Insurance Digest Part 5

FORTUNE INSURANCE AND SURETY CO., INC. vs.
COURT OF APPEALS and PRODUCERS BANK OF THE

PHILIPPINES
Rule Synopsis
Manpower supplied by agencies may be considered employees or authorized representatives of the employer for
purposes of construing exceptions to a robbery and theft policy exempting the insurer from liability for any loss caused by
any dishonest, fraudulent or criminal act of its employees or authorized representatives, among others.
Case Summary
Producers Bank had a Money, Security, and Payroll Robbery policy with Fortune Insurance and Surety Co., Inc. The policy
states that the insurer shall not be liable for: “any loss caused by any dishonest, fraudulent or criminal act of the insured
or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone
or in conjunction with others.” Producers then allegedly lost a sum of P725k during a robbery of its armored vehicle while
it was in transit to transfer the money from Pasay to Makati. The vehicle was driven by one Magalong (assigned by PRC
Management Systems). The security guard, Atiga, was assigned by Unicorn Security Services, Inc. The driver and the
security guard, along with others, were charged with highway robbery. The criminal case was still pending as of writing of
this decision. Producers filed a claim Fortune. Fortune denied on the ground that the robbery was due to the acts of
Producers’ own employees, thus an excluded loss under the general exceptions in the policy.
Producers filed a case against Fortune for the recovery of the insurance proceeds.
The trial court ruled in favor of Producers Bank. The CA affirmed. The lower courts found that both Magalong and Atiga
were not employees of the Bank. The SC reversed.
ISSUE: WON Fortune Insurance is liable under the Money, Security, and Payroll Robbery policy
HELD: NO.
FILIPINAS COMPANIA DE SEGUROS vs. CHRISTERN HUENEFELD and CO., INC.
FACTS:
On October 1, 1941, the respondent corporation, Christern Huenefeld and Co., Inc., after payment of corresponding
premium, obtained from the petitioner, Filipinas Cia de Seguros fire policy covering merchandise contained in a building
located at Binondo, Manila. On February 27, 1942 or during the Japanese military occupation, the building and insured
merchandise were burned. In due time, the respondent submitted to the petitioner its claim under the policy. The
petitioner refused to pay the claim on the ground that the policy in favor of the respondent that ceased to be a force on
the date the United States declared war against Germany, the respondent corporation (through organized under and by
virtue of the laws of Philippines) being controlled by German subjects and the petitioner being a company under American
jurisdiction when said policy was issued on October 1, 1941. The theory of the petitioner is that the insured merchandise
was burned after the policy issued in 1941 had ceased to be effective because the outbreak of the war between United
States and Germany on December 10, 1941, and that the payment made by the petitioner to the respondent corporation
during the Japanese military occupation was under pressure.
ISSUE:
Whether or not the respondent corporation is a corporation of public enemy.
RULING:
Since the majority of stockholders of the respondent corporation were German subjects, the respondent became an
enemy of the state upon the outbreak of the war between US and Germany. The English and American cases relied upon
by the Court of Appeals lost in force upon the latest decision of the Supreme Court of US in which the control test has
adopted.
Since World War I, the determination of enemy nationality of corporations has been discussed in many countries,
belligerent and neutral. A corporation was subject to enemy legislation when it was controlled by enemies, namely
managed under the influence of individuals or corporations themselves considered as enemies…
The Philippine Insurance Law (Act No 2427, as amended), in Section 8, provides that “anyone except a public enemy may
be insured”. It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public
enemy.
The respondent having an enemy corporation on December 10, 1941, the insurance policy issued in its favor on October
1, 1941, by the petitioner had ceased to be valid and enforceable, and since the insured good were burned during the
war, the respondent was not entitled to any indemnity under said policy from the petitioner. However, elementary rule of
justice (in the absence of specific provisions in the Insurance Law) require that the premium paid by the respondent for
the period covered by its policy from December 11, 1941, should be returned by the petitioner.

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FORTUNE INSURANCE AND SURETY CO., INC. vs.

COURT OF APPEALS and PRODUCERS BANK OF THE

Whether or not the respondent corporation is a corporation of public enemy.

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