Policy - Open Policy
Policy - Open Policy
Policy - Open Policy
50
In its decision of 21 June 1993,8 the Insurance Commission found that In addition, the premiums on both policies were paid
the petitioner did not violate Condition 3 as he had no knowledge of for by private respondent, not by the Tesing Textiles
the existence of the two fire insurance policies obtained from the PFIC; which is alleged to have taken out the other insurance
that it was Cebu Tesing Textiles which procured the PFIC policies without the knowledge of private respondent. This is
without informing him or securing his consent; and that Cebu Tesing shown by Premium Invoices nos. 46632 and 46630.
Textile, as his creditor, had insurable interest on the stocks. These (Annexes M and N). In both invoices, Tesing Textiles
findings were based on the petitioner's testimony that he came to know is indicated to be only the mortgagee of the goods
of the PFIC policies only when he filed his claim with the private insured but the party to which they were issued were
respondent and that Cebu Tesing Textile obtained them and paid for the "DISCOUNT MART (MR. ARMANDO
their premiums without informing him thereof. The Insurance GEAGONIA)."
Commission then decreed:
In is clear that it was the private respondent [petitioner
WHEREFORE, judgment is hereby rendered ordering herein] who took out the policies on the same property
the respondent company to pay complainant the sum subject of the insurance with petitioner. Hence, in
of P100,000.00 with legal interest from the time the failing to disclose the existence of these insurances
complaint was filed until fully satisfied plus the amount
private respondent violated Condition No. 3 of Fire "A"). My Income Statement as of
Policy No. 1462. . . . December 31, 1989 or five months
before the fire, shows my
Indeed private respondent's allegation of lack of merchandise inventory was already
knowledge of the provisions insurances is belied by some P595,455.75. . . . These will
his letter to petitioner [of 18 January 1991. The body support my claim that the amount
of the letter reads as follows;] claimed under the three policies are
much below the value of my stocks
xxx xxx xxx lost.
10. ID.; ID.; RECOURSE FROM THE DECISION OF THE REGIONAL Petitioner filed its claim of P80,000.00 for the repair of the vehicle but
TRIAL COURT ON A COMPLAINT ORIGINALLY FILED WITH IT IS private respondent, in a letter dated October 8, 1987, refused to grant
BY FILING A NOTICE OF APPEAL. — In this case, the petitioner it. As a consequence, the petitioner was prompted to file a complaint
assailed the dismissal order of the Regional Trial Court of a complaint with the Regional Trial Court, 6th Judicial Region, Branch 47 at
originally filed with it. This adverse order which had the effect of a Bacolod City, docketed as Civil Case No. 4707, to recover the claim
judgment on the merits, may be appealed to the Court of Appeals by of P80,000.00 plus interest and attorney’s fees.
filing a notice of appeal within fifteen (15) days from receipt of notice
of the order both on questions of law and of fact, (Section 39, Batas The private respondent filed a motion to dismiss alleging that the
Pambansa Blg. 129 and Section 19 (a) of the Interim Rules). complaint lacks a cause of action because the firing by armed men is
a risk excepted under the following provisions in the insurance
policy:jgc:chanrobles.com.ph
DECISION
"The Company shall not be liable under any Section of the Policy in
respect of: —
GUTIERREZ, JR., J.:
1. . . .
The main issues raised in this petition for review on certiorari are 2. . . .
whether the Court of Appeals erred in: (1) affirming the dismissal by
the trial court of the complaint for damages on the ground of lack of 3. Except in respect of claims arising under Sections I and II of the
cause of action, and in (2) denying due course to a petition policy, any accident, loss, damage or liability directly or indirectly,
for certiorari on the ground that the remedy of the petitioner to assail proximately or remotely occasioned by, contributed to by or traceable
to, or arising out of, or in connection with flood, typhoon, hurricane,
volcanic eruption, earthquake or other convulsion of nature, invasion, Thereafter, the petitioner filed a petition for certiorari with the Court of
the act of foreign enemies, hostilities or warlike operations (whether Appeals. The appellate court denied the petition, affirmed the trial
war be declared or not), civil commotion, mutiny, rebellion, court’s dismissal order, and also ruled that an appeal in the ordinary
insurrection, military or usurped power, or by any direct or indirect course of law, not a special civil action of certiorari, is the proper
consequences of any of the said occurrences and in the event of any remedy for the petitioner in assailing the dismissal order.
claim hereunder, the insured shall prove that the accident, loss or
damage or liability arose independently of, and was in no way Hence, this petition to review the respondent appellate court’s
connected with, or occasioned by, or contributed to, any of the said decision.
occurrences, or any consequence thereof, and in default of such proof,
the Company shall not be liable to make any payment in respect of Petitioner asserts that its complaint states a cause of action since
such claim." (Italics supplied; see Rollo, p. 33, 71)cralawnad ultimate facts were alleged as follows:chanrobles law library
The private respondent alleged that the firing was "an indirect "3. — That, on August 28, 1987, the ISUZU KBD PICK-UP referred to
consequence of rebellion, insurrection or civil commotion." The in the preceding paragraph was damaged as a result of an incident at
petitioner opposed the motion, saying that the quoted provision does Hda. Puyas, Barangay Blumentritt, Murcia, Negros Occidental, when
not apply in the absence of an official governmental proclamation of it was fired upon by a group of unidentified armed persons causing
any of the above-enumerated conditions. even the death of four (4) persons and rendering the said vehicle
almost totally damaged and unserviceable;
The trial court ordered the dismissal of the complaint for lack of cause
of action stating that the damage arose from a civil commotion or was 4. — That when the said incident occurred on August 28, 1987, the
a direct result thereof. (Rollo, p. 37) said ISUZU KBD PICK-UP was insured by the defendant for
P100,000.00 excluding third-party liability under Commercial Vehicle
A motion for reconsideration filed by the petitioner was denied by the Policy No. CV/122415 per Renewal Certificate No. 02189 a copy of
trial court which further noted that "Courts can take effective which is herewith attached as Annex "B" ; and with the premiums and
cognizance of the general civil disturbance in the country akin to civil other expenses thereon duly paid for under Official Receipt No. 691,
war without any executive proclamation of the existence of such dated September 8, 1986, covering the period from October 1, 1986
unsettling condition." (Rollo, p. 38) to October 1, 1987, a copy of the same being attached hereto as
Annex "C" ;
A second motion for reconsideration was filed but was later withdrawn.
5. — That, the damage on said motor vehicle being a "fait accompli"
Petitioner filed a notice of appeal which was given due course. and that it was insured by the defendant at the time it was damaged,
However, the trial court, stated in its order that "the records of the case it is the obligation of the defendant to restore the said vehicle to its
will not be transmitted to the Court of Appeals, the appropriate remedy former physical and running condition when it was insured however
being (a) petition for review by way of certiorari." In that same order, defendant refused and still refuses and fails, despite demands in
the trial court took cognizance of the withdrawal of the second motion writing made by plaintiff and its counsel to that effect, copies of said
for reconsideration but noted the police blotter appended to said letters attached hereto as Annexes "D" & "E" ;
motion which showed that "other than M-16 Armalite Rifles (the
number of which were not specified for unknown reasons), nothing 6. — That, for purposes of restoring the ISUZU KBD PICK-UP insured
else was taken by the attackers." (Rollo, p. 40) by the defendant to its former physical and running condition when it
was insured, as mentioned above, would cost P80,000.00, which will or private respondent to compensate the insured in case of a risk
include repair, repainting, replacement of spare parts, labor, etc., the insured against. The refusal of the insurer to satisfy the claim and the
said amount having arrived at upon inspection and appraisal of the consequent loss to the petitioner in incurring the cost of acquiring legal
said motor vehicle by knowledgeable and technical people; assistance on the matter constitutes a violation or an injury brought to
the petitioner.chanrobles law library
7. — That, as a consequence of defendant’s refusal to settle or pay
the just claim of plaintiff, plaintiff has been compelled to hire the legal There is, therefore, a sufficient cause of action upon which the trial
services of counsel for the protection of its rights and interest at the court can render a valid judgment. (Tañedo v. Bernad, et al; G. R. No.
agreed fee of P15,000.00, for and as attorney’s fees, which sum 66520, August 30, 1988).
plaintiff is claiming from the defendant." (At pp. 29-30, Rollo)
The Court is very much cognizant of the principle that a motion to
Petitioner further maintains that the order of dismissal was erroneous dismiss on the ground of failure to state a cause of action stated in the
in that: it overlooked the principle that a motion to dismiss a complaint complaint hypothetically admits the truth of the facts therein. The Court
on the ground of failure to state a cause of action hypothetically admits notes the following limitations on the hypothetical
the allegations in the complaint; no trial was held for the reception of admission:jgc:chanrobles.com.ph
proof that the firing incident was a direct or indirect result of a civil
commotion, mutiny, insurrection or rebellion; private respondent had "The hypothetical admission is however limited to the relevant and
the burden of proof to show that the cause was really an excepted risk; material facts well pleaded in the complaint and inferences fairly
and in any case, the nature of the incident as a "civil disturbance" must deducible therefrom. The admission does not extend to conclusions
first be officially proclaimed by the executive branch of the or interpretations of law; nor does it cover allegations of fact the falsity
government. Private respondent, on the other hand, argues that the of which is subject to judicial notice." (U. Bañez Electric Light Co. v.
accident was really a result of a civil commotion, one of the fatalities Abra Electric Cooperative, Inc., 119 SCRA 90 [1982])
being a military officer. (Rollo, p. 59)
Applying the above principle, we hold that the private respondent’s
After a review of the records, the Court finds that the allegations set motion to dismiss hypothetically admits the facts alleged in the
forth in the complaint sufficiently establish a cause of action. The complaint. We do not find anything in the complaint which does not
following are the requisites for the existence of a cause of action: (1) deserve admission by the motion since there are no "conclusions or
a right in favor of the plaintiff by whatever means and under whatever interpretations of law" nor "allegations of fact the falsity of which is
law it arises or is created; (2) an obligation on the part of the named subject to judicial notice." It is clear that the complaint does no more
defendant to respect, or not to violate such right; and (3) an act or and no less than state simply that the van was damaged due to the
omission on the part of the said defendant constituting a violation of firing by unidentified armed men. Since the complaint does not
the plaintiff’s right or a breach of the obligation of the defendant to the explicitly state nor intimate civil strife which private respondent insists
plaintiff. (Cole v. Vda. de Gregoria, 116 SCRA 670 [1982]; Baliwag to be the cause of the damage, the motion to dismiss cannot go
Transit, Inc. v. Ople, G. R. No. 57642, March 16, 1989) beyond the admission of the facts stated and inferences reasonably
deducible from them. Any other assertion by the private respondent is
The facts as alleged clearly define the existence of a right of the subject to proof. Meanwhile, the sufficiency of the petitioner’s cause of
petitioner to a just claim against the insurer for the payment of the action has been shown since, admitting the facts alleged, a valid
indemnity for a loss due to an event against which the petitioner’s judgment can be rendered.
vehicle was insured. The insurance contract mentioned therein
manifests a right to pursue a claim and a duty on the part of the insurer The private respondent’s invocation of the exceptions clause in the
insurance policy as the basis for its non-liability and the consequent
dismissal of the complaint is without merit. We also reiterate the The Court stresses that it would be a grave and dangerous procedure
established rule that when the terms of an insurance contract contain for the courts to permit insurance companies to escape liability through
limitations on liability, the court "should construe them in such a way a motion to dismiss without the benefit of hearing and evidence every
as to preclude the insurer from non-compliance with his obligations." time someone is killed, or as in this case, property is damaged in an
(Taurus Taxi Co. Inc. v. Capital Insurance and Surety Company, Inc., ambush. The question on the nature of the firing incident for the
24 SCRA 454 [1968]) A policy of insurance with a narration of purpose of determining whether or not the insurer is liable must first
exceptions tending to work a forfeiture of the policy shall be interpreted be threshed out and resolved in a full-blown trial.
liberally in favor of the insured and strictly against the insurance
company or the party for whose benefit they are inserted. (Eagle Star The evidence to be received does not even have to relate to the
Insurance, Ltd. v. Chia Yu, 96 Phil. 696 [1955]; Trinidad v. Orient existence of an official government proclamation of the nature of the
Protective Asso., 67 Phil. 181 [1939]; Serrano v. Court of Appeals, 130 incident because the latter is not an explicit requirement in the
SCRA 327 [1984]; and National Power Corp. v. Court of Appeals, 145 exception clause resolved in a mere motion to dismiss and is, for
SCRA 533 [1986]) purposes of this petition for review on certiorari, immaterial. This
particular issue on when to take cognizance of a rebellion for purposes
The facts alleged in the complaint do not give a complete scenario of of the law on contracts and obligations should have been developed
the real nature of the firing incident. Hence, it was incumbent upon the during the trial on the merits or may have to await remedial legislation
trial judge to have made a deeper scrutiny into the circumstances of in Insurance Law or a decision in a more appropriate case.
the case by receiving evidence instead of summarily disposing of the
case. Contrary to what the respondent appellate court says, this case The petitioner also questions the reasoning of the Court of Appeals in
does not present a pure question of law but demands a factual denying due course to the petition for certiorari. The appellate court
determination of whether the incident was a result of events falling said that even assuming for the sake of argument that the dismissal
under the exceptions to the liability of private respondent contained in order by the trial court was not procedurally correct for lack of hearing,
the policy of insurance.cralawnad there was only an "error of judgment or procedure" correctible only by
appeal then available in the ordinary course of law and not by a special
We agree with the petitioner’s claim that the burden of proof to show civil action of certiorari which cannot be a substitute for appeal.
that the insured is not liable because of an excepted risk is on the
private Respondent. The Rules of Court in its Section 1, Rule 131 The records show that the remedy of appeal was actually intended to
provides that "each party must prove his affirmative allegations." be pursued by petitioner. However, the appeal was rendered
(Summit Guaranty and Insurance Co., Inc. v. Court of Appeals, 110 unfeasible when the trial judge refused to transmit the records to the
SCRA 241 [1981]; Tai Tong Chuache & Co. v. Insurance appellate court. (see Rollo, p. 40) The judge, in effect, ruled out the
Commissioner, 158 SCRA 366 [1988]; Paris-Manila Perfume Co. v. remedy of appeal which was supposed to be availed of as a matter of
Phoenix Assurance Co., 49 Phil. 753 [1926]). Where the insurer right. In filing a petition for certiorari, the petitioner was acting upon the
denies liability for a loss alleged to be due to a risk not insured against, instructions of the judge. Under a situation where there was no more
but fails to establish the truth of such fact by concrete proofs, the Court plain, speedy and adequate remedy in the ordinary course of law, the
rules that the insurer is liable under the terms and conditions of the only available recourse was to file a special civil action of certiorari to
policy by which it has bound itself. In this case, the dismissal order determine whether or not the dismissal order was issued with grave
without hearing and reception of evidence to prove that the firing abuse of discretion.chanrobles virtual lawlibrary
incident was indeed a result of a civil commotion, rebellion or
insurrection constitutes reversible error on the part of the trial court. It is apparent, moreover, that the respondent appellate court failed to
appreciate the petitioner’s predicament. The trial judge, aside from
dismissing the complaint which we now rule to have a sufficient cause WHEREFORE, considering the foregoing, the petition is hereby
of action, likewise prevented an ordinary appeal to prosper in GRANTED. The decision of the respondent Court of Appeals affirming
contravention of what is provided for by the rules of procedure. the dismissal order by the Regional Trial Court. is hereby REVERSED
and SET ASIDE. Let the case be remanded to the lower court for trial
The April 6, 1988 order of the trial judge stating that the appropriate on the merits.
remedy was a petition for review by way of certiorari is deplorable. The
lower court cannot even distinguish between an original petition SO ORDERED.
for certiorari and a petition for review by way of certiorari. A petition for
review before the Court of Appeals could have been availed of if what
is challenged is an adverse decision of the Regional Trial Court in its
appellate capacity affirming, modifying or reversing a decision of a
municipal trial court or lower tribunal. (Section 22, Batas Pambansa
Blg. 129 and Section 22 (6) of the Interim Rules). In this case, the
petitioner assailed the dismissal order of the Regional Trial Court of a
complaint originally filed with it. This adverse order which had the
effect of a judgment on the merits, may be appealed to the Court of
Appeals by filing a notice of appeal within fifteen (15) days from receipt
of notice of the order both on questions of law and of fact, (Section 39,
Batas Pambansa Blg. 129 and Section 19 (a) of the Interim Rules).
This was exactly what petitioner did after its motion for reconsideration
was denied. Unfortunately, the trial judge failed to see the propriety of
this recourse. And the Court of Appeals compounded the problem
when it denied the petitioner any remedy arising from the Judge’s
wrong instructions.
The filing of the petition for certiorari was proper. Petitioner has
satisfactorily shown before the respondent appellate court that the trial
judge "acted whimsically in total disregard of evidence material to and
even decisive of the controversy." (Pure Foods Corp. v. National Labor
Relations Commission, G. R. No. 78591, March 21, 1989).chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph
Since the petitioner was denied the remedy of appeal, the Court
deems that a certiorari petition was in order.
G.R. No. L-38613 February 25, 1982 two marine policies bore the numbers 53 HO 1032
and 53 HO 1033 (Exhibits B and C, respectively).
PACIFIC TIMBER EXPORT CORPORATION, petitioner, Policy No. 53 H0 1033 (Exhibit B) was for 542 pieces
vs. of logs equivalent to 499,950 board feet. Policy No.
THE HONORABLE COURT OF APPEALS and WORKMEN'S 53 H0 1033 was for 853 pieces of logs equivalent to
INSURANCE COMPANY, INC., respondents. 695,548 board feet (Exhibit C). The total cargo
insured under the two marine policies accordingly
consisted of 1,395 logs, or the equivalent of
1,195.498 bd. ft.
DE CASTRO, ** J.:
After the issuance of Cover Note No. 1010 (Exhibit A),
but before the issuance of the two marine policies
This petition seeks the review of the decision of the Court of Appeals Nos. 53 HO 1032 and 53 HO 1033, some of the logs
reversing the decision of the Court of First Instance of Manila in favor intended to be exported were lost during loading
of petitioner and against private respondent which ordered the latter operations in the Diapitan Bay. The logs were to be
to pay the sum of Pll,042.04 with interest at the rate of 12% interest loaded on the 'SS Woodlock' which docked about 500
from receipt of notice of loss on April 15, 1963 up to the complete meters from the shoreline of the Diapitan Bay. The
payment, the sum of P3,000.00 as attorney's fees and the logs were taken from the log pond of the plaintiff and
costs 1 thereby dismissing petitioner s complaint with costs. 2 from which they were towed in rafts to the vessel. At
about 10:00 o'clock a. m. on March 29, 1963, while
The findings of the of fact of the Court of Appeals, which are generally the logs were alongside the vessel, bad weather
binding upon this Court, Except as shall be indicated in the discussion developed resulting in 75 pieces of logs which were
of the opinion of this Court the substantial correctness of still particular rafted together co break loose from each other. 45
finding having been disputed, thereby raising a question of law pieces of logs were salvaged, but 30 pieces were
reviewable by this Court 3 are as follows: verified to have been lost or washed away as a result
of the accident.
March 19, l963, the plaintiff secured temporary
insurance from the defendant for its exportation of In a letter dated April 4, 1963, the plaintiff informed the defendant
1,250,000 board feet of Philippine Lauan and Apitong about the loss of 'appropriately 32 pieces of log's during loading of the
logs to be shipped from the Diapitan. Bay, Quezon 'SS Woodlock'. The said letter (Exhibit F) reads as follows:
Province to Okinawa and Tokyo, Japan. The
defendant issued on said date Cover Note No. 1010, April 4, 1963
insuring the said cargo of the plaintiff "Subject to the
Terms and Conditions of the WORKMEN'S
INSURANCE COMPANY, INC. printed Marine Policy Workmen's Insurance Company, Inc. Manila,
Philippines
form as filed with and approved by the Office of the
Insurance Commissioner (Exhibit A).
Gentlemen:
The regular marine cargo policies were issued by the
defendant in favor of the plaintiff on April 2, 1963. The
This has reference to Insurance Cover Note No. 1010 within the 1,250,000 bd. ft. covered by Cover Note
for shipment of 1,250,000 bd. ft. Philippine Lauan and 1010 insured for $70,000.00.
Apitong Logs. We would like to inform you that we
have received advance preliminary report from our On September 14, 1963, the adjustment company
Office in Diapitan, Quezon that we have lost submitted a computation of the defendant's probable
approximately 32 pieces of logs during loading of the liability on the loss sustained by the shipment, in the
SS Woodlock. total amount of Pl1,042.04 (Exhibit 4).
We will send you an accurate report all the details On January 13, 1964, the defendant wrote the plaintiff
including values as soon as same will be reported to denying the latter's claim, on the ground they
us. defendant's investigation revealed that the entire
shipment of logs covered by the two marines policies
Thank you for your attention, we wish to remain. No. 53 110 1032 and 713 HO 1033 were received in
good order at their point of destination. It was further
Very respectfully yours, stated that the said loss may be considered as
covered under Cover Note No. 1010 because the said
Note had become 'null and void by virtue of the
PACIFIC TIMBER EXPORT CORPORATION
issuance of Marine Policy Nos. 53 HO 1032 and
1033'(Exhibit J-1). The denial of the claim by the
(Sgd.) EMMANUEL S. ATILANO Asst. General defendant was brought by the plaintiff to the attention
Manager. of the Insurance Commissioner by means of a letter
dated March 21, 1964 (Exhibit K). In a reply letter
Although dated April 4, 1963, the letter was received dated March 30, 1964, Insurance Commissioner
in the office of the defendant only on April 15, 1963, Francisco Y. Mandanas observed that 'it is only fair
as shown by the stamp impression appearing on the and equitable to indemnify the insured under Cover
left bottom corner of said letter. The plaintiff Note No. 1010', and advised early settlement of the
subsequently submitted a 'Claim Statement said marine loss and salvage claim (Exhibit L).
demanding payment of the loss under Policies Nos.
53 HO 1032 and 53 HO 1033, in the total amount of On June 26, 1964, the defendant informed the
P19,286.79 (Exhibit G). Insurance Commissioner that, on advice of their
attorneys, the claim of the plaintiff is being denied on
On July 17, 1963, the defendant requested the First the ground that the cover note is null and void for lack
Philippine Adjustment Corporation to inspect the loss of valuable consideration (Exhibit M). 4
and assess the damage. The adjustment company
submitted its 'Report on August 23, 1963 (Exhibit H). Petitioner assigned as errors of the Court of Appeals, the following:
In said report, the adjuster found that 'the loss of 30
pieces of logs is not covered by Policies Nos. 53 HO
I
1032 and 1033 inasmuch as said policies covered the
actual number of logs loaded on board the 'SS
Woodlock' However, the loss of 30 pieces of logs is
THE COURT OF APPEALS ERRED IN HOLDING Notes do not contain particulars of the shipment that would serve as
THAT THE COVER NOTE WAS NULL AND VOID basis for the computation of the premiums. As a logical consequence,
FOR LACK OF VALUABLE CONSIDERATION no separate premiums are intended or required to be paid on a Cover
BECAUSE THE COURT DISREGARDED THE Note. This is a fact admitted by an official of respondent company,
PROVEN FACTS THAT PREMIUMS FOR THE Juan Jose Camacho, in charge of issuing cover notes of the
COMPREHENSIVE INSURANCE COVERAGE respondent company (p. 33, tsn, September 24, 1965).
THAT INCLUDED THE COVER NOTE WAS PAID
BY PETITIONER AND THAT INCLUDED THE At any rate, it is not disputed that petitioner paid in full all the premiums
COVER NOTE WAS PAID BY PETITIONER AND as called for by the statement issued by private respondent after the
THAT NO SEPARATE PREMIUMS ARE issuance of the two regular marine insurance policies, thereby leaving
COLLECTED BY PRIVATE RESPONDENT ON ALL no account unpaid by petitioner due on the insurance coverage, which
ITS COVER NOTES. must be deemed to include the Cover Note. If the Note is to be treated
as a separate policy instead of integrating it to the regular policies
subsequently
I issued, the purpose and function of the Cover Note
would
I be set at naught or rendered meaningless, for it is in a real
sense a contract, not a mere application for insurance which is a mere
THE COURT OF APPEALS ERRED IN HOLDING offer. 6
THAT PRIVATE RESPONDENT WAS RELEASED
FROM LIABILITY UNDER THE COVER NOTE DUE It may be true that the marine insurance policies issued were for logs
TO UNREASONABLE DELAY IN GIVING NOTICE no longer including those which had been lost during loading
OF LOSS BECAUSE THE COURT DISREGARDED operations. This had to be so because the risk insured against is not
THE PROVEN FACT THAT PRIVATE for loss during operations anymore, but for loss during transit, the logs
RESPONDENT DID NOT PROMPTLY AND having already been safely placed aboard. This would make no
SPECIFICALLY OBJECT TO THE CLAIM ON THE difference, however, insofar as the liability on the cover note is
GROUND OF DELAY IN GIVING NOTICE OF LOSS concerned, for the number or volume of logs lost can be determined
AND, CONSEQUENTLY, OBJECTIONS ON THAT independently as in fact it had been so ascertained at the instance of
GROUND ARE WAIVED UNDER SECTION 84 OF private respondent itself when it sent its own adjuster to investigate
THE INSURANCE ACT. 5 and assess the loss, after the issuance of the marine insurance
policies.
1. Petitioner contends that the Cover Note was issued with a
consideration when, by express stipulation, the cover note is made The adjuster went as far as submitting his report to respondent, as
subject to the terms and conditions of the marine policies, and the well as its computation of respondent's liability on the insurance
payment of premiums is one of the terms of the policies. From this coverage. This coverage could not have been no other than what was
undisputed fact, We uphold petitioner's submission that the Cover stipulated in the Cover Note, for no loss or damage had to be assessed
Note was not without consideration for which the respondent court on the coverage arising from the marine insurance policies. For
held the Cover Note as null and void, and denied recovery therefrom. obvious reasons, it was not necessary to ask petitioner to pay
The fact that no separate premium was paid on the Cover Note before premium on the Cover Note, for the loss insured against having
the loss insured against occurred, does not militate against the validity already occurred, the more practical procedure is simply to deduct the
of petitioner's contention, for no such premium could have been paid, premium from the amount due the petitioner on the Cover Note. The
since by the nature of the Cover Note, it did not contain, as all Cover non-payment of premium on the Cover Note is, therefore, no cause for
the petitioner to lose what is due it as if there had been payment of successfully be raised against private respondent. Thus Section 84 of
premium, for non-payment by it was not chargeable against its fault. the Insurance Act provides:
Had all the logs been lost during the loading operations, but after the
issuance of the Cover Note, liability on the note would have already Section 84.—Delay in the presentation to an insurer
arisen even before payment of premium. This is how the cover note of notice or proof of loss is waived if caused by any
as a "binder" should legally operate otherwise, it would serve no act of his or if he omits to take objection promptly and
practical purpose in the realm of commerce, and is supported by the specifically upon that ground.
doctrine that where a policy is delivered without requiring payment of
the premium, the presumption is that a credit was intended and policy From what has been said, We find duly substantiated petitioner's
is valid. 7
assignments of error.
In the meantime, another notice of garnishment was handed a. To pay the plaintiff, jointly and severally, the following amounts:
down by another Manila RTC sala (Branch 28) for the amount of
P8,696,838.75 (Exhibit 22-Malayan).
1) P1,000,000.00 as exemplary damages;
After trial, Branch 3 of the Manila RTC rendered judgment in favor
of GOYU, disposing: 2) P1,000,000.00 as, and for, attorneys fees;
WHEREFORE, the decision of the lower court dated June 29, 1994 is (
hereby modified as follows: Rollo, p. 200.)
RCBC and MICO are now before us in G.R. No. 128833 and
1. FOR DEFENDANT MALAYAN INSURANCE CO., INC: 128866, respectively, seeking review and consequent reversal of the
above dispositions of the Court of Appeals.
a) To pay the plaintiff its fire loss claim in the total amount of
P74,040,518.58 less the amount of P50,505,594.60 (per O.R. No. In G.R. No. 128834, RCBC likewise appeals from the decision in
3649285) plus deposited in court and damages by way of interest C.A. G.R. No. CV-48376, which case, by virtue of the Court of Appeals
commencing July 27, 1992 until the time Goyu receives the said resolution dated August 7, 1996, was consolidated with C.A. G.R. No.
amount at the rate of thirty-seven (37%) percent per annum which is CV-46162 (subject of herein G.R. No. 128833). At issue in said
twice the ceiling prescribed by the Monetary Board. petition is RCBCs right to intervene in the action between Alfredo C.
Sebastian (the creditor) and GOYU (the debtor), where the subject
2. FOR DEFENDANT RIZAL COMMERCIAL BANKING insurance policies were attached in favor of Sebastian.
CORPORATION: After a careful review of the material facts as found by the two
courts below in relation to the pertinent and applicable laws, we find
a) To pay the plaintiff actual and compensatory damages in the merit in the submissions of RCBC and MICO.
amount of P5,000,000.00.
The several causes of action pursued below by GOYU gave rise
to several related issues which are now submitted in the petitions
3. FOR DEFENDANTS MALAYAN INSURANCE CO., INC., RIZAL before us. This Court, however, discerns one primary and central
COMMERCIAL BANKING CORPORATION, UY CHUN BING AND issue, and this is, whether or not RCBC, as mortgagee, has any right
ELI D. LAO: over the insurance policies taken by GOYU, the mortgagor, in case of
the occurrence of loss.
a) To pay the plaintiff jointly and severally the following amounts:
As earlier mentioned, accordant with the credit facilities extended
1. P1,500,000.00 as exemplary damages; by RCBC to GOYU, the latter executed several mortgage contracts in
favor of RCBC. It was expressly stipulated in these mortgage
contracts that GOYU shall insure the mortgaged property with any of
2. P1,500,000.00 as and for attorneys fees. the insurance companies acceptable to RCBC. GOYU indeed insured
the mortgaged property with MICO, an insurance company acceptable
to RCBC. Based on their stipulations in the mortgage contracts, GOYU and purpose of the doctrine was explained in Philippine National Bank
was supposed to endorse these insurance policies in favor of, and vs. Court of Appeals (94 SCRA 357 [1979]), to wit:
deliver them, to RCBC. Alchester Insurance Agency, Inc., MICOs
underwriter from whom GOYU obtained the subject insurance policies, The doctrine of estoppel is based upon the grounds of public policy,
prepared the nine endorsements (see Exh. 1-Malayan to 9-Malayan; fair dealing, good faith and justice, and its purpose is to forbid one to
also Exh. 51-RCBC to 59-RCBC), copies of which were delivered to speak against his own act, representations, or commitments to the
GOYU, RCBC, and MICO. However, because these endorsements do injury of one to whom they were directed and who reasonably relied
not bear the signature of any officer of GOYU, the trial court, as well thereon. The doctrine of estoppel springs from equitable principles
as the Court of Appeals, concluded that the endorsements are and the equities in the case. It is designed to aid the law in the
defective. administration of justice where without its aid injustice might result. It
We do not quite agree. has been applied by this Court wherever and whenever special
circumstances of a case so demand.
It is settled that a mortgagor and a mortgagee have separate and
distinct insurable interests in the same mortgaged property, such that (
each one of them may insure the same property for his own sole p. 368.)
benefit. There is no question that GOYU could insure the mortgaged
property for its own exclusive benefit. In the present case, although it Evelyn Lozada of Alchester testified that upon instructions of Mr.
appears that GOYU obtained the subject insurance policies naming Go, through a certain Mr. Yam, she prepared in quadruplicate on
itself as the sole payee, the intentions of the parties as shown by their February 11, 1992 the nine endorsement documents for GOYUs nine
contemporaneous acts, must be given due consideration in order to insurance policies in favor of RCBC. The original copies of each of
better serve the interest of justice and equity. these nine endorsement documents were sent to GOYU, and the
It is to be noted that nine endorsement documents were prepared others were sent to RCBC and MICO, while the fourth copies were
by Alchester in favor of RCBC. The Court is in a quandary how retained for Alchesters file (tsn, February 23, pp. 7-8). GOYU has not
Alchester could arrive at the idea of endorsing any specific insurance denied having received from Alchester the originals of these
policy in favor of any particular beneficiary or payee other than the endorsements.
insured had not such named payee or beneficiary been specifically RCBC, in good faith, relied upon the endorsement documents
disclosed by the insured itself. It is also significant that GOYU sent to it as this was only pursuant to the stipulation in the mortgage
voluntarily and purposely took the insurance policies from MICO, a contracts. We find such reliance to be justified under the
sister company of RCBC, and not just from any other insurance circumstances of the case. GOYU failed to seasonably repudiate the
company. Alchester would not have found out that the subject pieces authority of the person or persons who prepared such endorsements.
of property were mortgaged to RCBC had not such information been Over and above this, GOYU continued, in the meantime, to enjoy the
voluntarily disclosed by GOYU itself. Had it not been for GOYU, benefits of the credit facilities extended to it by RCBC. After the
Alchester would not have known of GOYUs intention of obtaining occurrence of the loss insured against, it was too late for GOYU to
insurance coverage in compliance with its undertaking in the mortgage disown the endorsements for any imagined or contrived lack of
contracts with RCBC, and verily, Alchester would not have endorsed authority of Alchester to prepare and issue said endorsements. If there
the policies to RCBC had it not been so directed by GOYU. had not been actually an implied ratification of said endorsements by
On equitable principles, particularly on the ground of estoppel, virtue of GOYUs inaction in this case, GOYU is at the very least
the Court is constrained to rule in favor of mortgagor RCBC. The basis estopped from assailing their operative effects. To permit GOYU to
capitalize on its non-confirmation of these endorsements while it
continued to enjoy the benefits of the credit facilities of RCBC which conditioned upon the endorsement of the insurance policies to be
believed in good faith that there was due endorsement pursuant to taken by GOYU to cover the mortgaged properties.
their mortgage contracts, is to countenance grave contravention of
public policy, fair dealing, good faith, and justice. Such an unjust This Court can not over stress the fact that upon receiving its
situation, the Court cannot sanction. Under the peculiar circumstances copies of the endorsement documents prepared by Alchester, GOYU,
obtaining in this case, the Court is bound to recognize RCBCs right to despite the absence of its written conformity thereto, obviously
the proceeds of the insurance policies if not for the actual considered said endorsement to be sufficient compliance with its
endorsement of the policies, at least on the basis of the equitable obligation under the mortgage contracts since RCBC accordingly
principle of estoppel. continued to extend the benefits of its credit facilities and GOYU
GOYU cannot seek relief under Section 53 of the Insurance Code continued to benefit therefrom. Just as plain too is the intention of the
which provides that the proceeds of insurance shall exclusively apply parties to constitute RCBC as the beneficiary of the various insurance
to the interest of the person in whose name or for whose benefit it is policies obtained by GOYU. The intention of the parties will have to be
made. The peculiarity of the circumstances obtaining in the instant given full force and effect in this particular case. The insurance
case presents a justification to take exception to the strict application proceeds may, therefore, be exclusively applied to RCBC, which
of said provision, it having been sufficiently established that it was the under the factual circumstances of the case, is truly the person or
intention of the parties to designate RCBC as the party for whose entity for whose benefit the policies were clearly intended.
benefit the insurance policies were taken out. Consider thus the Moreover, the laws evident intention to protect the interests of the
following: mortgagee upon the mortgaged property is expressed in Article 2127
of the Civil Code which states:
1. It is undisputed that the insured pieces of property were the subject
of mortgage contracts entered into between RCBC and GOYU in ART. 2127. The mortgage extends to the natural accessions, to the
consideration of and for securing GOYUs credit facilities from improvements, growing fruits, and the rents or income not yet received
RCBC. The mortgage contracts contained common provisions when the obligation becomes due, and to the amount of the indemnity
whereby GOYU, as mortgagor, undertook to have the mortgaged granted or owing to the proprietor from the insurers of the property
property properly covered against any loss by an insurance company mortgaged, or in virtue of expropriation for public use, with the
acceptable to RCBC. declarations, amplifications and limitations established by law,
whether the estate remains in the possession of the mortgagor, or it
2. GOYU voluntarily procured insurance policies to cover the passes into the hands of a third person.
mortgaged property from MICO, no less than a sister company of
RCBC and definitely an acceptable insurance company to RCBC. Significantly, the Court notes that out of the 10 insurance policies
subject of this case, only 8 of them appear to have been subject of the
3. Endorsement documents were prepared by MICOs underwriter, endorsements prepared and delivered by Alchester for and upon
Alchester Insurance Agency, Inc., and copies thereof were sent to instructions of GOYU as shown below:
GOYU, MICO, and RCBC. GOYU did not assail, until of late, the
validity of said endorsements. INSURANCE POLICY PARTICULARS ENDORSEMENT
4. GOYU continued until the occurrence of the fire, to enjoy the a. Policy Number : F-114-07795 None
benefits of the credit facilities extended by RCBC which was
Issue Date : March 18, 1992 Amount : P6,603,586.43
Amount : P24,750,000.00
Issue Date : January 18, 1992 g. Policy Number : ACIA/F-174-07223 Exhibit 6-Malayan
Expiry Date : February 15, 1993 Issue Date : May 29, 1991
Amount : P6,000,000.00
Total Obligation as admitted by GOYU as of January 21, NET AMOUNT as of January 21, 1993: P 107,246,887.90
1993: P116,301,992.60
The need for the payment of interest due upon the principal
Broken down as follows amount of the obligation, which is the cost of money to RCBC, the
primary end and the ultimate reason for RCBCs existence and being,
Principal[1] Interest was duly recognized by the trial court when it ruled favorably on
RCBCs counterclaim, ordering GOYU to pay its loan obligation with
Regular 80,535,946.32 RCBC in the amount of P68,785,069.04, as of April 27,1992, with
interest thereon at the rate stipulated in the respective promissory
FDU 7,548,025.17 notes (without surcharges and penalties) per computation, pp. 14-A,
14-B, 14-C (Record, p. 479). Inexplicably, the Court of Appeals,
without even laying down the factual or legal justification for its ruling,
____________ _____________ modified the trial courts ruling and ordered GOYU to pay the principal
amount of P68,785,069.04 without any interest, surcharges and
Total: 108,083,971.49 8,218,021.11[2] penalties (Rollo, p. 200).
LESS: It is to be noted in this regard that even the trial court hedgingly
and with much uncertainty deleted the payment of additional interest,
penalties, and charges, in this manner:
1) Proceeds from
Regarding defendant RCBCs commitment not to charge additional
Seaboard Eastern interest, penalties and surcharges, the same does not require that it
be embodied in a document or some form of writing to be binding and Lines, Inc. vs. Court of Appeals (234 SCRA 78 [1994]), shall apply, to
enforceable. The principle is well known that generally a verbal wit:
agreement or contract is no less binding and effective than a written
one. And the existence of such a verbal agreement has been amply I. When an obligation, regardless of its source, i.e., law, contracts,
established by the evidence in this case. In any event, regardless of quasi-contracts, delicts or quasi-delicts is breached, the contravenor
the existence of such verbal agreement, it would still be unjust and can be held liable for damages. The provisions under Title XVIII on
inequitable for defendant RCBC to charge the plaintiff with surcharges Damages of the Civil Code govern in determining the measure of
and penalties considering the latters pitiful situation. (Emphasis recoverable damages.
supplied.)
II. With regard particularly to an award of interest in the concept of
(actual and compensatory damages, the rate of interest, as well as the
Raccrual thereof, is imposed, as follows:
e
c1. When the obligation is breached, and it consists in the payment of
o
a sum of money, i.e., a loan or forbearance of money, the interest due
r
should be that which may have been stipulated in
d
writing. Furthermore, the interest due shall itself earn legal interest
,
from the time it is judicially demanded. In the absence of stipulation,
pthe rate of interest shall be 12% per annum to be computed from
. default, i.e., from judicial or extrajudicial demand under and subject to
4
the provisions of Article 1169 of the Civil Code.
7
6
)2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
The essence or rationale for the payment of interest or cost of money annum. No interest, however, shall be adjudged on unliquidated
is separate and distinct from that of surcharges and penalties. What
claims or damages except when or until the demand can be
may justify a court in not allowing the creditor to charge surcharges
established with reasonable certainty. Accordingly, where the demand
and penalties despite express stipulation therefor in a valid is established with reasonable certainty, the interest shall begin to run
agreement, may not equally justify non-payment of interest. The from the time the claim is made judicially or extrajudicially (Art. 1169,
charging of interest for loans forms a very essential and fundamental
Civil Code) but when such certainty cannot be so reasonably
element of the banking business, which may truly be considered to be
established at the time the demand is made, the interest shall begin to
at the very core of its existence or being. It is inconceivable for a bank
run only from the date of the judgment of the court is made (at which
to grant loans for which it will not charge any interest at all. We fail to
time the quantification of damages may be deemed to have been
find justification for the Court of Appeals outright deletion of the reasonably ascertained). The actual base for the computation of legal
payment of interest as agreed upon in the respective promissory interest shall, in any case, be on the amount finally adjudged.
notes. This constitutes gross error.
For the computation of the interest due to be paid to RCBC, the 3. When the judgment of the court awarding a sum of money becomes
following rules of thumb laid down by this Court in Eastern Shipping final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 12% per annum one case, may be totally just and equitable in another. This provision
from such finality until its satisfaction, this interim period being deemed of law will have to be applied to the established facts of any given
to be by then an equivalent to a forbearance of credit. case. Given the circumstances under which GOYU found itself after
the occurrence of the fire, the Court rules the surcharges rates ranging
( anywhere from 9% to 27%, plus the penalty charges of 36%, to be
pp. 95-97.) definitely iniquitous and unconscionable. The Court tempers these
rates to 2% and 3%, respectively.Furthermore, in the light of GOYUs
There being written stipulations as to the rate of interest owing on offer to pay the amount of P116,301,992.60 to RCBC as March 1993
each specific promissory note as summarized and tabulated by the (See: Exhibit BB), which RCBC refused, we find it more in keeping
with justice and equity for RCBC not to charge additional interest,
trial court in its decision (pp.470 and 471, Record) such agreed
surcharges, and penalties from that time onward.
interest rates must be followed. This is very clear from paragraph II,
sub-paragraph 1 quoted above. Given the factual milieu spread hereover, we rule that it was error
to hold MICO liable in damages for denying or withholding the
On the issue of payment of surcharges and penalties, we partly
agree that GOYUs pitiful situation must be taken into account. We do proceeds of the insurance claim to GOYU.
not agree, however, that payment of any amount as surcharges and Firstly, by virtue of the mortgage contracts as well as the
penalties should altogether be deleted. Even assuming that RCBC, endorsements of the insurance policies, RCBC has the right to claim
through its responsible officers, herein petitioners Eli Lao and Uy Chun the insurance proceeds, in substitution of the property lost in the
Bing, may have relayed its assurance for assistance to GOYU fire. Having assigned its rights, GOYU lost its standing as the
immediately after the occurrence of the fire, we cannot accept the beneficiary of the said insurance policies.
lower courts finding that RCBC had thereby ipso facto effectively
waived collection of any additional interests, surcharges, and penalties Secondly, for an insurance company to be held liable for
from GOYU. Assurances of assistance are one thing, but waiver of unreasonably delaying and withholding payment of insurance
additional interests, surcharges, and penalties is another. proceeds, the delay must be wanton, oppressive, or malevolent
(Zenith Insurance Corporation vs. CA, 185 SCRA 403 [1990]). It is
Surcharges and penalties agreed to be paid by the debtor in case generally agreed, however, that an insurer may in good faith and
of default partake of the nature of liquidated damages, covered by honesty entertain a difference of opinion as to its liability. Accordingly,
Section 4, Chapter 3, Title XVIII of the Civil Code. Article 2227 thereof the statutory penalty for vexatious refusal of an insurer to pay a claim
provides: should not be inflicted unless the evidence and circumstances show
that such refusal was willful and without reasonable cause as the facts
ART. 2227. Liquidated damages, whether intended as a indemnity or appear to a reasonable and prudent man (Buffalo Ins. Co. vs.
penalty, shall be equitably reduced if they are iniquitous and Bommarito [CCA 8th] 42 F [2d] 53, 70 ALR 1211; Phoenix Ins. Co. vs.
unconscionable. Clay, 101 Ga. 331, 28 SE 853, 65 Am St Rep 307; Kusnetsky vs.
Security Ins. Co., 313 Mo. 143, 281 SW 47, 45 ALR 189). The case at
In exercising this vested power to determine what is iniquitous bar does not show that MICO wantonly and in bad faith delayed the
and unconscionable, the Court must consider the circumstances of release of the proceeds. The problem in the determination of who is
each case. It should be stressed that the Court will not make any the actual beneficiary of the insurance policies, aggravated by the
sweeping ruling that surcharges and penalties imposed by banks for claim of various creditors who wanted to partake of the insurance
non-payment of the loans extended by them are generally iniquitous proceeds, not to mention the importance of the endorsement to RCBC,
and unconscionable. What may be iniquitous and unconscionable in
to our mind, and as now borne out by the outcome herein, justified determined that RCBC has the right to the insurance proceeds, the
MICO in withholding payment to GOYU. subject matter of intervention is rendered moot and
academic. Respondent Sebastian must, however, yield to the
In adjudging RCBC liable in damages to GOYU, the Court of preferential right of RCBC over the MICO insurance policies. It is basic
Appeals said that RCBC cannot avail itself of two simultaneous and fundamental that the first mortgagee has superior rights over
remedies in enforcing the claim of an unpaid creditor, one for specific junior mortgagees or attaching creditors (Alpha Insurance & Surety
performance and the other for foreclosure. In doing so, said the Co. vs. Reyes, 106 SCRA 274 [1981]; Sun Life Assurance Co. of
appellate court, the second action is deemed barred, RCBC having Canada vs. Gonzales Diaz, 52 Phil. 271 [1928]).
split a single cause of action (Rollo, pp. 195-199). The Court of
Appeals was too accommodating in giving due consideration to this WHEREFORE, the petitions are hereby GRANTED and the
argument of GOYU, for the foreclosure suit is still pending appeal decision and resolution of December 16, 1996 and April 3, 1997 in CA-
before the same Court of Appeals in CA G.R CV No. 46247, the case G.R. CV No. 46162 are hereby REVERSED and SET ASIDE, and a
having been elevated by RCBC. new one entered:
In finding that the foreclosure suit cannot prosper, the Fifteenth
Division of the Court of Appeals pre-empted the resolution of said 1. Dismissing the Complaint of private respondent GOYU in Civil Case
foreclosure case which is not before it.This is plain reversible error if No. 93-65442 before Branch 3 of the Manila Regional Trial Court for
not grave abuse of discretion. lack of merit;
As held in Pea vs. Court of Appeals (245 SCRA 691[1995]): 2. Ordering Malayan Insurance Company, Inc. to deliver to Rizal
Commercial Banking Corporation the proceeds of the insurance
It should have been enough, nonetheless, for the appellate court to policies in the amount of P51,862,390.94 (per report of adjuster Toplis
merely set aside the questioned orders of the trial court for having & Harding (Far East), Inc., Exhibits 2 and 2-1), less the amount of
been issued by the latter with grave abuse of discretion. In likewise P50,505,594.60 (per O.R. No. 3649285);
enjoining permanently herein petitioner from entering in and interfering
with the use or occupation and enjoyment of petitioners (now private 3. Ordering the Clerk of Court to release the amount of
respondent) residential house and compound, the appellate court in P50,505,594.60 including the interests earned to Rizal Commercial
effect, precipitately resolved with finality the case for injunction that Banking Corporation;
was yet to be heard on the merits by the lower court. Elevated to the
appellate court, it might be stressed, were mere incidents of the 4. Ordering Goyu & Sons, Inc. to pay its loan obligation with Rizal
principal case still pending with the trial court. In Municipality of Bian, Commercial Banking Corporation in the principal amount of
Laguna vs. Court of Appeals, 219 SCRA 69, we ruled that the Court P107,246,887.90, with interest at the respective rates stipulated in
of Appeals would have no jurisdiction in a certiorari proceeding each promissory note from January 21, 1993 until finality of this
involving an incident in a case to rule on the merits of the main case judgment, and surcharges at 2% and penalties at 3% from January
itself which was not on appeal before it. 21, 1993 to March 9, 1993, minus payments made by Malayan
Insurance Company, Inc. and the proceeds of the amount deposited
( trial court and its earned interest. The total amount due RCBC
with the
pp. 701-702.) at the time of the finality of this judgment shall earn interest at the legal
rate of 12% in lieu of all other stipulated interests and charges until
Anent the right of RCBC to intervene in Civil Case No. 1073,
fully paid.
before the Zamboanga Regional Trial Court, since it has been
G.R. No. 77530 October 5, 1989 The services of the Manila Adjusters and Surveyors Co. (Manila
Adjusters for brevity) were engaged by the Phil-American General
ABOITIZ SHIPPING CORPORATION, petitioner, Insurance Co., Inc. (Phil Am for short) which came out with the report
vs. that the cargo in question was delivered at Pier 4, North Harbor on
PHILIPPINE AMERICAN GENERAL INSURANCE CO., respondent. July 3, 1980 which cargo, when inspected on July 5, 1980 showed that
it was pilfered. The list of the remaining contents was in the report. 7 A
Cinco, Sarmiento, Ridad & Salinas for petitioner. confirmatory report was submitted by the Manila Adjusters dated
November 8,1980. 8
Fajardo Law Offices for private respondent.
On August 11, 1980, Marinduque filed a claim against Aboitiz in the
amount of P246,430.80 representing the value of the pilfered
cargo. 9 On the same day Marinduque filed a claim for the same
amount against the Phil-Am on the latter's policy MRN-01754 PAG. 10
GANCAYCO, J.:
On August 25, 1981 Phil-Am paid Marinduque the sum of P246,430.80
Marinduque Mining Industrial Corporation (Marinduque for short) as insurer of the cargo. 11
shipped on board SS Arthur Maersk from Boston, U.S.A. a shipment
of one (1) skid carton parts for valves as evidenced by bill of lading Phil-Am then filed a complaint in the Regional Trial Court (RTC) of
No. BOSF-45607 issued by the Maersk Lines dated April 25, 1980. 1 Manila against Aboitiz for the recovery of the same amount alleging
that it has been subrogated to the rights of Marinduque.
The shipment was ordered from Jamesbury, Singapore PTE, LTD.,
which issued the cargo's packing list 2 and Invoice number 3 showing In a decision rendered on January 11, 1984, the complaint was
the contents of the carton. The consular invoice was issued by the dismissed with costs against the plaintiff. A motion for reconsideration
Philippine Consulate in Singapore for the shipment showing the of this decision was denied in an order dated March 19,1984.
contents and its total price amounting to $39,419.60 as well as the
freight and other charges amounting to $2,791.73. 4 When the cargo
Hence the Phil-Am appealed to the Court of Appeals wherein in due
arrived in Manila, it was received and deposited in the office of Aboitiz
Shipping Corporation (Aboitiz for short) at Pier 4, North Harbor, Manila course a decision was rendered on December 17, 1986 reversing the
appealed order of dismissal of the complaint and ordering defendant
for transhipment to Nonoc Island for which it issued bill of lading No.
Aboitiz to pay plaintiff Phil-Am the sum of P246,430,80 plus
23. 5
P15,000.00 as attorney's fees. 12 A motion for reconsideration thereof
was denied in a resolution of the appellate court dated February 27,
On July 7,1980 Marinduque, as consignee of the cargo, made a report 1987.
to the effect that said cargo was pilfered on the night of July 3, 1980
while there was heavy rain at the Aboitiz terminal and that of the total
Hence the herein petition for review for certiorari filed by Aboitiz
value of the cargo of $42,209.33, only $7,412.00 worth remains of the
predicated on five assignments of errors, the resolution of which
cargo with the recommendation that the claim be made against
revolves on the singular issue of whether petitioner was properly held
Aboitiz. 6
liable to the private respondent by the appellate court.