GR 136914; (January, 2002) (Digest)
G.R. No. 136914 ; January 25, 2002
Country Bankers Insurance Corporation, petitioner, vs. Lianga Bay and Community Multi-Purpose Cooperative, Inc., respondent.
FACTS
Petitioner Country Bankers Insurance Corporation issued Fire Insurance Policy No. F-1397 to respondent Lianga Bay and Community Multi-Purpose Cooperative, covering its stocks-in-trade for P200,000.00 from June 20, 1989 to June 20, 1990. On July 1, 1989, the respondent’s building was gutted by fire, resulting in a total loss. The respondent filed a claim, submitting a police spot report and sworn statements indicating the fire was set by two NPA rebels seeking provisions.
The petitioner denied the claim, invoking paragraph 6(d) of the policy conditions which excludes loss directly or indirectly caused by “mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power.” The respondent then filed a complaint for recovery. The Regional Trial Court ruled in favor of the respondent, ordering the petitioner to pay the insurance claim with damages, which the Court of Appeals affirmed in toto.
ISSUE
Whether the petitioner is liable under the fire insurance policy despite its defense that the loss was caused by an excepted risk, specifically rebellion.
RULING
Yes, the petitioner is liable. The Supreme Court affirmed the lower courts’ decisions. The legal logic centers on the burden of proof. The petitioner, relying on an exclusionary clause, had the burden to prove by preponderance of evidence that the loss was directly caused by an excluded peril. The evidence presented—a spot report and sworn statements—were deemed insufficient.
The spot report was merely an unverified initial police report, not an official document made in the performance of duty that would constitute prima facie evidence. The sworn statements were hearsay, as the declarants were not presented as witnesses. The petitioner failed to present clear and convincing evidence that the fire was a direct consequence of rebellion, as required by the insurance policy’s exception clause. Consequently, the exclusion did not apply, and the insurer’s obligation to indemnify the insured for a fire loss, a covered peril, remained. The award of damages and interest was also upheld due to the petitioner’s unjustified refusal to pay a valid claim.