Professional Documents
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loss.
Held: No. No. Judgment reversed.
J. De Castro
Facts:
The plaintiff secured temporary insurance from the
defendant for its exportation of 1,250,000 board feet of
Philippine Lauan and Apitong logs to be shipped from
Quezon Province to Okinawa and Tokyo, Japan.
Workmens Insurance issued a cover note insuring the
cargo of the plaintiff subject to its terms and conditions.
The two marine policies bore the numbers 53 HO 1032
and 53 HO 1033. Policy No. 53 H0 1033 was for 542
pieces of logs equivalent to 499,950 board feet. Policy No.
53 H0 1033 was for 853 pieces of logs equivalent to
695,548 board feet. The total cargo insured under the two
marine policies consisted of 1,395 logs, or the equivalent
of 1,195.498 bd. ft.
After the issuance of the cover note, but before the
issuance of the two marine policies Nos. 53 HO 1032 and
53 HO 1033, some of the logs intended to be exported
were lost during loading operations in the Diapitan Bay.
While the logs were alongside the vessel, bad weather
developed resulting in 75 pieces of logs which were rafted
together co break loose from each other. 45 pieces of logs
were salvaged, but 30 pieces were verified to have been
lost or washed away as a result of the accident.
Pacific Timber informed Workmens about the loss of 32
pieces of logs during loading of SS woodlock.
Although dated April 4, 1963, the letter was received in the
office of the defendant only on April 15, 1963. The plaintiff
claimed for insurance to the value of P19,286.79.
Woodmens requested an adjustment company to assess
the damage. It submitted its report, where it found that the
loss of 30 pieces of logs is not covered by Policies Nos. 53
HO 1032 and 1033 but within the 1,250,000 bd. ft. covered
by Cover Note 1010 insured for $70,000.00.
The adjustment company submitted a computation of the
defendant's probable liability on the loss sustained by the
shipment, in the total amount of P11,042.04.
Woodmens wrote the plaintiff denying the latter's claim on
the ground they defendant's investigation revealed that the
entire shipment of logs covered by the two marine policies
were received in good order at their point of destination. It
was further stated that the said loss may be considered as
covered under Cover Note No. 1010 because the said
Note had become null and void by virtue of the issuance of
Marine Policy Nos. 53 HO 1032 and 1033.
The denial of the claim by the defendant was brought by
the plaintiff to the attention of the Insurance
Commissioner. The Insurance Commissioner ruled in
favor of indemnifying Pacific Timber. The company added
that the cover note is null and void for lack of valuable
consideration. The trial court ruled in petitioners favor
while the CA dismissed the case. Hence this appeal.
Issues:
WON the cover note was null and void for lack of valuable
consideration
WON the Insurance company was absolved from
responsibility due to unreasonable delay in giving notice of
Ratio:
1. The fact that no separate premium was paid on the
Cover Note before the loss occurred does not militate
against the validity of the contention even if no such
premium was paid. All Cover Notes do not contain
particulars of the shipment that would serve as basis for
the computation of the premiums. Also, no separate
premiums are required to be paid on a Cover Note.
The petitioner paid in full all the premiums, hence there
was no account unpaid on the insurance coverage and the
cover note. If the note is to be treated as a separate policy
instead of integrating it to the regular policies, the purpose
of the note would be meaningless. It is a contract, not a
mere application for insurance.
It may be true that the marine insurance policies issued
were for logs no longer including those which had been
lost during loading operations. This had to be so because
the risk insured against is for loss during transit, because
the logs were safely placed aboard.
The non-payment of premium on the Cover Note is,
therefore, no cause for the petitioner to lose what is due it
as if there had been payment of premium, for nonpayment by it was not chargeable against its fault. Had all
the logs been lost during the loading operations, but after
the issuance of the Cover Note, liability on the note would
have already arisen even before payment of premium.
Otherwise, the note would serve no practical purpose in
the realm of commerce, and is supported by the doctrine
that where a policy is delivered without requiring payment
of the premium, the presumption is that a credit was
intended and policy is valid.
2. The defense of delay cant be sustained. The facts
show that instead of invoking the ground of delay in
objecting to petitioner's claim of recovery on the cover
note, the insurer never had this in its mind. It has a duty to
inquire when the loss took place, so that it could
determine whether delay would be a valid ground of
objection.
There was enough time for insurer to determine if
petitioner was guilty of delay in communicating the loss to
respondent company. It never did in the Insurance
Commission. Waiver can be raised against it under
Section 84 of the Insurance Act.
Held:
NONE.
It is fundamental that contracts take effect only between
the parties thereto, except in some specific instance
provided by law where the contract contains some
stipulation in favor of a third person. Such stipulation is
known as a stipulation pour autrui; or a provision in favor
of a third person not a party to the contract.
Under this doctrine, a third person is ed to avail himself of
a benefit granted to him by the terms of the contract,
provided that the contracting parties have clearly and
deliberately conferred a favor upon such person.
&
INSURANCE
FACTS:
Upon WOODWORKSs application, PHIL. PHOENIX
issued in its favor a fire insurance policy whereby PHIL.
PHOENIX insured WOODWORKS building, machinery
and equipment for a term of one year from against loss by
fire. The premium and other charges amounted to
P10,593.36.
It is undisputed that WOODWORKS did not pay the
premium stipulated in the Policy when it was issued nor at
any time thereafter.
Before the expiration of the one-year term, PHIL.
PHOENIX notified WOODWORKS of the cancellation of
the Policy allegedly upon request of WOODWORKS. The
latter has denied having made such a request. PHIL.
PHOENIX credited WOODWORKS with the amount of
P3,110.25 for the unexpired period of 94 days, and
claimed the balance of P7,483.11 representing , earned
premium. Thereafter, PHIL. PHOENIX demanded in
writing for the payment of said amount.
WOODWORKS disclaimed any liability contending, in
essence, that it need not pay premium because the
Insurer did not stand liable for any indemnity during the
period the premiums were not paid.
For this reason, PHIL. PHOENIX commenced action in the
CFI of Manila. Judgment was rendered in PHIL.
PHOENIXs favor . From this adverse Decision,
WOODWORKS appealed to the Court of Appeals which
certified the case to SC on a question of law.
ISSUE:
May the insurer collect the earned premiums?
HELD:
NO. The Courts findings are buttressed by Section 77 of