Narratives

Insurance Law (Commercial)
Michael Vernon Guerrero Mendiola 2006 Shared under Creative Commons AttributionNonCommercial-ShareAlike 3.0 Philippines license.

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Table of Contents
Verendia vs. Court of Appeals [GR 76399, 22 January 1993] …......... 1 Rizal Surety & Insurance Company vs. Court of Appeals [GR 112360, 18 June 2000] …......... 2 Philamcare Health Systems Inc. vs. Court of Appeals [GR 125678, 18 March 2002] …......... 4 Fortune Insurance and Surety Co. Inc. vs. Court of Appeals [GR 115278, 23 May 1995] …......... 6 Enriquez vs. Sun Life Assurance Company of Canada [GR 15895, 29 November 1920] …......... 7 Development Bank of the Philippines vs. Court of Appeals [GR 109937, 21 March 1994] …......... 8 Great Pacific Life Assurance Company vs. Court of Appeals [GR L-31845, 30 April 1979] …......... 10 Spouses Cha vs. Court of Appeals [GR 124520, 18 August 1997] …......... 11 Geagonia vs. Court of Appeals [GR 114427, 6 February 1995] …......... 12 Rizal Commercial Banking Corporation (RCBC) vs. Court of Appeals [GR 128833, 20 April 1998] …......... 14 Great Pacific Life Assurance Corp. vs. Court of Appeals [GR 113899, 13 October 1999] …......... 17 Sunlife Assurance Company of Canada vs. Court of Appeals [GR 105135, 22 June 1995] …......... 18 Vda. de Canilang vs. Court of Appeals [GR 92492, 17 June 1993] …......... 19 Tan vs. Court of Appeals [GR 48049, 29 June 1989] …......... 21 Pacific Timber Export Corporation vs. Court of Appeals [GR L-38613, 25 February 1982] …......... 22 Philippine American Life and General Insurance Company vs. Valencia-Bagalacsa [GR 139776, 1 August 2002] …......... 23 Makati Tuscany Condominium Corporation vs. Court of Appeals [GR 95546, 6 November 1992] …......... 24 UCPB General Insurance vs. Masagana Telamart Inc. [GR 137172, 15 June 1999] …......... 26 UCPB General Insurance vs. Masagana Telamart Inc. [GR 137172, 14 April 2001] …......... 27 American Home Assurance Company vs. Chua [GR 130421, 28 June 1999] …......... 28 Tibay vs. Court of Appeals [GR 119655, 24 May 1996] …......... 29 Philippine Phoenix Surety & Insurance Company vs. Woodworks Inc. [GR L-25317, 6 August 1979] …......... 30 Bonifacio Brothers Inc. vs. Mora [GR L-20853, 29 May 1967] …......... 31 The Insular Life Assurance Company Ltd. vs. Ebrado [GR L-44059, 28 October 1977] …......... 33 Vda de Consuegra vs. Government Service Insurance System [GR L-28093, 30 January 1971] …......... 34 Go vs. Redfern [GR 47705, 25 April 1941] …......... 36 Country Bankers Insurance Corporation vs. Lianga Bay and Community Multi-Purpose Cooperative Inc. [GR 136914, 25 January 2002] …......... 37 Roque vs. Intermediate Appellate Court [GR L-66935, 11 November 1985] …......... 38 La Razon Social "Go Tiaoco y Hermanos" vs. Union Insurance Society of Canton Ltd. [GR 13983, 1 September 1919] …......... 40 Cathay Insurance Co. vs. Court of Appeals [GR 76145, 30 June 1987] …......... 41 Filipino Merchants Insurance Co. Inc. vs. Court of Appeals [GR 85141, 28 November 1989] …......... 43 Oriental Assurance Corporation vs. Court of Appeals [GR 94052, 9 August 1991] …......... 45 Finman General Assurance Corporation vs. Court of Appeals [GR 100970, 2 September 1992] …......... 46 Sun Insurance Office Ltd. vs. Court of Appeals [GR 92383, 17 July 1992] …......... 47 Vda. de Gabriel vs. Court of Appeals [GR 103883, 14 November 1996] …......... 48 Vda. de Maglana vs. Consolacion [GR 60506, 6 August 1992] …......... 50 Tio Khe Chio vs. Court of Appeals [GR 76101-02, 30 September 1991] …......... 52 Finman General Assurance Corporation vs. Court of Appeals [GR 138737, 12 July 2001] …......... 53

This collection contains thirty eight (38) cases summarized in this format by Michael Vernon M. Guerrero (as a senior law student) during the Second Semester, school year 2005-2006 in the Commercial Law Review class under Atty. Zarah Villanueva-Castro at the Arellano University School of Law (AUSL). Compiled as PDF, July 2011. Berne Guerrero entered AUSL in June 2002 and eventually graduated from AUSL in 2006. He passed the Philippine bar examinations immediately after (April 2007).

www.berneguerrero.com

Narratives (Berne Guerrero)

1 Verendia vs. Court of Appeals [GR 76399, 22 January 1993]; also Fidelity & Surety Co. of the Philippines Inc. vs. Verendia [GR 75605] Third Division, Melo (J): 4 concur Facts: Fidelity and Surety Insurance Company of the Philippines issued its Fire Insurance Policy F-18876 effective between 23 June 1980 and 23 June 1981 covering Rafael (Rex) Verendia's residential building located at Tulip Drive, Beverly Hills, Antipolo, Rizal in the amount of P385,000.00. Designated as beneficiary was the Monte de Piedad & Savings Bank. Verendia also insured the same building with two other companies, namely, The Country Bankers Insurance for P56,000.00 under Policy No. PDB-80-1913 expiring on 12 May 1981, and The Development Insurance for P400,000.00 under Policy F-48867 expiring on 30 June 1981. While the three fire insurance policies were in force, the insured property was completely destroyed by fire on the early morning of 28 December 1980. Fidelity was accordingly informed of the loss and despite demands, refused payment under its policy, thus prompting Verendia to file a complaint with the then Court of First Instance of Quezon City, praying for payment of P385,000.00, legal interest thereon, plus attorney's fees and litigation expenses. The complaint was later amended to include Monte de Piedad as an "unwilling defendant." Answering the complaint, Fidelity, among other things, averred that the policy was avoided by reason of over-insurance, that Verendia maliciously represented that the building at the time of the fire was leased under a contract executed on 25 June 1980 to a certain Roberto Garcia, when actually it was a Marcelo Garcia who was the lessee. On 24 May 1983, the trial court rendered a decision, per Judge Rodolfo A. Ortiz, ruling in favor of Fidelity. In sustaining the defenses set up by Fidelity, the trial court ruled that Paragraph 3 of the policy was also violated by Verendia in that the insured failed to inform Fidelity of his other insurance coverages with Country Bankers Insurance and Development Insurance. Verendia appealed to the then Intermediate Appellate Court and in a decision promulgated on 31 March 1986, (CA-GR CV 02895, Coquia, Zosa, Bartolome, and Ejercito (P), JJ.), the appellate court reversed for the following reasons: (a) there was no misrepresentation concerning the lease for the contract was signed by Marcelo Garcia in the name of Roberto Garcia; and (b) Paragraph 3 of the policy contract requiring Verendia to give notice to Fidelity of other contracts of insurance was waived by Fidelity as shown by its conduct in attempting to settle the claim of Verendia. Fidelity received a copy of the appellate court's decision on 4 April 1986, but instead of directly filing a motion for reconsideration within 15 days therefrom, Fidelity filed on 21 April 1986, a motion for extension of 3 days within which to file a motion for reconsideration. The motion for extension was not filed on 19 April 1986 which was the 15th day after receipt of the decision because said 15th day was a Saturday and of course, the following day was a Sunday. The motion for extension was granted by the appellate court on 30 April 1986, but Fidelity had in the meantime filed its motion for reconsideration on 24 April 1986. Verendia filed a motion to expunge from the record Fidelity's motion for reconsideration on the ground that the motion for extension was filed out of time because the 15th day from receipt of the decision which fell on a Saturday was ignored by Fidelity, for indeed, so Verendia contended, the Intermediate Appellate Court has personnel receiving pleadings even on Saturdays. The motion to expunge was denied on 17 June 1986 and after a motion for reconsideration was similarly brushed aside on 22 July 1986, a petition (GR 75605) was initiated. Subsequently, or more specifically on 21 October 1986, the appellate court denied Fidelity's motion for reconsideration and account thereof. Fidelity filed on 31 March 1986, the petition for review on certiorari (GR 76399). The two petitions, inter-related as they are, were consolidated and thereafter given due course. Issue: Whether Verandia forfeited all benefits due to his presentation of a false declaration to support his claim. Held: The contract of lease upon which Verendia relies to support his claim for insurance benefits, was entered into between him and one Robert Garcia, married to Helen Cawinian, on 25 June 1980, a couple of days after the effectivity of the insurance policy. When the rented residential building was razed to the ground on 28 December 1980, it appears that Robert Garcia (or Roberto Garcia) was still within the premises. However, according to the investigation report prepared by Pat. Eleuterio M. Buenviaje of the Antipolo police, the building appeared to have "no occupant" and that Mr. Roberto Garcia was "renting on the otherside
Commercial Law – Insurance Law, 2006 ( 1 )

Narratives (Berne Guerrero)

(sic) portion of said compound.". These pieces of evidence belie Verendia's uncorroborated testimony that Marcelo Garcia whom he considered as the real lessee, was occupying the building when it was burned. Robert Garcia disappeared after the fire. It was only on 9 October 1981 that an adjuster was able to locate him. Robert Garcia then executed an affidavit before the National Intelligence and Security Authority (NISA) to the effect that he was not the lessee of Verendia's house and that his signature on the contract of lease was a complete forgery. Thus, on the strength of these facts, the adjuster submitted a report dated 4 December 1981 recommending the denial of Verendia's claim. Ironically, during the trial, Verendia admitted that it was not Robert Garcia who signed the lease contract. According to Verendia, it was signed by Marcelo Garcia cousin of Robert, who had been paying the rentals all the while. Verendia, however, failed to explain why Marcelo had to sign his cousin's name when he in fact was paying for the rent and why Verendia himself, the lessor, allowed such a ruse. Fidelity's conclusions on these proven facts appear, therefore, to have sufficient bases: Verendia concocted the lease contract to deflect responsibility for the fire towards an alleged "lessee", inflated the value of the property by the alleged monthly rental of P6,500 when in fact, the Provincial Assessor of Rizal had assessed the property's fair market value to be only P40,300.00, insured the same property with two other insurance companies for a total coverage of around P900,000, and created a dead-end for the adjuster by the disappearance of Robert Garcia. Basically a contract of indemnity, an insurance contract is the law between the parties. Its terms and conditions constitute the measure of the insurer's liability and compliance therewith is a condition precedent to the insured's right to recovery from the insurer. As it is also a contract of adhesion, an insurance contract should be liberally construed in favor of the insured and strictly against the insurer company which usually prepares it. Considering, however, the foregoing discussion pointing to the fact that Verendia used a false lease contract to support his claim under Fire Insurance Policy F-18876, the terms of the policy should be strictly construed against the insured. Verendia failed to live by the terms of the policy, specifically Section 13 thereof which is expressed in terms that are clear and unambiguous, that all benefits under the policy shall be forfeited "if the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devises are used by the Insured or anyone acting in his behalf to obtain any benefit under the policy". Verendia, having presented a false declaration to support his claim for benefits in the form of a fraudulent lease contract, he forfeited all benefits therein by virtue of Section 13 of the policy in the absence of proof that Fidelity waived such provision. Worse yet, by presenting a false lease contract, Verendia reprehensibly disregarded the principle that insurance contracts are uberrimae fidae and demand the most abundant good faith. 2 Rizal Surety & Insurance Company vs. Court of Appeals [GR 112360, 18 June 2000] Third Division, Purisima (J): 4 concur Facts: On 13 March 1980, Rizal Surety & Insurance Company (Rizal Insurance) issued Fire Insurance Policy 45727 in favor of Transworld Knitting Mills, Inc. (Transworld), initially for P1,000,000.00 and eventually increased to P1,500,000.00, covering the period from 14 August 1980 to 13 March 1981. The same pieces of property insured with Rizal Insurance were also insured with New India Assurance Company, Ltd., (New India). On 12 January 1981, fire broke out in the compound of Transworld, razing the middle portion of its four-span building and partly gutting the left and right sections thereof. A two-storey building (behind said four-span building) where fun and amusement machines and spare parts were stored, was also destroyed by the fire. Transworld filed its insurance claims with Rizal Insurance and New India but to no avail. On 26 May 1982, TransWorld brought against the said insurance companies an action for collection of sum of money and damages (Civil Case 46106) before Branch 161 of the then Court of First Instance of Rizal; praying for judgment ordering Rizal Insurance and New India to pay the amount of P2,747,867.00 plus legal interest, P400,000.00 as attorney's fees, exemplary damages, expenses of litigation of P50,000.00 and costs of suit. Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-span building, which was partly burned, and not the damage caused by the fire on the two-storey annex building. On 4 January 1990, the trial court rendered its decision; dismissing the case as against New India; ordering Rizal Insurance to pay Transworld the amount of P826,500.00 representing the actual value of the losses suffered by it; and with cost against Rizal Insurance. Both Rizal Insurance and TransWorld went to the Court
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Narratives (Berne Guerrero)

of Appeals, which came out with its decision of 15 July 1993, modifying the lower court's decision by requiring New India to pay Transworld the amount of P1,818,604.19; and Rizal Surety to pay Transworld P470,328.67, based on the actual losses sustained by Transworld in the fire, totalling P2,790,376.00 as against the amounts of fire insurance coverages respectively extended by New India in the amount of P5,800,000.00 and Rizal Surety and Insurance Company in the amount of P1,500,000.00. On 20 August 1993, from the aforesaid judgment of the Court of Appeals, New India appealed to the Supreme Court theorizing inter alia that the TransWorld could not be compensated for the loss of the fun and amusement machines and spare parts stored at the two-storey building because it (Transworld) had no insurable interest in said goods or items. On 2 February 1994, the Court denied the appeal with finality in GR L-111118 (New India Assurance Company Ltd. vs. Court of Appeals). Rizal Insurance and TransWorld, on the other hand, interposed a Motion for Reconsideration before the Court of Appeals, and on 22 October 1993, the Court of Appeals reconsidered its decision of 15 July 1993, as regards the imposition of interest on the assessment against New India on the amount of P1,818,604.19 and that against Rizal Insurance on the amount of P470,328.67, commences from 26 May 1982 when the complaint was filed until payment is made. The rest of the said decision was retained in all other respects. Rizal Insurance filed the petition for review on certiorari. Issue [1]: Whether the fire insurance policy litigated upon protected only the contents of the main building (four-span), and did not include those stored in the two-storey annex building; or whether the so called "annex" was not an annex but was actually an integral part of the four-span building and therefore, the goods and items stored therein were covered by the same fire insurance policy. Held [1]: INCLUDES 2-STORY ANNEX BUILDING. The stipulation in subject fire insurance policy regarding its coverage, reads "contained and/or stored during the currency of this Policy in the premises occupied by them forming part of the buildings situated within own Compound." Therefrom, it can be gleaned unerringly that the fire insurance policy in question did not limit its coverage to what were stored in the fourspan building. The two-storey building involved a permanent structure, which adjoins and intercommunicates with the "first right span of the lofty storey building", formed part thereof, and meets the requisites for compensability under the fire insurance policy sued upon. So also, considering that the two-storey building aforementioned was already existing when subject fire insurance policy contract was entered into on 12 January 1981, having been constructed sometime in 1978, Rizal Insurance should have specifically excluded the said two-storey building from the coverage of the fire insurance if minded to exclude the same but it did not, and instead, went on to provide that such fire insurance policy covers the products, raw materials and supplies stored within the premises of Transworld which was an integral part of the four-span building occupied by Transworld, knowing fully well the existence of such building adjoining and intercommunicating with the right section of the four-span building. Issue [2]: Whether the ambiguity in fire insurance policy should be resolved against Rizal Surety. Held [2]: YES. The stipulation as to the coverage of the fire insurance policy under controversy has created a doubt regarding the portions of the building insured thereby. Article 1377 of the New Civil Code provides that "The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity." Conformably, it stands to reason that the doubt should be resolved against Rizal Insurance, whose lawyer or managers drafted the fire insurance policy contract under scrutiny. Citing the aforecited provision of law in point, the Court in Landicho vs. Government Service Insurance System, ruled that "as regards insurance policies, in respect of which it is settled that the 'terms in an insurance policy, which are ambiguous, equivocal, or uncertain are to be construed strictly and most strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially where forfeiture is involved' (29 Am. Jur., 181), and the reason for this is that the 'insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by experts and legal advisers employed by, and acting exclusively in the interest of, the insurance company.' (44 C.J.S., p. 1174)." Equally relevant is the following disquisition of the Court in
Commercial Law – Insurance Law, 2006 ( 3 )

She asked for reimbursement of her expenses plus moral damages and attorney's fees. the reduced amount of P10. He was also entitled to avail of "out-patient benefits" such as annual physical examinations. amounting to about P76. In the morning of 13 April 1990. the same was extended for another year from 1 March 1989 to 1 March 1990. Doctors at the MMC allegedly discovered at the time of Ernani's confinement that he was hypertensive. Philamcare's motion for reconsideration was denied. While her husband was in the hospital. Trinos was constrained to bring him back to the Chinese General Hospital where he died on the same day. However. the reduced amount of moral damages of P10. The courts cannot ignore that nowadays monopolies. Accordingly. Issue [1]: Whether a health care agreement between Philamcare and Ernani Trinos is an insurance contract. Hence. until the amount is fully paid to plaintiff who paid the same. Philamcare denied her claim saying that the Health Care Agreement was void. Trinos tried to claim the benefits under the health care agreement. Trinos' husband was entitled to avail of hospitalization benefits.000. and prevent their becoming traps for the unwary. whether ordinary or emergency. give details). the lower court ruled against Philamcare and Reverente. and the attorney's fees of P20. cartels and concentration of capital. vs.00 plus interest. After trial. Trinos paid the hospitalization expenses herself. Trinos instituted with the Regional Trial Court of Manila. On 24 July 1990. Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month beginning 9 March 1990. Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby Commercial Law – Insurance Law. Later.000. 18 March 2002] First Division.00. preventive health care and other out-patient services.Narratives (Berne Guerrero) Fieldmen's Insurance Company. Due to financial difficulties.00. 2006 ( 4 ) . De Songco. where it was held that the "rigid application of the rule on ambiguities has become necessary in view of current business practices. his participation in the 'agreement' being reduced to the alternative to 'take it or leave it' labelled since Raymond Saleilles 'contracts by adherence' (contrats [sic] d'adhesion). there was a concealment regarding Ernani's medical history." 3 Philamcare Health Systems Inc. " The application was approved for a period of one year from 1 March 1988 to 1 March 1989. Court of Appeals [GR 125678. Vda.000.000. Benito Reverente (Civil Case 90 53795). endowed with overwhelming economic power. liver disease. manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit.000. Dr. he was issued Health Care Agreement P010194. Under the agreement. In the standard application form. On appeal. During the period of his coverage. deceased husband of Julita Trinos. diabetes. diabetic and asthmatic. Upon the termination of the agreement.000. plus costs of suit. Trinos brought her husband home again. an action for damages against Philamcare and its president. in contrast to these entered into by parties bargaining on an equal footing. After her husband was discharged from the MMC. Thus. he was attended by a physical therapist at home. raising the primary argument that a health care agreement is not an insurance contract. Philamcare brought the petition for review. The amount of coverage was increased to a maximum sum of P75.00 per disability. cancer. contrary to his answer in the application form. According to Philamcare. Ynares-Santiago (J): 3 concur See also case entry 13 Facts: Ernani Trinos. applied for a health care coverage with Philamcare Health Systems. heart trouble. ordering them to pay and reimburse the medical and hospital coverage of the late Ernani Trinos in the amount of P76. he answered no to the following question: "Have you or any of your family members ever consulted or been treated for high blood pressure.00 as exemplary damages to Trinos. Held [1]: YES. vs. asthma or peptic ulcer? (If Yes. however. hence the "incontestability clause" under the Insurance Code does not apply. such contracts (of which policies of insurance and international bills of lading are prime example) obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition. Inc.00 to Trinos. then from 1 March 1990 to 1 June 1990. he was admitted at the Chinese General Hospital. listed therein. Branch 44. Ernani had fever and was feeling very weak. the Court of Appeals affirmed the decision of the trial court but deleted all awards for damages and absolved Reverente. Inc.

Under Section 27 of the Insurance Code." The right to rescind should be exercised previous to the commencement of an action on the contract. courts should construe them in such a way as to preclude the insurer from non-compliance with his obligation. answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. damage or liability arising from an unknown or contingent event. Thus. "a concealment entitles the injured party to rescind a contract of insurance. Philamcare is liable for claims made under the contract. In the end. without intent to deceive will avoid a policy when they were untrue. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true. to be actually untrue. belief. medical or any other expense arising from sickness. to furnish facts on which cancellation is based. a representation of the expectation. that which he then knows. (2) Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned. whether past or future. may be insured against. of which death or illness might delay or prevent the performance. (4) Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk. Issue [3]: Whether rescission must be exercised before commencement of an action on the contract. The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract. but is obligated to make further inquiry. the cancellation of health care agreements as in insurance policies require the concurrence of the following conditions: (1) Prior notice of cancellation to insured. or the impossibility of which is shown by the facts within his knowledge. Commercial Law – Insurance Law. with or without the authority to investigate. opinion. (3) The insurer assumes the risk. intention. Having assumed a responsibility under the agreement. An insurance contract exists where the following elements concur: (1) The insured has an insurable interest. the insurable interest of Trinos' husband in obtaining the health care agreement was his own health. or judgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk. where matters of opinion or judgment are called for. and this is likewise the rule although the statement is material to the risk. of his spouse and of his children. Section 10 provides that "Every person has an insurable interest in the life and health: (1) of himself. the insured pays a premium. which is primarily a contract of indemnity. the liability of the health care provider attaches once the member is hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid. (2) The insured is subject to a risk of loss by the happening of the designated peril. (3) of any person under a legal obligation to him for the payment of money. (4) Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured. Concealment as a defense for the health care provider or insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer. Issue [2]: Whether answers made in good faith. since in such case the intent to deceive the insurer is obvious and amounts to actual fraud. or in whom he has a pecuniary interest. which may damnify a person having an insurable interest against him. or its acceptance at a lower rate of premium.Narratives (Berne Guerrero) one undertakes for a consideration to indemnify another against loss. although false. When the terms of insurance contract contain limitations on liability. None of the above pre-conditions was fulfilled in this case. and (4) of any person upon whose life any estate or interest vested in him depends. Being a contract of adhesion. Every person has an insurable interest in the life and health of himself. since in such case the insurer is not justified in relying upon such statement. if the statement is obviously of the foregoing character. mailed or delivered to the insured at the address shown in the policy. as a matter of expectation or belief. Philamcare is bound to answer the same to the extent agreed upon. In any case. (3) Must be in writing. Section 3 of the Insurance Code states that any contingent or unknown event. 2006 ( 5 ) . and (5) In consideration of the insurer's promise. the health care provider must pay for the same to the extent agreed upon under the contract. Where matters of opinion or judgment are called for. Once the member incurs hospital. The health care agreement was in the nature of non-life insurance. no rescission was made. (2) of any person on whom he depends wholly or in part for education or support. Herein. Held [2]: NO. respecting property or service. Besides. Held [3]: YES. injury or other stipulated contingent." Herein.

The case is still being tried as of the date of filing of the present case. Inc. with interest thereon at the legal rate. ambiguity must be strictly interpreted against the insurer and liberally in favor of the insured. until fully paid.000.00 as and for attorney's fees. director. the trial court rendered its decision in favor of Producers. but the latter refused to pay as the loss is excluded from the coverage of the insurance policy. excluding certain types of loss which by law or custom are considered as falling exclusively within the scope of insurance such as fire or marine. Issue: Whether Fortune is liable under the Money.00 special clause deduction and by the recovered sum of P145. public liability insurance. Makati." Producers opposed the contention of Fortune and contended that Atiga and Magalong are not its "officer. vs. Security.. Issue [4]: Whether the membership of the late Trinos is now incontestable. but is not limited to. 2006 ( 6 ) . An armored car of Producers. Maribeth Alampay. The Fiscal of Pasay City then filed an information charging the aforesaid persons with the said crime before Branch 112 of the Regional Trial Court of Pasay City. and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. Held: It should be noted that the insurance policy entered into by the parties is a theft or robbery insurance policy which is a form of casualty insurance.000. Court of Appeals [GR 115278. trustee or authorized representative at the time of the robbery.Narratives (Berne Guerrero) the terms of an insurance contract are to be construed strictly against the party which prepared the contract — the insurer. escorted by Security Guard Saturnino Atiga y Rosete.00 under the custody of its teller. while in the process of transferring cash in the sum of P725. Fortune filed the petition for review on certiorari. Philamcare had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment of asthma. was robbed of the said cash.00 as liability under Policy 0207 (as mitigated by the P40. fraudulent or criminal act of the insured or any officer. specifically under page 1 thereof. especially to avoid forfeiture. In its decision promulgated on 3 May 1994. Fortune appealed this decision to the Court of Appeals (CA-GR CV 32946).. On 20 June 1994. and to pay the costs of suit. with Producers by virtue of a contract of Security Service executed on 25 October 1982.000. Section 174 of the Insurance Code provides that "Casualty insurance is insurance covering loss or liability arising from accident or mishap. with violation of PD 532 (Anti-Highway Robbery Law) before the Fiscal of Pasay City. It ordered Fortune to pay Producers the net amount of P540. employee. On 26 April 1990. from its Pasay Branch to its Head Office at 8737 Paseo de Roxas. and Payroll Robbery policy it issued to the issued to Producers or whether recovery thereunder is precluded under the general exceptions clause thereof. 1 on leave Facts: Producers Bank of the Philippines was insured by the Fortune Insurance and Surety Co. motor Commercial Law – Insurance Law. This is equally applicable to Health Care Agreements.000. and an insurance policy was issued. The periods having expired. Held [4]: YES. Demands were made by Producers upon Fortune to pay the amount of the loss of P725. Inc. 23 May 1995] First Division. The robbery took place while the armored car was traveling along Taft Avenue in Pasay City. The said armored car was driven by Benjamin Magalong y de Vera.000. Davide Jr (J): 2 concur. the defense of concealment or misrepresentation no longer lie. By reason of the exclusive control of the insurance company over the terms and phraseology of the insurance contract. Metro Manila on 29 June 1987. employer's liability insurance. "General Exceptions" Section (b). the sum of P30. the driver Magalong and guard Atiga were charged.00).00. and which reads as follows: "GENERAL EXCEPTIONS The company shall not be liable under this policy in respect of xxx (b) any loss caused by any dishonest. Inc. employee. 1 took no part. together with Edelmer Bantigue Y Eulalio. Reynaldo Aquino and John Doe.000. partner. Under the title Claim procedures of expenses. it affirmed in toto the appealed decision. trustee or authorized representative of the Insured whether acting alone or in conjunction with others. After an investigation conducted by the Pasay police authorities. It includes. Driver Magalong was assigned by PRC Management Systems with Producers by virtue of an Agreement executed on 7 August 1983. The Security Guard Atiga was assigned by Unicorn Security Services. 4 Fortune Insurance and Surety Co.

is a disputed point. control. These contracts are. burglary and theft insurance." In such cases. Joaquin Herrer made application to the Sun Life Assurance Company of Canada through its office in Manila for a life annuity. the policy was issued at Montreal. and Atiga to provide the needed security for the money. Producers entrusted the three with the specific duty to safely transfer the money to its head office." Except with respect to compulsory motor vehicle liability insurance. and other substantially similar kinds of insurance. insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent with public policy. fraudulent. or as statutorily declared even in a limited sense as in the case of Article 106 of the Labor Code which considers the employees under a "laboronly" contract as employees of the party employing them and not of the party who supplied them to the employer. for these particular tasks. On 26 November 1917. Two days later he paid the sum of P6. Magalong to drive the armored vehicle which would carry the money." Persons frequently excluded under such provisions are those in the insured's service and employment. In short. taking into consideration its purpose and always in accordance with the general principles of insurance law. 1 dissents Facts: On 24 September 1917. stating that the policy had been issued. 29 November 1920] En Banc. The following day the local office replied to Mr. it was its intention to exclude and exempt from protection and coverage losses arising from dishonest. the vehicle. A contract of insurance is a contract of adhesion. 5 Enriquez vs. It goes without saying then that if the terms of the contract are clear and unambiguous. and compensation. A "representative" is defined as one who represents or stands in the place of another. Sun Life Assurance Company of Canada [GR 15895. the terms specifying the excluded classes are to be given their meaning as understood in common speech. Canada.) On 4 December 1917. The purpose of the exception is to guard against liability should the theft be committed by one having unrestricted access to the property. personal accident and health insurance as written by non-life insurance companies. the rights and obligations of the parties must be determined by the terms of their contract. one who represents others or another in a special capacity. In the absence of statutory prohibition to the contrary. many designed to reduce this hazard. It has been aptly observed that in burglary. and called attention to the notification of 26 Commercial Law – Insurance Law. therefore. Insofar as Fortune is concerned. or it should be construed liberally in favor of the insured and strictly against the insurer. as an agent. robbery. When it used then the term "employee. 2006 ( 7 ) . the Insurance Code contains no other provisions applicable to casualty insurance or to robbery insurance in particular. attorney Aurelio A. or jurisprudentially established in the light of the four standards in the determination of the employer-employee relationship. Fortune is exempt from liability under the general exceptions clause of the insurance policy. The application was immediately forwarded to the head office of the company at Montreal. Seldom does the insurer assume the risk of all losses due to the hazards insured against. governed by the general provisions applicable to all types of insurance. It is settled that the terms of the policy constitute the measure of the insurer's liability. Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to preclude the insurer from non-compliance with its obligation." it must have had in mind any person who qualifies as such as generally and universally understood. the three acted as agents of Producers. (Whether on the same day the cable was received notice was sent by the Manila office to Herrer that the application had been accepted. or criminal acts of persons granted or having unrestricted access to Producers' money or payroll. The terms "service" and "employment" are generally associated with the idea of selection. Outside of these.000 to the manager of the company's Manila office and was given a receipt. howsoever viewed. Torres." In view of the foregoing. On 18 December 1917. An insurance contract is a contract of indemnity upon the terms and conditions specified therein. with Alampay to be responsible for its custody in transit. "the opportunity to defraud the insurer — the moral hazard — is so great that insurers have found it necessary to fill up their policies with countless restrictions. Still. and his two other companions.Narratives (Berne Guerrero) vehicle liability insurance. plate glass insurance. Malcolm (J): 4 concur. the head office gave notice of acceptance by cable to Manila. and theft insurance. and is interchangeable with "agent. thus any ambiguity therein should be resolved against the insurer. Torres wrote to the Manila office of the company stating that Herrer desired to withdraw his application. there is no room construction and such terms cannot be enlarged or diminished by judicial construction.

The DBP. the MRI premium of Dans.000. Basilan Branch. was credited by DBP to the savings account of the DBP MRI Pool. to hold that the contract for a life annuity was perfected. In resume. The further admitted facts are that the head office in Montreal did accept the application. Only the mailing of acceptance. Accordingly. Still it must be admitted that its enforcement avoids uncertainty and tends to security.00 with the Development Bank of the Philippines (DBP). On 15 August 1987. 2006 ( 8 ) . but in order that the principle may not be taken too lightly. Dans. notifying Mr. but was never actually mailed and thus was never received by the applicant. was prepared and signed in the local office of the insurance company. less the DBP service fee of 10%. applied for a loan of P500. the DBP MRI Pool was advised of the credit. Herrer died on 20 December 1917. courts in the United States. properly addressed and stamped.000 paid by the deceased for a life annuity. The pertinent fact is. it is fatal to the presumption. Dans.476. The trial court gave judgment for Sun Life.00 as payment for the MRI premium. that according to the provisional receipt. together with his wife Candida. Quiason (J): 4 concur Facts: In May 1987. The Civil Code rule. Not only this. upon notice. DBP deducted the amount of P1. his son and daughter-in-law. was approved by DBP on 4 August 1987 and released on 11 August 1987. 21 March 1994] First Division. relayed this information to the DBP MRI Pool. the law applicable to the case is found to be the second paragraph of article 1262 of the Civil Code providing that an acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge.Narratives (Berne Guerrero) November 1917. it has been said. was placed in the ordinary channels for transmission. it is identical with the principles announced by a considerable number of respectable. namely. On 23 September 1987. For instance. The courts who take this view have expressly held that an acceptance of an offer of insurance not actually or constructively communicated to the proposer does not make a contract. Dans died of cardiac arrest. did cable the Manila office to that effect. On 3 September 1987. then 76 years of age. that an acceptance made by letter shall bind the person making the offer only from the date it came to his knowledge. completes the contract of insurance. The fact as to the letter of notification thus fails to concur with the essential elements of the general rule pertaining to the mailing and delivery of mail matter as announced by the American courts. 6 Development Bank of the Philippines vs. a letter will not be presumed to have been received by the addressee unless it is shown that it was deposited in the post-office. Mr. (2) there had to be approval of the application by the head office of the company. the DBP MRI Pool notified DBP that Dans was not eligible for MRI Commercial Law – Insurance Law. therefore. The contract for a life annuity in the case at bar was not perfected because it has not been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant. Issue: Whether Herrer received notice of acceptance of his application.000. But if any one of these elemental facts fails to appear. Enriquez appealed. through its agent in Manila. Held: NO. This letter was received by Mr. Juan B. may not be the best expression of modern commercial usage. three things had to be accomplished by the insurance company before there was a contract: (1) There had to be a medical examination of the applicant. Torres on the morning of 21 December 1917. when a letter or other mail matter is addressed and mailed with postage prepaid there is a rebuttable presumption of fact that it was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the mails. A loan. and (3) this approval had in some way to be communicated by the company to the applicant. was advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool). Herrer to recover from Sun Life Assurance Company of Canada the sum of P6. Ferrer that his application had been accepted. An action was brought by Rafaek Enriquez as administrator of the estate of the late Joaquin Ma.00. Court of Appeals [GR 109937. in the reduced amount of P300. As the principal mortgagor. as the locus poienitentise is ended when the acceptance has passed beyond the control of the party. From the proceeds of the loan." On 20 August 1987. The letter of 26 November 1917. Dans accomplished and submitted the "MRI Application for Insurance" and the "Health Statement for DBP MRI Pool. did actually issue the policy and did. actually write the letter of notification and place it in the usual channels for transmission to the addressee.

000. In dealing with Dans. through Candida Dans as administratrix. thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming. Four days latter.Narratives (Berne Guerrero) coverage.00.00. These two conditions. no perfected contract of insurance. The DBP offered to refund the premium of P1. As an insurance agent. did not approve the application of Dans. DBP was wearing two legal hats: the first as a lender. On 10 February 1989. the appellate court affirmed in toto the decision of the trial court. Branch I. the borrower. however. to pay the Estate the amount of P10. he filled up and personally signed a "Health Statement for DBP Pool" with the following declaration: "I hereby declare and agree that all the statements and answers contained herein are true. The DBP's motion for reconsideration was denied in a resolution dated 20 April 1993. In a decision dated 7 September 1992. as it led Dans to believe that he has fulfilled all the requirements for the MRI and that the issuance of his policy was forthcoming. satisfied or set-off by virtue of the insurance coverage of the late Juan B. as a result. The pool. as a matter of policy and practice. DBP deducted 10% of the premium collected by it from Dans. which DBP credited to its account with full knowledge that it was payment for Dan's premium. DBP made Dans fill up and sign his application for MRI.00 plus legal rate of interest as amortization payment paid under protest. being joined conjunctively.00 as costs of litigation and other expenses. The DBP appealed to the Court of Appeals. Issue [2]: Whether DBP is liable for the entire value of the insurance policy. refused to accept an ex gratia settlement of P30. after the trial court found no privity of contract between it and the deceased. which the DBP later offered. as well as his health statement.00 which the deceased had paid. It is understood and agreed that no insurance coverage shall be effected unless and until this application is approved and the full premium is paid during my continued good health. and (2) when the full premium is paid during the continued good health of the applicant. Dans.00 as attorney's fees. hence.476. to pay the Estate the amount of P10. The DBP later submitted both the application form and health statement to the DBP MRI Pool at the DBP Main Building. The maximum age for MRI acceptance is 60 years as clearly and specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance Commercial Law – Insurance Law. Held [2]: It was DBP. When Dan's loan was released on 11 August 1987. to consider the mortgage loan of P300. Basilan. despite knowledge of his age ineligibility. likewise. DBP had full knowledge that Dan's application was never going to be approved. On 10 March 1990.000. Makati Metro Manila. filed a complaint with the Regional Trial Court. She. to secure MRI coverage. but Candida Dans refused to accept the same. must concur.00 including all interest accumulated or otherwise to have been settled.000. DBP filed the petition for review on certiorari. the DBP MRI Pool cannot be held liable on a contract that does not exist.476. was absolved from liability. that required Dans. demanding payment of the face value of the MRI or an amount equivalent to the loan. The DBP MRI Pool. the Estate of the Late Juan B. The court ordered DBP to return and reimburse the Estate the amount of P139. however. and other relief just and equitable. Issue [1]: Whether there was a perfected contract of insurance for DBP MRI Pool to be held liable. 2006 ( 9 ) .500. the trial court rendered a decision in favor of the Estate and against DBP. Undisputably. the MRI coverage shall take effect: (1) when the application shall be approved by the insurance pool. DBP already deducted from the proceeds thereof the MRI premium." Under the aforementioned provisions. against DBP and the insurance pool for collection of Sum of Money with Damages. being over the acceptance age limit of 60 years at the time of application. Held [1]: NO. Dans. Instead of allowing Dans to look for his own insurance carrier or some other form of insurance policy. The trial court declared DBP in estoppel for having led Dans into applying for MRI and actually collecting the premium and the service fee. DBP made Dans go through the motion of applying for said insurance. Apparently. complete and correct to the best of my knowledge and belief and form part of my application for insurance. There is also no showing that it accepted the sum of P1. the power to approve MRI applications is lodged with the DBP MRI Pool. On 21 October 1987. DBP compelled him to apply with the DBP MRI Pool for MRI coverage. There was. When Dans applied for MRI. and the second as an insurance agent.000. DBP apprised Candida Dans of the disapproval of her late husband's MRI application. As service fee.

especially the Chinese. and therefore would have been fully insured by the time he died. Two petitions for certiorari by way of appeal were filed by Pacific Life and Mondragon. Commercial Law – Insurance Law. i. The petitons were consolidated by the Supreme Court in a resolution dated 29 April 1970.75. Ngo Hing filed an application with the Great Pacific Life Assurance Company for a 20-year endowment policy in the amount of P50. Court of Appeals [GR L-31878] First Division. Instead. ordering Pacific Life and Mondragon jointly and severally to pay Ngo Hing. The liability of an agent who exceeds the scope of his authority depends upon whether the third person is aware of the limits of the agent's powers. which rendered a decision against Pacific Life and Mondragon. were asking for such coverage. but he retained the amount of P1. The DBP is not authorized to accept applications for MRI when its clients are more than 60 years of age. 7 Great Pacific Life Assurance Company vs. Then on 30 April 1957. Knowing all the while that Dans was ineligible for MRI coverage because of his advanced age. On reconsideration. cannot be for the entire value of the insurance policy. If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the non-disclosure thereof by the agent. the sum of P1. Mondragon finally type-wrote the data on the application form which was signed by Ngo Hing. and absolved Pacific Life and Mondragon from liability on the insurance policy. DBP exceeded the scope of its authority when it accepted Dan's application for MRI by collecting the insurance premium.000. Thereupon. It was when things were in such state that on 28 May 1957 Helen Go died of influenza with complication of broncho-pneumonia.75 going over to the Company. the appellate court affirmed in toto the decision of the Court of First Instance of Cebu. also Mondragon vs. then the latter is liable for damages to him.e.00 as his commission for being a duly authorized agent of Pacific Life. To assume that were it not for DBP's concealment of the limits of its authority. There is no showing that Dans knew of the limitation on DBP's authority to solicit applications for MRI. and on the twenty-third day from the date of release of his loan. Considering his advanced age. De Castro (J): 4 concur. The DBP's liability. and deducting its agent's commission and service fee. 2006 ( 10 ) .000. It must also be noted that Dans died almost immediately. Dans would have secured an MRI from another insurance company.00 on the life of his one-year old daughter Helen Go. Likewise.00 as attorney's fees plus costs of suits. on 6 May 1957. but Pacific Life can consider the same under the Juvenile Triple Action Plan. Mondragon received a letter from Pacific Life disapproving the insurance application.000. and advised that if the offer is acceptable. on the nineteenth day after applying for the MRI. The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by Mondragon to Ngo Hing. Ngo Hing supplied the essential data which Lapulapu D. Ngo Hing sought the payment of the proceeds of the insurance. without interest. however.317.. is highly speculative. and the sum of P10.077. the binding deposit receipt was issued to Ngo Hing. On appeal. The latter paid the annual premium. he filed the action for the recovery of the same before the Court of First Instance of Cebu. the Court of Appeals set aside the appealed decision of the Court of First Instance of Cebu. 30 April 1979].077.Narratives (Berne Guerrero) companies concerned. The letter stated that the said life insurance application for 20-year endowment plan is not available for minors below 7 years old. Upon the payment of the insurance premium.00 with interest at 6% from the date of the filing of the complaint. pointing out that since 1954 the customers. the Juvenile Non-Medical Declaration be sent to the Company. but having failed in his effort. Mondragon. however. Mondragon handwrote at the bottom of the back page of the application form his strong recommendation for the approval of the insurance application. there is no absolute certainty that Dans could obtain an insurance coverage from another company. Mondragon wrote back Pacific Life again strongly recommending the approval of the 20-year endowment life insurance on the ground that Pacific Life is the only insurance company not selling the 20year endowment insurance plan to children. Court of Appeals [GR L-31845. Branch Manager of the Pacific Life in Cebu City wrote on the corresponding form in his own handwriting . orderig them to solidarily pay Ngo Hing the amount of P50. 1 took no part See case entry 17 Facts: On 14 March 1957. but ordered the reimbursement to Ngo Hing the amount of P1.

063. fire broke out inside the leased premises.000. the Regional Trial Court. as lessees. which Ngo Hing failed to accept. Upon this premise. in life insurance. the insurance applied for shall not be in force at any time. On appeal.00 as exemplary damages. In the absence of a meeting of the minds between Pacific Life and Ngo Hing over the 20-year endowment life insurance in the amount of P50. and with the non-compliance of the abovequoted conditions stated in the disputed binding deposit receipt. Where an agreement is made between the applicant and the agent. the deposit paid by Ngo Hing shall have to be refunded by Pacific Life. Court of Appeals [GR 124520. P20. without the written consent of CKS. on 5 October 1988. textiles. Clearly implied from the aforesaid conditions is that the binding deposit receipt in question is merely an acknowledgment. as lessor. When CKS learned of the insurance earlier procured by the Cha spouses (without its consent).000. On the day that the lease contract was to expire. Held: YES. goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the LESSOR. On 2 June 1992. no liability shall attach until the principal approves the risk and a receipt is given by the agent. 2006 ( 11 ) . Branch 6.Narratives (Berne Guerrero) Issue: Whether the binding deposit receipt constituted a temporary contract of the life insurance in question. Commercial Law – Insurance Law. that the latter's branch office had received from the applicant the insurance premium and had accepted the application subject for processing by the insurance company. merchandise.00 in favor of the latter's one-year old daughter. the binding deposit receipt is. The provisions printed on the binding deposit receipt show that the binding deposit receipt is intended to be merely a provisional or temporary insurance contract and only upon compliance of the following conditions: (1) that the company shall be satisfied that the applicant was insurable on standard rates. Hence. and is subordinated to the act of the company in approving or rejecting the application. rendered a decision ordering United to pay CKS the amount of P335. the Court of Appeals in CA GR CV 39328 rendered a decision dated 11 January 1996. If the LESSEE obtain(s) the insurance thereof without the consent of the LESSOR then the policy is deemed assigned and transferred to the LESSOR for its own benefit" Notwithstanding the above stipulation in the lease contract.00 as attorney's fees and costs of suit. there could have been no insurance contract duly perfected between them.000. and thus negate the claim that the insurance contract was perfected. otherwise.00 with the United Insurance Co. (2) that if the company does not accept the application and offers to issue a policy for a different plan. One of the stipulations of the 1 year lease contract states that "The LESSEE shall not insure against fire the chattels. What it offered instead is another plan known as the Juvenile Triple Action. the latter filed a complaint against the Cha spouses and United. and the premium paid shall be returned to the applicant. and the company disapproves the application. on behalf of the company. based on its lease contract with the Cha spouses.000. Manila. Padilla (J): 4 concur Facts: Spouses Nilo Cha and Stella Uy-Cha. a "binding slip" or "binding receipt" does not insure by itself.. A motion for reconsideration by United was denied on 29 March 1996. affirming the trial court decision. Pacific Life disapproved the insurance application in question on the ground that it is not offering the 20-year endowment insurance policy to children less than 7 years of age. 8 Spouses Cha vs. 18 August 1997] First Division." Since Pacific Life disapproved the insurance application of Ngo Hing. The spouses Cha and United filed the petition for review on certiorari. Accordingly. deleting however the awards for exemplary damages and attorney's fees. merely conditional and does not insure outright. Thus. the insurance contract shall not be binding until the applicant accepts the policy offered. the deposit shall be refunded.11 and the Cha spouses to pay P50. and that the latter will either approve or reject the same on the basis of whether or not the applicant is "insurable on standard rates. entered into a lease contract with CKS Development Corporation. It bears repeating that through the intra-company communication of 30 April 1957. Inc. The acceptance is merely conditional. manifestly. United refused to pay CKS. it wrote the insurer (United) a demand letter asking that the proceeds of the insurance contract (between the Cha spouses and United) be paid directly to CKS. the Cha spouses insured against loss by fire their merchandise inside the leased premises for P500. and (3) that if the applicant is not insurable according to the standard rates. the binding deposit receipt in question had never become in force at any time.

Geagonia had in his inventory stocks amounting to P392.000.Narratives (Berne Guerrero) Issue: Whether paragraph 18 of the lease contract entered into between CKS and the Cha spouses is valid insofar as it provides that any fire insurance policy obtained by the lessee (Cha spouses) over their merchandise inside the leased premises is deemed assigned or transferred to the lessor (CKS) if said policy is obtained without the prior written consent of the latter. Insurable interest in the property insured must exist at the time the insurance takes effect and at the time the loss occurs." Geagonia declared in the policy under the subheading entitled CO-INSURANCE that Mercantile Insurance Co. that "the insured shall give notice to the Company of any insurance or insurances already effected.432. he obtained from Country Bankers Insurance Corporation fire insurance policy No. or which may subsequently be effected." On 27 May 1990. public order or public policy. The proceeds of the fire insurance policy thus rightfully belong to the spouses Nilo Cha and Stella Uy-Cha. F. that this condition shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200. morals.130. Davide Jr. all benefits under this policy shall be deemed forfeited. 250.50. which provides that "Every stipulation in a policy of Insurance for the payment of loss whether the person insured has or has not any interest in the property insured.000.00. under the Insurance Code — a special law — be validly a beneficiary of the fire insurance policy taken by the spouses over their merchandise. and every policy executed by way of gaming or wagering. the Cha spouses." Herein. or that the policy shall be received as proof of such interest. Merchandise. by or on behalf of the Company before the occurrence of any loss or damage. Inc. Legaspi Gen. good customs. The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for being contrary to law and/or public policy.50. was the co-insurer for P50. Country Bankers denied the claim because it found that at the time of the loss Commercial Law – Insurance Law. In such a case.00 (on credit)." Therefore. the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code. On 22 December 1989. Court of Appeals [GR 114427. This insurable interest over said merchandise remains with the insured. totalling P392. 9 Geagonia vs.698. covering any of the property or properties consisting of stocks in trade. Geagonia's insured stocks-in-trade were completely destroyed prompting him to file with Country Bankers a claim under the policy. fire of accidental origin broke out at around 7:30 p. 2006 ( 12 ) . it cannot be denied that CKS has no insurable interest in the goods and merchandise inside the leased premises under the provisions of Section 17 of the Insurance Code which provides that "The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof.00. The period of the policy was from 22 December 1989 to 22 December 1990 and covered the following: "Stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business. The insurer (United) cannot be compelled to pay the proceeds of the fire insurance policy to a person (CKS) who has no insurable interest in the property insured. Held: NO. and Cebu Tesing Textiles. Agusan del Sur. CKS cannot. On 28 December 1990.130. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property.50. is void. 6 February 1995] First Division.000. Agusan del Sur. (J): 4 concur Facts: Armando Geagonia is the owner of Norman's Mart located in the public market of San Francisco. From 1989 to 1990. goods in process and/or inventories only hereby insured. provided however." A non-life insurance policy such as the fire insurance policy taken by the spouses over their merchandise is primarily a contract of indemnity. itemized as follows: Zenco Sales. F-14622 2 for P100. at the public market of San Francisco. 86.. It is basic in the law on contracts that the stipulations contained in a contract cannot be contrary to law. Inc. The policy contained the following condition. and unless notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code. P55.00.000. Section 18 of the Insurance Code provides that "No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured..m.00.

in the sum of P50. Prop.. in order to constitute a violation. that it was Cebu Tesing Textiles which procured the PFIC policies without informing him or securing his consent. Discount Mart (Mr. and had it been so mentioned. Held [1]: Condition 3 of Country Bankers's Policy F-14622 is a condition which is not proscribed by law.. shall be payable to Messrs. had insurable interest on the stocks. These policies indicate that the insured was "Messrs. the other insurance must be upon the same subject matter. which was P1. — Phils. for P100. Armando Geagonia. issued by the Cebu Branch of the Philippines First Insurance Co.000. Cebu City as their interest may appear subject to the terms of the policy. Its violation would thus avoid the policy. It is commonly known as the additional or "other insurance" clause and has been upheld as valid and as a warranty that no other insurance exists. shall be payable to MESSRS. not a standard mortgage clause.00.)" with a mortgage clause reading ""MORTGAGEE: Loss. and the same risk. Cebu Tesing Textiles. Inc. the Insurance Commission found that Geagonia did not violate Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC.00. In its decision of 29 December 1993. Inc. First CEB/F-24758" The basis of Country Bankers' denial was Geagonia's alleged violation of Condition 3 of the policy. he would not have withheld such information. CO-INSURANCE DECLARED: P100.000. goods in process and/or inventories only hereby insured.00 under fire insurance policy F-14622 and for attorney's fees and costs of litigation. and (b) the nullity of the policy shall only be to the extent exceeding P200. if any. A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. if any. the two policies of the PFIC do not cover the same interest as that covered Commercial Law – Insurance Law. Country Bankers appealed to the Court of Appeals by way of a petition for review (CA-GR SP 31916).00 with legal interest from the time the complaint was filed until fully satisfied plus the amount of P10. as his creditor. and that Cebu Tesing Textile. the Court of Appeals reversed the decision of the Insurance Commission because it found that Geagonia knew of the existence of the two other policies issued by the PFIC. Issue [1]: Whether the non-disclosure of other insurance policies violate condition 3 of the policy. He further asserted that the total of the amounts claimed under the three policies was below the actual value of his stocks at the time of loss.00 as attorney's fees. 2006 ( 13 ) . He admitted in the said letter that at the time he obtained Country Bankers's fire insurance policy he knew that the two policies issued by the PFIC were already in existence. TESING TEXTILES. so as to deny Geagonia from recovering on the policy. These findings were based on Geagonia's testimony that he came to know of the PFIC policies only when he filed his claim with Country Bankers and that Cebu Tesing Textile obtained them and paid for their premiums without informing him thereof. The Court concludes that (a) the prohibition in Condition 3 of the subject policy applies only to double insurance. this requirement was not mentioned to him by Country Bankers' agent.000. The fire insurance policies issued by the PFIC name Geagonia as the assured and contain a mortgage clause which reads: "Loss.000. His motion to reconsider the adverse decision having been denied. he had no knowledge of the provision in Country Bankers' policy requiring him to inform it of the prior policies.000. The Insurance Commission ordered Country Bankers to pay Geagibua the sum of P100. the same interest therein.00 of the total policies obtained.000.00 each. With costs.000.000. (PFIC). He attached his letter of 18 January 1991 which asked for the reconsideration of the denial. Its motion for the reconsideration of the decision having been denied by the Insurance Commission in its resolution of 20 August 1993. However.Narratives (Berne Guerrero) Geagonia's stocks-in-trade were likewise covered by fire insurance policies GA-28146 and GA-28144." This is clearly a simple loss payable clause. Since the insurable interests of a mortgagor and a mortgagee on the mortgaged property are distinct and separate. Its incorporation in the policy is allowed by Section 75 of the Insurance Code. The first conclusion is supported by the portion of the condition referring to other insurance "covering any of the property or properties consisting of stocks in trade. Geagonia filed the petition for review on certiorari. Geagonia then filed a complaint against Country Bankers with the Insurance Commission (Case 3340) for the recovery of P100. In its decision of 21 June 1993. Cebu City as their interest may appear subject to the terms of this policy. however. Such a condition is a provision which invariably appears in fire insurance policies and is intended to prevent an increase in the moral hazard." and the portion regarding the insured's declaration on the subheading CO-INSURANCE that the co-insurer is Mercantile Insurance Co.000.

no double insurance exists. In an interlocutory order dated 12 October 1993. Held [2]: Unlike the "other insurance" clauses involved in General Insurance and Surety Corp. or which may subsequently be effected covering any of the property hereby insured. all benefits under this Policy shall be forfeited". Upon Goyu's application and Uy's and Lao's recommendation. vs. also RCBC vs. 61 SCRA 426 [1974] which reads "The insured shall give notice to the company of any insurance or insurances already effected. the insured may have an inducement to destroy the property for the purpose of collecting the insurance. but said claims were also denied for the same reasons that AGCO denied Goyu's claims. issued 9 endorsements in favor of RCBC seemingly upon instructions of Goyu.000. to endorse and deliver the insurance policies to RCBC. the insurance agent where Goyu obtained the Malayan insurance policies. Commercial Union Assurance Co. Court of Appeals [GR 128833. 1117 [1960].. and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage.000. Ng Hua. Goyu submitted its claim for indemnity on account of the loss insured against. Melo (J): 4 concur Facts: Goyu & Sons. and the insured will not be entitled to indemnity in case of loss. Country Bankers was amenable to assume a co-insurer's liability up to a loss not exceeding P200. without which such policy shall be null and void. What it had in mind was to discourage over-insurance. 2006 ( 14 ) . or in Pioneer Insurance & Surety Corp. In February 1992. and subsequently.00. Under each of these four mortgage contracts. A credit facility in the amount of P30 million was initially granted. which were registered with the Registry of Deeds at Valenzuela. Indeed. Branch 3) as Civil Case 93-65442. Yap. Goyu executed two real estate mortgages and two chattel mortgages in favor of RCBC. Goyu filed a complaint for specific performance and damages which was docketed at the Regional Trial Court of the National Capital Judicial Region (Manila. Lao. 334 [1930]. After due evaluation." By stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value. Goyu obtained in its name a total of 10 insurance policies from MICO. (Goyu) applied for credit facilities and accommodations with Rizal Commercial Banking Corporation (RCBC) at its Binondo Branch. RCBC. 55 Phil. through its key officers. the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. Inc. 20 April 1998]. 10 Rizal Commercial Banking Corporation (RCBC) vs..00. also filed with MICO its formal claim over the proceeds of the insurance policies. MICO denied the claim on the ground that the insurance policies were either attached pursuant to writs of attachments/garnishments issued by various courts or that the insurance proceeds were also claimed by other creditors of Goyu alleging better rights to the proceeds than the insured. which provided "that any outstanding insurance upon the whole or a portion of the objects thereby assured must be declared by the insured in writing and he must cause the company to add or insert it in the policy. one of Goyu's creditors. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured. vs. RCBC's executive committee increased Goyu's credit facility to P50 million. Issue [2]: Whether the violation of Condition 3 of the policy renders the policy void. petitioners Uy Chun Bing and Eli D. On 27 April 1992. Alchester Insurance Agency. 329. or in the 1930 case of Santa Ana vs. and finally to P117 million. RCBC Binondo Branch. 106 Phil.000. Court of Appeals [GR 128834] Second Division. Metro Manila. Goyu committed itself to insure the mortgaged property with an insurance company approved by RCBC. Consequently. then to P90 million. It expressly provides that the condition "shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200." Condition 3 in Country Bankers' policy F-14622 does not absolutely declare void any violation thereof. As security for its credit facilities with RCBC. Inc. recommended Goyu's application for approval by RCBC's executive committee. The non-disclosure then of the former policies was not fatal to Geagonia's right to recover on Country Bankers' policy. one of Goyu's factory buildings in Valenzuela was gutted by fire.Narratives (Berne Guerrero) by the policy of Country Bankers.00. the Regional Trial Commercial Law – Insurance Law.

518. RCBC and Malayan appealed separately but. on 7 January 1994. covering an aggregate amount of P14.500.58 less than the amount of P50. attorneys fees. another notice of garnishment was handed down by another Manila RTC sala (Branch 28) for the amount of P8. all parties interposed their respective appeals. Branch 3 of the Manila RTC rendered judgment in a favor of Goyu.069. the intentions of the parties as shown by their contemporaneous acts. The Court of Appeals partly granted Goyu's appeal.500. MICO deposited the amount of P50. as of 27 April 1992. The Court.785.000.60 with Branch 3 of the Manila RTC. with interest thereon at the rate stipulated in the respective promissory notes (without surcharges and penalties). ordered Goyuto pay its loan obligation with RCBC in the amount of P68.000. and not just from any other insurance company.R.000. in view of the common facts and issues involved. On equitable principles.00. Alchester would not have found out that the subject pieces of property were mortgaged to RCBC had not such information been voluntarily disclosed by Goyu itself.040. and for.000.000. Accordingly.58 — from 17 July 1992 up to the time when the writs of attachments were received by Malayan. such that each one of them may insure the same property for his own sole benefit. The appellate court modified the decision by ordering Malayan to pay Goyu its fire loss claim in the total amount of P74. in good faith.518. No.594.23. It is settled that a mortgagor and a mortgagee have separate and distinct insurable interests in the same mortgaged property.000.938. and verify. and Philippine Trust Company obtained their respective writs of attachments from various courts.000.00. Issue [1]: Whether RCBC. and Malayan and RCBC. on RCBC's Counterclaim. In the meantime.080.696. damages by way of interest for the duration of the delay since 27 July 1992 (90 days after Malayan's receipt of the required proof of loss and notice of loss) at the rate of twice the ceiling prescribed by the Monetary Board.00 from 27 July 1992 up to the time said amount was deposited with the Court on 7 January 1994. in case of the occurrence of loss. particularly on the ground of estoppel.000.518. Alfredo Sebastian.00 which is deposited with the Court. It is also significant that Goyu voluntarily and purposely took the insurance policies from MICO. but sustained the findings of the trial court with respect to MICO and RCBC's liabilities.04. Uy Chun Bing and Eli Lao to pay Goyu solidarily in the amounts of (1) P1. (2) P1.00 as exemplary damages.00 as and for attorney's fees.00 as exemplary damages.549. Alchester would not have known of Goyu's intention of obtaining insurance coverage in compliance with its undertaking in the mortgage contracts with RCBC.000.080. must be given due consideration in order to better serve the interest of justice and equity. surcharges and penalties. RCBC.04 as of 27 April 1992 without any interest. the mortgagor.58 less the amount of P50. on the amounts of (1) P50. ordering RCBC to pay Goyu actual and compensatory damages in the amount of P5.069. ordered Goyu to pay its loan obligations with RCBC in the amount of P68. and (2) P24. Urban Bank. The Court is in a quandary how Alchester could arrive at the idea of endorsing any specific insurance policy in favor of any particular beneficiary or payee other than the insured had not such named payee or beneficiary been specifically disclosed by the insured itself.040. their individual petitions were consolidated.505.505.785.000. It is to be noted that nine endorsement documents were prepared by Alchester in favor of RCBC. After trial. and (3) Costs of suit. Herein. as mortgagee. although it appears that Goyu obtained the subject insurance policies naming itself as the sole payee. a sister company of RCBC.60 (per O.23.75. confirmed that Goyu's other creditors.000.000. Goyu was unsatisfied with the amounts awarded in its favor.938.838. The court also ordered RCBC to pay Goyu actual and compensatory damages in the amount of P2. Held [1]: YES. Commercial Law – Insurance Law. Alchester would not have endorsed the policies to RCBC had it not been so directed by Goyu. namely. on the Counterclaim of RCBC. has any right over the insurance policies taken by Goyu. ordering Malayan to pay Goyu its fire loss claims in the total amount of P74.040. From this judgment. and both Malayan and RCBC to solidarily pay Goyu (1) P1. and ordered that the proceeds of the 10 insurance policies be deposited with the said court minus the aforementioned P14. Had it not been for Goyu.000. 3649285) plus deposited in court and damages by way of interest commencing 27 July 1992 until the time Goyu receives the said amount at the rate of 37% per annum which is twice the ceiling prescribed by the Monetary Board. MICO and RCBC disputed the trial court's findings of liability on their part. the Court is constrained to rule in favor of mortgagor RCBC.00 as. There is no question that Goyu could insure the mortgaged property for its own exclusive benefit.000. The Court. 2006 ( 15 ) .Narratives (Berne Guerrero) Court of Manila (Branch 3). and (2) P1.

in the meantime. obviously considered said endorsement to be sufficient compliance with its obligation under the mortgage contracts since RCBC accordingly continued to extend the benefits of its credit facilities and Goyu continued to benefit therefrom. If there had not been actually an implied ratification of said endorsements by virtue of Goyu's inaction in this case. to enjoy the benefits of the credit facilities extended by RCBC which was conditioned upon the endorsement of the insurance policies to be taken by Goyu to cover the mortgaged properties. these 8 policies can not be attached by Goyu's other creditors up to the extent of the Goyu's outstanding obligation in RCBC's favor. it having been sufficiently established that it was the intention of the parties to designate RCBC as the party for whose benefit the insurance policies were taken out. Being exclusively payable to RCBC by reason of the endorsement by Alchester to RCBC. (4) Goyu continued until the occurrence of the fire. despite the absence written conformity thereto. The fact that upon receiving its copies of the endorsement documents prepared by Alchester. and copies thereof were sent to Goyu. Alchester Insurance Agency. at least on the basis of the equitable principle of estoppel. The insurance proceeds may. Such reliance is justified under the circumstances of the case. The proceeds of the 8 insurance policies endorsed to RCBC aggregate to P89. Moreover. the Court cannot sanction..36. to the extent of Goyu's obligation with RCBC. Such an unjust situation. Under the peculiar circumstances. to enjoy the benefits of the credit facilities extended to it by RCBC. the interest of Goyu in the subject policies had been transferred to RCBC effective as of the time of the endorsement. which may nonetheless Commercial Law – Insurance Law.974. The peculiarity of the circumstances obtaining in the instant case presents a justification to take exception to the strict application of said provision. fair dealing. Goyu. Inc. until of late. Goyu did not assail. undertook to have the mortgaged property properly covered against any loss by an insurance company acceptable to RCBC. which we already ruled to have the force and effect of an endorsement by Goyu itself. the law's evident intention to protect the interests of the mortgagee upon the mortgaged property is expressed in Article 2127 of the Civil Code. Goyu failed to seasonably repudiate the authority of the person or persons who prepared such endorsements. Issue [2]: Whether Goyu can insist that the proceeds of insurance shall exclusively apply to the interest of the person in whose name or for whose benefit it is made. is to countenance grave contravention of public policy. The mortgage contracts contained common provisions whereby Goyu. no less than a sister company of RCBC and definitely an acceptable insurance company to RCBC. MICO and RCBC. 2006 ( 16 ) . be exclusively applied to RCBC. Goyu continued. Held [2]: NO. (3) Endorsement documents were prepared by MICO's underwriter. Section 53 of the Insurance Code ordains that the insurance proceeds of the endorsed policies shall be applied exclusively to the proper interest of the person for whose benefit it was made.Narratives (Berne Guerrero) relied upon the endorsement documents sent to it as this was only pursuant to the stipulation in the mortgage contracts. These policies may no longer be attached by the other creditors of Goyu. (2) Goyu voluntarily procured insurance policies to cover the mortgaged property from MICO. the Court is bound to recognize RCBC's right to the proceeds of the insurance policies if not for the actual endorsement of the policies. Just as plain too is the intention of the parties to constitute RCBC as the beneficiary of the various insurance policies obtained by Goyu. To permit Goyu to capitalize on its nonconfirmation of these endorsements while it continued to enjoy the benefits of the credit facilities of RCBC which believed in good faith that there was due endorsement pursuant to their mortgage contracts. which under the factual circumstances of the case. the validity of said endorsements. Over and above this. The intention of the parties will have to be given full force and effect in this particular case. In this case. it was too late for Goyu to disown the endorsements for any imagined or contrived lack of authority of Alchester to prepare and issue said endorsements. Consider thus the following: (1) It is undisputed that the insured pieces of property were the subject of mortgage contracts entered into between RCBC and Goyu in consideration of and for securing Goyu's credit facilities from RCBC. and justice. good faith. like Alfredo Sebastian in GR 128834. therefore. Goyu cannot seek relief under Section 53 of the Insurance Code which provides that the proceeds of insurance shall exclusively apply to the interest of the person in whose name or for whose benefit it is made. After the occurrence of the loss insured against. Goyu is at the very least estopped from assailing their operative effects. is truly the person or entity for whose benefit the policies were clearly intended.488. as mortgagor.

and levy by the other creditors of Goyu." During the trial.Narratives (Berne Guerrero) forthwith be dismissed for being moot and academic in view of the results reached herein. Dr. Grepalife asserts that Dr. which caused his death. had answered in his insurance application that he was in good health and that he had not consulted a doctor or any of the enumerated ailments. was called to testify. On 20 October 1986." On 15 November 1983.200. Are you now. the widow of the late Dr. On 6 August 1984. Leuterio was not autopsied. Grepalife insisted that Dr. stated that Dr.00. 13 October 1999] Second Division. As the attending physician. as insurance coverage of Dr. Hernando Mejia. Leuterio failed to disclose that he had hypertension. Wilfredo Leuterio. a physician for a heart condition. Dr. Leuterio was not physically healthy when he applied for an insurance coverage on 15 November 1983. garnished. probably secondary to hypertension. in good health? Answer: [ x ] Yes [ ] No. kidney or stomach disorder or any other physical impairment? Answer: No. Dr. Leuterio complained of headaches presumably due to high blood pressure. Hence. Leuterio answered questions concerning his health condition as follows: "7. filed a complaint with the Regional Trial Court of Misamis Oriental. Grepalife issued Certificate B-18558. diabetes. to the best of your knowledge. and fair dealing requires that he should communicate it to the assured. including hypertension. are. therefore. Dr. Leuterio died due to "massive cerebral hemorrhage. hence. the statement of the physician was properly considered by the trial court as hearsay. or consulted. Contrary to Grepalife’s allegations. Issue: Whether Dr. and that the widow’s declaration that her husband had "possible hypertension several years ago" should not be considered as hearsay. other causes were not ruled out. Leuterio’s death certificate stated that hypertension was only "the possible cause of death. On 22 February 1988. based partly from the information given by the widow. Leuterio. If so give details ___________. Have you ever had. as to the medical history of her husband. 11 Great Pacific Life Assurance Corp. Leuterio did not disclose he had been suffering from hypertension. but he designedly and intentionally withholds the same. but as part of res gestae. and thus concealment can be interposed by Grepalife as a defense to annul the insurance contract. Quisumbing (J): 3 concur. who issued the death certificate. Hernando Mejia.92 may be validly attached. to the extent of his DBP mortgage indebtedness amounting to P86. Held: Concealment exists where the assured had knowledge of a fact material to the risk. was due to her unreliable recollection of events. To the extent of Goyu's outstanding obligation with RCBC. Court of Appeals [GR 113899. Mejia did not conduct an autopsy on the body of the decedent. Aside Commercial Law – Insurance Law. against Grepalife for "Specific Performance with Damages. vs. Dr. On 17 May 1993. Mejia’s findings. Leuterio. Mejia’s technical diagnosis of the cause of death of Dr. Only the two other policies amounting to P19. cancer. the trial court rendered a decision in favor of the widow and against Grepalife. Dr. On 11 November 1983. Branch 18. and levied upon by Goyu's other creditors. such nondisclosure constituted concealment that justified the denial of the claim. garnishment. On the contrary. Medarda V. 2006 ( 17 ) . Grepalife merely relied on the testimony of the attending physician.646. Leuterio. Leuterio. the Court of Appeals sustained the trial court’s decision. the medical findings were not conclusive because Dr. Dr. Dr. In an application form. to be released from attachment. Leuterio was a duly documented hospital record." The widow’s statement. Mejia stated that he had no knowledge of Dr. Allegedly. all the rest of the other insurance policies which were endorsed to RCBC. a physician and a housing debtor of DBP applied for membership in the group life insurance plan. 1 on official leave Facts: A contract of group life insurance was executed between Great Pacific Life Assurance Corporation (Grepalife) and Development Bank of the Philippines (DBP). good faith. DBP submitted a death claim to Grepalife. and honesty. 8. as supported by the information given by the widow of the decedent. high blood pressure.224. which might have caused his death. Dr. Grepalife filed the petition for review." Consequently. there was no sufficient proof that the insured had suffered from hypertension. Leuterio’s any previous hospital confinement. when he died the attending physician had certified in the death certificate that the former died of cerebral hemorrhage. The inference was not conclusive because Dr. Grepalife denied the claim alleging that Dr. The insured. lung. Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP.

the insured died in a plane crash. ultra-sonography and hematology tests. with double indemnity in case of accidental death.000. Said Section provides that "a neglect to communicate that which a party knows and ought to communicate.000. Grepalife had not proven nor produced any witness who could attest to Dr. seeking the benefits of the insurance policy taken by her son. Grepalife had failed to establish that there was concealment made by the insured. The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. for cough and flu complications. and which the other has no means of ascertaining. Sunlife appealed to the Court of Appeals. ordering Sunlife to pay the former the amount of P100. On 14 January 1990. Sunlife then moved for a summary judgment and the trial court decided in favor of the Bacanis. that the insured did not disclosed material facts relevant to the issuance of the policy. In its letter.00 was attached to said letter. Bernarda Bacani. 5(a) in the affirmative but limited his answer to a consultation with a certain Dr. Sunlife filed the petition for review on certiorari. which affirmed the decision of the trial court. The designated beneficiary was his mother. all facts within his knowledge which are material to the contract and as to which he makes no warranty. Metro Manila. hence. A check representing the total premiums paid in the amount of P10. Bacani filed a "Proposed Stipulation with Prayer for Summary Judgment" where they manifested that they "have no evidence to refute the documentary evidence of concealment/misrepresentation by the decedent of his health condition. is called concealment. kidney or bladder disorder?" The deceased answered questions No. 22 June 1995] First Division. the insured was examined and confined at the Lung Center of the Philippines. Leuterio were for hypertension.00 the face value of insured's Insurance Policy 3903766. and is therefore liable to pay the proceeds of the insurance. During his confinement.00. where he was diagnosed for renal failure. He was issued Policy 3-903-766-X valued P100. Robert John B. Within the past 5 years have you: a) consulted any doctor or other health practitioner? b) submitted to: ECG? X-rays? blood tests? other tests? c) attended or been admitted to any hospital or other medical facility? 6. Held [1]: NO. Reinaldo D.Narratives (Berne Guerrero) from the statement of the insured’s widow who was not even sure if the medicines taken by Dr. Sunlife informed Bacani. Have you ever had or sought advice for: xxx b) urine. it cannot refuse payment of the claim. Bernarda Bacani and her husband. Sunlife's motion for reconsideration was denied. Sunlife's counterclaim was dismissed. On 26 June 1987. Sunlife discovered that two weeks prior to his application for insurance. Court of Appeals [GR 105135. Herein.000. Quiason (J): 4 concur Facts: On 15 April 1986. On 17 November 1988. hence." Commercial Law – Insurance Law.00 and further sum of P5." Sunlife filed its Request for Admissions relative to the authenticity and due execution of several documents as well as allegations regarding the health of the insured.172. respondent Rolando Bacani. Raymundo of the Chinese General Hospital on February 1986. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer. the deceased was subjected to urinalysis. Leuterio’s medical history. Sunlife filed its answer with counterclaim and a list off exhibits consisting of medical records furnished by the Lung Center of the Philippines. 2006 ( 18 ) .000. Sunlife conducted an investigation and its findings prompted it to reject the claim. Issue [1]: Whether good faith is a defense in concealment. 12 Sunlife Assurance Company of Canada vs.00 in the concept of reasonable attorney's fees and the costs of the suit. Bacani procured a life insurance contract for himself from Sunlife Assurance Company of Canada. and the Accidental Death Benefit in the amount of P100. Bernarda Bacani filed a claim with Sunlife. The other questions were answered in the negative. Sunlife claimed that the insured gave false statements in his application when he answered the following questions: "5. thus rendering the contract of insurance voidable. in good faith. filed an action for specific performance against Sunlife with the Regional Trial Court. Valenzuela. Grepalife failed to clearly and satisfactorily establish its defense. The Bacanis failed to oppose said request or reply thereto. thereby rendering an admission of the matters alleged. Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other. Branch 191.

Court of Appeals. The matters concealed would have definitely affected Bacani's action on his application. Jaime Canilang applied for a "non-medical" insurance policy with Great Pacific Life Assurance Company (Grepalife) naming his wife. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. The insured's failure to disclose the fact that he was hospitalized for two weeks prior to filing his application for insurance. is untenable. widow and beneficiary of the insured. Thus.Narratives (Berne Guerrero) Materiality is to be determined not by the event. 7 SCRA 316 (1963). During the hearing called by the Insurance Commissioner. in forming his estimate of the disadvantages of the proposed contract or in making his inquiries." The doctor prescribed the following for him: Trazepam. Moreover. a tranquilizer. In Vda." and "chronic anemia." Moreover. The insured is specifically required to disclose to the insurer matters relating to his health. Philippine American Life Insurance Company. de Canilang. Jaime Canilang was issued ordinary life insurance Policy 345163. 17 June 1993] Third Division. a beta-blocker drug. Neither does it depend on the actual or physical events which ensue." Vda. that Sunlife's waiver of the medical examination of the insured debunks the materiality of the facts concealed. 2006 ( 19 ) . and Aptin. a disclosure may have warranted a medical examination of the insured by Sunlife in order for it to reasonably assess the risk involved in accepting the application. either by approving it with the corresponding adjustment for a higher premium or rejecting the same. de Canilang testified that she was not aware of any serious illness suffered by her late husband and that. Claudio and was diagnosed as suffering from "sinus tachycardia. for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. de Commercial Law – Insurance Law. 4 August 1982. 13 Philamcare Health Systems Ioc." "anemia. Vda. but solely by the probable and reasonable influence of the facts upon the party to whom communication is due. Court of Appeals [GR 92492.vs. Wilfredo Claudio was presented by Vda. CA (379 SCRA 356) see case entry 3 14 Vda. Canilang consulted the same doctor again on 3 August 1982 and this time was found to have "acute bronchitis. such argument would make Section 27 of the Insurance Code. the Court held that "the waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered. A deposition given by Dr. It appears that such concealment was deliberate on his part. raises grave doubts about his bonafides. In Saturnino v. It is sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries. ineffective. Jaime Canilang consulted Dr. Thelma Canilang. The argument. Held [2]: NO. effective as of 9 August 1982. Wilfredo B.700. filed a claim with Grepalife which the insurer denied on 5 December 1983 upon the ground that the insured had concealed material information from it." On the next day. Issue [2]: Whether Sunlife's waiver of the medical examination of the insured debunks the materiality of the facts concealed. On 5 August 1983. which allows the injured party to rescind a contract of insurance where there is concealment. "good faith" is no defense in concealment. as his beneficiary. as far as she knew. de Canilang then filed a complaint against Grepalife with the Insurance Commission for recovery of the insurance proceeds. 223 SCRA 443 (1993). The information which the insured failed to disclose were material and relevant to the approval and the issuance of the insurance policy. de Canilang v. Mr. Vda. Anent the finding that the facts concealed had no bearing to the cause of death of the insured. de Canilang vs. The terms of the contract are clear. her husband had died because of a kidney disorder. with the face value of P19. Jaime Canilang died of "congestive heart failure. Feliciano (J): 4 concur Facts: On 18 June 1982. the Court held that materiality of the information withheld does not depend on the state of mind of the insured..

In any case. A man's state of mind or subjective belief is not capable of proof in our judicial process. Issue [2]: Whether Grepalife had waived inquiry into the concealment by issuing the insurance policy notwithstanding Canilang's failure to set out answers to some of the questions in the insurance application. Neither does materiality depend upon the actual or physical events which ensue. the Court of Appeals reversed and set aside the decision of the Insurance Commissioner and dismissed Thelma Canilang's complaint and Grepalife's counterclaim. be determined objectively. The materiality of the information withheld by Grepalife did not depend upon the state of mind of Jaime Canilang. She explained that as a rule. that "probable and reasonable influence of the facts" concealed must. for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. The restoration in 1985 by BP 874 of the phrase "whether intentional or unintentional" merely underscored the fact that all throughout (from 1914 to 1985).00 plus legal interest and P2. the diagnosis made and the medicines prescribed by such doctor. The insurance applied for was a "non-medical" insurance policy. de Canilang Thelma Canilang filed the petition for review on certiorari. Jaime Canilang. the nature of the facts not conveyed to the insurer was such that the failure to communicate must have been intentional rather than merely Commercial Law – Insurance Law. at the very least. the statute did not require proof that concealment must be "intentional" in order to authorize rescission by the injured party. 2006 ( 20 ) . Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the communication should have been made. made a material concealment as to the state of his health at the time of the filing of insurance application. The Court of Appeals found that the use of the word "intentionally" by the Insurance Commissioner in defining and resolving the issue agreed upon by the parties at pre-trial before the Insurance Commissioner was not supported by the evidence. justifying Grepalife's denial of the claim. a physician and a medical underwriter working for Grepalife. medical examinations are required only in cases where the applicant has indicated in his application for insurance coverage that he has previously undergone medical consultation and hospitalization. Claudio stated that he was the family physician of the deceased Jaime Canilang and that he had previously treated him for "sinus tachycardia" and "acute bronchitis. There Dr. She testified that the deceased's insurance application had been approved on the basis of his medical declaration. the waiver of medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered. On appeal by Grepalife. Insurance Commissioner Armando Ansaldo ordered Grepalife to pay P19. Held [2]: NO. of course. in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance. herein. In Saturnino v. the Court held that "if anything. PhilippineAmerican Life Insurance Company. In a decision dated 5 November 1985.700." It cannot be excused that that the failure of Canilang to convey certain information to the insurer was not intentional in nature.000. except through proof of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. in the insurance application. it may be reasonably assumed that Grepalife would have made further inquiries and would have probably refused to issue a non-medical insurance policy or. that the issue agreed upon by the parties had been whether the deceased insured. Issue [1]: Whether the information Canilang failed to disclose was material to the ability of Grepalife to estimate the probable risk he presented as a subject of life insurance.Narratives (Berne Guerrero) Canilang. Esperanza Quismorio. The phrase "whether intentional or unintentional" was in fact superfluous.00 as attorney's fees. Had Canilang disclosed his visits to his doctor. Section 27 of the Insurance Code of 1978 is properly read as referring to "any concealment" without regard to whether such concealment is intentional or unintentional. Vda. The deletion of the phrase "whether intentional or unintentional" could not have had the effect of imposing an affirmative requirement that a concealment must be intentional if it is to entitle the injured party to rescind a contract of insurance. The information which Jaime Canilang failed to disclose was material to the ability of Grepalife to estimate the probable risk he presented as a subject of life insurance. Held [1]: YES. by the judge ultimately. required a higher premium for the same coverage." Grepalife for its part presented Dr.

The interpretation of Emilio Tan et al. that the so-called "incontestability clause" precludes the insurer from raising the defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has been Commercial Law – Insurance Law. The policy was thus in force for a period of only one year and five months. In all probability. Emilio Tan et al. (J): 3 concur. Said application was approved and Policy 1082467 was issued effective 6 November 1973. previous to the commencement of this action on 27 November 1975. Issue: Whether Philamlife no longer had the right to rescind the contract of insurance as rescission must allegedly be done during the lifetime of the insured within two years and prior to the commencement of action. the last medical consultation took place just the day before the insurance application was filed. The premiums paid on the policy were thereupon refunded. the defenses of concealment or misrepresentation. a complaint against the former with the Office of the Insurance Commissioner (I. Section 48 of the Insurance Code provides that "Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter. Such failure precisely constituted concealment on the part of Canilang.000. 15 Tan vs. Case 218). filed on 27 November 1975. Indeed. Vda. et al.C. The Court of Appeals dismissed their appeal from the Insurance Commissioner's decision for lack of merit. then filed with Philamlife their claim for the proceeds of the life insurance policy. For Jaime Canilang could not have been unaware that this heart beat would at times rise to high and alarming levels and that he had consulted a doctor twice in the 2 months before applying for non-medical insurance. barred from proving that the policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation. Court of Appeals [GR 48049. the insurer cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. the policy was issued on 6 November 1973 and the insured died on 26 April 1975. Under the "incontestability clause. in a letter dated 11 September 1975. Held: NO. On 26 April 1975. "After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement. Considering that the insured died before the two-year period had lapsed. Gutierrez Jr. Emilio Tan et al." Herein. whether or not. de Canilang's argument. filed the petition for review on certiorari. After hearing the evidence of both parties. father of Emilio. Philamlife denied Emilio Tan et al. 29 June 1989] Third Division. Philamlife rescinded the contract of insurance and refunded the premiums paid on 11 September 1975. Congress felt this was a sufficient answer to the various tactics employed by insurance companies to avoid liability. if accepted.Narratives (Berne Guerrero) inadvertent. Moreover. Emilio Tan. Philamlife is not. such right must be exercised previous to the commencement of an action on the contract. Tan Lee Siong. et al. the Insurance Commissioner rendered judgment on 3 August 3. After two years." Grepalife had not waived inquiry into the concealment by issuing the insurance policy notwithstanding Canilang's failure to set out answers to some of the questions in the insurance application. 2006 ( 21 ) . the insured still lives within such period. with Emilio Tan. applied for life insurance in the amount of P80. Alberto. and Arturo Tan." the insurer has two years from the date of issuance of the insurance contract or of its last reinstatement within which to contest the policy. dismissing the complaint. Juanito. as beneficiaries. no matter how patent or well founded. Tan Lee Siong died of hepatoma. 1977. therefore.00 with the Philippine American Life Insurance Company (Philamlife). to said provision -.that the Insurance Law was amended and the second paragraph of Section 48 added to prevent the insurance company from exercising a right to rescind after the death of the insured. Alleging that Philamlife's refusal to pay them the proceeds of the policy was unjustified and unreasonable. would obviously erase Section 27 from the Insurance Code of 1978. Jaime Canilang went to visit his doctor precisely because of the discomfort and concern brought about by his experiencing "sinus tachycardia. no longer lie.'s claim and rescinded the policy by reason of the alleged misrepresentation and concealment of material facts made by the deceased Tan Lee Siong in his application for insurance. 1 took no part Facts: On 23 September 1973. However.

WICI requested the First Philippine Adjustment Corporation to inspect the loss and assess the damage.395 logs. and 53 HO 1033. WICI informed the Insurance Commissioner that. Quezon Province to Okinawa and Tokyo. PTEC subsequently submitted a Claim Statement demanding payment of the loss under Policies 53 HO 1033. the sum of P3. The Court of Appeals. the claim of PTEC is being denied on the ground that the cover note is null and void for lack of valuable consideration.950 board feet.250. 2006 ( 22 ) . The logs were to be loaded on the 'SS Woodlock' which docked about 500 meters from the shortline of the Diapitan Bay. Although dated 4 April 1963. (WICI) for its exportation of 1. Policy 53 HO 1032 was for 542 pieces of logs equivalent to 499.000 board feet of Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay. while the logs were alongside the vessel. In a reply letter dated 30 March 1964. It was further stated that the said loss may not be considered as covered under Cover Note 1010 because the said Note had become null and void by virtue of the issuance of Marine Policies 53 HO 1032 and 1033. The total cargo insured under the two marine policies accordingly consisted of 1.000 bd. However. 548 board feet. The Court of First Instance of Manila ruled in favor of PTEC and against WICI which ordered the latter to pay the sum of P11. the adjustment company submitted a computation of WICI's probable liability on the loss sustained by the shipment. At about 10:00 a. and advised early settlement of the said marine loss and salvage claim. Insurance Commissioner Francisco Y. reversed the decision of the trial court and thus dismissed PTEC's complaint Commercial Law – Insurance Law.042. In a letter dated 4 April 1963. would be allowed to collect on the policy even if the insured fraudulently concealed material facts. WICI wrote PTEC denying the latter's claim. the Pacific Timber Export Corporation (PTEC) secured temporary insurance from the Workmen's Insurance Company Inc. The key phrase in the second paragraph of Section 48 is "for a period of two years" -." The regular marine cargo policies were issued by WICI in favor of PTEC on 2 April 1963.498 bd. ft.m. The logs were taken from the log pond of PTEC and from which they were towed in rafts to the vessel.04. On 14 September 1963.Narratives (Berne Guerrero) in force for at least two years during the insured's lifetime. but 30 pieces were verified to have been lost or washed away as a result of the accident. Court of Appeals [GR L-38613. the adjuster found that 'the loss of 30 pieces of logs is not covered by Policies 53 HO 1032 and 1033 inasmuch as said policies covered the actual number of logs loaded on board the SS Woodlock. and that the phrase "during the lifetime" found in Section 48 simply means that the policy is no longer considered in force after the insured has died. the loss of 30 pieces of logs is within the 1. Mandanas observed that it is only fair and equitable to indemnify the insured under Cover Note 1010. Policy 53 HO 1033 was for 853 pieces of logs equivalent to 695. The denial of the claim by WICI was brought by PTEC to the attention of the Insurance Commissioner by means of a letter dated 21 March 1964.04 with interest at the rate of 12% interest from receipt of notice of loss on 15 April 1963 up to the complete payment. PTEC informed WICI about the loss of approximately 32 pieces of logs during loading of the SS Woodlock. The adjustment company submitted its Report on 23 August 1963. On 17 July 1963. 25 February 1982] First Division.00. some of the logs intended to be exported were lost during loading operations in the Diapitan Bay. In said report. on advice of their attorneys. bad weather developed resulting in 75 pieces of logs which were rafted together to break loose from each other 45 pieces of logs were salvaged. The two marine policies bore the numbers of 53 HO 1032 and 53 HO 1033.79. the letter was received in the office of WICI only on 15 April 1963. on 29 March 1963. on the ground that its investigation revealed that the entire shipment of logs covered by the two marine policies 53 HO 1032 and 53 HO 1033 were received in good order at their point of destination. Japan. but before the issuance of the two marine policies 53 HO 1032 and 53 HO 1033.00 as attorney's fees and the costs.250. On 26 June 1964. or the equivalent of 1. covered by Cover Note 1010 insured for $70.042. De Castro (J): 6 concur Facts: On 19 March 1963.would give rise to the incongruous situation where the beneficiaries of an insured who dies right after taking out and paying for a life insurance policy. 16 Pacific Timber Export Corporation vs. in the total amount of P19. ft.195. insuring the said cargo of PTEC "Subject to the Terms and Conditions of the WORKMEN'S INSURANCE COMPANY. however. in the total amount of P11. WICI issued on said date Cover Note 1010. INC.000. printed Marine Policy form as filed with and approved by the Office of the Insurance Commissioner. On 13 January 1964.286. After the issuance of Cover Note 1010.000.

As a logical consequence. At any rate. for the number or volume of logs lost can be determined independently. The Cover Note was not without consideration. The adjuster went as far as submitting his report to WICI. no separate premiums are intended or required to be paid on a Cover Note. the presumption is that a credit was intended and policy is valid. thereby leaving no account unpaid by PTEC due on the insurance coverage. CA. filed with the Regional Trial Court of Libmanan. despite repeated demands for payment and/or settlement of the claim due from Philamlife. This is how the cover note as a "binder" should legally operate. Juan Jose Camacho. therefore. not a mere application for insurance which is a mere offer. it would serve no practical purpose in the realm of commerce. the logs having already been safely placed aboard. Held: NO.00. This is a fact admitted by an official of WICI. For obvious reasons. liability on the note would have already arisen even before payment of premium. but after the issuance of the Cover Note. it is not disputed that PTEC paid in full all the premiums as called for by the statement issued by WICI after the issuance of the two regular marine insurance policies. otherwise.Narratives (Berne Guerrero) with costs. This would make no difference. Faustino Lumaniog. is null and void. and thus recovery cannot be made thereon. It may be true that the marine insurance policies issued were for logs no longer including those which had been lost during loading operations. the more practical procedure is simply to deduct the premium from the amount due PTEC on the Cover Note. Philamlife finally refused or Commercial Law – Insurance Law. which must be deemed to include the Cover Note. it was not necessary to ask PTEC to pay premium on the Cover Note. as in fact it had been so ascertained at the instance of WICI itself when it sent its own adjuster to investigate and assess the loss. Celso and Ruben Z. This had to be so because the risk insured against is not for loss during loading operations anymore. but for loss during transit. Lumaniog. however. The non-payment of premium on the Cover Note is. 2006 ( 23 ) . insofar as the liability on the cover note is concerned. they claimed and continuously claimed for all the proceeds and interests under the life insurance policy in the amount of P641.000. Valencia-Bagalacsa [GR 139776. no cause for PTEC to lose what is due it as if there had been payment of premium.000.00. as legitimate children and forced heirs of their late father. a complaint for recovery of sum of money against the Philippine American Life and General Insurance Company (Philamlife) alleging that: their father was insured by Philamlife under Life Insurance Policy 1305486 with a face value of P50. for non-payment by it was not chargeable against its fault. Camarines Sur. Austria-Martinez (J): 4 concur Facts: On 20 June 1995. it did not contain. Had all the logs been lost during the loading operations. 17 Great Pacific Life Assurance Corporation vs. in charge of issuing cover notes of WICI. since by the nature of the Cover Note. 1 August 2002] First Division. for no such premium could have been paid. for the loss insured against having already occurred. does not militate against the validity of PTEC's contention. as well as its computation of WICI's liability on the insurance coverage. the purpose and function of the Cover Note would be set at naught or rendered meaningless. If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued. for no loss or damage had to be assessed on the coverage arising from the marine insurance policies. on 22 June 1981. PTEC filed the petition for review. and is supported by the doctrine that where a policy is delivered without requiring payment of the premium. Issue: Whether the Cover Note is without consideration. their father died of "coronary thrombosis" on 25 November 1980. after the issuance of the marine insurance policies. 89 SCRA 543 see case entry 7 18 Philippine American Life and General Insurance Company vs. Eduardo. The fact that no separate premium was paid on the Cover Note before the loss insured against occurred. the last of which is on 1 December 1994. This coverage could not have been no other than what was stipulated in the Cover Note. as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums. for it is in a real sense a contract.

and so.). reiterating the early request for reconsideration which it denied in a letter dated 14 February 1995. AH-CPP-9210596. it reiterated its decision to deny the claim for payment of the proceeds. Said letter is crucial to Philamlife's defense that the filing of the complaint for recovery of sum of money in June 1995 is beyond the 10-year prescriptive period. 21 June 1982 and 16 November 1982. with a total premium of P466. On 10 February 1983. setting aside the decision of the Court of Appeals dated 30 April 1999 insofar only as it upheld the RTC Order dated 12 December 1997. Hence. in a letter dated 11 July 1983. The RTC committed a grave abuse of discretion when. 2006 ( 24 ) . for a period beginning 1 March 1982 and ending 1 March 1983. 20 May 1982. It based its finding on a mere explanation of the Lumaniogs' counsel and not on evidence presented by the parties as to the date when to reckon the prescriptive period.103. the RTC issued an Order as to the necessity of trial on merits. Philamlife's motion for reconsideration was denied by the RTC in its Order dated 22 December 1997 upholding however in the same Order the claim of the Lumaniogs' counsel that the running of the 10-year period was "stopped" on 25 May 1983 when they requested for a reconsideration of the denial and it was only on 14 February 1995 when Philamlife finally decided to deny their claim that the 10year period began to run. Court of Appeals [GR 95546. Philamlife filed an Answer with Counterclaim and Motion to Dismiss. The premium was paid on installments on 12 March 1982. Commercial Law – Insurance Law. signed by its then Assistant Vice President. rheumatic fever. The ruling of the RTC that the cause of action of the Lumaniogs had not prescribed.. the same is void. 19 Makati Tuscany Condominium Corporation vs. on ground of concealment on the part of the deceased insured Faustino when he asserted in his application for insurance coverage that he had not been treated for indication of "chest pain. On 7 June 1996. Consequently. that the Lumaniogs sent a letter dated 25 May 1983 requesting for reconsideration of the denial. 1 on leave Facts: Sometime in early 1982. Philamlife filed the petition for review on certiorari. Claro. Amado Dimalanta. The Supreme Court thus partially granted the petition. it received a letter from Jose C. dated 30 April 1999. it committed a reversible error when it declared that the RTC did not commit any grave abuse of discretion in issuing the Order dated 12 December 1997. A new judgment was entered reversing and setting aside the Order dated 12 December 1997 of the Regional Trial Court of Libmanan. Camarines Sur (Branch 56) and affirming its Order dated 20 June 1995. Philamlife filed a petition for certiorari (CA-GR 47885) in the Court of Appeals and after the comment of the Lumaniogs and reply of Philamlife. in resolving the motion for reconsideration of Philamlife.Narratives (Berne Guerrero) disallowed said claim on 14 February 1995. that it had denied the latter's claim in a letter dated 12 March 1982. (AHAC). represented by American International Underwriters (Phils. Said RTC was directed to proceed with dispatch with Civil Case L787. dismissed the petition for lack of merit. that the period of 10 years had not yet lapsed. Philamlife had specifically alleged in the Answer that it had denied the Lumaniogs' claim per its letter dated 11 July 1983. palpitation. due process demands that it be given the opportunity to prove that the Lumaniogs had received said letter. or whether an extrajudicial demand made after an action has prescribed shall cause the revival of the action. (AIUI) issued in favor of Makati Tuscany Condominium Corporation (Tuscany) Insurance Policy AH-CPP-9210452 on the latter's building and premises. and therefore. it arbitrarily ruled in its Order dated 12 December 1997. high blood pressure. Held: NO DETERMINATION.05. all of which were accepted by AHAC. Inc. they filed their complaint. more than 10 years later. Issue: Whether the complaint filed by the Lumaniogs for payment of life insurance proceeds is already barred by prescription of action. while the Court of Appeals did not err in upholding the 7 June 1986 Order of the RTC. or on 1 December 1994. Bellosillo (J): 3 concur. heart murmur. 6 November 1992] First Division. AHAC issued to Tuscany Insurance Policy No. heart attack or other disorder of the heart or blood vessel" when in fact he was a known hypertensive since 1974. is arbitrary and patently erroneous for not being founded on evidence on record. the appellate court rendered its Decision. American Home Assurance Co. The Lumaniogs opposed the motion to dismiss. contending that the cause of action had prescribed and that the Lumaniogs are guilty of laches. a provincial board member of the province of Camarines Sur.

It appearing from the peculiar circumstances that the parties actually intended to make the three (3) insurance contracts valid. 13 July 1983. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid. and later deny liability on the lame excuse that the premiums were not prepaid in full. Thereafter. the insured is not entitled to a refund of the premiums paid if the insurer was exposed to the risk insured for any period. AHAC filed an action to recover the unpaid balance of P314.00. both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted. The premium in the amount of P466.00 and the second. Commercial Law – Insurance Law. In those 3 years. The subject policies are valid even if the premiums were paid on installments. Thus. 9 September 1983. and in its answer with amended counterclaim. Section 78 of the Insurance Code in effect allows waiver by the insurer of the condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to make the policy binding despite the fact that premium is actually unpaid. On 8 October 1987. On 20 January 1984.000. Tuscany refused to pay the balance of the premium. while the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of the contract.05 was again paid on installments on 13 April 1983.Narratives (Berne Guerrero) which replaced and renewed the previous policy. It explained that it discontinued the payment of premiums because the policy did not contain a credit clause in its favor and the receipts for the installment payments covering the policy for 1984-85. After some incidents. the insurer accepted all the installment payments. On this renewed policy. Tuscany filed the petition. 3 August 1983. however brief or momentary. Tuscany made two installment payments. The records clearly show that Tuscany and AHAC intended subject insurance policies to be binding and effective notwithstanding the staggered payment of the premiums. as well as the two (2) previous policies. and 21 November 1983. both accepted by AHAC. Issue: Whether payment by installment of the premiums due on an insurance policy invalidates the contract of insurance. Tuscany further claimed that the policy was never binding and valid.103. Thereafter. good customs. the Court of Appeals rendered a decision modifying that of the trial court by ordering Tuscany to pay the balance of the premiums due on Policy AHCPP-921-651. the Court was not prepared to rule that the request to make installment payments duly approved by the insurer. and (3) Subject to no loss prior to premium payment. on 6 June 1984 for P100. or P314.00 for the premiums already paid for 1984-85. would prevent the entire contract of insurance from going into effect despite payment and acceptance of the initial premium or first installment. where the risk is entire and the contract is indivisible. So is an understanding to allow insured to pay premiums in installments not so proscribed. and affirming the denial of the counterclaim. Tuscany and AHAC moved for summary judgment. 2006 ( 25 ) . Both parties appealed from the judgment of the trial court.05 for Insurance Policy AHCPP-9210651. Consequently. It then pleaded a counterclaim for P152. sought the refund of P924.10 representing the premium payments for 1982-85. Tuscany admitted the issuance of Insurance Policy AH-CPP9210651. stated the following reservations: (2) Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising before such payments or after the expiration of the credit clause of the policy. Certainly. Moreover. the first on 6 February 1984 for P52. Tuscany may not be allowed to renege on its obligation to pay the balance of the premium after the expiration of the whole term of the third policy (AHCPP-9210651) in March 1985. All payments were likewise accepted by AHAC.206. although paid on installments.103. public order or public policy. At the very least. for a term covering 1 March 1903 to 1 March 1984. effective and binding. If there be any loss such is not covered. basic principles of equity and fairness would not allow the insurer to continue collecting and accepting the premiums. but does not expressly prohibit an agreement granting credit extension. In its answer with counterclaim. and no risk attached to the policy. then in 1984.000. The initial insurance contract entered into in 1982 was renewed in 1983. the policy was again renewed and AHAC issued to Tuscany Insurance Policy AH-CPP9210651 for the period 1 March 1984 to 1 March 1985.05 plus legal interest until fully paid. and such an agreement is not contrary to morals. Held: NO.000.103. the trial court dismissed the complaint and the counterclaim. Such acceptance of payments speaks loudly of the insurer's intention to honor the policies it issued to Tuscany.

and (4) ordering UCPBGen to pay Masagana the sums of: (a) P18. No. On 21 July 1992. After due trial. UCPBGen returned to Masagana the 5 manager's checks that it tendered.95 (refused by UCPBGen) as full payment of the corresponding premiums for the replacement-renewal policies. In March 1992. (c) P25. It alleged that the complaint "fails to state a cause of action". and. UCPBGen evaluated the policies and decided not to renew them upon expiration of their terms on 22 May 1992. ordering UCPBGen to deliver forthwith to Masagana the said replacement-renewal policies. Any agreement to the contrary is void. and for attorney's fees. UCPBGen appealed. Masagana was allowed a 60 to 90 day credit term for the renewal of its policies. Inc. representing the face value of the policies covering Masagana's insured property razed by fire.000. UCPB General Insurance Co. Inc. issued originally or on renewal.753. of its intention not to renew the policies. after its motion to dismiss had been denied.'s various property described therein against fire. On 23 October 1992. Cruz-Arnaldo is not applicable. UCPBGen filed an answer to the complaint.00. Zuellig Insurance Brokers. Masagana filed with the Regional Trial Court. On the same day.000. and at the same time rejected Masagana's claim for the reasons (a) that the policies had expired and were not renewed. fire razed Masagana's property covered by three of the insurance policies UCPBGen issued. 14 July 1992. UCPBGen advised Masagana's broker. (d) the costs of suit. rendered decision. (b) 25% of the total amount due as and for attorney's fees. (1) authorizing and allowing Masagana to consign/deposit with this Court the sum of P225. is not valid and binding until actual payment of the premium. payment of the premium was in fact actually made on 24 Commercial Law – Insurance Law. On 7 September 1998. 15 June 1999] First Division. (2) declaring Masagana to have fully complied with its obligation to pay the premium thereby rendering the replacement-renewal policy effective and binding for the duration 22 May 1992 until 22 May 1993. had expired on the latter date or had been extended or renewed by an implied credit arrangement though actual payment of premium was tendered on a latter date after the occurrence of the risk (fire) insured against. and the award of attorney's fees was reduced to 10% of the total amount due. before Masagana's tender of premium payment. Issue: Whether the fire insurance policies issued by UCPBGen to the Masagana covering the period 22 May 1991 to 22 May 1992. respectively. other than life. Pardo (J): 4 concur Facts: On 15 April 1991. No notice of loss was filed by Masagana under the policies prior to 14 July 1992. In that case. Branch 58. a civil complaint against UCPBGen for recovery of P18. and (b) that the fire occurred on 13 June 1992. On 6 April 1992. The parties may not agree expressly or impliedly on the extension of credit or time to pay the premium and consider the policy binding before actual payment. the Court of Appeals promulgated its decision affirming that of the Regional Trial Court with the modification that item 3 of the dispositive portion was deleted..000. an insurance policy. for the period from 22 May 1991 to 22 May 1992. On 14 July 1992. Makati. The case of Malayan Insurance Co.95.753. vs.00 as necessary litigation expenses. Inc. Held: The answer is easily found in the Insurance Code. On 13 July 1992. In due time. that UCPBGen was not liable to Masagana for insurance proceeds under the policies because at the time of the loss of Masagana's property due to fire. the policies had long expired and were not renewed. and that the acceptance of the late premium payment suggested an understanding that payment could be made later. (3) declaring two of the policies in force from 22 August 1991 up to 23 August 1992 and 9 August 1991 to 9 August 1992. Masagana presented to UCPBGen's cashier at its head office 5 manager's checks in the total amount of P225.00 representing the latter's claim for indemnity under three policies and/or its replacement-renewal policies. Branch 58. UCPBGen appealed to the Court of Appeals. on 10 March 1993. 2006 ( 26 ) . representing premium for the renewal of the policies from 22 May 1992 to 22 May 1993. (UCPBGen) issued 5 insurance policies covering Masagana Telamart. The Court of Appeals held that following previous practise. Makati City. Inc. the Regional Trial Court.Narratives (Berne Guerrero) 20 UCPB General Insurance vs. On 13 June 1992. and.645.645. Masagana filed with UCPBGen its formal claim for indemnification of the insured property razed by fire. [GR 137172. UCPBGen gave written notice to Masagana of the non-renewal of the policies at the address stated in the policies. Masagana Telamart Inc.

in Civil Case 92-2023. At the very least. which provides that "Any acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment.000. in Tuscany. Held [1]: YES. Davide Jr (CJ): 9 concur. Masagana Telamart Inc. 14 April 2001] Resolution En Banc. namely. morals. and that is. We are not prepared to rule that the request to make installment payments duly approved by the insurer would prevent the entire contract of insurance from going into effect despite payment and acceptance of the initial premium or first installment. both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted." By the approval of the aforequoted findings and conclusion of the Court of Appeals. 21 UCPB General Insurance vs. the Court rendered judgment dismissing Masagana's complaint and UCPBGen's counterclaims thereto filed with the Regional Trial Court. 5 wherein the Court ruled that Section 77 may not apply if the parties have agreed to the payment in installments of the premium and partial payment has been made at the time of loss. 175). The assured did not even give the insurer a notice of loss within a reasonable time after occurrence of the fire. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid. The first exception is provided by Section 77 itself. Branch 58. That agreement is not against the law. it would be unjust and inequitable if recovery on the policy would not be permitted against UCPBGen. Issue [1]: Whether there are exceptions to Section 77. Masagana seasonably filed a motion for the reconsideration of the adverse verdict.645." A third exception was laid down in Makati Tuscany Condominium Corporation vs. and such an agreement is not contrary to morals. that the insurer may grant credit extension for the payment of the premium. [GR 137172.Narratives (Berne Guerrero) December 1981. recovery on the policy should be allowed even though the premium is paid after the loss but within the credit term. the payment of the premium for renewal of the policies was tendered on 13 July 1992. Tuscany has also provided a fourth exception to Section 77. This simply means that if the insurer has granted the insured a credit term for the payment of the premium and loss occurs before the expiration of the term. The agreement binds the parties. and (c) ordering UCPBGen to pay Masagana P18. Further. The second is that covered by Section 78 of the Insurance Code. The modification consisted in the (1) deletion of the trial court's declaration that three of the policies were in force from August 1991 to August 1992. p. Section 78 of the Insurance Code in effect allows waiver by the insurer of the condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to make the policy binding despite the fact that premium is actually unpaid. (b) declaring the replacement-renewal policies effective and binding from 22 May 1992 until 22 May 1993. Moreover. Makati City.753. a month after the fire occurred on 13 June 1992. to allow Masagana to recover from UCPBGen. public order or public policy (De Leon. notwithstanding any stipulation therein that it shall not be binding until premium is actually paid. 2 file separate dissenting opinions to which 3 joined Facts: In the Supreme Court's decision of 15 June 1999. Hence. Court of Appeals. and (2) reduction of the award of the attorney's fees from 25% to 10% of the total amount due the Masagana.95 as full payment of the premiums for the renewal of the five insurance policies on Masagana's properties. so far as to make the policy binding. which affirmed with modification the judgment of the trial court (a) allowing Masagana to consign the sum of P225. public order or public policy. and the fire occurred on 18 January 1982. in case of a life or industrial life policy whenever the grace period provision applies. which had consistently Commercial Law – Insurance Law. The Insurance Code. it reversed and set aside the decision of the Court of Appeals. So is an understanding to allow insured to pay premiums in installments not so prescribed. the Supreme Court reversed and set aside the decision of the Court of Appeals in CA-GR CV 42321. the Court also quoted with approval the following pronouncement of the Court of Appeals in its Resolution denying the motion for reconsideration of its decision that "While the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of the contract.00 as indemnity for the burned properties covered by the renewal-replacement policies. good customs. 2006 ( 27 ) . Herein. but does not expressly prohibit an agreement granting credit extension. In lieu thereof. good customs. without costs. Here. there is nothing in Section 77 which prohibits the parties in an insurance contract to provide a credit term within which to pay the premiums.

000. the trial court held that AHAC failed to show that such omission was intentional and fraudulent.Narratives (Berne Guerrero) granted a 60. P100. particularly: (1) his submission of fraudulent income tax return and financial statements. whereby AHAC undertook to indemnify Chua for any damage or loss arising from fire up to P200. which was deposited in AHAC’s bank account. AHAC filed the petition for review on certiorari. located at Valencia. it noted that AHAC’s investigation of Chua's claim was done in collaboration with the representatives of other insurance companies who found no irregularity therein. the latter delivered Renewal Certificate 00099047 to Chua.00 as exemplary damages. Subsequently.to 90-day credit term for the payment of premiums despite its full awareness of Section 77. AHAC claimed there was no existing insurance contract when the fire occurred since Chua did not pay the premium. The check. the latter filed an action against AHAC before the trial court. The trial court ordered AHAC to pay Chua P200. The general rule in insurance laws is that unless the premium is paid the insurance policy is not valid and binding.50 to AHAC’s agent. The trial court ruled in favor of Chua. 22 American Home Assurance Company vs. Filipino Merchants Insurance Co. Well-settled is the rule that the Commercial Law – Insurance Law. The Court of Appeals found that Chua’s claim was substantially proved and AHAC’s unjustified refusal to pay the claim entitled Chua to the award of damages. P200. that there was a valid check payment by Chua to AHAC. Finally.983. Issue: Whether there was a valid payment of premium. as payment for the renewal of the policy. The trial court found. The corresponding official receipt was issued on 10 April.000 for the period 25 March 1990 to 25 March 1991. It declared that the alleged fraudulent documents were limited to the disparity between the official receipts issued by the Bureau of Internal Revenue (BIR) and the income tax returns for the years 1987 to 1989. Total loss was estimated between P4. Estoppel then is the fifth exception to Section 77. In its defense. P200. Estoppel bars it from taking refuge under said Section. 28 June 1999] First Division.000. and (3) his failure to notify to AHAC of any insurance already effected to cover the insured goods. was even acknowledged in the renewal certificate issued by AHAC’s agent. Chua filed an insurance claim with AHAC and four other co-insurers. Pioneer Insurance and Surety Corporation. as affirmed by the Court of Appeals. (CJ): 4 concur Facts: American Home Assurance Company (AHAC) is a domestic corporation engaged in the insurance business. and Cost of suit. It found that Chua paid by way of check a day before the fire occurred. Its motion for reconsideration of the judgment having been denied. On 6 April 1990 Moonlight Enterprises was completely razed by fire.000. As to Chua’s failure to notify AHAC of the other insurance contracts covering the same goods. Prudential Guarantee and Assurance. The check was drawn against a Manila bank and deposited in AHAC’s bank account in Cagayan de Oro City. Sometime in 1990. Inc.00 as loss of profit. It also alleged that even assuming there was a contract. In fact. James Uy. Whether payment was indeed made is a question of fact which is best determined by the trial court.000.00 as attorney’s fees. was issued. AHAC insisted.00. AHAC refused to honor the claim notwithstanding several demands by Chua. Davide Jr. In turn.000.000. The insurance was due to expire on 25 March 1990. thus. (2) his failure to establish the actual loss. it gave credence to the BIR certification that Chua paid the corresponding taxes due for the questioned years. 2006 ( 28 ) . Bukidnon.000. a new insurance policy. Nonetheless. Chua violated several conditions of the policy. On 5 April 1990 Chua issued PCIBank Check 352123 in the amount of P2. Policy 206-4234498-7. namely. representing the amount of the insurance. Moonlight Enterprises. and Domestic Insurance Company of the Philippines. On appeal. Held: YES. Inc.000.000. P50. since Masagana relied in good faith on such practice. Antonio Chua obtained from AHAC a fire insurance covering the stock-in-trade of his business.. the assailed decision was affirmed in toto by the Court of Appeals. which AHAC assessed at P70. The only exceptions are life and industrial life insurance. All the other documents were found to be genuine. Chua [GR 130421. promptly paid the claims filed by Chua. considering that Chua’s check was cashed after the occurrence of the fire. Pioneer Insurance and Surety Corporation and Prudential Guarantee and Assurance. These violations.000 and P5.00 as moral damages. justified the denial of the claim. plus legal interest from the date of filing of the case.

or in the investigating or ascertainment of the amount of actual cash value and loss. The insurance was for P600. Fortune Life and General Insurance Co. et al. Makati City. Ofelia M. and Rosabella M. Inc. Petitioner forthwith complied. et al.00 thus leaving a considerable balance unpaid. Section 306 of the Insurance Code provides that any insurance company which delivers a policy or contract of insurance to an insurance agent or insurance broker shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon. an admission of liability on the part of said companies or any of them. On the same day. and attorney's fees equivalent to 20% of the total claim.000.. It is not disputed that the check drawn by Chua in favor of AHAC and delivered to its agent was honored when presented and AHAC forthwith issued its official receipt to Chua on 10 April 1990. and adjudged Fortune liable for the total value of the insured building and personal properties in the amount of P600. nor the rights of either or any of the parties to this agreement. On 23 January 1987. On 19 July 1990 the trial court ruled for Tibay. 24 May 1996] First Division.50. of the total premium of P2. notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid. It is. (GASI).983. 2006 ( 29 ) . petitioner Violeta Tibay only paid P600. filed the petition for review." This Section establishes a legal fiction of payment and should be interpreted as an exception to Section 77. In a letter dated 11 June 1987 Fortune denied the claim of Violeta for violation of Policy Condition 2 and of Section 77 of the Insurance Code. Section 78 of the Insurance Code explicitly provides that "An acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment. Makati on 8 March 1987.50 plus 12% interest from 10 March 1987 until full payment. Inc. and will not be disturbed on appeal in the absence of any clear showing that the trial court overlooked certain facts or circumstances which would substantially affect the disposition of the case. According to the trial court the renewal certificate issued to Chua contained the acknowledgment that premium had been paid. P100. and such action shall not be. Goodwill Adjustment Services. bound by its agent’s acknowledgment of receipt of payment. On 8 March 1987 the insured building was completely destroyed by fire. as well. shall not waive or invalidate any condition of the policies of such companies held by said claimant. Roraldo. The Supreme Cpurt sees no reason to depart from this ruling. which immediately wrote Violeta requesting her to furnish it with the necessary documents for the investigation and processing of her claim. Roraldo. and attorney's fees equivalent to 20% of the total amount claimed plus costs of suit.000. 23 Tibay vs.00 representing the total coverage of the fire insurance policy plus 12% interest per annum. 1 filed a separate opinion to which 1 joined Facts: On 22 January 1987. Roraldo. Virgilio M. Court of Appeals [GR 119655. so far as to make the policy binding. (Fortune) issued Fire Insurance Policy 136171 in favor of Violeta R. Victorina M. Tibay and/or Nicolas Roraldo on their two-storey residential building located at 5855 Zobel Street. Roraldo) sued Fortune for damages in the amount of P600.983. Herein. On 24 March 1995 the Court of Appeals reversed the court a quo by declaring Fortune not to be liable to Tibay et al. but ordering Fortune to return to the former the premium of P2.00 covering the period from 23 January 1987 to 23 January 1988. Bellosillo (J): 2 concur. Myrna M. Two days later or on 10 March 1987 Violeta Tibay paid the balance of the premium. On 28 March 1987 she signed a non-waiver agreement with GASI to the effect that any action taken by the companies or their representatives in investigating the claim made by the claimant for his loss which occurred at 5855 Zobel Roxas. the best evidence of such authority is the fact that AHAC accepted the check and issued the official receipt for the payment. Roraldo.Narratives (Berne Guerrero) factual findings and conclusions of the trial court and the Court of Appeals are entitled to great weight and respect. Efforts to settle the case before the Insurance Commission proved futile. together with all their personal effects therein. she filed with Fortune a claim on the fire insurance policy. binding and enforceable upon mere partial payment of Commercial Law – Insurance Law.00 plus interest at the legal rate of 6% per annum from the filing of the complaint until full payment.000. Issue: Whether a fire insurance policy be valid.000. On 3 March 1988 Violeta and the other petitioners (Antonio Tibay. or be claimed to be. Tibay. Her claim was accordingly referred to its adjuster.00 moral damages.

" This leads us to the manner of payment envisioned by the law to make the insurance policy operative and binding. On 19 April 1961. The premium and other charges including the margin fee surcharge of P590. of the cancellation of the Policy allegedly upon request of Woodworks Inc.11 representing "earned premium from 21 July 1960 to 18 April 1961 or. the insurance contract did not take effect and the insured cannot collect at all on the policy. have done in this case. Melencio-Herrera (J): 4 concur. Woodworks Inc. 6 August 1979] First Division.483.25 for the unexpired period of 94 days. In said Indorsement. 2006 ( 30 ) . This is fully supported by Section 77 of the Insurance Code which provides that "An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. It must be emphasized here that all actuarial calculations and various tabulations of probabilities of losses under the risks insured against are based on the sound hypothesis of prompt payment of premiums.36. controverted basically on the theory that its failure "to pay the premium after the issuance of the policy put an end to the insurance Commercial Law – Insurance Law. Held: NO.593. say 271 days.983. [GR L-25317. the policy will lapse and be forfeited by its own terms. Phoenix commenced action in the Court of First Instance of Manila. we will surely wreak havoc on the business and set to naught what has taken actuarians centuries to devise to arrive at a fair and equitable distribution of risks and benefits between the insurer and the insured.60 affixed on the Policy. The consideration is the premium. that it need not pay premium "because the Insurer did not stand liable for any indemnity during the period the premiums were not paid.00 as partial undertaking out of the stipulated total premium of P2. and claimed the balance of P7. on the principle that the strength of the vinculum juris is not measured by any specific amount of premium payment.76 and the documentary stamps in the amount of P156. But once payment of premium is left to the whim and caprice of the insured. disclaimed any liability in its reply-letter of 15 August 1961. through its Indorsement F-6963/61. Accordingly. and if not so paid. through counsel. Facts: On 21 July 1960.483." On 30 January 1962. machinery and equipment for a term of one year from 21 July 1960 to 21 July 1961 against loss by fire.000. the imperative need for its prompt payment and full satisfaction. which must be paid at the time and in the way and manner specified in the policy.'s building. contending. with the amount of P3." Apparently the crux of the controversy lies in the phrase "unless and until the premium thereof has been paid." Woodworks Inc. where the premium has only been partially paid and the balance paid only after the peril insured against has occurred.. except in the case of a life or an industrial life policy whenever the grace period provision applies.00 whereby Phoenix insured Woodworks Inc. 24 Philippine Phoenix Surety & Insurance Company vs. amounted to P10. The Policy provides for payment of premium in full. Upon this bedrock insurance firms are enabled to offer the assurance of security to the public at favorable rates.11 as "earned premium. damage or liability arising from an unknown or contingent event. Phoenix demanded in writing for the payment of said amount. to recover the amount of P7. Woodworks Inc. 1 abroad. did not pay the premium stipulated in the Policy when it was issued nor at any time thereafter. Philippine Phoenix Surety & Insurance Company (Phoenix) issued in its favor Fire Insurance Policy 9749 for P500. The latter has denied having made such a request. The principle that where the law does not distinguish the court should neither distinguish assumes that the legislature made no qualification on the use of a general word or expression. no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid.'s application. For whatever judicial construction may be accorded the disputed phrase must ultimately yield to the clear mandate of the law.50 and the balance to be paid even after the risk insured against has occurred. Woodworks Inc. Branch IV (Civil Case 49468). as Tibay et al. hence. Notwithstanding any agreement to the contrary. Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss.. as when the courts tolerate the payment of a mere P600. On 6 July 1961. in essence. It cannot be disputed that premium is the elixir vitae of the insurance business because by law the insurer must maintain a legal reserve fund to meet its contingent obligations to the public.Narratives (Berne Guerrero) premium. Phoenix notified Woodworks Inc. or before the expiration of the one-year term. Phoenix credited Woodworks Inc.110. upon Woodworks Inc.

Since the premium had not been paid. health and accident. the present case differs from that involving the same parties where recovery of the balance of the unpaid premium was allowed inasmuch as in that case "there was not only a perfected contract of insurance but a partially performed one as far as the payment of the agreed premium was concerned. the policy must be deemed to have lapsed. yet it is obvious that Woodworks Inc. "when the policy is tendered the insured must pay the premium unless credit is given or there is a waiver." The Policy provides for pre-payment of premium. an insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid for the purpose of indemnity. for instance.00 as attorney's fees of the Phoenix. or the obligation of the insurer shall cease. if not so paid. because the contract so prescribes and because such a stipulation is a material and essential part of the contract. Accordingly. plus the sum of P700. with interest thereon at the rate of 6% per annum from 30 January 1962. vs. Moreover. fire and hail insurance policies. 2006 ( 31 ) . Castro (J): 9 concur Commercial Law – Insurance Law. The rule is that under policy provisions that upon the failure to make a payment of a premium or assessment at the time provided for. would have had a valid defense against recovery under the Policy it had issued. promulgated on December 18. The nonpayment of premiums does not merely suspend but puts an end to an insurance contract. in the case of life. so that no recovery can be had upon a lapsed policy. In fact. The continuance of the insurer's obligation is conditional upon the payment of premiums. 29 May 1967] En Banc.11. This is true. 25 Bonifacio Brothers Inc. notwithstanding any agreement to the contrary." The consideration is the "premium"." To constitute an extension of credit there must be a clear and express agreement therefor. In this respect. appealed to the Court of Appeals which certified the case to the Supreme Court on a question of law. as it is to make any other contract. or some agreement obviating the necessity for prepayment. The burden is on an insured to keep a policy in force by the payment of premiums. 1974). which now provides that no contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid. if the peril insured against had occurred. or words to like effect." This is not the situation obtaining here where no partial payment of premiums has been made whatsoever. until the principal shall have been fully paid. Woodworks Inc. had not accepted the insurer's offer to extend credit. From the Policy provisions. The foregoing findings are buttressed by section 77 of the Insurance Code (Presidential Decree No." From this adverse Decision.Narratives (Berne Guerrero) contract and rendered the policy unenforceable. is as essential to make a valid agreement for credit. Issue: Whether the Fire Insurance Policy was a binding contract even if the premium stated in the policy has not been paid. to change a conditional delivery of an insurance policy to an unconditional delivery. the contractual relation between the parties having ceased. the policy shall become void or forfeited. Phoenix. Mora [GR L-20853. the policy will lapse and be forfeited by its own terms. which is essential for the validity of such agreement. Such an acceptance could not be merely a mental act or state of mind. Held: Insurance is "a contract whereby one undertakes for a consideration to indemnify another against loss. "The premium must be paid at the time and in the way and manner specified in the policy and.483. 612. but would require a promise to pay made known in some manner to Woodworks Inc. if one was made. to pay Phoenix the sum of P7. as insurer. rather than on the insurer to exert every effort to prevent the insured from allowing a policy to elapse through a failure to make premium payments. judgment was rendered in Phoenix's favor "ordering Woodworks Inc. and the costs of the suit." On 13 September 1962. An acceptance of an offer to allow credit. And even if it were to be presumed that Phoenix had extended credit from the circumstances of the unconditional delivery of the Policy without prepayment of the premium. since the time of the payment is peculiarly of the essence of the contract. Explicit in the Policy itself is Phoenix's agreement to indemnify Woodworks Inc. for loss by fire only "after payment of premium. Compliance by the insured with the terms of the contract is a condition precedent to the right of recovery. there was no clear agreement that a credit extension was accorded Woodworks Inc. damage or liability arising from an unknown or contingent event.

S." indicating that it was only the H. to interplead in order to determine who has a better right to the insurance proceeds in question. Inc. appealed. Reyes..73. If it were the intention of the Insurance Company to make itself liable to the repair shop or material men. the Bonifacio Bros. expressed or implied exists. submitted a stipulation of facts.. The parties to the insurance contract omitted such stipulation.S. Inc. The Bonifacio Bros. without the knowledge and consent of the H. and evidence against him was received ex parte.73. Another cogent reason for not recognizing a right of action by Bonifacio Bros. by the insured and third person. Mora was billed at P2.. H.H.. affirming the decision of the Municipal Court. Reyes.8088. which is a circumstance that supports the said conclusion. and the Ayala Auto Parts Co. expressed or implied. requiring the Bonifacio Bros. on the basis of which the Municipal Court rendered a decision declaring the H. Inc. to the proceeds of it. Inc. Inc. Inc. is payable to H. On the other hand. Reyes. He mortgaged the same to the H. To hold now that the original parties to the insurance contract intended to confer upon Bonifacio Bros. a perusal thereof would show that instead of establishing privity between Bonifacio Bros. with the latter as beneficiary. drew a check in the amount of P2. and the insurance company. et al.S. against the insurance company is that "a policy of insurance is a distinct and independent contract between the insured and insurer. On 19 October 1962 the latter court rendered a decision. and third persons have no right either in a court of equity. and the H. Inc. Inc. The insurance company. it could have easily inserted in the contract a stipulation to that effect. the said sum of P2. It is likewise observed from the brief of the State Bonding & Insurance Company that it has vehemently opposed the assertion or pretension of Bonifacio Bros. et al. Bayne Adjustment Co.102. Inc. that they are privy to the contract. and Ayala Auto Parts Co. Bonifacio Bros. with the condition that the former would insure the automobile. As regards paragraph 4 of the insurance contract.S.002. of the cost of repairs and materials. Thus. For the cost of labor and materials. Reyes. such stipulation merely establishes the procedure that the insured has to follow in order to be entitled to indemnity for repair. the "loss payable" clause of the insurance policy stipulates that "Loss. no contract of trust. Issue: Whether Bonifacio Bros. In the meantime. but the trial court denied the motion. Inc. Inc. Inc. Bayne Adjustment Co. However. as having a better right to the disputed amount. or in a court of law. From this decision. after claiming a franchise in the amount of P100." Herein. Inc. 2006 ( 32 ) .S.73 through the H. and ordering the State Bonding & Insurance Co. Reyes.. the car met with an accident. bearing plate QC . for the collection of the sum of P2. to pay to the H. Inc. the counsel for the Bonifacio Bros. and State Bonding & Insurance Co. authorized the Bonifacio Bros. Bayne Adjustment Co. has any cause of action to claim indemnity from the insurance contract entered by State Bonding & Insurance Co.73. Inc.S Reyes. the car was delivered to Mora without the consent of the H. filed on 8 May 1961 a complaint with the Municipal Court of Manila against Mora and the State Bonding & Insurance Co. if any.H. for investigation and appraisal of the damage. Inc. as proceeds of the insurance policy. Inc. and the Ayala Auto Parts Co. Ayala Auto Parts Co. unless there be some contract of trust. Held: The insurance contract does not contain any words or clauses to disclose an intent to give any benefit to any repairmen or material men in case of repair of the car in question. Reyes. Bonifacio Bros. payable to the order of Mora or H.S. which they intended to benefit.S. Inc. and entrusted the check to the H. and Mora. Reyes. The insurance company then assigned the accident to the H. Inc. for disposition and delivery to the proper party. The insurance company filed its answer with a counterclaim for interpleader. Inc.. Mora. and motor car insurance policy A-0615 was issued to Mora. During the effectivity of an insurance contract. The automobile was thereafter insured on 23 June 1959 with the State Bonding & Insurance Co. Upon the theory that the insurance proceeds should be paid directly to them. Inc. elevated the case to the Court of First Instance of Manila before which the stipulation of facts was reproduced. This paragraph therefore should not be construed as bringing into existence in favor of Bonifacio Bros. to furnish the labor and materials. moved for reconsideration of the decision. Reyes.002. no cause of action exists in favor of Bonifacio Commercial Law – Insurance Law. a right of action against the insurance company as such intention can never be inferred therefrom. the benefit claimed by them would require as to ignore the indispensable requisite that a stipulation pour autrui must be clearly expressed by the parties. Mora was declared in default for failure to appear at the hearing. which the Court cannot do.Narratives (Berne Guerrero) Facts: Enrique Mora is the owner of an Oldsmobile sedan model 1956.002. and without payment to the Bonifacio Bros. some of which were supplied by the Ayala Auto Parts Co.S.

the trial court rendered judgment declaring.' claim. She asserts that she is the one entitled to the insurance proceeds. the general rules of civil law should be applied to resolve this void in the Insurance Law. in the sum of P36. Article 2011 of the New Civil Code states: "The contract of insurance is governed by special laws. Carponia T. as the same could easily be circumvented by modes of insurance. minus the unpaid premiums and interest thereon due for January and February. since a contract of insurance is personal in character. Buenventura C. 1969. Policy 009929 on a whole-life plan for P5. Insular Life stands liable to pay the coverage of the policy in an amount of P11. (2) Those made between persons found guilty of the same criminal offense." When not otherwise specifically provided for by the Insurance Law. Matters not expressly provided for in such special laws shall be regulated by this Code. as amended) or even the new Insurance Code (PD 612. among others.27. barred from receiving donations from each other. Ebrado [GR L-44059." Common-law spouses are. Ltd. although she admits that she and the insured Buenaventura C." 26 The Insular Life Assurance Company Ltd.882. in consideration thereof. descendants or Commercial Law – Insurance Law. representing the face value of the policy in the amount of P5. Ebrado were merely living as husband and wife without the benefit of marriage. Otherwise. as amended) does not contain any specific provision grossly resolutory of the prime question at hand. but on 11 July 1976. Ebrado filed with the insurer a claim for the proceeds of the policy as the designated beneficiary therein. Rather. Buenaventura Cristor Ebrado was issued by the Insular Life Assurance Co. Ebrado. 1969.Narratives (Berne Guerrero) Bros. Ebrado as the revocable beneficiary in his policy. Bonifacio Bros. Pascuala Vda. is merely equitable in nature and must be made effective through Enrique Mora who entered into a contract with the Bonifacio Bros Inc. but is clearly covered by the express provisions of section 50 of the Insurance Act which read that "the insurance shall be applied exclusively to the proper interest of the person in whose name it is made unless otherwise specified in the policy. The word "interest" highly suggests that the provision refers only to the insured and not to the beneficiary. vs.00 paid for the premium due November. As the insurance policy was in force. In doubt as to whom the insurance proceeds shall be paid.00 plus the additional benefits for accidental death also in the amount of P5. Martin (J): 5 concur Facts: On 1 September 1968..745.00 with a rider for Accidental Death Benefits for the same amount.882. Section 50 of the Insurance Act which provides that "(t)he insurance shall be applied exclusively to the proper interest of the person in whose name it is made" cannot be validly seized upon to hold that the same includes the beneficiary. the insurer commenced an action for Interpleader before the Court of First Instance of Rizal on 29 April 1970. (3) Those made to a public officer or his wife.882. Ebrado disqualified from becoming beneficiary of the insured Buenaventura Cristor Ebrado and directing the payment of the insurance proceeds to the estate of the deceased insured. the contract of life insurance is governed by the general rules of the civil law regulating contracts.00 and the refund of P18. Issue [1]: Whether a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds thereof in case of death of the latter. He referred to her as his wife. Carponia T. de Ebrado also filed her claim as the widow of the deceased insured. On 21 October 1969. the prohibitory laws against illicit relationships especially on property and descent will be rendered nugatory. Ebrado designated Carponia T. And under Article 2012 of the same Code. From this judgment. Ebrado appealed to the Court of Appeals. Held[1]: NO.73. Carponia T. 2006 ( 33 ) . "any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make a donation to him. Ebrado died as a result of an accident when he was hit by a falling branch of a tree. not the common-law wife. Buenaventura C. This conclusion is deducible not only from the principle governing the operation and effect of insurance contracts in general. On 25 September 1972. Carponia T. definitely. in so far as the proceeds of insurance are concerned. if at all. Article 739 of the new Civil Code provides that "the following donations shall be void: (1) Those made between persons who were guilty of adultery or concubinage at the time of donation. 28 October 1977] First Division.. the Appellate Court certified the case to the Supreme Court as involving only questions of law. It is quite unfortunate that the Insurance Act (RA 2327.

and the guilt of the donee may be proved by preponderance of evidence in the same action. It was agreed upon and stipulated therein that the deceased insured Buenaventura C. Ebrado was married to Pascuala Ebrado with whom she has six legitimate children." In essence. the beneficiary will receive the proceeds or profits of said insurance. And. Herein. with whom he has two children. it cannot even be gleaned from the aforequoted provision that a criminal prosecution is needed. These stipulations are nothing less than judicial admissions which. and the guilt of the donee may be proved by preponderance of evidence in the same action. the requisite proof of commonlaw relationship between the insured and the beneficiary has been conveniently supplied by the stipulations between the parties in the pre-trial conference of the case. solemnized in the parish church of San Nicolas de Tolentino. So long as marriage remains the threshold of family laws. A fortiori. was employed as a shop foreman of the office of the District Engineer in the province of Surigao-del Norte. Policy considerations and dictates of morality rightly justify the institution of a barrier between common-law spouses in regard to property relations since such relationship ultimately encroaches upon the nuptial and filial rights of the legitimate family. a policy of life insurance is considered as a testament and in construing it. In his lifetime. with more reason should an illicit relationship be restricted by these disabilities. a judgment may be validly rendered without going through the rigors of a trial for the sole purpose of proving the illicit liaison between the insured and the beneficiary. on the basis of these admissions. the law plainly states that the guilt of the party may be proved "in the same action" for declaration of nullity of donation. the deceased insured was living with his common-law wife. 27 Vda de Consuegra vs. a life insurance policy is no different from a civil donation insofar as the beneficiary is concerned. the proscription in Article 739 of the new Civil Code should equally operate in life insurance contracts. Issue [2]: Whether a conviction for adultery or concubinage is exacted before the disabilities mentioned in Article 739 may effectuate. 2006 ( 34 ) . Under American law. The mandate of Article 2012 cannot be laid aside: any person who cannot receive a donation cannot be named as beneficiary in the life insurance policy of the person who cannot make the donation. On the contrary." Article 739 itself provides that "In the case referred to in No. 1. at the time of his death. More specifically. the courts will. with regard to the disability on "persons who were guilty of adultery or concubinage at the time of the donation. as a consequence.Narratives (Berne Guerrero) ascendants by reason of his office. If legitimate relationship is circumscribed by these legal disabilities. Surigao. As pointed out. Government Service Insurance System [GR L-28093. Both the recipients of pure beneficence. Consuegra contracted two marriages. and Pedro Consuegra. Both are founded upon the same consideration: liberality. Jose Consuegra. the action for declaration of nullity may be brought by the spouse of the donor or donee. As a consequence. 1. and the second. which was contracted in good faith while the Commercial Law – Insurance Law. the action for declaration of nullity may be brought by the spouse of the donor or donee. Held [2]: NO. reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship. There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. out of which marriage were born two children. Carponia Ebrado. The quantum of proof in criminal cases is not demanded. because from the premiums of the policy which the insured pays out of liberality. but both predeceased their father. the first with Rosario Diaz. that during his lifetime. In fact. In the case referred to in No. a beneficiary in a life insurance policy is no different from a donee. it would be sufficient if evidence preponderates upon the guilt of the consort for the offense indicated. A conviction for adultery or concubinage is not exacted before the disabilities mentioned in Article 739 may effectuate. Jr. Surigao." The underscored clause neatly conveys that no criminal conviction for the disqualifying offense is a condition precedent. 30 January 1971] En Banc. namely. A beneficiary is like a donee. Zaldivar (J): 10 concur Facts: The late Jose Consuegra. no longer require proof and cannot be contradicted. so far as possible treat it as a will and determine the effect of a clause designating the beneficiary by rules under which wills are interpreted. on 15 July 1937.

Dissatisfied with the foregoing ruling and apportionment made by the GSIS. The court thus declared that Basilia Berdin Vda. who were the beneficiaries named in the life insurance should automatically be considered the beneficiaries to receive the retirement insurance benefits. Consuegra did not designate any beneficiary who would receive the retirement insurance benefits due to him.. Hence. Held [1]: NO. Jose.47 pursuant to Section 12(c) of Commonwealth Act 186 as amended by Republic Acts 1616 and 3836. Having been in the service of the government for 22. and the operation was resumed sometime in 1946. and Rosario Diaz.304. Being a member of the Government Service Insurance System (GSIS) when Consuegra died on 26 September 1965. asserting that being the beneficiaries named in the life insurance policy of Consuegra. Commonwealth Act 186 was not yet amended. praying that they (Basilia Berdin. Juliana.Narratives (Berne Guerrero) first marriage was subsisting. to the exclusion of Rosario Diaz. and that writ of preliminary injunction be issued restraining implementation of the adjudication made by the GSIS. all surnamed Consuegra.152. Basilia Berdin and her children appealed (on purely questions of law). Rosario Diaz. Resolving the conflicting claims. Rodrigo. Lenida and Luis. considering that the deceased did not designate any beneficiary with respect to his retirement insurance benefits. the GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario Diaz. During 1943 the operation of the GSIS was suspended because of the war. 2006 ( 35 ) . Pacita. Pacita. et al.5028 years. it cannot be said that cause Basilia Berdin et al. Maria Lourdes. Consuegra was entitled to retirement insurance benefits in the sum of P6. and the only benefits then provided for in said Act were those that proceed from a life insurance.47) due to the deceased Jose Consuegra from the GSIS or the amount of P3.304. de Consuegra.235. Jose Jr. namely. Basilia Berdin and her children. holding that when two women innocently and in good faith are legally united in holy matrimony to the same man. filed a similar claim with the GSIS. If Consuegra had 22. Likewise. pursuant to the provisions of CA 186 which was in force at the time. on the other hand. the widow by the first marriage. or 8/16. In 1943. or before 1943. de Consuegra is hereby declared beneficiary and entitled to the other half of the retirement benefit of the late Jose Consuegra or the amount of P3. likewise. beneficiary and entitled to 1/2 of the retirement benefit in the amount of P6. the court of First Instance of Surigao rendered judgment. will be regarded as legitimate children and each family be entitled to one half of the estate. his widow by his first marriage who is entitled to one-half. When Consuegra designated his beneficiaries in his life insurance he could not have intended those beneficiaries of his life insurance s also the beneficiaries of his retirement insurance because the provisions on retirement insurance under the GSIS came about only when CA 186 was amended by RA 660 on 16 June 1951.) be declared the legal heirs and exclusive beneficiaries of the retirement insurance of the late Jose Consuegra. On 7 March 1967. * all surnamed Consuegra. they are the only ones entitled to receive the retirement insurance benefits due the deceased Consuegra. Rodrigo. the Commissioner of Civil Service.152. being automatically insured on his life. of the retirement insurance benefits. Rosario Diaz Vda. the Commissioner of Public Highways. his widow by the second marriage and their seven children. with Basilia Berdin. Lenida and Luz. filed a claim with the GSIS asking that the retirement insurance benefits be paid to her as the only legal heir of Consuegra.235 to be divided equally among them in the proportional amount of 1/16 each. the Highway District Engineer of Surigao del Norte. or 8/16. Upon entering the government service Consuegra became a compulsory member of the GSIS. and Basilia Berdin. it follows that he started in the government service sometime during the early part of 1943. Maria Lourdes. Basilia Berdin and her children filed on 10 October 1966 a petition for mandamus with preliminary injunction in the Court of First Instance of Surigao del Norte (Special Proceeding 1720) naming as respondents the GSIS. when the deceased Jose Consuegra failed to designate the beneficiaries in his retirement insurance. on the one hand. were designated beneficiaries Consuegra's life insurance they automatically became beneficiaries also of his Commercial Law – Insurance Law. on 1 May 1957 in the same parish and municipality. Issue [1]: Whether Basilia Berdin Vda. born of said wedlock. each of them to receive an equal share of 1/16. who are entitled to the remaining one-half. they and their children.5028 years of service in the government when he died on 26 September 1965. the proceeds of his life insurance under policy 601801 were paid by the GSIS to Basilia Berdin and her children who were the beneficiaries named in the policy. de Consuegra and Juliana. out of which marriage were born seven children.

Narratives (Berne Guerrero) retirement insurance. The lower court has correctly applied the ruling of this Court in the case of Lao.. on the ground that the insurance policy was amended on 22 November 1937 to include another beneficiary. Consequently. Held [2]: YES. in construing the rights of two women who were married to the same man — a situation more or less similar to the case of Basilia Berdin and Rosario Diaz — held "that since the defendant's first marriage has not been dissolved or declared void the conjugal partnership established by that marriage has not ceased. the beneficiary in a life insurance under the GSIS may not necessarily be an heir of the insured. L-23214. as amended). the same are paid to whoever is named the beneficiary in the life insurance policy. 1970. 45 Phil. after rendering service in the government for a required number of years. this Court observed that although the second marriage can be presumed to be void ab initio as it was celebrated while the first marriage was still subsisting. or incapacity. On 31 August 1938. The mother claimed that the addition of the co-beneficiary is illegal. In the recent case of Gomez vs. Ltd. "[t]he only just and equitable solution in this case would be to recognize the right of the second wife to her share of one-half in the property acquired by her and her husband. The company. denied such claim. the retirement benefits will accrue his estate and will be given to his legal heirs in accordance with law. it being accepted as a fact that the second marriage of Jose Consuegra to Basilia Berdin was contracted in good faith. Edward K. If the employee reaches the age of retirement. Hence. on her part. Concordia Go. the proceeds of the insurance will go to the estate of the insured. If the employee failed or overlooked to state the beneficiary of his retirement insurance. Dee Tim. " And with respect to the right of the second wife. As in the case of a life insurance provided for in the Insurance Act (Act 2427. The beneficiary of the retirement insurance can only claim the proceeds of the retirement insurance if the employee dies before retirement. however. The insured in a life insurance may designate any person as beneficiary unless disqualified to be so under the provisions of the Civil Code. Horrilleno (J): 4 concur Decision in Spanish [Rough translation. vs. an action was filed to determine who has the right to collect the insurance proceeds of the deceased Redfern. Redfern died from an accident. Go appealed. the mother. and his second wife Basilia Berdin his children by her. had correctly acted when it ruled that the proceeds of the retirement insurance of the late Jose Consuegra should divided equally between his first living wife Rosario on the one hand. the Court. whether as conjugal partner in a still subsisting marriage or as such putative heir she has an interest in the husband's share in the property here in dispute. And inasmuch as the conjugal partnership formed by the second marriage was dissolved before judicial declaration of its nullity. accuracy unverified] Facts: In October 1937. Go. Redfern [GR 47705. therefore." 28 Go vs. alleged the contrary. on the other. Issue [2]: Whether the GSIS and the trial court are correct in ruling that each of the wives who contracted marriage to the same man in good faith are each entitled to half of the retirement insurance benefits. and the lower court did not commit error when it confirmed the action of the GSIS. Retirement insurance is primarily intended for the benefit of the employee — to provide for his old age. Commercial Law – Insurance Law. entitled to share in his estate upon his death should she survive him. presenting the necessary evidence of the death of Redfern. he gets the retirement benefits even to the exclusion of the beneficiary or beneficiaries named in his application for retirement insurance. The trial court ruled in favor of Angela Redfern. and consider the other half as pertaining to the conjugal partnership of the first marriage. Lipana. The GSIS. The mother of the deceased. And in the absence of any beneficiary named in the life insurance policy. 2006 ( 36 ) . Nor has the first wife lost or relinquished her status as putative heir of her husband under the new Civil Code. et al. as in the case of a life insurance if no beneficiary is named in the insurance policy. In the case of the proceeds of a life insurance. still there is need for judicial declaration of such nullity. 739. June 30. sought to claim the proceeds of the insurance policy from the assurance company. Redfern obtained an insurance policy against accidents from the International Assurance Co. et al. 25 April 1941] Second Division.

000. to pay in the concept of litigation expenses the sum of P5. however. the trial court rendered its Decision dated 26 December 1991 in favor of LBCMCI. denied the insurance claim on the ground that.00 with interest of 12% per annum from date of filing of the complaint until the same is fully paid. Juarbal.00. CBIC. damage or liability during the period starting from 20 June 1989 at 4:00 p. (LBCMCI) is a duly registered cooperative judicially declared insolvent and represented by the elected assignee.000. [GR 136914. and to pay the costs of the suit. and thus in effect the original beneficiary cannot recieve the full amount of the policy. to pay by way of reimbursement the attorney's fees in the sum of P10. at or about 12:40 a. LBCMCI then instituted in the trial court the complaint for recovery of "loss. In due time. CBIC insured LBCMCI's stocks-in-trade against fire loss. directly or indirectly. insurrection. The addition of Go's name as one of the beneficiaries of the policy constitutes change as all addition is an alteration. The same doctrine was enunciated by the Court in the cases of Gercio vs. damage or liability" against CBIC. It appears that sometime in 1989.000. Suva (34 Off. Lianga Bay and Community Multi-Purpose Cooperative Inc.00. and that such loss was an excepted risk under paragraph 6 of the policy conditions of Fire Insurance Policy F1397.00. 29 Country Bankers Insurance Corporation vs. to 20 June 1990 at 4:00 p. military or popular uprising. Under Fire Insurance Policy F-1397.000. Gaz. the appellate court Commercial Law – Insurance Law. rice and medicines as provisions for their comrades in the forest. dated 1 July 1989. military or usurped power. De Leon Jr. with respect to the beneficiary. unless the insured has reserved specifically the right to change or to modify the policy. Held: When designated in a policy. namely: xxx (d) Mutiny. to pay as and in the concept of exemplary damages in the total sum of P50.000. except to the extent that the Insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions. Sun Life Assurance Co. Arturo V. pieces of furniture and fixtures. 25 January 2002] Second Division. Lianga. ordering CBIC to pay LBCMCI to fully pay the insurance claim for the loss LBCMCI sustained as a result of the fire under its Fire Insurance Policy F-1397 in its full face value of P200. submitting: (a) the Spot Report of Pfc. it is admitted that Redfern did not reserve expressly his right to change or modify the policy. for the sum of P200. 55) and Insular Life vs.Narratives (Berne Guerrero) Issue: Whether the addition of Go’s name as co-beneficiary can be allowed for her share in the insurance proceeds. Change implies the idea of an alteration. Surigao del Sur was gutted by fire and reduced to ashes. which provides that "This insurance does not cover any loss or damage occasioned by or through or in consequence. Cornelio Jamero. 2006 ( 37 ) . for a consideration. LBCMCI's building located at Barangay Diatagon.00. LBCMCI filed an insurance claim with CBIC under its Fire Insurance Policy F-1397. INP Investigator. based on the submitted documents.. the building was set on fire by 2 NPA rebels who wanted to obtain canned goods. with costs against Go. Herein. directly or indirectly. The Supreme Court affirmed the appealed judgment in all of its parts. 861). Due to the loss. CBIC interposed an appeal to the Court of Appeals. of any of the following occurrences. Any loss or damage happening during the existence of abnormal conditions (whether physical or otherwise) which are occasioned by or through or in consequence.m. equipments and records. The addition of Go's name changed the policy inasmuch as there are two beneficiaries instead of one.m.000. and (c) the Sworn Statement of Ernesto Urbiztondo. On 1 July 1989." Finding the denial of its claim unacceptable. the CBIC and LBCMCI entered into a contract of fire insurance. the beneficiary acquires a right of which he cannot be deprived of without his consent. to indemnify another against loss. revolution. On 29 December 1998. damage or liability from an unknown or contingent event including fire while Lianga Baya and Community Multipurpose Cooperative Inc. (b) the Sworn Statement of Jose Lomocso.. Thus. (J): 4 concur Facts: Country Bankers Insurance Corporation (CBIC) is a domestic corporation principally engaged in the insurance business wherein it undertakes. riot. of any of said occurrences shall be deemed to be loss or damage which is not covered by this insurance. to pay as and in the concept of actual or compensatory damages in the total sum of P50.m. resulting in the total loss of LBCMCI's stocks-in-trade. rebellion. unless the right has been reserved specifically to the insured to modify the policy. said policy constitutes an acquired right of the beneficiary. of Canada (48 Phil.00. which cannot be modified except with the consent of the latter.

Issue: Whether the burden of proof of loss in this case is upon the insurer. and not the insured. Another letter was sent to Pioneer claiming the full amount of P100. dismissed Commercial Law – Insurance Law. gives rise to its liability to LBCMCI under Fire Insurance Policy F-1397. CBIC's evidence to prove its defense is sadly wanting and thus. Intermediate Appellate Court [GR L-66935. 11 November 1985] First Division. CBIC filed the petition for review on certiorari. Manila. but the shipment never reached its destination because Mable 10 sank with the 811 pieces of logs somewhere off Cabuli Point in Palawan on its way to Manila. loss from such a risk constitutes a defense which the insurer may urge. After hearing. the Manila Bay Lighterage Corporation (MBLC) a common carrier. Palawan for carriage and delivery to North Harbor. The court ordered them to be sold to the highest bidder with the funds to be deposited in a bank in the name of Civil Case 86599.00 as unrealized profits but the latter ignored the demand. and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation set up. ordering the counterclaim of MBLC against Roque and Ong.Narratives (Berne Guerrero) affirmed the challenged decision of the trial court in its entirety. the latter is ordered to reimburse the former for whatever amount it may pay Roque and Ong as such surety.00 under the insurance policy but Pioneer refused to pay on the ground that its liability depended upon the "Total loss by Total Loss of Vessel only". but as to its cross-claim against its MBLC. the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted or for which it is not liable.000.000. 2006 ( 38 ) . 30 Roque vs.000. plus P12.00 for the loss of the shipment plus P100. On 8 March 1972. the sum of P100.000. Arturo V. 811 pieces of logs at Malampaya Sound. Held: YES. for lack of merit. On 29 February 1972. But CBIC failed to do so. since it has not assumed that risk. Roque and Ong insured the logs against loss for P100. Hence.00. posits the view that the cause of the loss was an excepted risk under the terms of the fire insurance policy.00. the sum of P50.000.000. the ordinary splash of sea waves brought more water inside the barge. sentencing MBLC to pay Roque and Ong. it has the burden of proving the facts upon which such excepted risk is based. CBIC relies on the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo as well as on the Spot Report of Pfc. within the duration of said fire insurance. entered into a contract with Isabela Roque (doing business under the name and style of Isabela Roque Timber Enterprises) and Ong Chiong whereby the former would load and carry on board its barge Mable 10 about 422. 1 on leave Facts: On 19 February 1972. by a preponderance of evidence. or from a cause which limits its liability. One of the hatches was left open causing water to enter the barge and because the barge was not provided with the necessary cover or tarpaulin. that the latter advanced to the former as down payment for transporting the logs in question. Roque and Ong loaded on the barge. During the initial stages of the hearing. Roque and Ong commenced Civil Case 86599 against MBLC and Pioneer Pioneer. since CBIC in this case is defending on the ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy. in addition. damage or liability under Fire Insurance Policy F-1397 and that LBCMCI lost its stocks-in-trade in a fire that occurred on 1 July 1989. If a proof is made of a loss apparently within a contract of insurance. however. inasmuch as they did not take the witness stand and could not therefore be cross-examined. condemning MBLC and Pioneer to pay Roque and Ong. Palawan to North Harbor. Roque and Ong wrote a letter to MBLC demanding payment of P150. MBLC informed the trial court that it had salvaged part of the logs. the trial court found in favor of Roque and Ong.00 with the Pioneer Insurance and Surety Corporation (Pioneer). dismissed. Where a risk is excepted by the terms of a policy which insures against other perils or hazards. ordering the counterclaim of Pioneer against Roque and Ong. jointly and severally. The barge where the logs were loaded was apparently not seaworthy such that it developed a leak. CBIC.500. Stated elsewise.18 cubic meters of logs from Malampaya Sound. The Sworn Statements of Jose Lomocso and Ernesto Urbiztondo are inadmissible in evidence.00. CBIC does not dispute that LBCMCI's stocks-in-trade were insured against fire loss. Port of Manila. Gutierrez (J): 5 concur. Juarbal dated 1 July 1989. for being hearsay.

cargoes. (136 U.000. it becomes the obligation of a cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition.000. Roque and Ong filed the petition for certiorari. The purpose of such insurance is protection against contingencies and against possible damages and such a policy does not cover a loss or injury which must inevitably take place in the ordinary course of things.00. and not those ordinary perils which every vessel must encounter. which cannot be guarded against by the ordinary exertion of human skill and prudence. the risks insured against are 'perils of the sea' (Chute v. 2006 ( 39 ) . Inc.000. They are. ordering MBLC and Pioneer to pay the costs. 'Perils of the sea' has been said to include only such losses as are of extraordinary nature. Union Insurance Society of Canton (40 Phil.. Co. Commercial Law – Insurance Law. After the appellate court denied their motion for reconsideration. 55 ALR 933). goods. for lack of merit. 40). freights. it did not bother to appeal the questioned decision." Moreover. Damage done to a vessel by perils of the sea includes every species of damages done to a vessel at sea. 2427. or arise from some overwhelming power. As was held in Richelieu and Ontario Nav." Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine insurance. "the exception of losses occasioned by unseaworthiness was in effect a warranty that a loss should not be so occasioned. 214 NW 472.00 as exemplary damages. trying to recover their losses from the insurer. This rule is accepted in our own Insurance Law (Act No. There is no doubt that the term 'perils of the sea' extends only to losses caused by sea damage.S. However. the fact that the unseaworthiness of the ship was unknown to the insured is immaterial in ordinary marine insurance and may not be used by him as a defense in order to recover on the marine insurance policy. "In marine cases. MBLC did not appeal. They insure against losses from extraordinary occurrences only. there can be no mistaking the fact that the term "cargo" can be the subject of marine insurance and that once it is so made. The shipper of cargo may have no control over the vessel but he has full control in the choice of the common carrier that will transport his goods. The liability of the insurance company is governed by law. There is no dispute over the liability of the common carrier MBLC. such as stress of weather. rocks and the like. the appellate court modified the trial court's decision and absolved Pioneer from liability after finding that there was a breach of implied warranty of seaworthiness on the part of Roque and Ong and that the loss of the insured cargo was caused by the "perils of the ship" and not by the "perils of the sea".. as allegedly.000. lightning. a warranty is implied that the ship is seaworthy. until amount is fully paid." Section 99 of the same Code also provides in part that "Marine insurance includes: (1) Insurance against loss of or damage to: (a) Vessels. Or the cargo owner may enter into a contract of insurance which specifically provides that the insurer answers not only for the perils of the sea but also provides for coverage of perils of the ship. Minn. merchandise. 406). shall bear interest of 6% from 25 March 1975. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage.Narratives (Berne Guerrero) for lack of merit. It ruled that the loss is not covered by the marine insurance policy. "it is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance.. sec. These are understood to be the 'perils of the sea' referred in the policy. and holding that the sum of P150. Issue [1]: Whether there is a warranty of seaworthiness by the cargo owner in cases of marine cargo insurance. winds and waves. On 30 January 1984. as distinguished from the ordinary wear and tear of the voyage. granting Roque's and Ong's claim for attorney's fees in the sum of P10. dismissing Roque's and Ong's claim of not less than P100. vehicles. or by the violence of the elements. v. In fact. Co. the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo whether he be the shipowner or not. tempests. or freightage. Held [1]: YES. Pioneer appealed to the Intermediate Appellate Court." From the above-quoted provisions. Boston Marine. and does not embrace all losses happening at sea. or upon any thing which is the subject of marine insurance. 106). As ruled in the case of Go Tiaoco y Hermanos v. Roque and Ong state that MBLC has ceased operating as a firm and nothing may be recovered from it. North River Ins. craft.00 and P75. aircraft. Section 113 of the Insurance Code provides that "In every marine insurance upon a ship or freight. therefore.00 award to Roque and Ong.. Co. the transportation company is no longer doing business and is without funds. and whether the fact of unseaworthiness were known or unknown would be immaterial. The Court was constrained to apply Section 113 of the Insurance Code to the facts of this case.

master or shipper. shall not be reputed a peril. or damage of the said goods and merchandise or any part thereof.' The insurer undertakes to insure against perils of the sea and similar perils. it was discovered that 1. a condition which is natural and normal in the open sea. 277 US 66. de Navegacion v. 384. The policy of insurance. . that it was no longer seaworthy that was why it developed leak. and/or lack of skill of MBLC and/or MBLC's representatives on barge Mable 10. C. on the steamship Hondagua from the port of Saigon to Cebu. detriment. 48 S.. enemies. 1915. ." It was found out that the drain pipe which served as a discharge from the water closet passed down through the compartment where the rice in question was stowed and thence out to sea through the wall of the compartment. something which could not be foreseen as one of the necessary incidents of the adventure. and misfortunes that have or shall come to the hurt. from the ordinary wear and tear of the ship." Issue [2]: Whether the loss of the cargo was due to the perils of the ship rather than the perils of the sea. The facts clearly negate Roque's and Ong's claim under the insurance policy. it is alleged that the barge Mable 10 of MBLC developed a leak which allowed water to come in and that one of the hatches of said barge was negligently left open by the person in charge thereof causing more water to come in". negligence.Narratives (Berne Guerrero) and distinct from injuries suffered by the vessel in consequence of her not being seaworthy at the outset of her voyage (as in this case).875. or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. pirates. in the ordinary course of events. 1 September 1919] First Division. Cia. in order to make the insurer liable. rovers. or by the act of the owners.” 31 La Razon Social "Go Tiaoco y Hermanos" vs. if not otherwise borne in the policy. was signed upon a form long in use among companies engaged in maritime insurance. The effect of loading the boat was to Commercial Law – Insurance Law. the Court had occasion to elaborate on the term "perils of the ship" when it ruled that "It must be considered to be settled. (14 RCL on 'Insurance'. covering the shipment. not against events which must happen. in Roque's and Ong's complaint. Society of Canton.jettisons. after proper deduction had been made for the portion saved. 787. was transported in the early days of May. Union Insurance Society of Canton Ltd. pp. Union Ins. was P3. there must. Co. It is also the general rule that everything which happens thru the inherent vice of the thing.. In fact. losses. Street (J): 6 concur. Such a loss is rather due to what has been aptly called the 'peril of the ship. furthermore. . that the personnel of the tugboat and the barge committed a mistake when it turned loose the barge from the tugboat east of Cabuli point where it was buffeted by storm and waves. The evidence shows that the sinking of Mable 10 was due to improper loading of the logs on one side so that the barge was tilting on one side and for that it did not navigate on even keel. there was no typhoon but ordinary strong wind and waves. [GR 13983. The loss so resulting to the owners of rice. ed. which was a part of the wall of the ship. 503. .473 sacks had been damaged by sea water. In the case of Go Tiaoco y Hermanos v. of war. and in course of time it had become corroded and abraded until a longitudinal opening had appeared in the pipe about one inch in length. The joint or elbow where the pipe changed its direction was of cast iron. Sec. be 'some casualty. and that "he loss of their cargo was due to the fault. that a loss which. 1203-1204. 2006 ( 40 ) . 509). The purpose of the policy is to secure an indemnity against accidents which may happen. It is quite unmistakable that the loss of the cargo was due to the perils of the ship rather than the perils of the sea. and of all other perils. 72 L. . v. 459). 12 A. men. Held [2]: PERILS OF THE SHIP. Sons & Co. while the tugboat proceeded to west of Cabuli point where it was protected by the mountain side from the storm and waves coming from the east direction. Firemen's Fund Ins. At the time Mable 10 sank. results from the natural and inevitable action of the sea. fire. This hole had been in existence before the voyage was begun. It purports to insure the cargo from the following among other risks: "Perils . 1 dissents Facts: A cargo of rice belonging to the Go Tiaoco Brothers. and an attempt had been made to repair it by filling with cement and bolting over it a strip of iron. not against perils of the ship. barratry of the master and mariners. is not a peril of the sea. As was well said by Lord Herschell in Wilson. upon arrival at Cebu. of the seas. On discharging the rice from one of the compartments in the after hold. Owners of Cargo per the Xantho ([1887]. Ct. . thieves.

when they first became the subject of judicial construction. Such a loss is rather due to what has been aptly called the "peril of the ship. They were no doubt inserted in order to prevent disputes founded on nice distinctions. sec. if the expression "perils of the seas" is given its widest sense the general words have little or no effect as applied to that case. 106)." The insurer undertakes to insure against perils of the sea and similar perils. As a consequence the sea water rose in the pipe. not against events which must happen. they have always been held or assumed to be restricted to cases "akin to" or "resembling" or "of the same kind as" those specially mentioned. upon the cargo of rice belonging to the Go Tiaoco Brothers was filed. or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. Their office is to cover in terms whatever may be within the spirit of the cases previously enumerated. is not a peril of the sea. in order to make the insurer liable. and misfortunes" are to be interpreted as covering risks which are of like kind (ejusdem generis) with the particular risks which are enumerated in the preceding part of the same clause of the contract. not against perils of the ship. Navigation under these conditions resulted in the washing out of the cement-filling from the action of the sea water. the general words become most important. I see no reason for departing from this settled rule. Paras (J): 3 concur. results from the natural and inevitable action of the sea. But still. of the pipe until it was about 18 inches or 2 feet below the level of the sea. seeking collection of the sum of P868.339. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that which results from perils of the sea. For example. This rule is accepted in our own Insurance Law (Act No. 106).Narratives (Berne Guerrero) submerge the vent. It must be considered to be settled. that a loss which. According to the ordinary rules of construction these words must be interpreted with reference to the words which immediately precede them. vs. It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance. If on the other hand that expression is to receive a limited construction and loss by perils of the seas is to be confined to loss ex marine tempestatis discrimine. furthermore. 2006 ( 41 ) . 2427. 30 June 1987] Second Division. The trial court found that the inflow of the sea water during the voyage was due to a defect in one of the drain pipes of the ship and concluded that the loss was not covered by the policy of insurance. 2427." Herein. losses. 2 took no part Facts: A complaint was filed by Remington Industrial Sales Corporation against Cathay Insurance Co. in the ordinary course of events. An action on a policy of marine insurance issued by the Union Insurance Society of Canton. and so they have a greater or less effect as a narrower or broader view is taken of those cases. In marine insurance it is above all things necessary to abide by settled rules and to avoid anything like novel refinements or a new departure. from the ordinary wear and tear of the ship. Ltd. or orifice. be "some casualty. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage.15 representing Remington's losses and damages incurred in a Commercial Law – Insurance Law. It is also well settled that a ship which is seaworthy for the purpose of insurance upon the ship may yet be unseaworthy for the purpose of insurance upon the cargo (Act No. Held [2]: YES. It is determined that the words "all other perils. Issue [1]: Whether perils of the sea includes “entrance of water into the ship’s hold through a defective pipe.” Held [1]: NO. The purpose of the policy is to secure an indemnity against accidents which may happen. 32 Cathay Insurance Co. thus permitting the continued flow of the salt water into the compartment of rice.. Court of Appeals [GR 76145. something which could not be foreseen as one of the necessary incidents of the adventure. the entrance of the sea water into the ship's hold through the defective pipe already described was not due to any accident which happened during the voyage. sec. There must. Issue [2]: Whether there is an implied warranty on the seaworthy of the vessel in every marine insurance contract. but to the failure of the ship's owner properly to repair a defect of the existence of which he was apprised. Judgment was accordingly entered in favor of Union Insurance and Go Tiaoco Brothers appealed.

Cathay Insurance moved for reconsideration. and (9) The rate of 34% per annum double the ceiling prescribed by the Monetary Board is the rate of interest fixed by the Insurance Policy itself and the Insurance Code. (3) Rust is not an inherent vice of the seamless steel pipes without interference of external factors.463.Narratives (Berne Guerrero) shipment of seamless steel pipes under an insurance contract in favor of Remington as the insured." but Remington claims implied coverage from the phrase "perils of the sea" mentioned in the opening sentence of the policy. It thus filed the petition for review. when the shipment was made. and ordering Cathay Insurance to pay Remington certain amounts for marine surveyor's fee. contends that (1) Coverage of Remington's loss under the insurance policy issued by Cathay Insurance is unmistakable. (5) The decision was correct in not holding that the heavy rusting of the seamless steel pipes did not occur during the voyage of 7 days from July 1 to July 7.15. and (8) The evidence of Remington betrays the fact that the account of P868. the Court of Appeals affirmed the decision of the Regional Trial Court National Capital Region (NCR) Manila. Issue: Whether the rusting of steel pipes in the course of a voyage is a "peril of the sea. (8) The Court of Appeals did not engage in any guesswork or speculation in concluding a loss allowance of 30% in the amount of P868. (4) Remington inaccurately invokes the rule of strict construction against insurer under the guise of construction in order to impart a non-existing ambiguity or doubt into the policy so as to resolve it against the insurer.339. On appeal. Branch 38. in its comment on the petition. (6) The alleged lack of supposed bad order survey from the arrastre capitalized on by Cathay Insurance was more than clarified by no less than 2 witnesses. satisfactory and clear evidence. attorney's fees and costs of the suit. (7) The placing of notation "rusty" in the way bills is not only Remington's right but a natural and spontaneous reaction of whoever received the seamless steel pipes in a rusty condition at Remington's bodega.15 awarded by the respondent Court is founded on speculation. ordering Cathay Insurance to pay Remington interest on the aforecited amount at the rate of 34% or double the ceiling prescribed by the Monetary Board per annum from 3 February 1982 or 90 days from Remington's submission of proof of loss to Cathay Insurance until paid as provided in the settlement of claim provision of the policy.95 to a dollar in June and July 1984. but was denied. (3) The insistence of Remington that rusting is a peril of the sea is erroneous.339." and whether rusting is a risk insured against. Remington. Commercial Law – Insurance Law. since a risk to be insured against should be a casualty or some casualty. Cathay Insurance had introduced the clear cargo receipts or tally sheets indicating that there was no damage on the steel pipes during the voyage. Besides. (2) Alleged contractual limitations contained in insurance policies are regarded with extreme caution by courts and are to be strictly construed against the insurer.894." The total value of the shipment was P2. 2006 ( 42 ) . the 15-day clause of the policy had been foreclosed in the pre-trial order and it was not even raised in Cathay Insurance's answer to Remington's complaint. Remington has admitted that the questioned shipment is not covered by a "square provision of the contract. (4) No matter how Cathay Insurance might want it otherwise. (7) A fact capable of unquestionable demonstration or of public knowledge needs no evidence.83 at the prevailing rate of P7. something which could not be foreseen as one of the necessary incidents of adventure.339. (2) As adverted to in the Petition for Review. 1981. (6) Rusting is not a risk insured against. contrary to the finding of the respondent Court (that Cathay Insurance has failed "to present any evidence of any viable exception to the application of the policy") there is in fact an express exception to the application of the policy. This fact of unquestionable demonstration or of public knowledge is that heavy rusting of steel or iron pipes cannot occur within a period of a 7 day voyage. obscure phrases and exceptions should not be allowed to defeat the very purpose for which the policy was procured. The trial court decided in favor of Remington by ordering Cathay Insurance to pay it the sum of P866. consignee or importer of aforesaid merchandise while in transit from Japan to the Philippines on board vessel SS "Eastern Mariner. (5) Remington while impliedly admitting that a loss occasioned by an inherent defect or vice in the insured article is not within the terms of the policy. surmises or conjectures and the amount of less has not been proven by competent.15 as its recoverable insured loss equivalent to 30% of the value of the seamless steel pipes. erroneously insists that rusting is not an inherent vice or in the nature of steel pipes. Cathay Insurance however maintains that (1) Remington does not dispute the fact that.

2006 ( 43 ) . what was imported was 59. consisting of 3 pages. Razon.62 representing damages to said shipment which has been insured by FMICI under Policy M-2678. on the third party complaint. namely." "casualty" or "accidental cause" to which the alleged loss is attributable." An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses by an accidental cause of any kind. hence FMICI filed the petition for review. the terms have Commercial Law – Insurance Law. Court of Appeals [GR 85141.940 metric tons not 600 tons at $395. Inc. Razon. rendered judgment in favor of Choa. Held [1]: NO. have not acquired any technical meaning. Besides the precise purpose of insuring cargo during a voyage would be rendered fruitless. the Court of Appeals affirmed the decision of the lower court insofar as the award on the complaint is concerned and modified the same with regard to the adjudication of the third-party complaint. The condition of the bad order was reflected in the turn over survey report of Bad Order cargoes 120320 to 120322. Regalado (J): 3 concur. Inc. Actually. Choa Tiek Seng insured said shipment with Filipino Merchants Insurance Company (FMICI) under cargo Policy M-2678 for the sum of P267. damage. Choa made a formal claim against FMICI for P51. the third party defendant Compagnie Maritime Des Chargeurs Reunis and third party defendant E. Consequently. 28 November 1989] Second Division.148 kilos. and FMICI's surveyor ascertained and certified that in such discharge 105 bags were in bad order condition as jointly surveyed by the ship's agent and the arrastre contractor. and salt conditions. Thailand to Manila against all risks under warehouse to warehouse terms. This insurance is against all risks of logs or damage to the subject-matter insured but shall in no case be deemed to extend to cover loss. Thus.62 with interest at legal rate from the date of the filing of the complaint. 1 on leave Facts: In December 1976. an action was brought by the consignee (Choa Tiek Seng) of the shipment of fishmeal loaded on board the vessel SS Bougainville and unloaded at the Port of Manila on or about 11 December 1976 and seeks to recover from FMICI the amount of P51. Razon. namely.568. vs. Inc. The terms "accident" and "accidental". 14863 and 14869 covering a total of 227 bags in bad order condition. and. Based on said computation. They are construed by the courts in their ordinary and common acceptance. The cargo was also surveyed by the arrastre contractor before delivery of the cargo to the consignee and the condition of the cargo on such delivery was reflected in E. There is no question that the rusting of steel pipes in the course of a voyage is a "peril of the sea" in view of the toll on the cargo of wind. the Court would fail to observe a cardinal rule in the interpretation of contracts. water. The "all risks clause" of the Institute Cargo Clauses read as follows "5. seeking judgment against the third party defendants in case judgment is rendered against FMICI. or expense proximately caused by delay or inherent vice or nature of the subject-matter insured.42 a ton CNF Manila.568.Narratives (Berne Guerrero) Held: YES. Razon's Bad Order Certificates 14859. Claims recoverable hereunder shall be payable irrespective of percentage. The court below. The fishmeal in 666 new gunny bags were unloaded from the ship on 11 December 1976 at Manila unto the arrastre contractor E. are ordered to pay FMICI jointly and severally reimbursement of the amounts paid by FMICI with legal interest from the date of such payment until the date of such reimbursement.62 the computation of which claim is contained therein. A motion for reconsideration of the aforesaid decision was denied. without pronouncement as to costs. Issue [1]: Whether an "all risks" marine policy has a technical meaning in insurance in that before a claim can be compensable it is essential that there must be "some fortuity. the insurer. At any rate if the insurer cannot be held accountable therefor. and on 18 July 1988. ordering FMICI to pay Choa the sum of P51.653. after trial on the merits. FMICI brought a third party complaint against third party defendants Compagnie Maritime Des Chargeurs Reunis and/or E. 33 Filipino Merchants Insurance Co. but FMICI refused to pay the claim. as used in insurance contracts. FMICI's surveyor has conducted a final and detailed survey of the cargo in the warehouse for which he prepared a survey report with the findings on the extent of shortage or loss on the bad order bags totalling 227 bags amounting to 12. On appeal.568. Inc. that any ambiguity therein should be construed against the maker/issuer/drafter thereof.59 for the goods described as 600 metric tons of fishmeal in new gunny bags of 90 kilos each from Bangkok. A formal claim statement was also presented by the Choa against the vessel dated 21 December 1976.

it is written against all losses. Phoenix Assurance Co. An "all risks" policy has been evolved to grant greater protection than that afforded by the "perils clause. The burden of the insured. It is believed that in the absence of any showing that the losses/damages were caused by an excepted peril. therefore. Issue [2]: Whether the failure of Choa to adduce evidence. the insurer is liable under the policy. vs. unusual and unforeseen. Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. an event that proceeds from an unknown cause. The agreement has the force of law between the parties. showing that the alleged loss to the cargo in question was due to a fortuitous event. The very nature of the term "all risks" must be given a broad and comprehensive meaning as covering any loss other than a wilful and fraudulent act of the insured.. there is no evidence presented to show that the condition of the gunny bags in which the fishmeal was packed was such that they could not hold their contents in the course of the necessary transit. the basic rule is that the insurance company has the burden of proving that the loss is caused by the risks excepted and for want of such proof. Issue [3]: Whether the insurer is liable Issue [4]: There being no showing that the loss was caused by any of the excepted perils. The term "all risks" cannot be given a strained technical meaning. p. A marine insurance policy providing that the insurance was to be "against all risks" must be construed as creating a special insurance and extending to other risks than are usually contemplated. much less any evidence that the bags of cargo had burst as the result of the weakness of the bags themselves. Ltd. thereafter. Style [1956] cited in Marine Insurance Claims. it was sufficient to show that there was damage occasioned by some accidental cause of any kind. not expected. precludes his right to recover from the insurance policy. Had there been such a showing that spillage would have been a certainty. or is an unusual effect of a known cause and. delay or the inherent vice or nature of the subject matter insured. and there is no such showing. As held in Paris-Manila Perfumery Co. there may have been good reason to plead that there was no risk covered by the policy (See Berk vs. This is pursuant to the very purpose of an "all risks" insurance to give protection to the insured in those cases where difficulties of logical explanation or some mystery surround the loss or damage to property. without intention and design. the burden is shifted to the insurer to prove that the loss was due to excepted perils.Narratives (Berne Guerrero) been taken to mean that which happens by chance or fortuitously. that is. to the effect that it extends to all damages/losses suffered by the insured cargo except (a) loss or damage or expense proximately caused by delay. and covers all losses except such as arise from the fraud of the insured. the company is liable. the burden of proof is upon the insured to show that a loss arose from a covered peril. Herein. destroyed or deteriorated. 125). 2006 ( 44 ) . Thereafter. under an "all risks" policy the burden is not on the insured to prove the precise cause of loss or damage for which it seeks compensation. the loss was covered by the policy. To impose on the insured the burden of proving the precise cause of the loss or damage would be inconsistent with the broad protective purpose of "all risks" insurance. Held [2]: NO. The terms of the policy constitute the Commercial Law – Insurance Law. attributable to external causes. i. Although generally. and there is no necessity to point to any particular cause.e. and (b) loss or damage or expense proximately caused by the inherent vice or nature of the subject matter insured. and which is unexpected. the insurer can avoid coverage upon demonstrating that a specific provision expressly excludes the loss from coverage. An accident is an event that takes place without one's foresight or expectation. the language of the clause under the Institute Cargo Clauses being unequivocal and clear." in order to assure that no loss can happen through the incidence of a cause neither insured against nor creating liability in the ship. Under an “all risks” policy. The insured under an "all risks insurance policy" has the initial burden of proving that the cargo was in good condition when the policy attached and that the cargo was damaged when unloaded from the vessel. therefore. is to prove merely that the goods he transported have been lost. Coverage under an "all risks" provision of a marine insurance policy creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the burden of establishing that the loss was due to the peril falling within the policy's coverage. the burden then shifts to the insurer to show the exception to the coverage.

000 cubic meters." has insurable interest in said goods. There is a claim by Panama. 34 Oriental Assurance Corporation vs. whether real or personal. during the voyage.B. coupled with an existing interest in that out of which the expectancy arises. that the insurance coverage should have been for P3M were it not for the fraudulent act of one Benito Sy Yee Long to whom it had entrusted the amount of P6. C & F contracts are shipment contracts. The perfected contract of sale even without delivery vests in the vendee an equitable title.. and (2) on Barge TPAC-1000. Further. to transport the logs by sea to Manila and insured it against loss for PIM with Oriental Assurance Corporation (Oriental Assurance).00 as insurance indemnity with interest at the rate Commercial Law – Insurance Law. Panama filed a Complaint for Damages against Ever Insurance Agency (allegedly. the seller is authorized or required to send the goods to the buyer. they must be taken and understood in their plain. Panama demanded payment for the loss but Oriental Assurance refuse on the ground that its contracted liability was for "TOTAL LOSS ONLY. from that time. The logs were loaded on 2 barges: (1) on barge PCT7000. C. Held [4]: Choa. As vendee/consignee of the goods in transit has such existing interest therein as may be the subject of a valid contract of insurance. anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction whether he has or has not any title in.208 pieces of apitong logs. ordering Oriental Assurance to pay Panama the amount of P415." But. the RTC rendered its Decision.00 for the payment of the premium for a P3M policy. Insurable interest in property may consist in (a) an existing interest. (b) an inchoate interest founded on an existing interest. an existing interest over the goods sufficient to be the subject of insurance. Issue [4]: Whether the consignee (Choa) has an insurable interest in said goods. & F. On 28 January 1986. Inc. before the Regional Trial Court. the two barges were towed by one tugboat. or liability in respect thereof. ordinary and popular sense. It simply means that the seller must pay the costs and freight necessary to bring the goods to the named destination but the risk of loss or damage to the goods is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. His interest over the goods is based on the perfected contract of sale. Benito Sy Lee Yong and Oriental Assurance. Oriental Assurance issued Marine Insurance Policy OACM-86/002.000. with a total volume of 2. Melencio-Herrera (J): 4 concur Facts: Sometime in January 1986. whether named by the buyer or not. After trial on the merit.000 cubic meters. The contract of shipment. or (c) an expectancy. 1. as consignee of the goods in transit under an invoice containing the terms under "C & F Manila. 2006 ( 45 ) .O.Narratives (Berne Guerrero) measure of the insurer's liability. or lien upon or possession of the property. of such nature that a contemplated peril might directly damnify the insured." The rejection was upon the recommendation of the Tan Gatue Adjustment Company.. whether under F. the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer. as fate would have it.. 598 pieces of logs. Panama Sawmill Co. Unable to convince Oriental Assurance to pay its claim. The Court has heretofore ruled that the delivery of the goods on board the carrying vessels partake of the nature of actual delivery since. The term means that the price fixed includes in a lump sum the cost of the goods and freight to the named destination. delivery of the goods to a carrier. Article 1523 of the Civil Code provides that where. or any relation thereto. 9 August 1991] Second Division. Section 13 of the Insurance Code defines insurable interest in property as every interest in property.I. The perfected contract of sale between him and the shipper of the goods operates to vest in him an equitable title even before delivery or before he performed the conditions of the sale. It hired Transpacific Towage. in Palawan. If such terms are clear and unambiguous. for.F. or C. is immaterial in the determination of whether the vendee has an insurable interest or not in the goods in transit.610 pieces of logs with a volume f 1. (Panama) bought. also liable). Inc. Court of Appeals [GR 94052.. Branch 123 (Civil Case C-12601). the exceptions to said rule not obtaining in the present case. rough seas and strong winds caused damage to Barge TPAC-1000 resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon. Kalookan. also with a volume of 1. as in the present case. however. In principle. the MT "Seminole. in pursuance of a contract of sale.000. the foreign buyers assumed the risks of loss of the goods and paid the insurance premium covering them.000 cubic meters.

under Section 139 of the Insurance Code. at the port of destination. when the cause of the loss is a peril insured against. 185 SCRA 741). and dismissing the complaint against Benito Sy Lee Yong. the insurer's liability was for "total loss only. were not separately valued by the policy. or any particular portion thereof separately valued by the policy.45% of the entire shipment. Only one premium was paid for the entire shipment. The policy in question shows that the subject matter insured was the entire shipment of 2. and recover for a total loss thereof. ordering Panama to pay Ever Insurance Agency or Antonio Sy Lee Yong.000. Of the entirety of 1. xxx" The requirements for the application of Section 139 of the Insurance Code. or would have to be expended to recover it from the peril. The fact that the logs were loaded on two different barges did not make the contract several and divisible as to the items insured. only 497 pieces thereof were lost or 41. A constructive total loss is one which gives to a person insured a right to abandon. the Appellate Court affirmed the lower Court judgment in all respects except for the rate of interest.R.000. Inc. Oriental Assurance filed the petition for review on certiorari. Nocon (J): 4 concur Facts: On 22 October 1986. the logs lost in barge TPAC-1000 in relation to the total number of logs loaded on the same barge can not be made the basis for determining constructive total loss. Insurance Code). While said insurance policy was in full force and effect. v. The logs involved. 35 Finman General Assurance Corporation vs. be considered indivisible. Whether a contract is entire or severable is a question of intention to be determined by the language employed by the parties.00 as attorney's fee and another amount of P20. there can be no recovery by the insured Panama against the insurer. and brothers Christopher. pieces of logs. Court of Appeals. a constructive total loss. No. owner thereof (Ever being a single proprietorship) for the amount of P20." (Section 130. making for only one cause or consideration. Bacolod City after attending the celebration Commercial Law – Insurance Law. of the thing insured. (a) If more than threefourths thereof in value is actually lost. Winston Surposa. 2 September 1992] Second Division." A total loss may be either actual or constructive (Sec. nor separately insured. all surnamed Surposa. Oriental Assurance. or by being broken up. Carlie Surposa. therefore. Insurance Code). Since the cost of those 497 pieces does not exceed 75% of the value of all 1. or (d) Any other event which effectively deprives the owner of the possession. More importantly. Issue: Whether Oriental Assurance can be held liable under its marine insurance policy based on the theory of a divisible contract of insurance and.00 as moral damages. 78860. Resultantly. The logs having been insured as one inseparable unit.Narratives (Berne Guerrero) of 12% per annum computed from the date of the filing of the complaint. The insurance contract must.000 cubic meters of apitong logs. consequently. Court of Appeals [GR 100970. Held: NO. Charles. (b) If it is injured to such an extent as to reduce its value more than three-fourths. 2006 ( 46 ) . May 28. as beneficiaries. which was reduced from 12% to 6% per annum. have not been met. the insured. which reads "A person insured by a contract of marine insurance may abandon the thing insured. On appeal by both parties. (b) The irretrievable loss of the thing by sinking. were waiting for a ride on their way home along Rizal-Locsin Streets. G.208 pieces of logs. deceased Carlie Surposa was insured with Finman General Assurance Corporation under Finman General Teachers Protection Plan Master Policy 2005 and Individual Policy 08924 with his parents. died on 18 October 1988 as a result of a stab wound inflicted by one of 3 unidentified men without provocation and warning on the part of the former as he and his cousin. or otherwise separately insured. the correct basis for determining the existence of constructive total loss is the totality of the shipment of logs. An actual total loss is caused by: (a) A total destruction of the thing insured. No liability attaches. In the absence of either actual or constructive total loss. Chester and Clifton. The terms of the contract constitute the measure of the insurer's liability and compliance therewith is a condition precedent to the insured's right to recovery from the insurer (Perla Compania de Seguros. 1990. although placed in two barges.208. the shipment can not be said to have sustained a constructive total loss under Section 139(a) of the Insurance Code. (c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it. 129. The logs on the two barges were not separately valued or separately insured. spouses Julia and Carlos Surposa.

not expected. unexpected. the appellate court affirmed said decision. while the act may not exempt the unknown perpetrator from criminal liability. ordering Finman liable to pay Surposa the sum of P15.000. Thus. As no evidence was submitted to prove the claim for mortuary aid in the sum of P1. Issue: Whether the death was committed with deliberate intent which.00 representing the proceeds of the policy with interest from the date of the filing of the complaint until fully satisfied. death or injury does not result from accident or accidental means within the terms of an accident-policy if it is.00. As beneficiary. 2006 ( 47 ) . Jr.00. Surposa filed a complaint with the Insurance Commission which subsequently rendered a decision. therefore. disability or loss suffered by the insured." Thereafter. An accident is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause. and are construed by the courts in their ordinary and common acceptation. the natural result of the insured's voluntary act. issued Personal Accident Policy 05687 to Felix Lim. Held: NO. cannot be indemnified. the same was not entertained. 36 Sun Insurance Office Ltd. the failure of Finman to include death resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death. On 24 February 1989. They were confronted by unidentified persons. or if something unforeseen occurs in the doing of the act which produces the injury. the insured and his companion were on their way home from attending a festival. therefore.000. The record is barren of any circumstance showing how the stab wound was inflicted. In any event. 17 July 1992] First Division. It argued.000. where the death or injury is not the natural or probable result of the insured's voluntary act. and which is unexpected. Furthermore. Thus. In the first place. with a face value of P200. the resulting death is within the protection of the policies insuring against death or injury from accident. an event that proceeded from an unusual effect of a known cause and. unusual. Cruz (J): 3 concur Facts: Sun Insurance Office Ltd. vs. Two months later. There is no accident when a deliberate act is performed unless some additional. the personal accident insurance policy involved specifically enumerated only 10 circumstances wherein no liability attaches to Finamn for any injury. Julia Surposa and the other beneficiaries of said insurance policy filed a written notice of claim with Finman which denied said claim contending that murder and assault are not within the scope of the coverage of the insurance policy.Narratives (Berne Guerrero) of the "Maskarra Annual Festival. In other words. not having been expressly included in the enumeration of the circumstances that would negate liability in said insurance policy cannot be considered by implication to discharge Finman from liability for any injury. independent. Pilar Nalagon. Finman filed the petition for certiorari. The generally accepted rule is that. by the very nature of a personal accident insurance policy. and unforeseen happening occurs which produces or brings about the result of injury or death." as used in insurance contracts have not acquired any technical meaning. Sun Insurance agreed that there was no suicide. Neither can it be said that there was a capricious desire on the part of the accused to expose his life to danger considering that he was just going home after attending a festival. and unforeseen. or is an unusual effect of a known cause and. he was dead with a bullet wound in his head. Lim's secretary. The insured died from an event that took place without his foresight or expectation. the terms have been taken to mean that which happen by chance or fortuitously. was the only eyewitness Commercial Law – Insurance Law. his wife Nerissa Lim sought payment on the policy but her claim was rejected. not expected. the fact remains that the happening was a pure accident on the part of the victim. The terms "accident" and "accidental. Nor can it be pretended that the malefactor aimed at the insured precisely because the killer wanted to take his life. that there was no accident either. Herein. it cannot be pretended that Carlie Surposa died in the course of an assault or murder as a result of his voluntary act considering the very nature of these crimes. The principle of "expresso unius exclusio alterius" — the mention of one thing implies the exclusion of another thing — is therefore applicable in the present case since murder and assault. On 11 July 1991. disability or loss suffered by the insured as a result of any of the stipulated causes. Court of Appeals [GR 92383. without intention and design. unaccompanied by anything unforeseen except the death or injury. however.

He was covered by a personal accident insurance in the amount of P100. But it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. by ECDC for its overseas workers. He assured her it was not and then pointed it to his temple. and P5. 2006 ( 48 ) . the insured.that by the mere act of pointing the gun to his temple. It has also been defined as an injury which happens by reason of some violence or casualty to the insured without his design. P10. The posture -.m. and none of these exceptions is applicable in the present case. cause of Commercial Law – Insurance Law. The act was precisely intended to assure Nalagon that the gun was indeed harmless. There are only four exceptions expressly made in the contract to relieve the insurer from liability. Herein. Lim was in a happy mood (but not drunk) and was playing with his handgun.00 as exemplary damages. He was dead before he fell. He expressed assured her that the gun was not loaded. It bears noting that insurance contracts are as a rule supposed to be interpreted liberally in favor of the assured. The widow sued Sun Insurance in the Regional Trial Court of Zamboanga City and was sustained. within the life of the policy.00 under a group policy procured from Fortune Insurance & Surety Company Inc.000.00 as actual and compensatory damages. Among the documents thereafter submitted to Fortune were a copy of the death certificate 5 issued by the Ministry of Health of the Republic of Iraq — which stated "REASON OF DEATH: UNDER EXAMINATION NOW — NOT YET KNOWN " and an autopsy report of the National Bureau of Investigation (NBI) to the effect that "due to advanced state of postmortem decomposition.00 as moral damages. or voluntary co-operation. de Gabriel vs. was employed by Emerald Construction & Development Corporation (ECDC) at its construction project in Iraq.Narratives (Berne Guerrero) to his death.000. It happened on 6 October 1982. Sun Insurance contends that the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy. after his mother's birthday party. consent. Gabriel died in Iraq. he stood in front of her and pointed the gun at her. most accidents are caused by negligence. the parties agree that Lim did not commit suicide. an event which. It should be noted at the outset that suicide and willful exposure to needless peril are in pari materia because they both signify a disregard for one's life. Lim had willfully exposed himself to needless peril and so came under the exception -. A year later. or on 12 July 1983. under the circumstances.000. An accident is an event which happens without any human agency or. On the other hand. as suicide imports a positive act of ending such life whereas the second act indicates a reckless risking of it that is almost suicidal in intent. P50. The next moment there was an explosion and Lim slumped to the floor. with interest at the legal rate. There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. especially in view of the circumstances of the case.00 as attorney's fees. from which he had previously removed the magazine. Sun Insurance then came to the Supreme Court.is arguable.00. It is submitted that Lim did not willfully expose himself to needless peril when he pointed the gun to his temple because the fact is that he thought it was not unsafe to do so. As she watched the television. But what is not is that Lim had removed the magazine from the gun and believed it was no longer dangerous. 14 November 1996] First Division. Indeed. representing the face value of the policy. According to Nalagon. if happening through human agency.. Sun Insurance was sentenced to pay her P200.000. Issue: Whether the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy. is unusual to and not expected by the person to whom it happens. Lim was unquestionably negligent and that negligence cost him his own life. Nevertheless. She pushed it aside and said it might be loaded. Vitug (J): 4 concur Facts: Marcelino Gabriel. On 22 May 1982. There is no reason to deviate from this rule. The only difference is in degree. Held: NO.000. ECDC reported Gabriel's death to Fortune by telephone. the incident that resulted in Lim's death was indeed an accident. and the motion for reconsideration was denied. plus the cost of the suit. Court of Appeals [GR 103883. at about 10 p. The insured risk was for "bodily injury caused by violent accidental external and visible means which injury would solely and independently of any other cause" result in death or disability. 37 Vda. This decision was affirmed on appeal. P5.000.

unlike in ordinary life insurance where the insured's death." The notice of death was given to Fortune. she averred that her husband died of electrocution while in the performance of his work and prayed for the recovery of P100. there is absolutely no basis in fact and in law to hold that the insurance company was deemed to have waived -. de Gabriel as to the cause of death of her husband. The appellate court held that Vda. in invoking prescription.by failing to have its answers (to the Request for Admission) duly verified -. Action or suit for recovery of damage due to loss or injury must be brought. 2006 ( 49 ) . with the Commissioner or the Courts within one year from denial of the claim. de Gabriel and Fortune. stating that Gabriel died when he tried to haul water out of a tank while its submerged motor was still functioning. on 18 September 1991. Later. Following a series of communications between Jacqueline Jimenez vda. de Gabriel filed the petition for review on certiorari. Fortune. and exemplary damages. de Gabriel to take steps to cause the service of the fourth alias summons on ECDC. when the latter failed to impugn by evidence Vda. The Court of Appeals. that since both the death certificate issued by the Iraqi Ministry of Health and the autopsy report of the NBI failed to disclose the cause of Gabriel's death. the latter. Notice of claim must be filed within six months from date of the accident." Fortune referred the insurance claim to Mission Adjustment Service. admitting the genuineness and due execution of the insurance policy. moral. the claimant's right of action shall prescribe.e. which was not verified. the trial court held that Fortune was deemed to have waived the defense." invoking Section 384 10 of the Insurance Code. that the cause of Gabriel's death was not covered by the policy. In addition. it alleged. the court considered the complaint to have been timely filed or within 1 year from Fortune's denial of the claim. de Gabriel's claim. de Gabriel had failed to substantiate her allegation that her husband's death was caused by a risk insured against. The insurance policy expressly provided that to be compensable. concededly. Fortune filed an amended answer. Vda. more than a year after the death of Vda. de Gabriel could submit were a letter sent to her by her husband's co-worker. still unverified. the claim shall be deemed waived. in proper cases. however. it denied liability under the policy. otherwise. Vda. i. Issue [1]: Whether prescription was properly invoked by Fortune in this case. Fortune filed its answer. additionally putting up a counterclaim and a crossclaim. on 22 September 1983. Held [2]: YES. the trial court rendered its decision in favor (partly) of Vda. Held [1]: YES. would normally be compensable." In attempting to prove the cause of her husband's death. present to the insurance company concerned a written notice of claim setting forth the nature. reiterating its original defenses but. The trial court dismissed the case against ECDC for the failure of Vda. de Gabriel's husband was not caused by violent accidental external and visible means' as contemplated in the insurance policy. On 28 May 1987. without any unnecessary delay. On the other hand." Fortune correctly invoked Section 384 of the Insurance Code which provides that "Any person having any claim upon the policy issued pursuant to this chapter shall. Issue [2]: Whether Vda. Inc. With regard to the defense of prescription. Fortune raised the defense of "prescription.000. De Gabriel went to the Regional Trial Court of Manila. plus attorney's fees and costs of suit. The dismissal was without prejudice. The motion for reconsideration was denied. this time. ultimately denied the claim of ECDC on the ground of prescription. all that Vda. de Gabriel and Fortune both appealed to the Court of Appeals. extent and duration of the injuries sustained as certified by a duly licensed physician. In her complaint against ECDC and Fortune. De Gabriel is required to present proof that the insured’s demise was from an accidental death. de Gabriel's averment on the matter.00 for insurance indemnification and of various other sums by way of actual. was not referring to the one-year period from the denial of the claim within which to file an action against an insurer but obviously to the written notice of claim that had to be submitted within six months from the time of the accident. The Death Certificate and the Autopsy Report. On the issue of "prescription. de Gabriel's husband. Vda.the defense. that the death of Vda. the injury or death should be caused by "violent accidental external and visible means. regardless of the cause thereof. The case proceeded against Fortune alone.Narratives (Berne Guerrero) death could not be determined. and Commercial Law – Insurance Law. In arriving at its conclusion.. reversed the decision of the lower court. more than controverted the allegation of Vda. otherwise.

9 months and 11 days of prision correcional. The point of impact was on the lane of the motorcycle and the deceased was thrown from the road and met his untimely death. He died on the spot. regardless of the cause thereof. Lanang. early morning. An "accident insurance" is not thus to be likened to an ordinary life insurance where the insured's death.70 representing funeral and burial expenses of the deceased.00 for loss of income. In like manner. Sr. Evidence.000. the lower court rendered a decision finding that Destrajo had not exercised sufficient diligence as the operator of the jeepney. it lies with the claimant of the insurance proceeds to initially prove that the loss is caused by the covered peril. accused Into. From the investigation conducted by the traffic investigator. has merely to show the condition of the property insured when the policy attaches and the fact of loss or damage during the period of the policy and where. While overtaking. At Km. the burden would be on the insurer to show any "excluded peril. Davao City.00 as attorney's fees and to pay the costs of suit. No appeal was interposed by the accused who later applied for probation. the sum of P3." Not one of the other documents submitted. 2006 ( 50 ) . the heirs of Lope Maglana. Lope Maglana was on his way to his work station.000. Consolacion [GR 60506. plus P5. he met an accident that resulted in his death.000. would normally be compensable. Romero (J): 3 concur Facts: Lope Maglana was an employee of the Bureau of Customs whose work station was at Lasa. the sum of P12. filed an action for damages and attorney's fees against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO) before the then Court of First Instance of Davao. Sr. the insured risk is specified. Once the fact is established. All that appeared to be clear was the fact of Gabriel's demise on 22 May 1982 in Iraq. On 14 December 1981. on the aspect of burden of proof.000. de Gabriel's claim.000. to 4 years. could give any probative value to Vda. with all the accessory penalties provided by law.. On 20 December 1978. Consequently. the PUJ jeep of Destrajo running abreast with the overtaken jeep. 6 August 1992] Third Division. 7. 8 months and 1 day of prision correccional. Neither did the death certificate issued by the health authorities in Iraq nor the NBI autopsy report provide any clue on the cause of death. the burden then shifts to the insurer to show any excepted peril that may have been stipulated by the parties.00 in the concept of moral and exemplary damages with costs. Said the appellate court in this regard: "It must be noted that the only evidence presented by her to prove the circumstances surrounding her husband's death were her purported affidavit and the letter allegedly written by the deceased co-worker in Iraq.00 with subsidiary imprisonment in case of insolvency. Into was sentenced to suffer an indeterminate penalty of 1 year. This self-serving affidavit therefore is a mere hearsay under the rules. In an accident insurance. An information for homicide thru reckless imprudence was also filed against Pepito Into. de Maglana vs. the POEA decision. is utterly wanting to establish that the insured suffered from an accidental death. dated 06 June 1984.00 as moral damages which shall be deducted in the event judgment (sic) in Criminal Case 3527-D against the driver. the PUJ jeep was overtaking another passenger jeep that was going towards the city poblacion. driving a motorcycle owned by the Bureau of Customs. and to indemnify the heirs of Lope Maglana. as maximum. thereafter. 38 Vda. accused Into. The said affidavit however suffers from procedural infirmity as it was not even testified to or identified by the affiant (Vda. the letter allegedly written by the deceased's co-worker which was never identified to in court by the supposed author." When. bumped the motorcycle driven by the deceased who was going towards the direction of Lasa. the sum of P5. in Davao City. The latter is akin in property insurance to an "all risk" coverage where the insured. Branch II. the death certificate issued by the Ministry of Health of Iraq and the NBI autopsy report. de Gabriel's sinumpaang salaysay which merely confirmed the receipt and stated contents of the letter. the insured "s beneficiary has the burden of proof in demonstrating that the cause of death is due to the covered peril. shall have been enforced. The court ordered the insurance company is ordered Commercial Law – Insurance Law. the risk covered by the policy. the sum of P5.901. however. as minimum. to wit.000. operated and owned by Destrajo. suffers from the same defect as the affidavit of the plaintiff-appellant. in fine. The PUJ jeep that bumped the deceased was driven by Pepito Into. in the amount of P12.Narratives (Berne Guerrero) Vda. The POEA decision did not make any categorical holding on the specific cause of Gabriel's death. The court ordered Destrajo to pay the heirs of Maglana the sum of P28. De Gabriel) herself.00 which amount shall be deducted in the event judgment in Criminal Case 3527-D against the driver. During the pendency of the civil case.

The liability of the insurer is based on contract. the heirs cannot validly claim that AFISCO. "[w]here an insurance policy insures directly against liability..00. Commercial Law – Insurance Law." Since the heirs had received from AFISCO the sum of P5. In the event of the death of any person entitled to indemnity under this Policy.70 in accordance with the decision of the lower court. AFISCO's liability is only up to P20. The Company will.000. whose liability under the insurance policy is also P20.901. Held [2]: NO. in effect.00. The liability of AFISCO based on the insurance contract is direct. then the liability of the insurer is secondary only up to the extent of the insurance coverage. in respect of the liability incurred to such person indemnify his personal representatives in terms of. What should have been clearly stressed as to leave no room for doubt was the liability of AFISCO under the explicit terms of the insurance contract. where it ruled that "While it is true that where the insurance contract provides for indemnity against liability to third persons." The underlying reason behind the third party liability (TPL) of the Compulsory Motor Vehicle Liability Insurance is "to protect injured persons against the insolvency of the insured who causes such injury. the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault. Br. This motion was likewise denied for lack of merit." The Court then proceeded to distinguish the extent of the liability and manner of enforcing the same in ordinary contracts from that of insurance contracts. While in solidary obligations. (a) death of or bodily injury to any THIRD PARTY.000 from AFISCO and the balance from Destrajo or enforce the entire judgment from Destrajo subject to reimbursement from AFISCO to the extent of the insurance coverage. RTC of Olongapo City. and subject to the terms and conditions hereof. can be held solidarily liable with Destrajo for the total amount of P53. the creditor may enforce the entire obligation against one of the solidary debtors. The heirs of Maglana filed a motion for the reconsideration of the second paragraph of the dispositive portion of the decision contending that AFISCO should not merely be held secondarily liable because the Insurance Code provides that the insurer's liability is "direct and primary and/or jointly and severally with the operator of the vehicle. in an insurance contract. Court of Appeals. Judge. although only up to the extent of the insurance coverage. v. As the Court ruled in Shafer vs." Herein. the Court had the opportunity to resolve the issue as to the nature of the liability of the insurer and the insured vis-a-vis the third party injured in an accident." The heirs filed a second motion for reconsideration reiterating that the liability of the insurer is direct.00. and to give such injured person a certain beneficial interest in the proceeds of the policy. Issue [1]: Whether AFISCO is primarily liable. 2006 ( 51 ) . The heirs filed the petition for certiorari.Narratives (Berne Guerrero) to reimburse Destrajo whatever amounts the latter shall have paid only up to the extent of its insurance coverage. the insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends. the lower court denied the motion for reconsideration ruling that since the insurance contract "is in the nature of suretyship. 1982.000. not secondarily liable.000. the heirs have the option either to claim the P15. pay all sums necessary to discharge liability of the insured in respect of. and does not depend on the recovery of judgment by the injured party against the insured. xxx 3.00 under the no-fault clause. Inc. the insurer undertakes for a consideration to indemnify the insured against loss. 75. however. but not solidary with that of Destrajo which is based on Article 2180 of the Civil Code. AFISCO's liability is now limited to P15.000. on the insurance policy. the Company will. damage or liability arising from an unknown or contingent event. Issue [2]: Whether AFISCO is solidarily liable with Destrajo. the second paragraph of the dispositive portion of the decision in question may have unwittingly sown confusion among the heirs and their counsel. that of the insured is based on tort. primary and solidary with the jeepney operator because the petitioners became direct beneficiaries under the provision of the policy which. such third persons can directly sue the insurer. subject to the Limits of Liability. is a stipulation pour autrui. In Malayan Insurance Co." The above-quoted provision leads to no other conclusion but that AFISCO can be held directly liable by the heirs. Held [1]: The particular provision of the insurance policy on which the heirs base their claim provides "SECTION 1 — LIABILITY TO THE PUBLIC 1. Since under both the law and the insurance policy." In its Order of February 9. As such.

000 bags of fishmeal valued at $36. S." The trial court. the trial court denied EASCO's motion. the Appellate Court rendered judgment. Branch II for damages. When the goods reached Manila on 28 January 1979.68 less the amount of P18. entitled "Tio Khe Chio vs. Commercial Law – Insurance Law. as they apply only when the court finds an unreasonable delay or refusal in the payment of the claims. Dallas. the insurance company shall be adjudged to pay damages which shall consist of attorney's fees and other expenses incurred by the insured person by reason of such undeniable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of the claim due the insured.Narratives (Berne Guerrero) 39 Tio Khe Chio vs. under any policy other than life insurance policy. Tio Khe Chio imported 1. In its order of 30 July 1986.000. Held [1]: NO. Texas.A. That the failure to pay any such claim within the time prescribed in said sections shall be considered prima facie evidence of unreasonable delay in payment. until the claim is fully satisfied. as the case may be. The sheriff enforcing the writ reportedly fixed the legal rate of interest at 12%.387. apply in the present case. it shall be the duty of the Commissioner or the Court. U. but if such ascertainment is not had or made within sixty days after such receipt by the insurer of the proof of loss. Tio filed a claim with EASCO and Far Eastern Shipping. shall be paid within thirty days after proof of loss is received by the insurer and ascertainment of the loss or damage is made either by agreement between the insured and the insurer or by arbitration. EASCO. unless such failure or refusal to pay is based on the ground that the claim is fraudulent. Both refused to pay. Section 243 of the Insurance Code provides that "the amount of any loss or damage for which an insurer may be liable. Court of Appeals [GR 76101-02. EASCO moved to quash the writ alleging that the legal interest to be computed should be 6% per annum in accordance with Article 2209 of the Civil Code and not 12% as insisted upon by Tio's counsel. then the loss or damage shell be paid within ninety days after such receipt. as to interest. The aforecited sections of the Insurance Code are not pertinent to the case. The judgment became final as to EASCO but the shipping company appealed to the Court of Appeals and was absolved from liability by the said court in AC-GR 00161. On 30 June 1982. The goods were insured with Eastern Assurance and Surety Corporation (EASCO) and shipped on board the M/V Peskov. Whereupon. 30 September 1991] Third Division. without pronouncement as to costs. Fernan (J): 4 concur Facts: On 18 December 1978." Herein. 2006 ( 52 ) . a vessel owned by Far Eastern Shipping Company.000. they were found to have been damaged by sea water which rendered the fishmeal useless." Section 244 of the aforementioned Code also provides that "In case of any litigation for the enforcement of any policy or contract of insurance.598.30 from Agro Impex.S. as the insurer. to make a finding as to whether the payment of the claim of the insured has been unreasonably denied or withheld. Provided. On 30 July 1986. and the interest that Tio was entitled to collect from EASCO was reduced to 6% per annum.00 as attorney's fees and the costs. Eastern Assurance and Surety Corporation.82 from the date of filing of the complaint until the full payment of the amount. from the date following the time prescribed in section two hundred forty-two or in section two hundred forty-three. setting aside the order dated 30 July 1986 in so far as it fixes the interest at 12% on the principal amount of P87. issued a writ of execution against EASCO. Issue [1]: Whether Sections 243 and 244. EASCO then filed a petition for certiorari and prohibition before the Court of Appeals.86 for unpaid premiums with interest at the legal rate from the filing of the complaint. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board.986. the sum of P15.86 representing the unpaid insurance premiums. the trial court rendered judgment ordering EASCO and Far Eastern Shipping to pay Tio solidarily the sum of P105. and in the affirmative case. Tio filed the petition for certiorari and prohibition.A. Tio sued them before the then Court of First Instance of Cebu. upon motion by Tio. as the case may be. there was no unjustified refusal or withholding of payment on Tio's claim.387. filed a counterclaim against the Tio for the recovery of P18.

Circular 416 of the Central Bank which took effect on 29 July 1974 pursuant to Presidential Decree 116 (Usury Law) which raised the legal rate of interest from 6% to 12% cannot apply as the adjusted rate mentioned in the circular refers only to loans or forbearances of money. Usiphil Incorporated obtained a fire insurance policy from Finman General Assurance Corporation (then doing business under the name Summa Insurance Corporation) covering certain properties. 143 SCRA 158. During their meeting.H. the legal interest was properly pegged at 6%. Finman appointed Adjuster H. GR 52478.00 as exemplary damages in addition to the actual and compensatory damages awarded. Clearly. the Court declared that the legal rate of interest is 6% per annum. Despite repeated demands by Usiphil. and in the absence of stipulation. Sometime in 1982. there being no agreement to such effect.11 for the loss of the insured properties due to fire. Usiphil's Manager. Maghirang and Palallos signed a Statement/Agreement. dated 22 July 1982.000. No. Usiphil filed with Finman an insurance claim amounting to P987. which indicated that the amount due Usiphil was P842. 1986. Court of Appeals. since the actual damages. signed by Reynaldo Cayetano. Finman maintained that the claim of Usiphil could not be allowed because it failed to comply with Policy Condition 13 regarding the submission of certain documents to prove the loss.00 for actual damages under par. has been awarded under par. and ordered Finman to pay the cost of suit.C." And in the light of the fact that the contending parties did not allege the rate of interest stipulated in the insurance contract.500. Commercial Law – Insurance Law. in the case of Philippine Rabbit Bus Lines. Usiphil submitted its Sworn Statement of Loss and Formal Claim.40.683. vs. Usiphil likewise submitted Proof of Loss signed by its Accounting Manager Pedro Palallos and countersigned by H. the indemnity for damages. Finman undertook to indemnify Usiphil for any damage to or loss of said properties arising from fire.00 per court appearance of counsel. Finman filed the petition for review on certiorari. The appellate court modified the decision by ordering Finman to pay Usiphil the sum of P842. the amount of P30. The legal rate of interest is 6% per annum. 145 SCRA 311. 40 Finman General Assurance Corporation vs. Thereafter. G. where a judgment award is based on an action for damages for personal injury. there being no stipulation to the contrary. Thus. Kapunan (J): 4 concur Facts: On 15 September 1981. On the other hand. the applicable law is Article 2209 of the Civil Code which reads "If the obligation consists in the payment of a sum of money and the debtor incurs in delay. In compliance therewith. e.40 and to pay 24% interest per annum from 3 May 1985 until fully paid. July 28. 2006 ( 53 ) .683.Narratives (Berne Guerrero) Issue [2]: Whether the interest to be imposed on claims based on an insurance contract is 6% or 12%. Inc. Court of Appeals [GR 138737. Trial ensued. Acting thereon. to reconcile the records. the Court held in GSIS vs. 1 of the decision's dispositive portion. office. 12 July 2001] First Division. fixtures. On appeal. Bayne then required Usiphil to file a formal claim and submit proof of loss. Medina. that the rates under the Usury Law (amended by PD 116) are applicable only to interest by way of compensation for the use or forbearance of money. Ortega instructed their Finance Manager. In its Answer. Bayne to undertake the valuation and adjustment of the loss. Usiphil was constrained to file a complaint against Finman for the unpaid insurance claim.126.H. 2 of the prayer. goods or credit. 71017. the trial court rendered judgment in favor of Usiphil. 30 October 1986. dismissed the claim of interest under par.g. shop machinery and other trade equipment. Bayne's Adjuster F. the sum equivalent to 10% of the principal obligation as and for attorney's fees. dated 28 February 1985. Finman refused to pay the insurance claim. H.R. In the same vein. plus P1. Rosauro Maghirang.683. and not 12%. Under Policy F3100 issued to Usiphil.40 and to pay 24% interest per annum from 28 February 1985 until fully paid. It ordered Finman to pay Usiphil the sum of P842. the CA substantially affirmed the decision of the trial court. not use or forbearance of money. goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and loss of property which does not involve a loan. Held [2]: 6%. On 6 July 1994. shall be the payment of interest agreed upon. furniture. interest by way of damages is governed by Article 2209 of the Civil Code. the legal interest which is six per cent per annum. Cruz. dismissed the counter-claim for lack of merit..H.000. Palallos personally followed-up Usiphil's claim with Finman's President Joaquin Ortega. The court also dismissed the claim of P30. 4 of the prayer.

For its failure to do so." A perusal of the records shows that Usiphil. unless such failure or refusal to pay is based on the grounds (sic) that the claim is fraudulent. all other contracts of insurance. Section 29 of the policy itself provides for the payment of such interest: "Settlement of claim clause. and shall furnish a copy of all the descriptions and schedules in all policies. THE INSURED SHALL RENDER TO THE COMPANY A PROOF OF LOSS. Finman thus had until 2 May 1985 to pay Usiphil's insurance. substantial. then the loss or damage shall be paid within ninety days after such receipt. Issue [2]: Whether the payment of 24% interest per annum is authorized by Sections 243 and 244 of the Insurance Code. bills. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board.40 on 2 April 1985. the actual cash value of each item thereof and the amount of loss thereto. the same is authorized by Sections 243 and 244 of the Insurance Code. Further. covering any of said property. and undamaged property. (2) Proof of Loss. fixtures. compliance with the requirements will always be deemed sufficient. Usiphil had substantially complied with Policy Condition 13 which reads "The insured shall give immediate written notice to the Company of any loss. protect the property from further damage. it signed the document indicating that the amount due Usiphil is P842.40. Usiphil submitted the following documents: (1) Sworn Statement of Loss and Formal Claim and.Narratives (Berne Guerrero) Issue [1]: Whether Usiphil has complied with Policy Condition 13 in notifying Finman of the loss. and if required verified plans and specifications of any building. not strict as urged by Finman. shall produce for examination all books of account. 24% interest per annum in accordance with the above quoted Commercial Law – Insurance Law. or machinery destroyed or damaged. Finman and Usiphil signed the agreement indicating that the amount due Usiphil was P842. immediately notified Finman thereof.loss or damage for which the company may be liable. and subscribe the same. use. No claim under this policy shall be payable unless the terms of this condition have been complied with. Finman itself acknowledged its liability when through its Finance Manager. Notably. The amount of any . Indeed. AND WITHIN SIXTY DAYS AFTER THE LOSS. shall exhibit to any person designated by the company all that remains of any property herein described. Held [1]: YES. invoices. the Court of Appeals and the trial court rightfully directed Finman to pay. forthwith separate the damaged and undamaged personal property. possession or exposures of said property since the issuing of this policy by whom and for what purpose any buildings herein described and the several parts thereof were occupied at the time of loss and whether or not it then stood on leased ground. put it in the best possible order. 2006 ( 54 ) . Held [2]: YES. all encumbrances thereon. occupation. and submit to examination under oath by any person named by the Company. UNLESS SUCH TIME IS EXTENDED IN WRITING BY THE COMPANY. stating the knowledge and belief of the insured as to the following: the time and origin of the loss. Anent the payment of 24% interest per annum computed from 3 May 1985 until fully paid. a prima facie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within the time fixed in both Sections 243 and 244. The insured. as regards the submission of documents to prove loss." The policy itself obliges Finman to pay the insurance claim within 30 days after proof of loss and ascertainment of the loss made in an agreement between Usiphil and Finman. actual cash value and the amount of loss claimed. The submission of these documents constitutes substantial compliance with the above provision. as often as may be reasonably required. showing in detail quantities. but if such ascertainment is not had or made within sixty days after such receipt by the company of the proof of loss. whether valid or not. and. In any case. costs. the interest of the insured and of all others in the property. after the occurrence of the fire. under Section 244. inter alia. damaged. furnish a complete inventory of the destroyed. and other vouchers or certified copies thereof if originals be lost.683. any changes in the title. Rosauro Maghirang.683. signed and sworn to by the insured. Thereafter. under this policy shall be paid within thirty days after proof of loss is received by the company and ascertainment of the loss or damage is made either in an agreement between the insured and the company or by arbitration. location. at such reasonable time and place as may be designated by the Company or its representative and shall permit extracts and copies thereof to be made. as often as may be reasonably required.

Commercial Law – Insurance Law. 2006 ( 55 ) .Narratives (Berne Guerrero) provisions.