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THIRD DIVISION

[G.R. No. 126223. November 15, 2000]

PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner, vs. COURT OF APPEALS and ELIZA PULIDO, respondents. DECISION
GONZAGA-REYES, J.: This petition for review on certiorari seeks to reverse the Decision of the Special Second Division of the Court of Appeals dated August 27, 1996, [1] which affirmed in toto the Decision of the Regional Trial Court of Baguio City,[2] allowing herein private respondent, the beneficiary under a life insurance policy issued by petitioner, to recover the face amount of the said policy. Briefly, the antecedent facts are: On January 9, 1989, petitioner received from one Florence Pulido an application for life insurance, dated December 16, 1988, in the amount of P100,000.00 which designated her sister, herein private respondent, as its principal beneficiary. Because the insurance applied for was non-medical, petitioner did not require a medical examination and issued a policy on the sole basis of the application on February 11, 1989. On April 1992, petitioner received private respondents claim, which declared that the insured, Florence Pulido, died of acute pneumonia on September 10, 1991. Petitioner withheld payment on the ground that the policy claimed under was void from the start for having been procured in fraud. It is petitioners contention that even before they received private respondents claim for death benefits, their investigation concerning the subject policy yielded the information that the insured, Florence Pulido, died in 1988, before the application for insurance on her life was made.[3] While this was communicated to private respondent in a letter dated April 29, 1992, [4] private respondent had already filed her claim earlier that month. [5] In another letter dated July 27, 1992, however, petitioner confirmed to private respondent receipt of the claim papers and assured her that her case was being given preferential attention and prompt action.[6] Following the filing by private respondent of her claim, petitioner caused another investigation respecting the subject policy. Pursuant to the findings of this second investigation, petitioner stood by its initial decision to treat the policy as void and not to honor the claim. On November 9, 1992, private respondent enlisted the services of counsel in reiterating her claim for death benefits.[7] Petitioner still refused to make payment and thus, this action.

The complaint before the lower court sought payment of the face amount of the policy, equivalent to P100,000.00, with interest at 24% per annum for undue delay in payment pursuant to Section 244 of the Insurance Code, and for P5,000.00 as consequential damages. For its part, petitioner interposed that it was legally justified in denying plaintiffs claim, the results of its investigations having indicated that the insured was already dead at the time the policy was applied for. It also counterclaimed for attorneys fees. To substantiate its defense, petitioner submitted copies of the reports of its investigators. The first report,[8] prepared by one Dr. Benedicto Briones, was dated April 1, 1992, and had attached to it a questionnaire, responded to by one Ramon Piganto,[9] who represented to be the brother-in-law of the insured and the barangay chairman of Cardiz, Bagulin, La Union. To the question Where does [Florence Pulido] reside now?, Piganto had replied that Florence Pulido used to live in Cardiz, but was dead since 1988. Pigantos statement was signed by him, and witnessed by his wife, Nenita Piganto. This report was petitioners basis for treating the disputed policy as void since April 1992, even before receipt of private respondents claim. The next two reports pertained to the investigation petitioner commenced after private respondent filed her claim. One report, dated October 2, 1992, was submitted by Ferdinand Tanchoco, another of petitioners investigators, and dealt with Tanchocos interview with a certain Remylyn Piganto, a 14-year old high school student who was tniece of the insured and daughter of Ramon Piganto. Remylyn purportedly told Tanchoco that her auntie Florence Pulido died young a long time ago, before Remylyn was even born.[10]Remylyn, however, did not execute any written statement. The other report, dated December 28, 1992,[11] was prepared by Dr. Benedicto Briones, who also prepared the first report dated April 1, 1992. This last report intimated the claim of some neighbors of the Pulido family that Florence Pulido died in a car accident in 1985. These persons, however, refused to give their names or execute statements on the matter, as they were reportedly afraid of Ramon Piganto, the insureds brother -inlaw.[12] During the trial, plaintiff-private respondent testified that the insured died of acute pneumonia on September 10, 1991 in Barangay Cardiz, Bagulin, La Union and was buried two days after within their own yard. Plaintiff next presented as a witness Dr. Irineo Gutierrez, who testified that he attended to the ailing Florence Pulido on September 8, and 9, 1991 at their house in Cardiz. Dr. Gutierrez then authenticated a Certificate of Death,[13] issued on September 12, 1991 by the Local Civil Registrar of Bagulin, La Union, which bore his signature in his capacity as then Municipal Health Officer of Bagulin, La Union. The death certificate declared that Florence Pulido died on September 10, 1991 at around 4:00 in the afternoon. A neighbor of the Pulidos, Francisco Villano, also testified in support of plaintiff that the insured died of illness on September 1991. Villano claimed that he was at the Pulidos house when Dr. Gutierrez attended to the insured. He also said that he went to the wake of Florence Pulido and was able to view her remains.[14] Meanwhile, defendant-petitioner presented Pablito Angalot, petitioners Life Claims Manager, who said that even before the filing of private respondents claim, petitioners

Claims Committee had already declared the disputed policy null and void in light of the investigative report dated April 1, 1992. However, petitioner was unable to present Dr. Benedicto Briones, the investigator who prepared the April 1, 1992 report. Also, when it presented Ramon Piganto, whose statement attached to Dr. Brioness report dated April 1, 1992 was the basis for petitioners treating the subject policy as void, Piga nto denied giving the statement that Florence Pulido died in 1988, and said that he was made to sign a blank coupon bond.[15] Ferdinand Tanchoco, petitioners other investigator, identified his investigative report[16] and recounted the results of his investigation focusing particularly on the interview with Remylyn Piganto. Tanchoco also reported that private respondents information on the insureds death, as declared in her claim certificate, tallied with the entries of the death certificate as found in the records of the Local Civil Register of Bagulin, La Union. The dispositive portion of the decision of the Regional Trial Court, which was affirmed in toto by the Court of Appeals, states:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay the former the amount of P100,000.00, representing the face value of the insurance policy sued upon, with interest thereon at the legal rate from January 8, 1993, the date of the filing of the complaint, until fully paid, plus P20,000.00 for and as attorneys fees and costs of suit.
In ruling in favor of plaintiff-private respondent, the trial court found no reason to doubt the correctness of the entries in the Certificate of Death, which declared that Florence Pulido died on September 10, 1991. It is also found that defendant, petitioner herein, failed to discharge the burden of proving its affirmative defense that fraud attended the issuance of the policy sued upon. Contrarily, as the lower court observed, the evidence defendant presented sustained the validity of the policy instead of establishing its alleged fraud. The lower court also struck down as hearsay the two reports prepared by Dr. Benedicto Briones, the said investigator not having been presented as a witness in court. It also held as hearsay the alleged declaration of Remylyn Piganto, as recounted by Ferdinand Tanchoco in his report and on testimony, since Remylyn herself did not take the witness stand. However, the lower court found plaintiff-private respondent entitled to legal interest only, and not to 24% per annum as prayed for. Under Section 242 of the Insurance Code, the refusal of the insurer to pay a life insurance claim within the period prescribed will entitle the beneficiary to collect interest on the proceeds at the rate of twice the ceiling prescribed by the Monetary Board for the duration of the delay, unless the refusal to pay is based on the ground that the claim is fraudulent. Fraud being the ground invoked by petitioner for refusing to honor the claim, the lower court found no unreasonable delay in petitioners decision to withhold payment.

The petition is without merit. As a rule, a petition for review on certiorari may raise only questions of law which must be distinctly set forth.[17] This Court does not countenance the elevation of patently factual questions disguised by a loose and general wording of the assignment of errors. It is clear that the only issue the petition raises for review is respondent courts negative finding of fraud in the obtainment of Florence Pulidos insurance policy. Fraud is a question of fact which must be alleged and proved at the level of the lower court.[18] The records bear out that since the onset of this case, the main issue has always been whether there was fraud in the obtainment of the disputed policy, or put differently, whether the insured, Florence Pulido, was in fact dead before the application for insurance on her life was made. This the lower courts had effected ruled on, upon a preponderance of the evidence duly received from both parties. We see no reversible error in the finding of both respondent court and the trial court in favor of the correctness of the entries in Certificate of Death, duly registered with the Local Civil Registrar of Bagulin, La Union, which declared that Florence Pulido died of acute pneumonia on September 10, 1991. Dr. Irineo Gutierrez, the Municipal Health Officer of Bagulin, La Union whose signature appeared in the death certificate, testified in addition that he ministered to the ailing Florence Pulido for two days immediately prior to her death. This fact is likewise noted in the death certificate. Death certificates, and notes by a municipal health officer prepared in the regular performance of his duties, are prima facie evidence of facts therein stated.[19] A dulyregistered death certificate is considered a public document and the entries found therein are presumed correct, unless the party who contests its accuracy can produce positive evidence establishing otherwise.[20] Petitioners contention that the death certificate is suspect because Dr. Gutierrez was not present when Florence Pulido died, and knew of Florences death only through Ramon Piganto , does not merit a conclusion of fraud. No motive was imputed to Dr. Gutierrez for seeking to perpetuate a falsity in public records. Petitioner was likewise unable to make out any clear motive as to why Ramon Piganto would purposely lie. Mere allegations of fraud could not substitute for the full and convincing evidence that is required to prove it.[21] A failure to do so would leave intact the presumption of good faith and regularity in the performance of public duties, which was the basis of both respondent court and the trial court in finding the date of Florence Pulidos death to be as plaintiff -private respondent maintained. We cannot likewise give credence to petitioners submission that the inconsistencies in the testimonies of the witnesses for plaintiff-private respondent are in themselves evidence of fraud. Such alleged inconsistencies are matters of credibility which had been ably passed upon by the lower court. The absence of fraud, as a factual finding of the lower court adopted by the Court of Appeals, entirely consistent with the evidence on record, will not be reversed and, hence, is final and conclusive upon this Court. WHEREFORE, the instant petition is DENIED. Costs against petitioners. SO ORDERED.

Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

[1]

Penned by Associate Justice Fidel P. Purisima (now Retired Associate Justice of the Supreme Court), Chairman, and concurred in by the Associate Justices Ruben T. Reyes and Conrado M. Vasquez, members.
[2]

Penned by Judge Salvador J. Valdez, Jr. RTC Decision; Rollo, 47. Exhibit 4, Records of the Case, 293.

[3]

[4]

The records indicate that private respondent made out a claim form (Exhibit C, Certificate of Claimant) under date of April 13, 1992, which was submitted to petitioners San Fernando, La Union service office and was, in turn, forwarded to petitioners Manila office.
[5] [6]

Exhibit C, Records of the Case, 142. Exhibit D, Records of the Case, 143. Exhibit 3, Records of the Case, 286-289. Exhibit 3-E, Records of the Case, 291. Exhibit 5, Records of the Case, 294. Exhibit 6, Records of the Case, 295. Ibid. Exhibit A, Records of the Case, 139. Exhibit A, Records of the Case, 139. 1314 TSN, January 7, 1994, 4-5. RTC Decision; Rollo, 47; TSN, March 3, 1994, 9-10. Exhibit 5, Records of the Case, 294. Revised Rules of Court, Rule 45, Sec. 1.

[7]

[8]

[9]

[10]

[11]

[12]

[13]

[14]

[15]

[16]

[17]

[18]

BF Corporation vs. Court of Appeals, 288 SCRA 267; Chua vs. Court of Appeals, 242 SCRA 744; Periquet vs. Intermediate Appellate Court, 238 SCRA 697.
[19]

Revised Rules of Court, Rule 130, Sec. 44; People vs. San Gabriel, 253 SCRA 84; People vs. Silvestre, 244 SCRA 479.
[20]

Bingcoy vs. Court of Appeals, 280 SCRA 780; Stronghold Insurance Co., Inc. vs. Court of Appeals, 173 SCRA 620.
[21]

Republic vs. Court of Appeals, G. R. No. 116111, January 21, 1999; P. T. Cerna vs. Court of Appeals, 221 SCRA 19; Filinvest Credit Corporation vs. Relova, 117 SCRA 420.

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

ABOITIZ SHIPPING CORPORATION, Petitioner,

G.R. No. 168402 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: August 6, 2008

- versus -

INSURANCE COMPANY OF NORTH AMERICA, Respondent.

x--------------------------------------------------x DECISION

REYES, R.T., J.:

THE RIGHT of subrogation attaches upon payment by the insurer of the insurance claims by the assured. As subrogee, the insurer steps into the shoes of the assured and may exercise only those rights that the assured may have against the wrongdoer who caused the damage. Before Us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) which reversed the Decision[2] of the Regional Trial Court (RTC). The CA ordered petitioner Aboitiz Shipping Corporation to pay the sum ofP280,176.92 plus interest and attorneys fees in favor of respondent Insurance Company of North America (ICNA).

The Facts Culled from the records, the facts are as follows: On June 20, 1993, MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS) procured a marine insurance policy from respondent ICNA UK Limited of London. The insurance was for a transshipment of certain wooden work tools and workbenches purchased for the consignee Science Teaching Improvement Project (STIP), Ecotech Center, Sudlon Lahug, Cebu City, Philippines.[3] ICNA issued an all-risk open marine policy,[4] stating:
This Company, in consideration of a premium as agreed and subject to the terms and conditions printed hereon, does insure for MSAS Cargo International Limited &/or Associated &/or Subsidiary Companies on behalf of the title holder: Loss, if any, payable to the Assured or order.[5]

The cargo, packed inside one container van, was shipped freight prepaid from Hamburg, Germany on board M/S Katsuragi. A clean bill of lading[6] was issued by Hapag-Lloyd which stated the consignee to be STIP, Ecotech Center, Sudlon Lahug, CebuCity. The container van was then off-loaded at Singapore and transshipped on board M/S Vigour Singapore. On July 18, 1993, the ship arrived and docked at the Manila International Container Port where the container van was again offloaded. On July 26, 1993, the cargo was received by petitioner Aboitiz Shipping Corporation (Aboitiz) through its duly authorized booking representative, Aboitiz Transport System. The bill of lading[7] issued by Aboitiz contained the notation grounded outside warehouse. The container van was stripped and transferred to another crate/container van without any notation on the condition of the cargo on the Stuffing/Stripping Report.[8] On August 1, 1993, the container van was loaded on board petitioners vessel, MV Super Concarrier I. The vessel left Manila en route to Cebu City on August 2, 1993.

On August 3, 1993, the shipment arrived in Cebu City and discharged onto a receiving apron of the Cebu International Port. It was then brought to the Cebu Bonded Warehousing Corporation pending clearance from the Customs authorities. In the Stripping Report[9] dated August 5, 1993, petitioners checker noted that the crates were slightly broken or cracked at the bottom. On August 11, 1993, the cargo was withdrawn by the representative of the consignee, Science Teaching Improvement Project (STIP) and delivered to Don Bosco Technical High School, Punta Princesa, Cebu City. It was received by Mr. Bernhard Willig. OnAugust 13, 1993, Mayo B. Perez, then Claims Head of petitioner, received a telephone call from Willig informing him that the cargo sustained water damage. Perez, upon receiving the call, immediately went to the bonded warehouse and checked the condition of the container and other cargoes stuffed in the same container. He found that the container van and other cargoes stuffed there were completely dry and showed no sign of wetness.[10] Perez found that except for the bottom of the crate which was slightly broken, the crate itself appeared to be completely dry and had no water

marks. But he confirmed that the tools which were stored inside the crate were already corroded. He further explained that the grounded outside warehouse notation in the bill of lading referred only to the container van bearing the cargo.[11] In a letter dated August 15, 1993, Willig informed Aboitiz of the damage noticed upon opening of the cargo.[12] The letter stated that the crate was broken at its bottom part such that the contents were exposed. The work tools and workbenches were found to have been completely soaked in water with most of the packing cartons already disintegrating. The crate was properly sealed off from the inside with tarpaper sheets. On the outside, galvanized metal bands were nailed onto all the edges. The letter concluded that apparently, the damage was caused by water entering through the broken parts of the crate. The consignee contacted the Philippine office of ICNA for insurance claims. On August 21, 1993, the Claimsmen Adjustment Corporation (CAC) conducted an ocular inspection and survey of the damage. CAC reported to ICNA that the goods sustained water damage, molds, and corrosion which were discovered upon delivery to consignee.[13] On September 21, 1993, the consignee filed a formal claim[14] with Aboitiz in the amount of P276,540.00 for the damaged condition of the following goods: ten (10) wooden workbenches three (3) carbide-tipped saw blades one (1) set of ball-bearing guides one (1) set of overarm router bits twenty (20) rolls of sandpaper for stroke sander

In a Supplemental Report dated October 20, 1993,[15] CAC reported to ICNA that based on official weather report from the Philippine Atmospheric, Geophysical and Astronomical Services Administration, it would appear that heavy rains on July 28 and 29, 1993 caused water damage to the shipment. CAC noted that the shipment was placed outside the warehouse of Pier No. 4, NorthHarbor, Manila when it was delivered on July 26, 1993. The shipment

was placed outside the warehouse as can be gleaned from the bill of lading issued by Aboitiz which contained the notation grounded outside warehouse. It was only on July 31, 1993 when the shipment was stuffed inside another container van for shipment to Cebu. Aboitiz refused to settle the claim. On October 4, 1993, ICNA paid the amount of P280,176.92 to consignee. A subrogation receipt was duly signed by Willig. ICNA formally advised Aboitiz of the claim and subrogation receipt executed in its favor. Despite follow-ups, however, no reply was received from Aboitiz. RTC Disposition ICNA filed a civil complaint against Aboitiz for collection of actual damages in the sum of P280,176.92, plus interest and attorneys fees.[16] ICNA alleged that the damage sustained by the shipment was exclusively and solely brought about by the fault and negligence of Aboitiz when the shipment was left grounded outside its warehouse prior to delivery. Aboitiz disavowed any liability and asserted that the claim had no factual and legal bases. It countered that the complaint stated no cause of action, plaintiff ICNA had no personality to institute the suit, the cause of action was barred, and the suit was premature there being no claim made upon Aboitiz. On November 14, 2003, the RTC rendered judgment against ICNA. The dispositive portion of the decision[17] states:
WHEREFORE, premises considered, the court holds that plaintiff is not entitled to the relief claimed in the complaint for being baseless and without merit. The complaint is hereby DISMISSED. The defendants counterclaims are, likewise, DISMISSED for lack of basis.[18]

The RTC ruled that ICNA failed to prove that it is the real party-in-interest to pursue the claim against Aboitiz. The trial court noted that Marine Policy No. 87GB 4475 was issued by ICNA UK Limited with address at Cigna House, 8 Lime Street, LondonEC3M 7NA. However, complainant ICNA Phils. did not present

any evidence to show that ICNA UK is its predecessor-in-interest, or that ICNA UK assigned the insurance policy to ICNA Phils. Moreover, ICNA Phils. claim that it had been subrogated to the rights of the consignee must fail because the subrogation receipt had no probative value for being hearsay evidence. The RTCreasoned:
While it is clear that Marine Policy No. 87GB 4475 was issued by Insurance Company of North America (U.K.) Limited (ICNA UK) with address at Cigna House, 8 Lime Street, London EC3M 7NA, no evidence has been adduced which would show that ICNA UK is the same as or the predecessor-in-interest of plaintiff Insurance Company of North America ICNA with office address at Cigna-Monarch Bldg., dela Rosa cor. Herrera Sts., Legaspi Village, Makati, Metro Manila or that ICNA UK assigned the Marine Policy to ICNA. Second, the assured in the Marine Policy appears to be MSAS Cargo International Limited &/or Associated &/or Subsidiary Companies. Plaintiffs witness, Francisco B. Francisco, claims that the signature below the name MSAS Cargo International is an endorsement of the marine policy in favor of Science Teaching Improvement Project. Plaintiffs witness, however, failed to identify whose signature it was and plaintiff did not present on the witness stand or took (sic) the deposition of the person who made that signature. Hence, the claim that there was an endorsement of the marine policy has no probative value as it is hearsay. Plaintiff, further, claims that it has been subrogated to the rights and interest of Science Teaching Improvement Project as shown by the Subrogation Form (Exhibit K) allegedly signed by a representative of Science Teaching Improvement Project. Such representative, however, was not presented on the witness stand. Hence, the Subrogation Form is self-serving and has no probative value.[19] (Emphasis supplied)

The trial court also found that ICNA failed to produce evidence that it was a foreign corporation duly licensed to do business in the Philippines. Thus, it lacked the capacity to sue before Philippine Courts, to wit:
Prescinding from the foregoing, plaintiff alleged in its complaint that it is a foreign insurance company duly authorized to do business in the Philippines. This allegation was, however, denied by the defendant. In fact, in the Pre-Trial Order of 12 March 1996, one of the issues defined by the court is whether or not the plaintiff has legal capacity to sue and be sued. Under Philippine law, the condition is that a foreign insurance company must obtain licenses/authority to do business in the Philippines. These licenses/authority are obtained from the Securities and Exchange Commission, the Board of Investments and the Insurance Commission. If it fails to obtain these licenses/authority, such foreign corporation doing business in

the Philippines cannot sue before Philippine courts. Mentholatum Co., Inc. v. Mangaliman, 72 Phil. 524. (Emphasis supplied)

CA Disposition ICNA appealed to the CA. It contended that the trial court failed to consider that its cause of action is anchored on the right of subrogation under Article 2207 of the Civil Code. ICNA said it is one and the same as the ICNA UK Limited as made known in the dorsal portion of the Open Policy.[20] On the other hand, Aboitiz reiterated that ICNA lacked a cause of action. It argued that the formal claim was not filed within the period required under Article 366 of the Code of Commerce; that ICNA had no right of subrogation because the subrogation receipt should have been signed by MSAS, the assured in the open policy, and not Willig, who is merely the representative of the consignee.

On March 29, 2005, the CA reversed and set aside the RTC ruling, disposing as follows:
WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed decision of the Regional Trial Court of Makati City in Civil Case No. 94-1590 is hereby REVERSED and SET ASIDE. A new judgment is hereby rendered ordering defendant-appellee Aboitiz Shipping Corporation to pay the plaintiff-appellant Insurance Company of North America the sum of P280,176.92 with interest thereon at the legal rate from the date of the institution of this case until fully paid, and attorneys fees in the sum of P50,000, plus the costs of suit.[21]

The CA opined that the right of subrogation accrues simply upon payment by the insurance company of the insurance claim. As subrogee, ICNA is entitled to reimbursement from Aboitiz, even assuming that it is an unlicensed foreign corporation. The CA ruled:
At any rate, We find the ground invoked for the dismissal of the complaint as legally untenable. Even assuming arguendo that the plaintiff-insurer in this case is an unlicensed foreign corporation, such circumstance will not bar it from claiming reimbursement from the defendant carrier by virtue of subrogation under the contract of insurance and as recognized by Philippine courts. x x x

xxxx Plaintiff insurer, whether the foreign company or its duly authorized Agent/Representative in the country, as subrogee of the claim of the insured under the subject marine policy, is therefore the real party in interest to bring this suit and recover the full amount of loss of the subject cargo shipped by it from Manila to the consignee in Cebu City. x x x[22]

The CA ruled that the presumption that the carrier was at fault or that it acted negligently was not overcome by any countervailing evidence. Hence, the trial court erred in dismissing the complaint and in not finding that based on the evidence on record and relevant provisions of law, Aboitiz is liable for the loss or damage sustained by the subject cargo.

Issues The following issues are up for Our consideration:


(1) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT ICNA HAS A CAUSE OF ACTION AGAINST ABOITIZ BY VIRTUE OF THE RIGHT OF SUBROGATION BUT WITHOUT CONSIDERING THE ISSUE CONSISTENTLY RAISED BY ABOITIZ THAT THE FORMAL CLAIM OF STIP WAS NOT MADE WITHIN THE PERIOD PRESCRIBED BY ARTICLE 366 OF THE CODE OF COMMERCE; AND, MORE SO, THAT THE CLAIM WAS MADE BY A WRONG CLAIMANT. (2) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT THE SUIT FOR REIMBURSEMENT AGAINST ABOITIZ WAS PROPERLY FILED BY ICNA AS THE LATTER WAS AN AUTHORIZED AGENT OF THE INSURANCE COMPANY OF NORTH AMERICA (U.K.) (ICNA UK). (3) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT THERE WAS PROPER INDORSEMENT OF THE INSURANCE POLICY FROM THE ORIGINAL ASSURED MSAS CARGO INTERNATIONAL LIMITED (MSAS) IN FAVOR OF THE CONSIGNEE STIP, AND THAT THE SUBROGATION RECEIPT ISSUED BY STIP IN FAVOR OF ICNA IS VALID

NOTWITHSTANDING THE FACT THAT IT HAS NO PROBATIVE VALUE AND IS MERELY HEARSAY AND A SELF-SERVING DOCUMENT FOR FAILURE OF ICNA TO PRESENT A REPRESENTATIVE OF STIP TO IDENTIFY ANDAUTHENTICATE THE SAME. (4) THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT THE EXTENT AND KIND OF DAMAGE SUSTAINED BY THE SUBJECT CARGO WAS CAUSED BY THE FAULT OR NEGLIGENCE OF ABOITIZ.[23] (Underscoring supplied)

Elsewise stated, the controversy rotates on three (3) central questions: (a) Is respondent ICNA the real party-in-interest that possesses the right of subrogation to claim reimbursement from petitioner Aboitiz? (b) Was there a timely filing of the notice of claim as required under Article 366 of the Code of Commerce? (c) If so, can petitioner be held liable on the claim for damages? Our Ruling We answer the triple questions in the affirmative. A foreign corporation not licensed to do business in the Philippines is not absolutely incapacitated from filing a suit in local courts . Only when that foreign corporation is transacting or doing business in the country will a license be necessary before it can institute suits.[24] It may, however, bring suits on isolated business transactions, which is not prohibited under Philippine law.[25] Thus, this Court has held that a foreign insurance company may sue in Philippine courts upon the marine insurance policies issued by it abroad to cover international-bound cargoes shipped by a Philippine carrier, even if it has no license to do business in this country. It is the act of engaging in business without the prescribed license, and not the lack of license per se, which bars a foreign corporation from access to our courts.[26] In any case, We uphold the CA observation that while it was the ICNA UK Limited which issued the subject marine policy, the present suit was filed by the said companys authorized agent in Manila. It was the domestic corporation that brought the suit and not the foreign company. Its authority is expressly provided

for in the open policy which includes the ICNA office in thePhilippines as one of the foreign companys agents. As found by the CA, the RTC erred when it ruled that there was no proper indorsement of the insurance policy by MSAS, the shipper, in favor of STIP of Don Bosco Technical High School, the consignee. The terms of the Open Policy authorize the filing of any claim on the insured goods, to be brought against ICNA UK, the company who issued the insurance, or against any of its listed agents worldwide.[27] MSAS accepted said provision when it signed and accepted the policy. The acceptance operated as an acceptance of the authority of the agents. Hence, a formal indorsement of the policy to the agent in the Philippines was unnecessary for the latter to exercise the rights of the insurer. Likewise, the Open Policy expressly provides that:
The Company, in consideration of a premium as agreed and subject to the terms and conditions printed hereon, does insure MSAS Cargo International Limited &/or Associates &/or Subsidiary Companies in behalf of the title holder: Loss, if any, payable to the Assured or Order.

The policy benefits any subsequent assignee, or holder, including the consignee, who may file claims on behalf of the assured. This is in keeping with Section 57 of the Insurance Code which states:
A policy may be so framed that it will inure to the benefit of whosoever, during the continuance of the risk, may become the owner of the interest insured. (Emphasis added)

Respondents cause of action is founded on it being subrogated to the rights of the consignee of the damaged shipment. The right of subrogation springs from Article 2207 of the Civil Code, which states:
Article 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. (Emphasis added)

As this Court held in the case of Pan Malayan Insurance Corporation v. Court of Appeals,[28] payment by the insurer to the assured operates as an equitable assignment of all remedies the assured may have against the third party who caused the damage. Subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer.[29] Upon payment to the consignee of indemnity for damage to the insured goods, ICNAs entitlement to subrogation equipped it with a cause of action against petitioner in case of a contractual breach or negligence.[30] This right of subrogation, however, has its limitations. First, both the insurer and the consignee are bound by the contractual stipulations under the bill of lading.[31] Second, the insurer can be subrogated only to the rights as the insured may have against the wrongdoer. If by its own acts after receiving payment from the insurer, the insured releases the wrongdoer who caused the loss from liability, the insurer loses its claim against the latter.[32] The giving of notice of loss or injury is a condition precedent to the action for loss or injury or the right to enforce the carriers liability. Circumstances peculiar to this case lead Us to conclude that the notice requirement was complied with. As held in the case of Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc.,[33] this notice requirement protects the carrier by affording it an opportunity to make an investigation of the claim while the matter is still fresh and easily investigated. It is meant to safeguard the carrier from false and fraudulent claims.

Under the Code of Commerce, the notice of claim must be made within twenty four (24) hours from receipt of the cargo if the damage is not apparent from the outside of the package. For damages that are visible from the outside of the package, the claim must be made immediately. The law provides:

Article 366. Within twenty four hours following the receipt of the merchandise, the claim against the carrier for damages or average which may be found therein upon opening the packages, may be made, provided that the indications of the damage or average which give rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. (Emphasis supplied)

The periods above, as well as the manner of giving notice may be modified in the terms of the bill of lading, which is the contract between the parties. Notably, neither of the parties in this case presented the terms for giving notices of claim under the bill of lading issued by petitioner for the goods. The shipment was delivered on August 11, 1993. Although the letter informing the carrier of the damage was dated August 15, 1993, that letter, together with the notice of claim, was received by petitioner only on September 21, 1993. But petitioner admits that even before it received the written notice of claim, Mr. Mayo B. Perez, Claims Head of the company, was informed by telephone sometime in August 13, 1993. Mr. Perez then immediately went to the warehouse and to the delivery site to inspect the goods in behalf of petitioner.[34]

In the case of Philippine Charter Insurance Corporation (PCIC) v. Chemoil Lighterage Corporation,[35] the notice was allegedly made by the consignee through telephone. The claim for damages was denied. This Court ruled that such a notice did not comply with the notice requirement under the law. There was no evidence presented that the notice was timely given. Neither was there evidence presented that the notice was relayed to the responsible authority of the carrier. As adverted to earlier, there are peculiar circumstances in the instant case that constrain Us to rule differently from the PCICcase, albeit this ruling is being made pro hac vice, not to be made a precedent for other cases.

Stipulations requiring notice of loss or claim for damage as a condition precedent to the right of recovery from a carrier must be given a reasonable and practical construction, adapted to the circumstances of the case under adjudication, and their application is limited to cases falling fairly within their object and purpose.[36] Bernhard Willig, the representative of consignee who received the shipment, relayed the information that the delivered goods were discovered to have sustained water damage to no less than the Claims Head of petitioner, Mayo B. Perez. Immediately, Perez was able to investigate the claims himself and he confirmed that the goods were, indeed, already corroded. Provisions specifying a time to give notice of damage to common carriers are ordinarily to be given a reasonable and practical, rather than a strict construction.[37] We give due consideration to the fact that the final destination of the damaged cargo was a school institution where authorities are bound by rules and regulations governing their actions. Understandably, when the goods were delivered, the necessary clearance had to be made before the package was opened. Upon opening and discovery of the damaged condition of the goods, a report to this effect had to pass through the proper channels before it could be finalized and endorsed by the institution to the claims department of the shipping company. The call to petitioner was made two days from delivery, a reasonable period considering that the goods could not have corroded instantly overnight such that it could only have sustained the damage during transit. Moreover, petitioner was able to immediately inspect the damage while the matter was still fresh. In so doing, the main objective of the prescribed time period was fulfilled. Thus, there was substantial compliance with the notice requirement in this case. To recapitulate, We have found that respondent, as subrogee of the consignee, is the real party in interest to institute the claim for damages against petitioner; and pro hac vice, that a valid notice of claim was made by respondent. We now discuss petitioners liability for the damages sustained by the shipment. The rule as stated in Article 1735 of the Civil Code is that in cases

where the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence required by law.[38] Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property rights.[39] This standard is intended to grant favor to the shipper who is at the mercy of the common carrier once the goods have been entrusted to the latter for shipment.[40] Here, the shipment delivered to the consignee sustained water damage. We agree with the findings of the CA that petitioner failed to overturn this presumption:
x x x upon delivery of the cargo to the consignee Don Bosco Technical High School by a representative from Trabajo Arrastre, and the crates opened, it was discovered that the workbenches and work tools suffered damage due to wettage although by then they were already physically dry. Appellee carrier having failed to discharge the burden of proving that it exercised extraordinary diligence in the vigilance over such goods it contracted for carriage, the presumption of fault or negligence on its part from the time the goods were unconditionally placed in its possession (July 26, 1993) up to the time the same were delivered to the consignee (August 11, 1993), therefore stands. The presumption that the carrier was at fault or that it acted negligently was not overcome by any countervailing evidence. x x x[41] (Emphasis added)

The shipment arrived in the port of Manila and was received by petitioner for carriage on July 26, 1993. On the same day, it was stripped from the container van. Five days later, on July 31, 1993, it was re-stuffed inside another container van. On August 1, 1993, it was loaded onto another vessel bound for Cebu. During the period between July 26 to 31, 1993, the shipment was outside a container van and kept in storage by petitioner. The bill of lading issued by petitioner on July 31, 1993 contains the notation grounded outside warehouse, suggesting that from July 26 to 31, the goods were kept outside the warehouse. And since evidence showed that rain fell over Manila during the same period, We can conclude that this was when the shipment sustained water damage.

To prove the exercise of extraordinary diligence, petitioner must do more than merely show the possibility that some other party could be responsible for the damage. It must prove that it used all reasonable means to ascertain the nature and characteristic of the goods tendered for transport and that it exercised due care in handling them.[42] Extraordinary diligence must include safeguarding the shipment from damage coming from natural elements such as rainfall. Aside from denying that the grounded outside warehouse notation referred not to the crate for shipment but only to the carrier van, petitioner failed to mention where exactly the goods were stored during the period in question. It failed to show that the crate was properly stored indoors during the time when it exercised custody before shipment to Cebu. As amply explained by the CA:
On the other hand, the supplemental report submitted by the surveyor has confirmed that it was rainwater that seeped into the cargo based on official data from the PAGASA that there was, indeed, rainfall in the Port Area of Manila from July 26 to 31, 1993. The Surveyor specifically noted that the subject cargo was under the custody of appellee carrier from the time it was delivered by the shipper on July 26, 1993 until it was stuffed inside Container No. ACCU-2137984 on July 31, 1993. No other inevitable conclusion can be deduced from the foregoing established facts that damage from wettage suffered by the subject cargo was caused by the negligence of appellee carrier in grounding the shipment outside causing rainwater to seep into the cargoes. Appellees witness, Mr. Mayo tried to disavow any responsibility for causing wettage to the subject goods by claiming that the notation GROUNDED OUTSIDE WHSE. actually refers to the container and not the contents thereof or the cargoes. And yet it presented no evidence to explain where did they place or store the subject goods from the time it accepted the same for shipment on July 26, 1993 up to the time the goods were stripped or transferred from the container van to another container and loaded into the vessel M/V Supercon Carrier I on August 1, 1993 and left Manila for Cebu City on August 2, 1993. x x x If the subject cargo was not grounded outside prior to shipment to Cebu City, appellee provided no explanation as to where said cargo was stored from July 26, 1993 to July 31, 1993. What the records showed is that the subject cargo was stripped from the container van of the shipper and transferred to the container on August 1, 1993 and finally loaded into the appellees vessel bound for Cebu City on August 2, 1993. The Stuffing/Stripping Report (Exhibit D) at the Manila port did not indicate any such defect or damage, but when the container was stripped upon arrival in Cebu City port after being discharged from appellees vessel, it was noted that only one (1) slab was slightly broken at the bottom allegedly hit by a forklift blade (Exhibit F).[43] (Emphasis added)

Petitioner is thus liable for the water damage sustained by the goods due to its failure to satisfactorily prove that it exercised the extraordinary diligence required of common carriers. WHEREFORE, Decision AFFIRMED. SO ORDERED. the petition is DENIED and the appealed

RUBEN T. REYES Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

[1]

Rollo, pp. 43-60. Penned by Associate Justice Martin S. Villarama, Jr., with Associate Justices Regalado E. Maambong and Lucenito N. Tagle, concurring. CA-G.R. CV No. 81684, decision dated March 29, 2005. [2] Id. at 212-218. Penned by Judge Romeo F. Barza. Civil Case No. 94-1590, decision dated November 14, 2003. [3] Covered by a commercial invoice from Rainer Fux German Asia Trade. [4] Records, pp. 348-349. Open Marine Policy No. 87GB 4475. [5] Id. at 348. [6] Id. at 381-382. Bill of Lading No. 33-006402. [7] Id. at 346-347. Bill of Lading Nos. 02-4519072 and INA-02. [8] Id. at 350. Dated July 31, 1993. [9] Rollo, p. 127. [10] Records, pp. 536-539; TSN, October 16, 2001, pp. 6-9. [11] Id. [12] Id. at 375-376. [13] Id. at 356-359. Report dated September 18, 1993. [14] Id. at 377. [15] Id. at 373-374. [16] Docketed as Civil Case No. 94-1590, RTC-Makati, Branch 61. [17] Rollo, pp. 212-218. [18] Id. at 218. [19] Id. at 216-217. [20] The dorsal portion contained the provision stating that all claims shall be submitted to the office of the Company or to one (1) of the Agents or Representatives, as per list which included Manila, Philippines, Insurance Co. of North America, Legaspi Village, Makati CCPO Box 482. [21] Rollo, p. 59. [22] Id. at 52-53. [23] Id. at 20-21. [24] Corporation Code, Sec. 133. Doing business without a license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines, but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. See also European Resources and Technologies, Inc. v. Ingenieuburo Birkhahn + Nolte, G.R. No. 159586, July 26, 2004, 435 SCRA 246, 255. [25] Bulakhidas v. Navarro, G.R. No. L-49695, April 7, 1986, 142 SCRA 1, 2-3. [26] Universal Shipping Lines v. Intermediate Appellate Court, G.R. No. 74125, July 31, 1990, 188 SCRA 170, 173. [27] See note 20. [28] G.R. No. 81026, April 3, 1990, 184 SCRA 54; see also Philippine American General Insurance Co., Inc. v. Court of Appeals, G.R. No. 116940, June 11, 1997, 273 SCRA 262, 274. [29] Pan Malayan Insurance Corporation v. Court of Appeals, id. at 58. [30] Federal Express Corporation v. American Home Assurance Company, G.R. No. 150094, August 18, 2004, 437 SCRA 50, 56. [31] Id. at 56-57. [32] Manila Mahogany Manufacturing Corporation v. Court of Appeals, G.R. No. L-52756, October 12, 1987, 154 SCRA 650, 656. [33] G.R. No. 87434, August 5, 1992, 212 SCRA 194. [34] Records, pp. 536-539; TSN, October 16, 2001, pp. 6-9. [35] G.R. No. 136888, June 29, 2005, 462 SCRA 77. [36] 14 Am. Jur. 2d 581. [37] 14 Am. Jur. 2d 585. [38] Civil Code, Art. 1735. [39] Republic v. Lorenzo Shipping Corporation, G.R. No. 153563, February 7, 2005, 450 SCRA 550, 556, citing Blacks Law Dictionary, 5th ed. 1979, 411. [40] Id.

[41] [42]

Rollo, p. 58. Calvo v. UCPB General Insurance, Inc., 429 Phil. 244 (2002). [43] Rollo, pp. 57-58.

EN BANC G.R. No. L-5921 March 29, 1954

SALVACION B. LONDRES, plaintiff-appellee, vs. THE NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES, defendant-appellant. Vicente M. Custodio for appellee. E. V. Filamor for appellant. BAUTISTA ANGELO, J.: This is an appeal from a decision of the Court of First Instance of Manila ordering defendant to pay to plaintiff the sum of P3,000, Philippine currency, plus legal interest thereon from the time of the filing of the complaint until its full payment. On April 14, 1943, the National Life Insurance Company of the Philippines issued a policy on the life of Jose C. Londres whereby it undertook to pay its beneficiary upon his death the sum of P3,000. All the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when the insured died on February 7, 1945. Salvacion V. Londres, as beneficiary, demanded from the company the payment of the proceeds of the policy, and her demand having been refused, she instituted the present action against the company in the Court of First Instance of Manila. Defendant and its answer denied, for lack of sufficient proof, the allegation that the insured died on February 7, 1945, and set up the following special defenses: (a) that plaintiff's claim is covered by the Moratorium Law; (b) that the policy having been issued during the Japanese occupation, it is presumed that its face value should be paid in Japanese currency, there being no provision in the policy from which can be inferred that the parties contemplated payment in any other currency; (c) that the money paid by the insured as premiums, together with the money received from other policy-holders, was all deposited by the defendant in the Philippine National Bank and said deposit was declared without value by Executive Order No. 49 of the President of the Philippines; and (d) that the policy having been issued under abnormal circumstances, it should be considered in the light of equity which does not permit anyone to enrich himself at the expense of another. Defendant, however, as a proof of good faith, offered to pay the value of the policy in accordance with the Ballantyne scale of values, or the sum of P2,400, Philippine currency. On April 15, 1952, plaintiff filed a motion for summary judgment supported by an affidavit which contains a restatement of the allegations of the complaint attaching thereto in support of the motion certain annexes and affidavits which are intended to substantiate and prove said allegations. Defendant, answering this motion, stated that while it joins the plaintiff in her petition for summary judgment, it does so only in so far as its defense of moratorium is concerned, but not as regards the merits of the case because its answer raises questions of fact which should be established, not by mere affidavits, but by evidence duly presented in court. And on May 15,

1952, the court rendered decision not only on the question of moratorium but on the merits of the case, apparently disregarding the issue raised by defendant as regards the necessity of presenting evidence on the facts controverted by it in its answer. From this decision, the defendant has appealed. One of the errors assigned by appellants refers to the fact that the lower court rendered judgment on the merits by virtue merely of the motion for summary judgment filed by appellee without giving an opportunity to appellant to present evidence on the facts which, it alleges, its answer and special defenses are predicated. Appellant contends that the facts raised by its special defenses are "triable issues of facts" which cannot be the subject of summary judgment unless established by sufficient evidence, and that those facts are material to sustain its point of view that it can only be made to pay under the policy an indemnity in the amount of P2,400. When appellee filed a motion for summary judgment upon her claim she attached thereto in support of the motion certain annexes and affidavits which were intended to substantiate and prove her allegations. Appellant failed not only to interpose opposing affidavits but announced to the court that it was joining the appellee in her petition for summary judgment although it evinced its desire to present evidence with regard to the questions of facts raised in its special defenses. And acting on said motion, the lower court, after considering the pleadings and affidavits submitted in support of the motion for summary judgment, found that there was no substantial triable issue of facts and concluded that the appellee was entitled to a judgment as a matter of law. We find this to be in substantial compliance with the rules (sections 1 and 2, Rule 36). The material averments of the claim as regards the execution of the policy, the payment of the premiums, and the death of the insured, are not disputed. The only issues of fact which served as basis for the opposition to the summary judgment are those raised in the special defenses contained in the answer. But these facts are not material for a decision on the merits, as correctly stated by the lower court, for even if they are taken for granted the result would not materially change the findings as to the question affecting the main claim. We hold therefore that the lower court did not err in rendering a summary judgment on the merits of the case. The issue of moratorium, which was decided against the stand taken by appellant, and which is also raised as one of the errors, has now moot in view of the ruling in the case of Rutter vs. Esteban, 93 Phil., 68, wherein the Moratorium Law as declared invalid and unconstitutional. The main question to be determined refers to the amount to be paid by appellant under the policy by way of indemnity to the insured. Stated in another way, the question to be determined is whether the amount of P3,000 which appellant bound itself to pay to the insured under the policy upon his death should be paid in accordance with the present currency or should be adjusted under the Ballantyne scale of values. The answer to the question would depend upon the interpretation to be placed on the facts surrounding the death of the insured. It appears that the deceased took up the policy under consideration on April 15, 1943 for the sum of P3,000. All the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when the insured died on February 7, 1945. On said date, the battle of the liberation of the City of Manila was still raging. While the northern part may have been liberated, not so the southern part, as shown from the very affidavits submitted by appellee wherein it was stated that on the aforesaid date, the insured, Jose Londres, and his two sons were taken by the Japanese soldiers from their house at Singalong Street and were

massacred by their captors. It may therefore be said that the policy became due when the City of Manila was still under the yoke of the enemy and became payable only after liberation which took place on March 10, 1945 when President Osmea issued Proclamation No. 6 following the restoration of the civil government by General Douglas Mac Arthur. And we say that the policy became payable only after liberation even if it matured sometime before, because before that eventuality the insurance company, appellant herein, was not yet in a position to pay the value of the policy for the simple reason that it had not yet reopened. This much the court can take judicial notice of, for during those days of liberation, while the people were rejoicing because of the happy event, the banks, the insurance companies, and for that matter other commercial and business firms, were still feeling the adverse effects of the sudden fall of values and were uncertain and apprehensive as to the manner the readjustment would be made by the new Government. It is for this reason that the beneficiary, after realizing the truth about the death of her husband, and after gathering evidence to substantiate his death, had difficulty in effecting the collection of her claim from the insurance company because at that time it had not yet reopened for business purposes. Although the record does not disclose the exact date on which the insurance company reopened for this purpose, this Court can take judicial notice that it only did so after liberation. At that time the legal tender was already the present currency. However, it is an undisputed fact that the beneficiary submitted to the company formally her claim and demanded payment thereof on May 16, 1949, attaching thereto sufficient proof of the death of the insured, which claim however the company did not entertain, not because the proof submitted was not sufficient in contemplation of law, but because the policy was executed during the occupation and the determination of its value has not yet been passed upon by the Government. And following the provisions of our Insurance Law to the effect that in case of maturity by death, the conclusion is inescapable that from the point of view of the insurance company, the proceeds of the policy became payable only upon the expiration of that period. (Insurance Law, Section 91-A). In this sense, this case may be likened to those already decided by this Court wherein we said in substance that, where the parties have agreed that the payment of the obligation will be made in the currency that would prevail by the end of the stipulated period, and this takes place after liberation, the obligation shall be paid in accordance with the currency then prevailing, or Philippine currency. (Roo vs. Gomez, 83 Phil., 890, 46 Off. Gaz., Sup. 111, 339; Gomez vs. Tabia, 84 Phi;., 269, 47, Off. Gaz., 641.) We are, therefore, persuaded to conclude, on the strength of these authorities, that the present claim should be paid in accordance with the present legal tender, or the Philippine currency. With regard to the sufficiency of the proof presented by appellee as to the death of the insured, we find that the same has been sufficiently established in view of the death certificate issued by the Civil Register of Manila on April 15, 1952, which was attached to the motion for summary judgment. This certificate strengthens the proof submitted by appellee on May 16, 1949 and as such it can serve as basis for the determination of the interest that the company should pay under the policy as required by law. (Insurance Law, Section 91-A). However, the lower court, contrary to the claim of appellant, only required said appellant to pay legal interest from the filing of the complaint until the payment of the judgment. As final plea, appellant invokes equity in its favor in view of the nullification of the deposits made by it with the Philippine National Bank of all fiat money received from its policyholders, which money was declared without value by Executive Order No. 49 of the President of the Philippines. Appellant claims that, considering the unexpected circumstances that developed, the indemnity to be paid by it should be suffered by it under Article 307 of the Code of Commerce which provides: "When the deposits are of cash, with a specification of the coins

constituting them, . . . the increase or reduction which their value may suffer shall be for the account of the depositor." Moreover, appellant, by entering into an insurance contract, cannot claim, if it suffers loss, that the beneficiary cannot enrich herself at its expense. This is a risk attendant to any wagering contract.1 One who gambles and loses cannot be heard to complain of his loss. To appellant, we can only repeat the following admonition: "The parties herein gambled and speculated on the date of the termination of the war and the liberation of the Philippines by the Americans. This can be gleaned from the stipulation about redemption, particularly that portion to the effect that redemption could be effected not before the expiration of one year from June 24, 1944. This kind of agreement is permitted by law. We find nothing immoral or unlawful in it." (Gomez vs. Tabia, supra.) Wherefore, the decision appealed from is affirmed, with costs against appellant. Bengzon, Reyes, Jugo, Labrador, Concepcion and Diokno, JJ., concur. Paras, C.J., concurs in the result.

Footnotes
1

A wager may take the form of a contract, called wagering, or gambling, contract. Contracts of this nature include various common forms of valid commercial contracts, as contracts of insurance , contracts dealing in futures, options, etc. (Webster's New International Dictionary, 2nd ed. (unabridged) p. 2863)

EN BANC G.R. No. L-9146 January 27, 1959

TERESA VDA. DE FERNANDEZ, ET AL., plaintiffs-appellants, vs. THE NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES, defendant-appellee. Jose G. Macatangay for appellants. E. V. Filamor for appellee. ENDENCIA, J.: Appeal from a decision of the Court of First Instance of Manila applying the Ballantyne scale of values upon the proceeds of life insurance taken and maturing during the Japanese occupation but claimed after liberation. It is undisputed that on July 15, 1944, the National Life Insurance Company of the Philippines insured the life of Juan D. Fernandez for the sum of P10,000 under Policy No. 16346 upon payment by the latter of the amount of P444 for the period from July 15, 1944, to July 14, 1945, the beneficiaries thereof being his mother Teresa Duat Vda. de Fernandez and his sisters Maria

Teresa Fernandez and Manuel Fernandez. The insured died on November 2, 1944, at Muntinglupa, Rizal, while the policy was in force. After a lapse of more than seven years, or on August 1st, 1952, Atty. Alberto L. de la Torre, in representation of the beneficiaries, wrote the company advising it that and insured had died in 1944, and claimed the proceeds of the policy. On August 21, 1952, the company answered Atty. De la Torre stating that inasmuch as the status of the policies issued during the Japanese occupation was still pending consideration before the courts, it would like to know whether the beneficiaries represented by him were willing to compute the value of their claim under the Ballantyne scale of values. There was no reply to this inquiry, but on July 9, 1954, the beneficiaries presented instead proofs of death of the insured and at the same time filed Statement Exhibit G claiming the amount of P10,000. On July 21, 1954, the company advised the beneficiaries that inasmuch as the policy matured upon the death of the insured on November 2, 1944, the proceeds should be computed in accordance with the Ballantyne scale, which amount only to P500. In view of this, the beneficiaries commenced suit on August 6, 1954, but the lower court sustained the stand of the company and dismissed the complaint, awarding however to plaintiffs the sum of P500 in Philippine currency, without interest; hence the appeal. Appellants vigorously maintain that the obligation of the company to pay the proceeds of the insurance accrued not upon the death of the insured on November 2, 1944, but only upon receipt and approval by the company, at its Home Office, of proof of death of the insured, which was on July 9, 1954 in accordance with the provision of the policy which reads
National Life Insurance Company of the Philippine hereby agrees to pay at its Home Office, Manila, Ten Thousand Pesos to Juan D. Fernandez (hereinafter called the insured) on the 15th day of July, 1964, if the Insured is living and this Policy is in force, or upon receipt and approved at its Office of due proofs of the title of the claimant and of the prior death of the Insured while this Policy is in force to Teresa Duat Vda. De Fernandez, Maria T. and Manuela Fernandez, mother and sisters respectively of the Insured (Hereinafter called the Beneficiary) subject to the right of the Insured to change the beneficiary as stated on the second page of this Policy.

The above stipulation is apparently based on Sec. 91-A of the Insurance Law which provides as follows:
The proceeds of a life insurance policy shall be paid immediately upon maturity of the policy, unless such proceeds are made payable in installments or a as an annuity, in which case the installments or annuities shall be paid as they become due: Provided, however, That in case of a policy maturing by the death of the insured, the proceeds thereof shall be paid within sixty days after presentation of the claim and filing of the proof of the death of the insured. Refused to pay the claim within the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate of six per centum per annum, unless such failure or refusal to pay is based on the ground that the claim is fraudulent . . . .

Butterssed on the foregoing provision of law and the aforequoted stipulation as well as on the allegation that the filing of proof of death by the beneficiaries is a condition precedent of the demandability of the obligation of the insurer to pay the proceeds, appellants claim that they should be paid P10,000 in Philippine currency and not under the Ballantyne scale of values.

We find appellants' contention untenable. In life insurance, the policy matures either upon the expiration of the term set forth therein in which case its proceeds are immediately payable to the insured himself, or upon his death occuring at any time prior to the expiration of such stipulated term, in which case, the proceeds are payable to his beneficiaries within sixty days after their filing of proof of death (Sec. 91-A Insurance Law). In the case at bar, the policy matured upon the death of the insured on November 2, 1944, and the obligation of the insurer to pay arose as of that date. The sixty-day period fixed by law within which to pay the proceeds after presentation of proof of death is merely procedural in nature, evidently to determine the exact amount to be paid and the interest thereon to which the beneficiaries may be entitled to collect in case of unwarranted refusal of the company to pay, and also to enable the insurer to verify or check on the fact of death which it may even validly waive. It is the happening of the suspensive condition of death that renders a life policy matured and not the filing of proof of death which, as a above stated, is merely procedural, for even if such proof were presented but if turns out later that the insured is alive, such filing does not give maturity to the policy. The insured having died on November 2, 1944, during the Japanese occupation, the proceeds of his policy should be adjusted accordingly, for
The rule is already settled that where a debtor could have paid his obligation at any time during the Japanese occupation, payment after liberation must be adjusted in accordance with the Ballantyne schedule (De Asis vs. Agdamag, 90 Phil., 249; Ang Lam vs. Peregrina, 92 Phil., 506; Wilson vs. Berkenkotter, 92 Phil., 918; 49 Off. Gaz. No. 4 1401; Samson vs. Andal de Aguila, 94 Phil., 402). (Valero vs. Sycip, L-1119. May 23, 1958.)

Appellants vehemently invoke our ruling in the case of Salvacion B. Londres vs. The National Life Insurance Company of the Philippines, 94 Phil., 627 wherein, although the policy matured during the Japanese occupation, we allowed the proceeds to be paid in the present legal tender. That case, however, is not applicable to the present. In that case the insured, Jose Londes, and his two sons were massacred by Japanese soldiers on February 7, 1945, while the battle for the liberation of Manila was still raging and downtown offices, including that of the appelle, were closed for the duration. Thus we declared:
It may therefore be said that the policy became due when the city of Manila was still under the yoke of the enemy and became payable only after liberation which took place on March 10, 1945, when President Osmea issued Proclamation No. 6 following the restoration of the civil government by General Douglas MacArthur. And we say that the policy became payable only after liberation even if it matured sometime before, because before that eventuality the insurance company, appellant herein, was not yet in a position to pay the value of the policy for the simple reason that it has not yet reopened. . . .

In the present case the Home Office of the appellee was open for business until the last days of January, 1945, and had business transactions not only with the bank but also with its customers before its closure, and as a matter of fact had been making payments of claims as they were presented. The policy in question having matured on November 2, 1944, same could have been processed and paid before the company closed its Home Office in January, 1945. Appellants argue that they could not have presented their claim and proof of death during the Japanese occupation even if they wanted to because they knew that the deceased was insured only after liberation when the policy was handed to them by Mr. Pablo P. Gabriel, a business partner of the deceased. The delay in the presentation of proof of death does not make any difference, for it does not alter the date of maturity of the policy nor the ability of the company to pay the proceeds of the insurance during the Japanese occupation. Moreover, it is through no fault of the company that such delay was incurred. At any rate, irrespective of whether there was delay

or not in the filing of proof of death, the hard fact remains that the policy matured and was payable during the Japanese occupation, and under the doctrine in the Valero vs. Sycip case, supra, payment should be adjusted in accordance with the Ballantyne scale of values. Finding no error in the decision appealed from, and there being no question raised as to the adjusted amount of P500 under the Ballantyne schedule, judgment affirmed, with costs. Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion and Reyes, J.B.L., JJ.,concur.

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