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June 19, 1997] MAYER STEEL PIPE CORPORATION and HONGKONG GOVERNMENT SUPPLIES DEPARTMENT, Petitioners, v. COURT OF APPEALS, SOUTH SEA SURETY AND INSURANCE CO., INC. and the CHARTER INSURANCE CORPORATION, Respondents. DECISION PUNO, J.: This is a petition for review on certiorari to annul and set aside the Decision of respondent Court of Appeals dated December 14, 19951 and its Resolution dated February 22, 19962 in CA-G.R. CV No. 45805 entitled Mayer Steel Pipe Corporation and Hongkong Government Supplies Department v. South Sea Surety Insurance Co., Inc. and The Charter Insurance Corporation.3chanroblesvirtuallawlibrary In 1983, petitioner Hongkong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel Pipe Corporation (Mayer) to manufacture and supply various steel pipes and fittings. From August to October, 1983, Mayer shipped the pipes and fittings to Hongkong as evidenced by Invoice Nos. MSPC-1014, MSPC-1015, MSPC-1025, MSPC-1020, MSPC-1017 and MSPC1022.4chanroblesvirtuallawlibrary Prior to the shipping, petitioner Mayer insured the pipes and fittings against all risks with private respondents South Sea Surety and Insurance Co., Inc. (South Sea) and Charter Insurance Corp. (Charter). The pipes and fittings covered by Invoice Nos. MSPC-1014, 1015 and 1025 with a total amount of US$212,772.09 were insured with respondent South Sea, while those covered by Invoice Nos. 1020, 1017 and 1022 with a total amount of US$149,470.00 were insured with respondent Charter. Petitioners Mayer and Hongkong jointly appointed Industrial Inspection (International) Inc. as thirdparty inspector to examine whether the pipes and fittings are manufactured in accordance with the specifications in the contract. Industrial Inspection certified all the pipes and fittings to be in good order condition before they were loaded in the vessel. Nonetheless, when the goods reached Hongkong, it was discovered that a substantial portion thereof was damaged. Petitioners filed a claim against private respondents for indemnity under the insurance contract. Respondent Charter paid petitioner Hongkong the amount of HK$64,904.75. Petitioners demanded payment of the balance of HK$299,345.30 representing the cost of repair of the damaged pipes. Private respondents refused to pay because the insurance surveyor's report allegedly showed that the damage is a factory defect. On April 17, 1986, petitioners filed an action against private respondents to recover the sum of HK$299,345.30. For their defense, private respondents averred that they have no obligation to pay the amount claimed by petitioners because the damage to the goods is due to factory defects which are not covered by the insurance policies. The trial court ruled in favor of petitioners. It found that the damage to the goods is not due to
manufacturing defects. It also noted that the insurance contracts executed by petitioner Mayer and private respondents are "all risks" policies which insure against all causes of conceivable loss or damage. The only exceptions are those excluded in the policy, or those sustained due to fraud or intentional misconduct on the part of the insured. The dispositive portion of the decision states: WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally, to pay the plaintiffs the following: 1. the sum equivalent in Philippine currency of HK$299,345.30 with legal rate of interest as of the filing of the complaint; 2. P100,000.00 as and for attorney's fees; and 3. costs of suit. SO ORDERED.5chanroblesvirtuallawlibrary Private respondents elevated the case to respondent Court of Appeals. Respondent court affirmed the finding of the trial court that the damage is not due to factory defect and that it was covered by the "all risks" insurance policies issued by private respondents to petitioner Mayer. However, it set aside the decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action is barred under Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17, 1986, more than two years from the time the goods were unloaded from the vessel. Section 3(6) of the Carriage of Goods by Sea Act provides that "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 delivery of the goods or the date when the goods should have been delivered." Respondent court ruled that this provision applies not only to the carrier but also to the insurer, citing Filipino Merchants Insurance Co., Inc. vs. Alejandro.6chanroblesvirtuallawlibrary Hence this petition with the following assignments of error: 1. The respondent Court of Appeals erred in holding that petitioners' cause of action had already prescribed on the mistaken application of the Carriage of Goods by Sea Act and the doctrine of Filipino Merchants Co., Inc. v. Alejandro (145 SCRA 42); and 2. The respondent Court of Appeals committed an error in dismissing the complaint.7chanroblesvirtuallawlibrary The petition is impressed with merit. Respondent court erred in applying Section 3(6) of the Carriage of Goods by Sea Act. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. Under this provision, only the carrier's liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurer's liability is based not on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and/or the insurer on
the other hand. It defines the obligations of the carrier under the contract of carriage. It does not, however, affect the relationship between the shipper and the insurer. The latter case is governed by the Insurance Code. Our ruling in Filipino Merchants Insurance Co., Inc. v. Alejandro8 and the other cases9 cited therein does not support respondent court's view that the insurer's liability prescribes after one year if no action for indemnity is filed against the carrier or the insurer. In that case, the shipper filed a complaint against the insurer for recovery of a sum of money as indemnity for the loss and damage sustained by the insured goods. The insurer, in turn, filed a third-party complaint against the carrier for reimbursement of the amount it paid to the shipper. The insurer filed the third-party complaint on January 9, 1978, more than one year after delivery of the goods on December 17, 1977. The court held that the Insurer was already barred from filing a claim against the carrier because under the Carriage of Goods by Sea Act, the suit against the carrier must be filed within one year after delivery of the goods or the date when the goods should have been delivered. The court said that "the coverage of the Act includes the insurer of the goods."10chanroblesvirtuallawlibrary The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the insurer which filed a claim against the carrier for reimbursement of the amount it paid to the shipper. In the case at bar, it was the shipper which filed a claim against the insurer. The basis of the shipper's claim is the "all risks" insurance policies issued by private respondents to petitioner Mayer. The ruling in Filipino Merchants should apply only to suits against the carrier filed either by the shipper, the consignee or the insurer. When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by Sea Act applies to the insurer, it meant that the insurer, like the shipper, may no longer file a claim against the carrier beyond the one-year period provided in the law. But it does not mean that the shipper may no longer file a claim against the insurer because the basis of the insurer's liability is the insurance contract. An insurance contract is a contract whereby one party, for a consideration known as the premium, agrees to indemnify another for loss or damage which he may suffer from a specified peril.11 An "all risks" insurance policy covers all kinds of loss other than those due to willful and fraudulent act of the insured.12 Thus, when private respondents issued the "all risks" policies to petitioner Mayer, they bound themselves to indemnify the latter in case of loss or damage to the goods insured. Such obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.13chanroblesvirtuallawlibrary IN VIEW WHEREOF, the petition is GRANTED. The Decision of respondent Court of Appeals dated December 14, 1995 and its Resolution dated February 22, 1996 are hereby SET ASIDE and the Decision of the Regional Trial Court is hereby REINSTATED. No costs. SO ORDERED. Regalado, (Chairman), Romero, Mendoza, and Torres, Jr., JJ., concur.
PHILIPPINE HEALTH CARE
PROVIDERS, INC., Petitioner, Present: -versuscralaw
COMMISSIONER OF INTERNAL REVENUE, Respondent. cralawPromulgated: affirmatively June 12, 2008
DECISION CORONA, J.:
a health care agreement in the nature of an insurance contract and
therefore subject to the documentary stamp tax (DST) imposed under Section 185 of Republic Act 8424 (Tax Code of 1997)? This is an issue of first impression. The Court of Appeals (CA) answered it in its August 16, 2004 decision in CA-G.R. SP No. 70479. Petitioner Philippine Health Care Providers, Inc. believes otherwise and assails the CA decision in this petition for review under Rule 45 of the Rules of Court.
Petitioner is a domestic corporation whose primary purpose is [t]o establish, maintain, conduct and operate a prepaid group practice health care delivery system or a health
maintenance organization to take care of the sick and disabled persons enrolled in the health care plan and to provide for the administrative, legal, and financial responsibilities of the organization. Individuals enrolled in its health care programs pay an annual membership fee and are entitled to various preventive, diagnostic and curative medical services provided by its duly licensed physicians, specialists and other professional technical staff participating in the group practice health delivery system at a hospital or clinic owned, operated or accredited by it.
The pertinent part of petitioners membership or health care agreement provides:
VII BENEFITS Subject to paragraphs VIII [on pre-existing medical condition] and X [on claims for reimbursement] of this Agreement, Members shall have the following Benefits under this Agreement:
In-Patient Services. In the event that a Member contract[s] sickness or suffers injury which requires confinement in a participating Hospital[,] the services or benefits stated below shall be provided to the Member free of charge, but in no case shall [petitioner] be liable to pay more than P75,000.00 in benefits with respect to anyone sickness, injury or related causes. If a member has exhausted such maximum benefits with respect to a particular sickness, injury or related causes, all accounts in excess of P75,000.00 shall be borne by the enrollee. It is[,] however, understood that the payment by [petitioner] of the said maximum in In-Patient Benefits to any one member shall preclude a subsequent payment of benefits to such member in respect of an unrelated sickness, injury or related causes happening during the remainder of his membership term.
(a) Room and Board (b) Services of physician and/or surgeon or specialist
[petitioner] shall not be responsible for any charges incurred after discharge has been authorized.e. plaster casts and other miscellaneous supplies (h) Laboratory tests.. Participating Physician or [petitioners] Medical Coordinator in that Hospital prior to confinement. (a) Gold Plan Standard Annual Physical Examination on the anniversary date of membership. to wit: cralaw(i)cralawTaking a medical history cralaw(ii)cralawPhysical examination cralaw(iii)cralawChest x-ray cralaw(iv)cralawStool examination (v)cralawComplete Blood Count (vi)cralawUrinalysis cralaw(vii)cralawFasting Blood Sugar (FBS) cralaw(viii)cralawSGPT cralaw(ix)cralawCreatinine cralaw(x)cralawUric Acid cralaw(xi)cralawResting Electrocardiogram cralaw(xii)cralawPap Smear (Optional for women 40 years and above) (b) Platinum Family Plan/Gold Family Plan and Silver Annual Physical Examination. trombolytic agents) (f) Anesthesia and its administration (g) Dressings. Out-Patient Services. (b) The confinement shall be in a Participating Hospital and the accommodation shall be in accordance with the Members benefit classification. (d) If discharge from the Hospital has been authorized by [petitioners] attending Physician or Participating Physician and the Member shall fail or refuse to do so. cralawThe following tests are to be done as part of the Members Annual checkcralaw cralaw . The provision of the services or benefits mentioned in the immediately preceding paragraph shall be subject to the following conditions: (a) The Hospital Confinement must be approved by [petitioners] Physician. Participating Physician or [petitioners] Medical Coordinator. A Member is entitled free of charge to the following services or benefits which shall be rendered or administered either in [petitioners] Clinic or in a Participating Hospital under the direction or supervision of [petitioners] Physician. (c) Professional services shall be provided only by the [petitioners] Physicians or Participating Physicians. to be done at [petitioners] designated hospital/clinic.(c) Use of operating room and recovery room (d) Standard Nursing Services (e) Drugs and Medication for use in the hospital except those which are used to dissolve blood clots in the vascular systems (i. x-rays and other necessary diagnostic services (i) Transfusion of blood and other blood elements Condition for in-Patient Care.
00.000. casts and sutures and (f) x-rays. a Member is entitled to receive emergency care [in case of emergency. the member shall be entitled to the following services free of charge: (a) doctors fees.up program at [petitioners] designated clinic. (b) emergency room fees. all hospitals and all attending physician(s) in the Emergency Room automatically become accredited.000. and 50% of the professional fees of non-participating physicians based on [petitioners] schedule of fees provided that the total amount[.] whichever is lesser. For this purpose. laboratory and diagnostic examinations and other medical services related to the emergency treatment of the patient. including specialist evaluation (ii)cralawTreatment of injury or illness (iii)cralawNecessary x-ray and laboratory examination (iv)cralawEmergency medicines needed for the immediate relief of symptoms (v)cralawMinor surgery not requiring confinement cralaw Emergency Care. In participating hospitals. . exceed P75.000. intravenous fluids and whole blood and human blood products.] inclusive of hospital bills and professional fee shall not exceed P5. If the Member received care in a non-participating hospital. however. to wit: 1)cralawRoutine Physical Examination cralaw2)cralawCBC (Complete Blood Count) cralaw * Hemoglobin * Hematocrit * Differential * RBC/WBC 3)cralawChest X-ray cralaw4)cralawUrinalysis cralaw5)cralawFecalysis (c) Preventive Health Care. inclusive of hospital bill and professional fees.00. exercise and other healthy habits (iv)cralawImmunization but excluding drugs for vaccines used (d) Out-Patient Care.00[. that in no case shall the total amount payable by [petitioner] for said Emergency. [petitioner] shall reimburse [him] 80% of the hospital bill or the amount of P5. which shall include: (i)cralawConsultation. which shall include: (i)cralawPeriodic Monitoring of Health Problems (ii)cralawFamily planning counseling (iii) Consultation and advices on diet. (d) oxygen. (e) dressings. Subject to the conditions and limitations in this Agreement and those specified below.] Provided. (c) medicines used for immediate relief and during treatment.
641.23 1997 54. damage. On all policies of insurance or bonds or obligations of the nature of indemnity for loss. and all bonds. municipality. 2000.92 The deficiency DST assessment was imposed on petitioners health care agreement with the members of its health care program pursuant to Section 185 of the 1997 Tax Code which provides: Section 185.702. The assessment represented the following: Value Added Tax (VAT) 1996 P 45. or other public body or .258. steam boiler.18.450.596.19 68. or liability made or renewed by any person.434.73__ P 124. or recognizances.738.610.26 DST P 55. inland. glass.03__ P 100. association or company or corporation transacting the business of accident. conditioned for the performance of the duties of any office or position.352.767.196. Stamp tax on fidelity bonds and other insurance policies . for the doing or not doing of anything therein specified. for the taxable years 1996 and 1997 in the total amount of P224. city. and fire insurance). employers liability. including surcharges and interest. marine. fidelity. burglar.506. automatic sprinkler. respondent Commissioner of Internal Revenue sent petitioner a formal demand letter and the corresponding assessment notices demanding the payment of deficiency taxes. or other branch of insurance (except life.On January 27. elevator.030.746. and on all obligations guaranteeing the validity or legality of any bond or other obligations issued by any province. undertakings. plate.
which may be made or renewed by any such person.00).75 inclusive of 25% surcharge plus 20% interest from January 20. Respondent is ORDERED to DESIST from collecting the said DST deficiency tax. and on all obligations guaranteeing the title to any real estate. Accordingly. 2000.831. or guaranteeing any mercantile credits. It held that petitioners health care agreement was in the nature of a non-life insurance contract subject to DST: .50) on each four pesos (P4.87 inclusive of 25% surcharge plus 20% interest from January 20. there shall be collected a documentary stamp tax of fifty centavos (P0. of the premium charged. 1998 until fully paid for the 1997 VAT deficiency.organization. The 1996 and 1997 deficiency DST assessment against petitioner is hereby CANCELLED AND SET ASIDE. As respondent did not act on the protest. in view of the foregoing. VAT Ruling No. April 5. petitioner filed a petition for review in the Court of Tax Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments. 2004. Petitioner is hereby ORDERED to PAY the deficiency VAT amounting to P22. the CTA rendered a decision. -88 is declared void and without force and effect. company or corporation. or fractional part thereof.094. 1997 until fully paid for the 1996 VAT deficiency and P31. cralawRespondent appealed the CTA decision to the CA insofar as it cancelled the DST assessment. the instant Petition for Review is PARTIALLY GRANTED.054. the CA rendered its decision. (emphasis supplied) Petitioner protested the assessment in a letter dated February 23. 2002. On August 16. the dispositive portion of which read: cralawOn WHEREFORE. He claimed that petitioners health care agreement was a contract of insurance subject to DST under Section 185 of the 1997 Tax Code. cralaw cralaw SO ORDERED.163.
a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss. that are not based on loss or damage. bond or obligation in the nature of indemnity for loss.450. this petition. inland and fire insurance). Petitioner moved for reconsideration but the CA denied it. or facility offered at exchanges for the transaction of the business. the petition for review is GRANTED. including medical check-up. respectively. insofar as it cancelled and set aside the 1996 and 1997 deficiency documentary stamp tax assessment and ordered petitioner to desist from collecting the same is REVERSED and SET ASIDE.352. The Decision of the Court of Tax Appeals. not an insurance company under the jurisdiction of the Insurance Commission. or liability. 2000. the DST under Section 185 of the 1997 Tax Code is imposed on the privilege of making or renewing any policy of insurance (except life. damage or liability arising from an unknown or contingent event. Hence. The DST is levied on the exercise by persons of certain privileges conferred by law for the creation. Petitioner also insists that it is not engaged in the insurance business. In particular.19 and P68. plus 25% surcharge for late payment and 20% interest per annum from January 27.258. . pursuant to Sections 248 and 249 of the Tax Code. It is a health maintenance organization regulated by the Department of Health. opportunity. cralaw cralaw SO ORDERED. petitioner asserts that the health care agreement is not subject to DST. The event insured against must be designated in the contract and must either be unknown or contingent. Under the law. For these reasons. revision.73 as deficiency Documentary Stamp Tax for 1996 and 1997. until the same shall have been fully paid. Respondent is ordered to pay the amounts of P55. marine. damage. We do not agree. or termination of specific legal relationships through the execution of specific instruments.WHEREFORE. Petitioner essentially argues that its health care agreement is not a contract of insurance but a contract for the provision on a prepaid basis of medical services.746. It is an excise upon the privilege.
medical and professional services to the member in case of sickness. And in the recent case of Blue Cross Healthcare. The expenses to be incurred by each member cannot be predicted beforehand. vaccine administration and family planning counseling) is the contingent event which gives rise to liability on the part of the member. x-ray and laboratory tests. this Court ruled that a health care agreement is in the nature of a non-life insurance policy. Inc. Petitioner does not actually provide medical or hospital services but merely arranges for the same and pays for them up to the stipulated maximum amount of coverage. its health care agreement is not a contract for the provision of medical services. if they can be predicted at all. Petitioner assumes the risk of paying for the costs of the services even if they are significantly and substantially more than what the member has the member to liability. the rendition of hospital. v. he would be . Olivares. Furthermore. It is also incorrect to say that the health care agreement is not based on loss or damage because.Petitioners health care agreement is primarily a contract of indemnity. medical consultations. the fact that petitioner must relieve its member from liability by paying for expenses arising from the stipulated contingencies belies its claim that its services are prepaid. medical and related expenses (such as professional fees of physicians). The term loss or damage is broad enough to cover the monetary expense or liability a member will incur in case of illness or injury. under the said agreement. In case of exposure o f entitled to indemnification by petitioner. Contrary to petitioners claim. injury or emergency or his availment of so-called out-patient services (including physical examination. Under the health care agreement. petitioner assumes the liability and indemnifies its member for hospital.
v. among all the other members of the health care program.prepaid.: [T]he insurable interest of [the subscriber] in obtaining the health care agreement was his own health. Inc. This is insurance. medical or any other expense arising from sickness. injury or other stipulated contingency. Petitioners health care agreement is substantially similar to that involved in Philamcare Health Systems. injury or other stipulated contingency to the extent agreed upon under the contract. preventive health care and other out-patient services. or facility offered at exchanges for the transaction of the business. Contracts between companies like petitioner and the beneficiaries under their plans are treated as insurance contracts. DST is not a tax on the business transacted but an excise on the privilege. The health care agreement was in the nature of non-life insurance. This Court ruled in Philamcare Health Systems. Petitioners contention that it is a health maintenance organization and not an insurance company is irrelevant. the health care provider must pay for the same to the extent agreed upon under the contract. Once the member incurs hospital. opportunity. Moreover. medical or any other expense arising from sickness. Under the agreement. the insurable interest of every member of petitioners health care program in obtaining the health care agreement is his own health. whether ordinary or emergency. The health care agreement in that case entitled the subscriber to avail of the hospitalization benefits. that is. It also provided for out-patient benefits such as annual physical examinations. Inc. which is primarily a contract of indemnity. listed therein. petitioner is bound to indemnify any member who incurs hospital. (emphasis supplied) Similarly. Petitioner does not bear the costs alone but distributes or spreads them out among a large group of persons bearing a similar risk. CA.  It is .
2000 until full payment thereof. the petition is hereby DENIED.19 and P68.258. c cralaw cralawCARPIO cralaw MORALES.cralaw cralawRespondent. THE PHILIPPINE AMERICANcralawPromulgated: LIFE INSURANCE COMPANY.450. SO ORDERED. 2008 . SP No.73 as deficiency documentary stamp tax for 1996 and 1997.746.R. No.an excise on the facilities used in the transaction of the business. plus 25% surcharge for late payment and 20% interest per annum from January 27.352. SECOND DIVISION ETERNAL GARDENS MEMORIALcralawG.cralawApril 9. 166245 PARK CORPORATION. Petitioner is ordered to pay the amounts of P55.R. 2004 decision of the Court of Appeals in CA-G. Costs against petitioner. WHEREFORE. separate and apart from the business itself. 70479 is AFFIRMED. respectively. The August 16.
The amount of insurance coverage depended upon the existing balance of the purchased burial lots. The policy was to be effective for a period of one year.. . 2004 Decision of the Court of Appeals (CA) in CA-G. renewable on a yearly basis. and is accepted for Life Insurance coverage by the Company on its effective date is eligible for insurance under the Policy. CV No. 1980.x-----------------------------------------------------------------------------------------x DECISION cralaw VELASCO.: The Case cralawCentral to this Petition for Review on Certiorari under Rule 45 which seeks to reverse and set aside the November 26. Under the policy. the clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. crlaw EVIDENCE OF INSURABILITY. is indebted to the Assured for the unpaid balance of his loan with the Assured. J. cralawThe relevant provisions of the policy are: ELIGIBILITY. P-1920 with petitioner Eternal Gardens Memorial Park Corporation (Eternal). JR. respondent Philippine American Life Insurance Company (Philamlife) entered into an agreement denominated as Creditor Group Life Policy No. 57810 is the query: May the inaction of the insurer on the insurance application be considered as approval of the application? The Facts cralawOn December 10. Any Lot Purchaser of the Assured who is at least 18 but not more than 65 years of age.R.
cralaw EFFECTIVE DATE OF BENEFIT.00. . (4) Certificate of Attending Physician. Eternal complied by submitting a letter dated December 29. The Company reserves the right to require further evidence of insurability satisfactory to the Company in respect of the following: cralaw cralaw 1.000.000. In relation to the instant petition. Philamlife wrote Eternal a letter on November 12. which served as an insurance claim for Chuangs death. and the amounts of the respective unpaid balances of all insured lot purchasers. 2. His balance of payments was PhP 100. 1984. (3) Application for Insurance accomplished and signed by the insured. The Life Insurance coverage of any Lot Purchaser at any time shall be the amount of the unpaid balance of his loan (including arrears up to but not exceeding 2 months) as reported by the Assured to the Company or the sum of P100. (2) Identification Certificate stating that Chuang is a naturalized Filipino Citizen. On August 2. Chuang. together with a copy of the application of each purchaser. Such benefit shall be paid to the Assured if the Lot Purchaser dies while insured under the Policy.00. LIFE INSURANCE BENEFIT. 1984 to Philamlife. One of those included in the list as new business was a certain John Chuang. (3) Certificate of Claimant. containing a list of insurable balances of its lot buyers for October 1982. However. (2) Assureds Certificate (with form attached). Any lot purchaser who is more than 55 years of age. In reply. whichever is smaller. and (4) Statement of Account showing the unpaid balance of Chuang before his death.00. Chuang died. Attached to the claim were the following documents: (1) Chuangs Certificate of Death.000. cralaw cralawEternal was required under the policy to submit to Philamlife a list of all new lot purchasers. a declaration of good health shall be required for all Lot Purchasers as part of the application. 1982. The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with the Assured. Any amount of insurance in excess of P50.No medical examination shall be required for amounts of insurance up to P50.  requiring Eternal to submit the following documents relative to its insurance claim for Chuangs death: (1) Certificate of Claimant (with form attached). while still living. 1984. cralawEternal sent a letter dated August 20. and (5) Assureds Certificate. there shall be no insurance if the application of the Lot Purchaser is not approved by the Company.000. However.
Eternal transmitted the required documents through a letter dated November 14. 1986. Mr. cralawConsequently. P-1920.000 on April 25.000. Philamlife had not furnished Eternal with any reply to the latters insurance claim. under Evidence of Insurability provision. for our approval but was submitted instead on November 15. We cite further the provision on Effective Date of Coverage under the policy which states that there shall be no insurance if the application is not approved by the Company. Philamlife denied Eternals insurance claim in a letter dated May 20. 1984. these do not connote our approval per se of the insurance coverage but are held by us in trust for the payor until the prerequisites for insurance coverage shall have been met. 14736. Eternal filed a case before the Makati City Regional Trial Court (RTC) for a sum of money against Philamlife. 1986. After more than a year. prior to his death. which was received by Philamlife on November 15. Since no application had been submitted by the Insured/Assured. This prompted Eternal to demand from Philamlife the payment of the claim for PhP 100.00 each. the dispositive portion of which reads: . We will however. docketed as Civil Case No. With regard to our acceptance of premiums. a portion of which reads: The deceased was 59 years old when he entered into Contract #9558 and 9529 with Eternal Gardens Memorial Park in October 1982 for the total maximum insurable amount of P100. after his death. In accordance with our Creditors Group Life Policy No. John Uy Chuang was not covered under the Policy. a declaration of good health shall be required for all Lot Purchasers as party of the application. 1984. 1984. The trial court decided in favor of Eternal. We wish to point out that Eternal Gardens being the Assured was a party to the Contract and was therefore aware of these pertinent provisions. 1984. In response to Eternals demand. No application for Group Insurance was submitted in our office prior to his death on August 2. return all the premiums which have been paid in behalf of John Uy Chuang.
we have this petition with the following grounds: The Honorable Court of Appeals has decided a question of substance.  It further ruled that due to Philamlifes inaction from the submission of the requirements of the group insurance on December 29. It further ruled that the non-accomplishment of the submitted application form violated Section 26 of the Insurance Code. the decision of the Regional Trial Court of Makati in Civil Case No. the CA concluded. representing the proceeds of the Policy of John Uy Chuang.000. Philamlife was deemed to have approved Chuangs application. not . 1982.000. 1984. cralawHence. and the complaint is DISMISSED. and. stating. SO ORDERED. premises considered. against Defendant PHILAMLIFE. ordering the Defendant PHILAMLIFE. to pay the sum of P10. thus: WHEREFORE. cralawThe CA based its Decision on the factual finding that Chuangs application was not enclosed in Eternals letter dated December 29. until fully paid.WHEREFORE. 57810 is REVERSED and SET ASIDE.00. there being no application form. The RTC said that since the contract is a group life insurance. 1982. once proof of death is submitted. cralaw cralaw SO ORDERED. among others: Encl: Phil-Am Life Insurance Application Forms & Cert.00 as attorneys fees. Thus. The RTC found that Eternal submitted Chuangs application for insurance which he accomplished before his death. plus legal rate of interest. Philamlife appealed to the CA. Chuang was not covered by Philamlifes insurance. payment must follow. which ruled. as well as Philamlifes acceptance of the premiums during the same period. as testified to by Eternals witness and evidenced by the letter dated December 29. judgment is hereby rendered in favor of Plaintiff ETERNAL. No costs. to pay the sum of P100. 1982 to Chuangs death on August 2.
In Eternals letter dated December 29. a list of insurable interests of buyers for October 1982 was attached. in holding that: I. and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties. There was no valid insurance coverage. (8) when the findings are conclusions without citation of specific evidence on which they are based. The application for insurance was not duly submitted to respondent PhilamLife before the death of John Chuang. II. (7) when the findings [of the CA] are contrary to the trial court. 1982. (3) when there is grave abuse of discretion. 1996. as enunciated in Sampayan v. this Court is not a trier of facts and will not re-examine factual issues raised before the CA and first level courts. (6) when in making its findings the [CA] went beyond the issues of the case. The Courts Ruling As a general rule.) cralawIn the instant case. the factual findings of the RTC were reversed by the CA. (Emphasis supplied. (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. Eternal added it was noted at the bottom of said letter that the . absurd or impossible. and III. Court of Appeals: (1) when the findings are grounded entirely on speculation. this Court may review them. However. considering their findings of facts are conclusive and binding on this Court. which. Reversing and setting aside the Decision of the Regional Trial Court dated May 29. or has decided it in a way not in accord with law or with the applicable jurisprudence. including Chuang in the list of new businesses. would justify a different conclusion. or its findings are contrary to the admissions of both the appellant and the appellee. cralawEternal claims that the evidence that it presented before the trial court supports its contention that it submitted a copy of the insurance application of Chuang before his death. (4) when the judgment is based on a misapprehension of facts. if properly considered. (2) when the inference made is manifestly mistaken. (9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent. such rule is subject to exceptions. thus. surmises or conjectures.therefore determined by this Honorable Court. (5) when the findings of facts are conflicting.
Philamlife failed to do so. 1982. Eternal alleged that it provided a copy of the insurance application which was signed by Chuang himself and executed before his death. Philamlife is deemed to have received Chuangs insurance application. The burden of evidence has shifted to Philamlife. the letter dated December 29. cralawThe evidence on record supports Eternals position. if considered. However. and attitude. because it has the opportunity to observe firsthand the witnesses demeanor. were enclosed in the letter that was apparently received by Philamlife on January 15. cralawAn examination of the testimonies of the witnesses mentioned by Philamlife. fact of the matter is. Findings of the trial court on such matters are binding and conclusive on the appellate court. might affect the result of the case. 1983. the contents of the letter are correct and accounted for. thus. cralawTo reiterate. as shown by the testimony of Edilberto Mendoza: cralaw cralaw Atty. The trial court is in the best position to determine the reliability and credibility of the witnesses. however. that. cralawThe states that the insurance forms for the attached list of burial lot buyers were attached to the letter. arguing that Eternal must present evidence showing that Philamlife received a copy of Chuangs insurance application. cralawPhilamlife primarily claims that Eternal did not even know where the original insurance application of Chuang was. misapprehended. which Philamlife stamped as received. Such receipt is an admission by Philamlife against its own interest. it was Philamlifes bounden duty to make sure that before a transmittal letter is stamped as received. cralawPhilamlifes allegation that Eternals witnesses ran out of credibility and reliability due to inconsistencies is groundless. reveals no overlooked facts of substance and value. or misinterpreted. cralawOn the other hand.corresponding Phil-Am Life Insurance Application Forms & Cert. Finally. which must prove that the letter did not contain Chuangs insurance application. Such stamp of receipt has the effect of acknowledging receipt of the letter together with the attachments. Arevalo: Q cralawWhere is the original of the application form which is required in case of new coverage? cralaw . conduct. Philamlife claims that the evidence presented by Eternal is insufficient. unless some facts or circumstances of weight and substance have been overlooked.
cralaw Atty. . the number of copies of the insurance application that Chuang executed is not at issue. As to the seeming inconsistencies between the testimony of Manuel Cortez on whether one or two insurance application forms were accomplished and the testimony of Mendoza on who actually filled out the application form. neither is whether the insurance application presented by Eternal has been falsified. cralaw Atty. People: Minor discrepancies or inconsistencies do not impair the essential integrity of the prosecutions evidence as a whole or reflect on the witnesses honesty. Thus.[Mendoza:] AcralawIt is [a] standard operating procedure for the new client to fill up two copies of this form and the original of this is submitted to Philamlife together with the monthly remittances and the second copy is remained or retained with the marketing department of Eternal Gardens. Arevalo: cralaw QcralawWhere is the original? [Mendoza:] AcralawAs far as I remember I do not know where the original but when I submitted with that payment together with the new clients all the originals I see to it before I sign the transmittal letter the originals are attached therein. In other words. cralaw cralawIn the present case. Miranda: We move to strike out the answer as it is not responsive as counsel is merely asking for the location and does not [ask] for the number of copy. these are minor inconsistencies that do not affect the credibility of the witnesses. we ruled in People v. and these may even serve to strengthen their credibility as these negate any suspicion that the testimonies have been rehearsed. the witness admitted not knowing where the original insurance application was. Thus. The test is whether the testimonies agree on essential facts and whether the respective versions corroborate and substantially coincide with each other so as to make a consistent and coherent whole. cralaw but believed that the application was transmitted to Philamlife as an attachment to a transmittal letter. Paredes that minor inconsistencies are too trivial to affect the credibility of witnesses. the inconsistencies pointed out by Philamlife are minor and do not affect the credibility of Eternals witnesses. cralawWe reiterated the above ruling in Merencillo v.
this Court held that: Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured. In the policy. any ambiguity therein should be resolved against the insurer. being a contract of adhesion. However.) In the more recent case of Philamcare Health Systems. Thus. in other words. Inc. especially to avoid forfeiture. Philamlife and Eternal entered into an agreement denominated as Creditor Group Life Policy No. Court of Appeals. This question must be answered in the affirmative. An examination of the above provision would show ambiguity between its two sentences. the question arises as to whether Philamlife assumed the risk of loss without approving the application. it should be construed liberally in favor of the insured and strictly against the insurer. As earlier stated. the terms of an insurance contract are to be construed strictly against the party which prepared the contract. we reiterated the above ruling. there shall be no insurance if the application of the Lot Purchaser is not approved by the Company. the insurer. The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with the Assured. in Malayan Insurance Corporation v. 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. courts should construe them in such a way as to preclude the insurer from non-compliance with his obligation. where the contract or policy is prepared by the insurer. it is provided that: EFFECTIVE DATE OF BENEFIT. v. P-1920 dated December 10. stating that: When the terms of insurance contract contain limitations on liability. A contract of insurance. It must be remembered that an insurance contract is a contract of adhesion which must be construed liberally in favor of the insured and strictly against the insurer in order to safeguard the latters interest. par excellence. The first sentence appears to state that the insurance coverage of the clients of Eternal already became effective upon contracting a loan with Eternal while the second sentence appears to require Philamlife to approve the insurance contract before the same can become effective. Court of Appeals.However. (Emphasis supplied. Being a contract of adhesion. . By reason of the exclusive control of the insurance company over the terms and phraseology of the insurance contract. 1980. ambiguity must be strictly interpreted against the insurer and liberally in favor of the insured.
1996 Decision of the Makati City RTC. Branch 138 is MODIFIED. The November 26. The May 29. valid. or otherwise be bound to honor the application as a valid. to characterize the insurer and the insured as contracting parties on equal footing is inaccurate at best. As a final note. insurance contracts are imbued with public interest that must be considered whenever the rights and obligations of the insurer and the insured are to be delineated. the seemingly conflicting provisions must be harmonized to mean that upon a partys purchase of a memorial lot on installment from Eternal. cralaw(3) To pay Eternal legal interest at the rate of twelve percent (12%) per annum of PhP 100. in Creditor Group Life Policy No. and binding until terminated by Philamlife by disapproving the insurance application. Philamlife is hereby ORDERED: cralaw(1) To pay Eternal the amount of PhP 100. P-1920 dated December 10. cralawWHEREFORE. 1980. P-1920 on the Effective Date of Benefit is in the nature of a resolutory condition which would lead to the cessation of the insurance contract.R. insurance companies must be obligated to act with haste upon insurance applications. 2004 CA Decision in CA-G. in order to protect the interest of insurance applicants. an insurance contract covering the lot purchaser is created and the same is effective. insurance contracts are contracts of adhesion containing technical terms and conditions of the industry.000 from . Moreover. must be construed in favor of the insured and in favor of the effectivity of the insurance contract. we GRANT the petition.000 from the time of extra-judicial demand by Eternal until Philamlifes receipt of the May 29. binding. to either deny or approve the same. 57810 is REVERSED and SET ASIDE. Insurance contracts are wholly prepared by the insurer with vast amounts of experience in the industry purposefully used to its advantage. cralaw(2) To pay Eternal legal interest at the rate of six percent (6%) per annum of PhP 100. More often than not. The termination of the insurance contract by the insurer must be explicit and unambiguous. the mere inaction of the insurer on the insurance application must not work to prejudice the insured.000 representing the proceeds of the Life Insurance Policy of Chuang. that are imposed on those who wish to avail of insurance. it cannot be interpreted as a termination of the insurance contract. CV No. Hence. 1996. As such. 1996 RTC Decision on June 17. and effective insurance contract. confusing if at all understandable to laypersons. On the other hand. The second sentence of Creditor Group Life Policy No.Clearly. the vague contractual provision.
: At around 4:30 in the afternoon of 27 March 1982. With respect to death of or bodily injury to any third party or passenger. subject to the Limits of Liability. 1996 until full payment of this award. and DE DIOS TRANSPORTATION CO. Respondent bus company was insured with petitioner Western Guaranty Corporation ("Western") under its Master Policy which provided.Company will. causing her serious anxiety and moral distress. vs. chanrobl esvirtualawlibrary chanrobles virtual law library (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. Respondents.June 17. Priscilla was thrown to the ground... RODRIGUEZ. then driven by one Walter Saga y Aspero The bus driver disregarded the stop signal given by a traffic policeman to allow pedestrians to cross the road. and cralaw(4) To pay Eternal attorneys fees in the amount of PhP 10. among other things. while crossing Airport Road on a pedestrian lane on her way to work. hitting her forehead. 1990 WESTERN GUARANTY CORPORATION. In no case. Liability to the Public . respondent Priscilla E. Inc.000. cralawNo costs. 91666 July 20. No. SO ORDERED. Her face was permanently disfigured. Petitioner. pay all sums necessary to discharge liability of the insured in respect of chanrobles virtual law library (a) death of or bodily injury to or damage to property of any passenger as defined herein. the relevant section reading as follows: Section 1.. INC. shall the Company's total payment under both Section I and Section 11 combined exceed the Limits of Liability set forth herein. however. HONORABLE COURT OF APPEALS.R.. Rodriguez was struck by a De Dios passenger bus owned by respondent De Dios Transportation Co. J. FELICIANO. provided that the liability shall have first been determined. She was treated at the Protacio Emergency Hospital and later on hospitalized at the San Juan De Dios Hospital. the company's payment per victim in any one accident shall not exceed the limits . THIRD DIVISION G. PRISCILLA E. for protection against third party liability.
by way of contribution. Rodriguez. chanrobl es virtual law library On appeal.000. the dispositive portion of which read: WHEREFORE. the Court of Appeals denied the motion for reconsideration petition for lack of merit. Inc.500. petitioner Western. quoted above. chanrobl es virtual law library d) the sum of P10. moral damages and attorney's fees.00 as and by way of moral damages .00 by way of compensation for loss of earning during plaintiffs incapacity to work.000. chanroblesvirtualawlibrary chanrobl es virtual law library Deliberating on the instant Petition for Review. filed a third-party complaint against its insurance carrier. to the extent of not more than P50. indemnity or subrogation whatever amount may be left unpaid by the defendant De Dios Transportation Company. judgment is hereby rendered in favor of plaintiff and against the defendants.. hospitalization and medicines. ch anroblesvirtualawlibrary chanrobl es virtual law library 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 of Indemnities and in finding Western liable for loss of earnings.00. and Walter A. and such other burial and funeral expenses that might have been incurred.000. chanrobl esvirtualawlibrary ch anrobles virtual law library An examination of Section 1 entitled "Liability to the Public". Succinctly stated. ordering the latter to pay the former.776. as follows: chanrobles virtual law library a) The sum of P2. (Emphasis supplied) Respondent Priscilla Rodriguez filed a complaint for damages before the Regional Trial Court of Makati against De Dios Transportation Co. On 6 August 1985. and for the third-party defendant to pay to the plaintiff. jointly and severally. the Court of Appeals affirmed in toto the decision of the trial court. chanrobl es virtual law library c) the sum of P10. The scope of liability of Western is marked out in comprehensive terms: "all sums necessary to discharge liability of the insured in respect of [the . In a Resolution dated 10 January 1990.00 as and by way of attorney's fees . in turn. of the Master Policy issued by petitioner Western shows that that Section defines the scope of the liability of insurer Western as well as the events which generate such liability. Saga Respondent De Dios Transportation Co. chanrobl es virtual law library b) the sum of P1.indicated in the Schedule of indemnities provided for in this policy excluding the cost of additional medicines. 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. the trial court rendered a decision in favor of respondent Priscilla E. it is petitioner Western's position that it cannot be held liable for loss of earnings.00 as actual damages representing doctor's fees. Petitioner moved for the reconsideration of the appellate court's decision.and e) the cost of suit. we consider that petitioner Western has failed to show any reversible error on the part of the Court of Appeals in rendering its Decision dated 26 April 1989 and its Resolution dated 10 January 1990.
no bodily injury and no damage to property resulted from the casualty ("any accident caused by or arising out of the use of the Schedule Vehicle"). for services rendered to traffic accident victims under CMVLI coverage: DEATH INDEM NITY P12. bodily injuries of. chanroblesvirtualawlibrary chanrobl es virtual law library The "Schedule of Indemnities for Death and/or Bodily Injury" attached to the Master Policy. either in favor of a passenger or a third party. Where no death.00 chanrobles virtual law library PERMA NENT DISABL EMENT DESCRI PTION OF DISABL EMENT Loss of two limbs Loss of both hands. are specified in the following terms: (1) death of. no liability is created so far as concerns the insurer. or (3) damage to property of.000.precipitating events]-" The precipitating events which generate liability on the part of the insurer. the passenger or the third party. needs to be quoted in full: Schedule of Indemnities for Death and/or Bodily Injury: The following schedule of indemnities should be observed in the settlement of claims for death. professional fees and hospital charges. which petitioner Western invokes.000. or (2) bodily injury to. petitioner Western.00 . or all fingers and Amount P6.
00 .000.00 6.00 6.000.000.00 6.000.both thumbs Loss of both feet Loss of one hand and one foot Loss of sight of both eyes Injuries resulting in being permane ntly bedridde n Any other injury causing permane nt total disablem ent Loss of arm or above elbow 6.200.000.00 6.00 6.00 4.000.
550.00 P2.550.400.00 3.400.100.00 .00 900.Loss of arm between elbow and wrist Loss of hand Loss of four fingers and thumb of one hand Loss of four fingers Loss of leg at or above knee Loss of leg below knee Loss of one foot Loss of toes-all of one foot Loss of thumb 3.00 2.00 2.00 900.00 2.000.600.00 2.
0 0/ d a y HOS PIT AL RO OM Maximum of 45 days/year- Laboratory drugs fees.00 3. .Loss of index finger Loss of sight of one eye Loss of hearing both ears Loss of hearingone ear 600.00 1.800.000.00 Total of Accommodation of Professional Attendance Exte nded Services Rendered F ee s or C h ar g es P 3 6.00 450.
00 OPE RAT ING Major Operation 1 5 0 . 0 0 1 0 0. 300. 0 0 5 0 0. 0 0 0.00 Minor Operation 50.x-rays. etc.0 0 SUR GIC AL Major Operation 1. 0 0 EXP ENS ES Medium Operation Minor Operation AN AES THE SIO LOG IST LOG ISTS ' FEE S Major Operation 300.00 Medium Operation 150.
000. 0 0 4 0. 0 0 / d a y Specialist Total amount of medical expenses must not exceed (for single period of confinement) 400. .00 1 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.g.: loss of both feet P6.RO OM Medium Operation 1 0 0.00. e. 0 0 Minor Operation ME DIC AL EXP ENS ES For daily visits of Practitioner or 2 0.
and potential purchasers of its Master Policy. 3 chanrobles virtual law library Finally. an insurance contract is a contract of adhesion. all kinds of damages allowable by law" . and the essential requisites or conditions for grant of each species of damages are present. For Western's reading would drastically and without warning limit the otherwise unlimited (save for the over-all quantitative limit of liability of P50. 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. much less a closed enumeration. that because the Schedule of Indemnities limits the amount payable for certain kinds of expenses -"hospital room". But such internal injuries are surely covered by Section I of the Master Policy. "surgical expenses". Petitioner Western in effect contends before this Court. a foot or an arm or an eye). P1.. it was incumbent upon Western to use language far more specific and precise than that used in fact by Western. the Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen. chanroblesvirtualawlibrary chanrobl es virtual law library Firstly.400. "moral damages'. 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. however. does refer to certain "Limits of Liability" which in the case of the third party liability section of the Master Policy. and "exemplary damages" 2 .. professional services and hospital charges. "liquidated damages". quoted above. Accordingly.. It appears to us self-evident that the Schedule of Indemnities was not intended to be an enumeration. such as those in question.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.g. Within this over-all quantitative limit. as it did before the Court of Appeals. "temperate or moderate damages". since they certainly constitute bodily injuries. It must be stressed. for services rendered to traffic accident victims. may be properly informed and act accordingly. for instance.800. This result.may be awarded by a competent court against the insurer once liability is shown to have arisen. result in injury to internal organs of a passenger or third party. We are not persuaded by Western's contention. as already noted.000. or to enumerate exhaustively. "anaesthesiologists' fee". "nominal damages".' and not necessarily exclude claims against the insurance policy for other kinds of damages. "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. Section 1.loss of one foot loss of sight of one eye P2. we cannot agree with the movant that the schedule was meant to be an exclusive enumeration of the nature of the damages for which it would be liable under its policy. we agree with the Court of Appeals that: . is comprehensively defined in Section 1 . is apparently P50. without any accompanying amputation or loss of an external member (e. so that the insured.actual or compensatory damages". A car accident may. and the Office of the Insurance Commissioner. As we see it. the species of bodily injury occurrence of which generate liability for petitioner Western. bodily injuries of. that the Schedule of Indemnities does not purport to limit. chanroblesvirtualawlibrary chanrobl es virtual law library Petitioner Western would have us construe the Schedule of Indemnities as comprising contractual limitations of liability which. of the specific kinds of damages which may be awarded under the Master Policy Western has issued. which in this case happens to be petitioner Western. If what Western now urges is what Western intended to achieve by its Schedule of Indemnities. quoted above.00 per person per accident. 4 chanrobl es virtual law library .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]".00.Liability to the Public" .000.of the Master Policy. 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 was merely meant to set limits to the amounts the movant would be liable for in cases of claims for death. Secondly. however.00. It is wellsettled.
in an insurance claim filed by private respondent against Great Pacific Life Assurance Co. Have you ever had. COURT OF APPEALS AND MEDARDA V. in relation to Certification B-18558 liable and ordered to pay to the DEVELOPMENT BANK OF THE PHILIPPINES as creditor of the insured Dr. kidney or stomach disorder or any other physical impairment? Answer: No. 1983. other than the widowbeneficiary. are as follows: 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).00). in good health? . 1999] GREAT PACIFIC LIFE ASSURANCE CORP. Wilfredo Leuterio. attorneys fees and litigation expenses in the complaint and counterclaim.[3 The facts. No. LEUTERIO. Dr. Wilfredo Leuterio. concur. to the best of your knowledge. Leuterio answered questions concerning his health condition as follows: 7. Branch 18.R. a physician and a housing debtor of DBP applied for membership in the group life insurance plan. the Court Resolved to DENY the Petition for Review for lack of merit Costs against petitioner. lung. chanrobles virtual SECOND DIVISION [G. Jr. 18341. 113899. G-1907. CV No. 1994 in CA-G. Bidin and Cortes. a physician for a heart condition. The dispositive portion of the trial courts decision reads: WHEREFORE. In an application form. of the Court of Appeals and its Resolution[2 dated January 4. dismissing the claims for damages. Are you now. J. cancer. under Rule 45 of the Rules of Court.200. JJ. On November 11. assails the Decision[1 dated May 17.. Gutierrez.. Dr. Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. 8. Respondents. 1993. high blood pressure.: This petition for review.ACCORDINGLY. the amount of EIGHTY SIX THOUSAND TWO HUNDRED PESOS (P86. for lack of cause of action. petitioner vs.R.. with costs against the defendant and dismissing the complaint in respect to the plaintiffs. diabetes. If so give details ___________. as found by the Court of Appeals. October 13. DECISION QUISUMBING. The appellate court affirmed in toto the judgment of the Misamis Oriental Regional Trial Court. Fernan (Chairman). judgment is rendered adjudging the defendant GREAT PACIFIC LIFE ASSURANCE CORPORATION as insurer under its Group policy No. or consulted.
Dr. 1988. Consequently. the trial court rendered a decision in favor of respondent widow and against Grepalife. INSTEAD OF DISMISSING THE CASE AGAINST DEFENDANT-APPELLANT [Petitioner Grepalife] FOR LACK OF CAUSE OF ACTION. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty six thousand. 1984. as insurance coverage of Dr. two hundred (P86. Grepalife was held liable to pay the proceeds of insurance contract in favor of DBP. 2. the . The inference was not conclusive because Dr. against Grepalife for Specific Performance with Damages. THE LOWER COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO PAY TO DBP THE AMOUNT OF P86.200. Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage on November 15. 1983.200. Grepalife insisted that Dr. Whether the Court of Appeals erred in not finding that Dr. filed a complaint with the Regional Trial Court of Misamis Oriental. Petitioner alleges that the complaint was instituted by the widow of Dr. respondent Medarda V. B-18558.[4 On November 15. the widow of the late Dr. Leuterio. 4. based partly from the information given by the respondent widow. 1983. Dr.00 IN THE ABSENCE OF ANY EVIDENCE TO SHOW HOW MUCH WAS THE ACTUAL AMOUNT PAYABLE TO DBP IN ACCORDANCE WITH ITS GROUP INSURANCE CONTRACT WITH DEFENDANTAPPELLANT. Leuterio concealed that he had hypertension. THE LOWER COURT ERRED IN HOLDING DEFENDANT-APPELLANT LIABLE TO THE DEVELOPMENT BANK OF THE PHILIPPINES (DBP) WHICH IS NOT A PARTY TO THE CASE FOR PAYMENT OF THE PROCEEDS OF A MORTGAGE REDEMPTION INSURANCE ON THE LIFE OF PLAINTIFFS HUSBAND WILFREDO LEUTERIO ONE OF ITS LOAN BORROWERS. Leuterio.HOLDING THAT THERE WAS NO CONCEALMENT OF MATERIAL INFORMATION ON THE PART OF WILFREDO LEUTERIO IN HIS APPLICATION FOR MEMBERSHIP IN THE GROUP LIFE INSURANCE PLAN BETWEEN DEFENDANT-APPELLANT OF THE INSURANCE CLAIM ARISING FROM THE DEATH OF WILFREDO LEUTERIO. Branch 18. 3. Leuterio. Petitioners interposed the following assigned errors: "1. Whether the Court of Appeals 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. Mejias findings. It argues that when the Court of Appeals affirmed the trial courts judgment. Leuterio. to the extent of his DBP mortgage indebtedness amounting to eighty-six thousand. who issued the death certificate. two hundred (P86. Leuterio was not autopsied. the present petition. stated that Dr. DBP submitted a death claim to Grepalife.200. which would vitiate the insurance contract? 3. was called to testify.[5 During the trial. Leuterio did not disclose he had been sufferingjustified the denial of the claim.00) pesos. the Court of Appeals sustained the trial courts decision. 1986. THE LOWER COURT ERRED IN NOT DISMISSING THE CASE FOR WANT OF JURISDICTION OVER THE SUBJECT OR NATURE OF THE ACTION AND OVER THE PERSON OF THE DEFENDANT. Dr. On February 22. Hernando Mejia. not the real party in interest. other causes were not ruled out. hence the trial court acquired no jurisdiction over the case. Grepalife issued Certificate No.Answer: [ x ] Yes [ ] No. On August 6. Leuterio complained of headaches presumably due to high blood pressure. On May 17. hence. Leuterio died due to massive cerebral hemorrhage.00) pesos without proof of the actual outstanding mortgage payable by the mortgagor to DBP.[6 Synthesized below are the assigned errors for our resolution: 1. 1993. Hence. On October 20. THE LOWER COURT ERRED IN .
of the same work. Thereafter. although the property is in the hands of the mortgagee.[8 Consequently. The rationale of a group insurance policy of mortgagors.[14 the widow of the decedent Dr. although he has assigned the policy for the purpose of collection. with the same effect as if it had been performed by the mortgagor. if there is any. but any act which. thereby relieving the heirs of the mortgagor from paying the obligation. will or succession to any person. the insurance is on the mortgagors interest. To resolve the issue. interposing the defense of concealment committed by the insured. is to be performed by the mortgagor. And in volume 33.[7 In a similar vein. * * * Although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him. such loss-payable clause does not make the mortgagee a party to the contract. good faith. whether he has an insurable interest or not. Grepalife.[11 In Gonzales La O vs. The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance. who does not cease to be a party to the original contract. we must consider the insurable interest in mortgaged properties and the parties to this type of contract. Leuterio may file the suit against the insurer. the insurance is deemed to be upon the interest of the mortgagor. In this type of policy insurance. and the mortgagor continues to be a party to the contract.[9 Section 8 of the Insurance Code provides: Unless the policy provides.[12 we held: Insured. which might have caused his death. insured may thus sue. especially where the mortgagees interest is less than the full amount recoverable under the policy. we read the following: Insured may be regarded as the real party in interest. shall then be paid to the beneficiary/ies designated by the debtor. and such person may recover it whatever the insured might have recovered. may be performed by the mortgagee therein named. Concealment exists where the assured had knowledge of a fact material to the risk. where the mortgagor pays the insurance premium under the group insurance policy. Petitioner contends that Dr.[15 . and although it is expressly made payable to another as his interest may appear or otherwise. otherwise known as the mortgage redemption insurance. the mortgage obligation will be extinguished by the application of the insurance proceeds to the mortgage indebtedness. the latter denied payment thereof. is a device for the protection of both the mortgagee and the mortgagor. ample protection is given to the mortgagor under such a concept so that in the event of death. the proceeds from such insurance will be applied to the payment of the mortgage debt. being the person with whom the contract was made. making the loss payable to the mortgagee. * * * Subject to some exceptions. * * *. an amount to pay the outstanding indebtedness shall first be paid to the creditor and the balance of sum assured.[13 And since a policy of insurance upon life or health may pass by transfer. On the part of the mortgagee. or has assigned as collateral security any judgment he may obtain. although the policy is taken wholly or in part for the benefit of another person named or unnamed. the mortgagee is simply an appointee of the insurance fund. page 82. or assigns a policy of insurance to a mortgagee. and honesty. and any act of his. DBP collected the debt from the mortgagor and took the necessary action of foreclosure on the residential lot of private respondent. which would otherwise avoid the insurance. Leuterio failed to disclose that he had hypertension. prior to the loss. the policy stating that: In the event of the debtors death before his indebtedness with the Creditor [DBP] shall have been fully paid.indispensable party who was not joined in the suit. Co. where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee. and fair dealing requires that he should communicate it to the assured. under the contract of insurance. but he designedly and intentionally withholds the same. will have the same effect. The second assigned error refers to an alleged concealment that the petitioner interposed as its defense to annul the insurance contract. is primarily the proper person to bring suit thereon. Yek Tong Lin Fire & Marine Ins. it has to enter into such form of contract so that in the event of the unexpected demise of the mortgagor during the subsistence of the mortgage contract.[10 When DBP submitted the insurance claim against petitioner. yet the mortgagor may sue thereon in his own name.
Considering this supervening event.00 shall be paid. Leuterios outstanding indebtedness to DBP at the time of the mortgagors death. The proceeds now rightly belong to Dr. and that the widows declaration that her husband had possible hypertension several years ago should not be considered as hearsay.[21 The mortgagor paid the premium according to the coverage of his insurance. Dr. And that brings us to the last point in the review of the case at bar.Petitioner merely relied on the testimony of the attending physician. Leuterio were for hypertension. As the attending physician. Leuterio was a duly documented hospital record. Mejias technical diagnosis of the cause of death of Dr. the statement of the physician was properly considered by the trial court as hearsay. it cannot collect the insurance proceeds. she states that DBP foreclosed in 1995 their residential lot. if there is any shall then be paid to the beneficiary/ies designated by the debtor.. after it already foreclosed on the mortgage.[22 (Emphasis omitted) However. 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. Hence.[19 In the case at bar. Dr. Grepalife asserts that Dr. we noted that the Court of Appeals decision was promulgated on May 17. and is therefore liable to pay the proceeds of the insurance.[16 Dr. was due to her unreliable recollection of events. The question of whether there was concealment was aptly answered by the appellate court. Appellant alleged that the insured had concealed the fact that he had hypertension.. 1993. Aside from the statement of the insureds widow who was not even sure if the medicines taken by Dr. it cannot refuse payment of the claim. . Contrary to appellants allegations. herein private respondent Medarda Leuterio. which states that: The policy states that upon receipt of due proof of the Debtors death during the terms of this insurance.[17 The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. Petitioners claim is without merit. xxx Appellant insurance company had failed to establish that there was concealment made by the insured. the action for specific performance should be dismissed. A life insurance policy is a valued policy.[20 Unless the interest of a person insured is susceptible of exact pecuniary measurement. there was no sufficient proof that the insured had suffered from hypertension. the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy. From this report. Mejia stated that he had no knowledge of Dr. In the event of the debtors death before his indebtedness with the creditor shall have been fully paid. On the contrary the medical findings were not conclusive because Dr. when he died the attending physician had certified in the death certificate that the former died of cerebral hemorrhage. in satisfaction of mortgagors outstanding loan. Leuterios medical history. In private respondents memorandum. as to the medical history of her husband. the appellant had not proven nor produced any witness who could attest to Dr. Leuterios heirs represented by his widow. Equity dictates that DBP should not unjustly enrich itself at the expense of another (Nemo cum alterius detrimenio protest). including hypertension. a death benefit in the amount of P86. thus: The insured. The private respondents statement. Mejia did not conduct an autopsy on the body of the decedent. Leuterios any previous hospital confinement. but as part of res gestae. the appellant insurance company refused to pay the insurance claim. Dr. Hernando Mejia.[18 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.200. an amount to pay the outstanding indebtedness shall first be paid to the Creditor and the balance of the Sum Assured. probably secondary to hypertension. Leuterio. the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. for private respondents failure to establish the same. as supported by the information given by the widow of the decedent. Leuterios death certificate stated that hypertension was only the possible cause of death. hence. Petitioner claims that there was no evidence as to the amount of Dr. the petitioner failed to clearly and satisfactorily establish its defense. Hence. Hence.
COURT OF APPEALS and TRANSWORLD KNITTING MILLS. DECISION PURISIMA.00) pesos to the heirs of the insured. Costs against petitioner.R. covering the period from August 14. SO ORDERED. v. 46106. THIRD DIVISION [G. July 18.000. 1981. read: "On stocks of finished and/or unfinished products. Respondents. INC.R.00) Pesos. Wilfredo Leuterio (deceased). 1993 Decision1 and October 22. 28779. in Civil Case No. Pertinent portions of subject policy on the buildings insured. and location thereof. which modified the Ruling4 of the Regional Trial Court of Pasig. No. 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 . The Decision and Resolution of the Court of Appeals in CA-G. Inc. Rizal Surety & Insurance Company (Rizal Insurance) issued Fire Insurance Policy No. 1980 to March 13. initially for One Million (P1.. (Transworld). 45727 in favor of Transworld Knitting Mills.00) Pesos and eventually increased to One Million Five Hundred Thousand (P1. CV 18341 is AFFIRMED with MODIFICATION that the petitioner is ORDERED to pay the insurance proceeds amounting to Eighty-six thousand. raw materials and supplies of every kind and description. CV NO.500. Dr. J.R.200. Petitioner.WHEREFORE. 112360. The antecedent facts that matter are as follows: On March 13. Branch 161.000. 1993 Resolution2 of the Court of Appeals3 in CA-G. 1980. upon presentation of proof of prior settlement of mortgagors indebtedness to Development Bank of the Philippines. two hundred (P86.: At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the July 15.000. the petition is hereby DENIED. 2000] RIZAL SURETY & INSURANCE COMPANY. the properties of the Insureds and/or held by them in trust.
On May 26... (New India)... BLOCK NO. xxx. 1981. 1982.. timber above undergalvanized iron roof occupied as garage and quarters and partly by open space and/or tracking/ packing. A two-storey building (behind said four-span building) where fun and amusement machines and spare parts were stored... 601. offices.. warehouse and caretaker's quarters. fire broke out in the compound of Transworld. on its right and left by driveway. Transworld filed its insurance claims with Rizal Surety & Insurance Company and New India Assurance Company but to no avail. and at the rear by open spaces.... On January 12. was also destroyed by the fire... garment and lingerie factory..... .. BARRIO UGONG. Ltd.. beyond which is the aforementioned Magdalo Street... 'Bounds in front partly by one-storey concrete building under galvanized iron roof occupied as canteen and guardhouse.premises occupied by them forming part of the buildings situate (sic) within own Compound at MAGDALO STREET. PASIG. razing the middle portion of its four-span building and partly gutting the left and right sections thereof. 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.. thence open spaces.'"5 The same pieces of property insured with the petitioner were also insured with New India Assurance Company.. METRO MANILA.... transistor-stereo assembly plant.. xxx. private respondent brought against the said . partly by building of two and partly one storey constructed of concrete below.. PHILIPPINES.
and private respondent.604. disposing as follows: "ACCORDINGLY.00 as attorney's fees.6 Petitioner Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-span building.747. Rizal Insurance Company.328. the decretal portion of which reads: "WHEREFORE. 867. the amount of P826. SO ORDERED.000. 500. 1990.67. Transworld Knitting Mills. which was partly burned. exemplary damages. which came out with its decision of July 15. went to the Court of Appeals. based on the actual losses sustained by plaintiff . the decision of the court below is MODIFIED in that defendant New India Assurance Company has and is hereby required to pay plaintiff-appellant the amount of P1. docketed as Civil Case No. expenses of litigation of P50. and not the damage caused by the fire on the two-storey annex building. and (3) Cost against defendant Rizal Surety and Insurance Company.. Inc.. judgment is hereby rendered as follows: (1)Dismissing the case as against The New India Assurance Co.00 plus legal interest. 1993 under attack."8 Both the petitioner.00 and costs of suit. and upon all the foregoing..000.19 while the other Rizal Surety has to pay the plaintiff-appellant P470.818.7 On January 4. P400. praying for judgment ordering Rizal Insurance and New India to pay the amount of P2. Ltd. (2) Ordering defendant Rizal Surety And Insurance Company to pay Transwrold (sic) Knitting Mills. Inc.insurance companies an action for collection of sum of money and damages. 46106 before Branch 161 of the then Court of First Instance of Rizal. the trial court rendered its decision.00 representing the actual value of the losses suffered by it.
"10 Undaunted. contending that: I. as regards the imposition of interest. 1993. Petitioner Rizal Insurance and private respondent Transworld. No. 1993.00 and Rizal Surety and Insurance Company in the amount of P1. No costs.500. SO ORDERED. ruling thus: "WHEREFORE.604. SAID DECISION (ANNEX A) ERRED IN ASSUMING THAT THE ANNEX BUILDING WHERE THE BULK OF THE BURNED . The rest of the said decision is retained in all other respects. the Court of Appeals reconsidered its decision of July 15.790.800.Transworld in the fire. L-111118 (New India Assurance Company Ltd. On February 2.. Court of Appeals).818. totalling P2. SO ORDERED.67..000.R. 1993 is amended but only insofar as the imposition of legal interest is concerned.328. 1994.00 as against the amounts of fire insurance coverages respectively extended by New India in the amount of P5.19 and that against Rizal Surety & Insurance Company on the amount of P470. vs. 1982 when the complaint was filed until payment is made.000. and on October 22. on the assessment against New India Assurance Company on the amount of P1. that. the Court denied the appeal with finality in G.. the Decision of July 15.. 1993."9 On August 20. interposed a Motion for Reconsideration before the Court of Appeals. from May 26. petitioner Rizal Surety & Insurance Company found its way to this Court via the present Petition.376. from the aforesaid judgment of the Court of Appeals New India appealed to this 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.00.
the private respondent theorized that the so called "annex" was not an annex but was actually an integral part of the four-span building13 and therefore. 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" Therefrom. 2205. 2208 PARS.11 The Petition is not impressed with merit. WHICH CLEARLY SHOW THAT THE PREMISES OCCUPIED BY TRANSWORLD. SUSTAINED PARTIAL DAMAGE ONLY. SAID DECISION (ANNEX A) ERRED IN NOT HOLDING THAT TRANSWORLD HAD ACTED IN PALPABLE BAD FAITH AND WITH MALICE IN FILING ITS CLEARLY UNFOUNDED CIVIL ACTION. 4 and 11. As opined by the trial court of origin... On the other hand. III. CIVIL CODE). 3 TO 7C-RIZAL SURETY). WHERE THE INSURED PROPERTIES WERE LOCATED. PLUS ATTORNEY'S FEES AND EXPENSES OF LITIGATION (ART. 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..12 and did not include those stored in the two-storey annex building. TAKEN IMMEDIATELY AFTER THE FIRE. AND IN NOT ORDERING TRANSWORLD TO PAY TO RIZAL SURETY MORAL AND PUNITIVE DAMAGES (ART. SAID DECISION AND RESOLUTION (ANNEXES A AND B) ERRED IN NOT CONSIDERING THE PICTURES (EXHS. II. Resolution of the issues posited here hinges on the proper interpretation of the stipulation in subject fire insurance policy regarding its coverage. CIVIL CODE). WAS INCLUDED IN THE COVERAGE OF THE INSURANCE POLICY ISSUED BY RIZAL SURETY TO TRANSWORLD. It is petitioner's submission that the fire insurance policy litigated upon protected only the contents of the main building (fourspan).. two requirements must concur in order that the said fun and . the goods and items stored therein were covered by the same fire insurance policy.PROPERTIES WERE STORED.
said areas must form part of the building described in the policy xxx"14 '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. The letter-report of the Manila Adjusters and Surveyor's Company. transistor-stereo assembly plant. and the same carry even more weight when the Court of Appeals has affirmed the findings of fact arrived at by the lower court.15 In the case under consideration. garment and lingerie factory. ware house and caretaker's quarter. offices. .' 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. roof which is adjoining and intercommunicating with the repair of the first right span of the lofty storey building and thence by property fence wall.i. said properties must be contained and/or stored in the areas occupied by Transworld and second.17 formed part thereof. to wit: "First.amusement machines and spare parts would be deemed protected by the fire insurance policy under scrutiny. which petitioner itself cited and invoked. a permanent structure which adjoins and intercommunicates with the "first right span of the lofty storey building". describes the "annex" building as follows: "Two-storey building constructed of partly timber and partly concrete hollow blocks under g. the machines and spare parts stored therein were covered by the fire insurance in dispute."16 Verily. and meets the requisites for compensability under the fire insurance policy sued upon. 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. the two-storey building involved.
and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured. Indeed.So also. Rizal Surety Insurance Company. the Court does not find any basis for disturbing what the lower courts found and arrived at. whose lawyer or managers drafted the fire insurance policy contract under scrutiny. 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 . 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. or uncertain x x x are to be construed strictly and most strongly against the insurer. it stands to reason that the doubt should be resolved against the petitioner. especially where forfeiture is involved' (29 Am. in respect of which it is settled that the 'terms in an insurance policy.18 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. Article 1377 of the New Civil Code provides: "Art. having been constructed sometime in 1978.. Citing the aforecited provision of law in point. Government Service Insurance System. considering that the two-storey building aforementioned was already existing when subject fire insurance policy contract was entered into on January 12. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity" Conformably. which are ambiguous.19 ruled: "This is particularly true as regards insurance policies. went on to provide that such fire insurance policy covers the products. 181). equivocal.1377. raw materials and supplies stored within the premises of respondent Transworld which was an integral part of the four-span building occupied by Transworld. Jur. the Court in Landicho vs. After a careful study. 1981. knowing fully well the existence of such building adjoining and intercommunicating with the right section of the four-span building. and instead.
Court of Appeals. which entitles it to be indemnified for the loss thereof.. vs. upon the determination of which the finding or judgment was rendered. "xxx the judgment in the prior action operates as estoppel only as to those matters in issue or points controverted. the insurance company.R.. cartels and concentration of capital. In fine. of Supreme Court of Spain. endowed with overwhelming economic power. the previous judgment is .J.21 to wit: "'This rigid application of the rule on ambiguities has become necessary in view of current business practices. where the appeal of New India from the decision of the Court of Appeals under review.care and deliberation by experts and legal advisers employed by. and acting exclusively in the interest of. Ltd. 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. p. 13 Dec. No. De Songco. 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. entitled New India Assurance Company. The rule on conclusiveness of judgment. and prevent their becoming traps for the unwary (New Civil Code. The courts cannot ignore that nowadays monopolies. 1174). L-111118. 1934.)'"22 The issue of whether or not Transworld has an insurable interest in the fun and amusement machines and spare parts. 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). 27 February 1942. had been settled in G. was denied with finality by this Court on February 2. vs. Article 24.' (44 C. Sent. manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit. Inc. which obtains under the premises. Vda. 1994.""20 Equally relevant is the following disquisition of the Court in Fieldmen's Insurance Company. in contrast to these entered into by parties bargaining on an equal footing.S.
dated February . only as those matters actually and directly controverted and determined and not as to matters merely involved therein. was an issue that was actually.R. The Reyes Decision thus became final and executory approximately two (2) years before the Sison Decision. settled and sustained by the Court of Appeals in CA-G. was promulgated. Court of Appeals. the Court.B. and compensability for the loss of subject fun and amusement machines and spare parts. controverted and litigated in C.R. which issue had already been passed upon in a case filed by one of the insurers.R. had long been settled by this Court and could no longer be relitigated in C.-G. J. the issue of which vessel ('Don Carlos' or 'Yotai Maru') had been negligent. which is assailed in the case at bar..). 28779.B..A. had been adjudicated. 61206-R. directly and expressly raised. Applying the rule of conclusiveness of judgment. CV NO. in a Resolution. No. that Decision was affirmed by this Court in G.R. and that of this Court. No.R. L. Inc."25 The controversy at bar is on all fours with the aforecited case. Private respondent Go Thong was certainly bound by the ruling or judgment of Reyes.24 held that the issue of negligence of the shipping line.. 61320-R. and by this Court in G. J. is conclusive and can no longer be relitigated in a similar case filed by another insurer against the same shipping line on the basis of the same factual circumstances.A. No.-G. or so negligent as to have proximately caused the collision between them. L-111118. Reyes. in Smith Bell and Company (Phils. the Court opined: "In the case at bar.conclusive in the second case. vs."23 Applying the abovecited pronouncement. Considering that private respondent's insurable interest in. L-48839 in a Resolution dated 6 December 1987. The Court of Appeals fell into clear and reversible error when it disregarded the Decision of this Court affirming the Reyes Decision. Ratiocinating further. No. L. as already noted. the question of which vessel had been negligent in the collision between the two (2) vessels. resolved that issue in his Decision and held the 'Don Carlos' to have been negligent rather than the 'Yotai Maru' and.
. WHEREFORE .2. Ineluctably. Rizal Surety Insurance Company. So also. dated July 15. the same can no longer be relitigated and passed upon in the present case.26 All things studiedly considered and viewed in proper perspective. the Decision. is bound by the ruling of the Court of Appeals and of this Court that the private respondent has an insurable interest in the aforesaid fun and amusement machines and spare parts.R. the Court of Appeals correctly adjudged petitioner liable for the amount of P470. No pronouncement as to costs. dated October 22. liable for the destruction and loss of the insured buildings and articles of the private respondent. 1993. Melo. Rizal Surety Insurance Company. 1994. it being the total loss and damage suffered by Transworld for which petitioner Rizal Insurance is liable. CV NO. and so finds. (Chairman). and the Resolution. the Court is of the irresistible conclusion. and should be indemnified for the loss of the same.328. 1993.67. that the Court of Appeals erred not in holding the petitioner. SO ORDERED. Vitug. 28779 are AFFIRMED in toto. of the Court of Appeals in CAG. the petitioner.
CV No. is engaged in the coconut oil milling and refining industry. Inc. The two oil mills were separately covered by fire insurance policies issued by petitioner American Home Assurance Co. judgment is rendered in favor of the plaintiff ordering defendant to pay plaintiff: (a) P4.000. (b) P80. 306-7432321-9 (Ps 6M) and 306-7432324-4 (Ps 3M) extend insurance coverage to your oil mill under Building No. No. (c) P300. the lower court rendered a Decision finding the petitioner liable on the insurance policy thus: WHEREFORE. Respondent immediately notified the petitioner of the incident. 1991 to 1992.000.R. Both are located at its factory compound at Iyam. 1995. 14. The latter then sent its appraisers who inspected the burned premises and the properties destroyed.FIRST DIVISION [G. Thereafter. which affirmed in toto the Decision of the Regional Trial Court. Branch 53 of Lucena City.1991 gutted and consumed the new oil mill. Respondent Tantuco Enterprises.536.00) under Policy No..00) under Policy No.R. 1991. 306-7432321-9 for the same term.000. 5. [4 A fire that broke out in the early morning of September 30.000.00 for and as attorneys fees. [1 The first oil mill was insured for three million pesos (P3.00 for litigation expenses. It stated that the description of the insured establishment referred to another building thus: Our policy nos. petitioner rejected respondents claim for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill. It owns two oil mills. Lucena City in Civil Case No.406. and . vs. 1995. Branch 53. October 8. [5 A complaint for specific performance and damages was consequently instituted by the respondent with the RTC. J. On October 16. Philippine Branch. INC. respondent. it started operating its second oil mill.000. In 1988. [3 Official receipts indicating payment for the full amount of the premium were issued by the petitioner's agent. 2001] AMERICAN HOME ASSURANCE COMPANY. It appears that respondent commenced its business operations with only one oil mill.40 representing damages for loss by fire of its insured property with interest at the legal rate. 92-51 dated October 16. TANTUCO ENTERPRISES. whilst the affected oil mill was under Building No. [2 The new oil mill was insured for six million pesos (P6. 306-7432324-3 for the period March 1. Petitioner. Lucena City. after trial. DECISION PUNO.: Before us is a Petition for Review on Certiorari assailing the Decision of the Court of Appeals in CAG. The latter came to be commonly referred to as the new oil mill. 52221 promulgated on January 14..000. in a letter dated October 15. 138941. 1999.
it argues that this specific boundary description clearly pertains. The appellate court upheld the same in a Decision promulgated on January 14. the oil mill insured is specifically described in the policy by its boundaries in the following manner: Front: by a driveway thence at 18 meters distance by Bldg.[8 (2) The Court of Appeals erred in its legal interpretation of 'Fire Extinguishing Appliances Warranty' of the policy. is that it did not have the supposed wrong description or mistake corrected. not to the burned oil mill. but to the other mill. SO ORDERED. the conclusion of the Court of Appeals giving no regard to the parole evidence rule and the principle of estoppel is erroneous. or about three years before the fire. The motion. 1995 is hereby AFFIRMED in toto. 4. petitioner posits. where petitioner ascribes to the appellate court the following errors: (1) The Court of Appeals erred in its conclusion that the issue of non-payment of the premium was beyond its jurisdiction because it was raised for the first time on appeal. No. the instant appeal is hereby DISMISSED for lack of merit and the trial courts Decision dated October 16. 2. Right: by an open space thence by Bldg. the pertinent portion of which states: WHEREFORE.[6 Petitioner assailed this judgment before the Court of Appeals.(d) Pay the costs. 1999. SO ORDERED.[10 The petition is devoid of merit. the oil mill gutted by fire was not the one described by the specific boundaries in the contested policy. No. In other words. however. 1999. Rear: by an open space thence at 8 meters distance. was denied for lack of merit in a Resolution promulgated on June 10. However.[9 (3) With due respect. Hence. What exacerbates respondents predicament.[7 Petitioner moved for reconsideration. the present course of action. and despite the Important Notice in the policy that Please . 4. The primary reason advanced by the petitioner in resisting the claim of the respondent is that the burned oil mill is not covered by any insurance policy. According to it. No. Despite the fact that the policy in question was issued way back in 1988. Left: Adjoining thence an imperfect wall by Bldg.
It is unthinkable for respondent to obtain the other policy from the very same company. G. . BO. Indeed. LUCENA CITY UNBLOCKED.[14 (emphasis supplied) It is thus clear that the source of the discrepancy happened during the preparation of the written contract. it would be absurd to assume that respondent would protect its first oil mill for different amounts and leave uncovered its second one. the misdescription in the policy. copra cake and copra mills whilst contained in the new oil mill building. Edison Tantuco is to cover the new oil mill that is why when I presented the existing policy of the old policy. [12 Notwithstanding. situate (sic) at UNNO. Mr. it is beyond dispute. These contentions can not pass judicial muster.read and examine the policy and if incorrect. return it immediately for alteration. then there is no need to specify it as new. ALONG NATIONAL HIGH WAY. Alfredo Borja. Camaligan: Q: What did you do when you received the report? A: I told them as will be shown by the map the intention really of Mr.[13 (emphasis supplied. The imperfection in the description of the insured oil mills boundaries can be attributed to a misunderstanding between the petitioners general agent. however inaccurate the description may be. that what the parties manifestly intended to insure was the new oil mill. to our mind. IYAM. I had the policy prepared. the first oil mill is already covered under Policy No. In fact. two policies were prepared having the same date one for the old one and the other for the new oil mill and exactly the same policy period. just as it is barred by estoppel from claiming that the description of the insured oil mill in the policy was wrong. In construing the words used descriptive of a building insured.Borja: Atty. the policy issuing clerk just merely (sic) copied the wording from the old policy and what she typed is that the description of the boundaries from the old policy was copied but she inserted covering the new oil mill and to me at that time the important thing is that it covered the new oil mill because it is just within one compound and there are only two oil mill[s] and so just enough. As testified to by Mr. As mentioned earlier. By way of conclusion. 28. sir. petitioner argues that respondent is barred by the parole evidence rule from presenting evidence (other than the policy in question) of its self-serving intention (sic) that it intended really to insure the burned oil mill. [11 In view of the custom of insurance agents to examine buildings before writing policies upon them. extending its protection: On machineries and equipment with complete accessories usual to a coconut oil mill including stocks of copra. the courts are inclined to consider that the policy of insurance covers any building which the parties manifestly intended to insure. respondent apparently did not call petitioners attention with respect to the misdescription. the greatest liberality is shown by the courts in giving effect to the insurance. therefore. because it retained the policy without having the same corrected before the fire by an endorsement in accordance with its Condition No. who made the error of copying the boundaries of the first oil mill when typing the policy to be issued for the new one.) If the parties really intended to protect the first oil mill. 306-7432324-4 issued by the petitioner. This is obvious from the categorical statement embodied in the policy. and since a mistake as to the identity and character of the building is extremely unlikely. and its policy issuing clerk. The latter ought to know that a second agreement over that same realty results in its overinsurance.
Mr. The amount of the premium stated on the face of the policy was P89. However. the boundary description written on the policy concededly pertains to the first oil mill. keeping in mind always. 361 of the Insurance Code is illegal. leaving a difference of P14. This can be seen from the testimony on cross of Mr.These facts lead us to hold that the present case falls within one of the recognized exceptions to the parole evidence rule.The assurance convinced respondent that. among others. sir. we find that the same proceeds from a wrong assumption. you will only do that if you will make to increase the amount and it is by indorsement not by another policy. the courts will consider the purpose and object of the contract. Evidence on record reveals that respondents operating manager. sir. The argument fails to impress."[16 We again stress that 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. Borja regarding this matter and he told me that what is important is the word new oil mill. Borja said. despite the impreciseness in the specification of the boundaries. that at least in so far as Exhibit A is concern you have read what the policy contents. however.(sic) Kindly take a look in the page of Exhibit A which was marked as Exhibit A-2 particularly the boundaries of the property insured by the insurance policy Exhibit A. Yet. Plaintiff has not complied with the condition of the policy and renewal certificate that the renewal premium should be paid on or before renewal date.623. Mr.20 by reason of a discount or rebate. SALONGA: Q: You mentioned. beyond its jurisdiction to resolve. [18 The Court of Appeals refused to consider this contention of the petitioner.147. Borja.623. From the admission of respondents own witness. This irreconcilable difference can only be clarified by admitting evidence aliunde. as a matter of fact. Section 18 of the Rules of Court.20. the former only paid it P75.: 24. Anent petitioners argument that the respondent is barred by estoppel from claiming that the description of the insured oil mill in the policy was wrong. the contractual intention of the parties cannot be understood from a mere reading of the instrument. It insists that the issue was raised in paragraph 24 of its Answer. give effect to all the parts of the contract. in accordance with Section 77 of the Insurance Code. It is true that the asseverations petitioner made in paragraph 24 of its Answer ostensibly spoke of the policys condition for payment of the renewal premium on time and respondents non-compliance with it.20. however. Mr. Under the Rules of Court. petitioner argues. explain or add to the terms of the written agreement if he puts in issue in his pleading. who acknowledged that the paid amount was lacking by P14. pursuant to Rule 46. you can never insured (sic) one property with two (2) policies. [17 In a further attempt to avoid liability. which rebate under Sec. A: It was not. this doubt is to be resolved against the insurer. the prime rule that in the event of doubt. It held that this issue was raised for the first time on appeal. Edison Tantuco. will you tell us as the manager of the company whether the boundaries stated in Exhibit A-2 are the boundaries of the old (sic) mill that was burned or not. [19 Petitioner. viz. Borja.00. its failure to express the true intent and agreement of the parties thereto. suffices to invalidate the policy. notified Mr.770. Tantuco: "ATTY. In determining the intent of the parties to the contract. Mr. it . Petitioner adds that the issue was the subject of the cross-examination of Mr. Tantuco that the use of the adjective new will distinguish the insured property. The deficiency. a party may present evidence to modify. [15 Here. contests this finding of the appellate court. Borja assured Mr. the insurance will cover the new oil mill. which the petitioner cited. the courts will read and construe the policy as a whole and if possible. which will explain the imperfection and clarify the intent of the parties. hence. Thus. while the contract explicitly stipulated that it was for the insurance of the new oil mill. petitioner claims that respondent forfeited the renewal policy for its failure to pay the full amount of the premium and breach of the Fire Extinguishing Appliances Warranty. I called up Mr. In determining what the parties intended. Borja (the petitioners agent with whom respondent negotiated for the contract) about the inaccurate description in the policy.
Borja. but they should. finding no reversible error in the impugned Decision. on the other hand. Again. The thrust of the cross-examination of Mr. we find that neither did it require that the appliances are restricted to those mentioned in the warranty. We agree with the appellate courts conclusion that the aforementioned warranty did not require respondent to provide for all the fire extinguishing appliances enumerated therein. Borjas testimony. was not for the purpose of proving this fact.24-HOUR SECURITY SERVICES BREACH of this warranty shall render this policy null and void and the Company shall no longer be liable for any loss which may occur. It ought to be remembered that not only are warranties strictly construed against the insurer.PORTABLE EXTINGUISHERS . such was made in the course of discussing a discount or rebate. any witness to testify that respondent indeed failed to pay the full amount of the premium. Finally. SO ORDERED. during the whole course of the trial. or that it did not pay the full amount. Additionally. The breach occurred when the respondent failed to install internal fire hydrants inside the burned building as warranted. [24 That reasonableness is to be ascertained in light of the factual conditions prevailing in each case. Likewise.EXTERNAL HYDRANTS . This fact was admitted by the oil mills expeller operator. It must be remembered that he was called to the stand basically to demonstrate that an existing policy issued by the petitioner covers the burned building. what the warranty mandates is that respondent should maintain in efficient working condition within the premises of the insured property. the whole tenor of Mr. The said warranty provides: WARRANTED that during the currency of this Policy. but not limited to. Here. . when the issues to be resolved in the trial court were formulated at the pre-trial proceedings. fire fighting equipments such as. petitioner fatally neglected to present. (2) an emergency fire engine. the argument lacks merit. by themselves be reasonably interpreted. we find that there is no more need for an internal hydrant considering that inside the burned building were: (1) numerous portable fire extinguishers. and (3) a fire hose which has a connection to one of the external hydrants. both during direct and cross examinations. Certainly. petitioner contends that respondent violated the express terms of the Fire Extinguishing Appliances Warranty. which will serve as the oil mills first line of defense in case any part of it bursts into flame. those identified in the list. Though it briefly touched on the alleged deficiency. [21 fire hydrant. Most significant to point.did not contain any specific and definite allegation that respondent did not pay the premium. likewise. Gerardo Zarsuela. To be sure. [23 All of these equipments were in efficient working order when the fire occurred.FIRE PUMP . Fire Extinguishing Appliances as mentioned below shall be maintained in efficient working order on the premises to which insurance applies: . Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers. In other words. implicitly assumed a valid and subsisting insurance policy. which the agent apparently gave the respondent. the instant petition is hereby DISMISSED. the question of the supposed inadequate payment was never raised. [22 and an emergency fire engine. respondent was able to comply with the warranty. two fire hoses. or that it did not pay the amount on time.INTERNAL HYDRANTS . IN VIEW WHEREOF .[20 Petitioner argues that the warranty clearly obligates the insured to maintain all the appliances specified therein.
1985. among others. J. Respondents. and imprudence" of the unknown driver of a pick-up with plate no. that PANMALAY defrayed the cost of repair of the insured car and. ERLINDA FABIE AND HER UNKNOWN DRIVER. Library THIRD DIVISION G. since indemnification thereunder was made on the assumption that there was no wrongdoer or no third party at fault. PCR-220. chanrobl esvirtualawlibrary ch anrobles virtual law library On February 12. Erlinda Fabie. private respondents filed a Motion to Dismiss alleging that PANMALAY had no cause of action against them. DDZ-431 and registered in the name of Canlubang Automotive Resources Corporation [CANLUBANG]. ch anroblesvirtualawlibrary chanrobl es virtual law library Private respondents.Davide. on official leave.052. 81026 April 3.R. and that the driver of the insured car was.00. In compliance therewith. the insured car was hit and suffered damages in the amount of P42. PANMALAY clarified.: Petitioner Pan Malayan Insurance Company (PANMALAY) seeks the reversal of a decision of the Court of Appeals which upheld an order of the trial court dismissing for no cause of action PANMALAY's complaint for damages against private respondents Erlinda Fabie and her driver. JJ. 1990 PAN MALAYAN INSURANCE CORPORATION. Kapunan. failed and refused to pay the claim of PANMALAY. chanrobl esvirtualawlibrary ch anrobles virtual law library . that on May 26. Pardo. vs. They argued that payment under the "own damage" clause of the insurance policy precluded subrogation under Article 2207 of the Civil Code. thereafter. therefore.J. CORTES. an authorized driver duly licensed to drive the vehicle.. PANMALAY averred the following: that it insured a Mitsubishi Colt Lancer car with plate No. due to the "carelessness. and Ynares-Santiago. was subrogated to the rights of CANLUBANG against the driver of the pick-up and his employer. 1985. concur. coverage of the insurance policy. chanrobl esvirtualawlibrary chanrobles virtual law library On December 10. J. Petitioner. 1986.. at the time of the accident. chanrobl esvirtualawlibrary ch anrobles virtual law library The principal issue presented for resolution before this Court is whether or not 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. despite repeated demands. filed a Motion for Bill of Particulars and a supplemental motion thereto. recklessness. Jr. (Chairman).. No. PANMALAY filed a complaint for damages with the RTC of Makati against private respondents Erlinda Fabie and her driver. PANMALAY also submitted a copy of the insurance policy and the Release of Claim and Subrogation Receipt executed by CANLUBANG in favor of PANMALAY. C.. defendants. that the damage caused to the insured car was settled under the "own damage". COURT OF APPEALS. and that.
therefore. PANMALAY filed the present petition for review. Erie & Western Transport. If the insured property is destroyed or damaged through the fault or negligence of a party other than 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.. ch anrobles virtual law library chanrobl esvirtualawlibrary PANMALAY alleged in its complaint that. Fireman's Fund Insurance Company v. April 7. these orders were upheld by the Court of Appeals on November 27. the settlement is binding on both the assured and the insurer. The right of subrogation is not dependent upon. Co. then the insurer. ch anroblesvirtualawlibrary chanrobl es virtual law library After private respondents filed its comment to the petition. 1964. the former has no right of subrogation against the third party liable for the loss [Sveriges Angfartygs Assurans Forening v. chanrobl esvirtualawlibrary ch anrobles virtual law library There are a few recognized exceptions to this rule. pursuant to a motor vehicle insurance policy. PANMALAY contended. which reads: If the plaintiffs property has been insured. For instance. 70 SCRA 323]. Consequently. It accrues simply upon payment of the insurance claim by the insurer [Compania Maritima v. Elgin. nor does it grow out of. 117 US 312. Qua Chee Gan. Co. if the assured by his own act releases the wrongdoer or third party liable for the loss or damage. R. Ed. G.. No. And where the insurer pays the assured for a loss which is not a risk covered by the policy. the RTC issued an order dated June 16. Similarly. 21 SCRA . it had indemnified CANLUBANG for the damage to the insured car resulting from a traffic accident allegedly caused by the negligence of the driver of private respondent. 488 (1923)]. thereby effecting "voluntary payment". . 45 Phil.After hearings conducted on the motion. 1986 dismissing PANMALAY's complaint for no cause of action. . 1976. L-27427. the insurer's right of subrogation is defeated [Phoenix Ins. 29 L. Jamilla & Company. Insurance Company of North America. Inc. L-18965. and the latter cannot bring an action against the carrier on his right of subrogation [McCarthy v. On August 19. Insurance Company of North America v..R. G. any privity of contract or upon written assignment of claim. Erlinda Fabie. upon payment to the assured. Inc. reply and rejoinder. September 5. and petitioner filed its reply. chanrobl esvirtualawlibrary ch anrobles virtual law library On appeal taken by PANMALAY. the RTC denied PANMALAY's motion for reconsideration. of Brooklyn v. 1967. ch anroblesvirtualawlibrary chanrobl es virtual law library Deliberating on the various arguments adduced in the pleadings. that its cause of action against private respondents was anchored upon Article 2207 of the Civil Code. 1987. L-22146. October 30. from liability. Joliet & Eastern Railway Co. 1986. 12 SCRA 213. opposition thereto. No. chanroblesvirtualawlibrary chanrobl es virtual law library Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. No. 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. Barber Steamship Lines. 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. 229 F 2d 705 (1956)]. the Court finds merit in the petition. G. . the Court considered the issues joined and the case submitted for decision. 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.R. 873 (1886).. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. PANMALAY is correct.
L-43706. and therefore did not have any cause of action against private respondents.R. chanrobl esvirtualawlibrary ch anrobles virtual law library The above conclusion is without merit. Inc. October 30. No. No. November 14. which was the basis for settlement of CANLUBANG's claim. When PANMALAY utilized the phrase "own damage" . On the other hand. chanroblesvirtualawlibrary chanrobl es virtual law library None of the exceptions are availing in the present case.12]. G. 1988. the policy will be construed by the courts liberally in favor of the assured and strictly against the insurer [Union Manufacturing Co. G. equivocal or uncertain. National Power Corporation v. 1986. Both tribunals concluded that PANMALAY could not now invoke Article 2207 and claim reimbursement from private respondents as alleged wrongdoers or parties responsible for the damage.R. In the case of property insurance policies.. Pacific Banking Corporation v. the evident intention of the contracting parties. the Court of Appeals in applying the ejusdem generis rule held that Section III-1 of the policy.. determine the import of the various terms and provisions embodied in the policy. however. Philippine Guaranty Co. chanroblesvirtualawlibrary chanrobl es virtual law library 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. i. is not found in the insurance policy to define the basis for its settlement of CANLUBANG's claim under the policy. L-41014. 31]. p. p. 47 SCRA 271. incidentally. Not only does it stem from an erroneous interpretation of the provisions of the section.a phrase which. On the one hand. chanrobl esvirtualawlibrary ch anrobles virtual law library . Also Articles 1370-1378 of the Civil Code]. chanrobl esvirtualawlibrary chanrobles virtual law library Neither is there merit in the Court of Appeals' ruling that the coverage of insured risks under Section III-1 of the policy does not include to the insured vehicle arising from collision or overturning due to the negligent acts of the third party. Record. L-27932. or bodily injuries suffered by. 1. chanroblesvirtualawlibrary chanrobl es virtual law library It must be emphasized that the lower court's ruling that the "own damage" coverage under the policy implies damage to the insured car caused by the assured itself. proceeds from an incorrect comprehension of the phrase "own damage" as used by the insurer. such that the parties themselves disagree about the meaning of particular provisions. G. v. instead of third parties. Court of Appeals. It is only when the terms of the policy are ambiguous. the insurer and the assured. It is in this sense that the so-called "own damage" coverage under Section III of the insurance policy is differentiated from Sections I and IV-1 which refer to "Third Party Liability" coverage (liabilities arising from the death of. November 28. In such an event. 168 SCRA 1.R. Inc. but it also violates a fundamental rule on the interpretation of property insurance contracts. 145 SCRA 533..e. No. third parties) and from Section IV-2 which refer to "Property Damage" coverage (liabilities arising from damage caused by the insured vehicle to the properties of third parties). did not cover damage arising from collision or overturning due to the negligence of third parties as one of the insurable risks. the trial court held that 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. Court of Appeals.. it simply meant that it had assumed to reimburse the costs for repairing the damage to the insured vehicle [See PANMALAY's Compliance with Supplementary Motion for Bill of Particulars.. 1972. were of the opinion that PANMALAY was not legally subrogated under Article 2207 of the Civil Code to the rights of CANLUBANG. chanrobl esvirtualawlibrary ch anrobles virtual law library The lower court and Court of Appeals. that the courts will intervene.
Record. xxx xxx xxx ch anrobles virtual law library [Annex "A-1" of PANMALAY's Compliance with Supplementary Motion for Bill of Particulars. 34. chanroblesvirtualawlibrary chanrobl es virtual law library Considering that the very parties to the policy were not shown to be in disagreement regarding the meaning and coverage of Section III-1. ch anrobles virtual law library (b) by fire. reads as follows: SECTION III . self ignition or lightning or burglary. specifically sub-paragraph (a) thereof. 20]. it was improper for the appellate court to indulge in contract construction. housebreaking or theft. rail.Section III-1 of the insurance policy which refers to the conditions under which the insurer PANMALAY is liable to indemnify the assured CANLUBANG against damage to or loss of the insured vehicle. external explosion. Although the terms "accident" or "accidental" as used in insurance contracts have not acquired a technical meaning. p. an event that proceeds from an unknown cause. is comprehensive enough to include damage to the insured vehicle arising from collision or overturning due to the fault or negligence of a third party. lift or elevator. not expected" [De la Cruz v. waterway.LOSS OR DAMAGE ch anrobles virtual law library 1. chanrobl es virtual law library (d) whilst in transit (including the processes of loading and unloading) incidental to such transit by road. or is an unusual effect of a known cause and. or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear. and executed a Release of Claim and Subrogation Receipt in favor of latter. p. specifically Section III-1(a). and to ascribe meaning contrary to the clear intention and understanding of these parties. It then accepted payment from PANMALAY. therefore. to apply the ejusdem generis rule. subject to the Limits of Liability. the driver thereof fled the scene [Record. CANLUBANG is apparently of the same understanding. inland. PANMALAY contends that the coverage of insured risks under the above section. The Company will. Emphasis supplied]. The Capital Insurance & Surety . CANLUBANG filed its claim with PANMALAY for indemnification of the damage caused to its car. indemnify the Insured against loss of or damage to the Scheduled Vehicle and its accessories and spare parts whilst thereon: (a) by accidental collision or overturning. the Court has on several occasions defined these terms to mean that which takes place "without one's foresight or expectation. Based on a police report wherein the driver of the insured car reported that after the vehicle was sideswiped by a pick-up. chanrobl es virtual law library (c) by malicious act. ch anroblesvirtualawlibrary chanrobl es virtual law library It cannot be said that the meaning given by PANMALAY and CANLUBANG to the phrase "by accidental collision or overturning" found in the first paint of sub-paragraph (a) is untenable.
chanrobl esvirtualawlibrary ch anrobles virtual law library . is more in keeping with the rationale behind the various rules on the interpretation of insurance contracts favoring the assured or beneficiary so as to effect the dominant purpose of indemnity or payment [See Calanoc v. exclude events resulting in damage or loss due to the fault. G.. No. 8 SCRA 343. chanrobl esvirtualawlibrary chanrobles virtual law library For 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. L-21574. No. G. Inc. without qualification.. The concept "accident" is not necessarily synonymous with the concept of "no fault".R... No. Filipino Merchants Insurance Co. PANMALAY in effect advocates for a more comprehensive coverage of insured risks. 1984. supra.R. 1963. Court of Appeals. dismissal of PANMALAY's complaint against private respondents for no cause of action would still be a grave error of law.. 1966. Respondent Court of Appeals therefore committed reversible error in sustaining the lower court's order which dismissed PANMALAY's complaint against private respondents for no cause of action. L-16215. in the final analysis. recklessness or negligence of third parties. it is now for the trial court to determine if in fact the damage caused to the insured vehicle was due to the "carelessness.R. 98 Phil. a perusal of the provisions of the insurance policy reveals that damage to. 17 SCRA 559. Hence. v. It may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man. Del Rosario v. Inc. No. it cannot be inferred from jurisprudence that these terms. the amount which it had paid its assured under the insurance policy. PANMALAY would still have a cause of action against private respondents. it must be reiterated that in this present case. chanrobl esvirtualawlibrary ch anrobles virtual law library Moreover.Co. the insurer PANMALAY as subrogee merely prays that it be allowed to institute an action to recover from third parties who allegedly caused damage to the insured vehicle. Serrano v. furthermore. the Court ruled that 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. finds it noteworthy that the meaning advanced by PANMALAY regarding the coverage of Section III-1(a) of the policy is undeniably more beneficial to CANLUBANG than that insisted upon by respondents herein. And this. June 30. chanrobl esvirtualawlibrary ch anrobles virtual law library In conclusion. In the pertinent case of Sveriges Angfartygs Assurans Forening v. Court of Appeals. 85141. chanroblesvirtualawlibrary chanrobl es virtual law library Parenthetically. Certainly. The Equitable Insurance and Casualty Co. or loss of. June 29..R. G. 1989]. supra. the Court holds that there is no legal obstacle to the filing by PANMALAY of a complaint for damages against private respondents as the third parties allegedly responsible for the damage. G. recklessness and imprudence" of the driver of private respondent Erlinda Fabie.] chanrobl es virtual law library The Court. 130 SCRA 327]. L-35529. the insured vehicle due to negligent or careless acts of third parties is not listed under the general and specific exceptions to the coverage of insured risks which are enumerated in detail in the insurance policy itself [See Annex "A-1" of PANMALAY's Compliance with Supplementary Motion for Bill of Particulars. Having thus shown from the above discussion that PANMALAY has a cause of action against third parties whose negligence may have caused damage to CANLUBANG's car. Inc. and that PANMALAY's settlement of CANLUBANG's claim for damages allegedly arising from a collision due to private respondents' negligence would amount to unwarranted or "voluntary payment". By arguing that this section covers losses or damages due not only to malicious. but also to negligent acts of third parties. 79 (1955). November 28. July 16. Court of Appeals. Qua Chee Gan. even assuming for the sake of argument that Section III-1(a) of the insurance policy does not cover damage to the insured vehicle caused by negligent acts of third parties.
in view of the foregoing. Jr. Let the case be remanded to the lower court for trial on the merits. Gutierrez.. C...WHEREFORE. concur. chanrobl esvirtualawlibrary chanrobles virtual law library SO ORDERED. Petitioner's complaint for damages against private respondents is hereby REINSTATED. Feliciano and Bidin. Fernan. . JJ.J. the present petition is GRANTED.
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