 Sworn statement of formal claim
 Certification made by Deputy Fire Chief/ Senior
Loss and Notice of Loss
United Merchants Corporation v. Country Bankers
Insurance Corporation
Facts: Petitioner United Merchants Corporation (UMC) is
engaged in the business of buying, selling, and
manufacturing Christmas lights.
UMC leased a warehouse in Quezon City, where UMC
assembled and stored its products.
UMCs General Manager Alfredo Tan insured UMCs stocks in
trade of Christmas lights against fire with defendant
Country Bankers Insurance Corporation (CBIC) for P
15,000,000.00. The Fire Insurance Policy (Insurance Policy)
and Fire Invoice, valid until 6 September 1996.
On 7 May 1996, UMC and CBIC executed Endorsement and
Fire Invoice to form part of the Insurance Policy.
Endorsement F/96-154 provides that UMCs stocks in trade
were insured against additional perils, to wit: typhoon,
flood, ext. cover, and full earthquake.
The sum insured was also increased to P50,000,000.00
effective 7 May 1996 to 10 January 1997. On 9 May 1996,
CBIC issued Endorsement F/96-157 where the name of the
assured was changed from Alfredo Tan to UMC.
On 3 July 1996, a fire gutted the warehouse rented by UMC.
CBIC designated CRM Adjustment Corporation (CRM) to
investigate and evaluate UMCs loss by reason of the fire.
CBICs reinsurer, Central Surety, likewise requested the
National Bureau of Investigation (NBI) to conduct a parallel
investigation.
UMC demanded for at least fifty percent (50%) payment of
its claim from CBIC. On 25 February 1997, UMC received
CBIC's letter, dated 10 January 1997, rejecting UMC's claim
due to breach of Condition No. 15 of the Insurance Policy.
Condition No. 15 states:
“If the claim be in any respect fraudulent, or if any false
declaration be made or used in support thereof, or if any
fraudulent means or devices are used by the Insured or
anyone acting in his behalf to obtain any benefit under this
Policy; or if the loss or damage be occasioned by the willful
act, or with the connivance of the Insured, all the benefits
under this Policy shall be forfeited.
UMC filed a complaint against CBIC with the RTC. UMC
anchored its insurance claim on the:
 Insurance Policy
Superintendent Bonifacio J. Garcia of the Bureau
of Fire Protection whoch provides that:
XXXX The Bureau further certifies that no evidence was
gathered to prove that the establishment was willfully,
feloniously and intentionally set on fire.
That the investigation of the fire incident is already
closed being ACCIDENTAL in nature. XXXX
CBIC alleged:
 that UMC's claim was fraudulent because UMC's
Statement of Inventory showed that it had no
stocks in trade as of 31 December 1995, and
 that UMC's suspicious purchases for the year
1996 did not even amount to P25,000,000.00.
 UMC's GIS and Financial Reports further revealed
that it had insufficient capital, which meant UMC
could not afford the alleged P50,000,000.00
worth of stocks in trade
RTC: In favor of UMC | CA: In favor of CBIC
Issue: W/N UMC is entitled to claim from CBIC the full
coverage of its fire insurance policy.
HELD: NO. UMC not entitled to claim.
Burden of proof is the duty of any party to present evidence
to establish his claim or defense by the amount of evidence
required by law, which is preponderance of evidence in civil
cases.
Particularly, in insurance cases, once an insured makes out
a prima facie case in its favor, the burden of evidence shifts
to the insurer to controvert the insureds prima facie case.
In the present case, UMC established a prima facie case
against CBIC. CBIC does not dispute that UMCs stocks in
trade were insured against fire under the Insurance Policy
and that the warehouse, where UMCs stocks in trade were
stored, was gutted by fire on 3 July 1996, within the
duration of the fire insurance. However, since CBIC alleged
an excepted risk, then the burden of evidence shifted to
CBIC to prove such exception.
An insurer who seeks to defeat a claim because of an
exception or limitation in the policy has the burden of
establishing that the loss comes within the purview of the
exception or limitation. If loss is proved apparently within
a contract of insurance, the burden is upon the insurer to
establish that the loss arose from a cause of loss which is
excepted or for which it is not liable, or from a cause which
limits its liability.
In Uy Hu & Co. v. The Prudential Assurance Co., Ltd., the
Court held that where a fire insurance policy provides that
if the claim be in any respect fraudulent, or if any false
declaration be made or used in support thereof, or if any
fraudulent means or devices are used by the Insured or
anyone acting on his behalf to obtain any benefit under this
Policy, and the evidence is conclusive that the proof of
claim which the insured submitted was false and
fraudulent both as to the kind, quality and amount of the
goods and their value destroyed by the fire, such a proof
of claim is a BAR against the insured from recovering on the
policy even for the amount of his actual loss.
In the present case, as proof of its loss of stocks in trade
amounting to P 50,000,000.00, UMC submitted its Sworn
Statement of Formal Claim together with the following
documents:
(1) letters of credit and invoices for raw materials,
Christmas lights and cartons purchased;
(2) charges for assembling the Christmas lights; and
(3) delivery receipts of the raw materials.
However, the charges for assembling the Christmas lights
and delivery receipts could not support its insurance claim.
The Insurance Policy provides that CBIC agreed to insure
UMCs stocks in trade. UMC defined STOCK IN TRADE as
tangible personal property kept for sale or traffic. Applying
UMCs definition, only the letters of credit and invoices for
raw materials, Christmas lights and cartons may be
considered.
The invoices, however, cannot be taken as genuine. The
invoices reveal that the stocks in trade purchased for 1996
amounts to P20,000,000.00 which were purchased in one
month. Thus, UMC needs to prove purchases amounting to
P30,000,000.00 worth of stocks in trade for 1995 and prior
years. However, in the Statement of Inventory it submitted
to the BIR, which is considered an entry in official records,
34 UMC stated that it had no stocks in trade as of 31
December 1995.
It has long been settled that a false and material statement
made with an intent to deceive or defraud voids an
insurance policy.
The most liberal human judgment cannot attribute such
difference to mere innocent error in estimating or counting
but to a deliberate intent to demand from insurance
companies payment for indemnity of goods not existing at
the time of the fire. This constitutes the so-called fraudulent
claim which, by express agreement between the insurers
and the insured, is a ground for the exemption of insurers
from civil liability.
Country Bankers Insurance Corporation v. Lianga Bay and
Community Multi-Purpose Cooperative, Inc.
The petitioner is a domestic corporation principally
engaged in the insurance business while the respondent is
a duly registered cooperative judicially declared insolvent
and represented by the elected assignee, Cornelio Jamero.
The petitioner and the respondent entered into a contract
of fire insurance. Under Fire Insurance Policy No. F-1397,
the petitioner insured the respondent's stocks-in-trade
against fire loss, damage or liability during the period
starting from June 20, 1989 at 4:00 p.m. to June 20, 1990 at
4:00 p.m., for the sum P200,000.00.
On July 1, 1989, at or about 12:40 a.m., the respondent's
building located at Barangay Diatagon, Lianga, Surigao del
Sur was gutted by fire and reduced to ashes, resulting in the
total loss of the respondent's stocks-in-trade.
Due to the loss, the respondent filed an insurance claim
with the petitioner under its Fire Insurance Policy,
submitting: (a) the Spot Report of Pfc. Arturo V. Juarbal, INP
Investigator, dated July 1, 1989; (b) the Sworn Statement of
Jose Lomocso; and (c) the Sworn Statement of Ernesto
Urbiztondo.
The petitioner, however, denied the insurance claim on the
ground that, based on the submitted documents, the
building was set on fire by two (2) NPA rebels who wanted
to obtain canned goods, rice and medicines as provisions for
their comrades in the forest, and that such loss was an
excepted risk under paragraph No. 6 of the policy
conditions of Fire Insurance Policy No. F-1397, which
provides:
“This insurance does not cover any loss or damage
occasioned by or through or in consequence, directly or
indirectly, of any of the following occurrences, namely:
xxx xxx xxx
(d) Mutiny, riot, military or popular uprising, insurrection,
rebellion, revolution, military or usurped power.
Any loss or damage happening during the existence of
abnormal conditions … shall be deemed to be loss or
damage which is not covered by this insurance, except to
the extent that the Insured shall prove that such loss or
damage happened independently of the existence of such
abnormal conditions.”
Respondent filed an action for recovery of loss, damage or
liability against petitioner and the Trial Court ordered the
petition to pay the full value of the insurance.
Issue: Whether or not the insurance corporation is
exempted to pay based on the exception clause in the
insurance policy.
Held: NO. CBIC is required to pay the respondent.
The Supreme Court held that the insurance corporation has
the burden of proof to show that the loss comes within the
purview of the exception or limitation set-up. But the
insurance corporation cannot use a witness to prove that
the fire was caused by the NPA rebels on the basis that the
witness learned this from others.
ADMISSIBILITY; HEARSAY RULE; ELUCIDATED. — A witness
can testify only to those facts which he knows of his
personal knowledge, which means those facts which are
derived from his perception. Consequently, a witness may
not testify as to what he merely learned from others either
because he was told or read or heard the same. Such
testimony is considered hearsay and may not be received as
proof of the truth of what he has learned.
Such is the hearsay rule which applies not only to oral
testimony or statements but also to written evidence as
well. The hearsay rule is based upon serious concerns
about the trustworthiness and reliability of hearsay
evidence inasmuch as such evidence are not given under
oath or solemn affirmation and, more importantly, have
not been subjected to cross-examination by opposing
counsel to test the perception, memory, veracity and
articulateness of the out-of-court declarant or actor upon
whose reliability on which the worth of the out-of-court
statement depends. Thus, the Sworn Statements of Jose
Lomocso and Ernesto Urbiztondo are inadmissible in
evidence, for being hearsay, inasmuch as they did not take
the witness stand and could not therefore be cross-
examined. There are exceptions to the hearsay rule, among
which are entries in official records. To be admissible in
evidence, however, three (3) requisites must concur, to wit:
a) that the entry was made by a public officer, or by
another person specially enjoined by law to do so;
b) that it was made by the public officer in the
performance of his duties, or by such other
person in the performance of a duty specially
enjoined by law; and
c) that the public officer or other person had
sufficient knowledge of the facts by him stated,
which must have been acquired by him personally
or through official information.
The third requisite was not met in this case since no
investigation, independent of the statements gathered
from Jose Lomocso, was conducted by Pfc. Arturo V.
Juarbal.
FGU Insurance Corporation v. CA
G.R. No. 137775
DOCTRINE: It is a basic rule in insurance that the
carelessness and negligence of the insured or his agents
constitute no defense on the part of the insurer. This rule
however presupposes that the loss has occurred due to
causes which could not have been prevented by the
insured, despite the exercise of due diligence.
When evidence show that the insured's negligence or
recklessness IS SO GROSS AS TO BE SUFFICIENT TO
CONSTITUTE A WILLFUL ACT, the insurer must be
exonerated.
Facts: Anco Enterprises Company (ANCO), a partnership
between Ang Gui and Co To, was engaged in the shipping
business operating two common carriers: M/T ANCO
tugboat and D/B Lucio barge which has no engine of its
own, it could not maneuver by itself and had to be towed
by a tugboat for it to move from one place to another.
September 23 1979: San Miguel Corporation (SMC) shipped
from Mandaue City, Cebu, on board the D/B Lucio, for
towage by M/T ANCO:
 25,000 cases Pale Pilsen and 350 cases Cerveza
Negra consignee SMC’s Beer Marketing Division
(BMD)-Estancia Beer Sales Office, Estancia, Iloilo
 15,000 cases Pale Pilsen and 200 cases Cerveza
Negra - consignee SMC’s BMD-San Jose Beer Sales
Office, San Jose, Antique
The D/B Lucio was towed by the M/T ANCO all the way from
Mandaue City to San Jose, Antique. The vessels arrived at
San Jose, Antique, at about one o'clock in the afternoon of
30 September 1979. The tugboat M/T ANCO left the barge
immediately after reaching San Jose, Antique.
When the barge and tugboat arrived at San Jose, Antique,
the clouds over the area were dark and the waves were
already big. The arrastre workers unloading the cargoes of
SMC on board the D/B Lucio began to complain about their
difficulty in unloading the cargoes. SMC's District Sales
Supervisor requested ANCO's representative to transfer the
barge to a safer place because the vessel might not be able
to withstand the big waves.
ANCO's representative did not heed the request because he
was confident that the barge could withstand the waves.
Only the M/T ANCO was left at the wharf of San Jose,
Antique, as all other vessels already left the wharf to seek
shelter. With the waves growing bigger and bigger, only Ten
Thousand Seven Hundred Ninety (10,790) cases of beer
were discharged into the custody of the arrastre operator.
In the evening of 01 October 1979, the crew of D/B Lucio
abandoned the vessel because the barge's rope attached to
the wharf was cut off by the big waves. At around midnight,
the barge run aground and was broken and the cargoes of
beer in the barge were swept away.
As a result, ANCO failed to deliver to SMC's consignee
29,210 cases of Pale Pilsen and 550 cases of Cerveza Negra.
When SMC claimed against ANCO it stated that they agreed
that it would not be liable for any losses or damages
resulting to the cargoes by reason of fortuitous event and it
was agreed to be insured with FGU for 20,000 cases or
P858,500
ANCO filed 3rd party complaint against FGU .
FGU alleged that ANCO and SMC failed to exercise ordinary
diligence or the diligence of a good father of the family in
the care and supervision of the cargoes
RTC and CA: ANCO liable to SMC and FGU liable for 53% of
the lost cargoes
Issue: W/N FGU should be exempted from liability to
ANCO for the lost cargoes because of a fortuitous event
and negligence of ANCO
Held: YES. FGU is Exempted.
ANCO's representatives failed to exercise the extraordinary
degree of diligence required by the law to exculpate them
from liability for the loss of the cargoes.
First, ANCO admitted that they failed to deliver to the
designated consignee the Twenty Nine Thousand Two
Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred
Fifty (550) cases of Cerveza Negra.
Second, it is borne out in the testimony of the witnesses on
record that the barge D/B Lucio had no engine of its own
and could not maneuver by itself. Yet, the patron of ANCO's
tugboat M/T ANCO left it to fend for itself notwithstanding
the fact that as the two vessels arrived at the port of San
Jose, Antique, signs of the impending storm were already
manifest. As stated by the lower court, witness Mr.
Anastacio Manilag testified that the captain or patron of the
tugboat M/T ANCO left the barge D/B Lucio immediately
after it reached San Jose, Antique, despite the fact that
there were already big waves and the area was already
dark.
Petitioners asserted that the contention of respondents
SMC and FGU that "the crewmembers of D/B Lucio should
have left port at the onset of the typhoon is like advising the
fish to jump from the frying pan into the fire and an advice
that borders on madness."
The argument does not persuade. The records show that
the D/B Lucio was the only vessel left at San Jose, Antique,
during the time in question. The other vessels were
transferred and temporarily moved to Malandong, 5
kilometers from the wharf where the barge remained.
ANCO's arguments boil down to the claim that the loss of
the cargoes was caused by the typhoon Sisang, a fortuitous
event (caso fortuito), and there was no fault or negligence
on their part.
In this case, the calamity which caused the loss of the
cargoes was not unforeseen nor was it unavoidable. In fact,
the other vessels in the port of San Jose, Antique, managed
to transfer to another place. The D/B Lucio had no engine
and could not maneuver by itself. Even if ANCO's
representatives wanted to transfer it, they no longer had
any means to do so as the tugboat M/T ANCO has already
departed, leaving the barge to its own devices. The captain
of the tugboat should have had the foresight not to leave
the barge alone considering the pending storm.
One of the purposes for taking out insurance is to protect
the insured against the consequences of his own negligence
and that of his agents. Thus, it is a basic rule in insurance
that the carelessness and negligence of the insured or his
agents constitute no defense on the part of the insurer.
This rule however presupposes that the loss has occurred
due to causes which could not have been prevented by the
insured, despite the exercise of due diligence.
The question now is whether there is a certain degree of
negligence on the part of the insured or his agents that will
deprive him the right to recover under the insurance
contract. We say there is. When evidence show that the
insured's negligence or recklessness IS SO GROSS AS TO BE
SUFFICIENT TO CONSTITUTE A WILLFUL ACT, the insurer
must be exonerated.
The United States Supreme Court has made a distinction
between ordinary negligence and gross negligence or
negligence amounting to misconduct and its effect on the
insured's right to recover under the insurance contract.
According to the Court, while mistake and negligence of the
master or crew are incident to navigation and constitute a
part of the perils that the insurer is obliged to incur, such
negligence or recklessness must not be of such gross
character as to amount to misconduct or wrongful acts;
otherwise, such negligence shall release the insurer from
liability under the insurance contract.
In the case at bar, both the trial court and the appellate
court had concluded from the evidence that the
crewmembers of both the D/B Lucio and the M/T ANCO
were blatantly negligent.
Travellers Insurance & Surety Corp. v. Court of Appeals,
G.R. No. 82036
Facts: At about 5:30 oclock in the morning of July 20, 1980,
a 78-year old woman by the name of Feliza Vineza de
Mendoza was on her way to hear mass at the Tayuman
Cathedral. While walking along Tayuman corner Gregorio
Perfecto Streets, she was bumped by a taxi that was running
fast. Several persons witnessed the accident, among whom
were Rolando Marvilla, Ernesto Lopez and Eulogio Tabalno.
After the bumping, the old woman was seen sprawled on
the pavement. Right away, the good Samaritan that he was,
Marvilla ran towards the old woman and held her on his lap
to inquire from her what had happened, but obviously she
was already in shock and could not talk. At this moment, a
private jeep stopped. With the driver of that vehicle, the
two helped board the old woman on the jeep and brought
her to the Mary Johnston Hospital in Tondo. The victim was
brought to the U.S.T. Hospital where she expired at 9:00
oclock that same morning. Death was caused by traumatic
shock as a result of the severe injuries she sustained. The
evidence shows that at the moment the victim was bumped
by the vehicle, the latter was running fast, so much so that
because of the strong impact the old woman was thrown
away and she fell on the pavement.
Private respondent filed a complaint for damages against
Armando Abellon as the owner of the Lady Love Taxi and
Rodrigo Dumlao as the driver of the Lady Love taxicab that
bumped private respondent's mother. Subsequently,
private respondent amended his complaint to include
petitioner as the compulsory insurer of the said taxicab.
The trial court in its decision held Travellers Insurance to be
solidarily liable against private respondent with the taxicab
driver and operator.
Issue: Whether or not the trial court’s decision is proper.
Held:
No. The right of the person injured to sue the insurer of the
party at fault (insured), depends on whether the contract of
insurance is intended to benefit third persons also or on the
insured. And the test applied has been this:
 Where the contract provides for indemnity
against liability to third persons, then third
persons to whom the insured is liable can sue the
insurer.
 Where the contract is for indemnity against
actual loss or payment, then third persons cannot
proceed against the insurer, the contract being
solely to reimburse the insured for liability
actually discharged by him thru payment to third
persons, said third persons recourse being thus
limited to the insured alone.
While it is true that where the insurance contract provides
for indemnity against liability to third persons, such third
persons can directly sue the insurer, however, the direct
liability of the insurer under indemnity contracts against
third party liability does not mean that the insurer can be
held solidarily liable with the insured and/or the other
parties found at fault.
The liability of the insurer is based on contract; that of the
insured is based on tort.
We have certainly ruled with consistency that the
prescriptive period to bring suit in court under an insurance
policy, begins to run from the date of the insurers rejection
of the claim filed by the insured, the beneficiary or any
person claiming under an insurance contract.
This ruling is premised upon the compliance by the persons
suing under an insurance contract, with the indispensable
requirement of having filed the written claim mandated by
Section 384 of the Insurance Code before and after its
amendment.
Absent such written claim filed by the person suing under
an insurance contract, no cause of action accrues under
such insurance contract, considering that it is the rejection
of that claim that triggers the running of the one-year
prescriptive period to bring suit in court, and there can be
no opportunity for the insurer to even reject a claim if none
has been filed in the first place, as in the instant case.
When petitioner asseverates, thus, that no written claim
was filed by private respondent and rejected by petitioner,
and private respondent does not dispute such asseveration
through a denial in his pleadings, we are constrained to rule
that respondent appellate court committed reversible error
in finding petitioner liable under an insurance contract the
existence of which had not at all been proven in court. Even
if there were such a contract, private respondent's cause of
action can not prevail because he failed to file the written
claim mandated by Section 384 of the Insurance Code. He is
deemed, under this legal provision, to have waived his
rights as against petitioner-insurer.