INSURANCE

ABOITIZ SHIPPING CORPORATION V INDIA ASSURANCE COMPANY, LTD. [CITATION] QUISUMBING; May 2, 2006 NATURE Petition for review on certiorari FACTS - Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on board a vessel owned by Franco-Belgian Services, Inc. - The cargo was consigned to General Textile, Inc., in Manila and insured by respondent New India Assurance Company, Ltd. - While in Hongkong, the cargo was transferred to M/V P. Aboitiz for transshipment to Manila. - Before departing, the vessel was advised that it was safe to travel to its destination, but while at sea, the vessel received a report of a typhoon moving within its path. - To avoid the typhoon, the vessel changed its course. However, it was still at the fringe of the typhoon when its hull leaked. - On October 31, 1980, the vessel sank, but the captain and his crew were saved. - On November 3, 1980, the captain of M/V P. Aboitiz filed his “Marine Protest”, stating that the wind force was at 10 to 15 knots at the time the ship foundered and described the weather as “moderate breeze, small waves, becoming longer, fairly frequent white horse - Petitioner notified the consignee of the total loss of the vessel and all of its cargoes. - General Textile, lodged a claim with respondent for the amount of its loss. - Respondent paid General Textile and was subrogated to the rights of the latter. - Respondent hired a surveyor to investigate, and the same concluded that the cause was the flooding of the holds brought about by the vessel’s questionable seaworthiness. - Respondent filed a complaint for damages against petitioner Aboitiz, Franco-Belgian Services and the latter’s local agent, F.E. Zuellig, Inc. (Zuellig) - On November 20, 1989, the trial court ruled in favor of respondent and held petitioner Aboitiz liable for the total value of the lost cargo plus legal interest - The complaint with respect to Franco and Zuellig was dismissed NEW - Petitioner elevated the case to the Court of Appeals, which in turn, affirmed in toto the trial court’s decision. - Petitioner moved for reconsideration but the same was denied. - Hence, this petition for review Petitioner’s Claim > Petitioner contends that respondent’s claim for damages should only be against the insurance proceeds and limited to its pro-rata share in view of the doctrine of limited liability Respondent’s Comments > Respondent counters that the doctrine of real and hypothecary nature of maritime law is not applicable in the present case because petitioner was found to have been negligent. Hence, according to respondent, petitioner should be held liable for the total value of the lost cargo ISSUE WON the limited liability doctrine applies in this case HELD NO Ratio Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. Reasoning - From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carriers are responsible, unless they can prove that the loss, destruction or deterioration was brought about by the causes specified in Article 17341 of the Civil Code. In all other cases, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. Moreover, where the vessel is found unseaworthy, the shipowner is also
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Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act of omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority.

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presumed to be negligent since it is tasked with the maintenance of its vessel. Though this duty can be delegated, still, the shipowner must exercise close supervision over its men. - In the present case, petitioner has the burden of showing that it exercised extraordinary diligence in the transport of the goods it had on board in order to invoke the limited liability doctrine. Differently put, to limit its liability to the amount of the insurance proceeds, petitioner has the burden of proving that the unseaworthiness of its vessel was not due to its fault or negligence. - Considering the evidence presented and the circumstances obtaining in this case, we find that petitioner failed to discharge this burden. Both the trial and the appellate courts, in this case, found that the sinking was not due to the typhoon but to its unseaworthiness. Evidence on record showed that the weather was moderate when the vessel sank. These factual findings of the Court of Appeals, affirming those of the trial court are not to be disturbed on appeal, but must be accorded great weight. These findings are conclusive not only on the parties but on this Court as well. Disposition Petition is denied for lack of merit. PHILAMCARE HEALTH SYSTEMS, INC. V CA (TRINOS) 379 SCRA 357 YNARES-SANTIAGO; March 18, 2002 NATURE Petition for review of CA decision FACTS - Ernani TRINOS, deceased husband of respondent Julita, applied for a health care coverage with Philamcare Health Systems, Inc. In the standard application form, he answered no to the question: “Have you or any of your family members ever consulted or been treated for high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give details).” - The application was approved for period of one year; upon termination, it was extended for another 2 years. Amount of coverage was increased to a maximum sum of P75T per disability. - During this period, Ernani suffered a HEART ATTACK and was confined at the Manila Medical Center (MMC) for one month. While her husband was in the hospital, Julita tried to claim the hospitalization benefits.

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- Petitioner treated the Health Care Agreement (HCA) as void since there was a concealment regarding Ernani’s medical history. Doctors at the MMC allegedly discovered at the time of his confinement, he was hypertensive, diabetic and asthmatic. Julita then paid the hospitalization expenses herself, amounting to about P76T. - After her husband died, Julita instituted action for damages against Philamcare and its Pres. After trial, the lower court ruled in her favor and ordered Philamcare to reimburse medical and hospital coverage amounting to P76T plus interest, until fully paid; pay moral damages of P10T; pay exemplary damages of P10T; atty’s fees of P20T. - CA affirmed the decision of the trial court but deleted all awards for damages and absolved petitioner Reverente. Petitioner’s Claims (1) Agreement grants “living benefits” such as medical check-ups and hospitalization which a member may immediately enjoy so long as he is alive upon effectivity of the agreement until its expiration. (2) Only medical and hospitalization benefits are given under the agreement without any indemnification, unlike in an insurance contract where the insured is indemnified for his loss. (3) HCAs are only for a period of one year; therefore, incontestability clause does not apply, as it requires effectivity period of at least 2 yrs. (4) It is not an insurance company, governed by Insurance Commission, but a Health Maintenance Organization under the authority of DOH. (5) Trinos concealed a material fact in his application. (6) Julita was not the legal wife since at the time of their marriage, the deceased was previously married to another woman who was still alive.* ISSUES 1. WON a health care agreement is an insurance contract (If so, “incontestability clause” under the Insurance Code is applicable) 2. WON the HCA can be invalidated on the basis of alleged concealment HELD YES Ratio Every person has an insurable interest in the life and health of himself2. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract. Reasoning - A contract of insurance3 is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. - An insurance contract exists where the following elements concur: (a) The insured has an insurable interest; (b) The insured is subject to a risk of loss by the happening of the peril; (c) The insurer assumes the risk; (d) Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk; and (e) In consideration of the insurer’s promise, the insured pays a premium. 2. NO Ratio Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue; since in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. Reasoning - The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract. The right to rescind should be exercised previous to the commencement of an action on the contract. No rescission was made. Besides, the cancellation of health care agreements as in insurance policies requires: (a) Prior notice of cancellation to insured;

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(b) Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned; (c) Must be in writing, mailed or delivered to the insured at the address shown in the policy; (d) Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based. - These conditions have not been met. When the terms of insurance contract contain limitations on liability, courts should construe them in such a way as to preclude insurer from non-compliance of obligation. Being a contract of adhesion, terms of an insurance contract are to be construed strictly against the party which prepared it – the insurer. - Also, Philamcare had 12 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, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. * The health care agreement is in the nature of a contract of indemnity. Hence, payment should be made to the party who incurred the expenses. It is clear that respondent paid all the hospital and medical bills; thus, she is entitled to reimbursement. Disposition Petition DENIED. PINEDA V CA (INSULAR COMPANY) 226 SCRA 755 DAVIDE; September 27, 1993 LIFE INSURANCE

NATURE Appeal by certiorari for review and set aside the Decision of the public respondent Court of Appeals and its Resolution denying the petitioners' motion for reconsideration FACTS - In 1983, Prime Marine Services, Inc. (PMSI) procured a group policy from Insular Life to provide life insurance coverage to its sea-based employees enrolled under the plan. During the effectivity of the policy, 6 covered employees perished at sea. They were survived by complainants-appellees, the beneficiaries under the policy. - complainants-appellees sought to claim death benefits due them and approached Capt. Roberto Nuval, President and GM of PMSI, then executed special powers of attorney authorizing Capt. Nuval to

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Sec.10. Every person has an insurable interest in the life and health: (1) of himself, of his spouse and of his children; (2) of any person on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest; (3) of any person under a legal obligation to him for the payment of money, respecting property or service, of which death or illness might delay or prevent the performance; and (4) of any person upon whose life any estate or interest vested in him depends.

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Section 2 (1) of the Insurance Code

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“follow up, ask, demand, collect and receive” for their benefit indemnities of sums of money due them…” - Unknown to the complainants, PMSI filed with Insular Life claims for and in behalf of them through Capt. Nuval, even using the 5 special powers of attorney that they executed as documents. Insular Life then released 6 checks, payable to the order of the complainant-appellees, to the treasurer of PMSI (who happened to be Capt. Nuval’s son-in-law). Capt. Nuval then endorsed and deposited these checks (which were for the complainants) in his bank account. - 3 years after, the complainants-appellees found out that they were entitled, as beneficiaries, to life insular benefits under a group policy with respondent-appellant so they sought to recover these benefits from Insular Life. Insular Life denied the claim, saying that their liability to complainants was already extinguished upon delivery to and receipt by PMSI of the 6 checks issued in the complainants’ names. Complainants filed case with the Insurance Commission which decided in their favor. - Insurance Commission held that the special powers of attorney executed by complainants in favor of the complainants do not contain in unequivocal and clear terms authority to Capt. Nuval to obtain, receive, receipt from respondent company insurance proceeds arising from the death of the seamaninsured; also, that Insular Life did not convincingly refuted the claim of Mrs. Alarcon that neither she nor her husband executed a special power of authority in favor of Capt. Nuval (and therefore, the company should have not released the check to Capt. NuvalPMSI); and that it did not observe Sec 180(3), as repealed by Art. 225 of the Family Code, when it released the benefits due to the minor children of Ayo and Lontok, when the said complainants did not post a bond as required - Insular Life appealed to the CA; CA modified the decision of the Insurance Commission, eliminating the award to the Lontoks and Ayo ISSUES 1. WON Insular Life should be complainants when they relied on the of attorney, which Capt. Nuval documents, when they released the latter 2. WON Insular Life should be complainants when they released the liable to the special powers presented as checks to the liable to the check in favor of Ayo and LOntok, even if no bond was posted as required HELD 1. YES Ratio Third persons deal with agents at their peril and are bound to inquire as to the extent of the power of the agent with whom they contract. The person dealing with an agent must also act with ordinary prudence and reasonable diligence. Obviously, if he knows or has good reason to believe that the agent is exceeding his authority, he cannot claim protection. So if the suggestions of probable limitations be of such a clear and reasonable quality, or if the character assumed by the agent is of such a suspicious or unreasonable nature, or if the authority which he seeks to exercise is of such an unusual or improbable character, as would suffice to put an ordinarily prudent man upon his guard, the party dealing with him may not shut his eyes to the real state of the case, but should either refuse to deal with the agent at all, or should ascertain from the principal the true condition of affairs. Reasoning - The execution by the principals of special powers of attorney, which clearly appeared to be in prepared forms and only had to be filled up with their names, residences, dates of execution, dates of acknowledgement and others, excludes any intent to grant a general power of attorney or to constitute a universal agency. Being special powers of attorney, they must be strictly construed. Insular Life knew that a power of attorney in favor of Capt. Nuval for the collection and receipt of such proceeds was a deviation from its practice with respect to group policies (that the employer-policyholder is the agent of the insurer). - The employer acts as a functionary in the collection and payment of premiums and in performing related duties. Likewise falling within the ambit of administration of a group policy is the disbursement of insurance payments by the employer to the employees. Most policies, such as the one in this case, require an employee to pay a portion of the premium, which the employer deducts from wages while the remainder is paid by the employer. This is known as a contributory plan as compared to a non-contributory plan where the premiums are solely paid by the employer.

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- the labor of the employees is the true source of the benefits, which are a form of additional compensation to them. - the employer is the agent of the insurer in performing the duties of administering group insurance policies. It cannot be said that the employer acts entirely for its own benefit or for the benefit of its employees in undertaking administrative functions. While a reduced premium may result if the employer relieves the insurer of these tasks, and this, of course, is advantageous to both the employer and the employees, the insurer also enjoys significant advantages from the arrangement. The reduction in the premium which results from employer-administration permits the insurer to realize a larger volume of sales, insurer to realize a larger volume of sales, and at the same time the insurer's own administrative costs are markedly reduced. - the employee has no knowledge of or control over the employer's actions in handling the policy or its administration. An agency relationship is based upon consent by one person that another shall act in his behalf and be subject to his control. It is clear from the evidence regarding procedural techniques here that the insurer-employer relationship meets this agency test with regard to the administration of the policy, whereas that between the employer and its employees fails to reflect true agency. The insurer directs the performance of the employer's administrative acts, and if these duties are not undertaken properly the insurer is in a position to exercise more constricted control over the employer's conduct. - ON GROUP INSURANCE: Group insurance is essentially a single insurance contract that provides coverage for many individuals. In its original and most common form, group insurance provides life or health insurance coverage for the employees of one employer. The coverage terms for group insurance are usually stated in a master agreement or policy that is issued by the insurer to a representative of the group or to an administrator of the insurance program, such as an employer. Although the employer may be the titular or named insured, the insurance is actually related to the life and health of the employee. Indeed, the employee is in the position of a real party to the master policy, and even in a noncontributory plan, the payment by the employer of the entire premium is a part of the total compensation paid for the services of the employee.

with interest at the legal rate until full payment is made. . 11. RD-058 is REINSTATED. 1999 NATURE Petition for review on certiorari FACTS Cebu Shipyard and Engineering Works. or at its option to pay a sum equal to the cost of such replacement at its own works. the withdrawal of the Contractor’s workmen. the Contractor shall not be under any liability to the Customer either in contract or for delict or quasi-delict or otherwise except for negligence and such liability shall itself be Page 4 subject to the following overriding limitations and exceptions.On February 16. 1991. Cebu Shipyard’s quay. 225. Inc. x x x 20. William Lines. a luxury passenger-cargo vessel. Other employees hired by William Lines to do repairs and maintenance work on the vessel were also present during the dry-docking. Without such evidence. without necessity of court authority or the giving of a bond where the interest of the minor in the particular act involved does not exceed twenty thousand pesos " .While the M/V Manila City was undergoing drydocking and repairs within the premises of CSEW." -"market value of the property or the annual income of the child": the aggregate of the child's property or annual income. Inc. M/V Manila City.Petitioner CSEW was also insured by Prudential for third party liability under a Shiprepairer’s Legal Liability Insurance Policy. YES Ratio Regardless of the value of the unemancipated common child's property. To pay unto plaintiff. INC. the mother of any minor. 5.William Lines. using their cabins as living quarters. (Prudential) is in the non-life insurance business. resulting to its eventual total loss. an arrival conference was held between representatives of William Lines. On June 10. 1991. it would not be safe to conclude that. were signed thereafter.000 representing loss of income of M/V MANILA CITY.00. a bond has to be posted by the parents concerned to guarantee the performance of the obligations of a general guardian.000. alleging that the fire which broke out in M/V Manila City was caused by CSEW’s negligence and lack of care. among others. 22950 are SET ASIDE and the Decision of the Insurance Commission in IC Case No. after subject vessel was transferred to the docking quay. in behalf of said minor. any right under the policy. Inc. 1991 was filed an Amended Complaint impleading Prudential as co-plaintiff. INC. a bond is required . the sum of P927. The contracts. Inc. to the Cebu Shipyard in Lapulapu City for annual dry-docking and repair.95 as . the value of the hull and machinery insurance on the M/V Manila City. Save as provided in Clause 10. if this exceeds P50. with interest at the legal rate until full payment is made. Costs against the private respondent. INC. the trial court a quo came out with a judgment against CSEW: 1. ship repairmen . in addition to what it received from the insurance company to fully cover the injury or loss. Reasoning .” . . Inc. As a result of such payment Prudential was subrogated to the claim of P45 million.. namely: (a) The total liability of the Contractor to the Customer (over and above the liability to replace under Clause 10) or of any sub-contractor shall be limited in respect of any defect or event (and a series of accidents arising out of the same defect or event shall constitute one defect or event) to the sum of Pesos Philippine Currency One Million only. William Lines. 225. with interest at the legal rate until full payment is made. but not less than ten per centum (10%) of the value of the property or annual income. V WILLIAM LINES. indeed. the parent concerned shall be required to furnish a bond in such amount as the court may determine. Inc.054. 1991. subject vessel was insured with Prudential for P45M for hull and machinery. 1991. the father and mother ipso jure become the legal guardian of the child's property. In case of disagreement.000. with the following stipulations: “10.. The Contractor shall replace at its own work and at its own cost any work or material which can be shown to be defective and which is communicated in writing within one (1) month of redelivery of the vessel or if the vessel was not in the Contractor’s Possession. the sum of P3. in order to replace the M/V MANILA CITY. officers and crew of M/V Manila City stayed in the vessel.000. representing the value of the said insurance it paid. it caught fire and sank. . . that is his only property. the amount of P56. under the limited liability clause. 16. denominated as Work Orders. the amount of P11M as payment. Family Code: "ART. Inc. or in the latter's absence or incapacity.INSURANCE 2. (CSEW) is engaged in the business of dry-docking and repairing of marine vessels while the Prudential Guarantee and Assurance. if the market value of the property or the annual income of the child exceeds P50. 1994. The insurance on the vessel should be maintained by the customer and/or owner of the vessel during the period the contract is in effect. brought its vessel. the father.On Feb. Inc. At the time of the unfortunate occurrence sued upon. SP No. filed a complaint for damages against CSEW. and CSEW to discuss the work to be undertaken on the M/V Manila City. Where the market value of the property or the annual income of the child exceeds P50. may exercise. These conditions shall apply to any such replacements. is in the shipping business. and PRUDENTIAL GUARANTEE and ASSURANCE COMPANY. the subrogee. 1991. which caught fire and sank on Feb. unless there is judicial order to the contrary. CEBU SHIPYARD ENGINEERING WORKS.715. to guarantee the performance of the obligations prescribed for general guardians. with interest at the legal rate until full payment is made.R.On February 21. SO ORDERED. after the latter had paid William Lines. The Decision of 10 October 1991 and the Resolution of 19 May 1992 of the public respondent in CA-G. the father's decision shall prevail. The Hull Policy included an “Additional Perils (INCHMAREE)” Clause covering loss of or damage to the vessel through the negligence of. 2. the master. the amount of P45M. who is an insured or a beneficiary under a contract of life.Sec 180.00. to wit: . It was the owner of M/V Manila City. Disposition the instant petition is GRANTED. William Lines. 6. May 5.On July 15. To pay unto plaintiff Prudential Guarantee and Assurance.…repealed by Art. Insurance Code: 'In the absence of a judicial guardian.On Feb. Inc. The father and the mother shall jointly exercise legal guardianship over the property of their unemancipated common child without the necessity of a court appointment. The policy was for P10 million only.There is no evidence that the share of each of the minors in the proceeds of the group policy in question is the minor's only property. However. .039 for the loss of fuel and lub oil on board the vessel when she was completely gutted by fire at defendant. health or accident insurance.677. [CITATION] PURISIMA.

The finding of negligence by the CA is a question which this Court cannot look into as it would entail going into factual matters on which the finding of negligence was based. WON CSEW’S expert evidence is admissible or of probative value 4. witnesses saw smoke coming from Tank No. When it was too hot for them to stay on board and seeing that the fire cannot be controlled. the JNB workers noticed smoke coming from the passageway along the crew cabins. the fire was not controlled until 2AM of the following day. . The vessel’s reeferman reported such occurence to the Chief Mate who immediately assembled the crew members to put out the fire. the CSEW completed the drydocking of M/V Manila City at its grave dock. the subrogee. WON CSEW had “management and supervisory control“ of the m/v manila city at the time the fire broke out 2. . Both courts found that the M/V Manila City was under the custody and control of petitioner CSEW. ISSUES 1. and to pay the costs of this suit. when the said vessel was under the exclusive custody and control of CSEW is accordingly upheld. especially when. 5. However. on level with the flooring of the crew cabins located on the vessel’s second deck. YES .When M/V Manila City capsized. William Lines did not previously apply for a permit to do hotworks on the said portion of the ship as it should have done pursuant to its work order with CSEW.Furthermore. Casas. 16. prompting him to scold the workers. 1997. CSEW’s version: On Feb.INSURANCE payment for the spare parts and materials used in the M/V MANILA CITY during dry-docking with interest at the legal rate until full payment is made. and after a thorough investigation of the surrounding circumstances of the tragedy. WON Prudential has the right of subrogation against its own insured THE CONTRACTUAL 5. The decisions of both the lower court and the CA set forth clearly the evidence sustaining their finding of actionable negligence on the part of CSEW. M/V Manila City sank. Cordova Fire Dept. 2. Questions of fact cannot be entertained. 5. When supported by sufficient evidence. the JNB workers trimmed and cleaned the tank top framing which involved minor hotworks (welding/cutting works). Then the huge amounts of water pumped into the vessel. 1991. in petitions for review on certiorari. coupled with the strong current.On September 3. This factual finding is accorded great weight and is conclusive on the parties.. The facts and evidence on record reveal the concurrence of said conditions in the case under scrutiny. 12 which was subcontracted by CSEW to JNB General Services.The CA and the Cebu RTC are agreed that the fire which caused the total loss of subject M/V Manila City was due to the negligence of the employees and workers of CSEW. Such an approach cannot be allowed by this Court in the absence of clear showing that the case falls under any of the exceptions to the wellestablished principle. . . 1991. When one of the workers. the fire that occurred and consumed M/V Manila City would not have happened in the ordinary course of things if reasonable care and . He also observed that the rubber insulation wire coming out of the air-conditioning unit was already burning. only questions of law may be put into issue. Mr. gusty winds rekindled the flames on the vessel and fire again broke out. The JNB workers then proceeded to rig the steel plates. are not to be disturbed on appeal. even finality. caused the vessel to tilt until it capsized and sank . 1991. when the ill-fated vessel caught fire.On the early morning of Feb. . The said work was completed at about 10AM. Mr. . proceeded to the passageway to ascertain the origin of the smoke. 12. It was then transferred to the docking quay of CSEW where the remaining repair to be done was the replating of the top of Water Ballast Tank No. 12 was at the rear section of the vessel. YES Page 5 . when he saw that some workers of CSEW were cropping out steel plates on Tank Top No. the Chief Mate of M/V Manila City was inspecting the various works being done by CSEW on the vessel. As the vessel was insured with Prudential Guarantee. as in this case. and fire brigade of CSEW. who sounded the fire alarm. 1991. 5.the amount of P10Min attorney’s fees. Prudential’s version > At around 7AM of Feb. ordering CSEW to pay Prudential. and the Safety Officer of CSEW. The finding by the trial court and the Court of Appeals that M/V Manila City caught fire and sank by reason of the negligence of the workers of CSEW.The that factual findings by the CA are conclusive on the parties and are not reviewable by this Court.In the morning of Feb. The rigging was resumed at 1PM While in the process of rigging the second steel plate. Emergency Rescue Unit Foundation.000 in moral damages. the CA affirmed the factual findings arrived at by the trial court. He immediately sought out the proprietor of JNB. with interest at the legal rate until full payment is made. Aves. Mr. the vessel’s crew were forced to withdraw from CSEW’s docking quay. WON the doctrine of res ipsa loquitur applies against the crew 3. 17.Despite the combined efforts of the firemen of the Lapulapu City Fire Dept. The court discerns no basis for disturbing such finding firmly anchored on enough evidence. WON the provisions limiting csew’s liability for negligence to a maximum of p1 million are valid HELD 1. > At 2:45 PM of the same day. At around 7AM of Feb. 13. he noticed that smoke was gathering on the ceiling of the passageway but did not see any fire as the crew cabins on either side of the passageway were locked. 1991. Buenavista. 12 using acetylene. They are entitled to great weight and respect. officer or crew to guide the firemen inside the vessel. after which they had their lunch break. 17. the sum of P45 Million..For the doctrine of res ipsa loquitur to apply to a given situation. steel and angle bars were noticed to have been newly welded along the port side of the hull of the vessel. the Court of Appeals affirmed the appealed decision of the trial court. Prudential found the said insurance claim to be meritorious and issued a check in favor of William Lines in the amount of P45 million pesos representing the total value of M/V Manila City’s hull and machinery insurance. at the level of the crew cabins. The rationale behind this doctrine is that review of the findings of fact of the CA is not a function that the Supreme Court normally undertakes. and (2) that the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence. there were no WLI representative. CSEW’s fire brigade immediately responded as well as the other fire fighting units in Metro Cebu. findings of fact by the CA affirming those of the trial court. 16. the following conditions must concur: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent. William Lines filed a claim for constructive total loss. First. oxygen and welding torch. Mandaue Fire Dept. Tank Top No. P500.

there is no need for the judge to resort to expert opinion evidence.” What is more.. it would nullify any claim of William Lines. in the Additional Perils Clause of the same Marine Insurance Policy. even without applying the doctrine of res ipsa loquitur. The direct evidence substantiates the conclusion that CSEW was really negligent.It is petitioner’s submission that the loss of M/V Manila City or damage thereto is expressly excluded from the coverage of the insurance because the same resulted from “want of due diligence by the Assured. But courts are not bound by the testimonies of expert witnesses. when Prudential. The insurance on the vessel should be maintained by the customer and/or owner of the vessel during the period the contract is in effect. which had control over subject vessel when it was docked for annual repairs. theorizing that (1) the fire which gutted M/V Manila City was an excluded risk and (2) it is a co-assured under the Marine Hull Insurance Policy. Although they may have probative value. from Prudential named only “William Lines. The hull and machinery insurance procured by William Lines. Petitioner avers that since the said fire experts were one in their opinion that the fire did not originate in the area of Tank Top No. under Section 49. who testified on the probable origin of the fire in M/V Manila City. YES . Page 6 . petitioner argues. 5. reception in evidence of expert testimonies is within the discretion of the court. are sufficiently eliminated by the evidence. is the herein petitioner.. . NO . CSEW. any claim for loss or damage under the policy would be invalidated. . Inc. As aptly ruled by the Court of Appeals. . Concededly. William Lines. petitioner placed reliance on Clause 20 of the Work Order which states: 20. “other responsible causes. it is benefited and effectively constituted as a co-assured under the policy. the claim of CSEW that it is a co-assured is unfounded. If from the facts and evidence on record. a conclusion is readily ascertainable. the issue of who between the parties was negligent has already been resolved against CSEW.” as the assured. it is provided that: Subject to the conditions of this Policy.Petitioner theorizes further that there can be no right of subrogation as it is deemed a co-assured under the subject insurance policy. If the amount paid by the insurance company does not fully cover the injury or loss. Such result could not have been intended by William Lines. There was no manifestation of any intention of William Lines. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract.This theory of petitioner is devoid of sustainable merit. The intention of the parties to make each other a co-assured under an insurance policy is to be gleaned principally from the insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates the assured and the beneficiaries of the insurance. the ineluctable conclusion is that CSEW was negligent and consequently liable for damages to the respondent. if CSEW were deemed a co-assured under the policy. Inc. Inc. In other words. Inc.Although in this jurisdiction. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. . the fact that CSEW benefits from the said stipulation does not automatically make it as a coassured of William Lines. It is never mandatory for judges to give substantial weight to expert testimonies. Between the testimonies of the fire experts who merely based their findings and opinions on interviews and the testimonies of those present during the fire. it was subrogated to the right of the latter to recover the insured loss from the liable party. Inc. to constitute CSEW as a coassured under subject policy. Rule 130 of the Revised Rules of Court. this insurance also covers loss of or damage to vessel directly caused by the following: xxx Negligence of Charterers and/or Repairers. the latter are of more probative value. including the conduct of the plaintiff. Inc. William Lines. 12 where the JNB workers were doing hotworks but on the crew accommodation cabins on the portside No. provided such Charterers and/or Repairers are not an Assured hereunder. the agency charged with negligence. such a stipulation works to the benefit of CSEW as the shiprepairer.Thus.. the testimonies of the fire experts were not the only available evidence on the probable cause and origin of the fire. Inc. Again. To repeat. the former was subrogated to the right of the latter to indemnification from CSEW. under the aforecited clause. the law on the matter is succinct and clear. the RTC and the CA should have given weight to such finding based on the testimonies of fire experts. . as found by the trial court and the CA and as shown by the records. 2 deck. Inc. agreed to assume the risk of loss of the vessel while under drydock or repair and to such extent. in light of the direct evidence on record. To buttress its stance that it is a co-assured. and third persons.Then too. It proceeds from a wrong premise that the fire which gutted subject vessel was caused by the negligence of the employees of William Lines. . Inc. Inc. to wit: . some negligence must have occurred. 2207.Petitioner maintains that the CA erred in disregarding the testimonies of the fire experts. Second. otherwise. when the insurance policy involved named only William Lines. David Grey and Gregory Michael Southeard. paid the latter the total amount covered by its insurance policy. as found by the RTC.i] Thus. Owners or Managers” which is not included in the risks insured against. Clause 20 of the Work Order in question is clear in the sense that it requires William Lines to maintain insurance on the vessel during the period of dry-docking or repair. no shipowner would agree to make a shiprepairer a co-assured under such insurance policy. However. this theory of petitioner is bereft of any factual or legal basis.According to petitioner. as the assured thereunder. CSEW. after due verification of the merit and validity of the insurance claim of William Lines. Inc. in the present case the trial court found direct evidence to prove that the workers and/or employees of CSEW were remiss in their duty of exercising due diligence in the care of subject vessel. NO .. So also. Thus. . and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. as 4. 3. There were witnesses who were actually on board the vessel when the fire occurred. from Prudential for any loss or damage caused by the negligence of CSEW.As correctly pointed out by respondent Prudential. It is axiomatic that when the terms of a contract are clear its stipulations control. If the plaintiff’s property has been insured. In the case under consideration.Petitioner contends that Prudential is not entitled to be subrogated to the rights of William Lines. contracts of adhesion have been consistently upheld as valid per se.INSURANCE diligence had been exercised. Messrs. Inc. Upon proof of payment by Prudential to William Lines. Certainly.Art.

On February 8.. the Court recognizes instances when reliance on such contracts cannot be favored especially where the facts and circumstances warrant that subject stipulations be disregarded. The evaluation of the average adjuster also reported a constructive total loss.” To allow CSEW to limit its liability to P1M notwithstanding the fact that the total loss suffered by the assured and paid for by Prudential amounted to P45M would sanction the exercise of a degree of diligence short of what is ordinarily required because. Julian Sy went to the agent of Reliance Insurance whom he asked to accompany him to the office of the company so that he can file his claim. provided however. 69135 in the amount of P300.While it is a cardinal principle of insurance law that a policy or contract of insurance is to be construed liberally in favor of the insured and strictly against the insurer company.00. M/V Manila City was found to be beyond economical salvage and repair. Western Guaranty Corporation issued Fire Insurance Policy No. Inc. . then. the partnership engaged in the sale of construction materials at its place of business." Petitioner’s comments > Petitioners contend that they are not to be blamed for the omissions. 41997). it was ascertained that the replacement cost of the vessel (the price of a vessel similar to M/V Manila City). they will intervene only when the terms of the policy are ambiguous. when the words and language of documents are clear and plain or readily understandable by an ordinary reader thereof. like other contracts.It is worthy to note that M/V Manila City was insured with Prudential for P45M. was then found to be valid and compensable such that Prudential paid the latter the total value of its insurance claim.On May 15. .. This policy was renewed on May 13.00. 1982. The said claim of William Lines. amounts to P55M. 37201 in the amount of P350. ISSUE WON New Life Enterprises’ claim for payment be denied HELD YES Ratio Furthermore.550. Respondent’s comments > Western Guaranty Corporation through Claims Manager Bernard S. NEW LIFE ENTERPRISES V CA 207 SCRA 669 REGALADO. Razon told the plaintiff that his claim 'is denied for breach of policy conditions. . alleging that insurance agent Leon Alvarez (for Western) and Yap Kam Chuan (for Reliance and Equitable) knew about the existence of the additional insurance coverage and that they were not informed about the requirement that such other or additional insurance should be stated in the policy. or which may subsequently be effected. yet contracts of insurance. they would also pay.00. or uncertain.000. After the fire.000. let alone the fact that negligence on the part of petitioner has been sufficiently proven. 1982. 1981. Philippine Constabulary/Integrated National Police. Inc. are to be construed according to the .. 39328 in the amount of P200. March 31.Thus when the building occupied by the New Life Enterprises was gutted by fire at about 2:00 o'clock in the morning of October 19. As aptly held by the trial court. . there is absolutely no room for interpretation or construction anymore. Under the business name of New Life Enterprises. the stocks in trade inside said building were insured against fire in the total amount of P1. Equitable Insurance Corporation issued Fire Insurance Policy No. the three insurance companies denied plaintiffs' claim for payment. the Claims Manager told him to go first to Reliance Insurance and if said company agrees to pay. bearing in mind the principles of equity and fair play.The said policy in question follows: "The insured shall give notice to the Company of any insurance or insurances already effected. “it is rather unconscionable if not overstrained.00.' Page 7 Reliance Insurance purveyed the same message as well as Equitable Insurance Corporation. Reliance Surety and Insurance Co. To determine the validity and sustainability of the claim of William Lines. a two storey building situated at Iyam.000. he submitted the fire clearance.00 (Renewed under Renewal Certificate No. The parties must abide by the terms of the contract because such terms constitute the measure of the insurer's liability and compliance therewith is a condition precedent to the insured's right of recovery from the insurer. all benefits under this policy shall be deemed forfeited. The same treatment was given him by the other insurance companies.On July 30. Inc. The facts show that Julian Sy insured the stocks in trade of New Life Enterprises with Western Guaranty Corporation. Reliance Surety and Insurance Co. for a total loss. He averred that in support of his claim. the cause of fire was electrical in nature.000. Courts are not allowed to make contracts for the parties. Inc. . According to the certification issued by the Headquarters. Disposition Petition is DENIED. According to the plaintiffs. 1981 under Fire Insurance Policy No. Upon thorough investigation by its hull surveyor. .INSURANCE binding as an ordinary contract.. Resolution of the CA is AFFIRMED. the insurance policies and inventory of stocks.The antecedents of this case show that Julian Sy and Jose Sy Bang have formed a business partnership in the City of Lucena. 71547 in the amount of P700. rather. issued Fire Insurance Policy No. Inc. it would not be difficult for petitioner to escape liability by the simple expedient of paying an amount very much lower than the actual damage or loss suffered by William Lines. the building and the stocks inside were burned.000. covering any of the property or properties consisting of stocks in trade.00.000. Lucena City. by or on behalf of the Company before the occurrence of any loss or damage. the facts and circumstances vis-a-vis the nature of the provision sought to be enforced should be considered. Thus. Furthermore. and Equitable Insurance Corporation. goods in process and/or inventories only hereby insured. 1982.Considering the aforestated circumstances. equivocal. Prudential conducted its own inquiry. 1992 NATURE Appeal by certiorari FACTS . 1981. it would indeed be unfair and inequitable to limit the liability of petitioner to One Million Pesos only. that this condition shall not apply when the total insurance or insurances in force at the time of loss or damage is not more than P200. An additional insurance was issued by the same company on November 12. Ultimately. in ruling on the validity and applicability of the stipulation limiting the liability of CSEW for negligence to P1M only. and as a matter of fact when he was following-up his claim with Equitable Insurance. and unless such notice be given and the particulars of such insurance or insurances be stated therein or endorsed on this policy pursuant to Section 50 of the Insurance Code. . He further testified that the three insurance companies are sister companies. as they have not even read said policies. Camp Crame.

FACTS .TC held DMTC complaint dismissed for lack of merit and as regards the third-party complaint First Quezon City Insurance Co. The bus driver. the plaintiff saw a DMTC bus.000. Plaintiff’s medical expenses were advanced by his employer Maglines but he was required to reimburse Maglines on a staggered basis by way of salary deductions. While moving at a crawling pace.00. Plaintiff’s beneficiary was his employer. leaving the bus and the injured plaintiff behind. that is. The knowledge of such insurance by the insurer's agents.000. abruptly stopped the bus. a fire broke out which totally destroyed the Broadway .00 with legal interest.00 due to said physical injuries and the consequent hospital confinement. TY V FIRST NATIONAL SURETY 1 SCRA 1324 LABRADOR. Del Rosario.The plaintiff was brought to the Manila Sanitarium and Hospital where the doctors performed 2 major surgical operations on plaintiffs right leg. Ty. Inc. The bus company may not recover from the insurance company more than P12.000. del Rosario proceeded to the public utility bus stop. the sum of P50. as a result of which. . There being no satisfactory warrant the court dismissed the rest of the claims in the complaint and third-party complaint. (DMTC). employed as operator mechanic foreman in the Broadway Cotton Factory insured himself in 18 local insurance companies. among which being the 8 above-named defendants. If such terms are clear and unambiguous. Diosdado C.00 for the damages of the passenger. . who accidentally fell off the bug.444. the amount specified in the insurance contract. Inc. While at the bus stop.00 with interest. defendant DMTC filed a thirdparty complaint against First Quezon City Insurance Co. The insured is specifically required to disclose to the insurer any other insurance and its particulars which he may have effected on the same subject matter. After his release from the hospital. to indemnify theI private respondent. The terms of the contract are clear and unambiguous. Hence. While the plaintiff was still on the bus with his hand on the bus door. Broadway Cotton Factory. Disposition petition for review is GRANTED.After sending off certain seamen at the departure area of MIA.00 to each injured passenger. Besides. 1985 the complaint against DMTC and its driver.00 regardless of the number of passengers killed or injured therein. plaintiff was the last one to board the bus. knowledge of the agent is knowledge of the principal.The limit of P50. from June 10. Then fled from the scene. 1993 NATURE PETITION for review of the decision of the Court of Appeals. third-party defendant filed its answer to the third-party complaint. or (P50. which issued to him personal accident policies.00) per accident even if under the judgment of the court. he was dragged by the bus along the asphalted road. be ordered to indemnify third-party plaintiff DMTC the SUM of P50. ordinary and popular sense. Moreover. which modified the dispositive as regards the third-party complaint.00 only. Agpalo was later dropped as a party defendant because he could not be served with summons. On 24 December 1953.000. the so-called theory of imputed knowledge.500.The insurance policy clearly placed the maximum limit of the petitioner's liability for damages arising from death or bodily injury at P12. FQCIC seeks to limit to P12000. Upon filing its answer.. Costs against the private respondent De Dios Marikina Transportation Co.000. The trial court's interpretation of the insurance contract was the correct interpretation.000. Since only one passenger was injured in the accident. Gil Agpalo. April 29. the erring bus operator will have to pay more than P12.. Jose V. Inc. for the damages suffered by a passenger. was to indemnify third-party plaintiff DMTC in the sum of P12. 1984 to August 26. the plaintiff lost balance and fell from the bus. 1984. Inc.00 per passenger and its maximum liability per accident at (P50. Inc.000. ..000. The conformity of the insured to the terms of the policy is implied from his failure to express any disagreement with what is provided for. The decision promulgated by the CA.000.000. the slowly moving bus sped forward at a high speed.. First Quezon City Insurance Co. . FIRST QUEZON CITY INSURANCE CO. Medical expenses totaled the amount of P69.000. Also.The bus company appealed to the CA. The injuries had left plaintiff with a huge scar on his right leg. this petition for review.00 only.000. v. it was taking several passengers. that the third-party defendant First Quezon City Insurance Co. assailing the appellate courts' interpretation of the provision of the insurance contract on the limit of the insurer's liability. . even assuming the acquisition thereof by the former. obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Reasoning a. aside from being of dubious applicability here has likewise been roundly refuted by respondent court whose factual findings we find acceptable.41. is hereby modified by reducing the award to 12. is not the "notice" that would stop the insurers from denying the claim. 1961 FACTS .. CA (DE DIOS MARIKINA TRANSPORT CO) 218 SCRA 526 GRINO-AQUINO. which paid the insurance premiums. .At different times within a period of two months prior to 24 December 1953. As plaintiff clung instinctively to the handle bar. Petitioners should be aware of the fact that a party is not relieved of the duty to exercise the ordinary care and prudence that would be exacted in relation to other contracts.Plaintiff filed on June 26. they must be taken and understood in their plain. the insurer's liability for the damages suffered by said passenger is pegged to the amount of P12. Page 8 ISSUE WON the CA erred in the interpretation of the insurance contract on the limit of the insurer’s liability HELD YES . February 28. Insurance company filed a MFR which was denied.Plaintiff was confined at the hospital for (40) days. he returned to the hospital for further treatment and checkup. b.00 per accident means that the insurer's maximum liability for any single accident will not exceed P50. 1985. ordering the third party defendent.INSURANCE sense and meaning of the terms which the parties themselves have used.00 per passenger killed or injured. September 17. it’s liability to indemnify the respomdemt DMTC. the plaintiff incurred lost earning by way of unearned salaries amounting to P7. Jose V. all of whom managed to board the bus while it was already at the bus stop.

000 with Capital Insurance & Surety Company. The Company will subject to the Limits of Liability indemnify the Insured against loss or damage to the Motor Vehicle and its accessories and spare parts whilst thereon. distinction between “temporary disability” and “total disability” need not be made in relation to one’s occupation means that the condition of the insurance is such that common prudence requires him to desist from transacting his business or renders him incapable of working. . . all of which define partial disability as loss of either hand by a amputation through the bones of the wrist. is contrary to elementary justice and equity. . . Defendants rejected plaintiff’s claim for indemnity for the reason that there being no severance of amputation of the left hand.Since Capital refused to pay for the total cost of to wage and repairs. due to the clarity of the stipulation. The car was towed and repaired by Morosi Motors at a total cost of P302. which absolved the defendants from the complaints. At its option.The Supreme Court affirmed the appealed decision. . reinstate or replace the Motor Vehicle or any part thereof or its accessories or spare parts. suit was filed in the municipal court originally. for whose benefit the policies were issued. . The Insured may authorize the repair of the Motor Vehicle necessitated by damage for which the Company may be liable under this policy provided that: (a) the estimated cost of such repair does not exceed the authorized Repair Limit. Inc. Narvasa. it can not go beyond the clear and express conditions of the insurance policies. paragraph 4. but that in itself does not justify the abrogation of its express terms.27. Hence.To require the insurer to prove that the cost of the repairs ordered by the insured is unreasonable. the appeal. nor had it shown that it could have undertaken the repairs itself at less expense. with costs against the plaintiff-appellant. ISSUE WON Capital Insurance can be made to pay more than P150 HELD NO . the insured car.The agreement contained in the insurance policies is the law between the parties. The liability of the Company shall not exceed the value of the parts lost or damaged and the reasonable cost of fitting such parts or the value of the Motor Vehicle at the time of the loss or damage whichever is the loss. the Company may pay in cash the amount of the loss or damage or may repair. terms which the insured accepted or adhered to and which is the law between the contracting parties. applies. . per its sub-paragraph (a). which limits the company's liability to P150. Thereafter.The insurance contract may be rather onerous ("one-sided". as follows: 1. when the insurer was not given an opportunity to inspect and assess the damage before the repairs were made. an interpretation that would include the mere fracture or other temporary disability not covered by the policies would certainly be unwarranted. 3. He was brought to the Manila Central University hospital.INSURANCE Cotton Factory. is limited to P150. The abovedescribed physical injuries have caused temporary total disability of plaintiff’s left hand.Plaintiff sued the defendants in the Municipality Court of this City. The crankcase and flywheel housing of the car broke when it hit a hollow block lying Page 9 alongside the water hole. . The said company was deprived of the option because the insured took it upon itself to have the repairs made. From 26 December 1953 to 8 February 1954. express and specific that only amputation of the left hand should be considered as a loss thereof.00. The pertinent provisions of the policy provided. Plaintiff filed the corresponding notice of accident and notice of claim with all of the above-named defendants to recover indemnity. (b) a detailed estimate of the cost is forwarded to the Company without delay and providing also that the authorized repair limit is P150. Fighting his way out of the factory.27 is unreasonable. May 20. . Misamis made a report of the accident to Capital Insurance. while traveling along in Aurora Boulevard. . MISAMIS LUMBER V CAPITAL INSURANCE 17 SCRA 288 REYES. fourth.00. he underwent medical treatment in the hospital. In the case at bar. and only notified the insurer when the repairs were done. excessive or padded. 1966 NATURE Direct appeal on a point of law from the judgment of the Court of First Instance of Manila FACTS . expressly and plainly provided for in the policy. middle. and fifth fingers of left hand).” There was no such amputation in the case at bar. 2. The lower court did not exonerate the said appellant for the excess because the company's absolution would render the insurance contract one-sided and that the said insurer had not shown that the cost of repairs in the sum of P302. it being the actual contract. plaintiff was injured on the left hand by a heavy object. (a) by accidental collision or overturning or collision or overturning consequent when mechanical breakdown or consequent upon wear and tear. but not for any excess thereof. the disability suffered by him was not covered by his policy.The defendant-appellant admits liability in the amount of P150. passed over a water hole which the driver did not see because an oncoming car did not dim its light. under its former name. which dismissed his complaints. The literal meaning of this stipulation must control.When the repairs on the car had already been made. ISSUE WON Diosdado Ty is entitled to indemnity under the insurance policy for the disability of his left hand HELD . and after receiving first-aid. Inc. insured its Ford Falcon motor car for the amount of P14.One night. As a consequence. the plaintiff appealed to the Court of First Instance Manila. 4. as the lower court put it). As the terms of the policies are clear.The option to undertake the repairs is accorded to the insurance company per paragraph 2.The insurance policy stipulated in paragraph 4 that if the insured authorizes the repair the liability of the insurer.00. The Insured's estimate of value stated in the schedule shall be the maximum amount payable by the Company in respect of any claim for loss or damage. While the Court sympathizes with the plaintiff or his employer.Misamis Lumber Corporation. presided by Judge Gregorio S. he went to the National Orthopedic Hospital for treatment of his injuries (fractures in index..Recourse to legal hermeneutics is not called for because paragraph 4 of the policy is clear and specific and leaves no room for interpretation. Lanao Timber Mills. .

1983.. .000 property insurance policy to cover his interest in the electrical insurance store of his brother housed in a building in Iloilo City on August 15. May 23. ordinary and popular sense (New Life Enterprises Case.00 cash being transferred along a specified money route . RTC denied the motion and the subsequent motion for reconsideration. Ltd. Driver Magalong was assigned by PRC Management Systems. are to be construed according to the sense and meaning of the terms which the parties themselves have used. March 13.The Court clarified its ruling in Eagle Star Insurance Co.Trial Court > On being “EMPLOYEES” Magalong and Atiga were not employees or representatives of Producers as their services as armored car driver and as security guard having been merely offered by PRC Management and by Unicorn Security and which latter firms assigned them to plaintiff. fraudulent or criminal act of the insured or any officer. The Court noted that the one year period is likewise in accord with Section 23 of the Insurance Code which states that any condition which limits the time for commencing an action to a period of less than one year when the cause of action accrues is void. x x x trustee or authorized representative x x x at the time of the robbery . employee. 1987 during a robbery of Producer's armored vehicle while it was in transit to transfer the money from its Pasay City Branch to its head office in Makati under the custody of its teller. 1984 was clear and plain. Aquino and John Doe.00 but the latter refused to pay as the loss is excluded from the coverage of the insurance policy specifically under "General Exceptions" > The company shall not be liable under this policy in respect of x x x (b) any loss caused by any dishonest. Tan filed a civil case with the RTC.000. Sun Insurance. In its reply to the lawyer’s letter. Maribeth Alampay. which alone wields the power to dismiss them > On being “AUTHORIZED REPRESENTATIVE” They were merely an assigned armored car driver and security guard for the money transfer. NO . WON the court the filing of a motion for reconsideration interrupts the 12 months prescription period to contest the denial of the insurance claim 2.Demands were made by the Producers upon the Fortune to pay the amount of the loss of P725. The case is dismissed FORTUNE INSURANCE AND SURETY CO. the building including the insured store burned. If such terms are clear and unambiguous. > The language used by Fortune in the policy is plain. 1995 NATURE Petition for Review on certiorari of CA decision FACTS . V CA (TAN) 195 SCRA 193 PARAS. on February 29. The CA likewise denied the petition of Sun Insurance.V CA (PRODUCERS BANK OF THE PHILIPPINES) 244 SCRA 308 DAVIDE. Sun Insurance Office. 1985.D. they must be taken and understood in their plain.Court of Appeals > affirmed in toto > A policy or contract of insurance is to be construed liberally in favor of the insured and strictly against the insurance company (New Life Enterprises vs. Tan’s lawyer wrote another letter to the insurance company inquiring about the April 3 letter which sought for a reconsideration of the denial.On November 20. 1983. The Labor Code is a special law specifically dealing with/and specifically designed to protect labor and therefore its definition .The SC held that Condition 27 of the Insurance policy is very clear and free from any doubt or ambiguity.On August 20. wrote the private respondent denying the claim. private respondent wrote another letter to the insurance company requesting reconsideration of the denial. vs. 2. accrues at the time that the claim is rejected at the first instance. Petition filed a motion to dismiss on the alleged ground that the action has already prescribed based on Condition 27 of the Insurance Policy which stated that the window to file the appropriate action with either the Insurance Commission or in any court of competent jurisdiction is twelve months from the rejection of the claim. director. trustee or authorized representative of the Insured whether acting alone or in conjunction with others.00 under the policy issued by Fortune. 1985. together with Batigue .000. 1984. The Court noted that the rationale for the one year period is to ensure that the evidence as to the origin and cause of the destruction have not yet disappeared. escorted by Security Guard Saturnino Atiga Y Rosete.Fortune opposes the contention of Producers that Atiga and Magalong are not its "officer. What the court referred to in effect is the rejection in the first instance as claimed by Sun Insurance Disposition The decision of the CA is reversed and set aside. like other contracts. The rejection letter of February 29.Producers Bank of the Philippines filed a complaint against Fortune Insurance and Surety Co. 532 (Anti-Highway Robbery Law) Page 10 . employee. The right of action. On April 3. No other interpretation is necessary. 1984 and May 17. for recovery of P725. WON the rejection of the claim shall be deemed final only if it contains words to the effect that the denial is final HELD 1. Tan filed his claim for fire loss. driver Magalong and guard Atiga were charged. Sun Insurance Office). It has to be taken in its plain. Sun Insurance reiterated its denial of the claim and enclosed therein copies of the two previous denials dated February 29. NO . The word "employee" should be taken to mean in the ordinary sense. . ordinary. ISSUE 1. The wages and salaries of both Magalong and Atiga are presumably paid by their respective firms. The sum was allegedly lost on June 29. Court of Appeals).INSURANCE SUN INSURANCE OFFICE LTD. It was teller Maribeth Alampay who had "custody" of the P725. A request for reconsideration of the denial cannot suspend the running of the prescriptive period. 1991 NATURE Petition for certiorari to review the decision of the CA FACTS Private respondent Emilio Tan took from the petitioner a Peso 300. ordinary and simple.After an investigation by the Pasay police. The armored car was driven by Benjamin Magalong Y de Vera. with violation of P. . . 1984. Inc. and popular sense. Four days after the issuance of the policy. INC.000. Court of Appeals. according to the SC. Contracts of insurance. vs Chia Yu where it ruled that “the cause of action in an insurance contract does not accrue until the Insured’s claim is finally rejected by the Insurer” by stating the use of the word “finally” cannot be construed to mean the rejection of a petition for reconsideration. partner.

Reasoning . . it may now be asked whether Magalong and Atiga qualify as employees or authorized representatives has been . 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.Producer’s Contention > Magalong and Atiga were not its employees since it had nothing to do with their selection and engagement. nevertheless. (3) the power of dismissal. Assuming that they could not be considered authorized representatives. Said driver and security guard cannot be considered as employees of Producers bank because it has no power to hire or to dismiss said driver and security guard under the contracts except only to ask for their replacements from the contractors. and since Producers paid the monthly compensation of P1. the provisions in the contracts of Producers with PRC Management System for Magalong and with Unicorn Security Services for Atiga which state that Producers is not their employer and that it is absolved from any liability as an employer. It asserts that the power of control over Magalong and Atiga was vested in and exercised by Producers. It is settled that the terms of the policy constitute the measure of the insurer's liability. therefore. would not obliterate the relationship. It includes. 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. the Insurance Code contains no other provisions applicable to casualty insurance or to robbery insurance in particular. Security. . NLRC . work premises. and Payroll Robbery policy it issued to Producers Bank of the Philippines or WON recovery is precluded under the general exceptions clause of the policy HELD Page 11 NO Ratio A contract of insurance is a contract of adhesion. and the control of their conduct. employer's liability insurance. > International Timber Corp. . namely: (1) the selection and engagement of the employee." Thus. Fortune further insists that PRC Management System and Unicorn Security Services are but "labor-only" contractors under Article 106 of the Labor Code which provides: Art.Except with respect to compulsory motor vehicle liability insurance. equipment. . it is clear that Magalong was not Producers' employee. on the one hand. > Of the four. machineries. > International Timber Corp. In the absence of statutory prohibition to the contrary. on the other. plate glass insurance. it cannot be the subject of agreement. employees of Producers. Clave should be applied which stated In determining the existence of employeremployee relationship. Section 174 of the Insurance Code provides: Sec. Inc.With the foregoing principles in mind. Had it intended to apply the Labor Code in defining what the word "employee" refers to. there is no room for construction and such terms cannot be enlarged or diminished by judicial construction. if there was in reality an employer-employee relationship between Producers. These contracts are. they effectively and necessarily became its authorized representatives in the care and custody of the money. Outside of these. the rights and obligations of the parties must be determined by the terms of their contract. burglary and theft insurance. or it should be construed liberally in favor of the insured and strictly against the insurer. the payment of their wages. > an employer-employee relationship depends upon four standards: (1) the manner of selection and engagement of the putative employee (2) the mode of payment of wages (3) the presence or absence of a power to dismiss and (4) the presence and absence of a power to control the putative employee's conduct. As to Atiga. and (4) the power to control the employee's conduct. Contractor or subcontractor.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.There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools. the following elements are generally considered. and other substantially similar kinds of insurance. personal accident and health insurance as written by non-life insurance companies. a social legislation whose provisions may set aside contracts entered into by parties in order to give protection to the working man. public liability insurance. but is not limited to. (2) the payment of wages. vs. It asserts that the existence of an employer-employee relationship "is determined by law and being such. they were." ISSUE WON Fortune Insurance and Surety Co. motor vehicle liability insurance. Producers relies on the provision of its contract with Unicorn Security Services which provides that the guards of the latter "are in no sense employees of the CLIENT. their dismissal. . > American President Lines vs. is not applicable to all cases but only when it becomes necessary to prevent any violation or circumvention of the Labor Code. it must/ should have so stated expressly in the insurance policy. among others. the right-of-control test has been held to be the decisive factor. 106. excluding certain types of loss which by law or custom are considered as failing exclusively within the scope of insurance such as fire or marine. is liable under the Money.Since under Producers' contract with PRC Management Systems it is the latter which assigned Magalong as the driver of Producers' armored car and was responsible for his faithful discharge of his duties and responsibilities. taking into consideration its purpose and always in accordance with the general principles of insurance law. governed by the general provisions applicable to all types of insurance. thus any ambiguity therein should be resolved against the insurer. In such cases. It goes without saying then that if the terms of the contract are clear and unambiguous. and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer.00 per driver to PRC Management Systems and not to Magalong.Fortune’s Contention > when Producers commissioned a guard and a driver to transfer its funds from one branch to another.INSURANCE as to employer-employee relationships insofar as the application/enforcement of said Code is concerned must necessarily be inapplicable to an insurance contract.400. and Magalong and Atiga. 174.An insurance contract is a contract of indemnity upon the terms and conditions specified therein. the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Casualty insurance is insurance covering loss or liability arising from accident or mishap.a "laboronly" contractor is equivalent to a finding that there is an employer-employee relationship between the owner of the project and the employee of the "laboronly" contractor . (italics supplied) .

but the latter refused payment. and insured same property with two other companies. its "authorized representatives" who served as such with its teller Maribeth Alampay.An insurance firm. Reasoning . or if any false declaration be made or used in support thereof. it was its intention to exclude and exempt from protection and coverage losses arising from dishonest. in respect of the transfer of Producer's money from its Pasay City branch to its head office in Makati. 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”. that all benefits under the policy shall be forfeited “If the claim be in any respect fraudulent. 1993 NATURE Petition to review decision of the CA FACTS .But even granting for the sake of argument that these contracts were not "labor-only" contracts. we are satisfied that Magalong and Atiga were. VERENDIA V CA (FIDELITY & SURETY CO. specifically Section 13 thereof which is expressed in terms that are clear and unambiguous.INSURANCE aptly observed that in burglary.Verendia is found to have concocted the lease contract to deflect responsibility for the fire towards an alleged lessee." it must have had in mind any person who qualifies as such as generally and universally understood. The terms "service" and "employment" are generally associated with the idea of selection. It concerns the filing of a motion for extension of time to file a motion for reconsideration. DE SONGCO 25 SCRA 20 FERNANDO. the terms of the policy should be strictly construed against the insured. and Development Insurance for P400k). one who represents others or another in a special capacity." Persons frequently excluded under such provisions are those in the insured's service and employment. When it used then the term "employee.RTC: policy was violated by Verendia when it failed to inform Fidelity of his other insurance coverages. the insured property was completely destroyed by fire. . Verendia reprehensibly disregarded the principle that insurance contracts are uberrimae fidae and demand the most abundant good faith. even making it appear that the alleged lessee had disappeared. the three acted as agents of Producers. "the opportunity to defraud the insurer the moral hazard .There is marked disagreement between the parties on the correct meaning of the terms "employee" and "authorized representatives. . Seldom does the insurer assume the risk of all losses due to the hazards insured against.As it is also a contract of adhesion. Disposition Decision of CA reversed. . and is interchangeable with "agent. or criminal acts of persons granted or having unrestricted access to Producers' money or payroll. . NO Page 12 Ratio As the insurance contract is the law between the parties. and that Verendia maliciously represented that the building was under lease to a Roberto Garcia. Howsoever viewed. where the court said that although it now prohibits filing of such motion. Verendia failed to live by the terms of the policy. The purpose of the exception is to guard against liability should the theft be committed by one having unrestricted access to the property. issued a Fire Insurance Policy covering Verendia’s residential building in the amount of P385k. Magalong to drive the armored vehicle which would carry the money. with Alampay to be responsible for its custody in transit. thus no need to pay.is so great that insurers have found it necessary to fill up their policies with countless restrictions. .the court reviewed the factual findings of the courts below.. Verendia also insured the same building with two other companies (Country Bankers Insurance for P56k. thus allowing the adjudication of the case) WON Fidelity was liable to pay Verendia considering the circumstances HELD 1. CA decision and RTC Makati decision are REVERSED and SET ASIDE. In such cases.CA: reversed decision ISSUE (There is a procedural issue involved here. INC V VDA. as an agent. Verendia filed a claim against Fidelity. . 1968 FACTS . the terms specifying the excluded classes are to be given their meaning as understood in common speech.An insurance contract is the law between the parties.Considering. however. was not allowed to escape liability under a . 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. the fact that Verendia used a false lease contract to support his claim. when it was actually a Marcelo Garcia who was the lessee. A "representative" is defined as one who represents or stands in the place of another. the instant motion was filed before the effectivity of this rule. and that of RTC is reinstated. Inc. he forfeited all benefits therein by virtue of Section 13 of the policy in the absence of proof that Fidelity waived such provision. for these particular tasks." It is clear to us that insofar as Fortune is concerned. or jurisprudentially established in the light of the four standards in the determination of the employer-employee relationship 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 "labor-only" contract as employees of the party employing them and not of the party who supplied them to the employer. and compensation.While all 3 policies were in force. FIELDMEN'S INSURANCE CO. Producers entrusted the three with the specific duty to safely transfer the money to its head office. since it appears that there was a misapprehension of the facts by the CA. fraudulent. . . inflated the value of the property. OF THE PHILS) 217 SCRA 417 MELO. by presenting a false lease contract. Verendia is deemed to have forfeited his right to claim by the misrepresentation he made. an insurance contract should be liberally construed in favor of the insured and strictly against the insurer company which usually prepares it. petitioner Fieldmen's Insurance Co. the vehicle. Verendia.. thus a complaint was filed in the RTC. control. and theft insurance. . and Atiga to provide the needed security for the money. but is irrelevant to our discussion. Worse yet. having presented a false declaration to support his claim for benefits in the form of a fraudulent lease contract. many designed to reduce this hazard. Civil Case is DISMISSED." Disposition instant petition is hereby GRANTED. robbery. January 22. and his two other companions. and PRC Management Systems and Unicorn Security Services were truly independent contractors. In short. Fidelity’s reason for refusal: the policy was avoided by reason of over-insurance.Fidelity Co.

. should the parol evidence rule apply. B. Sambat.To the same effect is the following citation from the same leading case: "This rigid application of the rule on ambiguities has become necessary in view of current business practices.The plaintiffs in the lower court.As much. lt would now rely on the fact that the insured owned a private vehicle. and Rodolfo Songco. Common Carriers Accident Insurance Policy No. defendant Fieldmen's Insurance Company. Mr. not a common carrier. something Page 13 which it knew all along when not once but twice its agent. in order to forestall fraud or imposition on the insured. the failure to apply it in this case would result in a gross travesty of justice. renewed the policy by extending the coverage from October 15.. to enter into such a contract. On the above facts they prevailed. After petitioner Fieldmen's Insurance Co. it is "estopped from enforcing forfeitures in its favor.Even if it be assumed that there was an ambiguity. . J-68136Pampanga-1961.. the insured vehicle while being driven by Rodolfo Songco. .nèt . 1960. during the effectivity of the renewed policy. . the 'memo of warranty' invoked by appellant bars the latter from questioning the existence of the appliances called for in the insured premises. As estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall the innocent party due to its injurious reliance.. Angelita Songco. were the surviving widow and children of the deceased Federico Songco as well as the injured passenger Jose Manuel. upon payment of the corresponding premium... as a result of which mishap Federico Songco (father) and Rodolfo Songco (son) died. and a family friend by the name of Jose Manuel sustained physical injuries of varying degree. as such private vehicle owner. effective September 15. in the lower court and in the respondent Court of Appeals. a man of scant education being only a first grader ." 7 . the defendant company. The injured parties.' to which agent Sambat replied: 'whether our vehicle was an "owner" type or for passengers it could be insured because their company is not owned by the Government and the Government has nothing to do with their company. owned a private jeepney with Plate No. not once but twice. follow: "This is a peculiar case. was a private vehicle and not a common carrier.50.. to wit. Upon paying an annual premium of P16. Federico Songco of Floridablanca. a duly licensed driver and son of Federico (the vehicle owner) collided with a car in the municipality of Calumpit. for whose burial expenses the defendant company was also being made liable was the driver of the vehicle in question. it is hereby warranted .. Except for the fact. 1960 to September 15. petitioner being adamant in its far-fromreasonable plea that estoppel could not be invoked by the heirs of the insured as a bar to the alleged breach of warranty and condition in the policy. To be more explicit. 1962. Ltd.INSURANCE common carrier insurance policy on the pretext that what was insured. we find no valid reason to deviate and consequently hold that the decision appealed from should be affirmed. On October 29..It was further shown according to the decision of respondent Court of Appeals: "Amor Songco. Thus: "Moreover. It is now beyond question that where inequitable conduct is shown by an insurance firm. their status as beneficiaries under the policy is recognized therein.4254 . Petitioner in seeking the review of the above decision of respondent Court of Appeals cannot be so sanguine as to entertain the belief that a different outcome could be expected.. So it was held in a decision of the lower court thereafter affirmed by respondent Court of Appeals. 'the undernoted appliances for the extinction of fire being kept on the premises insured hereby. exerted the utmost pressure on the insured. L. endowed with overwhelming economic power. for whose hospital and medical expenses the defendant company was being made liable.. Carlos Songco. cartels and concentration of capital. declared that when insurance agent Benjamin Sambat was inducing his father to insure his vehicle.. his . since its initial expression. On September 15. taking into account the well known rule that ambiguities or obscurities must be strictly interpreted against the party that caused them. 3 with Justice J. Reyes speaking for the Court. he was induced by Fieldmen's Insurance Company Pampanga agent Benjamin Sambat to apply for a Common Carrier's Liability Insurance Policy covering his motor vehicle .' From this jurisprudence.. thereafter. an excerpt from the Qua Chee Gan decision would reveal anew the weakness of petitioner's contention. . binding upon us. the duration of which will be for one (1) year. Law Union and Rock Insurance Co. as had been mentioned. manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit. 1961.1awphîl.. a man of scant education.The facts as found by respondent Court of Appeals. likewise respondents here. the latter's wife." 6 . testifying as witness. its Pampanga Field Representative. the defendant company did not even care to rebut Amor Songco's testimony by calling on the witness-stand agent Benjamin Sambat. 1960. . no doubt without any objection in its part." finishing only the first grade..' the insurer 'is estopped from asserting breach of such conditions. that they were not fare paying passengers. had led the insured Federico Songco to believe that he could qualify under the common carrier liability insurance policy. On September 22. the policy being issued upon the insistence of its agent who discounted fears of the insured that his privately owned vehicle might not fall within its terms. and to enter into contract of insurance paying the premiums due. in any litigation arising out of such representation.Nor is there any merit to the second alleged error of respondent Court that no legal liability was incurred under the policy by petitioner. it could not. because our vehicle is an "owner" private vehicle and not for passengers. Thus: "Since some of the conditions contained in the policy issued by the defendantappellant were impossible to comply with under the existing conditions at the time and 'inconsistent with the known facts. 41-289 for the year 1960. Inc. So they could do what they please whenever they believe a vehicle is insurable' ... this is a case where the doctrine of estoppel undeniably calls for application. 1961. This time Federico Songco's private jeepney carried Plate No.." 1 . be permitted to change its stand to the detriment of the heirs of the insured. we sustain the Court of Appeals.. Angelito Songco and Jose Manuel. he butted in saying: 'That cannot be. the insured moreover being "a man of scant education. 1961. if not much more so than the Qua Chee Gan decision.That is all that needs be said insofar as the first alleged error of respondent Court of Appeals is concerned.The basis for the favorable judgment is the doctrine announced in Qua Chee Gan v." 2 . issued on September 19. were passengers of the jeepney at the time of the occurrence." 4 . Carlos Songco (another son). In spite of the fact that the present case was filed and tried in the CFI of Pampanga. 42year-old son of deceased Federico Songco. The courts cannot ignore that nowadays monopolies.' admits of interpretation as an admission of the existence of such appliances which appellant cannot now contradict. Why liability under the terms of the policy 5 was inescapable was set forth in the decision of respondent Court of Appeals. province of Bulacan. Pampanga. Inc. 45-HO. 1961 to October 15.

Risk policies should be construed reasonably and in a manner as to make effective the intentions and expectations of the parties. Clause. TKC advised Malayan that it might tranship the cargo and requested an extension of the insurance coverage until actual transhipment. on its face. & S. Said cargo was insured against the risk of loss by petitioner Malayan Insurance Corporation for which it issued two (2) Marine Cargo Policies. to borrow once again from the language of the Qua Chee Gan opinion: "The contract of insurance is one of perfect good faith (uberima fides) not for the insured alone.YES .We have no choice but to recognize the monetary responsibility of petitioner Fieldmen's Insurance Co.0138 per $1.Malayan replied that the arrest of the vessel by civil authority was not a peril covered by the policies.171 metric tons of soya bean meal which was loaded on board the ship MV Al Kaziemah for carriage from the port of Rio del Grande. March 20. .) 270 SCRA 242 ROMERO. of no persuasive force at all. in contrast to those entered into by parties bargaining on an equal footing.189. YES Ratio Insurance Policies should be construed liberally in favor of the insured and strictly against the insurer.1awphîl.The last error assigned which would find fault with the decision of respondent Court of Appeals insofar as it affirmed the lower court award for exemplary damages as well as attorney's fees is. x x x'" or the F.any loss which private respondent may have incurred was in the nature and form of unrecovered Page 14 acquisition value brought about by a voluntary sacrifice sale and not by arrest. being the sole author of the policies.While the vessel was docked in Durban.00) representing its loss after the proceeds of the sale were deducted from the original claim. it is more so for the latter. "arrests" caused by ordinary judicial process is also a risk excluded from the Standard Form of English Marine Policy by the F.09 (or its peso equivalent of P9. 1934. Much less should it find any receptivity from us for its unwarranted and unjustified plea to escape from its liability. For. 13 Dec. Jurisprudentially. However the cargo was sold in Durban. seizure. . . Inc.the deletion of the Free from Capture or Seizure Clause would leave the assured covered solely for the perils specified by the wording of the policy itself . was the owner/consignee of some 3. & S.66) for non-delivery of the cargo. 1997 CORP. arrest. .Petitioner cannot adopt the argument that the "arrest" caused by ordinary judicial process is not included in the covered risk simply because the F." 2. no court of justice should allow itself to lend its approval and support. It did not succeed in its persistent effort to avoid complying with its obligation in the lower court and the Court of Appeals. . should it happen thus.C. detention or seizure of the ship.C.806. . Sent. & S.886.1 of Section 1 of the Institute War Clauses.TKC Marketing Corp. for US$154. TKC Marketing notified Malayan of the arrest of the vessel and made a formal claim for the dollar equivalent on the policies (US$916.928. Clause under the Institute War Clauses can only be operative in case of hostilities or warlike operations on account of its heading "Institute War Clauses.231. MALAYAN INSURANCE MARKETING CORP. etc.C. it cannot descend so low as to be another name for guile or deception. WON insurance policies should be strictly construed against the insurer HELD 1.304. in fact.This is merely to stress that while the morality of the business world is not the morality of institutions of rectitude like the pulpit and the academe. Article 24. South Africa the civil authorities arrested and detained it because of a lawsuit on a question of ownership and possession.nèt . WON the arrest of the vessel was a risk covered under the subject insurance policies 2.the policies clearly stipulate that they cover the risks of non-delivery of an entire package and that it was petitioner itself that invited and granted the extensions and collected premiums thereon. 27 February 1942). V CA (TKC . and prevent their becoming traps for the unwary (New Civil Code." 9 .its act of rejecting the claim was a result of its honest belief that the arrest of the vessel was not a compensable risk under the policies issued Respondents Comments . of Supreme Court of Spain. It likewise sought the assistance of Malayan on what to do with the cargo. Moreover.The conclusion that inescapably emerges from the above is the correctness of the decision of respondent Court of Appeals sought to be reviewed. ISSUES 1.. which extension was approved upon payment of additional premium. "arrests" should be strictly interpreted against it because the rule is that any ambiguity is to be taken contra proferentum.1 of Section 1 of the Institute War Clauses provided that "this insurance covers the risks excluded from the Standard Form of English Marine Policy by the clause 'Warranted free of capture. The insurance coverage was extended under the same terms and conditions embodied in the original policies while in the process of making arrangements for the transhipment of the cargo from Durban to Manila. to the port of Manila.Malayan maintained its position that the arrest of the vessel by civil authorities on a question of ownership was an excepted risk under the marine insurance policies.40 per metric ton or a total of P10. such contracts (of which policies of insurance and international bills of lading are prime examples) 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. This interpretation becomes inevitable when subsection 1.89 at the exchange rate of P22.but equally so for the insurer.879. Reasoning NATURE Petition for review on certiorari FACTS .With the incorporation of subsection 1. "arrest" caused by ordinary judicial process is deemed included among the covered risks." 8 .INSURANCE participation in the 'agreement' being reduced to the alternative to 'take it or leave it' labelled since Raymond Saleilles 'contracts by adherence' (contrats d'adhesion).the rationale for the exclusion of an arrest pursuant to judicial authorities is to eliminate collusion between unscrupulous assured and civil authorities. South Africa.75 due to its perishable nature which could no longer stand a voyage of twenty days to Manila and another twenty days for the discharge thereof.petitioner. since its dominant bargaining position carries with it stricter responsibility.an arrest by civil authority is not compensable since the term "arrest" refers to "political or executive acts" and does not include a loss caused by riot or by ordinary judicial process as in this case . Petitioners Claim . Brazil. . It reduced its claim to US$448. Clause.

and DE DIOS TRANSPORTATION CO) 187 SCRA 652 FELICIANO. . Even an express exception in a policy is to be construed against the underwriters by whom the policy is framed. the Court of Appeals affirmed in toto the decision of the trial court. exceptions to the general coverage are construed most strongly against the company. that which is most favorable to the insured is adopted. For Western's reading would drastically and without warning limit the otherwise unlimited (save for the over-all quantitative limit of liability of P50. filed a third-party complaint against its insurance carrier. "surgical expenses". ISSUE Page 15 WON the Schedule of indemnities as stated in the insurance policy should be construed strictly to exclude all others not explicitly stated therein HELD NO Ratio An insurance policy being in the nature of an adhesion contract is to be strictly construed against the insurer and liberally in favor of the insured. Petitioner moved for the reconsideration of the appellate court's decision. Such policies will. causing her serious anxiety and moral distress. . quoted above. Respondent De Dios Transportation Co. being a contract of adhesion. any ambiguity therein should be resolved against the insurer. WESTERN GUARANTY CORPORATION V CA (RODRIGUEZ. petitioner Western. moral damages and attorney's fees because these items are not among those included in the Schedule Indemnities set forth in the insurance policy. .On 6 August 1985.00 per person per accident.INSURANCE . It appears to us self-evident that the Schedule of Indemnities was not intended to be an enumeration. to insure against risks of loss or damage to the goods.Respondent Priscilla Rodriguez filed a complaint for damages before the Regional Trial Court of Makati against De Dios Transportation Co. Succinctly stated.000. She was treated at the Protacio Emergency Hospital and later on hospitalized at the San Juan De Dios Hospital. then driven by one Walter Saga y Aspero.Respondent bus company was insured with petitioner Western Guaranty Corporation ("Western") under its Master Policy which enumerated specific liabilities of the insurance company and ended with a clause to clarify the limitations of the amount which could be granted as indemnity. A contract of insurance.An insurance contract should be so interpreted as to carry out the purpose for which the parties entered into the contract which is. . quoted above. . it should express such limitation in clear and unmistakable language.000. moral damages and attorney's fees. the reading urged by Western of the Schedule of Indemnities comes too close to working fraud upon both the insured and the third party beneficiary of Section 1. while crossing Airport Road on a pedestrian lane on her way to work. We are not persuaded by Western's contention. This result which is not essentially different from taking away with the left hand what had been given with the right hand we must avoid as obviously repugnant to public policy. and Walter A. is apparently P50. and the essential requisites or conditions for grant of each species of damages are present. . "liquidated damages". Such interpretation should result from the natural and reasonable meaning of language in the policy. Saga. the trial court rendered a decision in favor of respondent Priscilla E. and "exemplary damages" may be awarded by a competent court against the insurer once liability is shown to have arisen.On appeal. or exemption. Inc.Firstly. "temperate or moderate damages". Section 1. much less a closed enumeration. hitting her forehead.It must be borne in mind that such contracts are invariably prepared by the companies and must be accepted by the insured in the form in which they are written.. . all kinds of damages allowable by law "actual or compensatory damages". Be that as it may.Petitioner Western in effect contends before this Court.Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to preclude the insurer from noncompliance with its obligations . Priscilla was thrown to the ground.. "operating room" and "medical expenses" that Schedule should be read as excluding liability for any other type of expense or damage or loss even though actually sustained or incurred by the third party victim. If what Western now urges is what Western intended to achieve by its Schedule of Indemnities. Her face was permanently disfigured. "moral damages". in turn. therefore. The bus driver disregarded the stop signal given by a traffic policeman to allow pedestrians to cross the road. par excellence. "nominal damages". as it did before the Court of Appeals. respondent Priscilla E. Rodriguez. so that the . Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured. In a Resolution dated 10 January 1990. the Court of Appeals denied the motion for reconsideration for lack of merit. exception. and for whose benefit the exception is introduced. the Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen.If a marine insurance company desires to limit or restrict the operation of the general provisions of its contract by special proviso. it is petitioner Western's position that it cannot be held liable for loss of earnings. that because the Schedule of Indemnities limits the amount payable for certain kinds of expenses "hospital room". Within this over-all quantitative limit. it was incumbent upon Western to use language far more specific and precise than that used in fact by Western. does refer to certain "Limits of Liability" which in the case of the third party liability section of the Master Policy. be construed strictly against the company in order to avoid a forfeiture. Where restrictive provisions are open to two interpretations. Any construction of a marine policy rendering it void should be avoided. "an aesthesiologists' fee". Petitioner Western is now before us on a Petition for Review alleging that the Court of Appeals erred in holding petitioner liable to pay beyond the limits set forth in the Schedule Indemnities and in finding Western liable for loss of earnings. Reasoning .At around 4:30 in the afternoon of 27 March 1982. 1990 FACTS . of the specific kinds of damages which may be awarded under the Master Policy Western has issued.00 per person per accident) and comprehensive scope of liability assumed by the insurer Western under Section 1: "all sums necessary to discharge liability of the insured in respect of [bodily injury to a third party]". July 20.. unless no other result is possible from the language used. where the contract or policy is prepared by the insurer.Secondly. Rodriguez was struck by a De Dios passenger bus owned by respondent De Dios Transportation Co.

the sum of P150. owned by the municipality of Tabaco. or from some other source. it being claimed that they had set fire to the destroyed warehouses to collect the insurance. with not less than 100 feet of hose piping and nozzles for every two hydrants kept under cover in convenient places.the civil suit to collect the insurance money proceeded to its trial with the CFI holding that: judgment is rendered for the plaintiff and against the defendant condemning the latter to pay the former — (a) Under the first cause of action. pored over the books of the insured and conducted an extensive investigation.' . would invalidate the contract from its very inception. the hydrants being supplied with water pressure by a pumping engine. the appellant neverthless issued the policies in question subject to such warranty. The insurance company was aware. . until each is paid. 4 Memo. the sum of P5. protected. an insurance contract is a contract of adhesion. that an insurance company intends to executed a valid contract in return for the premium received. were indicted and tried in 1940 for the crime of arson. and the Office of the Insurance Commissioner. with the merchandise stored therein. and lasted almost one week.000. belonging to the municipality of Tabaco. the sum of P146. December 17. and this result is known to the insurer. with his brother. and when the policy contains a condition which renders it voidable at its inception. such knowledge constitutes a waiver of conditions in the contract inconsistent with the facts. and (e) Under the fifth cause of action. Reasoning . Qua Chee Pao. totalling P398. used for the storage of stocks of copra and of hemp. human justice of this doctrine is perfectly apparent.000. (d) Under the fourth cause of action. the appellee should have 11 fire hydrants in the compound.It is argued that since the bodegas insured had an external wall perimeter of 500 meters or 1.562. however. WON the insured connived at the loss and fraudulently inflated the quantity of the insured stock in the burnt bodegas HELD 1.Que Chee Gan. not less in number than one for each 150 feet of external wall measurement of building.394. acquitted by the trial court. and some employees of his. WON the insured violated the "Hemp Warranty" provisions of Policy No.4 . and the loose made payable to the Philippine National Bank as mortgage of the hemp and crops. in the absence of any showing to the contrary.Finally. that in the premises insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby. The plaintiff having submitted the corresponding fire claims. the sum of P15. gutted and completely destroyed Bodegas Nos. . WON the defendant-appellant can claim the policies it had issued as void ab initio 2. contrary to the requirements of the warranty in question . though it knows as it must. 96 PHIL 85 REYES. the insurance company alleges that the trial Court should have held that the policies were avoided for breach of warranty. 1. which in this case happens to be petitioner Western. The law is charitable enough to assume.000. in which the appellee dealt extensively. if insisted on.. NO Ratio It is usually held that where the insurer. however.000). that contractual limitations of liability found in insurance contracts should be regarded by courts with a jaundiced eye and extreme care and should be so construed as to preclude the insurer from evading compliance with its just obligations. and potential purchasers of its Master Policy. They were.In its first assignment of error.The plain. it will be presumed to have intended to waive the conditions and to execute a binding contract. ISSUES Page 16 1.Petitioner Western would have us construe the Schedule of Indemnities as comprising contractual limitations of liability which. at the time of the issuance of a policy of insurance. it is hereby warranted that the said appliances shall be maintained in efficient working order during the currency of this policy. and received the corresponding premiums.The appellant is barred estoppel to claim violation of the so-called fire hydrants warranty. Hydrants in the compound.640 feet. to the extent of its interest. and it being declared and understood that there is an ample and constant water supply with sufficient pressure available at all seasons for the same. of Warranty. filing of fraudulent claims. insured with the defendant Company since 1937. . as already noted. 1940.81 (but reduced to the full amount of the insurance. 2 and 4. LTD. (c) Under the third cause of action. is comprehensively defined in Section 1 "Liability to the Public" of the Master Policy. rather than to have deceived the insured into thinking he is insured when in fact he is not.INSURANCE insured. and on the next day. 1955 NATURE An appeal by defendant insurance company from the decision of CFI in favor of the plaintiff FACTS . all of which shall bear interest at the rate of 8% per annum in accordance with Section 91 (b) of the Insurance Act from September 26. for the reason that knowing fully all that the number of hydrants demanded therein never existed from the very beginning. may be properly informed and act accordingly. It is well-settled. They had been. and that the fire had been deliberately caused by the insured or by other persons in connivance with him. capable of discharging at the rate of not less than 200 gallons of water per minute into the upper story of the highest building protected.Fire of undetermined origin that broke out in the early morning of July 21. claiming violation of warranties and conditions. and a trained brigade of not less than 20 men to work the same. . that the assured believes it to be valid and binding. and to have taken his money without consideration. is so contrary to the dictates of honesty and fair dealing. and the insurer is stopped thereafter from asserting the breach of such conditions. the sum of P40. baled and loose. Plaintiff-appellee informed the insurer by telegram on the same date. QUA CHEE GAN V LAW UNION AND ROCK INSURANCE CO. Albay. — The undernoted Appliances for the extinction of fire being kept on the premises insured hereby.before the last war. The rule is well entrenched in our jurisprudence that the terms of such contract are to be construed strictly against the party which prepared the contract. P370. even before the policies were issued. plaintiff-appellee owned 4 warehouses or bodegas in Tabaco.000. 2637165 against the storage of gasoline 3. . (b) Under the second cause of action. and that he actually had only 2. the fire adjusters engaged by appellant insurance company arrived and proceeded to examine and photograph the premises. with a further pair nearby. To allow a company to accept one's money for a policy of insurance which it then knows to be void and of no effect. by reason whereof a discount of 2 1/2 per cent is allowed on the premium chargeable under this policy. has knowledge of existing facts which. specifically the one appearing on a rider pasted (with other similar riders) on the face of the policies.48. with costs against the defendant. with their contents. 1940. the Insurance Company resisted payment. . and so closely related to positive fraud.

and leave it at liberty to repudiate it the next moment. vouchers. vouchers. What does appear to have been rejected by the insured was the demand that he should submit "a list of all books. since the proof to establish the defense of connivance at the fire in order to defraud the insurer "cannot be materially less convincing than that required in order to convict the insured of the crime of arson. Reasoning . as expressly found by the Court in the criminal case for arson. the "memo of warranty" invoked by appellant bars the latter from questioning the existence of the appliances called for in the insured premises On the alleged violations of the plaintiff The alleged violation of the warranty of 100 feet of fire hose for every two hydrants.The contract of insurance is one of perfect good faith not for the insured alone. "Oils" mean "lubricants" and not gasoline or kerosene. the courts must." The cause relied upon by the insurer speaks of "oils (animal and/or vegetable and/or mineral and/or their liquid products having a flash point below 300 Fahrenheit)". the record is preponderant that the same was organized.Appellee admitted that there were 36 cans of gasoline in the building designed. It would be to allow the company to treat the policy as valid long enough to get the premium on it. thereby giving the insurance company a double benefit. since its dominant bargaining position carries with it stricter responsibility.Receipt of Premiums or Assessments after Cause for Forfeiture Other than Nonpayment.Moreover.If the company intended to rely upon a condition of that character. It However. although not maintained as a permanently separate unit. and the examiner even kept and photographed some of the examined books in his possession.INSURANCE as to the abhorrent to fair-minded men. to judge from the decision in the criminal case. over which it had absolute control. So long as insurance companies insist upon the use of ambiguous. is practically identical in both cases and must lead to the same result. and if he was able to do so. which requirement appellant is estopped from enforcing. ." On the submission of books. to which most of the insured hemp and copra was pledged. notwithstanding the insurer's refusal to pay the value of the policies the extensive resources of the insured enabled him to pay off the National Bank in a short time. by the use of obscure phrases and exceptions. etc. inferences and conclusions of its adjuster investigator who examined the premises during and after the fire. again.The appellant company so worded the policies that while exacting the greater number of fire hydrants and appliances. — It is a well settled rule of law that an insurer which with knowledge of facts entitling it to treat a policy as no longer in force. This cannot be deemed to be the real intention of the parties. taking into account the well known rule that ambiguities or obscurities must be strictly interpreted against the party that caused them. "It is well settled that the keeping of inflammable oils on the premises though prohibited by the policy does not void it if such keeping is incidental to the business. must be equally rejected. however. . NO Ratio Here. no motive appears for attempt to defraud the insurer. by reason of the exclusive control of the insurance company over the terms and phraseology of the contract. and no reason has been shown to Page 17 alter this finding. which conceal rather than frankly disclose. it kept the premium discount at the minimum of 2 1/2%. The insured gave the insurance examiner all the date he asked for. While the acquittal of the insured in the arson case is not res judicata on the present civil action. Such abnormal treatment of the insured strongly points at an abuse of the insurance company's selection of the words and terms of the contract. The charge that the insured failed or refused to submit to the examiners of the insurer the books. To hold that a literal construction of the policy expressed the true intention of the company would be to indict it. An insurer should not be allowed.Another point that is in favor of the insured is that the gasoline kept in Bodega No. and drilled. That the representatives of the insurance company were able to secure all the date they needed is proved by the fact that the adjuster Alexander Stewart was able to prepare his own balance sheet that did not differ from that submitted by the insured except for the valuation of the merchandise. in its nature. but the refusal of the insured in this instance was well justified. intricate and technical provisions. it ought to have been plainly expressed in the policy. which the warranty did not require. . are in a position to understand or determine "flash point below 300 Fahrenheit. 2 was only incidental to his business. for in ordinary parlance. . gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty. it is mere so for the latter. complex and difficult for the layman to understand." . being no more than a customary 2 day's supply for the five or six motor vehicles used for transporting of the stored merchandise. to defeat the very purpose for which the policy was procured. It cannot treat the policy as void for the purpose of defense to an action to recover for a loss thereafter occurring and at the same time treat it as valid for the purpose of earning and collecting further premiums. was based on inferences from . And how many insured. 2. that the volume of Qua Chee Gan's business ran into millions. for fraudulent purposes and designs which we cannot believe it to be guilty of. the insurer's evidence. the insurer's case rests almost exclusively on the estimates. etc. since the appellant's argument thereon is based on the assumption that the insured was bound to maintain no less than eleven hydrants. . the ambiguity must be held strictly against the insurer and liberally in favor of the insured. His testimony. in fairness to those who purchase insurance. Insurance is. their own intentions. specially to avoid a forfeiture. but equally so for the insurer. .As to the defense that the burned bodegas could not possibly have contained the quantities of copra and hemp stated in the fire claims. presumably in order to pay off the Philippine National Bank. voucbers. considering that such listing was superfluous because the insurer was not denied access to the records. receipts and other records". since the demand for a list of all the vouchers (which were not in use by the insured) and receipts was positively unreasonable. 3. and is decidedly ambiguous and uncertain. Policies are prepared by experts who know and can anticipate the hearing and possible complications of every contingency. demanded by them was found unsubstantiated by the trial Court. and that the demand was made just after the fire when everything was in turmoil. from time to give. receives and accepts a premium on the policy. NO Ratio Both defenses are predicted on the assumption that the insured was in financial difficulties and set the fire to defraud the insurance company. . Both defenses are fatally undermined by the established fact that. in fact. it may well be wondered. construe every ambiguity in favor of the insured.As to maintenance of a trained fire brigade of 20 men. estopped to take advantage of the forfeiture.

he obtained from the private respondent fire insurance policy for P100. and which shall result.000. The Company bound itself to pay P1000 to P3000 as indemnity for the death of the insured. ISSUE How much should the indemnity be Page 18 HELD . who was of the opinion that the liability of the company was only P1000.INSURANCE the photographs and traces found after the fire. . under Part VI of the policy. Hospital fees. He claimed that the amount payable should be P1500 under the provision of Section 2 Part I. independently of all other causes and within sixty days from the occurrence thereof. the Company shall pay the amount set opposite such injury: Section 1.A complaint for recovery of the balance of P2000 was instituted with the CFI Rizal. with his beneficiary to the policy. expenses of litigation and costs. visible and accidental means. GEAGONIA v. IV. Indemnity for Death If the insured sustains any bodily injury which is effected solely through violent.All the parties agree that indemnity has to be paid.00. Injury sustained other than those specified below unless excepted hereinafter P1000 Section 2. were forced to jump off said launch on account of fire which broke out on said vessel. 1957. Francisco wrote to the company acknowledging receipt by his client of the P1000 but informing said company that said amount was not the correct one.Where there is ambiguity with respect to the terms and conditions of the policy. which the company refused to pay.Simeon del Rosario. there is not specific amount mentioned in the policy for death thru drowning although the latter is.Feb 24. and to form a part of the provision covered by the policy. The interpretation of obscure stipulations in a contract should not favor the party who caused the obscurity. if any. the insured’s father. DROWNING It is hereby declared and agreed that exemption clause Letter (h) in PART VI of the policy is hereby waived by the company.. Injury sustained by the burning of a church. together with the drafting of its terms and conditions. participation in the preparation of the policy. filed a claim for payment with the company. yet. Atty. . resulting in the death by drowning of the insured and his beneficiary. external. The company paid him P1000 pursuant to section 1 Part I of the policy. . Exceptions This policy shall not cover disappearance of the Insured nor shall it cover Death. Inc under Personal Accident Policy no. Disposition We find no reversible error in the judgment appealed from. . the insured has little. based on the rule of pari materia. February 6 1995 BANKERS FACTS -Geagonia is the owner of Norman's Mart located in the public market of San Francisco. CA (COUNTRY INSURANCE) 8 SCRA 343 DAVIDE. thus the company refused to pay more that P1000. 1963 NATURE Appeal from judgment of CFI Rizal FACTS . . Injury sustained by the wrecking or disablement of a railroad passenger car or street railway car in or on which the Insured is traveling as a farepaying passenger P1500 Section 3. caused to the insured: x x x (h) By drowning except as a consequence of the wrecking or disablement in the Philippine waters of a passenger steam or motor vessel in which the Insured is traveling as a farepaying passenger. INC 8 SCRA 343 PAREDES.CFI ruled in favor of petitioner. But while the policy mentions specific amounts that may be recovered for death for bodily injury.On the same date. but the conflict centers on how much it should be.Francisco del Rosario was insured by Equitable Insurance and Casualty Co. Francisco wrote a subsequent letter to company asking for p3000. x x x plaintiff is therefore entitled to recover P3000. Disposition Judgment appealed from is affirmed. Since the defendant has bound itself to pay P1000 to P3000 as indemnity for the death of the insured but the policy does not positively state any definite amount that may be recovered in case of death by drowning. Injury sustained by a stroke of lightning or by a cyclone P3000 xxxx xxxx xxxx Part VI.The company referred the matter to the Insurance Coomissioner.SC agreed with the ruling of the lower court: x x x death by drowning is a ground for recovery apart from the bodily injury because death by bodily injury is covered by Part I of the policy while death by drowning is covered by Part VI thereof. Remedios Jayme. . June 29. . The period of the policy was from 22 Dec 1989 to 22 Dec 1990 and covered the ff: "Stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business. praying for a further sum of P10000 as attorney’s fees. Disability. there is an ambiguity in this respect in the policy. Francisco del Rosario while on board the motor launch ISLAMA.Under the policy: Part I. public library or municipal administration building while the Insured is therein at the commencement of the fire P2000 Section 4. DEL ROSARIO V EQUITABLE INSURANCE & CASUALTY CO. Generally. .A rider to the Policy contained the following. the same will be resolved against the one responsible thereof. which ambiguity must be interpreted in favor of the insured and strictly against the insurer so as to allow a greater indemnity. wherefore the same is hereby affirmed. 7136. and must yield to the contradictory testimony of those who actually saw the contents of the bodegas shortly before the fire. -The policy contained the following condition: . or Loss of time. Injury sustained by the wrecking or disablement of a regular passenger elevator car in which the Insured is being conveyed as a passenger (Elevator in mines exluded) P2500 Section 5. in the Death of the Insured. On 22 Dec 1989. theatre. . ordering the company to pay P2000 to del Rosario. Atty. Agusan del Sur. x x x . while inspecting them for the mortgagee Bank. a ground for recovery thereunder.

undoubtedly.00 each.000. conditions or exceptions in policies which tend to work a forfeiture of insurance policies should be construed most strictly against those for whose benefits they are inserted. 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. The petitioner's insured stocks-in-trade were completely destroyed prompting him to file w/ the private respondent a claim under the policy. Inc.000. covering any of the property or properties consisting of stocks in trade.00 with legal interest from the time the complaint was filed until fully satisfied plus the amount of P10. and (b) the nullity of the policy shall only be to the extent exceeding P200. The insured shall give notice to the Company of any insurance or insurances already effected. 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 P200.00 as attorney's fees. this requirement was not mentioned to him by the private respondent's agent.00 of the total policies obtained. 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.Furthermore. he had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies. goods in process and/or inventories only hereby insured. as his creditor." or in the 1930 case of Santa Ana vs. violating Condition 3 of the policy 2. and had it been so mentioned. without which such policy shall be null and void. if it is possible to construe the policy in a manner which would permit recovery. issued by the Cebu Branch of the Philippines First Insurance Co.With these principles in mind.m.000.000.000.00 under fire insurance policy.It must. . the reason being. 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.We agree w/ the CA that the petitioner knew of the prior policies issued by the PFIC. provided however. 2. YES . be underscored that unlike the "other insurance" clauses involved in General Insurance and Surety Corp. which read: "The insured shall give notice to the company of any insurance or insurances already effected. The Insurance Commission then ordered the respondent company to pay complainant the sum of P100. It was.Geagonia then filed a complaint against the private respondent w/ the Insurance Commission for the recovery of P100. and the insured will not be entitled to indemnity in case of loss. if he had. Yap. and costs of litigation. at the public market of San Francisco. These findings were based on the petitioner's testimony that he came to know of the PFIC policies only when he filed his claim with the private respondent and that Cebu Tesing Textile obtained them and paid for their premiums w/o informing him. for example.000. the language of the contract was carefully chosen and deliberated upon by experts and legal advisers who had acted exclusively in the interest of the insurers and the technical language employed therein is rarely understood by ordinary laymen. by stating within Condition 3 itself that such condition shall not apply if the total . Agusan del Sur. The reason for this is that. to afford the greatest protection which the insured was endeavoring to secure when he applied for insurance. or which may subsequently be effected.Interpretation: It is a cardinal rule on insurance that a policy or insurance contract is to be interpreted liberally in favor of the insured and strictly against the company. vs. Commercial Union Assurance Co. F-14622 does not absolutely declare void any violation thereof. all benefits under this policy shall be deemed forfeited. however. for attorney's fees. His testimony to the contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a written admission made ante litem motam. he would not have withheld such information. w/c was P1M." -On 27 May 1990." . fire of accidental origin broke out at around 7:30 p. which provided "that any outstanding insurance upon the Page 19 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. provisions. .00. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance. (PFIC). incredible that he did not know about the prior policies since these policies were not new or original. His letter of 18 January 1991 to the private respondent conclusively proves this knowledge. and that Cebu Tesing Textile." Condition 3 in the private respondent's policy No. -CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of the two other policies issued by the PFIC ISSUES 1. . 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. the insured sees the contract already in its final form and has had no voice in the selection or arrangement of the words employed therein. and most favorably toward those against whom they are intended to operate. as. It is also a cardinal principle of law that forfeitures are not favored and that any construction which would result in the forfeiture of the policy benefits for the person claiming thereunder. however. all benefits under this Policy shall be forfeited.INSURANCE "3. we are of the opinion that Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously analyzed.The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC.000. will be avoided. except for riders which may later be inserted. that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing him or securing his consent. On 28 Dec 1990. or which may subsequently be effected covering any of the property hereby insured. thereby. He claims that the time he obtained the private respondent's fire insurance policy he knew that the two policies issued by the PFIC were already in existence. vs. -The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy. for not disclosing such fact. the private respondent denied the claim because it found that at the time of the loss the petitioner's stocks-in-trade were likewise covered by two fire insurance policies for P100. Stated differently. had insurable interest on the stocks. WON he is precluded from recovering therefrom HELD 1. . Ng Hua or in Pioneer Insurance & Surety Corp.. by finding a waiver for such forfeiture. by or on behalf of the Company before the occurrence of any loss or damage. WON the petitioner had prior knowledge of the two insurance policies issued by the PFIC when he obtained the fire insurance policy from the private respondent. indeed. On the other hand. NO .

Accident insurance policies were never meant to reward the insured for his tendency to show off or for Page 20 his miscalculations. 2. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured. The adverse result of an action does not per se make the act wrongful and subject the act or to the payment of moral damages. unexpected. The decision of the Court of Appeals in CA-G. They were intended to provide for contingencies. Felix Lim’s death was an accident.INSURANCE insurance in force at the time of loss does not exceed P200. . The decision was affirmed by the CA. V CA (LIM) 211 SCRA 554 CRUZ. independent and unforeseen happening occurs which produces or brings bout their injury or death. His beneficiary was his wife Nerissa.000. (Transworld). Petitioners’ Claim .) 336 SCRA 12 PURISIMA. PHILIPPINES.There mere act of pointing the gun to his temple showed that Felix willfully exposed himself to danger because a gun should always be handled with caution.He repeatedly assured his secretary that the gun was not loaded.An accident has been defined to be that which happens by chance or fortuitously without intention or design and which is unexpected. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value. Respondents’ Comments . Disposition Petition granted.Rizal Surety & Insurance Company (Rizal Insurance) issued Fire Insurance Policy No. . RIZAL SURETY & INSURANCE COMPANY V CA (TRANSWORLD KNITTING MILLS. unusual and unforeseen. METRO MANILA. July 18. an event which. and location thereof. under the circumstances.00. . LTD. 601. . .Insurance contracts are.’ . BLOCK NO. Reasoning .Felix believed the gun to be safe because he had removed the magazine. read: "‘On stocks of finished and/or unfinished products. . sabi ko na nga ba). It an event that takes pace without one’s foresight or expectastion – an event that proceeds from an unknown cause or is an unusual effect of a known case and therefore not expected.October 6. INC. .There was no willful exposure to needless peril for the part of Felix. Indeed. What it had in mind was to discourage over-insurance. the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200. 1982 – Felix accidentally shot himself in the head with his own gun.Petitioner was acting in good faith when it resisted the private respondent’s claim on the ground that the death of the insured was covered by the exception.He was playing with the handgun after he had removed the gun’s magazine (kasi naman…). . .000. . the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. 2000 NATURE Petition for Review on Certiorari under Rule 45 of the Rules of Court FACTS .Both parties are in agreement that there was no suicide. Ratio There is no accident when a deliberate act is performed unless some additional. WON the award of damages to Nerissa Lim was justified HELD 1.000 representing the face value of the claim along with moral.Pertinent portions of subject policy on the buildings insured. July 17. . 3340 is REINSTATED. NO.The issue was debatable and was clearly not raised only for the purpose of evading a legitimate obligation. . thus making his widow Nerissa liable to claim the accident insurance 2. SP No.The firing of the gun was deemed to be the unexpected and independent and unforeseen occurrence that led to the insured person’s death. raw materials and supplies of every kind and description. .00.R.  .Lim was unquestionably negligent but it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. 45727 in favor of Transworld Knitting Mills.Nerissa claimed as Felix’s beneficiary but Sun Insurance would not grant her claim. . ISSUES 1.Nerissa sued Sun Insurance and won the case. .He pointed the gun at his secretary and only witness Pilar Nalagon as a joke and assured her that the gun was not loaded (are you sure…). exemplary and compensatory damages and attorney’s fees. on commission or on joint account with others and/or for which they (sic) responsible in case of loss whilst contained and/or stored during the currency of this Policy in the premises occupied by them forming part of the buildings situate (sic) within own Compound at MAGDALO STREET. 1992 NATURE Petition for review from the decision of the Court of Appeals FACTS . Reasoning . is unusual to and not expected by the person to whom it happens. 31916 is SET ASIDE and the decision of the Insurance Commission in Case No. saying that her husband’s death was not an accident. Ratio A person may be made liable to the payment of moral damages if his act is wrongful. supposed to be interpreted liberally in favor of the assured. WON Felix Lim’s death was an accident. It happens without any human agency.Felix Lim was issued a Personal Accident Policy insurance with petitioner company with a face value of P200.He then put the gun to his temple and fired it (haaay. the claim for damages should not be granted for being unjust. BARRIO UGONG. the properties of the Insureds and/or held by them in trust. PASIG. YES. Suicide and exposure to needless peril are similar in the sense that both signify disregard for one’s life. Inc. as a rule. the insured may have an inducement to destroy the property for the purpose of collecting the insurance. SUN INSURANCE OFFICE. Suicide imparts a positive act of ending one’s life whereas the latter indicates recklessness that is almost suicidal in intent.000.Sun Insurance cites one of the four exceptions in the contract of insurance which includes bodily injury consequent upon the insured person attempting to commit suicide or willfully exposing himself to needless peril in an attempt to save a human life. Sun Insurance was ordered to pay her P200.

1993. raw materials and supplies stored within the premises of respondent Transworld which was an integral part of the four-span building occupied by Transworld.. ruled: "This is particularly true as regards insurance policies. Ltd.1377. .New India appealed to the Court theorizing inter alia that the private respondent 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.Petitioner Rizal Insurance and private respondent Transworld. . Ltd. was also destroyed by the fire.. petitioner should have specifically excluded the said two-storey building from the coverage of the fire insurance if minded to exclude the same but if did not. . the Court in Landicho vs. Inc. .The Court denied the appeal with finality. and not the damage caused by the fire on the two-storey annex building.xxx ‘Said building of four-span lofty one storey in height with mezzanine portions is constructed of reinforced concrete and hollow blocks and/or concrete under galvanized iron roof and occupied as hosiery mills. . .... . transistor-stereo assembly plant. but ordered defendant Rizal Surety And Insurance Company to pay Transwrold (sic) Knitting Mills.In the case under consideration. which reconsidered its decision of July 15. 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. warehouse and caretaker's quarters.. as regards the imposition of interest. and private respondent..Undaunted. to wit: "First. timber above undergalvanized iron roof occupied as garage and quarters and partly by open space and/or tracking/ packing. As opined by the trial court of origin. Transworld Knitting Mills. . the two-storey building involved. .Private respondent brought against the said insurance companies an action for collection of sum of money and damages. . Rizal Surety Insurance Company. . considering that the two-storey building aforementioned was already existing when subject fire insurance policy contract was entered into. interposed a Motion for Reconsideration before the Court of Appeals.The Court is mindful of the well-entrenched doctrine that factual findings by the Court of Appeals are conclusive on the parties and not reviewable by this Court.INSURANCE x xx. two requirements must concur in order that the said fun and amusement machines and spare parts would be deemed protected by the fire insurance policy under scrutiny.. and meets the requisites for compensability under the fire insurance policy sued upon. formed part thereof. beyond which is the aforementioned Magdalo Street.. on its right and left by driveway. both the trial court and the Court of Appeals found that the so called "annex " was not an annex building but an integral and inseparable part of the four-span building described in the policy and consequently.328.Both the petitioner.Resolution of the issue posited hinges on the proper interpretation of the stipulation in subject fire insurance policy regarding its coverage. which reads: "xxx contained and/or stored during the currency of this Policy in the premises occupied by them forming part of the buildings situate (sic) within own Compound xxx" .xxx.So also.. razing the middle portion of its four-span building and partly gutting the left and right sections thereof. . and the same carry even more weight when the Court of Appeals has affirmed the findings of fact arrived at by the lower court. whose lawyer or managers drafted the fire insurance policy contract under scrutiny. (New India). 'Bounds in front partly by one-storey concrete building under galvanized iron roof occupied as canteen and guardhouse.. a permanent structure which adjoins and intercommunicates with the "first right span of the lofty storey building"... ISSUE WON the fire insurance policy litigated upon protected only the contents of the main building (four-span).Petitioner Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-span building..Conformably. offices. .. said properties must be contained and/or stored in the areas occupied by Transworld and second. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity" .Said building of four-span lofty one storey in height with mezzanine portions is constructed of reinforced concrete and hollow blocks and/or concrete under galvanized iron roof and occupied as hosiery mills. thence open spaces..19 while the Rizal Surety has to pay the plaintiff-appellant P470. knowing fully well the existence of such building adjoining and intercommunicating with the right section of the four-span building..Fire broke out in the compound of Transworld.....Transworld filed its insurance claims with Rizal Surety & Insurance Company and New India Assurance Company but to no avail. . Government Service Insurance System. garment and lingerie factory. petitioner Rizal Surety & Insurance Company found its way to the Court. Citing the aforecited provision of law in point. which was partly burned. A two-storey building (behind said fourspan building) where fun and amusement machines and spare parts were stored. in respect of which it is settled that the 'terms in an insurance policy. or uncertain x x x are to be construed strictly and most strongly against . transistor-stereo assembly plant.604.'" . Rizal Insurance Company. Inc. garment and lingerie factory. Article 1377 of the New Civil Code provides: "Art. which required New India Assurance Company to pay plaintiffappellant the amount of P1. the machines and spare parts stored therein were covered by the fire insurance in dispute. and instead.Indeed.. said areas must form part of the building described in the policy xxx" ..818.. equivocal.The same pieces of property insured with the petitioner were also insured with New India Assurance Company.Verily. .The trial court dismissed the case as against The New India Assurance Co. and at the rear by open spaces. .67. partly by building of two and partly one storey constructed of concrete below.. went to the Court of Appeals. ware house and caretaker's quarter. offices..It can be gleaned unerringly that the fire insurance policy in question did not limit its coverage to what were stored in the four-span building.. went on to provide that such fire insurance policy covers the products. and did not include those stored in the two-storey annex building HELD NO . Page 21 ... which are ambiguous. it stands to reason that the doubt should be resolved against the petitioner.

in contrast to these entered into by parties bargaining on an equal footing. PAN MALAYAN INSURANCE CORPORATION vs.General Rule: Payment by the insurer to the assured operates as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. this petition for review. PANMALAY averred the following: that it insured a Mitsubishi Colt Lancer car registered in the name of Canlubang Automotive Resources Corporation [CANLUBANG]. endowed with overwhelming economic power. and the Resolution of the CA WERE AFFIRMED in toto. upon payment to the assured.The rule on conclusiveness of judgment.INSURANCE the insurer. vs. . it simply meant that it had assumed to reimburse the costs for repairing the damage to the insured vehicle. 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). In fine.December 10.R. It accrues simply upon payment of the insurance claim by the insurer. any privity of contract or upon written assignment of claim." Disposition Decision. COURT OF APPEALS (ERLINDA FABIE & HER UNKNOWN DRIVER) 184 SCRA 55.Exceptions: a. and prevent their becoming traps for the unwary. where the appeal of New India from the decision of the Court of Appeals under review.e.. that on May 26.' " . . . De Songco.The issue of whether or not Transworld has an insurable interest in the fun and amusement machines and spare parts. No. 1985: PANMALAY filed a complaint for damages with the RTC of Makati against private respondents Erlinda Fabie and her driver. and acting exclusively in the interest of. 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. RTC dismissed PANMALAY's complaint for no cause of action and denied PANMALAY's motion for reconsideration. then the insurer. despite repeated demands. . upon the determination of which the finding or judgment was rendered. It is only when the terms of the policy are ambiguous. Hence. 81026 CORTES. to wit: "'This rigid application of the rule on ambiguities has become necessary in view of current business practices.052.00.Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. the insurer and the assured. specifically sub-paragraph (a) thereof.Considering that the very parties to the policy were not shown to be in disagreement regarding the meaning and coverage of Section III-1. and that.) where the insurer pays the assured for a loss which is not a risk covered by the policy. especially where forfeiture is involved' 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. Ltd. precludes the relitigation of a particular fact or issue in another action between the same parties based on a different claim or cause of action. such that the parties themselves disagree about the meaning of particular provisions. determine the import of the various terms and provisions embodied in the policy. If the insured property is destroyed or damaged through the fault Page 22 or negligence of a party other than the assured. The courts cannot ignore that nowadays monopolies. equivocal or uncertain. that the courts will intervene. from liability b.It is a basic rule in the interpretation of contracts that the terms of a contract are to be construed according to the sense and meaning of the terms which the parties thereto have used.None of the exceptions are availing in the present case. 1990 FACTS . therefore. Court of Appeals. . In the case of property insurance policies. 1994. 1985. which obtains under the premises. Inc. is not found in the insurance policy — to define the basis for its settlement of CANLUBANG's claim under the policy. will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. G. CA affirmed. and imprudence" of the unknown driver of a pick-up. was denied with finality by this Court on February 2. April 3. thereby effecting "voluntary payment" . the insurance company..Private respondents filed a Motion to Dismiss alleging that PANMALAY had no cause of action against them.) where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's claim for loss c. ISSUE WON the insurer PANMALAY may institute an action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents as the parties allegedly responsible for the damage caused to the insured vehicle HELD YES . due to the "carelessness. the insured car was hit and suffered damages in the amount of P42. vs. manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit. which entitles it to be indemnified for the loss thereof. PANMALAY clarified that the damage caused to the insured car was settled under the "own damage". recklessness. the policy will be construed by the courts liberally in favor of the assured and strictly against the insurer. had been settled in G. coverage of the insurance policy. the evident intention of the contracting parties. was subrogated to the rights of CANLUBANG against the driver of the pick-up and his employer. "xxx the judgment in the prior action operates as estoppel only as to those matters in issue or points controverted.'" .R. No. . . failed and refused to pay the claim of PANMALAY. entitled New India Assurance Company. Vda. the previous judgment is conclusive in the second case. i. incidentally. The right of subrogation is not dependent upon. In such an event. No pronouncement as to costs. Erlinda Fabie. it was improper for the . L-111118. and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured. that PANMALAY defrayed the cost of repair of the insured car and. cartels and concentration of capital. only as those matters actually and directly controverted and determined and not as to matters merely involved therein. defendants.Equally relevant is the following disquisition of the Court in Fieldmen's Insurance Company. nor does it grow out of.) if the assured by his own act releases the wrongdoer or third party liable for the loss or damage.When PANMALAY utilized the phrase "own damage" — a phrase which.

It owns two oil mills. Regarding policy requirements that fire extinguishment appliances should be available and in good working condition. 1990 NATURE Petition for review on certiorari of a decision of the Court of Appeals FACTS . Lucena City. however inaccurate the description may be. 306-7432321-9 for the same term. Borja assured Mr. and since a mistake as to the identity and character of the building is extremely unlikely. Cavite injuring several of its passengers.1991 gutted and consumed the new oil mill. or is an unusual effect of a known cause and. . 2001 NATURE Petition for Review on Certiorari Decision of the Court of Appeals. . It may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man. .The object of the court in construing a contract is to ascertain the intent of the parties to the contract and to enforce the agreement which the parties have entered into. fire hydrant.A fire that broke out in the early morning of September 30. the bus figured in an accident in Naic. IYAM. In 1988. Reasoning . Petitioner's complaint for damages against private respondents is REINSTATED. “On machineries and equipment with complete accessories usual to a coconut oil mill including stocks of copra. Disposition Petition is dismissed.As may be gleaned from the testimony of the petitioner’s employee. is engaged in the coconut oil milling and refining industry. Petitioner’s Claim The policies referred to the old mill. Case remanded to the lower court for trial on the merits. warranty did not require respondent to provide for all the fire extinguishing appliances enumerated therein. Mr.00 each. . No. PANMALAY would still have a cause of action against private respondents. not expected.Respondent is not estopped from claiming that the policy description is wrong. ALONG NATIONAL HIGH WAY. Mr.” . Right: by an open space thence by Bldg. However. . v. Both are located at its factory compound at Iyam. while three others agreed to a settlement of P4.Although the terms "accident" or "accidental" as used in insurance contracts have not acquired a technical meaning. 1978. the courts are inclined to consider that the policy of insurance covers any building which the parties manifestly intended to insure. 4. 2. ISSUE WON new oil mill is insured by fire insurance policy HELD YES. CA (MILAGROS CAYAS) 185 SCRA 741 FERNAN. No. the Court has on several occasions defined these terms to mean that which takes place "without one's foresight or expectation. Ratio In construing the words used descriptive of a building insured.Obiter Dicta: Even if under the above circumstances PANMALAY could not be deemed subrogated to the rights of its assured under Article 2207 of the Civil Code. and to ascribe meaning contrary to the clear intention and understanding of these parties. .Policy description: Front: by a driveway thence at 18 meters distance by Bldg. as stated in the description contained in the policy. Page 23 .The parties manifestly intended to insure the new oil mill. 1978. assailing the FACTS . notified the petitioner’s agent with whom respondent negotiated for the contract about the inaccurate description in the policy. Petitioner rejected respondent’s claim for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill. situate (sic) at UNNO. Inc. Tantuco that the use of the adjective new will distinguish the insured property.” . (Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers.INSURANCE appellate court to indulge in contract construction. insured with Perla Compania de Seguros. Respondent commenced its business operations with only one oil mill. Official receipts indicating payment for the full amount of the premium were issued by the petitioner's agent. The first oil mill was insured Policy No. Evidence on record reveals that respondent’s operating manager. (PCSI) under a policy issued on February 3. to apply the ejusdem generis rule. May 28. . BO. The insurer who may have no rights of subrogation due to "voluntary" payment may nevertheless recover from the third party responsible for the damage to the insured property under Article 1236 of the Civil Code. then there is no need to specify it as new. an event that proceeds from an unknown cause. COMPANY V 1991 to 1992. the courts will read and construe the policy as a whole and if possible. new oil mill is insured. 306-7432324-3 for the period March 1. two fire hoses. Rear: by an open space thence at 8 meters distance. October 8.) . It would be absurd to assume that respondent would protect its first oil mill for different amounts and leave uncovered its second one.If the parties really intended to protect the first oil mill. copra cake and copra mills whilst contained in the new oil mill building. AMERICAN HOME ASSURANCE TANTUCO ENTERPRISES 366 SCRA 740 PUNO. 19-year old Edgardo Perea.Respondent Tantuco Enterprises. PERLA COMPANIA DE SEGUROS. therefore. it started operating its second oil mill ( the new oil mill).The new oil mill was insured under Policy No.The two oil mills were separately covered by fire insurance policies issued by petitioner American Home Assurance Co.000. In determining what the parties intended. the source of the discrepancy happened during the preparation of the written contract.Private respondent Milagros Cayas was the registered owner of a Mazda bus. Inc. Disposition Petition is GRANTED. and an emergency fire engine. Neither did it require that the appliances are restricted to those mentioned in the warranty. It stated that the description of the insured establishment referred to another building.One of them. sued Milagros Cayas for damages in the CFI of Cavite." The concept "accident" is not necessarily synonymous with the concept of "no fault".On December 17. LUCENA CITY UNBLOCKED. Left: Adjoining thence an imperfect wall by Bldg. Edison Tantuco. In view of the custom of insurance agents to examine buildings before writing policies upon them. INC. . 4. No. the greatest liberality is shown by the courts in giving effect to the insurance. give effect to all the parts of the contract.

Milagros Cayas filed a complaint for a sum of money and damages against PCSI in the Court of First Instance of Cavite. . Inc vs. .000. the court promulgated a decision ordering defendant Perla Compania de Seguros.00 per person and to P50. .With notice to petitioners. public order or public policy.Said decision was set aside after the PCSI filed a motion therefor. Trial of the case ensued.The insurance policy involved explicitly limits petitioner's liability to P12. private respondent is precluded from seeking reimbursement of the payments made to the three other passangers in view of her failure to comply with the condition contained in the insurance policy. . American General Insurance Co. This is patent error. Said motion for reconsideration was acted upon favorably by the court.00. ( P32. Central Bank. vs. petitioner was made liable for the amount of P50. 1981. This was secured by a chattel mortgage over a 1-unit Nissan Sentra vehicle.On July 13. the Court held that 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 of recovery from the insurer. Disposition Petition granted. the fundamental principle that contracts are respected as the law between the contracting parties finds application in the present case. which provided that the liability of land transportation vehicle operators for bodily injuries sustained by a passenger arising out of the use of their vehicles shall not be less than P12. as maintained by petitioner. the court rendered a decision in favor of Perea. MANTRADE assigned to BPI.. all its rights. or to return to BPI the possession of the motor vehicle for foreclosure.In Stokes vs. Section 377 of Presidential Decree No. . P5. by way of a Deed of Assignment. It is specifically provided in the promissory note and chattel mortgage that failure to pay any installment when due shall make subsequent installments and the entire balance of the obligation due and payable. under the law. . . POLTAN v.00. to pay plaintiff Milagros Cayas the sum of P50. .000 total) . Petitioner's liability under the insurance contract not being less than P12.00.Clearly.00 per accident.000. the insurance policy clearly and categorically placed petitioner's liability for all damages arising out of death or bodily injury sustained by one person as a result of any one accident at P12..000 as compensation for the injured passengers. .000.It being specifically required that petitioner's written consent be first secured before any payment in settlement of any claim could be made. Malayan Insurance Co.On November 11.5T including accrued interest. . whenever the essential requisites for their validity are present.00 as reasonable attorney's fee . its liability is limited only to the payment made by private respondent to Perea and only up to the amount of P12." it was stated that the first and fundamental duty of the courts is the application of the law according to its express terms. as well as attorney’s fees.00.PCSI appealed to the Court of Appeals. and therefore not contrary to law.00.000.In view of Milagros Cayas' failure to prosecute the case. March 5. she did not file a motion to hold PCSI in default. the court motu propio ordered its dismissal without prejudice.After trial.00 under its maximum liability as provided for in the insurance policy. and the sum of P5.In Phil. for contracts are obligatory.We observe that although Milagros Cayas was able to prove a total loss of only P44. ordering Cayas to compensate him..INSURANCE . if their terms are clear and leave no room for doubt as to the intention of the contracting parties. Inc. No. valid and binding as between the parties. .000. interpretation being called for only when such literal application is impossible. .000 as attorney's fees.000.In due course. The same was obviously designed to safeguard the insurer's interest against collusion between the insured and the claimants. the court rendered judgment by default ordering PCSI to pay Milagros Cayas P50. no matter what form they Page 24 may be. . . Milagros Cayas moved for the reconsideration of the dismissal order. .In Pacific Oxygen & Acetylene Co. with an award of exemplary and moral damages.In other words. BPI then filed complaint. and that "out of sportsmanship". being merely an assistance or restitution insofar as can be fairly ascertained.Said amount complied with the minimum fixed by the law then prevailing. BPI & JOHN DOE G.In the case at bar. arbitrary or objectionable in this stipulation as would warrant its nullification.000. . morals.Petitioners POLTAN obtained a loan evidenced by a promissory note from the MANTRADE Dev’t Corp.000 as moral damages and P5. Milagros Cayas filed a motion to declare PCSI in default for its failure to file an answer.000 per passenger. The decision of the Court of Appeals is modified in that petitioner shall pay Milagros Cayas the amount of Twelve Thousand Pesos (P12. good customs. .It was error on the part of the trial and appellate courts to have disregarded the stipulations of the parties and to have substituted their own interpretation of the insurance policy. which affirmed in toto the lower court's decision.000. cannot be availed of by any accident victim or claimant as an instrument of enrichment by reason of an accident. 1982. . . . 164307 CHICO-NAZARIO. we rule as valid and binding upon private respondent the condition requiring her to secure the written permission of petitioner before effecting any payment in settlement of any claim against her. the minimum liability is P12.There is nothing unreasonable.Its motion for reconsideration having been denied by said appellate court.000. 00) plus legal interest from the promulgation of the decision of the lower court until it is fully paid and attorney's fees in the amount of P5. An insurance indemnity.Alleging that she had not received a copy of the answer to the complaint. Mutuc.00 HELD YES .In like manner.000. 612.000. the maximum liability per accident stipulated in the policy. we ruled that contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations. .About two months later. title and interest to the promissory note and chattel mortgage.After they refused to do so.Petitioners defaulted and so BPI demanded the whole balance of P286.R.000. Inc. said stipulation must be upheld as effective. . 2007 NATURE Petition for review of CA decision FACTS . . . PCSI filed this petition ISSUE WON.The motion was granted and plaintiff was allowed to adduce evidence ex-parte.

delivery of the goods to a carrier. Due to the failure and refusal of FGU Insurance to replace the vehicle or pay its value.Petitioners failed to show any provision in the insurance policy or mortgage contract providing that the loss of the mortgaged vehicle extinguishes their principal obligation to BPI. . In principle. They had been paying the monthly installments on the vehicle until it figured in an accident where it became a total wreck. November 28.Section 13 of the Insurance Code defines insurable interest in property as every interest in property.The very nature of the term "all risks" must be given a broad and comprehensive meaning as Page 25 covering any loss other than a willful and fraudulent act of the insured. it should be deemed as resulting in the extinguishment of petitioner’s obligation HELD 1. the vehicle had to be replaced or its value paid to them. there being no showing that the loss was caused by any of the excepted perils. 2.Some of the goods arrived in bad condition. NO Reasoning . thereafter. . they stopped payment of the monthly installments. the burden then shifts to the insurer to show the exception to the coverage. the basic rule is that the insurance company has the burden of proving that the loss is caused by the risk excepted and for want of such proof.Plaintiff insured said shipment with defendant insurance company under said cargo for the goods described as 600 metric tons of fishmeal in new gunny bags of 90 kilos each from Bangkok. . Plaintiff made a claim against Filipino Merchants Insurance Company. the petitioners filed a claim under the insurance policy.Petitioners failed to show that they were under duress or forced to sign the loan documents.RTC again ruled in favor of BPI. Plaintiff brought an action against them.Respondent’s interest over the goods is based on the perfected contract of sale. in pursuance of a contract of sale. . The defendant insurance company presented a third party complaint against the vessel and the arrastre contractor. the company is liable. . WON contracts presented in evidence by BPI were unjust and unacceptable contracts of adhesion 2.Generally. of such nature that a contemplated peril might directly damnify the insured. CA (CHOA TIEK SENG) 179 SCRA 638 REGALADO. YES . As we held in Paris-Manila Perfumery Co. Under the terms of the insurance policy from FGU Insurance. Phoenix Assurance Co. In the present case. but which the latter cannot modify. 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 be performed the conditions of the sale. NO Ratio A contract of adhesion is one in which one of the parties imposes a ready-made form of contract. coupled with an existing interest in that out of which the expectancy arises. 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. 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. . the burden of proof is upon the insured to show that a loss arose from a covered peril.RTC ordered POLTANS to pay BPI the said amount. Reasoning . or if the insurance proceeds were paid to BPI. or any relation thereto. whether real or personal. NO . the purpose of transmission to the buyer is deemed to be a delivery . 2.CA reversed and remanded case to RTC for trial on the merits. but modified the same with regard to the adjudication of the third-party complaint ISSUES 1. this will result in partial or full satisfaction of the obligation only if the insurer pays the mortgagee. v. and if so. WON the respondent has an insurable interest HELD 1. It is just as binding as ordinary contracts. . This is a sister company of BPI.Further. but did not settle their obligation with BPI which remained outstanding despite the loss of the vehicle. which the other party may accept or reject. WON the terms and conditions of the comprehensive car insurance policy issued by FGU should be deemed as having automatically operated in favor of BPI as the assured mortgagee. upon the loss of the vehicle due to total wreck. On the third party complaint.Petitioners claimed that BPI required them to obtain a motor vehicle insurance policy from FGU Insurance Corporation (FGU Insurance). BPI. (b) an inchoate interest founded on an existing interest. and the award of attorney’s fees be reduced to P50T. casualty or accidental cause is needed to be proved despite the “all risks” policy (as asserted by the insurance company) 2.. 7 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. Disposition CA decision AFFIRMED with the modification that the interest rate be reduced to 12% per annum from 24 May 1994 until fully paid. 1989 NATURE Review of the decision of the CA FACTS . Ltd. 16 Insurable interest in property may consist in (a) an existing interest. Article 1523 of the Civil Code provides that where. whether named by the buyer or not.Contracts of adhesion are not entirely prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to determine the respective claims of contending parties on their efficacy. for. or liability in respect thereof. In this case. FILIPINO MERCHANTS INS. CA affirmed. WON some fortuity.Judgment was rendered against the insurance company. collected and received the proceeds thereof. . the insurer is liable under the policy. but 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 third party defendants were ordered to pay the third party plaintiffs. The CA affirmed. The natural presumption is that one does not sign a document without first informing himself of its contents and consequences. ISSUES 1. . The latter refused to pay. or lien upon or possession of the property y.While it is true that the proceeds from the insurance policy over the mortgaged chattel is for the benefit of BPI.INSURANCE . Thailand to Manila against all risks under warehouse to warehouse terms. . vs. or (c) an expectancy. the seller is authorized or required to send the goods to the buyer.

that IMC and LSPI never communicated to it that they insured their properties.) Inc. the RTC rendered its decision dismissing respondent’s complaint. that it never consented to paying the claim of the insured.” The policies defined book debts as the “unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy. 2006 Co. 2001. that since the sales invoices state that “it is further agreed that merely for purpose of securing the payment of purchase price.119. the foreign buyers assumed the risks of loss of the goods and paid the insurance premium covering them . Warranted that the Company shall not be liable for any unpaid account in respect of the merchandise sold and delivered by the Insured which are outstanding at the date of loss for a period in excess of six (6) months from the date of the covering invoice or actual delivery of the merchandise whichever shall first occur. On October 11. that respondent paid the claims of IMC and LSPI and. and defined book debts as the “unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy.At the pre-trial conference the parties failed to arrive at an amicable settlement.” Nowhere is it provided in the questioned insurance policies that the subject of the insurance is the goods sold and delivered to the customers and dealers of the insured. the issue of lack of insurable interest was not raised in petitioner’s answer. IMC and LSPI retained ownership of the delivered goods and must bear the loss. that by subrogation.It is well-settled that when the words of a contract are plain and readily understood. to the general rule that if the thing is lost by a fortuitous event. the CA rendered its decision setting aside the decision of the RTC. the questioned insurance policies provide coverage for “book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines. the above-described merchandise remains the property of the vendor until the purchase price is fully paid”.INSURANCE of the goods to the buyer. On August 31. NO . respondent filed a complaint for damages against petitioner. petitioner appealed to the CA. that petitioner’s obligation to IMC and LSPI is not the delivery of the lost goods but the payment of its unpaid account and as such the obligation to pay is not extinguished. In this case. Dissatisfied. WON the petitioner liable for the unpaid accounts HELD 1. 1991. ISSUES 1. 2. being detailed statements of the nature.205. that the cause of the fire was not attributable to the negligence of the petitioner. 1991.Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. . Petitioner filed a motion for reconsideration but it was denied by the CA in its Resolution dated April 11.Moreover. OF . .Petitioner is a customer and dealer of the products of IMC and LSPI. even if the fire is considered a fortuitous event.. On February 25. quantity and cost of the thing sold. trial on the merits ensued. It held that the fire was purely accidental.00 while with LSPI it was P535. Levi Strauss (Phils. 1992. 1998. INSURANCE NORTH AMERICA 490 SCRA 296 Austria-Martinez. Included in the items lost or destroyed in the fire were stocks of ready-made clothing materials sold and delivered by IMC and LSPI. the insurer has the right to go against petitioner.” The policies also provide for the following conditions: 1. when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties. In its Answer with Counter Claim dated July 4.”. The CA held that the sales invoices are proofs of sale. from that time. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of every calendar month all amount shown in their books of accounts as unpaid and thus become receivable item from their customers and dealers. On February 4. petitioner contends that it could not be held liable because the property covered by the insurance policies were destroyed due to fortuities event or force majeure. 2. 2000.Indeed. respondent was subrogated to their rights against petitioner. that it has not been established that petitioner is the debtor of IMC and LSPI. the risk is borne by the owner of the thing at the time the loss under the principle of res perit domino. the Gaisano Superstore Complex in Cagayan de Oro City. that as of February 25. x xx . there is no room for construction. IMC and LSPI separately obtained from respondent fire insurance policies with book debt endorsements. It alleges that IMC and LSPI filed with respondent their claims under their respective fire insurance policies with book debt endorsements. 1995.00. being a fire insurance with book debt endorsements. the terms are to be understood literally just as they NATURE Petition for review on certiorari of the Decision of the Court of Appeals FACTS . June 8. that respondent made several demands for payment upon petitioner but these went unheeded. that respondent’s right of subrogation has no basis inasmuch as there was no breach of contract committed by it since the loss was due to fire which it could not prevent or foresee. the unpaid accounts of petitioner on the sale and delivery of ready-made clothing materials with IMC was P2.” 3. what was insured was the vendor’s interest as a creditor. The insurance policies provide for coverage on “book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines. The Court has heretofore ruled that the delivery of the goods on board the carrying vessels partake of the nature of actual delivery since. Disposition Petition denied GAISANO CAGAYAN v. by virtue thereof. WON the CA erred in construing a fire insurance policy on book debts as one covering the unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made clothing materials sold and delivered to petitioner.613. WON IMC bears the risk of loss because it expressly reserved ownership of the goods by stipulating in the sales invoices that “[i]t is further agreed that merely for purpose of securing the payment of the purchase price the above described merchandise remains the property of the vendor until the purchase price thereof is fully paid. Thus. was consumed by fire. owned by petitioner. the exceptions to said rule not obtaining in the present case. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co. that. that loss of the goods in the fire must be borne by petitioner since the proviso contained in the sales invoices is an exception under Page 26 Article 1504 (1) of the Civil Code.

or a lien upon. Unless otherwise agreed.With respect to IMC. but whether insured has substantial economic interest in the property. In this case. Accordingly. coupled with an existing interest in that out of which the expectancy arises. as where he has a vendor’s lien. petitioner bears the risk of loss of the goods delivered.” Parenthetically. in property insurance. the loss or destruction of anything of the same kind even without the debtor’s fault and before he has incurred in delay will not have the effect of extinguishing the obligation.. there is no evidence that respondent has been subrogated to any right which LSPI may have against petitioner.Moreover. . the insurable interest of IMC and LSPI pertain to the unpaid accounts appearing in their Books of Account 45 days after the time of the loss covered by the policies. and not the loss or destruction of the goods delivered. “[i]n an obligation to deliver a generic thing. Respondent’s action against petitioner is squarely sanctioned by Article 2207 of the Civil Code which provides: Art. it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured. 3. no subrogation receipt was offered in evidence. (b) an inchoate interest founded on existing interest.00. it is not excused by fortuitous loss of any specific property of the debtor. Article 1504 of the Civil Code: ART. Where the obligation consists in the payment of money.Petitioner’s argument that it is not liable because the fire is a fortuitous event under Article 1174 of the Civil Code is misplaced. whether real or personal. .00 in the fire that razed petitioner’s building on February 25. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract.Moreover. 1991 from petitioner’s General Manager.Section 13 of our Insurance Code defines insurable interest as “every interest in property.Under Article 1263 of the Civil Code. therefore. This rule is based on the principle that the genus of a thing can never perish. but when the ownership therein is transferred to the buyer the goods are at the buyer’s risk whether actual delivery has been made or not. What is relevant here is whether it has been established that petitioner has outstanding accounts with IMC and LSPI. Jr. check voucher evidencing payment to IMC.As to LSPI. except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer.119. it must be stressed that the insurance in this case is not for loss of goods by fire but for petitioner’s accounts with IMC and LSPI that remained unpaid 45 days after the fire. is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured. Thus. . The rationale for this is that the rule that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event. . the subject matter of the insurance. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. respondent failed to present sufficient evidence to prove its cause of action. (Emphasis supplied) . 2001 of the Court of Appeals in CA-G. Indeed. It only confirms the loss of Levi’s products in the amount of P535. an insurable interest in property does not necessarily imply a property interest in. the goods are at the buyer’s risk from the time of such delivery. The assailed Decision dated October 11.Thus. Thus. .IMC and LSPI did not lose complete interest over the goods. or possession of. there is no proof of full settlement of the insurance claim of LSPI. YES . Genus nunquan perit. the risk of loss is borne by the buyer. one’s interest is not determined by concept of title. 2. the loss or destruction of anything of the same kind does not extinguish the obligation. 2000 and Resolution dated April 11. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. x x x . As held earlier. Disposition Petition is partly GRANTED. what were insured against were the accounts of IMC and LSPI with petitioner which remained unpaid 45 days after the loss through fire.613. The subrogation receipt. Gaisano. subrogation receipt executed by IMC in favor of respondent upon receipt of the insurance proceeds. CV No. NO . whether fire is a fortuitous event or petitioner was negligent are matters immaterial to this case. under Section 14 of the same Code.INSURANCE appear on the face of the contract. Stephen S. the goods remain at the seller’s risk until the ownership therein is transferred to the buyer. . Page 27 . 61848 are AFFIRMED with the MODIFICATION that the order to pay the . 1991. . Accordingly. in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract. in other words. 1504. when the seller retains ownership only to insure that the buyer will pay its debt. petitioner bears the loss under Article 1504 (1) of the Civil Code. 2207.” If the obligation is generic in the sense that the object thereof is designated merely by its class or genus without any particular designation or physical segregation from all others of the same class. or (c) an expectancy. and neither the title nor a beneficial interest is requisite to the existence of such an interest.00. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. It does not apply when the obligation is pecuniary in nature.R. so long as he would suffer by its destruction.The present case clearly falls under paragraph (1). petitioner’s obligation is for the payment of money. No evidentiary weight can be given to Exhibit “F Levi Strauss”.Therefore. . Failure to substantiate the claim of subrogation is fatal to petitioner’s case for recovery of the amount of P535. an insurable interest in property may consist in: (a) an existing interest. a vendor or seller retains an insurable interest in the property sold so long as he has any interest therein. Petitioner has an outstanding account with IMC in the amount of P2. but also the amount paid to settle the insurance claim. the respondent has adequately established its claim. presented and marked as exhibits in court.Thus. If the plaintiff’s property has been insured. An obligation to pay money is generic. All these documents have been properly identified. or liability in respect thereof. They have an insurable interest until full payment of the value of the delivered goods. the failure of the debtor to make the payment even by reason of a fortuitous event shall not relieve him of his liability. Unlike the civil law concept of res perit domino. where ownership is the basis for consideration of who bears the risk of loss.205. since it is not an admission of petitioner’s unpaid account with LSPI.613. a letter dated April 23. of such nature that a contemplated peril might directly damnify the insured. by itself.Petitioner failed to refute respondent’s evidence. or any relation thereto.

BF filed a complaint against Mrs. Complainants were paid the following: P41. including the Travellers. Demand was made from respondent Travellers for its share in the loss but was refused.613. but she was only able to receive Php40.62. The validity of the insurance policy taken b petitioner was not assailed by private respondent. They assumed the mortgage of the building in favor of SSS. 1990. Another Fire Insurance Policy was later procured from respondent Philippine British Assurance Company (PBAC). Rodolfo Lalog (agent of BF) convinced him to apply for additional insurance coverage of Php50.14 by ZIC. Perez died while riding a banca which capsized during a storm.On September 21. PBAC.Without knowing that Perez died on November 25.INSURANCE amount of P535.000 because they maintain that such policy had not been perfected.57 by SSS. From said evidence respondent commission inferred that the credit extended by herein petitioner to the Palomos secured by the insured property must have been paid. it has been held in a long line of cases that when the creditor is in possession of the document of credit. 1987. TAI TONG CHUACHE & CO v. 1987. 1975. petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner. which building was insured with respondent SSS Accredited Group of Insurers for P25K. petitioner as mortgagee still had insurable interest therein. 1988 NATURE Petition for review on certiorari of the decision of the Insurance Commission FACTS . Sometime in 1987. hence.00 to respondent is DELETED for lack of factual basis. .000 under the first insurance policy. The perfection was also further conditioned upon (1) the issuance of the policy. respondents. he need not prove non-payment for it is presumed. During this time his application papers for the additional insurance coverage was still with the Gumaca.000 on December 2.294. and SSS paid their corresponding shares of the loss. CA (BF LIFEMAN INSURANCE CORP. (TTCC) and executed a mortgage over the land and the building in favor of Tai Tong Chuache & Co.An essential requisite of a valid contract is consent. 2000 NATURE Petition for review on certiorari Page 28 FACTS .546. this action. Respondent Insurance Commission absolved respondent insurance company from liability on the basis of the certification issued by the then CFI.894. Hence.877. Thus Chua as the managing partner of the partnership may execute all acts of administration including the right to sue debtors of the partnership in case of their failure to pay their obligations when it became due and demandable. respondent insurance commission based its findings on mere inference. Perez accomplished the application form and passed the required medical examination. . February 29. Arsenio Chua. . Quezon office of BF. ZIC.000 under the additional policy coverage of Php50. Moreover. .On November 25. PBAC: and P2.On April 25. Perez seeking recission and declaration of nullity of the insurance contract in question. So at the time of the fire. Consent must be manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. . the building and the contents were totally razed by fire.79 by PBAC. January 28. ISSUE WON petitioner Tai Tong has insurable interest in the said policy HELD YES .Based on the computation of the loss.First. Or at the least. petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by respondent insurance company. . BF approved Perez's application and issued the corresponding policy for the Php50. 1975. He also paid Php2.90. Being an agent. representative of TTCC insured the latter's interest with Travellers Multi-Indemnity Corporation (Travellers) for P100K (P70K for bldg and P30K for the contents thereof) . BF refused to pay the proceeds amounting to Php150.On June 11. .And third. P11.) 323 SCRA 613 YNARES-SANTIAGO.Complainants Palomo acquired a parcel of land and a building located in Davao City. Pedro Palomo secured a Fire Insurance Policy. covering the building for P50K with respondent Zenith Insurance Corporation (ZIC). On July 31.79-ZIC: P22.732. 1975. . it is understood that he acted for and in behalf of the firm. Costs against said private respondent.936. Mrs. 1975.000. When Perez filed the application.075 premium) to Lalog. .000. SSS) but was refused. ISSUE WON there was a consummated insurance between Perez and BF contract of HELD NO . INSURANCE COMMISSION and TRAVELLERS MULTIINDEMNITY CORPORATION 158 SCRA 366 GANCAYCO. . Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. as security of payment .Second.The offer must be certain and the acceptance absolute.31 (P5. that in a certain civil action against the Palomos. it was subject to the acceptance of BF. complainants demanded from the other 3 respondents the balance of each share in the loss based on the computation excluding Travellers Multi-Indemnity in the amount of P30. PEREZ v. and P5.Virginia Perez (wife of the deceased) claimed the benefits under the insurance policies of the deceased.000 plus damages.Primitivo Perez has been insured with the BF Lifeman Insurance Corporation (BF hereafter) since 1980 for Php20.866. Disposition Appealed decision SET ASIDE and ANOTHER judgment is rendered order private respondent Travellers to pay petitioner the face value of Fire Insurance Policy in the amount of P100K. Such is a glaring error which this Court cannot sanction. Azucena Palomo obtained a P100K loan from Tai Tong Chuache Inc. Perez filed a conterclaim for the collection of Php150.On April 19. Arsenio Lopez Chua stands as the complainant and not Tai Tong Chuache. 1987. covering the same building for P50K and contents thereof for P70K.

but a case where the local agents.06. As was well said in the case of MeLaurin vs. that this condition precedent goes to the very essence of the contract and cannot be waived by the agent making delivery of the policy . It is to December 1. contained among others the following provisions: “3 That the said policy shall not take effect until the first premium has been paid and the policy has been delivered to and accepted by me. up to the time of his death on January 19. 1933. should be delivered to his aunt..” -Main defense of the company in this case.06 was never cashed but returned to the company and appears in the record of this case as Exhibit D. that upon the facts it is not necessarily a case of waiver or of estoppel. 1933. By the terms of the policy. 1933 Insular Life obtained from the beneficiary. INSULAR 62 Phil 51 BUTTE. 1932..On January 18. who was then twenty-nine years of age. a number of American decisions hold that an agent to whom a life insurance policy similar to the one here involved was sent with instructions to deliver it to the insured has authority to bind the company by making such delivery.Mendoza was duly licensed by the Insurance Commissioner to act as the agent of the defendant insurance company. that is to say.On the other hand. Cristobal Mendoza. On January 15. . The agent asked Felicidad Estrada if her nephew was in good health and she replied that she believed so because she had no information that he was sick and he thereupon delivered to her the policy.06 to complete the payment of the first annual premium of P40. The non-fulfillment of the condition resulted in the non-perfection of the contract. Disposition Decision of CA affirmed in so far as it declared the insurance policy for Php50. the defendant. he called a physician who found that he was suffering from acute nephritis and uremia and on January 19. . Sindayen. 1933. to the defendant Insular Life Assurance Co. SATISFACTION AND RELEASE" whereby in consideration of the sum of P40. was examined by the company's doctor who made a favorable report. 1932. It was agreed with the agent that the policy. 1933. . It is to be noted that the policy was not issued and the company assumed no actual risk prior to January 11. -On January 11. 1932. in the exercise of the powers lodged in them.000 and he paid to the agent P15 cash as part of the first premium. an annual premium of P40. 47710 dated back to December 1. when and if issued. . . of all claims. he died. accepted the premium and delivered the policy. 1933. Ltd. in Camiling.On January 1. 1933. Granted that Mendoza made a mistake of judgement because he acted on insufficient evidence as to the state of health of the insured. But it is not charged that the . DE SINDAYEN v. does not constitute gross negligence because the application was granted within the normal processing time. with whom Sindayen left the sum of P26.” . “It is plain. and mailed the same to its agent. he complained of a severe headache and remained at home.. On January 11. 1933. her signature to a legal document entitled "ACCORD. Delay. obligation in or indebtedness.. for a policy of insurance on his life in the sum of P1.we are inclined to the view that it is more consonant with the well known practice of life insurance companies and the evidence in the present case to rest our decision on the proposition that Mendoza was authorized by the company to make the delivery of the policy when he received the payment of the first premium and he was satisfied that the insured was in good health. although the insured was not in good health at the time of delivery. The company accepted the risk and issued policy No.INSURANCE (2) the payment of the premium. for at the time of its delivery by the agent as aforesaid the insured was not in good health ISSUE WON the insurance policy is valid Page 29 HELD YES . releases and forever discharges said Isular Life Assurance Co. 1935 FACTS .There is one line of cases which holds that the stipulation contained in paragraph 3 is in the nature of a condition precedent.06 is due on the first day of December of each year. the first premium already paid by the insured covering the period from December 1. the condition as to the insurer's good health was waived by the company. Cristobal Mendoza. the agent.The delivery and acceptance by the applicant was a suspensive condition which was not fulfilled inasmuch as the applicant was already dead at the time the policy was issued. On January 12. namely.The application which the insured signed in Camiling. was employed as a linotype operator in the Bureau of Printing at Manila and had been such for eleven years prior thereto. But he did not return or offer to return the premium paid. delivered the policy to Felicidad Estrada upon her payment of the balance of the first year's annual premium. . Felicidad Estrada. 1933. in this case. and (3) the delivery to and acceptance by the applicant in good health. Sindayen was at work in the Bureau of Printing.000 issued by BF null and void (no recission because it presupposes a valid contract) VDA. Ltd. 1933.Granted that Mendoza's decision that the condition had been met by the insured and that it was proper to make a delivery of the policy to him is just as binding on the company as if the decision had been made by its board of directors. its successors and assigns. the agent learned of the death of Arturo Sindayen and called on Felicidad Estrada and asked her to return the policy. Felicidad Estrada on his aforesaid statement gave him the policy. therefore.On February 4. Delay in acting on the application does not constitute acceptance even though the insured has forwarded his first premium with his application. while I am in good health. Tarlac. While there he made a written application on December 26. Tarlac. Thereupon this action was brought to enforce payment of the policy. on the theory that the delivery of the policy being the final act to the consummation of the contract. Sindayen’s wife. That act binds their principal. 1932.On January 20. to the company. The said check for P40. .06 paid to her by a check of the company. she "assigns. The well known custom of the insurance business and the evidence in this case prove that Mendoza was not regarded by the company as a mere conduit or automaton for the performance of the physical act of placing the policy in the hands of the insured . that there can be no valid delivery to the insured unless he is in good health at the time.Arturo Sindayen. in accordance with his agreement with the insured. for delivery to the insured. Mutual Life Insurance Co. on December 26. that the said policy never took effect because of paragraph 3 of the application above quoted. September 4.An application for insurance is merely an offer which requires the overt act of the insurer for it to ripen to a contract. through its agent.

that the delivery of the policy by Mendoza does not bind the defendant. Torres on the morning of December 21. 1917. that the defendant waived the defense it now invokes. attorney Aurelio A. and that he said that the only document relating to the transaction in his possession was the provisional receipt. Herrer from the home office on November 26.Until quite recently. in the absence of fraud or other grounds for rescission. The witness further said that letters. whose only power is to solicit applications for insurance. was not called as a witness. SUN LIFE OF CANADA 41 PHIL 269 MALCOLM. Joaquin Herrer made application to the Sun Life Assurance Company of Canada through its office in Manila for a life annuity. Rafael Enriquez.It is therefore in the public interest.The application was immediately forwarded to the head office of the company at Montreal. the administrator of the estate."A local agent of an insurance company. testified to having received the cablegram accepting the application of Mr. has no power to waive any of the provision of the policy so delivered. Herrer. . the head office gave notice of acceptance by cable to Manila. Reasoning . gives strong clues as to the proper disposition of the case. The Page 30 local manager. In view of the facts established and admitted. as just noticed.The company therefore having decided that all the conditions precedent to the taking effect of the policy had been complied with and having accepted the premium and delivered the policy thereafter to the insured.INSURANCE mistake was induced by any misconduct or omission of duty of the insured. as we. . by reason of the delivery of the policy by its agent. 1917. Chapter IV of this Act concerns life and health insurance. Torres. stating that the policy had been issued. Tuason." . which will be discussed later. 1920 NATURE Appeal from judgment of trial court denying plaintiff’s (administrator of the estate of the late Joaquin Ma. 1915. in force the Insurance Act. ISSUE WON there exists a contract for life annuity between Herrer and defendant HELD NO Ratio 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. for the simple reason that Mendoza was not an agent with authority to issue policies or to accept risks in the name of his principle. the Insurance Act deals with life insurance.) On December 4. Mr. Mr. the policy was issued at Montreal. legally there could have been no waiver. Mr. 1917. Torres wrote to the Manila office of the company stating that Herrer desired to withdraw his application. however. He said that on the same day he signed a letter notifying Mr. if approved to the insured. it is plainly not within the intention of the parties that there should be any questions held in abeyance or reserved for future determination that leave the very existence of the contract in suspense and doubt.It is the interest not only the applicant but of all insurance companies as well that there should be some act which gives the applicant the definite assurance that the contract has been consummated. The following day the local office replied to Mr. Herrer. as well as in the interest of the insurance companies themselves by giving certainly and security to their policies.000 paid by the deceased for a life annuity. 1917. in article 1802. 1917. White. 1917. by reason of the delivery of the policy by its invokes. as to the existence of the fraud. This sense of security and of peace of mind that one's defendants are provided for without risk either of loss or of litigation is the bedrock of life insurance. This letter was received by Mr. When she gave Mendoza an incorrect information tending to create the impression that the insured was well when in fact he was seriously ill. The Act expressly repealed Title VIII of Book II and Section III of Title III of Book III of the code of Commerce. E. . there is no doubt. (Whether on the same day the cable was received. 1917.000 to the manager of the company's Manila office and was given a receipt. . . attorney Manuel Torres testified to having prepared the will of Joaquin Ma. After July 1. When the policy is issued and delivered. On the other hand. No. and called attention to the notification of November 26. testified that he had gone through the effects of the deceased and had found no letter of notification from the insurance company to Mr. article 16 of the Civil Code provides that "In matters which are governed by special laws. . 1917.For the defense. -There is another ground upon which the majority opinion is based. were sent to the chief clerk and placed on the mailing desk for transmission. Mr. all of the provisions concerning life insurance in the Philippines were found in the Code of Commerce and the Civil Code. November 29. that the delivery of the policy to the insured by an agent of the company who is authorized to make delivery or without delivery is the final act which binds the company (and the insured as well) in the absence of fraud or other legal ground for rescission . Herrer of this acceptance. On December 18. therefore. but it was her duty to find out it his true state of health in order to give true and correct information. Mr. there was. as a representative of the insured was not only bound to give a truthful information on the state of health of the insured. SEPARATE OPINION IMPERIAL [dissent] . do. it is silent as to the methods to be followed in order that there may be a contract of insurance. It is admitted that if the delivery of the policy was due to fraud. namely. For instance. who was the chief clerk on November 26. -Estrada. Herrer died on December 20.The chief clerk of the Manila office of Sun Life testified that he prepared the letter and handed it to the local manager. for the public is profoundly and generally interested in life insurance. not only describes a contact of life annuity markedly similar to the one we are considering. Canada. the company is now estopped to assert that it never intended that the policy should take effect.It is clear. FACTS .On September 24. E. On November 26. is a disputed point. The law of insurance is consequently now found in the Insurance Act and the Civil Code. That on this occasion.While. that we are constrained to hold. 1917. White. and forward them to the company for approval. when. but in two other articles. nor is the defendant estopped from alleging its defense. any . after being signed. Two days later he paid the sum of P6. 2427. notice was sent by the Manila office of Herrera that the application had been accepted. for signature. Herrer) action to recover from the defendant life insurance company the sum of pesos 6. there is no doubt that she committed fraud and imparted a deceitful information to the defendant agent ENRIQUEZ v. Herrer mentioned his application for a life annuity. the Civil Code.

" On the supposition. the subsequent insurance law which repealed its predecessor . Section 77 of the Insurance Code of 1978 has deleted the clause "unless there is clear agreement to grant the insured credit extension of the premium due" which was then involved in this controversy. did cable the Manila office to that effect. Two days later. The court however sees no proof of any such implied agreement. Such agreement may be express or implied. On 23 January 1987. 2427. that the special law on the subject of insurance is deficient in enunciating the principles governing acceptance. through its agent in Manila. Her claim was accordingly referred . Apostol was the judge. unless there is clear agreement to grant the insured credit extension of the premium due. the alleged insurance policy was not in force due to the non-payment of the premium thereon. .. Reasoning . No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid. etc. . . Act No. holding the defendants liable for repair of the car.000 with legal interest from November 20. Disposition Judgment is reversed. Inc. May 24. TIBAY v. center island in the road and collided with their car.On 22 January 1987 Fortune Life and General Insurance Co. Makati City. Private respondent Maharlika was eventually impleaded as a defendant in this case. 2427: an insurance policy would be valid and binding notwithstanding the non-payment of the premium if there was a clear agreement to grant to the insured credit extension. (2) there had to be approval of the application by the head office of the company.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. 136171 in favor of Violeta R. even if the cab had been insured. 1918.  both before the effectivity of Presidential Decree no. The insurance was for P600. The purported nexus between the delivery of the policy and the grant of credit extension is too tenuous to support the conclusion for which petitioners contend. May 9. . INC.The accident occurred in 1973. Also. faulting the respondent judge for considering the defense of late payment of premium when “the same was waived at the pre-trial”. when a taxicab crossed a FACTS . without special finding as to costs in either instance. 1989 NATURE Petition for review on certiorari and FACTS .50. CA (FORTUNE INSURANCE) 257 SCRA 126 BELLOSILLO. 1974. On the same day. The further admitted facts are that the head office in Montreal did accept the application.. did actually issue the policy and did. 612. 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. and (3) this approval had in some way to be communicated by the company to the applicant.(More pertinent to this class: ) petitioners assert that the private respondent had agreed to grant the then prospective insured a credit extension of the premium due. the complaint would be premature since the policy provides that the insurer would be liable only when the insured becomes legally liable.On 8 March 1987 the insured building was completely destroyed by fire. actually write the letter of notification and place it in the usual channels for transmission to the addressee.The case was an offshoot of an incident: plaintiffs were riding in their car.Petitioners elevated this case to this court. 1996 LIFE & GENERAL VELASCO and ACOSTA v. . ISSUE WON the insurance policy would be valid and binding notwithstanding the non-payment of the premium HELD NO Page 31 Ratio Act No. and the plaintiff shall have and recover from the defendant the sum of P6.  Parenthetically mention: in the present law. medical expenses. the judgment appealed from is hereby AFFIRMED.According to the provisional receipt. To them. which is incontestable. therefore. the subjectmatter of the Civil code. APOSTOL MAHARLIKA INSURANCE CO. Violeta Tibay paid the balance of the premium. she filed with FORTUNE a claim on the fire insurance policy.Petitioners were plaintiffs in a civil case of which public respondent Hon. Disposition Fnding no reversible error. would be controlling. BUT Maharlike was exonerated on the gnd that the policy was not in force. .INSURANCE deficiency of the latter shall be supplied by the provisions of this Code. . together with all their personal effects therein. .The former insurance law.Trial court ruled in favor of the plaintiff. the policy is binding because there was an implied agreement to grant a credit extension so as to make the policy effective. hence the evidence of late payment should be disregarded supposedly because the private respondent had admitted that such fact was not in issue. which applies to the case here.000. with an allegation that the taxicab involved was insured against third party liability for P20.983. if there be any. .This controversy arose under the old insurance law.00 with private respondent at the time of the accident .Maharlika claimed there was no cause of action against it because at the time of the accident. until paid.000 covering the period from 23 January 1987 to 23 January 1988.Petitioners maintain that in spite of their late payment. An acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge. the subsequent acceptance of the premium and delivery of the policy estops the respondent company from asserting that the policy is ineffective. provided: An insurer is entitled to the payment of premium as soon as the thing insured is exposed to the peril insured against. The complaint was filed on July 20. Tibay and/or Nicolas Roraldo on their two-storey residential building located at 5855 Zobel Street. (FORTUNE) issued Fire Insurance Policy No. Violeta Tibay only paid P600 thus leaving a considerable balance unpaid. In the Civil Code is found article 1262 providing that "Consent is shown by the concurrence of offer and acceptance with respect to the thing and the consideration which are to constitute the contract. of the total premium of P2. 173 SCRA 228 REGALADO..

.). Goodwill Adjustment Services. The trial court ruled for petitioners. the cardinal polestar in the construction of an insurance contract is the intention of the parties as expressed in the policy.Trial court dismissed the complaint and the counterclaim upon the following findings: (1) payment of the premiums of the three policies were made during the term of said policies. In case of loss. the full efficacy. Rather.10 representing the premium payments for 1982-85. On 3 March 1988 Violeta and the other petitioners sued FORTUNE for damages in the amount of P600. Verily. it could not be said. Partial payment even when accepted as a partial payment will not keep the policy alive even for such fractional part of the year as the part payment bears to the whole payment. is made by the insured which the insurer accepts. and no risk attached to the policy. upon the other hand. on the one hand.INSURANCE to its adjuster. CA reversed. not merely pro tanto. less the unpaid premium can accordingly be had. for the period 1 March 1982 to1 March 1983. If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ineffective. 2♪ and of Sec. recovery on the basis of the full contract value. cannot treat the contract as valid only for the purpose of collecting premiums and as invalid for the purpose of indemnity.The law neither requires. (2) as regards the unpaid premiums. . and far more importantly.103.FORTUNE denied the claim of Violeta for violation of Policy Condition No. November 6. both accepted by AHAC. any specific amount of premium payment. This was also pain in installment basis.206. Reasoning . Ergo. petitioner refused to pay the balance of the premium. The rule that contracts of insurance will be construed in favor of the insured and most strongly against the insurer should not be permitted to have the effect of making a plain agreement ambiguous and then construe it in favor of the insured. . CA ( AMERICAN HOME ASSURANCE CO. Disposition Petition is DENIED.05. The insured. this time covering the period 1 March 1983 to 1 March 1984. (AHAC). . Verily. NATURE Appeal from decision of the CA FACTS American Home Assurance Co. sought the refund of P924. It would have been altogether different were it not so stipulated. and attorney's fees equivalent to 20% of the total claim. an admission of liability. If there be any loss such is not covered. MAKATI TUSCANY v. if no loss occurs. partly or in full. Subject to no loss prior to premium payment. . it is either that a juridical tie exists (by such payment) or that it is not extant at all (by an absence thereof). It should thus be enough that payment on the premium. hence.A second policy was issued to renew the first one.Indeed. For this. which immediately wrote Violeta requesting her to furnish it with the necessary documents for the investigation and processing of her claim. In fine.Petitioner 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. stated the following reservations: 2. inspite of the reservations. of the insurance contract naturally follows. The insurance contract itself expressly provided that the policy would be effective only when the premium was paid in full. no vinculum juris whereby the insurer bound itself to indemnify the assured according to law ever resulted from the fractional payment of premium. 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. conversely. cannot avoid the obligation of paying the balance of the premium while the insurer. ♪ Page 32 . ISSUE WON a fire insurance policy is valid. . Inc. and 3.Petitioner further claimed that the policy was never binding and valid. 1992 This policy including any renewal thereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein. AHAC filed an action to recover the unpaid balance of P314. It then pleaded a counterclaim for P152k for the premiums already paid for 1984-85. The premium was paid on installments all of which were accepted by AHAC. it is elemental law that the payment of premium is requisite to keep the policy of insurance in force. and in its answer with amended counterclaim. Courts have no other function but to enforce the same. it must be taken in the concept of a deposit to be held in trust by the insurer until such time that the full amount has been tendered and duly receipted for. nor measures the strength of the vinculum juris by. (GASI). P100. On 28 March 1987 she signed a nonwaiver agreement with GASI to the effect that any action taken by the companies shall not be. Once the juridical relation comes into being. 77 of the Insurance Code.A third policy was again issued for the period 1 March 1984 to 1 March 1985. Efforts to settle the case before the Insurance Commission proved futile.000 moral damages. Inc. Petitioner forthwith complied. not only is there an insurance perfected but also a partially performed contract.. issued in favor of petitioner Makati Tuscany Condominium Corporation an insurance policy on the latter's building and premises. in view of the reservation in the receipts ordinarily issued by AHAC on premium payments the only plausible conclusion is that AHAC has no right to demand their payment after the lapse SEPARATE OPINION VITUG [dissent] . as well as the two (2) previous policies. or be claimed to be. that no risk attached under the policies. full payment must be made before the risk occurs for the policy to be considered effective and in force. the insurer can demand the payment of the unpaid balance of the premium. Decision of the CA is AFFIRMED. .) 215 SCRA 462 BELLOSILLO. petitioner made two installment payments. petitioners had absolute freedom of choice whether or not to be insured by FORTUNE under the terms of its policy and they freely opted to adhere thereto. binding and enforceable upon mere partial payment of premium HELD NO Ratio Where the insurer and the insured expressly stipulated that the policy is not in force until the premium has been fully paid the payment of partial premium by the assured in this particular instance should not be considered the payment required by the law and the stipulation of the parties. Thereafter.000 representing the total coverage of the fire insurance policy plus 12% interest per annum. represented by American International Underwriters (Phils.As expressly agreed upon in the contract. Thus.

There is nothing in Section 77 which suggests that the parties may not agree to allow payment of the premiums in installment. . INC. but does not expressly prohibit an agreement granting credit extension.At the very least. and there is no pretense that the parties never envisioned to make the insurance contract binding between them.Areola theorized that Malapit's act of signing and even sending the notice of cancellation himself.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.INSURANCE of the term of said policy on March 1.Prudential offered to reinstate same policy it had previously cancelled and even proposed to extend its lifetime to December 17. Reasoning . o Under the terms of the statement of account issued by Prudential. CA (PRUDENTIAL GUARANTEE AND ASSURANCE. Here. but it was found that Chua was authorized by South Sea to receive the premium on its behalf. and such an agreement is not contrary to morals.65 which included the premium of P1.00. SOUTH SEA SURETY AND INSURANCE v.CA modified the decision by ordering Tuscany to pay the balance of the premiums due on the third policy plus legal interest until fully paid. It delivered the check to Victorio Chua before the vessel sank. public order or public policy. Petitioner’s Claims Petitioner argues that where the premiums is not actually paid in full. . and affirming the denial of the counterclaim. Petitioners’ Claims . further reinforces the allegation of bad faith. PA-20015 (covering a period of one year). the policy would only be effective if there is an acknowledgment in the policy of the receipt of premium pursuant to Sec. where latter undertook to load the former’s logs on vessel.25 and 2% premium tax of P29. and petitioner's failure to pay said premiums on or before the effective dates of said policies rendered them invalid.) 236 SCRA 643 ROMERO. 1985. Acceptance of payments speaks loudly of the insurer's intention to honor the policies it issued to petitioner. .The fraudulent act of in misappropriating Areola’s premium payments is the proximate cause of the cancellation of the insurance policy. September 22. ISSUE WON payment by installment of the premiums due on an insurance policy invalidates the contract of insurance HELD Ratio Where the risk is entire and the contract is indivisible. Trial Court favored Hardwood. both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted. And if payment was made to a representative. 77 of the Insurance Code. Page 33 Appellant argues that Chua was not its broker. . Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid. Prudential's branch manager.40. And the insured never informed the insurer that it was terminating the policy because the terms were unacceptable. clients should demand for an OR. If payment is made to their office. however brief or momentary. 1994 NATURE CERTIORARI FACTS . The absence of an express acknowledgment in the policies of such receipt of the corresponding premium payments. Costs against petitioner.June 29. Disposition Judgment affirmed. 1985.470. Prudential should be notified. The vessel sank Jan 25. notwithstanding any agreement to the contrary.The obligation to pay premiums when due is ordinarily as indivisible obligation to pay the entire premium.August 3. but absolved Seven Bros. South Sea filed this instant petition. 78 of the Insurance Code. Malapit. 1984. o The statement of account stated that it must not be considered a receipt as an official receipt will be issued upon payment of the account. 1995 NATURE Petition for review on certiorari FACTS .The records clearly show that petitioner and private respondent intended subject insurance policies to be binding and effective notwithstanding the staggered payment of the premiums. Therefore. . 1985.609. . AREOLA v.It is already in effect because Hardwood has already paid the insurance premium. June 2. Prudential unilaterally cancelled the same since company records revealed that Areola failed to pay his premiums. . but Victorio Chua was only to deliver the check to South Sea five days after the vessel sank. the parties herein agreed to make the premiums payable in installments. or to consider the contract as valid and binding upon payment of the first premium. CA decided against South Sea. the insured is not entitled to a refund of the premiums paid if the insurer was exposed to the risk insured for any period. notwithstanding his personal knowledge of petitioner-insured's full payment of premiums. Areola was supposed to pay the total amount of P1.Hardwood entered into agreement with Seven Bros Shipping.Such fraudulent act committed by Malapit is attributable to Prudential. good customs. Hardwood insured the logs with South Sea Surety which issued Marine Cargo Insurance Policy. . . no contract of insurance is valid and binding unless the premium thereof has been paid. . 1985. documentary stamp of P110.7 months after the issuance of Santos Areola's Personal Accident Insurance Policy No. CA (VALENZUELA HARDWOOD) 244 SCRA 744 VITUG. the client must demand for a Provisional Receipt and if Official Receipts aren’t received within 7 days. Tuscany was justified in refusing to pay the same. Petitioner thus concludes that there cannot be a perfected contract of insurance upon mere partial payment of the premiums because under Sec.Hardwood filed claim with South Sea and Seven Bros. ISSUES WON the insurance contract was already in effect when the vessel sank HELD YES . upon a finding that the cancellation was erroneous and that the premiums were paid in full by Areola but were not remitted by Teofilo M.

therefore.The facts are clear as to the relationship between private respondent insurance company and Malapit. the relationship as creditor and debtor between the parties arose from a common cause: i. 1992. His act of receiving the premiums collected is well within the province of his authority as manager.Malapit's fraudulent act of misappropriating the premiums paid by petitioner-insured is beyond doubt directly imputable to Prudential. Inc.INSURANCE .Under the law governing reciprocal obligations. the principal is not bound except when he ratifies it expressly or tacitly.In March 1992. . bear the consequences of the erroneous cancellation of subject insurance policy caused by the nonremittance by its own employee of the premiums paid. . . by reason of their agreement to enter into a contract of insurance under whose terms. Page 34 . Disposition Petition for review on certiorari is hereby GRANTED. particularly the second paragraph of Article 1191. . fails to comply with what is incumbent upon him. no exoneration from liability could result therefrom. for the period from May 22. .Prudential’s earlier act of reinstating the insurance policy can not obliterate the injury inflicted on petitioner-insured.However. said article entitles the injured party to payment of damages. is given a choice between fulfillment or rescission of the obligation in case one of the obligors. regardless of whether he demands fulfillment or rescission of the obligation. 1993. On the same day. . Areola in this case. particularly under Article 1910 of the Civil Code. INC.95. Prudential within a reasonable time took steps to rectify the wrong committed by reinstating the insurance policy of petitioner. It must. 1991.Article 1910 thus reads: Art. . however. such that the obligation of one is dependent upon the obligation of the other. WON the erroneous act of canceling subject insurance policy entitle petitioner-insured to payment of damages 2. . there being an obvious breach of contract. . 1992. Zuellig Insurance Brokers. 1992. NATURE Petition for review on certiorari of a decision of the Court of Appeals. 1999 CO. . Petitioner advised respondent's broker. No notice of loss was filed by respondent under the policies prior to July 14. is bound by the acts of its agent. . namely.e. 1992. and (b) . by provision of law.Untenable then is reinstatement insurance company's argument. INC. respondent filed with petitioner its formal claim for indemnification of the insured property razed by fire. no actual or substantial damage or injury was inflicted on petitioner Areola at the time the insurance policy was cancelled.On July 13. divests petitioner-insured of a rightful claim for payment of damages. NO Reasoning . . ..On July 14.Malapit's failure to remit the premiums he received cannot constitute a defense for private respondent insurance company. petitioner evaluated the policies and decided not to renew them upon expiration of their terms on May 22. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. petitioner gave written notice to respondent of the non-renewal of the policies at the address stated in the policies. 1992. i. The latter’s acts are considered as its own for which it can be held to account. Prudential promised to extend protection to Areola against the risk insured for a consideration in the form of premiums to be paid by the latter. 1992 to May 22.Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind. . would be in the form of nominal damages .. 1991 to May 22. petitioner returned to respondent the five manager's checks that it tendered. or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown. acts solely thru its employees. Areola is left without a cause of action on which to predicate his claim for damages. such as respondent insurance company. and at the same time rejected respondent's claim for the reasons (a) that the policies had expired and were not renewed. June 15. Respondent’s Argument . representing premium for the renewal of the policies from May 22. Thus. 1992. . FACTS . such as respondent insurance company.Reinstatement effectively restored Areola to all his rights under the policy.Reciprocal obligations are those which arise from the same cause and in which each party is both a debtor and a creditor of the other.Malapit's actuations are therefore not separate and distinct from that of Prudential’s. of its intention not to renew the policies. . that reinstatement being equivalent to fulfillment of its obligation. 1992.On April 6.On June 13.Prudential argues that where reinstatement. .Under the circumstances of instant case. YES 2. petitioner issued five (5) insurance policies covering respondent's various property described therein against fire.On April 15. his receipt of said premiums is receipt by private respondent insurance company who.A corporation. . respondent presented to petitioner's cashier at its head office five (5) manager's checks in the total amount of P225. Such a claim finds no support in our laws on obligations and contracts. 1910.Respondent company should be reminded that a contract of insurance creates reciprocal obligations for both insurer and insured. v.e. UCPB GENERAL INSURANCE MASAGANA TELAMART.753. fire razed respondent's property covered by three of the insurance policies petitioner issued. RTC’ s DECISION is REINSTATED. WON the subsequent act of reinstating the wrongfully cancelled insurance policy obliterate whatever liability for damages Prudential has HELD 1. the injured party. prior to the filing of the complaint.The nature of damages to be awarded.Moreover. After all damage had already been inflicted on him and no amount of rectification could remedy the same.Subsequent reinstatement could not possibly absolve respondent insurance company from liability. DAMAGES: . As for any obligation wherein the agent has exceeded his power. the equitable relief sought by Areola was granted at an opportune moment. ISSUES 1. 308 SCRA 259 PARDO.Although the erroneous cancellation of the insurance policy constituted a breach of contract. .

Respondent also asserts that the principle of estoppel applies to Petitioner. this appeal. 1991 up to August 23. as follows. . . petitioner appealed to the Court of Appeals (CA). B. INC.000. Inc.” The Court resolved . 1992. (b) 25% of the total amount due as and for attorney's fees. on March 10. Branch 58. and that the acceptance of the late premium payment suggested an understanding that payment could be made later. a civil complaint against petitioner for recovery. 1993.00 as necessary litigation expenses. Despite its awareness of Section 77 Petitioner persuaded and induced Respondent to believe that payment of premium on the 60. MASAGANA TELAMART.. the dispositive portion of which reads: "WHEREFORE.. 1992. the Regional Trial Court. that petitioner was not liable to -respondent for insurance proceeds under the policies because at the time of the loss of respondent's property due to fire. (d) the costs of suit.to 90-day credit term for the renewal of its policies. The Code itself. in Section 78. representing the face value of the policies covering respondent's insured property razed by fire. B. It argues that both the trial court and the Court of Appeals overlooked the fact that on 6 April 1992 Petitioner sent by ordinary mail to Respondent a notice of non-renewal and sent UCPB GENERAL INSURANCE CO.In its decision of 15 June 1999. 1991 to May 22. 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 later date after the occurrence of the risk (fire) insured against HELD NO . 1992. Most insurance companies. D and E. C. including Petitioner.Respondent likewise disagrees with its ruling that parties may neither agree expressly or impliedly on the extension of credit or time to pay the premium nor consider a policy binding before actual payment. 1993. respondent was allowed a 60.753. the SC defined the main issue to be “whether the fire insurance policies issued by petitioner to the respondent covering the period from May 22.In due time. . ordering defendant to deliver forthwith to plaintiff the said replacement-renewal policies. C. extension of credit terms in premium payment has been the prevalent practice in the insurance industry.00 representing the latter's claim for indemnity under Exhibits A. INC. Hence. 1991 to August 9.Petitioner filed an opposition to the Respondent’s motion for reconsideration. it has implicitly agreed to modify the tenor of the insurance policy and in effect waived the provision therein that it would pay only for the loss or damage in case the same occurred after payment of the premium. D and E effective and binding for the duration May 22.000. Any agreement to the contrary is void.645. and Tibay v. (EN BANC) 356 SCRA 307 DAVIDE. Accordingly. of P18. 2001 v. and the award of attorney's fees was reduced to 10% of the total amount due. "(2) Declaring plaintiff to have fully complied with its obligation to pay the premium thereby rendering the replacement-renewal policy of Exhibits A. respectively. it reversed and set aside the decision of the Court of Appeals. and. since the premiums were paid within the 60. in fact it accepted payments within 60 to 90 days after the due dates. B & C and/or its replacement-renewal policies. 1992 and August 9. The CA promulgated its decision affirming that of the Regional Trial Court with the modification that item No.to 90-day credit term was perfectly alright. The courts below correctly found that no notice of non-renewal was made within 45 days before 22 May 1992. before respondent's tender of premium payment. Thus.On July. and for attorney's fees. Makati. rendered decision. v. or before the expiration date of the fire insurance policies. the policies in question were renewed by operation of law and were effective and valid on 30 June 1992 when the fire occurred. in force from August 22. It urges the Court to take judicial notice of the fact that despite the express provision of Section 77 of the Insurance Code. is not valid and binding until actual payment of the premium. other than life. extend credit terms because Section 77 of the Insurance Code is not a prohibitive injunction but is merely designed for the protection of the parties to an insurance contract. Court of Appeals. 1992. Court of Appeals. Makati City. South Sea Surety and Insurance Co.95 (refused by the defendant) as full payment of the corresponding premiums for the replacement-renewal policies for Exhibits A. and "(4) Ordering the defendant to pay plaintiff the sums of. (a) P18. It alleges in the motion that the SC had made in the decision its own findings of facts.645. . 1991 to May 22. . 3 of the dispositive portion was deleted. “xxx ” . the policies had long expired and were not renewed. "(1) Authorizing and allowing the plaintiff to consign/deposit with this Court the sum of P225. and. after its motion to dismiss had been denied. 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.to 90day credit term. After due trial. 1992 until May 22. (c) P25. By extending credit and habitually accepting payments 60 to 90 days from the effective dates of the policies. judgment is hereby rendered in favor of the plaintiff and against the defendant.000.Respondent seasonably filed a motion for the reconsideration of the adverse verdict. ISSUE WON the fire insurance policies issued by petitioner to the respondent covering the period May 22. NATURE Motion for reconsideration of the decision of the Supreme Court.00.On October 23. which are not in accord with those of the trial court and the Court of Appeals. Court of Appeals. respondent filed with the Regional Trial Court. Disposition Judgment reversed and set aside Page 35 this issue in the negative in view of Section 77 of the Insurance Code and its decisions in Valenzuela v.INSURANCE that the fire occurred on June 13. 1992. authorizes the validity of a policy notwithstanding non-payment of premiums. issued originally or on renewal. April 4. It alleged that the complaint "fails to state a cause of action". petitioner filed an answer to the complaint. Branch 58. "(3) Declaring Exhibits A & B. FACTS . 21. premises considered. .An insurance policy. It held that following previous practice. 1992 had been extended or renewed by an implied credit arrangement though actual payment of premium was tendered on a later date and after the occurrence of the (fire) risk insured against.

An essential characteristic of an insurance is its being synallagmatic.Finally. Estoppel bars it from taking refuge under said Section since Respondent relied in good faith on such practice.Assuming arguendo that the 60. In turn. wherein we 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. Any acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment.By weight of authority. No. 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. Moreover. Respondent’s argument that Section 77 is not a prohibitive provision finds no authoritative support. in case of a life or industrial life policy whenever the grace period provision applies. Notwithstanding any agreement to the contrary. 3540. namely.to 90-day credit term for the payment of premiums despite its full awareness of Section 77. The first exception is provided by Section 77 itself. NATURE Petition for Review on Certiorari of the Decision of the then Court of Appeals (CA-G. respondent could not still invoke estoppel to back up its claim. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the peril insured against.) 134 SCRA 155 MELENCIO-HERRERA.to 90-day credit term for the payment of premiums HELD NO . The second is that covered by Section 78 of the Insurance Code. which had consistently granted a 60. R. No. nor can it give validity to what the law so procribes as a matter of public policy. Petitioner had been granting Respondent a 60. PARDO [dissent] . and the copy thereof allegedly sent to Zuellig was ever transmitted to Respondent. Tuscany has provided a fourth exception to Section 77. . The agreement binds the parties. are indeed duly established: 1. Court of Appeals. 77. 2. denying recovery on an insurance policy. But there are exceptions to Section 77. except in the case of a life or an industrial life policy whenever the grace period provision applies. This must be complied with in the utmost good faith.to 90-day credit term and were duly accepted and received by Petitioner’s cashier.This Section is a reproduction of Section 77 of P.95 were paid by Respondent within the 60.D.Section 77 of the Insurance Code of 1978 provides: SEC. 4. this Section has its source in Section 72 of Act No. 58917-R). and that is. morals. . neither can it be successfully invoked to create a primary liability. 1306. Any agreement to the contrary is void as against law and public policy. CA (DOMESTIC INSURANCE COMPANY OF THE PHILS. which provides: SEC.The following facts. . terms and conditions as they may deem convenient. provided they are not contrary to law.to 90-day credit term within which to pay the premiums on the renewed policies. unless there is clear agreement to grant the insured credit extension of the premium due. For years. There was no valid notice of non-renewal of the policies in question. . January 17. as there is no proof at all that the notice sent by ordinary mail was received by Respondent. approved on 21 June 1963.INSURANCE by personal delivery a copy thereof to Respondent’s broker. thereby reversing the judgment of the Court of First Instance . as found by the trial court and the Court of Appeals. SEPARATE OPINION VITUG . The actual payment of premiums is a condition precedent to the validity of an insurance contract other than life insurance policy.753. Estoppel then is the fifth exception to Section 77. 612 (The Insurance Code) promulgated on 18 December 1974. recovery on the policy should be allowed even though the premium is paid after the loss but within the credit term. payment of the premium due on the effective date of renewal should first be made. Article 1306 of the Civil Code provides: ART.A third exception was laid down in Makati Tuscany Condominium Corporation vs. public order or public policy. that the insurer may grant credit extension for the payment of the premium. That agreement is not against the law. . . it would be unjust and inequitable if Page 36 recovery on the policy would not be permitted against Petitioner. v. no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid. 3. which read: SEC. A reading of Section 66 of the Insurance Code readily shows that in order for an insured to be entitled to a renewal of a non-life policy. good customs. morals.A. ACME SHOE RUBBER & PLASTIC CORP. No. Estoppel cannot give validity to an act that is prohibited by law or against public policy. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. 77 of the Insurance Code of 1978 must be strictly applied to Petitioner’s advantage despite its practice of granting a 60. a highly reciprocal contract where the rights and obligations of the parties correlate and mutually correspond. Both courts likewise ignored the fact that Respondent was fully aware of the notice of non-renewal. ISSUE WON Sec. good customs. 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.It can be seen at once that Section 77 does not restate the portion of Section 72 expressly permitting an agreement to extend the period to pay the premium. (Underscoring supplied) . estoppel cannot create a contract of insurance. The contracting parties may establish such stipulations clauses. 2427 otherwise known as the Insurance Act as amended by R. notwithstanding any stipulation therein that it shall not be binding until premium is actually paid. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid. and these policies were annually renewed. Respondent is required by law and by express terms of the policy to give immediate written notice of loss.to 90-day credit has been agreed between the parties. public order. that of the Court of Appeals affirmed in toto. Petitioner had been issuing fire policies to the Respondent. Zuellig. 78.An assured’s failure to give notice of the fire immediately upon its occurrence blatantly showed the fraudulent character of its claims. 1985. or public policy. so far as to make the policy binding. Disposition Judgment reconsidered and set aside. The premiums for the policies in question in the aggregate amount of P225. 72.

the properties burned were not covered by insurance. the policy was automatically cancelled and there was no insurance coverage to speak of as of the date of the fire on October 13. INSURER issued a Renewal Receipt for the period of May 15. 1965 to December 5. before RA 3540. ACME continued to insure its properties with INSURER in the amount of P200.The pertinent provision of Republic Act No. 3540 reads: "Sec. and in accordance with the express terms of the Promissory Note that it had signed. 1964. . THE CAPITAL INSURANCE & SURETY CO. Unhappily the instant case is one where the insurer has the law on its side. the Jan 8. 1964 to May 15. 1964 payment was for the period 1964-1965 and that INSURER had no right to apply it to the period 1963-1964 because under RA 3540. 15th May. Without pronouncement as to costs.What became automatically cancelled by R. 11 SCRA 63 ABAD SANTOS.TC found INSURER liable for P200k and opined that there was a clear intention on the INSURER's part to grant ACME a credit extension for the payment of the premium due. 3540. .) . On May 14. mutuality of obligation required that it should be liable on the policy. 1963. 1982.On May 15. . September 30.000 for the period May 15. 1963. INSURED still failed to pay the premium.26 yet to be paid) with a stamped note that says that the insurance will be deemed valid and binding only when the premium and documentary stamps have actually been paid in full and duly acknowledged in an official receipt. machines and general merchandise with Domestic Insurance Company (INSURER) since 1946. . The credit extension was granted for 90 days only.On October 13. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the perils insured against.331. and requested payment of the corresponding premium. as amended by R.A.Arce (INSURED) owned a residential house which was insured with the appellant COMPANY since 1961. Page 37 Disposition The judgment under review is hereby affirmed. ACME filed insurance claim but the INSURER disclaimed liability on the ground that as of the date of loss. (Laws have no retroactive effect unless the contrary is provided. If they are able to pay the whole amount before the 90-day period. CA reversed TC and dismissed the suit on the ground that. 1963. 3540 reads: "SEC. at Caloocan City. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid. 1964. 72. The Trial Court's opinion that there was a clear agreement to grant ACME credit extension for 1964-1965 is negated by ACME's Promissory Note binding itself to pay within ninety days from the effective date of this policy. The INSURED sued the COMPANY for indemnity. No. the house of the INSURED was totally destroyed by fire.Not having paid the 1964-1965 premium within the extension granted. and that to allow the INSURER to apply the premium ACME paid on January 8. Branch XII.On May 14. 1962. signed a promissory note saying that they promise to pay the premium and documentary stamps and agreed to the automatic cancellation penalty for not complying. (ACME should pay short period premium for 90 days before the period expires.A. Thereafter. Upon INSURED's presentation of claim for indemnity. ACME's properties were not insured and the INSURER could not be held liable for any indemnity as a result of the loss. .Sec.) Therefore. ACME’s properties were completely destroyed by fire. PEDRO ARCE v. After the lapse of the requested extension. In November 1965. . 1964. 1964 payment was properly applied to the 19631964 premium. 1965 (for renewal premium of P3. 1964. however. (So wala na by August 16. . 72. 1964.ACME Shoe Rubber and Plastic Corporation (ACME) had been insuring yearly against fire its building." . .A. 72 of the Insurance Act. through its President. . An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. the promissory note it signed did away with such credit arrangement. They are well aware that many insurance companies have fallen into the condemnable practice of collecting premiums promptly but resort to all kinds of excuses to deny or delay payment of just claims.If ACME was granted credit extensions in the past. 1964. 3540 was the 1964-1965 policy for ACME's failure to pay the premium within the 90-day extension granted. Anticipating that the premium could not be paid on time. the policy was void and INSURER could have validly disclaimed liability for loss had one occurred then.On January 8.331. . which had allowed such recovery. 1962 up to May 15. FACTS .The trial court held the COMPANY liable to indemnify the INSURED on the ground that since the COMPANY could have demanded payment of the premium. the Renewal Receipts issued by INSURER did not contain the auto-cancellation after 90 days note. and pursuant to R. 1964. the INSURED asked for an extension which was granted by the COMPANY. 1963 to May 15. ISSUE WON the COMPANY can be held liable on its policy HELD NO. INSURER issued Renewal Receipt to cover the period May 15. the situation had changed by the passage of the RA: no policy could be valid and binding unless and until the premium thereof had been paid. ACME was given 90 days to pay otherwise the policy would automatically become void and ineffective. Also. INC. ACME paid P3. 1964.On May 26. The INSURER applied the payment as renewal premium for the period of May 15.ACME claims that the January 8. 1963 to May 15.26 as premium. ISSUE WON the premium payment for 1964-1965 was paid HELD NO .1966. 1963. the automatic termination won’t apply anymore). the COMPANY sent to the INSURED a Renewal Certificate to cover the period from December 5.. FACTS . . 1964. unless there is clear agreement to grant the insured credit extension of the premium due. 2963 and was put into effect on Oct 1. as of the moment of loss.The Court commiserates with the INSURED. No. . By 1964.RA 3540 was approved on June 20. 1964. It could not be applied retroactively to the renewal of the policy for the 1963-1964 period because said policy was renewed on May 14. he was told that no indemnity was due because the premium was not paid. ACME. unless there is clear agreement to grant credit extension for the . No. NATURE Appeal from CFI decision on question of law.INSURANCE of Rizal.

When the policy was delivered. Pinca’s property was completely burned. Significantly. Disposition The decision of the CA is AFFIRMED in toto. waived the provision therein that it would only pay for the loss or damage in case the same occurs after the payment of the premium. Her demand for payment having been rejected by MICO. 1975 NATURE Petition for review of a decision of the CA affirming the decision of the CFI of Manila FACTS . an agent of MICO. 1961 and the same was dishonored by the bank for lack of funds. Capital Insurance decided to hold the same for thirty-five (35) days before presenting it for payment. which was remitted to MICO. 1982. products and accessories located at Sheridan Street. After the fire. 18. ISSUES Procedural 1. Considering that the insurance policy is silent as to the mode of payment. 72 has radically changed the legal regime in that unless the premium is paid there is no insurance. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid. petitioner Capital Insurance & Surety Co. v. Having held the check for such an unreasonable period of time.Tender of draft or check in order to effect payment that would extinguish the debtor's liability should be actually cashed. 1961. Inc. ARNALDO and PINCA 154 SCRA 672 CRUZ. 15 days after the notice.. . Records show MICO received Arnaldo’s decision on April 10. 1961 and Plastic Era had sufficient funds to cover it as of January 19. the insurance company shall make good all such loss or damage in an amount not exceeding P100. Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within 30 days from the effective date of policy.000.It is obvious from both the Insurance Act. at about 4:00 to 5:00 o'clock in the morning. Plastic Era failed to pay the corresponding insurance premium. Arce accepted the check.Irrelevant facts: The premium costs P38. Rizal.INSURANCE premium due. the appellee's complaint is dismissed. 24 Adora. but still sued the company. Disposition The decision of the court a quo is reversed. the property insured by Plastic Era was destroyed by fire. Plastic Era delivered to Capital Insurance. PLASTIC ERA CO. WON the petition should be dismissed for late filing Substantive 2. it has implicitly agreed to modify the tenor of the insurance policy and in effect. However.00 postdated January 16. the INSURED was given a grace period to pay the premium but the period having expired with no payment made. hence this petition from MICO. and the stipulation of the parties that time is of the essence in respect of the payment of the insurance premium so that if it is not paid the contract does not take effect unless there is still another stipulation to the contrary. Pinca went to the Insurance Commission. WON a contract of insurance has been duly perfected between petitioner and respondent 2. Public respondent Arnaldo. issued fire insurance for the amount of P14. effective July 1981-1982.On June 7. By so doing.. In the instant case. the latter refused to accept it. On Dec. 1961.Prior to the amendment (italicized portion above). The policy expressly provides that if the property insured would be destroyed or damaged by fire after the payment of the premiums. Capital Insurance tried to deposit the check only on February 20. v. Malayan Insurance Co. the reglementary period began to . the Insurance Commissioner. If the delivery of the check of Plastic Era to Capital Insurance were to be viewed in the light of the foregoing. No special pronouncement as to costs. raw materials. no payment of the premium had been effected. July 18. Pinca. 22760 but the latter refused for the reason that. the COMPANY issued a check for P300 to Arce as donation. On Feb. MICO filed a MFR on April 25 which was denied on June 4. instant petition was filed on July 2. . Capital Insurance is deemed to have accepted the promissory note in payment of the premium. October 12. On Jan. This rendered the policy immediately operative on the date it was delivered. in partial payment of the insurance premium.. . a check for the amount of P1. at anytime between the 15th day of December 1960 and one o'clock in the afternoon of the 15th day of December 1961. 65 SCRA 134 MARTIN. MICO returned Pinca’s payment to Adora on the ground that her policy had been cancelled. equipments. delivered to the respondent Plastic Era Manufacturing Co.00 as indemnity for the loss of the insured property under Policy No.000. YES . But the amendment to Sec.10.Petitioner invokes Sec 416 of the Insurance Code which grants it 30 days from notice of the Insurance Commission within which to appeal by certiorari with the Court.. WON there was a valid insurance contract at the time of the loss 3. received Pinca’s payment. On January 8. 22760 wherein the former undertook to insure the latter's building." . sustained Pinca. WON Adora was authorized to receive such payment 4.000. YES . Plastic Era failed to pay the insurance premium.On December 17. MICO later allegedly cancelled the policy for non-payment of the premium and sent a notice to Pinca. an insurance contract was effective even if the premium had not been paid so that an insurer was obligated to pay indemnity in case of loss and correlatively he had also the right to sue for payment of the premium. as amended. Mandaluyong. MICO received notice of this denial on June 14. he cannot insist that the COMPANY is nonetheless obligated to him. 5.00. 1981. Where the check is Page 38 held for an unreasonable time before presenting it for payment. 1960. WON an adjuster is indispensable in the valuation of the loss HELD Procedural 1. the insurer may be held estopped from claiming a forfeiture if the check is dishonored. 1987 FACTS . Inc.Although the check was due for payment on January 16. In less than a month Plastic Era demanded from Capital Insurance the payment of the sum of P100. 2. CAPITAL INC. MALAYAN INSURANCE CO. (MICO). INC. YES . Capital Insurance was estopped from claiming a forfeiture of its policy for non-payment even if the check had been dishonored later.000 on the property of private respondent.Two days after the insurance premium became due. WON the dishonored check constituted payment HELD 1. ISSUES 1. MICO filed its MFR on April 25. its open Fire Policy No. 1961. among others.

39 of B. WON. the amount of the loss may be determined on the basis of such proof offered by the insured.It is undisputed that payment of premium was made. company. credits. this is not applicable in the instant case as payment was eventually made. WON the making of premium advances. . Disposition petition is DENIED MANUFACTURERS LIFE INSURANCE CO. Automatic Premium Loan.Sec. compounded yearly. 5. Payment was thus legally made on the original transaction and validly received by Adora. ." . June 29. '11.From January 1. WON premium advances made by plaintiffappellant under the automatic premium loan clause of its policies are premiums collected' by the Company subject to tax 2. Here.12 pursuant to SEC.A valid cancellation requires the following conditions based on Sections 64-65 of the Code: prior notice which must be based on the occurrence of one or more of the grounds mentioned in Sec 64 (in this case. Pinca did not have to prove this since the strict language of Sec 64 requires that MICO ensure the cancellation was actually sent to and received by the insured. Since the petition was filed only on July 2. and therefore it is not amenable to the tax therein provided. it was already 18 days late by July 2. Alternatively it invokes Rule 45 of the Rules of Court for certiorari but the petition still exceeds the 15 day limit from the June 13 notice. Plaintiff head office at Toronto applied the provisions of the automatic premium loan clauses upon the nonpayment of the corresponding premiums by the people who subscribed to the insurance. invoke Sec. This is furthered by the fact that Adora had earlier told her to call him anytime she was ready with her payment. It is duly registered and licensed to engage in life insurance business in the Philippines. it. National Internal Revenue Code6 . 1946. YES . Cash and Paid-Up Insurance Values. and there is no indebtedness to the Company on the written request of the insured * * *. . without further requests. long after her house had burned down—this makes petitioner’s motives highly suspect. 15 payment only on Feb. who was not informed of the alleged cancellation and thus saw no reason to reject the payment. 4. be paid in whole or in part. it was tardy by 4 days. were done in Toronto. Page 39 .MICO also suggests that Pinca knew the policy had been cancelled and was paying the premium in order to renew the policy. shall be a first lien on this Policy in the Company's favour in priority to the claim of any assignee or any other person.917. The accumulated lien may at any time. non-payment of premium).069.INSURANCE run again after June 13. and one per cent. . 1942 to December 31. Canada 'When the premium falls due and is not paid in cash within the month's grace. on the other hand. Substantive 2. compounded yearly. ISSUES 1. while the Policy is in force. or any substitute for money but premiums refunded within six months after payment on account of rejection of risk or returned for other reason to person insured shall not be included in the taxable receipts * * *.255. and.Meer. The certification of the Integrated National Police as the extent of the loss should suffice. less all indebtedness to the Company on this Polley an the date of ouch surrender. for expenses.PLAINTIFF’s MAIN CONTENTION: when it made premium loans or premium advances by virtue of the non-forfeiture clauses. it must state the ground(s) for cancellation and the insurer must furnish details upon the request of the insured. indicating an understanding between the parties that payment could be made later. or (2) endorse this Policy as a Non-Participating Paid-up Polley for the amount as specified In Column (B) of the Table of Guaranteed Values * * *. who flatly denied receiving one. treat the premium then due as paid. . 3. and the amount of such premium.254. The Court also finds it strange that MICO only sought to return Pinca’s Jan. What’s really important here is the definition of CASH SURRENDER VALUE). MEER 89 PHIL 351 BENGZON. 1951 NATURE APPEAL from a judgment of the Court of First Instance of Manila FACTS (this is a tax case. if any subsequent premium is not paid when due. The net amount of premiums advanced (by the company) or loaned (to the insured) as payment for the premium due totaled P1. it did not collect premiums within the meaning of the above sections of the law. after the effective date of the policy. -Respondents.Company protested the assessment. NO . 255. Taxes on insurance premiums. MICO’s acknowledgement of Adora as its agent thus defeats its contention that he was not authorized to receive payments on its behalf. v. or corporation (except purely cooperative companies or associations) doing insurance business of any sort in the Philippines a tax of one per centum of the total premiums collected * * * whether such permiums are paid in money. but paid the taxes anyway. at the due date of such premium. maintains a branch office in Manila. notes.-At the end of the third policy year or thereafter.MICO claims to have sent a notice to Pinca. upon the legal surrender of this Policy to the Company while there is no default in premium payments or within two months after the due date of the premium in default. YES . the petition is still late. So whichever is applied.Plaintiff issued a number of life insurance policies in the Philippines containing stipulations referred to as NONFORFEITURE CLAUSES5 5"'8. if the Cash Value of this policy and of any bonus additions and dividends left on accumulation (after deducting any accumulated indebtedness) be less than the premium then due. credits. Extended Insurance-After the premiums for three or more full years have been paid hereunder in cash. granting for the sake of argument that it amounted to collection of premiums. 306 of the Insurance Code provides that any insurance company that delivers a policy to its agent is deemed to have authorized such agent to receive payment of premium on its behalf.CFI: Dissmiss complaint . in the application of the automatic premium loan clause of plaintiff-appellant's policies.In absence of fraud. '10.P. the notice must be written and mailed to the address on the policy. . It is to be noted that the premium invoice was stamped “Payment Received”. WON the collection of the alleged deficiency premium taxes constitutes double taxation 4. However. Petitioner relies heavily on Sec 77 of the Insurance Code to contest this." 6"SEC. or any substitutes for money 3. which have been alloted to this Policy. notes. A close study of the transcripts show. without further request. there is 'payment in money. Then they filed a complaint to recover money paid under protest for taxes . Since the MFR was filed only 15 days after receiving notice of the decision.98. It was engaged in such business in the Philippines for more than five years before and including the year 1941. the Collector of the National Internal Revenue assessed the net amount of premium at P17.Manufacturers Life Insurance Company is a duly organized corporation which has its head office at Toronto. continue this insurance in force for a period * * *. In which event the company will. 129 which pegs the period for appeal from decisions of any court in all cases at 15 days from the notice of the decision appealed from.-This Policy shall not lapse for non-payment of any premium after it has been three full years in force. the said provision requiring payment of premium as soon as the thing is exposed to the peril insured against and that the policy is invalid without it. the Cash Value of this Policy and of any bonus additions and dividends left on accumulation (after deducting any indebtedness to the company and the interest accrued thereon) shall exceed the amount of said premium. however. But due to the exigencies of the war It closed the branch office at Manila during 1942 up to September 1945.-There shall be collected from every person. the Company will. the Company will (1) grant a cash value as specified in Column (A) increased by the cash value of any bonus additions and dividends left on accumulation. with interest from its actual due date at six per cent per annum. It is a well-known principle under the law of agency that payment to an authorized agent is equivalent to payment to the principal himself. that Pinca only meant to renew the policy had it been cancelled but not if it was still in effect—it was conditional.

1951: Plaintiff sent a letter enclosed with a money order in the amount of P65. 3. 26. still it was practically and legally.Based on the example given by the plaintiff. without having previously taken any steps indicating withdrawal in good faith from this field of economic activity. "A" paid the premium for the eleventh year.000 from plaintiff-appellant Company and pays an annual premium of P250. 1958 NATURE Appeal from judgment of CFI FACTS . 20. NO . exempts it from payment of premium taxes corresponding to said period HELD NOTE (example given by the plaintiff): "Suppose that 'A'.500 and on this amount plaintiff-appellant pays the corresponding taxes under section 255 of the National Internal Revenue Code. 2. giving them 60 days from the date of lapse to file an application for reinstatement. 4. and Mrs. . What is important. the amount being a loan to the policyholder1 who could discharge it at any time with interest at 6 per cent.May 5. . 1950: For the sum of P5.Feb. THERE WERE NO NEW FUNDS ADDED TO THE COMPANY'S ASSETS”: Cash surrender value "as applied to a life insurance policy. defendant advised Rufino that its main office had approved the application and that the reinstatement of the lapsed policy was subject to the payment of the remaining premium balance of P65. therefore. The premium was therefore paid by means of a "note" or "credit" or "other substitute for money" and the tax is due because section 255 above quoted levies taxes according to the total premiums collected by the insurer "whether such premiums are paid in money. notes. NO . with the stipulation that the premiums are to be paid semi-annually. .the insurer agreed to consider the premium paid on the strength of the automatic loan. . 6.000.No constitutional prohibition against double taxation. credits or any substitute for money..The loans are made to policyholders in the Philippines. inclusive. in the same amount. through its branch secretary. .000. that value and the company's liability is thereby diminished pro tanto. 1945. 1. .B. not on the premium. 30 years of age.Jan. Page 40 ANDRES v. but not of the premium that had already been paid (advanced by the insurer). in the amount of P165. we hereby affirm it with costs. is the amount of money the company agrees to pay to the holder of the policy if he surrenders it and releases his claims upon it. Payment was denied by the defendant. It is therefore a liability of the company to the insured. . This debt he could repay either by later remitting the money to the insurer or by letting the cash value compensate for it. Now then.May 15.28. . 5. the P250 for the 11th year). CROWN LIFE INSURANCE 102 Phil. Approval of appellant's position will enable foreign insurers to evade the tax by contriving to require that premium payments shall be made at their head offices. the insurer treated the premium then over due as paid from the cash value. NO . The insurance contract.15 paid by Rufino as well as a Certificate of Reinstatement.ON ARGUMENT THAT IF THE CREDIT IS PAID OUT OF THE CASH SURRENDER VALUE. Suppose also that the cash value of said policy after the payment of the 10th annual premium amounts to P1. The debt may also be deducted from the amount of the policy should "A" die thereafter during the continuance of the policy. 1951: Severa Andres died of dystocia. The insurer “became a creditor” of the loan.L. operating in this country by collecting premiums on its outstanding policies.ON ARGUMENT THAT THE ASSETS OF THE INSURER REMAINED THE SAME AFTER THE APPLICATION OF THE AUTOMATIC PREMIUM LOAN CLAUSE: there was an increase in assets in the form of CREDIT for the advances made (in the example. irrespective of the place of its organization or establishment.15 were paid by Rufino but the premium for the third semester.Although during those years the appellant was not open for new business because its branch office was closed. 1951: Defendant sent a letter with official receipt of the P165. YES . The insurer is entitled to collect interest on the loan. Jan. 'A' pays the first ten yearly premiums amounting to P2." (Cyclopedia Law Dictionary 3d. . but the surrender value is always a lesser sum than the total amount of premiums paid. wrote to Mr. 13.Feb. WON the fact that plaintiff-appellant was not doing business in the Philippines during the period from January 1. 1077. YES . for the remaining balance due. Crown Life. 1951: Rufino presented a death claim as survivor-beneficiary of his deceased wife.) The cash value or cash surrender value is therefore an amount which the insurance company holds In trust for the insured to be delivered to him upon demand. 1951: Plaintiff and his wife executed a Statement of Health and application for reinstatement of the aforesaid policy. 1942 to September 30. enclosed with a money order for P100.15 was overdue. . ed. incurring the risks and/or enjoying the benefits consequent thereto. 1951. It is enough that the insurer is doing insurance business in the Philippines. was not paid. who in turn pay therewith the premium to the insurer thru the Manila branch. the law does not contemplate premiums collected in the Philippines. J." When on the eleventh year the annual premium fell due and the insured remitted no money within the mouth grace. Crown Life later sent another letter telling the spouses Andres that their insurance policy was no longer in force.INSURANCE 5. The more premiums the insured has paid the greater will be the surrender value. Upon acceptance. but in turn he became a debtor of the company for the sum of P250. continued in force for the eleventh year.May 3. 1951: Plaintiff wrote a letter to the defendant. 919 REYES. secures a 20-year endowment policy for P5. Andres advising them that their insurance policy lapsed on Dec.15. defendantappellee Crown Life issued an insurance policy in the name of plaintiff-appellant Rufino and his wife. Disposition finding no prejudicial error in the appealed decision. the insurer collected the amount of P250 as the annual premium for the eleventh year on the said policy when it loaned to “A” the sum of P250. when the company's credit for advances is paid out of the cash value or cash surrender value. . 1950 and the amount of P165.June 7.Feb.The premiums for the 1st and 2nd semester of the 1st year. contracted pelvis.

It found subsequent letters sent by defendant indicating that they insisted on full payment of the premium before the policy was reinstated and that defendant did not consider partial payment as sufficient consideration for the reinstatement. has been validly and completely reinstated after said date (Was there a perfected contract of reinstatement after the policy lapsed due to non-payment of premiums?) HELD NO Ratio The stipulation in a life insurance policy giving the insured the privilege to reinstate it upon written application does not give the insured absolute right to such reinstatement by the mere filing of an application. . . he was authorized to solicit and sell in behalf of Philamgen all kinds of non-life insurance. However. wherein it made statements such as: “If you are unable to pay the full amount immediately. . The Court reiterated the rule that a waiver must be clear and positive. 1954: CFI rendered a decision absolving the defendant company from any liability on the ground that the policy had lapsed and it was not reinstated at the time of the plaintiff’s wife’s death.The plaintiff did not comply with the last condition. (CA ordered Valenzuela to pay Philamgen the amount of One Million Nine Hundred Thirty-Two Thousand Five Hundred Thirty-Two and 17/100 Pesos (P1.6 Million from the P4. The Company has the right to deny the reinstatement if it is not satisfied as to the insurability of the insured and if the latter does not pay all overdue premiums and all other indebtedness to the Company. ISSUE WON the insurance policy. On the other hand.17) with legal interest) ISSUES . CA (PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY. On the face of such facts.4 Million from which he was entitled to a commission of 32%. (C) if the rate of premium depends upon the age of the Beneficiary.532. there should likewise be a production of evidence of his or her good health. . 1951.” The Court found the statements to be too vague and indefinite to indicate an intention on the insurer’s part to waive the full payment as prerequisite to the reinstatement of the lapsed policy. on Feb. should first be paid. As such. together with interest at 6%.4 Million insurance coverage of the Delta Motors. which has been in a state of lapse before May 3.In 1977. VALENZUELA v. Reasoning . Philamgen and its officers took drastic action against Valenzuela. They: (a) reversed the commission due him by not crediting in his account the commission earned from the Delta Motors. In its answer. the conditions set forth in the policy for reinstatement as provided in the contract itself are the following: (A) application shall be made within 3 years from the date of lapse. the intent to waive shown clearly and convincingly. October 19. . he only remitted the balance of P65.As found by the lower court. Crown Life disclaimed liability and set forth the special defense that the aforementioned policy had already lapsed. send as large amount as possible and advise us how soon you expect to be able to pay the balance. (c) threatened the cancellation of policies issued by his agency. and (F) all overdue premiums and other indebtedness in respect of the policy. the Delta Motors.00 were paid directly to Philamgen and Valenzuela's commission to which he is entitled amounted to P632. (Division of Electronics Airconditioning and Refrigeration) in the amount of P4.CA: In any event the principal's power to revoke an agency at will is so pervasive. INC. All of these acts resulted in the decline of his business as insurance agent. 1950. 1950. and despite the Company’s reminders.INSURANCE . premium payments amounting to P1.Petitioner Arturo P.Rufino contends that the condition regarding payment of the premium was waived by the insurance Company through its letters.5% from Philamgen under the scheduled commission rates. During the period 1976 to 1978. Inc.Then on December 27.Lower court: the termination of Valenzuela as General Agent was improper because the record will show the principal cause of the termination of the plaintiff as General Agent of defendant Philamgen was his refusal to share his Delta commission. (B) there should be a production of evidence of the good health of the insured. upon expiration of the 31-day grace period. Valenzuela solicited marine insurance from one of his clients. 1978.15 two days after his wife died. (E) there should be no change which has taken place in such good health and insurability subsequent to the date of such application and before the policy is reinstated. (D) there should be presented such other evidence of insurability at the date of application for reinstatement. (b) placed agency transactions on a cash-and-carry basis.946. Philamgen started to become interested in and expressed its intent to share in the commission due Valenzuela on a fifty-fifty basis. Valenzuela refused. 13.737. . Valenzuela did not receive his full commission which amounted to P1. the Company had the right to treat the contract as lapsed and refuse payment of the policy. After the death of the insured the insurance Company cannot be compelled to entertain an application for reinstatement of the policy because the conditions precedent to reinstatement can no longer be determined and satisfied.00.The stipulations of facts render it undisputable that the original policy lapsed for non-payment of premiums on Dec. for he only paid P100 before his wife’s death. Disposition Judgment appealed from is affirmed.Because of the refusal of Valenzuela. Philamgen terminated the General Agency Agreement of Valenzuela. Inc. .Aug. 26. . subject only to the principal's liability for damages. (Philamgen for short) since 1965. compounded annually.932. Plaintiff-Appellant’s failure to remit the balance before the death of his wife operated to deprive him of any right to waive the policy and recover the face value thereof. . 5. that the Supreme Court has consistently held that termination may be effected even if the principal acts in bad faith. FACTS . Plaintiff later appealed to the CA but the same was certified by the CA to the SC for having no question of fact.000 as the face value of a joint 20-year endowment insurance policy issued by defendant in favor of plaintiff and his wife. insurance .) 191 SCRA 1 GUTIERREZ. 1990 NATURE Petition for review of the decision of theca.April 1952: Rufino filed a complaint in CFI against Crown Life for the recovery of the amount of P5. . and in consideration of services rendered was entitled to receive the full agent's commission of 32.886. Inc. and (d) started to leak out news that Valenzuela has a substantial account with Philamgen. Valenzuela is a General Agent of private respondent Philippine American General Page 41 Insurance Company.From 1973 to 1975. we will work out an adjustment most beneficial to you.

should not be freely revocable at the unilateral will of the latter. YES . Chevrolet Motors Co. Worse. 1974). Pilar de Lim. Luis Lim of Zamboanga made application to the Sun Life Assurance Company of Canada for a policy of insurance on his life in the sum of P5. ISSUE WON the contract of insurance between Luis Lim and Sun Life Assurance Company of Canada was perfected HELD NO. November 29. it is clear that Valenzuela had an interest in the continuation of the agency when it was unceremoniously terminated not only because of the commissions he should continue to receive from the insurance business he has solicited and procured but also for the fact that by the very acts of the respondents. Under these circumstances.It is also evident from the records that the agency involving petitioner and private respondent is one "coupled with an interest.000. Luis D. it is evident that the agency ceases to be freely revocable by the sole will of the principal (PROCEDURAL: Where the findings of the Court of Appeals and the trial court are contrary to each other. NO. 117 SE 706. after the issuance of the provisional policy but before approval of the application by the home office of the insurance company. for which an application dated the 6th day of July. PARTIES THERETO. the amount named in the provisional policy. Lim of Zamboanga for P5.INSURANCE 1.On July 6. .After a painstaking review of the entire records of the case and the findings of facts of both the court a quo and respondent appellate court. There was no factual and legal basis for the award. 612.There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only for the interest of the principal but for the interest of third persons or for the mutual interest of the principal and the agent.For the pivotal factor rendering Philamgen and the other private respondents liable in damages is that the termination by them of the General Agency Agreement was tainted with bad faith. which now provides that no contract of Insurance by an insurance company is valid and binding unless and until the premium thereof has been paid. Pilar de Lim brought an action to recover from the Sun Life sum of P5. Should the Company not issue such a policy. Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid premiums.The "provisional policy" reads: "Received (subject to the following stipulations and agreements) the sum of P433.000. The first premium of P433 was paid by Lim. then this agreement shall be null and void ab initio. and the Company shall be held not to have been on the risk at all. . Valenzuela and Philippine American General Insurance Company shall be deemed terminated upon the satisfaction of the judgment as modified. ." Luis Lim died on August 23. SUN LIFE ASSURANCE COMPANY OF CANADA 41 PHIL 263 MALCOLM. Valenzuela would no longer be entitled to commission on the renewal of insurance policies of clients sourced from his agency. CA decision SET ASIDE."Sec."The principal may not defeat the agent's right to indemnification by a termination of the contract of agency (Erskine v. They are estopped by their own positive averments and claims for damages. 612. provided that the Company shall confirm this agreement by issuing a policy on said application when the same shall be submitted to the Head Office in Montreal." Immediately following the words fixing the four months period comes the word "provided" which has the meaning of "if. 1917. CHAPTER V – THE POLICY. therefore. despite the termination of the agency.The principal cause of the termination of Valenzuela as General Agent of Philamgen arose from his refusal to share his Delta commission. 32 ALR 196). the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding . and upon such payment the company issued what was called a ''provisional policy. 185 NC 479. And that the contractual relationship between Arturo P. In these cases. FACTS . 1917.) ." and. . he was made liable to Philamgen in the event the insured fail to pay the premiums due. [N]otwithstanding any agreement to the contrary." Disposition Petition is GRANTED. promulgated on December 18. this Court may scrutinize the evidence on record . no policy or contract of insurance is valid and binding unless and until the premiums thereof have been paid except in the case of a life or industrial life policy whenever the grace period provision applies (P. . . 1917. . .The document it is to be a provisional policy "for four months only from the date of this application. has been made to the Sun Life Assurance Company of Canada. This is in accordance with the precepts in Human Relations enshrined in our Civil Code.The above-mentioned life is to be assured in accordance with the terms and conditions contained or inserted by the Company in the policy which may be granted by it in this particular case for four months only from the date of the application. Under Section 77 of the Insurance Code. . notwithstanding any agreement to the contrary. then he is liable in damages. the Court affirmed the trial court’s findings.D. WON whether or not Philamgen and/or its officers can be held liable for damages due to the termination of the General Agency Agreement it entered into with the petitioners 2.This is buttressed by Section 776 of the Insurance Code (Presidential Decree No. the policy for . but in such case the amount herein acknowledged shall be returned. In his application Lim designated his wife. as the beneficiary. The respondent court erred in holding Valenzuela liable. The decision of the TC REINSTATED with the MODIFICATIONS. 77 . 1920 NATURE Page 42 Appeal from an order of the CFI of Zamboanga sustaining a demurrer to plaintiff's complaint upon the ground that it fails to state a cause of action. as amended otherwise known as the Insurance Code of 1974) .000. . & RIGHTS THEREON DE LIM v. WON petitioners are liable to Philamgen for the unpaid and uncollected premiums HELD 1. 2. being the amount of the first year's premium for a Life Assurance Policy on the life of Mr." Otherwise stated. The records sustain the conclusions of the trial court on the apparent bad faith of the private respondents in terminating the General Agency Agreement of petitioners.The private respondents by the simple expedient of terminating the General Agency Agreement appropriated the entire insurance business of Valenzuela. the plaintiff herein. With the termination of the General Agency Agreement.If a principal acts in bad faith and with abuse of right in terminating the agency.

must be assented to by both parties either in person or by their agents. the present petition. a physician and a housing debtor of DBP applied for membership in the group life insurance plan. Hence. the widow of the decedent Dr. Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. hence. 8. an amount to pay the outstanding indebtedness shall first be paid to the creditor and the balance of sum assured."Should the company not issue such a policy. who issued the death certificate. Leuterio died due to "massive cerebral hemorrhage. DBP collected the debt from the mortgagor and took the necessary action of foreclosure on the residential lot of private respondent. Grepalife. nothing to be passed upon. It is to be noted. like other contracts. In an application form.00 without proof of the actual outstanding mortgage payable by the mortgagor to DBP HELD 1. Q: Are you now. is primarily the proper person to bring suit. Allegedly. in good health? Yes. The contract. . the policy stating that: “In the event of the debtor's death before his indebtedness with the Creditor (DBP) shall have been fully paid. There can be no contract of insurance unless the minds of the parties have met in agreement. the petitioner failed to clearly and satisfactorily establish its defense. then this agreement shall be null and void ab initio. a physician for a heart condition. insured may thus sue. including hypertension. which would vitiate the insurance contract 3.00. if the application is accepted by the company. . Our view is.The trial court committed no error in sustaining the demurrer and dismissing the case." DBP submitted a death claim to Grepalife. Although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him. testified that Dr. CA sustained the RTC decision. Subject to some exceptions. nothing to be completed." Certainly language could hardly be used which would more clearly stipulate that the agreement should not go into effect until the home office of the company should confirm it by issuing a policy. 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. Leuterio. Dr. such non-disclosure constituted concealment that justified the denial of the claim. Page 43 Ratio Insured.A contract of group life insurance was executed between petitioner Great Pacific Life Assurance Corporation (hereinafter Grepalife) and Development Bank of the Philippines (hereinafter DBP). Leuterio concealed that he had hypertension. 1999 NATURE Petition for Review of CA decision FACTS . one that leaves nothing to be done. being the person with whom the contract was made. the latter denied payment thereof. other causes were not ruled out.” When DBP submitted the insurance claim against Grepalife. Leuterio complained of headaches presumably due to high blood pressure. Dr. 1983. . NO . Insurance Code) Reasoning [a] The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance. and although it is expressly made payable to another as his interest may appear or otherwise. 2. .Grepalife issued an insurance coverage of Dr. high blood pressure. 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. As we read and understand the socalled provisional policy. Dr. WON CA erred in not finding that Dr. and the company shall be held not to have been on the risks. Thereafter. WON CA erred in holding petitioner liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of the decedent/mortgagor 2.In Nov. widow. although the policy is taken wholly or in part for the benefit of another person named or unnamed. To re-enforce the same there follows the negative condition .200. cancer. Mejia. In Aug. (See Sec. CA (LEUTERIO) 316 SCRA 677 QUISUMBING. Grepalife insisted that Dr. Reasoning [a] The insured. Dr. 1984. [b] Since a policy of insurance upon life or health may pass by transfer. . Leuterio. Wilfredo Leuterio.Herein respondent Medarda Leuterio. Leuterio was not physically healthy when he applied for an insurance.200. and is therefore liable to pay the proceeds of the insurance. it is merely an offer or proposal to make a contract. diabetes. whether he has an insurable interest or not. The inference was not conclusive because Dr. WON CA erred in holding Grepalife liable for P86. when ISSUES 1. NO Ratio The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. especially where the mortgagee's interest is less than the full amount recoverable under the policy.It is of course a primary rule that a contract of insurance. GREAT PACIFIC LIFE v. Leuterio answered Qs concerning his health condition as follows: Q: Have you ever had. October 13. yet the mortgagor may sue thereon in his own name. . that a contract of insurance was not here consummated by the parties. to the best of your knowledge. interposing the defense of concealment committed by the insured. before it shall take effect." Dr. to be binding from the date of the application must have been a completed contract. that it has received from the person named therein the sum of money agreed upon as the first year's premium upon a policy to be issued upon the application. will or succession to any person. to the extent of his DBP mortgage indebtedness of P86. Leuterio may file the suit against the insurer. Grepalife denied the claim because Dr. In the case at bar. lung. it amounts to nothing but an acknowledgment on behalf of the company. or consulted. and such person may recover it whatever the insured might have recovered. shall then be paid to the beneficiary/ies designated by the debtor.INSURANCE four months is expressly made subject to the affirmative condition that the company shall confirm this agreement by issuing a policy on said application when the same shall be submitted to the head office in Montreal. kidney or stomach disorder or any other physical impairment? No. Leuterio was not autopsied. however that counsel for appellee admits the liability of the company for the return of the first premium to the estate of the deceased. if there is any.RTC ruled in favor of respondent widow and against Grepalife. So long as an application for insurance has not been either accepted or rejected. or determined. filed a complaint with RTC against Grepalife for "Specific Performance with Damages. Leuterio did not disclose he had been suffering from hypertension.

" From this. .195. NO . NO Ratio Cover note is issued with a consideration when. thereby leaving no account unpaid by petitioner due on the insurance coverage. WON the court of appeals erred in holding that private respondent was released from liability under the cover note due to unreasonable delay in giving notice of loss because the court disregarded the proven fact that private respondent did not promptly and specifically object to the claim on the ground of delay in giving notice of loss and. It alleged that the insured had concealed the fact that he had hypertension. 3. Quezon to Okinawa and Tokyo. not a mere application for insurance which is a mere offer. Japan. insuring the said cargo of the plaintiff "Subject to the Terms and Conditions of the WORKMEN'S INSURANCE COMPANY. The petitioner paid in full all the premiums as called for by the statement issued by private respondent after the issuance of the two regular marine insurance policies. the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. ISSUES 1. which must be deemed to include the Cover Note. 1982 FACTS . INC. a death benefit in the amount of P86. hence.April 4. there was no sufficient proof that the insured had suffered from hypertension. it cannot collect the insurance proceeds.the plaintiff secured temporary insurance from the defendant for its exportation of 1. The total cargo insured under the two marine policies accordingly consisted of 1. The proceeds now rightly belong to Dr.The Court ruled this issue based on the clear provisions of the policy. it is clear that Grepalife is liable and that Dr. by express stipulation. in satisfaction of mortgagor's outstanding loan.On January 13.The CFI of Manila ruled in favour of the petitioner. Leuterio's heirs represented by his widow. But it is covered by Cover Note. printed Marine Policy form as filed with and approved by the Office of the Insurance Commissioner. [c] Grepalife had failed to establish that there was concealment made by the insured. c. . Disposition Petition DENIED. it cannot refuse payment of the claim.April 2. . liability on the note would have already arisen even before payment of premium. 1963 .The Court of Appeals reversed the decision of the CFI. which states that: "The policy states that upon receipt of due proof of the Debtor's death during the terms of this insurance. as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums. WON the cover note is null and void for lack of valuable consideration because no separate Page 44 premiums are collected by private respondent on all its cover notes 2. no separate premiums are intended or required to be paid on a Cover Note. The defendant issued on said date Cover Note No. or the equivalent of 1. The mortgagor paid the premium according to the coverage of his insurance.Considering the supervening event that DBP foreclosed in 1995 their residential lot. otherwise. Reasoning a.the adjuster reported that 'the loss of 30 pieces of logs is not covered by the two policies inasmuch as said policies covered the actual number of logs loaded on board. . The plaintiff subsequently submitted a 'Claim Statement' demanding payment of the loss under the second marine cargo policy. Aside from the statement of the insured's widow who was not even sure if the medicines taken by Dr. Hence. If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued.August 23. for it is in a real sense a contract. ft.395 logs.March 19.the defendant wrote the plaintiff denying the latter's claim. 1963 . for no such premium could have been paid. the appellant had not proven nor produced any witness who could attest to Dr.The two (2) regular marine cargo policies were issued by the defendant in favor of the plaintiff. Leuterio's medical history. . 1964 .July 17. As a logical consequence. on the ground that defendant's investigation revealed that the entire shipment of logs covered by the two marines policies were received in good order at their point of destination. if there is any shall then be paid to the beneficiary/ies designated by the debtor. consequently. it would serve no practical purpose in the realm of commerce. probably secondary to hypertension.200. February 25. 1963 . objections on that ground are waived under section 84 of the insurance act HELD 1. Nature of the Cover Note: The fact that no separate premium was paid on the Cover Note before the loss insured against occurred. herein private respondent. Leuterio’s heirs must get the proceeds. the purpose and function of the Cover Note would be set at naught or rendered meaningless. 1963 . and the payment of premiums is one of the terms of the policies. and is supported by the doctrine that . PACIFIC TIMBER EXPORT CORPORATION v. does not militate against the validity of petitioner's contention. the cover note in question is subject to the terms and conditions of the marine policies b.498 bd. This is how the cover note as a "binder" should legally operate.After the issuance of cover note but before the issuance of the two marine policies some of the logs intended to be exported were lost during loading operations in the Diapitan Bay due to bad weather. but after the issuance of the Cover Note. the cover note is made subject to the terms and conditions of the marine policies.250. it did not contain. petitioner Grepalife refused to pay the insurance claim. . an amount to pay the outstanding indebtedness shall first be paid to the Creditor and the balance of the Sum Assured.The plaintiff informed the defendant about the loss of 'approximately 32 pieces of logs' during loading through a letter. Had all the logs been lost during the loading operations.INSURANCE he died the attending physician had certified in the death certificate that the former died of cerebral hemorrhage. From this report. after it already foreclosed on the mortgage.the defendant requested the First Philippine Adjustment Corporation to inspect the loss and assess the damage. since by the nature of the Cover Note. [b] Contrary to Grepalife’s allegations. . CA Decision AFFIRMED with modification. 1010. Leuterio were for hypertension. . .000 board feet of Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay.00 shall be paid… In the event of the debtor's death before his indebtedness with the creditor shall have been fully paid. It was further stated that the said loss may not be considered as covered under cover note because the said note had become 'null and void by virtue of the issuance of two marine policies. Equity dictates that DBP should not unjustly enrich itself at the expense of another. 1963 . CA (WORKMEN’S INSURANCE CO) 112 SCRA 199 DE CASTRO.

This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed. 1918 FACTS . Harding was the owner of a Studebaker automobile. .On appeal.000. Henry E.867. the petitioner moved to lift the order of default. . 1986 FACTS . and to vacate the judgment by default.00. COMMERCIAL UNION ASSURANCE 38 PHIL 464 FISHER. . the TC. subject to the applicable terms. the petitioner made no move at all for two months thereafter. DEVELOPMENT INSURANCE v. "an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss. But even on the assumption that there was delay.The actual loss has been ascertained in this case and the Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily. in consideration of the payment to the defendant of the premium of P150. the building was insured at P2. on motion of the private respondent filed declared the petitioner in default. That intention was revealed further in its subsequent acts ---. There is no such showing. waiver can successfully be raised against private respondent. . of the policy shall be separately subject to this condition. . warranties and clauses of this Policy. conditions.There is a pattern of inexcusable neglect. there is no evidence on record that the building was worth P5.However. The petitioner cites Condition 17 of the policy. shall be limited to the actual loss. August 10. by said plaintiff.00. Harding. the rest of the loss to be shouldered by it alone.The petitioner argues that since at the time of the fire the building insured was worth P5.800. the private respondent should be considered its own insurer for the difference between that amount and the face value of the policy and should share pro rata in the loss sustained. the actual value of the property insured on the day the fire occurred. We find duly substantiated petitioner's assignments of error. Even so. This is an open policy as defined in Sec57 of the Insurance Act. The petitioner allegedly failed to answer on time and was declared in default by TC. made its policy of insurance in writing upon said automobile was set forth in said policy to be P3. . Smith." . .The Court notes that the policy in this case is an open policy and is subject to the express condition that: "Open Policy.A fire occurred in the building of the private respondent and it sued for recovery of damages from the petitioner on the basis of an insurance contract between them. which was allowed full recovery of its claimed damages. Its motion was denied. WON default of petitioner is based on excusable neglect 2.000. This was done almost one month later. at the breaking out of any fire. with the consent of her husband. Disposition The appealed decision is set aside and the decision of the Court of First Instance is reinstated in toto with the affirmance of this Court. be collectively of greater value than the sum insured thereon then the insured shall be considered as being his own insurer for the difference. by agreement.".629. As a consequence. It must be because it did not find any delay. said automobile was totally destroyed by fire. ISSUE 1. this Court is satisfied and convinced that as expressly provided by law.31.From what has been said. NO . 2. On the contrary. Thus Section 84 of the Insurance Act provides: "Section 84." .000. Disposition The appealed decision is affirmed in full. Mrs.INSURANCE where a policy is delivered without requiring payment of the premium.or inaction ---. There were even several extensions to the original period to answer.000 that the value of said automobile was set forth in said policy to be P3. . as this Court fails to find a real and substantial sign thereof.Summons was served through its vice-president. and in no case shall exceed the amount of the policy. IAC affirmed the TC decision in toto.Delay in the presentation to an insurer of notice or proof of loss is waived if caused by any act of his or if he omits to take objection promptly and specifically upon that ground. 2. we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of P508. which is now Sec60 of the Insurance Code. applying the open policy clause as expressly agreed upon by the parties in their contract. Every item.000. the presumption is that a credit was intended and policy is valid.As defined in the aforestated provision. Bell & Company (limited). Accordingly.800. What is the amount of indemnity due to the private respondent under its insurance contract? WON CFI was correct in interpreting the contract HELD 1. HARDING v. Hence. which provides: "If the property hereby insured shall. the defendant by its duly authorized agent. . with costs against the petitioner. A judgment of default was rendered on the strength of the evidence submitted ex parte by the private respondent. 1916." . and shall bear a ratable proportion of the loss accordingly. July 16. whether total Page 45 or partial.000.The refusal of its vice-president to receive the private respondent's complaint. IAC (PHIL UNION REALTY DEVELOPMENT CORP) 143 SCRA 62 CRUZ.500. NO . It was only more than one month after the judgment of default was rendered by the TC that it filed a motion to lift the order of default and vacate the judgment by default.which indeed enabled it to avoid payment for more than five years from the filing of the claim against it in 1980. invoking excusable neglect. if more than one.On learning of this decision. In the event of loss. if established. the private respondent is entitled to an indemnity of only P67. will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not exceed the face value of the policy. and this must be considered. as reported in the sheriff's return. was the first indication of the petitioner's intention to prolong this case and postpone the discharge of its obligation to the private respondent under this agreement. as determined. that on March 24. it is understood that the amount of the loss shall be subject to appraisal and the liability of the company.Mrs. The policy is an open policy which means that the actual loss.00.The private respondent company never raised this ground in the proceedings. that the loss thereby to plaintiffs was the sum of P3.00 at the time of the loss.

INSURANCE . The amount stated was less than the actual outlay which the automobile represented to Mr.The "Schedule" in said policy of insurance describes the automobile here in question. Brannigan for the sum of P2. had no insurable interest in it 2. Harding. that the gift of an automobile by a husband to his wife is not a moderate one. that certain of the statements and representations contained in said proposal and warranted by said plaintiff to be true. (b) the value of said automobile at the time of the execution and delivery of the said proposal and (c) the ownership of said automobile. thereafter issued a policy of insurance upon proposal in which policy the said automobile was described as of the "present value" of P3. It cannot be assumed that defendant should not have issued the policy unless it were strictly true that the price representing the cost of the machine had been paid by the insured and by no other person ? that it would no event insure an automobile acquired by gift. statements.The evidence shows that Hermanos.800. and sold by it for a small sum. it issued the policy of insurance on an automobile alleged by the said plaintiff to be her property. and inducing the defendant.After the said proposal was made a representative of the Manila agent of defendant went to the Luneta Garage and examined said automobile and Mr. issued the said policy of insurance.000. inheritance. Bell & Company (limited). testified that the automobile was practically as good as new at the time the insurance was effected. and that. without dispute. exchange. ." . an expert automobile mechanic. Server. Harding was not the owner of the automobile at the time of the issuance of the policy. that a proposal was filled out by the said agent and signed by the plaintiff Mrs. NO . having agreed to the estimated value. Harding the insurance of said automobile by the Company. . Harding as premium on said policy the sum of P150. P3. 1916. the burden would be upon it to show that the gift in question does not fall within the exception therein established.000".Even assuming that defendant might have invoked article 1334 as a defense. the said automobile was totally destroyed by fire.000.000.We are of the opinion that it would be unfair to hold the policy void simply because the outlay represented by the automobile was made by the plaintiff's husband and not by his wife.Article 1334 of the Civil Code which provides that "All gifts between spouses during the marriage shall be void. when the insurance policy was issued. or 5 per cent of the then estimated value of P3. WON the statement regarding the cost of the automobile was a warranty. We cannot say. Bell & Company (limited). and in said proposal under the heading "Price paid by proposer. the Manila agents for the Studebaker automobile. and that the iron and steel portions of said automobile which did not burn were taken into the possession of the defendant by and through its agent Smith. on the contrary we believe that it shows that the automobile had in fact cost more than the amount mentioned. that the automobile was bought by plaintiff's husband a few weeks before the issuance of the policy in question for the sum of P2. The court below found." is the amount of "3.200 (testimony of Mr. that while the said automobile was at the Luneta Garage. 2. is bound by it and must pay the loss in accordance with the stipulated insured value. and the evidence shows. NO . Diehl). or any other title not requiring the owner to make a specific cash outlay for its acquisition. Harding. to wit: (a) the price paid by the proposer for the said automobile. and that defendant. Harding. the latter solicited of Mrs. were false and known to be false by the said plaintiff at the time of signing and delivering the said proposal and were made for the purpose of misleading and deceiving the defendant. that the proposal upon which the . which had never been tendered to the plaintiff prior to the trial of this case. that the statement was false. It was made by means of a proposal in writing signed and delivered by said plaintiff to the defendant.It has not been shown by the evidence that the statement was false. Henry E. the General Manager of the Luneta Garage. guaranteeing the truth of the statements contained therein which said proposal is referred to in the said policy of insurance made a part thereof. . but in open court during the trial the sum of P10 as the proceeds of such sale was tendered to plaintiff and refused. The form of proposal upon which the policy was issued does not call for a statement regarding the value of the automobile at the time of its acquisition by the applicant for the insurance.The witness Server. and having insured the automobile for that amount." . the policy never attached to the risk Page 46 HELD 1. that said automobile was repaired and repainted at the Luneta Garage at a cost of some P900. testified that at the time this automobile was insured it was worth about P3.On March 24. Henry E. as a matter of law. therefore.500. Whether it is or is not would depend upon the circumstances of the parties. and provides in part of follows: "That during the period above set forth and during any period for which the company may agree to renew this policy the company will subject to the exception and conditions contained herein or endorsed hereon indemnify the insured against loss of or damage to any motor car described in the schedule hereto (including accessories) by whatever cause such loss or damage may be occasioned and will further indemnify the insured up to the value of the car or P3.The court below found and the evidence shows.000 and the said defendant charged the said plaintiff Mrs. therefore. sold the automobile to Canson for P3. and representations contained in the said proposal and believing the same to be true. and the defendant. as to which nothing is disclosed by the record. including repairs. that she had an insurable interest therein. or with respect to its ownership. . an experienced automobile mechanic. and that between that time and the issuance of the policy some P900 was spent upon it in repairs and repainting.000 who sold the said automobile Henry Harding for the sum of P2. Moderate gifts which the spouses bestow on each other on festive days of the family are not included in this rule. and. by and through its said agent Smith.500" and under another heading "Present value" is the amount of "3. to whom he had given the automobile. relying upon the warranties.Trial judge decided that there was no proof of fraud on the part of plaintiff in her statement of the value of the automobile. ISSUE 1.800. Henry Harding gave the said automobile to his wife as a present. upon the basis of which the premium was paid.000 whichever is the greater against any claim at common law made by any person (not being a person in the said motor car nor in the insured's service) for loss of life or for accidental bodily injury or damage to property caused by the said motor car including law costs payable in connection with such claim when incurred with the consent of the company. WON Mrs. . who sold the said automobile to Henry Harding for the sum of P1. .The defendant’s version is that by request of Mrs. . Harding sold the said automobile to J. but merely a statement of its cost.

that there was no fraud on her part in procuring the insurance. even if it should have been shown that they were incorrect in the absence of proof of willful misstatement. or circumstances under which the performance becomes requisite. Likewise. In it. affirming the Decision of the Insurance Commission.A P & I Club is “a form of insurance against third party liability. Harding.000. the costs of this appeal to be paid by the appellant. must secure a license from the Insurance Commission. PIONEER INSURANCE 464 SCRA 448 QUISUMBING. There is no evidence to sustain the contention that this communication was made in bad faith. the appellate court distinguished between P & I Clubs vis-à-vis conventional insurance. . thereof. FACTS . It also appears that an examiner employed by the defendant made an inspection of the automobile before the acceptance of the risk. Basically. namely.Relatedly. a marine insurance undertakes to indemnify the assured against marine losses. . with interest. and that appellee simply signed the same. in proportion to their interest. . Additionally.SEC.” By definition then. regulation by the State is necessary. Steamship Mutual refused to renew the coverage. a separate license solely as agent/broker of Steamship Mutual was already superfluous. . hence. . and defense costs. the act required to be performed. for the purposes of the insurance. . protection and indemnity. Both decisions held that there was no violation of the Insurance Code and the respondents do not need license as insurer and insurance agent/broker. that the valuation of the automobile. July 28. is engaged in the insurance business in the Philippines 2. or within six months thereafter. Moreover. Thus. YES . When White Gold failed to fully pay its accounts. mutual insurance associations. an insurance contract is a contract of indemnity. . a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. 2. therefore. Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business. Pioneer also issued receipts evidencing payments for the coverage. such as the losses incident to a marine adventure. depends on the nature of the promise.In particular. It maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. Under such circumstance. Thus.Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latter’s unpaid balance. the members all contribute. Steamship Mutual or through its agent Pioneer. White Gold on the other hand. ISSUES 1. We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. and at the same time disclosed to defendant's agent the source of her information. to continue doing business here. The appellate court also held that Pioneer merely acted as a collection agent of Steamship Mutual. any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof. The Decision dated July 30. which must be renewed annually on the first day of January. or clubs. correct and must be affirmed. . WON Pioneer needs a license as an insurance agent/broker for Steamship Mutual HELD 1. damage or liability arising from an unknown or contingent event. without first procuring a license so to act from the Commissioner. and where the profits are divided among themselves. contingency. It explained that Steamship Mutual was a Protection and Indemnity Club (P & I Club). and that the judgment of the court below is.The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 187 of the Insurance Code. the manager of the Luneta Garage. YES . Pioneer was already licensed. and that the sum after this examination. filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code. 299 . Disposition Plaintiff was the owner of the automobile in question and had an insurable interest therein.No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance.The Court of Appeals affirmed the decision of the Insurance Commissioner. She merely repeated the information which had been given her by her husband.White Gold procured a protection and indemnity coverage for its vessels from Steamship Mutual through Pioneer Insurance. Pioneer need not obtain another license as insurance agent and/or a broker for Steamship Mutual because Steamship Mutual was not engaged in the insurance business. where the third party is anyone other than the P & I Club and the members. WON Steamship Mutual.The Insurance Commission dismissed the complaint. WHITE GOLD MARINE SERVICES v. a P & I Club. 2000 of the Insurance Commission is hereby REVERSED AND . Section 99 Page 47 of the Insurance Code enumerates the coverage of marine insurance.INSURANCE policy in question was issued was made out by defendant's agent by whom the insurance was solicited. In it. . by a system of premiums or assessments. in fixing the value of the automobile at P3. 2005 NATURE This petition for review assails the Decision of the Court of Appeals. Subsequently. In its decision. one undertakes for a consideration to indemnify another against loss. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business. war risks. provide three types of coverage. White Gold was issued a Certificate of Entry and Acceptance. or receive for services in obtaining insurance. The trial court found that Mrs. Server. . It is not by what it is called. is binding upon the defendant corporation. acted upon information given her by her husband and by Mr. the proposal is to be regarded as the act of the insurer and not of the insured. Disposition The petition is PARTIALLY GRANTED.The test to determine if a contract is an insurance contract or not. We do not think that the facts stated in the proposal can be held as a warranty of the insured. . 300 and 301 in relation to Sections 302 and 303. no insurer or insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance Commission. to the creation of a fund from which all losses and liabilities are paid. 2002 of the Court of Appeals affirming the Decision dated May 3.Since a contract of insurance involves public interest. while Pioneer violated Sections 299. and the exact nature of the agreement in the light of the occurrence.

Philippine Executive Commission.building and insured merchandise were burned. .Rosita filed a complaint with the Labor Arbiter naming Marine. the petitioner.) in section 8. it is not liable for the obligation arising out of the insurance contract. ISSUE 1. requirements. ISSUE WON the policy in question became null and void upon the declaration of war between United States and Germany HELD YES Ratio The Philippine Insurance Law (Act No. The NLRC. generally. . after deducting their value. 1941 .Pandiman is not an insurance agent as defined by Section 3007 of the Insurance Code. the respondent Corporation (though organized under and by virtue of the laws of the Philippines) being controlled by the German subjects and the Filipinas Cia being a company under American jurisdiction when said policy was issued on October 1.CA: CFI judgment affirmed. The CA sustained the decision of the NLRC.INSURANCE SET ASIDE. . WON Marine and its foreign principal. Marine Manning and Management Corporation. provides that "anyone except a public enemy may be insured. the vessel and the crew were insured with Ocean Marine Mutual Insurance Association Limited (OMMIAL).Filipinas Cia refused to pay the claim on the ground that the policy in favor of the respondent had ceased to be in force on the date the United States declared war against Germany. Pandiman Philippines. In due time the Huenefeld Co submitted to the Filipinas Cia its claim under the policy. the total loss suffered by the respondent was fixed at P92. is definitely not one of the liabilities of an insurance agent. Hence this appeal. FILIPINAS COMPANIA DE SEGUROS CHRISTERN..650. 711 Roman Street.. HUENEFELD AND CO INC 89 PHIL 54 PARAS. 1943. payment for claims arising from peril insured against. Disposition The petition is granted and the CA decision is reversed and set aside. and penalties to which an insurance agent is subject.Benito Singhid was hired as chief cook on board the vessel MV Sun Richie Five for a term of one year by Fullwin Maritime Limited through its Philippine agent. there is no legal basis whatsoever for holding petitioner solidarily liable with insurer OMMIAL for the widow’s claim for death benefits. In this case. Thus. is a member. covering merchandise contained in No.Apparently. is DENIED. paid to the Huenefeld Co the sum of P92. > Effect of war. While the said vessel was on its way to Shanghai from Ho Chih Minh City. limited the liable parties to Pandiman and OMMIAL but maintained the money award. as Benito’s principal employer is liable under the employment contract. Benito suffered a heart attack and subsequently died on June 24. NO .February 27. with costs.000. 1942 or during the Japanese military occupation ." It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy. on appeal by Marine. The Arbiter ordered all the respondents. 1943. 1941.Fullwin. OMMIAL. 2005 NATURE Petition for certiorari to review CA decision FACTS . there was no showing that Pndiman in fact negotiated the insurance contract between Sun Richie Five and the insurer OMMIAL. After her submission of the required documentation. Also.CFI: dismissed the action without pronouncement as to costs. WON Pandiman may be held liable for the death benefits 2. Fullwin. Pandiman recommended payment of the death benefits amounting to $79. 1941. . Pandiman. In other words. May 25. filed a claim for death benefits with Marine which referred her to Pandiman. if Pandiman were an agent. and that the payment made by the Filipinas Cia to Huenefeld Co during the Japanese military occupation was under pressure. is the local correspondent of OMMIAL. NO . de Seguros a fire policy in the sum of P1000. liabilities. 1997. including but not limited to the payment of wages.A. However. however. obtained from the Filipinas Cia. PANDIMAN v. The case is now before us on appeal by certiorari from the decision of the Court of Appeals. and Fullwin as respondents.Benito’s widow. June 21. 7 Section 300.650 above mentioned. 2. All intercourse between citizens of belligerent powers which is inconsistent with a state of war is prohibited by FACTS . except Pandiman. Even. & Co. . to which the insurer is liable. payment has not been made. Pandiman is not a party to the insurance contract and hence under Article 1311 of the Civil Code. 1946 – action filed in CFI Manila to recover from the Huenefeld Co the sum of P92. Any person who for compensation solicits or obtains on behalf of any insurance company transmits for a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the negotiating of such insurance shall be an insurance agent within the intent of this section and shall thereby become liable to all the duties. 2427.000. both Fullwin and Marine should be held liable for whatever death benefits the widow of Benito may be entitled to. 1951 V Page 48 . MARINE MANNING MNGT CORP. Rosita. heath and disability compensation and repatriation”.August 6. after payment of corresponding premium. should be absolved from the death claim liabilities HELD 1. dated April 9. Binondo Manila. The theory of the Filipinas Cia is that the insured merchandise were burned up after the policy issued in 1941 in favor of Huenefeld Co has ceased to be effective because of the outbreak of the war between the United States and Germany on December 10. . respectively. to jointly and severally pay the widow the death benefits plus legal fees. Filipinas Cia.Christern Huenefeld. Marine is also bound by its undertaking pursuant to the Rules and Regulations Governing Overseas Employment that “it shall assume joint and solidary liability with the employer for all the claims and liabilities which may arise in connection with the implementation of the contract. as amended. Inc..650 on April 19. a Protective and Indemnity Club of which Sun Richie Five Bulkers S. 460 SCRA 418 GARCIA. The petitioner’s prayer for the revocation of Pioneer’s Certificate of Authority and removal of its directors and officers.October 1. and Pioneer Insurance and Surety Corporation are ORDERED to obtain licenses and to secure proper authorizations to do business as insurer and insurance agent. in pursuance of the order of the Director of Bureau of Financing. The Steamship Mutual Underwriting Association (Bermuda) Ltd. . The salvage goods were sold at public auction and. .

. the Law on Insurance. The purpose of war is to cripple the power and exhaust the resources of the enemy. 1941. in which the controls test has been adopted. Page 49 FACTS . Reasoning . 44. this for the reason that the subjects of one country cannot be permitted to lend their assistance to protect by insurance the commerce or property of belligerent. October 28. for like reasons. also all acts concerning the transmission of money or goods. he died as a result of an accident when he was hit by a falling branch of a tree. .2012 “any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the INSULAR LIFE ASSURANCE CO. p. less the amount of the premium. all acts which will increase. NATURE Appeal from judgment of RTC. Pascuala Vda De Ebrado. or receiving its protection." .Rather. or for some other specified term it is plain that when the parties become alien enemies. decided on December 8. . The power of seizure and vesting was extended to all property of any foreign country or national so that no innocent appearing device could become a Trojan horse. pp. 1941. Uebersee Finanz Korporation. and the commencement of war determines. the respondent was not entitled to any indemnity under said policy from the petitioner.Also. and are public enemies. in Philippine currency. who compose the belligerent powers. . relying on English and American cases which held that a corporation is a citizen of the country or state by and under the laws of which it was created or organized.33. the Court: "The property of all foreign interest was placed within the reach of the vesting power (of the Alien Property Custodian) not to appropriate friendly or neutral assets but to reach enemy interest which masqueraded under those innocent fronts. 1941. that should be returned by the petitioner for the unexpired term of the policy in question. In "Enemy Corporation" by Martin Domke. Matters not expressly provided for in such special laws shall be regulated by this Code. (6 Couch. G.Insular then filed an interpleader in court (CFI Rizal) to determine to whom the proceeds should be paid. alien subjects.Afterwards. Carponia filed a claim for the proceeds as the designated beneficiary in the policy. 1941.Buenaventura Ebrado obtained a whole-life insurance policy from Insular. and since the insured goods were burned after December 10. by the petitioner (a Philippine corporation) had ceased to be valid and enforcible.) > In the case of an ordinary fire policy. The English and American cases relied upon by the Court of Appeals have lost their force in view of the latest decision of the Supreme Court of the United States in Clark vs. Philippine currency. 1941. CC states: “The contract of insurance is governed by special laws. ISSUE 1. 1977 . or render it aid. lost.INSURANCE the law of nations. the contract of life insurance is governed by the general rules of the civil law regulating contracts. referring to her as the wife. also filed her claim as the widow of the deceased.00 with a rider for accidental death benefits for the same amount. NO Ratio The prohibition that husband and wife cannot donate to each other applies to common-law relationships. and all contracts relating thereto are thereby nullified. He designated Carponia Ebrado as the revocable beneficiary. The legal wife. CFI declared that Carponia was disqualified from becoming beneficiary of the insured and directing the Insular to pay the proceeds to the estate of Buenaventura. as to each other.The respondent having become an enemy corporation on December 10. although she admits that she and Buenaventura were merely living as husband and wife without the benefit of marriage. so far as not vested. in a state of utter exclusion. It rejected the theory that nationality of private corporation is determined by the character or citizenship of its controlling stockholders. dealing with a Swiss corporation allegedly controlled by German interest. . one cannot name as beneficiary his common-law wife. the insurance policy issued in its favor on October 1. a paper presented to the Second International Conference of the Legal Profession held at the Hague (Netherlands) in August. Cyc. EBRADO 80 SCRA 181 MARTIN. v.208. Such prohibition includes all negotiations. upon the life or lives of aliens engaged in service with the enemy. beginning December 11. Therefore. It further prohibits insurance upon trade with or by the enemy. Sec. 1947. Disposition the appealed decision is hereby reversed and the respondent corporation is ordered to pay to the petitioner the sum of P77. the contractual tie is broken and the contractual rights of the parties. All individuals therefore. . or tend to increase. However.882. . 5352-5353. all acts of voluntary submission to it. when not otherwise specifically provided for by the Insurance Law.) Reasoning . Art. of Ins.There is no question that majority of the stockholders of the respondent corporation were German subjects.2011. . which prior thereto may have been lawful. general rules of civil law should be applied to resolve the issue. WON a common-law wife named as beneficiary in the insurance policy of a legally married man claim the proceeds of the same HELD 1. .It is quite unfortunate that the Insurance Code does not contain any specific provision grossly resolutory of the prime question at hand. or to do anything detrimental too their country's interest. A. Art. and during the war. and it is inconsistent that one country should destroy its enemy's property and repay in insurance the value of what has been so destroyed. Law. which grants insurance only from year. commerce. all trading intercourse with the enemy. or that it should in such manner increase the resources of the enemy.The Court of Appeals overruled the contention of the petitioner that the respondent corporation became an enemy when the United States declared war against Germany. its income or resources. 1948 also discussed this dilemma > In Clark vs. elementary rules of justice (in the absence of specific provision in the Insurance Law) require that the premium paid by the respondent for the period covered by its policy from December 11. 112. or trading with the enemy. Huenefeld Co became an enemy corporation upon the outbreak of the war between the United States and Germany. for P5. Uebersee Finanz Korporation. exist. As the appointment of a beneficiary in insurance may be considered a donation.” Thus. (Vance. should be returned by the petitioner.

. 601801 were paid by the GSIS to petitioner Basilia Berdin and her children who were the beneficiaries named in the policy.Art. they are the only ones entitled to receive the retirement insurance benefits due the deceased Consuegra. In 1943 Com. 1966 a petition for mandamus with preliminary injunction in the Court of First Instance of Surigao. GSIS 37 SCRA 315 ZALDIVAR. the beneficiary will receive the proceeds or profits of said insurance. each of them to receive an equal share of 1/16. notwithstanding the fact that the petitioners were named as beneficiaries of the life insurance HELD YES . These two distinct systems of benefits are paid out from two distinct and separate funds that are maintained by the GSIS. Surigao. Both are founded upon the same consideration: liberality. or 8/16. solemnized in the parish church of San Nicolas de Tolentino. In his lifetime. and the operation was resumed sometime in 1946. When Consuegra designated his beneficiaries in his life insurance he could not have intended those beneficiaries of his life insurance as also the beneficiaries of his retirement insurance because the provisions on retirement insurance under the GSIS came about only when Com. . FACTS . If legitimate relationship is circumscribed by these legal disabilities. on July 15. 1951. As a consequence.In essence. Act 660. because from the premiums of the policy which the insured pays out of liberality.Being a member of the Government Service Insurance System (GSIS. as amended by Rep. Jr. . Act 186 which was in force at the time. 1937. 1971 NATURE Appeal from the decision of the Court of First Instance of Surigao del Norte awarding the 8/16 part of the proceeds of the deceased Consuegra’s retirement benefits to Rosario Diaz. one is the life insurance and the other is the retirement insurance. with more reason should an illicit relationship be restricted by these disabilities.The late Jose Consuegra.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. reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship. and the only benefits then provided for in said Com. the first with herein respondent Rosario Diaz. A beneficiary is like a donee. During 1943 the operation of the Government Service Insurance System was suspended because of the war. it cannot be said that because herein appellants were designated beneficiaries in Consuegra's life insurance they automatically became the beneficiaries also of his retirement insurance. who are entitled to the remaining one-half. Thus. on the other hand. Pacita. the beneficiary named in the life insurance does not automatically become the beneficiary in the retirement insurance unless the same beneficiary in the life insurance is so designated in the application for retirement insurance. Basilia Berdin and her children filed on October 10. his widow by his first marriage who is entitled to one-half. Those made between persons who were guilty of adultery or concubinage at the time of donation. Upon entering the government service Consuegra became a compulsory member of the GSIS. barred from receiving donations from each other. it doesn’t necessarily mean that the beneficiaries in the life insurance are also the beneficiaries in the retirement insurance. and Pedro Consuegra. filed a similar claim with the GSIS. 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. Surigao. Act 660 on June 16. Act 186 was not yet amended. or 8/16. ISSUE Page 50 WON GSIS was correct in awarding half of the retirement benefit of the deceased to Rosario Diaz. Basilia Berdin and her children appealed said decision to the Supreme Court. CC: The following donations shall be void: 1. Thus.Policy considerations and dictates of morality rightly justify the institution of a barrier between commonlaw spouses in regard to property relations since such relationship ultimately encroaches upon the nuptial and filial rights of the legitimate family. but both predeceased their father. Disposition Decision AFFIRMED. being automatically insured on his life. Juliana. was employed as a shop foreman of the office of the District Engineer in the province of Surigao del Norte. Maria Lourdes. likewise. out of which marriage were born seven children. Resolving the conflicting claims.739 CC should equally operate in life insurance contracts. the proscription in Art. Act 186 were those that proceed from a life insurance.The CFI of Surigao ruled in favor of respondent Rosario Diaz and upheld the ruling of GSIS in all aspect. . January 30. all surnamed Consuegra.Consuegra started in the government service sometime during the early part of 1943. filed a claim with the GSIS asking that the retirement insurance benefits be paid to her as the only legal heir of Consuegra.The provisions of subsection (b) of Section 11 of Commonwealth Act 186. a life insurance policy is no different from a civil donation insofar as the beneficiary is concerned.The GSIS offers two separate and distinct systems of benefits to its members.INSURANCE person who cannot make a donation to him. with herein petitioner Basilia Berdin. namely. 1957 in the same parish and municipality. . Lenida and Luz. namely. of the retirement insurance benefits. pursuant to the provisions of Com. clearly indicate that there is need for the employee to file an application for retirement insurance benefits when he becomes a member of the GSIS. the widow by the first marriage. . his widow by the second marriage and their seven children. which was contracted in good faith while the first marriage was subsisting. Respondent Rosario Diaz. Hence. Consuegra did not designate any beneficiary who would receive the retirement insurance benefits due to him. on the one hand. 1965. at the time of his death. asserting that being the beneficiaries named in the life insurance policy of Consuegra. Jose Consuegra. and the second. the proceeds of his life insurance under policy No. Act 186 was amended by Rep. CONSUEGRA v. . the GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario Diaz. Rodrigo. the first wife. definitely. and he should state in his application the beneficiary of his retirement insurance. .Dissatisfied with the foregoing ruling and apportionment made by the GSIS. Consuegra contracted two marriages. . Jose. out of which marriage were born two children. . The mandate of Art. .So long as marriage remains the threshold of family laws. and Basilia Berdin. or before 1943. considering that the deceased did not designate any beneficiary with respect to his retirement insurance benefits.However. for short) when Consuegra died on September 26. Petitioner Basilia Berdin and her children. on May 1.739.” Common-law spouses are. Hence.

. YES . DAVAC 17 SCRA 863 BARRERA: July 30. Candelaria Davac as his beneficiary and indicated his relationship to her as that of "wife". Thus. with whom he had a minor daughter. Section 21 of the Social Security Actprovides that the benefits prescribed in this Act shall not be diminished and the Government of the Republic of the Philippines accepts general responsibility for the solvency of the System. 1957. and his second wife Basilia Berdin and his children by her. therefore. the beneficiary of the retirement insurance can only claim the proceeds of the retirement insurance if the employee dies before retirement. with Lourdes Tuplano on August 29. the employer's 'Contribution (equivalent to 3-1/2 per cent of the monthly compensation of the covered employee) .Section 13. The following donations shall be void: (1) Those made between persons who were guilty of adultery or concubinage at the time of the donation. but this purpose or intention of the law cannot be enforced to the extent of contradicting the very provisions of said law contained in Section 13. the procedure to be observed is governed not by the general provisions of law. the proceeds of the insurance will go to the estate of the insured. if the money is payable to the estate of a deceased member. . 1946. there being no proof that she had knowledge of the previous marriage of her husband Petronilo. Then. FACTS . became a member of the Social Security System (SSS for short) on September 1. the benefits are specifically declared not transferable. in force at the time of Petronilo Davac's death provides: Upon the covered employee's death or total and permanent disability under such conditions as the Commission may define.When the provisions of a law are clear and explicit. in case of his death. 739. . the beneficiary in a life insurance under the GSIS may not necessarily be an heir of the insured. . The insured in a life insurance may designate any person as beneficiary unless disqualified to be so under the provisions of the Civil Code. Romeo Davac. . If the employee failed or overlooked to state the beneficiary of his retirement insurance. before becoming eligible for retirement and if either such death or disability is not compensable under the Workmen's Compensation Act. ISSUES 1.Social Security Commission issued the resolution declaring respondent Candelaria Davac as the person entitled to receive the death benefits payable for the death of Petronilo Davac.INSURANCE . 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 any donation to him according to said article. thereof” . Disposition Petition Denied.Social Security Act is not a law of succession. it is the Commission. His contribution to the fund constitutes only an insignificant portion thereof. who bore him a child. Furthermore. because it contravenes the provisions of the Civil Code 3. 1792. (the court did not decide whether this partakes the nature of a life insurance policy) 3. on the one hand. as recorded by his employer shall be entitled to the following benefit: . that the respondent GSIS had correctly acted when it ruled that the proceeds of the retirement insurance of the late Jose Consuegra should be divided equally between his first living wife Rosario Diaz. with Candelaria Davac on January 18. Section 13 was construed:"it may be true that the purpose of the coverage under the Social Security System is protection of the employee as well as of his family. but by rules and regulations promulgated by the Commission. Page 51 ART. In the Member's Record he designated respondent. 2012. The amounts that may thus be received cannot be considered as property earned by the member during his lifetime. Social Security System. he or. Lopez) 2. WON the Social Security Commission Candelaria Davac is entitled to receive the death benefits 2. . WON a beneficiary under the Social Security System partakes of the nature of a beneficiary in a life insurance policy and. It appears that the deceased contracted two marriages. Both filed their claims for death benefit with the SSS. the retirement benefits will accrue to his estate and will be given to his legal heirs in accordance with law.They are disbursed from a public special fund created by Congress. WON the benefits accruing from membership with SSS forms part of the conjugal property thus the resolution deprives the lawful wife of her share in the conjugal property as well as of her own and her child's legitime in the inheritance HELD 1.The benefit receivable under the Act is in the nature of a special privilege or an arrangement secured by the law pursuant to the policy of the State to provide social security to the workingmen. and the second. legal processes. 1959. and exempted from tax. NO .On the other hand.Section 13.The benefits under the Social Security Act are not intended by the lawmaking body to form part of the estate of the covered –members.The sources of this special fund are the covered employee's contribution (equal to 21/2 per cent of the employee's monthly compensation) . the first. NO . Additionally.and the Government contribution which consists in yearly appropriation of public funds to assure the maintenance of an adequate working balance of the funds of the System. his beneficiaries.The disqualification mentioned in Article 739 is not applicable to herein appellee Candelaria Davac because she was not guilty of concubinage. As in the case of a life insurance provided for in the Insurance Act. Disposition Resolution of the Social Security Commission appealed is affirmed .Petronilo Davac. Republic Act No. the same are paid to whoever is named the beneficiary in the life insurance policy. RA1161 provides that the beneficiary "as recorded" by the employee's employer is the one entitled to the death benefits. 1161. 1966 NATURE APPEAL from a resolution Of the Social Security Commission. therefore the designation made in the person DAVAC as bigamous wife is null and void. 1949. not the probate or regular court that determines the person or persons to whom it is payable. Elizabeth Davac. .He died on April 5.In Tecson vs. as in the case of a life insurance if no beneficiary is named in the insurance policy. It is Our view. And in the absence of any beneficiary named in the life insurance policy.In the case of the proceeds of a life insurance. SSS v. the courts can do nothing but apply its clear and explicit provisions (Velasco vs. as amended by Republic Act No. in the settlement of claims thereunder. and lien. ART.

its ultimate destination is determined by those provisions of the Civil Code which relate to donations. which he still has in his possession. the balance of the insurance policy. it appears from the evidence in the case that the conveyances were taken in the name of the plaintiffs without his knowledge or consent. and that the sum be divided equally among the plaintiffs and defendant along with the other property of deceased.The defendant denies the material allegations of the complaint and sets up as special defense and counterclaim that the redemption of the real estate sold by his father was made in the name of the plaintiffs and himself instead of in his name alone without his knowledge or consent. gift. WON the insurance belongs to the defendant and not to the decedent’s estate 2. to make a gift of the real estate to the other heirs. This article provides that "gifts made to children which are not betterments shall be considered as part of their legal portion. that he proposed.The Court rejected this contention unless the fact appear or be shown that the defendant acted as he did with the intention that the other heirs should enjoy with him the ownership of the estate ---. . he alleging that he was and is the sole owner thereof and that it is his individual property. The complaint prays a partition of all the property. .For the complete and proper determination of the questions at issue in this case.Plaintiffs and defendant are brothers and sisters. but also of the P40. Andres contends that it was not his intention to use the proceeds of the insurance policy for the benefit of any person but himself." 2. he has two remedies. however.The SC agreed with the finding of the trial court that the proceeds of the life-insurance policy belong exclusively to the defendant as his individual and separate property.The redemption of said premises was made by the attorney of defendant ANDRES in the name of the plaintiffs and the defendant as heirs of the deceased vendor. they are entitled to a partition not only of the real and personal property." . NO . that the defendant account for P21. That the proceeds of an insurance policy belong exclusively to the beneficiary and not to the estate of the person whose life was insured. The Civil Code has no provisions which relate directly and specifically to life-insurance contracts or to the destination of life insurance proceeds. WON the Civil code provisions on succession prevail over any other law with respect to the insurance HELD 1. FACTS . asks that he be declared the owner of the real estate redeemed by the payment of the P18.80. and that the plaintiffs account for the use and occupation of the premises so redeemed since the date of the redemption. The one is to compel the plaintiffs to reconvey to him and the other is to let the title stand with them and to recover from them the sum he paid on their behalf. . intestate . YES . If the facts are as stated. the Court was of the opinion that the cause should be returned to the trial court with instructions to permit the parties to frame such issues as will permit the settlement of all the .INSURANCE FRANCISCO DEL VAL v. .Counsel also claims that the proceeds of the insurance policy were a donation or gift made by the father during his lifetime to the defendant and that.20 to redeem certain real estate which the decedent had sold to third persons with a right to repurchase. then it is probable that their contention is correct and that they are entitled to share equally with the defendant therein. therefore. as such.in other words. in order to compute it in fixing the legal portions and in the account of the division. who died in Manila on August 4.365. took possession of most of his personal property.000 life insurance. If it is established by the evidence that was his intention and that the real estate was delivered to the plaintiffs with that understanding. it is claimed by the attorney for the plaintiffs that insurance provisions in the Code of Commerce are subordinated to the provisions of the Civil Code as found in article 1035. therefore.634. It further appears from the pleadings that the defendant. especially article 819. If. and that he has also the balance on said insurance policy amounting to P21. 1915 NATURE Appeal from a judgment of the Court of First Instance of the city of Manila dismissing the complaint with costs. This article reads: "An heir by force of law surviving with others of the same character to a succession must bring into the hereditary estate the property or securities he may have received from the deceased during the life of the same.20. From said policy he paid the sum of P18. 1910. both real and personal.634. ANDRES DEL VAL 29 PHIL 534 MORELAND. We believe that the same doctrine obtains in these Islands by virtue of section 428 of the Code of Commerce.365. That subject is regulated exclusively by the Code of Commerce which provides for the terms of the contract. After his death the defendant collected the face of the policy. we agree.634. and such repurchase having been made and the conveyance taken in the names of all of the heirs instead of the defendant alone. .The trial court refused to give relief to either party and dismissed the action. . on the death of the deceased.Plaintiffs contend that the amount of the insurance policy belonged to the estate of the deceased and not to the defendant personally. He. February 16. In this appeal.000 and made it payable to the defendant ANDRES DEL VAL as sole beneficiary. and that such proceeds are the separate and individual property of the beneficiary. then it belongs to him.80. shall be the property of the latter. left by the deceased. is the doctrine in America. and not of the heirs of the person whose life was insured. plaintiffs claim that the property belongs to the heirs in common and not to the defendant alone. in fulfillment of the contract." ISSUES 1. .The contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with that subject. in effect. the relations of the parties and the destination of the proceeds of the policy. by way of dowry. that.Assuming that the proceeds of the life-insurance policy being the exclusive property of the defendant and he having used a portion thereof in the repurchase of the real estate sold by the decedent prior to his death with right to repurchase.80. that they are the only heirs at law and next of kin of Gregorio Nacianceno del Val. or for any good consideration.During the lifetime of the deceased he took out insurance on his life for the sum of P40. or that it was not his intention to make a gift to them of the real estate. even against the claims of the legitimate heirs or creditors of any kind whatsoever of the person who effected the insurance in favor of the former. the owner of the remaining P21. which reads: Page 52 "The amounts which the underwriter must deliver to the person insured.

. 1922. In the case of Del Val vs. The Civil Code has no provisions which relate directly and specifically to life-insurance contracts or to the destination of life-insurance proceeds. And this applies to a policy to which there are attached the incidents of a loan value. of Canada issued an insurance policy on the life of Hilario Gercio. 2427.INSURANCE questions involved and to introduce such evidence as may be necessary for the full determination of the issues framed. unless such be the necessary effect of the provisions of the policy itself. otherwise to the executors.On March 4. Mrs. or if the insured should die before said date. should she survive him. and to name instead his actual wife. No.000. the Sun Life Assurance Co. Del Val. the insurance company agreed to insure the life of Hilario Gercio for the sum of P2. belong. that a policy taken out in good faith and valid at its inception. . the Civil Code. . or the charter of the insurance company.In our judgment of life policy. 17955. that the Insurance Act. . NO Ratio The wife has an insurable interest in the life of her husband. although he has parted with nothing. has no power to change the beneficiary.Unlike the statutes of a few jurisdictions.Central National Bank of Washington City vs. we do so with the purpose of having the Philippine Law of Insurance conform as nearly as possible to the modern Law of Insurance as found in the United States proper. is not avoided by the cessation of the insurable interest. So when a policy of life insurance is taken out by the husband in which the wife is named as beneficiary. But if the policy contains no provision authorizing a change of beneficiary without the beneficiary's consent. however. payable to a designated beneficiary.Code of Commerce.On January 29. saying "the contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with that subject.there can be found in it no provision either permitting or prohibiting the insured to change the beneficiary. ISSUES 1. in the absence of a statute to the contrary. 1925 NATURE Mandamus to compel Sun Life Assurance Co. is the separate property of the beneficiary and beyond the control of the husband. she has a subsisting interest in the policy. became effective in 1914. originally valid. and the money to become due under it.Insurance Act. with but slight dissent in the courts of this country. an automatic extension by premiums paid. which he may keep alive for his own benefit by paying the premiums or assessments if the person who effected the insurance fails or refuses to do so.Civil Code. Accordingly. SUN LIFE ASSURANCE OF CANADA 48 PHIL 53 MALCOLM. does not cease to be so by the cessation of the assured party's interest in the life insured. there is no provision in the Philippine Law permitting the beneficiary in a policy for the benefit of the wife of the husband to be changed after a divorce. and is simply the object of another's bounty. administrators.Connecticut Mutual Life Insurance Company vs Schaefer “We do not hesitate to say. to be paid him on February 1. the . Andrea Zialcita was the lawful wife of Hilario Gercio. Whether the case be considered in the light of the Code of Commerce. Adela Garcia de Gercio. 1930. WON the insured. . . Gercio requested the insurance company to eliminate Andrea Zialcita as beneficiary. then to his wife. and that he had designated in her stead his present wife. or the general principles of law. . and that the effort to change the beneficiary was made in 1922. In adopting these rules. which had the effect of completely dissolving their bonds of matrimony . it declined to consider the proceeds of the insurance policy as a donation or gift. Booth “. Upon such issues and evidence taken thereunder the court will decide the questions involved according to the evidence. GERCIO v.On the date the policy was issued. . has the power to change the beneficiary. September 28. the insurance company has refused and still refuses to do. Andrea Zialcita. where the insured and the beneficiary have been divorced and where the policy of insurance does not expressly reserve to the insured the right to change the beneficiary HELD 1. or assigns of the insured. This. so provides. unless the policy itself. as well as to an ordinary life insurance policy. 1920. . (Preliminary) WON the provisions of the Code of Commerce and the Civil Code shall be in force in 1910. as the beneficiary of the policy. To that end. a decree of divorce was issued in civil case no. The policy was what is known as a 20year endowment policy. 1910. a subsequent divorce does not destroy her rights under the policy. . it is held that a life insurance policy of a husband made payable to the wife as beneficiary.” . In policy.” . The insurance policy was taken out in 1910. The beneficiary has an absolute vested interest in the policy from the date of its issuance and delivery. and to an endowment policy. the deficiencies in the law will have to be supplemented by the general principles prevailing on the subject. or the Insurance Act. Towards the end of the year 1919. Reasoning . Hume “It is indeed the general rule that a policy. that a person who procures a policy upon his own life. 2.there is likewise no provision either permitting or prohibiting the insured to change the beneficiary. If the husband wishes to retain to himself the control and ownership of the policy he may so provide in the policy. that if a policy is taken out upon a husband's life the wife is named as beneficiary therein. the insured cannot make such change. On September 4.it would be most difficult. . . we have gathered the rules which follow from the best considered American authorities. The policy did not include any provision reserving to the insured the right to change the beneficiary. and keeps the policy in his exclusive possession. Hilario Gercio formally notified the Sun Life that he had revoked his donation in favor of Andrea Zialcita. if indeed it is practicable. although he pays the premiums himself. therefore. of Canada to change the beneficiary in the policy issued by the defendant company on the life of the plaintiff Hilario Gercio FACTS . . cash Page 53 surrender value. or the provisions of the Insurance Act now in force. REMANDED. guide the court in its decision 2. the former wife..Yore vs. she was convicted of the crime of adultery." . By its terms. has acquired a vested and irrevocable interest in the policy.Court’s first duty is to determine what law should be applied to the facts. It must follow. subordinating his conclusions of law to the rules laid down in this opinion. It seems to be the settled doctrine. to test a life insurance policy by its provisions. the husband.

The parent-insured cannot exercise rights and/or privileges pertaining to the insurance contract.INSURANCE moment it is issued. 22.Based on the provision of their contract and the law applicable. except under the terms of the contract with the insurance company.Wallace vs Mutual Benefit Life Insurance Co. On Feb. before the policy becomes due. to the person or persons named in it as the beneficiary or beneficiaries. subject to be divested only by her death. He could deprive her of her interest absolutely in but one way. that the judgment of the lower court should be revoked. although she may have years thereafter secured a divorce from her husband. The plaintiff and the other parties who are claiming an interest in said policy should wait until there is something due them under the same. NO . the vested rights of the irrevocable . NO .” . the lapse of time. The premiums may not be paid.Respondent Judge denied petitioner’s Urgent Motion. PHIL. She could keep the policy alive by paying the premiums. Wallace acquired a vested interest therein.The Beneficiary Designation Indorsement in the policy in the name of Dimayuga states that the designation of the beneficiaries is irrevocable: “no right or privilege under the Policy may be exercised. if they ever become due and payable. Reasoning . July 19. is impossible. Her interest was free from any claim on the part of the insured or his creditors. be defeated only as provided by the terms of the policy. contingent or otherwise.Since the policy was procured in 1968. for contracts are obligatory. which would render it non effective. Illinois Life Insurance Company “The benefit accruing from a policy of life insurance upon the life of a married man. but for a different reason. “As soon as the policy was issued Mrs. naming her. one of whom is already deceased while the others are all minors could validly give consent to the change or amendment in the designation of the irrevocable beneficiaries HELD 1.” . 2. of which she cannot be deprived without her consent” . and can thereafter. WON the irrevocable beneficiaries herein. by living more than twenty years. during the life of the beneficiary. is payable to the surviving beneficiary named.Filley vs.Contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations. we are irresistibly led to the conclusion that the question at issue must be answered in the negative Disposition The judgment appealed from will be reversed and the complaint ordered dismissed as to the appellant. the beneficiary designated in a life insurance contract cannot be changed without the consent of the beneficiary because he has a vested interest in the policy. 1989 NATURE Petition for review on certiorari the orders of CFI Judge Pineda FACTS . 1980. the consequence of which was the issuance of the questioned Order granting the Page 54 petition. as in this case.Finally. or by the failure of the insured to pay the premiums. to transfer to any other person the interest of the person named. the action is premature and should have been dismissed. SEPARATE OPINION JOHNSON [concur] . The purpose of the petition is to have declared the rights of certain persons in an insurance policy which is not yet due and payable. for otherwise. .In re Dreuil & Co. “In so far as the law of Louisiana is concerned. for the reason that nothing may ever become payable under the contract of insurance.On the admitted facts and the authorities supporting the nearly universally accepted principles of insurance. thereby rendering the contract of insurance of non effect. no matter in what form they may be. Both the law and the Policy do not provide for any other exception. if their terms are clear and leave no room for doubt as to the intention of the contracting parties. In my judgment. PINEDA 175 SCRA 416 PARAS. It may never become due and payable. whenever the essential requisites for their validity are present.” . the beneficiary has a vested right in the policy.” . . but it was free from the control of her husband. It was contingent upon these events. and he was thereafter again married to one who sustained the relation of wife to him at the time of his death. by deed or by will. The rights of a beneficiary in an ordinary life insurance policy become vested upon the issuance of the policy. WON the designation of the irrevocable beneficiaries could be changed or amended without the consent of all the irrevocable beneficiaries 2. payable upon his death to his wife. Private Respondent Rodolfo Dimayuga procured an ordinary life insurance policy from the petitioner company and designated his wife and children as irrevocable beneficiaries. and for many reasons such persons may never have a right to receive anything when the policy does become due and payable. He had no interest in her property in this policy. or agreement made with the Company to any change in or amendment to the Policy. without the consent of the said beneficiary/beneficiaries. Petitioner then filed a MFR which was also denied hence this petition. by any act of his.In 1968.I agree with the majority of the court. it may also be considered settled that where a policy is of the semitontine variety. Dimayuga filed with the CFI a petition to amend the designation of the beneficiaries in his life policy from irrevocable to revocable. it is only with the consent of all the beneficiaries that any change or amendment in the policy concerning the irrevocable beneficiaries may be legally and validly effected. and that there is no power in the person procuring the insurance. the applicable law in this case is the Insurance Act and under that law. ISSUE 1. AMERICAN LIFE INSURANCE v. and many other things may occur. Her interest in the policy was her individual property. . of which she could not be deprived without her consent. the fact that the contract of insurance does not contain a contingency when the change in the designation of beneficiaries could be validly effected means that it was never within the contemplation of the parties. Petitioner filed an Urgent Motion to reset hearing as well as its comment and/or Opposition to the respondent’s petition. thus allowing private respondent to adduce evidence. No right to change the beneficiary was reserved. For the courts to declare now who are the persons entitled to receive the amounts due. if the insured did not do so.

and effects of the debtor with all his deeds. among items from the ownership of which the assignee is excluded. and such assignment shall relate back to the commencement of the proceedings in insolvency. The alleged acquiescence of the 6 children beneficiaries cannot be considered an effective ratification to the change of the beneficiaries from irrevocable to revocable. estate.These provisions clearly evince an intention to vest in the assignee. 166). has a right to the proceeds of the insurance HELD NO On the Philippine Insolvency Law (Act No. the clerk of the court shall.Under each of said laws the assignee acquires all the real and personal property. to prosecute to final judgment any action therefor against the debtor. such elements of property and property right as could be reached and subjected by process of law by any single creditor suing alone. estate. as well as the opening words of section 33. Page 55 On the applicability of the Insolvency Law . 1956) . They were minors at the time. and on August 21. was duly appointed as the administratrix of his intestate estate. to surrender the policy. contains nothing similar to these provisions. in consideration of the payment of a stipulated annual premium during the period of the policy. and if he should die before that date then to his legal representatives. by an instrument under his hand and seal of the court. 1938. books and papers relating thereto. to stay any civil proceedings pending against him. and this species of property is not enumerated. by section 24. . . . 2427. in determining what elements of value constitute assets in insolvency. asserted claims to the proceeds of the policy. and at the same time allow the insolvent debtor to retain anything subject to the payment of his debts in a normal state of solvency. SUN LIFE ASSURANCE v. 32. and could not validly give consent. the trustee in bankruptcy acquires the right to exercise any powers which the insolvent might have exercised for his own benefit. all life insurance policies are declared by law to be assignable. is property that may be taken upon execution against him. as administratix of Dy Poco's estate. as the property of the debtor. Moreover. As soon as an assignee is elected or appointed and qualified. although the same is then attached on mesne process. enacted in 1895." indicated in an annexed table. but inasmuch as no more than two premiums had been paid upon the policy now in question up to the time of the death of the assured. Hence. assign and convey to the assignee all the real and personal property. as assignee. estate. for the benefit of all the creditors of the insolvent. ISSUE WON Ingersoll. and effects of the debtor. and vice versa. declares that the assignment to be made by the clerk of the court "shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by law from execution. upon making an order adjudicating any person insolvent. 1921 NATURE Action of interpleader FACTS . with all deeds. books. or until the premiums had been completely paid for twenty years."leviable assets" and "assets in insolvency" are practically coextensive terms. and Tan Sit. In connection with the foregoing may be mentioned subsections 1 and 2 of section 36. On whether a policy of insurance having no cash surrender value. and papers relating thereto. in section 48 of the Insolvency Law. Ingersoll was appointed assignee of his estate. in common with the predecessor laws abovementioned. and effects in the assignee. Tan Sit. . at the time of the assured's death.INSURANCE beneficiaries would be rendered inconsequential. . after the commencement of proceedings in insolvency. was adjudged an involuntary insolvent by the CFI Manila. regardless of whether the assignee has an insurable interest in the life of the insured or not (Insurance Act No. and by operation of law shall vest the title to all such property.Philippine laws declare no exemption with respect to insurance policies. . November 8. The Insolvency Law here in force. to the effect that the assignee shall have the right and power to recover and to take into his possession. though it contains a few provisions from the American Bankruptcy Law of 1898 . and it does not appear that the company would in accordance with its own usage or otherwise have made any concession to the assured in the event he had desired.June 23. issued a policy of insurance on the life of Dy Poco for US$12. before his death. INGERSOLL 41 PHIL 331 STREET. except such as are exempt by law from execution.the Insolvency Law is in great part a copy of the Insolvency Act of California. and while this language is broad. this provision had not become effective. 1919. The lower court found that Ingersoll had a better right and ordered Sun Life to pay the insurance proceeds to him. payable to the said assured or his assigns on the 21st day of February.July 10. It must therefore be accepted that this policy had no cash surrender value.Sec 32 of the Insolvency Law among other things. the assured could surrender the policy to the company for a "cash surrender value. and shall relate back to the acts upon which the adjudication was founded. Dy Poco. and claims belonging to the insolvent. 1918.The property and interests of the insolvent which become vested in the assignee of the insolvent are specified in section 32 of the Insolvency Law which reads as follows: "SEC. for under subsection 3 of section 70 (a) of the last mentioned law. 1919. Neither could they act through their father-insured since their interests are quite divergent from one another. 1919. it nevertheless lacks the comprehensiveness of section 70 (a) of the American Bankruptcy Law of 1898 in at least two particulars. Dy Poco died." . either by contract or by convention practice of the company in such cases. SC is at liberty to consider what elements of value are subject to be taken upon execution. assets. and Frank B. the court is required. Such assignment shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by law from execution. sec. but payable to insured or his legal representative. and under subsection 5 the trustee acquires any property of the insolvent which the latter could by any means have assigned to another. and it is declared in section 60 that no creditor whose debt is provable under the Act shall be allowed. Disposition questioned Orders of respondent judge are nullified and set aside. ." Moreover. as assignee. all of the estate. .April 16. And this is exactly as it should be: for it cannot be supposed that the Legislature would suppress the right of action of every individual creditor upon the adjudication of insolvency.500.By the terms of the policy it was provided that after the payment of three full premiums. not exempt by law from execution.Both Ingersoll. the assured. Sun Life Assurance Company of Canada (Sun Life).

Formerly the contracts provided — as they still commonly do in the policies issued by fraternal organizations and benefit societies — for the payment of a premium sufficient to keep the estimated risk covered..the assignee in insolvency acquired no beneficial interest in the policy of insurance in question. to be relieved from all responsibility for the increased risk."leviable assets" and "assets in insolvency" are practically coextensive terms. for the mere purpose of speculating upon the chances of the bankrupt's death. except such as are exempt by law from execution.Philippine laws declare no exemption with respect to insurance policies.In re McKinney: no beneficial interest in the policy had ever passed to the assignee over and beyond what constituted the surrender value. (Misut Garcia vs. The assignee should surrender the policy upon the payment to him of said value. as he was in fact directed to do. that its proceeds are not liable for any of the debts provable against the insolvent in the pending proceedings. A return of a part in some form or other is now Usually made. until three full premiums have been paid. still in practical effect. And this is exactly as it should be: for it cannot be supposed that the Legislature would suppress the right of action of every individual creditor upon the adjudication of insolvency. though not the legal. with the obligation to maintain it unimpaired and suitably invested for the benefit of the insured. In connection with the foregoing may be mentioned subsections 1 and 2 of section 36. . with accumulations of interest..Sec 32 of the Insolvency Law among other things. after the discharge of the bankrupt. West Coast San Francisco Life Ins. "Upon the surrender of the policy before the death of the assured. is property that may be taken upon execution against him. instead of being retained by the assured and paid by him to the company in the shape of greatly-increased premiums.These provisions clearly evince an intention to vest in the assignee. Moreover. and vice versa. all life insurance policies are declared by law to be assignable. constitutes the surrender value. which is represented by this accumulating reserve. Co. The courts are therefore practically unanimous in refusing to permit the assignee in insolvency to wrest from the insolvent a policy of insurance which contains in it no present realizable assets. West Coast San Francisco Life Ins. among items from the ownership of which the assignee is excluded. and claims belonging to the insolvent. regardless of whether the assignee has an insurable interest in the life of the insured or not (Insurance Act No. On whether a policy of insurance having no cash surrender value. or his representative. an excess made necessary in order to balance the deficiency of the same premium to meet the annual risk during the latter years of the policy. to prosecute to final judgment any action therefor against the debtor. upon making an order adjudicating any person insolvent. when the risk is greatest. by section 24. and one who has gone through the process of bankruptcy usually finds himself in his declining years with the accumulated savings of years swept away and earning power diminished. such elements of property and property right as could be reached and subjected by process of law by any single creditor suing alone. As regards everything beyond the surrender value. relation of the company to this fund. as well as the opening words of section 33. and in case of a lapse the policy-holder received nothing. have no insurable interest in the life of the bankrupt.SC has held that insurance policies having a present cash surrender value are subject to be taken upon execution. in section 48 of the Insolvency Law. . sec.a policy devoid of a cash surrender value cannot be either "leviable assets" or "assets in insolvency. 2427. The explanation is to be found in the consideration that the destruction of a contract of life insurance is not only highly prejudicial to the insured and those dependent upon him. the company. . in determining what elements of value constitute assets in insolvency. after the commencement of proceedings in insolvency. Though this excess of premiums paid is legally the sole property of the company. The assignee in bankruptcy had no right to keep the estate unsettled for an indefinite period.) . and it is declared in section 60 that no creditor whose debt is provable under the Act shall be allowed.the stipulation providing for a cash surrender value is a comparatively recent innovation in life insurance.a policy devoid of a cash surrender value cannot be either "leviable assets" or "assets in insolvency. . Co. the assignee in bankruptcy would. 41 Phil. assets. and that said proceeds should therefore be delivered to his administratrix. it is moneys of the assured deposited with the company in advance to make up the deficiency in later premiums to cover the annual cost of insurance. This excess in the premium paid over the annual cost of insurance. and at the same time allow the insolvent debtor to retain anything subject to the payment of his debts in a normal state of solvency. life insurance is increasingly difficult to obtain with advancing years. though not in law. could well afford to surrender a considerable part of it to the assured. the court is required. . Hence. and that the legal title to the policy was vested in the assignee merely in order to make the surrender valueavailable to him. the cost is then so great as to be practically prohibitive to many. SC is at liberty to consider what elements of value are subject to be taken upon execution." . the practice is common among insurance companies even now to concede nothing in the character of cash surrender value. On applicable US case . to stay any civil proceedings pending against him.) . but payable to the insured or his legal representative. and this species of property is not enumerated. Furthermore. As is well known. 166).surrender value of a policy "arises from the fact that the fixed annual premiums is much in excess of the annual risk during the earlier years of the policy. So long as the policy remains in force the company has not practically any beneficial interest in it." (In re McKinney) . declares that the assignment to be made by the clerk of the court "shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by Page 56 law from execution. This is the practical. 258. as in this case. . all of the estate. and even when procurable after the age of fifty. and to be maintained to the credit of the policy.CONLUSION (from this case and other English and American cases cited following the same opinion): the assignee acquires no beneficial interest in insurance effected on the life of the insolvent." Moreover.INSURANCE . (Misut Garcia vs. except to the extent that such insurance contains assets which can be realized upon as of the date when the petition of insolvency is filed. Insolvency is a disaster likely to overtake men in mature life. Insurance is a species of property that should be conserved and not dissipated. for the benefit of all the creditors of the insolvent. except as its custodian. but is inimical to the interests of society. On the applicability of the Insolvency Law ." . It is the 'net reserve' required by law to be kept by the company for the benefit of the assured. to the effect that the assignee shall have the right and power to recover and to take into his possession.SC has held that insurance policies having a present cash surrender value are subject to be taken upon execution.

INSURANCE
- the assignee in insolvency acquired no beneficial interest in the policy of insurance in question; that its proceeds are not liable for any of the debts provable against the insolvent in the pending proceedings, and that said proceeds should therefore be delivered to his administratrix. Disposition Judgment reversed. Sun Life is directed to pay the proceeds of the policy to Tan Sit. CHAPTER VI – RESCISSION OF INSURANCE CONTRACTS: CONCEALMENT, MISREPRESENTATION, & BREACH OF WARRANTIES NG v. ASIAN CRUSADER LIFE ASSURANCE CORP 122 SCRA 461 ESCOLIN; May 30, 1983 FACTS - On May 12, 1962, Kwong Nam applied for a 20year endowment insurance on his life for the sum of P20,000, with his wife, Ng Gan Zee, as beneficiary. - He died on Dec 1963 of cancer of the liver with metastasis. All premiums had been paid at the time of his death. - Ng presented a claim for payment of the face value of the policy. Appellant (Asian Crusader) denied the claim on the ground that the answers given by the insured to the questions appearing in his application for life insurance were untrue. -Appellant: the insured was guilty of misrepresentation when 1) he answered "No" to the question (in the application) of "Has any life insurance company ever refused your application for insurance or for reinstatement of a lapsed policy or offered you a policy different from that applied for?" when in fact, Insular Life denied his application for reinstatement of his lapsed life insurance policy 2) he gave the appellant's medical examiner false and misleading information as to his ailment and previous operation when he said he was “operated on for a Tumor [mayoma] of the stomach… associated with ulcer of stomach. Tumor taken out was hard and of a hen's egg size. Operation was two years ago in Chinese General Hospital by Dr. Yap. Claims he is completely recovered.” Medical report show that insured was operated on for "peptic ulcer", involving the excision of a portion of the stomach, not tumor. ISSUE WON there was concealment (Was appellant, because of insured's aforesaid representation, misled or deceived into entering the contract or in accepting the risk at the rate of premium agreed upon?) HELD NO -"concealment exists where the assured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it to the assurer, but he designedly and intentionally withholds the same." - It has also been held "that the concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have been intentionally withheld." Reasoning 1) The evidence shows that the Insular Life Assurance Co., Ltd. approved Kwong Nam's request for reinstatement and amendment of his lapsed insurance policy on April 24, 1962…. It results, therefore, that when on May 12, 1962 Kwong Nam answered `No' to the question whether any life insurance company ever refused his application for reinstatement of a lapsed policy he did not misrepresent any fact. 2) Assuming that the aforesaid answer given by the insured is false, Sec. 278 of the Insurance Law nevertheless requires that fraudulent intent on the part of the insured be established to entitle the insurer to rescind the contract. And as correctly observed by the lower court, "misrepresentation as a defense of the insurer to avoid liability is an `affirmative’ defense. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant. The evidence before the Court does not clearly and satisfactorily establish that defense." -Kwong Nam had informed the appellant's medical examiner that the tumor for which he was operated on was ''associated with ulcer of the stomach." In the absence of evidence that the insured had sufficient medical knowledge as to enable him to distinguish between "peptic ulcer" and "a tumor", his statement that said tumor was "associated with ulcer of the stomach" should be construed as an expression made in good faith of his belief as to the nature of
8
"Sec. 27. Such party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty."

Page 57
his ailment and operation. Indeed, such statement must be presumed to have been made by him without knowledge of its incorrectness and without any deliberate intent on his part to mislead the appellant. 3) Waiver: While it may be conceded that, from the viewpoint of a medical expert, the information communicated was imperfect, the same was nevertheless sufficient to have induced appellant to make further inquiries about the ailment and operation of the insured. Section 32 of Insurance Law [Act No. 2427] provides: “The right to information of material facts may be waived either by the terms of insurance or by neglect to make inquiries as to such facts where they are distinctly implied in other facts of which information is communicated.” It has been held that where, "upon the face of the application, a question appears to be not answered at all or to be imperfectly answered, and the insurers issue a policy without any further inquiry, they waive the imperfection of the answer and render the omission to answer more fully immaterial. Disposition the judgment appealed from is hereby affirmed, with costs against appellant CANILANG v. CA (GREAT ASSURANCE CORP.) 223 SCRA 443 FELICIANO; June 17, 1993 PACIFIC LIFE

NATURE Petition for review on certiorari of the decision of the Court of Appeals FACTS - June 18, 1982 – Jaime Canilang was diagnosed by Dr. Claudio to have sinus tachycardia. He was directed by the doctor to take a tranquilizer (Trazepam) and a beta-blocker drug (Aptin). - August 3, 1982 – Jaime consulted Dr. Claudio again and was diagnosed to have acute bronchitis. - August 4, 1982 – Jaime applied for a nonmedical insurance policy with Great Pacific Life Assurance Company. He named his wife Thelma as his beneficiary. He was issue the policy with a face value of P19,700 effective August 9, 1982. - August 5, 1983 – Jaime died of congestive heart failure, anemia and chronic anemia. Thelma filed her claim but the insurance company refused to grant it on the ground that Jaime had concealed information.

INSURANCE
- Thelma filed a complaint against Great Pacific to recover the insurance proceeds. She testified that she was not aware of her husband’s ailments and that she thought he had died from a kidney disorder. - Great Pacific presented as witness Dr. Quismorio who testified that Jaime’s insurance application was the basis of his medical declaration and she explained that an applicant was required to undergo medical examination only if the applicant had disclosed that he had previously been consulted with a doctor and had been hospitalized. - The Insurance Commissioner ordered Great Pacific to pay Thelma the insurance proceeds, including attorney’s fees, holding that Jaime’s illness was not that serious as to Great Pacific’s decision to insure him and that there was no concealment on the part of Jaime with regard to his illness. Petitioners’ Claim: > Thelma argues that the non-disclosure of Jaime did not amount to fraud. > She also argues that the CA erred in not holding that the issue in the case agreed upon between the parties before the Insurance Commission is whether or not Jaime 'intentionally' made material concealment in stating his state of health; Respondents’ Comments: > The CA reversed the Insurance Commissioner’s decision, holding 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 and that the issue agreed upon by the parties had been whether Jaime made a material concealment as to the state of his health at the time of the filing of insurance application, justifying the denial of the claim. > It also found that the failure of Jaime to disclose previous medical consultation and treatment constituted material information which should have been communicated to Great Pacific to enable the latter to make proper inquiries. ISSUES 1. WON Jaime intentionally withheld information from Great Pacific 2. WON the information withheld would have been material to Great Pacific’s decision to grant Jaime the insurance policy HELD 1. YES Ratio 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. The restoration in 1985 by B.P. Blg. 874 of the phrase "whether intentional or unintentional" merely underscored the fact that all throughout (from 1914 to 1985), the statute did not require proof that concealment must be "intentional" in order to authorize rescission by the injured party. Reasoning - Art. 27 of the 1978 Insurance Code reads that “a concealment entitles the injured party to rescind a contract of insurance,” which does not include the words “whether intentional or unintentional” from the previous statutes. The Insurance Commissioner relied on this deletion in arguing that the statute intended to limit the kinds of concealment which generate a right to rescind on the part of the injured party to "intentional concealments." - In the case at bar, the nature of the facts not conveyed to the insurer was such that the failure to communicate must have been intentional rather than merely inadvertent. > Jaime could not have been unaware that his heart beat would at times rise to high and alarming levels and that he had consulted a doctor twice two months before applying for non-medical insurance. > The last medical consultation took place just the day before the insurance application was filed. 2. YES Ratio Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the communication should have been made, in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance; that "probable and reasonable influence of the farts" concealed must, of course, be determined objectively, by the judge ultimately. Reasoning - The information which Jaime failed to disclose was material to the ability of Great Pacific to estimate the probable risk he presented as a subject of life insurance. - Had Canilang disclosed his visits to his doctor, the diagnosis made and the medicines prescribed by such doctor, in the insurance application, it may be reasonably assumed that Great Pacific would have made further inquiries and would have probably refused to issue a non-medical insurance policy or, at

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the very least, required a higher premium for the same coverage. - As held in the case of Saturnino vs. PhilippineAmerican Life Insurance, “the waiver of medical examination in a non-medical insurance contract renders even more material the information inquired of the applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not.” Disposition the Petition for Review is DENIED for lack of merit and the Decision of the Court of Appeals dated 16 October 1989 in C.A.-G.R. SP No. 08696 is hereby AFFIRMED. YU PANG CHENG v. CA 105 PHIL 930 BAUTISTA ANGELO; May 29, 1959 FACTS - September 5, 1950: Yu Pang Eng submitted parts II and III of his application for insurance consisting of the medical declaration made by him to the medical examiner of defendant and the medical examiner's report - September 7: he submitted part I of his application which is the declaration made by him to an agent of defendant - September 8: defendant issued to the insured Policy No. 812858 - December 27, 1950: the insured entered St. Luke's Hospital for medical treatment but he died on February 27, 1951. - According to the death certificate, he died of "infiltrating medullary carcinoma, Grade 4, advanced cardiac and of lesser curvature, stomach metastases spleen." - Plaintiff, brother and beneficiary of the insured, demanded from defendant the payment of the proceeds of the insurance policy and when the demand was refused, he brought the present action. - The insured, in his application for insurance, particularly in his declarations to the examining physician, stated the following in answering the questions propounded to him: 14. Have you ever had any of the following diseases or symtoms? Each question must be read and answered "Yes" or "No.". "Gastritis, Ulcer of the Stomach or any disease of that organ? No.

INSURANCE
"Vertigo, Dizziness, Fainting-spells or Unconsciouness? No. "Cancer, Tumors or Ulcers of any kind? No. - 15. Have you ever consulted any physician riot included in any of the above answers? Give names and address or physicians list ailments or accidents and date. No." - It appears that the insured entered the Chinese General Hospital for medical treatment on January 29, 1950 having stayed there up to February 11, 1950. - An X-ray picture of his stomach was taken and the diagnosis made of him by his doctors showed that his illness was "peptic ulcer, bleeding." ISSUE WON the insured is guilty of concealment of some facts material to the risk insured against which has the effect of avoiding the policy as found by respondent court. HELD - It should be noted that the insured's confinement in the Chinese General Hospital took place from January 29, 1950 to February 11, 1950, whereas his application for insurance wherein he stated his answers to the questions propounded to him by the examining physician of defendant was submitted to defendant on September 5, 1950. - It is apparent that when the insured gave his answers regarding his previous ailment, particularly with regard to "Gastritis, Ulcer of the Stomach or any disease of that organ" and "Vertigo, Dizziness, Fainting-spells or Unconsciousness", he concealed the ailment of which he was treated in the Chinese General Hospital which precisely has direct connection with the subject of the questions propounded. - The negative answers given by the insured regarding his previous ailment, or his concealment of the fact that he was hospitalized and treated for sometime of peptic ulcer and had suffered from "dizziness, anemia, abdominal pains and tarry stools", deprived defendant of the opportunity to make the necessary inquiry as to the nature of his past illness so that it may form its estimate relative to the approval of his application. - Had defendant been given such opportunity, considering the previous illness of the insured as disclosed by the records of the Chinese General Hospital, defendant would probably had never consented to the issuance of the policy in question. In fact, according to the death certificate, the insured died of "infiltrating medullary carcinoma, Grade, 4, advanced cardiac and of lesser curvature, stomach metastases spleen", which may have a direct connection with his previous illness. - Our Insurance Law provides that "A neglect to communicate that which a party knows and ought to communicate, is called concealment" (Section 25, Act No. 2427). Whether intentional or unintentional, the concealment entitles the insurer to rescind the contract of insurance (Section 26). - Our law even requires the insured to communicate to the insurer all facts within his knowledge which are material to the contract and which the other party has not the means of ascertaining (Section 27), and the materiality is to be determined not by the event but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due (Section 30). - Argente vs. West Coast Life Insurance Co.: "One ground for the rescission of a contract of insurance under the Insurance Act is 'a concealment', which in section 25 is defined 'A neglect to communicate that which a party knows and ought to communicate.' Appellant argues that the concealment was immaterial and insufficient to avoid the policy. We cannot agree. In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue, the truth or falsity of the answers become the determining factor. If the policy was procured by fraudulent representations, the contract of insurance apparently set forth therein was never legally existent. It can fairly be assumed that had the true facts been disclosed by the assured, the insurance would never have been granted." Disposition Decision affirmed. Petition for review which set aside the in turn granted the civil case filed by Assurance.

Page 59
on certiorari of the CA decision, decision of CFI Manila, which had complaint for a sum of money in Pacific Banking against Oriental

GREAT PACIFIC LIFE v. CA (supra p.34) PACIFIC BANKING CORP v. ASSURANCE CORPORATION) 168 SCRA 1 PARAS; November 28, 1988 NATURE CA (ORIENTAL

FACTS - October 21,1963: an open Fire Policy was issued to the Paramount Shirt Manufacturing Co. (insured), by which Oriental Assurance Corporation bound itself to indemnify the insured for any loss or damage, not exceeding P61,000.00, caused by fire to its property consisting of stocks, materials and supplies usual to a shirt factory, including furniture, fixtures, machinery and equipment while contained in the ground, second and third floors of the building situated at number 256 Jaboneros St., San Nicolas, Manila, for a period of one year commencing from that date to October 21, 1964. - Insured was at the time of the issuance of the policy and is up to this time, a debtor of Pacific Banking in the amount of not less P800,000.00 and the goods described in the policy were held in trust by the insured for the Pacific Banking under thrust receipts. - Said policy was duly endorsed to Pacific Banking as mortgagee/trustor of the properties insured, with the knowledge and consent of Oriental Assurance to the effect that "loss if any under this policy is payable to the Pacific Banking Corporation". - While the aforesaid policy was in full force and effect, a fire broke out on the subject premises destroying the goods contained in its ground and second floors. Counsel for the Pacific Banking sent a letter of demand to Oriental Assurance for indemnity due to the loss of property by fire. Oriental Assurance informed counsel that it was not yet ready to accede to the latter's demand as the former is awaiting the final report of the insurance adjuster, H.H. Bayne Adjustment Company. - Said insurance adjuster notified counsel for the Pacific Banking that the insured under the policy had not filed any claim with it, nor submitted proof of loss which is a clear violation of Policy Condition No.11, and for which reason, determination of the liability of Oriental Assurance could not be had. Pacific Banking's counsel replied asking the insurance adjuster to verify from the records of the Bureau of Customs the entries of merchandise taken into the customs bonded warehouse razed by fire as a reliable proof of loss.

Consequently.000. the insured had been guilty of a false declaration. WON mortgagee/assignee can still claim from the insurance HELD 1. or in the very least.Court of Appeals reversed. P50. Page 60 2.Subject mortgage clause pecifically provides: “Loss. it must be deemed to have waived the requirement of proof of loss. . . Case was submitted for decision. the risk does not attach and the policy never becomes a contract between the parties.00 issued in favor of Paramount Shirt Manufacturing Co.000. the total absence of such notice nullifies the policy. misrepresentation.000. cannot be entitled to such proceeds. . 00 with Empire Surety and P250. the cause of action will accrue from the time the insurer finally rejects the claim for payment. 3.Generally.Policy Condition No. and P25. Pacific Banking field before CFI an action for a sum of money against the Oriental Assurance. .The paragraph clearly states the exceptions to the general rule that insurance as to the interest of the mortgagee.It is not disputed that the insured failed to reveal before the loss three other insurances.Concealment of the aforecited co-insurances can easily be fraud. the mortgagee/ trustor shall. and (b) failure of the insured to file the required proof of loss prior to court action. forfeited said right. it being hereby understood and agreed that this insurance as to the interest of the mortgagee/trustor only herein. YES . but when the policy provides that no action shall be brought unless the claim is first presented extrajudicially in the manner provided in the policy.” . Oriental Asurance was allowed to present additional evidence. Pacific Banking did not only object to the introduction of evidence but on the contrary. A void or inexistent contract is one which has no force and effect from the very beginning. it could have hesitated or plainly desisted from entering into such contract. Falsehood in such representations is not shown to vary or add to the contract. Pacific Banking > presented evidence that insured has undeclared co-insurances with the following: P30.Be that as it may.00 with Wellington Insurance. the whole foundation of the contract fails. the Court can consider a fact which surfaced only after trial proper. if any. SC has ample authority to give beyond the pleadings where in the interest of justice and the promotion of public policy. WON insured is guilty of fraud 2. as if it had never been entered into.000. also not pleaded in the Motion to Dismiss.The crux of the controversy centers on two points: (a) unrevealed co-insurances which violated policy conditions No. Bayne Adjustment Co. or to terminate a contract which has once been made. It is but fair and just that where the insured who is primarily entitled to receive the proceeds of the policy has by its fraud and/or misrepresentation. presented the very evidence that proved its existence. that in case the mortgagor or owner/ trustee neglects or refuses to pay any premium.Argument that notice of co-insurances may be made orally is preposterous and negates policy condition No. But upon MR. NO .INSURANCE .H.000. a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not. the superstructure does not arise. that was deception. and which cannot be validated either by time or by ratification. under this policy.00 with Asian Surety. policy condition No. all benefit under this policy shall be forfeited. . Oriental Assurance defenses (a) lack of formal claim by insured over the loss and (b) premature filing of the suit as neither plaintiff nor insured had submitted any proof of loss on the basis of which defendant would determine its liability and the amount thereof.' " CFI eventually adjudged Oriental Assurance liable to the Pacific Banking under the said contract of insurance. or misrepresentation or arson. undertaken by insured Paramount on the same property covered by its policy with Oriental Assurance whereas the only co-insurances declared in the subject policy are those of P30. 3 of the policy in relation to the other Insurance Clause. or which may subsequently be effected.00 with Victory . . shall be payable to the PACIFIC BANKING CORPORATION Manila mortgagee/trustor as its interest may appear. 20 which requires every notice and other communications to the insurer to be written or printed. . provided.NOTE: the defense of fraud and/or violation of nondeclaration of co-insurances was not pleaded in the answer. or arson of the mortgagor or owner/trustee of the property insured.For failure of the insurance company to pay the loss as demanded. had the insurer known that there were many co-insurances. Hence. the insured was guilty of clear fraud. P25. 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. covering any of the property hereby insured. Otherwise stated. but to show that no contract has ever existed (Tolentino). By reason of said unrevealed insurances. Representations of facts are the foundation of the contract and if the foundation does not exist. Pacific Banking's MR denied. either to the Oriental Assurance or its adjuster H. 3 explicitly provides: “The Insured shall give notice to the Company of any insurance already effected.00 with Malayan. ISSUES 1.” .000.As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property. . . the cause of action on the policy accrues when the loss occurs. with more reason Pacific Banking which is merely claiming as indorsee of said insured. 11 specifically provides that the insured shall on the happening of any loss or damage give notice to the company and shall within fifteen (15) days after such loss or damage deliver to the Oriental Assurance (a) a claim in writing giving particular account as to the articles or goods destroyed and the amount of the loss or damage and (b) particulars of all other . on demand pay the same. shall not be invalidated by any act or neglect except fraud or misrepresentation.Pacific Banking's contention that the allegation of fraud is but a mere inference or suspicion is untenable. there is a need to make its own finding to support its conclusion. Otherwise stated.CFI denied Oriental Assurance's motion on the ground that since the defense was raised for the first time. Concrete evidence of fraud or false declaration by the insured was furnished by the Pacific Banking itself when the facts alleged in the policy under clauses "Co-Insurances Declared" and "Other Insurance Clause" are materially different from the actual number of co-insurances taken over the subject property.00 with South Sea. .In the case at bar. namely: fraud.000. "in order to prove that 'insured has committed a violation of condition No. cannot be invalidated. in the principal sum of P61.The fact of fraud was tried by express or at least implied consent of the parties. .

. RTC granted Page 61 the plea on the ground that that the facts concealed by the insured were made in good faith and under the belief that they need not be disclosed. plans. procure and give to the company all such further particulars. the former did not furnish the latter whatever pertinent documents were necessary to prove and estimate its loss. Disposition Petition dismissed.Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. Pacific Banking shifted upon Oriental Assurance the burden of fishing out the necessary information to ascertain the particular account of the articles destroyed by fire as well as the amount of loss. June 22. Pacific Banking should have endeavored to file the formal claim and procure all the documents. 1987: the insured died in a plane crash. The insured is specifically required to disclose to the insurer matters relating to his health. and that the disclosure was not material since the policy was non-medical. While it is a cardinal principle of insurance law that a policy or contract of insurance is to be construed liberally in favor of the insured and strictly as against the insurer company yet.INSURANCE insurances. 11 is a requirement sine qua non to the right to maintain an action as prior thereto no violation of Pacific Banking's right can be attributable to Oriental Assurance. ordinary and popular sense. much less the herein Pacific Banking. . like other contracts. papers. Pacific Banking merely wrote letters to Oriental Assurance to serve as a notice of loss. bladder disorder?” . thereafter. SEC. the insured must show himself within those terms. . there was no real necessity for bringing suit. vouchers. Respondents’ Comments > The actual cause of death was not relevant to the concealed information. Bacani procured a life insurance contract for himself from SUNLIFE (petitioner) valued at P100K. are to be construed according to the sense and meaning of the terms which the parties themselves have used. documents. if any. The terms of the policy constitute the measure of the insurer's liability. The matters concealed would have definitely affected petitioner's action on his application. . contracts of insurance. Bernarda Bacani filed a claim with Sunlife. Bernarda Bacani (respondent). in forming his estimate of the disadvantages of the proposed contract or in making his inquiries . Instead.Sunlife discovered that two weeks prior to the issuance. was confined.Pacific Banking prematurely filed the civil case and dismissal thereof was warranted under the circumstances. inventory needed by Oriental Assurance or its adjuster to ascertain the amount of loss and after compliance await the final rejection of its claim. insured was required "at his own expense to produce. The agreement has the force of law between the parties. Indeed. CA affirmed. and underwent tests. is called a concealment. . invoices. SUNLIFE ASSURANCE COMPANY v. Petitioner conducted an investigation and its findings prompted it to reject the claim on the ground that the insured did not disclose facts material to the issuance of the policy. 1986: Robert John B. specifications. Likewise. but the latter denied the appeal on the ground that the cause of death was unrelated to the facts concealed by the insured. and such violation or want of performance has not been waived by the insurer. The compliance of the insured with the terms of the policy is a condition precedent to the light of recovery. Despite the notice. The insured gave false statements in the application when he answered in the negative to the question “have you ever had or sought advice for urine. The parties have a right to impose such reasonable conditions at the time of the making of the contract as they may deem wise and necessary. FACTS . 26 (IC) A neglect to communicate that which a party knows and ought to communicate.The information which the insured failed to disclose was material and relevant to the approval and the issuance of the insurance policy.April 15. Since the required claim by insured. .It appearing that insured has violated or failed to perform the conditions under No. . the law does not encourage unnecessary litigation. either by approving it with the corresponding adjustment for a higher premium or rejecting the same. it follows that Oriental Assurance could not be deemed to have finally rejected Pacific Banking's claim and therefore the latter's cause of action had not yet arisen.The waiver of a medical examination [in a nonmedical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases .Sunlife appealed to the CA. and in order to recover. 3 and 11 of the contract. If such terms are clear and unambiguous. ISSUE WON the concealment renders the insurance policy rescissible HELD YES Ratio The terms of the contract are clear. 1988: Bacani and her husband filed for specific performance against Sunlife. thus rescission of the contract may be invoked by the insurance company. kidney. BACANI) 245 SCRA 268 QUIASON.Evidence adduced shows that 24 days after the fire. It appears that such concealment was deliberate on the part of the insured. 31 (IC) Materiality is to be determined not by the event. together with the preliminary submittal of relevant documents had not been complied with. and the policy was entered into by the insured in good faith. . the insured cannot recover.June 26. they must be taken and understood in their plain. . proofs and information with respect to the claim". the function and duty of the courts is simply to enforce and carry out the contracts actually made. insured was diagnosed with renal failure. books.November 17. 1995 NATURE A petition for review on certiorari. Compliance with condition No. CA (SPS. Petitioner’s Claim > The insured did not disclose facts relevant to the issuance of the policy.Oriental Assurance and its adjuster notified Pacific Banking that insured had not yet filed a written claim nor submitted the supporting documents in compliance with the requirements set forth in the policy. seeking the benefits of the insurance policy taken by her son. Courts are not permitted to make contracts for the parties. the latter remained unheedful. The designated beneficiary was his mother. but solely by the probable and reasonable influence of the facts upon the party to whom communication is due. Reasoning SEC. . duplicates or copies thereof.Good faith is no defense in concealment. As before such final rejection.

for the reason that knowing fully all that the number of hydrants demanded therein never existed from the very beginning.Qua Chee Gan informed the insurance company of the fire. fulfillment whereof is claimed. WON Qua Chee Gan caused the fire 5. and in any of such cases the contract is void.It is proven that the signatures on the insurance applications reading "Dominado Albay" are false and forged. LAW UNION AND ROCK 98 PHIL 85 REYES. and despite the fact that the beneficiary submitted satisfactory proofs of his death and that the defendant company investigated the event. NO . ISSUE WON the life insurance obtained by Dominador Albay was issued through fraud and deceit HELD YES Ratio In a contract where one of the contracting parties may have given his consent through error. QUA CHEE GAN v. January 24. the insured died. naming as the beneficiary in case of his death the plaintiff Francisca Eguaras. . despite this nullity. And how many insured.Fire of undetermined origin that broke out in the early morning of July 21. to pay. Fire adjusters of the company conducted an Page 62 extensive investigation. intimidation. said policy being in force. or deceit.Qua Chee Gan. NO . These bodegas were used for the storage of stocks of copra and of hemp. The CFI ruled in favor of Qua Chee Gan and ordered Law Union Rock Co. They were acquitted. where counsel of the insurance company acted as a private prosecutor. 263 TORRES.The insurance company avers that the insured violated the hemp warranty when it admitted that it had 36 cans of gasoline in the building. GREAT EASTERN 33 PHIL. totaling P398.. and received the corresponding premiums. Vidal to be examined was not the real Dominador Albay. and claim that the judgment produces the effect of res judicata in the present suit. that the person who presented himself to Dr. and therefore the conclusions reached by the court in the judgment it rendered in the criminal proceedings for estafa do not affect this suit. but Castor Garcia who was positively identified by Dr. . . for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. wherefore it is plain that the insurance contract between the defendant and Dominador Albay is null and void because it is false. nor can they produce in the present suit the force of res adjudicata. but he only had 2. baled and loose.Qua Chee Gan insured 4 of his bodegas with Law Union & Rock Insurance Co in 1937. that after compliance with the requisites and the investigation carried on by the defendant company. for in ordinary parlance. WON the claims contained false and fraudulent statements HELD 1. WON the insured violated the Hemp warranty 3.INSURANCE suffered. WON there was a breach of the fire hydrant warranty 2. 1940.This civil suit was then instituted to claim against the insurance company. Castor Garcia and Francisca Eguaras. and ineffective. WON there was an error in the amount of copra and hemp lost 6. and that the fire had been deliberately caused by the insured or by other persons in connivance with him. .Anent the finding that the facts concealed had no bearing to the cause of death of the insured. the appellant nevertheless issued the policies in question subject to such warranty. no crime was committed." The cause relied upon by the insurer speaks of "oils (animal and/or vegetable and/or mineral and/or their liquid products having a flash point below 300o Fahrenheit". fraudulent and illegal. December 17. . P370. claiming violation of warranties and conditions. Vidal. gutted and completely destroyed Bodegas Nos. and is decidedly ambiguous and uncertain. Reasoning . still it refused and continues to refuse to pay to the plaintiff the value of the policy.000).81 (but reduced to the full amount of the insurance. but it was conclusively demonstrated by the trial that deceit entered into the insurance contract. There may not have been estafa in the case at bar.562. it may well be .Francisca Eguaras filed a written complaint in court.000. that at the time of the application for insurance and the issuance of the policy which is the subject matter of this suit the real Dominador Albay was informed of all those machinations. . We are in agreement with the trial Court that the appellant is barred by waiver (or rather estoppel) to claim violation of the so-called fire hydrants warranty. It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty. EGUARAS 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 Disposition Petition is granted and the decision of CA is reversed and set aside. . alleging as a cause of action that her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure his life for the sum of P5.Defendant set forth in special defense that the insurance policy issued in the name of Dominador Albay had been obtained through fraud and deceit known and consented to by the interested parties and is therefore completely illegal. 2 and 4. ISSUES 1. his brother and his employees were tried for arson. and lasted almost one week. They were acquitted. violence. Disposition The judgment appealed from is reversed and the defendant absolved from the complaint without special finding as to the costs. it accepted the application for insurance and issued the policy. 2. 1. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. the Insurance Company resisted payment. even though. filing of fraudulent claims.It is argued that he should have 11 fire hydrants in the compound. that. 1916 NATURE Appeal filed through bill of exceptions from the judgment of the CFI FACTS . WON Qua Chee Gan is guilty of overvaluation 4.A criminal case for frustrated estafa was filed by defendant against Ponciano Remigio. with the merchandise stored therein. Qua Chee Gan submitted the corresponding fire claims. 1955 FACTS . "Oils" mean "lubricants" and not gasoline or kerosene. void.

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wondered, are in a position to understand or determine "flash point below 003o Fahrenheit. Here, again, by reason of the exclusive control of the insurance company over the terms and phraseology of the contract, the ambiguity must be held strictly against the insurer and liberally in favor of the insured, especially to avoid a forfeiture - Another point that is in favor of the insured is that the gasoline kept in Bodega No. 2 was only incidental to his business, being no more than a customary 2 day's supply for the five or six motor vehicles used for transporting of the stored merchandise). "It is well settled that the keeping of inflammable oils on the premises though prohibited by the policy does not void it if such keeping is incidental to the business." (Bachrach vs. British American Ass. Co., 17 Phil. 555, 560) 3. NO - The charge that the insured failed or refused to submit to the examiners of the insurer the books, vouchers, etc. demanded by them was found unsubstantiated by the trial Court, and no reason has been shown to alter this finding. - In view of the discrepancy in the valuations between the insured and the adjuster Stewart for the insurer, the Court referred the controversy to a government auditor, Apolonio Ramos; but the latter reached a different result from the other two. Not only that, but Ramos reported two different valuations that could be reached according to the methods employed. Clearly then, the charge of fraudulent overvaluation cannot be seriously entertained. 4. NO - This defense is predicted on the assumption that the insured was in financial difficulties and set the fire to defraud the insurance company, presumably in order to pay off the Philippine National Bank, to which most of the insured hemp and copra was pledged. This defense is fatally undermined by the established fact that, notwithstanding the insurer's refusal to pay the value of the policies the extensive resources of the insured enabled him to pay off the National Bank in a short time; and if he was able to do so, no motive appears for attempt to defraud the insurer. While the acquittal of the insured in the arson case is not res judicata on the present civil action, the insurer's evidence, to judge from the decision in the criminal case, is practically identical in both cases and must lead to the same result, since the proof to establish the defense of connivance at the fire in order to defraud the insurer "cannot be materially less convincing than that required in order to convict the insured of the crime of arson. 5. NO - As to the defense that the burned bodegas could not possibly have contained the quantities of copra and hemp stated in the fire claims, the insurer's case rests almost exclusively on the estimates, inferences and conclusions of its adjuster investigator, Alexander D. Stewart, who examined the premises during and after the fire. His testimony, however, was based on inferences from the photographs and traces found after the fire, and must yield to the contradictory testimony of engineer Andres Bolinas, and specially of the then Chief of the Loan Department of the National Bank's Legaspi branch, Porfirio Barrios, and of Bank Appraiser Loreto Samson, who actually saw the contents of the bodegas shortly before the fire, while inspecting them for the mortgagee Bank 6. NO - Appellant insurance company also contends that the claims filed by the insured contained false and fraudulent statements that avoided the insurance policy. But the trial Court found that the discrepancies were a result of the insured's erroneous interpretation of the provisions of the insurance policies and claim forms, caused by his imperfect knowledge of English, and that the misstatements were innocently made and without intent to defraud. The trial court’s ruling must be upheld. - For example, the occurrence of previous fires in the premises insured in 1939, altho omitted in the claims, Exhibits EE and FF, were nevertheless revealed by the insured in his claims Exhibits Q (filed simultaneously with them), KK and WW. Considering that all these claims were submitted to the smae agent, and that this same agent had paid the loss caused by the 1939 fire, we find no error in the trial Court's acceptance of the insured's explanation that the omission in Exhibits EE and FF was due to inadvertance, for the insured could hardly expect under such circumstances, that the 1939 would pass unnoticed by the insurance agents. Similarly, the 20 per cent overclaim on 70 per cent of the hemo stock, was explained by the insured as caused by his belief that he was entitled to include in the claim his expected profit on the 70 per cent of the hemp, because the same was already contracted for and sold to other parties before the fire occurred. Compared with other cases of over-valuation recorded in our judicial annals, the 20 per cent

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excess in the case of the insured is not by itself sufficient to establish fraudulent intent. Certainly, the insured's overclaim of 20 per cent in the case at bar, duly explained by him to the Court a quo, appears puny by comparison (compared to other cases cited by the court), and can not be regarded as "more than misstatement, more than inadvertence of mistake, more than a mere error in opinion, more than a slight exaggeration" that would entitle the insurer to avoid the policy. It is well to note that the overcharge of 20 per cent was claimed only on a part (70 per cent) of the hemp stock; had the insured acted with fraudulent intent, nothing prevented him from increasing the value of all of his copra, hemp and buildings in the same proportion. This also applies to the alleged fraudulent claim for burned empty sacks, that was likewise explained to our satisfaction and that of the trial Court. The rule is that to avoid a policy, the false swearing must be willful and with intent to defraud which was not the cause. Of course, the lack of fraudulent intent would not authorize the collection of the expected profit under the terms of the polices, and the trial Court correctly deducted the same from its award. Disposition Decision affirmed ARGENTE v. WEST COAST LIFE 51 PHIL 725 MALCOLM; March 19, 1928 FACTS - This is an action upon a joint life insurance policy for P15,000 issued by the West Coast Life Insurance Co., on May 15, 1925, in favor of Bernardo Argente, and his wife, Vicenta de Ocampo, the latter having died on November 18, 1925. Fraud in obtaining the policy was pleaded by way of special defense. On the issue thus suggested, the court adopted the theory of the defendant, and held the insurance policy null and void, with the result that the complaint was dismissed, with costs. -Bernardo Argente signed an application for joint insurance with his wife in the sum of P2,000. The wife, Vicenta de Ocampo, signed a like application for the same policy. - Bernardo Argente and his wife was examined by Dr. Cesareo Sta. Ana, a medical examiner for the West Coast Life Insurance Co. which did not show previous and existing health problems. - A temporary policy for P15,000 was issued to Bernardo Argente and his wife as of May 15, 1925. In view of the fact that more than thirty days had

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elapsed since the applicants were examined by the company's physician, each of them was required to file a certificate of health before the policy was delivered to them. - On November 18, 1925, Vicenta de Ocampo died of cerebral apoplexy. Thereafter Bernardo Argente presented a claim. Following investigation conducted by the Manager of the Manila office of the insurance company, it was apparently disclosed that the answers given by the insured in their medical examinations with regard to their health and previous illnesses and medical attendance were untrue. West Coast Life Insurance Co. refused to pay the claim of Bernardo Argente, and wrote him to the effect that the claim was rejected because the insurance was obtained through fraud and misrepresentation. - It is admitted that it appears in the Medical Examiner's Report that Bernardo Argente gave false responses. As well as with the Medical Examiner's Report that Vicenta de Ocampo. It is, however, not disputed that Vicenta de Ocampo was taken by a patrolman, at the request of her husband, Bernardo Argente, on May 19, 1924, to the Meisic police station, and from there was transferred to the San Lazaro Hospital. In San Lazaro Hospital, her case was diagnosed by the admitting physician as "alcoholism," but later Doctor Domingo made a diagnosis of probable "manic-depressive psychosis," and still, later in Mary Chiles Hospital, made a final diagnosis of "phycho-neurosis." - Bernardo Argente, while readily conceding most of the facts herein narrated, yet alleges that both he and his wife revealed to the company's physician, Doctor Sta. Ana, all the facts concerning their previous illnesses and medical attendance, but that Doctor Sta. Ana, presumably acting in collusion with the insurance agent, Jose Geronimo del Rosario, failed to record them in the medical reports. The evidence on these points consists of the testimony of the plaintiff and his subordinate clerk, Apolonio Espiritu, on the one hand, and of the testimony of Doctor Sta. Ana and Jose Geronimo del Rosario on the other. This was rejected by the Trial Court. Trial judge found with the insurance company with regard to the question of fact. SC agrees. There appears no motive whatever on the part of Doctor Sta. Ana to falsify the Medical Examiner's Reports and thereby not only jeopardize his career as a physician, but also gravely implicate himself criminally. ISSUE WON the contract of insurance may be rescinded

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be known by him. And a concealment of such facts vitiates the policy. 'It does not seem to be necessary . . . that the . . . suppression of the truth should have been willful.' If it were but an inadvertent omission, yet if it were material to the risk and such as the plaintiff should have known to be so, it would render the policy void. But it is held that if untrue or false answers are given in response to inquiries and they relate to material facts the policy is avoided without regard to the knowledge or fraud of assured, although under the statute statements are representations which must be fraudulent to avoid the policy. So under certain codes the important inquiries are whether the concealment was willful and related to a matter material to the risk. xxx xxx xxx "If the assured has exclusive knowledge of material facts, he should fully and fairly disclose the same, whether he believes them material or not. But notwithstanding this general rule it will not infrequently happen, especially in life risks, that the assured may have a knowledge actual or presumed of material facts, and yet entertain an honest belief that they are not material. . . . The determination of the point whether there has or has not been a material concealment must rest largely in all cases upon the form of the questions propounded and the exact terms of the contract. Thus, where in addition to specifically named diseases the insured was asked whether he had had any sickness within ten years, to which he answered 'No,' and it was proven that within that period he had had a slight attack of pharyngitis, it was held a question properly for the jury whether such an inflammation of the throat was a 'sickness' within the intent of the inquiry, and the court remarked on the appeal decision that if it could be held as a matter of law that the policy was thereby avoided, then it was a mere device on the part of insurance companies to obtain money without rendering themselves liable under the policy. . . . " . . . The question should be left to the jury whether the assured truly represented the state of his health so as not to mislead or deceive the insurer; and if he did not deal in good faith with the insurer in that matter, then the inquiry should be made, Did he know the state of his health so as to be able to furnish a proper answer to such questions as are propounded? A Massachusetts case, if construed as it is frequently cited, would be opposed to the above conclusion; but, on the

HELD YES - Bernardo Argente and his wife applications’ were false with respect to their state of health during the period of five years preceding the date of such applications and that they knew the representations made by them in their applications were false. The question arises as to the state of the law in relation thereto. - One ground for the rescission of a contract of insurance under the Insurance Act is "a concealment," which in section 25 is defined as "A neglect to communicate that which a party knows and ought to communicate." In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue, the truth or falsity of the answers become the determining factor. If the policy was procured by fraudulent representations, the contract of insurance apparently set forth therein was never legally existent. It can fairly be assumed that had the true facts been disclosed by the assured, the insurance would never have been granted. - In Joyce, The Law of Insurance, second edition, volume 3, Chapter LV, is found the following: "The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into accepting the risk, or accepting it at the rate of premium agreed upon; The insurer, relying upon the belief that the assured will disclose every material fact within his actual or presumed knowledge, is misled into a belief that the circumstance withheld does not exist, and he is thereby induced to estimate the risk upon a false basis that it does not exist. The principal question, therefore, must be, Was the assurer misled or deceived into entering a contract obligation or in fixing the premium of insurance by a withholding of material information or facts within the assured's knowledge or presumed knowledge? "It therefore follows that the assurer in assuming a risk is entitled to know every material fact of which the assured has exclusive or peculiar knowledge, as well as all material facts which directly tend to increase the hazard or risk which are known by the assured, or which ought to be or are presumed to

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contrary, it sustains it, for the reason that symptoms of consumption had so far developed themselves within a few months prior to effecting the insurance as to induce a reasonable belief that the applicant had that fatal disease, and we should further construe this case as establishing the rule that such a matter cannot rest alone upon the assured's belief irrespective of what is a reasonable belief, but that it ought to be judged by the criterion whether the belief is one fairly warranted by the circumstances. A case in Indiana, however, holds that if the assured has some affection or ailment of one or more of the organs inquired about so well defined and marked as to materially derange for a time the functions of such organ, as in the case of Bright's disease, the policy will be avoided by a nondisclosure, irrespective of the fact whether the assured knew of such ailment or not. . . ." - Lastly, appellant contends that even if the insurance company had a right to rescind the contract, such right cannot now be enforced in view of the provisions of section 47 of the Insurance Act providing "Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right must be exercised previous to the commencement of an action on the contract." This section was derived from section 2583 of the California Civil Code, but in contrast thereto, makes use of the imperative "must" instead of the permissive "may." Nevertheless, there are two answers to the problem as propounded. The first is that the California law as construed by the code examiners, at whose recommendation it was adopted, conceded that "A failure to exercise the right (of rescission), cannot, of course, prejudice any defense to the action which the concealment may furnish." (Codes of California Annotated; Tan Chay Heng vs. West Coast Life Insurance Company [1927], p. 80, ante.) The second answer is that the insurance company more than one month previous to the commencement of the present action wrote the plaintiff and informed him that the insurance contract was void because it had been procured through fraudulent representations, and offered to refund to the plaintiff the premium which the latter had paid upon the return of the policy for cancellation. As held in California as to a fire insurance policy, where any of the material representations are false, the insurer's tender of the premium and notice that the policy is canceled, before the commencement of suit thereon, operate to rescind the contract of insurance. (Rankin vs. Amazon Insurance Co. [1891], 89 Cal., 203.) Disposition Judgment affirmed, with the costs of this instance against the appellant. GREAT PACIFIC LIFE v. CA (NGO HING) 89 SCRA 543 DE CASTRO, J; April 30, 1979 NATURE Petition for certiorari FACTS - On March 14, 1957, private respondent Ngo Hing filed an application with the Great Pacific Life Assurance Co. (Pacific Life) for a 20 year endowment policy of P50k on the life of his 1 year old daughter, Helen. Ngo Hing supplied the essetntial data which petitioner Mondragon, branch manager of the Pacific Life in Cebu, wrote on the corresponding form in his own handwriting, later typing the data on an application form signed by Ngo Hing. The latter paid the P1077.75 annual premium but retained P1,317 as commission as he was also a duly authorized agent of Pacific Life. The binding deposit receipt was then issued to Ngo Hing; Mondragon handwrote his strong recommendation for the approval of the application on the back of the form. - On April 30, Mondragon received a letter from Pacific Life which stated that the 20 year endowment plan was not available for minors below 7, but that Pacific Life could consider the same under the Juvenile Triple Action Plan, advising that if the offer was acceptable, the Juvenile Non-Medical Declaration be sent to the company. -Mondragon allegedly failed to inform Ngo Hing of the non-acceptance of the insurance plan, instead writing Pacific Life again, recommending the approval of the endowment plan to children since customers had been asking for such coverage since 1954. -On May 28, 1957, Helen died of influenza. Ngo Hing sought the payment of the proceeds of the insurance, but having failed to do so, filed an action for recovery with the CFI of Cebu. The Court ordered Pacific Life to pay P50k with 6% interest, hence this petition. ISSUE WON the binding deposit receipt constituted a temporary contract of the life insurance in question HELD

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NO - The binding deposit receipt is merely a provisional contract and only upon compliance with the ff conditions: (1) that the company be satisfied that the applicant was insurable on standard rates (2) that if the company does not accept the application and offers a different policy, the insurance contract shall not be binding until the applicant accepts the new policy (3) that if the applicant is not found to be insurable on standard rates and the application is disapproved, the insurance shall not be in force at any time and the premium be returned to the applicant. -This implies the receipt is merely an acknowledgement, on behalf of the company, that the Cebu branch of Pacific Life had received the premium and had accepted the application subject to processing by the insurance company, which will approve or reject it depending on whether the applicant is insurable on standard rates. As such, the receipt was never in force—it does not insure outright. No liability attaches until the principal approves the risk and a receipt is given by the agent; because private respondent failed to accept Pacific Life’s offer for the Juvenile Triple Action plan, there was no meeting of the minds and thus no contract. Also, being an authorized agent of Pacific Life, Ngo Hing must have known the company did not offer the insurance applied for and merely took a chance on Mondragon’s recommendation. Disposition the decision appealed from is set aside, absolving Pacific Life from their civil liabilities EDILLON v. MANILA BANKERS LIFE 117 SCRA 187 VASQUEZ; September 30, 1982 NATURE Appeal from a decision of the CFI FACTS - Sometime in April 1969, Carmen O, Lapuz applied with respondent insurance corporation for insurance coverage against accident and injuries. In the application form which was dated April 15, 1969, she gave the date of her birth as July 11, 1904. On the same date, she paid the sum of P20.00 representing the premium for which she was issued the corresponding receipt signed by an authorized agent of the respondent insurance corporation. Upon the filing of said application and the payment of the premium on the policy applied for, the respondent

The key phrase in the second paragraph of Section 48 is "for a period of two years. The accident which resulted in the death of the insured. . the respondent insurance corporation received her payment of premium and issued the corresponding certificate of insurance without question. or. considering its prominence thereon and its materiality to the coverage applied for. Lapuz died in a vehicular accident. Disposition Judgment appealed from is REVERSED and SET ASIDE and respondent insurance corporation is ordered to pay to the petitioner the proceeds of Insurance HARDING v. such right must be exercised previous to the commencement of an action on the contract. 1969 or during the effectivity of the Insurance. ISSUE WON the acceptance by the private respondent insurance corporation of the premium and the issuance of the corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of overage stated in the said certificate of insurance HELD YES ." It is pointed out that the insured being over sixty (60) years of age when she applied for the insurance coverage. Lapuz its Certificate of Insurance. Her claim having been denied. COMMERCIAL UNION (supra p. the respondent insurance corporation relies on a provision contained in the Certificate of Insurance.The age of the insured Carmen 0. 1975. If the private respondent failed to act. Regina L." . He was only pressured by insistent salesmen to do so -The legislative answer to the arguments posed by the petitioners is the "incontestability clause" added by the second paragraph of Section 48. applied for life insurance in the amount of P 80. through the negligence or incompetence of its employees for which it has only itself to blame. and no risk on the part of the respondent insurance corporation had arisen therefrom. Despite such information which could hardly be overlooked in the application form. CA (PHILIPPINE INSURANCE COMPANY) 174 SCRA 403 GUTIERREZ. Commissioner denied petition. 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. father of herein petitioners. the policy was null and void. . 1969 or FORTY-FIVE (45) DAYS after the insurance coverage was applied for.On April 26.According to the petitioners. . .. The policy was to be effective for a period of 90 days. respondent company is not. Its inaction to revoke the policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such condition. petitioner Regina L. 1969.RTC dismissed the complaint. There was sufficient time for the private respondent to process the application and to notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it was minded to do so. barred from proving that the policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation. Under the circumstances. excluding its liability to pay claims under the policy in behalf of "persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years .1975.On June 7. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter. Carmen O.The policy was issued on November 6. the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent. Tan Lee Siong. occurred on May 31. CA affirmed Commissioners decision . 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 . Edillon instituted this action in the Court of First Instance of Rizal. filed her claim for the proceeds of the insurance. Lapuz was not concealed to the insurance company.1975.On May 31. Tan Lee Siong died of hepatoma (Exhibit B). Said application was approved and was issued effective November 6. 48 of the Insurance Code. 1989 AMERICAN LIFE Page 66 ISSUE WON according to Sec.. . The premiums paid on the policy were thereupon refunded . 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. submitting all the necessary papers and other requisites with the private respondent. . the insurance corporation is already deemed in estoppel. Her application for insurance coverage which was on a printed form furnished by private respondent and which contained very few items of information clearly indicated her age of the time of filing the same to be almost 65 years of age. June 29.On September 23. 1973 .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 in force for at least two years during the insured's lifetime.Petitioners filed on November 27. The insurer has two years from the date of issuance of the NATURE Review on certiorari of the decision of the Court of Appeals affirming the decision of the Insurance Commissioner FACTS . Edillon. a risk covered by the policy. it simply overlooked such fact.Section 48. it is either because it was willing to waive such disqualification. a sister of the insured and who was the named beneficiary in the policy.1973. a complaint against the former with the Office of the Insurance Commissioner.000. Considering that the insured died before the twoyear period had lapsed.36) TAN v.The petitioners contend that there could have been no concealment or misrepresentation by their late father because Tan Lee Siong did not have to buy insurance. The policy was thus in force for a period of only one year and five months. therefore.In resisting the claim of the petitioner. insurance company is barred from rescinding contract HELD .INSURANCE insurance corporation issued to Carmen O. Petitioners then filed with respondent company their claim for the proceeds of the life insurance policy -respondent company denied petitioners' 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.00 with respondent company.1973 and the insured died on April 26.

caused the said Dr. and which enterprise was capitalized by him by furnishing the funds with which to pay the premium on said fraudulent insurance. for the recovery of the amounts of two insurance policies aggregating P19. whether or not. V. prepared and falsified the necessary medical certificate. which illness was incurable and was 4. the defendant agreed to pay the plaintiff as beneficiary the amount of the policy upon the receipt of the proofs of the death of the insured while the policy was in force.50. that such permanent policy was never delivered to the plaintiff because defendant discovered the fraud before its delivery. that in and by its terms. caused Tan Caeng to sign an application for insurance with the defendant in the sum of P10. among other things.Defendant also alleges that plaintiff was. in criminal case No. and that plaintiff was not a nephew of the said Tan Ceang. 1925. and costs. medical certificate and confidential report had been prepared and falsified.INSURANCE insurance contract or of its last reinstatement within which to contest the policy. 5. Occidental Negros. that the policy was issued upon the payment by the said Tan Ceang of the first year's premium amounting to P936. in which it was said that Tan Ceang was single and was a merchant.50 not having been paid within 60 days after medical examination of the applicant as required by the Page 67 regulations of the defendant insurance company. S. that in June. 2 ½ months after the supposed medical examination above referred to. amounting to P936. Locsin. plaintiff submitted the proofs of the death of Tan Ceang with a claim for the payment of the policy which the defendant refused to pay. and was not a merchant but a mere employee of Tan Quina from whom he received only a meager salary. provisionally accepted the said application for insurance on the life of Tan Ceang in the sum of P10. for which he prays for a corresponding judgment. Locsin. and that there was no sign of either present or past disease of his lungs. to wit: 1. was convicted by the Court of First Instance of the City of Manila. of the crime of falsification of private documents in connection with an fraudulent insurance. and Dr. that he had never spit blood. during. . because he offered himself and was utilized as a state's witness. that the said Go Chulian. but that the plaintiff coconspirators. in the belief that said statements and representations were true and in reliance thereon. who was an employee of Go Chulian. S. the same illness from which suffering at the time it is supposed he was examined by Dr. the defenses of concealment or misrepresentation. V. S. cocaine. and relying thereon. was obtained by the plaintiff in confabulation with one Go Chulian. on August 28. no longer lie TAN CHAY HENG v. FACTS . Negros Occidental. in which it was falsely represented that Tan Ceang was worth about P40. had an annual income of from eight to ten thousand pesos net. had the appearance of good health. was his nephew. that in the same case the said Francisco Sanchez was one of the coaccused of the said Go Chulian but was discharged from the complaint. 1924. 3. and said application for insurance and confidential report thru the said Francisco Sanchez in his capacity as one of the agents of the defendant insurance company in the Province of Occidental Negros. and for about three year prior thereto had been suffering from pulmonary tuberculosis. similar to the present.Defendant alleges that the insurance policy on the life of Tan Ceang. that without any premium being due or unpaid. whereas in truth and in fact and as the plaintiff and his said coconspirators well knew. 2. no matter how patent or well founded. of La Carlota. 6. 28680). the said Tan Ceang was not single but was married and had several children. and exactly 1 month after the date of the health certificate for reinstatement above set forth. where in case of approval a permanent policy was to be issued. the medical certificate thru the said Dr. 1927 COAST LIFE well known to the plaintiff and his said coconspirators. fraudulently obtained by the said Go Chulian and Sanchez. were engaged in the illicit enterprise of procuring fraudulent life insurances from the present defendant. . the beneficiary. Tan Ceang was addicted to morphine. 1926. . of Bacolod. that he was then in good health and had never consulted any physician. California. Sanchez and Locsin. of pulmonary tuberculosis.Plaintiff alleges that defendant accepted and approved a life insurance policy of for the sum of P10. pursuant to their conspiracy. committed against this defendant in the month of September. Locsin to state falsely in the certificate of death that the said Tan Ceang had died of cerebral hemorrhage. that the latter was the ringleader of a gang of malefactors. Locsin. That the first agreed annual premium on the insurance in question of P936. Sy Yock Kian. Sy Yock Kian. After said application for insurance. After two years. and for some years previous to the dates above mentioned. and opium and had been convicted and imprisoned therefor. Tan Ceang died on May 10. S. cocaine or any other drug. November 21.000 and issued a temporary policy pending the final approval or disapproval of said application by defendant's home-office in San Francisco. in which it was made to appear. V. that the defendant. that the said Go Chulian was the one who furnished the money with which to pay the first and only annual premium on the insurance here in question. believing that the representations made in said document were true. Locsin as medical examiner. an employee of Go Chulian. Tan Ceang died in Valladolid. 7. Negros Occidental. suffering from pulmonary tuberculosis of about three years' duration. V. like V.000. thru fraud and deceit perpetrated against this defendant in the following manner. that the said temporary policy was delivered by defendant to the insured on April 10. WEST INSURANCE 51 PHIL 80 JOHNS. plaintiff and coconspirators caused the same to be forwarded to the defendant at its office in Manila. 1925. plaintiff and coconspirators well knew. and that the plaintiff Tan Chai Heng. Francisco Sanchez of the same place.000 in which the plaintiff was the sole beneficiary. that there is another civil action now pending against Go Chulian and Sanchez in the Court of First Instance of Manila (civil case No. Plaintiff caused a confidential report to the defendant insurance company to be signed by one V. Go. and never had tuberculosis. the insured still lives within such period. whereas in truth and in fact. 31425 of that court. that Tan Ceang had never used morphine. in which the present defendant is the plaintiff. 1925. plaintiff and coconspirators caused Tan Ceang to sign a health certificate for reinstatement.000. in his capacity as medical examiner for the defendant. who. Tan Ceang was seriously ill. similar to the one in question.000. upon which plaintiff's action is based. with legal interest from the date of the policy.

being informed of the fact. That section is as follows: Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter.INSURANCE . 47 HELD NO Ratio The word "rescind" has a well defined legal meaning. covering any of the property hereby insured. etc. all other terms and conditions remain unchanged. YAP 61 SCRA 426 FERNANDEZ. Upon the question as to whether or not they or are not true. This policy was procured without notice to and the written consent of Pioneer. for the simple reason that the minds of the parties never met and never agreed upon the terms and conditions of the contract.000 issued by the Great American Insurance Company covering the same properties was noted on said policy as coinsurance. and yet to bind the other party to obligations. unless. ISSUE WON defense is barred by Art.There was a violation by Yap of the co-insurance clause contained in Policy No.At the time of insurance of Policy 4219(April 19.among the conditions set forth: The Insured shall give notice to the Company of any insurance or insurances already effected. 1962: Fire burned Yap’s store ISSUE WON petitioner should be absolved from liability on Fire insurance Policy No. (emphasis supplied) It is understood that.To this. and that is the question which it seeks to have litigated by its special defense. . It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract.September 26. . . section 47 upon which the lower based its decision in sustaining the demurrer does not apply. fixtures.By the plain terms of the policy.000 covering her stocks. with costs against the plaintiff. If all of the material matters set forth and alleged in the defendant's special plea are true.Yap owned a store in a 2 storey building. but for those stipulation would not have been entered into. there is no contract to rescind. an insurance policy for P20. wherever the specified conditions should occur. CA 207 SCRA 609 REGALADO. he has no right to ask the court to dispense with the performance of his own part of the agreement. According to Justice Story: "The insured has no right to complain. other insurance without the consent of petitioner would ipso facto avoid the contract. Reasoning .000 covering the same properties. it consented to the additional insurance.December 19. In the very nature of things. . 4219 which resulted in the avoidance of the petitioner’s liability. 1962 : parties executed an endorsement on Policy 4219 stating: It is hereby declared and agreed that the coinsurance existing at present under this policy is as follows: P20. such right must be exercised previous to the commencement of an action on the contract. 4219 on account of any violation by respondent Yap of the co-insurance clause therein HELD YES . and not as originally stated. NEW LIFE ENTERPRISES v. is interested in preventing the situation in which a fire would be profitable to the insured. and that the trial court erred in sustaining the demurrer." Disposition the appealed judgment of the Court of Appeals is reversed and set aside. where she sold shopping bags and footwear.It will be noted that defendant does not seek to have the alleged insurance contract rescinded.000.00 � Northwest Ins. if such matters are known to exist by a preponderance of the evidence.April 19. office furniture. for he assents to comply with all the stipulation on his side. Any false declaration or breach or this condition will render this policy null and void. or which may subsequently be effected. and as applied to contracts. except as may be stated on the face of this policy there is no other insurance on the property hereby covered and no other insurance is allowed except by the consent of the Company endorsed hereon. which. We are clearly of the opinion that.. and that when so applied. PIONEER INSURANCE AND CORPORATION v. . but we are clear that section 47 does not apply to the allegations made in the answer. 1962).The petitioner should be absolved. and was therefore not noted as a co-insurance in Policy 4219. and the petitioner absolved from all liability under the policy. in order to entitle himself to the benefit of the contract. March 31. upon reason or principle. an action to rescind a contract is founded upon and presupposes the existence of the contract which is sought to be rescinded. . it presupposes the existence of a contract to rescind. from Federal Insurance Company. and unless such notice be given and the particulars of such insurance or insurances be stated in. Her son-in-law was in charge of the store . if the defendant never made or entered into the contract in question. plaintiff filed a demurrer which was granted. The public. 1962. hence. 1992 FACTS NATURE Appeal by certiorari from CA decision affirming a CFI decision which declared plaintiff Yap entitled to recover from defendant Pioneer Insurance and Surety Corp. as well as the insurer. defendant is barred and estopped to plead and set forth the matters alleged in its special defense. 1962: Yap took out another fire . Reasoning . It denies that it ever made any contract of insurance on the life of Tan Ceang or that any such a contract ever existed. As stated. Disposition The judgment of the lower court is reversed and the case is remanded for such other and further proceedings as are not inconsistent with this opinion.Yap took out Fire Insurance Policy No. they would constitute a valid defense to plaintiff's cause of action. which. 4216 from Pioneer with a face value of P25. there was no valid contract of insurance. we do not at this time have or express any opinion.Plaintiff vigorously contends that section 47 of the Insurance Act should be applied. or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage. Its obligations ceased. 1974 SURETY Page 68 insurance policy for P20. and.The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. 4219 FACTS . December 19. all benefits under this Policy shall be forfeited. .August 29. the full amount of the damage inquired in Policy No. . (emphasis supplied) Except as varied by this endorsement.

had the insurer known that there were many co-insurances. and no hazardous trade or process be carried on. entered into a contract of insurance with Young by the terms of which the company. and exonerated the insurance companies from liability. would not nave been entered into..e. . that there were no other insurance on the property. 1982.” (i.The condition contained in an insurance policy that claims must be presented within one year after rejection is not merely a procedural requirement but an important matter essential to a prompt settlement of claims against insurance companies as it demands that insurance suits be brought by the insured while the evidence as to the origin and cause of destruction have not yet disappeared. Reliance Surety and Insurance Co. The Midland Textile Insurance Co.S. were gutted by fire. . that is. . found petitioner to have violated Clauses 3 and 27 of the separate insurance policies issued by the 3 companies. petitioners filed an insurance claim against the three companies. the Court of Appeals reversed the trial court’s decision. namely. Young had a candy and fruit store on the Escolta. the so-called theory of imputed knowledge. Hence. Manila. .The coverage by other insurance or co-insurance effected or subsequently arranged by petitioners were neither stated nor endorsed in the policies of the 3 private respondents. . However..” Julian Sy insured against fire the stocks in trade of New Life Enterprises with Western Guaranty Corporation. in consideration of the payment of a premium of P60.00. promised to pay Young the sum of P3. the “other insurance” clause which required New Life Enterprises to inform each of the insurance companies in case the former insures with another company the same property already insured by each of the insurance companies). a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not. he has no right to ask the court to dispense with the performance of his own part of the agreement. which. When the building where New Life Enterprises was located. March 31.Petitioners admit that the respective insurance policies issued by private respondents did not state or endorse thereon the other insurance coverage obtained or subsequently effected on the same stocks in trade for the loss of which compensation is claimed by petitioners. ISSUE WON petitioners violated the Clause” of the insurance policies “Other Insurance benefits thereunder if we are to follow the express stipulation in Policy Condition No. which cases were consolidated for trial.Additionally. The mere fact that Yap Kam Chuan was an agent for both Reliance and Equitable does not justify the allegation that the two are sister companies. . Otherwise stated. .The terms of the contract are clear and unambiguous. but for those stipulations.48) HELD YES . that of Western in the amount of P350. it is not denied that the complaint for recovery was filed in court by petitioners only on January 31. 3.The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. along with the stocks in trade therein. 30 PHIL 617 JOHNSON.One of the conditions of the contract is: "Warranty B – It is hereby declared and agreed that during the pendency of this policy no hazardous goods be stored or kept for sale. or after more than one (1) year had elapsed from petitioners' receipt of the insurers' letter of denial on November 29. The insured is specifically required to disclose to the insurer any other insurance and its particulars which he may have effected on the same subject matter.Because of the denial of their claims for payment by the 3 insurance companies. and occupied a building at 321 Calle Claveria.Julian Sy and Jose Sy Bang are partners engaged in the business of selling construction materials under the business name “New Life Enterprises. . insofar as the liability of respondent Reliance is concerned. the insured was guilty of clear fraud. which.K. or in any building connected therewith. MIDLAND TEXTILE INSURANCE CO. is interested in preventing the situation in which a fire would be profitable to the insured. . in order to entitle himself to the benefit of the contract. The insurance companies all denied Julian Sy’s claim on the ground of “breach of policy condition. the statement in question must be deemed to be a statement (warranty) binding on both insurer and insured. 1915 FACTS .000. even assuming the acquisition thereof by the former. 1984. and yet to bind the other party to obligations. as well as the insurer. that was deception.00. The annotation then. The public. it could Page 69 have hesitated or plainly desisted from entering into such contract. the insured had been guilty of a false declaration. as a residence and bodega. Besides. The trial court ruled in favor of petitioner. Availment of the services of the same agents and adjusters by different companies is a common practice in the insurance business and such facts do not warrant the speculative conclusion of the trial court.As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property.Considering the terms of the policy which required the insured to declare other insurances. warranting forfeiture of all YOUNG v. for he assents to comply with all the stipulations on his side. The insured has no right to complain. . QUA CHEE GAN v. upon reason or principle. must be deemed to be a warranty that the property was not insured by any other policy. and Equitable Insurance Corporation in the aggregate amount of P1.000. knowledge of the agent is knowledge of the principal. in the building to which this insurance applies.INSURANCE . Inc. is not the "notice" that would stop the insurers from denying the claim." .000. It is further admitted by petitioners that Equitable's policy stated "nil" in the space thereon requiring indication of any coinsurance although there were 3 policies subsisting on the same stocks in trade at the time of the loss.550.00 and two 2 policies of Reliance in the total amount of P1.000. LAW UNION (supra p.It is not disputed that the insured failed to reveal before the loss three other insurances. the total absence of such notice nullifies the policy. petitioners filed separate civil actions against the former before the Regional Trial Court of Lucena City. By reason of said unrevealed insurances.000 in case said residence and bodega and contents should be destroyed by fire. Violation thereof entitled the insurer to rescind. upon certain conditions. The knowledge of such insurance by the insurer's agents. aside from being of dubious applicability here has likewise been roundly refuted by respondent court whose factual findings we find acceptable.

ISSUE 1. the placing of the firecrackers in the building insured increased the risk. May 20. 1913. paints. then may it not repudiate its liability. terminated. If the insured. . as that word is generally defined. 1966 NATURE Petition for review of a decision of the Court of Appeals FACTS . or to the loss that resulted. CA (supra p." mentioned in "Warranty B" of the policy. . Nava entered into a contract of insurance with Insular Life Assurance Co. Ltd. Certainly. Said residence and bodega and the contents thereof were partially destroyed by fire. he may justly insist upon a fulfillment of the terms of the contract. the benefits of an insurance policy upon one risk. the cash value specified in the Schedule of Policy Values. The defendant had neither been paid nor had issued a policy to cover the increased risk. WEST COAST (supra p. provided interest at six per centum per annum on the whole amount of the loan is paid in advance to the end of the current policy-year. and for actual daily use. The rate of premium is measured by the character of the risk assumed. and that the placing of them in the building was not a violation of the terms of the contract. NAVA 17 SCRA 210 BAUTISTA ANGELO. for sale. depend upon the intention of the parties. He intended to use them in the celebration of the Chinese New Year. The terms of the contract constitute the measure of the insurer's liability. (face value of P5k)." HELD 1. (2) Where such articles have been brought on the premises for actual use thereon. and upon no other. . will advance on proper assignment and delivery of this Policy and on the sole security thereof a sum equal to." The plaintiff contends that under all the facts and circumstances of the case. The insurer.Young placed in the residence and bodega three boxes filled with fireworks. neither had the defendant issued a Page 70 policy upon the theory of a different risk. by virtue of the provisions of the policy itself. Reasoning It is admitted by both parties that the fireworks are hazardous goods. and in small quantities. An increase of risk which is substantial and which is continued for a considerable period of time. in some degree..51) AREOLA v.The fireworks had been given to Young by the former owner of the Luneta Candy Store. When the insurer is called upon to pay. . whereas. by a violation of its terms on the part of the insured. like the present. Disposition Decision of the lower court is REVERSED. Young had not paid a premium based upon the increased risk. in case of loss. or at the option of the owner less than. they were not “stored” in said building.INSURANCE . it was issued upon an entirely different risk. After three full years' premiums have been paid upon this Policy. At the end of the current policy-year interest at the same rate for one year in advance will be due and payable. etc. upon the terms and conditions agreed upon. is a direct and certain injury to the insurer. or for safe keeping. cannot bring himself within the terms and conditions of the contract. will not its violation cause a breach and justify noncompliance or repudiation? . he should be permitted to recover. even after the fire? If the "warranty" is a term of the contract. is beside the question. would it not have been justified in declaring the policy null and of no effect by reason of a violation of its terms? If it might. the Company. and had found the "hazardous goods" there. and annually thereafter. he is not entitled to recover for any loss suffered.Before the war. the authorities of the city of Manila had prohibited the use of fireworks on said occasion. they being "hazardous goods. so Young then placed them in the bodega where they remained from the 4th or 5th of February. subject to its then existing rules." was a violation of the terms of the contract of insurance and especially of "Warranty B. if no premium payment is in default.Both parties agree that the fireworks come within the phrase "hazardous goods. upon the terms and conditions specified therein. YES. that the fireworks were found in a part of the building not destroyed by the fire and that they in no way contributed to the fire. which might easily have been permitted by the terms of the policy.Young paid a premium based upon the risk at the time the policy was issued. That argument. at the election of either party. less any existing indebtedness on or secured by this Policy and any unpaid balance of the premium for the current policy-year. Compliance with the terms of the contract is a condition precedent to the right of recovery.In the present case no claim is made that the "hazardous goods" were placed in the bodega for present or daily use. It seems clear to us that the "hazardous goods" in question were "stored" in the bodega. if the "storing" was a violation of the terms of the contract. Parties have a right to impose such reasonable conditions at the time of the making of the contract as they deem wise and necessary. and excepted from the operation of the warranty. and in small quantities. and costs.Contracts of insurance are contracts of indemnity. and (3) Where such articles or goods were used for lighting purposes." or for future consumption. such as gasoline. there can be no recovery. 1913 until after the fire of March 18.(1) Where merchants have had or kept the "hazardous" articles in small quantities. as a matter of fact. . (total face value of P90k). and 17 separate contracts of life insurance with Filipinas Life Assurance Co. WON the placing of the fireworks in the building insured. if his contention may be allowed. undertakes to guarantee the insured against loss or damage. That being true. for a comparatively small consideration. If the contract has been terminated. however. The violation of the terms of the contract.78. . suppose the defendant had made an examination of the premises. It is admitted that they were placed in the bodega "for future use. .Whether a particular article is "stored" or not must. the contractual relations. .26) TAN CHAY v. CA (supra p. Nearly all of the cases cited by the lower court are cases where the article was being put to some reasonable and actual use.The lower court rendered a judgment in favor of Young for the sum of P2.51) FILIPINAS LIFE ASSURANCE v. even in the absence of a fire. such as oil. However. TAN v. and changes the basis upon which the contract of insurance rests.708. The defendant alleged that they were "stored. Each and everyone of the 18 policies issued by defendants to plaintiff contains a loan clause of the following tenor: Policy loans. and within the intention of the parties.Young argues that since the "storing" of the fireworks on the premises did not contribute in any way to the damage occasioned by the fire. gunpowder. He was enjoying.. . etc.

072.Feb 10. . .29 which represents the aggregate cash surrender values of all the policies in question as of February 10. 1295. or other material provision of a policy. as postulated in Article 16 of the same Code. to pay plaintiff the amount of P2. .Nava had so far paid to Insular a total of P2.60. WON CA erred in ruling that by virtue of Article 1295 of the old Civil Code petitioners should refund to defendant all the premiums paid on his insurance policies as a consequence of their rescission 3." is not controlling in this jurisdiction. ISSUES 1. 1949: Nava brought case to the CFI Manila praying for the rescission of the abovementioned 18 policies and for the refund to him of all the premiums so far paid by him to defendants in the amount of P31. Ltd.CA affirmed. on the part of either party thereto. Firstly.INSURANCE and if not so paid will be added to the principal and bear the same rate of interest.80.Considering that our Insurance Law does not contain an express provision as to what the court should do in cases of rescission of an insurance policy under Section 69. WON CA erred in ruling that as a consequence of the decision in the Haw Pia case petitioners violated the loan clause contained in the insurance policies thereby entitling respondent to their rescission 2.. NO. the fact however is that such requirement has already lost its legal effect and value when our Supreme Court rendered its decision in the Haw Pia case wherein it was declared. with their fruits. Consequently.Said the petitioners: "Recovery of the full amount of the premium after the insurer has sustained for sometime the risk of the insurance and the insured .It cannot be denied that a life insurance policy involves a contractual obligation wherein the insured becomes duty bound to pay the premiums agreed upon. the payment of premiums on the life insurance policies made by Nava before and during the war up to the time he applied for the loan in question with petitioners should be considered likewise as valid payments upon the theory that such insurance policies are in the nature of a contractual obligation within the meaning of the civil law. WON CA erred in not ruling that.xxx .00 ..Companies still refused saying that the SC decision was not applicable to transactions undertaken during Japanese occupation when they relate to life insurance policies. even if respondent is entitled to the rescission of said insurance policies. for the result of such failure would only be for him to pay later the premium plus the corresponding interest depending upon the condition of the policy. NO . those payments were made by a debtor to a creditor within the meaning of the requirement of the regulations of the Insurance Commissioner and as such they can offer no excuse to petitioners for refusing to grant the loan as contemplated in the loan clause embodied in the policies in question.CFI: (1) rescinded the insurance contracts. Any indebtedness on this Policy shall first be deducted from any money payable or in any settlement under this Policy. . 1951: companies passed a resolution which was approved by the Insurance Commissioner.072. . .Nov 28. that all payments made in fiat currency during the Japanese occupation in relation with any contractual obligation executed before the war were valid to all intents and purposes. giving full credit to all premium payments made by their policyholders in fiat currency during the Japanese occupation on account of pre-war policies for which reason they filed an amended answer offering to pay plaintiff the amount of P9." . and secondly. therefore.468. a total of P32.Even assuming the validity of the Insurance Commissioner’s regulations."The general rule is that a breach of the agreement to make the loan does not entitle the insured to rescind the contract. But certainly it does not cease to be a contractual liability insofar as the payment of that premium is Page 71 concerned for whether he likes it or not that premium has to be paid lest he allows the lapse of his policy. entitles the other to rescind. but apparently this offer was refused. which provides that on matters which are not governed by special laws the provisions of said Code shall supplement its deficiency. .. 2. 1949. and of the price paid.468. China Banking Corporation) establishing and recognizing the relationship of debtor and creditor with respect to payments in fiat currency made during the Japanese occupation on pre-war obligations. (2) ordered defendant Filipinas Life Assurance Co. but they refused to grant it because certain regulations issued by the Insurance Commissioner required the insurance companies to withhold the payments on premiums made during the Japanese occupation because the same shall be subject to future adjustments " as soon as debtor-creditor relationship is established" and because of such process of "withholding" plaintiff was not entitled to borrow any amount until such adjustment has been made. with interest thereon.It is clear from the foregoing that the petitioners violated the loan clause embodied in each of the 18 life insurance policies issued to respondent to rescind all said policies under Section 69 of the Insurance Act.Feb 4. the provision that should apply is that embodied in Article 1225 of the old Civil Code. 1948: Nava called the attention of the insurance companies to the SC decision (Haw Pia v. 1948: Nava applied to the companies for a P5k loan in line with the loan clause. which provides: "The violation of a material warranty. plus 6% interest thereon as damages . Rescission makes necessary the return of the things which were the subject-matter of the contract.April 28. lest he runs the risk of having his insurance policy lapse if he fails to pay such premiums.The fact that if the insured had paid in full the premiums corresponding to the first 3 years of the life of his policy he cannot be considered delinquent that would cause the lapse of his policy if the same contains an automatic premium payment clause cannot divest such policy of its contractual nature. and (3) ordered defendant Insular Life Assurance Co. 1949: Nava was again refused even if the total amount of the cash surrender values of the 18 policies reached the sum of P9.574. Failure to repay any such loan or interest shall not avoid this Policy unless the total indebtedness shall equal or exceed the full amount of the loan value available hereunder.Sept 30. and to Filipinas Life. .60. And said Article 1295 provides: ART. . the rule cited by Vance is not a rule uniformly followed by all states in the US. . among others. it was not shown that the insurance laws in the states where said ruling prevails contain a provision identical to Section 69 of our Insurance Law we quoted above.29. . In effect. .574. he can only recover their cash surrender value at the time the complaint was filed HELD 1.633. for on this matter there is a marked divergence of opinion. and yet petitioners apparently did not give any importance to such decision for in their opinion it does not have any application to transactions which have any relation to payment of premiums on life insurance policies. to pay plaintiff the amount of P32.

Issue is corollary to preceding issue. and yet neither the driver nor the conductor would appear to have cautioned or taken steps to warn rescuers not to bring the lighted torch too near the bus. October 22. this for the reason that when the vehicle turned not only on its side but completely on its back. all surnamed. the majority rule being that the insured can recover all premiums paid. and do not refer to intangible ones which cannot be the subject of restoration. should have known that in the position in which the overturned bus was. as beneficiaries. and passenger is burned to death. through its driver and conductor.The coming of the men with the torch was to be expected.TC opined that proximate cause of Bataclan’s death was not the overturning of bus but the fire. Chester and Clifton. 4 passengers couldn’t get out. . the insured. If through some event. 1988 as a result of a stab wound inflicted by one of the 3 unidentified men without provocation and warning on the part of the former as he and his cousin. unexpected and extraordinary. for to interpret it otherwise would be to defeat the law itself with the result that rescission can never be had under Section 69 of our Insurance Law. The bus was running very fast. died on October 18. or at least the driver. At the time fire started. 1 carried a torch and when he approached the bus. . 2005 and Individual Policy No. RISKS AND COVERAGES VDA. and in this light alone petitioners cannot claim prejudice or unfairness if they are ordered to refund the premiums paid by respondents. termination or rescission of the contract of life insurance. ISSUE WON CA committed GAD in applying the principle of "expresso unius exclusio alterius" in a personal accident insurance policy (since death resulting from murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the assailant in killing the former as indicated by the location of the lone stab wound on the insured) [TF they cannot be made to indemnify the Surposa heirs] HELD NO ." . While the act may not exempt the unknown perpetrator from criminal liability. . the proximate cause of Bataclan’s death is the overturning of the bus. 3. What was more natural than that said rescuers should innocently approach the overturned vehicle to extend aid. September 2. 08924 with his parents. 1989: Surposa filed a complaint with the Insurance Commission which subsequently ordered FINMAN to pay Surposa the proceeds of the policy with interest. leaking of gasoline from the tank was not unnatural or unexpected. not for his death. an event that proceeded . Gasoline began to leak from the overturned bus." The ruling above quoted merely represents the minority rule in the US. including Bataclan.The proximate cause is the overturning of the bus. 22.Ordinarily. FINMAN GENERAL ASSURANCE CORPORATION v. spouses Julia and Carlos Surposa. Coming as they did from rural area where lanterns and flashlights were not available. gasoline could and must have leaked from the gasoline tank and soaked the area in and around the bus. NO. They.But here. the trapping of some of its passengers and the call for outside help. but for physical injuries suffered.Oct. 1992 NATURE Certiorari Page 72 FACTS . . and was a natural sequence of the overturning of the bus. the fact remains that the happening was a pure accident on the part of the victim. Costs against petitioners CHAPTER VII. .Feb. 10 men came to help. merely causing him injuries. Winston Surposa.It cannot be denied that petitioners had in turn already derived material benefits from the use of premiums paid to them by respondent before. . the bus is set on fire. 24.The burning of bus can also in part be attributed to negligence of carrier. fire started.Contention that because respondent cannot restore to petitioners the "value of the benefit of protection" which he might have received under the 18 life insurance policies in question he is not entitled to rescind them under the provision of Article 1295 of the old Civil Code. DE BATACLAN v. . and brothers Christopher. The insured died from an event that took place without his foresight or expectation. . killing the trapped passengers. they had to use a torch. 1957 FACTS . 1986: Carlie Surposa was insured with Finman General Assurance Corporation under Finman General Teachers Protection Plan Master Policy No. Gasoline can be smelt and detected even from a distance. is untenable because said article only contemplates a transaction whether material things are involved. Bus fell into canal and turned turtle. about 2:30 am. was still alive and damages were awarded. shortly after midnight. and because it was very dark.While said insurance policy was in full force and effect.The coming of the men with the torch was in response to the call for help. . Surposa.Juan Bataclan rode Bus 30 of Medina Transport. rescuers had to carry a light with them. one might contend that the proximate cause was the fire and not the overturning of the vehicle. CA (SURPOSA) 213 SCRA 493 NOCON. Disposition Decision appealed from is AFFIRMED. . MEDINA 102 PHIL 181 MONTEMAYOR. during and after the last war from which they must have realized huge profits. made only not by the passengers but even the driver and conductor. Carlie Surposa. driven by Saylon. No need to refute. when a bus overturns and pins down passenger.The record is barren of any circumstance showing how the stab wound was inflicted.CA affirmed said decision. . in some cases with interest in case of wrongful cancellation. .Thereafter. One of the front tires burst. ISSUE/S WON the proximate cause is the overturning of the bus or the fire HELD . though injured. were waiting for a ride on their way home after attending the celebration of the "Maskarra Annual Festival. Julia Surposa and the other beneficiaries of said insurance policy filed a written notice of claim with the FINMAN Corp which denied said claim contending that murder and assault are not within the scope of the coverage of the insurance policy. repudiation. Charles. Bataclan.INSURANCE has enjoyed the benefit of protection is obviously unjust and is so recognized by the better authorities.

Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary. He secured a life insurance policy from the Philippine American Life Insurance Company in the amount of P2. . rightly or wrongly. the company refused alleging. and unforeseen happening occurs which produces or brings about the result of injury or death. as contended. Nor can it be said that the killing was intentional for there is the possibility that the malefactor had fired the shot merely to scare away the people around for his own protection and not necessarily to kill or hit the victim. ISSUE WON the death of the victim comes within the purview of the exception clause of the supplementary policy and. not expected. Inc (1966)~ The terms "accident" and "accidental" as used in insurance contracts have not acquired any technical meaning. Ojeda at the corner of Oroquieta and Zurbaran streets. and upon approaching the gate of the residence he was shot and died. In any event. 1951.000 to which was attached a supplementary contract covering death by accident. he might have thought. . he died of a gunshot wound on the occasion of a robbery committed in the house of Atty. exempts the company from liability HELD NO . While at first he declined the invitation of Atty. Ojeda for it cannot be pretended that the malefactor aimed at the deceased precisely because he wanted to take his life. The victim could have been either the policeman or Atty. unaccompanied by anything unforeseen except the death or injury. unexpected. CALANOC v. hence. not having been expressly included in the enumeration of the circumstances that would negate liability in said insurance policy: the failure of the 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. There is no accident when a deliberate act is performed unless some additional.NPC vs. . CA 98 PHIL 79 BAUTISTA. but that risk always existed it being inherent in the position he was holding. where the death or injury is not the natural or probable result of the insured's voluntary act. for certainly he did not go there for that purpose nor was he asked to do so by the policeman. or is an unusual effect of a known cause and. December 16.. The circumstance that he was a mere watchman and had no duty to heed the call of Atty. unusual. Ojeda should not be taken as a capricious desire on his part to expose his life to danger considering the fact that the place he was in duty-bound to guard was only a block away. independent. disability or loss suffered by the insured as a result of any of the stimulated causes. and are construed by the courts in their ordinary and common acceptation. that to know the truth was in the interest of his employer it being a matter that affects the security of the neighborhood. the fact remains that the happening was a pure accident on the part of the victim. death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act. An accident is an event that takes place without one's foresight or expectation an event that proceeds from an unknown cause.The personal accident insurance policy involved herein specifically enumerated only 10 circumstances wherein no liability attaches to FINMAN for any injury. Disposition DENIED for lack of merit. face value of the policy. Hence.It is contended in behalf of the company that Basilio was killed which "making an arrest as an officer of the law" or as a result of an "assault or murder" committed in the place and therefore his death was caused by one of the risks excluded by the supplementary contract which exempts the company from liability. In volunteering to extend help under the situation. He cannot therefore be blamed solely for doing what he believed was in keeping with his duty as a watchman and as a citizen. therefore. not expected. Reasoning . but when she demanded the payment of the additional sum of P2. In other words. -The principle of " expresso unius exclusio alterius" the mention of one thing implies the exclusion of another thing is therefore applicable in the instant case since murder and assault. Capital Insurance & Surety Co. there is no proof that the death of Basilio is the result of either crime for the record is barren of any circumstance showing how the fatal shot was fired. No doubt there was some risk coming to him in pursuing that errand.Basilio was a watchman of the Manila Auto Supply which was a block away from the house of Atty. Disposition Decision set aside BIAGTAN v. Perhaps this may be clarified in the criminal case now pending in court as regards the incident but before that is done anything that might be said on the point would be a mere conjecture. Calanoc. the widow. 1955 FACTS . . and unforeseen. LTD.000. Thus. simply because he went with the traffic policeman. In the first place. Ojeda where something suspicious was happening Page 73 which caused the latter to ask for help. this petition. he later agreed to come along when prompted by the traffic policeman. And he cannot be considered as making an arrest as an officer of the law. the terms have been taken to mean that which happen by chance or fortuitously. THE INSULAR LIFE ASSURANCE COMPANY. that the deceased died because he was murdered by a person who took part in the commission of the robbery and while making an arrest as an officer of the law which contingencies were expressly excluded in the contract and have the effect of exempting the company from liability. without intention and design.A1377 NCC: The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. This contention was upheld by the Court of Appeals. On January 25. . Ratio The generally accepted rule is that. Ojeda to go with him to his residence to inquire into what was going on because he was not a regular policeman.INSURANCE from an unusual effect of a known cause and.De la Cruz vs.Basilio was a watchman of the Manila Auto Supply located at the corner of Avenida Rizal and Zurbaran. CA [1986]~ It is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. the resulting death is within the protection of the policies insuring against death or injury from accident. or if something unforeseen occurs in the doing of the act which produces the injury. was paid the sum of P2. while the act may not exempt the triggerman from liability for the damage done. . as main defense.000 representing the value of the supplemental policy. and which is unexpected.Much less can it be pretended that Basilio died in the course of an assault or murder considering the very nature of these crimes. therefore.

(Burden of proof is with the insurance company) . .Examples of unintentional: >> A gun which discharges while being cleaned and kills a bystander. . either with or without provocation on the part of the insured. It argued. he stood in front of her and pointed the gun at her. The only exception which is not susceptible of classification is that provided in paragraph 5(e). from which he had previously removed the magazine. and whether or not the attack or the defense by the third party was caused by a violation of the law by the insured. FACTS . As she watched the television.It is obvious from the very classification of the exceptions and applying the rule of noscitus a sociis. Pilar Nalagon. intentionally inflicted by a third party. the very exception herein involved.' . SUN INSURANCE v. . CA (LIM) 211 SCRA 554 CRUZ. the Court held that it could not be said that the killing was intentional for there was the possibility that the malefactor had fired the shot to scare the people around for his own protection and not necessarily to kill or hit the victim. . construed as the insurance company now Page 74 claims. Lim was in a happy mood (but not drunk) and was playing with his handgun. however. ISSUE WON the injuries were intentionally inflicted HELD YES . whether caused by fault. negligence or intent of a third party which is unforeseen and unexpected by the insured. however. . 1992 FACTS . The robbers were convicted of robbery with homicide. but only of the fact that such injuries have been "intentionally" inflicted — this obviously to distinguish them from injuries which. that the double-indemnity policy covers the insured against accidental death.Whether the robbers had the intent to kill or merely to scare the victim or to ward off any defense he might offer." The clause. Insular refused on the ground that the death resulted from injuries intentionally inflicted by 3rd parties and was therefore not covered. . being contracts of adhesion. A similar possibility is clearly ruled out by the facts in this case. The next moment there was an explosion and Lim slumped to the floor. Jr. CA: Where a shot was fired and it turned out afterwards that the watchman was hit in the abdomen. could indeed have been fired without intent to kill or injure. and independently of all other causes. expressly provided that it would not apply where death resulted from an injury "intentionally inflicted by a third party.The term "accident" has been defined as follows: . the court rendered judgment for the insurance company and held that while the assassination of the insured was as to him an unforeseen event and therefore accidental. with a face value of P200.000." Disposition CFI decision reversed. The supplementary contract enumerated exceptions. . and defeat the very purpose of the policy of giving the insured double indemnity in case of accidental death by "external and violent means" — in the very language of the policy. in case death or injury is intentionally inflicted by any other person.The exception in the accidental benefit clause invoked by the appellant does not speak of the purpose — whether homicidal or not — of a third party in causing the injuries. which would also except injuries "inflicted intentionally by a third party. Two months later. He assured her it was not and then pointed it to his temple." . regardless of any violation of law or provocation by the insured. March 29. According to Nalagon.In Calanoc vs.INSURANCE 44 SCRA 58 MAKALINTAL. All the associated words and concepts in the policy plainly exclude the accidental death from the coverage of the policy only where the injuries are self-inflicted or attended by some proscribed act of the insured or are incurred in some expressly excluded calamity such as riot. >> an athlete in a competitive game involving physical effort who collides with an opponent and fatally injures him as a result.Juan Biagtan was insured with Insular for P5k and a supplementary contract “Accidental Death Benefit” clause for another P5k if "the death of the Insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident . The petitioner agreed that there was no suicide. SEPARATE OPINION TEEHANKEE [dissent] . although received at the hands of a third party. As beneficiary. 1972 NATURE Appeal from decision of CFI Pangasinan. .One night. He was dead before he fell. must be construed strictly against insurance company in cases of ambiguity. Lim's secretary. that there was no accident either.The petitioner issued Personal Accident Policy to Felix Lim. while this clause. >> a hunter who shoots at his prey and hits a person instead. nine wounds inflicted with bladed weapons at close range cannot conceivably be considered as innocent insofar as such intent is concerned. was the only eyewitness to his death. For while a single shot fired from a distance. would seemingly except also all other injuries. He died. applies to this case. CFI ruled in favor of Biagtans." . it cannot be denied that the act itself of inflicting the injuries was intentional.This ambiguous clause conflicts with all the other four exceptions in the same paragraph 5 particularly that immediately preceding it in item (d) which excepts injuries received where the insured has violated the law or provoked the injury. Travelers' Ins. a band of robbers entered their house. July 17. She pushed it aside and said it might be loaded.The untenability of insurer's claim that the insured's death fell within the exception is further heightened by the stipulated fact that two other insurance companies which likewise covered the insured for much larger sums under similar accidental death benefit clauses promptly paid the benefits thereof to plaintiffs beneficiaries. under the Accidental Death Benefit clause. Biagtans filed against Insular. (US case): where the insured was waylaid and assassinated for the purpose of robbery. and by a person who was not even seen aiming at the victim. the wound causing his death. "the clause of the proviso that excludes the (insurer's) liability.The family was claiming the additional P5k from Insular.Insurance. war or atomic explosion.00. CA is controlling in this case because the insurance company wasn’t able to prove that the killing was intentional. his wife Nerissa Lim sought payment on the policy but her claim was rejected. he was dead with a bullet wound in his head.Calanoc v. are purely accidental. .In Hucthcraft's Ex'r vs. Juan went out of his room and he was met with 9 knife stabs. Co.

independent. therefore. the injury was sustained when he slid.Furthermore. Eduardo slipped and was hit by his opponent on the left part of the back of the head. therefore. pigsticking. 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. It has also been defined as an injury which happens by reason of some violence or casualty to the insured without his design. death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act. 1956 to November 12. intracranial. mountaineering. polo-playing. with his head hitting the rope of the ring. the terms have been taken to mean that which happen by chance or fortuitously. .Defendant insurer set up the defense that the death of the insured. That posture is arguable. In substance. was the holder of an accident insurance policy underwritten by the Capital Insurance & Surety Co. . Inc. Inc. Failure of the defendant insurance company to include death resulting from a boxing match or other sports among the prohibitive risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death.An accident is an event which happens without any human agency or. therefore.On January 1.The terms "accident" and "accidental". .The generally accepted rule is that. such as basketball or baseball. the Itogon-Suyoc Mines. under the circumstances. . and unforeseen. it ever does. and unforeseen happening occurs which produces or brings about the result of injury or death. if happening through human agency. There is no accident when a deliberate act is performed unless some additional. cites one of the four exceptions provided for in the insurance contract and contends that the private petitioner's claim is barred by such provision. It is there stated: Exceptions —The company shall not be liable in respect of. In other words.He instituted the action in the CFI of Pangasinan for specific performance. employed in the Itogon-Suyoc Mines. the parties agree that Lim did not commit suicide. and when used in an insurance contract are to be construed and considered according to the ordinary understanding and common usage and speech of people generally. and unforeseen.. for the period beginning November 13. hunting. an event that proceeds from an unknown cause. but he died as a result of hemorrhage. CAPITAL INSURANCE 17 SCRA 554 BARRERA.. . but it was denied. ISSUE WON what happened was an accident HELD YES . the petitioner contends that the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy. . the resulting death is within the protection of policies insuring against death or injury from accident. .In the present case. as the secretary testified. Nevertheless.Death or disablement resulting from engagement in boxing contests was not declared outside of the protection of the insurance contract. causing Eduardo to fall. death is not ordinarily anticipated to result. while the participation of the insured in the boxing contest is voluntary. left. The definition that has usually been adopted by the courts is that an accident is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause. or voluntary co-operation. filed a claim with the insurance company for payment of the indemnity. unusual. steeplechasing.The petitioner. Page 75 and which is unexpected. xxx xxx xxx b. the injury or death can only be accidental or produced by some unforeseen happening or event as what occurred in this case. Lim had removed the magazine from the gun and believed it was no longer dangerous. not expected. is unusual to and not expected by the person to whom it happens. the father and named beneficiary of the insured. sponsored a boxing contest wherein the insured Eduardo de la Cruz participated.. was not accidental and. 1957. the courts are practically agreed that the words "accident" and "accidental" mean that which happens by change or fortuitously.The court rendered the decision in favor of the plaintiff. 1957. the present appeal. an event which. as used in insurance contracts.In the course of his bout.He was brought to the Baguio General Hospital.Simon de la Cruz. . Bodily injury. racing of any kind.INSURANCE The words "accident" and "accidental" have never acquired any technical signification in law. without intention and design. The act was precisely intended to assure Nalagon that the gun was indeed harmless. 1. But what is not is that. caused by his participation in a boxing contest. where the death or injury is not the natural or probable result of the insured's voluntary act. and which is unexpected. unexpected. June 30. have not acquired any technical meaning. without intention or design.To repeat. .The fact that boxing is attended with some risks of external injuries does not make any injuries received in the course of the game not accidental. and are construed by the courts in their ordinary and common acceptation. giving occasion to the infliction by his opponent of the blow that threw him to the ropes of the ring. .Eduardo de la Cruz. He expressed assured her that the gun was not loaded. not covered by insurance HELD NO . i) The insured persons attempting to commit suicide or wilfully exposing himself to needless peril except in an attempt to save human life. An accident is an event that takes place without one's foresight or expectation. and therefore not expected. Disposition CA Affirmed DE LA CRUZ v. In boxing as in other equally physically rigorous sports. hence. consequent upon. . unusual. If. unaccompanied by anything unforeseen except the death or injury. ISSUE WON the death of the insured was not accidental and. 1966 NATURE Appeal from the decision of the CFI of Pangasinan FACTS . or is an unusual effect of a known case. however. Disposition The decision appealed from is affirmed . . or motorcycling. or if something unforeseen occurs in the doing of the act which produces the injury. Thus. consent. . not covered by insurance . the policy involved herein specifically excluded from its coverage: (e) Death or disablement consequent upon the Insured engaging in football. Inc. therefore. or is an unusual effect of a known cause and.

tested and examined and subsequently certified as having complied with the safety measures and standards by qualified experts before it was loaded in the vessel only shows to a great extent that negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship. or shall have been abandoned by them. it unnecessarily exposed its passengers to grave danger and injury. Section 19 of Act No.7) PHIL HOME ASSURANCE CORP v. shall be entitled to like reward. not being included in the above paragraph.INSURANCE FORTUNE INSURANCE v. Reasoning . Disposition Judgment appealed from is REVERSED and SET ASIDE. damage. known as the Salvage Law. (2) ESLI should have known that by storing the acetylene cylinder in the accommodation area supposed to be reserved for passengers. is liable for the additional charges or expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier. On the contrary. a small flame was detected on the acetylene cylinder located in the accommodation area near the engine room. When in case of shipwreck. 2616. the physical impossibility of the prestation extinguished defendant's obligation. ISSUE WON the burning of the SS Eastern Explorer rendering it a constructive total loss was a natural disaster or calamity HELD NO Ratio In our jurisprudence. . is ORDERED to return to petitioner Philippine Home Assurance Corporation the amount it paid under protest in behalf of the consignees herein. 1968 . . fire may not be considered a natural disaster or calamity since it almost always arises from some act of man or by human means. against ESLI to recover the sum paid under protest on the ground that the same were actually damages directly brought about by the fault. PHAC. consigned to William Lines. that the fire was caused by a natural disaster. . assist in saving a vessel or its cargo from shipwreck. (3) The fact that the acetylene cylinder was checked. ESLI charged the consignees several amounts corresponding to additional freight and salvage charges. freight pre-paid and in good order and condition: (a) 2 boxes internal combustion engine parts. and that salvage charges are properly collectible under Act No. the cargoes which were saved were loaded to another vessel for delivery to their original ports of destination. there is strong evidence indicating that the acetylene cylinder caught fire because of the fault and negligence of respondent ESLI. loaded on board SS Eastern Explorer in Kobe.The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of the consignees. PHILIPPINE AMERICAN LIFE INSURANCE COMPANY v. (c) 200 bags Glue 300. . CA sustained the trial court's finding that the fire that gutted the ship was a natural disaster or calamity. Salvage operations conducted by Fukuda Salvage Company was perfectly a legal operation and charges made on the goods recovered were legitimate charges. Inc. CA (supra p. ESLI should have easily foreseen that the acetylene cylinder. 2616. these were all delivered to the consignees. and none was alleged by the parties. THE AUDITOR GENERAL 22 SCRA 135 SANCHEZ.After the fire was extinguished. containing highly inflammable material. 1996 NATURE . that the additional freight charges are due and demandable pursuant to the Bill of Lading. Japan.There was no showing. consigned to Ding Velayo. then filed a complaint before the RTC of Manila. even if the transshipment took longer than necessary. the same are also validly demandable. and picked up and conveyed to a safe place by other persons. the latter shall be entitled to a reward for the salvage.Eastern Shipping Lines. . In absolving respondent carrier of any liability.ESLI contended that it exercised the diligence required by law in the handling. Page 76 caused by lightning or a natural disaster or casualty not attributable to human agency. it indubitably follows that the cargo consignees cannot be made liable to respondent carrier for additional freight and salvage charges. its captain and its crew: (1) The acetylene cylinder which was fully loaded should not have been stored near the engine room where the heat generated therefrom could cause the acetylene cylinder to explode by reason of spontaneous combustion. the following shipment for carriage to Manila and Cebu.The burning of "EASTERN EXPLORER" while off Okinawa rendered it physically impossible for defendant to comply with its obligation of delivering the goods to their port of destination pursuant to the contract of carriage. the Salvage Law is applicable. It cannot be an act of God unless 9 Section 1. JANUARY 18. that the fire was caused by an unforeseen event. illegal act and/or breach of contract of ESLI..While the vessel was off Okinawa. Inc. among the carrier. or deterioration of the goods transported by them but who. . What is at issue therefore is not whether or not the carrier is liable for the loss. With respect to the additional freight charged by defendant from the consignees of the goods.The burning of the vessel was not the fault or negligence of defendant but a natural disaster or calamity. and (d) garments. the vessel or its cargo shall be beyond the control of the crew.Note: The goods subject of the present controversy were neither lost nor damaged in transit by the fire that razed the carrier. As the crew was trying to extinguish the fire. . Respondent Eastern Shipping Lines. thus causing death and severe injuries to the crew and instantly setting fire to the whole vessel. consigned to Orca's Company.From the foregoing premises. Under Article 1266 of the Civil Code. (b) 10 metric tons (334 bags) ammonium chloride. . was in a real danger of exploding. All consignations were made by virtue of a Bill of Lading. consigned to Pan Oriental Match Company. negligence. June 20. .SS Eastern Explorer was then found to be a constructive total loss and its voyage was declared abandoned. as subrogee of the consignees. Those who. CA (EASTERN SHIPPING) 257 SCRA 468 KAPUNAN. consignee or insurer of the goods.RTC: dismissed PHAC's complaint and ruled in favor of ESLI. the cylinder suddenly exploded. . In fact. custody and carriage of the shipment. Inc.

If the obligation does not inhere and subsist in the contract itself.998. FACTS . The reinsurance treaty per se cannot give rise to a contractual obligation for the payment of foreign exchange. as the reinsuring company. particularly contractual obligations calling for payment of foreign exchange issued. and therefore exempted. as it is only after Philamlife seeks to remit that reinsurance premium that the obligation to pay the margin fee arises. nothing in the treaty obligates Philamlife to remit to Airco a fixed. WON Margin Law impairs the obligation of contract 3.. Second. an agreement between insurance companies to cover the different situations described. saying reinsurance treaty NOT EXEMPTED. the Margin Law was approved and became effective.Philamlife. . . but in the law applicable to the contract. a "reinsurance cession" which may be automatic or facultative. if really continuance of the existing reinsurance treaty becomes unbearable. Disposition For the reasons given.48 as foreign exchange margin on Philamlife remittances to Airco purportedly totalling $610. entered into 7 reinsurance agreements under which the former. Ratio A reinsurance policy is thus a contract of indemnity one insurer makes with another to protect the first insurer from a risk it has already assumed. ASIAN Reasoning .On Sep. Philamlife filed a claim for refund on the ground that the reinsurance premiums remitted were paid in pursuant to the January 1950 reinsurance treaty. 9. 1959. 31 of the year in which the notice was given. to reduce the excessive demand-for foreign exchange. 1959. When petitioner entered into the reinsurance treaty of January 1. became an unwritten condition thereof. which exempts certain “obligations from payment of margin fees. 1970 INC v. Auditor of CB refused to pass in audit Philamlife’s claim for refund. 1950 with Airco. Inc.' Such a treaty is. Philamlife exempted from paying margin fee 2. FIELDMEN'S INSURANCE CO SURETY & INSURANCE CO INC 34 SCRA 36 MAKALINTAL. and therefore.. a corporation organized under the laws of the Republic of Panama. 1960 and Jan.On various dates between April 11. a specified portion of the amount of insurance underwritten by ASIAN upon payment to FIELDMEN'S of a proportionate share of the gross rate of the premium applicable with respect to each cession after deducting a commission. propio vigore. to provide the Central Bank with an additional instrument for effectively coping with the problem and achieving domestic and international stability of our currency. 19. . the petition for review is hereby denied.INSURANCE NATURE PETITION FOR REVIEW of a ruling of the Auditor General. and obligatory sum by way of reinsurance premiums. 2. a reinsurance treaty is merely an agreement between two insurance companies whereby one agrees to cede and the other to accept reinsurance business pursuant to provisions specified in the treaty. NO . reinsurance policies or cessions are contracts of insurance. the cancellation to take effect as of Dec.First. . 25. The practice of issuing policies by insurance companies includes. Treaties are contracts for insurance. it did so with the understanding that the municipal laws of the Philippines at the time said treaty was executed. -Rationale of Margin Law: to reduce the excessive demand on and prevent further decline of our FACTS . It is only after a reinsurance cession is made that payment of reinsurance premium may be exacted. Reinsurance treaties and reinsurance policies are not synonymous. certain. . approved and outstanding as of the date this Act takes place”.implementation of Margin Law in accordance with police power 3.Monetary Board exempted Philamlife from payment of margin fee. However. Philamlife sought reconsideration but was denied. WON the premia remitted were in pursuance of the reinsurance treaty between Philamlife and Airco of January 1959. Petitioner is not forced to continue its reinsurance treaty indefinitely with Airco. . served notice to ASIAN of the former's desire to be relieved from all participation in its various agreements with the latter effective Dec. in fact. the issuance of reinsurance policies on standard risks and also on substandard risks under special arrangements. and the Fieldmen's Insurance Company. and the ruling of the Auditor General of October 24.Central Bank of the Philippines collected P268. Existing laws form part of the contract "as the measure of the obligation to perform them by the one party and the right acquired by the other. there is no concrete evidence that such imposition of the 25% margin fee is unreasonable. 1961. NO Ratio. 1961. July 31. This communication. entered into a REINSURANCE TREATY wherein Philamlife agrees to reinsure with Airco on January 1950. . did not elicit any reply from ASIAN.For an exemption to come into play. 31. and American International Reinsurance Company (Airco). that contract itself provides that petitioner may potestatively write finis thereto on ninety days' written notice.Even if reinsurance treaty preceded the Margin Law by over nine years. Such municipal laws constitute part of the obligation of contract. Said agreements were to take effect from certain specific dates and were to be in force until cancelled by either party upon previous notice of at least 3 months by registered mail to the other party. by means of registered mail. In contradistinction. Page 77 international reserves. . . among other things. The lumping of the different agreements under a contract has resulted in the term known to the insurance world as 'treaties.In July 16. NO Reasoning .63 and made subsequent to July 16. Costs against petitioner. So ordered. as in the reinsurance treaty provided.747. Inc. Philamlife agreed to pay premiums for all reinsurances on an annual premium basis. although admittedly received by ASIAN on Sep. WON reinsurance contracts abroad would be made impractical by the imposition of the 25% margin fee HELD 1. as the ceding company undertook to cede to the latter. 1961 the Asian Surety & Insurance Company. there must be a reinsurance policy or. Philamlife’s obligation to remit reinsurance premiums becomes fixed and definite upon the execution of the reinsurance cession. ISSUES 1. a contract antedating the Margin Law. a domestic life insurance corp. 1961 denying refund is hereby affirmed. Reasoning . 1961 FIELDMEN'S.

Plaintiff Equitable Insurance file a complaint with the CFI of Manila against defendant Rural Insurance alleging. Since the policy was issued on July 1. insofar as the two reinsurance agreements are concerned.Defendant filed a motion to dismiss on the ground that it states no cause of action. 1962 reminding ASIAN of the cancellation of all the reinsurance treaties and cessions as of Dec. 1962. elect to withdraw the existing cessions . ." and the 4th paragraph of Article VI of the Personal Accident Reinsurance Treaty states: "4. plaintiff reinsured for P2k with defendant stock covered by fire insurance Policy No. without prejudice to the filing of a proper action between the parties for that purpose. The said agreements have been cancelled. . the liability of the REINSURER (Fieldmen's) under any current cession including any amounts due to be ceded under the terms of this Agreement and which are not cancelled in the ordinary course of business shall continue in full force until their expiry unless the COMPANY (Asian) shall. as first cause of action. RURAL INSURANCE 4 SCRA 343 BARRERA.In its answer below ASIAN denied having received FIELDMEN'S letter dated Sep 19. the reinsurer becoming the reinsured and vice versa. filed a petition for declaratory relief with the CFI of Manila to seek a declaration that all the reinsurance contracts entered into between them had terminated as of December 31." . that they entered into a reciprocal facultative reinsurance agreement. . 1961 — the liability of FIELDMEN'S with respect to policies or cessions issued under two of the said agreements prior to their cancellation continued to have full force and effect until the stated expiry dates of such policies or cessions. 1961. Future conflicts of the same nature as those which have motivated the present action can of course be obviated by using more precise and definite terminology in the reinsurance agreements which the parties may enter into henceforth. ISSUE WON the cancellation as of Dec. 1961. . . defendant refused to pay. Not having received any formal reply from ASIAN. FIELDMEN'S could not have terminated the reinsurance treaties as of Dec 31. and argued that even assuming it did. 6062 which also burned. the liability of the Fieldmen's under current cessions shall continue in full force and effect until their natural expiry . ASIAN immediately notified FIELDMEN'S of said fire loss. relying on the sufficiency of its notice of termination dated September 19. 31.With respect to the other 4 agreements. prior to the thirty-first December next following such notice. Such cessions continued to be in force until their respective dates of expiration. 1961.On appeal to the CA. before a court action can be brought.Of the 6 reinsurance contracts. . 2 contain provisions. 1961 and to obtain an order directing ASIAN to render final accounting of the transactions between them with respect to said reinsurance treaties as of the cut-off date. . At the same time. and that no useful purpose would be served by defining the respective rights and obligations of the parties thereunder.INSURANCE . 1961 FIELDMEN'S sent another letter to ASIAN expressing regrets at alleged violations committed by the latter with respect to the various agreements between them and reiterated its position that it would consider itself "no longer at risk for any reinsurance and/or cession" given by ASIAN which might be in force on Dec.On Dec. the trial court declared 6 of the 7 reinsurance agreements in question cancelled as of Dec 31. and it does not appear that any claim by or liability in favor of the insured has actually arisen under any of the reinsurance cessions made prior to such cancellation. The said treaties provide "that in the event of termination of this Agreement . FIELDMEN'S cannot avoid liability which arose by reason of the burning of the insured property. EQUITABLE INSURANCE v. the parties agreed to submit all disputes to a board of arbitrators.Meanwhile one of the risks reinsured with FIELDMEN'S issued in favor of the GSIS became a liability when the insured property was burned on February 16.. it upheld ASIAN'S position that all cessions of reinsurance made by it to FIELDMEN'S prior to the cancellation of the reinsurance treaties continued in full force and effect until expiry dates and ordered FIELDMEN'S to make an accounting of its business transactions with ASIAN within 30 days. there is clearly no merit in FIELDMEN'S claim that their cancellation carried with it ipso facto the termination of all reinsurance cessions thereunder.Thus. which clearly and expressly recognize the continuing effectivity of policies ceded under them for reinsurance notwithstanding the cancellation of the contracts themselves. FIELDMEN'S sent a new a letter on Feb. . 17. Since it was under one of said agreements that the reinsurance cession corresponding to the GSIS policy Page 78 had been made. January 31. . 7. . it would seem that the petition for declaratory relief is moot. 17.On Dec. it was supposed to expire on July 1. 1962 FACTS . wherein they agreed to cede to each other. . defendant refused to pay its share of the loss of P1. 1961 and requested ASIAN to submit its final accounting of all cessions made to the former for the preceding months when the reinsurance agreements were in force. On the termination of this Agreement from any cause whatever.FIELDMEN'S. . with the slight modification that the order for accounting was eliminated. 1962.Defendant filed its answer. Again. and that said agreement has not yet been abrogated so the liability of either to the other . The Court denied the motion and required defendant to answer. 31. . alleging that the nature of the agreement is “self-liquidating between the parties”. as pursuant to Art VIII of the Reinsurance Agreement between the parties. By way of special defense Asian contended that even if the Sep. 1961 because the letter was merely an expression of FIELDMEN'S desire to cancel the treaties and not a formal notice of cancellation as contemplated in their reinsurance agreements. 1961 of the reinsurance treaties had the effect of terminating also the liability of FIELDMEN'S as reinsurer with respect to policies or cessions issued prior to the termination of the principal reinsurance contracts or treaties HELD NO to the 2 reinsurance contracts .334 hence said complaint.. 1961 and obviously bent on avoiding its liability under the reinsurance agreements with ASIAN.On the second cause of action. Despite repeated demands by plaintiff. . Feb. 2 The next day. 19 letter were considered sufficient notice of cancellation — thereby rendering the reinsurance agreements terminated as of December 31. the share of the loss of defendant as per insurance agreement was computed at P2.024 for which plaintiff sent to defendant a statement of account for payment by the latter. Pursuant to said agreement. 31. 5880 issued by plaintiff which was later burned. 1962. 1961. . plaintiff reinsured for P2k with defendant the stock covered by fire insurance Policy No. the decision of the trial court was substantially affirmed. 4.

509. Wellington contends that Artex should have been directed against the reinsurers to cover the liability and not against Wellington. Inc.000. and secured by a chattel mortgage over a brand new red Ford Laser. May 7. 2.On the same date. demands.940. Hence this appeal. insured for P24.864. that defendant insured plaintiff against business interruption (use and occupancy) for P5. not being privy to the reinsurance contract. Inc.6M paid by the insurer in full and final settlement of all or any claims of Artex against its insurer. In the instant case. of New York.554. With regard the balance unpaid.00. Evelyn Lim. Disposition judgment appealed from the TC is affirmed ARTEX DEVELOPMENT CO INC v.On Nov11. WON in a facultative obligation the right to choose an alternative remedy lies only with the debtor (here the defendant) under Art 1206 HELD 1. the company will be deemed to have waived the condition precedent with reference to arbitration and a suit upon the policy will lie. Evelyn Lim reported said incident to the LTO in compliance with the insurance requirement.43 and P1.134.The requirement of submission for decision to 2 arbitrators or an umpire the matter of losses by fire or the liability of the parties thereto under Art VIII of the agreement arises only if the same is disputed by one of the parties. . . The document recited further that Artex acknowledges receipt of the sum of P3. NO .At around 2:30pm Nov9. . Inc. WELLINGTON INSURANCE CO INC 51 SCRA 352 TEEHANKEE. It is expressly provided in Section 91 the Insurance Act 1 that "(T)he original insured has no interest in a contract of insurance.00. if in the course of the settlement of a loss. June 27. NO . the obligation is absolute and the liability assumed thereunder can be discharged by only one way—the payment of the share of the losses.683. USA. as it was in the case at bar.That defendant has paid to the plaintiff the sum of P6. . Inc. said vehicle was carnapped while parked at the back of Broadway Centrum. respectively. 1982. ISSUE WON the insured (Artex) has a cause of action against the reinsurer HELD Page 79 NO .000. 1973 FACTS Wellington Insurance Co. namely. immediately called up the Anti-Carnapping Unit of the Philippine Constabulary to report said incident and thereafter. title and interest on said promissory note and chattel mortgage as shown by the Deed of Assignment.200. costs and expenses in respect thereof.00.870. went to the nearest police substation to make a police report regarding said incident. .07 of the property loss suffered by plaintiff and P1. leaving a balance of P3. WON Equitable had no cause of action as the matter was not referred to the decision of arbitrators 2.624. 1982 on the ground that Evelyn .40 and the total business interruption loss was P3.Notice of the loss and damage was given the defendant. (Perla for brevity) for comprehensive coverage. ISSUES 1.346. the action of the company or its agents amounts to refusal to pay.748. CA(LIM) 208 SCRA 487 NOCON. . of New York.Private respondents spouses Herminio and Evelyn Lim executed a promissory note in favor of Supercars.On Nov10. Constabulary Highway Patrol Group.There is no connection between Art 1206 NCC and the agreement of this action.00 the buildings. that as per report of the adjusters.00. in the stipulation of facts defendant admitted that plaintiff had paid its liability and defendant likewise admitted that it ignored plaintiff’s demands for reimbursement for defendant’s failure to pay its share as reinsurer. claims.00. Inc. who was driving said car before it was carnapped. but instead referred it to the Insurance Commissioner. the reinsurance contract in favor of the insured or a manifest intention of the contracting parties to the reinsurance contract to grant such benefit or favor to the insured. the insured. assigned to petitioner FCP Credit Corporation (FCP for brevity) its rights. which is registered under the name of private respondent Herminio Lim and insured with the petitioner Perla Compania de Seguros.The buildings. or assignment of. Inc. stocks and machinery of plaintiff Artex Development Co. the total property loss of the plaintiff was the sum of P10. has no cause of action against the reinsurer. . in the sum of P77. USA. The CFI rendered judgment in favor of plaintiff. Wellington entered into a contract of reinsurance with Alexander and Alexander. Supercars.813. It discharges its insurer from all actions. 1982.106. The term “facultative” is used in reinsurance contracts.08 on its business interruption loss.00.000.034. merely to define the right of the reinsurer to accept or not to accept participation in the risk insured. the parties submitted their case for decision stipulating the ff facts: defendant admits the allegations of the complaint and that plaintiff admits that the issues of the complaint were not submitted to a Board of Arbitrators as provided in par VIII of the complaint.Instead of going into a formal hearing. But once the share is accepted. FACTS .Unless there is a specific grant in. there is no dispute between the parties. . the only remaining liability subject of litigation shall be the proportion of the loss reinsured with or through Alexander and Alexander. She also filed a complaint with the Headquarters. Defendant prayed that the complaint be dismissed and plaintiff filed a motion for judgment on the pleadings which the court denied. As held in Maligad v United Assurance Co. 1982. with notice to private respondents spouses. private respondent filed a claim for loss with the petitioner Perla but said claim was denied on Nov18.The counsel for Artex filed a Manifestation saying that in view of the Deeds of Discharge and Collateral Agreement. stocks and machineries of plaintiffs spinning department were burned. Inc.. proceedings. that said properties were insured for an additional sum of P883. 1992 NATURE Petition for certiorari by Perla Compania de Seguros and FOC Credit Corporation seeking to annul and set aside CA decision revering the RTC decision for replevin and damages. P397.INSURANCE is not yet known. and it is so used in this particular case.481." PERLA COMPANIA DE SEGUROS v. payable in monthly installments according to the schedule of payment indicated in said note..460. . against loss or damage by fire or lighting upon payment of the plaintiff of the corresponding premiums.

1983. private respondents were justified in asking petitioner FCP to demand the unpaid installments from petitioner Perla. housebreaking or theft. denied private respondents' claim. the chattel mortgage contract and the insurance policy. private respondents requested from petitioner FCP for a suspension of payment on the monthly amortization agreed upon due to the loss of the vehicle and. was in possession of an expired driver's license at the time of the loss of said vehicle which is in violation of the authorized driver clause of the insurance policy. Private respondents were able to secure an insurance policy from petitioner Perla. required private respondents to insure the automobile and to make the proceeds thereof payable to Supercars. CA reversed said decision .. this does not mean that private respondents are bound to pay the interest. litigation expenses and attorney's fees HELD 1. since the carnapped vehicle was insured with petitioner Perla. Therefore. the insurance company Perla undertakes to pay directly to the mortgagor or to their assignee. the promissory note. and." . to drive the Scheduled Vehicle. and not the "AUTHORIZED DRIVER" clause. and the unjustified refusal of . thereby reducing indemnity to a shadow. which states. such taking constitutes theft. 2. as well as the cost of suit.On July25. the contract of indemnity was procured to insure the return of the money loaned from petitioner FCP. over the automobile the former purchased from the latter. petitioners filed these separate petitions for review on certiorari. .Upon appeal. however.The comprehensive insurance policy issued by petitioner Perla undertook to indemnify the private respondents against loss or damages to the car (a) by accidental collision or overturning. the commission of which was attended by intent. The chattel mortgage constituted over the automobile is merely an accessory contract to the promissory note. in accordance with the licensing or other laws or regulations. . Inc. the loss of the insured vehicle did not result from an accident where intent was involved. Consequently." . . . e. it is the "THEFT" clause. self-ignition or lightning or burglary.INSURANCE Lim. (b) by fire. WON the loss of the collateral exempted the debtor from his admitted obligations under the promissory note particularly the payment of interest.After petitioners' separate MFRs were denied by CA. the amount stated therein in accordance with the schedule provided for. NO .On Nov17. i.If the insured vehicle had figured in an accident at the time she drove it with an expired license. and the same was made specifically payable to petitioner FCP. It also ordered the dismissal of the Third party complaint against ThirdParty Defendant. But in the present case. ISSUE 1. Inc. petitioner FCP filed a complaint against private respondents. the promissory note is unaffected Page 80 by whatever befalls the subject matter of the accessory contract. Provided that the person driving is permitted.There is no causal connection between the possession of a valid driver's license and the loss of a vehicle.The unpaid balance on the promissory note should be paid. . 1983 until fully paid. and not in contemplation or anticipation of an event such as theft. FCP. 1983. If the claim on the insurance policy had been approved by petitioner Perla. external explosion. private respondents constituted a chattel mortgage in favor of Supercars. and this would have had the effect of extinguishing private respondents' obligation to petitioner FCP. litigation expenses and attorney's fees stipulated in the promissory note.The risk against accident is distinct from the risk against theft. The chattel mortgage.Where a car is unlawfully and wrongfully taken without the owner's consent or knowledge. despite the fact that at first glance there is no relationship whatsoever between the parties thereto. .Perla. the outstanding balance of the mortgage at the time of said loss under the mortgage contract. To rule otherwise would render car insurance practically a sham since an insurance company can easily escape liability by citing restrictions which are not applicable or germane to the claim. to petitioner FCP. then. who in turn filed an amended third party complaint against petitioner Perla on Dec8. TC ordered sps Lim to pay jointly and severally. To secure said promissory note. the loss in the present case was caused by theft. private respondents should not be made to pay the interest. Because of the peculiar relationship between the three contracts in this case. therefore. After trial on the merits. As mentioned above. . Inc.93 plus interest thereon at the rate of 24% per annum from July 2. liquidated damages and attorney's fees as stipulated in the promissory note.055. Being the principal contract. The distinction often seized upon by insurance companies in resisting claims from their assureds between death occurring as a result of accident and death occurring as a result of intent may apply to the case at bar.However. Lim spouses are obliged to pay Supercars. WON there was grave abuse of discretion on the part of the appellate court in holding that private respondents did not violate the insurance contract because the authorized driver clause is not applicable to the "Theft" clause of said Contract 2. or with his permission. and not just the installments due and payable before the automobile was carnapped. in turn. 1982. said insurance company should be made to pay the remaining balance of the promissory note and the chattel mortgage contract. as erronously held by the CA . . appellee Perla Compania could properly resist appellants' claim for indemnification for the loss or destruction of the vehicle resulting from the accident. or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear.Because petitioner Perla had unreasonably denied their valid claim. . with the knowledge of private respondents. Inc. or has been permitted and is not disqualified by order of a Court of Law or by reason of any enactment or regulation in that behalf. The court agrees with FCP that Lim spouses are not relieved of their obligation to pay the former the installments due on the promissory note on account of the loss of the automobile. that should apply. the Court is compelled to construe all three contracts as intimately interrelated to each other. The 'authorized driver clause' in a typical insurance policy as in contemplation or anticipation of accident in the legal sense in which it should be understood. The promissory note and chattel mortgage were assigned by Supercars. petitioner FCP demanded that private respondents pay the whole balance of the promissory note or to return the vehicle but the latter refused.Under the promissory note. plaintiff the sum of P55. and (c) by malicious act. who was using the vehicle before it was carnapped. to wit: "AUTHORIZED DRIVER: Any of the following: (a) The Insured (b) Any person driving on the Insured's order.From the abovementioned provision that upon the loss of the insured vehicle. it would have paid the proceeds thereof directly to petitioner FCP.

. No pronouncement as to costs. Sr. testified on his claim for damages for the serious physical injuries which he claimed to have sustained as a result of the accident. regardless of the financial capacity of motor vehicle owners. We hold that the Court of Appeals did not err in requiring petitioner Perla to indemnify private respondents for the loss of their insured vehicle. Sr. 1983 until fully paid. 1983 until fully paid. 1982 up to July 1. .In view of the foregoing discussion. Besides. SHAFER v. . ISSUE WON the court a quo erred in dismissing petitioner's third party complaint on the ground that petitioner had no cause of action yet against the insurance company HELD YES .The injured for whom the contract of insurance is intended can sue directly the insurer. .. The occurrence of the injury to the third party immediately gave rise to the liability of the insurer under its policy. the insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends. if well exercised. November 14.e. in the City of Olongapo.. representing the unpaid installments from December 30. .As to the award of moral damages. The court further stated that the better procedure is for the accused (petitioner) to wait for the outcome of the criminal aspect of the case to determine whether or not the accused. Sr. Such discretion. was impliedly instituted with the criminal case. as well as attorney's fees are left to the sound discretion of the Court. exemplary damages and attorney's fees. During the effectivity of the policy. then the motion to dismiss the third party complaint should be denied. based on the premise that unless the accused (herein petitioner) is found guilty and sentenced to pay the offended party (Poblete Sr.345. private respondents are legally entitled to the same since Perla had acted in bad faith by unreasonably refusing to honor the insurance claim of the private respondents. Instead. 13 Third party complaints are allowed to minimize the number of lawsuits and avoid the necessity of bringing two (2) or more actions involving the same subject matter. .055.) has sought to recover civil damages. while Jovencio Poblete. The information said that on or about the 17th day of May 1985. and that this result can be avoided by allowing the third party complaint to remain. or TPL) is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles.055.A third party complaint is a device allowed by the rules of procedure by which the defendant can bring into the original suit a party against whom he will have a claim for indemnity or remuneration as a result of a liability established against him in the original suit.93. did not reserve his right to file a separate civil action for damages.Private respondents can not be said to have unduly enriched themselves at the expense of FCP since they will be required to pay the latter the unpaid balance of its obligation under the promissory note.00 and as a result thereof one Jovencio Poblete.The liability of the insurance company under the Compulsory Motor Vehicle Liability Insurance is for loss or damage. thereby causing damage in the total amount of P12.. arose from the offense charged in the criminal case.Compulsory Motor Vehicle Liability Insurance (third party liability. has a cause of action against the third party defendant for the enforcement of its third party liability (TPL) under the insurance contract. JUDGE 167 SCRA 386 PADILLA. the latter should be ordered to pay petitioner FCP the amount of P55.The court issued an order dismissing the third party complaint on the ground that it was premature. 18 plus legal interest from July 2. in the course of the trial in the criminal case. an information for reckless imprudence resulting in damage to property and serious physical injuries was filed against shafer. i. .There is no need on the part of the insured to wait for the decision of the trial court finding him guilty of reckless imprudence. They are predicated on the need for expediency and the avoidance of unnecessary lawsuits. The civil aspect of the offense charged. 6 Petitioner moved for reconsideration of said order. with legal interest from July 2. Disposition the assailed decision of the CA is hereby MODIFIED to require private respondents to pay petitioner FCP the amount of P55. Respondent insurance company's contention that the third party complaint involves extraneous matter which will only clutter. complicate and delay the criminal case is without merit.93. from which the injured (Jovencio Poblete. Shafer hit and bumped a Volkswagen car owned and driven by Felino llano y Legaspi. but the motion was denied. this petition. Where an insurance policy insures directly against liability. as shown in the statement of account prepared by petitioner FCP. 1988 NATURE Petition for review on certiorari FACTS .INSURANCE petitioner Perla to recognize the valid claim of the private respondents should not in any way prejudice the latter. . awards for moral and exemplary damages. The victims and/or their dependents are assured of immediate financial assistance.) indemnity or damages. . Petitioner may thus raise all defenses available to him insofar as the criminal and civil aspects of the case are concerned. such claim of petitioner against the insurance company cannot be regarded as not related to the criminal action. Poblete. for third party liability. and to give such injured person a certain beneficial interest in the proceeds of the policy. Sr. If it appears probable that a second action will result if the plaintiff prevails. the third party complaint is without cause of action. 1983. serious physical injuries allegedly suffered by Jovencio Poblete. .Sherman Shafer obtained a private car policy over his Ford Laser from Makati Insurance Company. for the Page 81 alleged bodily injuries caused to said third party. It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured as if such injured person were specifically named in the policy. Sr. The owner of the damaged Volkswagen car filed a separate civil action against petitioner for damages. However. The decision appealed from is hereby affirmed as to all other respects. who was on board of the said Volkswagen car sustained physical injuries which injuries causing deformity on the face. The claim of petitioner for payment of indemnity to the injured third party. also the third party plaintiff. Hence. and does not depend on the recovery of judgment by the injured party against the insured. will not be disturbed on appeal. under the insurance policy. The general purpose of statutes enabling an injured person to proceed directly against the insurer is to protect injured persons against the insolvency of the insured who causes such injury. and statutes are to be liberally construed so that their intended purpose may be accomplished. hence. Inc. who was a passenger in the Volkswagen car.

v. funeral and burial expenses of the deceased." Since petitioners had received from AFISCO the sum of P5. The liability of the insurer is based on contract. For if petitioner-insurer were solidarily liable with said.000.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 PUJ jeep that bumped the deceased was driven by Pepito Into.AFISCO argued that since the Insurance Code does not expressly provide for a solidary obligation.00. . . CONSOLACION 212 SCRA 268 ROMERO.INSURANCE .00 coverage of the insurance policy issued by AFISCO. namely respondents Sio Choy and San Leon Rice Mill. Court of Appeals. An information for homicide thru reckless imprudence was also filed against Pepito Into. Not even a "no action" clause under the policy-which requires that a final judgment be first obtained against the insured and that only thereafter can the person insured recover on the policy can prevail over the Rules of Court provisions aimed at avoiding multiplicity of suits. such third persons can directly sue the insurer. bumped the motorcycle driven by the deceased. this 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 lower court denied the motion for reconsideration ruling that since the insurance contract "is in the nature of suretyship.000. . . should have been awarded in their favor. the PUJ jeep was overtaking another passenger jeep that was going towards the city poblacion. moral damages. .During the pendency of the civil case. . . however. From the investigation conducted by the traffic investigator.While in solidary obligations. is liable to respondent Vallejos (the injured third party). One day. This motion was likewise denied for lack of merit. Sr.Petitioners filed a second motion for reconsideration reiterating that the liability of the insurer is direct. and attorney's fees and costs of suit.In the event that the injured fails or refuses to include the insurer as party defendant in his claim for indemnity against the insured. operated and owned by defendant Destrajo. when he was on his way to his work.70 in accordance with the decision of the lower court. AFISCO's liability is only up to P20. and to indemnify the heirs of Lope Maglana.Heirs of Lope Maglana.Lope Maglana was an employee of the Bureau of Customs whose work station was at Lasa. we cannot agree that AFISCO is likewise solidarily liable with Destrajo. although only up to the extent of the insurance coverage. Since under both the law and the insurance policy. he met an accident that resulted in his death. and to give such injured person a certain beneficial interest in the proceeds of the policy ." Hence. plus five thousand pesos in the concept of moral and exemplary damages with costs. The point of impact was on the lane of the motorcycle and the deceased was thrown from the road and met his untimely death. primary and solidary with the jeepney operator because the petitioners became direct beneficiaries under the provision of the policy which. the PUJ jeep of defendant Destrajo running abreast with the overtaken jeep. Judge. . August 6. The questioned order dated 24 April 1987 is SET ASIDE and a new one entered admitting petitioner's third party complaint against the private respondent Makati Insurance Company. Inc.901.However. filed an action for damages and attorney's fees against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO). No appeal was interposed by accused who later applied for probation. petitioner as insurer of Sio Choy. 75. We categorically ruled thus: While it is true that where the insurance contract provides for indemnity against liability to third persons. the latter is not prevented by law to avail of the procedural rules intended to avoid multiplicity of suits. as incorrectly held by the trial court. AFISCO's liability is now limited to P15. the insurer's liability accrues immediately upon the occurrence of the injury or even upon which the liability depends. .00 under the no-fault clause. the insurer undertakes for a consideration to indemnify the insured against loss." . they argued that the P20. can be held solidarily liable with Destrajo for the total amount of P53. Inc.000. In the case at bar. 1992 NATURE Petition for certiorari FACTS . whose liability under the insurance policy is also P20. 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. "[w]here an insurance policy insures directly against liability.As this Court ruled in Shafer vs. While overtaking. the creditor may enforce the entire obligation against one of the solidary debtors.The lower court rendered a decision finding that Destrajo had not exercised sufficient diligence as the operator of the jeepney ordering him to pay plaintiffs the sum for loss of income.00. here in Davao City. damage or liability arising from an unknown or contingent event." . then the liability of the insurer is secondary only up to the extent of the insurance coverage. the presumption is that the obligation is joint. two (2) respondents by reason of the indemnity contract against third party liability under which an insurer can be directly sued by a third party this will result in a violation of the principles underlying solidary obligation and insurance contracts.00.. in the amount of twelve thousand pesos with subsidiary imprisonment in case of insolvency. that of the insured is based on tort.Petitioners filed a motion for the reconsideration of the second paragraph 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. Disposition instant petition is GRANTED. with all the accessory penalties provided by law. in effect. . RTC of Olongapo City.Similarly. Sr. in an insurance contract. ISSUE WON AFISCO can be held directly liable HELD YES . . the second paragraph of the dispositive portion of the . but it cannot. Inc. petitioners herein cannot validly claim that AFISCO. In Malayan Insurance Co.000. be made "solidarily" liable with the two principal tortfeasors. He died on the spot. The defendant insurance company is ordered to reimburse defendant Destrajo whatever amounts the latter shall have paid only up to the extent of its insurance coverage. . and Page 82 does not depend on the recovery of judgment by the injured party against the insured.000. is a stipulation pour autrui. VDA DE MAGLANA v. Into was sentenced to suffer an indeterminate penalty.

00 in fun settlement of the liability of the vehicles owner and driver. found the taxi company liable for damages to the passengers on the strength of its representation contained in the sticker above noted that the passengers were insured against accidents.. and attorney’s fees payable by La Mallorca and sentenced Far Eastern to pay La Mallorca P10.200. Peza attempted to neutralize that fact by(1) the issuance of the TVR by the LTC officer to Amar. while holding that the collision was due to the fault of the driver of the gravel and sand truck. Empire refused to pay on the ground that the driver had no authority to operate the vehicle.The award for damages made to the passengers was exclusively predicated on the representation made by La Mallorca that its passengers were insured against accidents and not because it was at fault in causing the accident. P10.000.000.Socorro Dancel Vda. However. .00 as exemplary damages. La Mallorca has insured its passengers against accidents. was not permitted by law and was in truth disqualified to operate any motor vehicle.00 to P50. the findings of the CA and the trial court that the causative factor of the mishap was the negligence of the gravel and truck driver would have been sufficient to relieve the taxi company of any liability arising from the accident.800. Inc. 1988 NATURE Motion praying that Judge Alikpala be declared guilty of contempt of court for having decided the case on the merits despite the pendency in this Court of the certiorari action instituted by the plaintiffs FACTS Page 83 . La Mallorca. In other words. The father agreed to accept P6. a fact which it expressly excepted from liability under the policy. La Mallorca accepted the responsibility for damages or injuries to passengers even if it had no fault at all. . only having a temporary operator's permit (TVR) [already expired] his driver’s license having earlier been confiscated by an agent of the Land Transportation Commission for an alleged violation of Land Transportation and Traffic Rules.driver Perfecto Amar. A motion for reconsideration was filed in and dismissed by the CA.de Misa and Araceli Pinto hired a taxi cab operated by La Mallorca on September 3. 1968 NATURE Appeal by petition for review from a CA judgment FACTS .Empire's basic defense to the suit was anchored on the explicit requirement in the policy limiting the operation of the insured vehicle to the "authorized driver" therein defined. whether it was at fault or not. . provided that. the SC ruled that it neither authorized nor consented to the representations made by the taxi company to its passengers. They were killed. PEZA v. and P10. as it was passing a national highway at barrio Makiling Calamba.The two passengers instituted a suit for damages against La Mallorca who.INSURANCE decision in question may have unwittingly sown confusion among the petitioners and their counsel. (a) the insured. filed a claim with Empire. .200. MISA 25 SCRA 663 REYES.In this case.000. The insurance company therefore cannot be held liable for the award. She amended her complaint shortly thereafter to include Diman & Co. on its third party liability insurance. Laguna. 1957. involved in accidents caused by. moral and exemplary damages. loss by theft excluded. as well as P20. It was insured with the Empire Insurance Co. Disposition present petition is hereby GRANTED.00. . belonging to a partnership known as Diman & Company driven by its driver. as alternative party plaintiff. for payment of compensation to the family of the 2 children who died as a result of the accident. The taxi they were riding in collided with a gravel and sand truck resulting to injuries to both Misa and Pinto. was .00 representing loss of income is INCREASED to P192. cost and expenses which the insured shall become legally liable.The taxi company is adjudged to be the sole party responsible for the award.It would appear from the case that a sticker was placed in all the taxis of La Mallorca stating that passengers of the taxis were insured against accidents. or arising out of. in view of the sticker in all of its taxicabs.Placida Peza.vehicular accident with 2 children running across the path of a Chevrolet "Carry-All". or (b) any person driving on the insured order or with his permission. .On appeal. the CA overruled the defense of the insurance company to the effect that it was responsible only if the insured. This was done to entice the public into patronizing La Mallorca. under a so-called 'comprehensive coverage" policy. namely. the liability of the said insurance company based on its insurance contract is limited to the recovery by the insured of all sums. In so ruling. The policy was in force at the time of the accident. .00 and the death indemnity of P12. ALIKPALA 160 SCRA 31 NARVASA. Disposition The decision of the CA is modified by eliminating the award against Far Eastern. ISSUE WON Far Eastern Surety is liable to the insured on its insurance policy HELD NO . but had been renewed. FAR EASTERN SURETY v. As such. the use of the motor vehicle. and Peza paid him this sum. October 26. What Peza did was to negotiate directly with the deceased children father for an out-of-court settlement.. Perfecto Amar.In the case of the insurance company. instituted a third party complaint against Far Eastern Surety to recoup from the latter any award for damages that might be recovered by the passengers. . .000.00 as attorney's fees.000.00 as actual damages.000.000. that the person driving is permited in accordance with the licensing or other laws or regulations to drive the Motor vehicle or has been so permitted and is not disqualified by order of the Court of Law of by reason of any enactment or regulation in that behalf from driving such Motor Vehicle. the managing partner of Diman & Co. in proof of the proposition that there was no reason for confiscation of Amar's license (2) Amar's license had not expired. Reasoning .. 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. while denying responsibility.The trial court awarded to Misa and Pinto actual. The award of P28. the CA..00 as moral damages. April 15.Peza thereafter sued Empire to recover this sum of P6.

The claimant is not free to choose from which insurer he will claim the “no fault indemnity. and Perla (as insurer of the bus). 378: Any claim for death or injury to any passenger or 3rd party pursuant to the provisions of this chapter shall be paid without the necessity of proving fault or negligence of any kind. such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. 378 PERLA COMPANIA DE SEGUROS v. since the case was then already ripe for adjudication. claim shall lie against the insurer of the vehicle in which the occupant is riding. mounting or dismounting from. NO .It would seem fairly obvious that whether the LTC agent was correct or not in his opinion that driver Amar had violated some traffic regulation warranting confiscation of his license and issuance of a TVR in lieu thereof.e. That for purposes of this section (i) The indemnity in respect of any one person shall not exceed P5.Perla was the insurer of a Superlines bus which figured in a collision with a III Scout (it’s a kind of vehicle).Even positing error in the Judge's analysis of the evidence attempted to be introduced and his rejection thereof.” as the law. if the victim is not an occupant of a vehicle). the bus driver. the established principle is "that ruling of the trial court on procedural questions and on admissibility of evidence during the course of the trial are interlocutory in nature and may not be the subject of separate appeal or review on certiorari. 4. YES . If the victim is an occupant of a vehicle.e. Sec. it is clear that it was at most an error of judgment. Perla denied its liability under the above provision and said that the insurer of the vehicle that the respondents were riding (Malayan Insurance in this case) should be liable. Its 2 MFRs denied. are established: 1.000. CFI Judge Ancheta ordered that Perla should pay the respondents immediately the P5000 under the “no fault clause” as provided in Sec. The judgment ordered dismissal of the case for failure on the part of the plaintiff to prove their cause of action against Empire. ANCHETA 164 SCRA 144 CORTES. In any other case. mounting or dismounting from. WON confiscation of license and expiration of TVR of the driver would serve as bar for Peza in recovering from Empire HELD 1. Disposition petition is DISMISSED for lack of merit Page 84 ISSUE WON Perla is the insurer liable to indemnify under Sec. (iii) Claim may be made against one motor vehicle only. 2. In the case of an occupant of a vehicle. and (b) Death certificate and evidence sufficient to establish.. Provided. mounting or dismounting from. but are to be assigned as errors and reviewed in the appeal properly taken from the decision rendered by the trial court on the merits of the case. the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. 2. 378.the rules on claims under the “no fault indemnity” provision.” and no other. the proper payee. against which the writ of certiorari will lie. pending final determination of who is responsible for the accident and liable for the victims' injuries or death. In any other case (i. when submitted under oath. Neither would proof of the renewal of Amar's license change the fact that it had really been earlier confiscated by the LTC agent. A claim may be made against one motor vehicle only. 378 may recover against the owner of the vehicle responsible for the accident. In turn. . shall be sufficient evidence to substantiate the claim: (a) Police report of accident. In all cases. the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. August 8. 377) which was mandated in order to ensure ready compensation for victims of vehicular accidents. this would not alter the undisputed fact that Amar's licence had indeed been confiscated and a TVR issued to him. In all cases. the claim shall lie against the insurer of the vehicle in which he is riding. (ii) The following proofs of loss. claim shall lie against the insurer of the directly offending vehicle. . and the TVR had already expired at the time that the vehicle being operated by him killed two children by accident. where proof of fault or negligence is not necessary for payment of any claim for death or injury to a passenger or to a 3 rd party.Judge Alikpala did not admit such evidence ISSUES 1. Notice of the judgment was served on the parties in due course. Perla filed this action HELD NO Ratio The law is very clear – the claim shall lie against the insurer of the vehicle in which the “occupant xxx is riding. by using the word “shall”. Reasoning . In any event. i. Judge Alikpala rendered judgment on the merits. Injured passengers of the latter (and respondents in this case) filed a complaint for damages against Superlines. not such an error as may be branded a grave abuse of discretion. or (c) Medical report and evidence of medical or hospital disbursement in respect of which refund is claimed. the claim shall lie against the insurer of the directly offending vehicle. This is precisely the essence of “no fault indemnity” insurance which was introduced to and made part of our laws in order to provide victims of vehicular accidents or their heirs immediate compensation. WON Judge Alikapala committed grave abuse of discretion in not admitting evidence 2. the “no fault indemnity” provision is part and parcel of the Code provisions on compulsory motor vehicle liability insurance and should be read together with the requirement for compulsory passenger and/or 3rd party liability insurance (Sec. makes it mandatory that the claim be made against the insurer of the vehicle in which the occupant is riding. 3.INSURANCE . 1988 NATURE Petition for certiorari and prohibition with prelim injunction to review orders of CFI Camarines Norte FACTS . -That the vehicle ridden might not be the one that caused the accident is of no moment since the law itself provides that the party paying the claim under Sec.In the meantime. although in a limited amount.

Respondent Priscilla Rodriguez filed a complaint for damages before the Regional Trial Court of Makati against De Dios Transportation Co.It will be seen that the above quoted Schedule of Indemnities establishes monetary limits which Western may invoke in case of occurrence of the particular kinds of physical injury there listed. "temperate or moderate damages". It appears to us self-evident that the Schedule of Indemnities was not intended to be an enumeration. Rodriguez was struck by a De Dios passenger bus owned by respondent De Dios Transportation Co. that the Schedule of Indemnities does not purport to limit.which is not essentially different from taking away with the left hand what had been given with the right hand we must avoid as obviously repugnant to public policy. and such other burial and funeral expenses that might have been incurred. Liability to the Public ? Company will. such as those in question. "moral damages'. moral damages and attorney's fees HELD YES . FACTS . Disposition Petition denied. shall the Company's total payment under both Section I and Section 11 combined exceed the Limits of Liability set forth herein. filed a third-party complaint against its insurance carrier. among other things.Moreover. however. professional services and hospital charges. It was merely meant to set limits to the amounts the movant would be liable for in cases of claims for death. . CA for in this policy excluding the cost of additional medicines. pay all sums necessary to discharge liability of the insured in respect of ? (a) death of or bodily injury to or damage to property of any passenger as defined herein. awarding moral damages. Inc. the trial court rendered a decision in favor of respondent Priscilla E. (b) death of or bodily injury or damage to property of any THIRD PARTY as defined herein in any accident caused by or arising out of the use of the Schedule Vehicle. the relevant section reading as follows: Section 1.INSURANCE -Irrespective of whether or not fault or negligence lies with the driver of the Superlines bus.. Her face was permanently disfigured. . petitioner Western. much less a closed enumeration. may be properly informed and act accordingly. and "exemplary damages" ? may be awarded by a competent court against the insurer once liability is shown to have arisen. . But such internal injuries are surely covered by Section I of the Master Policy. Rodriguez.. is apparently P50. quoted above. which in this case happens to be petitioner Western. it was incumbent upon Western to use language far more specific and precise than that used in fact by Western. and the Office of the Insurance Commissioner. all kinds of damages allowable by law" actual or compensatory damages".On appeal. result in injury to internal organs of a passenger or third party. This result. For Western's reading would drastically and without warning limit the otherwise unlimited and comprehensive scope of liability assumed by the insurer Western under Section 1: "all sums necessary to discharge liability of the insured in respect of [bodily injury to a third party]". Page 85 . The claim should be made against the insurer of the vehicle they were riding. 378 from Perla. . Within this over-all quantitative limit. "liquidated damages". ARNALDO 158 SCRA 332 GANCAYCO. lossof earning and attorney's fees among others. In no case. Priscilla was thrown to the ground.Respondent Priscilla E. since they certainly constitute bodily injuries. "nominal damages". Orders of CFI ordering Perla to pay respondents immediately P5000 ANNULLED and SET ASIDE WESTERN GUARANTY CORPORATION (RODRIGUEZ & DE DIOS TRANS) 185 SCRA 652 FELICIANO. the Court of Appeals affirmed in toto the decision of the trial court.00 per person per accident. however. an insurance contract is a contract of adhesion. and potential purchasers of its Master Policy. She was treated at the Protacio Emergency Hospital and later on hospitalized at the San Juan De Dios Hospital. or to enumerate exhaustively. they cannot claim the “no fault indemnity” provided in Sec. and Walter A.' and not necessarily exclude claims against the insurance policy for other kinds of damages. On 6 August 1985. quoted above.The reading urged by Western of the Schedule of Indemnities comes too close to working fraud upon both the insured and the third party beneficiary of Section 1. .The Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen. With respect to death of or bodily injury to any third party or passenger. and the essential requisites or conditions for grant of each species of damages are present. 1988 NATURE Petition for review the decision of CA affirming in toto the damages awarded to private respondent by the trial court. hitting her forehead. February 29. provided that the liability shall have first been determined. . . Respondent bus company was insured with petitioner Western Guaranty Corporation ("Western") under its Master Policy which provided. If what Western now urges is what Western intended to achieve by its Schedule of Indemnities. as respondents were not occupants of the bus. ISSUE WON petitioner can be held liable for loss of earnings. July 20.The Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen. moral damages and attorney's fees because these items are not among those included in the Schedule of Indemnities set forth in the insurance policy. SUMMIT GUARANTY & INSURANCE COMPANY v. the company's payment per victim in any one accident shall not exceed the limits indicated in the Schedule of indemnities provided . The rule is well entrenched in our jurisprudence that the terms of such contract are to be construed strictly against the party which prepared the contract. Saga Respondent De Dios Transportation Co. so that the insured. bodily injuries of. causing her serious anxiety and moral distress.Petitioner contends that it cannot be held liable for loss of earnings.It must be stressed.g. of the specific kinds of damages which may be awarded under the Master Policy Western has issued. the species of bodily injury occurrence of which generate liability for petitioner Western. for services rendered to traffic accident victims. A car accident may. a foot or an arm or an eye).000. does refer to certain "Limits of Liability" which in the case of the third party liability section of the Master Policy. Disposition Petition GRANTED.. for protection against third party liability. subject to the Limits of Liability. without any accompanying amputation or loss of an external member (e. Section 1. for instance. 1990 v. in turn.

Third Party Liability. and one of the passengers died and the other four sustained physical injuries. Reasoning .The court takes note of the dilatory tactics employed by petitioner in this as in the several cases aforecited to avoid payment of its liabilities. In G. petitioner company devised means and ways of stalling the settlement proceedings. L-48679. THE INSURANCE COMMISSION 100 SCRA 467 TEEHANKEE. the car was allegedly taken by six (6) persons and driven out to Montalban. in G.Theft. Nevertheless the complaint was filed even before a denial of the claim was made by petitioner.The case do not fall within the meaning of proper cases' as contemplated in Section 384 of the Insurance Code. Sitio Palyasan. effective May 16. ISSUE WON the action must be dismissed on the ground of prescription under Section 384 of PD No. Rizal. The facts of these cases evidently reflect the deliberate efforts of petitioner company to prevent the filing of a formal action against it. Complainant. Notice of claim must be filed within six months from date of the accident. As a consequence.On May 9. October 30. Court of Appeals: 'Legislative intent must be ascertained from a consideration of the statute as a whole.It is not denied that an extrajudicial demand for payment was made by respondent FGU on petitioner but petitioner failed to respond to the same. Rizal. 1978 FGU filed a case in the Insurance Commissioner's Office against Summit for recovery of said amount. the one-year prescriptive period provided for in Section 384 of the Insurance Code has not begun to run.000.in Aisporna. . No. L-48758-petitioner company even provided legal assistance to one of the private respondents in the criminal case filed against him leading Private respondents to believe that it was Page 86 ready to pay. and with manifest bad faith. otherwise.The cause of action arises only and starts to run upon the denial of the claim by the insurance company. While travelling along Mabini St.Own Damage. No. (Summit) and thus requested the insurance commissioner for a conference with Summit and demanded from Summit through counsel on February 28. 1978. a Ford Pick-up truck owned by Marcos Olasco was bumped by a cargo truck owned by Floralde. filed a claim for .00 . with the Commissioner or the Courts within one year from date of accident.Hence on May 22.00 . FACTS .JEWEL VILLACORTA was the owner of a Colt Lancer. 612.On Nov. The car.00 . L50997. Action or suit for recovery of damage due to loss or injury must be brought. Having been subrogated to the rights and causes of action of Olaso in the said amount FGU formally demanded payment of said amount from Floralde and attempted to verify Floralde's insurance carrier but failed to do so. Benito Mabasa.R. Averring that the accident happened on November 26. . Had the lawmakers intended it to be the way Petitioner Company assumes it to be. The particular words. Inc. while it was in the custody of the Sunday Machine Works. present to the insurance company concerned a written notice of claim setting forth the amount of his loss.Petitioner company is trying to use Section 384 of the Insurance Code as a cloak to hide itself from its liabilities. . 1978 the payment of the damages sustained by the car of Olaso but to no avail. insured with respondent company for P35. VILLACORTA v. the vehicle was brought to the Sunday Machine Works. A statute must be so construed as to harmonize and give effect to all its provisions whenever possible. In view of the foregoing. petitioner company admits that it took no final action or adjudication of the claim.R.R. . Worse still.. In 1978 FGU was able to ascertain the identity of Floralde's insurance carrier to be the Summit Guaranty and Insurance Company. petitioner company made private respondents believe that their claims would be settled in order that the latter will not find it necessary to immediately bring suit. assurances of payment were constantly given and petitioner company even said that a check was ready for release. vs. The driver. Inc. going North at Montalban. 612 HELD NO . 1978. 1980 FACTS .In G. . 1977 to May 16.000. . no steps were taken to process the claim and no rejection of said claim was ever made even if private respondent had already complied with all the requirements. and/or the nature. the gravel and sand truck veered to the right side of the pavement going south and the car veered to the right side of the pavement going north.817. the claimant's right of action shall prescribe.000. 1976.INSURANCE NATURE PETITION to review the order of the Insurance Commissioner. extent and duration of the injuries sustained as certified by a duly licensed physician. Bearing in mind that if it succeeds in doing so until one year lapses from the date of the accident it could set up the defense of prescription.It is very clear that the one-year period is only required In proper cases. otherwise.Summit filed a motion to dismiss on the ground of prescription under Section 384 of PD No. clauses and phrases should not be studied as detached and isolated expressions. Model 1976. without any unnecessary delay. as well. This Court has made the observation that some insurance companies have been inventing excuses to avoid their just obligations and it is only the State that can give the protection which the insuring public needs from possible abuses of the insurers. but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. the car figured in an accident. and P30. In violation of its duties to adopt and implement reasonable standards for the prompt investigation of claims and to effectuate prompt. No. fair and equitable settlement of claims. 1976 while the complaint was filed on May 22. 1978. On May 11. In the same case. .. thereafter. P30. 26. 1978 beyond the one-year period from the time of the accident provided for by the said provision. in proper cases.50 as its share in the repair cost of the said Ford Pick-up. hitting and bumping a gravel and sand truck parked at the right side of the road going south. IC-VF-07185 paid Olaso the sum of P2. FGU Insurance Corporation (FG U) by reason of Motor Vehicle Insurance Policy No. For all legal purposes. then the phrase 'in proper cases' would not have been inserted. suffered extensive damage.Section 384 of PD 612 (Insurance Code) Any person having any claim upon the policy issued pursuant to this chapter shall.' . the claim shall be deemed waived. for general check-up and repairs. Barrio Burgos.

who." . or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear. be they employees of the car shop or not to whom it had been entrusted. which.The Court rejects respondent commission's premise that there must be an intent on the part of the taker of the car "permanently to deprive the insured of his car" and that since the taking here was for a "joy ride" and "merely temporary in nature. with the intention. and taken on a long trip to Montalban without the owner's consent or knowledge. and. Apparently. plaintiff had it refloated by the Luzon Stevedoring Co. external explosion.The S S "San Antonio". which clause limits the use of the insured vehicle to two (2) persons only. such taking constitutes or partakes of the nature of theft as defined in Article 308 of the Revised Penal Code.Respondent commission likewise upheld private respondent's assertion that the car was not stolen and therefore not covered by the Theft clause. made a deposit or signed a bond to answer for their contribution to the average. not the "authorized driver" clause. namely: the insured himself or any person on his (insured's) permission. . left Manila on October 6.The comprehensive motor car insurance policy for P35. with general cargo belonging to different shippers. The mere happenstance that the employee(s) of the shop owner diverts the use of the car to his own illicit or unauthorized purpose in violation of the trust reposed in the shop by the insured car owner does not mean that the "authorized driver" clause has been violated such as to bar recovery. amounts to P841. who. The vessel reached Aparri." . with the exception of defendant.On the theory that the expenses incurred in floating the vessel constitute general average to which both ship and cargo should contribute.The lower court found for plaintiff ISSUE WON the expenses incurred in floating a vessel so stranded should be considered general average and shared by the cargo owners HELD NO . Inc. vis Aparri. is that a person other than the insured owner. as may be seen from its text. (b) by fire. dismissed petitioner's complaint for recovery of the total loss of the vehicle against private respondent. or with his permission. but while still in the port. . vessel owned and operated by plaintiff. plaintiff brought the present action in the CFI of Manila to make defendant pay his contribution.00 issued by respondent Empire Insurance Company admittedly undertook to indemnify the petitioner-insured against loss or damage to the car (a) by accidental collision or overturning. at the time of the 'taking'. it is the theft clause. and independently of the foregoing (since when a car is unlawfully taken." a "temporary taking is held not a taking insured against. who drives the car on the insured's order. provided that such employee is duly qualified to drive under a valid driver's license. at an agreed compensation. among them the defendant. . and that the liquidation of the average was not made in accordance with law. that the stranding of the vessel was due to the fault. respondent commission's ruling that the person who drove the vehicle in the person of Benito Mabasa. and (c) by malicious act.00 under the theft clause of the policy. AGAN 96 PHIL 504 REYES. of withholding it with the character of permanency ISSUE WON the Insurance commission’s findings are in accord with law HELD NO . subject to the filing of such claim for reimbursement or payment as it may have as subrogee against the Sunday Machine Works. that the expenses incurred in putting it afloat did not constitute general average. such as his regular driver.The insurer must therefore indemnify the petitioner owner for the total loss of the insured car in the sum of P35. Page 87 CHAPTER VIII. was one of the residents of the Sunday Machine Works.Defendant denies liability to his amount. negligence and lack of skill of its master. alleging. and prevent their becoming traps for the unwary." .INSURANCE total loss with the respondent company but claim was denied. . supra. There the cargoes were delivered to their respective owners or consignees.000.Respondent insurance commission. Batanes. according to its own finding.40. attempts to refloat it under its own power having failed. "obviously call for greater strictness and vigilance on the part of courts of justice with a view of protecting the weaker party from abuse and imposition. it ran aground at the mouth of the Cagayan river. . ruling that "(T)he element of 'taking' in Article 308 of the Revised Penal Code means that the act of depriving another of the possession and dominion of a movable thing is coupled . MARINE INSURANCE MAGSAYSAY INC v. to whom the car had been entrusted for general check-up and repairs was not an "authorized driver" of petitioner-complainant is too restrictive and contrary to the established principle that insurance contracts. sustaining respondent insurer's contention that the accident did not fall within the provisions of the policy either for the Own Damage or Theft coverage. 1955 FACTS .Secondly. however. 1949. housebreaking or theft. . Once afloat the vessel returned to Manila to refuel and then proceeded to Basco. complainant was compelled to institute the present action. self-ignition or lightning or burglary. that applies)." . . January 31.First. bound for Basco. invoking the policy provision on "Authorized Driver" clause. among other things.The main purpose of the "authorized driver" clause. being contracts of adhesion where the only participation of the other party is the signing of his signature or his "adhesion" thereto.000. Cagayan. such as a friend or member of the family or the employees of a car service or repair shop must be duly licensed drivers and have no disqualification to drive a motor vehicle. as determined by the average adjuster. where a car is admittedly as in this case unlawfully and wrongfully taken by some people. the port of destination. Hence. A car owner who entrusts his car to an established car service and repair shop necessarily entrusts his car key to the shop owner and employees who are presumed to have the insured's permission to drive the car for legitimate purposes of checking or road-testing the car. Inc. the Insurance commission sees the unauthorized taking of the vehicle for a joyride as a violation of the 'Authorized Driver' clause of the policy. .

Losses and Misfortunes. 31.86 as its part of the indemnity for the gen. . 809). NO Ratio The liability for contribution in general average is not based on the express terms of the policy. But as the sacrifice was for the benefit of the vessel to enable it to proceed to destination and not for the purpose of saving the cargo. Generally speaking.. 1932 NATURE Appeal from judgment of the lower court FACTS . whether during the voyage. was a success. Under that law. and of all other Perils. 812). 1928. for it does not appear that the expenses here in question were incurred after following the procedure laid down in article 813. to the Charges whereof the said Company. they are of the Seas. Fire. WON the lower court erred in disregarding the typewritten clause endorsed upon the policy. NUFIC is liable to contribute to the general average resulting from the jettison of a part of said vessel's cargo HELD 1. Fourth.The insurance company. Princes and People of what Nation. there must be a common danger. and are. averages are classified into simple or particular and general or gross. while general or gross averages include "all the damages and expenses which are deliberately caused in order to save the vessel. Restraints and Detainments. the NUFIC was assessed P2. The present action was thereupon instituted. As a result of the jettison. the cargo owners are not in law bound to contribute to the expenses. the former controls the latter. were not in imminent peril. gives the following requisites for general average: First. from a real and known risk" (Art. the decision appealed from is reversed. in his commentaries on the Code of Commerce. or in the port of loading or unloading. or Damage of the said Vessel or any part thereof. “Pandan” was insured on a marine insurance policy with National Union Fire Insurance Company (NUFIC) for P45K. Disposition Wherefore.610. Reasoning .Section 291 of the Code of Civil Procedure provides that “when an instrument consists partly of written words and partly of a printed form and the two are inconsistent. dispositions of the authority. NO Ratio In case repugnance exists between written and printed portions of a policy. a quasi contract is implied by law.. are subject to the same danger. .” 2. to sue. its cargo. One of the clauses of the document originally read as follows: “Touching the Adventures and Perils which the said NUFIC is content to bear. The standing may. and not of the voyage. or faults of men. This means. WON lower court erred in concluding that defendant and appellant. it shall be lawful for the Assured.. Jettison. that for the common safety part of the vessel or of the cargo or both is sacrificed deliberately. to be borne only by the owner of the property gave rise to same (Art. gross averages are to be borne by the owners of the articles saved (Art. November11. therefore.the stranding of plaintiff's vessel was due to the sudden shifting of the sandbars at the mouth of the river which the port pilot did not anticipate.” On Oct. but rests upon the theory that from the relation of the parties and for their benefit. in and about the Defence. therefore. that have or shall come to the Hurt. 56 PHIL 758 OSTRAND. Surprisals. . . insisting that its obligation did not extend beyond the insurance of the “absolute total loss of the vessel only. that the expenses or damages should have been incurred or inflicted after taking proper legal steps and authority. Arrests. Reasoning . Pirates. 810).With respect to the third requisite. and in case of any Loss or Misfortunes.610. and after trial the court below rendered judgment in favor of the plaintiff and ordered the defendant to pay the plaintiff P2.” refused to contribute to the settlement of the gen. Being for the common benefit.Attached to the policy over and above the said clause is a “rider” containing typewritten provisions. and to take upon them in this Voyage. Men-ofWar. . The insurance company then appealed to the SC. Detriment. be regarded as accidental. the ship ran into very heavy sea and it became necessary to jettison a portion of the cargo. will contribute. brought about by the jettison of cargo.it is the safety of the property.INSURANCE Ratio The law on averages is contained in the Code of Commerce.The final requisite has not been proved. . which constitutes the true foundation of the general average.” . or assigns. we need only repeat that the expenses in question were not incurred for the common safety of vessel and cargo. the written portion prevails. Thieves.As to the second requisite. ave. or both at the same time. after has been loaded. . and Takings at Page 88 Sea. Third. provided that the circumstances producing the peril should be ascertained and imminent or may rationally be said to be certain and imminent. JARQUE v.Plaintiff’s motorboat. ave. 811). expressly limiting insurer's liability thereunder of the total loss of the wooden vessel Pandan and to proportionate salvage charges 2.86 as its contribution to the general average.Tolentino.The insurance contract is printed in the English common form of marine policies. the salvage operation. that the danger arises from the accidents of the sea. This last requirement exclude measures undertaken against a distant peril.With respect to the first requisite. that from the expenses or damages caused follows the successful saving of the vessel and cargo. Barratry of the Master and Marines. Servants. and to pay proportionate salvage of the declared value. BELL & CO. it is true. his or their Factors. that both the ship and the cargo. Condition or Quality soever. according to the rate and quantity of the sum herein assured. Letters of Mart and Countermart. the evidence does not disclose that the expenses sought to be recovered from defendant were incurred to save vessel and cargo from a common danger. . and recovery of the said Vessel or any part thereof. SMITH. without Prejudice to this Insurance. or at least the cargo. among which appears in capitalized type the following clause: “AGAINST THE ABSOLUTE TOTAL LOSS OF THE VESSEL ONLY. of all Kings.” ISSUES 1. Second.. Safeguard. AND TO PAY PROPORTIONATE SALVAGE CHARGES OF THE DECLARED VALUE. simple or particular averages include all expenses and damages caused to the vessel or cargo which have not inured to the common benefit (Art. labour and travel for. According to the provisions of a “rider” attached to the policy. since they. the insurance was against the “absolute total loss of the vessel only.

859. 461).On discharging the rice from one of the compartments in the after hold. .In the absence of positive legislation to the contrary. 812. and the insurers (whether for the vessel or for the freight or for the cargo) are bound to contribute to the indemnity of the general average. . and loss by perils of the seas is to be confined to loss ex marine tempestatis discrimine.Union Insurance Society of Canton. Such a loss is rather due to what has been aptly called the "peril of the ship.The court found in effect that the opening above described had resulted in course of time from ordinary wear and tear and not from the straining of the ship in rough weather on that voyage. & S. Art. thieves. and misfortunes that have or shall come to the hurt. from the ordinary wear and tear of the ship. Code of Commerce)." Page 89 ISSUE WON Union Insurance is liable for the loss of the Go Tiaco Brothers HELD NO . rovers. at the time of the occurrence of the general average and who are compelled to contribute (Art. 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.INSURANCE Reasoning ." The insurer undertakes to insure against perils of the sea and similar perils..” Here. pirates. 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. X x x For example. something which could not be foreseen as one of the necessary incidents of the adventure.” . but to the failure of the ship's owner properly to repair a defect of the existence of which he was apprised. which was a part of the wall of the ship. is not a peril of the sea. not against events which must happen. There must. ." (Wilson. They were no doubt inserted in order to prevent disputes founded on nice distinctions.” But the policy was executed in this jurisdiction and “warranted to trade within the waters of the Philippine Archipelago only. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that which results from perils of the sea. issued a marine insurance policy upon a cargo of rice belonging to the Go Tiaoco Brothers. . not against perils of the ship.In the present case 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. The latter was compelled to contribute to the indemnity. barratry of the master and mariners. Navigation under these conditions resulted in the washing out of the cementfilling from the action of the sea water. it was discovered that 1473 sacks had been damaged by sea water. For this reason the court held that the ship was unseaworthy. The jettison was therefore as much to the benefit of the underwriter as to the owner of the cargo. . The provision simply places the insurer on the same footing as other persons who have an interest in the vessel. which was transported in the early days of May. why should not the insurer be required to do likewise? If no jettison had taken place and if the ship by reason thereof had foundered. losses. Hamilton. and to pay proportionate salvage of the declared value. the general words become most important. by reason of the condition of this pipe. and an attempt had been made to repair it by filling with cement and bolting over it a strip of iron. 1915. of the freight. as apparently it did in Cullen vs.) . or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions.875.The article is mandatory in its terms. in the ordinary course of events. As a consequence the sea water rose in the pipe.In the present case it is not disputed that the ship was in grave peril and that the jettison of part of the cargo was necessary. results from the natural and inevitable action of the sea. of the seas. . be "some casualty. the ship must also have been in great danger.25.the words "all other perils. or the cargo therein. losses. or orifice. The trial court made the ff findings: 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. possibly sufficient to cause its absolute loss. 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.jettisons. Owners of Cargo per the Xantho) . Disposition Appealed judgment is affirmed GO TIACO v. If the cargo was in peril to the extent of call for general average. in order to make the insurer liable. Fraser & Co.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.. Sons & Co. on the steamship Hondagua from the port of Saigon to Cebu. 859 of the Code of Commerce is still in force: “ART. and of all other perils. the ship was not properly equipped to receive the rice at the time the voyage was begun. . fire. . vs. detriment. If on the other hand that expression is to receive a limited construction. the underwriter's loss would have been many times as large as the contribution now demanded. upon arrival at Cebu. ''According to the ordinary rules of construction. men. UNION INSURANCE 40 PHIL 40 STREET. . of the pipe until it was about 18 inches or 2 feet below the level of the sea. these words must be interpreted with reference to the words which immediately precede them. perhaps. 1919 FACTS . . vs. The effect of loading the boat was to submerge the vent. The purpose of the policy is to secure an indemnity against accidents which may happen.a loss which. The loss was P3. . The underwriters of the vessel. Butler (5 M. . Ltd. September 1. or damage of the said goods and merchandise or any part thereof. and of the cargo shall be obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects respectively. The joint or elbow where the pipe changed its direction was of cast iron. This hole had been in existence before the voyage was begun. The court also found that the repairs that had been made on the pipe were slovenly and defective and that. be limited to “absolute loss of the vessel only. enemies.The policy purports to insure the cargo from the following among other risks: "Perils . X x x" (Thames and Mersey Marine Insurance Co. the liability of the defendant insurance company on its policy would. of war. thus permitting the continued flow of the salt water into the compartment of rice.

A fact capable of unquestionable demonstration or of public knowledge needs no evidence.there is no room to doubt the liability of the shipowner for such a loss as occurred in this case. Besides.000. . .00 as unrealized profits but the latter ignored the demand. and the hiring of a sufficient number of competent officers and seamen. This rule is accepted in our own Insurance Law (Act No.A letter was also sent to Pioneer. ISSUE WON the loss should have been covered by the marine insurance policy HELD NO NATURE Petition for certiorari to review the decision of the IAC FACTS . the trial court favored Roque. its cables. They argue that a cargo owner has no control over the structure of the ship. for. on board vessel SS "Eastern Mariner”) and filed complaint against Cathay Insurance Co seeking collection of the sum of P868. 3. We would fail to observe a cardinal rule in the interpretation of contracts. By parity of reasoning the insurer is not liable. CA affirmed. Roque insured the logs with Pioneer Insurance for P100. It incurred losses and damages (I gather the steel pipes rusted during the voyage from Japan to the Phils. The contract stated . 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.000. namely. Cathay filed MR. Pioneer appealed the decision.00 for the loss of the shipment plus P100.After hearing.1972 – Roque and Chiong wrote a letter to Manila Bay. 1972 – 811 logs were loaded in Malampaya but en route to Manila. . 106).Cathay contend (among other things): 1. . namely. has nothing to do with its seaworthiness. 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 seven (7) day voyage. private respondent has admitted that the questioned shipment is not covered by a "square provision of the contract. Besides the precise purpose of insuring cargo during a voyage would be rendered fruitless. causing water to enter the barge and because the barge was not provided with the necessary cover or tarpaulin. . fuel and provisions. 1984 – Pioneer was absolved from liability after finding that there was a breach of implied warranty of seaworthiness on the part of the petitioners and that the loss of the insured cargo was caused by the "perils of the ship" and not by the "perils of the sea".CA said (among other things): 1. The insistence of private respondent that rusting is a peril of the sea is erroneous. Alleged contractual limitations contained in insurance policies are regarded with extreme caution by courts and are to be strictly construed against the insurer.It was alleged that Mable 10 was not seaworthy and that it developed a leak . .February 19. 2427.March 8. Coverage of private respondent's loss under the insurance policy issued by petitioner is unmistakable. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. As applied to the present case it results that the owners of the damaged rice must look to the shipowner for redress and not to the insurer. having no control over the ship.18 cu. and the assailed decision of the Court of Appeals is hereby AFFIRMED. water. 106). since a risk to be insured against should be a casualty or some casualty.TC decided for Remington. 2427. while this is the very peril against which the insurer intends to give protection. that any ambiguity therein should be construed against the maker/issuer/drafter thereof. entered into a contract with Roque Timber Enterprises and Chiong.Petitioners contend that the implied warranty of seaworthiness provided for in the Insurance Code refers only to the responsibility of the shipowner who must see to it that his ship is reasonably fit to make in safety the contemplated voyage. 1985 AND Page 90 that Manila Bay would carry 422. Rust is not an inherent vice of the seamless steel pipes without interference of external factors . Mable 10 sank. ROQUE v.The IAC found that one of the hatches was left open. generally speaking. . demanding payment of P150. Palawan to Manila North Harbor. the manner of loading his cargo and the cargo of other shippers. meters of logs on its vessel Mable 10 from Malampaya Sound. sec. 2. petitioner had introduced the clear cargo receipts or tally sheets indicating that there was no damage on the steel pipes during the voyage.000. and salt conditions.February 29. IAC (PIONEER INSURANCE SURETY CORP.15 . The same conclusion must be reached if the question be discussed with reference to the seaworthiness of the ship.339. Rusting is not a risk insured against. 3. . the shipowner excepts the perils of the sea from his engagement under the bill of lading. which was denied.Remington Industrial Sales Corp insured its shipment of seamless steel pipes. . 1972 – Common carrier Manila Bay Lighterage Corp. the insurer. anchors. obscure phrases and exceptions should not be allowed to defeat the very purpose for which the policy was procured. June 30 1987 FACTS . the splash of sea waves brought more water inside the barge. November 11. It ruled that the loss is not covered by the marine insurance policy.000. claiming the full amount of P100.) 151 SCRA 710 PARAS.) 139 SCRA 596 GUTIERREZ. something which could not be foreseen as one of the necessary incidents of adventure. v.The petitioners state that a mere shipper of cargo. 4. It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance. this petition is hereby DENIED. Pioneer and Manila Bay were ordered to pay Roque P100.January 30.INSURANCE .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.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". Disposition Decision of trial court is affirmed CATHAY INSURANCE CO.000. sec. 2. ISSUE WON rusting is a “peril of the sea” HELD YES . CA (REMINGTON INDUSTRIAL SALES CORP. At any rate if the insurer cannot be held accountable therefor." but private respondent claims implied coverage from the phrase "perils of the sea" mentioned in the opening sentence of the policy. Disposition WHEREFORE.

by reason of the condition of this pipe.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. results from the natural and inevitable action of the sea. and misfortunes. upon arrival at Cebu. For this reason the court held that the ship was unseaworthy.The words "all other perils. it becomes the obligation of a cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition. CA (supra p. but to the failure of the ship's owner properly to repair a defect of the existence of which.INSURANCE Ratio It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance. in the ordinary course of events.19) COASTWISE LIGHTERAGE CORP v. CO.Based on Sec. the risks insured against are 'perils of the sea. Such a loss is rather due to what has been aptly called the "peril of the ship. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that which results from perils of the sea. Judgment was accordingly entered in favor of the defendant and the plaintiffs appealed. on the part of the insured.On discharging the rice from one of the compartments in the after hold.’ The term extends only to losses caused by sea damage. .The meaning of the expression "perils * * * of the seas * * * and all other perils. Ltd. has been the subject of frequent discussion.In the present case 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. ." used in describing the risks covered by policies of marine insurance. or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. 40 PHIL 40 STREET. 113 and Sec. losses. 1919 FACTS . the ship was not properly equipped to receive the rice at the time the voyage was begun. . see. something which could not be foreseen as one of the necessary incidents of the adventure. Page 91 .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. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. the risks insured against are classified as 'perils of the sea. in the ordinary course of events. CA (supra p. . vs." . the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo whether he be the shipowner or not. ISSUE WON the insurer is liable HELD . Reasoning . The court also found that the repairs that had been made on the pipe were slovenly and defective and that. is not a peril of the sea.This is an action on a policy of marine insurance issued by the Union Insurance Society of Canton. and misfortunes. LA RAZON v. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. 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. This rule is accepted in our own Insurance Law (Act No. The purpose of the policy is to secure an indemnity against accidents which may happen. MALAYAN INSURANCE v. losses. from the ordinary wear and tear of the ship. . .Loss which.473 sacks had been damaged by sea water. 106). . Owners of Cargo per the Xantho. he was apprised. 99 of the Insurance Code. or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. results from the natural and inevitable action of the sea.In marine cases. In marine insurance. the term "cargo" can be the subject of marine insurance and that once it is so made. or by the violence of the elements. 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.10) FILIPINO MERCHANTS INS. the other has reference to the implied warranty. upon a cargo of rice belonging to the plaintiffs. Disposition Jjudgment affirmed. which was transported on the steamship Hondagua from the port of Saigon to Cebu. not against perils of the ship. be "some casualty. see.The court found in effect that the opening above described had resulted in course of time from ordinary wear and tear and not from the straining of the ship in rough weather on that voyage.Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine insurance. . losses. and certain propositions relative thereto are now so generally accepted as to be considered definitely settled. . Go Tiaoco Brothers.The loss so resulting to the owners of rice. . was P3." The insurer undertakes to insure against perils of the sea and similar perils. is not a ‘peril of the sea’ but is called ‘peril of the ship. not against events which must happen. which cannot be guarded against by the ordinary exertion of human skill and prudence. or arise from some overwhelming power. . September 1.The fact that the un-seaworthiness 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. UNION INSURANCE SOCIETY OF CANTON.’ Disposition Decision appealed from is affirmed. 2427. in order to make the insurer liable. from the ordinary wear and tear of the ship. after proper deduction had been made for the portion saved.’ which includes such losses that are of extraordinary nature.The question whether the insurer is liable on this policy for the loss caused in the manner above stated presents two phases which are in a manner involved with each other. as to the seaworthiness of the ship." as used in the policy. . it was discovered that 1.It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance.25. 106). and does not embrace all losses happening at sea. The shipper of cargo my have no control over the vessel but he has full control in the choice of the common carrier that will transport his goods.As was said by Lord Herschell in Wilson. CA (PHILIPPINE GENERAL INSURANCE COMPANY) 245 SCRA 796 . 2427. Sons & Co.A loss which. there must.875. One has reference to the meaning of the expression "perils of the seas and all other perils. v.. LTD. .

It cannot safely claim to have exercised extraordinary diligence. 1995 NATURE Petition for review of CA Decision affirming decision of RTC Manila holding that Coastwise is liable to pay PhilGen Insurance the amount of P700thou plus legal interest thereon. Inc. Had the patron been licensed. by the contract of affreightment. but the possession.Jesus R. did it exercise the ordinary diligence to which a private carrier is in turn bound?) 2..Therefore. It may also logically. PhilGen now claims to be subrogated to all the contractual rights and claims which the consignee may have against the carrier. . The forward buoyancy compartment was damaged. (Corollarily. and prove the skill capacity and qualifications necessary to command and direct the vessel. and water gushed in through a hole "two inches wide and twenty-two inches long. but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. one of the barges struck an unknown sunken object. To create a demise. On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others.Coastwise is liable for breach of the contract of carriage it entered into with Pag-asa Sales. applies to Coastwise. the carrier was culpably remiss in the observance of its duties. while approaching Pier 18. . the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of Page 92 the same goods at the place of destination in bad order makes for a prima facie case against the carrier. Inc. Constantino. YES . destroyed or deteriorated. vs. was not converted into a private carrier. have legal capacity to contract in accordance with this code. using the latter's dumb barges. FACTS . anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all. Coastwise denied the claim and it was PhilGen which paid Pag-asa Sales the amount of P700k representing the value of the damaged cargo of molasses. wherein SC ruled: “Under the demise or bareboat charter of the vessel." . . as established by marine and navigation laws. NO . . . The barges were towed in tandem by the tugboat MT Marica. WON Coastwise Lighterage was transformed into a private carrier. command and navigation of the ship. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession. Thereafter. and being free from fault. command and navigation thereof to the charterer. which is presumed to have violated the contract of carriage. masters. this petition. once the goods it transports are lost.The distinction between the two kinds of charter parties (i. ISSUES 1. The Code of Commerce. This prompted consignee Pag-asa Sales to reject the shipment of molasses as a total loss. seeking to recover the P700k which it paid to Pag-asa Sales for the latter's lost cargo.PhilGen then filed an action against Coastwise before the RTC Manila. The presumption of negligence that attaches to common carriers. Court of Appeals. which is overcome only by proof of the exercise of extraordinary diligence. remained unrebutted in this case.The damage to the barge which carried the cargo of molasses was caused by its hitting an unknown sunken object as it was heading for Pier 18. the charterer will generally be regarded as the owner for the voyage or service stipulated. 2.Although a charter party may transform a common carrier into a private one. by placing a person whose navigational skills are questionable. Pag-asa Sales filed a formal claim with the insurer of its lost cargo (PhilGen) and against the carrier (Coastwise). the owner of a vessel must completely and exclusively relinquish possession. Captains. This presumption. the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. CA affirmed.As a consequence. The object turned out to be a submerged derelict vessel. only leased three of petitioner's vessels. As such. command and navigation of the vessels remained with Coastwise. .” . WON the insurer was subrogated into the rights of the consignee against the carrier.” ..RTC awarded the amount prayed for by PhilGen. the same however is not true in a contract of affreightment on account of the aforementioned distinctions between the two. upon payment by the insurer of the value of the consignee's goods lost while on board one of the carrier's vessels HELD 1. Upon reaching Manila Bay. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise. lacks not just the skill to do so. by virtue of the contract of affreightment which it entered into with the consignee. The evidence on record appeared that far from having rendered service with the greatest skill and utmost foresight.e. the patron of the vessel "Coastwise 9" admitted that he was not licensed. and must not be disqualified according to the same for the discharge of the duties of the position. by proof of its exercise of extraordinary diligence.INSURANCE FRANCISCO. 609. the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. ordinances or regulations. but remained a common carrier and was still liable as such. Hence. Pag-asa Sales.SC agrees with Coastwise's admission that the contract it entered into with the consignee was one of affreightment. . follow that a person without license to navigate. another sum of P100thou as attorney's fees and the cost of the suit. which subsidiarily governs common carriers (which are primarily governed by the provisions of the Civil Code) provides: “Art. Inc. in order to carry cargo from one point to another. at the helm of the vessel which eventually met the fateful accident. or patrons of vessels must be Filipinos. Coastwise is liable for breach of the contract of carriage. Pag-asa Sales. . July 12. remains liable as carrier and must answer for any breach of duty as to the care.Pag-asa Sales. loading and unloading of the cargo. The charterer mans the vessel with his own people and becomes the owner pro hac vice. Inc. bareboat or demise and contract of affreightment) is more clearly set out in the case of Puromines.As a common carrier. having failed to overcome the presumption of negligence with the loss and destruction of goods it transported. if it were in fact transformed into a private carrier.Clearly. Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this rule. also owned by Coastwise. Inc. Coastwise. he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. subject to liability to others for damages caused by negligence. An owner who retains possession of the ship though the hold is the property of the charterer.

no liability should attach unless there was a stipulation to the contrary. then the insurer. Nonetheless.Article 2207 of the Civil Code: If the plaintiffs property has been insured.CA ruled that “MV Asilda” was unseaworthy for being top. Disposition Petition denied. WON PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN. respondent court held that the filing of notice of abandonment had absolved the shipowner/agent from liability under the limited liability rule. Considering that the ship’s hatches were properly secured. and that. CA (FELMAN SHIPPING LINES) 273 SCRA 226 BELLOSILLO. THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY INC v. .Coca-Cola Bottlers Philippines. YES . nor does it grow out of. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who violated the contract. Cebu. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. evidence shows that approximately 2. upon payment by respondent insurer PhilGen of the amount of P700. It is settled that carrying a deck cargo raises the presumption of unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the ship. It accrues simply upon payment of the insurance claim by the insurer. it was not the carrier which paid the value thereof to Pag-asa Sales. This liability however can be limited through . PHILAMGEN was not properly subrogated to the rights and interests of the shipper.The ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel.This legal provision is founded on the well-settled principle of subrogation. Inc.. Art. herein private respondent PhilGen.” . but the latter's insurer. On appeal the Court of Appeals set aside the dismissal and remanded the case to the lower court for trial on the merits.500 cases of softdrink bottles were stowed on deck. It further alleged that the vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list. any privity of contract or upon written assignment of claim. the consignee of the cargo of molasses totally damaged while being transported by petitioner Coastwise Lighterage.000. .250. The strong winds and waves encountered by the vessel are but the ordinary vicissitudes of a sea voyage and as such merely contributed to its already unstable and unseaworthy condition.500 empty Coca-Cola plastic cases were recovered near the vicinity of the sinking.INSURANCE However. FELMAN had abandoned all its rights.00. in any event. Furthermore. Consequently. .500 cases of Coca-Cola Page 93 softdrink bottles were improperly stowed on deck. 587 of the Code of Commerce should apply 3.500 cases of 1-liter Coca-Cola softdrink bottles.Undoubtedly. .. 587 of the Code of Commerce. or to the negligence of the captain and his crew. 2. . Perfunctorily. 1997 FACTS . the empty Coca-Cola cases recovered could have come only from the vessel’s deck cargo.” a vessel owned and operated by Felman 7. . the former was subrogated into all the rights which Pag-asa Sales. in this case it was established that “MV Asilda” was not designed to carry substantial amount of cargo on deck.The consignee filed a claim with respondent FELMAN for recovery of damages it sustained as a result of the loss of its softdrink bottles that sank with “MV Asilda. in which case. 587 of the Code of Commerce should apply.The vessel sank in the waters of Zamboanga del Norte bringing down her entire cargo with her including the subject 7.00 to Pag-asa Sales. an estimated 2.. The shipment was insured with petitioner Philippine American General under Marine Open Policy. Contrary to the ship captain’s allegations. The inordinate loading of cargo deck resulted in the decrease of the vessel’s metacentric height thus making it unstable. .. June 11.” Respondent denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN which paid its claim of P755.FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor of PHILAMGEN was transmitted by the shipper. upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. herein petitioner Coastwise Lighterage. WON “MV Asilda” was seaworthy when it left the port of Zamboanga 2. Inc.“MV Asilda” was unseaworthy when it left the port of Zamboanga. We subscribe to the findings of the Elite Adjusters. Thus the loss of the vessel and its entire shipment could only be attributed to either a fortuitous event. FELMAN filed a petition for certiorari with this Court but it was subsequently denied on 13 February 1989.Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which disclaimed any liability for the loss. interests and ownership over “MV Asilda” together with her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art. Inc. CA affrimed.500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu for consignee Coca-Cola Bottlers Philippines. . If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. loaded on board “MV Asilda. Inc. Inc.PHILAMGEN alleged that the sinking and total loss of “MV Asilda” and its cargo were due to the vessel’s unseaworthiness as she was put to sea in an unstable condition. WON the limited liability under Art. .Trial court dismissed the complaint of PHILAMGEN. the shipowner HELD 1. NO . the appellate court denied the claim of PHILAMGEN on the ground that the assured’s implied warranty of seaworthiness was not complied with. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. However. Inc. PHILAMGEN sued the shipowner for sum of money and damages. It ruled that “MV Asilda” was seaworthy when it left the port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the shipowner’s surveyor attesting to its seaworthiness. and the Court of Appeals that the proximate cause of the sinking of “MV Asilda” was its being top-heavy. in which case. . ISSUES 1. for the damage sustained by the loss of the cargo which petitioner-carrier was transporting. The right of subrogation is not dependent upon. may have had against the carrier.heavy as 2.Trial court rendered judgment in favor of FELMAN. Several days after “MV Asilda” sank.

the question of seaworthiness cannot be raised by the assurer without showing concealment or misrepresentation by the assured.The defendant argues that the policy contains the provision that it “shall be of as force and effect as the surest writing or policy of insurance made in London”. there are exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment.250. If the plaintiff’s property has been insured. 2207. Upon the facts shown here. UNION INSURANCE SOCIETY OF CANTON 42 PHIL 378 JOHNS. a ship is “seaworthy when reasonably fit to perform the service. this kind of policy would be worthless.In policies where the law will generally imply a warranty of seaworthiness. Nevertheless. a warranty is implied that the ship is seaworthy. YES . Disposition Decision reversed CHOA TIEK SENG v. and there would not be any consideration for the premium. thus there was an actual total loss. If the amount paid by the insurance company does not fully cover the injury or loss. it was of no value to the owner. . March 15. repair and reconstruction was more than the original cost of the ship at the time the policy was issued. INC. Inc. CA (FILIPINO MERCHANTS INSURANCE) 183 SCRA 223 GANCAYO. WON the Marine Law of Great Britain applies HELD 1. However. v. It cannot apply when such proof is lacking.. It is faitr to assume that in its then condition much further time would be required to make the necessary repairs and install the new machinery before it could again be placed in commission. 1921 FACTS .INSURANCE abandonment of the vessel. does not apply to cases where the injury or average was occasioned by the shipowner’s own fault. .At the time that the lighter was at the bottom of the bay. The company asked the plaintiff to salvage the ship.. 3. the liability of FELMAN for the loss of the 7. As found by the trial court. The international rule is to the effect that the right of abandonment of vessels. not a constructive total loss. or upon anything which is the subject of marine insurance. contemplated by the parties to the policy. Disposition Petition is GRANTED.” Under Sec. saying that the policy only covered an actual total loss. . 2212 and 2213 of the Civil Code.00) plus legal interest thereon counted from 29 November 1983.With the plaintiff able to raise the lighter. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. as a legal limitation of a shipowner’s liability. 587. WON there was an absolute total loss that can be covered by the policy 2. it can only be excluded by terms in writing in the policy in the clearest language.Petitioner imported some lactose crystals from Holland. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. pursuant to Arts. in the English practice. PHILIPPINE MFTG. Seven Hundred Fifty-five Thousand Two Hundred and Fifty Pesos (P755. any other construction would nullify the statute and as applied to the conditions existing in the Manila Bay. 1918. During that time the owner would be deprived of the use of its vessel or the interest on its investment. the defendant insurance company claims that it was only liable for a total absolute loss and that there was no total destruction of the lighter. As a result of a typhoon. 20. And where the policy stipulates that the seaworthiness of the vessel as between the assured and the assurer is admitted. Page 94 . the lighter sunk in Manila Bay.PHILAMGEN’s action against FELMAN is squarely sanctioned by Art. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO. He also has full discretion in the choice of assurer that will underwrite a particular venture.The ship was sunk in July 1. Having failed to rebut the presumption of fault. its equipment and freightage as provided in Art. a ship is a total loss when she has sustained such extensive damages that it would not be reasonably practical to repair her. as where the loss or injury was due to the fault of the shipowner and the captain.The doctrine of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice. He may have no control over the vessel but he has full control in the selection of the common carrier that will transport his goods. CO. and to encounter the ordinary perils of the voyage. 2207 of the Civil Code which provides: Art. When those questions are considered the testimony is conclusive that the cost of salvage. . gave the former the right to bring an action as subrogee against FELMAN. 113 of the Insurance Code provides that “(i)n every marine insurance upon a ship or freight.Sec. “t is difficult to see how there could have been a more complete loss of the vessel than that which actually occurred”. or freightage. November 22. NO . After several futile attempts. the payment made by PHILAMGEN to Coca-Cola Bottlers Philippines. which it was able to do so. 2. reconstruct it and placed it in commission. 1990 NATURE Appeal from a decision of the Court of Appeals FACTS . the date of judicial demand. Therefore. ISSUES 1. Nonetheless..The plaintiff’s steel tank lighter was insured by defendant company for absolute total loss. . .The trial court decided in favor of the defendant.” Thus it becomes the obligation of the cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. it was finally raised on Sept. equity and good conscience ought to pay. 1918. YES .500 cases of 1-liter Coca-Cola softdrink bottles is inevitable. for such law to apply to our courts the existence of such law must be proven. 114. The plaintiff demanded payment from the defendant insurance company but the latter refused.

Inc.19) Page 95 ABOITIZ SHIPPING v. .430. as consignee of the cargo.430. the van did not carry any evidence of spillage. de Seguros.63 as damages to petitioner with legal interest from the filing of the complaint. (Phil Am) which came out with the report that the cargo in question. A confirmatory report was submitted by the Manila Adjusters. 403 were in bad order. The goods were loaded at the port at Rotterdam in sea vans on board the vessel "MS Benalder' as the mother vessel. When the cargo arrived in Manila. the equivalent of US$8. The goods were insured by the respondent Filipino Merchants' Insurance Co.000.In this case. prior to the delivery to petitioner through his broker. damage. On the same day Marinduque filed a claim for the same amount against the Phil-Am on the latter's policy.117. October 5. the "all risks" clause of the policy sued upon reads as follows: "5.Respondent insurance company rejected the claim alleging that assuming that spillage took place while the goods were in transit. . made a report that said cargo was pilfered on July 3. Thus. Appealed in CA but denied.117. . . PHILAMGEN INSURANCE 179 SCRA 357 GANCAYCO. the counterclaim and the third-party complaint with costs against the petitioner. Singapore PTE. The Philippine Consulate in Singapore issued invoice for the shipment showing the contents and its total price of $39. plus attorney's fees and expenses of litigation in the amount of P10. only $7.117. Disposition the decision appealed from is hereby REVERSED AND SET ASIDE and another judgment is hereby rendered ordering the respondent Filipinas Merchants Insurance Company. It is the duty of the respondent insurance company to establish that said loss or damage falls within the exceptions provided for by law. MFR was denied as well. Inc. showed that it was pilfered.50. This insurance is against all risks of loss or damage to the subject matter insured but shall in no case be deemed to extend to cover loss. Inc. U. Of the 600 bags delivered to petitioner. Ltd.73.The services of the Manila Adjusters and Surveyors Co. against all risks under the terms of the insurance cargo policy.Petitioner filed a complaint in the RTC against the insurance company seeking payment of the sum of P33. The insurance policy covers all loss or damage to the cargo except those caused by delay or inherent vice or nature of the cargo insured. each bag at 25 kilos net. Marinduque.419. Hence. . Inc. to pay the sum of P33.117. CO.The terms of the policy are so clear and require no interpretation.. 12 it was held that an all risk insurance policy insures against all causes of conceivable loss or damage. (Manila Adjusters) were engaged by the PhilAmerican General Insurance Co. Upon arrival at the port of Manila. this petition. the cargo was discharged into the custody of the arrastre operator respondent E.Phil-Am then filed a complaint in RTC Manila against Aboitiz for recovery of same amount alleging that it has been subrogated to the rights of Marinduque.63 as damages plus attorney's fees and expenses of litigation.412.35. including pilferage losses during the war. v. thus violating the terms of the insurance policy sued upon. MFR thereof was denied. LTD. Insurance company filed a third-party complaint against respondents Ben Lines and broker..80 representing the value of the pilfered cargo. ISSUE WON insurance company should be held liable even if the technical meaning in marine insurance of an “insurance against all risk" is applied HELD YES . the damage caused to the cargo has not been attributed to any of the exceptions provided for nor is there any pretension to this effect.On August 11. otherwise it is liable therefor. (Ben Lines for short). and thereafter aboard the feeder vessel "Wesser Broker V-25" of respondent Ben Lines Container. FILIPINO MERCHANTS INS.. . Petitioner filed a claim for said loss dated February 16. CA reversed.S.80 as insurer of the cargo. . except as otherwise excluded in the policy or due to fraud or intentional misconduct on the part of the insured. a shipment of 1 skid carton parts for valves. It covers all losses during the voyage whether arising from a marine peril or not. CA (supra p.63. or expense proximately caused by delay or inherent vice or nature of the subject matter insured. the said 400 bags were loaded in bad order. Claims recoverable hereunder shall be payable irrespective of percentage. and that assuming that the spillage did not occur while the cargo was in transit. Razon. which issued the cargo's packing list and Invoice number showing the contents of the carton. . vs.00 as well as the costs of the suit.In the present case. the liability of respondent insurance company is clear.791.The importation involved fifteen (15) metric tons packed in 600 6-ply paper bags with polythelene inner bags.RTC dismissed the complaint. .00 plus 50% mark-up or US $13. The shipment was ordered from Jamesbury.765.33.882.60 and the freight and other charges of $2. 1980 due to heavy rain at the Aboitiz terminal and that of the total value of the cargo of $42. .147." .00 worth remains of the cargo with the recommendation that the claim be made against Aboitiz. when inspected. Insurance company denied all the material allegations of the complaint and raised several special defenses as well as a compulsory counterclaim. petitioner and his agent failed to avert or minimize the loss by failing to recover spillage from the sea van.An "all risks" provision of a marine 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 peril falling within the policy's coverage. 1977 against respondent insurance company in the amount of P33. and that in any case. Phil-Am paid Marinduque the sum of P246.63 as the insured value of the loss.INSURANCE . The surveys showed that the bad order bags suffered spillage and loss later valued at P33.In July 1980. (insurance company for short) for the sum of P98.209. ISSUE . (broker for short). it was received and deposited in the office of Aboitiz Shipping Corporation (Aboitiz) for transhipment to Nonoc Island. 1989 NATURE Petition for review on certiorari FACTS Marinduque Mining Industrial Corporation (Marinduque) shipped on board SS Arthur Maersk from Boston. 1980 Marinduque then filed a claim against Aboitiz in the amount of P246. The insurer can avoid coverage upon demonstrating that a specific provision expressly excludes the loss from coverage. Complaint dismissed and MFR denied. Filipinas Cia.In Gloren Inc.A.

The logs involved. 1.A. pieces of logs. August 9.Panama demanded payment for the loss but Oriental Assurance refuse on the ground that its contracted liability was for "TOTAL LOSS ONLY. (a) If more than three-fourths thereof in value is actually lost. a constructive total loss HELD NO . U. or would have to be expended to recover it from the peril. The logs on the two barges were not separately valued or separately insured. rough seas and strong winds caused damage to one of the two barges resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon.The terms of the contract constitute the measure of the insurer liability and compliance therewith is a condition precedent to the insured's right to recovery from the insurer. at the port of destination. Obviously TC mistook said Marine Risk Note as an insurance policy when it is NOT. in Palawan. [c] The contention of the Aboitiz that it could not be liable for the pilferage of the cargo as it was stolen even before it was loaded on its vessel is untenable. as contained in Marine Open Policy No. 1975. [b] TC in dismissing the complaint apparently relied on Marine Risk Note No.More importantly.208. nor separately insured. xxx xxx xxx . Aboitiz received cargo when it arrived in Manila at its offices. (b) If it is injured to such an extent as to reduce its value more than three-fourths. . therefore.Sometime in January 1986. It hired Transpacific Towage. have not been met. . be considered indivisible. the shipment cannot be said to have sustained a constructive total loss under Section 139(a) of the Insurance Code. (b) The irretrievable loss of the thing by sinking. or (d) Any other event which effectively deprives the owner of the possession.000 cubic meters. the insurer's liability was for "total loss only. Whether a contract is entire or severable is a question of intention to be determined by the language employed by the parties. 1. consequently.INSURANCE WON petitioner Aboitiz was properly held liable to the private respondent Phil-Am by the appellate court HELD YES . Disposition Petition DISMISSED. A similar insurance coverage was also executed by petitioner in favor of Marinduque for all its goods shipped or moved within the territorial limits of the Philippines also effective after Sept. .The requirements for the application of Section 139 of the Insurance Code. . The logs having been insured as one inseparable unit. CA affirmed in toto. petitioner Aboitiz was properly held liable to Phil-Am. An actual total loss is caused by: (a) A total destruction of the thing insured. Insurance Code). Resultantly. making for only one cause or Page 96 consideration. to transport the logs by sea to Manila and insured it against loss for P1-M with petitioner Oriental Assurance Corporation (Oriental Assurance). It is only an acknowledgment or declaration of the private respondent confirming the specific shipment covered by its Marine Open Policy. or otherwise separately insured. 1980 after the shipment in question was already pilfered. 1980. Since the cost of those 497 pieces does not exceed 75% of the value of all 1. A person insured by a contract of marine insurance may abandon the thing insured. 129.A constructive total loss is one which gives to a person insured a right to abandon. and recover for a total loss thereof. Its liability is clear. Disposition judgment under review is SET ASIDE . Inc.RTC ordered Oriental Assurance to pay Panama with the view that the insurance contract should be liberally construed in order to avoid a denial of substantial justice. quoted above. (Panama) bought. or any particular portion thereof separately valued by the policy. Only one premium was paid for the entire shipment. Hence. 1975 and contained in Marine Open Policy No.The questioned shipment is covered by a continuing open insurance coverage (which took effect after Sept." A total loss may be either actual or constructive (Sec..Unable to convince Oriental Assurance to pay its claim. 1. to the time it was delivered to the possession of petitioner at its offices at Pier 4 in Manila until it was pilfered when the great majority of the cargo was lost on July 3. 100184. although placed in two barges. (Section 130. The policy in question shows that the subject matter insured was the entire shipment of 2.While the logs were being transported. The insurance contract must.208 pieces of logs. Reasoning [a] Records of the case show that Phil-Am executed a continuous and open insurance coverage covering goods of Marinduque imported into and exported from the Philippines which took effect after Sept. 017545 issued by private respondent Phil-Am only on July 28.S. ISSUE WON Oriental Assurance can be held liable under its marine insurance policy based on the theory of a divisible contract of insurance and.208 pieces of apitong logs. were not separately valued by the policy. 1975. 1. the logs lost in the damaged barge in relation to the total number of logs loaded on the same barge cannot be made the basis for determining constructive total loss." . private respondent Panama Sawmill Co. as contained in Marine Open Policy No. . 1991 NATURE Petition for review on certiorari FACTS . of the thing insured. 100185. ORIENTAL ASSURANCE v. the correct basis for determining the existence of constructive total loss is the totality of the shipment of logs. The fact that the logs were loaded on two different barges did not make the contract several and divisible as to the items insured. with a total volume of 2. when the cause of the loss is a peril injured against. Of the entirety of 1. or by being broken up. the evaluation of the cargo and the chargeable premium. Panama filed a Complaint for Damages against Oriental Assurance before the Regional Trial Court.. only 497 pieces thereof were lost or 41.45% of the entire shipment. This provision reads: SECTION 139. Insurance Code). (c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it. under Section 139 of the Insurance Code. CA (PANAMA SAW MILL) 200 SCRA 459 MELENCIO-HERRERA.000 cubic meters of apitong logs. Inc. 100184) from the time it was loaded aboard the SS Arthur Maersk in Boston. and that the logs loaded in the two barges should be treated separately such that the loss sustained by the shipment in one of them may be considered as "constructive total loss" and correspondingly compensable. and it was while in its possession and before loading it in its vessel that the cargo was pilfered.

FAO was informed by LUSTEVECO of the recovery of the lost shipment. While this was communicated to private respondent in a letter dated April 29. private respondent abandoned it and the same was sold or used for the benefit of LUZTEVECO or Pan Malayan Corporation. . Page 97 Ed. November 15. Fogarty. Under Sections 129 and 130 of the New Insurance Code. formally filed its claim under the marine insurance policy. petitioner did not require a medical examination and issued a policy on the sole basis of the application on February 11. On April 1992. could not withstand delay because of the inherent risks of termination and/or spoilage. later. CA (ELIZA PULIDO) 344 SCRA 260 GONZAGA-REYES. and so forth. a person insured is entitled to payment without notice of abandonment. dated December 16. a fact which is not denied nor controverted .Y. Pan Malayan likewise failed to pay for the losses and damages sustained by FAO by reason of its inability to recover the value of the shipment from LUZTEVECO .00 which designated her sister. 1980. Total loss may be actual or absolute. as where the cargo by the process of decomposition or other chemical agency no longer remains the same kind of thing as before (Williams vs. Although there were bags which were recovered.00 . Because the insurance applied for was non-medical. FAO did not receive any compensation for said recovered bags as the same were distributed by LUZVETECO without authorization of FAO . 1992. the insurance premiums on the shipment was paid by FAO petitioner . .000. Such a loss may exist where the form and specie of the thing is destroyed. claims that. . Thus rendering them useless for FAO.FAO filed a civil case against both LUZTEVECO and Pan Malayan.FAO secured insurance coverage in the amount of P5. for which reason FAO formally filed its claim with LUZTEVECO for compensation of damage to its cargo . -as said and proven. LC-3000 and consisted of 34. ntended and made arrangements to send to Kampuchea 1. Trial court found in favor of FAO and ordered both to pay jointly and severally the full amount of the claim. recompense for which it has been denied up to the present -Section 135 of the Insurance Code explicitly provides that "(u)pon an actual total loss. FAO "has never been compensated for this total loss or damage. . 216). September 5. 1988. NO . Petitioner submits that respondent court erred in ruling that there was total loss of the shipment despite the fact that only 27.122 bags of IR-36 certified rice seeds purchased by FAO from the Bureau of Plant Industry for P4. these were “stained” and not in the same condition it was brought in.On June 16. 16 Me. And the wetting of said seeds affected the state of seeds.500 metric petitions winch is the subject of the present action.602. herein private respondent. despite the alleged recovery by defendant LUZTEVECO. Florence Pulido..The Food and Agricultural Organization of the United Nations (hereinafter referred to as FAO). CA (THE FOOD AND AGRICULTURAL ORGANIZATION OF THE UNITED NATIONS) 201 SCRA 382 REGALADO.SEC. 1991 FACTS .Petitioner withheld payment on the ground that the policy claimed under was void from the start for having been procured in fraud.922 bags of rice seeds out of 34. This was affirmed by CA ISSUE 1. however. As found by the court below and reproduced with approval by respondent court.325. by LUZTEVECO. This is evidenced by two surveys upon the cargo wherein it was found that only around 78% was lost. Pan Malayan Insurance Corporation .On January 9. FAO was advised of the sinking of the barge in the China Sea.FAO.500 metric petitions of IR-36 certified rice seeds to be distributed to the people for seedling purposes . 1989. In case of total loss in Marine Insurance. a total loss may either be actual or constructive. vs. the right of the insured to claim the whole insurance is absolute. petitioner received from one Florence Pulido an application for life insurance. On July 29. The cargo was loaded on board LUZTEVECO Barge No. 22 L. as its principal beneficiary.On June 26. 1991. specifically under paragraphs (c) and (d) thereof. petitioner received private respondent’s claim. inclusive of expenses. their investigation concerning the subject policy yielded the information that the insured.It is thus clear that FAO suffered actual total loss under Section 130 of the Insurance Code. in the amount of P100. premium fees. 2000 NATURE This petition for review on certiorari seeks to reverse the Decision of the Special Second Division of the Court of Appeals FACTS .The law classifies loss into either total or partial. died of acute pneumonia on September 10.If there were some cargoes saved. or (d) Any other event which effectively deprives the owner of the possession. private respondent had already filed her claim earlier that month. the seeds were of fragile nature. Co. 130. On the same date. 1980.00 from petitioner. FAO gave instructions to LUZTEVECO to leave for Vaung Tau. In another letter dated July 27. Cole. It is petitioner’s contention that even before they received private respondent’s claim for death benefits." This is a statutory adoption of a long standing doctrine in maritime insurance law that in case of actual total loss. 1992. N. Florence Pulido. 207). for all intents and purposes. before the application for insurance on her life was made. died in 1988. Vietnam to deliver the cargo which.the complete physical destruction of the subject matter is not essential to constitute an actual total loss. 1980. hence it informed petitioner thereof and.INSURANCE PAN MALAYAN INSURANCE v. the assured is entitled to recover from the underwriter the whole amount of his subscription . An actual total loss is caused by: (c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it. . although the materials of which it consisted still exist (Great Western Ins.92 in respect of one lot of 1. in addition to this. it has practically lost its total or entire shipment in this case.LUZTEVECO was to ship the cargo amounting to US$83. at the port of destination of the thing insured. 1989. which declared that the insured.122 bags were rendered valueless to FAO and the shipment sustained only a loss of 78%. 19 Wall 640.270. WON respondent court committed a reversible error in holding that the trial court is correct in holding that there is a total loss of the shipment HELD 1. by its nature.Pan Malayan claims that part of the cargo was recovered and thus the claim by FAO was unwarranted.250. without need of a notice of abandonment PHILIPPINE AMERICAN LIFE INSURANCE COMPANY v.000.LUZTEVECO failed and refused to pay. or it may otherwise be constructive or technical.

who represented to be the brother-in-law of the insured and the barangay chairman of Cardiz. March 29. La Union whose signature appeared in the death certificate. Gutierrez for seeking to perpetuate a falsity in public records. Bagulin. (c) that the money paid by the insured as premiums.INSURANCE however. La Union. Petitioner was likewise unable to make out any clear motive as to why Ramon Piganto would purposely lie. This fact is likewise noted in the death certificate.000. which was the basis of both respondent court and the trial court in finding the date of Florence Pulido’s death to be as plaintiff-private respondent maintained. and knew of Florence’s death only through Ramon Piganto. does not merit a conclusion of fraud. however. 1943 for the sum of P3. Disposition The instant petition is DENIED CHAPTER IX. 1945. Irineo Gutierrez. the Municipal Health Officer of Bagulin. for lack of sufficient proof. Philippine currency. the allegation that the insured died on February 7.000. will not be reversed and.Petitioner: the results of its investigations having indicated that the insured was already dead at the time the policy was applied for. We see no reversible error in the finding of both respondent court and the trial court in favor of the correctness of the entries in Certificate of Death. unless the party who contests its accuracy can produce positive evidence establishing otherwise. was all deposited by the defendant in the Philippine National Bank and said deposit was declared without value by Executive Order No. Dr. A failure to do so would leave intact the presumption of good faith and regularity in the performance of public duties.It appears that the deceased took up the policy under consideration on April 15. SUBROGATION CLAIMS SETTLEMENT & Page 98 . (b) that the policy having been issued during the Japanese occupation. responded to by one Ramon Piganto. as shown from the very affidavits submitted by appellee wherein it was stated that on the aforesaid date. Londres. . 1992. not so the southern part. or the sum of P2. A duly-registered death certificate is considered a public document and the entries found therein are presumed correct. Petitioner’s contention that the death certificate is suspect because Dr. Such alleged inconsistencies are matters of credibility which had been ably passed upon by the lower court. and had attached to it a questionnaire. ISSUE WON there was fraud (whether the insured. All the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when the insured died on February 7. there being no provision in the policy from which can be inferred that the parties contemplated payment in any other currency. . . Defendant. .Death certificates.000. and notes by a municipal health officer prepared in the regular performance of his duties. and his two sons were taken by the Japanese soldiers from their house at Singalong Street and were massacred by their captors. which declared that Florence Pulido died of acute pneumonia on September 10.Following the filing by private respondent of her claim. hence. testified in addition that he ministered to the ailing Florence Pulido for two days immediately prior to her death. Londres whereby it undertook to pay its beneficiary upon his death the sum of P3. offered to pay the value of the policy in accordance with the Ballantyne scale of values. the National Life Insurance Company of the Philippines issued a policy on the life of Jose C. was in fact dead before the application for insurance on her life was made) HELD NO . 1992. On said date. Salvacion V. together with the money received from other policyholders. even before receipt of private respondent’s claim. she instituted the present action against the company in the Court of First Instance of Manila. but was dead since 1988. Florence Pulido. upon a preponderance of the evidence duly received from both parties. Nenita Piganto. On November 9. Gutierrez was not present when Florence Pulido died. . Philippine currency. To the question “Where does [Florence Pulido] reside now?”. entirely consistent with the evidence on record.On April 14. Pursuant to the findings of this second investigation. petitioner confirmed to private respondent receipt of the claim papers and assured her that her case was “being given preferential attention and prompt action”. The first report. was dated April 1. it should be considered in the light of equity which does not permit anyone to enrich himself at the expense of another. and witnessed by his wife. 1943. Petitioner still refused to make payment and thus. Piganto had replied that Florence Pulido used to live in Cardiz. All the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when the insured died on February 7. the insured. prepared by one Dr. are prima facie evidence of facts therein stated. Piganto’s statement was signed by him. as a factual finding of the lower court adopted by the Court of Appeals. NATIONAL LIFE INSURANCE 94 PHIL 627 BAUTISTA ANGELO. plus legal interest thereon from the time of the filing of the complaint until its full payment.Defendant in its answer denied. . La Union. demanded from the company the payment of the proceeds of the policy. While the northern part may have been liberated. as beneficiary. 1954 NATURE Appeal from a decision of the Court of First Instance of Manila ordering defendant to pay to plaintiff the sum of P3. 1945. Mere allegations of fraud could not substitute for the full and convincing evidence that is required to prove it. 1945. as a proof of good faith. Jose Londres. 49 of the President of the Philippines. and set up the following special defenses: (a) that plaintiff's claim is covered by the Moratorium Law. petitioner stood by its initial decision to treat the policy as void and not to honor the claim. This report was petitioner’s basis for treating the disputed policy as void since April 1992. No motive was imputed to Dr. It also counterclaimed for attorney’s fees. FACTS .We cannot likewise give credence to petitioner’s submission that the inconsistencies in the testimonies of the witnesses for plaintiff-private respondent are in themselves evidence of fraud. private respondent enlisted the services of counsel in reiterating her claim for death benefits. and her demand having been refused. the battle of the liberation of the City of Manila was still raging. duly registered with the Local Civil Registrar of Bagulin. It may therefore be said that the policy became due when the City of Manila was still under the yoke of the enemy and became LONDRES v. is final and conclusive upon this Court. and (d) that the policy having been issued under abnormal circumstances.This the lower courts had effected ruled on. petitioner caused another investigation respecting the subject policy. 1991.The absence of fraud.400. Benedicto Briones. . it is presumed that its face value should be paid in Japanese currency. this action.

DE FERNANDEZ v. the insurance companies. the increase or reduction which their value may suffer shall be for the account of the depositor. The company said that the status of the policies issued during the Japanese occupation was still pending consideration before the courts. 68. if it suffers loss. was not yet in a position to pay the value of the policy for the simple reason that it had not yet reopened. particularly that portion to the effect that redemption could be effected not before the expiration of one year from June 24. To appellant." Appellant. At that time the legal tender was already the present currency. Maria T. The policy reads: National Life Insurance Company of the Philippine hereby agrees to pay at its Home Office.The insured died on November 2. after realizing the truth about the death of her husband. . 1944 to July 14. VDA. unless such proceeds are made payable in installments or a as an annuity. while the people were rejoicing because of the happy event. but only upon the receipt and approval by the company.beneficiaries maintain that the obligation of the company to pay accrued not upon the death of Fernandez.000 upon his payment of P444 from July 15. . 1959 LIFE NATURE Appeal from CFI decision applying the Ballantyne scale of values upon the proceeds of life insurance taken and maturing during the Japanese occupation but claimed after liberation FACTS . present currency. This kind of agreement is permitted by law. in 1952. had difficulty in effecting the collection of her claim from the insurance company because at that time it had not yet reopened for business purposes. while the policy was in force .As final plea. One who gambles and loses cannot be heard to complain of his loss. they should compute the value of their claim under the Ballantyne scale of values (which would amount only to P500) .After more than 7 years. 91-A of the Insurance Law which provides as follows: The proceeds of a life insurance policy shall be paid immediately upon maturity of the policy. Fernandez’s life for P10. appellant invokes equity in its favor in view of the nullification of the deposits made by it with the Philippine National Bank of all fiat money received from its policyholders.000 which appellant bound itself to pay to the insured under the policy upon his death should be paid in accordance with the present currency or should be adjusted under the Ballantyne scale of values HELD YES. that the beneficiary cannot enrich herself at its expense. . Tabia) Disposition Wherefore.INSURANCE payable only after liberation which took place on March 10. We find nothing immoral or unlawful in it. .National Life Insurance Company (NLIC) insured J. because before that eventuality the insurance company. Reasoning . the decision appealed from is affirmed. representing the benficiaries of the policy. and after gathering evidence to substantiate his death. with a specification of the coins constituting them. . Atty de la Torre." (Gomez vs. Refused to pay the claim within the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate of six per centum per annum. 1945 . and the lower court sustained the stand of the company. And we say that the policy became payable only after liberation even if it matured sometime before. Manila. unless such failure or refusal to pay is based on the ground that the claim is fraudulent .The above stipulation is apparently based on Sec. appellants claim that they should be paid P10. considering the unexpected circumstances that developed. in which case the installments or annuities shall be paid as they become due: Provided. by entering into an insurance contract. NATIONAL INSURANCE CO OF THE PHILS 105 PHIL 59 ENDENCIA.beneficiaries commenced suit.Based on the foregoing provision of law and the aforequoted stipulation as well as on the allegation that the filing of proof of death by the beneficiaries is a condition precedent of the demandability of the obligation of the insurer to pay the proceeds. the Moratorium Law was declared invalid and unconstitutional. on proof of death of the insured. January 27. . 6 following the restoration of the civil government by General Douglas Mac Arthur. 93 Phil. with costs against appellant. the indemnity to be paid by it should be suffered by it under Article 307 of the Code of Commerce which provides: "When the deposits are of cash. . the banks. which money was declared without value by Executive Order No. Page 99 matured upon the insured’s death in November. . 1944. NLIC said that because the policy . or upon receipt and approved at its Office of due proofs of the title of the claimant and of the prior death of the Insured while this Policy is in force to Teresa Duat Vda. 1944. were still feeling the adverse effects of the sudden fall of values and were uncertain and apprehensive as to the manner the readjustment would be made by the new Government. and for that matter other commercial and business firms. De Fernandez. dismissed the complaint. and Manuela Fernandez. ISSUE WON the amount of P3. Although the record does not disclose the exact date on which the insurance company reopened for this purpose. Fernandez (hereinafter called the insured) on the 15th day of July. .000 in Philippine currency and not under the Ballantyne scale of values. . Appellant claims that. . cannot claim. Ten Thousand Pesos to Juan D. we can only repeat the following admonition: "The parties herein gambled and speculated on the date of the termination of the war and the liberation of the Philippines by the Americans. appellant herein. 1945 when President Osmena issued Proclamation No. mother and sisters respectively of the Insured (Hereinafter called the Beneficiary) subject to the right of the Insured to change the beneficiary as stated on the second page of this Policy. however. and claimed the proceeds of the policy. 49 of the President of the Philippines. the proceeds thereof shall be paid within sixty days after presentation of the claim and filing of the proof of the death of the insured. It is for this reason that the beneficiary. if the Insured is living and this Policy is in force. This can be gleaned from the stipulation about redemption. informed the company that Fernandez had died in 1944.In the case of Rutter vs.During those days of liberation. 1944. Esteban. 1964. This is a risk attendant to any wagering contract. That in case of a policy maturing by the death of the insured.. this Court can take judicial notice that it only did so after liberation. which was in 1954.

S. payment after liberation must be adjusted in accordance with the Ballantyne schedule (De Asis vs. .000.Circular No. through their adjusters. All. Mabolo. and even arson which was not seriously pressed for.000. The sheriff enforcing the writ reportedly fixed the legal rate of interest at 12%. They apply only when the court finds an unreasonable delay or refusal in the payment of the claims.. misdeclaration. this petition. The fire policies described the insured property as "stocks of Printing materials. The insurance companies denied liability. the Cebu Filipina Press was razed by electrical fire together with all the stocks and merchandise stored in the premises. 1982.The trial court. Sotto Sts.A. filed a counterclaim against the petitioner for the recovery of the unpaid insurance premiums. Reasoning . the applicable law is Article 2209 of the Civil Code. issued a writ of execution against EASCO. . is merely procedural. In this case.INSURANCE 100 ISSUE WON the policy matured upon the death of the insured HELD YES Ratio In life insurance.A. Clearly. CA (EASTERN ASSURANCE & SURETY) 202 SCRA 119 FERNAN. for “The rule is already settled that where a debtor could have paid his obligation at any time during the Japanese occupation. they were found to have been damaged by sea water which rendered the fishmeal useless. WON lower court erred in awarding damages to . Texas. June 5. CATHAY INSURANCE v. Quirino cor. WON the private respondents claim for loss was inflated 4. and finally. or upon his death occuring at any time prior to the expiration of such stipulated term. the proceeds are payable to his beneficiaries within sixty days after their filing of proof of death.000 as indemnity.On December 18. among other cases). (Collaboration is defined as the acts of working together in a joint project. The goods were insured with respondent EASCO and shipped on board the M/V Peskov. but she insisted on full recovery. she sued to collect on December 15. while not sufficient to free it from liability under its policy. ISSUE WON the applicable rate of interest is 12% per annum HELD NO .S. It is the happening of the suspensive condition of death that renders a life policy matured. the said provisions of the Insurance Code are not pertinent to the instant case. On January 15. a separate amount of 20% of the P4. nevertheless is sufficient to negate any assertion that in refusing to pay. EASCO's refusal to settle the claim to Tio Khe Chio was based on some ground which. Respondent EASCO moved to quash the writ alleging that the legal interest to be computed should be 6% per cent per annum in accordance with Article 2209 of the Civil Code. Agdamag.000 to the Cebu Filipina Press owned by Emilia Chan Lugay. were renewals of earlier policies issued for the same property. upon motion by petitioner. Lugay submitted sworn Statements of Loss and Formal Claims to the insurers. 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. The trial court denied EASCO's motion. the legal interest was Page properly pegged by the Appellate Court at 6% per cent. . CA(LUGAY) 174 SCRA 11 GRINO-AQUINO.After nearly 10 months of waiting. except one policy (Paramount's). . U.000 representing fees of counsel. ISSUES 1. evidently to determine the exact amount to be paid and the interest thereon to which the beneficiaries may be entitled to collect in case of unwarranted refusal of the company to pay. Whereupon. EASCO.595. Both refused to pay. it acted unjustifiably. the Court of Appeals reversed the trial court’s denial of EASCO’s motion and ruled that the applicable interest is 6% per annum. She claimed a total loss of P4. petitioner sued them before the then Court of First Instance of Cebu for damages.The trial court rendered judgment in favor of petitioner. the proceeds of his policy should be adjusted accordingly. The co-insurers were indicated in each of the policies. . Petitioner filed a claim with EASCO and Far Eastern Shipping.Petitioner Tio Khe Chio imported 1.000. the petitioners offered to pay 50% of her claim. which raised the legal rate of interest from 6% to 12% per annum refers only to loans or forbearances of money. in which case. 1982. The insured having died during the Japanese occupation. a vessel owned by Far Eastern Shipping Company.000. 1989 FACTS . and not ht efiling of proof of death which. P48. papers and general merchandise usual to the Assured's trade" stored in a one-storey building of strong materials housing the Cebu Filipina Press located at UNNO Pres.000 bags of fishmeal valued at $36.Trial court rendered judgment in her favor ordering the insurers to pay her a total of P4. . When the goods reached Manila. Don V. Simply put. and also to enable the insurer to verify or check on the fact of death which it may even validly waive. as the insurer. On appeal. Cebu City. 416 of the Central Bank.The sixty day period fixed by law within which to pay the proceeds after presentation of proof of death Is merely procedural in nature.Petitioners are 6 insurance companies that issued fire insurance policies for the total sum of P4. come the pre-trial. with costs. Disposition Judgment affirmed TIO KHE CHIO v. alleging violation of certain conditions of the policy. interests at the rate of twice the ceiling being prescribed by the Monetary Board starting from the time when the case was filed. CA affirmed.Sections 243 and 244 of the Insurance Code apply only when there is an unjustified refusal or withholding of payment on the insured’s claim.000.And in the light of the fact that the contending parties did not allege the rate of interest stipulated in the insurance contract. Hence.000 representing expenses of the plaintiff. 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. WON the insured's cause of action had already accrued before she filed her complaint 2. 1981. Dallas. the policy matures either upon the expiration of the term set forth therein. September 30. WON sufficient proofs of loss had been presented by the insured 3. as above stated. 1991 FACTS .30 from Agro Impex. .

Zenith had fully discharged its liability under said policy which covered furniture. Mangagoy. but with the application of the three-fourths loss clause.In view of the not insubstantial value of the private respondent's claims and the considerable time and effort expended by them and their counsel in prosecuting these claims for the past 8 years.INSURANCE 101 the private respondent in the form of interest equivalent to double the interest ceiling set by the Monetary Board 5. an independent fire. Hence. payment should have been made within 90 days thereafter (Sec 243). Surigao del Sur. and in the affirmative case. 1977 and at Barreda St. and that petitioner failed to substantiate his claim as to the value of the goods reputedly destroyed by fire. and Item 2 for P60k on stocks in trade usual to petitioner's retail business situated in . moral and exemplary damages prayed for. when the assured filed her complaint on December 15. 03734 in the amount of P15. YES . plus damages. or on or before September 21. 244 In case of any litigation for the enforcement of any policy or contract of insurance. 5. that Zenith's liability under Policy No.67 represented the whole loss and damage" incurred by petitioner. . 242 and 243 of the IC. F-03724 with a face value of P30k covering the goods and stocks in trade in his business establishment at the market site in Mangagoy. . fittings and other personal belongings of petitioner. 1982 in compliance with the adjusters' numerous requests for various documents.472. her cause of action had already accrued. Zenith settled petitioner’s fire loss claim under Item 1 of Policy No. she held that in view of the payment of P15.An award equivalent to 10% of the proceeds of the policies would be more reasonable than the 20% awarded by the trial court and the CA. As for petitioner's claim under Policy No. 13 was prepared by the insurers themselves. NO .In 1977. YES . Said report concluded that "the sound value of P26.50 to petitioner. was limited to P15. F-03724 was not in full force and effect at the time of the fire because the premium on the policy was not paid. . NODA v.As the fire which destroyed the Cebu Filipina Press occurred on December 19. it should be taken most strongly against them. to make a finding as to whether the payment of the claim of the insured has been unreasonably denied or withheld.While the case was pending. fire destroyed petitioner's insured properties at the market site on September 5. .50 in view of the co-insurance.When petitioner failed to obtain indemnity on his claims from Zenith. WON attorney's fees awarded were exorbitant HELD 1. 4. fixtures. Bislig. 1982 through June 21. NO . attorney's fees were properly awarded to the private respondents.Zenith interposed that petitioner had no cause of action. fittings and other personal effects.While both policies were in force. he filed a complaint with the Insurance Commission praying that Zenith be ordered to pay him P130kj representing the value of the 2 policies insured by respondent with interest at 12% per annum. attorney's fees and other expenses of litigation.The petitioners' contention that the charging of double interest was improper because no unreasonable delay in the processing of the fire claim was proven is refuted by the trial court's explicit finding that "there was a delay that was not reasonable in processing the claim and doing payments". it shall be the duty of the Commissioner or the Court. on November 9. Sec.472. that Policy No. as the case may be. marine and casualty adjuster contracted by Zenith to investigate the claims of its various policyholders. 2.In allowing recovery under Policy No. YES .Insurance Commissioner allowed petitioner to recover under said policy and ordered Zenith to pay him the amount of P20k with legal interest from the date the complaint was filed. the insured was not obligated to produce them and the insurers had no right to ask for them. .666.. F-03734 with a face value in the aggregate amount of P100k and consisting of Item 1 for P40k on household furniture. ISSUES 1. 1987 NATURE Petition to review Commissioner decision of the Insurance Page a two-storey building at 039 Barreda St. June 22.472. CRUZ 151 SCRA 227 FERNAN. Condition No. F-03734. Bislig.50. . Noda obtained from Zenith Insurance Corporation 2 fire insurance policies: [1] No. 1981 and the proofs of loss were submitted from January 15. Disposition Decision of the CA AFFIRMED with MODIFICATION. . 13 of the policy does not require the insured to produce her bank statements. WON Insurance Commissioner erred in denying petitioner's demand for P60k under Item 2 of Policy No. F-03734 FACTS . . Surigao del Sur and [2] No. if any. 1982. including P1k as attorney's fees but excluding the actual. 243 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. 3. Therefore. Commissioner placed much weight on the final report prepared by Dela Merced Adjustment Corporation. fixtures. 1982.. Zenith's liability was reduced to P20k. F-03734.Both the trial court and the CA noted that the proofs were ample and more than enough for defendant insurers to do a just assessment supporting the 1981 fire claim for an amount exceeding four million pesos. 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 Sec. . 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 unreasonable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of claim due the insured.The award of double interest on the claim is lawful and justified under Sections 243 and 244 of the Insurance Code which provide: Sec.There is no merit in the petitioners' contention that the proofs of loss were insufficient because Lugay failed to comply with the adjuster's request for the submission of her bank statements. 1977. F-03734. Condition No.. hence. Under Section 244.

INSURANCE 102 2.277.12. 2.57 representing the insured value of the lost cargo.302. that the adjuster's report deserved scant consideration since the allegations therein were not substantiated. FACTS . it is the best evidence which affords the greatest certainty of the facts in dispute. . but deducting therefrom the amount of P15.To prove the existence of the stocks in trade covered by Policy No. NO . they may not set up for themselves an arbitrary standard of satisfaction. JR. MT Maysun. ISSUES 1. The foregoing evidence for petitioner preponderantly showed the presence of some P590k worth of goods in his retail store during the fire of November 9. WON MT Maysun was seaworthy at the time of the voyage (outline topic) 3.Said document was offered as evidence by Zenith itself and could very well be considered as an admission of its liability up to the amount recommended. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. NO Ratio The fact of payment grants American Home the subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier. F-03734 submitted by its own adjuster.Zenith introduced in evidence the final report on Policy No.RTC found that the vessel. purchase invoices. oppressive or malevolent manner to warrant the imposition of corrective damages. Reasoning Art.096. Disposition Zenith Insurance Corporation ordered to pay petitioner Norman R.10. petitioner submitted his income tax return for 1978.592. 2001 NATURE A petition for review on certiorari of the decision of CA. thus exempting the common carrier from liability for the loss of its cargo. 592. thus precluding any action for recovery against the petitioner 2. Delsan Transport Lines. It therefore recommended that Zenith pay the petitioner the amount of P60.50 which it had earlier paid to petitioner. 2207. WON Insurance Commissioner erred in not awarding in favor of petitioner exemplary damages for Zenith's unjustified and wanton refusal to pay petitioner's claim under the said two insurance contracts HELD 1. Respondent paid Caltex P5. CA ruled that the petitioner is liable on its obligation as common carrier to respondent insurance company as subrogee of Caltex.CA reversed RTC decision on the basis of evidence from PAG-ASA that there were no 20 ft. (Civil Code) If the plaintiff’s property has been insured. DELSAN TRANSPORT. 1977.While the insurer. have the right to reject proofs of loss if they are unsatisfactory.A scrutiny of the abovementioned adjuster's report reveals that together with the formal demand for full indemnity. the private respondent demanded of the petitioner the same amount it paid to Caltex. Delsan refused to pay. and the Insurance Commissioner for that matter.There is no showing that Zenith. 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil.592. Dela Merced Adjustment Corporation. .10. the insurance company shall be subrogated to the 10 Sec.635. Inc. WON payment made by American Home to Caltex for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy. 10 When private respondent paid Caltex the value of its lost cargo. in contesting payment. forcing American home to file a case for collection in the RTC. for a period of one year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. and that the Page incident was caused by an unexpected inclement weather condition or force majeure. and that said report did not even make a recommendation for payment. The report even took into account the appraisals of the other adjusters and concluded that the total loss sustained by petitioner in his household effects and stocks in trade reached P379.314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. Respondent’s Comment > American Home Assurance is entitled to payment by its right of subrogation. waves in the area. Petitioner’s Claim > In every marine insurance upon a ship or freight. YES . WON non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of action HELD 1. reasoning that with regard to Item 2 of Policy No. The shipment was insured by American Home Assurance Corporation (respondent). Noda the sum of P60. F03734 the claim for loss of the stocks in trade was not successfully proven in view of petitioner's failure to present evidence.472. 2. Substantial compliance with the requirements will always be deemed sufficient. 113 Insurance Code . 1986: MT Maysun set sail from Batangas for Zamboanga City. the act of the private respondent is equivalent to a tacit recognition that the ill-fated vessel was seaworthy. Exercising its right of subrogation under Article 2207 of the New Civil Code. had acted in a wanton. INC. certification from his suppliers as to his purchases. Respondent Commissioner should not have perfunctorily dismissed that particular evidence as a worthless piece of paper. v.August 14. and other supporting papers. But after apportioning said amount among petitioner's six different insurers [the co-insurance being known to Zenith]. The vessel sank in the early morning of August 16. MT Maysun. or freightage. (petitioner). November 15. was seaworthy to undertake the voyage. .10 with legal interest from the filing of the complaint until full payment. Being in the nature of an admission against interest. . . F-03734. Delsan took on board its vessel. CA (AMERICAN HOME ASSURANCE) 369 SCRA 24 DE LEON. Respondent Commissioner however ignored such report. . petitioner offered his testimony and that of his wife as well as documentary exhibits. .Caltex entered into a contract of affreightment with the petitioner. or upon any thing which is the subject of marine insurance there is an implied warranty by the shipper that the ship is seaworthy. the liability of Zenith was placed at P60.

CHIA YU 96 PHIL 696 REYES. November 15. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Hernandez filed with POEA complaints against Pan Pacific for violation of Labor Code and for refund of placement fees.Finman had not violated Labor Code . the ship may have appeared fit. . March 31.085. any privity of contract or upon written assignment of claim. 1955 NATURE Certiorari FACTS . loaded on the S. . . Cardones. Disposition Petition is denied. 14 bales of assorted underwear valued at P8.POEA Administrator issued Order that respondents should pay. or his surveyor. was fit for voyage. Neither the granting of classification or the issuance of certificates establishes seaworthiness. . Public policy will be effectively negated if POEA and the DoLE were held powerless to compel a surety company to make good on its solidary undertaking. . There was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank. These pieces of evidence do not necessarily take into account the actual condition of the vessel at the time of the commencement of the voyage. Roeph Silverlight owned and operated by Leigh Hoegh & Co. Page ISSUE WON Finman can be held liable for complainants’ claims against Pan Pacific HELD YES .If Pan Pacific is liable. POEA considered that constructive service of complaints had been effected.The right of subrogation is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice and good conscience ought to pay.k. FACTS . by itself. under a policy issued to the shipper and by the latter assigned to the consignee. Secretary upheld the POEA order. MT Maysun sank with its entire cargo for the reason that it was not seaworthy. however.INSURANCE 103 rights of the insured against the wrongdoer or the person who has violated the contract. Finman appealed to Secretary of Labor. . The subrogation receipt.Atkin.Common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them.The vessel arrived in Manila but of the 14 bales (a. and the decision of the CA is affirmed. . of San Francisco California. as the assured shipper of the lost cargo of industrial fuel oil. 3.Complainants have no cause of action against Finman . of the condition of the vessel or her stowage does not establish due diligence if the vessel was in fact unseaworthy.POEA held and Secretary of Labor affirmed that Pan Pacific had violated Labor Code. NO Ratio The presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. At the time of dry-docking and inspection.Amounts claimed were paid as deposits and not as placement fees. are incorporated into all bonds tendered under that statute even though not set out in printer’s ink. . Co. of San Francisco. POEA and Secretary of Labor can require Pan Pacific to refund the placement fees and to impose the fine.The tale of strong winds and big waves by the said officers of the petitioner however.Inocencio. S. It is not dependent upon. If the amount paid by the insurance company does not fully cover the injury or loss. and at least one of the conditions for the grant and continued use of the recruitment license. but also the amount paid to settle the insurance claim.Conditions of a bond specified and required in the provisions of a statute providing for submission of the bond. . freights =p) consigned to Chia Yu only 10 were delivered to him as the remaining 3 could not FINMAN GENERAL ASSURANCE INOCENCIO 179 SCRA 480 FELICIANO. 1989 CORP v. A/S. was effectively rebutted and belied by the weather report from PAGASA. .Pan Pacific is a recruitment and employment agency.. EAGLE STAR INSURANCE CO LTD v. Kroll & Co. The certificates issued.Petitioner may not escape liability by presenting in evidence certificates that tend to show that at the time of dry-docking and inspection by the Philippine Coast Guard MT Maysun. . .The shipment was insured against all risks by Eagle Star Ins. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. liability of surety in a surety bond is joint and several with the principal obligor. do not negate the presumption of unseaworthiness triggered by an unexplained sinking. Palero.. .Under Insurance Code. California.Pan Pacific moved out and no notice of transfer was furnished to POEA as required. 2. and if Finman is solidarily liable with Pan Pacific.a. destruction or deterioration is by force majeure. is sufficient to establish not only the relationship of respondent as insurer and Caltex.Authorities are clear that diligence in securing certificates of seaworthiness does not satisfy the vessel owner’s obligation. then Finman is liable both to private respondents and to POEA. . according to all the circumstances of each case.23 consigned to Chia Yu in the City of Manila. Cash and surety bonds are required from recruitment companies as means of ensuring prompt and effective recourse against such companies when held liable. Reasoning . for the cargo owner has no obligation in relation to seaworthiness. It accrues simply upon payment by the insurance company of the insurance claim. POEA Administrator motu propio impleaded Finman as surety for Pan Pacific. Also securing the approval of the shipper of the cargo. jurisdiction is vested in Insurance Commission .Finman denied liability and said that POEA had no jurisdiction over surety bonds. It posted surety bond issued by Finman General Assurance and was granted license to operate by POEA. nor does it grow out of. There is no liability if the loss. NO Ratio Seaworthiness relates to a vessel’s actual condition.

by the carrier and afterward by the insurer. on 14 February 1958. the Court of First Instance denied dismissal. stipulation or agreement in any policy of insurance. whereupon Chia Yu brought the present action against both. before such final rejection. -Chia Yu claimed indemnity for the missing and damaged bales. (This stipulation is but a repetition of a provision in the CA 65 which says that bills of lading covering shipments from the US to the Phils should be brought w/in one year after the delivery of the goods or the date when the goods should have been delivered to hold the carrier liable.If so.At first. is based. -TC favored Chia Yu and CA affirmed. . But the claim was declined.Insular Government vs. and (3) that Ladines was a necessary and indispensable party but had not been joined as such. This is because. there is nothing in the record to show that the claim was rejected in the year 1947. and statute of limitations. (But in our jurisdiction. is void. Frank(13 Phil.3 of those delivered were also found damaged to the extent of 50 per cent. ) . and presented the proof of loss within the period fixed in the bond.. SEC. some P11. Agricultural Credit Cooperative and Financing Administration (ACCFA for short). . the appellee. (FACOMA) against loss on account of "personal dishonesty. S. upon reconsideration. with the carrier and then with the insurer. . of which P6. providing as follows: EIGHT LIMITATION OF ACTION: No action. July 29. shall be sustainable in any Court of law or equity unless the insured shall have fully complied with all the terms and conditions of this Policy nor unless commenced with twelve (12) months next after the happening of the loss . first. amounting to larceny or estafa of its SecretaryTreasurer. its bond. . (Insurance Code) ~ Any condition. Alpha Insurance & Surety Company had issued. ACCFA filed suit against appellee on 30 May 1960.An action was filed at the CFI after more than 2 years after delivery of the damaged bales and the date when the missing bales should have been delivered. Page ACCFA v. to his personal benefit.Being contrary to the law of the forum. the action cannot be deemed to have prescribed even on the supposition that the period given the insured for bringing suit under the prescriptive clause of the policy is twelve months after the accrual of the cause of action. . Inc. prescription is 10 years after action accrues. but despite repeated demands the surety company refused and failed to pay. with approval of the principal and the surety.513. (46 C. for the sum of P5. 273. ACCFA immediately notified in writing the survey company on 10 October 1958.Defendant Alpha Insurance & Surety Co. and dismissed the complaint on the ground that the action was filed . Having been filed within twelve months form that date. depend upon the law of the place where the suit is brought" TF any policy clause repugnant to this amendment to the Insurance Act cannot be given effect in an action in our courts. (now appellee) moved to dismiss the complaint for failure to state a cause of action. ISSUE WON ATKIN’ s action has prescribed HELD NO . 236)~ "matters respecting a remedy.) Disposition Judgment appealed from is REVERSED with respect to the carrier and its agents but AFFIRMED with respect to the insurance company and its agents. . admissibility of evidence. Chia Yu's claim was considered to have been finally rejected by the insurer on April 22. 61-A. the Asingan FACOMA assigned its rights to the appellant. . such as the bringing of suit. ..22 of the FACOMA funds. 1968 FACTS . On the same date. .INSURANCE 104 be found. but.Furthermore.During the effectivity of the bond. in accordance with the fourth section hereof. Upon discovery of the loss. giving as reason that (1) the same was filed more than one year after plaintiff made claim for loss. suit or proceeding. as per A1144. the stipulation in the policy cannot be given effect as it would reduce the period allowed the insured for bringing his action to less than one year (because the prescription period begins from the “happening of the loss” and that before any suit could be sustained the insured shall have to comply with the terms and conditions of the policy first TF lessening the period to less than a year. ALPHA INSURANCE 24 SCRA 151 REYES. contrary to the eighth condition of the bond. J. Whereupon. including their respective agents in the Philippines. . the court reversed its original stand. first. *** CARRIER’s defense of prescription is made to rest on the following stipulation of the bill of lading: In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered.In order to guarantee the Asingan Farmers' Cooperative Marketing Association. P-FID-15-58. Ladines converted and misappropriated. for the recovery of any claim. the action was resisted by the Atkins and Eagle Star principally on the ground of prescription.) No suit action on this Policy. 1948. there was no real necessity for bringing suit. limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues.307. as required by conditions 4 and 11 of the bond.000 with said Ladines as principal and the appellee as solidary surety.33 belonged to the ACCFA. when did the cause of action accrue? Chia Yu’s action did not accrue until his claim was finally rejected by the insurance company.) *** INSURER’s claim of prescription is founded upon the terms of the policy and not upon the bill of lading.The prescription clause could be harmonized with section 61-A of the Insurance Act by taking it to mean that the time given the insured for bringing his suit is twelve months after the cause of action accrues. No. Ladines.As the policy provides that the insured should file his claim. (2) the complaint failed to show that plaintiff had filed civil or criminal action against Ladines. he had a right to wait for his claim to be finally decided before going to court.For the purpose of this action. . Inc. either by the insurance company in London or its settling agents in the Philippines.Contractual limitations contained in insurance policies are regarded with extreme jealousy by courts and will be strictly construed against the insurer and should not be permitted to prevent a recovery when their just and honest application would not produce that result. . suit or proceeding shall be had or maintained upon this Bond unless the same be commenced within one year from the time of making claim for the loss upon which such action.

and their agreement that an action on a claim denied by the insurer must be brought within one year from the denial. 1997 NATURE The petition herein seeks the review and reversal of the decision of respondent Court of Appeals affirming in toto the judgment of the Regional Trial Court in an action for damages filed by private respondent Vicente Mendoza. 1956.000. limiting the period for bringing action thereon.The Angs brought an action against the agent on May 11. and an additional sum of P2. Consequently. limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues is void.There was a clause in the policy: 13. to pay the plaintiffs the sum of P10. as essential elements. if the claim be made and rejected and an action or suit be not commenced within twelve months after such rejection or (in case of arbitration taking place in pursuance of the 18th condition of this Policy) within twelve months after the arbitrator or arbitrators or umpire shall have made their award all benefit under this Policy shall be forfeited. and is governed by the same principles of interpretation. with costs against plaintiffs-appellees. Later. 1958. as heir of his mother who was killed in a vehicular accident. to pay the amount of the bond). as amended by Act 4101 of the pre-Commonwealth Philippine Legislature. July 31. therefore. 61-A: A condition. v. cannot have any legal effect except that of notifying the agent of the claim. Hence. as condition eight of the bond requires action to be filed within one year from the filing of the claim for loss. such stipulation contradicts the public policy expressed in Section 61-A of the Philippine Insurance Act.00 as attorney's fees. ISSUE WON RTC and CA erred HELD YES . Where the contract is for indemnity against actual loss or payment. The court denied the suit and the mfr on Sept.Their claim was denied on April 6. or. to comply with its duty (in this case. expressly or impliedly. fire destroyed the goods.Their contract is the law between the parties. or if any false declaration is made or used in support thereof. therefore. if the loss or damage be occasioned by the wilful act or with the connivance of the Insured. is subject to the provisions of Section 61-A of the Insurance Act (No.The stocks of general merchandise in the store of the Ang spouses are insured with Fulton.Since a "cause of action" requires. 1961 NATURE Appeal from judgment of the CFI ordering the defendant Fulton Fire Insurance Co. is null and void.If the claim be in any respect fraudulent. 3 and 12. in effect. not the rules on the prescription of actions. prescribing that: SEC.INSURANCE 105 beyond the contractual limitation period. or. FACTS -an old lady was hit by a taxicab. They received notice on April 19. it can not be counted from the creditor's filing of the claim of loss. The taxicab was later identified and a case was filed against the driver and owner. stipulation or agreement in any policy of insurance. action may be brought within the statutory period of limitation for written contracts (New Civil Code. 1957. RTC and CA ordered that the owner.Where the contract provides for indemnity against liability to third persons. such that the filing against Fulton was only 9 months after the claim was rejected HELD NO Page . May 22. from the time of appellee's refusal to comply with its bond. or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under this Policy. Article 1144). ISSUE WON the provision of a fidelity bond that no action shall be had or maintained thereon unless commenced within one year from the making of a claim for the loss upon which the action is based. in the nature of a contract of insurance against loss from misconduct. ANG v. then third persons to whom the insured is liable can sue the insurer. As a consequence of the foregoing. is valid. with interest. . therefore. Disposition The judgment appealed from is hereby set aside and the case dismissed. The discouraging of unnecessary litigation must be deemed a rule of public policy.000. for that does not import that the surety company will refuse to pay. . an amendment was filed to include the insurance company. the condition of the bond in question. Jr. and the Court can not by interpretation extend the clear scope of the agreement beyond what is agreed upon by the parties. 2427).The Angs filed against Fulton on May 26. ." ISSUE WON the suit against the agent tolled the prescription period. .A fidelity bond is. governs. JR.The bringing of the action against the Paramount Surety & Insurance Company. 1956. Besides. and costs. . In so far. . the agent of the defendant company." the cause of action does not accrue until the party obligated refuses.Condition eight of the bond. the filing of the action can serve no other purpose. There is no law giving any effect to such action upon the principal. FACTS . considering the unrelieved congestion in the courts. TRAVELLERS INSURANCE & SURETY CORP.00. in view of Section 61-A of the Insurance Act invalidating stipulations limiting the time for commencing an action thereon to less than one year from the time the cause of action accrues HELD NO . The year for instituting action in court must be reckoned. and the appellant is not bound to comply with its provisions. While the insurance was in force. FULTON FIRE INSURANCE CO. 1956. then third persons cannot proceed against . this appeal. not only a legal right of the plaintiff and a correlative obligation of the defendant but also "an act or omission of the defendant in violation of said legal right. . Beyond such notification. 2 SCRA 945 LABRADOR. The Angs filed their first claim immediately after the fire. CA (MENDOZA) 272 SCRA 536 HERMOSISIMA. there is no condition in the policy that the action must be filed against the agent. driver as well as the insurance company be held solidarily liable.

130412 of the Civil Code. and he shall be preferred to the person who has been subrogated in his place in virtue of the partial payment of the same credit. said third persons' recourse being thus limited to the insured alone. without prejudice to the insurer's right of subrogation.CA affirned CFI. the insurer will be entitled to recover from the insured whatever it has paid to the latter.486. with the modification that petitioner was to pay the total amount of P5. under this legal provision.000 HELD YES Ratio Since the insurer can be subrogated to only such rights as the insured may have. claims. and costs of suit FACTS . with the Commissioner or the Courts within one year from denial of the claim. demands and rights of action that now exist or hereafter arising out of or as a consequence of the accident" after the insurer had paid the proceeds of the policy . Inc. . to demand reimbursement from San Miguel. unless the release was made with the consent of the insurer. 1987 NATURE Petition to review CA decision ordering Manila Mahogany Manufacturing Corporation to pay Zenith Insurance Corporation P5. 220711 and Art. CA (ZENITH INSURANCE CORP) 154 SCRA 652 PADILLA. as evidenced by a cash voucher and a Release of Claim executed by the General Manager of petitioner.From 6 March 1970 to 6 March 1971. ZENITH paid MLA MAHOGANY P5.000 it had earlier received from ZENITH.CFI affirmed the City Court's decision in toto. the insurer loses his rights against the latter. .70) CEBU SHIPYARD v. WILLIAM LINES (supra p.000 to ZENITH as the subrogation in the Release of Claim it executed in favor of respondent was conditioned on recovery of the total amount of damages petitioner had sustained. CA (supra p. For the damage caused. ISSUE WON the insurer may recover the sum of P5.Although petitioner’s right to file a deficiency claim against San Miguel is with legal basis. the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured. MLA MAHOGANY insured its Mercedes Benz 4-door sedan with ZENITH.As held in Phil.000 being based on the insurance policy . when Manila Mahogany executed another release claim discharging San Miguel from "all actions. despite the subrogation in favor of ZENITH. release the wrongdoer who caused the loss. But in such a case.City Court ordered petitioner to pay respondent P4. attorney's fees. and much more. Inc.” . Insurance Adjusters. may exercise his right for the remainder. . The former is based on torts and quasi-delicts while the latter is based on contract. under Art. and claims a preferred right to retain the amount coming from San Miguel. Since total damages were valued by petitioner at P9.57) COASTWISE v. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. Disposition Petition DENIED. nevertheless. should the insured. to have waived his rights as against petitioner-insurer. private respondent's cause of action can not prevail because he failed to file the written claim mandated by the Insurance Code (before it was amended-action must be brought within six months from date of the accident (this is what’s applicable here) .the compromise agreement of P5. the right of action of petitioner against the insurer was also nullified.500. after amendment"action or suit for recovery of damage due to loss or injury must be brought in proper cases. ZENITH thus demanded from petitioner reimbursement of the sum of P4. Heald Lumber Co. . otherwise the claimant's right of action shall prescribe" ). ZENITH wrote Insurance Adjusters. the contents having expressed all intents and purposes of the parties. .Even assuming arguendo that there was such a contract. What then was the basis of the RTC and the CA to say that the insurance contract was a thirdparty liability insurance policy? Consequently. there was no contract shown. Respondent’s Arguments > There was no qualification to its right of subrogation under the Release of Claim executed by 11 Page petitioner. 2207. then he may sue the party responsible for the damage for the remainder. Reasoning .43 and only P5. If the insurance proceeds are not sufficient to cover the damages suffered by the insured. CA (supra p. MLA MAHOGANY argues that it was entitled to go after San Miguel to claim the additional P4. after receiving payment from the insurer. He is deemed.500.” 12 Article 1305: “A creditor. October 12.500.000 in amicable settlement.the insurer is entitled to recover from the insured the amount of insurance money paid.500.000 was received by petitioner. . But in the case at bar. Judgment appealed from is AFFIRMED with costs against petitioner. the contract being solely to reimburse the insured for liability actually discharged by him thru payment to third persons.3) MANILA MAHOGANY MANUFACTURING CORP v. SUBROGATION: The right of subrogation can only exist after the insurer has paid the insured.000 with 6% annual interest. refused reimbursement.On 4 May 1970. thereby defeating private respondent’s right of subrogation.. MLA MAHOGANY's general manager executed a Release of Claim. > It cites Art. the trial court was confused as it did not distinguish between the private respondent's cause of action against the owner and the driver of the Lady Love taxicab and his cause of action against petitioner. . Since petitioner by its own acts released San Miguel. the insured vehicle was bumped and damaged by a truck owned by San Miguel Corporation.On 11 Dec 1972.500 paid by San Miguel. alleging that San Miguel had already paid petitioner P4. otherwise the insured will be deprived of his right to full indemnity. Article 2207: “If the plaintiff's property has been insured. Air Lines v.INSURANCE 106 the insurer. to whom partial payment has been made. Petitioner’s Claims > It is not bound to pay P4. P5. If the amount paid by the insurance company does not fully cover the injury or loss the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. subrogating respondent company to all its right to action against San Miguel Corporation. To the extent of the amount he has already received from the insurer enjoys the right of subrogation. Disposition petition granted SUN INSURANCE v.

The Cervanteses and Maglana. v. to wit: Art.12. therefore.00 from the reinsurers.00 for one of the airplanes and P2. executed and issued its Surety Bond No. and Manila Mahogany Manufacturing Corporation v. PAN MALAYAN INSURANCE CORPORATION v.Hence the applicable law is Article 2207 of the new Civil Code. Since Pioneer has collected P295. 6639 in favor of JDA. July 28. on payment of a loss acquires the same rights by subrogation as are acquired in similar cases where the original insurer Page pays a loss (Universal Ins. This is the amount for which Pioneer may sue defendants. . It was stipulated therein that Lim transfer and convey to the surety the two aircrafts.The payment to the petitioner made by the reinsurers was not disputed. v. ISSUE WON the petition of Pioneer Insurance and Surety Corporation against all defendants was rightly dismissed HELD YES . .. Pennsylvania Fire Ins. v. at Tokyo. **Maglana. Therefore. the uninsured portion of what it paid to JDA is the difference between the two amounts.000. Pioneer has no more claim against defendants. Japan. Old Time Molasses Co.000. -Border Machinery and Heavy Equipment Company. Heald Lumber Co. Co. however. 1989 NATURE Petitions for review on certiorari of a decision of the CA FACTS . . Bormaheco and the Cervanteses filed cross-claims against Lim alleging that they were not privies to the contracts signed by Lim and. the Cervanteses. 1965. . CA (FABIE. Considering this admitted payment. . Lim doing business under the name and style of SAL executed in favor of Pioneer as deed of chattel mortgage as security for the latter's suretyship in favor of the former.00 for a spare engine. collected the proceeds of such reinsurance in the sum of P295.Pioneer then filed a petition for the extrajudicial foreclosure of the said chattel mortgage before the Sheriff of Davao City.00 to be paid in installments. The total amount paid by Pioneer to JDA is P299. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. Evidently.626. 2207. Lim was engaged in the airline business as owner-operator of Southern Air Lines (SAL).Lim defaulted on his subsequent installment payments prompting JDA to request payments from the surety. filed a third party claim alleging that they are co-owners of the aircrafts.666. assuming that the indemnity agreement is still valid and effective.After trial on the merits. But since the amount realized from the sale of the mortgaged chattels are P35. in behalf of its principal.000. has no cause of action against the respondents.It is clear from the records that Pioneer sued in its own name and not as an attorney-in-fact of the reinsurer.CA modified the trial court's decision in that the plaintiff’s complaint against all the defendants (including Lim) was dismissed.On May 22. (this constitutes the second petition but will no longer be discussed because it is not relevant to the topic) . the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured (.383. Co. .666. 1990 NATURE PETITION to review the decision of the Court of Appeals . Pioneer is still overpaid by P33. under this legal provision. 1966. CA (BORDER MACHINERY & HEAVY EQUIPMENT INC) 175 SCRA 668 GUTIERREZ. Francisco and Modesto Cervantes (Cervanteses) and Constancio Maglana contributed some funds used in the purchase of the above aircrafts and spare parts.00. 1965. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury .Both the TC and CA made the finding that Pioneer reinsured its risk of liability under the surety bond it had executed in favor of JDA. sought for damages for being exposed to litigation and for recovery of the sums of money they advanced to Lim for the purchase of the aircrafts in question. by way of counterclaim. April 3. Ins.29. Court of Appeals) . Air Lines. -On May 17.050. Bormaheco and the Cervanteses.On July 19. Lim. Pioneer Insurance and Surety Corporation. one signed by Maglana and the other jointly signed by Lim for SAL.If a property is insured and the owner receives the indemnity from the insurer. the appellate court did not commit a reversible error in dismissing the petitioner's complaint as against the respondents for the reason that the petitioner was not the real party in interest in the complaint and. or P3. and paid with the said amount the bulk of its alleged liability to JDA under the said surety bond.000. or a total of P37. for the balance price of the aircrafts and spare parts. Pioneer filed an action for judicial foreclosure with an application for a writ of preliminary attachment against Lim and respondents. JR. . as surety.). They executed two (2) separate indemnity agreements in favor of Pioneer.Pioneer paid a total sum of P298.72.050. Bormaheco and Maglana.). a decision was rendered holding Lim liable to pay Pioneer but dismissed Pioneer's complaint against all other defendants.In general a reinsurer. . Inc. the only question was the effect of payment made by the reinsurers to the petitioner . 1965. Disposition Petitions dismissed. Japan Domestic Airlines (JDA) and Lim entered into and executed a sales contract for the sale and purchase of two (2) DC-3A Type aircrafts and one (1) set of necessary spare parts for the total agreed price of US $109. HER UNKNOWN DRIVER) 184 SCRA 54 CORTES. . Inc. it is provided in said article that the insurer is deemed subrogated to the rights of the insured against the wrongdoer and if the amount paid by the insurer does not fully cover the loss. Questioned decision of CA affirmed.INSURANCE 107 PIONEER INSURANCE v..In 1965. .28. Accordingly. . the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the plaintiff’s property has been insured. then the aggrieved party is the one entitled to recover the deficiency.The rules of practice in actions on original insurance policies are in general applicable to actions or contracts of reinsurance (Delaware. Jacob S. (Bormaheco). Co. a single proprietorship. If the amount paid by the insurance company does not fully cover the injury or loss.On June 10.

. or is an unusual effect of a known cause and. thereby effecting "voluntary payment".INSURANCE 108 FACTS . that the courts will intervene. ON TC: “Own damage” (not found in the insurance policy) simply meant that Panmalay had assumed to reimburse the cost for repairing the damage to the insured vehicle.] The concept "accident" is not necessarily synonymous with the concept of "no fault". the insurer's right of subrogation is defeated. defrayed the cost of repair of the insured car and was subrogated to the rights of Canlubang against the driver and owner of the pick-up. determine the import of the various terms and provisions embodied in the policy. Payment by the insurer to the assured operates as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. any privity of contract or upon written assignment of claim. upon payment to the assured.Both Panmalay and Canlubang had the same interpretation regarding the coverage of insured risk regarding “accidental collision or overturning…” to include damages caused by 3rd party to Canlubang so it was improper for CA to ascribe meaning contrary to the clear intention and understanding of the parties. i.Court on several occasions defined “accident” or “accidental” as taking place “without one’s foresight or expectation. theless recover from the third party responsible for the damage to the insured property under Article 1236 of the Civil Code. Panmalay. from liability. Inc. It is only when the terms of the policy are ambiguous. It may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man. Among the provisions of the policy was a “own-damage” clause whereby Panmalay agrees to indemnify Canlubang in cases of damage caused by “accidental collision or overturning. . as interpreted by TC: the insurer who may have no rights of subrogation due to "voluntary" payment may never. . Jamila assumed responsibility for the acts of its security guards.RTC: dismissed complaint for lack of cause of action (payment by PANMALAY of CANLUBANG's claim under the "own damage" clause of the insurance policy was an admission by the insurer that the damage was caused by the assured and/or its representatives) – Panmalay appealed . executed a bond in the sum of P20. therefore. In such an event.damage/loss to insured vehicle due to negligence of 3rd parties not listed as exceptions to coverage in the insurance policy . FIREMAN'S FUND INSURANCE COMPANY JAMILA & COMPANY. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured.Both TC and CA are incorrect. with the latter failing and refusing to pay their claim. In the case of property insurance policies.On 1985. the policy will be construed by the courts liberally in favor of the assured and strictly against the insurer Page . NCC HELD YES Ratio Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear”.. not expected” [Dela Cruz v. Inc. the insured car was sideswept and damaged by a car owned by Erlinda Fabie. [Sveriges Angfartygs Assurans Forening v. in accordance with the policy. FACTS Jamila & Co. (3) where the insurer pays the assured for a loss which is not a risk covered by the policy. equivocal or uncertain. the evident intention of the contracting parties. . INC. affirmed RTC (applying the ejusdem generis rule held that Section III-1 of the policy. did not cover damage arising from collision or overturning due to the negligence of third parties as one of the insurable risk) ISSUE WON the insurer PANMALAY may institute an action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents as the parties allegedly responsible for the damage caused to the insured vehicle. The First Quezon City Insurance Co. Petitioner's complaint for damages against private respondents is hereby REINSTATED. Let the case be remanded to the lower court for trial on the merits. Fabie filed a Motion for Bill of Particulars. 70 SCRA 323 AQUINO. The right of subrogation is not dependent upon. It accrues simply upon payment of the insurance claim by the insurer Exceptions (1) if the assured by his own act releases the wrongdoer or third party liable for the loss or damage. such that the parties themselves disagree about the meaning of particular provisions. the settlement is binding on both the assured and the insurer. will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay.. 1963 properties of Firestone valued at P11. or the Veterans Philippine Scouts Security Agency contracted to supply security guards to Firestone.925 were lost allegedly due to the acts of its . (2) where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's claim for loss.Pan Malayan Insurance Company (Panmalay) insured the Mitsubishi Colt Lancer car registered in the name of Canlubang Automotive Resources Corporation (Canlubang) under its motor vehicle insurance policy. Qua Chee Gan] Disposition the present petition is GRANTED. It’s different from “Third Party Liability” coverage (liabilities arising from the death of or bodily injuries suffered by 3rd parties) and from “Property Damage” coverage (liabilities from damage caused by insured vehicle to properties of 3rd parties) ON CA: the terms of a contract are to be construed according to the sense and meaning of the terms which the parties thereto have used.On May 18. .CA: dismissed appeal. then the insurer.EVEN if voluntarily indemnified Canlubang. nor does it grow out of. Capital Insurance & Surety Co.Interpretation given by Panmalay is more in keeping with rationale behind rules on interpretation of insurance contracts in favor of assured or beneficiary: indemnity or payment . April 1976 v. Panmalay then filed a complaint for damages with RTC Makati against Erlinda Fabie and her driver on the grounds of subrogation. the insurer and the assured. driven by an unknown driver who fled the scene. the former has no right of subrogation against the third party liable for the loss Reasoning . which was the basis for settlement of CANLUBANG's claim. in accordance with A2207.000 to guarantee Jamila's obligations under that contract..e. and the latter cannot bring an action against the carrier on his right of subrogation. an event that proceeds from an unknown cause.

The court did not mention Firestone. is a partyplaintiff and could sue directly Jamila in its own right. due to inadvertence. ISSUE WON the complaint of Firestone and Fireman's Fund states a cause of action against Jamila HELD YES . Stated otherwise. Subrogation is a normal incident of indemnity insurance. or upon written assignment of claim. It appears that the same action was previously filed in a civil case which was dismissed because of the failure of the same plaintiffs and their counsel to appear at the pre-trial. the equitable right of subrogation as the legal effect of payment inures to the insurer without any formal assignment or any express stipulation to that effect in the policy. As the insurer. any privity of contract. May 16. the lower court did not state in its order why it set aside its prior order dismissing the complaint with respect to Jamila. . were not relying on the novation by change of creditors as contemplated in articles 1291 and 1300 to 1303 of the Civil Code but rather on article 2207. Jamila in its MR invoked the first ground which had never been passed upon by the lower court. the insurer is entitled to be subrogated pro tanto to any right of Page action which the insured may have against the third person whose negligence or wrongful act caused the loss. . and payment to the insured makes the insurer an assignee in equity. under Bill of Lading No. completely ignored that first ground.The plaintiffs cited article 2207 of the Civil Code which provides that "if the plaintiff's property has been insured. Upon defendant's motions. the lower court set aside its order of dismissal and sustained plaintiff's contention that there was no res judicata as to First Quezon City because the civil case was dismissed without prejudice. Obviously. Fireman's Fund was subrogated to Firestone's right to get reimbursement from Jamila.Republic Flour was advised of the vessel’s arrival in Manila. its basis is the doing of complete. that is. 001 and insured with Tabacalera. . It rests on the principle that substantial justice should be attained regardless of form. Sufficient ultimate facts are alleged in the complaint to sustain that cause of action. the lower court denied plaintiffs' second MR. But the lower court in its order granting Jamila's motion for reconsideration. therefore. nor does it grow out of. Unloading was only completed 20 days after the arrival of the barge. essential. It had already been indemnified for the loss which it had sustained. it becomes the loss of the insurer. Subrogation has been referred to as the doctrine of substitution.Upon an MR. the cargo was short 26. paid to Firestone the amount of the loss. and its operation is governed by principles of equity. it joined as a party-plaintiff in order to help Fireman's Fund to recover the amount of the loss from Jamila and First Quezon City. It also dismissed the complaint as to First Quezon City on the ground of res judicata. . It is an arm of equity that may guide or even force one to pay a debt for which an obligation was incurred but which was in whole or in part paid by another. when the insurance company pays for the loss. Jamila and its surety. Jamilla had originally moved for the dismissal of the complaint on the ground of lack of cause of action. The lower court reiterated its order.Article 2207 is a restatement of a settled principle of American jurisprudence. stating that Fireman's Fund had no cause of action against Jamila because Jamila did not consent to the subrogation. the subrogor. That right is not dependent upon.Firestone and Fireman's Fund filed an MR on the ground that Fireman's Fund was suing on the basis of legal subrogation whereas the lower court erroneously predicated its dismissal order on the theory that there was no conventional subrogation because the debtor's consent was lacking. Unloading was sometimes stopped due to varying weather and sometimes for no apparent reason. . The loss in the first instance is that of the insured but after reimbursement or compensation. Firestone is really a nominal party in this case. The plaintiffs in alleging in their complaint that Fireman's Fund "became a party in interest in this case by virtue of a subrogation right given in its favor by" Firestone. as insurer. It reverted to the second ground which was relied upon in its order previous order. .On the other hand. Although many policies including policies in the standard form. calling the lower court's attention to the fact that the issue of subrogation was of no moment because Firestone. and thus determine the rights of the insurer in this respect.234 sacks of corn grains valued at P3. They filed a second MR. the lower court dismissed the complaint as to Jamila on the ground that there was no allegation that it had consented to the subrogation and. . First Quezon City failed to pay the amount of the loss in spite of repeated demands. Firestone had tacitly assigned to Fireman's Fund its cause of action against Jamila for breach of contract. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract".5M were shipped on board North Front 777. 1997 FACTS .333 metric tons and the rest was already moldy and deteriorating. . by then.The trial court erred in applying to this case the rules on novation. NORTH FRONT SHIPPING 272 SCRA 527 BELLOSILLO. However. Prudential Guarantee & Assurance. The lower court in its order of dismissal had sustained the second ground. Fireman's Fund. the co-plaintiff of Fireman's Fund. TABACALERA v. and perfect justice between all the parties without regard to form. Fireman's Fund is entitled to go after the person or entity that violated its contractual commitment to answer for the loss insured against.INSURANCE 109 employees who connived with Jamila's security guard. but did not immediately commence the unloading operations. had investigated the loss and that Jamila was represented in the investigation and (2) that Jamila did not consent to the subrogation of Fireman's Fund to Firestone's right to get reimbursement from Jamila and its surety.20. Fireman's Fund had no cause of action against it. such payment operates as an equitable assignment to the insurer of the property and all remedies which the insured may have for the recovery thereof. now provide for subrogation.Fireman's Fund's action against Jamila is squarely sanctioned by article 2207. Without resolving that contention. pursuant to the contractual stipulation quoted in the complaint. . and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. Upon payment of the loss. The cargo was consigned to Republic Flour Mills Corp. defendant’s vessel. The lower court denied plaintiff's motion.Subrogation is founded on principles of justice and equity. Its basis for its contention were: (1) that the complaint did not allege that Firestone. The right of subrogation is of the highest equity. and New Zealand Insurance.

it should share at least 40% of the loss. 1989. testified in addition that he ministered to the ailing Florence Pulido for two days immediately prior to her death. however. was in fact dead before the application for insurance on her life was made.As a corporation engaged in the business of transporting cargo offering its services indiscriminately to the public. the Municipal Health Officer of Bagulin. herein private respondent. Disposition The decision of the CA is REVERSED and SET ASIDE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY v. . petitioner confirmed to private respondent receipt of the claim papers and assured her that her case was “being given preferential attention and prompt action”. they were subrogated to the rights of Republic Flour. private respondent had already filed her claim earlier that month. died of acute pneumonia on September 10. which must prove its non-liability.By virtue of the insurance companies’ payment. the character of the goods or defects in their packing. The demands were unheeded and the insurance companies were obliged to pay Republic Flour P2. unless the party who contests its accuracy can produce positive evidence establishing otherwise. whether the insured.Death certificates. are prima facie evidence of facts therein stated. Florence Pulido. claiming the loss was exclusively attributable to the latter’s fault and negligence. 1989. dated December 16. destruction or deterioration was due to a fortuitous event. They further averred that the grains were farm wet and not properly dried before loading. We see no reversible error in the finding of both respondent court and the trial court in favor of the correctness of the entries in Certificate of Death.INSURANCE 110 . This fact is likewise noted in the death certificate.00 which designated her sister. La Union. Gutierrez for seeking to . This the lower courts had effected ruled on. Irineo Gutierrez. CA (ELIZA PULIDO) 344 SCRA 360 GONZAGA-REYES. However.The records bear out that since the onset of this case. As such. Pursuant to the findings of this second investigation. defendants failed to rebut said arguments or even endeavor to establish that the loss.Analyses showed that the deterioration was caused by moisture content from salt water. and knew of Florence’s death only through Ramon Piganto. ISSUE WON defendant is required to observe extraordinary diligence in its vigilance over the goods it transports HELD YES . Republic Flour is also found to be guilty of contributory negligence for not immediately staring the unloading operations and for providing no explanation for the delay. as such. petitioner did not require a medical examination and issued a policy on the sole basis of the application on February 11. Republic Flour rejected the entire cargo and demanded that defendant North Front Shipping pay the damages suffered by it. Petitioners filed a complaint against North Front Shipping. private respondent enlisted the services of counsel in reiterating her claim for death benefitsPetitioner still refused to make payment and thus. Gutierrez was not present when Florence Pulido died. La Union whose signature appeared in the death certificate. Florence Pulido.However. it was found that the barge had cracks in its bodega.Petitioner withheld payment on the ground that the policy claimed under was void from the start for having been procured in fraud. the main issue has always been whether there was fraud in the obtainment of the disputed policy. which declared that the insured. ruling that the contract entered into was a charter-party agreement. or an order or act of a competent public authority. A duly-registered death certificate is considered a public document and the entries found therein are presumed correct. As such. petitioner received from one Florence Pulido an application for life insurance. their investigation concerning the subject policy yielded the information that the insured. the master of the vessel should have known that the grains would eventually deteriorate when sealed in hot compartments in hatches of a ship and should have undertaken precautionary measures to avoid this. which declared that Florence Pulido died of acute pneumonia on September 10. On April 1992. which could be arrested by drying. it is without a doubt a common carrier. or put differently. ISSUE WON lower court erred in holding that there was no fraud HELD . this action. duly registered with the Local Civil Registrar of Bagulin. 1991. November 15. .433 . petitioner stood by its initial decision to treat the policy as void and not to honor the claim. While this was communicated to private respondent in a letter. Having surveyed the vessel. only ordinary diligence in the care of the goods was required of North Front Shipping. 1992. does not merit a conclusion of fraud. it has the burden of proving that it observed extraordinary diligence to avoid responsibility for the lost cargo.Petitioner caused another investigation respecting the subject policy. On November 9. 1988. In another Page letter. If they were wet.On January 9.While petitioners presented evidence of the vessel’s bad shape and a laboratory analysis revealing that the grains were contaminated with salt water.000. No motive was imputed to Dr. petitioner received private respondent’s claim. as its principal beneficiary. . Florence Pulido. . contrary to North Front Shipping’s claims.The court dismissed the complaint.189. an act/omission of the owner of the goods. The hatches on the crates of grain were not sealed and the tarpaulins used in covering them were not new. before the application for insurance on her life was made. Petitioner’s contention that the death certificate is suspect because Dr. It is petitioner’s contention that even before they received private respondent’s claim for death benefits. Dr. 1991. . and notes by a municipal health officer prepared in the regular performance of his duties. The arrival of the goods at the place of destination in bad order makes a prima facie case against the common carrier. North Front Shipping reiterated that the barge was inspected prior to loading and found seaworthy and were issued a permit to sail by the Coast Guard. died in 1988. 2000 NATURE This petition for review on certiorari seeks to reverse the Decision of the Special Second Division of the Court of Appeals FACTS . in the amount of P100. upon a preponderance of the evidence duly received from both parties. The clean bill of lading it issued disprove the master of the vessel’s claim that the grains were farm wet when loaded. Because the insurance applied for was non-medical. .

46 or its equivalent in pesos at the rate of P3. The shipment was insured by the shipper against loss and/or damage with the St. the consignee filed its claim with the insurer.I. This limitation of the carrier's liability is sanctioned by the freedom of the contracting parties to establish such stipulations.PAUL FIRE & MARINE INSURANCE CO v. Petitioner was likewise unable to make out any clear motive as to why Ramon Piganto would purposely lie. instead of P2.F.134. 1976 FACTS .F.We cannot likewise give credence to petitioner’s submission that the inconsistencies in the testimonies of the witnesses for plaintiff-private respondent are in themselves evidence of fraud. a suit by the insurer as subrogee necessarily is subject to like limitations and restrictions. on the basis of such claim. which was the basis of both respondent court and the trial court in finding the date of Florence Pulido’s death to be as plaintiff-private respondent maintained. . A failure to do so would leave intact the presumption of good faith and regularity in the performance of public duties..00 to . provided they are not contrary to law. The Insured filed therefor a claim for P5. in case of loss or damage to the goods.90. a common carrier accident insurance policy. Paul Fire & Marine Insurance Co. Paul Fire & Marine Insurance Co. value of the goods which were lost or damaged 2.S. paid to the consignee the insured value of the lost and damagcd goods. in the name of Winthrop Products.INSURANCE 111 perpetuate a falsity in public records.As subrogee of the rights of' the shipper and/or consignee. March 25. value of the damaged drum and cartons of medicine with the carrier and the Manila Port Service. PHILAM v.00. 1961. after paying the claim of the insured for damages under the insurance. The plaintiff filed a MFR contending that it should recover the amount of $1.46. but this offer was declined by the plaintiff. Conductor and/or Inspector who is riding in the Motor Vehicle insured at the time of accident or injury. 218 cartons and drums of drugs and medicine. 2.60) EQUITABLE v. Hence. RURAL INSURANCE (supra p. However. Inc. YES Ratio The purpose of the bill of lading is to provide for the rights and liabilities of the parties in reference to the contract to carry. Paul Fire & Marine Insurance Company. issued. appellant Fieldmen's Insurance Company. 1968 NATURE Appeal from the decision of the CFI certified by CA FACTS .F.December 1. as insurer.The SS "Tai Ping" arrived at the Port of Manila and discharged its aforesaid shipment into the custody of Manila Port Service. . Mere allegations of fraud could not substitute for the full and convincing evidence that is required to prove it. owned and operated by Wilhelm Wilhelmsen. is limited or restricted by the provisions in the bill of lading.The plaintiff-appellant. for the purpose only of avoiding litigation without admitting liability to the consignee. Barber Steamship Lines. covering the period from December 1. subject to the Limits of Liability and under the Terms of this Policy. Consequently.Winthrop Products. provided it is (a) reasonable and just under the circumstances. INC. shipped aboard the SS "Tai Ping".60) COQUIA v.00 which was the rate existing at that time. . is valid and binding. Disposition the instant petition is DENIED ST. In the case at bar. value of the goods as per contract of sea carriage embodied in the bill of lading. and (b) has been fairly and freely agreed upon. this appeal. unless the shipper or owner declares a greater value. in favor of the Manila Yellow Taxicab Co..I. WON the insurer who has paid the claim in dollars to the consignee should be reimbursed in its peso equivalent on the date of discharge of the cargo or on the date of the decision HELD 1. the consignee filed the corresponding claim in the amount of P1. Because consignee failed to receive the whole shipment and as several cartons of medicine were received in bad order condition.46 U. as shipper.I. agent of Wilhelm Wilhelmsen issued Bill of Lading No. the insurance company. WON in case of loss or damage. However. 26 SCRA 178 CONCEPCION. or conditions as they may deem convenient.While the policy was in force. the insurer. FIELDMEN'S INSURANCE CO." . value of the damaged cargo. 34.134. including other expenses in connection therewith. both refused to pay such claim. MACONDRAY & CO INC 70 SCRA 122 ANTONIO. On the date of the discharge of the cargo. or on February 10. but this was denied.015 to $1. The stipulation in the bill of lading limiting the common carrier's liability to the value of the goods appearing in the bill. ISSUES 1.134. terms.00. The peso equivalent was based by the consignee on the exchange rate of P2. the liabilities of the defendants- Page appellees with respect to the lost or damaged shipments are expressly limited to the C. the arrastre contractor for the Port of Manila. It was stipulated in said policy that: "The Company will. the defendants offered to settle the latter’s claim in full by paying the C.F. ASIAN SURETY (supra p. good customs and public policy. 1961 to December .. Inc. Such alleged inconsistencies are matters of credibility which had been ably passed upon by the lower court. a taxicab of the Insured. AUDITOR (supra p. the liability of the carrier to the consignee is limited to the C. Inc. driven by Carlito Coquia. November 29. As subrogee. Inc. with arrival notice in-Manila to consignee Winthrop-Stearns.000. A stipulation fixing or limiting the sum that may be recovered from the carrier on the loss or deterioration of the goods is valid. St. .1962. Inc. . The said shipment was discharged complete and in good order with the exception of one (1) drum and several cartons which were in bad order condition.I. morals.The defendants resisted the action. with the freight prepaid. Since the right of the assured. instituted an action against the defendants for the recovery of said amount of $1.59) FIELDMEN’S v. clauses. in the total amount of $1.67 representing the C. indemnify the Insured in the event of accident caused by or arising out of the use of Motor Vehicle against all sums which the Insured will become legally liable to pay in respect of: Death or bodily injury to any fare-paying passenger including the Driver.. it can recover only the amount that is recoverable by the latter. Inc. which were consigned to Winthrop-Stearns. Inc. St. currency. is subrogated merely to the rights of the assured. met a vehicular accident to which he died. plus costs.109. The LC rendered judgment ordering the defendants to pay the plaintiff the sum of P300. 1962.

with or without securing the consent of or prior notification to the Insured. the respondent’s building at Barangay Diatagon. Country Bankers Insurance and Lianga Bay entered into a contract of fire insurance. make indemnity payable directly to the claimants or heirs of claimants. LIANGA BAY DE LEON. Country Bankers insured the respondent’s stocks-intrade against fire loss. . . which were deducted from his weekly commissions.. for the sum of P200. observe. that none of them had. it being the true intention of this Policy to protect. — Liability to the Public "3. to the extent herein specified and subject always to the Terms of this Policy. Juarbal. but the Company did not accept it. Based upon Section 17 of the policy: "If any difference or dispute shall arise with respect to the amount of the Company's liability under this Policy. .Thus. at or about 12:40 a. In its answer.The petitioner. the respondent filed an insurance claim with the petitioner under its Fire Insurance Policy. or made any reference to arbitration. pieces of furnitures and fixtures. January 25. The Company will. INP Investigator. at its option. .00. COUNTRY BANKERS INSURANCE CORP v. since they could have maintained this action by themselves. Cornelio Jamero.On July 1. WON the insured has not complied with the provisions of the policy concerning arbitration HELD 1. The Insured rejected it and made a counter-offer for P4. during the negotiations preceding the institution of the present case. WON there was contractual relations between the Coquias and the Company 2. provided. Lianga. with costs against the herein defendant-appellant. who is riding in the Motor Vehicle insured at the time of accident or injury. to the decision of an umpire who shall have been appointed in writing by the arbitrators before entering on the reference and the costs of and incidental to the reference shall be dealt with in the Award. counsel for both parties stipulated. it goes without saying that they could and did properly join the latter in filing the complaint herein. denied the insurance claim on the ground that. this rule is subject to exceptions. Arturo V. arbitrators or umpire of the amount of the Company's liability hereunder if disputed shall be first obtained. and (c) the Sworn Statement of Ernesto Urbiztondo. the Company admitted the existence thereof.. dated July 1. only parties to a contract may bring an action based thereon.00. that such representatives shall. equipments and records. which contends that plaintiffs have no cause of action because: 1) the Coquias have no contractual relation with the Company. . The Company may. In fact. he may demand its fulfillment provided he communicated his acceptance of the obligor before its revocation. as though they were the Insured. the same shall be referred to the decision of a single arbitrator to be agreed upon by both parties or failing such agreement of a single arbitrator. 1990 at 4:00 p. in respect of the liability incurred by such person." . reading: "If a contract should contain some stipulation in favor of a third person. indemnify his personal representatives in terms of and subject to the limitations of this Policy. however." . submitting: (a) the Spot Report of Pfc. the Company will indemnify any authorized Driver who is driving the Motor Vehicle .00 and the costs.INSURANCE 112 which the Company replied with an offer to pay P2. without the assistance of the Insured. to June 20.Does the policy in question belong to such class of contracts pour autrui? In this connection. 1989 at 4:00 p. by way of compromise. 1962. and 2) the Insured has not complied with the provisions of the policy concerning arbitration. The contracting parties must have clearly and deliberately conferred a favor upon a third person. to the decision of two arbitrators. 1989. admittedly. 2002 NATURE Petition for review on certiorari FACTS .Lianga Bay is a duly registered cooperative judicially declared insolvent and is here represented by. the building was set on fire by 2 NPA .TC rendered a decision sentencing the Company to pay to the plaintiffs the sum of P4. Hence.000. one of which is found in the Art 1311 CC. ISSUES 1. " "Conditions "7. said policy provides. the policy under consideration is typical of contracts pour autrui.On September 18. Their aforementioned acts or omissions had the effect of a waiver of their respective right to demand an arbitration. and. 1989. A mere incidental benefit or interest of a person is not sufficient.m. at any time during said negotiations. . this character being made more manifest by the fact that the deceased driver paid fifty percent (50%) of the corresponding premiums. indemnify the Insured in the event of accident caused by or arising out of the use of Motor Vehicle against all sums which the Insured will become legally liable to pay in respect of: Death or bodily injury to any fare-paying passenger including the Driver. it is clear that the Coquias — who. in general. the Insured and Carlito's parents filed a complaint against the Company to collect the proceeds of the policy. In terms of and subject to the limitations of and for the purposes of this Section. Inc.. "8. the Company will.m. this appeal by the Company. Under these conditions.000. Surigao del Sur was gutted by fire. Although.m. even suggested the settlement of the issue between them by arbitration. (b) the Sworn Statement of Jose Lomocso. damage or liability during the period starting from June 20.000. one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties and in case of disagreement between the arbitrators. but pleaded lack of cause of action on the part of the plaintiffs.The record shows that none of the parties to the contract invoked this section. "Section II.00. 1. are the sole heirs of the deceased — have a direct cause of action against the Company. the liabilities of the Insured towards the passengers of the Motor Vehicle and the Public.Due to the loss. as provided in said section. In the event of death of any person entitled to indemnify under this Policy. Disposition The decision appealed from should be as it is hereby affirmed in toto. subject to the Limits of Liability and under the Terms of this Policy." . 2. . in the trial court. .000. Fieldmen's Insurance Co. resulting in the total loss of the respondent’s stocks-in-trade. inter alia: "Section I — Liability to Passengers. fulfill and be subject to the Terms of this Policy insofar as they can apply. . And it is hereby expressly stipulated and declared that it shall be a condition precedent Page to any right of action or suit upon this Policy that the award by such arbitrator. based on the submitted documents.

revolution. The silica sand was placed on . since it has not assumed that risk. a witness may not testify as to what he merely learned from others either because he was told or read or heard the same. riot. insurrection. it is the insurance companies which have the burden to prove that the loss comes within the purview of the exception or limitation set up.The petitioner relies on the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo as well as on the Spot Report of Pfc. directly or indirectly. 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.The insurers maintained that based on witnesses and evidence gathered at the site. act of foreign enemies. or warlike operations (whether war be declared or not). . Juarbal. by a preponderance of evidence. ISSUE WON the insurance companies are liable to pay Radio Mindanao Network under the insurance policies HELD YES .Ilian Silica Mining entered into a contract of carriage with Lea Mer Industries for the shipment of 900 metric tons of silica sand valued at P565. Stated else wise. 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. military or popular uprising.The trial court and the CA found in favor of the respondent. If a proof is made of a loss apparently within a contract of insurance. Consequently. of any of the following consequences. 6 of the policy conditions of Fire Insurance Policy No. Lianga Bay then instituted in the trial court the complaint for recovery of "loss.000. Any loss or damage happening during the existence of abnormal conditions (whether physical or otherwise) which are occasioned by or through or in consequence. The rate of interest on the adjudged principal amount of Two Hundred Thousand Pesos (P200. namely: (d) Mutiny.INSURANCE 113 rebels who wanted to obtain canned goods. military or usurped power.000.00) as litigation expenses. This insurance does not cover any loss or damage occasioned by or through or in consequence. invasion.000. the fire was caused by the members of the Communist Party of the Philippines/New People’s Army. rice and medicines as provisions for their comrades in the forest. or from a cause which limits its liability. . 2006 NATURE Petition for certiorari FACTS . But petitioner failed to do so. revolution. Disposition Petition dismissed. directly or indirectly.00) as exemplary damages. and Ten Thousand Pesos (P10. 1988.The Court will not disturb the factual findings of the appellant and trial courts absent compelling reason. Such testimony is considered hearsay and may not be received as proof of the truth of what he has learned. loss from such a risk constitutes a defense which the insurer may urge.In the evening of July 27. of any of said occurrences shall be deemed to be loss or damage which is not covered by this insurance. Once the insured makes out a prima facie case in its favor. the radio station of Radio Mindanao Network located at the SSS Building in Bacolod City was burned down causing damage in the amount of over one million pesos. military or usurped power. . Five Thousand Pesos (P5. the cargo was to be transported from Palawan to Manila. insurrection. rebellion. military or popular uprising.RTC ruled in favor of the cooperative. Decision of the CA is affirmed. DBP POOL OF ACCREDITED RADIO MINDANAO NETWORK 480 SCRA 314 MARTINEZ. since Country bank here is defending on the ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy it has the burden of proving the facts upon which such excepted risk is based. of any of the following occurrences. Disposition the appealed Decision is MODIFIED. . which means those facts which are derived from his perception. INSURANCE v.00) shall be six percent (6%) per annum computed from the date of filing of the Complaint in the trial court. LEA MER INDUSTRIES v. Page (d) Mutiny. A witness can testify only to those facts which he knows of his personal knowledge. MALAYAN INSURANCE 471 SCRA 698 PANGANIBAN. Fifty Thousand Pesos (P50. 6 (c) and (d). September 30.000.Finding the denial of its claim unacceptable. riot. January 27. hostilities. which provides: This insurance does not cover any loss or damage occasioned by or through or in consequence. Under this mode of review. Hence the refusal to honor their obligations. and that such loss was an excepted risk under paragraph No. namely: (c) War. . damage or liability" against Country Bankers. the duty or burden of evidence shifts to the insurer to controvert said prima facie case. to wit: 6. Consigned to Vulcan Industrial and Mining Corporation.Where a risk is excepted by the terms of a policy which insures against other perils or hazards.Particularly in cases of insurance disputes with regard to excepted risks.00) as actual damages. ISSUE WON the cause of the loss was an excepted risk under the terms of the fire insurance policy HELD . It is sufficient for the insured to prove the fact of damage or loss. civic war.000. Arturo V. The awards in the amounts of Fifty Thousand Pesos (P50. F-1397. 2005 NATURE Petition for Review FACTS . both courts mentioned the fact that there was no credible evidence presented that the CCP/NPA did in fact cause the fire that gutted the radio station in Bacolod. except to the extent that the Insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions. Respondent sought to recover under two insurance policies but the claims were denied on the basis that the case of the loss was an excepted risk under condition no. the jurisdiction of the court is limited to reviewing only errors of law.00) as attorney?s fees are hereby DELETED. . CA affirmed.000. directly or indirectly. rebellion. In its findings.

. It was not enough for the common carrier to show that there was an unforeseen or unexpected occurrence. as well as properly manned and equipped and failure to deliver was due to force majeure. or that the loss or damage was occasioned by any of the following causes: “(1) Flood. Inc. January 24. or other natural disaster or calamity. “(2) Act of the public enemy in war. the vessel sank. “(3) Act or omission of the shipper or owner of the goods. (2) the weather and sea conditions then prevailing were usual and expected for that time of the year and as such. . It should have exercised due diligence to prevent or minimize the loss before. 2002 and (2) the Resolution dated February 27. the fortuitous event must have been the proximate and only cause of the loss.March 11. 2006 NATURE Review on certiorari (1) the Decision dated October 15. . 1984 .February 15.400.RTC decided in favor of PIONEER and that LOADSTAR .October 15.000.LOADSTAR is a corporation engaged in the business of transporting cargo by water and for compensation. against petitioner. The shipment was covered by petitioner’s Bill of Lading dated June 23. by land. without doubt. as required by the nature of their business and for reasons of public policy. Inc.000 bags of cement from Iligan City to Manila. The shipper was Iligan Cement Corporation.October 15.Captain Montera of M/V Weasel ordered the vessel to be forced aground which rendered the entire shipment of cement as good as gone due to exposure to sea water. bears the burden of proving that it exercised extraordinary diligence in its vigilance over the goods it transported. registered owner and operator of the vessel M/V Weasel. lightning. This presumption can be rebutted only by proof that they observed extraordinary diligence.67. (LOADSTAR). the consignee insured the shipment of cement with respondent Pioneer Asia Insurance Corporation (PIONEER) for P1. tropical storm “Asiang” had moved away from the Philippines was presented. the value of the lost shipment of cement. 1986 – PIONEER filed a complaint against LOADSTAR with the RTC Manila alleging that: (1) the M/V Weasel was not seaworthy at the commencement of the voyage. a statutory presumption arises that the common carrier was negligent unless it could prove that it had observed extraordinary diligence. 1980. (MARKET) . storm. was Page an ordinary peril of the voyage for which the M/V Weasel should have been normally able to cope with.500 bags of cement were loaded on board M/V Weasel and stowed in the cargo holds for delivery to the consignee. . ISSUE WON Lea Mer is liable for the loss of the cargo HELD YES . Inc. The trial court explained that in case of loss or destruction of the goods. earthquake. and (3) LOADSTAR was negligent in the selection and supervision of its agents and employees then manning the M/V Weasel.Common carriers are bound to observe extraordinary diligence in their vigilance over the goods and the safety of the passengers they transport. whether international or civil. offering its services indiscriminately to the public. 1985 – PIONEER paid the MARKET P1.000. “(4) The character of the goods or defects in the packing or in the containers. 157481 QUISUMBING. the MARKET executed a Loss and Subrogation Receipt in favor of PIONEER concerning the latter’s subrogation rights against LOADSTAR.Petitioner bore the burden of proving that it had exercised extraordinary diligence to avoid the loss.. Extraordinary diligence requires rendering service with the greatest skill and foresight to avoid damage and destruction to the goods entrusted for carriage and delivery. while the consignee in Manila was Market Developers. “(5) Order or act of competent public authority. . . offering their services to the public. 1984 . it is a common carrier. covering all shipments made on or after September 30. Assuming it is a common carrier. for compensation.INSURANCE 114 board Judy VII.June 25.Common carriers are presumed to have been at fault or to have acted negligently for loss or damage to the goods that they have transported. LOADSTAR refused to reimburse the MARKET despite repeated demands. or that the loss had been occasioned by a fortuitous event -. WON proximate cause of the loss of cargo was not a fortuitous event but was allegedly due to the failure of petitioner to exercise extraordinary diligence HELD 1.June 24.LOADSTAR alleged that no fault nor negligence could be attributed to it because it exercised due diligence to make the ship seaworthy. PIONEER ASIA INSURANCE CORP GR No.To excuse the common carrier fully of any liability. Thus. it did not in any way convert the common carrier into a private carrier. . as a common carrier. In return. . Even if it entered into a voyage-charter agreement with Northern Mindanao Transport Company. resulting in the loss of the cargo. 2003 of CA FACTS .400. YES . 1984. WON LOADSTAR is a common carrier under Article 1732 CC 2.Prior to the voyage. . MOP-006 dated September 17.an exempting circumstance. . 1984 . entered into a voyagecharter with Northern Mindanao Transport Company. MARKET demanded from LOADSTAR full reimbursement of the cost of the lost shipment. LOADSTAR’S defense of force majeure was found bereft of factual basis as a PAG-ASA report that at the time of the incident. for the carriage of 65.The evidence presented by petitioner in support of its defense of fortuitous event was sorely insufficient. water.June 6. Inc. LOASTAR thus failed to deliver the goods to MARKET in Manila. 1980 .” . 2002 – CA affirmed RTC Decision with modification ISSUES 1.A1732 CC defines a “common carrier” as follows: Common carriers are persons. 1993 . corporations. for which it issued Marine Open Policy No. firms or associations engaged in the business of carrying or transporting passengers or goods or both. during and after the occurrence of the event.000 plus an additional amount of P500. a barge leased by Lea Mer. . Costs LOADSTAR SHIPPING CO INC v. Disposition Petition is DENIED and the assailed Decision and Resolution are AFFIRMED. or air.Petitioner Loadstar Shipping Co.

When the goods placed in its care are lost. It is supported by evidence that the loss of the entire shipment of cement was due to the gross negligence of LOADSTAR . and (5) Order or act of competent public authority . LOADSTAR is presumed to have been at fault or to have acted negligently. as in the case of a time-charter or voyagecharter. (3) Act or omission of the shipper or owner of the goods. CA .As a common carrier. YES .A1734 CC enumerates the instances when a carrier might be exempt from liability for the loss of the goods. It is only when the charter includes both the vessel and its crew. LOADSTAR has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo. (2) Act of the public enemy in war. (4) The character of the goods or defects in the packing or in the containers.INSURANCE 115 > Planters Products. and to exercise due care in the handling and stowage. 2. Inc. v. lightning. provided the charter is limited to the ship only. or other natural disaster or calamity. LOADSTAR has only itself to blame for its misjudgment.It requires common carriers to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristics of goods tendered for shipment. including such methods as their nature requires. Yet. which exposed the voyage to unexpected hazard.Compania Maritima V CA . earthquake. its claim is not substantiated. the sea and weather conditions in the vicinity of Negros Occidental were calm. whether international or civil. . storm. (1) Flood. instead of the usual route.public carrier shall remain as such. The records reveal that LOADSTAR took a shortcut route. LOADSTAR is required to observe extraordinary diligence in the vigilance over the goods it transports. at least insofar as the particular voyage covering the charter-party is concerned. . Disposition petition is DENIED Page . 1984. notwithstanding the charter of the whole or portion of a vessel by one or more persons. as in a bareboat or demise that a common carrier becomes private.Records show that in the evening of June 24.LOADSTAR claims that the loss of the goods was due to a fortuitous event under paragraph 1.

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