Professor Loss • Transfer of the claim after the loss is against public policy and therefore void because the rights of the parties are fixed after the loss. (Sec. 85, ICP) – Exceptions: (1) In cases of life insurance (2) Sec 175, ICP, w/c prohibits the transfer of a fire insurance policy to any person/company who acts as agent or otherwise represents the issuing company & declares such transfer void insofar as it may affect other creditors of the insured Cause of Loss • An insurer is liable for the loss if the peril insured against was the proximate cause of the loss, even though an uncontemplated peril was a remote cause of the loss – PROXIMATE CAUSE – a natural & continuous sequence, unbroken by any efficient interveing cause, produces an injury & without which the injury would not have occurred. – Example: X insured his warehouse against fire. An explosion caused by fire damaged the warehouse. The insurer is liable because the proximate cause of the loss was fire, the peril insured against. Proximate Cause extended to loss incurred while saving thing insured • Sec. 87, ICP • Insurer is liable where while saving the property from the peril insured against that would otherwise caused a loss, the thing insured is damaged. • Example: – Damage to property insured against fire caused by water during an attempt to save it from fire is generally regarded as resulting directly from the fire itself and the insurer is liable. Where excepted peril is the proximate cause • Where a peril is especially excepted in a contract of insurance, a loss, which would not have occurred but for such peril, is thereby excepted although the immediate cause of the loss was a peril which was not excepted. (Sec 88, ICP) • Insurer is not liable if the proximate cause is an excepted peril although the immediate peril is a peril not excepted. • Example: In a fire policy w/c excludes loss through explosion, if an explosion occurs first and causes fire w/c results in a loss, the insurer is NOT LIABLE. • Fire is an immediate cause but not a proximate cause Loss by the willful act or through connivance of the insured • An insurer is not liable for a loss caused by the willful act or through the connivance of the insured; but he is not exonerated by the negligence of the insured, or of the insurance agents or others. (Sec 89, ICP) • The insurer is exonerated from liability for a loss caused by the willful act or through the connivance of the insured. – Insurer cannot be liable on a fire policy where it is proven by preponderance of evidence that the insured had intentionally caused the burning of the insured property. Loss due to negligence of the Insured • Negligence of the insured or of others does not exonerate the insurer from liability. • Where the negligence is so gross as to a sufficient evidence of fraudulent intent or his act was so reckless as amounting to a willful act, the insurer will be exonerated. – Example: The insured could have extinguished the fire but refused to do so. Notice of Loss • Apprises the insurer of the occurrence of the loss • Purpose: to enable the insurer to make proper investigation and take such action as may be necessary to protect its interest • No particular form of notice is required; May be oral – EXCEPTION: in fire insurance, it is required that the notice be written & such be given w/o delay (Sec 90, ICP) • Notice should be given without unnecessary delay – “as soon as circumstances permitted the insured, in the exercise of reasonable diligence to communicate” Notice of Loss (Sec 90, ICP) • In case of loss upon an insurance against fire, an insurer is exonerated, if written notice thereof be not given to him by an insured, or some person entitled to the benefit of the insurance, without unnecessary delay. • For other non-life insurance, the Commissioner may specify the period for the submission of the notice of loss. Proof of Loss (Sec 91, ICP) • The evidence given to the insurer if the occurrence of the loss, particulars thereof and data necessary to enable the company to determine its liability & the amount thereof. • It is sufficient that the insured give the best evidence which he has in his power at that time and not evidence as necessary in a court of justice • Failure to serve notice or proof of loss as required by the policy may be excused when the circumstances are as such to make strict compliance with the requirement Preliminary Proof of Loss • If the policy requires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured, it is sufficient for the insured to use reasonable diligence to procure it, and in case of the refusal of such person to give it, then to furnish reasonable evidence to the insurer that such refusal was not induced by any just grounds of disbelief in the facts necessary to be certified or testified. (Sec 94, ICP) Fraudulent Claim of Loss • To protect itself from fraudulent claims, the policy usually contains a provision that it will be rendered void should the insured file any fraudulent claim of loss. • An honest misstatement or mistake or mere error of opinion or even a slight exaggeration by the insured will not exonerate the insurer. • There must be a positive proof of fraud, the burden of proving it is on the insurer. Waiver of Defects in Notice or Proof of Loss • When there are defects in the notice or preliminary proof of loss which the insured might remedy and which the insurer omits to specify to him, without unnecessary delay, as grounds for objection, said defects are waived by the insurer. (Sec 92, ICP) • Example: Where the policy requires an affidavit of loss under oath and the insurer accepts the unsubscribed affidavit without objecting thereto, there is a waiver of the defect in the affidavit. Waiver of Delay in giving Notice or Proof of Loss • Delay in the presentation to an insurer of notice or proof of loss is waived if caused by any act of him, or if he omits to take objection promptly and specifically upon that ground. (Sec 93, ICP) • Where notice or proof of loss was given but not within the time provided for by law or the policy, such delay is considered waived: – If caused by any act of the insurer; or – If he fails to object promptly to the delay. Rule on Claims Settlement (Sec 247 par (a), ICP) • No insurance company doing business in the Philippines shall refuse, without just cause, to pay or settle claims arising under coverages provided by its policies, nor shall any such company engage in unfair claim settlement practices. • Insurance companies are enjoined from: – Refusing without just cause, to pay or settle claims arising under their policies; or – Engaging in unfair claim settlement practices. Unfair Claims Settlement Practices 1. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage ender its policies; 2. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies; 3. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its policies; Unfair Claims Settlement Practices 4. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; 5. Compelling policyholders to institute suits to recover amounts due under its policies by offering without justifiable reason substantially less than the amount ultimately recovered in suits brought by them Payment of Proceeds of Life Insurance • The proceeds in life insurance shall be paid immediately upon maturity unless such shall be paid in installments or annuities. (Sec 248, ICP) • In case of policy maturing by death of the insured, the proceeds shall be paid within 60 days after presentation of claim and filing of proof of death. (Sec 248, ICP) – After said date, the beneficiary shall be entitled to interests unless the refusal to pay is based on the ground that the claim is fraudulent. – Fernandez v. National Life Ins. Co. 105 Phil 59 Payment of Proceeds in Non- Life Insurance • The payment of proceeds in a non-life insurance policy shall be paid within 30 days after proof of loss is received by the insurer and after ascertainment of the loss or damage is made either by agreement between the insured and insurer or by arbitration. (Sec 249, ICP) – Bay View Hotel Inc v. Ker & Co. Ltd. 116 SCRA 327 • if such ascertainment is not had or made within sixty (60) days after such receipt by the insurer of the proof of loss, then the loss or damage shall be paid within ninety (90) days after such receipt. (Sec 249, ICP) Effect of Refusal to Pay Proceeds • Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board. (Secs 248 & 249, ICP) • EXCEPTION: failure or refusal to pay is based on the ground that the claim is fraudulent Liability of Insurer for Refusal to Pay • It shall be the duty of the Commissioner or the Court, as the case may be, to make a finding as to whether the payment of the claim of the insured has been unreasonably denied or withheld. • If found liable, the insurer will be adjudged to pay damages (Sec 250, ICP) – Damages = attorney’s fees + expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment + interest of twice the ceiling prescribed by the Monetary Board of the amount of the claim due the insured • There is prima facie evidence of unreasonable delay if the insurer fails to pay any claim within the time prescribed in Section 248 & 249. Prohibited Acts (Sec 251, ICP) • It is unlawful to: “(a) Present or cause to be presented any fraudulent claim for the payment of a loss under a contract of insurance; and “(b) Fraudulently prepare, make or subscribe any writing with intent to present or use the same, or to allow it to be presented in support of any such claim. Advancement or Loan of money by Insurer after Loss • A written agreement between the insured and the insurer whereby after the loss the insurer will advance or loan the amount representing the loss repayable only out of money collected by the insured on account of the loss is valid. • Such loan is not a payment of insurance and the insurer is not subrogated to the insured's rights. – Galutera v. Maersk Line 11 SCRA 251 Right of Subrogation • After payment of loss by the insurance company, it is subrogated to the rights of the insured against third persons whose negligence or wrongful acts caused the loss. – Compania Maritima v. Insurance Co. of North America 12 SCRA 213 – Fireman’s Fund Ins. Co. v. Jamilla & Co. Inc. 70 SCRA 323 – F.F. Cruz & Co. v. CA 164 SCRA 731 • The subrogated insurer cannot recover more than what the insured can recover from third persons causing the loss. Right of Subrogation • The insurer is subrogated to whatever rights the insured has against his solidary debtor under Art. 1217 of the NCC which gives to a solidary debtor who has paid the entire obligation the right to be reimbursed by his co-debtors for the share which corresponds to each. – Malayan Insurance Co. v. CA 165 SCRA 536 – Pan Malayan Insurance Corp. v. CA 184 SCRA 54 Right of Subrogation • If the insured property is destroyed or damaged through the negligence of a party other than the assured, the insurer, upon payment to the assured will be subrogated tit he rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. – Coastwise Lighterage Corporation v. CA 245 SCRA 796 – Cebu Shipyard & Engineering Works Inc. v. William Lines Inc. 306 SCRA 762 END OF LECTURE
G.R. No. 161803. February 4, 2008. DY TEBAN TRADING, INC., Petitioner, vs. JOSE CHING And/Or Liberty Forest, Inc. and Cresilito M. LIMBAGA, Respondents