim or defense by the amount of evidence
required by law, which is preponderance of evidence in civil cases. The party, whether plaintiff or defendant, who asserts the
affirmative of the issue has the burden of proof to obtain a favorable judgment. Particularly, in insurance cases, once an insured
makes out a prima facie case in its favor, the burden of evidence shifts to the insurer to controvert the insureds prima facie
case. In the present case, UMC established a prima facie case against CBIC. CBIC does not dispute that UMCs stocks in trade
were insured against fire under the Insurance Policy and that the warehouse, where UMCs stocks in trade were stored, was
gutted by fire on 3 July 1996, within the duration of the fire insurance. However, since CBIC alleged an excepted risk, then the
burden of evidence shifted to CBIC to prove such exception.

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. If loss is proved apparently within a contract of insurance, the
burden is upon the insurer to establish that the loss arose from a cause of loss which is excepted or for which it is not liable, or
from a cause which limits its liability.

In Uy Hu & Co. v. The Prudential Assurance Co., Ltd., the Court held that where a fire insurance policy provides that 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 on his behalf to obtain any benefit under this Policy, and the evidence is
conclusive that the proof of claim which the insured submitted was false and fraudulent both as to the kind, quality and
amount of the goods and their value destroyed by the fire, such a proof of claim is a bar against the insured from recovering on
the policy even for the amount of his actual loss.

In the present case, as proof of its loss of stocks in trade amounting to P 50,000,000.00, UMC submitted its Sworn Statement of
Formal Claim together with the following documents: (1) letters of credit and invoices for raw materials, Christmas lights and
cartons purchased; (2) charges for assembling the Christmas lights; and (3) delivery receipts of the raw materials. However, the
charges for assembling the Christmas lights and delivery receipts could not support its insurance claim. The Insurance Policy
provides that CBIC agreed to insure UMCs stocks in trade. UMC defined stock in trade as tangible personal property kept for
sale or traffic. Applying UMCs definition, only the letters of credit and invoices for raw materials, Christmas lights and cartons
may be considered.

It has long been settled that a false and material statement made with an intent to deceive or defraud voids an insurance
policy. The most liberal human judgment cannot attribute such difference to mere innocent error in estimating or counting but
to a deliberate intent to demand from insurance companies payment for indemnity of goods not existing at the time of the fire.
This constitutes the so-called fraudulent claim which, by express agreement between the insurers and the insured, is a ground
for the exemption of insurers from civil liability.
7)
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:
a. The person insured is the same;
b. Two or more insurers insuring separately;
c. There is identity of subject matter;
d. There is identity of interest insured; and
e. 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.
8)
Perla Compania de Seguros Inc vs. Ramolete

Facts:
On June 1976, a Cimarron PUJ owned by Nelia Enriquez, and driven by Cosme Casas, was travelling from Cebu City to Danao
City. While passing through Liloan, Cebu, the Cimarron PUJ collided with a private jeep owned by the late Calixto Palmes
(husband of private respondent Primitiva Palmes) who was then driving the private jeep. The impact of the collision was such
that the private jeep was flung away to a distance of about thirty (30) feet and then fell on its right side pinning down Calixto
Palmes. He died as a result of cardio-respiratory arrest due to a crushed chest. The accident also caused physical injuries on
the part of 2-year-old Adeudatus Borbon.

Private respondents Primitiva and Honorato Borbon, Sr. (father of Adeudatus) filed a complaint against Cosme and Nelia before
the then Cebu CFI claiming actual, moral, nominal and exemplary damages as a result of the accident. The claim of Borbon, Sr.
was excluded from the complaint due to jurisdiction.

The CFI ruled in favor of Primitiva, ordering common carrier Nelia to pay her damages and attorney’s fees. The judgment of the
trial court became final and executory and a writ of execution was issued, which however, returned unsatisfied, prompting the
court to summon and examine Nelia. She declared that the Cimarron PUJ was covered by a third-party liability insurance
policy issued by petitioner Perla.

Palmes then filed a motion for garnishment praying that an order of garnishment be issued against the insurance policy
issued by petitioner in favor of the judgment debtor. Respondent Judge then issued an Order directing the Provincial Sheriff
or his deputy to garnish the third-party liability insurance policy. Petitioner filed for MR and quashal of the writ of
garnishment on the ground that Perla was not a party to the case and that jurisdiction over its person had never been
acquired by the trial court by service of summons or by any process. The trial court denied petitioner’s motion. An Order for
issuance of an alias writ of garnishment was subsequently issued.

More than two (2) years later, the present Petition for Certiorari and Prohibition was filed with this Court alleging grave abuse
of discretion on the part of respondent Judge Ramolete in ordering garnishment of the third-party liability insurance contract
issued by petitioner Perla in favor of the judgment debtor, Nelia Enriquez. The Petition should have been dismissed forthwith
for having been filed way out of time but, for reasons which do not appear on the record, was nonetheless entertained.

Issue:
W/N there insurance policy may be subject to garnishment

Held:
Yes. Garnishment has been defined as a species of attachment for reaching any property or credits pertaining or payable to a
judgment debtor.

In order that the trial court may validly acquire jurisdiction to bind the person of the garnishee, it is not necessary that
summons be served upon him. The garnishee need not be impleaded as a party to the case. All that is necessary for the trial
court lawfully to bind the person of the garnishee or any person who has in his possession credits belonging to the judgment
debtor is service upon him of the writ of garnishment. Rule 39, Section 15 and Rule 57, Section 7(e) of the ROC themselves do
not require that the garnishee be served with summons or impleaded in the case in order to make him liable.

In the present case, there can be no doubt, therefore, that the trial court actually acquired jurisdiction over petitioner Perla
when it was served with the writ of garnishment of the third-party liability insurance policy it had issued in favor of
judgment debtor Nelia Enriquez. Perla cannot successfully evade liability thereon by such a contention.

In a third-party liability insurance contract, the insurer assumes the obligation of paying the injured third party to whom the
insured is liable. The insurer becomes liable as soon as the liability of the insured to the injured third person attaches. Prior
payment by the insured to the injured third person is not necessary in order that the obligation of the insurer may arise. From
the moment that the insured became liable to the third person, the insured acquired an interest in the insurance contract,
which interest may be garnished like any other credit.

A separate action is not necessary to establish petitioner’s liability.

9)
Fortune Insurance vs. CA

Facts:
Producers Bank’s money was stolen while it was being transported from Pasay to Makati. The people guarding the money were
charged with the theft. The bank filed a claim for the amount of Php 725,000, and such was refused by the insurance
corporation due to the stipulation:
GENERAL EXCEPTIONS
The company shall not be liable under this policy in report of
(b) any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner,
director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others. . . .

In the trial court, the bank claimed that the suspects were not any of the above mentioned. They won the case. The appellate
court affirmed on the basis that the bank had no power to hire or dismiss the guard and could only ask for replacements from
the security agency.

Issue:
Did the guards fall under the general exceptions clause of the insurance policy and thus absolved the insurance company from
liability?

Held:
Yes to both. Petition granted.
The insurance agency contended that the guards automatically became the authorized representatives of the bank when they
cited International Timber Corp. vs. NLRC where a contractor is a "labor-only" contractor in the sense that there is an
employer-employee relationship between the owner of the project and the employees of the "labor-only" contractor.

They cited Art. 106. Of the Labor Code which said: Contractor or subcontractor. — There is "labor-only" contracting where the
person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities
which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.

The bank asserted that the guards were not its employees since it had nothing to do with their selection and engagement, the
payment of their wages, their dismissal, and the control of their conduct. They cited a case where an employee-employer
relationship was governed by (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct.

The case was governed by Article 174 of the Insurance Code where it stated that casualty insurance awarded an amount to loss
cause by accident or mishap.

“The term "employee," should be read as a person who qualifies as such as generally and universally understood, or
jurisprudentially established in the light of the four standards in the determination of the employer-employee relationship, or
as statutorily declared even in a limited sense as in the case of Article 106 of the Labor Code which considers the employees
under a "labor-only" contract as employees of the party employing them and not of the party who supplied them to the
employer.”

But even if the contracts were not labor-only, the bank entrusted the suspects with the duty to safely transfer the money to its
head office, thus, they were representatives. According to the court, “a ‘representative’ is defined as one who represents or
stands in the place of another; one who represents others or another in a special capacity, as an agent, and is interchangeable
with “agent”.
10)
Sherman Shaper v. Hon. Judge RTC of Olongapo City
GR. No. 78848, 14 November 1988, 167 SCRA 368

FACTS:

Petitioner Sherman Shafer obtained a private car policy over his Ford Laser car from Makati Insurance Company, Inc., for third
party liability (TPL). During the effectivity of the policy, an information for reckless imprudence resulting in damage to property
and serious physical injuries was filed against petitioner. The owner of the damaged Volkswagen car filed a separate civil action
against petitioner for damages. The court a quo issued an order dismissing the third party complaint on the ground that it was
premature, based on the premise that unless the accused (herein petitioner) is found guilty and sentenced to pay the offended
party indemnity or damages, the third party complaint is without cause of action. The court further stated that the better
procedure is for the accused (petitioner) to wait for the outcome of the criminal aspect of the case to determine whether or not
the accused, also the third party plaintiff, has a cause of action against the third party defendant for the enforcement of its
third party liability (TPL) under the insurance contract.

ISSUE:

Whether or not the accused in a criminal action for reckless imprudence, where the civil action is jointly prosecuted, can legally
implead the insurance company as third party defendant under its private car insurance policy.

RULING:

YES. In the instant case, the court a quo erred in dismissing petitioner’s third party complaint on the ground that petitioner had
no cause of action yet against the insurance company (third party defendant). There is no need on the part of the insured to
wait for the decision of the trial court finding him guilty of reckless imprudence. The occurrence of the injury to the third party
immediately gave rise to the liability of the Insure under its policy.

A third party complaint is a device allowed by the rules of procedure by which the defendant can bring into the original suit a
party against whom he will have a claim for indemnity or remuneration as a result of a liability established against him in the
original suit. Third party complaints are allowed to minimize the number of lawsuits and avoid the necessity of bringing two (2)
or more actions involving the same subject matter. They are predicated on the need for expediency and the avoidance of
unnecessary lawsuits. If it appears probable that a second action will result if the plaintiff prevails, and that this result can be
avoided by allowing the third party complaint to remain, then the motion to dismiss the third party complaint should be
denied.