Philippine Home Assurance Corp (PHAC) vs. CA Facts:Eeastern Shipping Lines Inc. (ESLI) loaded on board a vessel (SS Easter Explorer) several shipment of 2 boxes of internal combustion engine parts, 334 bags of ammonium chloride, 200 bags of glue and garments for carriage to several consignees. While the vessel was off Okinawa, Japan, a small fire was detected on the acetylene cylinder located in the accommodation area near the engine room. This resulted in a flash of flame throughout the accommodation area. The vessel was abandoned. All the cargoes of ESLI were delivered to their respective consignees but with corresponding additional freight and salvage charges. All the charges were paid by PHAC. Thus, PHAC, as subrogee of the consignees now seeks recovery from ESLI alleging that they were negligent. ESLI argues, among others, that the fire was a fortuitous event. The trial court and the CA ruled in favour o ESLI. Hence this petition for review with the Supreme Court.  Issue:WON the fire was a fortuitous event.WON ESLI should be held liable for the additional charges. Held: No, the fire cannot be considered as a fortuitous event. Thus, it is presumed that ESLI was negligent and should be held liable to PHAC. In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost always arises from some act of man or by human means.It cannot be an act of God unless caused by lightning or a natural disaster or casualty not attributable to human agency. There is strong evidence indicating that the acetylene cylinder caught fire because of the fault and negligence of respondent ESLI, its captain and its crew:(1) The acetylene cylinder which was fully loaded should not have been stored in the accommodation area near the engine room where the heat generated therefrom could cause the acetylene cylinder to explode by reason of spontaneous combustion;(2) Respondent ESLI should have known that by storing the acetylene cylinder in the accommodation area supposed to be reserved for passengers, it unnecessarily exposed its passengers to grave danger and injury.(3) The fact that the acetylene cylinder was checked, tested and examined and subsequently certified as having complied with the safety measures and standards by qualified experts before it was loaded in the vessel only shows to a great extent that negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship.Bachrach v. British American Insurance Co. - Insurance Proceeds17 PHIL 555Facts:

>  Bachrach insured properties of its general furniture shop with British.  The properties were subsequently destroyed by fire.>  Bachrach claims from the insurance company.  The claim was denied on the ff grounds:o    The policy was allegedly forfeited because the insured stored varnishes and paints within the premises;o    Insured stored gasoline in the building; ando    Bachrach executed a chattel mortgage on the properties insured without the consent of the insured.

Issue:Whether or not Bachrach can claim the proceeds of the policy.

Held:Yes.The policy was NOT forfeited due to the strong paints and varnishes.  There was no express provision pertaining to it and these paints and varnishes are incidental to the business of the insured to keep the furniture in a saleable condition.  The gasoline stored within the premises was in the reservoir of the car and thus does not violate any provision in the policy.  There is no express prohibition against the execution of a chattel mortgage on the property insured.Tan Chuco vs Yorkshire Fire and Life Insurance Company

Facts: Tan Chuco files a claim under an open fire

insurance policy for the alleged loss by fire of certain stock of goods insured by Yorkshire.

CFI: Evidence did not sustain Yorkshire’s allegation that Tan Chuco or his agents had intentionally and fraudulently set the building on fire

o But was of the opinion that the Tan Chuco failed to establish the value of the goods he alleges were destroyed by the fire.

o He submitted fabricated written evidence and false testimony in support of his claim that the insured goods actually destroyed were worth more than the total amount of the insurance thereon.

o CFI was of the opinion that the submitted inventory was not genuine and was fraudulently prepared.

o Tan Chuco’s representatives and employees who were in the building when the fire took place, not only made no effort to extinguish the fire, or to save the goods from destruction, but also failed to save any of the books or papers connected with the business of which he was in charge of—those could have corroborated with the data in the alleged inventory

o The inventory submitted was dated January 1, not of custom to Tan Chuco who were of Chinese decent.

o No explanation was offered which would account for the remarkable conduct of Tan Chuco’s manager in preparing an inventory two months after his employer had left for China and then instead of forwarding such inventory to his principal by mail, entrusted it for transmission to a friend who had not even left for China when the fire took place.

o Indication that Tan Chuco had been experiencing adverse business conditions before the fire

Issue: Whether or not Tan Chuco may claim under the fire insurance policy?

Held: NO.

We think that the action of the trial court in rejecting the proof offered by Tan Chuco as to the amount of the loss must be sustained.

The contract of fire insurance being a contract of indemnity, Tan Chuco is only entitled to recover the amount of actual loss sustained by him. There being no express valuation in the policy, the judgment was properly entered against him for lack of satisfactory proof of the amount of loss.

Rule: In the absence of express valuation in a fire insurance policy, the insured is only entitled to recover the amount of actual loss sustained and the burden is upon him to establish such amount. MICO vs Arnaldo

G.R. No. L-67835 October 12, 1987

Lessons Applicable: Authority to Receive Payment/Effect of Payment (Insurance)Laws Applicable: Article 64, Article 65, Section 77, Section 306 of the Insurance Code

FACTS: June 7, 1981: Malayan insurance co., inc.

(MICO)  issued to Coronacion Pinca, Fire Insurance Policy for her property effective July 22, 1981, until July 22, 1982

October 15,1981: MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca

December 24, 1981: payment of the premium for Pinca was received by Domingo Adora, agent of MICO

January 15, 1982: Adora remitted this payment to MICO,together with other payments

January 18, 1982: Pinca's property was completely burned

February 5, 1982: Pinca's payment was returned by MICO to Adora on the ground that her policy had

been cancelled earlier but Adora refused to accept  it and instead demanded for payment

Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein petition was filed on July 2, 1981, or nineteen days later, there is no question that it is tardy by four days.

Insurance Commission: favored Pinca MICO appealedISSUE: W/N MICO should be liable because its agent Adora was authorized to receive it

HELD: YES. petition is DENIED SEC. 77.    An insurer is entitled to payment of the

premium as soon as the thing is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issuedby an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.

SEC. 306.   xxx  xxx   xxx

Any insurance company which delivers to an insurance agant or insurance broker a policy or contract ofinsurance shall be demmed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon. Payment to an agent having authority to receive or

collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal.

SEC. 64.    No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:

(a)    non-payment of premium;

(b)    conviction of a crime arising out of acts increasing the hazard insured against;

(c)    discovery of fraud or material misrepresentation;

(d)    discovery of willful, or reckless acts or commissions increasing the hazard insured against;

(e)    physical changes in the property insured which result in the property becoming uninsurable;or

(f)     a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code.

As for the method of cancellation, Section 65 provides as follows:

SEC. 65.    All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based.

A valid cancellation must, therefore, require concurrence of the following conditions:

(1)    There must be prior notice of cancellation to the insured; 

(2)    The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned;

(3)    The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy; 

(4)    It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based.  All MICO's offers to show that the cancellation was

communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section." without more

It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981. Instead, she would have asked for a new insurance, effective on that date and until one year later, and so taken advantage of the extended period.

Incidentally, Adora had not been informed of the cancellation either and saw no reason not to accept the said payment 

Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO sought to return it to Adora only on February 5, 1982, after it presumably had learned of the occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly suspicious

Harding vs Commercial Union In February 1916, Mrs. Harding applied for car insurance for a Studebaker she received as a gift from her husband. She was assisted by Smith, Bell, and Co. which was the duly authorized representative (insuranceagent) of Commercial Union Assurance Company in the Philippines. The car’s value was estimated with the help of an experienced mechanic (Mr. Server) of the Luneta Garage. The car was bought by Mr.

Harding for P2,800.00. The mechanic, considering some repairs done, estimated the value to be at P3,000.00. This estimated value was the value disclosed by Mrs. Harding to Smith, Bell, and Co. She also disclosed that the value was an estimate made by Luneta Garage (which also acts as an agent for Smith, Bell, and Co).In March 1916, a fire destroyed the Studebaker. Mrs. Harding filed an insurance claim but Commercial Union denied it as it insisted that the representations and averments made as to the cost of the car were false; and that said statement was a warranty. Commercial Union also stated that the car does not belong to Mrs. Harding because such a gift [from her husband] is void under the Civil Code.ISSUE: Whether or not Mrs. Harding is entitled to the insurance claim.HELD: Yes. Commercial Union is not the proper party to attack the validity of the gift made by Mr. Harding to his wife.The statement made by Mrs. Harding as to the cost of the car is not a warranty. The evidence does not prove that the statement is false. In fact, the evidence shows that the cost of the car is more than the price of theinsurance. The car was bought for P2,800.00 and then thereafter, Luneta Garage made some repairs and body paints which amounted to P900.00. Mr. Server attested that the car is as good as new at the time the insurancewas effected.Commercial Union, upon the information given by Mrs. Harding, and after an inspection of the automobile by its examiner, having agreed that it was worth P3,000, is bound by this valuation in the absence of fraud on the part of the insured. All statements of value are, of necessity, to a large extent matters of opinion, and it would be outrageous to hold that the validity of all valued policies must depend upon the absolute correctness of such estimated value.