LEGAL WRITING

CASE DIGESTS
Submitted to PROF. DAVID AQUINO

JOHN STEPHEN T. HUMIWAT

1-16-2015

HUMIWAT, JOHN STEPHEN T. HUMIWAT

Legal Wiritng | Case Digest | Saturday | 10:00 AM -12:00 NN

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Filipino Merchants Insurance Co., Inc. v. Court of Appeals

G.R. No. 85141, 179 SCRA 638, 28 November 1989
Choa Tiek Seng (Choa) consigned a shipment of 600 metric tons of fishmeal in new gunny
bags of 90 kilos each from Bangkok, Thailand to Manila and insured in December 1976 such goods
with Filipino Merchants Insurance, Co., Inc. (FMI, Inc.) under a marine insurance policy which
contained an "all risks" clause which excludes from its coverage loss, damage, or expense
proximately caused by delay or inherent vice or nature of the subject-matter insured.
The goods were loaded on board the vessel SS Bougainville and unloaded unto the arrastre
contractor E. Razon, Inc. (ER) at the Port of Manila on or about 11 December 1976. Upon a joint
survey conducted by the surveyor of ERs and ships agent, it was discovered that only 59.940
metric tons were actually imported and a total of 227 bags in bad order condition.
Consequently, Choa made a formal claim against FMI, Inc. However, FMI, Inc. refused to
pay the claim arguing that an "all risks" marine policy has a technical meaning in insurance -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 Choa, 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.
ISSUE: Whether the insured under a marine assurance policy which contains an all risk clause
is required to prove the occurrence of fortuitous event, casualty, or accidental cause to which the
loss is attributable in order to sustain a claim under such policy?
RULING:
Generally, the burden of proof is upon the insured to show that a loss arose from a covered
peril, but under an "all risks" policy the burden is not on the insured to prove the precise cause of
loss or damage for which it seeks compensation. The insured under an "all risks insurance policy"
has the initial burden of proving that the cargo was in good condition when the policy attached and
that the cargo was damaged when unloaded from the vessel; thereafter, the burden then shifts to
the insurer to show the exception to the coverage. xxx
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.

HUMIWAT, JOHN STEPHEN T. HUMIWAT

Legal Wiritng | Case Digest | Saturday | 10:00 AM -12:00 NN

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Traders Insurance & Surety Co. v. Golangco

G.R. No. L-6442, 95 Phil. 826, 21 September 1954

Tomas Lianco (Lianco) and the Archbishop of Manila entered into a contract of lease on a
parcel of land owned by Church. As lessee, Lianco erected a building on the leased portion of the
subject land. Thereafter, Lianco transferred ownership of this building to Kaw Eng Si, who later
transferred the same to Juan Golangco (Golangco). It bears stressing that these transfers were made
without the consent of the Archbishop of Manila.
As a consequence thereof, the Archbishop of Manila filed an ejectment case against Lianco,
who appears to occupy the building premises with others and pays rent to Golangco. Consequently,
the right of Golangco to receive rent on the building was judicially recognized in a case decided
between Lianco and others occupying the premises pursuant to a compromise agreement. The
Archbishop did not exercise his option to question Golangcos rights as lessee.
On 7 April 1949, Golangco applied for fire insurance with Traders Insurance and Surety
Co. (Traders) which provides "that all insurance covered under said policy, includes the 'rent or
other subject matter of insurance in respect of or in connection with any building or any property
contained in any building."
On 5 June 1949, the building premises was burned. Thereafter, Golangco claimed from
Traders the proceeds of the insurance policy. Traders insurance refused to pay the insurance for
the rent averring that Golangco has no insurable interest.
ISSUE: In view of the judgment in ejectment case, whether Golangco had insurable interest on
the subject property?
RULING: The ejectment case filed by the Archbishop against Lianco did not remove nor destroy
plaintiffs insurable interest: first, because plaintiff was not a party thereto and cannot be bound
thereby; xxx so that, as far as plaintiff Golangco was concerned, his right to the premises and to
the rentals thereon continued to exist on June 5, 1949 when the fire took place.

HUMIWAT, JOHN STEPHEN T. HUMIWAT

Legal Wiritng | Case Digest | Saturday | 10:00 AM -12:00 NN

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Antonina Lampano v. Placida Jose

G.R. No. L-9401, 30 Phil. 537, March 30, 1915
Mariano R. Barretto (Barretto), constructed a house for Placida A. Jose (Jose) for a fee.
Subsequently, Jose sold the house to Antonina Lampano (Lampano). Thereafter, the house was
destroyed by fire.
At the outset, during the interim of completion of the house and destruction, Barretto took
out an insurance policy upon it in his own name, with the consent of Jose. After its destruction,
Barretto collected P3,600 from the insurance company.
On the basis of an alleged verbal agreement, between her and Jose, to the effect that the
latter agreed to deliver to her the insurance policy on the building, Lampano filed an action to
claim the proceeds of the abovementioned insurance policy against Barretto and Jose.
Contrariwise, Jose denied that she agreed to transfer the policy of insurance to Lampano
and that the insurance was entirely for the personal account of and in the exclusive interest of
Barretto. Barretto also denied any obligation to Lampano.
Judgment was entered against Barretto. From this judgment Barretto appealed. On appeal,
the court found that: (1) there was no privity of contract between the Lampano and the Barretto;
(2) the insurance policy was held in trust for Jose, and that any balance, resulting after deducting
the amount owing upon the construction contract and paid for premiums, belonged to her. Thus,
Barreto filed this petition.
Parenthetically, Jose made no claim against Barretto for the insurance money, nor for any
participation therein.
ISSUE: Under the circumstances, to whom among (a) Barreto [the contractor who insured the
property] or (c) the Lampano [the buyer/subsequent owner of the property] should the proceeds
of the insurance policy be awarded?
RULING: [In effect, the Supreme Court recognized the right of Barretto (the contractor who
insured the property) to the entirety of the proceeds of the insurance. The Supreme Court succinctly
explained its reason for such ruling in the following manner, viz.:]
xxx [Lampanos] right to recover this amount of the insurance rests upon an alleged verbal
agreement between herself and Placida A. Jose to the effect that the latter agreed, at the time of
the purchase and sale of the house, to transfer to her the insurance policy, the policy being held in
trust by Barretto for the benefit of the Jose woman. xxx Placida A. Jose denies that she agreed to
transfer the policy to the plaintiff, and the deed of purchase and sale makes no mention of such an

HUMIWAT, JOHN STEPHEN T. HUMIWAT

Legal Wiritng | Case Digest | Saturday | 10:00 AM -12:00 NN

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agreement. xxx The trial court did not find that such an agreement existed and we think [Lampano]
has failed to establish this verbal agreement.
If Barretto had an insurable interest in the house, he could insure this interest for his sole
protection. The policy was in the name of Barretto alone. It was, therefore, a personal contract
between him and the company and not a contract which ran with the property. According to this
personal contract the insurance policy was payable to the insured without regard to the nature and
extent of his interest in the property, provided that he had, as we have said, an insurable interest at
the time of the making of the contract, and also at the time of the fire. Where different persons
have different interests in the same property, the insurance taken by one in his own right and in his
own interest does not in any way insure to the benefit of another. This is the general rule prevailing
in the United States and we find nothing different in this jurisdiction. xxx
xxx

xxx

xxx

In the case at bar Barretto assumed the responsibility for the insurance. The premiums, as
we have indicated, were paid by him without any agreement or right to recoup the amount paid
therefor should no loss result to the property. It would not, therefore, be in accordance with the
law and his contractual obligations to compel him to account for the insurance money, or any par
thereof, to the plaintiff, who assumed no risk whatever.
That Barretto had an insurable interest in the house, we think there can be no question. He
construed the building, furnishing all the materials and supplies, and insured it after it had been
completed xxx.

HUMIWAT, JOHN STEPHEN T. HUMIWAT

Legal Wiritng | Case Digest | Saturday | 10:00 AM -12:00 NN

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Froilan Lopez vs. Salvador and Benita Del Rosario

G.R. No. L-19189, 44 Phil. 98, November 27, 1922
Benita del Rosario (Mrs. Del Rosario), the owner of a bonded warehouse, secured
insurance on the warehouse and its contents with several insurance companies. All, except for one
of, the policies were made in the name of Mrs. Del Rosario.
Meanwhile, among the persons who had copra deposited in warehouse was Froilan Lopez
(Lopez), the holder of fourteen warehouse receipts. The warehouse receipts provided insurance on
goods stored therein. Fees relating to the insurance of such goods were paid by Lopez on May 18,
1920, but not thereafter.
The warehouse and its contents were destroyed by fire on June 6, 1920. The warehouse
was a total loss, while of the copra stored therein, only an amount equal to P49,985 was salvaged.
After claiming the proceeds of her insurance policies from several insurance companies, Mrs. Del
Rosario seemed to have satisfied all of the persons who had copra stored in her warehouse with
the exception of Lopez, who contended that he should receive not a centavo less than P88,595.43.
On the other hand, Mrs. Del Rosario rebuts Lopezs claim on the ground that Lopez lost
his rights to proceeds of insurance covering the goods under his warehouse receipts when he failed
to pay the insurance fees provided for in such warehouse receipts.
ISSUE: Whether failure to pay the insurance fees provided for in a warehouse receipt would
deprive the depositor from his right to recover the proceeds of such insurance?
RULING: [Lopezs] rights to the insurance money have not been forfeited by failure to pay the
insurance provided for in the warehouse receipts. A preponderance of the proof does not
demonstrate that the plaintiff ever ordered the cancellation of his insurance with the defendant.
Nor is it shown that the plaintiff ever refused to pay the insurance when the bills were presented
to him, and that notice of an intention to cancel the insurance was ever given the plaintiff.

HUMIWAT, JOHN STEPHEN T. HUMIWAT

Legal Wiritng | Case Digest | Saturday | 10:00 AM -12:00 NN

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Spouses Nilo and Stella Cha, et al. vs. Court of Appeals, et. al.
G.R. No. 124520, 277 SCRA 690, 18 August 1997
Spouses Nilo Cha and Stella Uy-Cha (Spouses Cha), as lessees, entered into a lease
contract with private respondent CKS Development Corporation (CKS), as lessor, on 5 October
1988. The contract prohibits the lessees to insure against fire the chattels, merchandise, textiles,
goods and effects placed at any stall or store or space in the leased premises without first obtaining
the written consent and approval of the lessor. Further, the lease contract provided that if the
lessee obtain(s) the insurance thereof without the consent of the LESSOR then the policy is deemed
assigned and transferred to the LESSOR for its own benefit.
Notwithstanding the above stipulation in the lease contract, Spouses Cha insured against
loss by fire the merchandise inside the leased premises with the United Insurance Co., Inc. (United)
without the written consent of private respondent CKS.
On the day that the lease contract was to expire, fire broke out inside the leased premises.
When CKS learned of the insurance earlier procured by the Spouses Cha, it wrote the insurer
(United) a demand letter asking that the proceeds of the insurance contract (between the Cha
spouses and United) be paid directly to CKS, based on its lease contract with the Spouses Cha.
United refused to pay CKS. Hence, the CKS filed a complaint against the Spouses Cha and
United.
ISSUE: Whether the provisions of the lease contract is valid and has binding effect on the insurer?
RULING: The contract is void. A non-life insurance policy such as the fire insurance policy taken
by petitioner-spouses over their merchandise is primarily a contract of indemnity. Insurable
interest in the property insured must exist at the time the insurance takes effect and at the time the
loss occurs. xxx In such a case, the contract of insurance is a mere wager which is void under
Section 25 of the Insurance Code xxx
ISSUE: Whether the CKS should be granted the insurance proceeds?
RULING: No. xxx CKS cannot, under the Insurance Code a special law be validly a
beneficiary of the fire insurance policy taken by the petitioner-spouses over their merchandise.
This insurable interest over said merchandise remains with the insured, the Cha spouses. The
automatic assignment of the policy to CKS under the provision of the lease contract previously
quoted is void for being contrary to law and/or public policy. The proceeds of the fire insurance
policy thus rightfully belong to the spouses Nilo Cha and Stella Uy-Cha (herein co-petitioners).
The insurer (United) cannot be compelled to pay the proceeds of the fire insurance policy to a
person (CKS) who has no insurable interest in the property insured.