Professional Documents
Culture Documents
The Court of Appeals affirmed the decision of the Insurance Commissioner. In its Since a contract of insurance involves public interest, regulation by the State is
decision, the appellate court distinguished between P & I Clubs vis-à-vis conventional necessary. Thus, no insurer or insurance company is allowed to engage in the insurance
insurance. The appellate court also held that Pioneer merely acted as a collection agent of business without a license or a certificate of authority from the Insurance Commission.
Steamship Mutual.
On the second issue, Pioneer is the resident agent of Steamship Mutual as evidenced
ISSUES
by the certificate of registration issued by the Insurance Commission. It has been licensed to
do or transact insurance business by virtue of the certificate of authority issued by the same
Whether or not Steamship Mutual Underwriting Association (Bermuda) Ltd. Is engaged in an
agency. However, a Certification from the Commission states that Pioneer does not have a
insurance business.
separate license to be an agent/broker of Steamship Mutual. Although Pioneer is already
licensed as an insurance company, it needs a separate license to act as insurance agent for
Whether or not Pioneer Insurance and Surety Corp. needs a license to operate as the
Steamship Mutual.
insurance agent/broker of Steamship Mutual?
Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue
GR no. 167330 RULING
September 18, 2009
The Supreme Court ruled in favor of the petitioner and granted the motion for
Corona, J. reconsideration. The Court ruled that the health care agreement between the petitioner’s
and its beneficiaries is not a contract of insurance.
FACTS
The Court based its decision on the fact that the HMO agreement does not qualify as
This is based on a Motion for Reconsideration filed by the petitioner. an insurance business based on the “principal object and purpose test.” The test is based on
Section 2 (2) of the Insurance Code. Accordingly, an enterprise is considered engaged in an
Philippine Health Care Providers, Inc. is a domestic corporation primarily engaged in insurance business when the principal object of the enterprise is the assumption of risk and
the business of providing prepaid group practice health care delivery system. On January 27, the indemnification of loss. If the enterprise assumes risk and indemnifies beneficiaries for
2000, the Commissioner of Internal Revenue sent an assessment letter to the petitioner losses, then it is an insurance company.
informing it and demanding payment of P224, 702, 614. 18 in back taxes, surcharge, and 2
interests. The deficiency is composed mostly of unpaid documentary stamp tax (DST) American courts have pointed out that the main difference between an HMO and an
imposed on the petitioner’s agreement with its members. insurance company is that HMOs undertake to provide or arrange for the provision of
medical services through participating physicians while insurance companies simply
Petitioner protested before the CIR but due to the latter’s inaction; it filed a petition for undertake to indemnify the insured for medical expenses incurred up to a pre-agreed limit.
review before the Court of Tax Appeals. The CTA rendered a decision partially granting the
petition for review. The petitioner was ordered to pay P53M instead of the original P225M. A substantial portion of petitioner’s services covers preventive and diagnostic medical
Furthermore, the CIR was ordered to desist from collecting DST tax services intended to keep members from developing medical conditions or diseases. As an
HMO, it is its obligation to maintain the good health of its members. Accordingly, its health
Respondent CIR appealed the decision before the Court of Appeals. According to him, care programs are designed to prevent or to minimize the possibility of any assumption of
the petitioner’s healthcare agreement is a contract of insurance and as such, is subject to DST risk on its part. Thus, its undertaking under its agreements is not to indemnify its members
under Section 185 of the 1997 Tax Code. The CA rendered a decision reversing the earlier against any loss or damage arising from a medical condition but, on the contrary, to provide
decision of the CTA. It ordered the petitioner to pay P123M in DST. the health and medical services needed to prevent such loss or damage.
Petitioner appealed the decision before the Supreme Court which affirmed the CA’s Overall, petitioner appears to provide insurance-type benefits to its members (with
decision. The SC held that the petioner’s health care agreement during the pertinent period respect to its curative medical services), but these are incidental to the principal activity of
was in the nature of non-life insurance which is a contact of indemnity. The Court further providing them medical care. The “insurance-like” aspect of petitioner’s business is miniscule
ruled that contracts between companies like petitioner and its beneficiaries under their plans compared to its noninsurance activities. Therefore, since it substantially provides health care
are treated as insurance contract. The petitioner filed a motion for reconsideration. services rather than insurance services, it cannot be considered as being in the insurance
business.
ISSUE
Lastly, it is significant that petitioner, as an HMO, is not part of the insurance
Whether or not the health care agreement between petitioner and its beneficiaries is an industry. This is evident from the fact that it is not supervised by the Insurance Commission
insurance contract. but by the Department of Health. In fact, in a letter dated September 3, 2000, the Insurance
Commissioner confirmed that petitioner is not engaged in the insurance business. This
determination of the commissioner must be accorded great weight. It is well-settled that the
interpretation of an administrative agency which is tasked to implement a statute is accorded On July 24, 1990, respondent instituted with the Regional Trial Court of Manila, Branch
great respect and ordinarily controls the interpretation of laws by the courts. 44, an action for damages against petitioner and its president, Dr. Benito Reverente, which
Philamcare Health Systems, Inc. v. Court of Appeals was docketed as Civil Case No. 90-53795. She asked for reimbursement of her expenses plus
GR no. 125678 moral damages and attorney’s fees. After trial, the lower court ruled against petitioners.
March 18, 2002
On appeal, the Court of Appeals affirmed the decision of the trial court but deleted
Ynares-Santiago, J. all awards for damages and absolved petitioner Reverente. Petitioner’s motion for
reconsideration was denied. Hence, petitioner brought the instant petition for review, raising
FACTS the primary argument that a health care agreement is not an insurance contract; hence the
"incontestability clause" under the Insurance Code does not apply.
Ernani Trinos, deceased husband of respondent Julita Trinos, applied for a health
ISSUE
care coverage with petitioner Philamcare Health Systems, Inc. In the standard application
form, he answered no to the following question:
Whether or not a healthcare agreement is not an insurance contract.
Have you or any of your family members ever consulted or been 3
treated for high blood pressure, heart trouble, diabetes, cancer, RULING
liver disease, asthma or peptic ulcer? (If Yes, give details).
The Supreme Court ruled that there is a valid insurance contract, after all, all the
The application was approved for a period of one year from March 1, 1988 to elements for an insurance contract are contract are present and alleged concealment
March 1, 1989. Accordingly, he was issued Health Care Agreement No. P010194. Under the answers made in good faith and without intent to deceive will not avoid the policy. The
agreement, respondent’s husband was entitled to avail of hospitalization benefits, whether insurer, in case of material fact, is not justified in relying upon such statement, but obligated
ordinary or emergency, listed therein. He was also entitled to avail of "out-patient benefits" to make further inquiry.
such as annual physical examinations, preventive health care and other out-patient services.
Upon the termination of the agreement, the same was extended for another year
from March 1, 1989 to March 1, 1990, then from March 1, 1990 to June 1, 1990. The amount
of coverage was increased to a maximum sum of P75,000.00 per disability.
During the period of his coverage, Ernani suffered a heart attack and was confined
at the Manila Medical Center (MMC) for one month beginning March 9, 1990. While her
husband was in the hospital, respondent tried to claim the benefits under the health care
agreement. However, petitioner denied her claim saying that the Health Care Agreement was
void. According to petitioner, there was a concealment regarding Ernani’s medical history.
Doctors at the MMC allegedly discovered at the time of Ernani’s confinement that he was
hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Thus,
respondent paid the hospitalization expenses herself, amounting to about P76,000.00.
After her husband was discharged from the MMC, he was attended by a physical
therapist at home. Later, he was admitted at the Chinese General Hospital. Due to financial
difficulties, however, respondent brought her husband home again. In the morning of April
13, 1990, Ernani had fever and was feeling very weak. Respondent was constrained to bring
him back to the Chinese General Hospital where he died on the same day.
The Court also ruled that the lessee, herein petitioner, had an insurable interest in
the items even if he was only a lessee. Section 17 of the Insurance Code provides that the
Vicente Ong Lim Sing, Jr. v. Feb Leasing and Finance Corp. measure of an insurable interest in property is the extent to which the insured might be
GR no. 168115 damnified by loss or injury thereof. It cannot be denied that JVL will be directly damnified in
June 8, 2007 case of loss, damage, or destruction of any of the properties leased.
Nachura, J.
FACTS
FEB Leasing and Finance Corp entered into a lease agreement of equipment and
motor vehicles with JVL Food Products. Vicente Ong Lim Sing, Jr. executed an Individual
Guarantee Agreement with FEB regarding faithful compliance with the terms of the lease
agreement.
The trial court, through logic, ruled that Lim cannot be a mere lessee because of he
had an insurable interest over the items. It has also been held that the test of insurable
interest in property is whether the assured has a right, title or interest therein that he will be
benefited by its preservation and continued existence or suffer a direct pecuniary loss from
its destruction or injury by the peril insured against. If Lim and JVL were to be regarded as
only a lessee, logically the lessor who asserts ownership will be the one directly benefited or
injured and therefore the lessee is not supposed to be the assured as he has no insurable
interest.
FEB appealed the decision before the Court of Appeals. The appellate court
rendered judgment in favor of FEB. It reversed the earlier decision of the RTC of Manila and
ordered Lim and JVL to pay FEB the amount due plus damages. Unsatisfied with the decision,
JVL and Lim appealed the case before the Supreme Court.
ISSUE
RULING
The Supreme Court dismissed the petition of Lim and affirmed the decision of the
Court of Appeals. According to the Court, the agreement was indeed a financial lease
agreement and not a sale by installment basis.
Simeon del Rosario v. The Equitable Insurance and Casualty Co., Inc. RULING
GR no. L-16215
June 29, 1963 The Supreme Court affirmed the decision of the CFI of Rizal.
Paredes, J. “We believe that under the proven facts and circumstances, the findings and
conclusions of the trial court, are well taken, for they are supported by the generally
FACTS accepted principles or rulings on insurance, which enunciate that where there is an ambiguity
with respect to the terms and conditions of the policy, the same will be resolved against the
On February 7, 1957, the defendant Equitable Insurance and Casualty Co., Inc., one responsible thereof. It should be recalled in this connection, that generally, the insured,
issued Personal Accident Policy No. 7136 on the life of Francisco del Rosario, alias Paquito has little, if any, participation in the preparation of the policy, together with the drafting of its
Bolero, son of herein plaintiff-appellee, binding itself to pay the sum of P1,000.00 to terms and Conditions. The interpretation of obscure stipulations in a contract should not
P3,000.00, as indemnity for the death of the insured. favor the party who cause the obscurity (Art. 1377, N.C.C.), which, in the case at bar, is the
insurance company.”
It is stipulated under Part VI (h) of the contract that the insurance does not cover 5
death caused by drowning except as a consequence of the wrecking or disablement in “. . . . And so it has been generally held that the "terms in an insurance policy,
Philippine waters of a passenger steam or motor vessel in which the insured is travelling as a which are ambiguous, equivocal or uncertain . . . are to be construed strictly against, the
fare paying passenger. There is, however, a rider in the contract stating that the provisions of insurer, and liberally in favor of the insured so as to effect the dominant purpose of
Part VI (h) are waived. indemnity or payment to the insured, especially where a forfeiture is involved," (29 Am. Jur.
181) and the reason for this rule is that the "insured usually has no voice in the selection or
On February 24, 1957, the insured Francisco del Rosario, alias Paquito Bolero, arrangement of the words employed and that the language of the contract is selected with
while on board the motor launch "ISLAMA" together with 33 others, including his beneficiary great care and deliberation by expert and legal advisers employed by, and acting exclusively
in the Policy, Remedios Jayme, were forced to jump off said launch on account of fire which in the interest of, the insurance company" (44 C.J.S. 1174). Calanoc v. Court of Appeals, et al.,
broke out on said vessel, resulting in the death of drowning, of the insured and beneficiary in G.R. No. L-8151, Dec. 16, 1955.”
the waters of Jolo.
Simeon del Rosario, father and sole heir of the insured, filed a claim for payment
with the insurance company. The company issued to del Rosario P1,000. The counsel of del
Rosario, however, wrote to the company and informed them that del Rosario should get
P1,500 instead of P1,000.
The company referred the issue to the Insurance Commissioner who ruled in favor
of the company. Unhappy with the decision of the IC, del Rosario appealed the decision
before the CFI of Rizal (Pasay City). The CFI issued a decision in favor of del Rosario.
According to the court, the policy covers drowning but does not specify the amount to be
paid in case of drowning. Since the company promised to pay between P1000 and P3000 and
insurance policies should be construed in favor of the insured, the company should pay del
Rosario P3,000.
The case was elevated on appeal before the Court of Appeals but was affirmed by
the appellate court.
ISSUE