Mayer Steel Pipe vs Court of Appeals273 SCRA 432 (1997)

FACTS:

Hong Kong Government Supplies Department contracted Mayer Steel Pipe Corporation to manufacture and supply various steel pipes and fittings. Prior to the shipping, Mayer insured these pipes and fittings against all risks with South Sea Surety and Insurance Co., Inc. and Charter Insurance Corp., with Industrial Inspection Inc. appointed as third-party inspector.

After examining the pipes and fittings, Industrial Inspection certified that they are in good order condition. However, when the goods reached Hong Kong , it was discovered that a substantial portion thereof was damaged.

The trial court found in favor of the insured. However, when the case was elevated to the CA, it set aside the decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action was barred under Sec. 3(6) of the Carriage of Goods by Sea Act (COGSA) since it was filed only on April 17, 1986, more than two years from the time the goods were unloaded from the vessel.

ISSUE: Whether or not the action is barred by prescription

SCRuling:

Sec. 3(6) of the Carriage of Goods by Sea Actthat the carrier and the ship shall be discharged from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. Under this provision, only the carriers liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurers liability is based not on the contract of carriage but on the contract of insurance.

An insurance contract is a contract whereby one party, for a consideration known as the premium, agrees to indemnify another for loss or damage which he may suffer from a specified peril. An all risks insurance policy covers all kinds of loss other than those due to willful and fraudulent act of the insured. Thus, when private respondents issued the all risks policies to Mayer, they bound themselves to indemnify the latter in case of loss or damage to the goods insured. Such obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.

Insurance Case Digest:

Guingon V. Del Monte, 20 SCRA 1043 (1967)

FACTS:

Julio Aguilar owner and operator of several jeepneys insured them with Capital Insurance& Surety Co., Inc.

February 20, 1961: Along the intersection of Juan Luna and Moro streets, City of Manila, thejeepneys operated by Aguilardriven by Iluminado del Monte and Gervacio Guingon bumped and Guingon died some days after

Iluminado del Monte was charged with homicide thru reckless imprudence and was penalized 4 months imprisonment

The heirs of GervacioGuingon filed an action for damages praying that P82,771.80 be paid to them jointly and severallyby the driver delMonte, owner and operator Aguilar, and the Capital Insurance & Surety Co., Inc.

CFI: Iluminado del Monte and JulioAguilar jointly and severally to pay plaintiffs thesum ofP8,572.95 as damages for the death of theirfather, plus P1,000.00 for attorney's fees plus costs

Capital Insurance and Surety Co., Inc. is hereby sentenced to pay P5,000plus P500 as attorney's fees and costs to be applied inpartial satisfaction of the judgment rendered against Iluminado del Monte and Julio Aguilar inthis case

ISSUE:1. W/N there astipulation pour autriu to enable that will enable theheirs to sue against Capital Insurance andSurety Co., Inc.? YES

HELD: Affirmed in toto.1. YES

policy: the insurer agreed to indemnify theinsured "against all sums . . . which theInsured shall become legally liable to pay in respect of: a. death of or bodily injury to any person . . .." - indemnity against liability

TEST:

Where the contract provides for indemnity against liabilityto 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 thirdpersons CANNOT proceed against the insurer, the contract being solely toreimburse the insured for liability actually discharged by him thru payment to third persons, said third persons' recourse being thus limited to the insured alone.

Insurance Case Digest: Bonifacio Bros., Inc. V. Mora (1967)G.R. No. L-20853 May 29, 1967Lessons Applicable:stipulation pour autrui(Insurance)

FACTS: Enrique Mora, owner of Oldsmobile sedan model 1956, mortgaged it to H.S. Reyes, Inc., with the condition that they would be the beneficiary of its insurance June 23, 1959: The sedan was insured withState Bonding & Insurance Co., Inc During the period of effectivity, the sedan met an accident and it wasappraised byBayne Adjustment Co. and repaired it with Bonifacio Bros. and the parts were supplied by Ayala Auto Parts Co. This was all done without the knowledge of H.S. Reyes. Enrique was billed P2,102.73 through Bayne. The insurance company drew a check deducting P100 for franchise and entrusted it to Bayne payable to Enrique or H.S. Reyes. Still unpaid, the sedan was delivered to Enrique without the Knowledge of H.S. Reyes Bonifacio Bros and Ayala Auto filed in the MTC on the theory that the insurance proceeds should be paid directly to them CFI affirmed MTC:H.S. Reyes, Inc. as having a better right

ISSUE: W/N there is privity between Bonifacio Bro and Ayala Auto against the insurance company

HELD: NO. Judgment affirmed GR:contracts take effect only between the parties thereto EX: some specific instances provided by law where the contract contains some stipulation in favor of a third person -stipulation pour autrui provision in favor of a third person not a party to the contract third person is allowed 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 stipulation pour autrui must be clearly expressed - none here "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit. stipulation merely establishes the procedure that the insured has to follow in order to be entitled to indemnity for repair a policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract of trust, expressed or implied between the insured and third person "loss" in insurance law embraces injury or damage The injury or damage sustained by the insured in consequence of the happening of one or more of the accidents or misfortune against which the insurer, in consideration of the premium, has undertaken to indemnify the insured

Sun Insurance Office, Ltd. v. CA and Emilio TanG.R. No. 89741 March 13, 1991Paras, J.

FACTS:Emilio Tan took from Sun Insurance Office a P300,000.00 property insurance policy to cover his interest in the electrical supply store of his brother. Four daysafter the issuance ofthe policy, the building was burned including the insured store. On August 20, 1983, Tan filedhis claimfor firelosswithSun InsuranceOffice,butonFebruary29, 1984, Sun Insurance Office wrote Tan denying the latters claim. On April 3, 1984, Tan wrote Sun Insurance Office, seeking reconsideration of the denial of his claim. Sun Insurance Office answered the letter, advising Tans counsel that theInsurers denial of Tans claim remained unchanged.

ISSUES:(1)WONthefilingofamotionforreconsiderationinterruptsthe12monthsprescriptive period tocontest the denial ofthe insurance claim; and(2)WON the rejection ofthe claim shall be deemed final only ofit contains words to the effect that the denial is final;

HELD:(1) No. In thiscase, Condition 27 of the Insurance Policy ofthe parties reads:27.Action or suit clause

- If a claim be made and rejected and an action or suit be notcommenced either in the Insurance Commission or in any court of competent jurisdiction within twelve (12) months from receipt of notice ofsuch rejection, or in case of arbitration taking place as provided herein, within twelve (12) months after due notice of the award made by the arbitrator or arbitrators or umpire, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable here under. As the terms are very clear and free from anydoubt or ambiguity whatsoever, it must be taken and understood in its plain, ordinary and popular sense.Tan, in his letter addressed to Sun Insurance Office dated April 3, 1984, admitted thathereceivedacopyoftheletterofrejectiononApril2,1984.Thus,the12-monthprescriptive period started to run from the said date of April 2, 1984, for such is the plain meaning and intention of Section 27 ofthe insurance policy.The condition contained in an insurance policy that claims must be presented within one year after rejection is not merely a procedural requirement but an important matter essential to a prompt settlement of claims against insurance companies as it demands that insurance suits be brought by the insured while the evidence as to the origin and cause ofdestruction have notyet disappeared. It is apparent that Section 27 of the insurance policy was stipulated pursuant to Section 63 of theInsurance Code, which states that:

Sec.63.Acondition,stipulationoragreementinanypolicyofinsurance, 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 also begs to ask, when does the cause of action accrue?

The insureds cause ofactionorhis rightto fileaclaimeither inthe InsuranceCommissionorin acourt ofcompetent jurisdiction commences from the time of the denial of his claim by the Insurer, eitherexpresslyorimpliedly.But therejectionreferred toshouldbeconstruedas the rejection in the first instance (i.e. at the first occasion or for the first time), not rejection conveyed in a resolution of a petition for reconsideration. Thus, to allow the filing of a motionfor reconsideration tosuspend therunningofthe prescriptiveperiodoftwelvemonths, a whole new body of rules on the matter should be promulgated so as to avoid any conflict that may be brought byit, such as:

a. whether the mere filing of a plea for reconsideration of a denial is sufficient or must itbe supported byarguments/affidavits/material evidence; b. how many petitions for reconsideration should be permitted?

(2) No. The Eagle Starcase cited by Tan to defend his theory that the rejection of the claim shall be deemed final only of it contains words to the effect that the denial is final is inapplicableinthe instantcase.Finalrejectionordenialcannotbetakentomeantherejection ofapetition forreconsideration. TheInsurance policy intheEagleStar

Case provides that the insured should file his claim, first, with the carrier and then with the insurer. The final rejection being referred to in said case is the rejection by the insurance company.

Interpretation of insurance contracts

SIMON DE LA CRUZ vs. THE CAPITAL INSURANCE AND SURETYCO., INC.G.R. No. L-21574, June 30,196617 SCRA 599

FACTS:Eduardo de la Cruz, the son of herein petitioner, was the holderofanaccidentinsurancepolicy.InconnectionwiththecelebrationoftheNewYear,theinsured,anon-professionalboxer, participated in a boxing contest. Inthe course of hisbout with another person, likewise a non-professional, of the same height, weight, and size, Eduardo slipped and was hit by hisopponentontheleftpartofthebackofthehead,causingEduardo to fall, with his head hitting the rope of the ring. The insured died with the cause of death reported as hemorrhage intercranial, left. The insurer refused to pay the proceeds ofthe policy on the ground that the death of the insured, caused by his participation in a boxing contest, was not accidental and, therefore, not covered by insurance.ISSUE: Whether or not the death of the insured is covered by the policyHELD:The terms accident and accidental as used in the insurancecontract,havenotacquiredanytechnicalmeaning,andareconstruedbythecourtsintheirordinaryandcommonacceptation. Thus, the terms have been taken to mean that which happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An accident is an event thatproceeds from an unknown cause and, therefore, not expected. Without the unintentional slipping ofthe deceased, perhaps he would not have received the blow in the head and would not have died. Boxing is attended with some risks of external injuries, but any injury received in the course of the game could be accidental. In boxing, as in otherequallyphysicallyrigoroussports,suchasbasketballorbaseball,deathisnotordinarilyanticipatedtoresult.If,therefore,iteverdoes,theinjuryordeathcanonlybeaccidentalor produced bysome unforeseen happening orevent as what occurred in this case.The insurer was liable.WHEREFORE,inviewoftheforegoing,considerations,the decision appealed from is hereby affirmed, with costs against appellant, so ordered

Finman General Assurance Corp. vs. Court of Appeals, 213 SCRA 493The terms accident and accidental are construed by the courts in their ordinary and common acceptation. The terms have been taken to mean that which happen by chance, without intention and design, and which is unexpected, unusual and unforeseen. Where the death or injury is not the natural or probable result of the insureds voluntary act, the resulting death is within the protection of the policies insuring against death or injury from accident.

GALLARDO VS MORALES

FACTS: The CFI of Manila sentenced defendant Morales to pay Gallardo the sum of Php 7,ooo. The sheriff of Manila, in enforcing the writ of execution, garnished and levied on Php 7,ooo out of Php 30,000 from Capital Insurance as a beneficiary under a personal accident policy issued by said company to defendant under a personal accident insurance policy issued by the said company to defendants husband who died by assassination. Defendant questioned the garnishment made arguing that the said proceeds same from a life insurance policy, thus, exempt from execution.

ISSUE:Whether or not a personal accident insurance which insures injuries and/or death as a result of assault or attempt thereat is a life insurance

HELD: Yes, the personal accident insurance policy is alife insurance policy. It is notdisputed that a life insurance policyis different from an accident insurance. However, when one of the risksinsured in the latter is thedeath of the insured byaccident, then the authorities are inclined o consider such insurance as alife insurance policy. Although intended primarily for indemnity for risks arising from accident and , likewise, insures against loss due to accidental causes or to the willful and criminal act, as long asthe nature if the insurance is to enable the head of the family to secure his widow and children from becoming a burden to the community, it should merit a liberal consideration