Gaisano v. Insurance Company

SUPREME COURT REPORTS ANNOTATED VOLUME 490
G.R. No. 147839. June 8, 2006.
2/22/16, 2:58 PM
GAISANO CAGAYAN, INC., petitioner, vs. INSURANCE

COMPANY OF NORTH AMERICA, respondent.
Actions; Pleadings and Practice; Appeals; Petition for Review;
Findings of fact of the appellate court are generally conclusive on the
Supreme Court.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. The Supreme Court is not a trier of facts; it is not its
function to analyze or weigh evidence all over again. Accordingly,
findings of fact of the appellate court are generally conclusive on the
Supreme Court.
Same; Same; Same; Same; Exceptions; Nevertheless,
jurisprudence has recognized several exceptions in which factual
issues may be resolved by the Supreme Court.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 specu-
_______________
*
FIRST DIVISION.
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Gaisano Cagayan, Inc. vs. Insurance Company of North America
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lation, 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 petitioners
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.
Statutory Construction; When the words of a contract are plain
and readily understood, there is no room for construction.It is
well-settled that when the words of a contract are plain and readily
understood, there is no room for construction. 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; 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.
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.
Civil Law; Contracts; Sales; Loss; When the seller retains
ownership only to insure that the buyer will pay its debt, the risk of
loss is borne by the buyer.The present case clearly falls under
paragraph (1), Article 1504 of the Civil Code: ART. 1504. Unless
otherwise agreed, the goods remain at the sellers 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
buyers risk whether actual delivery has been made or not, except
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that: (1) Where delivery

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SUPREME COURT REPORTS ANNOTATED

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
buyers 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.
Accordingly, petitioner bears the risk of loss of the goods delivered.
Same; Same; Insurance; Insurable Interest; Kinds; An insurable
interest in property may consist in the following.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.
Same; Same; Same; Same; Anyone has an insurable interest in
property who derives a benefit from its existence or would suffer loss
from its destruction.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. Anyone
has an insurable interest in property who derives a benefit from its
existence or would suffer loss from its destruction. 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 vendors lien. In this
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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.
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Same; Same; Subrogation; There is no evidence that respondent
has been subrogated to any right which Levi Strauss (Phils.) Inc.
(LSPI) may have against petitioner.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 petitioners case for recovery of the amount of P535,613.00.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Lawrence L. Ko Teh for petitioner.
Omar U. Obias for respondent.
AUSTRIA-MARTINEZ, J.:
Before the
Court is a petition for review on certiorari of the
1
Decision 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 petitioners 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
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endorse_______________
1
Penned by Associate Justice Portia Alio-Hormachuelos and
concurred in by Associate Justices Angelina Sandoval-Gutierrez (now

Associate Justice of this Court) and Elvi John S. Asuncion.
290
290
Gaisano Cagayan, Inc. vs. Insurance Company of North

America
ments. The insurance policies provide for coverage on book
debts in connection with ready-made clothing materials
which have been sold or delivered to various customers2 and
dealers of the Insured anywhere in the Philippines. The
policies defined book debts as the unpaid account still
appearing in the Book of Account of the Insured 453 days
after the time of the loss covered under this Policy. The
policies also provide for the following conditions:
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
4
xx
xxxx
Petitioner is a customer and dealer of the products of IMC
and LSPI. On February 25, 1991, the Gaisano Superstore
Complex in Cagayan de Oro City, owned by petitioner, was
consumed by fire. Included in the items lost or destroyed in
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the fire were stocks of ready-made clothing materials sold

and delivered by IMC and LSPI.
On February 4, 1992, respondent filed a complaint for
damages against petitioner. It alleges that IMC and LSPI
filed with respondent their claims under their respective
fire insurance policies with book debt endorsements; that
as of February 25, 1991, the unpaid accounts of petitioner
on the sale and delivery of ready-made clothing materials
with IMC was P2,119,205.00 while with LSPI it was
P535,613.00; that re_______________
2
Records, pp. 146, 190.
Id., at pp. 149 and 200; Exhibits A-3-a and E-2-a Levi Strauss.
Id., Exhibits A-3 and E-2 Levi Strauss.

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spondent 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
5
payment upon petitioner but these went unheeded.
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
respondents 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;6 that it never consented to paying
the claim of the insured.
At the pre-trial conference
the parties failed to arrive at
7
an amicable settlement. Thus, trial on the merits ensued.
On August 31, 1998, the RTC8 rendered its decision
dismissing respondents complaint. It held that the fire
was purely accidental; that the cause of the fire was not
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attributable to the negligence of the petitioner; that it has

not been established that petitioner is the debtor of IMC
and LSPI; that since the sales invoices state that it is
further agreed that merely for purpose of securing the
payment of purchase price, the above-described
merchandise remains the property of the vendor until the
purchase price is fully paid, IMC and LSPI retained
ownership of the delivered goods and must bear9 the loss.
Dissatisfied, petitioner appealed to the CA. On October
11, 2000, the CA rendered its decision setting aside the
decision of the RTC. The dispositive portion of the decision
reads:
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5
Id., at p. 1.
Id., at p. 63.
Id., at p. 93.
Id., at p. 540.
CA Rollo, p. 18.
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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.
10
SO ORDERED.
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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 petitioners 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, 11
what was insured was the vendors
interest as a creditor.
12
Petitioner filed a motion for reconsideration but it 13
was
denied by the CA in its Resolution dated April 11, 2001.
Hence, the present petition for review on certiorari
anchored on the following Assignment of Errors:
_______________
10
Id., at pp. 101-102.
11
Id., at pp. 98-100.
12
Id., at p. 105.
13
Id., at p. 135.
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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
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14
OF THE CIVIL CODE IN FAVOR OF RESPONDENT.
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
15
insurance policies.
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
_______________
14
Rollo, p. 36.
15
Id., at p. 28 (Petition), 132 (Memorandum).

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any real interest on the part of respondent in the obligation
to pay, limiting its interest to keeping the insured goods
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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 to16 overcome the presumption of
liability under Article 1265 of the Civil Code; that the fire
was caused through petitioners 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 respondents
valid claim and should be liable to respondent for
contracted
lawyers fees, litigation expenses and cost of
17
suit.
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 of18 the evidence
presented by the litigants or any of them. The Supreme
Court is not a trier of facts; it is not its function to analyze
or weigh evidence all over
_______________
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; 390
SCRA 439, 447 (2002); St. Michaels Institute v. Santos, 422 Phil. 723,
737; 371 SCRA 383, 396 (2001).
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19
again. Accordingly, findings of fact of the appellate

court
20
are generally conclusive on the Supreme Court.
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 petitioners
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 21considered, would justify a
different conclusion. 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 ap_______________
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,
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G.R. No. 122249, January 29, 2004, 421 SCRA 310, 319.
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plies to loss of the ready-made clothing materials sold and
delivered to petitioner.
The Court disagrees with petitioners stand.
It is well-settled that when the words of a contract are
plain and readily
understood, there is no room for
22
construction. 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 customers23 and dealers of the Insured
anywhere in the Philippines; 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
24
under this Policy.
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
25
contract. 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
_______________
22
De Mesa v. Court of Appeals, 375 Phil. 432, 443; 317 SCRA 24, 32
(1999).
Page 12 of 19
23
Records, pp. 146, 190.
24
Id.
25
2/22/16, 2:58 PM
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).
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above described merchandise remains the property 26of the
vendor until the purchase price thereof is fully paid.
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
sellers 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 buyers 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 buyers
risk from the time of such delivery; (Emphasis supplied)
xxxx
Thus, when the seller retains ownership only to insure that

the buyer
will pay its debt, the risk of loss is borne by the
27
buyer. 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, ones interest is not determined by concept of
title, but whether insured has substantial economic
Page 13 of 19
interest in the property.
2/22/16, 2:58 PM
28
_______________
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; 13 SCRA 762, 764-765 (1965).

28
Aetna Ins. Co. v. King, 265 So 2d 716, cited in 43 Am. Jur. 2d 943.
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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
29
the peril against which it is insured. Anyone has an
insurable interest in property who derives a benefit from
30
its existence or would suffer loss from its destruction.
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,
31
as where he has a vendors lien. 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
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accounts?
Petitioners argument that it is not liable32 because the
fire is a fortuitous event under Article 1174 of the Civil
Code is
_______________
29
43 Am. Jur. 2d 943.
30
Id.
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
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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 petitioners
accounts with IMC and LSPI that remained unpaid 45 days
after the fire. Accordingly, petitioners 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 reason33 of a
fortuitous event shall not relieve him of his liability. 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
34
nature.
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
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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 debtors fault
and before he has incurred in delay
will not have the effect
35
of extinguishing the obligation. This rule is based on the
principle that the genus
_______________
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 p. 741;
p. 765.
35
Jurado, Comments and Jurisprudence on Obligations and Contracts
(1993), pp. 289-290. See also Republic v. Grijaldo, 122 Phil. 1060, 1066;
15 SCRA 681, 687 (1965); De Leon v. Soriano, 87 Phil. 193, 196 (1950).
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36
of a thing can never perish. Genus nunquan perit. An

obligation to pay money is generic; therefore, it is not
excused37 by fortuitous loss of any specific property of the
debtor.
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 has38 adequately
established its claim. Exhibits C to C-22 show that
petitioner has an outstanding account
with IMC in the
39
amount of P2,119,205.00. Exhibit E is the check
voucher
40
evidencing payment to IMC. Exhibit F
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
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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
41
company of the insurance claim. Respondents 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
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36
Bunge Corp. and Universal Comm. Agencies v. Elena Camenforte &
Company, 91 Phil. 861, 865 (1952). See also Republic v. Grijaldo, supra;
De Leon v. Soriano, supra.
37
Ramirez v. Court of Appeals, 98 Phil. 225, 228 (1956).
38
Records, pp. 151-173.
39
Id., at p. 182.
40
Id., at p. 183.
41
Delsan Transport Lines, Inc. v. Court of Appeals, 420 Phil. 824, 834;
369 SCRA 24, 31 (2001); Philippine American General Insurance

Company, Inc. v. Court of Appeals, 339 Phil. 455, 466; 273 SCRA 262, 275
(1997).
301
VOL. 490, JUNE 8, 2006
301

America
insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract.
xxx
Petitioner failed to refute respondents evidence.

As to LSPI, respondent failed to present sufficient
evidence to prove its cause of action. No evidentiary
weight
42
can be given to Exhibit F Levi Strauss, a letter dated
April 23, 1991 from petitioners General Manager, Stephen
S. Gaisano, Jr., since it is not an admission of petitioners
Page 17 of 19
2/22/16, 2:58 PM
unpaid account with LSPI. It only confirms the loss of

Levis products in the amount of P535,613.00 in the fire
that razed petitioners building on February 25, 1991.
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 petitioners case for recovery of the amount of
P535,613.00.
WHEREFORE, the petition is partly GRANTED. The
assailed Decision dated October 11, 2000 and Resolution
dated April 11, 2001 of the Court of Appeals in CA-G.R. CV
No. 61848 are AFFIRMED with the MODIFICATION that
the order to pay the amount of P535,613.00 to respondent
is DELETED for lack of factual basis.
No pronouncement as to costs. SO ORDERED.
Panganiban (C.J., Chairperson), Callejo, Sr. and
Chico-Nazario, JJ., concur.
Ynares-Santiago, J., On Leave.
_______________
42
Records, p. 201.
302
302

Racaza vs. Gozum
Petition partly granted, assailed decision and resolution

affirmed with modification.
Note.The filing of a claim with the carrier within the
time limitation therefore actually constitutes a condition
precedent to the accrual of a right of action against a
carrier for loss of or damage to the goods. (Federal Express
Corporation vs. American Home Assurance Company, 437
SCRA 50 [2004])
o0o
Page 18 of 19
2/22/16, 2:58 PM
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SUPREME COURT REPORTS ANNOTATED VOLUME 490

G.R. No. 147839. June 8, 2006.

GAISANO CAGAYAN, INC., petitioner, vs. INSURANCE

VOL. 490, JUNE 8, 2006

Gaisano Cagayan, Inc. vs. Insurance Company of North America

SUPREME COURT REPORTS ANNOTATED VOLUME 490

lation, surmises or conjectures; (2) when the inference made is

SUPREME COURT REPORTS ANNOTATED VOLUME 490

that: (1) Where delivery

SUPREME COURT REPORTS ANNOTATED

Gaisano Cagayan, Inc. vs. Insurance Company of North America

SUPREME COURT REPORTS ANNOTATED VOLUME 490

VOL. 490, JUNE 8, 2006

Gaisano Cagayan, Inc. vs. Insurance Company of North America

PETITION for review on certiorari of the decision and

SUPREME COURT REPORTS ANNOTATED VOLUME 490

Penned by Associate Justice Portia Alio-Hormachuelos and

concurred in by Associate Justices Angelina Sandoval-Gutierrez (now

SUPREME COURT REPORTS ANNOTATED

Gaisano Cagayan, Inc. vs. Insurance Company of North

SUPREME COURT REPORTS ANNOTATED VOLUME 490

the fire were stocks of ready-made clothing materials sold

Records, pp. 146, 190.

Id., Exhibits A-3 and E-2 Levi Strauss.

VOL. 490, JUNE 8, 2006

Gaisano Cagayan, Inc. vs. Insurance Company of North

SUPREME COURT REPORTS ANNOTATED VOLUME 490

attributable to the negligence of the petitioner; that it has

SUPREME COURT REPORTS ANNOTATED

Gaisano Cagayan, Inc. vs. Insurance Company of North

SUPREME COURT REPORTS ANNOTATED VOLUME 490

Id., at pp. 101-102.

Id., at pp. 98-100.

VOL. 490, JUNE 8, 2006

Gaisano Cagayan, Inc. vs. Insurance Company of North

SUPREME COURT REPORTS ANNOTATED VOLUME 490

OF THE CIVIL CODE IN FAVOR OF RESPONDENT.

Anent the first error, petitioner contends that the

Id., at p. 28 (Petition), 132 (Memorandum).

SUPREME COURT REPORTS ANNOTATED

Gaisano Cagayan, Inc. vs. Insurance Company of North

SUPREME COURT REPORTS ANNOTATED VOLUME 490

safe from fire.

Rollo, pp. 105 (Comment), 153 (Memorandum).

Spouses Hanopol v. Shoemart, Incorporated, 439 Phil. 266, 277; 390

VOL. 490, JUNE 8, 2006

SUPREME COURT REPORTS ANNOTATED VOLUME 490

Gaisano Cagayan, Inc. vs. Insurance Company of North

again. Accordingly, findings of fact of the appellate

358, 364; Spouses Hanopol v. Shoemart, Incorporated, supra.

511; Spouses Hanopol v. Shoemart, Incorporated, supra.

The Insular Life Assurance Company, Ltd. v. Court of Appeals, G.R.

SUPREME COURT REPORTS ANNOTATED VOLUME 490

SUPREME COURT REPORTS ANNOTATED

Gaisano Cagayan, Inc. vs. Insurance Company of North

SUPREME COURT REPORTS ANNOTATED VOLUME 490

Records, pp. 146, 190.

First Fil-Sin Lending Corporation v. Padillo, G.R. No. 160533,

VOL. 490, JUNE 8, 2006