FIRST DIVISION
GAISANO
CAGAYAN, INC. G.R. No.
147839
Petitioner,
Present:
PANGANIBAN,
C.J.
(Chairperson)
- versus - *YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO,
SR., and
CHICO-NAZARIO,
JJ.
INSURANCE
COMPANY OF
Respondent.
x
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- - - - - - - - - - -x
D E C I S I O N
AUSTRIA-MARTINEZ,
J.:
Before
the Court is a petition for review on certiorari
of the Decision[1] dated
October 11, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 61848 which set
aside the Decision dated August 31, 1998 of the
Regional Trial Court, Branch 138, Makati (RTC) in Civil Case No. 92-322
and upheld the causes of action for damages of Insurance Company of North
America (respondent) against Gaisano Cagayan, Inc. (petitioner); and the CA
Resolution dated April 11, 2001 which denied petitioner’s motion for
reconsideration.
The
factual background of the case is as follows:
Intercapitol
Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. Levi Strauss
(Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks
owned by Levi Strauss & Co.. IMC and
LSPI separately obtained from respondent fire insurance policies with book debt
endorsements. The insurance policies
provide for coverage on “book debts in connection with ready-made clothing
materials which have been sold or delivered to various customers and dealers of
the Insured anywhere in the
1.
Warranted that the Company shall not be
liable for any unpaid account in respect of the merchandise sold and delivered
by the Insured which are outstanding at the date of loss for a period in excess
of six (6) months from the date of the covering invoice or actual delivery of
the merchandise whichever shall first occur.
2.
Warranted that the Insured shall submit
to the Company within twelve (12) days after the close of every calendar month
all amount shown in their books of accounts as unpaid and thus become
receivable item from their customers and dealers. x x x[4]
x x x x
Petitioner is a customer and dealer
of the products of IMC and LSPI. On
On P2,119,205.00 while with LSPI it was P535,613.00;
that respondent paid the claims of IMC and LSPI and, by virtue thereof,
respondent was subrogated to their rights against petitioner; that respondent
made several demands for payment upon petitioner but these went unheeded.[5]
In its Answer with Counter Claim
dated July 4, 1995, petitioner contends that it could not be held liable
because the property covered by the insurance policies were destroyed due to
fortuities event or force majeure; that
respondent’s right of subrogation has no basis inasmuch as there was no breach
of contract committed by it since the loss was due to fire which it could not
prevent or foresee; that IMC and LSPI never communicated to it that they
insured their properties; that it never consented to paying the claim of the
insured.[6]
At the pre-trial conference the
parties failed to arrive at an amicable settlement.[7] Thus, trial on the merits ensued.
On
Dissatisfied, petitioner appealed to
the CA.[9] On
WHEREFORE,
in view of the foregoing, the appealed decision is REVERSED and SET ASIDE and a
new one is entered ordering defendant-appellee Gaisano Cagayan, Inc. to pay:
1.
the amount of P2,119,205.60 representing the amount paid by the
plaintiff-appellant to the insured Inter Capitol Marketing Corporation, plus
legal interest from the time of demand until fully paid;
2.
the amount of P535,613.00 representing the amount paid by the
plaintiff-appellant to the insured Levi Strauss Phil., Inc., plus legal
interest from the time of demand until fully paid.
With
costs against the defendant-appellee.
SO
ORDERED.[10]
The CA held that the sales invoices
are proofs of sale, being detailed statements of the nature, quantity and cost
of the thing sold; that loss of the goods in the fire must be borne by
petitioner since the proviso contained in the sales invoices is an
exception under Article 1504 (1) of the Civil Code, to the general rule that if
the thing is lost by a fortuitous event, the risk is borne by the owner of the
thing at the time the loss under the principle of res perit domino; that petitioner’s obligation to IMC and LSPI is
not the delivery of the lost goods but the payment of its unpaid account and as
such the obligation to pay is not extinguished, even if the fire is considered
a fortuitous event; that by subrogation, the insurer has the right to go
against petitioner; that, being a fire insurance with book debt endorsements,
what was insured was the vendor’s interest as a creditor.[11]
Petitioner filed a motion for
reconsideration[12] but it was denied by the CA in its
Resolution dated
Hence, the present petition for
review on certiorari anchored on the
following Assignment of Errors:
THE COURT OF APPEALS
ERRED IN HOLDING THAT THE INSURANCE IN
THE INSTANT CASE WAS ONE OVER CREDIT.
THE COURT OF APPEALS
ERRED IN HOLDING THAT ALL RISK OVER THE SUBJECT GOODS IN THE INSTANT CASE HAD
TRANSFERRED TO PETITIONER UPON DELIVERY THEREOF.
THE COURT OF APPEALS
ERRED IN HOLDING THAT THERE WAS AUTOMATIC SUBROGATION UNDER ART. 2207 OF THE
CIVIL CODE IN FAVOR OF RESPONDENT.[14]
Anent
the first error, petitioner contends that the insurance in the present case
cannot be deemed to be over credit since an insurance “on credit” belies not
only the nature of fire insurance but the express terms of the policies; that
it was not credit that was insured since respondent paid on the occasion of the
loss of the insured goods to fire and not because of the non-payment by
petitioner of any obligation; that, even if the insurance is deemed as one over
credit, there was no loss as the accounts were not yet due since no prior
demands were made by IMC and LSPI against petitioner for payment of the debt
and such demands came from respondent only after it had already paid IMC and
LSPI under the fire insurance policies.[15]
As
to the second error, petitioner avers that despite delivery of the goods,
petitioner-buyer IMC and LSPI assumed the risk of loss when they secured fire
insurance policies over the goods.
Concerning the third ground,
petitioner submits that there is no subrogation in favor of respondent as no
valid insurance could be maintained thereon by IMC and LSPI since all risk had
transferred to petitioner upon delivery of the goods; that petitioner was not
privy to the insurance contract or the payment between respondent and its
insured nor was its consent or approval ever secured; that this lack of privity
forecloses any real interest on the part of respondent in the obligation to
pay, limiting its interest to keeping the insured goods safe from fire.
For
its part, respondent counters that while ownership over the ready- made
clothing materials was transferred upon delivery to petitioner, IMC and LSPI
have insurable interest over said goods as creditors who stand to suffer direct
pecuniary loss from its destruction by fire; that petitioner is liable for loss
of the ready-made clothing materials since it failed to overcome the
presumption of liability under Article 1265[16]
of the Civil Code; that the fire was caused through petitioner’s negligence in
failing to provide stringent measures of caution, care and maintenance on its
property because electric wires do not usually short circuit unless there are
defects in their installation or when there is lack of proper maintenance and
supervision of the property; that petitioner is guilty of gross and evident bad
faith in refusing to pay respondent’s valid claim and should be liable to
respondent for contracted lawyer’s fees, litigation expenses and cost of suit.[17]
As a general rule, in petitions for
review, the jurisdiction of this Court in cases brought before it from the CA
is limited to reviewing questions of law which involves no examination of the
probative value of the evidence presented by the litigants or any of them.[18]
The Supreme Court is not a trier of facts; it is not its function to analyze or
weigh evidence all over again.[19] Accordingly, findings of fact of the
appellate court are generally conclusive on the Supreme Court.[20]
Nevertheless, jurisprudence has
recognized several exceptions in which factual issues may be resolved by this
Court, such as: (1) when the findings are grounded entirely on speculation,
surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd
or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in making its findings the
CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are
contrary to the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner’s main and reply briefs are
not disputed by the respondent; (10) when the findings of fact are premised on
the supposed absence of evidence and contradicted by the evidence on record; and
(11) when the CA manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.[21] Exceptions (4), (5), (7), and (11) apply to
the present petition.
At issue is the proper interpretation
of the questioned insurance policy. Petitioner
claims that the CA erred in construing a fire insurance policy on book debts as
one covering the unpaid accounts of IMC and LSPI since such insurance applies
to loss of the ready-made clothing materials sold and delivered to petitioner.
The Court disagrees with petitioner’s
stand.
It is well-settled that when the
words of a contract are plain and readily understood, there is no room for
construction.[22] In this case, the questioned insurance policies
provide coverage for “book debts in connection with ready-made clothing
materials which have been sold or delivered to various customers and dealers of
the Insured anywhere in the Philippines.”[23]; and
defined book debts as the “unpaid account still appearing in the Book of
Account of the Insured 45 days after the time of the loss covered under this
Policy.”[24] Nowhere is it provided in the questioned insurance
policies that the subject of the insurance is the goods sold and delivered to
the customers and dealers of the insured.
Indeed, when the terms of the
agreement are clear and explicit that they do not justify an attempt to read
into it any alleged intention of the parties, the terms are to be understood
literally just as they appear on the face of the contract.[25] Thus,
what were insured against were the accounts of IMC and LSPI with petitioner which
remained unpaid 45 days after the loss through fire, and not the loss or
destruction of the goods delivered.
Petitioner argues that IMC bears the risk
of loss because it expressly reserved ownership of the goods by stipulating in the
sales invoices that “[i]t is further agreed that merely for purpose of securing
the payment of the purchase price the above described merchandise remains the
property of the vendor until the purchase price thereof is fully paid.”[26]
The Court is not persuaded.
The present case clearly falls under
paragraph (1), Article 1504 of the Civil Code:
ART.
1504. Unless otherwise agreed, the goods remain at the seller’s risk until the
ownership therein is transferred to the buyer, but when the ownership therein
is transferred to the buyer the goods are at the buyer’s risk whether actual
delivery has been made or not, except
that:
(1)
Where delivery of the goods has been made to the buyer or to a bailee for the
buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the goods are
at the buyer’s risk from the time of such delivery; (Emphasis supplied)
x x x x
Thus, when the seller retains ownership
only to insure that the buyer will pay its debt, the risk of loss is borne by
the buyer.[27] Accordingly, petitioner bears the risk of
loss of the goods delivered.
IMC and LSPI did not lose complete
interest over the goods. They have an insurable
interest until full payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the
basis for consideration of who bears the risk of loss, in property insurance,
one’s interest is not determined by concept of title, but whether insured has
substantial economic interest in the property.[28]
Section 13 of our Insurance Code
defines insurable interest as “every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of such
nature that a contemplated peril might directly damnify the insured.”
Parenthetically, under Section 14 of the same Code, an insurable interest in
property may consist in: (a) an existing interest; (b) an inchoate interest
founded on existing interest; or (c) an expectancy, coupled with an existing
interest in that out of which the expectancy arises.
Therefore, an insurable interest in
property does not necessarily imply a property interest in, or a lien upon, or
possession of, the subject matter of the insurance, and neither the title nor a
beneficial interest is requisite to the existence of such an interest, it is
sufficient that the insured is so situated with reference to the property that
he would be liable to loss should it be injured or destroyed by the peril
against which it is insured.[29] Anyone has an insurable interest in property
who derives a benefit from its existence or would suffer loss from its destruction.[30] Indeed, a vendor or seller retains an
insurable interest in the property sold so long as he has any interest therein,
in other words, so long as he would suffer by its destruction, as where he has
a vendor’s lien.[31] In this case, the insurable interest of IMC
and LSPI pertain to the unpaid accounts appearing in their Books of Account 45
days after the time of the loss covered by the policies.
The next question is: Is petitioner
liable for the unpaid accounts?
Petitioner’s argument that it is not
liable because the fire is a fortuitous event under Article 1174[32]
of the Civil Code is misplaced. As held
earlier, petitioner bears the loss under Article 1504 (1) of the Civil Code.
Moreover, it must be stressed that the
insurance in this case is not for loss of goods by fire but for petitioner’s accounts
with IMC and LSPI that remained unpaid 45 days after the fire. Accordingly, petitioner’s obligation is for the
payment of money. As correctly stated by
the CA, where the obligation consists in the payment of money, the failure of
the debtor to make the payment even by reason of a fortuitous event shall not
relieve him of his liability.[33] The
rationale for this is that the rule that an obligor should be held exempt from
liability when the loss occurs thru a fortuitous event only holds true when the
obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event. It does not apply when the obligation is
pecuniary in nature.[34]
Under Article 1263 of the Civil Code,
“[i]n an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation.” If the
obligation is generic in the sense that the object thereof is designated merely
by its class or genus without any particular designation or physical
segregation from all others of the same class, the loss or destruction of
anything of the same kind even without the debtor’s fault and before he has
incurred in delay will not have the effect of extinguishing the obligation.[35]
This rule is based on the principle that the genus of a thing can never perish.
Genus nunquan perit.[36] An
obligation to pay money is generic; therefore, it is not excused by fortuitous
loss of any specific property of the debtor.[37]
Thus, whether fire is a fortuitous
event or petitioner was negligent are matters immaterial to this case. What is relevant
here is whether it has been established that petitioner has outstanding
accounts with IMC and LSPI.
With respect to IMC, the respondent
has adequately established its claim. Exhibits “C” to “C-22”[38] show
that petitioner has an outstanding account with IMC in the amount of P2,119,205.00.
Exhibit “E”[39] is the
check voucher evidencing payment to IMC.
Exhibit “F”[40] is
the subrogation receipt executed by IMC in favor of respondent upon receipt of
the insurance proceeds. All these documents have been properly identified,
presented and marked as
exhibits in court. The subrogation
receipt, by itself, is sufficient to establish not only the relationship of
respondent as insurer and IMC as the insured, but also the amount paid to
settle the insurance claim. The right of
subrogation accrues simply upon payment by the insurance company of the
insurance claim.[41] Respondent’s action against petitioner is
squarely sanctioned by Article 2207 of the Civil Code which provides:
Art.
2207. If the plaintiff’s property has
been insured, and he has received indemnity from the insurance company for the
injury or loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the insured against
the wrongdoer or the person who has violated the contract. x x x
Petitioner failed to refute
respondent’s evidence.
As to LSPI, respondent failed to
present sufficient evidence to prove its cause of action. No evidentiary weight can be given to Exhibit
“F Levi Strauss”,[42] a
letter dated P535,613.00
in the fire that razed petitioner’s building on
Moreover, there is no proof of full
settlement of the insurance claim of LSPI; no subrogation receipt was offered
in evidence. Thus, there is no evidence that respondent has been subrogated to
any right which LSPI may have against petitioner. Failure to substantiate the
claim of subrogation is fatal to petitioner’s case for recovery of the amount
of P535,613.00.
WHEREFORE, the petition is partly GRANTED.
The assailed Decision dated P535,613.00 to respondent is DELETED
for lack of factual basis.
No pronouncement as to costs.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate
Justice
WE CONCUR:
ARTEMIO
V. PANGANIBAN
Chief Justice
Chairperson
(On Leave)
CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
MINITA
V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
it is hereby certified that the conclusions in the above Decision were reached
in consultation before the case was assigned to the writer of the opinion of
the Court’s Division.
ARTEMIO
V. PANGANIBAN
Chief Justice
* On Leave.
[1] Penned by Associate Justice Portia Aliño-Hormachuelos and concurred in by Associate Justices Angelina Sandoval-Gutierrez (now Associate Justice of this Court) and Elvi John S. Asuncion.
[2] Records, pp. 146, 190.
[3]
[4]
[5]
[6]
[7]
[8]
[9] CA rollo, p. 18.
[10]
[11]
[12]
[13]
[14] Rollo, p. 36.
[15]
[16] Art. 1265. Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault, unless there is proof to the contrary, and without prejudice to the provisions of Article 1165. This presumption does not apply in case of earthquake, flood, storm, or other natural calamity.
[17] Rollo, pp. 105 (Comment), 153 (Memorandum).
[18] Spouses Hanopol v. Shoemart, Incorporated, 439 Phil. 266, 277 (2002); St. Michael’s Institute v. Santos, 422 Phil. 723, 737 (2001).
[19] Go v. Court of Appeals, G.R. No. 158922, May 28, 2004, 430 SCRA 358, 364; Spouses Hanopol v. Shoemart, Incorporated, supra.
[20] Custodio v. Corrado, G.R. No. 146082, July 30, 2004, 435 SCRA 500, 511; Spouses Hanopol v. Shoemart, Incorporated, supra.
[21] The Insular Life Assurance Company, Ltd. v.
Court of Appeals, G.R. No. 126850, April 28, 2004, 428 SCRA 79, 86; Aguirre v. Court of Appeals, G.R. No.
122249, January 29, 2004, 421 SCRA 310, 319.
[22] De
Mesa v. Court of Appeals, 375 Phil. 432, 443 (1999).
[23] Records, pp. 146, 190.
[24]
[25] First Fil-Sin Lending Corporation v. Padillo, G.R. No. 160533, January 12, 2005, 448 SCRA 71, 76; Azarraga v. Rodriguez, 9 Phil. 637 (1908).
[26] Records, at the back of pp. 151-173; Exhibits “C” to “C-22”.
[27] See Lawyers Cooperative Publishing Co. v. Tabora, 121 Phil. 737, 741 (1965).
[28] Aetna Ins. Co. v. King, 265 So 2d 716, cited in 43 Am Jur 2d §943.
[29] 43 Am Jur 2d §943.
[30]
[31] 43 Am Jur 2d §962.
[32] Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen were inevitable.
[33] CA Decision, p. 11; CA rollo, p. 100.
[34] Lawyers Cooperative Publishing v. Tabora, supra note 27, at 741.
[35] Jurado, Comments and Jurisprudence on Obligations and Contracts (1993), pp. 289-290. See also Republic of the Philippines v. Grijaldo, 122 Phil. 1060, 1066 (1965); De Leon v. Soriano, 87 Phil. 193, 196 (1950).
[36] Bunge
Corp. and Universal Comm. Agencies v. Elena Camenforte & Company, 91
Phil. 861, 865 (1952). See also Republic of the
[37] Ramirez v. Court of Appeals, 98 Phil. 225, 228 (1956).
[38] Records, pp. 151-173.
[39]
[40]
[41] Delsan Transport Lines, Inc. v. Court of Appeals, 420 Phil. 824, 834 (2001); Philippine American General Insurance Company, Inc. v. Court of Appeals, 339 Phil. 455, 466 (1997).
[42] Records, p. 201.