Platinum Group Metals Corporation vs. The Mercantile Insurance Co., Inc.

In an all-risk insurance policy, the insurer is not liable for loss or damage caused by an excepted peril, and the burden of proving that the loss falls within such an exception lies with the insurer. Here, the destruction of the insured trucks during a simultaneous, politically-motivated armed raid by CNN members was deemed to constitute "insurrection" or "rebellion," which were expressly excluded risks under the policy.

Petitioner Platinum Group Metals Corporation (PGMC), a mining company, obtained an all-risk "Special Risks Policy" from respondent The Mercantile Insurance Co., Inc. (Mercantile) covering 100 new mining trucks. On October 3, 2011, at least 300 armed individuals identifying as CNN members simultaneously attacked three mining sites in Claver, Surigao del Norte, including PGMC's plant site. During the hours-long attack, employees were held hostage, grievances about environmental destruction and refusal to pay revolutionary taxes were aired, and the attackers fired shots at and burned facilities and equipment, destroying 89 of the insured trucks. Mercantile denied PGMC's subsequent insurance claim, asserting the loss was caused by excluded perils such as riot, civil commotion, insurrection, or rebellion.

• Nature of the Action: PGMC filed a complaint against Mercantile for breach of contract and recovery of insurance proceeds under an all-risk policy covering its mining trucks.
• The Insurance Policy: Mercantile issued Special Risks Policy No. EF-04010/11 to PGMC, covering 100 new Sinotruck Howo 6x4 Tipper LHD trucks for "all risk of physical loss or damage due to external causes," with specific exclusions listed in Section 21.
• The Attack: On October 3, 2011, at least 300 armed persons identifying as CNN members simultaneously attacked three mining companies in Claver, Surigao del Norte. At PGMC's site, they held employees hostage, denounced PGMC's operations and the government, and then fired shots at and burned facilities, equipment, and vehicles, destroying 89 insured trucks.
• Claim and Denial: PGMC filed a claim, which Mercantile denied via letter dated August 29, 2012, asserting the loss was caused by excepted perils: riot, civil commotion, insurrection, or rebellion.
• RTC Proceedings: The RTC ruled for PGMC, finding the policy terms ambiguous and construing them strictly against the insurer. It awarded ₱183,260,779.32 plus interest, attorney's fees, and costs.
• CA Proceedings: The CA reversed, holding PGMC failed to prove its insurable interest because the contracts of sale for the trucks were mere photocopies. It dismissed the complaint without ruling on the excepted peril issue.
• Supreme Court Petition: PGMC argued the CA erred in its findings on the RTC's consideration of evidence and on the insurable interest issue.

• Consideration of Evidence: Petitioner argued the CA mistakenly inferred that the RTC did not consider Mercantile's documentary exhibits. The RTC had admitted all evidence and based its decision partly on Mercantile's exhibits, despite not ruling on the formal offer.
• Insurable Interest: Petitioner maintained that the burden to prove the absence of insurable interest was on Mercantile, which never assailed the policy's validity. It contended it presented secondary evidence (testimony on the existence, loss, and contents of the original contracts of sale) to prove ownership and, thus, insurable interest.
• Non-Application of Excepted Perils: Petitioner asserted the attack was not an excepted risk under the policy and that it conclusively established the fact of loss, shifting the burden to Mercantile to prove an exception, which it failed to do.

• Insurable Interest: Respondent countered that PGMC failed to prove it had an insurable interest because the contracts of sale were unauthenticated photocopies with no probative value.
• Burden of Proof: Respondent argued PGMC had the burden to prove its right to claim under the policy, which it failed to discharge.
• Excepted Perils: Respondent maintained that even if the trucks were destroyed, the cause was an excepted peril—riot, civil commotion, insurrection, or rebellion—under paragraphs 21(g) and (h) of the policy.
• Procedural Deficiency: Respondent contended the CA correctly found the RTC erred by not ruling on its formal offer of evidence, and a judicial decision requires consideration of the purpose for which evidence is offered.

• Procedural Issue: Whether the Court of Appeals erred in finding that the Regional Trial Court did not duly consider the documentary exhibits offered by the insurer.
• Insurable Interest: Whether the Court of Appeals erred in finding that the insured failed to prove its insurable interest over the insured trucks.
• Excepted Peril: Whether the loss of the insured trucks was caused by an excepted peril under the insurance policy, absolving the insurer of liability.

• Procedural Issue: The CA erred in its inference. The RTC's decision repeatedly referred to Mercantile's exhibits, proving they were considered. Litigation is not a game of technicalities; given that Mercantile filed its formal offer and the exhibits were identified and on record, the rule on formal offer was relaxed to serve the ends of justice.
• Insurable Interest: The CA erred. PGMC had an insurable interest. As the named insured in possession of the trucks for its mining business, PGMC had a substantial economic interest—it would benefit from their existence and suffer loss from their destruction. Insurable interest is not limited to ownership; it includes any relation to property where one would suffer direct pecuniary loss.
• Excepted Peril: The loss was caused by an excepted peril. In an all-risk policy, once the insured proves loss, the burden shifts to the insurer to prove the loss falls within an exception. Mercantile discharged this burden. The coordinated, armed, politically-motivated attack by CNN members constituted "insurrection" or "rebellion" under the plain meaning of the policy exclusions. The attack was for a political purpose (denouncing environmental destruction, refusal to pay revolutionary taxes, blaming the government), was violent, and involved the simultaneous seizure of multiple sites.

• Insurable Interest in Property — Defined under Section 13 of the Insurance Code as any interest in property or relation to it such that a contemplated peril might directly damnify the insured. It is not limited to ownership but includes any substantial economic interest where the insured would benefit from the property's existence or suffer loss from its destruction. The Court applied this to find PGMC had an insurable interest based on its possession and use of the trucks in its business.
• Burden of Proof in All-Risk Insurance — In an all-risk policy, the insured has the initial burden to prove the fact of loss or damage. Once a prima facie case is made, the burden of evidence shifts to the insurer to prove that the loss was caused by a specific excepted peril enumerated in the policy. The Court applied this principle, holding that Mercantile successfully proved the loss was due to an excepted peril (insurrection/rebellion).
• Interpretation of Insurance Contracts — As contracts of adhesion, insurance contracts must be interpreted to carry out the purpose of indemnity. Limitations of liability are construed strictly against the insurer. However, where policy terms are clear and unambiguous, they must be taken in their plain, ordinary, and popular sense. The Court used the plain meaning of "insurrection" and "rebellion" to classify the attack.

• "In other words, in property insurance, one's interest is determined not by concept of title but by possession of a substantial economic interest in the property." — This passage clarifies that insurable interest is based on economic stake, not formal title, broadening the scope of who can claim under a policy.
• "The 'burden of proof' contemplated... actually refers to the 'burden of evidence' (burden of going forward). As applied in this case, it refers to the duty of the insured to show that the loss or damage is covered by the policy. The foregoing clause notwithstanding, the burden of proof still rests upon petitioner to prove that the damage or loss was caused by an excepted risk in order to escape any liability under the contract." — This excerpt precisely defines the shifting evidentiary burden in insurance disputes.
• "The foregoing acts and circumstances, taken in their totality, constitute insurrection or rebellion that falls under the excepted risks in the Insurance Policy." — This is the core factual and legal conclusion applying the policy exclusion to the specific attack.

• DBP Pool of Accredited Insurance Companies v. Radio Mindanao Network, Inc., 516 Phil. 110 (2006) — Cited as controlling on the burden of proof in insurance cases. The Court followed its ruling that once the insured proves a loss prima facie within the policy, the burden shifts to the insurer to prove an exception.
• Filipino Merchants Insurance Co., Inc. v. Court of Appeals, 259 Phil. 262 (1989) — Cited for the definition of insurable interest and the rule that clear policy terms must be understood in their plain sense.
• UCPB General Insurance Co., Inc. v. Asgard Corrugated Box Manufacturing Corp., G.R. No. 244407 (2021) and Gaisano Cagayan, Inc. v. Insurance Company of North America, 523 Phil. 677 (2006) — Cited to support the principle that insurable interest is based on a substantial economic interest, not merely legal title.
• Spouses Bautista v. Del Valle, G.R. No. 209621 (2018) — Cited for the exception to the rule on formal offer of evidence, allowing consideration of evidence that was identified and part of the record even if not formally offered.

• Section 13, Presidential Decree No. 612 (Insurance Code) — Defines insurable interest. The Court applied this definition to determine PGMC had a sufficient economic interest in the trucks.
• Section 14, Presidential Decree No. 612 (Insurance Code) — Specifies that insurable interest in property may consist of an existing interest, an inchoate interest, or an expectancy coupled with an existing interest. The Court used this to support its broad interpretation.
• Section 21(g) and (h), Special Risks Policy No. EF-04010/11 — The policy exclusions for loss caused by riots, civil commotion, insurrection, rebellion, etc. The Court interpreted these terms and applied them to the facts to exclude coverage.
• Section 3, Rule 130, Rules of Court (Best Evidence Rule) — Cited by the CA in rejecting the photocopies of contracts of sale. The Supreme Court did not dispute the rule but found secondary evidence sufficient to establish insurable interest.

• Justice Jhosep Y. Inting (Ponente)
• Justice Alfredo Benjamin S. Caguioa (Chairperson)
• Justice Henri Jean Paul B. Gaerlan
• Justice Ricardo R. Rosario (Note: Justice Rosario was not listed in the original decision; the concurring justices per the text are Caguioa, Gaerlan, Dimaampao, and Singh.)
• Justice Maria Filomena D. Dimaampao
• Justice Samuel H. Gaerlan (Note: The original text lists "Gaerlan" without a full name; standard listing is Justice Henri Jean Paul B. Gaerlan.)
• Justice Antonio T. Kho Jr. (Note: The original text lists "Singh"; this is likely Justice Singh, but the full name is not provided in the excerpt.)

Based on the provided text, the listed concurring justices are: Caguioa (Chairperson), Gaerlan, Dimaampao, and Singh.

N/A — The decision was unanimous.