Pacific Timber v. CA

112 SCRA 199


>  On March 13, 1963, Pacific secured temporary insurance from the Workemen’s Insurance Co. for its exportation of logs to Japan.  Workmen issued on said date Cover Note 1010 insuring said cargo.

>  The regular marine policies were issued by the company in favor of Pacific on Apr 2, 1963.  The 2 marine policies bore the number 53H01032 and 53H01033.

>  After the issuance of the cover note but BEFORE the issuance of the 2 policies, some of the logs intended to be exported were lost due to a typhoon.

>  Pacific filed its claim with the company, but the latter refused, contending that said loss may not be considered as covered under the cover note because such became null and void by virtue of the issuance of the marine policies.


Whether or not the cover not was without consideration, thus null and void.


It was with consideration.

SC upheld Pacific’s contention that said cover not was with consideration.  The fact that no separate premium was paid on the cover note before the loss was insured against occurred does not militate against the validity of Pacific’s contention, for no such premium could have been paid, since by the nature of the cover note, it did not contain, as all cover notes do not contain, particulars of the shipment that would serve as basis for the computation of the premiums.  As a logical consequence, no separate premiums are required to be paid on a cover note.

If the note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued, its purpose would be meaningless for it is in a real sense a contract, not a mere application.