Insurance case digest:

Gaisano cagayan, inc. V. Insurance company of north america (2006) g.r. no. 147839 june 8, 2006

Lessons applicable: existing interest (insurance)

Laws applicable: article 1504,article 1263, article 2207 of the civil code, section 13 of insurance code

Facts:

Intercapitol marketing corporation (imc) is the maker of wrangler blue jeans. While levi strauss (phils.)
Inc. (lspi) is the local distributor of products bearing trademarks owned by levi strauss & co imc and lspi
separately obtained from insurance company of north america fire insurance policies for their book debt
endorsements related to their ready-made clothing materials which have been sold or delivered to
various customers and dealers of the insured anywhere in the philippines which are unpaid 45 days after
the time of the loss

February 25, 1991: gaisano superstore complex in cagayan de oro city, owned by gaisano cagayan, inc.,
containing the ready-made clothing materials sold and delivered by imc and lspi was consumed by fire.

February 4, 1992: insurance company of north america filed a complaint for damages against gaisano
cagayan, inc. Alleges that imc and lspi filed their claims under their respective fire insurance policies
which it paid thus it was subrogated to their rights

Gaisano cagayan, inc: not be held liable because it was destroyed due to fortuities event or force
majeure

Rtc: imc and lspi retained ownership of the delivered goods until fully paid, it must bear the loss (res
perit domino)

Ca: reversed - sales invoices is an exception under article 1504 (1) of the civil code to res perit domino

Issue: w/n insurance company of north america can claim against gaisano cagayan for the debt that was
isnured

Held: yes. Petition is partly granted. Order to pay p535,613 is deleted

Insurance policy is clear that the subject of the insurance is the book debts and not goods sold and
delivered to the customers and dealers of the insured
Art. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at
the buyer's risk whether actual delivery has been made or not, except that:

(1) where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of
the contract and the ownership in the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from
the time of such delivery;

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

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

Anyone has an insurable interest in property who derives a benefit from its existence or would suffer
loss from its destruction.

It is sufficient that the insured is so situated with reference to the property that he would be liable to
loss should it be injured or destroyed by the peril against which it is insured

An insurable interest in property does not necessarily imply a property interest in, or a lien upon, or
possession of, the subject

Matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of
such an interest

Insurance in this case is not for loss of goods by fire but for petitioner's accounts with imc and lspi that
remained unpaid 45 days after the fire - obligation is pecuniary in nature

Obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true
when the obligation consists in the delivery of a determinate thing and there is no stipulation holding
him liable even in case of fortuitous event

Article 1263 of the civil code in an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation (genus nunquan perit)
The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as
insurer and imc as the insured, but also the amount paid to settle the insurance claim

Art. 2207. If the plaintiff's 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.

As to lspi, no subrogation receipt was offered in evidence.

Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of
p535,613

Insurance case digest: gercio v. Sun life assurance co. Of canada (1925)

G.r. no. 23703 september 28, 1925

Lessons applicable:

Blood relationship (insurance)

Revocable designation (insurance)

Facts:

January 29, 1910: sun life assurance co. Of canada issued a 20-year endowment insurance policy on the
life of hilario gercio

Insurance company agreed to insure the life of gercio for the sum of p2,000, to be paid him on february
1, 1930, or if the insured should die before said date, then to his wife, mrs. Andrea zialcita, should she
survive him; otherwise to the executors, administrators, or assigns of the insured

Policy did not include any provision reserving to the insured the right to change the beneficiary

End of 1919: she was convicted of the crime of adultery

September 4, 1920: a decree of divorce was issued

March 4, 1922: gercio formally notified the sun life that he had revoked his donation in favor of andrea
zialcita, and that he had designated in her stead his present wife, adela garcia de gercio, as the
beneficiary of the policy
Sun life refused

Gercio filed a petition for mandamus to compel sun life

Trial court: favored gercio

Issue: w/n gercio has the right to change the beneficiary of the policy

Held: no. Dismissed.

The wife has an insurable interest in the life of her husband.

The beneficiary has an absolute vested interest in the policy from the date of its issuance and delivery.
So when a policy of life insurance is taken out by the husband in which the wife is named as beneficiary,
she has a subsisting interest in the policy

Applies to a policy to which there are attached the incidents of a loan value, cash surrender value, an
automatic extension by premiums paid, and to an endowment policy, as well as to an ordinary life
insurance policy.

If the husband wishes to retain to himself the control and ownership of the policy he may so provide in
the policy.

But if the policy contains no provision authorizing a change of beneficiary without the beneficiary's
consent, the insured cannot make such change.

Accordingly, it is held that a life insurance policy of a husband made payable to the wife as beneficiary, is
the separate property of the beneficiary and beyond the control of the husband.

Effect produced by the divorce, the philippine divorce law, act no. 2710, merely provides in section 9
that the decree of divorce shall dissolve the community property as soon as such decree becomes final

Absence of a statute to the contrary, that if a policy is taken out upon a husband's life the wife is named
as beneficiary therein, a subsequent divorce does not destroy her rights under the policy

Neither the husband, nor the wife, nor both together had power to destroy the vested interest of the
children in the policy.

Separate opinion:

Johnson, concurring opinion:

I agree with the majority of the court, that the judgment of the lower court should be revoked, but for a
different reason. In my judgment, the action is premature and should have been dismissed.
Filipino merchants v. Ca

- insurable interest

179 scra 638

Facts:

> the chao tiek seng a consignee of the shipment of fishmeal loaded on board the vessel ss bougainville
and unloaded at the port of manila on or about december 11, 1976 and seeks to recover from filipino
the amount of p51,568.62 representing damages to said shipment which has been insured by filipino.

> filipino brought a third party complaint against compagnie maritime des chargeurs reunis and/or e.
Razon, inc. Seeking judgment against the third party defendants in case judgment is rendered against it.

> it appears from the evidence presented that chao insured said shipment with filipino for the sum of
p267,653.59 for the goods described as 600 metric tons of fishmeal in gunny bags of 90 kilos each from
bangkok, thailand to manila against all risks under warehouse to warehouse terms.

> actually, what was imported was 59.940 metric tons not 600 tons at $395.42 a ton.

> the fishmeal in 666 gunny bags were unloaded from the ship on december 11, 1976 at manila unto
the arrastre contractor e. Razon, inc. And filipino’s surveyor ascertained and certified that in such
discharge 105 bags were in bad order condition as jointly surveyed by the ship's agent and the arrastre
contractor.

> based on said computation the chao made a formal claim against the filipino for p51,568.62. A
formal claim statement was also presented by the plaintiff against the vessel, but the filipino refused to
pay the claim.

Issues & resolutions:

Filipino contends that an "all risks" marine policy has a technical meaning in insurance in that before a
claim can be compensable it is essential that there must be "some fortuity," "casualty" or "accidental
cause" to which the alleged loss is attributable and the failure of herein private respondent, upon whom
lay the burden, to adduce evidence showing that the alleged loss to the cargo in question was due to a
fortuitous event precludes his right to recover from the insurance policy.

Sc did not uphold this contention. An "all risks policy" should be read literally as meaning all risks
whatsoever and covering all losses by an accidental cause of any kind. The terms "accident" and
"accidental", as used in insurance contracts, have not acquired any technical meaning. They are
construed by the courts in their ordinary and common acceptance. Thus, the terms have been taken to
mean that which happens by chance or fortuitously, without intention and design, and which is
unexpected, unusual and unforeseen. An accident is an event that takes place without one's foresight or
expectation; an event that proceeds from an unknown cause, or is an unusual effect of a known cause
and, therefore, not expected.

Coverage under an "all risks" provision of a marine insurance policy creates a special type of insurance
which extends coverage to risks not usually contemplated and avoids putting upon the insured the
burden of establishing that the loss was due to the peril falling within the policy's coverage; the insurer
can avoid coverage upon demonstrating that a specific provision expressly excludes the loss from
coverage. A marine insurance policy providing that the insurance was to be "against all risks" must be
construed as creating a special insurance and extending to other risks than are usually contemplated,
and covers all losses except such as arise from the fraud of the insured. The burden of the insured,
therefore, is to prove merely that the goods he transported have been lost, destroyed or deteriorated.
Thereafter, the burden is shifted to the insurer to prove that the loss was due to excepted perils. To
impose on the insured the burden of proving the precise cause of the loss or damage would be
inconsistent with the broad protective purpose of "all risks" insurance.

In the present case, there being no showing that the loss was caused by any of the excepted perils, the
insurer is liable under the policy

Filipino contends that chao does not have insurable interest, being only a consignee of the goods.

Anent the issue of insurable interest, sc upheld the ruling of the ca that chao, as consignee of the goods
in transit under an invoice containing the terms under "c & f manila," has insurable interest in said
goods.

Section 13 of the insurance code defines insurable interest in property as every interest in property,
whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a
contemplated peril might directly damnify the insured. In principle, anyone has an insurable interest in
property who derives a benefit from its existence or would suffer loss from its destruction whether he
has or has not any title in, or lien upon or possession of the property. Insurable interest in property
may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or (c) an
expectancy, coupled with an existing interest in that out of which the expectancy arises.
Chao, as vendee/consignee of the goods in transit has such existing interest therein as may be the
subject of a valid contract of insurance. His interest over the goods is based on the perfected contract of
sale. The perfected contract of sale between him and the shipper of the goods operates to vest in him
an equitable title even before delivery or before he performed the conditions of the sale. The contract
of shipment, whether under f.o.b., c.i.f., or c. & f. As in this case, is immaterial in the determination of
whether the vendee has an insurable interest or not in the goods in transit. The perfected contract of
sale even without delivery vests in the vendee an equitable title, an existing interest over the goods
sufficient to be the subject of insurance

Rizal Commercial Banking Corp v. CA 289 SCRA 292 (1998).

Facts:

Goyu applied for credit facilities and accommodations with RCBC. After due evaluation, a credit facility
in the amount of P30 million was initially granted. Upon Goyu's application increased Goyu's credit
facility to P50 million, then to P90 million, and finally to P 117 million. As security for its credit facilities
with RCBC, Goyu executed two rem and two cm in favor of RCBC, which were registered with the
registry of deeds at. Under each of these four mortgage contracts, Goyu committed itself to insure the
mortgaged property with an insurance company approved by RCBC, and subsequently, to endorse and
deliver the insurance policies to RCBC.

Goyu obtained in its name a total of 10 insurance policies from MICO. In February 1992, Alchester
Insurance Agency, Inc., the insurance agent where Goyu obtained the Malayan insurance policies, issued
nine endorsements in favor of RCBC seemingly upon instructions of Goyu. On April 27, 1992, one of
Goyu's factory buildings in Valenzuela was gutted by fire. Consequently, Goyu submitted its claim for
indemnity. MICO denied the claim on the ground that the insurance policies were either attached
pursuant to writs of attachments/garnishments issued by various courts or that the insurance proceeds
were also claimed by other creditors of Goyu alleging better rights to the proceeds than the insured.

Goyu filed a complaint for specific performance and damages. RCBC, one of Goyu's creditors, also filed
with MICO its formal claim over the proceeds of the insurance policies, but said claims were also denied
for the same reasons that AGCO denied Goyu's claims. However, because the endorsements do not bear
the signature of any officer of Goyu, the trial court, as well as the court of appeals, concluded that the
endorsements are defective and held that RCBC has no right over the insurance proceeds.

Issue:

Whether or not RCBC has a right over the insurance proceeds.

Held:

RCBC has a right over the insurance proceeds.

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 benefit.
There is no question that Goyu could insure the mortgaged property for its own exclusive benefit. In the
present case, although it appears that Goyu obtained the subject insurance policies naming itself as the
sole payee, the intentions of the parties as shown by their contemporaneous acts, must be given due
consideration in order to better serve the interest of justice and equity.

It is to be noted that 9 endorsement documents were prepared by Alchester in favor of RCBC. The court
is in a quandary how Alchester could arrive at the idea of endorsing any specific insurance policy in favor
of any particular beneficiary or payee other than the insured had not such named payee or beneficiary
been specifically disclosed by the insured itself. It is also significant that Goyu voluntarily and purposely
took the insurance policies from MICO, a sister company of RCBC, and not just from any other insurance
company. Alchester would not have found out that the subject pieces of property were mortgaged to
RCBC had not such information been voluntarily disclosed by Goyu itself. Had it not been for Goyu,
Alchester would not have known of Goyu's intention of obtaining insurance coverage in compliance with
its undertaking in the mortgage contracts with RCBC, and verify, Alchester would not have endorsed the
policies to RCBC had it not been so directed by Goyu.

On equitable principles, particularly on the ground of estoppel, the court is constrained to rule in favor
of mortgagor RCBC. RCBC, in good faith, relied upon the endorsement documents sent to it as this was
only pursuant to the stipulation in the mortgage contracts. We find such reliance to be justified under
the circumstances of the case. Goyu failed to seasonably repudiate the authority of the person or
persons who prepared such endorsements. Over and above this, Goyu continued, in the meantime, to
enjoy the benefits of the credit facilities extended to it by RCBC. After the occurrence of the loss insured
against, it was too late for Goyu to disown the endorsements for any imagined or contrived lack of
authority of Alchester to prepare and issue said endorsements. If there had not been actually an implied
ratification of said endorsements by virtue of Goyu's inaction in this case, Goyu is at the very least
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 believed in good faith that there was due endorsement
pursuant to their mortgage contracts, is to countenance grave contravention of public policy, fair
dealing, good faith, and justice. Such an unjust situation, the court cannot sanction. Under the peculiar
circumstances obtaining in this case, the court is bound to recognize RCBC's right to the proceeds of the
insurance policies if not for the actual endorsement of the policies, at least on the basis of the equitable
principle of estoppel.
Goyu cannot seek relief under section 53 of the insurance code which provides that the proceeds of
insurance shall exclusively apply to the interest of the person in whose name or for whose benefit it is
made. The peculiarity of the circumstances obtaining in the instant case presents a justification to take
exception to the strict application of said provision, it having been sufficiently established that it was the
intention of the parties to designate RCBC as the party for whose benefit the insurance policies were
taken out. Consider thus the following:

1. It is undisputed that the insured pieces of property were the subject of mortgage contracts
entered into between RCBC and Goyu in consideration of and for securing Goyu's credit facilities from
RCBC. The mortgage contracts contained common provisions whereby Goyu, as mortgagor, undertook
to have the mortgaged property properly covered against any loss by an insurance company acceptable
to RCBC.

2. Goyu voluntarily procured insurance policies to cover the mortgaged property from MICO, no less
than a sister company of RCBC and definitely an acceptable insurance company to RCBC.

3. Endorsement documents were prepared by MICO's underwriter, Alchester insurance agency, inc.,
and copies thereof were sent to Goyu, MICO and RCBC. Goyu did not assail, until of late, the validity of
said endorsements.

4. Goyu continued until the occurrence of the fire, to enjoy the benefits of the credit facilities
extended by RCBC which was conditioned upon the endorsement of the insurance policies to be taken
by Goyu to cover the mortgaged properties.

This court can not over stress the fact that upon receiving its copies of the endorsement documents
prepared by Alchester, Goyu, despite the absence written conformity thereto, obviously considered said
endorsement to be sufficient compliance with its obligation under the mortgage contracts since RCBC
accordingly continued to extend the benefits of its credit facilities and Goyu continued to benefit
therefrom. Just as plain too is the intention of the parties to constitute RCBC as the beneficiary of the
various insurance policies obtained by Goyu. The intention of the parties will have to be given full force
and effect in this particular case. The insurance proceeds may, therefore, be exclusively applied to RCBC,
which under the factual circumstances of the case, is truly the person or entity for whose benefit the
policies were clearly intended.