Insurance Case Digests E

28. Heirs of Ildefonso Coscolluela Sr vs Rico Gen Ins (1989)Facts:The petitioner, Heirs of Ildefonso Coscoluella, was the registered owner of an Isuzu pick-up truck that was insured with Rico General Insurance Corporation (Rico Gen) for P100,000. But an incident occurred at Hacienda Puyas, Barangay Blumentritt, Murcia, Negros Occidental where the vehicle was fired upon by a group of unidentified men. Four persons also died at the same time. As a result of the incident, the insured vehicle was rendered unserviceable. When petitioner sought to collect from Rico Gen, the latter refused payment, pointing out to an exception clause, which include an indirect consequence of rebellion, insurrection or civil commotion.Petitioner sued Rico Gen. The RTC dismissed the case based on Rico Gens motion to dismiss based on lack of cause of action. Thereafter, the RTC refused to transmit the records of the case, saying that petitioners remedy should be petition for review by way of certiorari and not a notice of appeal. But what petitioner did was to file a petition for certiorari under Rule 65 before the CA. The CA affirmed the the dismissal, adding that an ordinary appeal was the proper remedy and not a special civil action for certioari.[footnoteRef:1] [1: The Supreme Court later on took note of this absurdity. The CA reprimanded petitioner when the RTC was the one that prevented petitioner from availing of an ordinary appeal. ]

Issue: Whether or not petitioner has a cause of action.Held: Yes. At the onset, it should be noted that Rico Gens motion to dismiss based on lack of cause of action had the effect of hypothetically admitting the facts stated by petitioner. We do not find anything in the complaint which does not deserve admission by the motion since there are no "conclusions or interpretations of law" nor "allegations of fact the falsity of which is subject to judicial notice." It is clear that the complaint does no more and no less than state simply that the van was damaged due to the firing by unidentified armed men. Since the complaint does not explicitly state nor intimate civil strife which private respondent insists to be the cause of the damage, the motion to dismiss cannot go beyond the admission of the facts stated and inferences reasonably deducible from them. Any other assertion by the private respondent is subject to proof. Meanwhile, the sufficiency of the petitioner's cause of action has been shown since, admitting the facts alleged, a valid judgment can be rendered. The private respondent's invocation of the exceptions clause in the insurance policy as the basis for its non-liability and the consequent dismissal of the complaint is without merit. We also reiterate the established rule that when the terms of an insurance contract contain limitations on liability, the court "should construe them in such a way as to preclude the insurer from non-compliance with his obligations." A policy of insurance with a narration of exceptions tending to work a forfeiture of the policy shall be interpreted liberally in favor of the insured and strictly against the insurance company or the party for whose benefit they are inserted. 29. Pacific Timber Corp vs CA (1982)Facts: Pacific Timber Export Corporation (Pacific) secured a temporary insurance from the Workmens Insurance Co. for its exportation from Quezon Province to Okinawa and Tokyo, Japan. The insurance company issued a Cover Note insuring the cargo. Thereafter, the insurance company issued two regular marine cargo policies. But it was discovered that some of the logs were missing during the loading operations. Apparently, when the logs were alongside the vessel, bad weather developed resulting in 75 pieces of log to break loose from each other, with only 45 being saved. The insurance company refused to pay for the loss, informing the Insurance Commissioner that it was denying Pacifics claim on the ground that the cover note is null and void for lack of valuable consideration.Issue: Whether or not the cover note is null and void for lack of valuable consideration.Held: No. Petitioner contends that the Cover Note was issued with a consideration when, by express stipulation, the cover note is made subject to the terms and conditions of the marine policies, and the payment of premiums is one of the terms of the policies. From this undisputed fact, We uphold petitioner's submission that the Cover Note was not without consideration for which the respondent court held the Cover Note as null and void, and denied recovery therefrom. The fact that no separate premium was paid on the Cover Note before the loss insured against occurred, does not militate against the validity of petitioner's contention, for no such premium could have been paid, since by the nature of the Cover Note, it did not contain, as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums. As a logical consequence, no separate premiums are intended or required to be paid on a Cover Note. This is a fact admitted by an official of respondent company, Juan Jose Camacho, in charge of issuing cover notes of the respondent company (p. 33, tsn, September 24, 1965). At any rate, it is not disputed that petitioner paid in full all the premiums as called for by the statement issued by private respondent after the issuance of the two regular marine insurance policies, thereby leaving no account unpaid by petitioner due on the insurance coverage, which must be deemed to include the Cover Note. If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued, the purpose and function of the Cover Note would be set at naught or rendered meaningless, for it is in a real sense a contract, not a mere application for insurance which is a mere offer.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 not for loss during operations anymore, but for loss during transit, the logs having already been safely placed aboard. This would make no difference, however, insofar as the liability on the cover note is concerned, for the number or volume of logs lost can be determined independently as in fact it had been so ascertained at the instance of private respondent itself when it sent its own adjuster to investigate and assess the loss, after the issuance of the marine insurance policies. The adjuster went as far as submitting his report to respondent, as well as its computation of respondent's liability on the insurance coverage. This coverage could not have been no other than what was stipulated in the Cover Note, for no loss or damage had to be assessed on the coverage arising from the marine insurance policies. For obvious reasons, it was not necessary to ask petitioner to pay premium on the Cover Note, for the loss insured against having already occurred, the more practical procedure is simply to deduct the premium from the amount due the petitioner on the Cover Note. 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 non-payment 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. This is how the cover note as a "binder" should legally operate otherwise, it 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.30. Great Pacific Life Assurance Co vs CA (1979)Facts: Ngo Hing filed an application with the Great Pacific for a twenty-year endowment policy in the amount of P50,000.00 on the life of his one-year old daughter Helen. He supplied the essential data which petitioner Mondragon, the Branch Manager, wrote on the form. The latter paid the annual premium the sum of P1,077.75 going over to the Company, but he retained the amount of P1,317.00 as his commission for being a duly authorized agent of Pacific Life. Upon the payment of the insurance premium, the binding deposit receipt was issued Ngo Hing. Likewise, petitioner Mondragon handwrote at the bottom of the back page of the application form his strong recommendation for the approval of the insurance application. Then Mondragon received a letter from Pacific Life disapproving the insurance application. The letter stated that the said life insurance application for 20-year endowment plan is not available for minors below seven years old, but Pacific Life can consider the same under the Juvenile Triple Action Plan, and advised that if the offer is acceptable, the Juvenile Non-Medical Declaration be sent to the company. The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner Mondragon to private respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote back Pacific Life again strongly recommending the approval of the 20-year endowment insurance plan to children, pointing out that since the customers were asking for such coverage. Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the insurance, but having failed in his effort, he filed the action for the recovery before the Court of First Instance of Cebu, which ruled against him.Issue: Whether the binding deposit receipt constituted a temporary contract of the life insurance in question.Held: No. The receipt was intended to be merely a provisional insurance contract. Its perfection was subject to compliance of the following conditions: (1) that the company shall be satisfied that the applicant was insurable on standard rates; (2) that if the company does not accept the application and offers to issue a policy for a different plan, the insurance contract shall not be binding until the applicant accepts the policy offered; otherwise, the deposit shall be refunded; and (3) that if the company disapproves the application, the insurance applied for shall not be in force at any time, and the premium paid shall be returned to the applicant. The receipt is merely an acknowledgment that the latter's branch office had received from the applicant the insurance premium and had accepted the application subject for processing by the insurance company. There was still approval or rejection the same on the basis of whether or not the applicant is "insurable on standard rates." Since Pacific Life disapproved the insurance application of respondent Ngo Hing, the binding deposit receipt in question had never become in force at any time. The binding deposit receipt is conditional and does not insure outright.31. RCBC vs CA (1998)Facts:Goyu & Sons applied for credit facilities/accommodations with RCBC. It was granted for an initial amount of P30 million which later on increased to P117 million. As security, Goyu executed two REMs and two chattel mortgages in favor of RCBC. It also committed itself to insure the mortgaged property with Malayan Insurance Co I (Mico). Goyu obtained in its name a total of ten insurance policies from Mico. Thereafter, Alchester Insurance Agency Inc, the agent where Goyu obtained the Malayan insurance policies, issued nine endorsements in favor of RCBC seemingly upon instructions of Goyu.Later on, Goyus factory buildings in Valenzuela was gutted by fire. When it claimed from Mico, the latter denied 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 against Mico. It was later revealed that Goyu had other creditors that obtained their respective writs of attachments from various courts covering an aggregate amount of P14,938,080.23, and the RTC ordered that the proceeds of the ten insurance policies be deposited with the court. Hence, Mico deposited the amount of around P50 million with the RTC.Goyu invoked Sec. 53 of the Insurance Code which provides: The insurance proceeds shall be applied exclusively to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy.The RTC ruled in favor of Goyu and ordered Mico and RCBC to pay damages. The CA sustained the findings of the RTC with respect to the liability of Mico and RCBC. Issue: whether or not RCBC, as mortgagee, has any right over the insurance policies taken by Goyu, the mortgagor, in case of the occurrence of loss.Held: Yes. 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 nine 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 GOYUs intention of obtaining insurance coverage in compliance with its undertaking in the mortgage contracts with RCBC, and verily, 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.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. The Court considered 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 GOYUs 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 MICOs 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.Significantly, the Court notes that out of the 10 insurance policies subject of this case, only 8 of them appear to have been subject of the endorsements prepared and delivered by Alchester for and upon instructions of GOYU. The proceeds of the 8 insurance policies endorsed to RCBC aggregate to P89,974,488.36. Being exclusively payable to RCBC by reason of the endorsement by Alchester to RCBC, which we already ruled to have the force and effect of an endorsement by GOYU itself, these 8 policies can not be attached by GOYUs other creditors up to the extent of the GOYUs outstanding obligation in RCBCs favor. Section 53 of the Insurance Code ordains that the insurance proceeds of the endorsed policies shall be applied exclusively to the proper interest of the person for whose benefit it was made. In this case, to the extent of GOYUs obligation with RCBC, the interest of GOYU in the subject policies had been transferred to RCBC effective as of the time of the endorsement. These policies may no longer be attached by the other creditors of GOYU, like Alfredo Sebastian in the present G.R. No. 128834, which may nonetheless forthwith be dismissed for being moot and academic in view of the results reached herein. Only the two other policies amounting to P19,646,224.92 may be validly attached, garnished, and levied upon by GOYUs other creditors. To the extent of GOYUs outstanding obligation with RCBC, all the rest of the other insurance policies above-listed which were endorsed to RCBC, are, therefore, to be released from attachment, garnishment, and levy by the other creditors of GOYU.32. Aboitiz Shipping Corp vs Philamgen Insurance Co (1989)Facts: Marinduque Mining Industrial Corp (Marinduque) shipped on board SS Arthur Maersk from Boston a shipment of one skid carton parts for valves. When the cargo arrived in Manila, it was received and deposited in the office of Aboitiz Shipping Corp in Manila for transshipment to Nonoc Island. But thereafter, the cargo was pilfered on a rainy night at the Aboitiz terminal. Of the total value of around $42,000, only $7,000 remains. Philamgen paid Marinduque P246,430 as insurer of the cargo. And thereafter, Philamgen sued Aboitiz.Aboitiz contended that the insurance policy covering the cargo was issued at the time when the cargo was already pilfered and that the coverage under the Marine Policy No. 100105 PAG never began and that Marine Policy No. 100184 did not attach to the shipment, because the shipment was never loaded on any vessel of the defendant.The RTC ruled in favor of Aboitiz, the CA reversed. Hence, this petition.Issue: Whether or not Aboitiz is liable.Held: Yes. The records of this case show that private respondent executed a continuous and open insurance coverage covering goods of Marinduque imported into and exported from the Philippines which took effect after September 1, 1975, as contained in Marine Open Policy No. 100184. A similar insurance coverage was also executed by petitioner in favor of Marinduque for all its goods shipped or moved within the territorial limits of the Philippines also effective after September 1, 1975 and contained in Marine Open Policy No. 100185. The questioned shipment is covered by this continuing open insurance coverage from the time it was loaded aboard the SS Arthur Maersk in Boston, U.S.A. to the time it was delivered to the possession of petitioner at its offices at Pier 4 in Manila until it was pilfered when the great majority of the cargo was lost on July 3, 1980. The trial court in dismissing the complaint apparently relied on Marine Risk Note No. 017545 which was issued by private respondent only on July 28, 1980 after the shipment in question was already pilfered. Obviously the trial court mistook said Marine Risk Note as an insurance policy when it is not. It is only an acknowledgment or declaration of the private respondent confirming the specific shipment covered by its Marine Open Policy, the evaluation of the cargo and the chargeable premium. The contention of the petitioner that it could not be liable for the pilferage of the cargo as it was stolen even before it was loaded on its vessel is untenable. Petitioner received the cargo when it arrived in Manila at its offices at Pier 4, North Harbor and it was while in its possession and before loading it in its vessel that the cargo was pilfered. Its liability is clear.33. Development Insurance Corp vs IAC (1986)Facts: Private respondent Philippine Union Realty Development Corporations building was insured by petitioner Development Insurance Corp. A fire occurred in the building of the private respondent and it sued for recovery of damages from the petitioner on the basis of an insurance contract between them. The petitioner allegedly failed to answer on time and was declared in default by the trial court. A judgment of default was subsequently rendered on the strength of the evidence submitted ex parte by the private respondent, which was allowed full recovery of its claimed damages. On learning of this decision, the petitioner moved to lift the order of default, invoking excusable neglect, and to vacate the judgment by default. Its motion was denied. It then went to the respondent court, which affirmed the decision of the trial court in toto. The petitioner is now before us, hoping presumably that it will fare better here than before the trial court and the Intermediate Appellate Court. We shall see.The only remaining question to be settled is the amount of the indemnity due to the private respondent under its insurance contract with the petitioner. This will require an examination of this contract, Policy No. RY/F-082, as renewed, by virtue of which the petitioner insured the private respondent's building against fire for P2,500,000.00. The petitioner argues that since at the time of the fire the building insured was worth P5,800,000.00, the private respondent should be considered its own insurer for the difference between that amount and the face value of the policy and should share pro rata in the loss sustained. Accordingly, the private respondent is entitled to an indemnity of only P67,629.31, the rest of the loss to be shouldered by it alone. In support of this contention, the petitioner cites Condition 17 of the policy, which provides: If the property hereby insured shall, at the breaking out of any fire, be collectively of greater value than the sum insured thereon then the insured shall be considered as being his own insurer for the difference, and shall bear a ratable proportion of the loss accordingly. Every item, if more than one, of the policy shall be separately subject to this condition.Issue: Whether or not petitioners contention is tenable.Held: No! there is no evidence on record that the building was worth P5,800,000.00 at the time of the loss; only the petitioner says so and it does not back up its self-serving estimate with any independent corroboration. On the contrary, the building was insured at P2,500,000.00, and this must be considered, by agreement of the insurer and the insured, the actual value of the property insured on the day the fire occurred. This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed. The Court notes that Policy RY/F-082 is an open policy and is subject to the express condition that: Open Policy This is an open policy as defined in Section 57 of the Insurance Act. In the event of loss, whether total or partial, it is understood that the amount of the loss shall be subject to appraisal and the liability of the company, if established, shall be limited to the actual loss, subject to the applicable terms, conditions, warranties and clauses of this Policy, and in no case shall exceed the amount of the policy. As defined in the aforestated provision, which is now Section 60 of the Insurance Code, "an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss. " This means that the actual loss, as determined, will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not exceed the face value of the policy. The actual loss has been ascertained in this case and, to repeat, this Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily. There is no such showing. Hence, applying the open policy clause as expressly agreed upon by the parties in their contract, we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of P508,867.00.34. Eagle Star Insurance Co vs Yu (1955)Facts: Atkin, Kroll & Co., loaded on the S. S. Roeph Silverlight owned and operated by Leigh Hoegh & Co., A/S, of San Francisco California, 14 bales of assorted underwear valued at P8,085.23 consigned to Chia Yu in the City of Manila. The shipment was insured against all risks by Eagle Star Ins. Co. of San Francisco, California, under a policy issued to the shipper and by the latter assigned to the consignee. The vessel arrived in Manila on February 10, 1946, and on March 4 started discharging its cargo into the custody of the Manila Terminal Co., Inc., which was then operating the arrastre service for the Bureau of Customs. But the 14 bales consigned to Chia Yu only 10 were delivered to him as the remaining 3 could not be found. Three of those delivered were also found damaged to the extent of 50 per cent. Chia Yu claimed indemnity for the missing and damaged bales. But the claim was declined, first, by the carrier and afterward by the insurer, whereupon Chia Yu brought the present action against both, including their respective agents in the Philippines on Nov. 16, 1948.Both interposed the defense of prescription. The RTC and CA ruled in favor of plaintiff. Issue: Whether or not the action has prescribed.Held: As to the shipping company, yes it has prescribed for being filed more than one year (more than two years). As to the insurer, no. The case for the insurer stands on a different footing, for its claim of prescription is founded upon the terms of the policy and not upon the bill of lading. Under our law the time limit for bringing a civil action upon a written contract is ten years after the right of action accrues. (Sec. 43, Act 190; Art. 1144, New Civil Code.) But counsel for the insurer claim that this statutory in the policy: No suit action on this Policy, for the recovery of any claim, shall be sustainable in any Court of law or equity unless the insured shall have fully complied with all the terms and conditions of this Policy nor unless commenced with twelve (12) months next after the happening of the loss . . . To this we cannot agree.SEC. 61-A. Any condition, stipulation or agreement in any policy of insurance, limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues, is void.It may perhaps be suggested that the policy clause relied on by the insurer for defeating plaintiff's action should be given the construction that would harmonize it with section 61-A of the Insurance Act by taking it to mean that the time given the insured for bringing his suit is twelve months after the cause of action accrues. But the question then would be: When did the cause of action accrue? On that question we agree with the court below that plaintiff's cause of action did not accrue until his claim was finally rejected by the insurance company. This is because, before such final rejection, there was no real necessity for bringing suit. As the policy provides that the insured should file his claim, first, with the carrier and then with the insurer, he had a right to wait for his claim to be finally decided before going to court. The law does not encourages unnecessary litigation. At this junction it should be explained that while the decision of the Court of Appeals states that the claim against the insurance company "was finally rejected o April 22, 1947, as correctly concluded by the court below," it is obvious from the context and we find it to be a fact that the date meant was April 22, 1948, for this was the date when, according to the finding of the trial court, the insurance company in London rejected the claim.35. ACCFA vs Alpha Insurance (1968)Facts: -To guarantee the Asingan Farmers' Cooperative Marketing Association, Inc. (FACOMA) against loss on account of personal dishonesty, amounting to larceny/estafa of its Secretary-Treasurer, Ladines, appellee Alpha Insurance & Surety Company had issued, on 14 February 1958, its bond with Ladines as principal and the appellee as solidary surety. On the same date, the Asingan FACOMA assigned its rights to the appellant, Agricultural Credit Cooperative and Financing Administration (ACCFA) with approval of the principal and the surety. During the effectivity of the bond, Ladines converted and misappropriated, to his personal benefit, some of the FACOMA funds, of which a part belonged to the ACCFA. Upon discovery of the loss, ACCFA immediately notified in writing the survey company on 10 October 1958, and presented the proof of loss within the period fixed in the bond; but despite repeated demands the surety company refused and failed to pay. ACCFA filed suit against appellee on 30 May 1960. Defendant Alpha Insurance & Surety Co., Inc., (now appellee) moved to dismiss the complaint as it was filed more than one year after plaintiff made claim for loss, contrary to the eighth condition of the bond At first, the Court of First Instance denied dismissal; but, upon reconsideration, the court reversed its original stand, and dismissed the complaint on the ground that the action was filed beyond the contractual limitation period. Hence, this appeal.Issue: WON the provision of a fidelity bond that no action shall be had or maintained thereon unless commenced within one year from the making of a claim for the loss upon which the action is based, is valid, in view of Section 61-A of the Insurance Act invalidating stipulations limiting the time for commencing an action thereon to less than one year from the time the cause of action accrues?Held: No. A fidelity bond is, in the nature of a contract of insurance against loss from misconduct, and is governed by the same principles of interpretation. Consequently, the condition of the bond in question, limiting the period for bringing action is subject to the provisions of Section 61-A of the Insurance Act (No. 2427), as amended by Act 4101 of the pre-Commonwealth Philippine Legislature, prescribing that: SEC. 61-A: A condition, stipulation or agreement in any policy of insurance, limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues is void. - Since a "cause of action" requires, as essential elements, not only a legal right of the plaintiff and a correlative obligation of the defendant but also "an act or omission of the defendant in violation of said legal right," the cause of action does not accrue until the party obligated refuses, expressly or impliedly, to comply with its duty (in this case, to pay the amount of the bond). -The year for instituting action in court must be reckoned from the time of appellee's refusal to comply with its bond. It cant be counted from the creditor's filing of the claim of loss, for that does not import that the surety company will refuse to pay. -In so far, therefore, as condition eight of the bond requires action to be filed within one year from the filing of the claim for loss, such stipulation contradicts the public policy expressed in Section 61-A of the Philippine Insurance Act. - Condition eight of the bond, therefore, is null and void, and the appellant is not bound to comply with its provisions. The discouraging of unnecessary litigation must be deemed a rule of public policy, considering the unrelieved congestion in the courts. -As a consequence, the action may be brought within the statutory period of limitation for written contracts (New Civil Code, Article 1144).36. Travellers Insurance & Surety Corp vs CA (1997)Facts: A 78-year-old woman named Feliza Mendoza was on her way to hear mass at the Tayuman Cathedral when she was ran over by a speeding taxi driven by Rodrigo Dumlao and owned by Armando Abellon. She died as a result of the accident.Thereafter, her son, Vicente Mendoza, sued Armando Abellon and Rodrigo Dumalo for damages. He amended his complaint to include petitioner Travellers Insurance as the compulsory insurer of the said taxicab.Petitioner mainly contends that it did not issue an insurance policy as compulsory insurer of the Lady Love Taxi and that, assuming arguendo that it had indeed covered said taxicab for third-party liability insurance, private respondent failed to file a written notice of claim with petitioner as required by Section 384 of P.D. No. 612, otherwise known as the Insurance Code.The RTC and CA ruled against petitioner. Issue: Whether or not petitioners contention is meritorious.Held: Yes. It is significant to point out at this juncture that the right of a third person to sue the insurer depends on whether the contract of insurance is intended to benefit third persons also or only the insured. Since private respondent failed to attach a copy of the insurance contract to his complaint, the trial court could not have been able to apprise itself of the real nature and pecuniary limits of petitioners liability. More importantly, the trial court could not have possibly ascertained the right of private respondent as third person to sue petitioner as insurer of the Lady Love taxicab because the trial court never saw nor read the insurance contract and learned of its terms and conditions.Apparently, the trial court did not distinguish between the private respondents cause of action against the owner and the driver of the Lady Love taxicab and his cause of action against petitioner. The former is based on torts and quasi-delicts while the latter is based on contract. Confusing these two sources of obligations as they arise from the same act of the taxicab fatally hitting private respondents mother, and in the face of overwhelming evidence of the reckless imprudence of the driver of the Lady Love taxicab, the trial court brushed aside its ignorance of the terms and conditions of the insurance contract and forthwith found all three - the driver of the taxicab, the owner of the taxicab, and the alleged insurer of the taxicab - jointly and severally liable for actual, moral and exemplary damages as well as attorneys fees and litigation expenses. This is clearly a misapplication of the law by the trial court, and respondent appellate court grievously erred in not having reversed the trial court on this ground.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.The above principles take on more significance in the light of the counterallegation of petitioner that, assuming arguendo that it is the insurer of the Lady Love taxicab in question, its liability is limited to onlyP50,000.00, this being its standard amount of coverage in vehicle insurance policies. It bears repeating that no copy of the insurance contract was ever proffered before the trial court by the private respondent, notwithstanding knowledge of the fact that the latters complaint against petitioner is one under a written contract. Thus, the trial court proceeded to hold petitioner liable for an award of damages exceeding its limited liability of P50,000.00. This only shows beyond doubt that the trial court was under the erroneous presumption that petitioner could be found liable absent proof of the contract and based merely on the proof of reckless imprudence on the part of the driver of the Lady Love taxicab that fatally hit private respondents mother.With regard to the issue of failure to file a claim. 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 respondents 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.37. Coastwise Lighterage Corp vs CA and Philamgen (1995)Facts: Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole "two inches wide and twenty-two inches long". As a consequence, the molasses at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine General Insurance Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost. Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to the claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals ruled against Coastwise.Issues: (1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with Pag-asa, and whether it exercised the required degree of diligence; (2) Whether Philgen was subrogated into the rights of the consignee against the carrier.Held: (1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier, but remained a common carrier and was still liable as such. The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows then that the presumption of negligence that attaches to common carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence.(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any private of contract or upon written assignment of, claim. It accrues simply upon payment of the insurance claim by the insurer.38. Servicewide Specialists Inc vs CA (1996)Facts: On August 1, 1983, private respondent spouses Ricardo and Elisa Trinidad purchased one unit Isuzu Gemini car, 1983 model, yellow in color, from Autoworld Sales Corporation. The price was P98,156.00 payable in 24 equal monthly installments of P4,089.00 every 15th of each month beginning September 1983 to August 15, 1985. To secure payment thereof, the Trinidads executed on the same date a promissory note and a deed of chattel mortgage on the subject car in favor of Autoworld Sales Corporation. Autoworlds interest eventually passed to petitioner Servicewide Specialists Inc. On November 18, 1985, private respondent Ricardo Trinidad received a demand letter from petitioner dated November 8, 1985 stating that an assignment of credit had been made by Filinvest in its favor and that the Trinidads had not paid two successive installments on the car which had matured on July 15 and August 15, 1985. No mention was made in the letter that Filinvest had paid insurance premiums to Perla Compania de Seguros to insure the car against loss and damage corresponding to two years, i.e., from July 29, 1984 to July 29, 1985 and July 29, 1985 to July 29, 1986. Private respondents were also never informed by Filinvest that their installment payments on the car were converted to premium payments on the insurance.After informing private respondents that they failed to pay the last two consecutive monthly installments, petitioner demanded that either they pay the whole remaining balance of P6,977.67, including accrued interest, or return possession of the car to petitioner. When private respondents refused to pay the amount demanded or to return the car, petitioner filed an action for replevin and damages with the Metropolitan Trial Court, Branch V, Manila. The sole issue resolved by the trial court was whether private respondents were liable for the payment of the insurance premiums effected by petitioner.RTC and CA ruled against Servicewide.Issue: Whether or not petitioner should have applied the installment payments made by private respondents for the payment of the car to the payment of the insurance premiums without prior notice to private respondents.Held: No. While it is true that the Chattel Mortgage does not say that notice to the mortgagor of the renewal of the insurance premium by the mortgagee is necessary, at the same time, there is no provision that authorizes petitioner to apply the payments made to it for the payment of the chattel to the payment of the said premiums. From the records of the case, it is clear that private respondents had fully paid for the car. This fact was never rebutted by petitioner; it was the insurance premiums pertaining to the two-year period from July 29, 1984 to July 29, 1986 that petitioner claims were not paid. Both the Regional Trial Court and the Court of Appeals found that before the mortgagee (petitioner) may effect the renewal of insurance, two conditions must be met: (1) Default by the mortgagor (private respondents) in effecting renewal of the insurance and (2) failure to deliver the policy with endorsement to petitioner. The Court notes an additional element of the provisions regarding the renewal of the insurance; specifically, that petitioner was under no obligation to effect the same. In other words, petitioner as mortgagee was not duty-bound to renew the insurance in the event that private respondents failed to do so; it was merely optional on its part. The question now arises whether private respondents were in default for failing to have the car covered by insurance for the period in question. Private respondents claim that the car was duly covered and the Court finds no evidence on record showing this assertion to be false. Petitioner has averred, however, that the insurance taken by private respondents was only for third-party liability and not the comprehensive insurance required. If petitioner was aware that the insurance coverage was inadequate, why did it not inform private respondent about it? After all, since petitioner was under no obligation to effect renewal thereof, it is but logical that it should relay to private respondents any defect of the insurance coverage before itself assuming the same. Furthermore, even if the car were not covered with the proper insurance, there is nothing in the provisions of the Chattel Mortgage that authorizes petitioner to apply previous payments for the car to the insurance.