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    Pacific Timber v. CA

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    kmand_lustreg
    Workmen's Insurance issued a cover note to Pacific Timber providing temporary insurance for exported logs. Before policies were issued, some logs were lost during loading. The court ruled that Workmen's was still liable under the cover note, as it integrated the temporary coverage into the later-issued policies, for which premiums were paid. The loss could be determined separately from what the policies covered. The court reinstated the lower court's ruling in favor of Pacific Timber.

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    Pacific Timber v. CA

    Uploaded by

    kmand_lustreg
    323 views2 pages
    Workmen's Insurance issued a cover note to Pacific Timber providing temporary insurance for exported logs. Before policies were issued, some logs were lost during loading. The court ruled that Workmen's was still liable under the cover note, as it integrated the temporary coverage into the later-issued policies, for which premiums were paid. The loss could be determined separately from what the policies covered. The court reinstated the lower court's ruling in favor of Pacific Timber.

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    Pacific Timber v. CA

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    Workmen's Insurance issued a cover note to Pacific Timber providing temporary insurance for exported logs. Before policies were issued, some logs were lost during loading. The court ruled that Workmen's was still liable under the cover note, as it integrated the temporary coverage into the later-issued policies, for which premiums were paid. The loss could be determined separately from what the policies covered. The court reinstated the lower court's ruling in favor of Pacific Timber.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    323 views2 pages

    Pacific Timber v. CA

    Uploaded by

    kmand_lustreg
    Workmen's Insurance issued a cover note to Pacific Timber providing temporary insurance for exported logs. Before policies were issued, some logs were lost during loading. The court ruled that Workmen's was still liable under the cover note, as it integrated the temporary coverage into the later-issued policies, for which premiums were paid. The loss could be determined separately from what the policies covered. The court reinstated the lower court's ruling in favor of Pacific Timber.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PACIFIC TIMBER EXPORT CORP. V. CA, WORKMEN’S INSURANCE CO., INC.

    February 25, 1982 | De Castro, J.


    Policies, Parties Thereto, Rights Thereon > Coverage Notes
    AKGL

    DOCTRINE: If a loss occurs during the period covered by a cover note and an insurance policy is later on
    given accounting for loss during the cover notes, the insurance company is still liable by virtue of the of the
    cover note.
    CASE SUMMARY: Pacific obtained marine insurance from Workmen’s Insurance for the importation of logs.
    The latter issued a Cover Note for the said insurance. However, before the issuance of the policy, the logs
    were loss during loading.

    FACTS:
     (March 19, 1963) Pacific Timber obtained temporary insurance from Workmen’s Insurance for the
    exportation of 1,250,000 board feet of Philippine Lauan and Apitong logs from Diapitan, Quezon to
    Okinawa and Tokyo. Workmen’s Insurance issued a Cover Note insuring the said cargo subject to the
    Terms and Conditions to be printed in the policy.
     (March 29, 1963 [i.e., after issuance of Cover Note, before issuance of Policy]) Some of the logs
    intended to be exported were lost during loading operations in the Diapitan Bay.
     (April 2, 1963) Workmen’s Insurance issued 2 marine policies for the above transaction.
     Pacific Timber informed Workmen’s Insurance about the loss in a letter. But, Workmen’s Insurance
    denied the claim on the following grounds: 1. investigation revealed that the entire shipment of logs
    were received in good order at point of destination; and 2. the said Note had become ‘null and void by
    virtue of the issuance of marine policies.
     [CFI] Ordered Workmen’s Insurance to pay Pacific Timber of the assessed amount of loss plus
    damages.
     [CA] Set aside CFI’s decision. There was no valuable consideration because there was no payment of
    premium.

    ISSUE: W/N Pacific Timber can claim from Workmen’s Insurance the amount of the lost logs despite the fact
    that the loss occurred after the issuance of the cover note but before the issuance of the policies? YES!

    RULING:
     The Court found that Cover Note 1010 was issued with consideration when, by express stipulation, the
    cover note was made subject to the terms and condition of the marine policies, and the payment of
    premiums is one of the terms of the policies. Nevertheless, it is undisputed that Pacific Timber paid all
    the premiums on the two marine insurance policies, thereby leaving no account unpaid due on the
    insurance coverage, which must be deemed to include the Cover Note.
     The fact that no separate premium was paid on the Cover Note before the loss insured against
    occurred, does not militate against the validity of petitioner’s contention, for no such premium could
    have been paid, since all Cover Notes do not contain particulars of the shipment that would serve as
    basis for the computation of the premiums.
     If the Note is to be treated as a separate policy instead of integrating it to the regular policies
    subsequently issued, the purpose and function of the Cover Note would be set at naught or rendered
    meaningless, for it is in a real sense a contract, not a mere application for insurance which is a mere
    offer.
     For obvious reasons, it was not necessary to ask petitioner to pay premium on the Cover Note, for the
    loss insured against having already occurred, the more practical procedure is simply to deduct the
    premium from the amount due the petitioner on the Cover Note.
     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.
    PACIFIC TIMBER EXPORT CORP. V. CA, WORKMEN’S INSURANCE CO., INC.
     It is true that the issued marine insurance policies covered only logs lost during transit and not logs lost
    during loading. However, this makes no difference insofar as the liability on the Cover Note is
    concerned because the number of logs lost can be determined independently and in fact it had been
    determined at the instance of Workmen’s Insurance itself when it sent its own adjuster. The adjuster
    even went as far as computing the liability on the basis of the Cover Note.

    DISPOSITION: ACCORDINGLY, the appealed decision is set aside and the decision of the Court of First
    Instance is reinstated in toto with the affirmance of this Court. No special pronouncement as to costs.

    RELEVANT PROVISIONS CITED: (Sec. 52 is not cited in the case, but is cited in the course outline)
    Sec. 52, IC: “Cover notes may be issued to bind insurance temporarily pending the issuance of the
    policy. Within sixty (60) days after issue of a cover note, a policy shall be issued in lieu thereof, including
    within its terms the identical insurance bound under the cover note and the premium therefor. xxx”

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