PACIFIC TIMBER EXPORT CORPORATION vs CA and WORKMEN'S
INSURANCE COMPANY, INC.
G.R. No. L-38613 | February 25, 1982 | DE CASTRO, J.
Doctrine: Where a policy is delivered without requiring payment of the
premium, the presumption is that a credit was intended and policy is valid.
Facts:
Pacific Timber secured temporary insurance from Workmens Insurance for
its exportation of 1,250,000 board feet of Philippine Lauan and Apitong logs
to be shipped from Quezon Province to Okinawa and Tokyo, Japan.
Workmens Insurance issued a cover note insuring the cargo of the
petitioner subject to its terms and conditions.
The 2 marine policies bore the numbers 53 HO 1032 and 53 HO 1033.
Policy No. 53 H0 1033 was for 542 pieces of logs equivalent to 499,950
board feet. Policy No. 53 H0 1033 was for 853 pieces of logs equivalent to
695,548 board feet. The total cargo insured under the two marine policies
consisted of 1,395 logs, or the equivalent of 1,195.498 bd. ft.
After the issuance of the cover note, but before the issuance of the 2
marine policies, some of the logs intended to be exported were lost
during loading operations in the Diapitan Bay.
While the logs were alongside the vessel, bad weather developed resulting
in 75 pieces of logs which were rafted together to break loose from each
other. 45 pieces of logs were salvaged, but 30 pieces were verified to have
been lost or washed away as a result of the accident.
Pacific Timber informed Workmens about the loss of 32 pieces of logs
during loading of SS woodlock.
Pacific Timber claimed for insurance to the value of P19,286.79.
Workmens requested an adjustment company to assess the damage. It
submitted its report, where it found that the loss of 30 pieces of logs is
not covered by the 2 marine policies but within the Cover Note 1010
insured for $70,000.00.
The adjustment company submitted a computation of Workmen's probable
liability on the loss sustained by the shipment, in the total amount of
P11,042.04.
Workmens wrote Pacific Timber denying the latter's claim on the ground
that the entire shipment of logs covered by the 2 marine policies were
received in good order at their point of destination. The said loss may
be considered as covered under the Cover Note because the said Note had
become null and void by virtue of the issuance of the 2 Marine Policies.
Petitioner raised the question beforef the Insurance Commissioner. The
Insurance Commissioner ruled in favor of indemnifying Pacific Timber. The
company added that the cover note is null and void for lack of valuable
consideration. The trial court ruled in petitioners favor while the CA
dismissed the case. Hence this appeal.
Issues:
1. WON the cover note was null and void for lack of valuable
consideration | NO
2. WON the Insurance company was absolved from responsibility due to
unreasonable delay in giving notice of loss | NO
Decision:
1. The fact that no separate premium was paid on the Cover Note before the
loss occurred does not militate against the validity of the contention even if
no such premium was paid. All Cover Notes do not contain particulars of the
shipment that would serve as basis for the computation of the premiums.
Also, no separate premiums are required to be paid on a Cover Note.
The petitioner paid in full all the premiums, hence there was no account unpaid
on the insurance coverage and the cover note. If the note is to be treated as a
separate policy instead of integrating it to the regular policies, the purpose of
the note would be meaningless. It is a contract, not a mere application for
insurance.
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 for loss during transit, because the logs were
safely placed aboard.
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.
2. The defense of delay cant be sustained. The facts show that instead of
invoking the ground of delay in objecting to petitioner's claim of recovery on the
cover note, the insurer never had this in its mind. It has a duty to inquire when
the loss took place, so that it could determine whether delay would be a valid
ground of objection.
There was enough time for insurer to determine if petitioner was guilty of delay
in communicating the loss to respondent company. It never did in the Insurance
Commission. Waiver can be raised against it under Section 84 of the Insurance
Act.