31 La Razon Social "Go Tiaoco y Hermanos" vs.
Union was due to a defect in one of the drain pipes of the ship and
Insurance Society of Canton Ltd. [GR 13983, 1 September
1919] First Division, Street (J): 6 concur, 1 dissents
Facts: A cargo of rice belonging to the Go Tiaoco Brothers, was
transported in the early days of May, 1915, on the 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 1,473 sacks had been damaged by
sea water. The loss so resulting to the owners of rice, after proper
deduction had been made for the portion saved, was P3,875. The
policy of insurance, covering the shipment, was signed upon a form
long in use among companies engaged in maritime insurance. It
purports to insure the cargo from the following among other risks:
"Perils . . . of the seas, men, of war, fire, enemies, pirates, rovers,
thieves, .jettisons, . . . barratry of 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 goods and merchandise
or any part thereof." It was found out that the drain pipe which
served as a discharge from the water closet passed down through
the compartment where the rice in question was stowed and
thence out to sea through the wall of the compartment, which was
a part of the wall of the ship. The joint or elbow where the pipe
changed its direction was of cast iron; and in course of time it had
become corroded and abraded until a longitudinal opening had
appeared in the pipe about one inch in length. This hole had been
in existence before the voyage was begun, and an attempt had
been made to repair it by filling with cement and bolting over it a
strip of iron. The effect of loading the boat was tosubmerge the
vent, or orifice, of the pipe until it was about 18 inches or 2 feet
below the level of the sea. As a consequence the sea water rose in
the pipe. Navigation under these conditions resulted in the washing
out of the cement-filling from the action of the sea water, thus
permitting the continued flow of the salt water into the
compartment of rice. An action on a policy of marine insurance
issued by the Union Insurance Society of Canton, Ltd., upon the
cargo of rice belonging to the Go Tiaoco Brothers was filed. The
trial court found that the inflow of the sea water during the voyage
concluded that the loss was not covered by the policy of insurance.
Judgment was accordingly entered in favor of Union Insurance and
Go Tiaoco Brothers appealed.
Issue [1]: Whether perils of the sea includes entrance of water
into the ships hold through a defective pipe.
Held [1]: NO. It is determined that the words "all other perils,
losses, and misfortunes" are to be interpreted as covering risks
which are of like kind (ejusdem generis) with the particular risks
which are enumerated in the preceding part of the same clause of
the contract. According to the ordinary rules of construction these
words must be interpreted with reference to the words which
immediately precede them. They were no doubt inserted in order
to prevent disputes founded on nice distinctions. Their office is to
cover in terms whatever may be within the spirit of the cases
previously enumerated, and so they have a greater or less effect as
a narrower or broader view is taken of those cases. For example, if
the expression "perils of the seas" is given its widest sense the
general words have little or no effect as applied to that case. If on
the other hand that expression is to receive a limited construction
and loss by perils of the seas is to be confined to loss ex marine
tempestatis discrimine, the general words become most important.
But still, when they first became the subject of judicial
construction, they have always been held or assumed to be
restricted to cases "akin to" or "resembling" or "of the same kind
as" those specially mentioned. I see no reason for departing from
this settled rule. In marine insurance it is above all things
necessary to abide by settled rules and to avoid anything like novel
refinements or a new departure. 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. There must, in order to make the insurer liable, be "some
casualty, something which could not be foreseen as one of the
necessary incidents of the adventure. The purpose of the policy is
to secure an indemnity against accidents which may happen, not
against events which must happen." Herein, the entrance of the
sea water into the ship's hold through the defective pipe already
described was not due to any accident which happened during the
voyage, but to the failure of the ship's owner properly to repair a
defect of the existence of which he was apprised. The loss was
therefore more analogous to that which directly results from simple
unseaworthiness than to that which results from perils of the sea.
Issue [2]: Whether the loss of the cargo was due to the perils of
the ship rather than the perils of the sea. Held [2]: PERILS OF THE
SHIP. At the time Mable 10 sank, there was no typhoon but
ordinary strong wind and waves, a condition which is natural and
normal in the open sea. The evidence shows that the sinking of
Mable 10 was due to improper loading of the logs on one side so
that the barge was tilting on one side and for that it did not
navigate on even keel; that it was no longer seaworthy that was
why it developed leak; that the personnel of the tugboat and the
barge committed a mistake when it turned loose the barge from
the tugboat east of Cabuli point where it was buffeted by storm
and waves, while the tugboat proceeded to west of Cabuli point
where it was protected by the mountain side from the storm and
waves coming from the east direction. In fact, in Roque's and
Ong's complaint, it is alleged that the barge Mable 10 of MBLC
developed a leak which allowed water to come in and that one of
the hatches of said barge was negligently left open by the person
in charge thereof causing more water to come in", and that "he
loss of their cargo was due to the fault, negligence, and/or lack of
skill of MBLC and/or MBLC's representatives on barge Mable 10. It
is quite unmistakable that the loss of the cargo was due to the
perils of the ship rather than the perils of the sea. The facts clearly
negate Roque's and Ong's claim under the insurance policy. In the
case of Go Tiaoco y Hermanos v. Union Ins. Society of Canton, the
Court had occasion to elaborate on the term "perils of the ship"
when it ruled that "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. As was
well said by Lord Herschell in Wilson, Sons & Co. v. Owners of
Cargo per the Xantho ([1887], 12 A. C., 503, 509), there must, in
order to make the insurer liable, be 'some casualty, something
which could not be foreseen as one of the necessary incidents of
the adventure. The purpose of the policy is to secure an indemnity
against accidents which may happen, not against events which
must happen.
33 Filipino Merchants Insurance Co. Inc. vs. Court of
Appeals [GR 85141, 28 November 1989] Second Division,
Regalado (J): 3 concur, 1 on leave
Facts: In December 1976, Choa Tiek Seng insured said shipment
with Filipino Merchants Insurance Company (FMICI) under cargo
Policy M-2678 for the sum of P267,653.59 for the goods described
as 600 metric tons of fishmeal in new gunny bags of 90 kilos each
from Bangkok, Thailand to Manila against all risks under warehouse
to warehouse terms. Actually, what was imported was 59.940
metric tons not 600 tons at $395.42 a ton CNF Manila. The
fishmeal in 666 new gunny bags were unloaded from the ship on
11 December 1976 at Manila unto the arrastre contractor E. Razon,
Inc. and FMICI's surveyor ascertained and certified that in such
discharge 105 bags were in bad order condition as jointly surveyed
by the ship's agent and the arrastre contractor. The condition of
the bad order was reflected in the turn over survey report of Bad
Order cargoes 120320 to 120322, consisting of 3 pages. The cargo
was also surveyed by the arrastre contractor before delivery of the
cargo to the consignee and the condition of the cargo on such
delivery was reflected in E. Razon's Bad Order Certificates 14859,
14863 and 14869 covering a total of 227 bags in bad order
condition. FMICI's surveyor has conducted a final and detailed
survey of the cargo in the warehouse for which he prepared a
survey report with the findings on the extent of shortage or loss on
the bad order bags totalling 227 bags amounting to 12,148 kilos.
Based on said computation, Choa made a formal claim against
FMICI for P51,568.62 the computation of which claim is contained
therein. A formal claim statement was also presented by the Choa
against the vessel dated 21 December 1976, but FMICI refused to
pay the claim. Consequently, an action was brought by the
consignee (Choa Tiek Seng) of the shipment of fishmeal loaded on
board the vessel SS Bougainville and unloaded at the Port of Manila
on or about 11 December 1976 and seeks to recover from FMICI
the amount of P51,568.62 representing damages to said shipment
which has been insured by FMICI under Policy M-2678. FMICI
brought a third party complaint against third party defendants
Compagnie Maritime Des Chargeurs Reunis and/or E. Razon, Inc.
seeking judgment against the third party defendants in case
judgment is rendered against FMICI. The court below, after trial on
the merits, rendered judgment in favor of Choa, ordering FMICI to
pay Choa the sum of P51,568.62 with interest at legal rate from
the date of the filing of the complaint; and, on the third party
complaint, the third party defendant Compagnie Maritime Des
Chargeurs Reunis and third party defendant E. Razon, Inc. are
ordered to pay FMICI jointly and severally reimbursement of the
amounts paid by FMICI with legal interest from the date of such
payment until the date of such reimbursement; without
pronouncement as to costs. On appeal, and on 18 July 1988, the
Court of Appeals affirmed the decision of the lower court insofar as
the award on the complaint is concerned and modified the same
with regard to the adjudication of the third-party complaint. A
motion for reconsideration of the aforesaid decision was denied,
hence FMICI filed the petition for review.
Issue [1]: Whether an "all risks" marine policy has a technical
meaning in insurance in that before a claim can be compensable it
is essential that there must be "some fortuity," "casualty" or
"accidental cause" to which the alleged loss is attributable.
Held [1]: NO. The "all risks clause" of the Institute Cargo Clauses
read as follows "5. This insurance is against all risks of logs or
damage to the subject-matter insured but shall in no case be
deemed to extend to cover loss, damage, or expense proximately
caused by delay or inherent vice or nature of the subject-matter
insured. Claims recoverable hereunder shall be payable irrespective
of percentage." An "all risks policy" should be read literally as
meaning all risks whatsoever and covering all losses by an
accidental cause of any kind. The terms "accident" and
"accidental", as used in insurance contracts, have not acquired any
technical meaning. They are construed by the courts in their
ordinary and common acceptance. Thus, the terms have been
taken to mean that which happens by chance or fortuitously,
without intention and design, and which is unexpected, unusual
and unforeseen. An accident is an event that takes place without
one's foresight or expectation; an event that proceeds from an
unknown cause, or is an unusual effect of a known cause and,
therefore, not expected. The very nature of the term "all risks"
must be given a broad and comprehensive meaning as covering
any loss other than a wilful and fraudulent act of the insured. This
is pursuant to the very purpose of an "all risks" insurance to give
protection to the insured in those cases where difficulties of logical
explanation or some mystery surround the loss or damage to
property. An "all risks" policy has been evolved to grant greater
protection than that afforded by the "perils clause," in order to
assure that no loss can happen through the incidence of a cause
neither insured against nor creating liability in the ship; it is written
against all losses, that is, attributable to external causes. The term
"all risks" cannot be given a strained technical meaning, the
language of the clause under the Institute Cargo Clauses being
unequivocal and clear, to the effect that it extends to all
damages/losses suffered by the insured cargo except (a) loss or
damage or expense proximately caused by delay, and (b) loss or
damage or expense proximately caused by the inherent vice or
nature of the subject matter insured.
Issue [2]: Whether the failure of Choa to adduce evidence,
showing that the alleged loss to the cargo in question was due to a
fortuitous event, precludes his right to recover from the insurance
policy.
Held [2]: NO. Although generally, the burden of proof is upon the
insured to show that a loss arose from a covered peril, under an
"all risks" 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 "all risks insurance policy" has the initial
burden of proving that the cargo was in good condition when the
policy attached and that the cargo was damaged when unloaded
from the vessel; thereafter, the burden then shifts to the insurer to
show the exception to the coverage. As held in Paris-Manila
Perfumery Co. vs. Phoenix Assurance Co., Ltd. the basic rule is that
the insurance company has the burden of proving that the loss is
caused by the risks excepted and for want of such proof, the
company is liable. Coverage under an "all risks" provision of a
marine insurance 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 loss
was due to the peril falling within the policy's coverage; the insurer
can avoid coverage upon demonstrating that a specific provision
expressly excludes the loss from coverage. A marine insurance
policy providing that the insurance was to be "against all risks"
must be construed as creating a special insurance and extending to
other risks than are usually contemplated, and covers all losses
except such as arise from the fraud of the insured. The burden of
the insured, therefore, is to prove merely that the goods he
transported have been lost, destroyed or deteriorated. Thereafter,
the burden is shifted to the insurer to prove that the loss was due
to excepted perils. To impose on the insured the burden of proving
the precise cause of the loss or damage would be inconsistent with
the broad protective purpose of "all risks" insurance.
Issue [3]: Whether the insurer is liable
Held [3]: There being no showing that the loss was caused by any
of the excepted perils, the insurer is liable under the policy. It is
believed that in the absence of any showing that the
losses/damages were caused by an excepted peril, i.e. delay or the
inherent vice or nature of the subject matter insured, and there is
no such showing, the loss was covered by the policy. Herein, there
is no evidence presented to show that the condition of the gunny
bags in which the fishmeal was packed was such that they could
not hold their contents in the course of the necessary transit, much
less any evidence that the bags of cargo had burst as the result of
the weakness of the bags themselves. Had there been such a
showing that spillage would have been a certainty, there may have
been good reason to plead that there was no risk covered by the
policy (See Berk vs. Style [1956] cited in Marine Insurance Claims,
p. 125). Under an all risks policy, it was sufficient to show that
there was damage occasioned by some accidental cause of any
kind, and there is no necessity to point to any particular cause.
Contracts of insurance are contracts of indemnity upon the terms
and conditions specified in the policy. The agreement has the force
of law between the parties. The terms of the policy constitute the
measure of the insurer's liability. If such terms are clear and
unambiguous, they must be taken and understood in their plain,
ordinary and popular sense.
Issue [4]: Whether the consignee (Choa) has an insurable interest
in said goods.
Held [4]: Choa, as consignee of the goods in transit under an
invoice containing the terms under "C & F Manila," has insurable
interest in said goods. Section 13 of the Insurance Code defines
insurable interest in property 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. In principle, anyone has an insurable interest
in property who derives a benefit from its existence or would suffer
loss from its destruction whether he has or has not any title in, or
lien upon or possession of the property. Insurable interest in
property may consist in (a) an existing interest; (b) an inchoate
interest founded on an existing interest; or (c) an expectancy,
coupled with an existing interest in that out of which the
expectancy arises. As vendee/consignee of the goods in transit has
such existing interest therein as may be the subject of a valid
contract of insurance. His interest over the goods is based on the
perfected contract of sale. The perfected contract of sale between
him and the shipper of the goods operates to vest in him an
equitable title even before delivery or before he performed the
conditions of the sale. The contract of shipment, whether under
F.O.B., C.I.F., or C. & F. as in the present case, is immaterial in the
determination of whether the vendee has an insurable interest or
not in the goods in transit. The perfected contract of sale even
without delivery vests in the vendee an equitable title, an existing
interest over the goods sufficient to be the subject of insurance.
Further, Article 1523 of the Civil Code provides that where, in
pursuance of a contract of sale, the seller is authorized or required
to send the goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for, the purpose of
transmission to the buyer is deemed to be a delivery of the goods
to the buyer, the exceptions to said rule not obtaining in the
present case. The Court has heretofore ruled that the delivery of
the goods on board the carrying vessels partake of the nature of
actual delivery since, from that time, the foreign buyers assumed
the risks of loss of the goods and paid the insurance premium
covering them. C & F contracts are shipment contracts. The term
means that the price fixed includes in a lump sum the cost of the
goods and freight to the named destination. It simply means that
the seller must pay the costs and freight necessary to bring the
goods to the named destination but the risk of loss or damage to
the goods is transferred from the seller to the buyer when the
goods pass the ship's rail in the port of shipment.
White Gold Marine Service Inc. vs. Pioneer Insurance and
Surety Co.
Post under case digests, Commercial Law at Tuesday, February 21,
2012
Facts: Petitioner White Gold bought a protection and indemnity
coverage for its ships from Steamship Mutual through Respondent
Pioneer. Certificates and receipts thus were given. However,
Petitioner failed to fulfill its payments thus Steamship refused to
renew its coverage. Steamship then filed for collection against
Petitioner for recovery of unpaid balance. Thereafter, Petitioner
also filed a complaint against Steamship and Respondent before
the Insurance Commission for violations (186,187 for Steamship
and 299,300,301 in relation to 302 and 303 for Respondent) of the
Insurance Code-license requirements as an Insurance company for
the former and as insurance agent for the latter. Said commission
dismissed the complaint which decision was affirmed by the CA.
Issue: Whether or not Steamship Mutual is a Protection and
Indemnity Club engaged in the insurance business in the
Philippines
Held: Steamship Mutual as a P & I Club is a mutual insurance
company engaged in the marine insurance business.
An insurance contract is a contract of indemnity. This means that
one party undertakes for a consideration to indemnify another
party against loss, damage, or liability arising from an unknown or
contingent event. While to determine if a contract is an insurance
contract we can look at the nature of the promise, the act to be
performed, exact nature of the agreement in view of the entire
occurrence, contingency or circumstance where the performance is
mandated. The label is not controlling. While under Section 2(2) of
the Insurance Code the phrase doing an insurance business
constitutes the following: 1) making or proposing to make, as
insurer, any insurance contract; 2) making or proposing to make,
as surety, any contract of suretyship as a vocation and not as
merely incidental to any other legitimate business or activity of the
surety; 3) doing any kind of business, including a reinsurance
business, specifically recognized as constituting the doing of an
insurance business within the meaning of this code; 4) doing or
proposing to do any business in substance to any of the foregoing
in a manner designed to evade the provision of this code.
Taking all of these in to consideration, Steamship Mutual engaged
in marine insurance business undertook to indemnify Petitioner
White Gold against marine losses as enumerated under sec. 99 of
the Insurance Code. It is immaterial whether profit is derived from
making insurance contract and that no separate or direct
consideration is received since these does not preclude the
existence of an insurance business.
NOTES:
*Mutual Insurance company- cooperative enterprise where the
members are both the insurer and insured.
*Protection and Indemnity Club- a form of insurance against third
party liability where the third party is anyone other than the P & I
Club and its members.
G.R. No. L-6106-07 April 18, 1958
MADRIGAL, TIANGCO and CO., plaintiff-appellant,
vs.
HANSON, ORTH and STEVENSON, INC., defendant-appellee.
MADRIGAL, TIANGCO and CO., ET AL., plaintiffs-appellants,
vs.
ROMAN MABANTA, defendant-appellant.
REHABILITATION FINANCE CORPORATION, intervenor.
San Juan, Africa, Yigo and Benedicto for appellants.
Nicodemus L. Dasig for appellee.
Nicodemus L. Dasig and Ramon Mabanta, Jr. for defendant and
appellant.
Sixto de la Costa for intervenor.
PADILLA, J.:
On 6 January 1948, for and in consideration of the sum of P1,750
to be paid monthly as rental, a motor launch named "Isla Verde"
owned by the plaintiffs was chartered by the defendant for six
months from the date of actual delivery and acceptance, under and
by virtue of a contract which, among other terms, required delivery
thereof on 20 January 1948, in seaworthy condition together with
the necessary documents to enable her to navigate. Delivery of the
motor launch was not made as agreed upon, because it was on 12
January 1948 only that the motor launch was dry docked at
Malabon to undergo repairs; and on 28 January 1948 she was
transferred to the dock of the defendant near the Hospicio de San
Jose of the Isla Convalesencia and there some additional
improvements were made on the motor launch. On the 29th,
manned by a complement engaged by the defendant, the motor
launch was put to sea and at 5:00 o'clock a.m. of the following day
she sank off the coast of Limay, province of Bataan, becoming a
total loss. To recover P50,000, the estimated value of the motor
launch with all equipment and tackle and a monthly rental of
P1,750, the plaintiffs brought this action. The Rehabilitation
Finance Corporation, successor to the Agricultural and Industrial
Bank, was allowed to intervene to recover P10,745.06, together
with a daily interest thereon of P1.77 from 18 January 1950 until
the (late of payment thereof, from the plaintiffs, should they be
successful in their claim against either the defendant or the
insurance company, against which an action was also brought by
the plaintiff to recover the amount for which the motor launch was
insured under a policy issued by the insurance company. As the
intervenor has not appealed from the judgment dismissing its
complaint, the same is no longer involved in these appeals.
The defendant in his answer denies liability for the sinking of the
motor launch and claims in a counterclaim P5,000 for unrealized
profits; P2,500 for equipment and fishing tackle; P1,086.16 for the
cost of repairs of four sets of nets and the value of the new ropes;
and P1,485.28 for the value of 5 blocks of ice, 2,754 gallons of
crude oil, 3 drums of motor oil and 300 fish boxes.
After hearing the Court rendered judgment dismissing the
complaint without pronouncement as to costs, on the ground that
although it found that there had been delivery of the motor launch
to the defendant, yet she was unseaworthy. For the same reason
the action against Hanson, Orth and Stevenson, Inc. to recover the
amount for which the motor launch was insured under a policy
issued by it was dismissed with costs against the plaintiff. From the
judgment rendered in civil case No. 4616 of the Court of First
Instance of Manila, both the plaintiffs and the defendant have
appealed (G.R. No. L-6107); and from that rendered in civil case
No. 5756 of the same Court the plaintiff also has appealed (G.R.
No. L-6106).
The plaintiffs contend that, as found by the trial court, there was
delivery of the motor launch to the defendant and that this finding
not having been appealed by the defendant is now final. On the
other hand, the defendant claims that the sinking of the motor
launch off the coast of Limay, Bataan, was due to her
unseaworthiness and not to the incompetence or negligence of the
complement engaged by him (defendant) to man her.
The preponderance of evidence leans towards the conclusion that
there was no delivery of the motor launch in accordance with the
terms of the contract, because there was no license issued by the
Bureau of Customs, the license of the motor launch having expired
on 6 June 1947 (Exhibit E) and the special permit, on 15 December
1947 (Exhibits F and 12); there was no license issued by the
Bureau Fisheries authorizing the motor launch to engage in deep
sea fishing; and the defendant refused to sign a document, dated
28 January 1948 purporting to acknowledge receipt or acceptance
of the motor launch and to waive the delivery thereof on 20
January 1948 ( Exhibit 3) in accordance with the terms of the
contract (Exhibit A). Nevertheless, even if the motor launch was
not delivered on the date agreed upon, the fact that the defendant
took possession thereof when she was put to on 29 January 1948;
and that if on that trip the motor launch sank due to the negligence
or incompetence of thepatron, engineer, or crew engaged by the
defendant to manger, provided that she was seaworthy, the
defendant would still be responsible for the sinking of the motor
launch, because he has to answer for the negligent acts of his
agents. Hence whether there was actual delivery or it was merely a
trial run becomes unimportant if the motor launch was
unseaworthy. Again the preponderance of evidence leans toward
the conclusion that the motor launch was unseaworthy. And this
conclusion is supported by the fact that there was no typhoon; that
the waves were those that were caused by the monsoon winds of
the season (Exhibit 13-E) ; and that the or hit anything during her
cruise in the bay (Exhibit 13-C). The claim of the plaintiffs that the
big waves of the sea filled the engine room with water, one and
one-half or two feet high, as a result of which the engine stopped,
and that the water could not be pumped out by the bilge pump,
cannot be believed, because according to Pedro Ala and Eugenio
Maraginot they saw the water bubbling in the engine room (pp.
738, 808, t.s.n.) and this testimony is corroborated by Zoilo Belale,
the patron, who said that he thought the water entered the engine
room through the tail shaft but that he was wondering why it was
filled with water so soon (Exhibit 13-B, p. 3). This was also found
by the board of inquiry of the Bureau of Customs that investigated
the sinking of the motor launch with a view to finding the
responsibility of the patron. For, that reason the board exonerated
the patron from any negligence arising from the sinking of the
motor launch (Exhibit 13-C). The plaintiffs argue and contend that
the board did not have jurisdiction to make such finding and that it
was a mere conjecture. The cause of the sinking of the motor
launch was connected with the responsibility of the patron for the
sinking thereof. It is true that nobody saw the underneath
plankings give way; but this fact may be inferred from the
established facts that there was no typhoon; that there were no big
waves; that the motor launch did not touch bottom or hit anything
before she sank; and that the water was bubbling in the engine
room.
The plaintiff s further contend that the motor launch was put to sea
on 29 January 1948 an uneven keel; that she was not properly
loaded, because the oil weighing 11 tons and water weighing 1 or 2
tons were placed at the astern, whereas only a few blocks of ice
weighing 1,500 pounds were at the prow of the motor launch; that
this unbalanced loading became worse because of the fishing nets
attached to the rear of the motor launch, of the weight of the chain
which was 140 kilos, of the stones which was 40 kilos and of
the aldake which could be carried only by four persons if not wet
and by six if wet. They conclude that the uneven keel of the motor
launch constitutes negligence on the part of the complement and
the direct cause of the sinking thereof. The fact that the motor
launch was run and operated for 17 hours in the bay without
mishap is strong proof that the cause of the sinking was not the
uneven keel. It was a different cause which as above stated is
inferred from established facts which need not be restated.
Another contention is that the motor launch was thoroughly
repaired and overhauled. But such repair did not include the hull. If
only water entered the engine room through the tail shaft, it would
not have been bubbling and could have been pumped out easily.
As to the claim of the defendant in his counterclaim, the trial court
made the following pronouncements.
With respect to the counterclaim of the defendant, the Court
agrees with the plaintiffs that the amount of P5,000 cannot be
recovered. As to the amount of P2,500, the represents the
purchase price of the by the plaintiffs to the defendant. Under the
defendant is not entitled to the refund of said amount. As to the
repairs made on old equipment and the acquisition of new ones,
the charter party being silent about the same, the defendant
cannot recover their cost from the plaintiffs.
We agree to this pronouncement of the trial court.
The finding that the motor launch was unseaworthy at the time she
sank precludes recovery by the plaintiffs of the amount for which
the motor launch was insured under the policy issued by the
insurance company (paragraph 7 of the Marine Hull Policy, Annex A
to the complaint filed in civil case No. 5756).
The judgments appealed from are affirmed, without
pronouncement as to costs.
30 Roque vs. Intermediate Appellate Court [GR L-66935, 11
November 1985] First Division, Gutierrez (J): 5 concur, 1 on
leave
Facts:
On 19 February 1972, the Manila Bay Lighterage Corporation
(MBLC) a common carrier, entered into a contract with Isabela
Roque (doing business under the name and style of Isabela Roque
Timber Enterprises) and Ong Chiong whereby the former would
load and carry on board its barge Mable 10 about 422.18 cubic
meters of logs from Malampaya Sound, Palawan to North Harbor,
Manila. Roque and Ong insured the logs against loss for
P100,000.00 with the Pioneer Insurance and Surety Corporation
(Pioneer). On 29 February 1972, Roque and Ong loaded on the
barge, 811 pieces of logs at Malampaya Sound, Palawan for
carriage and delivery to North Harbor, Port of Manila, but the
shipment never reached its destination because Mable 10 sank with
the 811 pieces of logs somewhere off Cabuli Point in Palawan on its
way to Manila. The barge where the logs were loaded was
apparently not seaworthy such that it developed a leak. One of the
hatches was left open causing water to enter the barge and
because the barge was not provided with the necessary cover or
tarpaulin, the ordinary splash of sea waves brought more water
inside the barge. On 8 March 1972, Roque and Ong wrote a letter
to MBLC demanding payment of P150,000.00 for the loss of the
shipment plus P100,000.00 as unrealized profits but the latter
ignored the demand. Another letter was sent to Pioneer claiming
the full amount of P100,000.00 under the insurance policy but
Pioneer refused to pay on the ground that its liability depended
upon the "Total loss by Total Loss of Vessel only". Hence, Roque
and Ong commenced Civil Case 86599 against MBLC and Pioneer
Pioneer. During the initial stages of the hearing, MBLC informed the
trial court that it had salvaged part of the logs. The court ordered
them to be sold to the highest bidder with the funds to be
deposited in a bank in the name of Civil Case 86599. After hearing,
the trial court found in favor of Roque and Ong, condemning MBLC
and Pioneer to pay Roque and Ong, jointly and severally, the sum
of P100,000.00; sentencing MBLC to pay Roque and Ong, in
addition, the sum of P50,000.00, plus P12,500.00, that the latter
advanced to the former as down payment for transporting the logs
in question; ordering the counterclaim of Pioneer against Roque
and Ong, dismissed, for lack of merit, but as to its cross-claim
against its MBLC, the latter is ordered to reimburse the former for
whatever amount it may pay Roque and Ong as such surety;
ordering the counterclaim of MBLC against Roque and Ong, for lack
of merit; dismissing Roque's and Ong's claim of not less than
P100,000.00 and P75,000.00 as exemplary damages, for lack of
merit; granting Roque's and Ong's claim for attorney's fees in the
sum of P10,000.00; ordering MBLC and Pioneer to pay the costs;
and holding that the sum of P150,000.00 award to Roque and Ong,
shall bear interest of 6% from 25 March 1975, until amount is fully
paid. Pioneer appealed to the Intermediate Appellate Court. MBLC
did not appeal, as allegedly, the transportation company is no
longer doing business and is without funds. On 30 January 1984,
the appellate court modified the trial court's decision and absolved
Pioneer from liability after finding that there was a breach of
implied warranty of seaworthiness on the part of Roque and Ong
and that the loss of the insured cargo was caused by the "perils of
the ship" and not by the "perils of the sea". It ruled that the loss is
not covered by the marine insurance policy. After the appellate
court denied their motion for reconsideration, Roque and Ong filed
the petition for certiorari.
Issue [1]: Whether there is a warranty of seaworthiness by the
cargo owner in cases of marine cargo insurance.
Held [1]: YES. There is no dispute over the liability of the common
carrier MBLC. In fact, it did not bother to appeal the questioned
decision. However, Roque and Ong state that MBLC has ceased
operating as a firm and nothing may be recovered from it. They
are, therefore, trying to recover their losses from the insurer. 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 any thing which is the
subject of marine insurance, a warranty is implied that the ship is
seaworthy." Section 99 of the same Code also provides in part that
"Marine insurance includes: (1) Insurance against loss of or
damage to: (a) Vessels, craft, aircraft, vehicles, goods, freights,
cargoes, merchandise..." From the above-quoted provisions, 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.
As ruled in the case of Go Tiaoco y Hermanos v. Union Insurance
Society of Canton (40 Phil. 40), "it is universally accepted that in
every contract of insurance upon anything which is the subject of
marine insurance, a warranty is implied that the ship shall be
seaworthy at the time of the inception of the voyage. This rule is
accepted in our own Insurance Law (Act No. 2427, sec. 106)."
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 was held in Richelieu and Ontario
Nav. Co. v. Boston Marine, Inc., Co. (136 U.S. 406), "the exception
of losses occasioned by unseaworthiness was in effect a warranty
that a loss should not be so occasioned, and whether the fact of
unseaworthiness were known or unknown would be immaterial."
Since the law provides for an implied warranty of seaworthiness in
every contract of ordinary marine insurance, it becomes the
obligation of a cargo owner to look for a reliable common carrier
which keeps its vessels in seaworthy condition. The shipper of
cargo may have no control over the vessel but he has full control in
the choice of the common carrier that will transport his goods. Or
the cargo owner may enter into a contract of insurance which
specifically provides that the insurer answers not only for the perils
of the sea but also provides for coverage of perils of the ship. The
Court was constrained to apply Section 113 of the Insurance Code
to the facts of this case. "In marine cases, the risks insured against
are 'perils of the sea' (Chute v. North River Ins. Co., Minn. 214 NW
472, 55 ALR 933). The purpose of such insurance is protection
against contingencies and against possible damages and such a
policy does not cover a loss or injury which must inevitably take
place in the ordinary course of things. 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. They insure against losses from
extraordinary occurrences only, such as stress of weather, winds
and waves, lightning, tempests, rocks and the like. These are
understood to be the 'perils of the sea' referred in the policy, and
not those ordinary perils which every vessel must encounter. 'Perils
of the sea' has been 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. Damage done to a vessel by perils of
the sea includes every species of damages done to a vessel at sea,
as distinguished from the ordinary wear and tear of the voyage,
and distinct from injuries suffered by the vessel in consequence of
her not being seaworthy at the outset of her voyage (as in this
case). 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. (14 RCL on 'Insurance', Sec. 384, pp. 1203-
1204; Cia. de Navegacion v. Firemen's Fund Ins. Co., 277 US 66,
72 L. ed. 787, 48 S. Ct. 459)."
Issue [2]: Whether the loss of the cargo was due to the perils of
the ship rather than the perils of the sea.
Held [2]: PERILS OF THE SHIP. At the time Mable 10 sank, there
was no typhoon but ordinary strong wind and waves, a condition
which is natural and normal in the open sea. The evidence shows
that the sinking of Mable 10 was due to improper loading of the
logs on one side so that the barge was tilting on one side and for
that it did not navigate on even keel; that it was no longer
seaworthy that was why it developed leak; that the personnel of
the tugboat and the barge committed a mistake when it turned
loose the barge from the tugboat east of Cabuli point where it was
buffeted by storm and waves, while the tugboat proceeded to west
of Cabuli point where it was protected by the mountain side from
the storm and waves coming from the east direction. In fact, in
Roque's and Ong's complaint, it is alleged that the barge Mable 10
of MBLC developed a leak which allowed water to come in and that
one of the hatches of said barge was negligently left open by the
person in charge thereof causing more water to come in", and that
"he loss of their cargo was due to the fault, negligence, and/or lack
of skill of MBLC and/or MBLC's representatives on barge Mable 10.
It is quite unmistakable that the loss of the cargo was due to the
perils of the ship rather than the perils of the sea. The facts clearly
negate Roque's and Ong's claim under the insurance policy. In the
case of Go Tiaoco y Hermanos v. Union Ins. Society of Canton, the
Court had occasion to elaborate on the term "perils of the ship"
when it ruled that "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. As was
well said by Lord Herschell in Wilson, Sons & Co. v. Owners of
Cargo per the Xantho ([1887], 12 A. C., 503, 509), there must, in
order to make the insurer liable, be 'some casualty, something
which could not be foreseen as one of the necessary incidents of
the adventure. The purpose of the policy is to secure an indemnity
against accidents which may happen, not against events which
must happen.
THE PHILIPPINE AMERICAN GENERAL INSURANCE
COMPANY, INC., petitioner, vs. COURT OF APPEALS and
FELMAN SHIPPING LINES, respondents.
DECISION
BELLOSILLO, J.:
This case deals with the liability, if any, of a shipowner for loss of
cargo due to its failure to observe the extraordinary diligence
required by Art. 1733 of the Civil Code as well as the right of the
insurer to be subrogated to the rights of the insured upon payment
of the insurance claim.
On 6 July 1983 Coca-Cola Bottlers Philippines, Inc., loaded on
board MV Asilda, a vessel owned and operated by respondent
Felman Shipping Lines (FELMAN for brevity), 7,500 cases of 1-liter
Coca-Cola softdrink bottles to be
transported from Zamboanga City to Cebu City for consignee Coca-
Cola Bottlers Philippines, Inc., Cebu.[1] The shipment was insured
with petitioner Philippine American General Insurance Co., Inc.
(PHILAMGEN for brevity), under Marine Open Policy No. 100367-
PAG.
MV Asilda left the port of Zamboanga in fine weather at eight
oclock in the evening of the same day. At around eight forty-five
the following morning, 7 July 1983, the vessel sank in the waters
of Zamboanga del Norte bringing down her entire cargo with her
including the subject 7,500 cases of 1-liter Coca-Cola softdrink
bottles.
On 15 July 1983 the consignee Coca-Cola Bottlers Philippines, Inc.,
Cebu plant, filed a claim with respondent FELMAN for recovery of
damages it sustained as a result of the loss of its softdrink bottles
that sank withMV Asilda. Respondent denied the claim thus
prompting the consignee to file an insurance claim with
PHILAMGEN which paid its claim of P755,250.00.
Claiming its right of subrogation PHILAMGEN sought recourse
against respondent FELMAN which disclaimed any liability for the
loss. Consequently, on 29 November 1983 PHILAMGEN sued the
shipowner for sum of money and damages.
In its complaint PHILAMGEN alleged that the sinking and total loss
of MV Asilda and its cargo were due to the vessels unseaworthiness
as she was put to sea in an unstable condition. It further alleged
that the vesselwas improperly manned and that its officers were
grossly negligent in failing to take appropriate measures to proceed
to a nearby port or beach after the vessel started to list.
On 15 February 1985 FELMAN filed a motion to dismiss based on
the affirmative defense that no right of subrogation in favor of
PHILAMGEN was transmitted by the shipper, and that, in any
event, FELMAN had abandoned all its rights, interests and
ownership over MV Asilda together with her freight and
appurtenances for the purpose of limiting and extinguishing its
liability under Art. 587 of the Code of Commerce.[2]
On 17 February 1986 the trial court dismissed the complaint of
PHILAMGEN. On appeal the Court of Appeals set aside the
dismissal and remanded the case to the lower court for trial on the
merits. FELMAN filed a petition for certiorari with this Court but it
was subsequently denied on 13 February 1989.
On 28 February 1992 the trial court rendered judgment in favor of
FELMAN.[3] It ruled that MV Asilda was seaworthy when it left the
port of Zamboanga as confirmed by certificates issued by the
Philippine Coast Guard and the shipowners surveyor attesting to its
seaworthiness. Thus the loss of the vessel and its entire shipment
could only be attributed to either a fortuitous event, in which case,
no liability should attach unless there was a stipulation to the
contrary, or to the negligence of the captain and his crew, in which
case, Art. 587 of the Code of Commerce should apply.
The lower court further ruled that assuming MV Asilda was
unseaworthy, still PHILAMGEN could not recover from FELMAN
since the assured (Coca-Cola Bottlers Philippines, Inc.) had
breached its implied warranty on the vessels
seaworthiness. Resultantly, the payment made by PHILAMGEN to
the assured was an undue, wrong and mistaken payment. Since it
was not legally owing, it did not give PHILAMGEN the right of
subrogation so as to permit it to bring an action in court as a
subrogee.
On 18 March 1992 PHILAMGEN appealed the decision to the Court
of Appeals. On 29 August 1994 respondent appellate court
rendered judgment finding MV Asilda unseaworthy for being top-
heavy as 2,500 cases of Coca-Cola softdrink bottles were
improperly stowed on deck. In other words, while the vessel
possessed the necessary Coast Guard certification indicating its
seaworthiness with respect to the structure of the ship itself, it was
not seaworthy with respect to the cargo. Nonetheless, the
appellate court denied the claim of PHILAMGEN on the ground that
the assureds implied warranty of seaworthiness was not complied
with. Perfunctorily, PHILAMGEN was not properly subrogated to the
rights and interests of the shipper. Furthermore, respondent court
held that the filing of notice of abandonment had absolved the
shipowner/agent from liability under the limited liability rule.
The issues for resolution in this petition are: (a) whether MV
Asilda was seaworthy when it left the port of Zamboanga; (b)
whether the limited liability under Art.
587 of the Code of Commerce should apply; and, (c) whether
PHILAMGEN was properly subrogated to the rights and legal
actions which the shipper had against FELMAN, the shipowner.
MV Asilda was unseaworthy when it left the port of Zamboanga. In
a joint statement, the captain as well as the chief mate of the
vessel confirmed that the weather was fine when they left the port
of Zamboanga.According to them, the vessel was carrying 7,500
cases of 1-liter Coca-Cola softdrink bottles, 300 sacks of seaweeds,
200 empty CO2 cylinders and an undetermined quantity of empty
boxes for fresh eggs. They loaded the empty boxes for eggs and
about 500 cases of Coca-Cola bottles on deck.[4] The ship captain
stated that around four oclock in the morning of 7 July 1983 he
was awakened by the officer on duty to inform him that the vessel
had hit a floating log. At that time he noticed that the weather had
deteriorated with strong southeast winds inducing big waves. After
thirty minutes he observed that the vessel was listing slightly to
starboard and would not correct itself despite the heavy rolling and
pitching. He then ordered his crew to shift the cargo from
starboard to portside until the vessel was balanced. At about seven
oclock in the morning, the master of the vessel stopped the engine
because the vessel was listing dangerously to portside. He ordered
his crew to shift the cargo back to starboard. The shifting of cargo
took about an hour afterwhich he rang the engine room to resume
full speed.
At around eight forty-five, the vessel suddenly listed to portside
and before the captain could decide on his next move, some of the
cargo on deck were thrown overboard and seawater entered the
engine room and cargo holds of the vessel. At that instance, the
master of the vessel ordered his crew to abandon ship. Shortly
thereafter, MV Asilda capsized and sank. He ascribed the
sinking to the entry of seawater through a hole in the hull caused
by the vessels collision with a partially submerged log.[5]
The Elite Adjusters, Inc., submitted a report regarding the sinking
of MV Asilda. The report, which was adopted by the Court of
Appeals, reads -
We found in the course of our investigation that a reasonable
explanation for the series of lists experienced by the vessel that
eventually led to her capsizing and sinking, was that the vessel
was top-heavy which is to say that while the vessel may not have
been overloaded, yet the distribution or stowage of the cargo on
board was done in such a manner that the vessel was in top-heavy
condition at the time of her departure and which condition
rendered her unstable and unseaworthy for that particular voyage.
In this connection, we wish to call attention to the fact that this
vessel was designed as a fishing vessel x x x x and it was not
designed to carry a substantial amount or quantity of cargo on
deck. Therefore, we believe strongly that had her cargo been
confined to those that could have been accommodated under deck,
her stability would not have been affected and the vessel would not
have been in any danger of capsizing, even given the prevailing
weather conditions at that time of sinking.
But from the moment that the vessel was utilized to load heavy
cargo on its deck, the vessel was rendered unseaworthy for the
purpose of carrying the type of cargo because the weight of the
deck cargo so decreased the vessels metacentric height as to cause
it to become unstable.
Finally, with regard to the allegation that the vessel encountered
big waves, it must be pointed out that ships are precisely designed
to be able to navigate safely even during heavy weather and
frequently we hear of ships safely and successfully weathering
encounters with typhoons and although they may sustain some
amount of damage, the sinking of ship during heavy weather is not
a frequent occurrence and is not likely to occur unless they are
inherently unstable and unseaworthy xx x x
We believe, therefore, and so hold that the proximate cause of the
sinking of the M/V Asilda was her condition of unseaworthiness
arising from her having been top-
heavy when she departed from the Port of Zamboanga. Her having
capsized and eventually sunk was bound to happen and was
therefore in the category of an inevitable occurrence (underscoring
supplied).[6]
We subscribe to the findings of the Elite Adjusters, Inc., and the
Court of Appeals that the proximate cause of the sinking of MV
Asilda was its being top-heavy. Contrary to the ship captains
allegations, evidence shows that approximately 2,500 cases of
softdrink bottles were stowed on deck. Several days after MV
Asilda sank, an estimated 2,500 empty Coca-Cola plastic cases
were recovered near the vicinity of the sinking. Considering that
the ships hatches were properly secured, the empty Coca-Cola
cases recovered could have come only from the vessels deck
cargo. It is settled that carrying a deck cargo raises the
presumption of unseaworthiness unless it can be shown that the
deck cargo will not interfere with the proper management of the
ship. However, in this case it was established that MV Asilda was
not designed to carry substantial amount of cargo on deck.The
inordinate loading of cargo deck resulted in the decrease of the
vessels metacentric height[7] thus making it unstable. The strong
winds and waves encountered by the vessel are but the ordinary
vicissitudes of a sea voyage and as such merely contributed to its
already unstable and unseaworthy condition.
On the second issue, Art. 587 of the Code of Commerce is not
applicable to the case at bar.[8] Simply put, the ship agent is liable
for the negligent acts of the captain in the care of
goods loaded on the vessel. This liability however can be limited
through abandonment of the vessel, its equipment and freightage
as provided in Art. 587. Nonetheless, there are exceptional
circumstances wherein the ship agent could still be held
answerable despite the abandonment, as where the loss or injury
was due to the fault of the shipowner and the captain. [9] The
international rule is to the effect that the right of abandonment of
vessels, as a legal limitation of a shipowners liability, does not
apply to cases where the injury or average was occasioned by the
shipowners own fault.[10] It must be stressed at this point that Art.
587 speaks only of situations where the fault or negligence is
committed solely by the captain. Where the shipowner is likewise
to be blamed, Art. 587 will not apply, and such situation will be
covered by the provisions of the Civil Code on common carrier.[11]
It was already established at the outset that the sinking of MV
Asilda was due to its unseaworthiness even at the time of its
departure from the port of Zamboanga. It was top-heavy as an
excessive amount of cargo was loaded on deck. Closer supervision
on the part of the shipowner could have prevented this fatal
miscalculation. As such, FELMAN was equally negligent. It cannot
therefore escape liability through the expedient of filing a notice of
abandonment of the vessel by virtue of Art. 587 of the Code of
Commerce.
Under Art 1733 of the Civil Code, (c)ommon carriers, from the
nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case x x x x" In the event of loss of goods,
common carriers are presumed to have acted negligently. FELMAN,
the shipowner, was not able to rebut this presumption.
In relation to the question of subrogation, respondent appellate
court found MV Asilda unseaworthy with reference to the cargo and
therefore ruled that there was breach of warranty of seaworthiness
that rendered the assured not entitled to the payment of is claim
under the policy. Hence, when PHILAMGEN paid the claim of the
bottling firm there was in effect a voluntary payment and no right
of subrogation accrued in its favor. In other words, when
PHILAMGEN paid it did so at its own risk.
It is generally held that in every marine insurance policy the
assured impliedly warrants to the assurer that the vessel is
seaworthy and such warranty is as much a term of the contract as
if expressly written on the face of the policy.[12] Thus Sec. 113 of
the Insurance Code provides that (i)n 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. Under Sec. 114, a ship is seaworthy when reasonably
fit to perform the service, and to
encounter the ordinary perils of the voyage, contemplated by the
parties to the policy. Thus it becomes the obligation of the cargo
owner to look for a reliable common carrier which keeps
its vessels in seaworthy condition. He may have no control
over the vessel but he has full control in the selection of the
common carrier that will transport his goods. He also has full
discretion in the choice of assurer that will underwrite a particular
venture.
We need not belabor the alleged breach of warranty of
seaworthiness by the assured as painstakingly pointed out by
FELMAN to stress that subrogation will not work in this case. In
policies where the law will generally imply a warranty of
seaworthiness, it can only be excluded by terms in writing in the
policy in the clearest language.[13] And where the policy stipulates
that the seaworthiness of the vessel as between the assured and
the assurer is admitted, the question of seaworthiness cannot be
raised by the assurer without showing concealment or
misrepresentation by the assured.[14]
The marine policy issued by PHILAMGEN to the Coca-Cola bottling
firm in at least two (2) instances has dispensed with the usual
warranty of worthiness. Paragraph 15 of the Marine Open Policy
No. 100367-PAG reads (t)he liberties as per Contract of
Affreightment the presence of the Negligence Clause and/or Latent
Defect Clause in the Bill of Lading and/or Charter Party and/or
Contract of Affreightment as between the Assured and
the Company shall not prejudice the insurance. The seaworthiness
of the vessel as between the Assured and the Assurers is hereby
admitted.[15]
The same clause is present in par. 8 of the Institute Cargo
Clauses (F.P.A.) of the policy which states (t)he seaworthiness of
the vessel as between the Assured and Underwriters in hereby
admitted x x x x"[16]
The result of the admission of seaworthiness by the assurer
PHILAMGEN may mean one or two things: (a) that the warranty of
the seaworthiness is to be taken as fulfilled; or, (b) that the risk of
unseaworthiness is assumed by the insurance company.[17] The
insertion of such waiver clauses in cargo policies is in recognition of
the realistic fact that cargo owners cannot control the state of the
vessel. Thus it can be said that with such categorical
waiver, PHILAMGEN has accepted the risk of unseaworthiness so
that if the ship should sink by unseaworthiness, as what occurred
in this case, PHILAMGEN is liable.
Having disposed of this matter, we move on to the legal basis for
subrogation. PHILAMGENs action against FELMAN is squarely
sanctioned by Art. 2207 of the Civil Code which provides:
Art. 2207. If the plaintiffs property has been insured, and he has
received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the
contract. If the amount paid by the insurance company does not
fully cover the injury or loss, the aggrieved party shall be entitled
to recover the deficiency from the person causing the loss or
injury.
In Pan Malayan Insurance Corporation v. Court of Appeals,[18] we
said that payment by the assurer to the assured operates as an
equitable assignment to the assurer of all the remedies
which the assured may have against the third party whose
negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of any
privity of contract or upon payment by the insurance company of
the insurance claim. It accrues simply upon payment by the
insurance company of the insurance claim.
The doctrine 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, equity and good conscience ought to pay. [19] Therefore, the
payment made by PHILAMGEN to Coca-Cola Bottlers Philippines,
Inc., gave the former the right to bring an action as subrogee
against FELMAN. Having failed to rebut the presumption of fault,
the liability of FELMAN for the loss of the 7,500 cases of 1-liter
Coca-Cola softdrink bottles is inevitable.
WHEREFORE, the petition is GRANTED. Respondent FELMAN
SHIPPING LINES is ordered to pay petitioner PHILIPPINE
AMERICAN GENERAL INSURANCE CO., INC., Seven Hundred Fifty-
five Thousand TwoHundred and Fifty Pesos (P755,250.00) plus
legal interest thereon counted from 29 November 1983, the date
of judicial demand, pursuant to Arts. 2212 and 2213 of the Civil
Code.[20]
SO ORDERED.
November 22, 1921
G.R. No. 16473
PHILIPPINE MANUFACTURING CO., plaintiff-appellant,
vs.
UNION INSURANCE SOCIETY OF CANTON, LTD., defendant-
appellee.
Crossfield & O'Brien for appellant.
Fisher & DeWitt for appellee.
JOHNS, J.:
The plaintiff is a corporation duly organized under the laws of the
Philippine Islands with its principal office and place of business at
Manila, and at the times alleged was the owner of the steel tank
lighter named Philmaco. The defendant is an insurance company
organized under the laws of Hongkong and duly authorized to
transact business here.
July, 1917, the defendant insured the plaintiff's lighter for the sum
of P16,000, and issued its policy for such insurance, which recites
that the steel tank lighter Philmaco is insured "for and during the
space of twelve calendar-months from July 6, 1917 to July 5, 1918,
both dates inclusive, upon the hull, machinery, tackle, apparel,
boats or other furniture of the good ship or vessel", and that "the
assured is and shall be rated and valued on hull, engine and
pumping machinery, whereof this policy insures pesos sixteen
thousand, P. I. C. Warranted against the absolute total loss of the
lighter only. Warranted trading between Bitas, Tondo, or Pasig
River and steamers in the Bay of Manila or harbor." In
consideration thereof, the plaintiff paid the defendant P960 as a
premium for such insurance. About July 1, 1918, and during the
life of the policy and as a result of a typhoon, the lighter was sunk
in the Manila Bay, of which the plaintiff notified the defendant and
demanded payment of the full amount of its policy, which the
defendant refused, and denied its liability. On February 25, 1919,
the plaintiff commenced this action and, among other things,
alleged in the complaint:
That during the period of said insurance the said steel tank
lighter Philmaco became a total loss by sinking in the waters of the
Bay of Manila while operating within the places noted in the said
insurance policy.
That the loss of the said steel tank lighter was total and the full
amount for which it was insured upon such loss immediately
became due and payable, and prayed for judgment for the sum of
P16,000, with legal interest and costs. For answer the defendant
admits the issuance and delivery of the policy, and, as a further
and separate defense, alleges that, under its terms, the defendant
was only liable for an absolute total loss, and that there was not a
total destruction of the lighter.
After the testimony was taken, the lower court sustained this
contention and rendered judgment for the defendant, from which
the plaintiff appeals, claiming that the trial court erred in holding
that there was not an absolute total loss, and in refusing to hold
that policy covered a "constructive total loss, as well as an actual
total loss", and that under the facts, it was entitled to recover the
full amount of the policy.
As a result of a typhoon the vessel was sunk in the Manila Bay in
front of the Manila Hotel. The plaintiff at once notified the
defendant that the lighter was of no value, and offered to abandon
the wreck as an absolute total loss to the plaintiff. The defendant
refused the offer, and instructed plaintiff to salve the wreck, if it
was possible to do so. Under such instructions, the plaintiff
employed a third party to proceed with the salvage, which was
commenced some time in July, 1918. After several attempts and
on September 20, 1918, the storm-beaten hull was finally raised
and between two barges was taken to the Pandacan Slipway.
Upon the evidence for the plaintiff, the trial court found, and upon
that point the testimony is conclusive, that the cost of salvage and
the necessary repairs were substantially equal to the original cost
of the lighter and its value as stipulated in the policy. The findings
did not take into consideration any damages to the plaintiff for
being deprived of the use of the lighter of the interest on the
investment. Although the evidence is clear that the lighter was
raised and floated to the slipway on September 20, 1918, it does
not appear how long it remained there or when it was finally
reconstructed and again placed in commission. The plaintiff having
finally raised the lighter, reconstructed and placed it in
commission, and having used a large portion of its hull in such
reconstruction, the defendant claims that the loss was not an
absolute total loss under the terms and provisions of the policy.
That plaintiff having reconstructed a new lighter out the remains of
the old one, it cannot claim or assert that the old one was a total
loss. The defendant did not offer any evidence. The question is
thus squarely presented whether, under the facts shown, the loss
is an absolute total loss within the terms and provisions of the
policy. The testimony is conclusive that the hull itself was very
seriously damaged, and that in the reconstruction of the lighter the
damaged hull was repaired, and that the lighter with such repaired
hull was eventually placed in commission. Through the violence of
the storm and the action of the waves, a large portion of its
machinery and other equipment were lost or destroyed.
The policy was executed at Manila and the lighter was sunk in the
Manila Bay, and under the rule of construction, the physical
conditions then and there existing should be read into and become
a part of the policy.
An act revising the insurance laws and regulating insurance
business in the Philippine Islands, No. 2427, was enacted by the
Philippine Legislature December 12, 1914, and, under the heading
of "Loss", contains the following provisions:
SEC. 120. A loss may be either total or partial.
SEC. 121. Every loss which is not total is partial.
SEC. 122. A total loss may be either actual or constructive.
SEC. 123. An actual total loss is caused by:
(a) A total destruction of the thing insured;
(b) The loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the
owner for the purpose for which he held it. . . .
Whatever may be the rule in other jurisdictions, the policy having
been issued at Manila, it must be construed under the terms and
provisions of those sections, and section 122 specifically says that
"a total loss may be either actual or constructive," and that "the
loss of the thing by sinking, or being broken up," is an actual loss
or that "any damage to the thing which renders it valueless to the
owner for the purposes for which he held it" is an actual loss.
As we construe the record, at the time the lighter was sunk and in
the bottom of the bay under the conditions then there existing, it
was of no value to the owner, and, if it was of no value to the
owner, it would be a actual total loss. To render it valueless to the
owner, it is not necessary that there should be an actual or total
loss or destruction of all the different parts of the entire vessel. The
question here is whether, under the conditions then and there
existing, and as the lighter laid in the bottom of the bay, was it of
any value to the owner. If it was not of any value to the owner,
then there was an actual loss or a "total destruction of the thing
insured" within the meaning of the above sections of Act No.
2427 of the insurance code.
The lighter was sunk about July 1, 1918. After several futile
attempts, it was finally raised September 20, 1918. It is fair to
assume that in its then condition much further time would be
required to make the necessary repairs and install the new
machinery before it could again be placed in commission. During all
that time the owner would be deprived of the use of its vessel or
the interest on its investment. When those questions are
considered the testimony is conclusive that the cost of salvage,
repair, and reconstruction was more than the original cost of the
vessel of its value at the time the policy was issued. As found by
the trial court "it is difficult to see how there could have been a
more complete loss of the vessel than that which actually
occurred." Upon the facts that shown here, any other construction
would nullify the statute, and, as applied to the conditions existing
in the Manila Bay, this kind of a policy would be worthless, and
there would not be any consideration for the premium.
In their able brief, the distinguished counsel for the defendant
point out that the policy itself provides that it "shall be of as much
force and effect as the surest writing or policy of insurance made in
London," and contend that the policy should be construed under
the Marine Law of Great Britain, but as to what may be the law
there is not alleged or proven.
In Liverpool and Great Western Steam Co. vs. Phoenix Ins. Co.
(129 U.S., 397; 32 L. ed., 788, 793), the court says:
The law of Great Britain since the Declaration of Independence is
the law of a foreign country, and, like any other foreign law, is
matter of fact, which the courts of this country cannot be
presumed to be acquainted with, or to have judicial knowledge of,
unless it is pleaded and proved.
The rule that the courts of one country cannot take cognizance of
the law of another without plea and proof has been constantly
maintained at law and in equity, in England and America.
That rule was followed by this court in Sy Joc Lieng vs. Encarnacion
(16 Phil., 137, 139), where it says:
When in a litigation the application of a foreign law, for example
the law of China, is sought, it is necessary to prove before the
courts of the Islands, in a satisfactory manner, the existence of
such law as a question of fact; and when proof of such a law is
lacking, it is improper to apply unknown laws to suits pending
before the courts of the Islands.
The notes to the Great Western Insurance Company vs. Fogarty
(86 U. S., 216), say:
In the English practice, a ship is a total loss when she has sustain
such extensive damage that it would not be reasonably practical to
repair her. The ordinary measure of prudence which the courts
have adopted is this: If the ship, when repaired, will not be worth
the sum which it would be necessary to expend upon her, the
repairs are, practically speaking, impossible, and it is a case of
total loss. (Citing a number of English authorities.)
After a careful consideration of the important case, we hold that
the decision of the trial court should be reversed, and that a
judgment should be entered here in favor of the plaintiff against
the defendant for P16,000, with interest thereon, from February
25, 1919, at the rate of 6 per cent per annum, and the costs and
disbursements of this action in this and the lower court. So
ordered.
Malayan Insurance Co, Inc. V CA (1986)
G.R. No. L-59919 November 26, 1986 Oriental v CA G.R. No. 94052 August 9, 1991
J. Melencio-Herrera
Lessons Applicable: Motor Vehicle Liability Insurance - Authorized
Driver Cause (Insurance) Facts:
Laws Applicable: Panama Sawmill shipped 1208 pieces of apitog logs to Manila and
insured the logs with Oriental for the value of Php 1 million. Two
FACTS: barges were loaded with 610 and 598 logs. At
Aurelio Lacson ,owner of a Toyota NP Land Cruiser, Model 1972, sea, typhoons ravaged one of the barges, resulting in the lossof
bearing Plate No. NY-362 and with engine Number F- 497 of 598 of the logs.
374325 insured with Malayan Insurance Co The Insurance contract provided for indemnity under the following
Dec. 1, 1975: Aurelio brought it to the shop of Carlos Jamelo for conditions:
repair Warranted that this Insurance is against TOTAL LOSS ONLY.
Dec. 2, 1975: Rogelio Mahinay, together with Johnny Mahinay, Subject to the following clauses:
Rogelio Macapagong and Rogelio Francisco took and drove the Civil Code Article 1250 Waiver clause
Toyota Land Cruiser and it met an accident with Bo Typhoon warranty clause
Carlos reported the incident to the police and instituted a criminal Omnibus clause.
case for Qualified Theft against his employees Oriental didnt give an indemnity because there wasnt total loss of
Rogelio Mahinay pleaded guilty and was convicted of theft the shipment.
Aurelio was not allowed to claim on the ground that the claim is The sawmill filed a civil case against Oriental and the court
not covered by the policy inasmuch as the driver of the insured ordered it to pay 410,000 as value for the missing logs. The CA
vehicle at the time of the accident was not a duly licensed driver affirmed the lower court judgment but reduced the legal interest.
Trial Court: favored Aurelio Hence this appeal by Oriental.
CA: Affirmed
ISSUE: W/N the taking of the vehicle by another person without Issue:
permission or authority from the owner or person-in-charge thereof Whether or not Oriental Assurance can be held liable under its
is sufficient to place it within the ambit of the word theft in the marine insurance policy based on the theory of a divisiblecontract
policy of insurance and, consequently, a constructive total loss.

Held: No. Petition granted.

HELD: YES.
The damages therefore were sustained in the course of the
unlawful taking
Bacolod IFCs interest in the insured vehicle was in the amount of
P2,000.00 only compared to plaintiff's P26,000.00 it is well to
presume that Bacolod IFC did not deem it wise to be impleaded as
party-plaintiff in this case. This inaction on the part of BIFC will
only show that it was not really interested to intervene.
Ratio:
Perla v CA- The terms of the contract constitute the measure of
the insurer liability and compliance therewith is a condition
precedent to the insured's right to recovery from the insurer.
Whether a contract is entire or severable is a question of intention
to be determined by the language employed by the parties. The
policy in question shows that the subject matter insured was the
entire shipment of 2,000 cubic meters of apitong logs. The
fact that the logs were loaded on two different barges did not make
the contract several and divisibleas to the items insured. The logs
on the two barges were not separately valued or separately
insured. Only one premium was paid for the entire shipment,
making for only one cause or consideration. The insurance
contract must, therefore, be considered indivisible.
Also, the insurer's liability was for "total loss only" as stipulated. A
total loss may be either actual or constructive. An actual total loss
under Sec 130 of the Insurance Code is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being
broken up;
(c) Any damage to the thing which renders it valueless to the
owner for the purpose for which he held it; or
(d) Any other event which effectively deprives the owner of the
possession, at the port of destination, of the thing insured.
A constructive total loss, gives to a person insured a right to
abandon and it means:
SECTION 139. A person insured by a contract of marine
insurance may abandon the thing insured, or any particular portion
thereof 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 injured 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
The appellate court considered the cargo in one barge as separate
from the other and ruled that 497 of 598 was more than of the
amount lost, showing a constructive total loss.
The SC, however, said that although the logs were placed in two
barges, they were not separately valued by the policy, nor
separately insured. Of the entirety of 1,208, pieces of logs, only
497 pieces thereof were lost or 41.45% of the entireshipment.
Since the cost of those 497 pieces does not exceed 75% of the
value of all 1,208 pieces of logs, the shipmentcan not be said to
have sustained a constructive total loss under Section 139(a) of
the Insurance Code.
FRANCISCO JARQUE, plaintiff-appellee,
vs.
SMITH, BELL & CO., LTD., ET AL., defendants.
UNION FIRE INSURANCE CO., appellant.
Benj. S. Ohnick for appellant.
Vicente Pelaez for appellee.
OSTRAND, J.:
The plaintiff was the owner of the motorboat Pandan and held a
marine insurance policy for the sum of P45,000 on the boat, the
policy being issued by the National Union Fire Insurance Company
and according to the provisions of a "rider" attached to the policy,
the insurance was against the "absolute total loss of the vessel
only." On October 31, 1928, the ship ran into very heavy sea off
the Islands of Ticlin, and it became necessary to jettison a portion
of the cargo. As a result of the jettison, the National Union Fire
Insurance Company was assessed in the sum of P2,610.86 as its
contribution to the general average. The insurance company,
insisting that its obligation did not extend beyond the insurance of
the "absolute total loss of the vessel only, and to pay proportionate
salvage of the declared value," refused to contribute to the
settlement of the general average. The present action was
thereupon instituted, and after trial the court below rendered
judgment in favor of the plaintiff and ordered the defendant
National Union Fire Insurance Company to pay the plaintiff the sum
of P2,610.86 as its part of the indemnity for the general average
brought about by the jettison of cargo. The insurance company
appealed to this court and assigns as errors (1) "that the lower
court erred in disregarding the typewritten clause endorsed upon
the policy, Exhibit A, expressly limiting insurer's liability thereunder
of the total loss of the wooden vessel Pandan and to proportionate
salvage charges," and (2) "that the lower court erred in concluding
that defendant and appellant, National Union Fire Insurance
Company is liable to contribute to the general average resulting
from the jettison of a part of said vessel's cargo."
I. As to the first assignment of error, little need be said. The
insurance contract, Exhibit A, is printed in the English common
form of marine policies. One of the clauses of the document
originally read as follows:
Touching the Adventures and Perils which the said National Union
Fire Insurance Company is content to bear, and to take upon them
in this Voyage; they are of the Seas, Men-of-War, Fire, Pirates,
Rovers, Thieves, Jettison, Letters of Mart and Countermart,
Surprisals, and Takings at Sea. Arrest, Restraint and Detainments,
of all Kings Princes and People of what Nation, Condition or Quality
so ever; Barratry of the Master and Marines, and of all other Perils,
Losses and Misfortunes, that have or shall come to the Hurt,
Detriment, or Damage of the said Vessel or any part thereof; and
in case of any Loss or Misfortunes, it shall be lawful for the
Assured, his or their Factors, Servants, or assigns, to sue, labour
and travel for, in and about the Defense. Safeguard, and recovery
of the said Vessel or any Charges whereof the said Company, will
contribute, according to the rate and quantity of the sum herein
assured shall be of as much force and Virtue as the surest Writing
or Policy of Insurance made in LONDON.
Attached to the policy over and above the said clause is a "rider"
containing typewritten provisions, among which appears in
capitalized type the following clause:
AGAINST THE ABSOLUTE TOTAL LOSS OF THE VESSEL ONLY, AND
TO PAY PROPORTIONATE SALVAGE CHARGES OF TEH DECLARED
VALUE.
At the bottom of the same rider following the type written
provisions therein set forth are the following words: "Attaching to
and forming part of the National Union Fire Insurance Co., Hull
Policy No. 1055."
It is a well settled rule that in case repugnance exists between
written and printed portions of a policy, the written portion
prevails, and there can be no question that as far as any
inconsistency exists, the above-mentioned typed "rider" prevails
over the printed clause it covers. Section 291 of the Code of Civil
Procedure provides that "when an instrument consists partly of
written words and partly of a printed form and the two are
inconsistent, the former controls the latter." (See also Joyce on
Insurance, 2d ed., sec. 224, page 600; Arnould on Marine
Insurance, 9th ed., sec. 73; Marine Equipment Corporation vs.
Automobile Insurance Co., 24 Fed. (2d), 600; and Marine
Insurance Company vs. McLahanan, 290 Fed., 685, 688.)
II. In the absence of positive legislation to the contrary, the liability
of the defendant insurance company on its policy would, perhaps,
be limited to "absolute loss of the vessel only, and to pay
proportionate salvage of the declared value." But the policy was
executed in this jurisdiction and "warranted to trade within the
waters of the Philippine Archipelago only." Here the liability for
contribution in general average is not based on the express terms
of the policy, but rest upon the theory that from the relation of the
parties and for their benefit, a quasi contract is implied by law.
Article 859 of the Code of Commerce is still in force and reads as
follows:
ART. 859. The underwriters of the vessel, of the freight, and of the
cargo shall be obliged to pay for the indemnity of the gross
average in so far as is required of each one of these objects
respectively.
The article is mandatory in its terms, and the insurers, whether for
the vessel or for the freight or for the cargo, are bound to
contribute to the indemnity of the general average. And there is
nothing unfair in that provisions; it simply places the insurer on the
same footing as other persons who have an interest in the vessel,
or the cargo therein at the time of the occurrence of the general
average and who are compelled to contribute (art. 812, Code of
Commerce).
In the present case it is not disputed that the ship was in grave
peril and that the jettison of part of the cargo was necessary. If the
cargo was in peril to the extent of call for general average, the ship
must also have been in great danger, possibly sufficient to cause
its absolute loss. The jettison was therefore as much to the benefit
of the underwriter as to the owner of the cargo. The latter was
compelled to contribute to the indemnity; why should not the
insurer be required to do likewise? If no jettison had take place and
if the ship by reason thereof had foundered, the underwriter's loss
would have been many times as large as the contribution now
demanded. lawphil.net
The appealed judgment is affirmed with the cost against the
appellant. So ordered.
A person alternatively bound by different prestations shall
completely perform one of them.
The creditor cannot be compelled to receive part of one and part of
the other undertaking. (1131)
CASE DIGEST: Ong Guan Can v. The Century Insurance Co.
(46 PHIL. 592), December 2, 1924
FACTS:
PLAINTIFFS-APPELLEES: Ong Guan Can and the Bank of the
Philippine Islands
DEFENDANT-APPELLANT: The Century Insurance Co., LTD.
PONENTE: Villamor, J.
The plaintiff owned a building that was insured against fire by the
defendant in the sum of Php 30,000, including the merchandise
therein contained in the sum of Php 15,000. Both the house and
merchandise insured were burned in February 28, 1923 while the
policies issued by the defendant in favor of the plaintiff were still in
force.
The CFI of Iloilo granted the case in favor of the plaintiff that The
Century Insurance Co. should pay Ong Guan Can the sum of Php
45,000 as the total value of the insured house and merchandise.
The Insurance Company appealed that the judgment be modified
to permit it to rebuild the house and that they be relieved from the
payment of the sum in which the building was insured.
ISSUE:
Whether the defendant-appellant can rebuild the house burnt as a
sufficient idemnity to the inured for the actual loss suffered by him.
APPLICABLE LAW:
Article 1199:
A person alternatively bound by different prestations shall
completely perform one of them.
The creditor cannot be compelled to receive part of one and part of
the other undertaking. (1131)
HELD:
Yes. The defendant may build the house as an alternative
prestation, freeing him from the payment of the sum in which the
building was insured. This conclusion is in line with The Civil Codes
Article 1131.
Paying the sum in which the building was insured is one of the 2
prestations provided in one of the clauses stipulating the conditions
of the policies. Based on the same Article of the Civil Code, the
complete performance of one of them is sufficient to extinguish the
obligation. While there are several prestations, only one is due.
G.R. No. L-8405 February 10, 1915
FRANCISCO GALIAN, plaintiff-appellant,
vs.
THE STATE ASSURANCE COMPANY, LTD., defendant-appellant.
Recaredo M.a Calvo for plaintiff.
Haussermann, Cohn and Fisher for defendant.
TRENT, J.:
This is an action upon an open policy of fire insurance of household
effects. The property was insured on January 25, 1912, for P3,000.
On March 25, 1912, the day following the fire, the insured
presented an itemized statement of the goods contained in the
house at the time of the fire, the total value of which he claims to
be P4,512. The insured property was not a total loss, and some of
it was afterward sold by the insured at public auction for the net
amount of P120.40 The complaint prays for the recovery of the
total amount of the policy less two-thirds of the P120.40, or
P2,919.74.
The insurance company interposed a special defense to the effect
that the policy had been forfeited by reason of the fact that the
claim presented by the plaintiff was fraudulently false in that (a)
the insured had alleged a total loss, (b) that not all the articles
listed in the plaintiff's claim of loss were in the house where and
when the fire occurred, and (c) that the plaintiff had attributed
much greater value to the articles included in the list than they
were worth.
Upon trial there was evidence for the plaintiff that the statement
presented to the insurance company after the fire was substantially
correct, both in quantities and values. The plaintiff testified that
the statement was prepared from memory immediately after the
fire by himself with the assistance of his brother. The defendant
introduced three witnesses, who were sent to the scene of the fire
shortly after it occurred to estimate the value of the property
contained in the house. From photographs submitted in evidence it
appears that the first floor of the plaintiff's residence was not
damaged by the fire at all, but did suffer damage from water and
breakage. In the parlor on the second floor the rattan work on the
chairs was entirely consumed, but the woodwork was probably only
charred or scorched. The fire did the most damages in the
bedroom, where the roof partly fell in. Articles of clothing contained
in the wardrobes in this room are visible in the photograph, they
having evidently been taken out for inspection after the fire. Mr.
Young testified that upon request of the defendant company he
had examined the contents of the house and estimated the loss at
P1,000. He said, however, that this was only a casual estimate.
They pulled out a few drawers of the wardrobes and examined
some of the wearing apparel contained in them. Mr. Dow testified
that he made a rough estimate of the damage done. He estimated
the value of the goods on the first floor at P500, and said that from
what he saw of the remains on the upper floor, P1,500 would be a
liberal estimate of the damages done. He did not believe that there
was P4,000 worth of property on the second floor. Mr. Laing, agent
of the defendant company, estimated the loss at P1,500. This, he
thought, was a very liberal estimate. He appears to have made a
more careful estimate of the value of the different articles than
either of the other witnesses called by the defendant. He testified
that nothing had been entirely consumed by the fire. In this he is
contradicted by the plaintiff, who claims that some of the furniture,
even, was totally consumed. From the appearance of the bedroom,
as portrayed by the photograph (Exhibit 4), we are inclined to
believe that some, at least, of the plaintiff's effects were
completely destroyed by the fire.
The court below declined to consider as competent the testimony
of the plaintiff and his brother as to the value of the property on
the ground that neither was qualified to appraise the property. The
testimony of the three experts was also dismissed as not being a
reliable basis for a findings as to damages. The court then
proceeded to determine that the property was worth P1,500 at the
time of the fire, based upon an offer of compromise made to the
plaintiff by the defendant company at the figure. This offer was
introduced in evidence, it is claimed, without objection by the
defendant company, and the court held that this failure of the
defendant to object to the admission of the offer of compromise
rendered it competent evidence. Thereupon, a judgment in favor of
the plaintiff was entered for P1,500, with interest from the date the
complaint was filed. Both parties excepted to this judgment, and
moved for a new trial on the ground that the judgment was
manifestly against the weight of the evidence. These motions being
overruled, they have brought the case to this court by separate
bills of exception.
The main issue on this appeal is as to the value of the property.
After a careful examination of the evidence, we are of the opinion
that there is no satisfactory evidence that the plaintiff included in
his itemized list of property contained in the house at the time of
the fire, any property which was not there. The plaintiff prepared
the list from memory, and absolute accuracy could hardly be
expected. With regard to the fact that the plaintiff claims there
were about 25 chairs in the house, it may be said that the remains
of 8 chairs may be seen in the photograph (Exhibit 3), and 3 more
in the photograph (Exhibit 1). This accounts for nearly half the
number claimed and the plaintiff asserts that a bundle of chairs
was stored on top of some of the wardrobes in the bedroom. The
remaining furniture described is not of an amount or description
which convinces us that the floor space in the plaintiff's dwelling
was too limited to contain all of it, in the absence of something like
definite figures as to the size of the house and of the furniture.
The inventory which the plaintiff gives of the wardrobe of himself
and wife covers an amount and quality of clothing which counsel is
quite correct in saying is not usually possessed by persons in the
station of life of the plaintiff. It may be well to state here that the
evidence shows the plaintiff to have been a cashier of a local
business house with a salary of P175 per month. In addition to this
he and his wife each had shares of stock in a commercial concerns
which brought them between P25 and P30 per month dividends. He
had inherited about P15,000 from his father, and was administrator
of his father's estate. While the family wardrobe denotes what
might be considered a high degree of extravagance, we cannot say
from the evidence before us that there was less or other clothing
than that described by the plaintiff. From the photograph (Exhibit
4) it is evident that there was considerable clothing which had not
been consumed and was only damaged by water or smoke. It
appears that the plaintiff's claim wherein this extraordinary list of
wearing apparel was set forth was submitted to the defendant
before any of the three experts made his examination of the
property. The defendant was consequently well aware of the claim
which the plaintiff intended to make and could very easily have
made an exact list of the quantity and quality of the clothing which
had not been consumed by the fire, and which would doubtedless
have aided us considerably in determining whether the plaintiff's
description of the family clothing was correct. The cross-
examination of the plaintiff at the trial did not develop anything
material in the way of contradiction to the list of property
submitted by him.
As to the values set out opposite the various items in the plaintiff's
list, much the same reasoning must be applied. If furniture or
clothing of the kind and quality described is not worth the amounts
set out by the plaintiff, it would have been easy for the experts
introduced by the plaintiff to take each item separately and show
wherein and how much the price was erroneous. After an
inspection of each separate article in the list, we are not prepared
to say that the prices are fabulous.
The testimony of the three witnesses introduced by the defendant
we decline to accept for two reasons: First, because it appears that
some of the plaintiff's property was entirely consumed by the fire
and some was so badly damaged that it was impossible to judge of
its value. In the second place, the inspection made by these
several witnesses was so superficial, in view of their opportunity,
that their conclusions do not carry conviction.
As to the ruling of the trial court that the plaintiff and his brother
were not qualified to appraise the value of the household effects of
the former, we must say that we do not agree with the learned trial
court on the point. There is nothing in the whole list, except the
jewelry, but what may be legitimately described as household
effects furniture, clothing, dishes, kitchen utensils, etc. They are
with which all people of ordinary education and refinement are
reasonably familiar. Such articles are on sale in retail shops
everywhere and the prices are readily available to anyone seeking
the information. Not only this, but most of them are articles which
persons with a reasonably fair income purchase for their own
convenience and comfort. Hence, information as to their value
must necessarily be acquired by all such individuals. While the
knowledge of some persons on the subject may be greater than
that possessed by others, this is true of all other branches of
knowledge and equally as true of experts. For these reasons we
cannot subscribe to the proposition that none but experts can
testify as to the values of ordinary household articles.
The knowledge of values in most cases does not depend upon
professional or other special skill; and witnesses without having
any special experience or training as would entitle them to be
called experts, may yet have gained such knowledge of the land, or
other subject under inquiry, as to aid the court or jury in arriving at
a conclusion. . . . Persons by their common experience and
observation necessarily gain some common use by all or nearly all;
and their evidence as to such values is not excluded by the fact
that experts may have more accurate knowledge as to such values.
Obviously the witness must have some means of knowledge as to
the nature and quality of the articles in question before he is
qualified to express an opinion as to values. It would be an idle
ceremony to allow witnesses to give their opinions in evidence,
unless they had better means of knowledge as to the subject
matter of their testimony than the jury might possess in common
with all other persons. The qualification of the witness is, of course,
a question for the court. (Jones on Ev., sec. 363.)
The plaintiff was intimately acquianted with the articles described
by him. He, no doubt, had purchased most of them. One could
hardly expected to be in much better position to estimate the value
of the articles than this. We conclude, therefore, that the
preponderance of the evidence is to the effect that the quantity
and quality of the goods contained in the house at the time of the
fire were substantially those described by the plaintiff in his claim
of loss.
Having reached this conclusion, we presume that the defendant
company will no longer insist upon the remainder of its points,
which would, if decided favorably to its contention, tend to reduce
the total value of the plaintiff's household effects, but not to a
figure which would make the company's liability under the policy
less than that which they would be held liable under the
coinsurance clause of the policy.
We do not understand that the plaintiff at any time alleged a total
loss. The list presented by him the day after the fire is designated
as a "Statement of household furniture and personal effects . . . on
hand" at the time of the fire. He latter offered to abandon the
remains of the fire, and still later caused these remains to be sold
at public auction. These facts clearly negative the assertion that he
alleged a total loss.
Clause 17 of the conditions of the policy reads: "If the property
hereby insured shall, at the breaking out of any fire, be collectively
of greater value than the sum insured thereon, then the insured
shall be considered as being his own insurer for the difference, and
shall bear a ratable proportion of the loss accordingly. Every item,
if more than one, of the policy shall be separately subject to this
condition."
The property was worth P4,512. The salvage amounted to
P120.40. This leaves a partial loss amounting to P4,391.60. As the
property was insured for only P3,000, the insurer must bear a
portion of the loss represented by a fraction the numerator of
which is the amount of the insurance and the denominator of which
is the value of the property at the time of the fire. This entitles the
insured to a judgment against the insurrer for 2,919.92. Let
judgment be entered accordingly, without costs in this instance. So
ordered.
Arellano, C. J., Torres, Carson and Araullo, JJ., concur.
Separate Opinions
MORELAND, J., concurring:
The facts in this case are fully stated in the foregoing opinion. I
desire to add only one or two other facts appearing in the record
which have to do with the ideas which I desire to present in this
opinion.
The policy on which this action is brought reads as follows:
This policy of insurance witnesseth that Mr. Francisco Galian, of
Manila (hereinafter called the insured), having paid to the
undersigned, as authorized agent of the State Assurance Company,
Limited (hereinafter called the company), the premium as above
noted for insuring against loss or damages by fire or lightning as
hereinafter mentioned, the property hereinafter described, in the
sum or several sums following, namely:
(Then follows description of the property insured consisting of
household goods exclusively.)
The company hereby agrees with the insured (but subject to the
conditions on the back hereof, which are to be taken as part of this
policy) that if the property above described, or any part thereof,
shall be destroyed by fire or lightning, at any time between the
24th January, 1912, and four o'clock in the afternoon of the 24th
January, 1913, or at any time afterwards so long as and during the
period in respect of which the insured or the insured's
representative in interest shall have paid to the company, and in
shall have accepted, the sum required for the renewal of this
policy, on or before the date of renewal in each succeeding
year, the company will, out of its capital stock, and funds, pay or
make good to the insured the amount of such loss or damage, but
not exceeding in respect of each or any of the several matters
above specified, the sum set opposite thereto respectively, and not
exceeding in the whole the sum of three thousand pesos Philippine
currency. And also not exceeding, in any case the amount of the
insurable interest therein of the insured at the time of the
happening of such fire.
In witness whereof, this is subscribed by the authorized agent of
the company, this 25th January, 1912.
For Warner, Barnes & Co., Ltd.:
(Sgd.) J.T. FIGUERAS, Manager.
Per power of attorney.
As is clear from this policy, which is the contract signed by the
parties, the company agrees to pay to the insured whatever loss he
may suffer on the household goods by reason of the causes
mentioned not to exceed P3,000. In other words, the company
agrees to pay all (not a part only) of the loss or damages which the
property may suffer to the amount of P3,000. This is the essential
stipulation of the policy, the one on which the minds of the parties
really met, and, in reality, the only contract to which the signatures
of the parties are attached. However, when we examine the back
of the policy, we find there, in the print, a clause (called clause 17)
by means of which the company withdraws the agreement which
forms the body of the policy, which is signed by the parties and is
the one on which the minds of the parties really met, and
substitutes another in its place wholly different in terms, nature
and effect. This clause is quoted in the opinion of the court and is
as follows:
17. If the property hereby insured shall, at the breaking out of any
fire, be collectively of greater value than the sum insured thereon,
then the insured shall be considered as being his own insurer for
the difference, and shall bear a ratable proportion of the loss
accordingly. Every item, if more than one, of the policy shall be
separately subject to this condition.
This clause, if valid between the parties, creates a contracts, as I
have stated, different in every conceivable aspect from the
contract of the policy. By virtue of this clause we have this
situation presented: Mr. Rogers has a library of the value of
P2,000. Not desiring to incur the expense of insuring it for full
value, he insured it against loss or damage by fire to the amount of
P1,000. He paid the insurance premium on P1,000 for ten years. At
the end of that item a fire occurs by which the library is damages
in the admitted sum of P1,000. He goes to the insurance company,
confidently expecting that he will receive the amount of the
damage, 1,000, for which his library had been insured and on
which sum he has been paying premiums for ten years. Arriving at
the office of the company he is informed that the company did not
agree to pay the full loss suffered but that, by virtue of clause 17
above quoted, it agreed to pay only P500; "For," says the company
to him, "the value of your library was P2,000. We were an insurer
for P1,000 and you for the other P1,000. You being a coinsurer
with the company in equal amount, you must stand with the
company an equal share of the loss. The loss being P1,000, we pay
you P500, although we admit that, for ten years, you have been
paying premiums on P1,000." Stated concisely, the company
pays one-half of what, in the contract signed by both parties, it had
agreed to pay.
By virtue of this clause, therefore, a person who insures his
property for less than its value is required to become an insurer
himself . In other words, unless he insures for full value or more,
he becomes himself an insurer (this is the inexplicable part of
it), not for his own benefit but for the benefit of the insurance
company. In addition to having bought the goods and paid for
them, he himself insures the uncovered portion so that he may
enjoy the privilege of relieving the company from paying the sum it
has solemnly agreed to pay and on which sum and for the payment
of which by the company he has been paying premiums since the
insurance was created. This amounts to the proposition that, in
order to secure what the company has agreed to pay him, the
insured must not only lose P1,000 worth of books but he must
lose all the books he has. To obtain payment for the loss of halfof
his property he must lose all of his property. This is very like the
assertion of an accident insurance company that it would pay the
insured only half the sum agreed on for the loss of a leg on the
ground that he had escaped with his life. Having lost his leg instead
of his life, he should reduce by one-half or more the amounts of
the insurance to which he was entitled under the terms of the
policy for the loss of a leg. So with the one insured against loss by
fire; having had the good fortune to save half of his property, he
must pay for his good fortune by donating to the insurance
company one-half of the value of the property saved.
Whether this condition of affairs is permitted by the laws of the
Philippine Islands now in force I do not stop to inquire. The
question was not directly presented or argued. The validity of the
clause creating that condition has been assumed in default of a
challenge thereto. It is clear, however, that the principle involved
in sustaining the legality of such a clause provides a method of
payment of loss in insurance cases quite different from that found
in article 428 of the Code of Commerce, which seems to require full
payment of the loss regardless of the value of the property at the
breaking out of the fire. It is possible, however, that, under article
385, such a clause is legal and enforceable. I have not gone into
the matter deeply, as it seems from a casual reading that such a
situation as I have described above will be difficult under section
164 of the new insurance law, which is to take effect on the 1st of
July next. I do not, therefore, undertake, at this time, to pass on
the question of the validity of the clause, particularly as my
brethen on the court are unanimous in the opinion that clause 17 is
legal and proper.
I am aware that such clauses are earnestly defended by insurance
companies. But, in spite of that defense, such clauses are directly
opposes to the ordinary meaning of the contract as written and
signed. Their very existence is unknown in most cases, and were
known they are not understood. They are violate of the fair intent
of the agreement and, as a natural consequence, deceive the
insured in the majority of cases. After an insurance company has
solemnly agreed, in an instrument signed by the parties, to pay an
insured P1,000 if his loss is P1,000, and then, when his loss in
admittedly P1,000, offers him only P500, clauses permitting such a
result are deception and explanations supporting them without
effect. Dissertations on community of interest, ownership in
common, inability to ascertain which portion of the insured goods
was destroyed, the protection to all the property by an insurance
on only half, etc., are metaphysical rather than substantial and, in
the great majority of cases, form no party of the contract which the
insured believes, and has the right to believe, he is entering into.
When the company agrees to pay the whole loss, one must go
outside the understanding of the ordinary man to defend the
payment of only half the loss; and when one is insured by an
insurance company, common reason fails and explanations are a
burden when he is informed that by the act of being insured by the
insurance company, he became an insurer of the insurance
company. In making contracts with public corporations citizens are
entitled to plain words with plain meanings. They should not be
compelled to call upon a dialectician to plead their cause or a
metaphysician to secure their rights. Common sense and ordinary
understanding should be their recourse, and not metaphysics
that fertile field of delusion propagated by language.
Tanco Jr. V. Philippine Guaranty Co. (1965)
G.R. No.L-17312 November 29, 1965
Lessons Applicable: Definition and Coverage of Casualty
Insurance (Insurance)
FACTS:
While Tanco's automobile was driven by his brother Manuel Tanco,
who at the time didn't have a valid license since it was not renewed
until the next week, had a collision with a pick-up delivery van at
the southern approach of the Jones bridge
The repairs cost P2,536.99 so he filed a claim against the insurance
company which was rejected
He filed a claim in the Municipal Court of Manila and elevated to
the Court of First Instance of Manila on Appeal which favored Tanco
exception clause "the company shall not be liable in respect of any
accident, loss, damage or liability caused, sustained or incurred ...
whilst (the insured vehicle) is ... being driven by or is for the
purpose of being driven by him in the charge of any person other
than an Authorized Driver.
Authorized Driver" to be the insured himself and "(b) any person
driving on the Insured's order or with his permission, provided that
the person driving is permitted in accordance with the licensing or
other laws or regulations to drive the Motor Vehicle or has been
permitted and is not disqualified by order of a court of law or by
reason of any enactment or regulation in that behalf from driving
such Motor Vehicle.
ISSUE: W/N the Tanco can claim because it was not covered by the
exemption clause
HELD: NO. appealed from is reversed, with costs
The exclusion clause in the contract invoked by appellant is clear.
It does not refer to violations of law in general, which indeed would
tend to render automobile insurance practically a sham, but to a
specific situation where a person other than the insured himself,
even upon his order or with his permission, drives the motor
vehicle without a license or with one that has already expired. No
principle of law or of public policy militates against the validity of
such a provision.
 Domingo Reyes is in possession of a driver's license issued by the
CCC Insurance Corp. V. CA (1970) Motor Vehicles Office which on its face appears to have been
regularly issued
G.R. No. L-25920 January 30, 1970 Neither Gloria Presa nor the officer-in-charge Marciano A. Monzon
was placed on the witness stand to be examined in order to
Lessons Applicable: Motor vehicle liability insurance - "Authoried determine whether said license is indeed void
Driver Clause" (Insurance) Section 24 of the Revised Motor Vehicles Law, Act 3992 of the
Laws Applicable: Philippine Legislature, as amended by Republic Acts Nos. 587,
1204 and 2863,1

FACTS: An examination or demonstration to show any applicant's ability to

Carlos F. Robes insured with the CCC Insurance Corporation his
Dodge Kingsway car against loss or damage through accident for
an amount not exceeding P8,000
June 25 1961: Carlos' driver Domingo Reyes met a vehicular
collision along Rizal Avenue Extension, Potrero, Malabon, Rizal
Ccc Insurance Corporation denied his claim reasoning that the
driver was not an "authorized driver"
Reyes, who cannot read and write, who has never passed any
examination for drivers, and has not applied for a license from the
duly constituted government agency entrusted with the duty of
licensing drivers, cannot be considered an authorized driver
AUTHORIZED DRIVER:
Any of the following:
(a) The insured;
(b) Any person driving on the Insured's order or with his
permission, provided that the person driving is permitted in
accordance with licensing laws or regulations to drive the motor
vehicle covered by this Policy, or has been so permitted and is not
disqualified by order of a court of law or by reason of any
enactment or regulation from driving such Motor Vehicle.
RTC: favored Robes and CCC was order to pay
ISSUE: W/N Domingo Reyes was an authorized driver
operate motor vehicles may also be required in the discretion of
the Chief, Motor Vehicles Office or his deputies.
Section 26 of the Act prescribes further:
SEC. 26. Issuance of chauffeur's license; professional badge: If,
after examination, or without the same, the Chief, Motor Vehicles
Office or his deputies, believe the applicant to possess the
necessary qualifications and knowledge, they shall issue to such
applicant a license to operate as chauffeur ...
There is no proof that the owner of the automobile knew that the
circumstance surrounding such issuance showed that it was
irregular
the weight of authority is in favor of a liberal interpretation of the
insurance policy for the benefit of the party insured, and strictly
against the insurer
G.R. No. L-54171 October 28, 1980
JEWEL VILLACORTA, assisted by her husband, GUERRERO
VILLACORTA, petitioner,
vs.
THE INSURANCE COMMISSION and EMPIRE INSURANCE
COMPANY, respondents.

HELD: YES. CA affirmed TEEHANKEE, Acting C.J.:

Court of Appeals found that the driver's license No. 271703 DP was The Court sets aside respondent Insurance Commission's dismissal
genuine of petitioner's complaint and holds that where the insured's car is
wrongfully taken without the insured's consent from the car service
and repair shop to whom it had been entrusted for check-up and
repairs (assuming that such taking was for a joy ride, in the course
of which it was totally smashed in an accident), respondent insurer
is liable and must pay insured for the total loss of the insured
vehicle under the theft clause of the policy.
The undisputed facts of the case as found in the appealed decision
of April 14, 1980 of respondent insurance commission are as
follows:
Complainant [petitioner] was the owner of a Colt Lancer, Model
1976, insured with respondent company under Private Car Policy
No. MBI/PC-0704 for P35,000.00 Own Damage; P30,000.00
Theft; and P30,000.00 Third Party Liability, effective May 16,
1977 to May 16, 1978. On May 9, 1978, the vehicle was brought to
the Sunday Machine Works, Inc., for general check-up and repairs.
On May 11, 1978, while it was in the custody of the Sunday
Machine Works, the car was allegedly taken by six (6) persons and
driven out to Montalban, Rizal. While travelling along Mabini St.,
Sitio Palyasan, Barrio Burgos, going North at Montalban, Rizal, the
car figured in an accident, hitting and bumping a gravel and sand
truck parked at the right side of the road going south. As a
consequence, the gravel and sand truck veered to the right side of
the pavement going south and the car veered to the right side of
the pavement going north. The driver, Benito Mabasa, and one of
the passengers died and the other four sustained physical injuries.
The car, as well, suffered extensive damage. Complainant,
thereafter, filed a claim for total loss with the respondent company
but claim was denied. Hence, complainant, was compelled to
institute the present action.
The comprehensive motor car insurance policy for P35,000.00
issued by respondent Empire Insurance Company admittedly
undertook to indemnify the petitioner-insured against loss or
damage to the car (a) by accidental collision or overturning, or
collision or overturning consequent upon mechanical breakdown or
consequent upon wear and tear; (b) by fire, external explosion,
self-ignition or lightning or burglary, housebreaking or theft; and
(c) by malicious act.
Respondent insurance commission, however, dismissed petitioner's
complaint for recovery of the total loss of the vehicle against
private respondent, sustaining respondent insurer's contention that
the accident did not fall within the provisions of the policy either for
the Own Damage or Theft coverage, invoking the policy provision
on "Authorized Driver" clause. 1
Respondent commission upheld private respondent's contention on
the "Authorized Driver" clause in this wise: "It must be observed
that under the above-quoted provisions, the policy limits the use of
the insured vehicle to two (2) persons only, namely: the insured
himself or any person on his (insured's) permission. Under the
second category, it is to be noted that the words "any person' is
qualified by the phrase
... on the insured's order or with his permission.' It is therefore
clear that if the person driving is other than the insured, he must
have been duly authorized by the insured, to drive the vehicle to
make the insurance company liable for the driver's negligence.
Complainant admitted that she did not know the person who drove
her vehicle at the time of the accident, much less consented to the
use of the same (par. 5 of the complaint). Her husband likewise
admitted that he neither knew this driver Benito Mabasa (Exhibit
'4'). With these declarations of complainant and her husband, we
hold that the person who drove the vehicle, in the person of Benito
Mabasa, is not an authorized driver of the complainant. Apparently,
this is a violation of the 'Authorized Driver' clause of the policy.
Respondent commission likewise upheld private respondent's
assertion that the car was not stolen and therefore not covered by
the Theft clause, ruling that "The element of 'taking' in Article 308
of the Revised Penal Code means that the act of depriving another
of the possession and dominion of a movable thing is coupled ...
with the intention. at the time of the 'taking', of withholding it with
the character of permanency (People vs. Galang, 7 Appt. Ct. Rep.
13). In other words, there must have been shown a felonious
intent upon the part of the taker of the car, and the intent must be
an intent permanently to deprive the insured of his car," and that
"Such was not the case in this instance. The fact that the car was
taken by one of the residents of the Sunday Machine Works, and
the withholding of the same, for a joy ride should not be construed
to mean 'taking' under Art. 308 of the Revised Penal Code. If at all
there was a 'taking', the same was merely temporary in nature. A
temporary taking is held not a taking insured against (48 A LR 2d.,
page 15)."
The Court finds respondent commission's dismissal of the
complaint to be contrary to the evidence and the law.
First, respondent commission's ruling that the person who drove
the vehicle in the person of Benito Mabasa, who, according to its
finding, was one of the residents of the Sunday Machine Works,
Inc. to whom the car had been entrusted for general check-up and
repairs was not an "authorized driver" of petitioner-complainant is
too restrictive and contrary to the established principle that
insurance contracts, being contracts of adhesion where the only
participation of the other party is the signing of his signature or his
"adhesion" thereto, "obviously call for greater strictness and
vigilance on the part of courts of justice with a view of protecting
the weaker party from abuse and imposition, and prevent their
becoming traps for the unwary. 2
The main purpose of the "authorized driver" clause, as may be
seen from its text, supra, is that a person other than the insured
owner, who drives the car on the insured's order, such as his
regular driver, or with his permission, such as a friend or member
of the family or the employees of a car service or repair shop must
be duly licensed drivers and have no disqualification to drive a
motor vehicle.
A car owner who entrusts his car to an established car service and
repair shop necessarily entrusts his car key to the shop owner and
employees who are presumed to have the insured's permission to
drive the car for legitimate purposes of checking or road-testing
the car. The mere happenstance that the employee(s) of the shop
owner diverts the use of the car to his own illicit or unauthorized
purpose in violation of the trust reposed in the shop by the insured
car owner does not mean that the "authorized driver" clause has
been violated such as to bar recovery, provided that such
employee is duly qualified to drive under a valid driver's license.
The situation is no different from the regular or family driver, who
instead of carrying out the owner's order to fetch the children from
school takes out his girl friend instead for a joy ride and instead
wrecks the car. There is no question of his being an "authorized
driver" which allows recovery of the loss although his trip was for a
personal or illicit purpose without the owner's authorization.
Secondly, and independently of the foregoing (since when a car is
unlawfully taken, it is the theft clause, not the "authorized driver"
clause, that applies), where a car is admittedly as in this case
unlawfully and wrongfully taken by some people, be they
employees of the car shop or not to whom it had been entrusted,
and taken on a long trip to Montalban without the owner's consent
or knowledge, such taking constitutes or partakes of the nature of
theft as defined in Article 308 of the Revised Penal Code, viz. "Who
are liable for theft. Theft is committed by any person who, with
intent to gain but without violence against or intimidation of
persons nor force upon things, shall take personal property of
another without the latter's consent," for purposes of recovering
the loss under the policy in question.
The Court rejects respondent commission's premise that there
must be an intent on the part of the taker of the car "permanently
to deprive the insured of his car" and that since the taking here
was for a "joy ride" and "merely temporary in nature," a
"temporary taking is held not a taking insured against."
The evidence does not warrant respondent commission's findings
that it was a mere "joy ride". From the very investigator's report
cited in its comment, 3 the police found from the waist of the car
driver Benito Mabasa Bartolome who smashed the car and was
found dead right after the incident "one cal. 45 Colt. and one apple
type grenade," hardly the materials one would bring along on a
"joy ride". Then, again, it is equally evident that the taking proved
to be quite permanent rather than temporary, for the car was
totally smashed in the fatal accident and was never returned in
serviceable and useful condition to petitioner-owner.
Assuming, despite the totally inadequate evidence, that the taking
was "temporary" and for a "joy ride", the Court sustains as the
better view that which holds that when a person, either with the
object of going to a certain place, or learning how to drive, or
enjoying a free ride, takes possession of a vehicle belonging to
another, without the consent of its owner, he is guilty of theft
because by taking possession of the personal property belonging to
another and using it, his intent to gain is evident since he derives
therefrom utility, satisfaction, enjoyment and pleasure. Justice
Ramon C. Aquino cites in his work Groizard who holds that the use
of a thing constitutes gain and Cuello Calon who calls it "hurt de
uso. " 4
The insurer must therefore indemnify the petitioner-owner for the
total loss of the insured car in the sum of P35,000.00 under the
theft clause of the policy, subject to the filing of such claim for
reimbursement or payment as it may have as subrogee against the
Sunday Machine Works, Inc.
ACCORDINGLY, the appealed decision is set aside and judgment is
hereby rendered sentencing private respondent to pay petitioner
the sum of P35,000.00 with legal interest from the filing of the
complaint until full payment is made and to pay the costs of suit.
SO ORDERED.
Association of Baptists for World Evangelism, Inc. v.
Fieldmens Insurance Co.,Inc.
GR No. L-28772 September 21, 1983
FACTS:
Plaintiff (herein Petitioner) Association of Baptists for World
Evangelism, Inc., a domestic religious corporation, insured with the
Fieldmens Insurance Co., Inc under its Private Car Comprehensive
Policy a Chevrolet Carry-all, up to a maximum indemnity of
5,000.00, in case of loss or damage to the vehicle. In 1961, Dr.
Antonio Lim, the representative of the association, displayed the
Chevrolet for sale at the Jones Monument Mobilgas Service Station
at Davao City, under the care of the stations operator. However,
on January 1962, instead of keeping it safe, one of the boys at the
Jones Monument Mobilgas Service Station, Romeo Catiben, took
the Chevrolet for a joy ride without the prior permission of Lim. On
its way back to Davao City, the Chevrolet, allegedly due to some
mechanical defect, accidentally bumped an electric post causing
actual damages to the tune of 5,518.61.
When defendant resisted payment, suit was brought by plaintiff to
recover on the insurance indemnity. As per the terms of the
contract, the trial court ordered the defendant insurance company
to indemnify the association the amount of P5,000.00 for the
damage sustained by the vehicle. On appeal, defendant interposed
the defense that Catiben had not yet been proven to be guilty of
theft, so recovery on the policy cannot be had.
ISSUE:
Is a prior conviction for theft required in order to recover on a
comprehensive policy payable upon loss or damage to the vehicle?
HELD:
No. Prior conviction of Catiben is not necessary. The insurance
company is liable to pay the association.
The comprehensive policy issued by the insurance company
includes loss of or damage to the motor vehicle by burglary or
theft. It is settled that the act of Catiben in taking the vehicle for a
joy ride to Toril, Davao City, constitutes theft within the meaning of
the insurance policy and that recovery for damage to the car is not
barred by the illegal use of the car by one of the station boys.
There need be no prior conviction for the crime of theft to make an
insurer liable under the theft clause of the policy. Upon the facts
stipulated by the parties it is admitted that Catiben had taken the
vehicle for a joy ride and while the same was in his possession he
bumped it against an electric post resulting in damages. The act is
theft within a policy of insurance.
In a civil action for recovery on an automobile insurance, the
question whether a person using a certain automobile at the time
of the accident stole it or not is to be determined by a fair
preponderance of evidence and not by the rule of criminal law
requiring proof of guilt beyond reasonable doubt. Besides, there is
no provision in the policy requiring prior criminal conviction for
theft, in the absence of any provision in the policy to the contrary.
Judgment of the trial court was AFFIRMED.
Gallardo V. Morales (1960)
G.R. No. L-12189 April 29, 1960
Lessons Applicable: Definition and Coverage of Life
Insurance (Insurance)
Laws Applicable: Rule 39, section 12, subdivision (k) of the
Rules of Court (old law)
FACTS:
CFI: Hermenegilda S. Morales to pay P7,000 to a creditor Francisca
Gallardo
writ of execution was issued and delivered to the Sheriff
who garnished and levied execution on the sum of P7,000 out of
the P30,000 due from the Capital Insurance & Surety Co. Inc.,
to Morales as beneficiary whose husband Luis Morales died
by assassination.
Morales asked the sheriff to quash and lift said garnishment or levy
on execution invoking Rule 39, section 12, subdivision (k) of the
Rules of Court but it was denied.
All moneys, benefits, privileges, or annuities accruing or in any
manner growing out of any life insurance, if the annual premiums
paid do not exceed five hundred pesos, and if they exceed that
sum a like exemption shall exist which shall bear the same
proportion to the moneys, benefits, privileges, and annuities so
accruing or growing out of such insurance that said five hundred
pesos bears to the whole annual premiums paid.
Morales appealed maintaining that it was a life insurance for it
insured her husband for injuries and/or death as a result of murder
or assault or attempt thereat
ISSUE: W/N the insurance is a life insurance and not an accident
insurance
HELD: NO. order appealed from is reversed, and the garnishment
in dispute hereby set aside and quashed
the annual premium was for P15
If it were an ordinary life insurance policy, taking into account that
the insured, Luis G. Morales, was 38 years of age and the amount
of the policy was for P50,000.00 the annual premium would have
been around P1,206
the period for the policy was stipulated for one year, and
considerations as to age, health, occupation and other personal
circumstances were not taken into account in an accident insurance
policy
Annex "1" of the opposition, shows that the Capital Insurance and
Surety Company Inc. is a non-life insurance company and that the
only authority granted to it to transact business covers fire,
marine, surety, fidelity, accident, motor car, and miscellaneous
insurance, except life insurance
Accident vs Life Insurance Policy
accident policy - merely insures the person from injury and or
death resulting from murder, assault, or an attempt thereat
Accident insurance
indemnity or casualty contract
life insurance policy - what is insured is the life of the subject for a
definite number of years
life insurance
investment contract
contract by which the insurer, for a stipulated sum, engages to pay
a certain amount of money if another dies within the time limited
by the policy
contract for insurance for one year in consideration of an advanced
premium, with the right of assured to continue it from year to year
upon payment of a premium as stipulated
includes accident insurance, since life is insured under either
contract
includes all policies of insurance in which payment of insurance
money is contingent upon loss of life
"any life insurance"
applies to ordinary life insurance contracts, as well as to those
which, although intended primarily to indemnify for risks arising
from accident, likewise, insure against loss of life due, either to
accidental causes, or to the willful and criminal act of another,
which, as such, is not strictly accidental in nature
statutes of this nature seek to enable the head of the family to
secure his widow and children from becoming a burden upon the
community and, accordingly, should merit a liberal interpretation
Calanoc vs. CA (98 PHIL 79)
Post under case digests, Commercial Law at Wednesday, February
22, 2012
Facts: Basilio was a watchman of the Manila Auto Supply located at
the corner of Avenida Rizal and Zurbaran. He secured a life
insurance policy from the Philippine American Life
InsuranceCompany in the amount of P2,000 to which was attached
a supplementary contract covering death by accident. On January
25, 1951, he died of a gunshot wound on the occasion of a robbery
committed in the house of Atty. Ojeda at the corner of Oroquieta
and Zurbaran streets. Calanoc, the widow, was paid the sum of
P2,000, face value of the policy, but when she demanded the
payment of the additional sum of P2,000 representing the value of
the supplemental policy, the company refused alleging, as main
defense, that the deceased died because he was murdered by a
person who took part in the commission of the robbery and while
making an arrest as an officer of the law which contingencies were
expressly excluded in the contract and have the effect of
exempting the company from liability.
It is contended in behalf of the company that Basilio was killed
which "making an arrest as an officer of the law" or as a result of
an "assault or murder" committed in the place and therefore his
death was caused by one of the risks excluded by the
supplementary contract which exempts the company from liability.
This contentionwas upheld by the Court of Appeals. Hence, this
petition.
Issue: Whether or not the death of the victim comes within the
purview of the exception clause of the supplementary policy and,
hence, exempts the company from liability.
Held: NO. Basilio was a watchman of the Manila Auto Supply which
was a block away from the house of Atty. Ojeda where something
suspicious was happening which caused the latter to ask for help.
While at first he declined the invitation of Atty. Ojeda to go with
him to his residence to inquire into what was going on because he
was not a regular policeman, he later agreed to come along when
prompted by the traffic policeman, and upon approaching the gate
of the residence he was shot and died. The circumstance that he
was a mere watchman and had no duty to heed the call of Atty.
Ojeda should not be taken as a capricious desire on his part to
expose his life to danger considering the fact that the place he was
in duty-bound to guard was only a block away. In volunteering to
extend help under the situation, he might have thought, rightly or
wrongly, that to know the truth was in the interest of his employer
it being a matter that affects the security of the neighborhood.
No doubt there was some risk coming to him in pursuing that
errand, but that risk always existed it being inherent in
the position he was holding. He cannot therefore be blamed solely
for doing what he believed was in keeping with his duty as a
watchman and as a citizen. And he cannot be considered as
making an arrest as an officer of the law, as contended, simply
because he went with the traffic policeman, for certainly he did not
go there for that purpose nor was he asked to do so by the
policeman.
Much less can it be pretended that Basilio died in the course of an
assault or murder considering the very nature of these crimes. In
the first place, there is no proof that the death of Basilio is the
result of either crime for the record is barren of
any circumstance showing how the fatal shot was fired. Perhaps
this may be clarified in the criminal case now pending in court as
regards the incident but before that is done anything that might be
said on the point would be a mere conjecture. Nor can it be said
that the killing was intentional for there is the possibility that the
malefactor had fired the shot merely to scare away the people
around for his own protection and not necessarily to kill or hit the
victim. In any event, while the act may not exempt the triggerman
from liability for the damage done, the fact remains that the
happening was a pure accident on the part of the victim. The victim
could have been either the policeman or Atty. Ojeda for it cannot
be pretended that the malefactor aimed at the deceased precisely
because he wanted to take his life.
HERMINIA Q. KANAPI, plaintiff-appellant,
vs.
THE INSULAR LIFE ASSURANCE CO., LTD., defendant-appellee.
Jose Aguirre and Alfredo Catalico for appellant.
Araneta and Araneta for appellee.
REYES, J.:
This is an action on a life insurance policy.
On August 1, 1848, the defendant insurance company issued a
policy on the life of plaintiff's husband, Henry G. Kanapi, whereby
defendant undertook to pay to plaintiff as beneficiary, upon the
death of the insured, the sum of P5,000 if the death be due to
natural causes and an additional P5,000 if the death be due to
accidental means, payment of this additional sum being provided
for in the "Accidental Death Benefit Policy Clause" appended to and
forming part of the policy but expressly made subject to the
exception that the clause would not apply where death resulted
from injury "intentionally inflicted by a third party." During the life
of the policy, the insured died from a bullet wound inflicted,
without provocation, by one Conrado Quemosing, who, as author
of the killing, was found guilty of murder and sentenced to prison.
Upon receiving proof of the insured's death, defendant paid plaintiff
P5,000, but refused to pay the additional P5,000 claimed upon the
accidental death benefit clause on the ground that, as the injured
died from an injury intentionally inflicted by a third party, the
clause did not apply. The present action is for the recovery of the
additional sum.
Upholding defendant's stand, the lower court dismissed the action,
whereupon plaintiff appealed to this Court, and the question for us
to determine is whether plaintiff is entitled to the additional P5,000
claimed under the accident benefit clause of the policy.
This clause provide for the payment of the sum upon proof "that
the death of the Insured resulted directly from bodily injury
affected through external and violent means sustained in an
accident . . . and independently of all other clauses." But far from
proving that the insured died from bodily injury sustained in an
accident, the agreed facts are to the effect that the insured
was murdered, thus making it indisputable that his death resulted
from injury "intentionally inflicted by a third party"; which is one of
the exceptions to the accident benefit clause, according to which
the benefit shall not apply to death resulting from "(5) Any injury
received . . . (e) that has been inflicted intentionally by a third
party, either with or without provocation on the part of the
Insured, and whether or not the attack or the defense by the third
party was caused by a violation of the law by the Insured. . . ."
There is nothing to the suggestion that the case comes under
exception 5 (d) or that portion of it which excepts from the benefit
any injury received "in any assault provoked by the Insured", it
being argued that by express mention of provoked assault an
unprovoked one is inferentially excluded. The inference is not
admissible because where the injury is inflicted without provocation
the case comes within the terms of exception 5 (e), which, is,
therefore, the one that should be applied.
We find the decision appealed from to be in accordance with law
and the facts. It is, therefore, affirmed, with costs.
G.R. No. L-25579 March 29, 1972
EMILIA T. BIAGTAN, JUAN T. BIAGTAN, JR., MIGUEL T.
BIAGTAN, GIL T. BIAGTAN and GRACIA T.
BIAGTAN, plaintiffs-appellees,
vs.
THE INSULAR LIFE ASSURANCE COMPANY, LTD., defendant-
appellant.
Tanopo, Millora, Serafica, and Saez for plaintiff-appellees.
Araneta, Mendoza and Papa for defendant-appellant.
MAKALINTAL, J.:p
This is an appeal from the decision of the Court of First Instance of
Pangasinan in its Civil Case No. D-1700.
The facts are stipulated. Juan S. Biagtan was insured with
defendant InsularLife Assurance Company under Policy No. 398075
for the sum of P5,000.00 and, under a supplementary contract
denominated "Accidental Death Benefit Clause, for an additional
sum of P5,000.00 if "the death of the Insured resulted directly
from bodily injury effected solely through external and violent
means sustained in an accident ... and independently of all other
causes." The clause, however,expressly provided that it would not
apply where death resulted from an injury"intentionally inflicted by
another party."
On the night of May 20, 1964, or during the first hours of the
following day a band of robbers entered the house of the insured
Juan S. Biagtan. What happened then is related in the decision of
the trial court as follows:
...; that on the night of May 20, 1964 or the first hours of May 21,
1964, while the said life policy and supplementary contract were in
full force and effect, the house of insured Juan S. Biagtan was
robbed by a band of robbers who were charged in and convicted by
the Court of First Instance of Pangasinan for robbery with
homicide; that in committing the robbery, the robbers, on reaching
the staircase landing on the second floor, rushed towards the door
of the second floor room, where they suddenly met a person near
the door of oneof the rooms who turned out to be the insured Juan
S. Biagtan who received thrusts from their sharp-pointed
instruments, causing wounds on the body of said Juan S. Biagtan
resulting in his death at about 7 a.m. on the same day, May 21,
1964;
Plaintiffs, as beneficiaries of the insured, filed a claim under the
policy. The insurance company paid the basic amount of P5,000.00
but refused to pay the additional sum of P5,000.00 under the
accidental death benefit clause, on the ground that the insured's
death resulted from injuries intentionally inflicted by third parties
and therefore was not covered. Plaintiffs filed suit to recover, and
after due hearing the court a quo rendered judgment in their favor.
Hence the present appeal by the insurer.
The only issue here is whether under the facts are stipulated and
found by the trial court the wounds received by the insured at the
hands of the robbers nine in all, five of them mortal and four
non-mortal were inflicted intentionally. The court, in ruling
negatively on the issue, stated that since the parties presented no
evidence and submitted the case upon stipulation, there was no
"proof that the act of receiving thrust (sic) from the sharp-pointed
instrument of the robbers was intended to inflict injuries upon the
person of the insured or any other person or merely to scare away
any person so as to ward off any resistance or obstacle that might
be offered in the pursuit of their main objective which was
robbery."
The trial court committed a plain error in drawing the conclusion it
did from the admitted facts. Nine wounds were inflicted upon the
deceased, all by means of thrusts with sharp-pointed instruments
wielded by the robbers. This is a physical fact as to which there is
no dispute. So is the fact that five of those wounds caused the
death of the insured. Whether the robbers had the intent to kill or
merely to scare the victim or to ward off any defense he might
offer, it cannot be denied that the act itself of inflicting the injuries
was intentional. It should be noted that the exception in the
accidental benefit clause invoked by the appellant does not speak
of the purpose whether homicidal or not of a third party in
causing the injuries, but only of the fact that such injuries have
been "intentionally" inflicted this obviously to distinguish them
from injuries which, although received at the hands of a third
party, are purely accidental. This construction is the basic idea
expressed in the coverage of the clause itself, namely, that "the
death of the insured resulted directly from bodily injury effected
solely through external and violent means sustained in
an accident ... and independently of all other causes." A gun which
discharges while being cleaned and kills a bystander; a hunter who
shoots at his prey and hits a person instead; an athlete in a
competitive game involving physical effort who collides with an
opponent and fatally injures him as a result: these are instances
where the infliction of the injury is unintentional and therefore
would be within the coverage of an accidental death benefit clause
such as thatin question in this case. But where a gang of robbers
enter a house and coming face to face with the owner, even if
unexpectedly, stab him repeatedly, it is contrary to all reason and
logic to say that his injuries are not intentionally inflicted,
regardless of whether they prove fatal or not. As it was, in the
present case they did prove fatal, and the robbers have been
accused and convicted of the crime of robbery with homicide.
The case of Calanoc vs. Court of Appeals, 98 Phil. 79, is relied upon
by the trial court in support of its decision. The facts in that case,
however, are different from those obtaining here. The insured
there was a watchman in a certain company, who happened to be
invited by a policeman to come along as the latter was on his way
to investigate a reported robbery going on in a private house. As
the two of them, together with the owner of the house, approached
and stood in front of the main gate, a shot was fired and it turned
out afterwards that the watchman was hit in the abdomen, the
wound causing his death. Under those circumstances this Court
held that it could not be said that the killing was intentional for
there was the possibility that the malefactor had fired the shot to
scare people around for his own protection and not necessarrily to
kill or hit the victim. A similar possibility is clearly ruled out by the
facts in the case now before Us. For while a single shot fired from a
distance, and by a person who was not even seen aiming at the
victim, could indeed have been fired without intent to kill or injure,
nine wounds inflicted with bladed weapons at close range cannot
conceivably be considered as innocent insofar as such intent is
concerned. The manner of execution of the crime permits no other
conclusion.
Court decisions in the American jurisdiction, where similar
provisions in accidental death benefit clauses in insurance policies
have been construed, may shed light on the issue before Us. Thus,
it has been held that "intentional" as used in an accident policy
excepting intentional injuries inflicted by the insured or any other
person, etc., implies the exercise of the reasoning faculties,
consciousness and volition. 1 Where a provision of the policy
excludes intentional injury, it is the intention of the person
inflicting the injury that is controlling. 2 If the injuries suffered by
the insured clearly resulted from the intentional act of a third
person the insurer is relieved from liability as stipulated. 3
In the case of Hutchcraft's Ex'r v. Travelers' Ins. Co., 87 Ky. 300, 8
S.W. 570, 12 Am. St. Rep. 484, the insured was waylaid and
assassinated for the purpose of robbery. Two (2) defenses were
interposed to the action to recover indemnity, namely: (1) that the
insured having been killed by intentional means, his death was not
accidental, and (2) that the proviso in the policy expressly
exempted the insurer from liability in case the insured died from
injuries intentionally inflicted by another person. In rendering
judgment for the insurance company the Court held that while the
assassination of the insured was as to him an unforeseen event
and therefore accidental, "the clause of the proviso that excludes
the (insurer's) liability, in case death or injury is intentionally
inflicted by another person, applies to this case."
In Butero v. Travelers' Acc. Ins. Co., 96 Wis. 536, 65 Am. St. Rep.
61, 71 S.W. 811, the insured was shot three times by a person
unknown late on a dark and stormy night, while working in the coal
shed of a railroad company. The policy did not cover death
resulting from "intentional injuries inflicted by the insured or any
other person." The inquiry was as to the question whether the
shooting that caused the insured's death was accidental or
intentional; and the Court found that under the facts, showing that
the murderer knew his victim and that he fired with intent to kill,
there could be no recovery under the policy which excepted death
from intentional injuries inflicted by any person.
WHEREFORE, the decision appealed from is reversed and the
complaint dismissed, without pronouncement as to costs.
Pineda V. CA (1993)
Commissioner of Internal Revenue vs Lincoln Philippine Life
Insurance Company, Inc.
Prior to 1984, Lincoln Philippine Life Insurance Company, Inc. (now
called Jardine-CMA Life Insurance Company, Inc.) used to issue
policies called Junior Estate Builder Policy. A clause therein
provides for an automatic increase in the amount of life insurance
coverage upon attainment of a certain age by the insured without
the need of issuing a new policy. The clause was to take effect in
the year 1984. Documentary stamp taxes due on the policy were While tax avoidance schemes and arrangements are not prohibited,
paid by Lincoln Philippine only on the initial sum assured. tax laws cannot be circumvented in order to evade the payment of
When the clause became effective in 1984, the Commissioner of just taxes. In the case at bar, to claim that the increase in the
Internal Revenue assessed anadditional tax on the increased amount insured (by virtue of the automatic increase clause
amount of the coverage of the said policies. Said tax was to cover incorporated into the policy at the time of issuance) should not be
the deficiency documentary stamps tax for said year. The Court of included in the computation of the documentary stamp taxes due
Appeals ruled that there is only one policy and the automatic on the policy would be a clear evasion of the law requiring that the
increase is not a separate policy; that said increase of coverage is tax be computed on the basis of the amount insured by the policy.
not covered by another documentary stamp tax.
ISSUE: Whether or not there is only one policy.
HELD: Yes. Section 49, Title VI of the Insurance Code defines an
insurance policy as the written instrument in which a contract of
insurance is set forth. Section 50 of the same Code provides that
the policy, which is required to be in printed form, may contain any
word, phrase, clause, mark, sign, symbol, signature, number, or
word necessary to complete the contract of insurance. It is thus
clear that any rider, clause, warranty or endorsement pasted or
attached to the policy is considered part of such policy or contract
of insurance.
The subject insurance policy at the time it was issued contained an
automatic increase clause. Although the clause was to take effect
only in 1984, it was written into the policy at the time of its
issuance. The distinctive feature of the junior estate builder
policy called the automatic increase clause already formed part
and parcel of the insurance contract, hence, there was no need for
an execution of a separate agreement for the increase in the
coverage that took effect in 1984 when the assured reached a
certain age.
The said increase however is imposable with documentary stamp
taxes. The original documentary stamps tax paid by Lincoln
Philippine covers the original amount of the policies without the
projected increase. The said increase was already definite at the
time of the issuance of the policy. Thus, the amount insured by the
policy at the time of its issuance necessarily included
the additional sum covered by the automatic increase clause
because it was already determinable at the time the transaction
was entered into and formed part of the policy.