CIR vs Asturias Sugar Central
compensable under the War Damage
FACTS:
Asturias Sugar Central is a corporation
duly organized under the laws of the
Philippines engaged in the manufacture of
sugar.
On April 18, 1942, the ASC was burned
by the retreating US armed forces under its
scorch earth policy and/or to resist enemy
attack. The Central was total destroyed and
was reconstructed only on or about 1947.
On Feb. 26, 1948, ASC filed with the
Philippine Damage Commission a claim for
damages sustained on its properties during
the war. The War Commission approved the
payment in favor of ASC. However, on its
second payment it informed the Central that
it would be their last payment because funds
were no longer available.
In filing its income tax returns( for
1950 and 1951) the Central claimed
deductions as war loses on the ground that
the destruction of its properties on April 18,
1942, were covered by the war risk
insurance.
CIR on the on other hand, claims that
loses sustained by the Central were not
covered by the insurance; hence, such loses
must be claimed in the year they were
actually sustained, not in the years the claim
for indemnity was finally determined.
It is urged that insurance is a contract,
which did not exist under the War Damage
Corporation Act.
ISSUE/s:
WON the loses sustained by the ASC was
covered by the insurance
WON there exist an insurance contract
under the said act
HELD: YES.
The loss of the Central was
Corporation Act (enacted by the US
Congress).
The ASC was destroyed on April 18,
1942, at the time the War Damage
Corporation Act was already in force, and
that sec 5g of which specifically provides
that:
any loss or damage to any such property
sustained subsequent to Dec. 6, 1941, and
prior to the date xxx maybe compensated by
the War Damage Corporation without
requiring a contract of insurance or the
payment of premiums, or other charge xxx
The ASC had, therefore, not only the
right, but, also, the duty, to claim deduction
for the loss of its central, to wait until it could
determine, with reasonable certainty, how
much compensation, if any, it could get
pursuant to War Damage Corporation Act.
YES.
The court said:
Although insurance is generally a
contract, nothing in its nature bars an
insurance by operation of law.
Indeed, the said section 5g
specifically providing for
compensation by the War Damage
Corporation without requiring a
contract of insurance or the
payment of premiums and other
charge xxx leaves no room for doubt
about the intent of the US Congress, to
establish between the War Damage
Corporation and the owner of the
property lost or damaged, a relation
identical to that existing between the
insurer and the insured under the
contract of insurance.