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

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

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

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

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

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

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Section 2 (1) of the Insurance Code

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

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

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2. YES Ratio Regardless of the value of the unemancipated common child's property, the father and mother ipso jure become the legal guardian of the child's property. However, if the market value of the property or the annual income of the child exceeds P50,000,00, a bond has to be posted by the parents concerned to guarantee the performance of the obligations of a general guardian. Reasoning - Sec 180, Insurance Code: 'In the absence of a judicial guardian, the father, or in the latter's absence or incapacity, the mother of any minor, who is an insured or a beneficiary under a contract of life, health or accident insurance, may exercise, in behalf of said minor, any right under the policy, without necessity of court authority or the giving of a bond where the interest of the minor in the particular act involved does not exceed twenty thousand pesos " - …repealed by Art. 225, Family Code: "ART. 225. The father and the mother shall jointly exercise legal guardianship over the property of their unemancipated common child without the necessity of a court appointment. In case of disagreement, the father's decision shall prevail, unless there is judicial order to the contrary. Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned shall be required to furnish a bond in such amount as the court may determine, but not less than ten per centum (10%) of the value of the property or annual income, to guarantee the performance of the obligations prescribed for general guardians." -"market value of the property or the annual income of the child": the aggregate of the child's property or annual income; if this exceeds P50,000.00, a bond is required - There is no evidence that the share of each of the minors in the proceeds of the group policy in question is the minor's only property. Without such evidence, it would not be safe to conclude that, indeed, that is his only property. Disposition the instant petition is GRANTED. The Decision of 10 October 1991 and the Resolution of 19 May 1992 of the public respondent in CA-G.R. SP No. 22950 are SET ASIDE and the Decision of the Insurance Commission in IC Case No. RD-058 is REINSTATED. Costs against the private respondent. SO ORDERED. CEBU SHIPYARD ENGINEERING WORKS, INC. V WILLIAM LINES, INC. and PRUDENTIAL GUARANTEE and ASSURANCE COMPANY, INC. [CITATION] PURISIMA; May 5, 1999 NATURE Petition for review on certiorari FACTS Cebu Shipyard and Engineering Works, Inc. (CSEW) is engaged in the business of dry-docking and repairing of marine vessels while the Prudential Guarantee and Assurance, Inc. (Prudential) is in the non-life insurance business. - William Lines, Inc. is in the shipping business. It was the owner of M/V Manila City, a luxury passenger-cargo vessel, which caught fire and sank on Feb. 16, 1991. At the time of the unfortunate occurrence sued upon, subject vessel was insured with Prudential for P45M for hull and machinery. The Hull Policy included an “Additional Perils (INCHMAREE)” Clause covering loss of or damage to the vessel through the negligence of, among others, ship repairmen - Petitioner CSEW was also insured by Prudential for third party liability under a Shiprepairer’s Legal Liability Insurance Policy. The policy was for P10 million only, under the limited liability clause, to wit: - On Feb. 5, 1991, William Lines, Inc. brought its vessel, M/V Manila City, to the Cebu Shipyard in Lapulapu City for annual dry-docking and repair. - On Feb. 6, 1991, an arrival conference was held between representatives of William Lines, Inc. and CSEW to discuss the work to be undertaken on the M/V Manila City. The contracts, denominated as Work Orders, were signed thereafter., with the following stipulations: “10. The Contractor shall replace at its own work and at its own cost any work or material which can be shown to be defective and which is communicated in writing within one (1) month of redelivery of the vessel or if the vessel was not in the Contractor’s Possession, the withdrawal of the Contractor’s workmen, or at its option to pay a sum equal to the cost of such replacement at its own works. These conditions shall apply to any such replacements. 11. Save as provided in Clause 10, the Contractor shall not be under any liability to the Customer either in contract or for delict or quasi-delict or otherwise except for negligence and such liability shall itself be

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subject to the following overriding limitations and exceptions, namely: (a) The total liability of the Contractor to the Customer (over and above the liability to replace under Clause 10) or of any sub-contractor shall be limited in respect of any defect or event (and a series of accidents arising out of the same defect or event shall constitute one defect or event) to the sum of Pesos Philippine Currency One Million only. x x x 20. The insurance on the vessel should be maintained by the customer and/or owner of the vessel during the period the contract is in effect.” - While the M/V Manila City was undergoing drydocking and repairs within the premises of CSEW, the master, officers and crew of M/V Manila City stayed in the vessel, using their cabins as living quarters. Other employees hired by William Lines to do repairs and maintenance work on the vessel were also present during the dry-docking. - On February 16, 1991, after subject vessel was transferred to the docking quay, it caught fire and sank, resulting to its eventual total loss. - On February 21, 1991, William Lines, Inc. filed a complaint for damages against CSEW, alleging that the fire which broke out in M/V Manila City was caused by CSEW’s negligence and lack of care. - On July 15, 1991 was filed an Amended Complaint impleading Prudential as co-plaintiff, after the latter had paid William Lines, Inc. the value of the hull and machinery insurance on the M/V Manila City. As a result of such payment Prudential was subrogated to the claim of P45 million, representing the value of the said insurance it paid. On June 10, 1994, the trial court a quo came out with a judgment against CSEW: 1. To pay unto plaintiff Prudential Guarantee and Assurance, Inc., the subrogee, the amount of P45M, with interest at the legal rate until full payment is made; the amount of P56,715,000 representing loss of income of M/V MANILA CITY, with interest at the legal rate until full payment is made; 2. To pay unto plaintiff, William Lines, Inc. the amount of P11M as payment, in addition to what it received from the insurance company to fully cover the injury or loss, in order to replace the M/V MANILA CITY, with interest at the legal rate until full payment is made; the sum of P927,039 for the loss of fuel and lub oil on board the vessel when she was completely gutted by fire at defendant, Cebu Shipyard’s quay, with interest at the legal rate until full payment is made; the sum of P3,054,677.95 as

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payment for the spare parts and materials used in the M/V MANILA CITY during dry-docking with interest at the legal rate until full payment is made; P500,000 in moral damages;the amount of P10Min attorney’s fees; and to pay the costs of this suit. - On September 3, 1997, the Court of Appeals affirmed the appealed decision of the trial court, ordering CSEW to pay Prudential, the subrogee, the sum of P45 Million, with interest at the legal rate until full payment is made. CSEW’s version: On Feb. 13, 1991, the CSEW completed the drydocking of M/V Manila City at its grave dock. It was then transferred to the docking quay of CSEW where the remaining repair to be done was the replating of the top of Water Ballast Tank No. 12 which was subcontracted by CSEW to JNB General Services. Tank Top No. 12 was at the rear section of the vessel, on level with the flooring of the crew cabins located on the vessel’s second deck. At around 7AM of Feb. 16, 1991, the JNB workers trimmed and cleaned the tank top framing which involved minor hotworks (welding/cutting works). The said work was completed at about 10AM. The JNB workers then proceeded to rig the steel plates, after which they had their lunch break. The rigging was resumed at 1PM While in the process of rigging the second steel plate, the JNB workers noticed smoke coming from the passageway along the crew cabins. When one of the workers, Mr. Casas, proceeded to the passageway to ascertain the origin of the smoke, he noticed that smoke was gathering on the ceiling of the passageway but did not see any fire as the crew cabins on either side of the passageway were locked. He immediately sought out the proprietor of JNB, Mr. Buenavista, and the Safety Officer of CSEW, Mr. Aves, who sounded the fire alarm. CSEW’s fire brigade immediately responded as well as the other fire fighting units in Metro Cebu. However, there were no WLI representative, officer or crew to guide the firemen inside the vessel. - Despite the combined efforts of the firemen of the Lapulapu City Fire Dept., Mandaue Fire Dept., Cordova Fire Dept. Emergency Rescue Unit Foundation, and fire brigade of CSEW, the fire was not controlled until 2AM of the following day. - On the early morning of Feb. 17, 1991, gusty winds rekindled the flames on the vessel and fire again broke out. Then the huge amounts of water pumped into the vessel, coupled with the strong current, caused the vessel to tilt until it capsized and sank - When M/V Manila City capsized, steel and angle bars were noticed to have been newly welded along the port side of the hull of the vessel, at the level of the crew cabins. William Lines did not previously apply for a permit to do hotworks on the said portion of the ship as it should have done pursuant to its work order with CSEW. Prudential’s version > At around 7AM of Feb. 16, 1991, the Chief Mate of M/V Manila City was inspecting the various works being done by CSEW on the vessel, when he saw that some workers of CSEW were cropping out steel plates on Tank Top No. 12 using acetylene, oxygen and welding torch. He also observed that the rubber insulation wire coming out of the air-conditioning unit was already burning, prompting him to scold the workers. > At 2:45 PM of the same day, witnesses saw smoke coming from Tank No. 12. The vessel’s reeferman reported such occurence to the Chief Mate who immediately assembled the crew members to put out the fire. When it was too hot for them to stay on board and seeing that the fire cannot be controlled, the vessel’s crew were forced to withdraw from CSEW’s docking quay. - In the morning of Feb. 17, 1991, M/V Manila City sank. As the vessel was insured with Prudential Guarantee, William Lines filed a claim for constructive total loss, and after a thorough investigation of the surrounding circumstances of the tragedy, Prudential found the said insurance claim to be meritorious and issued a check in favor of William Lines in the amount of P45 million pesos representing the total value of M/V Manila City’s hull and machinery insurance. ISSUES 1. WON CSEW had “management and supervisory control“ of the m/v manila city at the time the fire broke out 2. WON the doctrine of res ipsa loquitur applies against the crew 3. WON CSEW’S expert evidence is admissible or of probative value 4. WON Prudential has the right of subrogation against its own insured THE CONTRACTUAL 5. 5. 5. 5. WON the provisions limiting csew’s liability for negligence to a maximum of p1 million are valid HELD 1. YES

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- The that factual findings by the CA are conclusive on the parties and are not reviewable by this Court. They are entitled to great weight and respect, even finality, especially when, as in this case, the CA affirmed the factual findings arrived at by the trial court. When supported by sufficient evidence, findings of fact by the CA affirming those of the trial court, are not to be disturbed on appeal. The rationale behind this doctrine is that review of the findings of fact of the CA is not a function that the Supreme Court normally undertakes. - The CA and the Cebu RTC are agreed that the fire which caused the total loss of subject M/V Manila City was due to the negligence of the employees and workers of CSEW. Both courts found that the M/V Manila City was under the custody and control of petitioner CSEW, when the ill-fated vessel caught fire. The decisions of both the lower court and the CA set forth clearly the evidence sustaining their finding of actionable negligence on the part of CSEW. This factual finding is accorded great weight and is conclusive on the parties. The court discerns no basis for disturbing such finding firmly anchored on enough evidence. - Furthermore, in petitions for review on certiorari, only questions of law may be put into issue. Questions of fact cannot be entertained. The finding of negligence by the CA is a question which this Court cannot look into as it would entail going into factual matters on which the finding of negligence was based. Such an approach cannot be allowed by this Court in the absence of clear showing that the case falls under any of the exceptions to the wellestablished principle. The finding by the trial court and the Court of Appeals that M/V Manila City caught fire and sank by reason of the negligence of the workers of CSEW, when the said vessel was under the exclusive custody and control of CSEW is accordingly upheld. 2. YES - For the doctrine of res ipsa loquitur to apply to a given situation, the following conditions must concur: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; and (2) that the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence. The facts and evidence on record reveal the concurrence of said conditions in the case under scrutiny. First, the fire that occurred and consumed M/V Manila City would not have happened in the ordinary course of things if reasonable care and

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diligence had been exercised. In other words, some negligence must have occurred. Second, the agency charged with negligence, as found by the trial court and the CA and as shown by the records, is the herein petitioner, CSEW, which had control over subject vessel when it was docked for annual repairs. So also, as found by the RTC, “other responsible causes, including the conduct of the plaintiff, and third persons, are sufficiently eliminated by the evidence.” What is more, in the present case the trial court found direct evidence to prove that the workers and/or employees of CSEW were remiss in their duty of exercising due diligence in the care of subject vessel. The direct evidence substantiates the conclusion that CSEW was really negligent. Thus, even without applying the doctrine of res ipsa loquitur, in light of the direct evidence on record, the ineluctable conclusion is that CSEW was negligent and consequently liable for damages to the respondent, William Lines, Inc. 3. NO - Petitioner maintains that the CA erred in disregarding the testimonies of the fire experts, Messrs. David Grey and Gregory Michael Southeard, who testified on the probable origin of the fire in M/V Manila City. Petitioner avers that since the said fire experts were one in their opinion that the fire did not originate in the area of Tank Top No. 12 where the JNB workers were doing hotworks but on the crew accommodation cabins on the portside No. 2 deck, the RTC and the CA should have given weight to such finding based on the testimonies of fire experts; petitioner argues. But courts are not bound by the testimonies of expert witnesses. Although they may have probative value, reception in evidence of expert testimonies is within the discretion of the court, under Section 49, Rule 130 of the Revised Rules of Court. It is never mandatory for judges to give substantial weight to expert testimonies. If from the facts and evidence on record, a conclusion is readily ascertainable, there is no need for the judge to resort to expert opinion evidence. In the case under consideration, the testimonies of the fire experts were not the only available evidence on the probable cause and origin of the fire. There were witnesses who were actually on board the vessel when the fire occurred. Between the testimonies of the fire experts who merely based their findings and opinions on interviews and the testimonies of those present during the fire, the latter are of more probative value.

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- According to petitioner, under the aforecited clause, William Lines, Inc., agreed to assume the risk of loss of the vessel while under drydock or repair and to such extent, it is benefited and effectively constituted as a co-assured under the policy. - This theory of petitioner is devoid of sustainable merit. Clause 20 of the Work Order in question is clear in the sense that it requires William Lines to maintain insurance on the vessel during the period of dry-docking or repair. Concededly, such a stipulation works to the benefit of CSEW as the shiprepairer. However, the fact that CSEW benefits from the said stipulation does not automatically make it as a coassured of William Lines. The intention of the parties to make each other a co-assured under an insurance policy is to be gleaned principally from the insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates the assured and the beneficiaries of the insurance. The hull and machinery insurance procured by William Lines, Inc. from Prudential named only “William Lines, Inc.” as the assured. There was no manifestation of any intention of William Lines, Inc. to constitute CSEW as a coassured under subject policy. It is axiomatic that when the terms of a contract are clear its stipulations control.i] Thus, when the insurance policy involved named only William Lines, Inc. as the assured thereunder, the claim of CSEW that it is a co-assured is unfounded. - Then too, in the Additional Perils Clause of the same Marine Insurance Policy, it is provided that: Subject to the conditions of this Policy, this insurance also covers loss of or damage to vessel directly caused by the following: xxx Negligence of Charterers and/or Repairers, provided such Charterers and/or Repairers are not an Assured hereunder. - As correctly pointed out by respondent Prudential, if CSEW were deemed a co-assured under the policy, it would nullify any claim of William Lines, Inc. from Prudential for any loss or damage caused by the negligence of CSEW. Certainly, no shipowner would agree to make a shiprepairer a co-assured under such insurance policy; otherwise, any claim for loss or damage under the policy would be invalidated. Such result could not have been intended by William Lines, Inc. 5. NO - Although in this jurisdiction, contracts of adhesion have been consistently upheld as valid per se; as

4. YES - Petitioner contends that Prudential is not entitled to be subrogated to the rights of William Lines, Inc., theorizing that (1) the fire which gutted M/V Manila City was an excluded risk and (2) it is a co-assured under the Marine Hull Insurance Policy. - It is petitioner’s submission that the loss of M/V Manila City or damage thereto is expressly excluded from the coverage of the insurance because the same resulted from “want of due diligence by the Assured, Owners or Managers” which is not included in the risks insured against. Again, this theory of petitioner is bereft of any factual or legal basis. It proceeds from a wrong premise that the fire which gutted subject vessel was caused by the negligence of the employees of William Lines, Inc. To repeat, the issue of who between the parties was negligent has already been resolved against CSEW. Upon proof of payment by Prudential to William Lines, Inc., the former was subrogated to the right of the latter to indemnification from CSEW. As aptly ruled by the Court of Appeals, the law on the matter is succinct and clear, to wit: - Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. - Thus, when Prudential, after due verification of the merit and validity of the insurance claim of William Lines, Inc., paid the latter the total amount covered by its insurance policy, it was subrogated to the right of the latter to recover the insured loss from the liable party, CSEW. - Petitioner theorizes further that there can be no right of subrogation as it is deemed a co-assured under the subject insurance policy. To buttress its stance that it is a co-assured, petitioner placed reliance on Clause 20 of the Work Order which states: 20. The insurance on the vessel should be maintained by the customer and/or owner of the vessel during the period the contract is in effect.

it would indeed be unfair and inequitable to limit the liability of petitioner to One Million Pesos only. He further testified that the three insurance companies are sister companies. 1982.00 (Renewed under Renewal Certificate No. Julian Sy went to the agent of Reliance Insurance whom he asked to accompany him to the office of the company so that he can file his claim. .On July 30.00. the partnership engaged in the sale of construction materials at its place of business. there is absolutely no room for interpretation or construction anymore.000. Inc. Reliance Surety and Insurance Co.. The said claim of William Lines.000. The parties must abide by the terms of the contract because such terms constitute the measure of the insurer's liability and compliance therewith is a condition precedent to the insured's right of recovery from the insurer. 41997). The same treatment was given him by the other insurance companies..While it is a cardinal principle of insurance law that a policy or contract of insurance is to be construed liberally in favor of the insured and strictly against the insurer company.00. for a total loss. As aptly held by the trial court. that this condition shall not apply when the total insurance or insurances in force at the time of loss or damage is not more than P200.. 1981. 1982. Courts are not allowed to make contracts for the parties. yet contracts of insurance. was then found to be valid and compensable such that Prudential paid the latter the total value of its insurance claim. they would also pay. The facts show that Julian Sy insured the stocks in trade of New Life Enterprises with Western Guaranty Corporation. by or on behalf of the Company before the occurrence of any loss or damage. and as a matter of fact when he was following-up his claim with Equitable Insurance. Camp Crame. This policy was renewed on May 13. and Equitable Insurance Corporation. are to be construed according to the . Lucena City. Inc. Under the business name of New Life Enterprises. Thus." Petitioner’s comments > Petitioners contend that they are not to be blamed for the omissions. According to the certification issued by the Headquarters. . he submitted the fire clearance. issued Fire Insurance Policy No. as they have not even read said policies. the Claims Manager told him to go first to Reliance Insurance and if said company agrees to pay. in ruling on the validity and applicability of the stipulation limiting the liability of CSEW for negligence to P1M only. .00.The said policy in question follows: "The insured shall give notice to the Company of any insurance or insurances already effected. Disposition Petition is DENIED.Considering the aforestated circumstances. Reliance Surety and Insurance Co. Equitable Insurance Corporation issued Fire Insurance Policy No. 39328 in the amount of P200.' Page 7 Reliance Insurance purveyed the same message as well as Equitable Insurance Corporation. “it is rather unconscionable if not overstrained. 37201 in the amount of P350. Western Guaranty Corporation issued Fire Insurance Policy No. . Inc. like other contracts.000. NEW LIFE ENTERPRISES V CA 207 SCRA 669 REGALADO. and unless such notice be given and the particulars of such insurance or insurances be stated therein or endorsed on this policy pursuant to Section 50 of the Insurance Code. the stocks in trade inside said building were insured against fire in the total amount of P1. then. An additional insurance was issued by the same company on November 12. or uncertain. After the fire. March 31. 1981 under Fire Insurance Policy No. 1981. Inc. . . According to the plaintiffs. ISSUE WON New Life Enterprises’ claim for payment be denied HELD YES Ratio Furthermore. Razon told the plaintiff that his claim 'is denied for breach of policy conditions. Respondent’s comments > Western Guaranty Corporation through Claims Manager Bernard S. it was ascertained that the replacement cost of the vessel (the price of a vessel similar to M/V Manila City).000. He averred that in support of his claim. rather. covering any of the property or properties consisting of stocks in trade. Upon thorough investigation by its hull surveyor. all benefits under this policy shall be deemed forfeited. Philippine Constabulary/Integrated National Police.INSURANCE binding as an ordinary contract. equivocal. goods in process and/or inventories only hereby insured. they will intervene only when the terms of the policy are ambiguous. On February 8. Ultimately. a two storey building situated at Iyam. bearing in mind the principles of equity and fair play. amounts to P55M.00.550. the three insurance companies denied plaintiffs' claim for payment. it would not be difficult for petitioner to escape liability by the simple expedient of paying an amount very much lower than the actual damage or loss suffered by William Lines. 1982. 71547 in the amount of P700. Resolution of the CA is AFFIRMED. let alone the fact that negligence on the part of petitioner has been sufficiently proven. the facts and circumstances vis-a-vis the nature of the provision sought to be enforced should be considered. To determine the validity and sustainability of the claim of William Lines.000. 69135 in the amount of P300. Prudential conducted its own inquiry. . M/V Manila City was found to be beyond economical salvage and repair..The antecedents of this case show that Julian Sy and Jose Sy Bang have formed a business partnership in the City of Lucena.00. 1992 NATURE Appeal by certiorari FACTS . when the words and language of documents are clear and plain or readily understandable by an ordinary reader thereof.” To allow CSEW to limit its liability to P1M notwithstanding the fact that the total loss suffered by the assured and paid for by Prudential amounted to P45M would sanction the exercise of a degree of diligence short of what is ordinarily required because. the insurance policies and inventory of stocks.Thus when the building occupied by the New Life Enterprises was gutted by fire at about 2:00 o'clock in the morning of October 19. Furthermore. the Court recognizes instances when reliance on such contracts cannot be favored especially where the facts and circumstances warrant that subject stipulations be disregarded. The evaluation of the average adjuster also reported a constructive total loss. alleging that insurance agent Leon Alvarez (for Western) and Yap Kam Chuan (for Reliance and Equitable) knew about the existence of the additional insurance coverage and that they were not informed about the requirement that such other or additional insurance should be stated in the policy. or which may subsequently be effected.On May 15.000. Inc. provided however.It is worthy to note that M/V Manila City was insured with Prudential for P45M. the cause of fire was electrical in nature. the building and the stocks inside were burned.

is hereby modified by reducing the award to 12.00 only.00 with interest. who accidentally fell off the bug. Inc. Page 8 ISSUE WON the CA erred in the interpretation of the insurance contract on the limit of the insurer’s liability HELD YES . is not the "notice" that would stop the insurers from denying the claim.000. Ty..The limit of P50..444. . he was dragged by the bus along the asphalted road. the slowly moving bus sped forward at a high speed. FIRST QUEZON CITY INSURANCE CO. ordering the third party defendent.00 per accident means that the insurer's maximum liability for any single accident will not exceed P50.00 per passenger killed or injured.The bus company appealed to the CA. Reasoning a.00) per accident even if under the judgment of the court. Then fled from the scene. The bus driver. from June 10. he returned to the hospital for further treatment and checkup.Plaintiff was confined at the hospital for (40) days. which paid the insurance premiums.00 regardless of the number of passengers killed or injured therein.500. TY V FIRST NATIONAL SURETY 1 SCRA 1324 LABRADOR. 1984 to August 26. While the plaintiff was still on the bus with his hand on the bus door. this petition for review. Since only one passenger was injured in the accident. third-party defendant filed its answer to the third-party complaint. February 28.At different times within a period of two months prior to 24 December 1953. .00. the so-called theory of imputed knowledge. Petitioners should be aware of the fact that a party is not relieved of the duty to exercise the ordinary care and prudence that would be exacted in relation to other contracts.000.000.00 due to said physical injuries and the consequent hospital confinement. . the insurer's liability for the damages suffered by said passenger is pegged to the amount of P12.00 with legal interest. the plaintiff incurred lost earning by way of unearned salaries amounting to P7. the plaintiff lost balance and fell from the bus. the sum of P50.00 per passenger and its maximum liability per accident at (P50.After sending off certain seamen at the departure area of MIA. Agpalo was later dropped as a party defendant because he could not be served with summons. (DMTC). Broadway Cotton Factory. the plaintiff saw a DMTC bus.The plaintiff was brought to the Manila Sanitarium and Hospital where the doctors performed 2 major surgical operations on plaintiffs right leg.INSURANCE sense and meaning of the terms which the parties themselves have used.00 only..000. del Rosario proceeded to the public utility bus stop. or (P50. Hence. 1985 the complaint against DMTC and its driver. as a result of which. Costs against the private respondent De Dios Marikina Transportation Co. among which being the 8 above-named defendants. defendant DMTC filed a thirdparty complaint against First Quezon City Insurance Co. While moving at a crawling pace. The trial court's interpretation of the insurance contract was the correct interpretation. knowledge of the agent is knowledge of the principal. The conformity of the insured to the terms of the policy is implied from his failure to express any disagreement with what is provided for.000. While at the bus stop. Inc. a fire broke out which totally destroyed the Broadway . that the third-party defendant First Quezon City Insurance Co. The terms of the contract are clear and unambiguous. CA (DE DIOS MARIKINA TRANSPORT CO) 218 SCRA 526 GRINO-AQUINO. Moreover. September 17. Also. Plaintiff’s medical expenses were advanced by his employer Maglines but he was required to reimburse Maglines on a staggered basis by way of salary deductions.00 to each injured passenger. Inc. FQCIC seeks to limit to P12000. which issued to him personal accident policies. assailing the appellate courts' interpretation of the provision of the insurance contract on the limit of the insurer's liability. ordinary and popular sense.00 for the damages of the passenger. The injuries had left plaintiff with a huge scar on his right leg. even assuming the acquisition thereof by the former. obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. There being no satisfactory warrant the court dismissed the rest of the claims in the complaint and third-party complaint. they must be taken and understood in their plain. FACTS . Plaintiff’s beneficiary was his employer. Medical expenses totaled the amount of P69.000.The insurance policy clearly placed the maximum limit of the petitioner's liability for damages arising from death or bodily injury at P12.TC held DMTC complaint dismissed for lack of merit and as regards the third-party complaint First Quezon City Insurance Co. all of whom managed to board the bus while it was already at the bus stop. which modified the dispositive as regards the third-party complaint. On 24 December 1953. Jose V. it’s liability to indemnify the respomdemt DMTC. Diosdado C.000.41.000. 1961 FACTS . 1993 NATURE PETITION for review of the decision of the Court of Appeals. for the damages suffered by a passenger. plaintiff was the last one to board the bus. First Quezon City Insurance Co. Gil Agpalo..000. it was taking several passengers. to indemnify theI private respondent. b. aside from being of dubious applicability here has likewise been roundly refuted by respondent court whose factual findings we find acceptable. Besides. that is. The decision promulgated by the CA.Plaintiff filed on June 26. 1984. Inc. Inc. leaving the bus and the injured plaintiff behind.000. The insured is specifically required to disclose to the insurer any other insurance and its particulars which he may have effected on the same subject matter. was to indemnify third-party plaintiff DMTC in the sum of P12. . Del Rosario. . . The knowledge of such insurance by the insurer's agents. v.000. Disposition petition for review is GRANTED.000. the erring bus operator will have to pay more than P12.. abruptly stopped the bus. The bus company may not recover from the insurance company more than P12. Insurance company filed a MFR which was denied. Upon filing its answer. Jose V. April 29. 1985. be ordered to indemnify third-party plaintiff DMTC the SUM of P50. If such terms are clear and unambiguous. the amount specified in the insurance contract. employed as operator mechanic foreman in the Broadway Cotton Factory insured himself in 18 local insurance companies. As plaintiff clung instinctively to the handle bar. After his release from the hospital.

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

D. Sun Insurance. Tan filed his claim for fire loss. No other interpretation is necessary. the building including the insured store burned. The wages and salaries of both Magalong and Atiga are presumably paid by their respective firms. Tan filed a civil case with the RTC. 1991 NATURE Petition for certiorari to review the decision of the CA FACTS Private respondent Emilio Tan took from the petitioner a Peso 300. 1987 during a robbery of Producer's armored vehicle while it was in transit to transfer the money from its Pasay City Branch to its head office in Makati under the custody of its teller.00 under the policy issued by Fortune.On November 20. Sun Insurance Office. ordinary. What the court referred to in effect is the rejection in the first instance as claimed by Sun Insurance Disposition The decision of the CA is reversed and set aside. ordinary and popular sense (New Life Enterprises Case. Inc. vs.000. and popular sense. 1985. 532 (Anti-Highway Robbery Law) . It was teller Maribeth Alampay who had "custody" of the P725. together Page with Batigue . . 1984 was clear and plain. director. March 13. employee. NO . The armored car was driven by Benjamin Magalong Y de Vera. according to the SC. The CA likewise denied the petition of Sun Insurance. Ltd.Producers Bank of the Philippines filed a complaint against Fortune Insurance and Surety Co. Court of Appeals. NO . The Court noted that the one year period is likewise in accord with Section 23 of the Insurance Code which states that any condition which limits the time for commencing an action to a period of less than one year when the cause of action accrues is void. employee. Four days after the issuance of the policy. A request for reconsideration of the denial cannot suspend the running of the prescriptive period. fraudulent or criminal act of the insured or any officer. 2.The SC held that Condition 27 of the Insurance policy is very clear and free from any doubt or ambiguity. Petition filed a motion to dismiss on the alleged ground that the action has already prescribed based on Condition 27 of the Insurance Policy which stated that the window to file the appropriate action with either the Insurance Commission or in any court of competent jurisdiction is twelve months from the rejection of the claim. In its reply to the lawyer’s letter.00 cash being transferred along a specified money route . 1995 NATURE Petition for Review on certiorari of CA decision FACTS . Court of Appeals).Demands were made by the Producers upon the Fortune to pay the amount of the loss of P725. The sum was allegedly lost on June 29. > The language used by Fortune in the policy is plain. The right of action.Fortune opposes the contention of Producers that Atiga and Magalong are not its "officer. accrues at the time that the claim is rejected at the first instance.After an investigation by the Pasay police. wrote the private respondent denying the claim. WON the court the filing of a motion for reconsideration interrupts the 12 months prescription period to contest the denial of the insurance claim 2. .Court of Appeals > affirmed in toto > A policy or contract of insurance is to be construed liberally in favor of the insured and strictly against the insurance company (New Life Enterprises vs. INC. on February 29. they must be taken and understood in their plain. Driver Magalong was assigned by PRC Management Systems. The Court noted that the rationale for the one year period is to ensure that the evidence as to the origin and cause of the destruction have not yet disappeared. If such terms are clear and unambiguous. Sun Insurance Office). It has to be taken in its plain.000.000. . Contracts of insurance. 1983. trustee or authorized representative of the Insured whether acting alone or in conjunction with others. WON the rejection of the claim shall be deemed final only if it contains words to the effect that the denial is final HELD 1. V CA (TAN) 195 SCRA 193 PARAS. driver Magalong and guard Atiga were charged.00 but the latter refused to pay as the loss is excluded from the coverage of the insurance policy specifically under "General Exceptions" > The company shall not be liable under this policy in respect of x x x (b) any loss caused by any dishonest. Maribeth Alampay. are to be construed according to the sense and meaning of the terms which the parties themselves have used. private respondent wrote another letter to the insurance company requesting reconsideration of the denial. partner.. 1984 and May 17. Sun Insurance reiterated its denial of the claim and enclosed therein copies of the two previous denials dated February 29. . Tan’s lawyer wrote another letter to the insurance company inquiring about the April 3 letter which sought for a reconsideration of the denial. 1984.INSURANCE 10 SUN INSURANCE OFFICE LTD. The word "employee" should be taken to . RTC denied the motion and the subsequent motion for reconsideration. ordinary and simple. May 23. The case is dismissed FORTUNE INSURANCE AND SURETY CO. On April 3. ISSUE 1. with violation of P. vs Chia Yu where it ruled that “the cause of action in an insurance contract does not accrue until the Insured’s claim is finally rejected by the Insurer” by stating the use of the word “finally” cannot be construed to mean the rejection of a petition for reconsideration. like other contracts.000 property insurance policy to cover his interest in the electrical insurance store of his brother housed in a building in Iloilo City on August 15. 1985.The Court clarified its ruling in Eagle Star Insurance Co. for recovery of P725.V CA (PRODUCERS BANK OF THE PHILIPPINES) 244 SCRA 308 DAVIDE. escorted by Security Guard Saturnino Atiga Y Rosete. The rejection letter of February 29.On August 20. which alone wields the power to dismiss them > On being “AUTHORIZED REPRESENTATIVE” They were merely an assigned armored car driver and security guard for the money transfer. 1983.Trial Court > On being “EMPLOYEES” Magalong and Atiga were not employees or representatives of Producers as their services as armored car driver and as security guard having been merely offered by PRC Management and by Unicorn Security and which latter firms assigned them to plaintiff. x x x trustee or authorized representative x x x at the time of the robbery . 1984. Aquino and John Doe.

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

and his two other companions. and theft insurance. It concerns the filing of a motion for extension of time to file a motion for Page reconsideration. When it used then the term "employee. Verendia failed to live by the terms of the policy. In short. it was its intention to exclude and exempt from protection and coverage losses arising from dishonest. as an agent.But even granting for the sake of argument that these contracts were not "labor-only" contracts. even making it appear that the alleged lessee had disappeared. "the opportunity to defraud the insurer the moral hazard . January 22. thus no need to pay. that all benefits under the policy shall be forfeited “If the claim be in any respect fraudulent. the terms specifying the excluded classes are to be given their meaning as understood in common speech. . and is interchangeable with "agent. or jurisprudentially established in the light of the four standards in the determination of the employer-employee relationship or as statutorily declared even in a limited sense as in the case of Article 106 of the Labor Code which considers the employees under a "labor-only" contract as employees of the party employing them and not of the party who supplied them to the employer. the insured property was completely destroyed by fire. an insurance contract should be liberally construed in favor of the insured and strictly against the insurer company which usually prepares it. . for these particular tasks. and that Verendia maliciously represented that the building was under lease to a Roberto Garcia. or if any false declaration be made or used in support thereof. inflated the value of the property.Considering. Outside of these. and Atiga to provide the needed security for the money. or if any fraudulent means or devises are used by the Insured or anyone acting in his behalf to obtain any benefit under the policy”." it must have had in mind any person who qualifies as such as generally and universally understood. one who represents others or another in a special capacity. Verendia is deemed to have forfeited his right to claim by the misrepresentation he made. NO Ratio As the insurance contract is the law between the parties. . . since it appears that there was a misapprehension of the facts by the CA.the court reviewed the factual findings of the courts below. the vehicle. Magalong to drive the armored vehicle which would carry the money. the fact that Verendia used a false lease contract to support his claim. The terms "service" and "employment" are generally associated with the idea of selection. and PRC Management Systems and Unicorn Security Services were truly independent contractors." Persons frequently excluded under such provisions are those in the insured's service and employment." Disposition instant petition is hereby GRANTED. OF THE PHILS) 217 SCRA 417 MELO.There is marked disagreement between the parties on the correct meaning of the terms "employee" and "authorized representatives. control. fraudulent. or criminal acts of persons granted or having unrestricted access to Producers' money or payroll.While all 3 policies were in force. A "representative" is defined as one who represents or stands in the place of another. Fidelity’s reason for refusal: the policy was avoided by reason of over-insurance. many designed to reduce this hazard. when it was actually a Marcelo Garcia who was the lessee. The purpose of the exception is to guard against liability should the theft be committed by one having unrestricted access to the property.is so great that insurers have found it necessary to fill up their policies with countless restrictions. . Producers entrusted the three with the specific duty to safely transfer the money to its head office. 1993 NATURE Petition to review decision of the CA FACTS . Howsoever viewed. and Development Insurance for P400k). we are satisfied that Magalong and Atiga were. with Alampay to be responsible for its custody in transit. CA decision and RTC Makati decision are REVERSED and SET ASIDE.With the foregoing principles in mind. and insured same property with two other companies. having presented a false declaration to support his claim for benefits in the form of a fraudulent lease contract. issued a Fire Insurance Policy covering Verendia’s residential building in the amount of P385k. VERENDIA V CA (FIDELITY & SURETY CO. its "authorized representatives" who served as such with its teller Maribeth Alampay. Worse yet. its terms and conditions constitute the measure of the insurer’s liability and compliance therewith is a condition precedent to the insured’s right to recovery from the insurer. it may now be asked whether Magalong and Atiga qualify as employees or authorized representatives has been aptly observed that in burglary. robbery. specifically Section 13 thereof which is expressed in terms that are clear and unambiguous.RTC: policy was violated by Verendia when it failed to inform Fidelity of his other insurance coverages.An insurance contract is the law between the parties. . . .Verendia is found to have concocted the lease contract to deflect responsibility for the fire towards an alleged lessee.INSURANCE 12 applicable to all types of insurance. the terms of the policy should be strictly construed against the insured.Fidelity Co. Verendia reprehensibly disregarded the principle that insurance contracts are uberrimae fidae and demand the most abundant good faith. Verendia also insured the same building with two other companies (Country Bankers Insurance for P56k. however.As it is also a contract of adhesion. Reasoning . Verendia filed a claim against Fidelity. but is irrelevant to our discussion. Seldom does the insurer assume the risk of all losses due to the hazards insured against. the three acted as agents of Producers." It is clear to us that insofar as Fortune is concerned. but the latter refused payment. In such cases. thus allowing the adjudication of the case) WON Fidelity was liable to pay Verendia considering the circumstances HELD 1. . . thus a complaint was filed in the RTC. where the court said that although it now prohibits filing of such motion. in respect of the transfer of Producer's money from its Pasay City branch to its head office in Makati. . the instant motion was filed before the effectivity of this rule. and compensation. by presenting a false lease contract. he forfeited all benefits therein by virtue of Section 13 of the policy in the absence of proof that Fidelity waived such provision. taking into consideration its purpose and always in accordance with the general principles of insurance law. Verendia. Civil Case is DISMISSED.CA: reversed decision ISSUE (There is a procedural issue involved here. the rights and obligations of the parties must be determined by the terms of their contract.

it is "estopped from enforcing forfeitures in its favor. since its initial expression. exerted the utmost pressure on the insured. a man of scant education being only a first grader .. Ltd. Inc.. 1960 to September 15. in the lower court and in the respondent Court of Appeals." 2 . So it was held in a decision of the lower court thereafter affirmed by respondent Court of Appeals. issued on September 19. as such private vehicle owner.. 41-289 for the year 1960. the duration of which will be for one (1) year. 45-HO. province of Bulacan. he was induced by Fieldmen's Insurance Company Pampanga agent Benjamin Sambat to apply for a Common Carrier's Liability Insurance Policy covering his motor vehicle . . owned a private jeepney with Plate No. Mr. On September 22. thereafter. Carlos Songco (another son). the policy being issued upon the insistence of its agent who discounted fears of the insured that his privately owned vehicle might not fall within its terms. we find no valid reason to deviate and consequently hold that the decision appealed from should be affirmed. Reyes speaking for the Court. and a family friend by the name of Jose Manuel sustained physical injuries of varying degree.. . was not allowed to escape liability under a common carrier insurance policy on the pretext that what was insured. a duly licensed driver and son of Federico (the vehicle owner) collided with a car in the municipality of Calumpit..1awphîl. 1961.4254 . 1968 FACTS .INSURANCE 13 Disposition Decision of CA reversed. Sambat. not once but twice.That is all that needs be said insofar as the first alleged error of respondent Court of Appeals is concerned." 4 . Pampanga. he butted in saying: 'That cannot be. 1960.. J-68136Pampanga-1961. its Pampanga Field Representative. be permitted to change its stand to the detriment of the heirs of the insured. B. had led the insured Federico Songco to believe that he could qualify under the common carrier liability insurance policy.An insurance firm. binding upon us. Why liability under the terms of the policy 5 was inescapable was set forth in the decision of respondent Court of Appeals. and Rodolfo Songco.' From this jurisprudence. an excerpt from the Qua Chee Gan decision would reveal anew the weakness of petitioner's contention. in order to forestall fraud or imposition on the insured. in any litigation arising out of such representation.. On October 29.It was further shown according to the decision of respondent Court of Appeals: "Amor Songco. taking into account the well known rule that ambiguities or obscurities must be strictly interpreted against the party that caused them. and to enter into contract of insurance paying the premiums due.' to which agent Sambat replied: 'whether our vehicle was an "owner" type or for passengers it could be insured because their company is not owned by the Government and the Government has nothing to do with their company. this is a case where the doctrine of estoppel undeniably calls for application. Federico Songco of Floridablanca." 6 . 1961 to October 15. the insured vehicle while being driven by Rodolfo Songco.The facts as found by respondent Court of Appeals. Inc. petitioner Fieldmen's Insurance Co. Inc. upon payment of the corresponding premium.nèt .. we sustain the Court of Appeals." 1 . DE SONGCO 25 SCRA 20 FERNANDO. 'the undernoted appliances for the extinction of fire being kept on the premises ... In spite of the fact that the present case was filed and tried in the CFI of Pampanga. the 'memo of warranty' invoked by appellant bars the latter from questioning the existence of the appliances called for in the insured premises. 1961. So they could do what they please whenever they believe a vehicle is insurable' . and that of RTC is reinstated. renewed the policy by extending the coverage from October 15. follow: "This is a peculiar case. . It is now beyond question that where inequitable conduct is shown by an insurance firm.As much. likewise respondents here. that they were not fare paying passengers.Even if it be assumed that there was an ambiguity. the latter's wife. Thus: "Moreover. To be more explicit. As estoppel is primarily based Page on the doctrine of good faith and the avoidance of harm that will befall the innocent party due to its injurious reliance.' the insurer 'is estopped from asserting breach of such conditions. the failure to apply it in this case would result in a gross travesty of justice. not a common carrier. were passengers of the jeepney at the time of the occurrence. FIELDMEN'S INSURANCE CO. the defendant company did not even care to rebut Amor Songco's testimony by calling on the witness-stand agent Benjamin Sambat. 1961. for whose burial expenses the defendant company was also being made liable was the driver of the vehicle in question. no doubt without any objection in its part..The plaintiffs in the lower court.Nor is there any merit to the second alleged error of respondent Court that no legal liability was incurred under the policy by petitioner. during the effectivity of the renewed policy..... This time Federico Songco's private jeepney carried Plate No. to wit. the insured moreover being "a man of scant education. as had been mentioned. because our vehicle is an "owner" private vehicle and not for passengers. if not much more so than the Qua Chee Gan decision. to enter into such a contract. Upon paying an annual premium of P16. L. Common Carriers Accident Insurance Policy No. effective September 15. 3 with Justice J. Thus: "Since some of the conditions contained in the policy issued by the defendantappellant were impossible to comply with under the existing conditions at the time and 'inconsistent with the known facts. petitioner being adamant in its far-fromreasonable plea that estoppel could not be invoked by the heirs of the insured as a bar to the alleged breach of warranty and condition in the policy. Petitioner in seeking the review of the above decision of respondent Court of Appeals cannot be so sanguine as to entertain the belief that a different outcome could be expected. On September 15. Angelita Songco. declared that when insurance agent Benjamin Sambat was inducing his father to insure his vehicle. was a private vehicle and not a common carrier. 1962.The basis for the favorable judgment is the doctrine announced in Qua Chee Gan v. Except for the fact. Law Union and Rock Insurance Co. the defendant company. . defendant Fieldmen's Insurance Company. The injured parties. as a result of which mishap Federico Songco (father) and Rodolfo Songco (son) died.50. After petitioner Fieldmen's Insurance Co. something which it knew all along when not once but twice its agent. were the surviving widow and children of the deceased Federico Songco as well as the injured passenger Jose Manuel. testifying as witness. 1960. lt would now rely on the fact that the insured owned a private vehicle. Angelito Songco and Jose Manuel. for whose hospital and medical expenses the defendant company was being made liable." finishing only the first grade.. a man of scant education. On the above facts they prevailed. 42year-old son of deceased Federico Songco. their status as beneficiaries under the policy is recognized therein. Carlos Songco. it could not. INC V VDA.

C. It reduced its claim to US$448. .petitioner. it cannot descend so low as to be another name for guile or deception.. 27 February 1942).INSURANCE 14 insured hereby. 13 Dec. since its dominant bargaining position carries with it stricter responsibility. of Supreme Court of Spain. ISSUES 1. Said cargo was insured against the risk of loss by petitioner Malayan Insurance Corporation for which it issued two (2) Marine Cargo Policies. being the sole author of the policies.66) for non-delivery of the cargo.89 at the exchange rate of P22. and prevent their becoming traps for the unwary (New Civil Code.1awphîl. on its face.1 of Section 1 of the Institute War Clauses provided that "this insurance covers the risks excluded from the Standard Form of English Marine Policy by the clause 'Warranted free of capture.To the same effect is the following citation from the same leading case: "This rigid application of the rule on ambiguities has become necessary in view of current business practices. Petitioners Claim .40 per metric ton or a total of P10. should it happen thus. It likewise sought the assistance of Malayan on what to do with the cargo." 7 .The last error assigned which would find fault with the decision of respondent Court of Appeals insofar as it affirmed the lower court award for exemplary damages as well as attorney's fees is.928. Sent. However the cargo was sold in Durban. The courts cannot ignore that nowadays monopolies. It did not succeed in its persistent effort to avoid complying with its obligation in the lower court and the Court of Appeals.189.. For. "arrests" should be strictly interpreted against it because the rule is that any ambiguity is to be taken contra proferentum. Inc.With the incorporation of subsection 1. cartels and concentration of capital.. Risk policies should be construed reasonably and in a manner as to make effective the intentions and expectations of the parties. x x x'" or the F. Brazil. & NATURE Petition for review on certiorari FACTS . TKC Marketing notified Malayan of the arrest of the vessel and made a formal claim for the dollar equivalent on the policies (US$916. 1997 CORP.09 (or its peso equivalent of P9.any loss which private respondent may have incurred was in the nature and form of unrecovered acquisition value brought about by a voluntary sacrifice sale and not by arrest. . manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit. to the port of Manila. seizure. detention or seizure of the ship. endowed with overwhelming economic power. in fact.the deletion of the Free from Capture or Seizure Clause would leave the assured covered solely for the perils specified by the wording of the policy itself .the rationale for the exclusion of an arrest pursuant to judicial authorities is to eliminate collusion between unscrupulous assured and civil authorities.00) representing its loss after the proceeds of the sale were deducted from the original claim. Article 24. no court of justice should allow itself to lend its approval and support.We have no choice but to recognize the monetary responsibility of petitioner Fieldmen's Insurance Co. MALAYAN INSURANCE MARKETING CORP. "arrest" caused by ordinary judicial process is deemed included among the covered risks. 1934. TKC advised Malayan that it might tranship the cargo and requested an extension of the insurance coverage until actual transhipment.Malayan replied that the arrest of the vessel by civil authority was not a peril covered by the policies.' admits of interpretation as an admission of the existence of such appliances which appellant cannot now contradict. . it is more so for the latter.879. in contrast to those entered into by parties bargaining on an equal footing.171 metric tons of soya bean meal which was loaded on board the ship MV Al Kaziemah for carriage from the port of Rio del Grande. arrest. which extension was approved upon payment of additional premium.YES . such contracts (of which policies of insurance and international bills of lading are prime examples) obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition. The insurance coverage was extended under the same terms and conditions embodied in the original policies while in the process of making arrangements for the transhipment of the cargo from Durban to Manila.. March 20." 8 .Malayan maintained its position that the arrest of the vessel by civil authorities on a . his participation in the 'agreement' being reduced to the alternative to 'take it or leave it' labelled since Raymond Saleilles 'contracts by adherence' (contrats d'adhesion). should the parol evidence rule apply.The conclusion that inescapably emerges from the above is the correctness of the decision of respondent Court of Appeals sought to be reviewed. for US$154.but equally so for the insurer.TKC Marketing Corp. it is hereby warranted . Much less should it find any receptivity from us for its unwarranted and unjustified plea to escape from its liability.) 270 SCRA 242 ROMERO. .an arrest by civil authority is not compensable since the term "arrest" refers to "political or executive acts" and does not include a loss caused by riot or by ordinary judicial process as in this case .While the vessel was docked in Durban. Moreover.nèt . to borrow once again from the language of the Qua Chee Gan opinion: "The contract of insurance is one of perfect good faith (uberima fides) not for the insured alone.This is merely to stress that while the morality of the business world is not the morality of institutions of rectitude like the pulpit and the academe.231. South Africa the civil authorities arrested and detained it because of a lawsuit on a question of ownership and possession.806. was the owner/consignee of some 3. WON the arrest of the vessel was a risk covered under the subject insurance policies 2.886..304.75 due to its perishable nature which could no longer stand a voyage of twenty days to Manila and another twenty days for the discharge thereof. . This interpretation becomes inevitable when subsection 1.0138 per $1. South Africa. V CA (TKC Page question of ownership was an excepted risk under the marine insurance policies.. . WON insurance policies should be strictly construed against the insurer HELD 1. of no persuasive force at all.the policies clearly stipulate that they cover the risks of non-delivery of an entire package and that it was petitioner itself that invited and granted the extensions and collected premiums thereon. etc.1 of Section 1 of the Institute War Clauses.its act of rejecting the claim was a result of its honest belief that the arrest of the vessel was not a compensable risk under the policies issued Respondents Comments . ." 9 .

Page moral damages and attorney's fees because these items are not among those included in the Schedule Indemnities set forth in the insurance policy. or exemption. We are not persuaded by Western's contention.On appeal. Such policies will. exceptions to the general coverage are construed most strongly against the company. ISSUE WON the Schedule of indemnities as stated in the insurance policy should be construed strictly to exclude all others not explicitly stated therein HELD NO Ratio An insurance policy being in the nature of an adhesion contract is to be strictly construed against the insurer and liberally in favor of the insured.If a marine insurance company desires to limit or restrict the operation of the general provisions of its contract by special proviso. "an aesthesiologists' fee". unless no other result is possible from the language used.Petitioner cannot adopt the argument that the "arrest" caused by ordinary judicial process is not included in the covered risk simply because the F..Secondly. the trial court rendered a decision in favor of respondent Priscilla E. being a contract of adhesion. She was treated at the Protacio Emergency Hospital and later on hospitalized at the San Juan De Dios Hospital.It must be borne in mind that such contracts are invariably prepared by the companies and must be accepted by the insured in the form in which they are written. Even an express exception in a policy is to be construed against the underwriters by whom the policy is framed. petitioner Western. Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured. WESTERN GUARANTY CORPORATION V CA (RODRIGUEZ. .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 .Petitioner Western in effect contends before this Court. July 20. The bus driver disregarded the stop signal given by a traffic policeman to allow pedestrians to cross the road. "temperate or moderate damages".C. hitting her forehead. Within this over-all quantitative limit.00 per person per accident. Where restrictive provisions are open to two interpretations. Priscilla was thrown to the ground. Reasoning . par excellence. all kinds of damages allowable by law "actual or compensatory damages"..Firstly. to insure against risks of loss or damage to the goods. "surgical expenses". that which is most favorable to the insured is adopted. .On 6 August 1985. & S. A contract of insurance. . Section 1. where the contract or policy is prepared by the insurer. in turn.C. while crossing Airport Road on a pedestrian lane on her way to work. the Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen. Petitioner Western is now before us on a Petition for Review alleging that the Court of Appeals erred in holding petitioner liable to pay beyond the limits set forth in the Schedule Indemnities and in finding Western liable for loss of earnings. as it did before the Court of Appeals. is apparently P50. the Court of Appeals denied the motion for reconsideration for lack of merit. Rodriguez was struck by a De Dios passenger bus owned by respondent De Dios Transportation Co. . Inc. . Clause. Such interpretation should result from the natural and reasonable meaning of language in the policy. that because the Schedule of Indemnities limits the amount payable for certain kinds of expenses "hospital room". filed a third-party complaint against its insurance carrier. causing her serious anxiety and moral distress. does refer to certain "Limits of Liability" which in the case of the third party liability section of the Master Policy. Succinctly stated. Saga. & S.Respondent bus company was insured with petitioner Western Guaranty Corporation ("Western") under its Master Policy which enumerated specific liabilities of the insurance company and ended with a clause to clarify the limitations of the amount which could be granted as indemnity.An insurance contract should be so interpreted as to carry out the purpose for which the parties entered into the contract which is. it is petitioner Western's position that it cannot be held liable for loss of earnings.Respondent Priscilla Rodriguez filed a complaint for damages before the Regional Trial Court of Makati against De Dios Transportation Co. "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. . "liquidated damages". "moral damages". Rodriguez. Clause. the reading urged by Western of the Schedule of Indemnities comes too close to working . Petitioner moved for the reconsideration of the appellate court's decision. It appears to us self-evident that the Schedule of Indemnities was not intended to be an enumeration.INSURANCE 15 S.000. any ambiguity therein should be resolved against the insurer. and the essential requisites or conditions for grant of each species of damages are present. . respondent Priscilla E. quoted above. In a Resolution dated 10 January 1990.. and DE DIOS TRANSPORTATION CO) 187 SCRA 652 FELICIANO. Be that as it may. Her face was permanently disfigured. and Walter A. Reasoning . Clause under the Institute War Clauses can only be operative in case of hostilities or warlike operations on account of its heading "Institute War Clauses. YES Ratio Insurance Policies should be construed liberally in favor of the insured and strictly against the insurer.At around 4:30 in the afternoon of 27 March 1982. it should express such limitation in clear and unmistakable language. "nominal damages". and for whose benefit the exception is introduced. the Court of Appeals affirmed in toto the decision of the trial court. moral damages and attorney's fees. ." 2. then driven by one Walter Saga y Aspero. much less a closed enumeration. be construed strictly against the company in order to avoid a forfeiture. "arrests" caused by ordinary judicial process is also a risk excluded from the Standard Form of English Marine Policy by the F. of the specific kinds of damages which may be awarded under the Master Policy Western has issued. Any construction of a marine policy rendering it void should be avoided. Jurisprudentially. therefore. and "exemplary damages" may be awarded by a competent court against the insurer once liability is shown to have arisen. 1990 FACTS . Respondent De Dios Transportation Co. exception.

claiming violation of warranties and conditions. at the time of the issuance of a policy of insurance. the sum of P146. protected.INSURANCE 16 fraud upon both the insured and the third party beneficiary of Section 1. the sum of P150.81 (but reduced to the full amount of the insurance. with their contents. . ISSUES 1. and the loose made payable to the Philippine National Bank as mortgage of the hemp and crops. and on the next day.394. and a trained brigade of not less than 20 men to work the same. (d) Under the fourth cause of action. and this result is known to the insurer.It is argued that since the bodegas insured had an external wall perimeter of 500 meters or 1. 2637165 against the storage of gasoline 3. as already noted. 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.Que Chee Gan. Qua Chee Pao.000). insured with the defendant Company since 1937. WON the insured connived at the loss and fraudulently inflated the quantity of the insured stock in the burnt bodegas HELD 1. and that he actually had only 2. it was incumbent upon Western to use language far more specific and precise than that used in fact by Western. with his brother. Plaintiff-appellee informed the insurer by telegram on the same date. . . and some employees of his. may be properly informed and act accordingly.Finally. (c) Under the third cause of action.000. acquitted by the trial court. WON the insured violated the "Hemp Warranty" provisions of Policy No.the civil suit to collect the insurance money proceeded to its trial with the CFI holding that: judgment is rendered for the plaintiff and against the defendant condemning the latter to pay the former — (a) Under the first cause of action. it will be presumed to have intended to waive the conditions and to execute a binding contract. This result which is not essentially different from taking away with the left hand what had been given with the right hand we must avoid as obviously repugnant to public policy. is comprehensively defined in Section 1 "Liability to the Public" of the Master Policy.Petitioner Western would have us construe the Schedule of Indemnities as comprising contractual limitations of liability which. of Warranty. It is well-settled. with the merchandise stored therein. LTD. the appellee should have 11 fire hydrants in the compound. They had been. and the Office of the Insurance Commissioner. so that the insured. and when the policy contains a condition which renders it voidable at its inception. the sum of P15.000. 1955 NATURE An appeal by defendant insurance company from the decision of CFI in favor of the plaintiff FACTS . The law is charitable enough to assume.48. filing of fraudulent claims. the hydrants being supplied with water pressure by a pumping engine. QUA CHEE GAN V LAW UNION AND ROCK INSURANCE CO. in which the appellee dealt extensively. totalling P398. gutted and completely destroyed Bodegas Nos. (b) Under the second cause of action. WON the defendant-appellant can claim the policies it had issued as void ab initio 2. not less in number than one for each 150 feet of external wall measurement of building. and potential purchasers of its Master Policy. an insurance contract is a contract of adhesion.000. and it being declared and understood that there is an ample and constant water supply with sufficient pressure available at all seasons for the same. the insurance company alleges that the trial Court should have held that the policies were avoided for breach of warranty.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]". and the insurer is stopped thereafter from asserting the breach of such conditions. and lasted almost one week.640 feet. however. . in the absence of any showing to the contrary. If what Western now urges is what Western intended to achieve by its Schedule of Indemnities.Fire of undetermined origin that broke out in the early morning of July 21. that an insurance company intends to executed a valid contract in return for the premium received. They were. however. plaintiff-appellee owned 4 warehouses or bodegas in Tabaco. with a further pair nearby. the fire adjusters engaged by appellant insurance company arrived and proceeded to examine and photograph the premises. the sum of P40. 1. all of which shall bear interest at the rate of 8% per annum in accordance with Section 91 (b) of the Insurance Act from September 26. were indicted and tried in 1940 for the crime of arson. with not less than 100 feet of hose piping and nozzles for every two hydrants kept under cover in convenient places.. belonging to the municipality of Tabaco.In its first assignment of error. the sum of P5. has knowledge of existing facts which. used for the storage of stocks of copra and of hemp. Albay. by reason whereof a discount of 2 1/2 per cent is allowed on the premium chargeable under this policy. and that the fire had been deliberately caused by the insured or by other persons in connivance with him. . quoted above. such knowledge constitutes a waiver of conditions in the contract inconsistent with the facts. rather than to have deceived the 4 Memo. and (e) Under the fifth cause of action. the Insurance Company resisted payment. or from some other source. Hydrants in the compound.562. with costs against the defendant.4 . capable of discharging at the rate of not less than 200 gallons of water per minute into the upper story of the highest building protected. 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. The plaintiff having submitted the corresponding fire claims. 2 and 4. NO Ratio It is usually held that where the insurer. would invalidate the contract from its very inception. P370.000. to the extent of its interest.' .before the last war. specifically the one appearing on a rider Page pasted (with other similar riders) on the face of the policies. — The undernoted Appliances for the extinction of fire being kept on the premises insured hereby.000. 1940. if insisted on. until each is paid. 96 PHIL 85 REYES. which in this case happens to be petitioner Western. it is hereby warranted that the said appliances shall be maintained in efficient working order during the currency of this policy. pored over the books of the insured and conducted an extensive investigation. it being claimed that they had set fire to the destroyed warehouses to collect the insurance. . 1940. December 17. baled and loose. For Western's reading would drastically and without warning limit the otherwise unlimited (save for the over-all quantitative limit of liability of P50.

in fairness to those who purchase insurance. voucbers. and to have taken his money without consideration. it is mere so for the latter. their own intentions. . human justice of this doctrine is perfectly apparent. taking into account the well known rule that ambiguities or obscurities must be strictly interpreted against the party that caused them. which the warranty did not require. construe every ambiguity in favor of the insured. . "Oils" mean "lubricants" and not gasoline or kerosene.The appellant company so worded the policies that while exacting the greater number of fire hydrants and appliances.Moreover. as expressly found by the Court in the criminal case for arson. receives and accepts a premium on the policy. It However. again. "It is well settled that the keeping of inflammable oils on the premises though prohibited by the policy does not void it if such keeping is incidental to the business. contrary to the requirements of the warranty in question . Policies are prepared by experts who know and can anticipate the hearing and possible complications of every contingency.INSURANCE 17 insured into thinking he is insured when in fact he is not. demanded by them was found unsubstantiated by the trial Court. owned by the municipality of Tabaco. specially to avoid a forfeiture. by the use of obscure phrases and exceptions. and no reason has been shown to alter this finding. to defeat the very purpose for which the policy was procured. that in the premises insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby. the ambiguity must be held strictly against the insurer and liberally in favor of the insured. That the representatives of the insurance company were able to secure all the date they needed is proved by the fact that the adjuster Alexander Stewart was able to prepare his own balance sheet that did not differ from that submitted by the insured except for the valuation of the merchandise. — It is a well settled rule of law that an insurer which with knowledge of facts entitling it to treat a policy as no longer in force. are in a position to understand or determine "flash point below 300 Fahrenheit. . which conceal rather than frankly disclose. and the examiner even kept and photographed some of the examined books in his possession. and that the demand was made just after the fire when everything was in turmoil.The contract of insurance is one of perfect good faith not for the insured alone. . etc. for in ordinary parlance. since its dominant bargaining position carries with it stricter responsibility. gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty. from time to give. is so contrary to the dictates of honesty and fair dealing. And how many insured. Insurance is. in its nature. as to the abhorrent to fair-minded men. NO . that the volume of Qua Chee Gan's business ran into millions. It would be to allow the company to treat the policy as valid long enough to get the premium on it. that the assured believes it to be valid and binding. though it knows as it must.If the company intended to rely upon a condition of that character. What does appear to have been rejected by the insured was the demand that he should submit "a list of all books. receipts and other records". the record is preponderant that the same was organized. An insurer should not be allowed. .The appellant is barred estoppel to claim violation of the so-called fire hydrants warranty.Another point that is in favor of the insured is that the gasoline kept in Bodega No. being no more than a customary 2 day's supply for the five or six motor vehicles used for transporting of the stored merchandise. thereby giving the insurance company a double benefit. estopped to take advantage of the forfeiture. 2. it may well be wondered. This cannot be deemed to be the real intention of the parties. for the reason that knowing fully all that the number of hydrants demanded therein never existed from the very beginning." On the submission of books. the appellant neverthless issued the policies in question subject to such warranty. it kept the premium discount at the minimum of 2 1/2%." The cause relied upon by the insurer speaks of "oils (animal and/or vegetable and/or mineral and/or their liquid products having a flash Page point below 300 Fahrenheit)". although not maintained as a permanently separate unit.Receipt of Premiums or Assessments after Cause for Forfeiture Other than Nonpayment. NO Ratio Here.As to maintenance of a trained fire brigade of 20 men. it ought to have been plainly expressed in the policy. etc. must be equally rejected. complex and difficult for the layman to understand. by reason of the exclusive control of the insurance company over the terms and phraseology of the contract. The charge that the insured failed or refused to submit to the examiners of the insurer the books. and is decidedly ambiguous and uncertain. which requirement appellant is estopped from enforcing. since the appellant's argument thereon is based on the assumption that the insured was bound to maintain no less than eleven hydrants. vouchers. Such abnormal treatment of the insured strongly points at an abuse of the insurance company's selection of the words and terms of the contract. but equally so for the insurer. .The plain. the "memo of warranty" invoked by appellant bars the latter from questioning the existence of the appliances called for in the insured premises On the alleged violations of the plaintiff The alleged violation of the warranty of 100 feet of fire hose for every two hydrants. and drilled. To hold that a literal construction of the policy expressed the true intention of the company would be to indict it. So long as insurance companies insist upon the use of ambiguous. 2 was only incidental to his business. The insurance company was aware. and received the corresponding premiums. 3. and leave it at liberty to repudiate it the next moment. . To allow a company to accept one's money for a policy of insurance which it then knows to be void and of no effect. Reasoning . and so closely related to positive fraud. for fraudulent purposes and designs which we cannot believe it to be guilty of. since the demand for a list of all the vouchers (which were not in use by the insured) and receipts was positively unreasonable. The insured gave the insurance examiner all the date he asked for. in fact. even before the policies were issued.Appellee admitted that there were 36 cans of gasoline in the building designed. considering that such listing was superfluous because the insurer was not denied access to the records. but the refusal of the insured in this instance was well justified. the courts must. It cannot treat the policy as void for the purpose of defense to an action to recover for a loss thereafter occurring and at the same time treat it as valid for the purpose of earning and collecting further premiums. over which it had absolute control. vouchers. intricate and technical provisions. Reasoning .

1963 NATURE Appeal from judgment of CFI Rizal FACTS . The interpretation of obscure stipulations in a contract should not favor the party who caused the obscurity. the insured has little. thus the company refused to pay more that P1000. if any.A rider to the Policy contained the following. public library or municipal administration building while the Insured is therein at the commencement of the fire P2000 Section 4. Injury sustained by the wrecking or disablement of a regular passenger elevator car in which the Insured is being conveyed as a passenger (Elevator in mines exluded) P2500 Section 5. or Loss of time. to judge from the decision in the criminal case. DEL ROSARIO V EQUITABLE INSURANCE & CASUALTY CO. . . Injury sustained by the wrecking or disablement of a railroad passenger car or street railway car in or on which the Insured is traveling as a farepaying passenger P1500 Section 3. inferences and conclusions of its adjuster investigator who examined the premises during and after the fire. participation in the preparation of the policy. and must yield to the contradictory testimony of those who actually saw the contents of the bodegas shortly before the fire.INSURANCE 18 Ratio Both defenses are predicted on the assumption that the insured was in financial difficulties and set the fire to defraud the insurance company.CFI ruled in favor of petitioner. Disposition We find no reversible error in the judgment appealed from.All the parties agree that indemnity has to be paid. since the proof to establish the defense of connivance at the fire in order to defraud the insurer "cannot be materially less convincing than that required in order to convict the insured of the crime of arson. Injury sustained by a stroke of lightning or by a cycloneP3000 xxxx xxxx xxxx Part VI.A complaint for recovery of the balance of P2000 was instituted with the CFI Rizal.On the same date.. caused to the insured: x x x (h) By drowning except as a consequence of the wrecking or disablement in the Philippine waters of a passenger steam or motor vessel in which the Insured is traveling as a farepaying passenger. Disability.As to the defense that the burned bodegas could not possibly have contained the quantities of copra and hemp stated in the fire claims. however. and which shall result. Atty. ordering the company to pay P2000 to del Rosario. The Company bound itself to pay P1000 to P3000 as indemnity for the death of the insured.Simeon del Rosario. . Atty.Where there is ambiguity with respect to the terms and conditions of the policy. who was of the opinion that the liability of the company was only P1000.Under the policy: Part I.SC agreed with the ruling of the lower court: x x x death by drowning is a ground for recovery apart from the bodily injury because death by bodily injury is covered by Part I of the policy while death by drowning is covered by Part VI thereof. together with the drafting of its terms and conditions. ISSUE How much should the indemnity be HELD . Page . Both defenses are fatally undermined by the established fact that. June 29. in the Death of the Insured.Francisco del Rosario was insured by Equitable Insurance and Casualty Co. external. 7136. the same will be resolved against the one responsible thereof. Indemnity for Death If the insured sustains any bodily injury which is effected solely through violent. Injury sustained other than those specified below unless excepted hereinafter P1000 Section 2. and if he was able to do so. . Injury sustained by the burning of a church. notwithstanding the insurer's refusal to pay the value of the policies the extensive resources of the insured enabled him to pay off the National Bank in a short time. presumably in order to pay off the Philippine National Bank. . filed a claim for payment with the company. wherefore the same is hereby affirmed. visible and accidental means. Francisco wrote a subsequent letter to company asking for p3000. 1957. praying for a further sum of P10000 as attorney’s fees. Francisco del Rosario while on board the motor launch ISLAMA. resulting in the death by drowning of the insured and his beneficiary. Remedios Jayme. . based on the rule of pari materia. While the acquittal of the insured in the arson case is not res judicata on the present civil action. independently of all other causes and within sixty days from the occurrence thereof. IV.Feb 24. Hospital fees. . the insured’s father. theatre. Generally. His testimony. there is not specific amount . expenses of litigation and costs.The company referred the matter to the Insurance Coomissioner. the Company shall pay the amount set opposite such injury: Section 1. . the insurer's evidence. Inc under Personal Accident Policy no. yet. was based on inferences from the photographs and traces found after the fire. The company paid him P1000 pursuant to section 1 Part I of the policy. is practically identical in both cases and must lead to the same result." . Exceptions This policy shall not cover disappearance of the Insured nor shall it cover Death. but the conflict centers on how much it should be. x x x . and to form a part of the provision covered by the policy. which the company refused to pay. were forced to jump off said launch on account of fire which broke out on said vessel. to which most of the insured hemp and copra was pledged. with his beneficiary to the policy. while inspecting them for the mortgagee Bank. He claimed that the amount payable should be P1500 under the provision of Section 2 Part I. But while the policy mentions specific amounts that may be recovered for death for bodily injury. no motive appears for attempt to defraud the insurer. the insurer's case rests almost exclusively on the estimates. DROWNING It is hereby declared and agreed that exemption clause Letter (h) in PART VI of the policy is hereby waived by the company. Francisco wrote to the company acknowledging receipt by his client of the P1000 but informing said company that said amount was not the correct one. INC 8 SCRA 343 PAREDES.

provided however. which ambiguity must be interpreted in favor of the insured and strictly against the insurer so as to allow a greater indemnity. for attorney's fees.000. vs. as his creditor. the private respondent denied the claim because it found that at the time of the loss the petitioner's stocks-in-trade were likewise covered by two fire insurance policies for P100. that this condition shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200. he obtained from the private respondent fire insurance policy for P100.00 each. It expressly provides that the condition "shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200. Inc. x x x plaintiff is therefore entitled to recover P3000.Geagonia then filed a complaint against the private respondent w/ the Insurance Commission for the recovery of P100. and costs of litigation. had insurable interest on the stocks. GEAGONIA v. and the insured will not be entitled to indemnity in case of loss. without which such policy shall be null and void.00. under Part VI of the policy. CA (COUNTRY INSURANCE) 8 SCRA 343 DAVIDE.00." . he would not have withheld such information. however. Since the defendant has bound itself to pay P1000 to P3000 as indemnity for the death of the insured but the policy does not positively state any definite amount that may be recovered in case of death by drowning. His letter of 18 January 1991 to the private respondent conclusively proves this knowledge. a ground for recovery thereunder." Condition 3 in the private respondent's policy No.00 with legal interest from the time the complaint was filed until fully satisfied plus the amount of P10. which read: "The insured shall give notice to the company of any insurance or insurances already effected.Interpretation: It is a cardinal rule on insurance that a policy or insurance contract is to be interpreted liberally in favor of the insured and strictly against the company. and had it been so mentioned. violating Condition 3 of the policy 2. be underscored that unlike the "other insurance" clauses involved in General Insurance and Surety Corp. YES . F-14622 does not absolutely declare void any violation thereof. Commercial Union Assurance Co. goods in process and/or inventories only hereby insured. all benefits under this Policy shall be forfeited. . . NO . which provided "that any outstanding insurance upon the whole or a portion of the objects thereby assured must be declared by the insured in writing and he must cause the company to add or insert it in the policy. He further asserted that the total of the amounts claimed under the three policies was below the actual value of his stocks at the time of loss.000.. On 28 Dec 1990. Agusan del Sur. -The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy.00 as attorney's fees. Disposition Judgment appealed from is affirmed.INSURANCE 19 mentioned in the policy for death thru drowning although the latter is.It must. the reason being. February 6 1995 BANKERS claim under the policy. he had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies. -The policy contained the following condition: "3. if he had. Ng Hua or in Pioneer Insurance & Surety Corp. w/c was P1M." -On 27 May 1990. indeed. and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage." or in the 1930 case of Santa Ana vs. (PFIC). covering any of the property or properties consisting of stocks in trade. fire of accidental origin broke out at around 7:30 p. The insured shall give notice to the Company of any insurance or insurances already effected. that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing him or securing his consent. or which may subsequently be effected.000. and unless notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code. On 22 Dec 1989. The period of the policy was from 22 Dec 1989 to 22 Dec 1990 and covered the ff: "Stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business.000. at the public market of San Francisco. vs.We agree w/ the CA that the petitioner knew of the prior policies issued by the PFIC. issued by the Cebu Branch of the Philippines First Insurance Co. These findings were based on the petitioner's testimony that he came to know of the PFIC policies only when he filed his claim with the private respondent and that Cebu Tesing Textile obtained them and paid for their premiums w/o informing him.000. however. WON the petitioner had prior knowledge of the two insurance policies issued by the PFIC when he obtained the fire insurance policy from the private Page respondent. It was. Yap. all benefits under this policy shall be deemed forfeited.00. and that Cebu Tesing Textile. WON he is precluded from recovering therefrom HELD 1. -CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of the two other policies issued by the PFIC ISSUES 1. The petitioner's insured stocks-in-trade were completely destroyed prompting him to file w/ the private respondent a . 2.000. to afford the greatest protection which FACTS -Geagonia is the owner of Norman's Mart located in the public market of San Francisco. He claims that the time he obtained the private respondent's fire insurance policy he knew that the two policies issued by the PFIC were already in existence. for not disclosing such fact.000. or which may subsequently be effected covering any of the property hereby insured. thereby.m. there is an ambiguity in this respect in the policy. His testimony to the contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a written admission made ante litem motam. undoubtedly.00 under fire insurance policy. The Insurance Commission then ordered the respondent company to pay complainant the sum of P100. Agusan del Sur. by or on behalf of the Company before the occurrence of any loss or damage.The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC. incredible that he did not know about the prior policies since these policies were not new or original. this requirement was not mentioned to him by the private respondent's agent.

Sun Insurance was ordered to pay her P200. and (b) the nullity of the policy shall only be to the extent exceeding P200. if it is possible to construe the policy in a manner which would permit recovery. Reasoning .The firing of the gun was deemed to be the unexpected and independent and unforeseen occurrence that led to the insured person’s death. Suicide imparts a positive act of ending one’s life whereas the latter indicates recklessness that is almost suicidal in intent.An accident has been defined to be that which happens by chance or fortuitously without intention or design and which is unexpected.He then put the gun to his temple and fired it (haaay. NO.  . will be avoided. Reasoning . SUN INSURANCE OFFICE. Ratio There is no accident when a deliberate act is performed unless some additional. . 2. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured. sabi ko na nga ba).R. His beneficiary was his wife Nerissa.INSURANCE 20 the insured was endeavoring to secure when he applied for insurance. .Felix believed the gun to be safe because he had removed the magazine. we are of the opinion that Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously analyzed. conditions or exceptions in policies which tend to work a forfeiture of insurance policies should be construed most strictly against those for whose benefits they are inserted. exemplary and compensatory damages and attorney’s fees. It happens without any human agency. . by finding a waiver for such forfeiture. It is also a cardinal principle of law that forfeitures are not favored and that any construction which would result in the forfeiture of the policy benefits for the person claiming thereunder. . Petitioners’ Claim . LTD. independent and unforeseen happening occurs which produces or brings bout their injury or death. the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. They were intended to provide for contingencies. .With these principles in mind. unusual and unforeseen. The decision was affirmed by the CA.000.He was playing with the handgun after he had removed the gun’s magazine (kasi naman…). the insured sees the contract already in its final form and has had no voice in the selection or arrangement of the words employed therein.Both parties are in agreement that there was no suicide. an event which. the insured may have an inducement to destroy the property for the purpose of collecting the insurance. .00 of the total policies obtained.He pointed the gun at his secretary and only witness Pilar Nalagon as a joke and assured her that the gun was not loaded (are you sure…). .Furthermore. .He repeatedly assured his secretary that the gun was not loaded.000. The adverse result of an action does not per se make the act wrongful and subject the act or to the payment of moral damages.There was no willful exposure to needless peril for the part of Felix.000.There mere act of pointing the gun to his temple showed that Felix willfully exposed himself to danger because a gun should always be handled with caution.Nerissa sued Sun Insurance and won the case. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value. What it had in mind was to discourage over-insurance. the claim for damages should not be granted for being unjust. as. WON the award of damages to Nerissa Lim was justified HELD 1. Suicide and exposure to needless peril are similar in the sense that both signify disregard for one’s life. 31916 is SET ASIDE and the decision of the Insurance Commission in Case No. for example. Disposition Petition granted. by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200.Lim was unquestionably negligent but it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. Page ISSUES 1. . under the circumstances. . YES. saying that her husband’s death was not an accident. . provisions.Accident insurance policies were never meant to reward the insured for his tendency to show off or for his miscalculations. Ratio A person may be made liable to the payment of moral damages if his act is wrongful.Felix Lim was issued a Personal Accident Policy insurance with petitioner company with a face value of P200.Sun Insurance cites one of the four exceptions in the contract of insurance which includes bodily injury consequent upon the insured person attempting to commit suicide or willfully exposing himself to needless peril in an attempt to save a human life.October 6. is unusual to and not expected by the person to whom it happens. 1982 – Felix accidentally shot himself in the head with his own gun. the language of the contract was carefully chosen and deliberated upon by experts and legal advisers who had acted exclusively in the interest of the insurers and the technical language employed therein is rarely understood by ordinary laymen. . Such analysis leads us to conclude that (a) the prohibition applies only to double insurance. The reason for this is that. unexpected. WON Felix Lim’s death was an accident.000 representing the face value of the claim along with moral. SP No. 3340 is REINSTATED. except for riders which may later be inserted. and most favorably toward those against whom they are intended to operate.Nerissa claimed as Felix’s beneficiary but Sun Insurance would not grant her claim. . The decision of the Court of Appeals in CA-G. 1992 NATURE Petition for review from the decision of the Court of Appeals FACTS . Felix Lim’s death was an accident.Insurance contracts are.000. Respondents’ Comments . July 17. as a rule. On the other hand. V CA (LIM) 211 SCRA 554 CRUZ. thus making his widow Nerissa liable to claim the accident insurance 2. . . It an event that takes pace without one’s foresight or expectastion – an event that proceeds from an unknown cause or is an unusual effect of a known case and therefore not expected. the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200.00. supposed to be interpreted liberally in favor of the assured. Stated differently. Indeed.00.

45727 in favor of Transworld Knitting Mills.Pertinent portions of subject policy on the buildings insured.Transworld filed its insurance claims with Rizal Surety & Insurance Company and New India Assurance Company but to no avail. partly by building of two and partly one storey constructed of concrete below. .604. said properties must be contained and/or stored in the areas occupied by Transworld and second. .xxx. to wit: "First. .Fire broke out in the compound of Transworld. 'Bounds in front partly by one-storey concrete building under galvanized iron roof occupied as canteen and guardhouse. INC.In the case under consideration.. timber above undergalvanized iron roof occupied as garage and quarters and partly by open space and/or tracking/ packing. Transworld Knitting Mills..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. 1993.. BLOCK NO.Private respondent brought against the said insurance companies an action for collection of sum of money and damages.Both the petitioner.67.. . (New India). offices. 601.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.INSURANCE 21 . . was also destroyed by the fire.. . garment and lingerie factory. warehouse and caretaker's quarters. ware house and caretaker's quarter. went to the Court of Appeals. the properties of the Insureds and/or held by them in trust.Petitioner Rizal Insurance and private respondent Transworld.. PHILIPPINES. and not the damage caused by the fire on the two-storey annex building.'" .... thence open spaces. As opined by the trial court of origin. Inc...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.The issue was debatable and was clearly not raised only for the purpose of evading a legitimate obligation...’ x xx.. and location thereof.. the .Petitioner Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-span building.Rizal Surety & Insurance Company (Rizal Insurance) issued Fire Insurance Policy No.. (Transworld)... transistor-stereo assembly plant. .The trial court dismissed the case as against The New India Assurance Co.Petitioner was acting in good faith when it resisted the private respondent’s claim on the ground that the death of the insured was covered by the exception. . raw materials and supplies of every kind and description. ..328.. which was partly burned.. Rizal Insurance Company. on its right and left by driveway. and at the rear by open spaces. . which required New India Assurance Company to pay plaintiffappellant the amount of P1.The Court denied the appeal with finality. Ltd. on commission or on joint account with others and/or for which they (sic) responsible in case of loss whilst contained and/or stored during the currency of this Policy in the premises occupied by them forming part of the buildings situate (sic) within own Compound at MAGDALO STREET. which Page reconsidered its decision of July 15. read: "‘On stocks of finished and/or unfinished products. 2000 NATURE Petition for Review on Certiorari under Rule 45 of the Rules of Court FACTS .The same pieces of property insured with the petitioner were also insured with New India Assurance Company. 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" .New India appealed to the Court theorizing inter alia that the private respondent could not be compensated for the loss of the fun and amusement machines and spare parts stored at the two-storey building because it (Transworld) had no insurable interest in said goods or items.. . .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.. . . but ordered defendant Rizal Surety And Insurance Company to pay Transwrold (sic) Knitting Mills. interposed a Motion for Reconsideration before the Court of Appeals. July 18. . razing the middle portion of its four-span building and partly gutting the left and right sections thereof. as regards the imposition of interest. Inc. and the same carry even more weight when the Court of Appeals has affirmed the findings of fact arrived at by the lower court. PASIG. said areas must form part of the building described in the policy xxx" . Ltd. RIZAL SURETY & INSURANCE COMPANY V CA (TRANSWORLD KNITTING MILLS.. METRO MANILA.818..19 while the Rizal Surety has to pay the plaintiff-appellant P470. . Inc. garment and lingerie factory. 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.Undaunted. transistor-stereo assembly plant. and private respondent. ISSUE WON the fire insurance policy litigated upon protected only the contents of the main building (four-span).. offices.Resolution of the issue posited hinges on the proper interpretation of the stipulation in subject fire insurance policy regarding its coverage.. A two-storey building (behind said fourspan building) where fun and amusement machines and spare parts were stored. two requirements must concur in order that the said fun and amusement machines and spare parts would be deemed protected by the fire insurance policy under scrutiny.) 336 SCRA 12 PURISIMA. BARRIO UGONG. beyond which is the aforementioned Magdalo Street.. and did not include those stored in the two-storey annex building HELD NO . petitioner Rizal Surety & Insurance Company found its way to the Court..

L-111118. ruled: "This is particularly true as regards insurance policies. PANMALAY clarified that the damage caused to the insured car was settled under the "own damage". ISSUE WON the insurer PANMALAY may institute an action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents as the parties allegedly responsible for the damage caused to the insured vehicle HELD YES . Hence. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. Inc. went on to provide that such fire insurance policy covers the products.Private respondents filed a Motion to Dismiss alleging that PANMALAY had no cause of action against them. 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. and that.December 10. due to the "carelessness. . formed part thereof.' " . Article 1377 of the New Civil Code provides: "Art. Vda. entitled New India Assurance Company." Disposition Decision. 81026 CORTES. and imprudence" of the unknown driver of a pick-up. vs. . it stands to reason that the doubt should be resolved against the petitioner. vs. whose lawyer or managers drafted the fire insurance policy contract under scrutiny. and prevent their becoming traps for the unwary. was denied with finality by this Court on February 2. . the Court in Landicho vs. . raw materials and supplies stored within the premises of respondent Transworld which was an integral part of the four-span building occupied by Transworld.052. and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured. considering that the two-storey building aforementioned was already existing when subject fire insurance policy contract was entered into.So also.R.Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. No pronouncement as to costs. failed and refused to pay the claim of PANMALAY. which are ambiguous.00. 1985. Erlinda Fabie. . had been settled in G. that PANMALAY defrayed the cost of repair of the insured car and.R. RTC dismissed PANMALAY's complaint for no cause of action and denied PANMALAY's motion for reconsideration. which entitles it to be indemnified for the loss thereof. recklessness. The courts cannot ignore that nowadays monopolies. PANMALAY averred the following: that it insured a Mitsubishi Colt Lancer car registered in the name of Canlubang Automotive Resources Corporation [CANLUBANG]. cartels and concentration of capital. 1994. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity" . 1990 FACTS . Court of Appeals. "xxx the judgment in the prior action operates as estoppel only as to those matters in issue or points controverted. the insured car was hit and suffered damages in the amount of P42. despite repeated demands. COURT OF APPEALS (ERLINDA FABIE & HER UNKNOWN DRIVER) 184 SCRA 55. equivocal. 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. Ltd.1377. . 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. endowed with overwhelming economic power.The rule on conclusiveness of judgment. this petition for review. and meets the requisites for compensability under the fire insurance policy sued upon. Citing the aforecited provision of law in point. upon payment to the assured. which obtains under the premises. and the Resolution of the CA WERE AFFIRMED in toto. CA affirmed. manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit. De Songco. upon the determination of which the finding or judgment was rendered. No. and instead. knowing fully well the existence of such building adjoining and intercommunicating with the right section of the four-span building. 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).The issue of whether or not Transworld has an insurable interest in the fun and amusement machines and spare parts. April 3.Verily. where the appeal of New India from the decision of the Court of Appeals under review.INSURANCE 22 machines and spare parts stored therein were covered by the fire insurance in dispute.Equally relevant is the following disquisition of the Court in Fieldmen's Insurance Company.General Rule: Payment by the insurer to the assured operates as an equitable assignment to the . to wit: "'This rigid application of the rule on ambiguities has become necessary in view of current business practices. a permanent structure which adjoins and intercommunicates with the "first right span of the lofty storey building". Rizal Surety Insurance Company. and acting exclusively in the interest of.Conformably. then the insurer. in contrast to these entered into by parties bargaining on an equal footing. coverage of the insurance policy. or uncertain x x x are to be construed strictly and most strongly against the insurer. 1985: PANMALAY filed a complaint for damages with the RTC of Makati against private respondents Erlinda Fabie and her driver..'" . the insurance company. the two-storey building involved. in respect of which it is settled that the 'terms in an insurance policy. defendants. Page PAN MALAYAN INSURANCE CORPORATION vs. Government Service Insurance System. especially where forfeiture is involved' and the reason for this is that the 'insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by experts and legal advisers employed by. therefore. No. G. only as those matters actually and directly controverted and determined and not as to matters merely involved therein. 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. 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. In fine. that on May 26. was subrogated to the rights of CANLUBANG against the driver of the pick-up and his employer. the previous judgment is conclusive in the second case.Indeed.

It accrues simply upon payment of the insurance claim by the insurer. as stated in the description contained in the policy.As may be gleaned from the testimony of the petitioner’s employee. LUCENA CITY UNBLOCKED. Case remanded to the lower court for trial on the merits. It stated that the description of the insured establishment referred to another building.” . Reasoning . . 4. and since a mistake as to the identity and character of the building is extremely unlikely. 4.e. PANMALAY would still have a cause of action against private respondents. . It would be absurd to assume that respondent would protect its first oil mill for different amounts and leave uncovered its second one. any privity of contract or upon written assignment of claim. the greatest liberality is shown by the courts in giving effect to the insurance.The parties manifestly intended to insure the new oil mill. the source of the discrepancy happened during the preparation of the written contract. determine the import of the various terms and provisions embodied in the policy. or is an unusual effect of a known cause and. No. . . . it was improper for the appellate court to indulge in contract construction. assailing the FACTS . then there is no need to specify it as new.) where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's claim for loss c. Left: Adjoining thence an imperfect wall by Bldg. it simply meant that it had assumed to reimburse the costs for repairing the damage to the insured vehicle. from liability b. . In 1988. specifically sub-paragraph (a) thereof.If the parties really intended to protect the first oil mill. new oil mill is insured. equivocal or uncertain. 2. that the courts will intervene. Rear: by an open space thence at 8 meters distance. The first oil mill was insured Policy No. 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. Both are located at its factory compound at Iyam. the policy will be construed by the courts liberally in favor of the assured and strictly against the insurer. copra cake and copra mills whilst contained in the new oil mill building. In the case of property insurance policies.” . incidentally. Inc. Official receipts indicating payment for the full amount of the premium were issued by the petitioner's agent.Obiter Dicta: Even if under the above circumstances PANMALAY could not be deemed subrogated to the rights of its assured under Article 2207 of the Civil Code. the Court has on several occasions defined these terms to mean that which takes place "without one's foresight or expectation. however inaccurate the description may be. ISSUE WON new oil mill is insured by fire insurance policy HELD YES. IYAM.A fire that broke out in the early morning of September 30. Respondent commenced its business operations with only one oil mill. Lucena City.INSURANCE 23 former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss.When PANMALAY utilized the phrase "own damage" — a phrase which." The concept "accident" is not necessarily synonymous with the concept of "no fault". Petitioner's complaint for damages against private respondents is REINSTATED.Respondent Tantuco Enterprises. 2001 NATURE Petition for Review on Certiorari Decision of the Court of Appeals.Exceptions: a. nor does it grow out of. not expected. situate (sic) at UNNO. . BO. No. It is only when the terms of the policy are ambiguous.The two oil mills were separately covered by fire insurance policies issued by petitioner American Home Assurance Co. and to ascribe meaning contrary to the clear intention and understanding of these parties.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. Right: by an open space thence by Bldg. 306-7432324-3 for the period March 1. It owns two oil mills. the insurer and the assured. 306-7432321-9 for the same term. ALONG NATIONAL HIGH WAY.Policy description: . “On machineries and equipment with complete accessories usual to a coconut oil mill including stocks of copra. is not found in the insurance policy — to define the basis for its settlement of CANLUBANG's claim under the policy. is engaged in the coconut oil milling and refining industry. Petitioner rejected respondent’s claim for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill.The new oil mill was insured under Policy No. October 8.) where the insurer pays the assured for a loss which is not a risk covered by the policy. AMERICAN HOME ASSURANCE TANTUCO ENTERPRISES 366 SCRA 740 PUNO. the evident intention of the contracting parties. . In such an event.Considering that the very parties to the policy were not shown to be in disagreement regarding the meaning and coverage of Section III-1. COMPANY V Page Front: by a driveway thence at 18 meters distance by Bldg. it started operating its second oil mill ( the new oil mill). an event that proceeds from an unknown cause. In view of the custom of insurance agents to examine buildings before writing policies upon them. the courts are inclined to consider that the policy of insurance covers any building which the parties manifestly intended to insure. Petitioner’s Claim The policies referred to the old mill. It may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man.1991 gutted and consumed the new oil mill.. i.Although the terms "accident" or "accidental" as used in insurance contracts have not acquired a technical meaning. Disposition Petition is GRANTED.None of the exceptions are availing in the present case. The right of subrogation is not dependent upon. .) if the assured by his own act releases the wrongdoer or third party liable for the loss or damage. No. to apply the ejusdem generis rule. Ratio In construing the words used descriptive of a building insured. therefore. 1991 to 1992. thereby effecting "voluntary payment" . such that the parties themselves disagree about the meaning of particular provisions.

. and an emergency fire engine. the courts will read and construe the policy as a whole and if possible.000.About two months later. 612. Section 377 of Presidential Decree No. public order or public policy. arbitrary or objectionable in this stipulation as would warrant its nullification. . the court rendered a decision in favor of Perea.000 as attorney's fees. Milagros Cayas filed a motion to declare PCSI in default for its failure to file an answer. Edison Tantuco. Cavite injuring several of its passengers.. as well as attorney’s fees. fire hydrant.On November 11. while three others agreed to a settlement of P4. Mr. .INSURANCE 24 .00 each. ( P32.In due course. . and that "out of sportsmanship".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. .The insurance policy involved explicitly limits petitioner's liability to P12. Mutuc. 1981. Inc.Respondent is not estopped from claiming that the policy description is wrong.In Stokes vs. .Private respondent Milagros Cayas was the registered owner of a Mazda bus. said stipulation must be upheld as effective.000.00 HELD YES .On December 17.000. Neither did it require that the appliances are restricted to those mentioned in the warranty. . we ruled that contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations.) . INC. 1978. good customs..000 as moral damages and P5. we rule as valid and binding upon private respondent the condition requiring her to secure the written permission of petitioner before effecting any payment in settlement of any claim against her. as maintained by petitioner. . (Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers. CA (MILAGROS CAYAS) 185 SCRA 741 FERNAN. Milagros Cayas moved for the reconsideration of the dismissal order.00 as reasonable attorney's fee .The motion was granted and plaintiff was allowed to adduce evidence ex-parte. PCSI filed this petition ISSUE WON.000 per passenger.000 as compensation for the injured passengers. .Said amount complied with the minimum fixed by the law then prevailing. the fundamental principle that contracts are respected as the law between the contracting parties finds application in the present case.After trial. Borja assured Mr. and therefore not contrary to law. Inc vs.00 per person and to P50. the minimum liability is P12. .In Phil. Mr. American General Insurance Co. v. the court motu propio ordered its dismissal without prejudice. private respondent is precluded from seeking reimbursement of the payments made to the three other passangers in view of her failure to comply with the condition contained in the insurance policy.Said decision was set aside after the PCSI filed a motion therefor. valid and binding as between the parties.00 under its maximum liability as provided for in the insurance policy. . Trial of the case ensued.Its motion for reconsideration having been denied by said appellate court.Alleging that she had not received a copy of the answer to the complaint. (PCSI) under a policy issued on February 3.One of them. Said motion for reconsideration was acted upon favorably by the court. Tantuco that the use of the adjective new will distinguish the insured property.000.000. which affirmed in toto the lower court's decision.000 total) . 1982. she did not file a motion to hold PCSI in default.In other words. However. ordering Cayas to compensate him.000.It was error on the part of the trial and appellate courts to have disregarded the stipulations of the parties and to have substituted their own interpretation of the insurance policy. . no matter what form they . Inc. Petitioner's liability under the insurance contract not being less than P12. the court rendered judgment by default ordering PCSI to pay Milagros Cayas P50. .Clearly. Evidence on record reveals that respondent’s operating manager.In view of Milagros Cayas' failure to prosecute the case.On July 13. its liability is limited only to the payment made by private respondent to Perea and only up to the amount of P12. 19-year old Edgardo Perea. morals. .000.It being specifically required that petitioner's written consent be first secured before any payment in settlement of any claim could be made.00. the insurance policy clearly and categorically placed petitioner's liability for all damages arising out of death or bodily injury sustained by one person as a result of any one accident at P12. . notified the petitioner’s agent with whom respondent negotiated for the contract about the inaccurate description in the policy. PERLA COMPANIA DE SEGUROS. . . sued Milagros Cayas for damages in the CFI of Cavite.. warranty did not require respondent to provide for all the fire extinguishing appliances enumerated therein. 1990 NATURE Petition for review on certiorari of a decision of the Court of Appeals FACTS . Malayan Insurance Co. give effect to all the parts of the contract.In like manner.000. with an award of exemplary and moral damages. . Milagros Cayas filed a complaint for a sum of money and damages against PCSI in the Court of First Instance of Cavite. In determining what the parties intended. . which provided that the liability of land transportation vehicle operators for bodily injuries sustained by a passenger arising out of the use of their vehicles shall not be less than P12.00 per accident. the court promulgated a decision ordering defendant Perla Compania de Seguros. Inc. Disposition Petition is dismissed. the bus figured in an accident in Naic. Regarding policy requirements that fire extinguishment appliances should be available and in good working condition. the Court held that the terms of the contract constitute the measure of the insurer's liability and compliance Page therewith is a condition precedent to the insured's right of recovery from the insurer. under the law. insured with Perla Compania de Seguros. two fire hoses. . May 28.PCSI appealed to the Court of Appeals.000. for contracts are obligatory. . The same was obviously designed to safeguard the insurer's interest against collusion between the insured and the claimants. and the sum of P5.In the case at bar.There is nothing unreasonable. if their terms are clear and leave no room for doubt as to the intention of the contracting parties. to pay plaintiff Milagros Cayas the sum of P50. P5.00. 1978.

Petitioners failed to show that they were under duress or forced to sign the loan documents. 00) plus legal interest from the promulgation of the decision of the lower court until it is fully paid and attorney's fees in the amount of P5. . by way of a Deed of Assignment. Central Bank. On the third party complaint." it was stated that the first and fundamental duty of the courts is the application of the law according to its express terms. all its rights. Disposition CA decision AFFIRMED with the modification that the interest rate be reduced to 12% per annum from 24 May 1994 until fully paid. Under the terms of the insurance policy from FGU Insurance. November 28. The latter refused to pay. the petitioners filed a claim under the insurance policy. WON contracts presented in evidence by BPI were unjust and unacceptable contracts of adhesion 2. the third party defendants were ordered to pay the third party plaintiffs.Petitioners claimed that BPI required them to obtain a motor vehicle insurance policy from FGU Insurance Corporation (FGU Insurance).Judgment was rendered against the insurance company. Reasoning . . title and interest to the promissory note and chattel mortgage.INSURANCE 25 may be. . POLTAN v.RTC again ruled in favor of BPI. the vehicle had to be replaced or its value paid to them.Petitioners POLTAN obtained a loan evidenced by a promissory note from the MANTRADE Dev’t Corp. and if so. whenever the essential requisites for their validity are present. vs. . Plaintiff made a claim against Filipino Merchants Insurance Company.RTC ordered POLTANS to pay BPI the said amount. interpretation being called for only when such literal application is impossible. In this case. BPI then filed complaint. .Petitioners defaulted and so BPI demanded the whole balance of P286.Plaintiff insured said shipment with defendant insurance company under said cargo for the goods described as 600 metric tons of fishmeal in new gunny bags of 90 kilos each from Bangkok.With notice to petitioners. . March 5.00. BPI. . Disposition Petition granted. WON some fortuity. WON the respondent has an insurable interest HELD 1. WON the terms and conditions of the comprehensive car insurance policy issued by FGU should be deemed as having automatically operated in favor of BPI as the assured mortgagee. upon the loss of the vehicle due to total wreck. this will result in partial or full satisfaction of the obligation only if the insurer pays the mortgagee. . they stopped payment of the monthly installments. The defendant insurance company presented a third party complaint against the vessel and the arrastre contractor.000.R. and the award of attorney’s fees be reduced to P50T. CA affirmed. but did not settle their obligation with BPI which remained outstanding despite the loss of the vehicle. .We observe that although Milagros Cayas was able to prove a total loss of only P44. . This is patent error. The CA affirmed. v. This was secured by a chattel mortgage over a 1-unit Nissan Sentra vehicle. Due to the failure and refusal of FGU Insurance to replace the vehicle or pay its value. casualty or accidental cause is needed to be proved despite the “all risks” policy (as asserted by the insurance company) 2. Plaintiff brought an action against them.Petitioners failed to show any provision in the insurance policy or mortgage contract providing that the loss of the mortgaged vehicle extinguishes their principal obligation to BPI. collected and received the proceeds thereof. it should be deemed as resulting in the extinguishment of petitioner’s obligation HELD 1. They had been paying the monthly installments on the vehicle until it figured in an accident where it became a total wreck.00. FILIPINO MERCHANTS INS. but modified the same with regard to the adjudication of the third-party complaint ISSUES 1. An insurance indemnity. 164307 CHICO-NAZARIO.000.While it is true that the proceeds from the Page insurance policy over the mortgaged chattel is for the benefit of BPI. BPI & JOHN DOE G. cannot be availed of by any accident victim or claimant as an instrument of enrichment by reason of an accident.000.In Pacific Oxygen & Acetylene Co.Contracts of adhesion are not entirely prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to determine the respective claims of contending parties on their efficacy. MANTRADE assigned to BPI.5T including accrued interest. CA (CHOA TIEK SENG) 179 SCRA 638 REGALADO. NO Ratio A contract of adhesion is one in which one of the parties imposes a ready-made form of contract. but which the latter cannot modify. The natural presumption is that one does not sign a document without first informing himself of its contents and consequences. which the other party may accept or reject. . or if the insurance proceeds were paid to BPI. NO Reasoning . or to return to BPI the possession of the motor vehicle for foreclosure. NO . The decision of the Court of Appeals is modified in that petitioner shall pay Milagros Cayas the amount of Twelve Thousand Pesos (P12. Thailand to Manila against all risks under warehouse to warehouse terms. 2007 NATURE Petition for review of CA decision FACTS . It is specifically provided in the promissory note and chattel mortgage that failure to pay any installment when due shall make subsequent installments and the entire balance of the obligation due and payable. being merely an assistance or restitution insofar as can be fairly ascertained. ISSUES 1. 2. . This is a sister company of BPI. 1989 NATURE Review of the decision of the CA FACTS . No. .00.After they refused to do so. the maximum liability per accident stipulated in the policy. petitioner was made liable for the amount of P50.000.CA reversed and remanded case to RTC for trial on the merits.Some of the goods arrived in bad condition. It is just as binding as ordinary contracts.

In the present case. 1998. It alleges that IMC and LSPI filed with respondent their claims under their respective fire insurance policies with book debt endorsements.613. delivery of the goods to a carrier. Levi Strauss (Phils.Section 13 of the Insurance Code defines insurable interest in property as every interest in property. the insurer is liable under the policy. that since the sales invoices state that “it is further agreed that merely for purpose of securing the payment of purchase price. NATURE Petition for review on certiorari of the Decision of the Court of Appeals FACTS . the burden of proof is upon the insured to show that a loss arose from a covered peril. 2. that as of February 25. June 8. owned by petitioner. 1991. 2006 Co. that respondent’s right of subrogation has no basis inasmuch as there was no breach of contract committed by it since the loss was due to fire which it could not prevent or foresee. for. the above-described merchandise remains the property of the vendor until the purchase price is fully paid”. . The CA held that the sales invoices are proofs of sale. whether real or personal.. Phoenix Assurance Co. the company is liable. The insured under an "all risks insurance policy" has the initial burden of proving that the cargo was in good condition when the policy attached and that the cargo was damaged when unloaded from the vessel. x xx . On August 31. Ltd. Disposition Petition denied GAISANO CAGAYAN v. the burden then shifts to the insurer to show the exception to the coverage. . In its Answer with Counter Claim dated July 4. from that time.” The policies also provide for the following conditions: 1. was consumed by fire.00 while with LSPI it was P535. the foreign buyers assumed the risks of loss of the goods and paid the insurance premium covering them . that it never consented to paying the claim of the insured. INSURANCE NORTH AMERICA 490 SCRA 296 Austria-Martinez. whether named by the buyer or not.00. As we held in ParisManila Perfumery Co. that respondent made several demands for payment upon petitioner but these went unheeded. 7 This is pursuant to the very purpose of an "all risks" insurance to give protection to the insured in those cases where difficulties of logical explanation or some mystery surround the loss or damage to property. coupled with an existing interest in that out of which the expectancy arises.Petitioner is a customer and dealer of the products of IMC and LSPI. 1991.) Inc. It held that the fire was purely accidental. 1992. Thus. thereafter. or any relation thereto. the unpaid accounts of petitioner on the sale and delivery of ready-made clothing materials with IMC was P2.Generally. YES . . that respondent paid the claims of IMC and LSPI and. 16 Insurable interest in property may consist in (a) an existing interest.205. or lien upon or possession of the property y. Included in the items lost or destroyed in the fire were stocks of ready-made clothing materials sold and delivered by IMC and LSPI. of such nature that a contemplated peril might directly damnify the insured. The Court has heretofore ruled that the delivery of the goods on board the carrying vessels partake of the nature of actual delivery since.119.” The policies defined book debts as the “unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy.. (b) an inchoate interest founded on an existing interest. or liability in respect thereof. Warranted that the Company shall not be liable for any unpaid account in respect of the merchandise sold and delivered by the Insured which are outstanding at the date of loss for a period in excess of six (6) months from the date of the covering invoice or actual delivery of the merchandise whichever shall first occur. On February 25. or (c) an expectancy. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co. the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer. petitioner contends that it could not be held liable because the property covered by the insurance policies were destroyed due to fortuities event or force majeure. the CA rendered its decision setting aside the decision of the RTC.Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. Dissatisfied. The perfected contract of sale between him and the shipper of the goods operates to vest in him an equitable title even before delivery or before be performed the conditions of the sale. On February 4. OF Page books of accounts as unpaid and thus become receivable item from their customers and dealers. that IMC and LSPI never communicated to it that they insured their properties. that the cause of the fire was not attributable to the negligence of the petitioner. .The very nature of the term "all risks" must be given a broad and comprehensive meaning as covering any loss other than a willful and fraudulent act of the insured. Article 1523 of the Civil Code provides that where. In principle. vs. On October 11. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of every calendar month all amount shown in their . IMC and LSPI separately obtained from respondent fire insurance policies with book debt endorsements. IMC and LSPI retained ownership of the delivered goods and must bear the loss. but under an "all risks" policy the burden is not on the insured to prove the precise cause of loss or damage for which it seeks compensation. that it has not been established that petitioner is the debtor of IMC and LSPI. The insurance policies provide for coverage on “book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines.Respondent’s interest over the goods is based on the perfected contract of sale.INSURANCE 26 . anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction whether he has or has not any title in. in pursuance of a contract of sale. the RTC rendered its decision dismissing respondent’s complaint. respondent filed a complaint for damages against petitioner. 2.At the pre-trial conference the parties failed to arrive at an amicable settlement.Moreover. by virtue thereof. the basic rule is that the insurance company has the burden of proving that the loss is caused by the risk excepted and for want of such proof. the Gaisano Superstore Complex in Cagayan de Oro City. the issue of lack of insurable interest was not raised in petitioner’s answer. 2000. the seller is authorized or required to send the goods to the buyer. respondent was subrogated to their rights against petitioner. trial on the merits ensued. the exceptions to said rule not obtaining in the present case. there being no showing that the loss was caused by any of the excepted perils. 1995. petitioner appealed to the CA.Further.

and defined book debts as the “unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy. of such nature that a contemplated peril might directly damnify the insured. what were insured against were the accounts of IMC and LSPI with petitioner which remained unpaid 45 days after the loss through fire.It is well-settled that when the words of a contract are plain and readily understood.”. but when the ownership therein is transferred to the buyer the goods are at the buyer’s risk whether actual delivery has been made or not. (b) an inchoate interest founded on existing interest. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. Indeed.Indeed. petitioner bears the risk of loss of the goods delivered. or liability in respect thereof. it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured. In this case. Where the obligation consists in the payment of money.” Parenthetically. “[i]n an obligation to deliver a generic thing. the loss or destruction of anything of the same kind does not extinguish the obligation. coupled Page with an existing interest in that out of which the expectancy arises.” If the obligation is generic in the sense that the object thereof is designated merely by its class or genus without any particular designation or physical segregation from all others of the same class.” 3. where ownership is the basis for consideration of who bears the risk of loss. . the questioned insurance policies provide coverage for “book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines. that by subrogation. so long as he would suffer by its destruction. that petitioner’s obligation to IMC and LSPI is not the delivery of the lost goods but the payment of its unpaid account and as such the obligation to pay is not extinguished.Petitioner’s argument that it is not liable because the fire is a fortuitous event under Article 1174 of the Civil Code is misplaced. NO . an insurable interest in property does not necessarily imply a property interest in.Moreover. the risk of loss is borne by the buyer. NO . in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract.Under Article 1263 of the Civil Code. what was insured was the vendor’s interest as a creditor. Unlike the civil law concept of res perit domino. Unless otherwise agreed. In this case. the goods are at the buyer’s risk from the time of such delivery. to the general rule that if the thing is lost by a fortuitous event. YES . As held earlier. the goods remain at the seller’s risk until the ownership therein is transferred to the buyer. 2. or (c) an expectancy. 3. 2. or a lien upon. there is no room for construction. . except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer.Therefore. but whether insured has substantial economic interest in the property. when the seller retains ownership only to insure that the buyer will pay its debt. it must be stressed that the insurance in this case is not for loss of goods by fire but for petitioner’s accounts with IMC and LSPI that remained unpaid 45 days after the fire. petitioner bears the loss under Article 1504 (1) of the Civil Code.The present case clearly falls under paragraph (1). the subject matter of the insurance. It does not apply when the obligation is pecuniary in nature.Section 13 of our Insurance Code defines insurable interest as “every interest in property. under Section 14 of the same Code.Thus.INSURANCE 27 being detailed statements of the nature. that. the risk is borne by the owner of the thing at the time the loss under the principle of res perit domino. Article 1504 of the Civil Code: ART.IMC and LSPI did not lose complete interest over the goods. (Emphasis supplied) . WON the CA erred in construing a fire insurance policy on book debts as one covering the unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made clothing materials sold and delivered to petitioner. the insurable interest of IMC and LSPI pertain to the unpaid accounts appearing in their Books of Account 45 days after the time of the loss covered by the policies. or possession of. 2001. Petitioner filed a motion for reconsideration but it was denied by the CA in its Resolution dated April 11. WON IMC bears the risk of loss because it expressly reserved ownership of the goods by stipulating in the sales invoices that “[i]t is further agreed that merely for purpose of securing the payment of the purchase price the above described merchandise remains the property of the vendor until the purchase price thereof is fully paid. the insurer has the right to go against petitioner. and not the loss or destruction of the goods delivered. the failure of the debtor to make the payment even by reason of a fortuitous event shall not relieve him of his liability. when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties. or any relation thereto. in property insurance. . Accordingly. as where he has a vendor’s lien. .” Nowhere is it provided in the questioned insurance policies that the subject of the insurance is the goods sold and delivered to the customers and dealers of the insured. Thus. The rationale for this is that the rule that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event. even if the fire is considered a fortuitous event. the terms are to be understood literally just as they appear on the face of the contract. one’s interest is not determined by concept of title. quantity and cost of the thing sold. the loss or destruction of anything of . a vendor or seller retains an insurable interest in the property sold so long as he has any interest therein. an insurable interest in property may consist in: (a) an existing interest. . being a fire insurance with book debt endorsements. WON the petitioner liable for the unpaid accounts HELD 1. petitioner’s obligation is for the payment of money. Accordingly. that loss of the goods in the fire must be borne by petitioner since the proviso contained in the sales invoices is an exception under Article 1504 (1) of the Civil Code. 1504. . in other words. They have an insurable interest until full payment of the value of the delivered goods. ISSUES 1. and neither the title nor a beneficial interest is requisite to the existence of such an interest. whether real or personal.

no subrogation receipt was offered in evidence. as security of payment . petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner. petitioner as mortgagee still had insurable interest therein. and SSS paid their corresponding shares of the loss.31 (P5. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. . this action.On June 11. Or at the least. An obligation to pay money is generic. Moreover.And third. . it is not excused by fortuitous loss of any specific property of the debtor. Azucena Palomo obtained a P100K loan from Tai Tong Chuache Inc. INSURANCE COMMISSION and TRAVELLERS MULTIINDEMNITY CORPORATION 158 SCRA 366 GANCAYCO. respondent failed to present sufficient evidence to prove its cause of action. This rule is based on the principle that the genus of a thing can never perish. Failure to substantiate the claim of subrogation is fatal to petitioner’s case for recovery of the amount of P535. x x x . . including the Travellers. TAI TONG CHUACHE & CO v. 2207.877.Complainants Palomo acquired a parcel of land and a building located in Davao City. but also the amount paid to settle the insurance claim. Thus Chua as the managing partner of the partnership may execute all acts of administration including the right to sue debtors of the partnership in case of their failure to pay their obligations when it became due and demandable. 1991. It only confirms the loss of Levi’s products in the amount of P535. Hence. Respondent Insurance Commission absolved respondent insurance company from liability on the basis of the certification issued by the then CFI. petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by respondent insurance company. presented and marked as exhibits in court.546. P11. complainants demanded from the other 3 respondents the balance of each share in the loss based on the computation excluding Travellers Multi-Indemnity in the amount of P30.Thus. 1975.732. covering the same building for P50K and contents thereof for P70K. CV No. 1988 NATURE Petition for review on certiorari of the decision of the Insurance Commission FACTS . Jr. 2001 of the Court of Appeals in CA-G. All these documents have been properly identified.119. he need not prove non-payment for it is presumed. Thus.. On July 31. . 61848 are AFFIRMED with the MODIFICATION that the order to pay the amount of P535. that in a certain civil action against the Palomos. Such is a glaring error which this Court cannot sanction. Genus nunquan perit.613.205. .57 by SSS.79 by PBAC. is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured. . Disposition Petition is partly GRANTED. there is no evidence that respondent has been subrogated to any right which LSPI may have against petitioner. Gaisano. the respondent has adequately established its claim. Respondent’s action against petitioner is squarely sanctioned by Article 2207 of the Civil Code which provides: Art.On April 19.613. 2000 and Resolution dated April 11.Petitioner failed to refute respondent’s evidence.Second.Based on the computation of the loss. What is relevant here is whether it has been established that petitioner has outstanding accounts with IMC and LSPI. the building and the contents were totally razed by fire. covering the building for P50K with respondent Zenith Insurance Corporation (ZIC).00 to respondent is DELETED for lack of factual basis. and P5. by itself. there is no proof of full settlement of the insurance claim of LSPI. Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership.936. 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.866. PBAC: and P2. The validity of the insurance policy taken b petitioner was not assailed by private respondent. So at the time of the fire. which building was insured with respondent SSS Accredited Group of Insurers for P25K. Complainants were paid the following: P41. 1975. respondents.INSURANCE 28 the same kind even without the debtor’s fault and before he has incurred in delay will not have the effect of extinguishing the obligation. respondent insurance commission based its findings on mere inference. it has been held in a long line of cases that when the creditor is in possession of the document of credit. (TTCC) and executed a mortgage over the land and the building in favor of Tai Tong Chuache & Co. SSS) but was refused. ISSUE WON petitioner Tai Tong has insurable interest in the said policy HELD YES . If the plaintiff’s property has been insured. PBAC. Being an agent.With respect to IMC. hence. .On April 25.R.62. 1991 from petitioner’s General Manager. Pedro Palomo secured a Fire Insurance Policy. February 29.Moreover. They assumed the mortgage of the building in favor of SSS. From said evidence respondent commission inferred that the credit extended by herein petitioner to the Palomos secured by the insured property must have been paid. Arsenio Lopez Chua stands as the complainant and not Tai Tong Chuache. since it is not an admission of petitioner’s unpaid account with LSPI. representative of TTCC insured the latter's interest with Travellers Multi-Indemnity Corporation (Travellers) for P100K (P70K for bldg and P30K for the contents thereof) .First. ZIC. The subrogation receipt. Stephen S. Demand Page was made from respondent Travellers for its share in the loss but was refused.14 by ZIC. whether fire is a fortuitous event or petitioner was negligent are matters immaterial to this case.00 in the fire that razed petitioner’s building on February 25.As to LSPI.894. check voucher evidencing payment to IMC.00. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. The assailed Decision dated October 11. .90. therefore. a letter dated April 23.00. Petitioner has an outstanding account with IMC in the amount of P2.79-ZIC: P22. No evidentiary weight can be given to Exhibit “F Levi Strauss”. . 1975. Another Fire Insurance Policy was later procured from respondent Philippine British Assurance Company (PBAC). 1975.613. subrogation receipt executed by IMC in favor of respondent upon receipt of the insurance proceeds.294. it is understood that he acted for and in behalf of the firm. Arsenio Chua.

1987. 1933. 1933.An essential requisite of a valid contract is consent.On September 21. Costs against said private respondent. was examined by the company's doctor who made a favorable report. . when and if issued.On February 4. it was subject to the acceptance of BF. she "assigns.The delivery and acceptance by the applicant was a suspensive condition which was not fulfilled inasmuch as the applicant was already dead at the time the policy was issued.000. But he did not return or offer to return the premium paid. Rodolfo Lalog (agent of BF) convinced him to apply for additional insurance coverage of Php50. to the defendant Insular Life Assurance Co. The company accepted the risk and issued policy No.06.On January 18. The non-fulfillment of the condition resulted in the non-perfection of the contract. On January 12. Cristobal Mendoza.The offer must be certain and the acceptance absolute. DE SINDAYEN v. Perez died while riding a banca which capsized during a storm.000. Quezon office of BF. Sindayen’s wife. for a policy of insurance on his life in the sum of P1. . The said check for P40. 1933 Insular Life obtained from the beneficiary. up to the time of his death on January 19. . The agent asked Felicidad Estrada if her nephew was in good health and she replied that she believed so because she had no information that he was sick and he thereupon delivered to her the policy.000 on December 2. During this time his application papers for the additional insurance coverage was still with the Gumaca. PEREZ v. in accordance with his agreement with the insured.) 323 SCRA 613 YNARES-SANTIAGO. . . the agent learned of the death of Arturo Sindayen and called on Felicidad Estrada and asked her to return the policy.. He also paid Php2. Tarlac. through its agent. 1933. 1935 FACTS . Perez accomplished the application form and passed the required medical examination. her signature to a legal document entitled "ACCORD.075 premium) to Lalog. . INSULAR 62 Phil 51 BUTTE.. should be delivered to his Page aunt. Cristobal Mendoza. he called a physician who found that he was suffering from acute nephritis and uremia and on January 19.000 because they maintain that such policy had not been perfected. in this case. of all claims.INSURANCE 29 Disposition Appealed decision SET ASIDE and ANOTHER judgment is rendered order private respondent Travellers to pay petitioner the face value of Fire Insurance Policy in the amount of P100K.On January 20. for delivery to the insured. SATISFACTION AND RELEASE" whereby in consideration of the sum of P40. Delay in acting on the application does not constitute acceptance even though the insured has forwarded his first premium with his application. ISSUE WON there was a consummated insurance between Perez and BF contract of HELD NO . an annual premium of P40.On January 1. who was then twenty-nine years of age. It is to December 1. 1933. Ltd. Felicidad Estrada. -On January 11.000 under the additional policy coverage of Php50. 1987. Disposition Decision of CA affirmed in so far as it declared the insurance policy for Php50. the agent. Thereupon this action was brought to enforce payment of the policy.. does not constitute gross negligence because the application was granted within the normal processing time. Sindayen. BF approved Perez's application and issued the corresponding policy for the Php50. By the terms of the policy. Mrs. he complained of a severe headache and remained at home. January 28. 1932. When Perez filed the application. . delivered the policy to Felicidad Estrada upon her payment of the balance of the first year's annual premium.000 issued by BF null and void (no recission because it presupposes a valid contract) VDA.06 was never cashed but returned to the company and appears in the record of this case as Exhibit D.06 is due on the first day of December of each year.. BF filed a complaint against Mrs. with whom Sindayen left the sum of P26. 1932. On January 15. 1933. and mailed the same to its agent. While there he made a written application on December 26.06 to complete the payment of the first annual premium of P40. September 4. Felicidad Estrada on his aforesaid statement gave him the policy. in Camiling. he died. releases and forever discharges said Isular Life Assurance Co. 2000 NATURE Petition for review on certiorari FACTS . 1933. The perfection was also further conditioned upon (1) the issuance of the policy. Ltd. obligation in or indebtedness.Arturo Sindayen.Without knowing that Perez died on November 25. on December .The application which the insured signed in Camiling. BF refused to pay the proceeds amounting to Php150. . its successors and assigns. to the company. 1932.On November 25. 47710 dated back to December 1. Sometime in 1987. Tarlac.Virginia Perez (wife of the deceased) claimed the benefits under the insurance policies of the deceased. but she was only able to receive Php40.06 paid to her by a check of the company. was employed as a linotype operator in the Bureau of Printing at Manila and had been such for eleven years prior thereto. Perez filed a conterclaim for the collection of Php150. Delay. 1987. . On January 11. the first premium already paid by the insured covering the period from December 1. . 1990. CA (BF LIFEMAN INSURANCE CORP.000 under the first insurance policy. It is to be noted that the policy was not issued and the company assumed no actual risk prior to January 11. Perez seeking recission and declaration of nullity of the insurance contract in question. .000 plus damages.An application for insurance is merely an offer which requires the overt act of the insurer for it to ripen to a contract.Primitivo Perez has been insured with the BF Lifeman Insurance Corporation (BF hereafter) since 1980 for Php20. It was agreed with the agent that the policy. and (3) the delivery to and acceptance by the applicant in good health. 1933. (2) the payment of the premium. Consent must be manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.000 and he paid to the agent P15 cash as part of the first premium. Sindayen was at work in the Bureau of Printing. 1933. 1933.

as well as in the interest of the insurance companies themselves by giving certainly and security to their policies. for at the time of its delivery by the agent as aforesaid the insured was not in good health ISSUE WON the insurance policy is valid HELD YES . When she gave Mendoza an incorrect information tending to create the impression that the insured was well when in fact he was seriously ill." . nor is the defendant estopped from alleging its defense. there is no doubt that she committed fraud and imparted a deceitful information to the defendant agent ENRIQUEZ v. and forward them to the company for approval. by reason of the delivery of the policy by its invokes.It is clear. if approved to the insured. 1917.INSURANCE 30 26. FACTS .On the other hand. that there can be no valid delivery to the insured unless he is in good health at the time. as a representative of the insured was not only bound to give a truthful information on the state of health of the insured. while I am in good health. Herrer) action to recover from the defendant life insurance company the sum of pesos 6.The application was immediately forwarded to the head office of the company at Montreal.Granted that Mendoza's decision that the condition had been met by the insured and that it was proper to make a delivery of the policy to him is just as binding on the company as if the decision had been made by its board of directors. the condition as to the insurer's good health was waived by the company. On .The company therefore having decided that all the conditions precedent to the taking effect of the policy had been complied with and having accepted the premium and delivered the policy thereafter to the insured. “It is plain.Mendoza was duly licensed by the Insurance Commissioner to act as the agent of the defendant insurance company. therefore. when. but it was her duty to find out it his true state of health in order to give true and correct information. Mutual Life Insurance Co. a number of American decisions hold that an agent to whom a life insurance policy similar to the one here involved was sent with instructions to deliver it to the insured has authority to bind the company by making such delivery. namely.000 to the manager of the company's Manila office and was given a receipt. as we. November 29. on the theory that the delivery of the policy being the final act to the consummation of the contract.It is the interest not only the applicant but of all insurance companies as well that there should be some act which gives the applicant the definite assurance that the contract has been consummated. As was well said in the case of MeLaurin vs. that this condition precedent goes to the very essence of the contract and cannot be waived by the agent making delivery of the policy . When the policy is issued and delivered. has no power to waive any of the provision of the policy so delivered.we are inclined to the view that it is more consonant with the well known practice of life insurance companies and the evidence in the present case to rest our decision on the proposition that Mendoza was authorized by the company to make the delivery of the policy when he received the payment of the first premium and he was satisfied that the insured was in good health. there is no doubt. 1920 NATURE Appeal from judgment of trial court denying plaintiff’s (administrator of the estate of the late Joaquin Ma.There is one line of cases which holds that the stipulation contained in paragraph 3 is in the nature of a condition precedent. accepted the premium and delivered the policy. Canada. that the said policy never took effect because of paragraph 3 of the application above quoted. as to the existence of the fraud. that the delivery of the policy to the insured by an agent of the company who is authorized to make delivery or without delivery is the final act which binds the company (and the insured as well) in the absence of fraud or other legal ground for rescission . 1932. for the public is profoundly and generally interested in life insurance. legally there could have been no waiver. That act binds their principal. in the exercise of the powers lodged in them.On September 24. that we are constrained to hold.” .000 paid by the deceased for a life annuity. In view of the facts established and admitted. but a case where the local agents. This sense of security and of peace of mind that one's defendants are provided for without risk either of loss or of litigation is the bedrock of life insurance."A local agent of an insurance company. that the defendant waived the defense it now invokes. . . Granted that Mendoza made a mistake of judgement because he acted on insufficient evidence as to the state of health of the insured. It is admitted that if the delivery of the policy was due to fraud. the company is now estopped to assert that it never intended that the policy should take effect. -There is another ground upon which the majority opinion is based. that is to say. whose only power is to solicit applications for insurance. SEPARATE OPINION IMPERIAL [dissent] Page . by reason of the delivery of the policy by its agent. that the delivery of the policy by Mendoza does not bind the defendant. SUN LIFE OF CANADA 41 PHIL 269 MALCOLM. that upon the facts it is not necessarily a case of waiver or of estoppel. it is plainly not within the intention of the parties that there should be any questions held in abeyance or reserved for future determination that leave the very existence of the contract in suspense and doubt. The well known custom of the insurance business and the evidence in this case prove that Mendoza was not regarded by the company as a mere conduit or automaton for the performance of the physical act of placing the policy in the hands of the insured . . Joaquin Herrer made application to the Sun Life Assurance Company of Canada through its office in Manila for a life annuity. But it is not charged that the mistake was induced by any misconduct or omission of duty of the insured. the defendant. for the simple reason that Mendoza was not an agent with authority to issue policies or to accept risks in the name of his principle. . Two days later he paid the sum of P6.It is therefore in the public interest. although the insured was not in good health at the time of delivery. contained among others the following provisions: “3 That the said policy shall not take effect until the first premium has been paid and the policy has been delivered to and accepted by me. -Estrada. therefore.” -Main defense of the company in this case. in the absence of fraud or other grounds for rescission. do. namely.

medical expenses. the alleged insurance policy was not in force due to the non-payment of the premium thereon. Herrer mentioned his application for a life annuity. . 1917. however. testified that he had gone through the effects of the deceased and had found no letter of notification from the insurance company to Mr.. with an allegation that the taxicab involved was insured against third party liability for P20. The law of insurance is consequently now found in the Insurance Act and the Civil Code. The following day the local office replied to Mr. In the Civil Code is found article 1262 providing that "Consent is shown by the concurrence of offer and acceptance with respect to the thing and the consideration which are to constitute the contract. did cable the Manila office to that effect.According to the provisional receipt. without special finding as to costs in either instance. Herrer died on December 20. Herrer. which will be discussed later. and (3) this approval had in some way to be communicated by the company to the applicant. 1917. there was. three things had to be accomplished by the insurance company before there was a contract: (1) There had to be a medical examination of the applicant. . who was the chief clerk on November 26. ISSUE WON there exists a contract for life annuity between Herrer and defendant HELD NO Ratio The law applicable to the case is found to be the second paragraph of article 1262 of the Civil Code providing that an acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge.) On December 4. which is incontestable. was not called as a witness. the Insurance Act deals with life insurance. For instance. . and the plaintiff shall have and recover from the defendant the sum of P6.While. not only describes a contact of life annuity markedly similar to the one we are considering.000 with legal interest from November 20. notice was sent by the Manila office of Herrera that the application had been accepted. as just noticed. all of the provisions concerning life insurance in the Philippines were found in the Code of Commerce and the Civil Code. Tuason. even if the cab had been insured.The case was an offshoot of an incident: plaintiffs were riding in their car. . that the special law on the subject of insurance is deficient in enunciating the principles governing acceptance. 1917. gives strong clues as to the proper disposition of the case.(More pertinent to this class: ) petitioners assert that the private respondent had agreed to grant the then prospective insured a credit extension of the premium due. and called attention to the notification of November 26.For the defense. if there be any. Herrer of this acceptance. 173 SCRA 228 REGALADO. Mr. after being signed.. E.INSURANCE 31 November 26. (2) there had to be approval of the application by the head office of the company. (Whether on the same day the cable was received. Page Disposition Judgment is reversed.The contract for a life annuity in the case at bar was not perfected because it has not been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant. Torres wrote to the Manila office of the company stating that Herrer desired to withdraw his application. hence the evidence of late payment should be disregarded supposedly because the private respondent had admitted that such fact was not in issue. Reasoning .Maharlika claimed there was no cause of action against it because at the time of the accident. the head office gave notice of acceptance by cable to Manila. the complaint would be premature since the policy provides that the insurer would be liable only when the insured becomes legally liable. testified to having received the cablegram accepting the application of Mr. but in two other articles. the administrator of the estate. did actually issue the policy and did. 2427. were sent to the chief clerk and placed on the mailing desk for transmission. On the other hand. until paid." On the supposition. White. . This letter was received by Mr. The local manager. .000. 1989 NATURE Petition for review on certiorari and FACTS . 1917. in article 1802. . faulting the respondent judge for considering the defense of late payment of premium when “the same was waived at the pre-trial”. An acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge. Rafael Enriquez. . The witness further said that letters. Herrer from the home office on November 26. for signature. 1918.Petitioners were plaintiffs in a civil case of which public respondent Hon. stating that the policy had been issued. Mr. The Act expressly repealed Title VIII of Book II and Section III of Title III of Book III of the code of Commerce. Torres. it is silent as to the methods to be followed in order that there may be a contract of insurance. White. . Mr. 1917. the Civil Code. Private respondent Maharlika was eventually impleaded as a defendant in this case. through its agent in Manila. when a taxicab crossed a center island in the road and collided with their car. Mr. Mr. any deficiency of the latter shall be supplied by the provisions of this Code. the subjectmatter of the Civil code. attorney Aurelio A.Trial court ruled in favor of the plaintiff.00 with private respondent at the time of the accident . That on this occasion. etc. No. 1917. the policy was issued at Montreal. BUT Maharlike was exonerated on the gnd that the policy was not in force. in force the Insurance Act. 1917. and that he said that the only document relating to the transaction in his possession was the provisional receipt. On December 18. therefore. attorney Manuel Torres testified to having prepared the will of Joaquin Ma. Torres on the morning of December 21. article 16 of the Civil Code provides that "In matters which are governed by special laws. INC. He said that on the same day he signed a letter notifying Mr. VELASCO and ACOSTA v. After July 1. 1915.Petitioners elevated this case to this court.The chief clerk of the Manila office of Sun Life testified that he prepared the letter and handed it to the local manager. E. 1917. Herrer. would be controlling. APOSTOL MAHARLIKA INSURANCE CO. Apostol was the judge. May 9. .Until quite recently. actually write the letter of notification and place it in the usual channels for transmission to the addressee. Chapter IV of this Act concerns life and health insurance. The further admitted facts are that the head office in Montreal did accept the application. Also. is a disputed point. holding the defendants liable for repair of the car.

Verily. Efforts to settle the case before the Insurance Commission proved futile. 612.As expressly agreed upon in the contract. Such agreement may be express or implied.The accident occurred in 1973. Disposition Fnding no reversible error.983. . The purported nexus between the delivery of the policy and the grant of credit extension is too tenuous to support the conclusion for which petitioners contend. Reasoning . 1996 LIFE & GENERAL Page FACTS . It would have been altogether different were it not so stipulated. CA reversed. Goodwill Adjustment Services. Inc. Two days later. she filed with FORTUNE a claim on the fire insurance policy. May 24. The insurance contract itself expressly provided that the policy would be effective only when the premium was paid in full. . Violeta Tibay only paid P600 thus leaving a considerable balance unpaid. full payment must be made before the risk occurs for the policy to be considered effective and in force.This controversy arose under the old insurance law. If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ineffective. and far more importantly. 136171 in favor of Violeta R. the subsequent acceptance of the premium and delivery of the policy estops the respondent company from asserting that the policy is ineffective. Disposition Petition is DENIED. Tibay and/or Nicolas Roraldo on their two-storey residential building located at 5855 Zobel Street. 2♪ and of Sec. it is elemental law that the payment of premium is requisite to keep the policy of insurance in force. binding and enforceable upon mere partial payment of premium HELD NO Ratio Where the insurer and the insured expressly stipulated that the policy is not in force until the premium has been fully paid the payment of partial premium by the assured in this particular instance should not be considered the payment required by the law and the stipulation of the parties. Courts have no other function but to enforce the same. of the total premium of P2.  Parenthetically mention: in the present law. 1974. P100. Petitioner forthwith complied. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid.Indeed. 2427: an insurance policy would be valid and binding notwithstanding the non-payment of the premium if there was a clear agreement to grant to the insured credit extension. together with all their personal effects therein. On 23 January 1987. On the same day. On 3 March 1988 Violeta and the other petitioners sued FORTUNE for damages in the amount of P600. Section 77 of the Insurance Code of 1978 has deleted the clause "unless there is clear agreement to grant the insured credit extension of the premium due" which was then involved in this controversy. ISSUE WON a fire insurance policy is valid. Ergo. Violeta Tibay paid the balance of the premium. 77 of the Insurance Code. which applies to the case here. . The insurance was for P600. and attorney's fees equivalent to 20% of the total claim. .FORTUNE denied the claim of Violeta for violation of Policy Condition No.On 22 January 1987 Fortune Life and General Insurance Co. ISSUE WON the insurance policy would be valid and binding notwithstanding the non-payment of the premium HELD NO Ratio Act No.50. 2427. CA (FORTUNE INSURANCE) 257 SCRA 126 BELLOSILLO. The court however sees no proof of any such implied agreement. it must be taken in the concept of a deposit to be held in trust by the insurer until such time that the full amount has been tendered and duly receipted for. an admission of liability. petitioners had absolute freedom of choice whether or not to be insured by FORTUNE under the terms of its policy and they freely opted to adhere thereto. Inc. To them. Decision of the CA is AFFIRMED. the subsequent insurance law which repealed its predecessor .INSURANCE 32 .000 covering the period from 23 January 1987 to 23 January 1988. Her claim was accordingly referred to its adjuster.000 representing the total coverage of the fire insurance policy plus 12% interest per annum.The former insurance law. TIBAY v. Rather. (FORTUNE) issued Fire Insurance Policy No. the judgment appealed from is hereby AFFIRMED.Petitioners maintain that in spite of their late payment. the cardinal polestar in the construction of an insurance contract is the intention of the parties as expressed in the policy. provided: An insurer is entitled to the payment of premium as soon as the thing insured is exposed to the peril insured against. ♪ SEPARATE OPINION VITUG [dissent] This policy including any renewal thereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein. Act No. or be claimed to be. Reasoning .. the policy is binding because there was an implied agreement to grant a credit extension so as to make the policy effective. Makati City.On 8 March 1987 the insured building was completely destroyed by fire.000 moral damages.  both before the effectivity of Presidential Decree no. . (GASI). Partial payment even when accepted as a partial payment will not keep the policy alive even for such fractional part of the year as the part payment bears to the whole payment. The rule that contracts of insurance will be construed in favor of the insured and most strongly against the insurer should not be permitted to have the effect of making a plain agreement ambiguous and then construe it in favor of the insured. unless there is clear agreement to grant the insured credit extension of the premium due. The complaint was filed on July 20. which immediately wrote Violeta requesting her to furnish it with the necessary documents for the investigation and processing of her claim. Thus. no vinculum juris whereby the insurer bound itself to indemnify the assured according to law ever resulted from the fractional payment of premium. The trial court ruled for petitioners. On 28 March 1987 she signed a nonwaiver agreement with GASI to the effect that any action taken by the companies shall not be.

cannot treat the contract as valid only for the purpose of collecting premiums and as invalid for the purpose of indemnity. . is made by the insured which the insurer accepts. .A third policy was again issued for the period 1 March 1984 to 1 March 1985.The records clearly show that petitioner and private respondent intended subject insurance policies to be binding and effective notwithstanding the staggered payment of the premiums. Here. and 3. notwithstanding contrary. The absence of an express acknowledgment in the policies of such receipt of the corresponding premium payments. the full efficacy. And the insured never informed the insurer that it was terminating the policy because the terms were unacceptable. CA ( AMERICAN HOME ASSURANCE CO. good customs. In fine. it is either that a juridical tie exists (by such payment) or that it is not extant at all (by an absence thereof). For this. The premium was paid on installments all of which were accepted by AHAC. Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising before such payments or after the expiration of the credit clause of the policy. public order or public policy.Petitioner further claimed that the policy was never binding and valid.INSURANCE 33 . any Page agreement to the ISSUE WON payment by installment of the premiums due on an insurance policy invalidates the contract of insurance HELD Ratio Where the risk is entire and the contract is indivisible. (AHAC). both accepted by AHAC. . It should thus be enough that payment on the premium. November 6. and affirming the denial of the counterclaim. and petitioner's failure to pay said premiums on or before the effective dates of said policies rendered them invalid. Inc. and there is no pretense that the parties never envisioned to make the insurance contract binding between them.103. the insured is not entitled to a refund of the premiums paid if the insurer was exposed to the risk insured for any period. and such an agreement is not contrary to morals. Petitioner’s Claims Petitioner argues that where the premiums is not actually paid in full. cannot avoid the obligation of paying the balance of the premium while the insurer. petitioner made two installment payments.There is nothing in Section 77 which suggests that the parties may not agree to allow payment of the premiums in installment. the policy would only be effective if there is an acknowledgment in the policy of the receipt of premium pursuant to Sec. Reasoning .Section 78 of the Insurance Code in effect allows waiver by the insurer of the condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to make the policy binding despite the fact that premium is actually unpaid. upon the other hand. less the unpaid premium can accordingly be had. 77 of the Insurance Code.206. AHAC filed an action to recover the unpaid balance of P314.). . and no risk attached to the policy. the parties herein agreed to make the premiums payable in installments. Thereafter.A second policy was issued to renew the first one. recovery on the basis of the full contract value. this time covering the period 1 March 1983 to 1 March 1984. if no loss occurs. on the one hand. both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted. Verily. inspite of the reservations. it could not be said.) 215 SCRA 462 BELLOSILLO. issued in favor of petitioner Makati Tuscany Condominium Corporation an insurance policy on the latter's building and premises. 1992 NATURE Appeal from decision of the CA FACTS American Home Assurance Co. .10 representing the premium payments for 1982-85. that no risk attached under the policies. sought the refund of P924. no contract of insurance is valid and binding unless the premium thereof has been paid.The law neither requires.CA modified the decision by ordering Tuscany to pay the balance of the premiums due on the third policy plus legal interest until fully paid.The obligation to pay premiums when due is ordinarily as indivisible obligation to pay the entire premium. . or to consider the contract as valid and binding upon payment of the first premium.. Tuscany was justified in refusing to pay the same. In case of loss. stated the following reservations: 2.Trial court dismissed the complaint and the counterclaim upon the following findings: (1) payment of the premiums of the three policies were made during the term of said policies. in view of the reservation in the receipts ordinarily issued by AHAC on premium payments the only plausible conclusion is that AHAC has no right to demand their payment after the lapse of the term of said policy on March 1. (2) as regards the unpaid premiums. The insured. . Subject to no loss prior to premium payment. Petitioner thus concludes that there cannot be a perfected contract of insurance upon mere partial payment of the premiums because under Sec. This was also pain in installment basis. represented by American International Underwriters (Phils. petitioner refused to pay the balance of the premium. nor measures the strength of the vinculum juris by. the insurer can demand the payment of the unpaid balance of the premium. of the insurance contract naturally follows. however brief or momentary. not only is there an insurance perfected but also a partially performed contract. conversely. . Acceptance of payments speaks loudly of the insurer's intention to honor the policies it issued to petitioner. If there be any loss such is not covered.05. 1985.Petitioner explained that it discontinued the payment of premiums because the policy did not contain a credit clause in its favor and the receipts for the installment payments covering the policy for 1984-85. 78 of the Insurance Code. for the period 1 March 1982 to1 March 1983. MAKATI TUSCANY v. . not merely pro tanto. but does not expressly prohibit an agreement granting credit extension. . Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid. and in its answer with amended counterclaim. Once the juridical relation comes into being. hence. as well as the two (2) previous policies.At the very least. It then pleaded a counterclaim for P152k for the premiums already paid for 1984-85. Therefore. partly or in full. any specific amount of premium payment. .

And if payment was made to a representative. NO Reasoning . CA (VALENZUELA HARDWOOD) 244 SCRA 744 VITUG. Malapit. . 1984. 1910.00. by provision of law. Trial Court favored Hardwood.470. .Article 1910 thus reads: Art.Areola theorized that Malapit's act of signing and even sending the notice of cancellation himself. . notwithstanding his personal knowledge of petitioner-insured's full payment of premiums. Appellant argues that Chua was not its broker. is bound by the acts of its agent.25 and 2% premium tax of P29. no exoneration from liability could result therefrom. As for any obligation wherein the agent has exceeded his power. .Subsequent reinstatement could not possibly absolve respondent insurance company from liability. but absolved Seven Bros. but Victorio Chua was only to deliver the check to South Sea five days after the vessel sank.Respondent company should be reminded that a contract of insurance creates reciprocal obligations for both insurer and insured. Prudential unilaterally cancelled the same since . particularly under Article 1910 of the Civil Code.40.e. where latter undertook to load the former’s logs on vessel. therefore. PA-20015 (covering a period of one year). 1985. . o The statement of account stated that it must not be considered a receipt as an official receipt will be issued upon payment of the account. INC. .Malapit's fraudulent act of misappropriating the premiums paid by petitioner-insured is beyond doubt directly imputable to Prudential. AREOLA v.A corporation.INSURANCE 34 Disposition petitioner.Reinstatement effectively restored Areola to all his rights under the policy. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. His act of receiving the premiums collected is well within the province of his authority as manager. upon a finding that the cancellation was erroneous and that the premiums were paid in full by Areola but were not remitted by Teofilo M.The fraudulent act of in misappropriating Areola’s premium payments is the proximate cause of the cancellation of the insurance policy.Reciprocal obligations are those which arise from the same cause and in which each party is both a SOUTH SEA SURETY AND INSURANCE v.Hardwood filed claim with South Sea and Seven Bros. ISSUES WON the insurance contract was already in effect when the vessel sank HELD YES . It must. WON the erroneous act of canceling subject insurance policy entitle petitioner-insured to payment of damages 2. CA decided against South Sea. Costs against company records revealed that Areola failed to pay his premiums. clients should demand for an OR. Hardwood insured the logs with South Sea Surety which issued Marine Cargo Insurance Policy. June 2. Prudential should be notified. Respondent’s Argument . September 22. . It delivered the check to Victorio Chua before the vessel sank. After all damage had already been inflicted on him and no amount of rectification could remedy the same. documentary stamp of P110. there being an obvious breach of contract. but it was found that Chua was authorized by South Sea to receive the premium on its behalf. Petitioners’ Claims . bear the consequences of the erroneous cancellation of subject insurance policy caused by the nonremittance by its own employee of the premiums paid.Malapit's failure to remit the premiums he received cannot constitute a defense for private respondent insurance company. .Prudential’s earlier act of reinstating the insurance policy can not obliterate the injury inflicted on petitioner-insured. 1985. The latter’s acts are considered as its own for which it can be held to account. CA (PRUDENTIAL GUARANTEE AND ASSURANCE. Judgment affirmed.65 which included the premium of P1. 1994 NATURE CERTIORARI FACTS .Prudential argues that where reinstatement. 1995 NATURE Petition for review on certiorari FACTS . Areola was supposed to pay the total amount of P1.7 months after the issuance of Santos Areola's Personal Accident Insurance Policy No. Areola is left without a cause of action on which to predicate his claim for damages. WON the subsequent act of reinstating the wrongfully cancelled insurance policy obliterate whatever liability for damages Prudential has HELD 1. . the principal is not bound except when he ratifies it expressly or tacitly. . . i.It is already in effect because Hardwood has already paid the insurance premium. such as respondent insurance company. South Sea filed this instant petition.) 236 SCRA 643 ROMERO.Such fraudulent act committed by Malapit is attributable to Prudential. further reinforces the allegation of bad faith. YES 2. his receipt of said premiums is receipt by private respondent insurance company who. o Under the terms of the statement of account issued by Prudential.Malapit's actuations are therefore not separate and distinct from that of Prudential’s. the client must demand for a Provisional Receipt and if Official Receipts aren’t received within 7 days. the equitable relief sought by Areola was granted at an opportune moment.August 3.Hardwood entered into agreement with Seven Bros Shipping. The vessel sank Jan 25.June 29. ISSUES 1. prior to the filing of the Page complaint.The facts are clear as to the relationship between private respondent insurance company and Malapit. 1985.609. Thus. . If payment is made to their office. .Prudential offered to reinstate same policy it had previously cancelled and even proposed to extend its lifetime to December 17. acts solely thru its employees. . Prudential's branch manager.

. petitioner returned to respondent the five manager's checks that it tendered. respondent filed with petitioner its formal claim for indemnification of the insured property razed by fire.000. by reason of their agreement to enter into a contract of insurance under whose terms. and. ISSUE WON the fire insurance policies issued by petitioner to the respondent covering the period May 22. the dispositive portion of which reads: "WHEREFORE. such that the obligation of one is dependent upon the obligation of the other. divests petitioner-insured of a rightful claim for payment of damages. had expired on the latter date or had been extended or renewed by an implied credit arrangement though actual payment of premium was tendered on a later date after the occurrence of the risk (fire) insured against .000.. On the same day. a civil complaint against petitioner for recovery. particularly the second paragraph of Article 1191. representing the face value of the policies covering respondent's insured property razed by fire. C. the relationship as creditor and debtor between the parties arose from a common cause: i. C. and. 1992. It held that following previous practice. B & C and/or its replacement-renewal policies. INC. (c) P25. It alleged that the complaint "fails to state a cause of action". Makati City. . 1992 and August 9.753. D and E effective and binding for the duration May 22. 21. "(3) Declaring Exhibits A & B. INC. 1992.95 (refused by the defendant) as full payment of the corresponding premiums for the replacement-renewal policies for Exhibits A. Prudential promised to extend protection to Areola against the risk insured for a consideration in the form of premiums to be paid by the latter. 1992..INSURANCE 35 debtor and a creditor of the other. . . said article entitles the injured party to payment of damages. B. (b) 25% of the total amount due as and for attorney's fees. the Regional Trial Court. Branch 58. 1992.On July 14.00 representing the latter's claim for indemnity under Exhibits A.e. representing premium for the renewal of the policies from May 22. 308 SCRA 259 PARDO. . 1999 CO. fails to comply with what is incumbent upon him. 1992 to May 22.95. D and E. (d) the costs of suit. “xxx ” . respectively. as follows. 1992.On April 15.645.645.753. The CA promulgated its decision affirming that of the Regional Trial Court with the modification that item No. rendered decision. that reinstatement being equivalent to fulfillment of its obligation. Zuellig Insurance Brokers. petitioner issued five (5) insurance policies covering respondent's various property described therein against fire.to 90-day credit term for the renewal of its policies. or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown. of its intention not to renew the policies. and (b) that the fire occurred on June 13.On April 6. v.In March 1992.In due time. Branch 58. 1992 until May 22. of P18. 1991. the injured party. before respondent's tender of premium payment. 1993. 1992. Makati. on March 10. . 1991 to May 22. regardless of whether he demands fulfillment or rescission of the obligation.Under the law governing reciprocal obligations. . 1992. in force from August 22. No notice of loss was filed by respondent under the policies prior to July 14. "(2) Declaring plaintiff to have fully complied with its obligation to pay the premium thereby rendering the replacement-renewal policy of Exhibits A. and "(4) Ordering the defendant to pay plaintiff the sums of. fire razed respondent's property covered by three of the insurance policies petitioner issued. Areola in this case. ordering defendant to deliver forthwith to plaintiff the said replacement-renewal policies. 1992. . judgment is hereby rendered in favor of the plaintiff and against the defendant.00 as necessary litigation expenses.00. respondent presented to petitioner's cashier at its head office five (5) manager's checks in the total amount of P225. NATURE Petition for review on certiorari of a decision of the Court of Appeals. 1991 to August 9. premises considered. Prudential within a reasonable time took steps to rectify the wrong committed by reinstating the insurance policy of petitioner. namely. B. after its motion to dismiss had been denied.Moreover.The nature of damages to be awarded.Under the circumstances of instant case. 1993. this appeal. 1992. for the period from May 22. would be in the form of nominal damages . the policies had long expired and were not renewed. Inc. 3 of the dispositive portion was deleted. and at the same time rejected respondent's claim for the reasons (a) that the policies had expired and were not renewed. June 15. petitioner filed an answer to the complaint. .Untenable then is reinstatement insurance company's argument. . (a) P18. and for attorney's fees.On June 13. Such a claim finds no support in our laws on obligations and contracts. "(1) Authorizing and allowing the plaintiff to consign/deposit with this Court the sum of P225. . petitioner gave written notice to respondent of the non-renewal of the policies at the address stated in the policies. 1991 to May 22. such as respondent insurance company. 1993. petitioner appealed to the Court of Appeals (CA). UCPB GENERAL INSURANCE MASAGANA TELAMART.000.On October 23. respondent was allowed a 60.On July. Petitioner advised respondent's broker. 1992. 1992. however.Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind. RTC’ s DECISION is REINSTATED. FACTS . 1992. that petitioner was not liable to -respondent for insurance proceeds under the policies because at the time of the loss of respondent's property due to fire.On July 13. 1991 up to August 23. respondent filed with the Regional Trial Court. . . petitioner evaluated the policies and decided not to renew them upon expiration of their terms on May 22.Although the erroneous cancellation of the insurance policy constituted a breach of contract. Page After due trial. is given a choice between fulfillment or rescission of the obligation in case one of the obligors.However. no actual or substantial damage or injury was inflicted on petitioner Areola at the time the insurance policy was cancelled. and the award of attorney's fees was reduced to 10% of the total amount due. and that the acceptance of the late premium payment suggested an understanding that payment could be made later. Hence. Disposition Petition for review on certiorari is hereby GRANTED. DAMAGES: .

in fact it accepted payments within 60 to 90 days after the due dates. and the copy thereof allegedly sent to Zuellig was ever transmitted to Respondent. Disposition Judgment reversed and set aside non-renewal was made within 45 days before 22 May 1992. are indeed duly established: 1. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the peril insured against. as there is no proof at all that the notice sent by ordinary mail was received by Respondent. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. 3540. 3.. 72. 1991 to May 22. the policies in question were renewed by operation of law and were effective and valid on 30 June 1992 when the fire occurred. 2001 v. extend credit terms because Section 77 of the Insurance Code is not a prohibitive injunction but is merely designed for the protection of the parties to an insurance contract.Section 77 of the Insurance Code of 1978 provides: SEC. There was no valid notice of non-renewal of the policies in question. as found by the trial court and Page the Court of Appeals.Respondent likewise disagrees with its ruling that parties may neither agree expressly or impliedly on the extension of credit or time to pay the premium nor consider a policy binding before actual payment. It alleges in the motion that the SC had made in the decision its own findings of facts. extension of credit terms in premium payment has been the prevalent practice in the insurance industry.95 were paid by Respondent within the 60.A. A reading of Section 66 of the Insurance Code readily shows that in order for an insured to be entitled to a renewal of a non-life policy. Court of Appeals. 77 of the Insurance Code of 1978 must be strictly applied to Petitioner’s advantage despite its practice of granting a 60.D. 2427 otherwise known as the Insurance Act as amended by R. .Respondent seasonably filed a motion for the reconsideration of the adverse verdict. Court of Appeals. v. it has implicitly agreed to modify the tenor of the insurance policy and in effect waived the provision therein that it would pay only for the loss or damage in case the same occurred after payment of the premium. Petitioner had been granting Respondent a 60. The Code itself. including Petitioner. Inc. 612 (The Insurance Code) promulgated on 18 December 1974.to 90-day credit term within which to pay the premiums on the renewed policies. No. approved on 21 June 1963. It urges the Court to take judicial notice of the fact that despite the express provision of Section 77 of the Insurance Code. The parties may not agree expressly or impliedly on the extension of credit or time to pay the premium and consider the policy binding before actual payment.753.This Section is a reproduction of Section 77 of P.Respondent also asserts that the principle of estoppel applies to Petitioner. . which are not in accord with those of the trial court and the Court of Appeals. Any agreement to the contrary is void. this Section has its source in Section 72 of Act No. (Underscoring supplied) .It can be seen at once that Section 77 does not UCPB GENERAL INSURANCE CO.to 90-day credit term for the payment of premiums HELD NO .INSURANCE 36 HELD NO . and Tibay v. For years. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid.Petitioner filed an opposition to the Respondent’s motion for reconsideration.to 90-day credit term was perfectly alright. Accordingly.. NATURE Motion for reconsideration of the decision of the Supreme Court. unless there is clear agreement to grant the insured credit extension of the premium due. . Thus. in Section 78. .The following facts.to 90day credit term. payment of the premium due on the effective date of renewal should first be made. Petitioner had been issuing fire policies to the Respondent.An insurance policy. INC. is not valid and binding until actual payment of the premium. Most insurance companies. The courts below correctly found that no notice of . issued originally or on renewal. By extending credit and habitually accepting payments 60 to 90 days from the effective dates of the policies. . South Sea Surety and Insurance Co. The premiums for the policies in question in the aggregate amount of P225.to 90-day credit term and were duly accepted and received by Petitioner’s cashier. 2. which read: SEC. (EN BANC) 356 SCRA 307 DAVIDE. other than life. ISSUE WON Sec. No. it reversed and set aside the decision of the Court of Appeals. Notwithstanding any agreement to the contrary. Despite its awareness of Section 77 Petitioner persuaded and induced Respondent to believe that payment of premium on the 60. since the premiums were paid within the 60. Respondent’s argument that Section 77 is not a prohibitive provision finds no authoritative support. 1992 had been extended or renewed by an implied credit arrangement though actual payment of premium was tendered on a later date and after the occurrence of the (fire) risk insured against. the SC defined the main issue to be “whether the fire insurance policies issued by petitioner to the respondent covering the period from May 22. Both courts likewise ignored the fact that Respondent was fully aware of the notice of non-renewal. 77. and these policies were annually renewed. .In its decision of 15 June 1999. no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid. MASAGANA TELAMART. It argues that both the trial court and the Court of Appeals overlooked the fact that on 6 April 1992 Petitioner sent by ordinary mail to Respondent a notice of non-renewal and sent by personal delivery a copy thereof to Respondent’s broker. April 4. INC. authorizes the validity of a policy notwithstanding non-payment of premiums. or before the expiration date of the fire insurance policies. Court of Appeals.” The Court resolved this issue in the negative in view of Section 77 of the Insurance Code and its decisions in Valenzuela v. FACTS . Zuellig. 4. except in the case of a life or an industrial life policy whenever the grace period provision applies. In turn.

A third exception was laid down in Makati Tuscany Condominium Corporation vs. the policy was void and INSURER could have validly disclaimed liability for loss had one occurred then. This simply means that if the insurer has granted the insured a credit term for the payment of the premium and loss occurs before the expiration of the term.26 yet to be paid) with a stamped note that says that the insurance will be deemed valid and binding only when the premium and documentary stamps have actually been paid in full and duly acknowledged in an official receipt. 1964. 1963 to May 15. neither can it be successfully invoked to create a primary liability. Moreover. The first exception is provided by Section 77 itself. ACME continued to insure its properties with INSURER in the amount of P200. 58917-R).On October 13. good customs. .An essential characteristic of an insurance is its being synallagmatic. 1964. On May Page 14. . 1962 up to May 15. in case of a life or industrial life policy whenever the grace period provision applies. ACME SHOE RUBBER & PLASTIC CORP. the properties burned were not covered by insurance. as of the moment of loss. Tuscany has provided a fourth exception to Section 77. 1306. at Caloocan City. SEPARATE OPINION VITUG . NATURE Petition for Review on Certiorari of the Decision of the then Court of Appeals (CA-G. The contracting parties may establish such stipulations clauses. ACME. morals. If they are able to pay the whole amount before the 90-day period. . and that to allow the INSURER to apply the premium ACME paid on January 8. 1964. 1965 (for renewal premium of P3. thereby reversing the judgment of the Court of First Instance of Rizal. nor can it give validity to what the law so procribes as a matter of public policy. recovery on the policy should be allowed even though the premium is paid after the loss but within the credit term. wherein we ruled that Section 77 may not apply if the parties have agreed to the payment in installments of the premium and partial payment has been made at the time of loss. (ACME should pay short period premium for 90 days before the period expires. that of the Court of Appeals affirmed in toto. which had consistently granted a 60. it would be unjust and inequitable if recovery on the policy would not be permitted against Petitioner. That agreement is not against the law.331.to 90-day credit has been agreed between the parties. so far as to make the policy binding. But there are exceptions to Section 77. . .On January 8. which had allowed such recovery. Estoppel bars it from taking refuge under said Section since Respondent relied in good faith on such practice.331.) 134 SCRA 155 MELENCIO-HERRERA. Article 1306 of the Civil Code provides: ART. INSURER issued Renewal Receipt to cover the period May 15.ACME claims that the January 8.to 90-day credit term for the payment of premiums despite its full awareness of Section 77.An assured’s failure to give notice of the fire immediately upon its occurrence blatantly showed the fraudulent character of its claims. ISSUE WON the premium payment for 1964-1965 was paid . The agreement binds the parties. Any acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment. the automatic termination won’t apply anymore). or public policy.On May 14. ACME's properties were not insured and the INSURER could not be held liable for any indemnity as a result of the loss. morals. 1964. signed a promissory note saying that they promise to pay the premium and documentary stamps and agreed to the automatic cancellation penalty for not complying.On May 15. namely. a highly reciprocal contract where the rights and obligations of the parties correlate and mutually correspond. ACME paid P3.Assuming arguendo that the 60. 1985.000 for the period May 15. . PARDO [dissent] . public order or public policy. ACME’s properties were completely destroyed by fire. 78. 1964 to May 15. v. .INSURANCE 37 restate the portion of Section 72 expressly permitting an agreement to extend the period to pay the premium. Court of Appeals. 1964 payment was for the period 1964-1965 and that INSURER had no right to apply it to the period 1963-1964 because under RA 3540. Estoppel then is the fifth exception to Section 77. Estoppel cannot give validity to an act that is prohibited by law or against public policy. The second is that covered by Section 78 of the Insurance Code. that the insurer may grant credit extension for the payment of the premium. through its President. 1963 to May 15.TC found INSURER liable for P200k and opined that there was a clear intention on the INSURER's part to grant ACME a credit extension for the payment of the premium due.Finally. notwithstanding any stipulation therein that it shall not be binding until premium is actually paid. which provides: SEC. Respondent is required by law and by express terms of the policy to give immediate written notice of loss. CA (DOMESTIC INSURANCE COMPANY OF THE PHILS.By weight of authority. 1962. FACTS . and that is.ACME Shoe Rubber and Plastic Corporation (ACME) had been insuring yearly against fire its building. 1964. terms and conditions as they may deem convenient. Any agreement to the contrary is void as against law and public policy. 1963. public order. estoppel cannot create a contract of insurance. ACME filed insurance claim but the INSURER disclaimed liability on the ground that as of the date of loss. machines and general merchandise with Domestic Insurance Company (INSURER) since 1946.26 as premium. R. good customs. 1964. there is nothing in Section 77 which prohibits the parties in an insurance contract to provide a credit term within which to pay the premiums. . . January 17. CA reversed TC and dismissed the suit on the ground that. INSURER issued a Renewal Receipt for the period of May 15. No. The actual payment of premiums is a condition precedent to the validity of an insurance contract other than life insurance policy. respondent could not still invoke estoppel to back up its claim. 1964. 1963. provided they are not contrary to law. . The INSURER applied the payment as renewal premium for the period of May 15.On May 26. This must be complied with in the utmost good faith. Branch XII. . denying recovery on an insurance policy. Disposition Judgment reconsidered and set aside. ACME was given 90 days to pay otherwise the policy would automatically become void and ineffective.

When the policy was delivered. and in accordance with the express terms of the Promissory Note that it had signed. No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid. delivered to the respondent Plastic Era Manufacturing Co. the appellee's complaint is dismissed. . the Jan 8. an insurance contract was effective even if the premium had not been paid so that an insurer was obligated to pay indemnity in case of loss and correlatively he had also the right to sue for payment of the premium. products and accessories located at Sheridan Street.. NATURE Appeal from CFI decision on question of law.00 postdated January 16.. 2963 and was put into effect on Oct 1. 72. Plastic Era delivered to Capital Insurance.On December 17. the COMPANY issued a check for P300 to Arce as donation. as amended by R.INSURANCE 38 HELD NO . the promissory note it signed did away with such credit arrangement. INC. It could not be applied retroactively to the renewal of the policy for the 1963-1964 period because said policy was renewed on May 14. (So wala na by August 16.Irrelevant facts: The premium costs P38. Also. By 1964. 1963. and pursuant to R. a check for the amount of P1.10.If ACME was granted credit extensions in the past.A. he cannot insist that the COMPANY is nonetheless obligated to him. 3540 was the 1964-1965 policy for ACME's failure to pay the premium within the 90-day extension granted. 1965 to December 5.A. In the instant case. . The policy expressly provides that if the property insured would be destroyed or damaged by fire after the payment of the premiums. 1961. unless there is clear agreement to grant credit extension for the premium due.RA 3540 was approved on June 20.00. Inc.A. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. ISSUE WON the COMPANY can be held liable on its policy HELD NO. equipments. Disposition The decision of the court a quo is reversed. . The credit extension was granted for 90 days only. Mandaluyong. and the stipulation of the parties that time Page is of the essence in respect of the payment of the insurance premium so that if it is not paid the contract does not take effect unless there is still another stipulation to the contrary. 72 has radically changed the legal regime in that unless the premium is paid there is no insurance. the INSURED asked for an extension which was granted by the COMPANY.. No special pronouncement as to costs. however. the policy was automatically cancelled and there was no insurance coverage to speak of as of the date of the fire on October 13. After the lapse of the requested extension.The pertinent provision of Republic Act No. 1964 payment was properly applied to the 19631964 premium. 72 of the Insurance Act. mutuality of obligation required that it should be liable on the policy. Upon INSURED's presentation of claim for indemnity. before RA 3540. 1982.Sec. Rizal. CAPITAL INC. the COMPANY sent to the INSURED a Renewal Certificate to cover the period from December 5. and requested payment of the corresponding premium. No. .000. THE CAPITAL INSURANCE & SURETY CO.The trial court held the COMPANY liable to indemnify the INSURED on the ground that since the COMPANY could have demanded payment of the premium.Not having paid the 1964-1965 premium within the extension granted. the Renewal Receipts issued by INSURER did not contain the auto-cancellation after 90 days note.It is obvious from both the Insurance Act. 1960. The INSURED sued the COMPANY for indemnity. 1963. 1964. 1975 NATURE Petition for review of a decision of the CA affirming the decision of the CFI of Manila FACTS . Disposition The judgment under review is hereby affirmed. After the fire.) . Without pronouncement as to costs. PEDRO ARCE v. 1964.. On January 8. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the perils insured against. Anticipating that the premium could not be paid on time. Thereafter.What became automatically cancelled by R. but still sued the company." . v.) Therefore. In November 1965. PLASTIC ERA CO. 3540 reads: "SEC. 22760 wherein the former undertook to insure the latter's building. July 18. raw materials. . 65 SCRA 134 MARTIN. Plastic Era failed to pay the corresponding insurance premium. Arce accepted the check. petitioner Capital Insurance & Surety Co. September 30. (Laws have no retroactive effect unless the contrary is provided. its open Fire Policy No. They are well aware that many insurance companies have fallen into the condemnable practice of collecting premiums promptly but resort to all kinds of excuses to deny or delay payment of just claims. unless there is clear agreement to grant the insured credit extension of the premium due. . INSURED still failed to pay the premium. 3540. the situation had changed by the passage of the RA: no policy could be valid and binding unless and until the premium thereof had been paid. in partial payment of the insurance premium. . as amended. at anytime between the 15th day of December 1960 and one o'clock in the afternoon of the 15th day of December 1961. The Trial Court's opinion that there was a clear agreement to grant ACME credit extension for 1964-1965 is negated by ACME's Promissory Note binding itself to pay within ninety days from the effective date of this policy.000. the insurance company shall make good all such loss or damage in an amount not exceeding P100. he was told that no indemnity was due because the premium was not paid.Arce (INSURED) owned a residential house which was insured with the appellant COMPANY since 1961. Inc. No. 72. Unhappily the instant case is one where the insurer has the law on its side.The Court commiserates with the INSURED. the INSURED was given a grace period to pay the premium but the period having expired with no payment made. 3540 reads: "Sec. FACTS .Prior to the amendment (italicized portion above). No policy issued by an insurance company is valid and binding unless and until the premium thereof has been paid." . 15th May. 11 SCRA 63 ABAD SANTOS. the house of the INSURED was totally destroyed by fire. .1966. 1964. But the amendment to Sec. No.

24 Adora. 1987 FACTS . no payment of the premium had been effected. who flatly denied receiving one.It is undisputed that payment of premium was made. If the delivery of the check of Plastic Era to Capital Insurance were to be viewed in the light of the foregoing. MICO later allegedly cancelled the policy for non-payment of the premium and sent a notice to Pinca. effective July 1981-1982. Having held the check for such an unreasonable period of time. . Payment was thus legally made on the original transaction and validly received . Capital Insurance is deemed to have accepted the promissory note in payment of the premium. A close study of the transcripts show.. it must state the ground(s) for cancellation and the insurer must furnish details upon the request of the insured. Malayan Insurance Co. ISSUES Procedural 1. 5. MICO filed a MFR on April 25 which was denied on June 4. ISSUES 1. after the effective date of the policy.000. Capital Insurance was estopped from claiming a forfeiture of its policy for non-payment even if the check had been dishonored later. the property insured by Plastic Era was destroyed by fire. Capital Insurance tried to deposit the check only on February 20. Alternatively it Page invokes Rule 45 of the Rules of Court for certiorari but the petition still exceeds the 15 day limit from the June 13 notice. long after her house had burned down—this makes petitioner’s motives highly suspect. . 39 of B. WON the dishonored check constituted payment HELD 1.MICO claims to have sent a notice to Pinca. MALAYAN INSURANCE CO. it was already 18 days late by July 2. However. On Dec. YES . 22760 but the latter refused for the reason that. This is furthered by the fact that Adora had earlier told her to call him anytime she was ready with her payment. 1981. the insurer may be held estopped from claiming a forfeiture if the check is dishonored. 15 payment only on Feb. sustained Pinca. received Pinca’s payment.000 on the property of private respondent. this is not applicable in the instant case as payment was eventually made. 1961 and the same was dishonored by the bank for lack of funds. WON the petition should be dismissed for late filing Substantive 2. it was tardy by 4 days. INC. hence this petition from MICO. . Records show MICO received Arnaldo’s decision on April 10. the latter refused to accept it. YES . however. the reglementary period began to run again after June 13. invoke Sec. MICO received notice of this denial on June 14. YES . Pinca. In less than a month Plastic Era demanded from Capital Insurance the payment of the sum of P100. MICO returned Pinca’s payment to Adora on the ground that her policy had been cancelled. Pinca went to the Insurance Commission. Her demand for payment having been rejected by MICO. -Respondents. the Insurance Commissioner. Where the check is held for an unreasonable time before presenting it for payment. 1961 and Plastic Era had sufficient funds to cover it as of January 19. Capital Insurance decided to hold the same for thirty-five (35) days before presenting it for payment. October 12.P. Significantly. among others. ARNALDO and PINCA 154 SCRA 672 CRUZ.Two days after the insurance premium became due. Since the petition was filed only on July 2. YES .Tender of draft or check in order to effect payment that would extinguish the debtor's liability should be actually cashed. On Feb. indicating an understanding between the parties that payment could be made later. 129 which pegs the period for appeal from decisions of any court in all cases at 15 days from the notice of the decision appealed from. WON an adjuster is indispensable in the valuation of the loss HELD Procedural 1. . the petition is still late.A valid cancellation requires the following conditions based on Sections 64-65 of the Code: prior notice which must be based on the occurrence of one or more of the grounds mentioned in Sec 64 (in this case. 15 days after the notice. that Pinca only meant to renew the policy had it been cancelled but not if it was still in effect—it was conditional. MICO filed its MFR on April 25. on the other hand. waived the provision therein that it would only pay for the loss or damage in case the same occurs after the payment of the premium. On Jan. Pinca did not have to prove this since the strict language of Sec 64 requires that MICO ensure the cancellation was actually sent to and received by the insured. 1961. non-payment of premium). the notice must be written and mailed to the address on the policy. Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within 30 days from the effective date of policy. Pinca’s property was completely burned. Public respondent Arnaldo.00 as indemnity for the loss of the insured property under Policy No.Petitioner invokes Sec 416 of the Insurance Code which grants it 30 days from notice of the Insurance Commission within which to appeal by certiorari with the Court. which was remitted to MICO.INSURANCE 39 1961. v. 1982. (MICO). WON there was a valid insurance contract at the time of the loss 3. the said provision requiring payment of premium as soon as the thing is exposed to the peril insured against and that the policy is invalid without it. 2. an agent of MICO. Substantive 2. This rendered the policy immediately operative on the date it was delivered. 5. Considering that the insurance policy is silent as to the mode of payment. issued fire insurance for the amount of P14.Although the check was due for payment on January 16. 18. instant petition was filed on July 2. at about 4:00 to 5:00 o'clock in the morning. However.On June 7. It is to be noted that the premium invoice was stamped “Payment Received”. So whichever is applied. WON a contract of insurance has been duly perfected between petitioner and respondent 2. Petitioner relies heavily on Sec 77 of the Insurance Code to contest this. Disposition The decision of the CA is AFFIRMED in toto. it has implicitly agreed to modify the tenor of the insurance policy and in effect. Since the MFR was filed only 15 days after receiving notice of the decision. Plastic Era failed to pay the insurance premium. WON Adora was authorized to receive such payment 4.MICO also suggests that Pinca knew the policy had been cancelled and was paying the premium in order to renew the policy. By so doing. The Court also finds it strange that MICO only sought to return Pinca’s Jan.

exempts it from payment of premium taxes corresponding to said period HELD NOTE (example given by the plaintiff): "Suppose that 'A'.Plaintiff issued a number of life insurance policies in the Philippines containing stipulations referred to as NONFORFEITURE CLAUSES5 5"'8. without further request. the Collector of the National Internal Revenue assessed the net amount of premium at P17. and. the P250 for the 11th year).ON ARGUMENT THAT IF THE CREDIT IS PAID OUT OF THE CASH SURRENDER VALUE.PLAINTIFF’s MAIN CONTENTION: when it made premium loans or premium advances by virtue of the non-forfeiture clauses. and there is no indebtedness to the Company on the written request of the insured * * *.500 and on this amount plaintiff-appellant pays the corresponding taxes under section 255 of the National Internal Revenue Code. WON.000. and the amount of such premium.Company protested the assessment. the amount being a loan to the policyholder1 who could discharge it at any time with interest at 6 per cent. and therefore it is not amenable to the tax therein provided. who was not informed of the alleged cancellation and thus saw no reason to reject the payment. or corporation (except purely cooperative companies or associations) doing insurance business of any sort in the Philippines a tax of one per centum of the total premiums collected * * * whether such permiums are paid in money. credits. but in turn he became a debtor of the company for the sum of P250. while the Policy is in force. treat the premium then due as paid. The accumulated lien may at any time. YES . Page . or any substitutes for money 3. 4.-At the end of the third policy year or thereafter.254. The insurer “became a creditor” of the loan. It is duly registered and licensed to engage in life insurance business in the Philippines.-There shall be collected from every person. Taxes on insurance premiums.917.000 from plaintiff-appellant Company and pays an annual premium of P250. were done in Toronto. Canada 5. and one per cent. 1945. the insurer collected the amount of P250 as the annual premium for the eleventh year on the said policy when it loaned to “A” the sum of P250. '11. Suppose also that the cash value of said policy after the payment of the 10th annual premium amounts to P1.Manufacturers Life Insurance Company is a duly organized corporation which has its head office at Toronto. credits. 1946. Plaintiff head office at Toronto applied the provisions of the automatic premium loan clauses upon the nonpayment of the corresponding premiums by the people who subscribed to the insurance. NO .In absence of fraud. without further requests. compounded yearly. in the application of the automatic premium loan clause of plaintiff-appellant's policies.Based on the example given by the plaintiff. It is a well-known principle under the law of agency that payment to an authorized agent is equivalent to payment to the principal himself. inclusive. Extended Insurance-After the premiums for three or more full years have been paid hereunder in cash. Then they filed a complaint to recover money paid under protest for taxes . National Internal Revenue Code6 . Automatic Premium Loan. less all indebtedness to the Company on this Polley an the date of ouch surrender. WON the making of premium advances.98.-This Policy shall not lapse for non-payment of any premium after it has been three full years in force.INSURANCE 40 by Adora. the Cash Value of this Policy and of any bonus additions and dividends left on accumulation (after deducting any indebtedness to the company and the interest accrued thereon) shall exceed the amount of said premium.ON ARGUMENT THAT THE ASSETS OF THE INSURER REMAINED THE SAME AFTER THE APPLICATION OF THE AUTOMATIC PREMIUM LOAN CLAUSE: 'When the premium falls due and is not paid in cash within the month's grace.255. the Company will (1) grant a cash value as specified in Column (A) increased by the cash value of any bonus additions and dividends left on accumulation. . The insurance contract. This debt he could repay either by later remitting the money to the insurer or by letting the cash value compensate for it. The debt may also be deducted from the amount of the policy should "A" die thereafter during the continuance of the policy. v. WON premium advances made by plaintiffappellant under the automatic premium loan clause of its policies are premiums collected' by the Company subject to tax 2. ISSUES 1. continue this insurance in force for a period * * *. 3.CFI: Dissmiss complaint . But due to the exigencies of the war It closed the branch office at Manila during 1942 up to September 1945. if any subsequent premium is not paid when due. Cash and Paid-Up Insurance Values. for expenses. 1942 to December 31. if the Cash Value of this policy and of any bonus additions and dividends left on accumulation (after deducting any accumulated indebtedness) be less than the premium then due. MEER 89 PHIL 351 BENGZON. "A" paid the premium for the eleventh year. compounded yearly. . company. 306 of the Insurance Code provides that any insurance company that delivers a policy to its agent is deemed to have authorized such agent to receive payment of premium on its behalf. it. granting for the sake of argument that it amounted to collection of premiums. June 29. at the due date of such premium. therefore. there is 'payment in money. secures a 20-year endowment policy for P5. 1951 NATURE APPEAL from a judgment of the Court of First Instance of Manila FACTS (this is a tax case. What’s really important here is the definition of CASH SURRENDER VALUE). notes. the Company will. . 30 years of age. WON the collection of the alleged deficiency premium taxes constitutes double taxation 4. 1. It was engaged in such business in the Philippines for more than five years before and including the year 1941. Here. maintains a branch office in Manila. Disposition petition is DENIED MANUFACTURERS LIFE INSURANCE CO. it did not collect premiums within the meaning of the above sections of the law. shall be a first lien on this Policy in the Company's favour in priority to the claim of any assignee or any other person. YES . or (2) endorse this Policy as a Non-Participating Paid-up Polley for the amount as specified In Column (B) of the Table of Guaranteed Values * * *. the amount of the loss may be determined on the basis of such proof offered by the insured. In which event the company will. . 1942 to September 30.From January 1. or any substitute for money but premiums refunded within six months after payment on account of rejection of risk or returned for other reason to person insured shall not be included in the taxable receipts * * *. continued in force for the eleventh year. The net amount of premiums advanced (by the company) or loaned (to the insured) as payment for the premium due totaled P1. THERE WERE NO NEW FUNDS ADDED TO THE ." there was an increase in assets in the form of CREDIT for the advances made (in the example. the insurer treated the premium then over due as paid from the cash value.12 pursuant to SEC. '10. which have been alloted to this Policy. The insurer is entitled to collect interest on the loan. with interest from its actual due date at six per cent per annum. be paid in whole or in part. upon the legal surrender of this Policy to the Company while there is no default in premium payments or within two months after the due date of the premium in default. 'A' pays the first ten yearly premiums amounting to P2.Meer. MICO’s acknowledgement of Adora as its agent thus defeats its contention that he was not authorized to receive payments on its behalf." 6"SEC. WON the fact that plaintiff-appellant was not doing business in the Philippines during the period from January 1. not on the premium. but paid the taxes anyway. 255. The certification of the Integrated National Police as the extent of the loss should suffice. .069." When on the eleventh year the annual premium fell due and the insured remitted no money within the mouth grace. notes. but not of the premium that had already been paid (advanced by the insurer).Sec.

with the stipulation that the premiums are to be paid semi-annually.L. 13.April 1952: Rufino filed a complaint in CFI against Crown Life for the recovery of the amount of P5.INSURANCE 41 COMPANY'S ASSETS”: Page Disposition finding no prejudicial error in the appealed decision. . Crown Life. 26. 26.) The cash value or cash surrender value is therefore an amount which the insurance company holds In trust for the insured to be delivered to him upon demand. on Feb. for the remaining balance due.No constitutional prohibition against double taxation. NO . wrote to Mr. It is therefore a liability of the company to the insured.B. Crown Life later sent another letter telling the spouses Andres that their insurance policy was no longer in force.the insurer agreed to consider the premium paid on the strength of the automatic loan. defendant advised Rufino that its main office had approved the application and that the reinstatement of the lapsed policy was subject to the payment of the remaining premium balance of P65. 5. 1077. that value and the company's liability is thereby diminished pro tanto. in the amount of P165.Aug. defendantappellee Crown Life issued an insurance policy in the name of plaintiff-appellant Rufino and his wife.June 7. . incurring the risks and/or enjoying the benefits consequent thereto.May 5.Jan. 3. . . Reasoning .28. 1950. Jan. through its branch secretary.The premiums for the 1st and 2nd semester of the 1st year. is the amount of money the company agrees to pay to the holder of the policy if he surrenders it and releases his claims upon it. . credits or any substitute for money. 5. upon expiration of the 31-day grace period.The stipulations of facts render it undisputable that the original policy lapsed for non-payment of premiums on Dec. when the company's credit for advances is paid out of the cash value or cash surrender value. In its answer. was not paid. NO . 919 REYES. giving them 60 days from the date of lapse to file an application for reinstatement. and Mrs.Feb. without having previously taken any steps indicating withdrawal in good faith from this field of economic activity. Approval of appellant's position will enable foreign insurers to evade the tax by contriving to require that premium payments shall be made at their head offices. has been validly and completely reinstated after said date (Was there a perfected contract of reinstatement after the policy lapsed due to non-payment of premiums?) HELD NO Ratio The stipulation in a life insurance policy giving the insured the privilege to reinstate it upon written application does not give the insured absolute right to such reinstatement by the mere filing of an application. operating in this country by collecting premiums on its outstanding policies. 1951: Rufino presented a death claim as survivor-beneficiary of his deceased wife. The premium was therefore paid by means of a "note" or "credit" or "other substitute for money" and the tax is due because section 255 above quoted levies taxes according to the total premiums collected by the insurer "whether such premiums are paid in money. 1951: Plaintiff wrote a letter to the defendant. 1954: CFI rendered a decision absolving the defendant company from any liability on the ground that the policy had lapsed and it was not reinstated at the time of the plaintiff’s wife’s death. Plaintiff later appealed to the CA but the same was certified by the CA to the SC for having no question of fact. 1951: Severa Andres died of dystocia. Crown Life disclaimed liability and set forth the special defense that the aforementioned policy had already lapsed. The more premiums the insured has paid the greater will be the surrender value.As found by the lower court. The Company has the right to deny the reinstatement if it is not satisfied as to the insurability of the insured and if the latter does not pay all overdue premiums and all other indebtedness to the Company.May 3. 1951: Plaintiff and his wife executed a Statement of Health and application for reinstatement of the aforesaid policy. 1950. J. 2. 1951: Plaintiff sent a letter enclosed with a money order in the amount of P65. Andres advising them that their insurance policy lapsed on Dec. . CROWN LIFE INSURANCE 102 Phil. but the surrender value is always a lesser sum than the total amount of premiums paid. 6.15 were paid by Rufino but the premium for the third semester. in the same amount. Now then.15 paid by Rufino as well as a Certificate of Reinstatement. Upon acceptance.15 was overdue. who in turn pay therewith the premium to the insurer thru the Manila branch. 1950: For the sum of P5. ANDRES v.. What is important. contracted pelvis. 1951: Defendant sent a letter with official receipt of the P165. irrespective of the place of its organization or establishment. notes.Feb. 1958 NATURE Appeal from judgment of CFI FACTS . 1950 and the amount of P165. ISSUE WON the insurance policy. 20. ed. . the law does not contemplate premiums collected in the Philippines. 4. It is enough that the insurer is doing insurance business in the Philippines.The loans are made to policyholders in the Philippines. NO .000 as the face value of a joint 20-year endowment insurance policy issued by defendant in favor of plaintiff and his wife.15.Feb.May 15. which has been in a state of lapse before May 3. Payment was denied by the defendant. the conditions set forth in the policy for reinstatement as provided in Cash surrender value "as applied to a life insurance policy. . 1951. . . we hereby affirm it with costs. . enclosed with a money order for P100.000. After the death of the insured the insurance Company cannot be compelled to entertain an application for reinstatement of the policy because the conditions precedent to reinstatement can no longer be determined and satisfied.Although during those years the appellant was not open for new business because its branch office was closed. . YES . 1951. 13." (Cyclopedia Law Dictionary 3d. still it was practically and legally.

However. (b) placed agency transactions on a cash-and-carry basis. that the Supreme Page Court has consistently held that termination may be effected even if the principal acts in bad faith. Valenzuela would no longer be . They: (a) reversed the commission due him by not crediting in his account the commission earned from the Delta Motors. 1990 NATURE Petition for review of the decision of theca. therefore. 1978. wherein it made statements such as: “If you are unable to pay the full amount immediately. .In 1977. YES .15 two days after his wife died. .The private respondents by the simple expedient of terminating the General Agency Agreement appropriated the entire insurance business of Valenzuela. . there should likewise be a production of evidence of his or her good health. . Valenzuela solicited marine insurance from one of his clients. (B) there should be a production of evidence of the good health of the insured.Rufino contends that the condition regarding payment of the premium was waived by the insurance Company through its letters. should first be paid. (Division of Electronics Airconditioning and Refrigeration) in the amount of P4.It is also evident from the records that the agency involving petitioner and private respondent is one "coupled with an interest. and (F) all overdue premiums and other indebtedness in respect of the policy. send as large amount as possible and advise us how soon you expect to be able to pay the balance. Philamgen and its officers took drastic action against Valenzuela. During the period 1976 to 1978.4 Million from which he was entitled to a commission of 32%.If a principal acts in bad faith and with abuse of right in terminating the agency.There is an exception to the principle that an agency is revocable at will and that is when the agency has been given not only for the interest of the principal but for the interest of third persons or for the mutual interest of the principal and the agent. it is evident that the agency ceases to be freely revocable by the sole will of the principal (PROCEDURAL: Where the findings of the Court of Appeals and the trial court are contrary to each other. Valenzuela did not receive his full commission which amounted to P1.5% from Philamgen under the scheduled commission rates. (c) threatened the cancellation of policies issued by his agency.) 191 SCRA 1 GUTIERREZ.) .The principal cause of the termination of Valenzuela as General Agent of Philamgen arose from his refusal to share his Delta commission.00.Petitioner Arturo P. (E) there should be no change which has taken place in such good health and insurability subsequent to the date of such application and before the policy is reinstated.Then on December 27. In these cases. premium payments amounting to P1.Because of the refusal of Valenzuela. . compounded annually. INC. .The plaintiff did not comply with the last condition. the Company had the right to treat the contract as lapsed and refuse payment of the policy.946. and in consideration of services rendered was entitled to receive the full agent's commission of 32. the Court affirmed the trial court’s findings. Philamgen started to become interested in and expressed its intent to share in the commission due Valenzuela on a fifty-fifty basis. we will work out an adjustment most beneficial to you.532. (CA ordered Valenzuela to pay Philamgen the amount of One Million Nine Hundred Thirty-Two Thousand Five Hundred Thirty-Two and 17/100 Pesos (P1. and despite the Company’s reminders.17) with legal interest) ISSUES 1. As such. (D) there should be presented such other evidence of insurability at the date of application for reinstatement. the intent to waive shown clearly and convincingly. the Delta Motors. Valenzuela refused. Valenzuela is a General Agent of private respondent Philippine American General Insurance Company. together with interest at 6%. On the other hand. VALENZUELA v.737. Plaintiff-Appellant’s failure to remit the balance before the death of his wife operated to deprive him of any right to waive the policy and recover the face value thereof. Philamgen terminated the General Agency Agreement of Valenzuela." and.4 Million insurance coverage of the Delta Motors. CA (PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY. All of these acts resulted in the decline of his business as insurance agent. The Court reiterated the rule that a waiver must be clear and positive. Disposition Judgment appealed from is affirmed. should not be freely revocable at the unilateral will of the latter. WON petitioners are liable to Philamgen for the unpaid and uncollected premiums HELD 1. Inc. Inc. then he is liable in damages. . he was authorized to solicit and sell in behalf of Philamgen all kinds of non-life insurance. It found subsequent letters sent by defendant indicating that they insisted on full payment of the premium before the policy was reinstated and that defendant did not consider partial payment as sufficient consideration for the reinstatement. this Court may scrutinize the evidence on record .From 1973 to 1975.INSURANCE 42 the contract itself are the following: (A) application shall be made within 3 years from the date of lapse. and (d) started to leak out news that Valenzuela has a substantial account with Philamgen. (Philamgen for short) since 1965.886. . for he only paid P100 before his wife’s death. FACTS .932.CA: In any event the principal's power to revoke an agency at will is so pervasive. The records sustain the conclusions of the trial court on the apparent bad faith of the private respondents in terminating the General Agency Agreement of petitioners.Lower court: the termination of Valenzuela as General Agent was improper because the record will show the principal cause of the termination of the plaintiff as General Agent of defendant Philamgen was his refusal to share his Delta commission.6 Million from the P4. subject only to the principal's liability for damages. insurance . Inc. he only remitted the balance of P65. . WON whether or not Philamgen and/or its officers can be held liable for damages due to the termination of the General Agency Agreement it entered into with the petitioners 2. October 19.After a painstaking review of the entire records of the case and the findings of facts of both the court a quo and respondent appellate court.00 were paid directly to Philamgen and Valenzuela's commission to which he is entitled amounted to P632.” The Court found the statements to be too vague and indefinite to indicate an intention on the insurer’s part to waive the full payment as prerequisite to the reinstatement of the lapsed policy. With the termination of the General Agency Agreement. On the face of such facts. . . (C) if the rate of premium depends upon the age of the Beneficiary.

no policy or contract of insurance is valid and binding unless and until the premiums thereof have been paid except in the case of a life or industrial life policy whenever the grace period provision applies (P. Pilar de Lim. if the application is accepted by the company. Under these circumstances. 612." Immediately following the words fixing the four months period comes the word "provided" which has the meaning of "if. nothing to be passed upon." Disposition Petition is GRANTED. 1974). [N]otwithstanding any agreement to the contrary. The first premium of P433 was paid by Lim.INSURANCE 43 entitled to commission on the renewal of insurance policies of clients sourced from his agency." Otherwise stated. PARTIES THERETO.000. Valenzuela and Philippine American General Insurance Company shall be deemed terminated upon the satisfaction of the judgment as modified. . CHAPTER V – THE POLICY. 1917.It is of course a primary rule that a contract of insurance. promulgated on December 18. and the Company shall be held not to have been on the risk at all. must be assented to by both parties either in person or by their agents. notwithstanding any agreement to the contrary.This is buttressed by Section 776 of the Insurance Code (Presidential Decree No. 117 SE 706. it amounts to nothing but an acknowledgment on behalf of the company. Chevrolet Motors Co. To re-enforce the same there follows the negative condition ."The principal may not defeat the agent's right to indemnification by a termination of the contract of agency (Erskine v. as amended otherwise known as the Insurance Code of 1974) . then this agreement shall be null and void ab initio. . 1917. 1920 NATURE Appeal from an order of the CFI of Zamboanga sustaining a demurrer to plaintiff's complaint upon the ground that it fails to state a cause of action. like other contracts."Should the company not issue such a policy. however that counsel for appellee admits the liability . As we read and understand the socalled provisional policy. . .D. November 29. . and upon such payment the company issued what was called a ''provisional policy. . the policy for four months is expressly made subject to the affirmative condition that the company shall confirm this agreement by issuing a policy on said application when the same shall be submitted to the head office in Montreal. as the beneficiary. There was no factual and legal basis for the award. Worse. It is to be noted. 1917. the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding . Page ISSUE WON the contract of insurance between Luis Lim and Sun Life Assurance Company of Canada was perfected HELD NO. for which an application dated the 6th day of July. Our view is. & RIGHTS THEREON DE LIM v. The respondent court erred in holding Valenzuela liable.The above-mentioned life is to be assured in accordance with the terms and conditions contained or inserted by the Company in the policy which may be granted by it in this particular case for four months only from the date of the application."Sec. which now provides that no contract of Insurance by an insurance company is valid and binding unless and until the premium thereof has been paid. Under Section 77 of the Insurance Code. to be binding from the date of the application must have been a completed contract. The decision of the TC REINSTATED with the MODIFICATIONS. Should the Company not issue such a policy. And that the contractual relationship between Arturo P. the amount named in the provisional policy.000. one that leaves nothing to be done. 2.On July 6. nothing to be completed. despite the termination of the agency.The "provisional policy" reads: "Received (subject to the following stipulations and agreements) the sum of P433. being the amount of the first year's premium for a Life Assurance Policy on the life of Mr. So long as an application for insurance has not been either accepted or rejected. 77 . provided that the Company shall confirm this agreement by issuing a policy on said application when the same shall be submitted to the Head Office in Montreal. after the issuance of the provisional policy but before approval of the application by the home office of the insurance company. that a contract of insurance was not here consummated by the parties. Pilar de Lim brought an action to recover from the Sun Life sum of P5. They are estopped by their own positive averments and claims for damages.The trial court committed no error in sustaining the demurrer and dismissing the case. before it shall take effect.The document it is to be a provisional policy "for four months only from the date of this application. This is in accordance with the precepts in Human Relations enshrined in our Civil Code. .000. 612." Luis Lim died on August 23. the plaintiff herein." Certainly language could hardly be used which would more clearly stipulate that the agreement should not go into effect until the home office of the company should confirm it by issuing a policy. but in such case the amount herein acknowledged shall be returned. 32 ALR 196).For the pivotal factor rendering Philamgen and the other private respondents liable in damages is that the termination by them of the General Agency Agreement was tainted with bad faith. 185 NC 479. CA decision SET ASIDE. and the company shall be held not to have been on the risks. . . that it has received from the person named therein the sum of money agreed upon as the first year's premium upon a policy to be issued upon the application. There can be no contract of insurance unless the minds of the parties have met in agreement. Lim of Zamboanga for P5. In his application Lim designated his wife. The contract. Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid premiums. it is clear that Valenzuela had an interest in the continuation of the agency when it was unceremoniously terminated not only because of the commissions he should continue to receive from the insurance business he has solicited and procured but also for the fact that by the very acts of the respondents. FACTS . has been made to the Sun Life Assurance Company of Canada. NO. it is merely an offer or proposal to make a contract. he was made liable to Philamgen in the event the insured fail to pay the premiums due. Luis D. then this agreement shall be null and void ab initio. or determined. SUN LIFE ASSURANCE COMPANY OF CANADA 41 PHIL 263 MALCOLM. Luis Lim of Zamboanga made application to the Sun Life Assurance Company of Canada for a policy of insurance on his life in the sum of P5.

Dr. Leuterio were for hypertension. an amount to pay the outstanding indebtedness shall first be paid to the creditor and the balance of sum assured. although the policy is taken wholly or in part for the benefit of another person named or unnamed. NO . there was no sufficient proof that the insured had suffered from hypertension. Leuterio was not physically healthy when he applied for an insurance. Leuterio died due to "massive cerebral hemorrhage.Grepalife issued an insurance coverage of Dr.” When DBP submitted the insurance claim against Grepalife. Hence. being the person with whom the contract was made. From this report. 3. the present petition. who issued the death certificate. [c] Grepalife had failed to establish that there was concealment made by the insured. such non-disclosure constituted concealment that justified the denial of the claim. Grepalife. The inference was not conclusive because Dr. 8.The Court ruled this issue based on the clear provisions of the policy. it cannot collect the insurance proceeds. testified that Dr. which would vitiate the insurance contract 3. shall then be paid to the beneficiary/ies designated by the debtor. Leuterio. and such person may recover it whatever the insured Page might have recovered. GREAT PACIFIC LIFE v. interposing the defense of concealment committed by the insured. which states that: "The policy states that upon . Reasoning [a] The insured. the appellant had not proven nor produced any witness who could attest to Dr. petitioner Grepalife refused to pay the insurance claim. 1984. Leuterio was not autopsied. the policy stating that: “In the event of the debtor's death before his indebtedness with the Creditor (DBP) shall have been fully paid. Grepalife denied the claim because Dr." Dr. Dr. Leuterio's heirs represented by his widow. including hypertension. 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. Equity dictates that DBP should not unjustly enrich itself at the expense of another. hence. Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. Leuterio. and although it is expressly made payable to another as his interest may appear or otherwise.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).Herein respondent Medarda Leuterio. Leuterio may file the suit against the insurer. cancer. . Allegedly. . widow. herein private respondent. Leuterio concealed that he had hypertension.200.00.RTC ruled in favor of respondent widow and against Grepalife. [b] Since a policy of insurance upon life or health may pass by transfer. diabetes. The mortgagor paid the premium according to the coverage of his insurance. Although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him. Q: Are you now. will or succession to any person. insured may thus sue. 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. Aside from the statement of the insured's widow who was not even sure if the medicines taken by Dr. in satisfaction of mortgagor's outstanding loan. Wilfredo Leuterio. CA (LEUTERIO) 316 SCRA 677 QUISUMBING.INSURANCE 44 of the company for the return of the first premium to the estate of the deceased. if there is any. CA sustained the RTC decision. lung. . filed a complaint with RTC against Grepalife for "Specific Performance with Damages. Leuterio complained of headaches presumably due to high blood pressure. the widow of the decedent Dr. other causes were not ruled out. Hence. [b] Contrary to Grepalife’s allegations. Dr. whether he has an insurable interest or not. it cannot refuse payment of the claim. NO Ratio Insured. is primarily the proper person to bring suit. Dr. 1999 NATURE Petition for Review of CA decision FACTS . In an application form. It alleged that the insured had concealed the fact that he had hypertension. In the case at bar.00 without proof of the actual outstanding mortgage payable by the mortgagor to DBP HELD 1. WON CA erred in holding petitioner liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of the decedent/mortgagor 2. October 13. WON CA erred in holding Grepalife liable for P86. 1983. to the extent of his DBP mortgage indebtedness of P86. Thereafter.200. hence. to the best of your knowledge." DBP submitted a death claim to Grepalife. . ISSUES 1. kidney or stomach disorder or any other physical impairment? No. Subject to some exceptions. a physician and a housing debtor of DBP applied for membership in the group life insurance plan. when he died the attending physician had certified in the death certificate that the former died of cerebral hemorrhage. the petitioner failed to clearly and satisfactorily establish its defense. . (See Sec. Leuterio answered Qs concerning his health condition as follows: Q: Have you ever had. DBP collected the debt from the mortgagor and took the necessary action of foreclosure on the residential lot of private respondent. in good health? Yes. high blood pressure. Leuterio's medical history. a physician for a heart condition. Leuterio did not disclose he had been suffering from hypertension. after it already foreclosed on the mortgage. 2. or consulted.In Nov. The proceeds now rightly belong to Dr. Insurance Code) Reasoning [a] The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance.Considering the supervening event that DBP foreclosed in 1995 their residential lot. the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. In Aug. probably secondary to hypertension. yet the mortgagor may sue thereon in his own name. Mejia. especially where the mortgagee's interest is less than the full amount recoverable under the policy. WON CA erred in not finding that Dr. NO Ratio The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. Grepalife insisted that Dr. and is therefore liable to pay the proceeds of the insurance. the latter denied payment thereof. which caused his death.

1963 . and is supported by the doctrine that where a policy is delivered without requiring payment of the premium. the presumption is that a credit was intended and policy is valid.The private respondent company never raised this ground in the proceedings. Quezon to Okinawa and Tokyo. .After the issuance of cover note but before the issuance of the two marine policies some of the logs intended to be exported were lost during loading operations in the Diapitan Bay due to bad weather. ft. since by the nature of the Cover Note.Delay in the presentation to an insurer of notice or proof of loss is waived if caused by any act of his or if he omits to take objection promptly and specifically upon that ground. 1964 . this Court is satisfied and convinced that as expressly provided by law. as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums. printed Marine Policy form as filed with and approved by the Office of the Insurance Commissioner. This is how the cover note as a "binder" should legally operate. NO Ratio Cover note is issued with a consideration when.the plaintiff secured temporary insurance from the defendant for its exportation of 1. 1963 . . Disposition The appealed decision is set aside and the decision of the Court of First Instance is reinstated in toto with the affirmance of this Court. or the equivalent of 1. The plaintiff subsequently submitted a 'Claim Statement' demanding payment of the loss under the second marine cargo policy.395 logs. waiver can successfully be raised against private respondent.the adjuster reported that 'the loss of 30 pieces of logs is not covered by the two policies inasmuch as said policies covered the actual number of logs loaded on board. does not militate against the validity of petitioner's contention.On January 13.The CFI of Manila ruled in favour of the petitioner. WON the cover note is null and void for lack of valuable consideration because no separate premiums are collected by private respondent on all its cover notes 2.the defendant requested the First Philippine Adjustment Corporation to inspect the loss and assess the damage. Leuterio’s heirs must get the proceeds. which must be deemed to include the Cover Note. liability on the note would have already arisen even before payment of premium. The petitioner paid in full all the premiums as called for by the statement issued by private respondent after the issuance of the two regular marine insurance policies. It was further stated that the said loss may not be considered as covered under cover note because the said note had become 'null and void by virtue of the issuance of two marine policies. But even on the assumption that there was delay.250. it did not contain. IAC (PHIL UNION REALTY DEVELOPMENT CORP) 143 SCRA 62 CRUZ.April 2. the purpose and function of the Cover Note would be set at naught or rendered meaningless. July 16. CA (WORKMEN’S INSURANCE CO) 112 SCRA 199 DE CASTRO.March 19. no separate premiums are intended or required to be paid on a Cover Note. Had all the logs been lost during the loading operations.498 bd. Thus Section 84 of the Insurance Act provides: "Section 84. But it is covered by Cover Note.From what has been said. Reasoning a. objections on that ground are waived under section 84 of the insurance act HELD 1. for no such premium could have been paid. WON the court of appeals erred in holding that private respondent was released from liability under the cover note due to unreasonable delay in giving notice of loss because the court disregarded the proven fact that private respondent did not promptly and specifically object to the claim on the ground of delay in giving notice of loss and. .April 4." . As a logical Page consequence. but after the issuance of the Cover Note. Japan. We find duly substantiated petitioner's assignments of error. The total cargo insured under the two marine policies accordingly consisted of 1. The defendant issued on said date Cover Note No. as this Court fails to find a real and substantial sign thereof. .The plaintiff informed the defendant about the loss of 'approximately 32 pieces of logs' during loading through a letter. Nature of the Cover Note: The fact that no separate premium was paid on the Cover Note before the loss insured against occurred.195. NO . consequently.August 23. not a mere application for insurance which is a mere offer. otherwise.200. CA Decision AFFIRMED with modification. on the ground that defendant's investigation revealed that the entire shipment of logs covered by the two marines policies were received in good order at their point of destination. the cover note is made subject to the terms and conditions of the marine policies.00 shall be paid… In the event of the debtor's death before his indebtedness with the creditor shall have been fully paid. c.The Court of Appeals reversed the decision of the CFI. . if there is any shall then be paid to the beneficiary/ies designated by the debtor. thereby leaving no account unpaid by petitioner due on the insurance coverage. It must be because it did not find any delay. insuring the said cargo of the plaintiff "Subject to the Terms and Conditions of the WORKMEN'S INSURANCE COMPANY. . it is clear that Grepalife is liable and that Dr. ISSUES 1. . Disposition Petition DENIED. and the payment of premiums is one of the terms of the policies." From this. 1963 . an amount to pay the outstanding indebtedness shall first be paid to the Creditor and the balance of the Sum Assured.INSURANCE 45 receipt of due proof of the Debtor's death during the terms of this insurance. by express stipulation. February 25. 1986 FACTS . for it is in a real sense a contract. . . If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued. it would serve no practical purpose in the realm of commerce. 1010. INC.000 board feet of Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay. 1963 .July 17. the cover note in question is subject to the terms and conditions of the marine policies b. 1963 . PACIFIC TIMBER EXPORT CORPORATION v.The two (2) regular marine cargo policies were issued by the defendant in favor of the plaintiff. a death benefit in the amount of P86. 2. 1982 FACTS .the defendant wrote the plaintiff denying the latter's claim. DEVELOPMENT INSURANCE v.

800. the TC. warranties and clauses of this Policy. Every item. said automobile was totally destroyed by fire. Diehl).Summons was served through its vice-president. applying the open policy clause as expressly agreed upon by the parties in their contract. IAC affirmed the TC decision in toto.or inaction ---. the private respondent should be considered its own insurer for the difference between that amount and the face value of the policy and should share pro rata in the loss sustained. and representations contained in the said proposal and believing the same to be true. and to vacate the judgment by default.The evidence shows that Hermanos. NO . Accordingly. was the first indication of the petitioner's intention to prolong this case and postpone the discharge of its obligation to the private respondent under this agreement.00. who sold the said automobile to Henry Harding for the sum of P1. if more than one. 1916. that on March 24. HARDING v. the petitioner made no move at all for two months thereafter. Smith. made its policy of insurance in writing upon said automobile was set forth in said policy to be P3. This is an open policy as defined in Sec57 of the Insurance Act.The actual loss has been ascertained in this case and the Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily.500. Harding sold the said automobile to J. guaranteeing the truth of the statements contained therein which said proposal is referred to in the said policy of insurance made a part thereof. invoking excusable neglect.000. which is now Sec60 of the Insurance Code. ISSUE 1. .31.On appeal. there is no evidence on record that the building was worth P5. Harding.000. Its motion was denied. if established.There is a pattern of inexcusable neglect. as determined. and shall bear a ratable proportion of the loss accordingly. 2. It was made by means of a proposal in writing signed and delivered by said plaintiff to the defendant. with costs against the petitioner. . Henry E. which was allowed full recovery of its claimed damages.A fire occurred in the building of the private respondent and it sued for recovery of damages from the petitioner on the basis of an insurance contract between them. In the event of loss. it issued the policy of insurance on an automobile alleged by the said plaintiff to be her property. Harding. of the policy shall be separately subject to this condition.000. be collectively of greater value than the sum insured thereon then the insured shall be considered as being his own insurer for the difference. . Hence.Mrs.which indeed enabled it to avoid payment for more than five years from the filing of the claim against it in 1980. will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not exceed the face value of the policy.500. .629.However. There were even several extensions to the original period to answer. On the contrary. which provides: "If the property hereby insured shall. the actual value of the property insured on the day the fire occurred. August 10.000. . subject to the applicable terms. by agreement. Disposition The appealed decision is affirmed in full. Mrs.00 at the time of the loss.INSURANCE 46 .The Court notes that the policy in this case is an open policy and is subject to the express condition that: "Open Policy.The refusal of its vice-president to receive the private respondent's complaint. the private respondent is entitled to an indemnity of only P67. conditions.800. "an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss. whether total or partial. (b) the value of said automobile at the time of the execution and delivery of the said proposal and (c) the ownership of said automobile. A judgment of default was rendered on the strength of the evidence submitted ex parte by the private respondent. by said plaintiff. relying upon the warranties. What is the amount of indemnity due to the private respondent under its insurance contract? WON CFI was correct in interpreting the contract HELD 1. Bell & Company (limited). on motion of the private respondent filed declared the petitioner in default. Harding was the owner of a Studebaker automobile." . 1918 FACTS . sold the automobile to Canson for P3. we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of P508. it is understood that the amount of the loss shall be subject to appraisal and the liability of the company. to wit: (a) the price paid by the proposer for the said automobile.The defendant’s version is that by request of Mrs. in consideration of the payment to the defendant of the premium of P150. the defendant by its duly authorized agent.867. that certain of the statements and representations contained in said proposal and warranted by said plaintiff to be true.The petitioner argues that since at the time of the fire the building insured was worth P5. The petitioner cites Condition 17 of the policy. and in no case shall exceed the amount of the policy.On learning of this decision. statements. as reported in the sheriff's return.As defined in the aforestated provision." .200 (testimony of Mr. There is no such showing. This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed. .000 that the value of said automobile was set forth in said policy to be P3. issued the said policy of insurance. The policy is an open policy which means that the actual loss.00. the Manila agents for the Studebaker automobile. were false and known to be false by the said plaintiff at the time of signing and delivering the said proposal and were made for the purpose of misleading and deceiving the defendant. The petitioner allegedly failed to answer on time and was declared in default by TC. It was only more than one month after the judgment of default was rendered by the TC that it filed a motion to lift the order of default and vacate the judgment by default. shall be limited to the actual loss. that the loss thereby to plaintiffs was the sum of P3. WON default of petitioner is based on excusable neglect 2. Brannigan for the sum of P2. . This was done almost one month later. . at the breaking out of any fire. the building was insured at P2.00. As a consequence. and inducing the defendant. with the consent of her husband. . and this must be considered. the petitioner moved to lift the order of default.". Even so.000. the rest of the loss to be shouldered by it alone. That intention was revealed further in its subsequent acts Page ---.000 . COMMERCIAL UNION ASSURANCE 38 PHIL 464 FISHER.

Article 1334 of the Civil Code which provides that "All gifts between spouses during the marriage shall be void. or 5 per cent of the then estimated value of P3. that said automobile was repaired and repainted at the Luneta Garage at a cost of some P900. Harding. which had never been tendered to the plaintiff prior to the trial of this case. without dispute. The amount stated was less than the actual outlay which the automobile represented to Mr. Henry E.000. There is no evidence to sustain the contention that this communication was made in bad faith. and that defendant. and the evidence shows. Harding. the policy never attached to the risk HELD 1. WON the statement regarding the cost of the automobile was a warranty.000 and the said defendant charged the said plaintiff Mrs. P3. We cannot say.Even assuming that defendant might have invoked article 1334 as a defense. The form of proposal upon which the policy was issued does not call for a statement regarding the value of the automobile at the time of its acquisition by the applicant for the insurance. Harding. testified that the automobile was practically as good as new at the time the insurance was effected. on the contrary we believe that it shows that the automobile had in fact cost more than the amount mentioned. 2. that the statement was false. including repairs. the proposal is to be regarded as the act of the insurer and not of the insured. exchange. but in open court during the trial the sum of P10 as the proceeds of such sale was tendered to plaintiff and refused. even if it should have been shown that they were incorrect in the absence of proof of willful misstatement. inheritance. Henry Harding gave the said automobile to his wife as a present. is bound by it and must pay the loss in accordance with the stipulated insured value.Trial judge decided that there was no proof of fraud on the part of plaintiff in her statement of the value of the automobile. therefore.800. and that the iron and steel portions of said automobile which did not burn were taken into the possession of the defendant by and through its agent Smith. by and through its said agent Smith. Server. and that appellee simply signed the same. . testified that at the time this automobile was insured it was worth about P3. Page or any other title not requiring the owner to make a specific cash outlay for its acquisition.It has not been shown by the evidence that the statement was false. that a proposal was filled out by the said agent and signed by the plaintiff Mrs.The "Schedule" in said policy of insurance describes the automobile here in question. having agreed to the estimated value. . and having insured the automobile for that amount. and the defendant. ISSUE 1. . Harding was not the owner of the automobile at the time of the issuance of the policy. as a matter of law.000". that while the said automobile was at the Luneta Garage. and that the sum after this examination.000 whichever is the greater against any claim at common law made by any person (not being a person in the said motor car nor in the insured's service) for loss of life or for accidental bodily injury or damage to property caused by the said motor car including law costs payable in connection with such claim when incurred with the consent of the company. It cannot be assumed that defendant should not have issued the policy unless it were strictly true that the price representing the cost of the machine had been paid by the insured and by no other person ? that it would no event insure an automobile acquired by gift. Harding as premium on said policy the sum of P150.The court below found and the evidence shows. Whether it is or is not would depend upon the circumstances of the parties. . and provides in part of follows: "That during the period above set forth and during any period for which the company may agree to renew this policy the company will subject to the exception and conditions contained herein or endorsed hereon indemnify the insured against loss of or damage to any motor car described in the schedule hereto (including accessories) by whatever cause such loss or damage may be occasioned and will further indemnify the insured up to the value of the car or P3. the latter solicited of Mrs. that the gift of an automobile by a husband to his wife is not a moderate one. acted upon information given her by her husband and by Mr. therefore.The witness Server. She merely repeated the information which had been given her by her husband. It also appears that an examiner employed by the defendant made an inspection of the automobile before the acceptance of the risk. . Harding the insurance of said automobile by the Company. in fixing the value of the automobile at P3. The trial court found that Mrs.INSURANCE 47 who sold the said automobile Henry Harding for the sum of P2. WON Mrs.000. and sold by it for a small sum. Bell & Company (limited). NO . and at the same time disclosed to defendant's agent the source of her information." . We do not think that the facts stated in the proposal can be held as a warranty of the insured.500" and under another heading "Present value" is the amount of "3. an expert automobile mechanic. thereafter issued a policy of insurance upon proposal in which policy the said automobile was described as of the "present value" of P3. NO . but merely a statement of its cost. . upon the basis of which the premium was paid. as to which nothing is disclosed by the record. when the insurance policy was issued. The court below found. the General Manager of the Luneta Garage. Server. that there was no fraud on her part in ." is the amount of "3. Bell & Company (limited). had no insurable interest in it 2.000. and that. the manager of the Luneta Garage. that the proposal upon which the policy in question was issued was made out by defendant's agent by whom the insurance was solicited. that she had an insurable interest therein. and that between that time and the issuance of the policy some P900 was spent upon it in repairs and repainting. an experienced automobile mechanic. the burden would be upon it to show that the gift in question does not fall within the exception therein established.We are of the opinion that it would be unfair to hold the policy void simply because the outlay represented by the automobile was made by the plaintiff's husband and not by his wife. and in said proposal under the heading "Price paid by proposer. Disposition Plaintiff was the owner of the automobile in question and had an insurable interest therein. 1916. Under such circumstance.On March 24.000. the said automobile was totally destroyed by fire. Henry E. Moderate gifts which the spouses bestow on each other on festive days of the family are not included in this rule.After the said proposal was made a representative of the Manila agent of defendant went to the Luneta Garage and examined said automobile and Mr.800. or with respect to its ownership. that the automobile was bought by plaintiff's husband a few weeks before the issuance of the policy in question for the sum of P2." . to whom he had given the automobile. and.

It explained that Steamship Mutual was a Protection and Indemnity Club (P & I Club).The test to determine if a contract is an insurance contract or not. White Gold on the other hand. 2005 NATURE Petition for certiorari to review CA decision FACTS . or receive for services in obtaining insurance.In particular.Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latter’s unpaid balance. White Gold was issued a Certificate of Entry and Acceptance. Disposition The petition is PARTIALLY GRANTED. Pioneer was already licensed. or clubs.SEC.Relatedly. ISSUES 1. one undertakes for a consideration to indemnify another against loss. . WON Pioneer needs a license as an insurance agent/broker for Steamship Mutual HELD 1. to continue doing business here. Section 99 of the Insurance Code enumerates the coverage of marine insurance. hence. to the creation of a fund from which all losses and liabilities are paid. July 28. In it. Steamship Mutual refused to renew the coverage. the act required to be performed.Since a contract of insurance involves public interest. Both decisions held that there was no violation of the Insurance Code and the respondents do not need license as insurer and insurance agent/broker. or within six months thereafter. must secure a license from the Insurance Commission. Thus. . 299 . protection and indemnity. filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code.Benito Singhid was hired as chief cook on board the vessel MV Sun Richie Five for a term of one year by Fullwin Maritime Limited through its Philippine agent. and defense costs. while Pioneer violated Sections 299. mutual insurance associations. a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In its decision.A P & I Club is “a form of insurance against third party liability. . namely. It maintains a resident agent in the Philippines to solicit insurance and to collect Page payments in its behalf. correct and must be affirmed. When White Gold failed to fully pay its accounts. In it. a separate license solely as agent/broker of Steamship Mutual was already superfluous. without first procuring a license so to act from the Commissioner. no insurer or insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance Commission. PIONEER INSURANCE 464 SCRA 448 QUISUMBING. any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof. It is not by what it is called. provide three types of coverage. and Pioneer Insurance and Surety Corporation are ORDERED to obtain licenses and to secure proper authorizations to do business as insurer and insurance agent. is DENIED. While the said vessel was on its way to Shanghai from Ho . YES . regulation by the State is necessary. is engaged in the insurance business in the Philippines 2. the costs of this appeal to be paid by the appellant. Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business. 2000 of the Insurance Commission is hereby REVERSED AND SET ASIDE.The Court of Appeals affirmed the decision of the Insurance Commissioner. and where the profits are divided among themselves. 2005 NATURE This petition for review assails the Decision of the Court of Appeals. MARINE MANNING MNGT CORP. an insurance contract is a contract of indemnity. depends on the nature of the promise..The Insurance Commission dismissed the complaint. and that the judgment of the court below is. . . .No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance. respectively. the appellate court distinguished between P & I Clubs vis-à-vis conventional insurance. Steamship Mutual or through its agent Pioneer. where the third party is anyone other than the P & I Club and the members. Additionally. with interest. and the exact nature of the agreement in the light of the occurrence. the members all contribute. The Decision dated July 30. WON Steamship Mutual. Pioneer also issued receipts evidencing payments for the coverage. a marine insurance undertakes to indemnify the assured against marine losses. June 21. a P & I Club. 460 SCRA 418 GARCIA. is binding upon the defendant corporation. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business.The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 187 of the Insurance Code. or circumstances under which the performance becomes requisite. . Thus. 2. . Marine Manning and Management Corporation. . Basically. YES . Pioneer need not obtain another license as insurance agent and/or a broker for Steamship Mutual because Steamship Mutual was not engaged in the insurance business.” By definition then. PANDIMAN v. Likewise. contingency. 300 and 301 in relation to Sections 302 and 303. The Steamship Mutual Underwriting Association (Bermuda) Ltd. We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. 2002 of the Court of Appeals affirming the Decision dated May 3. for the purposes of the insurance. The petitioner’s prayer for the revocation of Pioneer’s Certificate of Authority and removal of its directors and officers. which must be renewed annually on the first day of January. WHITE GOLD MARINE SERVICES v. FACTS . affirming the Decision of the Insurance Commission. Subsequently. such as the losses incident to a marine adventure. thereof. damage or liability arising from an unknown or contingent event. by a system of premiums or assessments.White Gold procured a protection and indemnity coverage for its vessels from Steamship Mutual through Pioneer Insurance.INSURANCE 48 procuring the insurance. . The appellate court also held that Pioneer merely acted as a collection agent of Steamship Mutual. . that the valuation of the automobile. war risks. therefore. Moreover. in proportion to their interest.

1946 – action filed in CFI Manila to recover from the Huenefeld Co the sum of P92. Philippine Executive Commission. to jointly and severally pay the widow the death benefits plus legal fees. or trading with the enemy. WON Pandiman may be held liable for the death benefits 2.. 1997. limited the liable parties to Pandiman and OMMIAL but maintained the money award. . payment has not been made. or to do anything detrimental too their country's interest. The NLRC. de Seguros a fire policy in the sum of P1000. there was no showing that Pndiman in fact negotiated the insurance contract between Sun Richie Five and the insurer OMMIAL. alien subjects. Benito suffered a heart attack and subsequently died on June 24.650. dated April 9. also all acts concerning the transmission of money or goods. and penalties to which an insurance agent is subject. both Fullwin and Marine should be held liable for whatever death benefits the widow of Benito may be entitled to.building and insured merchandise were burned. & Co. payment for claims arising from peril insured against. May 25.CFI: dismissed the action without pronouncement as to costs. In other words.A.000. 1941. Marine is also bound by its undertaking pursuant to the Rules and Regulations Governing Overseas Employment that “it shall assume joint and solidary liability with the employer for all the claims and liabilities which may arise in connection with the implementation of the contract. or receiving its protection. HUENEFELD AND CO INC 89 PHIL 54 PARAS. and that the payment made by the Filipinas Cia to Huenefeld Co during the Japanese military occupation was under pressure. including but not limited to the payment of wages. The purpose of war is to cripple the power and exhaust the resources of the enemy. Pandiman is not a party to the 7 Page insurance contract and hence under Article 1311 of the Civil Code. Even.Christern Huenefeld. . . Hence this appeal. and it is inconsistent that one country should destroy its enemy's property and repay in Section 300. except Pandiman. after deducting their value. > Effect of war. in pursuance of the order of the Director of Bureau of Financing. WON Marine and its foreign principal. Thus. provides that "anyone except a public enemy may be insured.Apparently. 1941 . and Fullwin as respondents. Filipinas Cia. Inc.. the total loss suffered by the respondent was fixed at P92. this for the reason that the subjects of one country cannot be permitted to lend their assistance to protect by insurance the commerce or property of belligerent. filed a claim for death benefits with Marine which referred her to Pandiman. The case is now before us on appeal by certiorari from the decision of the Court of Appeals. 1942 or during the Japanese military occupation .650 on April 19. all acts of voluntary submission to it. Pandiman recommended payment of the death benefits amounting to $79. 1943. ISSUE 1. It further prohibits insurance upon trade with or by the enemy.Pandiman is not an insurance agent as defined by Section 3007 of the Insurance Code. Disposition The petition is granted and the CA decision is reversed and set aside. 2. .Rosita filed a complaint with the Labor Arbiter naming Marine.October 1. In due time the Huenefeld Co submitted to the Filipinas Cia its claim under the policy. its income or resources. the respondent Corporation (though organized under and by virtue of the laws of the Philippines) being controlled by the German subjects and the Filipinas Cia being a company under American jurisdiction when said policy was issued on October 1. commerce. however. after payment of corresponding premium. All intercourse between citizens of belligerent powers which is inconsistent with a state of war is prohibited by the law of nations. 1943. it is not liable for the obligation arising out of the insurance contract. is a member. The salvage goods were sold at public auction and. all acts which will increase. Any person who for compensation solicits or obtains on behalf of any insurance company transmits for a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the negotiating of such insurance shall be an insurance agent within the intent of this section and shall thereby become liable to all the duties. The Arbiter ordered all the respondents.February 27. FACTS . the petitioner. should be absolved from the death claim liabilities HELD 1. is definitely not one of the liabilities of an insurance agent. paid to the Huenefeld Co the sum of P92.CA: CFI judgment affirmed. Fullwin. . NO .) in section 8." It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy.000. . upon the life or lives of aliens engaged in service with the enemy. Pandiman Philippines. to which the insurer is liable. as Benito’s principal employer is liable under the employment contract. generally. if Pandiman were an agent. liabilities. the vessel and the crew were insured with Ocean Marine Mutual Insurance Association Limited (OMMIAL). on appeal by Marine. is the local correspondent of OMMIAL.August 6.Filipinas Cia refused to pay the claim on the ground that the policy in favor of the respondent had ceased to be in force on the date the United States declared war against Germany. Binondo Manila. or tend to increase. After her submission of the required documentation.650 above mentioned. obtained from the Filipinas Cia. 2427.Benito’s widow. Such prohibition includes all negotiations. However. there is no legal basis whatsoever for holding petitioner solidarily liable with insurer OMMIAL for the widow’s claim for death benefits. ISSUE WON the policy in question became null and void upon the declaration of war between United States and Germany HELD YES Ratio The Philippine Insurance Law (Act No. The CA sustained the decision of the NLRC. Rosita. covering merchandise contained in No.INSURANCE 49 Chih Minh City. .Fullwin. and all contracts relating thereto are thereby nullified. as amended. requirements. NO . In this case. . Also. FILIPINAS COMPANIA DE SEGUROS CHRISTERN. OMMIAL. The theory of the Filipinas Cia is that the insured merchandise were burned up after the policy issued in 1941 in favor of Huenefeld Co has ceased to be effective because of the outbreak of the war between the United States and Germany on December 10. heath and disability compensation and repatriation”. with costs. Pandiman. 1941. a Protective and Indemnity Club of which Sun Richie Five Bulkers S. 1951 V . 711 Roman Street.

208. referring to her as the wife. the Law on Insurance. Cyc.. 1941.33. As the appointment of a beneficiary in insurance may be considered a donation. Sec.) Reasoning . Carponia filed a claim for the proceeds as the designated beneficiary in the policy. the respondent was not entitled to any indemnity under said policy from the petitioner. Art. he died as a result of an accident when he was hit by a falling branch of a tree. A. decided on December 8. lost. dealing with a Swiss corporation allegedly controlled by German interest. The English and American cases relied upon by the Court of Appeals have lost their force in view of the latest decision of the Supreme Court of the United States in Clark vs. for like reasons.Rather. Philippine currency.) > In the case of an ordinary fire policy. He designated Carponia Ebrado as the revocable beneficiary. CC states: “The contract of insurance is governed by special laws. . October 28. (6 Couch. As a consequence. the insurance policy issued in its favor on October 1. Those made between persons who were guilty of adultery or concubinage at the time of donation. although she admits that she and Buenaventura were merely living as husband and wife without the benefit of marriage. when not otherwise specifically provided for by the Insurance Law. who compose the belligerent powers. FACTS . Uebersee Finanz Korporation. Reasoning . 1941. 1941. exist.In essence. by the petitioner (a Philippine corporation) had ceased to be valid and enforcible. in a state of utter exclusion.Buenaventura Ebrado obtained a whole-life insurance policy from Insular. ISSUE 1.It is quite unfortunate that the Insurance Code does not contain any specific provision grossly resolutory of the prime question at hand.882. relying on English and American cases which held that a corporation is a citizen of the country or state by and under the laws of which it was created or organized. All individuals therefore. the contractual tie is broken and the contractual rights of the parties. less the amount of the premium. should be returned by the petitioner. 112. Disposition the appealed decision is hereby reversed and the respondent corporation is ordered to pay to the petitioner the sum of P77. the beneficiary will receive the proceeds or profits of said insurance. 44.00 with a rider for accidental death benefits for the same amount. Pascuala Vda De Ebrado. as to each other. Art. for P5. and are public enemies.” Common-law spouses are. NO Ratio The prohibition that husband and wife cannot donate to each other applies to common-law relationships. general rules of civil law should be applied to resolve the issue. . in Philippine currency. and the commencement of war determines. G.Insular then filed an interpleader in court (CFI Rizal) to determine to whom the proceeds should be paid. the Court: "The property of all foreign interest was placed within the reach of the vesting power (of the Alien Property Custodian) not to appropriate friendly or neutral assets but to reach enemy interest which masqueraded under those innocent fronts. definitely. so far as not vested. In "Enemy Corporation" by Martin Domke. Therefore. one cannot name as beneficiary his common-law wife. 5352-5353. because from the premiums of the policy which the insured pays out of liberality. 1948 also discussed this dilemma > In Clark vs. 1947. Uebersee Finanz Korporation.739 CC should INSULAR LIFE ASSURANCE CO. and during the war. beginning December 11. Both are founded upon the same consideration: liberality.739. A beneficiary is like a donee. CFI declared that Carponia was disqualified from becoming beneficiary of the insured and directing the Insular to pay the proceeds to the estate of Buenaventura.2012 “any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make a donation to him.Afterwards. pp. the proscription in Art. or for some other specified term it is plain that when the parties become alien enemies. which prior thereto may have been lawful. or render it aid.Also. p. . Law. and since the insured goods were burned after December 10. The power of seizure and vesting was extended to all property of any foreign country or national so that no innocent appearing device could become a Trojan horse. (Vance. . the contract of life insurance is governed by the general rules of the civil law regulating contracts. . It rejected the theory that nationality of private corporation is determined by the character or citizenship of its controlling stockholders. . Huenefeld Co became an enemy corporation upon the outbreak of the war between the United States and Germany. . elementary rules of justice (in the absence of specific provision in the Insurance Law) require that the premium paid by the respondent for the period covered by its policy from December 11.INSURANCE 50 insurance the value of what has been so destroyed. WON a common-law wife named as beneficiary in the insurance policy of a legally married man claim the proceeds of the same HELD 1. Matters not expressly provided for in such special laws shall be regulated by this Code. . However. of Ins. 1941.Art. in which the controls test has been adopted. Page The legal wife.There is no question that majority of the stockholders of the respondent corporation were German subjects. . also filed her claim as the widow of the deceased. .” Thus. or that it should in such manner increase the resources of the enemy. that should be returned by the petitioner for the unexpired term of the policy in question. barred from receiving donations from each other. 1977 NATURE Appeal from judgment of RTC. which grants insurance only from year. ." . 1941. a life insurance policy is no different from a civil donation insofar as the beneficiary is concerned. EBRADO 80 SCRA 181 MARTIN. CC: The following donations shall be void: 1.The respondent having become an enemy corporation on December 10. all trading intercourse with the enemy.The Court of Appeals overruled the contention of the petitioner that the respondent corporation became an enemy when the United States declared war against Germany.2011. a paper presented to the Second International Conference of the Legal Profession held at the Hague (Netherlands) in August. v.

INSURANCE 51
equally operate in life insurance contracts. The mandate of Art.2012 cannot be laid aside: any person who cannot receive a donation cannot be named as beneficiary in the life insurance policy of the person who cannot make the donation. - Policy considerations and dictates of morality rightly justify the institution of a barrier between common-law spouses in regard to property relations since such relationship ultimately encroaches upon the nuptial and filial rights of the legitimate family. There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. - So long as marriage remains the threshold of family laws, reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship. If legitimate relationship is circumscribed by these legal disabilities, with more reason should an illicit relationship be restricted by these disabilities. Disposition Decision AFFIRMED. CONSUEGRA v. GSIS 37 SCRA 315 ZALDIVAR; January 30, 1971 NATURE Appeal from the decision of the Court of First Instance of Surigao del Norte awarding the 8/16 part of the proceeds of the deceased Consuegra’s retirement benefits to Rosario Diaz. FACTS - The late Jose Consuegra, at the time of his death, was employed as a shop foreman of the office of the District Engineer in the province of Surigao del Norte. In his lifetime, Consuegra contracted two marriages, the first with herein respondent Rosario Diaz, solemnized in the parish church of San Nicolas de Tolentino, Surigao, Surigao, on July 15, 1937, out of which marriage were born two children, namely, Jose Consuegra, Jr. and Pedro Consuegra, but both predeceased their father; and the second, which was contracted in good faith while the first marriage was subsisting, with herein petitioner Basilia Berdin, on May 1, 1957 in the same parish and municipality, out of which marriage were born seven children, namely, Juliana, Pacita, Maria Lourdes, Jose, Rodrigo, Lenida and Luz, all surnamed Consuegra. - Being a member of the Government Service Insurance System (GSIS, for short) when Consuegra died on September 26, 1965, the proceeds of his life insurance under policy No. 601801 were paid by the GSIS to petitioner Basilia Berdin and her children who were the beneficiaries named in the policy. - However, Consuegra did not designate any beneficiary who would receive the retirement insurance benefits due to him. Respondent Rosario Diaz, the widow by the first marriage, filed a claim with the GSIS asking that the retirement insurance benefits be paid to her as the only legal heir of Consuegra, considering that the deceased did not designate any beneficiary with respect to his retirement insurance benefits. Petitioner Basilia Berdin and her children, likewise, filed a similar claim with the GSIS, asserting that being the beneficiaries named in the life insurance policy of Consuegra, they are the only ones entitled to receive the retirement insurance benefits due the deceased Consuegra. Resolving the conflicting claims, the GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario Diaz, his widow by his first marriage who is entitled to one-half, or 8/16, of the retirement insurance benefits, on the one hand; and Basilia Berdin, his widow by the second marriage and their seven children, on the other hand, who are entitled to the remaining one-half, or 8/16, each of them to receive an equal share of 1/16. - Dissatisfied with the foregoing ruling and apportionment made by the GSIS, Basilia Berdin and her children filed on October 10, 1966 a petition for mandamus with preliminary injunction in the Court of First Instance of Surigao. - The CFI of Surigao ruled in favor of respondent Rosario Diaz and upheld the ruling of GSIS in all aspect. Thus, Basilia Berdin and her children appealed said decision to the Supreme Court. ISSUE WON GSIS was correct in awarding half of the retirement benefit of the deceased to Rosario Diaz, the first wife, notwithstanding the fact that the petitioners were named as beneficiaries of the life insurance HELD YES - The GSIS offers two separate and distinct systems of benefits to its members, one is the life insurance and the other is the retirement insurance. These two

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distinct systems of benefits are paid out from two distinct and separate funds that are maintained by the GSIS. Thus, it doesn’t necessarily mean that the beneficiaries in the life insurance are also the beneficiaries in the retirement insurance. - Consuegra started in the government service sometime during the early part of 1943, or before 1943. In 1943 Com. Act 186 was not yet amended, and the only benefits then provided for in said Com. Act 186 were those that proceed from a life insurance. Upon entering the government service Consuegra became a compulsory member of the GSIS, being automatically insured on his life, pursuant to the provisions of Com. Act 186 which was in force at the time. During 1943 the operation of the Government Service Insurance System was suspended because of the war, and the operation was resumed sometime in 1946. When Consuegra designated his beneficiaries in his life insurance he could not have intended those beneficiaries of his life insurance as also the beneficiaries of his retirement insurance because the provisions on retirement insurance under the GSIS came about only when Com. Act 186 was amended by Rep. Act 660 on June 16, 1951. Hence, it cannot be said that because herein appellants were designated beneficiaries in Consuegra's life insurance they automatically became the beneficiaries also of his retirement insurance. - The provisions of subsection (b) of Section 11 of Commonwealth Act 186, as amended by Rep. Act 660, clearly indicate that there is need for the employee to file an application for retirement insurance benefits when he becomes a member of the GSIS, and he should state in his application the beneficiary of his retirement insurance. Hence, the beneficiary named in the life insurance does not automatically become the beneficiary in the retirement insurance unless the same beneficiary in the life insurance is so designated in the application for retirement insurance. - In the case of the proceeds of a life insurance, the same are paid to whoever is named the beneficiary in the life insurance policy. As in the case of a life insurance provided for in the Insurance Act, the beneficiary in a life insurance under the GSIS may not necessarily be an heir of the insured. The insured in a life insurance may designate any person as beneficiary unless disqualified to be so under the provisions of the Civil Code. And in the absence of any beneficiary named in the life

INSURANCE 52
insurance policy, the proceeds of the insurance will go to the estate of the insured. - On the other hand, the beneficiary of the retirement insurance can only claim the proceeds of the retirement insurance if the employee dies before retirement. If the employee failed or overlooked to state the beneficiary of his retirement insurance, the retirement benefits will accrue to his estate and will be given to his legal heirs in accordance with law, as in the case of a life insurance if no beneficiary is named in the insurance policy. Disposition Petition Denied. It is Our view, therefore, that the respondent GSIS had correctly acted when it ruled that the proceeds of the retirement insurance of the late Jose Consuegra should be divided equally between his first living wife Rosario Diaz, on the one hand, and his second wife Basilia Berdin and his children by her. SSS v. DAVAC 17 SCRA 863 BARRERA: July 30, 1966 NATURE APPEAL from a resolution Of the Social Security Commission. FACTS - Petronilo Davac, became a member of the Social Security System (SSS for short) on September 1, 1957. In the Member's Record he designated respondent, Candelaria Davac as his beneficiary and indicated his relationship to her as that of "wife". - He died on April 5, 1959. It appears that the deceased contracted two marriages, the first, with Lourdes Tuplano on August 29, 1946, who bore him a child, Romeo Davac, and the second, with Candelaria Davac on January 18, 1949, with whom he had a minor daughter, Elizabeth Davac. Both filed their claims for death benefit with the SSS. - Social Security Commission issued the resolution declaring respondent Candelaria Davac as the person entitled to receive the death benefits payable for the death of Petronilo Davac. ISSUES 1. WON the Social Security Commission Candelaria Davac is entitled to receive the death benefits 2. WON a beneficiary under the Social Security System partakes of the nature of a beneficiary in a life insurance policy and, therefore the designation made in the person DAVAC as bigamous wife is null and void, because it contravenes the provisions of the Civil Code 3. WON the benefits accruing from membership with SSS forms part of the conjugal property thus the resolution deprives the lawful wife of her share in the conjugal property as well as of her own and her child's legitime in the inheritance HELD 1. YES - Section 13, RA1161 provides that the beneficiary "as recorded" by the employee's employer is the one entitled to the death benefits. - Section 13, Republic Act No. 1161, as amended by Republic Act No. 1792, in force at the time of Petronilo Davac's death provides: Upon the covered employee's death or total and permanent disability under such conditions as the Commission may define, before becoming eligible for retirement and if either such death or disability is not compensable under the Workmen's Compensation Act, he or. in case of his death, his beneficiaries, as recorded by his employer shall be entitled to the following benefit: - In Tecson vs. Social Security System. Section 13 was construed:"it may be true that the purpose of the coverage under the Social Security System is protection of the employee as well as of his family, but this purpose or intention of the law cannot be enforced to the extent of contradicting the very provisions of said law contained in Section 13, thereof” - When the provisions of a law are clear and explicit, the courts can do nothing but apply its clear and explicit provisions (Velasco vs. Lopez) 2. NO - The disqualification mentioned in Article 739 is not applicable to herein appellee Candelaria Davac because she was not guilty of concubinage, there being no proof that she had knowledge of the previous marriage of her husband Petronilo. ART. 2012. Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make any donation to him according to said article. ART. 739. The following donations shall be void: (1) Those made between persons who were guilty of adultery or concubinage at the time of the

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donation; (the court did not decide whether this partakes the nature of a life insurance policy) 3. NO - The benefit receivable under the Act is in the nature of a special privilege or an arrangement secured by the law pursuant to the policy of the State to provide social security to the workingmen. The amounts that may thus be received cannot be considered as property earned by the member during his lifetime. His contribution to the fund constitutes only an insignificant portion thereof. Then, the benefits are specifically declared not transferable, and exempted from tax, legal processes, and lien. Furthermore, in the settlement of claims thereunder, the procedure to be observed is governed not by the general provisions of law, but by rules and regulations promulgated by the Commission. Thus, if the money is payable to the estate of a deceased member, it is the Commission, not the probate or regular court that determines the person or persons to whom it is payable. - They are disbursed from a public special fund created by Congress.The sources of this special fund are the covered employee's contribution (equal to 21/2 per cent of the employee's monthly compensation) ; the employer's 'Contribution (equivalent to 3-1/2 per cent of the monthly compensation of the covered employee) ;and the Government contribution which consists in yearly appropriation of public funds to assure the maintenance of an adequate working balance of the funds of the System. Additionally, Section 21 of the Social Security Actprovides that the benefits prescribed in this Act shall not be diminished and the Government of the Republic of the Philippines accepts general responsibility for the solvency of the System. - The benefits under the Social Security Act are not intended by the lawmaking body to form part of the estate of the covered –members. - Social Security Act is not a law of succession. Disposition Resolution of the Social Security Commission appealed is affirmed FRANCISCO DEL VAL v. ANDRES DEL VAL 29 PHIL 534 MORELAND; February 16, 1915 NATURE

INSURANCE 53
Appeal from a judgment of the Court of First Instance of the city of Manila dismissing the complaint with costs. FACTS - Plaintiffs and defendant are brothers and sisters; that they are the only heirs at law and next of kin of Gregorio Nacianceno del Val, who died in Manila on August 4, 1910, intestate - During the lifetime of the deceased he took out insurance on his life for the sum of P40,000 and made it payable to the defendant ANDRES DEL VAL as sole beneficiary. After his death the defendant collected the face of the policy. From said policy he paid the sum of P18,365.20 to redeem certain real estate which the decedent had sold to third persons with a right to repurchase. - The redemption of said premises was made by the attorney of defendant ANDRES in the name of the plaintiffs and the defendant as heirs of the deceased vendor. It further appears from the pleadings that the defendant, on the death of the deceased, took possession of most of his personal property, which he still has in his possession, and that he has also the balance on said insurance policy amounting to P21,634.80. - Plaintiffs contend that the amount of the insurance policy belonged to the estate of the deceased and not to the defendant personally; that, therefore, they are entitled to a partition not only of the real and personal property, but also of the P40,000 life insurance. The complaint prays a partition of all the property, both real and personal, left by the deceased; that the defendant account for P21,634.80, and that the sum be divided equally among the plaintiffs and defendant along with the other property of deceased. - The defendant denies the material allegations of the complaint and sets up as special defense and counterclaim that the redemption of the real estate sold by his father was made in the name of the plaintiffs and himself instead of in his name alone without his knowledge or consent. Andres contends that it was not his intention to use the proceeds of the insurance policy for the benefit of any person but himself, he alleging that he was and is the sole owner thereof and that it is his individual property. He, therefore, asks that he be declared the owner of the real estate redeemed by the payment of the P18,365.20, the owner of the remaining P21,634.80, the balance of the insurance policy, and that the plaintiffs account for the use and occupation of the premises so redeemed since the date of the redemption. - The trial court refused to give relief to either party and dismissed the action. In this appeal, it is claimed by the attorney for the plaintiffs that insurance provisions in the Code of Commerce are subordinated to the provisions of the Civil Code as found in article 1035. This article reads: "An heir by force of law surviving with others of the same character to a succession must bring into the hereditary estate the property or securities he may have received from the deceased during the life of the same, by way of dowry, gift, or for any good consideration, in order to compute it in fixing the legal portions and in the account of the division." - Counsel also claims that the proceeds of the insurance policy were a donation or gift made by the father during his lifetime to the defendant and that, as such, its ultimate destination is determined by those provisions of the Civil Code which relate to donations, especially article 819. This article provides that "gifts made to children which are not betterments shall be considered as part of their legal portion." ISSUES 1. WON the insurance belongs to the defendant and not to the decedent’s estate 2. WON the Civil code provisions on succession prevail over any other law with respect to the insurance HELD 1. YES - The SC agreed with the finding of the trial court that the proceeds of the life-insurance policy belong exclusively to the defendant as his individual and separate property, we agree. That the proceeds of an insurance policy belong exclusively to the beneficiary and not to the estate of the person whose life was insured, and that such proceeds are the separate and individual property of the beneficiary, and not of the heirs of the person whose life was insured, is the doctrine in America. We believe that the same doctrine obtains in these Islands by virtue of section 428 of the Code of Commerce, which reads: "The amounts which the underwriter must deliver to the person insured, in fulfillment of the contract, shall be the property of the latter, even against the claims of the legitimate heirs or

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creditors of any kind whatsoever of the person who effected the insurance in favor of the former." 2. NO - The contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with that subject. The Civil Code has no provisions which relate directly and specifically to life-insurance contracts or to the destination of life insurance proceeds. That subject is regulated exclusively by the Code of Commerce which provides for the terms of the contract, the relations of the parties and the destination of the proceeds of the policy. - Assuming that the proceeds of the life-insurance policy being the exclusive property of the defendant and he having used a portion thereof in the repurchase of the real estate sold by the decedent prior to his death with right to repurchase, and such repurchase having been made and the conveyance taken in the names of all of the heirs instead of the defendant alone, plaintiffs claim that the property belongs to the heirs in common and not to the defendant alone. - The Court rejected this contention unless the fact appear or be shown that the defendant acted as he did with the intention that the other heirs should enjoy with him the ownership of the estate ---- in other words, that he proposed, in effect, to make a gift of the real estate to the other heirs. If it is established by the evidence that was his intention and that the real estate was delivered to the plaintiffs with that understanding, then it is probable that their contention is correct and that they are entitled to share equally with the defendant therein. If, however, it appears from the evidence in the case that the conveyances were taken in the name of the plaintiffs without his knowledge or consent, or that it was not his intention to make a gift to them of the real estate, then it belongs to him. If the facts are as stated, he has two remedies. The one is to compel the plaintiffs to reconvey to him and the other is to let the title stand with them and to recover from them the sum he paid on their behalf. - For the complete and proper determination of the questions at issue in this case, the Court was of the opinion that the cause should be returned to the trial court with instructions to permit the parties to frame such issues as will permit the settlement of all the questions involved and to introduce such evidence as may be necessary for the full determination of the issues framed. Upon such issues and evidence taken

as the beneficiary of the policy. To that end. she was convicted of the crime of adultery. is the separate property of the beneficiary and beyond the control of the husband. It must follow. does not cease to be so by the cessation of the assured party's interest in the life insured. On September 4. originally valid. a decree of divorce was issued in civil case no. or if the insured should die before said date. and that the effort to change the beneficiary was made in 1922. By its terms. the insurance company has refused and still refuses to do. 1920. however. should she survive him. if indeed it is practicable. an automatic extension by Page premiums paid.there can be found in it no provision either permitting or prohibiting the insured to change the beneficiary.On the date the policy was issued. Accordingly. unless such be the necessary effect of the provisions of the policy itself.. Hilario Gercio formally notified the Sun Life that he had revoked his donation in favor of Andrea Zialcita. In policy. The beneficiary has an absolute vested interest in the policy from the date of its issuance and delivery. so provides.Yore vs. 1922. and is simply the object of another's bounty. which had the effect of completely dissolving their bonds of matrimony . Del Val. Towards the end of the year 1919. the Sun Life Assurance Co. belong.” . administrators. the insurance company agreed to insure the life of Hilario Gercio for the sum of P2. to be paid him on February 1. we do so with the purpose of having the Philippine Law of Insurance conform as nearly as possible to the modern Law of Insurance as found in the United States proper.Civil Code.there is likewise no provision either permitting or prohibiting the insured to change the beneficiary.On January 29. SUN LIFE ASSURANCE OF CANADA 48 PHIL 53 MALCOLM. we have gathered the rules which follow from the best considered American authorities.Central National Bank of Washington City vs. with but slight dissent in the courts of this country. Gercio requested the insurance company to eliminate Andrea Zialcita as beneficiary. the deficiencies in the law will have to be supplemented by the general principles prevailing on the subject.On March 4. It seems to be the settled doctrine. there is no provision in the Philippine Law permitting the beneficiary in a policy for the benefit of the wife of the husband to be changed after a divorce. 17955. REMANDED. and that he had designated in her stead his present wife. (Preliminary) WON the provisions of the Code of Commerce and the Civil Code shall be in force in 1910. Andrea Zialcita. which he may keep alive for his own benefit by paying the premiums or assessments if the person who effected the insurance fails or refuses to do so. . although he has parted with nothing. . The policy did not include any provision reserving to the insured the right to change the beneficiary. she has a subsisting interest in the policy.it would be most difficult. is not avoided by the cessation of the insurable interest.Court’s first duty is to determine what law should be applied to the facts. Adela Garcia de Gercio. 1930. unless the policy itself. 2.000.In our judgment of life policy. .Connecticut Mutual Life Insurance Company vs Schaefer “We do not hesitate to say. NO Ratio The wife has an insurable interest in the life of her husband. therefore. the husband. . . Reasoning . Booth “. 1910. or assigns of the insured. The Civil Code has no provisions which relate directly and specifically to life-insurance contracts or to the destination of life-insurance proceeds. . But if the policy contains no provision authorizing a change of beneficiary without the beneficiary's consent. has no power to change the beneficiary.INSURANCE 54 thereunder the court will decide the questions involved according to the evidence. Mrs. the insured cannot make such change. that if a policy is taken out upon a husband's life the wife is named as beneficiary therein. as well as to an ordinary life insurance policy. Whether the case be considered in the light of the Code of Commerce. . to test a life insurance policy by its provisions. . payable to a designated beneficiary. became effective in 1914. Hume “It is indeed the general rule that a policy.Insurance Act. . otherwise to the executors. In adopting these rules. and the money to become due under it. subordinating his conclusions of law to the rules laid down in this opinion. and to an endowment policy. guide the court in its decision 2. No. although he pays the premiums himself. of Canada issued an insurance policy on the life of Hilario Gercio.Unlike the statutes of a few jurisdictions. The policy was what is known as a 20year endowment policy. a subsequent divorce does not destroy her rights under the policy. Andrea Zialcita was the lawful wife of Hilario Gercio.Code of Commerce. 1925 NATURE Mandamus to compel Sun Life Assurance Co.” . . that a policy taken out in good faith and valid at its inception. saying "the contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with that subject. in the absence of a statute to the contrary. and keeps the policy in his exclusive possession. where the insured and the beneficiary have been divorced and where the policy of insurance does not expressly reserve to the insured the right to change the beneficiary HELD 1. . WON the insured. has acquired a vested and irrevocable interest in the policy. The insurance policy was taken out in 1910. that the Insurance Act. . GERCIO v. And this applies to a policy to which there are attached the incidents of a loan value. or the provisions of the Insurance Act now in force. If the husband wishes to retain to himself the control and ownership of the policy he may so provide in the policy. September 28. the former wife. has the power to change the beneficiary. or the charter of the insurance company. it is held that a life insurance policy of a husband made payable to the wife as beneficiary. cash surrender value. the Civil Code. ISSUES 1. of Canada to change the beneficiary in the policy issued by the defendant company on the life of the plaintiff Hilario Gercio FACTS . In the case of Del Val vs. that a person who procures a policy upon his own life. and to name instead his actual wife. the . . This. it declined to consider the proceeds of the insurance policy as a donation or gift. then to his wife. So when a policy of life insurance is taken out by the husband in which the wife is named as beneficiary. or the Insurance Act. or the general principles of law." . 2427.

but it was free from the control of her husband. if they ever become due and payable. The rights of a beneficiary in an ordinary life insurance policy become vested upon the issuance of the policy. Both the law and the Policy do not provide for any other exception. is payable to the surviving beneficiary named. the fact that the contract of insurance does not contain a contingency when the change in the designation of beneficiaries could be validly effected means that it was never within the contemplation of the parties. that the judgment of the lower court should be revoked. July 19. Her interest was free from any claim on the part of the insured or his creditors.Respondent Judge denied petitioner’s Urgent Motion. naming her. No right to change the beneficiary was reserved. WON the designation of the irrevocable beneficiaries could be changed or amended without the consent of all the irrevocable beneficiaries 2. during the life of the beneficiary. and many other things may occur.” . to the person or persons named in it as the beneficiary or beneficiaries.” .” . the applicable law in this case is the Insurance Act and under that law. Dimayuga filed with the CFI a petition to amend the designation of the beneficiaries in his life policy from irrevocable to revocable.” . subject to be divested only by her death. or agreement made with the Company to any change in or amendment to the Policy. He had no interest in her property in this policy. it is only with the consent of all the beneficiaries that any change or amendment in the policy concerning the irrevocable beneficiaries may be legally and validly effected. and that there is no power in the person procuring the insurance. The purpose of the petition is to have declared the rights of certain persons in an insurance policy which is not yet due and payable. The premiums may not be paid. Petitioner then filed a MFR which was also denied hence this petition. the beneficiary has a vested right in the policy. “As soon as the policy was issued Mrs. and can thereafter. for the reason that nothing may ever become payable under the contract of insurance. we are irresistibly led to the conclusion that the question at issue must be answered in the negative Disposition The judgment appealed from will be reversed and the complaint ordered dismissed as to the appellant. Illinois Life Insurance Company “The benefit accruing from a policy of life insurance upon the life of a married man.I agree with the majority of the court.In 1968. Reasoning . be defeated only as provided by the terms of the policy. and for many reasons such persons may never have a right to receive anything when the policy does become due and payable.Since the policy was procured in 1968. Private Respondent Rodolfo Dimayuga procured an ordinary life insurance policy from the petitioner company and designated his wife and children as irrevocable beneficiaries. by any act of his.Filley vs. It was contingent upon these events. . AMERICAN LIFE INSURANCE v. without the consent of the said beneficiary/beneficiaries. payable upon his death to his wife. of which she could not be deprived without her consent.Finally. 1989 NATURE Petition for review on certiorari the orders of CFI Judge Pineda FACTS . PHIL. although she may have years thereafter secured a divorce from her husband.Based on the provision of their contract and the law applicable. the beneficiary designated in a life insurance contract cannot be changed without the consent of the beneficiary because he has a vested interest in the policy. it may also be considered settled that where a policy is of the semitontine variety. by living more than twenty years. for contracts are obligatory. 22. which would render it non effective. contingent or otherwise. NO .The Beneficiary Designation Indorsement in the policy in the name of Dimayuga states that the designation of the beneficiaries is irrevocable: “no right or privilege under the Policy may be exercised. if their terms are clear and leave no room for doubt as to the intention of the contracting parties.Wallace vs Mutual Benefit Life Insurance Co. the action is premature and should have been dismissed. . the lapse of time. 1980. Her interest in the policy was her individual property. by deed or by will. SEPARATE OPINION JOHNSON [concur] . before the policy becomes due. is impossible. and he was thereafter again married to one who sustained the relation of wife to him at the time of his death. of which she cannot be deprived without her consent” . the consequence of which was the Page issuance of the questioned Order granting the petition. one of whom is already deceased while the others are all minors could validly give consent to the change or amendment in the designation of the irrevocable beneficiaries HELD 1.Contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations. In my judgment. PINEDA 175 SCRA 416 PARAS. whenever the essential requisites for their validity are present. no matter in what form they may be. to transfer to any other person the interest of the person named. For the courts to declare now who are the persons entitled to receive the amounts due.On the admitted facts and the authorities supporting the nearly universally accepted principles of insurance. She could keep the policy alive by paying the premiums. thereby rendering the contract of insurance of non effect.In re Dreuil & Co. The plaintiff and the other parties who are claiming an interest in said policy should wait until there is something due them under the same. “In so far as the law of Louisiana is concerned. except under the terms of the contract with the insurance company. as in this case. but for a different reason. It may never become due and payable. He could deprive her of her interest absolutely in but one way. WON the irrevocable beneficiaries herein. thus allowing private respondent to adduce evidence.INSURANCE 55 moment it is issued. Petitioner filed an Urgent Motion to reset hearing as well as its comment and/or Opposition to the respondent’s petition. NO . 2. . Wallace acquired a vested interest therein. or by the failure of the insured to pay the premiums. On Feb. if the insured did not do so. ISSUE 1.

except such as are exempt by law from execution. SUN LIFE ASSURANCE v. and claims belonging to the insolvent. at the time of the assured's death. and effects of the debtor with all his deeds. not exempt by law from execution. Disposition questioned Orders of respondent judge are nullified and set aside. in section 48 of the Insolvency Law. and vice versa. Dy Poco. asserted claims to the proceeds of the policy. 1919. to the effect that the assignee shall have the right and power to recover and to take into his possession. for under subsection 3 of section 70 (a) of the last mentioned law. contains nothing similar to these provisions. with all deeds." Moreover."leviable assets" and "assets in insolvency" are practically coextensive terms. As soon as an assignee is elected or appointed and qualified. all of the estate.Under each of said laws the assignee acquires all the real and personal property. Sun Life Assurance Company of Canada (Sun Life). and effects in the assignee. but payable to insured or his legal representative. 1919. and shall relate back to the acts upon which the adjudication was founded.The parent-insured cannot exercise rights and/or privileges pertaining to the insurance contract. assign and convey to the assignee all the real and personal property. . The Insolvency Law here in force. declares that the assignment to be made by the clerk of the court "shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by law from execution. In connection with the foregoing may be mentioned subsections 1 and 2 of section 36. and could not validly give consent. It must therefore be accepted that this policy had no cash surrender value. . The lower court found that Ingersoll had a better right and ordered Sun Life to pay the insurance proceeds to him. has a right to the proceeds of the insurance HELD NO On the Philippine Insolvency Law (Act No. And this is exactly as it should be: for it cannot be supposed that the Legislature would suppress the right of action of every individual creditor upon the adjudication of insolvency. and it is declared in section 60 that no creditor whose debt is provable under the Act shall be allowed. in consideration of the payment of a stipulated annual premium during the period of the policy. was adjudged an involuntary insolvent by the CFI Manila. but inasmuch as no more than two premiums had been paid upon the policy now in question up to the time of the death of the assured. upon making an order adjudicating any person insolvent. The alleged acquiescence of the 6 children beneficiaries cannot be considered an effective ratification to the change of the beneficiaries from irrevocable to revocable. as assignee. and at the same time allow the insolvent debtor to retain anything subject to the payment of his debts in a normal state of solvency. and while this language is broad. . as well as the opening words of section 33. estate. by section 24. and Tan Sit. though it contains a few provisions from the American Bankruptcy Law of 1898 . 1956) . after the commencement of proceedings in insolvency.the Insolvency Law is in great part a copy of the Insolvency Act of California.500. such elements of property and property right as could be reached and subjected by process of law by any single creditor suing alone. it nevertheless lacks the comprehensiveness of section 70 (a) of the American Bankruptcy Law of 1898 in at least two particulars. for otherwise. the vested rights of the irrevocable beneficiaries would be rendered inconsequential. estate. Hence. the clerk of the court shall. 32. and such assignment shall relate back to the commencement of the proceedings in insolvency. . and this species of property is not enumerated. the court is required. in common with the predecessor laws abovementioned. in determining what elements of value constitute assets in insolvency. 1921 NATURE Action of interpleader FACTS ." indicated in an annexed table. Ingersoll was appointed assignee of his estate.July 10. either by contract or by convention practice of the company in such cases. INGERSOLL 41 PHIL 331 STREET. this provision had not become effective. 1938. before his death. Such assignment shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by law from execution. On whether a policy of insurance having no cash surrender value. and papers relating thereto.April 16. November 8. 1918. payable to the said assured or his assigns on the 21st day of February. to surrender the policy. Neither could they act through their father-insured since their interests are quite divergent from one another. issued a policy of insurance on the life of Dy Poco for US$12. as the property of the debtor. to stay any civil proceedings pending against him. . Tan Sit. the assured. although the same is then attached on mesne process. and on August 21. the trustee in bankruptcy acquires the right to exercise any powers which the insolvent might have exercised for his own benefit. enacted in 1895. and under Page subsection 5 the trustee acquires any property of the insolvent which the latter could by any means have assigned to another. as assignee. or until the premiums had been completely paid for twenty years. and effects of the debtor. . for the benefit of all the creditors of the insolvent. and if he should die before that date then to his legal representatives. as administratix of Dy Poco's estate. Dy Poco died." . is property that may be taken upon execution against him. ISSUE WON Ingersoll. SC is at liberty to consider what elements of value are subject to be taken upon execution. . 1919.INSURANCE 56 . was duly appointed as the administratrix of his intestate estate.Philippine laws declare no exemption with respect to insurance policies. and it does not appear that the company would in accordance with its own usage or otherwise have made any concession to the assured in the event he had desired.Sec 32 of the Insolvency Law among other things.The property and interests of the insolvent which become vested in the assignee of the insolvent are specified in section 32 of the Insolvency Law which reads as follows: "SEC. estate.Both Ingersoll. .These provisions clearly evince an intention to vest in the assignee. assets. On the applicability of the Insolvency Law . and by operation of law shall vest the title to all such property.By the terms of the policy it was provided that after the payment of three full premiums. books. They were minors at the time. and Frank B. the assured could surrender the policy to the company for a "cash surrender value. books and papers relating thereto.June 23. to prosecute to final judgment any action therefor against the debtor. by an instrument under his hand and seal of the court.

" (In re McKinney) . and to be maintained to the credit of the policy. The courts are therefore practically unanimous in refusing to permit the Page assignee in insolvency to wrest from the insolvent a policy of insurance which contains in it no present realizable assets. until three full premiums have been paid. when the risk is greatest. On applicable US case . among items from the ownership of which the assignee is excluded. Furthermore. in section 48 of the Insolvency Law. as well as the opening words of section 33. . to be relieved from all responsibility for the increased risk. . It is the 'net reserve' required by law to be kept by the company for the benefit of the assured. Though this excess of premiums paid is legally the sole property of the company. and that the legal title to the policy was vested in the assignee merely in order to make the surrender valueavailable to him. and at the same time allow the insolvent debtor to retain anything subject to the payment of his debts in a normal state of solvency. SC is at liberty to consider what elements of value are subject to be taken upon execution. This excess in the premium paid over the annual cost of insurance. Hence.Philippine laws declare no exemption with respect to insurance policies. Moreover. which is represented by this accumulating reserve. except to the extent that such insurance contains assets which can be realized upon as of the date when the petition of insolvency is filed. And this is exactly as it should be: for it cannot be supposed that the Legislature would suppress the right of action of every individual creditor upon the adjudication of insolvency. with accumulations of interest. On whether a policy of insurance having no cash surrender value. . by section 24. life insurance is increasingly difficult to obtain with advancing years. such elements of property and property right as could be reached and subjected by process of law by any single creditor suing alone. for the mere purpose of speculating upon the chances of the bankrupt's death. but is inimical to the interests of society. As is well known. . The explanation is to be found in the consideration that the destruction of a contract of life insurance is not only highly prejudicial to the insured and those dependent upon him. As regards everything beyond the surrender value."leviable assets" and "assets in insolvency" are practically coextensive terms. and this species of property is not enumerated. with the obligation to maintain it unimpaired and suitably invested for the benefit of the insured. On the applicability of the Insolvency Law . to the effect that the assignee shall have the right and power to recover and to take into his possession. . though not in law. after the commencement of proceedings in insolvency. to prosecute to final judgment any action therefor against the debtor. except as its custodian.a policy devoid of a cash surrender value cannot be either "leviable assets" or "assets in insolvency. the cost is then so great as to be practically prohibitive to many. upon making an order adjudicating any person insolvent.In re McKinney: no beneficial interest in the policy had ever passed to the assignee over and beyond what constituted the surrender value. A return of a part in some form or other is now Usually made. This is the practical. have no insurable interest in the life of the bankrupt.SC has held that insurance policies having a present cash surrender value are subject to be taken upon execution. the practice is common among insurance companies even now to concede nothing in the character of cash surrender value. it is moneys of the assured deposited with the company in advance to make up the deficiency in later premiums to cover the annual cost of insurance.the assignee in insolvency acquired no beneficial interest in the policy of insurance in question.CONLUSION (from this case and other English and American cases cited following the same opinion): the assignee acquires no beneficial interest in insurance effected on the life of the insolvent. the assignee in bankruptcy would." Moreover. all life insurance policies are declared by law to be assignable. an excess made necessary in order to balance the deficiency of the same premium to meet the annual risk during the latter years of the policy. as he was in fact directed to do.INSURANCE 57 among items from the ownership of which the assignee is excluded. The assignee should surrender the policy upon the payment to him of said value. and vice versa. In connection with the foregoing may be mentioned subsections 1 and 2 of section 36. assets. sec. and that said proceeds should therefore be delivered to his administratrix. still in practical effect. the court is required. The assignee in bankruptcy had no right to keep the estate unsettled for an indefinite period. could well afford to surrender a considerable part of it to the assured. or his representative. "Upon the surrender of the policy before the death of the assured. Formerly the contracts provided — as they still commonly do in the policies issued by fraternal organizations and benefit societies — for the payment of a premium sufficient to keep the estimated risk covered." . instead of being retained by the assured and paid by him to the company in the shape of greatly-increased premiums. Insurance is a species of property that should be conserved and not dissipated.the stipulation providing for a cash surrender value is a comparatively recent innovation in life insurance. and in case of a lapse the policy-holder received nothing. the company. regardless of whether the assignee has an insurable interest in the life of the insured or not (Insurance Act No.Sec 32 of the Insolvency Law among other things. 2427. and one who has gone through the process of bankruptcy usually finds himself in his declining years with the accumulated savings of years swept away and earning power diminished. to stay any civil proceedings pending against him. that its proceeds are not liable for any of the debts provable against the insolvent in the pending proceedings. . though not the legal. So long as the policy remains in force the company has not practically any beneficial interest in it. except such as are exempt by law from execution. and claims belonging to the insolvent. West Coast San Francisco Life Ins. Insolvency is a disaster likely to overtake men in mature life. in determining what elements of value constitute assets in insolvency.These provisions clearly evince an intention to vest in the assignee. declares that the assignment to be made by the clerk of the court "shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by law from execution. is property that may be taken upon execution against him. (Misut Garcia vs. and it is declared in section 60 that no creditor whose debt is provable under the Act shall be allowed.surrender value of a policy "arises from the fact that the fixed annual premiums is much in excess of the annual risk during the earlier years of the policy. Moreover. constitutes the surrender value. after the discharge of the bankrupt. as in this case. all life insurance policies are declared by law to be assignable. but payable to the insured or his legal representative. for the benefit of all the creditors of the insolvent.) . 166). relation of the company to this fund. and even when procurable after the age of fifty. Co. all of the estate. .

INSURANCE 58 regardless of whether the assignee has an insurable interest in the life of the insured or not (Insurance Act No.. they waive the imperfection of the answer and render the omission to answer more fully immaterial. 3) Waiver: While it may be conceded that. a question appears to be not answered at all or to be imperfectly answered. Indeed.Ng presented a claim for payment of the face value of the policy. Sec. that its proceeds are not liable for any of the debts provable against the insolvent in the pending proceedings. and that said proceeds should therefore be delivered to his administratrix. 1982 – Jaime Canilang was diagnosed by Dr. Operation was two years ago in Chinese General Hospital by Dr.On May 12.) . Disposition the judgment appealed from is hereby affirmed. with his wife. Section 32 of Insurance Law [Act No. involving the excision of a portion of the stomach. CHAPTER VI – RESCISSION OF INSURANCE CONTRACTS: CONCEALMENT. all facts within his knowledge which are material to the contract. and as to which he makes no warranty. Claims he is completely recovered. West Coast San Francisco Life Ins. Appellant (Asian Crusader) denied the claim on the ground that the answers given by the insured to the questions appearing in his application for life insurance were untrue. and which the other has not the means of ascertaining. 1962…. therefore. his statement that said tumor was "associated with ulcer of the stomach" should be construed as an expression made in good faith of his belief as to the nature of his ailment and operation. "upon the face of the application.It has also been held "that the concealment must. the same was nevertheless sufficient to have induced appellant to make further inquiries about the ailment and operation of the insured. from the viewpoint of a medical expert. and the insurers issue a policy without any further inquiry. sec. be not only material.He died on Dec 1963 of cancer of the liver with metastasis. Disposition Judgment reversed. Ltd. 1962.) 223 SCRA 443 FELICIANO. 278 of the Insurance Law nevertheless requires that fraudulent intent on the part of the insured be established to entitle the insurer to rescind the contract. ASIAN CRUSADER LIFE ASSURANCE CORP 122 SCRA 461 ESCOLIN." Reasoning 1) The evidence shows that the Insular Life Assurance Co. misled or deceived into entering the contract or in accepting the risk at the rate of premium agreed upon?) HELD NO -"concealment exists where the assured had knowledge of a fact material to the risk. such statement must be presumed to have been made by him without knowledge of its incorrectness and without any deliberate intent on his part to mislead the appellant. (Misut Garcia vs. as beneficiary. It results. 27. 2427.SC has held that insurance policies having a present cash surrender value are subject to be taken upon execution." . because of insured's aforesaid representation. May 30. Such party to a contract of insurance must communicate to the other. Kwong Nam applied for a 20year endowment insurance on his life for the sum of P20. Yap.” Medical report show that insured was operated on for "peptic ulcer"... and honesty. 2427] provides: “The right to information of material facts may be waived either by the terms of insurance or by neglect to make inquiries as to such facts where they are distinctly implied in other facts of which information is communicated. good faith. . & BREACH OF WARRANTIES NG v. with costs against appellant CANILANG v. Claudio to have sinus tachycardia. but fraudulent. ISSUE WON there was concealment (Was appellant. June 17. 1983 FACTS . Co. in good faith. Insular Life denied his application for reinstatement of his lapsed life insurance policy 2) he gave the appellant's medical examiner false and misleading information as to his ailment and previous operation when he said he was “operated on for a Tumor [mayoma] of the stomach… associated with ulcer of stomach. All premiums had been paid at the time of his death. Sun Life is directed to pay the proceeds of the policy to Tan Sit." In the absence of evidence that the insured had sufficient medical knowledge as to enable him to distinguish between "peptic ulcer" and "a tumor". in the absence of inquiries. He was ." -Kwong Nam had informed the appellant's medical examiner that the tumor for which he was operated on was ''associated with ulcer of the stomach. that when on May 12.” It has been held that where." Page Court does not clearly and satisfactorily establish that defense. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant. the information communicated was imperfect. or the fact must have been intentionally withheld. not tumor. Tumor taken out was hard and of a hen's egg size. but he designedly and intentionally withholds the same.the assignee in insolvency acquired no beneficial interest in the policy of insurance in question. . And as correctly observed by the lower court. 166). Ng Gan Zee. 41 Phil. CA (GREAT ASSURANCE CORP. 1962 Kwong Nam answered `No' to the question whether any life insurance company ever refused his application for reinstatement of a lapsed policy he did not misrepresent any fact.a policy devoid of a cash surrender value cannot be either "leviable assets" or "assets in insolvency.June 18. 258. 1993 PACIFIC LIFE NATURE Petition for review on certiorari of the decision of the Court of Appeals FACTS .000. and fair dealing requires that he should communicate it to the assurer. The evidence before the 8 "Sec. approved Kwong Nam's request for reinstatement and amendment of his lapsed insurance policy on April 24." . . MISREPRESENTATION. 2) Assuming that the aforesaid answer given by the insured is false. -Appellant: the insured was guilty of misrepresentation when 1) he answered "No" to the question (in the application) of "Has any life insurance company ever refused your application for insurance or for reinstatement of a lapsed policy or offered you a policy different from that applied for?" when in fact. "misrepresentation as a defense of the insurer to avoid liability is an `affirmative’ defense.

2. 812858 . by the judge ultimately.R. at the very least. > She also argues that the CA erred in not holding that the issue in the case agreed upon between the parties before the Insurance Commission is whether or not Jaime 'intentionally' made material concealment in stating his state of health. . ISSUES 1.Great Pacific presented as witness Dr.August 5. . She testified that she was not aware of her husband’s ailments and that she thought he had died from a kidney disorder. “the waiver of medical examination in a non-medical insurance contract renders even more material the information inquired of the applicant concerning previous condition of health and diseases suffered. 27 of the 1978 Insurance Code reads that “a concealment entitles the injured party to rescind a contract of insurance. > The last medical consultation took place just the day before the insurance application was filed.Had Canilang disclosed his visits to his doctor. Grade 4. of course. that "probable and reasonable influence of the farts" concealed must.September 7: he submitted part I of his application which is the declaration made by him to an agent of defendant ." .September 5. 1982.August 4.” which does not include the words “whether intentional or unintentional” from the previous statutes. 874 of the phrase "whether intentional or unintentional" merely underscored the fact that all throughout (from 1914 to 1985).September 8: defendant issued to the insured Policy No. > It also found that the failure of Jaime to disclose previous medical consultation and treatment constituted material information which should have been communicated to Great Pacific to enable the latter to make proper inquiries. YES Ratio Section 27 of the Insurance Code of 1978 is properly read as referring to "any concealment without regard to whether such concealment is intentional or unintentional. .P. . including attorney’s fees. Reasoning . Respondents’ Comments: > The CA reversed the Insurance Commissioner’s decision. Thelma filed her claim but the insurance company refused to grant it on the ground that Jaime had concealed information. WON the information withheld would have been material to Great Pacific’s decision to grant Jaime the insurance policy HELD 1. justifying the denial of the claim. Luke's Hospital for medical treatment but he died on February 27. > Jaime could not have been unaware that his heart beat would at times rise to high and alarming levels and that he had consulted a doctor twice two months before applying for non-medical insurance. May 29. the nature of the facts not conveyed to the insurer was such that the failure to communicate must have been intentional rather than merely inadvertent.As held in the case of Saturnino vs. advanced . in the insurance application. required a higher premium for the same coverage. be determined objectively. holding that Jaime’s illness was not that serious as to Great Pacific’s decision to insure him and that there was no concealment on the part of Jaime with regard to his illness. .December 27. Petitioners’ Claim: > Thelma argues that the non-disclosure of Jaime did not amount to fraud. SP No.Art. 1951. 1950: the insured entered St. Reasoning .INSURANCE 59 directed by the doctor to take a tranquilizer (Trazepam) and a beta-blocker drug (Aptin). for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. Blg.The Insurance Commissioner ordered Great Pacific to pay Thelma the insurance proceeds. 08696 is hereby AFFIRMED. YES Ratio Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the communication should have been made. The restoration in 1985 by B. the statute did not require proof that concealment must be "intentional" in order to authorize rescission by the injured party. he died of "infiltrating medullary carcinoma. 1983 – Jaime died of congestive heart failure. . holding that the use of the word 'intentionally" by the Insurance Commissioner in defining and resolving the issue agreed upon by the parties at pre-trial before the Insurance Commissioner was not supported by the evidence and that the issue agreed upon by the parties had been whether Jaime made a material concealment as to the state of his health at the time of the filing of insurance application. 1982 – Jaime consulted Dr.August 3.700 effective August 9. 1950: Yu Pang Eng submitted parts II and III of his application for insurance consisting of the medical declaration made by him to the medical examiner of defendant and the medical examiner's report .” Disposition the Petition for Review is DENIED for lack of merit and the Decision of the Court of Appeals dated 16 October 1989 in C.According to the death certificate. anemia and chronic anemia. it may be reasonably assumed that Great Pacific would have made further inquiries and would have probably refused to issue a non-medical insurance policy or.The information which Jaime failed to disclose was material to the ability of Great Pacific to estimate the probable risk he presented as a subject of life insurance. . PhilippineAmerican Life Insurance. the diagnosis made and the medicines prescribed by such doctor. 1982 – Jaime applied for a nonmedical insurance policy with Great Pacific Life Assurance Company. YU PANG CHENG v. He named his wife Thelma as his beneficiary.Thelma filed a complaint against Great Pacific to recover the insurance proceeds. CA 105 PHIL 930 BAUTISTA ANGELO. He was issue the policy with a face value of P19. Quismorio who testified that Jaime’s insurance application was the basis of his medical declaration and she explained that an applicant was required to undergo medical examination only if the applicant had disclosed that he had previously been consulted with a doctor and had been hospitalized. WON Jaime intentionally withheld information from Great Pacific 2. .A. .In the case at bar. Claudio again and was diagnosed to have acute bronchitis. The Insurance Commissioner relied on this deletion in arguing that the statute intended to limit the kinds of concealment which generate a right to rescind on the part of the injured party to "intentional concealments. 1959 FACTS .-G. in assessing the risk involved in making or omitting to make further inquiries and in accepting the Page application for insurance.

a debtor of Pacific Banking in the amount of not less P800. second and third floors of the building situated at number 256 Jaboneros St.: "One ground for the rescission of a contract of insurance under the Insurance Act is 'a concealment'. Fainting-spells or Unconsciousness". which may have a direct connection with his previous illness.000.The insured.October 21. . . November 28. .Said policy was duly endorsed to Pacific Banking as mortgagee/trustor of the properties insured. . abdominal pains and tarry stools". caused by fire to its property consisting of stocks. the truth or falsity of the answers become the determining factor. or his concealment of the fact that he was hospitalized and treated for sometime of peptic ulcer and had suffered from "dizziness.Our law even requires the insured to communicate to the insurer all facts within his knowledge which are material to the contract and which the other party has not the means of ascertaining (Section 27). Whether intentional or unintentional. the contract of insurance apparently set forth therein was never legally existent. according to the death certificate. 1950. in his application for insurance.It appears that the insured entered the Chinese General Hospital for medical treatment on January 29..Had defendant been given such opportunity.Insured was at the time of the issuance of the policy and is up to this time. 4. . Manila.00 and the goods described in the policy were held in trust by the insured for the Pacific Banking under thrust receipts. machinery and equipment while contained in the ground.Argente vs. advanced cardiac and of lesser curvature. which in section 25 is defined 'A neglect to communicate that which a party knows and ought to communicate. Act No.While the aforesaid policy was in full force and effect. particularly with regard to "Gastritis. ASSURANCE CORPORATION) 168 SCRA 1 PARAS.1963: an open Fire Policy was issued to the Paramount Shirt Manufacturing Co. demanded from defendant the payment of the proceeds of the insurance policy and when the demand was refused.INSURANCE 60 cardiac and of lesser curvature. deprived defendant of the opportunity to make the necessary inquiry as to the nature of his past illness so that it may form its estimate relative to the approval of his application. Counsel for the Pacific Banking sent a . with the knowledge and consent of Oriental Assurance to the effect that "loss if any under this policy is payable to the Pacific Banking Corporation"." Disposition Decision affirmed. fixtures. for a period of one year commencing from that date to October 21. materials and supplies usual to a shirt factory. "Vertigo. and the materiality is to be determined not by the event but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due (Section 30).00. the concealment entitles the insurer to rescind the contract of insurance (Section 26). In fact. stomach metastases spleen. by which Oriental Assurance Corporation bound itself to indemnify the insured for any loss or damage. he brought the present action. . which had complaint for a sum of money in Pacific Banking against Oriental FACTS . . a fire broke out on the subject premises destroying the goods contained in its ground and second floors. Have you ever had any of the following diseases or symtoms? Each question must be read and answered "Yes" or "No. the insured died of "infiltrating medullary carcinoma. In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue. anemia." . CA (supra p. Fainting-spells or Unconsciouness? No. (insured). stated the following in answering the questions propounded to him: 14. HELD .' Appellant argues that the concealment was immaterial and insufficient to avoid the policy. the insurance would never have been granted.It is apparent that when the insured gave his answers regarding his previous ailment. defendant would probably had never consented to the issuance of the policy in question.The negative answers given by the insured regarding his previous ailment. Have you ever consulted any physician riot included in any of the above answers? Give names and address or physicians list ailments or accidents and date. 1964. 2427). 1988 NATURE Petition for review which set aside the in turn granted the civil case filed by Assurance. Dizziness. including furniture. Ulcer of the Stomach or any disease of that organ" and "Vertigo. No. "Gastritis. San Nicolas." . .Plaintiff. .15. not exceeding P61. . Grade. whereas his application for insurance wherein he stated his answers to the questions propounded to him by the examining physician of defendant was submitted to defendant on September 5. brother and beneficiary of the insured." ISSUE WON the insured is guilty of concealment of some facts material to the risk insured against which has the effect of avoiding the policy as found by respondent court. CA (ORIENTAL on certiorari of the CA decision.An X-ray picture of his stomach was taken and the diagnosis made of him by his doctors showed that his illness was "peptic ulcer. We cannot agree. he concealed the ailment of which he was treated in the Chinese General Hospital which precisely has direct connection with the subject of the questions propounded.000.Our Insurance Law provides that "A neglect to communicate that which a party knows and ought to communicate. is called concealment" (Section 25. 1950.34) PACIFIC BANKING CORP v. Tumors or Ulcers of any kind? No. . considering the previous illness of the insured as disclosed by the records of the Chinese General Hospital. It can fairly be assumed that had the true Page facts been disclosed by the assured. 1950. Ulcer of the Stomach or any disease of that organ? No. "Cancer. stomach metastases spleen". If the policy was procured by fraudulent representations. Dizziness. GREAT PACIFIC LIFE v.It should be noted that the insured's confinement in the Chinese General Hospital took place from January 29. decision of CFI Manila. 1950 having stayed there up to February 11. 1950 to February 11. bleeding. particularly in his declarations to the examining physician. West Coast Life Insurance Co. .".

the mortgagee/ trustor shall.000. if any. shall not be invalidated by any act or neglect except fraud or misrepresentation.CFI denied Oriental Assurance's motion on the ground that since the defense was raised for the first time. Oriental Assurance informed counsel that it was not yet ready to accede to the latter's demand as the former is awaiting the final report of the insurance adjuster.” . Hence.Policy Condition No.000.Argument that notice of co-insurances may be made orally is preposterous and negates policy condition No.00 with Asian Surety.00 with Victory .INSURANCE 61 letter of demand to Oriental Assurance for indemnity due to the loss of property by fire. or which may subsequently be effected. cannot be entitled to such proceeds. and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage. Representations of facts are the foundation of the contract and if the foundation does Page not exist. on demand pay the same.11. a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not.” . 3. .The fact of fraud was tried by express or at least implied consent of the parties. determination of the liability of Oriental Assurance could not be had. all benefit under this policy shall be forfeited. Concrete evidence of fraud or false declaration by the insured was furnished by the Pacific Banking itself when the facts alleged in the policy under clauses "Co-Insurances Declared" and "Other Insurance Clause" are materially different from the actual number of co-insurances taken over the subject property. Bayne Adjustment Company. misrepresentation.00 with Wellington Insurance. or to terminate a contract which has once been made. shall be payable to the PACIFIC BANKING CORPORATION Manila mortgagee/trustor as its interest may appear. that was deception. presented the very evidence that proved its existence.000. provided.NOTE: the defense of fraud and/or violation of nondeclaration of co-insurances was not pleaded in the answer. undertaken by insured Paramount on the same property covered by its policy with Oriental Assurance whereas the only co-insurances declared in the subject policy are those of P30.' " CFI eventually adjudged Oriental Assurance liable to the Pacific Banking under the said contract of insurance. 3 of the policy in relation to the other Insurance Clause. . it being hereby understood and agreed that this insurance as to the interest of the mortgagee/trustor only herein. that in case the mortgagor or owner/ trustee neglects or refuses to pay any premium.00 with Malayan. the insured had been guilty of a false declaration. "in order to prove that 'insured has committed a violation of condition No. 3 explicitly provides: “The Insured shall give notice to the Company of any insurance already effected. Oriental Asurance was allowed to present additional evidence. But upon MR. or arson of the mortgagor or owner/trustee of the property insured. covering any of the property hereby insured. Pacific Banking field before CFI an action for a sum of money against the Oriental Assurance. and which cannot be validated either by time or by ratification. Falsehood in such representations is not shown to vary or add to the contract. Oriental Assurance defenses (a) lack of formal claim by insured over the loss and (b) premature filing of the suit as neither plaintiff nor insured had submitted any proof of loss on the basis of which defendant would determine its liability and the amount thereof. Pacific Banking's counsel replied asking the insurance adjuster to verify from the records of the Bureau of Customs the entries of merchandise taken into the customs bonded warehouse razed by fire as a reliable proof of loss. H. and P25. Consequently. had the insurer known that there were many co-insurances. 00 with Empire Surety and P250. nor submitted proof of loss which is a clear violation of Policy Condition No. . forfeited said right. . . or in the very least. It is but fair and just that where the insured who is primarily entitled to receive the proceeds of the policy has by its fraud and/or misrepresentation. or misrepresentation or arson.000. but to show that no contract has ever existed (Tolentino).00 with South Sea. with more reason Pacific Banking which is merely claiming as indorsee of said insured.000. and for which reason. namely: fraud. as if it had never been entered into.It is not disputed that the insured failed to reveal before the loss three other insurances.H. . it could have hesitated or plainly desisted from entering into such contract. . . A void or inexistent contract is one which has no force and effect from the very beginning.000. cannot be invalidated. By reason of said unrevealed insurances. 20 which requires every notice and other communications to the insurer to be written or printed. Bayne Adjustment Co.The crux of the controversy centers on two points: (a) unrevealed co-insurances which violated policy conditions No. the superstructure does not arise. ISSUES 1. under this policy. 2. . P25.For failure of the insurance company to pay the loss as demanded.Said insurance adjuster notified counsel for the Pacific Banking that the insured under the policy had not filed any claim with it.As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property. Pacific Banking's MR denied.Subject mortgage clause pecifically provides: “Loss. it must be deemed to have waived the requirement of proof of loss. and (b) failure of the insured to file the required proof of loss prior to court action. WON mortgagee/assignee can still claim from the insurance HELD 1. also not pleaded in the Motion to Dismiss. the whole foundation of the contract fails. WON insured is guilty of fraud 2. in the principal sum of P61. YES . Case was submitted for decision. . the insured was guilty of clear fraud.Concealment of the aforecited co-insurances can easily be fraud.000.Pacific Banking's contention that the allegation of fraud is but a mere inference or suspicion is untenable. . Otherwise stated.H.The paragraph clearly states the exceptions to the general rule that insurance as to the interest of the mortgagee. NO . Pacific Banking did not only object to the introduction of evidence but on the contrary.Court of Appeals reversed. the total absence of such notice nullifies the policy.00 issued in favor of Paramount Shirt Manufacturing Co. Pacific Banking > presented evidence that insured has undeclared co-insurances with the following: P30. either to the Oriental Assurance or its adjuster H. P50. the risk does not attach and the policy never becomes a contract between the parties.

the Court can consider a fact which surfaced only after trial proper. it follows that Oriental Assurance could not be deemed to have finally rejected Pacific Banking's claim and therefore the latter's cause of action had not yet arisen. The insured is specifically required to disclose to the insurer matters relating to his health. . vouchers. contracts of insurance.Pacific Banking prematurely filed the civil case and dismissal thereof was warranted under the circumstances. kidney. CA affirmed. and in order to recover. The insured gave false statements in the application when he answered in the negative to the question “have you ever had or sought advice for urine. Since the required claim by insured. 1988: Bacani and her husband filed for specific performance against Sunlife. RTC granted the plea on the ground that that the facts concealed by the insured were made in good faith and under the belief that they need not be disclosed. and underwent tests. FACTS Page . was confined. Bernarda Bacani (respondent).April 15.Oriental Assurance and its adjuster notified Pacific Banking that insured had not yet filed a written claim nor submitted the supporting documents in compliance with the requirements set forth in the policy. Courts are not permitted to make contracts for the parties.November 17.June 26. procure and give to the company all such further particulars.Generally. Reasoning SEC. and such violation or want of performance has not been waived by the insurer. The agreement has the force of law between the parties. 26 (IC) . . policy condition No.It appearing that insured has violated or failed to perform the conditions under No. much less the herein Pacific Banking. Bacani procured a life insurance contract for himself from SUNLIFE (petitioner) valued at P100K. As before such final rejection. and that the disclosure was not material since the policy was non-medical. thus rescission of the contract may be invoked by the insurance company. SUNLIFE ASSURANCE COMPANY v. June 22. The parties have a right to impose such reasonable conditions at the time of the making of the contract as they may deem wise and necessary. 3 and 11 of the contract.Be that as it may. 1995 NATURE A petition for review on certiorari.Sunlife discovered that two weeks prior to the issuance. if any. If such terms are clear and unambiguous. insured was diagnosed with renal failure. Otherwise stated. . Instead. 11 specifically provides that the insured shall on the happening of any loss or damage give notice to the company and shall within fifteen (15) days after such loss or damage deliver to the Oriental Assurance (a) a claim in writing giving particular account as to the articles or goods destroyed and the amount of the loss or damage and (b) particulars of all other insurances. . inventory needed by Oriental Assurance or its adjuster to ascertain the amount of loss and after compliance await the final rejection of its claim. but when the policy provides that no action shall be brought unless the claim is first presented extrajudicially in the manner provided in the policy. like other contracts. the cause of action will accrue from the time the insurer finally rejects the claim for payment. documents. ISSUE WON the concealment renders the insurance policy rescissible HELD YES Ratio The terms of the contract are clear. 1987: the insured died in a plane crash.Sunlife appealed to the CA. papers.Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. 1986: Robert John B.INSURANCE 62 . the insured cannot recover. Pacific Banking merely wrote letters to Oriental Assurance to serve as a notice of loss. plans. The terms of the policy constitute the measure of the insurer's liability. The compliance of the insured with the terms of the policy is a condition precedent to the light of recovery. Pacific Banking shifted upon Oriental Assurance the burden of fishing out the necessary information to ascertain the particular account of the articles destroyed by fire as well as the amount of loss. invoices. The designated beneficiary was his mother. Indeed. . the function and duty of the courts is simply to enforce and carry out the contracts actually made. the former did not furnish the latter whatever pertinent documents were necessary to prove and estimate its loss. . insured was required "at his own expense to produce. the cause of action on the policy accrues when the loss occurs. . Despite the notice. books. and the policy was entered into by the insured in good faith. CA (SPS. the law does not encourage unnecessary litigation. the latter remained unheedful. BACANI) 245 SCRA 268 QUIASON. are to be construed according to the sense and meaning of the terms which the parties themselves have used. Petitioner conducted an investigation and its findings prompted it to reject the claim on the ground that the insured did not disclose facts material to the issuance of the policy. .Evidence adduced shows that 24 days after the fire. they must be taken and understood in their plain. Bernarda Bacani filed a claim with Sunlife. . specifications. seeking the benefits of the insurance policy taken by her son. there is a need to make its own finding to support its conclusion. together with the preliminary submittal of relevant documents had not been complied with. SC has ample authority to give beyond the pleadings where in the interest of justice and the promotion of public policy. ordinary and popular sense. Petitioner’s Claim > The insured did not disclose facts relevant to the issuance of the policy.In the case at bar. Respondents’ Comments > The actual cause of death was not relevant to the concealed information. Disposition Petition dismissed. . thereafter. the insured must show himself within those terms. 11 is a requirement sine qua non to the right to maintain an action as prior thereto no violation of Pacific Banking's right can be attributable to Oriental Assurance. bladder disorder?” . Compliance with condition No. proofs and information with respect to the claim". Pacific Banking should have endeavored to file the formal claim and procure all the documents. While it is a cardinal principle of insurance law that a policy or contract of insurance is to be construed liberally in favor of the insured and strictly as against the insurer company yet. but the latter denied the appeal on the ground that the cause of death was unrelated to the facts concealed by the insured. Likewise. there was no real necessity for bringing suit. duplicates or copies thereof.

. December 17. .Qua Chee Gan insured 4 of his bodegas with Law Union & Rock Insurance Co in 1937. intimidation. It is sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries Disposition Petition is granted and the decision of CA is reversed and set aside. said policy being in force. Qua Chee Gan submitted the corresponding fire claims. . . These bodegas were used for the storage of stocks of copra and of hemp.Defendant set forth in special defense that the insurance policy issued in the name of Dominador Albay had been obtained through fraud and deceit known and consented to by the interested parties and is therefore completely illegal.000.A criminal case for frustrated estafa was filed by defendant against Ponciano Remigio. claiming violation of warranties and conditions. P370. and that the fire had been deliberately caused by the insured or by other persons in connivance with him.It is proven that the signatures on the insurance applications reading "Dominado Albay" are false and forged. They were acquitted. and ineffective. . nor can they produce in the present suit the force of res adjudicata.000). . .Qua Chee Gan. that at the time of the application for insurance and the issuance of the policy which is the subject matter of this suit the real Dominador Albay was informed of all those Page machinations. but Castor Garcia who was positively identified by Dr. Disposition The judgment appealed from is reversed and the defendant absolved from the complaint without special finding as to the costs. 31 (IC) Materiality is to be determined not by the event. wherefore it is plain that the insurance contract between the defendant and Dominador Albay is null and void because it is false. .The information which the insured failed to disclose was material and relevant to the approval and the issuance of the insurance policy. 263 TORRES. WON the claims contained false and fraudulent statements .INSURANCE 63 A neglect to communicate that which a party knows and ought to communicate. 1916 NATURE Appeal filed through bill of exceptions from the judgment of the CFI FACTS . despite this nullity.The waiver of a medical examination [in a nonmedical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered. 1955 FACTS . still it refused and continues to refuse to pay to the plaintiff the value of the policy. WON Qua Chee Gan is guilty of overvaluation 4. and in any of such cases the contract is void. naming as the beneficiary in case of his death the plaintiff Francisca Eguaras. They were acquitted. Reasoning . but solely by the probable and reasonable influence of the facts upon the party to whom communication is due. . void.This civil suit was then instituted to claim against the insurance company. Fire adjusters of the company conducted an extensive investigation. that. or deceit. violence.Good faith is no defense in concealment. fulfillment whereof is claimed. WON the insured violated the Hemp warranty 3. ISSUES 1. that after compliance with the requisites and the investigation carried on by the defendant company. GREAT EASTERN 33 PHIL. The matters concealed would have definitely affected petitioner's action on his application. WON there was an error in the amount of copra and hemp lost 6. 1. LAW UNION AND ROCK 98 PHIL 85 REYES.Francisca Eguaras filed a written complaint in court. QUA CHEE GAN v. Castor Garcia and Francisca Eguaras. totaling P398.81 (but reduced to the full amount of the insurance. January 24. 2 and 4. alleging as a cause of action that her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure his life for the sum of P5. and claim that the judgment produces the effect of res judicata in the present suit. . WON Qua Chee Gan caused the fire 5. filing of fraudulent claims. no crime was committed. WON there was a breach of the fire hydrant warranty 2. in forming his estimate of the disadvantages of the proposed contract or in making his inquiries . to pay. either by approving it with the corresponding adjustment for a higher premium or rejecting the same. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. with the merchandise stored therein. for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. gutted and completely destroyed Bodegas Nos. is called a concealment. the insured died.Anent the finding that the facts concealed had no bearing to the cause of death of the insured. but it was conclusively demonstrated by the trial that deceit entered into the insurance contract. It appears that such concealment was deliberate on the part of the insured. fraudulent and illegal. EGUARAS v. SEC. it accepted the application for insurance and issued the policy.Fire of undetermined origin that broke out in the early morning of July 21. his brother and his employees were tried for arson.562. and lasted almost one week. Vidal to be examined was not the real Dominador Albay. that the person who presented himself to Dr.Qua Chee Gan informed the insurance company of the fire. Vidal. even though. ISSUE WON the life insurance obtained by Dominador Albay was issued through fraud and deceit HELD YES Ratio In a contract where one of the contracting parties may have given his consent through error. the Insurance Company resisted payment. baled and loose. and therefore the conclusions reached by the court in the judgment it rendered in the criminal proceedings for estafa do not affect this suit. where counsel of the insurance company acted as a private prosecutor. and despite the fact that the beneficiary submitted satisfactory proofs of his death and that the defendant company investigated the event. The CFI ruled in favor of Qua Chee Gan and ordered Law Union Rock Co. 1940. There may not have been estafa in the case at bar.

The charge that the insured failed or refused to submit to the examiners of the insurer the books. It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the so-called "hemp warranty. and is decidedly ambiguous and uncertain. more than a slight exaggeration" that would entitle the insurer to avoid the policy. Alexander D. the Court referred the controversy to a government auditor. since the proof to establish the defense of connivance at the fire in order to defraud the insurer "cannot be materially less convincing than that required in order to convict the insured of the crime of arson. and received the corresponding premiums. 17 Phil. altho omitted in the claims. the lack of fraudulent intent would not authorize the collection of the expected profit . Certainly. and must yield to the contradictory testimony of engineer Andres Bolinas. but the latter reached a different result from the other two. Of course. for in ordinary parlance. that the 1939 would pass unnoticed by the insurance agents. that was likewise explained to our satisfaction and that of the trial Court. NO .The insurance company avers that the insured violated the hemp warranty when it admitted that it had 36 cans of gasoline in the building.For example. and if he was able to do so. more than a mere error in opinion. . British American Ass.In view of the discrepancy in the valuations between the insured and the adjuster Stewart for the insurer. NO . duly explained by him to the Court a quo. was based on inferences from the photographs and traces found after the fire. and that this same agent had paid the loss caused by the 1939 fire.Another point that is in favor of the insured is that the gasoline kept in Bodega No. This defense is fatally undermined by the established fact that. we find no error in the trial Court's acceptance of the insured's explanation that the omission in Exhibits EE and FF was due to inadvertance. more than inadvertence of mistake. had the insured acted with fraudulent intent. especially to avoid a forfeiture . vouchers. The rule is that to avoid a policy. and no reason has been shown to alter this finding. 2. to judge from the decision in the criminal case. KK and WW. Compared with other cases of over-valuation recorded in our judicial annals. Here." (Bachrach vs. Clearly then. and of Bank Appraiser Loreto Samson. the 20 per cent excess in the case of the insured is not by itself sufficient to establish fraudulent intent. was explained by the insured as caused by his belief that he was entitled to include in the claim his expected profit on the 70 per cent of the hemp. the occurrence of previous fires in the premises insured in 1939. no motive appears for attempt to defraud the insurer. notwithstanding the insurer's refusal to pay the value of the policies the extensive resources of the insured enabled him to pay off the National Bank in a short time. presumably in order to pay off the Philippine National Bank. and can not be regarded as "more than misstatement. . however. again. are in a position to understand or determine "flash point below 003o Fahrenheit. We are in agreement with the trial Court that the appellant is barred by waiver (or rather estoppel) to claim violation of the so-called fire hydrants warranty. who examined the premises during and after the fire. 555. caused by his imperfect knowledge of English. And how many insured." The cause relied upon by the insurer speaks of "oils (animal and/or vegetable and/or mineral and/or their liquid products having a flash point below 300o Fahrenheit". 2 was only incidental to his business. for the insured could hardly expect under such circumstances. were nevertheless revealed by the insured in his claims Exhibits Q (filed simultaneously with them). nothing prevented him from increasing the value of all of his copra. the false swearing must be willful and with intent to defraud which was not the cause.This defense is predicted on the assumption that the insured was in financial difficulties and set the fire to defraud the insurance company. the 20 per cent overclaim on 70 per cent of the hemo stock. "It is well settled that the keeping of inflammable oils on the premises though prohibited by the policy does not void it if such keeping is incidental to the business. to which most of the insured hemp and copra was pledged. and specially of the then Chief of the Loan Department of the National Bank's Legaspi branch. appears puny by comparison (compared to other cases cited by the court).As to the defense that the burned bodegas could not possibly have contained the quantities of copra and hemp stated in the fire claims. inferences and conclusions of its adjuster investigator. But the trial Court found that the Page discrepancies were a result of the insured's erroneous interpretation of the provisions of the insurance policies and claim forms. the insurer's evidence.INSURANCE 64 HELD 1. but he only had 2.. NO . it may well be wondered. is practically identical in both cases and must lead to the same result. who actually saw the contents of the bodegas shortly before the fire. and that the misstatements were innocently made and without intent to defraud. While the acquittal of the insured in the arson case is not res judicata on the present civil action. the appellant nevertheless issued the policies in question subject to such warranty. Apolonio Ramos. "Oils" mean "lubricants" and not gasoline or kerosene. 560) 3. This also applies to the alleged fraudulent claim for burned empty sacks. the insured's overclaim of 20 per cent in the case at bar.It is argued that he should have 11 fire hydrants in the compound. because the same was already contracted for and sold to other parties before the fire occurred. the insurer's case rests almost exclusively on the estimates. NO . NO . Stewart. by reason of the exclusive control of the insurance company over the terms and phraseology of the contract. being no more than a customary 2 day's supply for the five or six motor vehicles used for transporting of the stored merchandise). etc. the ambiguity must be held strictly against the insurer and liberally in favor of the insured. Considering that all these claims were submitted to the smae agent. Exhibits EE and FF.Appellant insurance company also contends that the claims filed by the insured contained false and fraudulent statements that avoided the insurance policy. Co. 5. 4. demanded by them was found unsubstantiated by the trial Court. Similarly. for the reason that knowing fully all that the number of hydrants demanded therein never existed from the very beginning. NO . the charge of fraudulent overvaluation cannot be seriously entertained. Not only that. but Ramos reported two different valuations that could be reached according to the methods employed. It is well to note that the overcharge of 20 per cent was claimed only on a part (70 per cent) of the hemp stock. His testimony. Porfirio Barrios. The trial court’s ruling must be upheld. hemp and buildings in the same proportion. while inspecting them for the mortgagee Bank 6.

Ana and Jose Geronimo del Rosario on the other. on May 15. he should fully and fairly disclose HELD YES ." but later Doctor Domingo made a diagnosis of probable "manic-depressive psychosis. made a final diagnosis of "phycho-neurosis. to the Meisic police station. . If the policy was procured by fraudulent representations. 1928 FACTS . failed to record them in the medical reports.000 issued by the West Coast Life Insurance Co.Bernardo Argente and his wife applications’ were false with respect to their state of health during the period of five years preceding the date of such applications and that they knew the representations made by them in their applications were false. on May 19. all the facts concerning their previous illnesses and medical attendance. each of them was required to file a certificate of health before the policy was delivered to them.It is admitted that it appears in the Medical Examiner's Report that Bernardo Argente gave false responses.000. Trial judge found with the insurance company with regard to the question of fact. March 19. Ana. the contract of insurance apparently set forth therein was never legally existent. Vicenta de Ocampo. yet if it were material to the risk and such as the plaintiff should have known to be so. But it is held that if untrue or false answers are given in response to inquiries and they relate to material facts the policy is avoided without regard to the knowledge or fraud of assured. Cesareo Sta. presumably acting in collusion with the insurance agent. not disputed that Vicenta de Ocampo was taken by a patrolman. and from there was transferred to the San Lazaro Hospital. second edition. signed a like application for the same policy. but that Doctor Sta. Fraud in obtaining the policy was pleaded by way of special defense.. 'It does not seem to be necessary . a medical examiner for the West Coast Life Insurance Co. volume 3. yet alleges that both he and his wife revealed to the company's physician. Apolonio Espiritu. SC agrees. Ana to falsify the Medical Examiner's Reports and thereby not only jeopardize his career as a physician. 1925. The question arises as to the state of the law in relation thereto. Following investigation conducted by the Manager of the Manila office of the insurance company.Bernardo Argente. suppression of the truth should have been willful.Bernardo Argente and his wife was examined by Dr. it would render the policy void. and the trial Court correctly deducted the same from its award. therefore.000 was issued to Bernardo Argente and his wife as of May 15. The insurer. On the issue thus suggested. WEST COAST LIFE 51 PHIL 725 MALCOLM. Disposition Decision affirmed ARGENTE v. must be. which did not show previous and existing health problems. . Doctor Sta.' If it were but an inadvertent omission. with the result that the complaint was dismissed. at the request of her husband. ISSUE WON the contract of insurance may be rescinded Page diseases were untrue. . her case was diagnosed by the admitting physician as "alcoholism.In Joyce. although under the statute statements are representations which must be fraudulent to avoid the policy. while readily conceding most of the facts herein narrated. . the insurance would never have been granted. and his wife." In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning ." . on the one hand. As well as with the Medical Examiner's Report that Vicenta de Ocampo. later in Mary Chiles Hospital. Jose Geronimo del Rosario. 1925. And a concealment of such facts vitiates the policy. the latter having died on November 18. the truth or falsity of the answers become the determining factor.INSURANCE 65 under the terms of the polices. the court adopted the theory of the defendant. or which ought to be or are presumed to be known by him." and still. Vicenta de Ocampo died of cerebral apoplexy.On November 18. or accepting it at the rate of premium agreed upon. . . is found the following: "The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into accepting the risk. as well as all material facts which directly tend to increase the hazard or risk which are known by the assured. It can fairly be assumed that had the true facts been disclosed by the assured. Chapter LV. In view of the fact that more than thirty days had elapsed since the applicants were examined by the company's physician. 1925. . xxx xxx xxx "If the assured has exclusive knowledge of material facts.A temporary policy for P15. The wife. 1924. and wrote him to the effect that the claim was rejected because the insurance was obtained through fraud and misrepresentation. 1925. It is.This is an action upon a joint life insurance policy for P15. Vicenta de Ocampo. The principal question. Ana. and of the testimony of Doctor Sta. Thereafter Bernardo Argente presented a claim. but also gravely implicate himself criminally. . In San Lazaro Hospital. with costs. relying upon the belief that the assured will disclose every material fact within his actual or presumed knowledge. There appears no motive whatever on the part of Doctor Sta. Was the assurer misled or deceived into entering a contract obligation or in fixing the premium of insurance by a withholding of material information or facts within the assured's knowledge or presumed knowledge? "It therefore follows that the assurer in assuming a risk is entitled to know every material fact of which the assured has exclusive or peculiar knowledge. however.One ground for the rescission of a contract of insurance under the Insurance Act is "a concealment. The Law of Insurance. -Bernardo Argente signed an application for joint insurance with his wife in the sum of P2. . The evidence on these points consists of the testimony of the plaintiff and his subordinate clerk. West Coast Life Insurance Co. Bernardo Argente. So under certain codes the important inquiries are whether the concealment was willful and related to a matter material to the risk. and held the insurance policy null and void. that the . Ana. and he is thereby induced to estimate the risk upon a false basis that it does not exist. is misled into a belief that the circumstance withheld does not exist. it was apparently disclosed that the answers given by the insured in their medical examinations with regard to their health and previous illnesses and medical attendance were untrue. This was rejected by the Trial Court. refused to pay the claim of Bernardo Argente." which in section 25 is defined as "A neglect to communicate that which a party knows and ought to communicate. in favor of Bernardo Argente. .

makes use of the imperative "must" instead of the permissive "may. The latter paid the P1077. -On May 28. then the inquiry should be made. however. Helen died of influenza. where any of the material representations are false.On April 30. where in addition to specifically named diseases the insured was asked whether he had had any sickness within ten years. conceded that "A failure to exercise the right (of rescission). The binding deposit receipt was then issued to Ngo Hing. later typing the data on an application form signed by Ngo Hing." Nevertheless. April 30. holds that if the assured has some affection or ailment of one or more of the organs inquired about so well defined and marked as to materially derange for a time the functions of such organ.On March 14. but having failed to do so. it was held a question properly for the jury whether such an inflammation of the throat was a 'sickness' within the intent of the inquiry. 203.75 annual premium but retained P1. and yet entertain an honest belief that they are not material. . 1957. if construed as it is frequently cited. and if he did not deal in good faith with the insurer in that matter. -Mondragon allegedly failed to inform Ngo Hing of the non-acceptance of the insurance plan. (Rankin vs. The Court ordered Pacific Life to pay P50k with 6% interest. ." (Codes of California Annotated. . operate to rescind the contract of insurance. Helen. before the commencement of suit thereon. for the reason that symptoms of consumption had so far developed themselves within a few months prior to effecting the insurance as to induce a reasonable belief that the applicant had that fatal disease. Mondragon received a letter from Pacific Life which stated that the 20 year endowment plan was not available for minors below 7. Ngo Hing sought the payment of the proceeds of the insurance. the policy will be avoided by a nondisclosure. West Coast Life Insurance Company [1927]. whether he believes them material or not. and we should further construe this case as establishing the rule that such a matter cannot rest alone upon the assured's belief irrespective of what is a reasonable belief. the insurance shall not be in force at any time and the premium be returned to the applicant. . branch manager of the Pacific Life in Cebu. " . Thus. such right cannot now be enforced in view of the provisions of section 47 of the Insurance Act providing "Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter. The first is that the California law as construed by the code examiners. . 80. especially in life risks. there are two answers to the problem as propounded. on behalf of the company. wrote on the corresponding form in his own handwriting. would be opposed to the above conclusion. Amazon Insurance Co. Ngo Hing supplied the essetntial data which petitioner Mondragon. 89 Cal. ante. . 1957.) The second answer is that the insurance company more than one month previous to the commencement of the present action wrote the plaintiff and informed him that the insurance contract was void because it had been procured through fraudulent representations. . hence this petition. it sustains it. The determination of the point whether there has or has not been a material concealment must rest largely in all cases upon the form of the questions propounded and the exact terms of the contract. prejudice any defense to the action which the concealment may furnish. advising that if the offer was acceptable. . . A case in Indiana. p. as in the case of Bright's disease. to which he answered 'No. . recommending the approval of the endowment plan to children since customers had been asking for such coverage since 1954. J.Lastly. 1979 NATURE Petition for certiorari FACTS ." This section was derived from section 2583 of the California Civil Code. (Pacific Life) for a 20 year endowment Page policy of P50k on the life of his 1 year old daughter. Tan Chay Heng vs. of course. but. and the court remarked on the appeal decision that if it could be held as a matter of law that the policy was thereby avoided.) Disposition Judgment affirmed. that the assured may have a knowledge actual or presumed of material facts. then it was a mere device on the part of insurance companies to obtain money without rendering themselves liable under the policy. . cannot. such right must be exercised previous to the commencement of an action on the contract. filed an action for recovery with the CFI of Cebu. at whose recommendation it was adopted." . private respondent Ngo Hing filed an application with the Great Pacific Life Assurance Co. -This implies the receipt is merely an acknowledgement. with the costs of this instance against the appellant. CA (NGO HING) 89 SCRA 543 DE CASTRO.317 as commission as he was also a duly authorized agent of Pacific Life. Mondragon handwrote his strong recommendation for the approval of the application on the back of the form. but that it ought to be judged by the criterion whether the belief is one fairly warranted by the circumstances. As held in California as to a fire insurance policy. appellant contends that even if the insurance company had a right to rescind the contract. ISSUE WON the binding deposit receipt constituted a temporary contract of the life insurance in question HELD NO . irrespective of the fact whether the assured knew of such ailment or not..' and it was proven that within that period he had had a slight attack of pharyngitis. The question should be left to the jury whether the assured truly represented the state of his health so as not to mislead or deceive the insurer. instead writing Pacific Life again. But notwithstanding this general rule it will not infrequently happen. on the contrary.INSURANCE 66 the same. GREAT PACIFIC LIFE v. . Did he know the state of his health so as to be able to furnish a proper answer to such questions as are propounded? A Massachusetts case. but in contrast thereto. the insurer's tender of the premium and notice that the policy is canceled.The binding deposit receipt is merely a provisional contract and only upon compliance with the ff conditions: (1) that the company be satisfied that the applicant was insurable on standard rates (2) that if the company does not accept the application and offers a different policy. but that Pacific Life could consider the same under the Juvenile Triple Action Plan. that . the insurance contract shall not be binding until the applicant accepts the new policy (3) that if the applicant is not found to be insurable on standard rates and the application is disapproved. and offered to refund to the plaintiff the premium which the latter had paid upon the return of the policy for cancellation. the Juvenile Non-Medical Declaration be sent to the company. [1891].

. such right must be exercised previous to the commencement of an action on the contract. 1973 . In the application form which was dated April 15. and no risk on the part of the respondent insurance corporation had arisen therefrom.00 with respondent company.Petitioners filed on November 27..00 representing the premium for which she was issued the corresponding receipt signed by an authorized agent of the respondent insurance corporation. MANILA BANKERS LIFE 117 SCRA 187 VASQUEZ. Under the circumstances.1973. or.On June 7. 1969 or FORTY-FIVE (45) DAYS after the insurance coverage was applied for. occurred on May 31. Disposition the decision appealed from is set aside. 1904.1975. the respondent insurance corporation relies on a provision contained in the Certificate of Insurance. a risk covered by the policy. 1969 or during the effectivity of the Insurance. it simply overlooked such fact. filed her claim for the proceeds of the insurance. There was sufficient time for the private respondent to process the application and to notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it was minded to do so. submitting all the necessary papers and other requisites with the private respondent. No liability attaches until the principal approves the risk and a receipt is given by the agent. Regina L. father of herein petitioners. 1975. Edillon instituted this action in the Court of First Instance of Rizal.Sometime in April 1969. 1969. Ngo Hing must have known the company did not offer the insurance applied for and merely took a chance on Mondragon’s recommendation. considering its prominence thereon and its materiality to the coverage applied for. Lapuz its Certificate of Insurance.On September 23. it is either because it was willing to waive such disqualification. excluding its liability to pay claims under the policy in behalf of "persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years .On April 26. Upon the filing of said application and the payment of the premium on the policy applied for.Section 48. .36) TAN v. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter. Edillon. insurance company is barred from rescinding contract HELD . Lapuz was not concealed to the insurance company.The age of the insured Carmen 0. Tan Lee Siong.RTC dismissed the complaint. applied for life insurance in the amount of P 80. The premiums paid on the policy were thereupon refunded . petitioner Regina L. CA affirmed Commissioners decision ISSUE WON according to Sec. which will approve or reject it depending on whether the applicant is insurable on standard rates. If the private respondent failed to act. she paid the sum of P20. Commissioner denied petition. As such. 48 of the Insurance Code. Said application was approved and was issued effective November 6. Also. . Carmen O. the receipt was never in force—it does not insure outright. Lapuz died in a vehicular accident. The policy was to be effective for a period of 90 days. Petitioners then filed with respondent company their claim for the proceeds of the life insurance policy -respondent company denied petitioners' claim and rescinded the policy by reason of the alleged misrepresentation and concealment of material facts made by the deceased Tan Lee Siong in his application for insurance. .On May 31.In resisting the claim of the petitioner.. through the negligence or incompetence of its employees for which it has only itself to blame. Her application for insurance coverage which was on a printed form furnished by private respondent and which contained very few items of information clearly indicated her age of the time of filing the same to be almost 65 years of age. June 29. absolving Pacific Life from their civil liabilities EDILLON v. the respondent insurance corporation issued to Carmen O. 1982 NATURE Appeal from a decision of the CFI FACTS . Despite such information which could hardly be overlooked in the application form. she gave the date of her birth as July 11. 1969. the insurance corporation is already deemed in estoppel. the respondent insurance corporation received her payment of premium and issued the corresponding certificate of insurance without question. there was no meeting of the minds and thus no contract. The accident which resulted in the death of the insured. Her claim having been denied. Carmen O. Its inaction to revoke the policy despite a departure from the exclusionary Page condition contained in the said policy constituted a waiver of such condition.INSURANCE 67 the Cebu branch of Pacific Life had received the premium and had accepted the application subject to processing by the insurance company. Tan Lee Siong died of hepatoma (Exhibit B)." It is pointed out that the insured being over sixty (60) years of age when she applied for the insurance coverage. being an authorized agent of Pacific Life. . a complaint against the former with the Office of the Insurance Commissioner. a sister of the insured and who was the named beneficiary in the policy. COMMERCIAL UNION (supra p. CA (PHILIPPINE INSURANCE COMPANY) 174 SCRA 403 GUTIERREZ. ISSUE WON the acceptance by the private respondent insurance corporation of the premium and the issuance of the corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of overage stated in the said certificate of insurance HELD YES . because private respondent failed to accept Pacific Life’s offer for the Juvenile Triple Action plan. the policy was null and void. September 30. On the same date. 1989 AMERICAN LIFE NATURE Review on certiorari of the decision of the Court of Appeals affirming the decision of the Insurance Commissioner FACTS . Disposition Judgment appealed from is REVERSED and SET ASIDE and respondent insurance corporation is ordered to pay to the petitioner the proceeds of Insurance HARDING v. Lapuz applied with respondent insurance corporation for insurance coverage against accident and injuries.000.

whereas in truth and in fact and as the plaintiff and his said coconspirators well knew. and opium and had been convicted and imprisoned therefor. that Tan Ceang had never used morphine.000 in which the plaintiff was the sole beneficiary. the beneficiary.000. in which it was made to appear. The insurer has two years from the date of issuance of the insurance contract or of its last reinstatement within which to contest the policy. Tan Ceang was seriously ill. where in case of approval a permanent policy was to be issued. and relying thereon.The petitioners contend that there could have been no concealment or misrepresentation by their late father because Tan Lee Siong did not have to buy insurance.According to the petitioners. S. 2. that in June. plaintiff submitted the proofs of the death of Tan Ceang with a claim for the payment of the policy which the defendant refused to pay. .INSURANCE 68 After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement. believing that the representations made in said document were true. prepared and falsified the necessary medical certificate. to wit: 1. Plaintiff caused a confidential report to the defendant insurance company to be signed by one V.000. that he was then in good health and had never Page consulted any physician. that the said temporary policy was delivered by defendant to the insured on April 10. had an annual income of from eight to ten thousand pesos net. whether or not. and that plaintiff was not a nephew of the said Tan Ceang. in the belief that said statements and . medical certificate and confidential report had been prepared and falsified. V.1975. Tan Ceang died on May 10. California. and was not a merchant but a mere employee of Tan Quina from whom he received only a meager salary. plaintiff and coconspirators well knew. and never had tuberculosis. was obtained by the plaintiff in confabulation with one Go Chulian. Locsin as medical examiner. no longer lie TAN CHAY HENG v. After said application for insurance. that the defendant. in which it was falsely represented that Tan Ceang was worth about P40. 1927 COAST LIFE FACTS . of Bacolod. and Dr. barred from proving that the policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation. suffering from pulmonary tuberculosis of about three years' duration. Sy Yock Kian. the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent. 6. provisionally accepted the said application for insurance on the life of Tan Ceang in the sum of P10. with legal interest from the date of the policy. Negros Occidental. and costs.Plaintiff alleges that defendant accepted and approved a life insurance policy of for the sum of P10. S. the insured still lives within such period. for which he prays for a corresponding judgment. that he had never spit blood. After two years. the said Tan Ceang was not single but was married and had several children. 5.50 not having been paid within 60 days after medical examination of the applicant as required by the regulations of the defendant insurance company. whereas in truth and in fact. 3. Negros Occidental. The policy was thus in force for a period of only one year and five months. who was an employee of Go Chulian. Locsin. Tan Ceang was addicted to morphine. The key phrase in the second paragraph of Section 48 is "for a period of two years. that in and by its terms.000 and issued a temporary policy pending the final approval or disapproval of said application by defendant's home-office in San Francisco.Defendant alleges that the insurance policy on the life of Tan Ceang. and that the plaintiff Tan Chai Heng. respondent company is not. in which it was said that Tan Ceang was single and was a merchant. therefore." . the medical certificate thru the said Dr. caused Tan Caeng to sign an application for insurance with the defendant in the sum of P10.1973 and the insured died on April 26. that without any premium being due or unpaid. thru fraud and deceit perpetrated against this defendant in the following manner. Sanchez and Locsin. Go. V. plaintiff and coconspirators caused the same to be forwarded to the defendant at its office in Manila. which illness was incurable and was well known to the plaintiff and his said coconspirators. plaintiff and coconspirators caused Tan Ceang to sign a health certificate for reinstatement. had the appearance of good health. no matter how patent or well founded. the defendant agreed to pay the plaintiff as beneficiary the amount of the policy upon the receipt of the proofs of the death of the insured while the policy was in force. was his nephew. . Francisco Sanchez of the same place. in his capacity as medical examiner for the defendant.The so-called "incontestability clause" precludes the insurer from raising the defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has been in force for at least two years during the insured's lifetime. and that there was no sign of either present or past disease of his lungs. cocaine or any other drug. Considering that the insured died before the twoyear period had lapsed. November 21. that the policy was issued upon the payment by the said Tan Ceang of the first year's premium amounting to P936. Locsin. that such permanent policy was never delivered to the plaintiff because defendant discovered the fraud before its delivery. . He was only pressured by insistent salesmen to do so -The legislative answer to the arguments posed by the petitioners is the "incontestability clause" added by the second paragraph of Section 48. 1925. 1925. That the first agreed annual premium on the insurance in question of P936. of La Carlota. The phrase "during the lifetime" found in Section 48 simply means that the policy is no longer considered in force after the insured has died. among other things. WEST INSURANCE 51 PHIL 80 JOHNS. 4. and said application for insurance and confidential report thru the said Francisco Sanchez in his capacity as one of the agents of the defendant insurance company in the Province of Occidental Negros. the defenses of concealment or misrepresentation. upon which plaintiff's action is based. 1925. cocaine.The policy was issued on November 6. and for about three year prior thereto had been suffering from pulmonary tuberculosis. the Insurance Law was amended and the second paragraph of Section 48 added to prevent the insurance company from exercising a right to rescind after the death of the insured .

. and not as originally stated. an action to rescind a contract is founded upon and presupposes the existence of the contract which is sought to be rescinded. 2 ½ months after the supposed medical examination above referred to.It will be noted that defendant does not seek to have the alleged insurance contract rescinded. Locsin to state falsely in the certificate of death that the said Tan Ceang had died of cerebral hemorrhage. that the said Go Chulian.. December 19. S. 47 HELD NO Ratio The word "rescind" has a well defined legal meaning. for the simple reason that the minds of the parties never met and never agreed upon the terms and conditions of the contract. 1974 Page NATURE Appeal by certiorari from CA decision affirming a CFI decision which declared plaintiff Yap entitled to recover from defendant Pioneer Insurance and Surety Corp. but that the plaintiff coconspirators.among the conditions set forth: The Insured shall give notice to the Company of any insurance or insurances already effected. and for some years previous to the dates above mentioned. V. plaintiff filed a demurrer which was granted. . pursuant to their conspiracy. with costs against the plaintiff. covering any of the property hereby insured. or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage. This policy was procured without notice to and the written . section 47 upon which the lower based its decision in sustaining the demurrer does not apply. during. Any false declaration or breach or this condition will render this policy null and void. they would constitute a valid defense to plaintiff's cause of action. amounting to P936.000 issued by the Great American Insurance Company covering the same properties was noted on said policy as coinsurance. 1962). and unless such notice be given and the particulars of such insurance or insurances be stated in.Defendant also alleges that plaintiff was. hence. if such matters are known to exist by a preponderance of the evidence. YAP 61 SCRA 426 AND SURETY FERNANDEZ. 1924.000. 4219 FACTS . 31425 of that court.April 19. . . 7.00 � Northwest Ins. an employee of Go Chulian. defendant is barred and estopped to plead and set forth the matters alleged in its special defense. committed against this defendant in the month of September. was convicted by the Court of First Instance of the City of Manila. all other terms and conditions remain unchanged. for the recovery of the amounts of two insurance policies aggregating P19. and exactly 1 month after the date of the health certificate for reinstatement above set forth. Upon the question as to whether or not they or are not true. and as applied to contracts. That section is as follows: Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter. fraudulently obtained by the said Go Chulian and Sanchez. that the said Go Chulian was the one who furnished the money with which to pay the first and only annual premium on the insurance here in question. and that when so applied. . we do not at this time have or express any opinion. that there is another civil action now pending against Go Chulian and Sanchez in the Court of First Instance of Manila (civil case No. in which the present defendant is the plaintiff.50. 1962 : parties executed an endorsement on Policy 4219 stating: It is hereby declared and agreed that the coinsurance existing at present under this policy is as follows: P20.At the time of insurance of Policy 4219(April 19. were engaged in the illicit enterprise of procuring fraudulent life insurances from the present defendant. office furniture. Locsin. ISSUE WON defense is barred by Art. S. Disposition The judgment of the lower court is reversed and the case is remanded for such other and further proceedings as are not inconsistent with this opinion. V. fixtures. similar to the present.Yap owned a store in a 2 storey building. It denies that it ever made any contract of insurance on the life of Tan Ceang or that any such a contract ever existed. of pulmonary tuberculosis. that the latter was the ringleader of a gang of malefactors. of the crime of falsification of private documents in connection with an fraudulent insurance. etc. except as may be stated on the face of this policy there is no other insurance on the property hereby covered and no other insurance is allowed except by the consent of the Company endorsed hereon. but we are clear that section 47 does not apply to the allegations made in the answer. Tan Ceang died in Valladolid. We are clearly of the opinion that. PIONEER INSURANCE CORPORATION v.Plaintiff vigorously contends that section 47 of the Insurance Act should be applied. 4216 from Pioneer with a face value of P25.000 covering her stocks. .To this.INSURANCE 69 representations were true and in reliance thereon. similar to the one in question. an insurance policy for P20. . Reasoning .000. who. Her son-in-law was in charge of the store . 1926. the full amount of the damage inquired in Policy No. 1962: Yap took out another fire insurance policy for P20. and that the trial court erred in sustaining the demurrer. If all of the material matters set forth and alleged in the defendant's special plea are true.Yap took out Fire Insurance Policy No. or which may subsequently be effected. As stated. and that is the question which it seeks to have litigated by its special defense. Occidental Negros. and. 1962. (emphasis supplied) Except as varied by this endorsement. there was no valid contract of insurance.August 29. (emphasis supplied) It is understood that. on August 28. that in the same case the said Francisco Sanchez was one of the coaccused of the said Go Chulian but was discharged from the complaint.September 26. Sy Yock Kian. there is no contract to rescind. if the defendant never made or entered into the contract in question.000 covering the same properties. caused the said Dr. it presupposes the existence of a contract to rescind. because he offered himself and was utilized as a state's witness. In the very nature of things. where she sold shopping bags and footwear. 28680). the same illness from which suffering at the time it is supposed he was examined by Dr. and which enterprise was capitalized by him by furnishing the funds with which to pay the premium on said fraudulent insurance. in criminal case No. from Federal Insurance Company. all benefits under this Policy shall be forfeited. like V. such right must be exercised previous to the commencement of an action on the contract.

knowledge of the agent is knowledge of the principal.December 19. .The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. that is.” (i. . and exonerated the insurance companies from liability.00. aside from being of dubious applicability here has likewise been roundly refuted by respondent court whose factual findings we find acceptable. wherever the specified conditions should occur. for he assents to comply with all the stipulation on his side. must be deemed to be a warranty that the property was not insured by any other policy. which cases were consolidated for trial. namely. The public. in order to entitle himself to the benefit of the contract. warranting forfeiture of all benefits thereunder if we are to follow the express stipulation in Policy Condition No. it could have hesitated or plainly desisted from entering into HELD YES . that was deception. the insured had been guilty of a false declaration.Considering the terms of the policy which required the insured to declare other insurances. that there were no other insurance on the property. Otherwise stated. The insurance companies all denied Julian Sy’s claim on the ground of “breach of policy condition. which. When the building where New Life Enterprises was located.e. is interested in preventing the situation in which a fire would be profitable to the insured. 1992 FACTS . . 4219 which resulted in the avoidance of the petitioner’s liability.INSURANCE 70 consent of Pioneer. 4219 on account of any violation by respondent Yap of the co-insurance clause therein HELD YES . It is further admitted by petitioners that Equitable's policy stated "nil" in the space thereon requiring indication of any coinsurance although there were 3 policies subsisting on the same stocks in trade at the time of the loss. Inc. By reason of said unrevealed insurances. which. upon reason or principle. and yet to bind the other party to obligations. 1962: Fire burned Yap’s store ISSUE WON petitioner should be absolved from liability on Fire insurance Policy No. CA 207 SCRA 609 REGALADO. ISSUE WON petitioners violated the Clause” of the insurance policies “Other Insurance Page . . and was therefore not noted as a co-insurance in Policy 4219. were gutted by fire.000. had the insurer known that there were many co-insurances. Reliance Surety and Insurance Co. would not nave been entered into." Disposition the appealed judgment of the Court of Appeals is reversed and set aside. which. the so-called theory of imputed knowledge. The mere fact that Yap Kam Chuan was an agent for both Reliance and Equitable does not justify the allegation that the two are sister companies. . in order to entitle himself to the benefit of the contract. along with the stocks in trade therein.Because of the denial of their claims for payment by the 3 insurance companies. The public.It is not disputed that the insured failed to reveal before the loss three other insurances. and Equitable Insurance Corporation in the aggregate amount of P1. . Besides. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract. is not the "notice" that would stop the insurers from denying the claim. he has no right to ask the court to dispense with the performance of his own part of the agreement. . Reasoning . The knowledge of such insurance by the insurer's agents. as well as the insurer. .” Julian Sy insured against fire the stocks in trade of New Life Enterprises with Western Guaranty Corporation. but for those stipulation would not have been entered into. unless. March 31. he has no right to ask the court to dispense with the performance of his own part of the agreement. that of Western in the amount of P350. .00 and two 2 policies of Reliance in the total amount of P1. The trial court ruled in favor of petitioner. which. Its obligations ceased.. but for those stipulations.Petitioners admit that the respective insurance policies issued by private respondents did not state or endorse thereon the other insurance coverage obtained or subsequently effected on the same stocks in trade for the loss of which compensation is claimed by petitioners. the Court of Appeals reversed the trial court’s decision. The annotation then. and the petitioner absolved from all liability under the policy. Violation thereof entitled the insurer to rescind. the “other insurance” clause which required New Life Enterprises to inform each of the insurance companies in case the former insures with another company the same property already insured by each of the insurance companies). However. as well as the insurer.550.The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud.000.00. upon reason or principle. other insurance without the consent of petitioner would ipso facto avoid the contract.000. According to Justice Story: "The insured has no right to complain.By the plain terms of the policy..The terms of the contract are clear and unambiguous. it consented to the additional insurance. petitioners filed separate civil actions against the former before the Regional Trial Court of Lucena City. being informed of the fact. petitioners filed an insurance claim against the three companies. The insured is specifically required to disclose to the insurer any other insurance and its particulars which he may have effected on the same subject matter. for he assents to comply with all the stipulations on his side. 3. a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not.There was a violation by Yap of the co-insurance clause contained in Policy No.The petitioner should be absolved. even assuming the acquisition thereof by the former. The insured has no right to complain. found petitioner to have violated Clauses 3 and 27 of the separate insurance policies issued by the 3 companies.The coverage by other insurance or co-insurance effected or subsequently arranged by petitioners were neither stated nor endorsed in the policies of the 3 private respondents. is interested in preventing the situation in which a fire would be profitable to the insured. and yet to bind the other party to obligations.Julian Sy and Jose Sy Bang are partners engaged in the business of selling construction materials under the business name “New Life Enterprises. Availment of the services of the same agents and adjusters by different companies is a common practice in the insurance business and such facts do not warrant the speculative conclusion of the trial court.000. NEW LIFE ENTERPRISES v. the statement in question must be deemed to be a statement (warranty) binding on both insurer and insured.

" HELD 1. . The defendant alleged that they were "stored. he should be permitted to recover. It is admitted that they were placed in the bodega "for future use. terminated. (2) Where such articles have been brought on the premises for actual use thereon. YES.Young placed in the residence and bodega three boxes filled with fireworks. at the election of either party. . gunpowder. Young had a candy and fruit store on the Escolta. if the "storing" was a violation of the terms of the contract. Hence.One of the conditions of the contract is: "Warranty B – It is hereby declared and agreed that during the pendency of this policy no hazardous goods be stored or kept for sale. ISSUE 1. Said residence and bodega and the contents thereof were partially destroyed by fire. would it not have been justified in declaring the policy null and of no effect by reason of a violation of its terms? If it might. If the contract has been terminated. However. and no hazardous trade or process be carried on." mentioned in "Warranty B" of the policy. and in small quantities. upon certain conditions. If the insured.000 in case said residence and bodega and contents should be destroyed by fire. such as oil.708.Young argues that since the "storing" of the fireworks on the premises did not contribute in any way to the damage occasioned by the fire. cannot bring himself within the terms and conditions of the contract. he is not entitled to recover for any loss suffered. Reasoning It is admitted by both parties that the fireworks are hazardous goods. MIDLAND TEXTILE INSURANCE CO.Additionally.INSURANCE 71 such contract. Nearly all of the cases cited by the lower court are cases where the article was being put to some reasonable and actual use. The violation of the terms of the contract. That argument. etc. QUA CHEE GAN v. 30 PHIL 617 JOHNSON.Whether a particular article is "stored" or not must. or for safe keeping. WON the placing of the fireworks in the building insured. Parties have a right to impose such reasonable conditions at the time of the making of the contract as they deem wise and necessary. they were not “stored” in said building. YOUNG v. paints. and Page in small quantities. for sale. and that the placing of them in the building was not a violation of the terms of the contract. etc. however.The fireworks had been given to Young by the former owner of the Luneta Candy Store.Both parties agree that the fireworks come within the phrase "hazardous goods. insofar as the liability of respondent Reliance is concerned.In the present case no claim is made that the "hazardous goods" were placed in the bodega for present or daily use.48) insurance applies. by virtue of the provisions of the policy itself. promised to pay Young the sum of P3. is beside the question. and had found the "hazardous goods" there. The terms of the contract constitute the measure of the insurer's liability. That being true. The Midland Textile Insurance Co. . the total absence of such notice nullifies the policy. and for actual daily use. 1982. March 31. the authorities of the city of Manila had prohibited the use of fireworks on said occasion. . by a violation of its terms on the part of the insured. undertakes to guarantee the insured against loss or damage. and excepted from the operation of the warranty. in the building to which this . Manila. then may it not repudiate its liability. and within the intention of the parties. which might easily have been permitted by the terms of the policy.(1) Where merchants have had or kept the "hazardous" articles in small quantities.As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property. . there can be no recovery. The insurer. and (3) Where such articles or goods were used for lighting purposes. suppose the defendant had made an examination of the premises. even after the fire? If the "warranty" is a term of the contract. The rate of premium is measured by the character of the risk assumed. like the present. Compliance with the terms of the contract is a condition precedent to the right of recovery. he may justly insist upon a fulfillment of the terms of the contract. such as gasoline. the contractual relations. in consideration of the payment of a premium of P60. 1913 until after the fire of March 18." The plaintiff contends that under all the facts and circumstances of the case. . . they being "hazardous goods. and upon no other. .S. and costs. . so Young then placed them in the bodega where they remained from the 4th or 5th of February.Contracts of insurance are contracts of indemnity. in case of loss." . LAW UNION (supra p. or after more than one (1) year had elapsed from petitioners' receipt of the insurers' letter of denial on November 29. that the fireworks were found in a part of the building not destroyed by the fire and that they in no way contributed to the fire. will not its violation cause a breach and justify noncompliance or repudiation? .. It seems clear to us that the "hazardous goods" in question were "stored" in the bodega. . depend upon the intention of the parties. upon the terms and conditions agreed upon. 1984." or for future consumption." was a violation of the terms of the contract of insurance and especially of "Warranty B. even in the absence of a fire.K. He intended to use them in the celebration of the Chinese New Year. and occupied a building at 321 Calle Claveria. 1913. for a comparatively small consideration. 1915 FACTS . upon the terms and conditions specified therein. as that word is generally defined. as a residence and bodega. . or in any building connected therewith. or to the loss that resulted. in some degree.The condition contained in an insurance policy that claims must be presented within one year after rejection is not merely a procedural requirement but an important matter essential to a prompt settlement of claims against insurance companies as it demands that insurance suits be brought by the insured while the evidence as to the origin and cause of destruction have not yet disappeared.The lower court rendered a judgment in favor of Young for the sum of P2. it is not denied that the complaint for recovery was filed in court by petitioners only on January 31.78. the insured was guilty of clear fraud. entered into a contract of insurance with Young by the terms of which the company. When the insurer is called upon to pay.

Even assuming the validity of the Insurance Commissioner’s regulations. among others. TAN v. Nava entered into a contract of insurance with Insular Life Assurance Co. is a direct and certain injury to the insurer. plus 6% interest thereon as damages . and if not so paid will be added to the principal and bear the same rate of interest. CA (supra p. the benefits of an insurance policy upon one risk. will advance on proper assignment and delivery of this Policy and on the sole security thereof a sum equal to.574. that all payments made in fiat currency during the Japanese occupation in relation with any contractual obligation executed before the war were valid to all intents and purposes. and (3) ordered defendant Insular Life Assurance Co. Any indebtedness on this Policy shall first be deducted from any money payable or in any settlement under this Policy. less any existing indebtedness on or secured by this Policy and any unpaid balance of the premium for the current policy-year. but apparently this offer was refused. The defendant had neither been paid nor had issued a policy to cover the increased risk. Ltd.The fact that if the insured had paid in full the premiums corresponding to the first 3 years of the life of his policy he cannot be considered delinquent that would cause the lapse of his policy if the same . 1948: Nava called the attention of the insurance companies to the SC decision (Haw Pia v.. . ISSUES 1.60.633.574. WON CA erred in not ruling that. An increase of risk which is substantial and which is continued for a considerable period of time.80. but they refused to grant it because certain regulations issued by the Insurance Commissioner required the insurance companies to withhold the payments on premiums made during the Japanese occupation because the same shall be subject to future adjustments " as soon as debtor-creditor relationship is established" and because of such process of "withholding" plaintiff was not entitled to borrow any amount until such adjustment has been made. . if his contention may be allowed.Companies still refused saying that the SC decision was not applicable to transactions undertaken during Japanese occupation when they relate to life insurance policies. provided interest at six per centum per annum on the whole amount of the loan is paid in advance to the end of the current policy-year. After three full years' premiums have been paid upon this Policy. or at the option of the owner less than. if no premium payment is in default. .51) FILIPINAS LIFE ASSURANCE v. giving full credit to all premium payments made by their policyholders in fiat currency during the Page Japanese occupation on account of pre-war policies for which reason they filed an amended answer offering to pay plaintiff the amount of P9. even if respondent is entitled to the rescission of said insurance policies. . to pay plaintiff the amount of P32. the fact however is that such requirement has already lost its legal effect and value when our Supreme Court rendered its decision in the Haw Pia case wherein it was declared. He was enjoying. to pay plaintiff the amount of P2.26) TAN CHAY v. the cash value specified in the Schedule of Policy Values. and to Filipinas Life.29. 1966 NATURE Petition for review of a decision of the Court of Appeals FACTS . the placing of the firecrackers in the building insured increased the risk. 1949: Nava was again refused even if the total amount of the cash surrender values of the 18 policies reached the sum of P9.60. 1951: companies passed a resolution which was approved by the Insurance Commissioner.Nov 28. May 20. 1949: Nava brought case to the CFI Manila praying for the rescission of the abovementioned 18 policies and for the refund to him of all the premiums so far paid by him to defendants in the amount of P31. it was issued upon an entirely different risk. and 17 separate contracts of life insurance with Filipinas Life Assurance Co.072.CFI: (1) rescinded the insurance contracts. 1949.April 28. NAVA 17 SCRA 210 BAUTISTA ANGELO. and yet petitioners apparently did not give any importance to such decision for in their opinion it does not have any application to transactions which have any relation to payment of premiums on life insurance policies. the Company. 1948: Nava applied to the companies for a P5k loan in line with the loan clause.072. CA (supra p. NO. (total face value of P90k). Certainly. Young had not paid a premium based upon the increased risk. neither had the defendant issued a policy upon the theory of a different risk.Young paid a premium based upon the risk at the time the policy was issued. Disposition Decision of the lower court is REVERSED. (2) ordered defendant Filipinas Life Assurance Co.468. . .Nava had so far paid to Insular a total of P2. lest he runs the risk of having his insurance policy lapse if he fails to pay such premiums. WEST COAST (supra p.It cannot be denied that a life insurance policy involves a contractual obligation wherein the insured becomes duty bound to pay the premiums agreed upon.Before the war. Failure to repay any such loan or interest shall not avoid this Policy unless the total indebtedness shall equal or exceed the full amount of the loan value available hereunder. WON CA erred in ruling that as a consequence of the decision in the Haw Pia case petitioners violated the loan clause contained in the insurance policies thereby entitling respondent to their rescission 2. Each and everyone of the 18 policies issued by defendants to plaintiff contains a loan clause of the following tenor: Policy loans. and changes the basis upon which the contract of insurance rests.CA affirmed. At the end of the current policy-year interest at the same rate for one year in advance will be due and payable. and annually thereafter. . WON CA erred in ruling that by virtue of Article 1295 of the old Civil Code petitioners should refund to defendant all the premiums paid on his insurance policies as a consequence of their rescission 3.Sept 30. subject to its then existing rules.51) AREOLA v.Feb 4.Feb 10. as a matter of fact. a total of P32.INSURANCE 72 . he can only recover their cash surrender value at the time the complaint was filed HELD 1. Ltd. China Banking Corporation) establishing and recognizing the relationship of debtor and creditor with respect to payments in fiat currency made during the Japanese occupation on pre-war obligations. .468. ..00 . whereas. .29 which represents the aggregate cash surrender values of all the policies in question as of February 10. (face value of P5k).

. and secondly. with their fruits. October 22. is untenable because said article only contemplates a transaction whether material things are involved.INSURANCE 73 contains an automatic premium payment clause cannot divest such policy of its contractual nature.TC opined that proximate cause of Bataclan’s death was not the overturning of bus but the fire. during and after the last war from which they must have realized huge profits. when a bus overturns and pins down passenger. ." .But here.Said the petitioners: "Recovery of the full amount of the premium after the insurer has sustained for sometime the risk of the insurance and the insured has enjoyed the benefit of protection is obviously unjust and is so recognized by the better authorities. If through some event. Rescission makes necessary the return of the things which were the subject-matter of the contract. it was not shown that the insurance laws in the states where said ruling prevails contain a provision identical to Section 69 of our Insurance Law we quoted above. with interest thereon. killing the trapped passengers. and was a natural sequence of the overturning of the bus. . merely causing him injuries. RISKS AND COVERAGES VDA. 1957 FACTS Page . and of the price paid. which provides: "The violation of a material warranty.Considering that our Insurance Law does not contain an express provision as to what the court should do in cases of rescission of an insurance policy under Section 69. for to interpret it otherwise would be to defeat the law itself with the result that rescission can never be had under Section 69 of our Insurance Law. DE BATACLAN v. MEDINA 102 PHIL 181 MONTEMAYOR. Bataclan. shortly after midnight. therefore. as postulated in Article 16 of the same Code.Issue is corollary to preceding issue.The proximate cause is the overturning of the bus. Disposition Decision appealed from is AFFIRMED. but for physical injuries suffered." is not controlling in this jurisdiction. . 1295. on the part of either party thereto.Ordinarily. But certainly it does not cease to be a contractual liability insofar as the payment of that premium is concerned for whether he likes it or not that premium has to be paid lest he allows the lapse of his policy."The general rule is that a breach of the agreement to make the loan does not entitle the insured to rescind the contract. . 10 men came to help. the majority rule being that the insured can recover all premiums paid.The coming of the men with the torch was to be expected.Contention that because respondent cannot restore to petitioners the "value of the benefit of protection" which he might have received under the 18 life insurance policies in question he is not entitled to rescind them under the provision of Article 1295 of the old Civil Code. .The burning of bus can also in part be attributed to negligence of carrier. about 2:30 am. should have known that in the position in which the overturned bus was. 2. gasoline could and must have leaked from the gasoline tank and soaked the area in and around . not for his death. for on this matter there is a marked divergence of opinion. Gasoline began to leak from the overturned bus. . . and because it was very dark. made only not by the passengers but even the driver and conductor. the proximate cause of Bataclan’s death is the overturning of the bus. Costs against petitioners CHAPTER VII. No need to refute. repudiation. including Bataclan. 1 carried a torch and when he approached the bus. 4 passengers couldn’t get out. for the result of such failure would only be for him to pay later the premium plus the corresponding interest depending upon the condition of the policy. the payment of premiums on the life insurance policies made by Nava before and during the war up to the time he applied for the loan in question with petitioners should be considered likewise as valid payments upon the theory that such insurance policies are in the nature of a contractual obligation within the meaning of the civil law. What was more natural than that said rescuers should innocently approach the overturned vehicle to extend aid. In effect. the trapping of some of its passengers and the call for outside help. Coming as they did from rural area where lanterns and flashlights were not available. was still alive and damages were awarded.Juan Bataclan rode Bus 30 of Medina Transport. the provision that should apply is that embodied in Article 1225 of the old Civil Code. or other material provision of a policy. the bus is set on fire. One of the front tires burst.xxx . they had to use a torch.. and do not refer to intangible ones which cannot be the subject of restoration. termination or rescission of the contract of life insurance. though injured.The coming of the men with the torch was in response to the call for help.. At the time fire started. which provides that on matters which are not governed by special laws the provisions of said Code shall supplement its deficiency. this for the reason that when the vehicle turned not only on its side but completely on its back.It cannot be denied that petitioners had in turn already derived material benefits from the use of premiums paid to them by respondent before. 3. rescuers had to carry a light with them. ISSUE/S WON the proximate cause is the overturning of the bus or the fire HELD . or at least the driver. . Bus fell into canal and turned turtle. the rule cited by Vance is not a rule uniformly followed by all states in the US. leaking of gasoline from the tank was not unnatural or unexpected. driven by Saylon. And said Article 1295 provides: ART." The ruling above quoted merely represents the minority rule in the US. and in this light alone petitioners cannot claim prejudice or unfairness if they are ordered to refund the premiums paid by respondents.It is clear from the foregoing that the petitioners violated the loan clause embodied in each of the 18 life insurance policies issued to respondent to rescind all said policies under Section 69 of the Insurance Act. and passenger is burned to death. fire started. NO . in some cases with interest in case of wrongful cancellation. those payments were made by a debtor to a creditor within the meaning of the requirement of the regulations of the Insurance Commissioner and as such they can offer no excuse to petitioners for refusing to grant the loan as contemplated in the loan clause embodied in the policies in question. Firstly. through its driver and conductor. They. Consequently. entitles the other to rescind. The bus was running very fast. NO. . . one might contend that the proximate cause was the fire and not the overturning of the vehicle. unexpected and extraordinary.

. CA (SURPOSA) 213 SCRA 493 NOCON. not expected. or is an unusual effect of a known cause and. Ratio The generally accepted rule is that. 1992 NATURE Certiorari FACTS . ." .The personal accident insurance policy involved herein specifically enumerated only 10 circumstances wherein no liability attaches to FINMAN for any injury. . Winston Surposa.INSURANCE 74 the bus. independent. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary. unexpected. died on October 18. were waiting for a ride on their way home after attending the celebration of the "Maskarra Annual Festival.NPC vs. Capital Insurance & Surety Co. Surposa.Feb. the widow. unusual.It is contended in behalf of the company that Basilio was killed which "making an arrest as an officer of the law" or as a result of an "assault or murder" committed in the place and therefore his death was caused by one of the risks excluded by the supplementary contract which exempts the . and yet neither the driver nor the conductor would appear to have cautioned or taken steps to warn rescuers not to bring the lighted torch too near the bus. An accident is an event that takes place without one's foresight or expectation an event that proceeds from an unknown cause. 24. and unforeseen happening occurs which produces or brings about the result of injury or death. The insured died from an event that took place without his foresight or expectation. the resulting death is within the protection of the policies insuring against death or injury from accident. or if something unforeseen occurs in the doing of the act which produces the injury.. He secured a life insurance policy from the Philippine American Life Insurance Company in the amount of P2. ISSUE WON CA committed GAD in applying the principle of "expresso unius exclusio alterius" in a personal accident insurance policy (since death resulting from murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the assailant in killing the former as indicated by the location of the lone stab wound on the insured) [TF they cannot be made to indemnify the Surposa heirs] HELD NO . and which is unexpected. Julia Surposa and the other beneficiaries of said insurance policy filed a written notice of claim with the FINMAN Corp which denied said claim contending that murder and assault are not within the scope of the coverage of the insurance policy. 22. face value of the policy. 1955 FACTS . where the death or injury is not the natural or probable result of the insured's voluntary act. as main defense.A1377 NCC: The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. 2005 and Individual Policy No. Thus.CA affirmed said decision. 1951. an event that proceeded from an unusual effect of a known cause and. therefore. as beneficiaries.The record is barren of any circumstance showing how the stab wound was inflicted. death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act. and brothers Christopher. the insured. that the deceased died because he was murdered by a person who took part in the commission of the robbery and while making an arrest as an officer of the law which contingencies were expressly excluded in the contract and have the effect of exempting the company from liability.000 to which was attached a supplementary contract covering death by accident. the terms have been taken to mean that which happen by chance or fortuitously. the company refused alleging. but when she demanded the payment of the additional sum of P2. Inc (1966)~ The terms "accident" and "accidental" as used in insurance contracts have not acquired any technical meaning. . Calanoc. . not having been expressly included in the enumeration of the circumstances that would negate liability in said insurance policy: the failure of the FINMAN to include death resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death. and are construed by the courts in their ordinary and common acceptation.000. all surnamed. not expected. 08924 with his parents. Reasoning .Thereafter. unaccompanied by anything unforeseen except the death or injury. On January 25. therefore. There is no accident when a deliberate act is performed unless some additional. CA [1986]~ It is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. he died of a gunshot wound on the occasion of a robbery committed in the house of Atty. . 1988 as a result of a stab wound inflicted by one of the 3 unidentified men without provocation and warning on the part of the former as he and his cousin. Chester and Clifton.Oct. Charles. was paid the sum of P2.While said insurance policy was in full force and effect. Ojeda at the corner of Oroquieta and Zurbaran streets. Disposition DENIED for lack of merit. CA 98 PHIL 79 BAUTISTA. -The principle of " expresso unius exclusio alterius" the mention of one thing implies the exclusion of Page another thing is therefore applicable in the instant case since murder and assault.Basilio was a watchman of the Manila Auto Supply located at the corner of Avenida Rizal and Zurbaran. December 16. September 2. While the act may not exempt the unknown perpetrator from criminal liability. disability or loss suffered by the insured as a result of any of the stimulated causes. Gasoline can be smelt and detected even from a distance. CALANOC v. the fact remains that the happening was a pure accident on the part of the victim.De la Cruz vs. without intention and design.000 representing the value of the supplemental policy. . and unforeseen. spouses Julia and Carlos Surposa. FINMAN GENERAL ASSURANCE CORPORATION v. 1986: Carlie Surposa was insured with Finman General Assurance Corporation under Finman General Teachers Protection Plan Master Policy No. In other words. Carlie Surposa. 1989: Surposa filed a complaint with the Insurance Commission which subsequently ordered FINMAN to pay Surposa the proceeds of the policy with interest.

Biagtans filed against Insular. . . the Court held that it could not be said that the killing was intentional for there was the possibility that the malefactor had fired the shot to scare the people around for his own protection and not necessarily to kill or hit the victim.Much less can it be pretended that Basilio died in the course of an assault or murder considering the very nature of these crimes." The clause. Ojeda to go with him to his residence to inquire into what was going on because he was not a regular policeman.The family was claiming the additional P5k from Insular. And he cannot be considered as making an arrest as an officer of the law. he might have thought. (US case): where the insured was waylaid and assassinated for the purpose of robbery. are purely accidental. however. . For while a single shot fired from a distance. .In Calanoc vs. . He cannot therefore be blamed solely for doing what he believed was in keeping with his duty as a watchman and as a citizen. the court rendered judgment for the insurance company and held that while the assassination of the insured was as to him an unforeseen event and therefore accidental. he later agreed to come along when prompted by the traffic policeman. LTD. for certainly he did not go there for that purpose nor was he asked to do so by the policeman. it cannot be denied that the act itself of inflicting the injuries was intentional. .Juan Biagtan was insured with Insular for P5k and a supplementary contract “Accidental Death Benefit” clause for another P5k if "the death of the Insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident . could indeed have been fired without intent to kill or injure. and upon approaching the gate of the residence he was shot and died.One night. Disposition Decision set aside BIAGTAN v. 44 SCRA 58 MAKALINTAL. Hence. "the clause of the proviso that excludes the (insurer's) liability.Whether the robbers had the intent to kill or merely to scare the victim or to ward off any defense he Page might offer. This contention was upheld by the Court of Appeals. Insular refused on the ground that the death resulted from injuries intentionally inflicted by 3rd parties and was therefore not covered. this petition. expressly provided that it would not apply where death resulted from an injury "intentionally inflicted by a third party. Ojeda for it cannot be pretended that the malefactor aimed at the deceased precisely because he wanted to take his life. While at first he declined the invitation of Atty. although received at the hands of a third party. Nor can it be said that the killing was intentional for there is the possibility that the malefactor had fired the shot merely to scare away the people around for his own protection and not necessarily to kill or hit the victim. ISSUE WON the death of the victim comes within the purview of the exception clause of the supplementary policy and. SEPARATE OPINION TEEHANKEE [dissent] . nine wounds inflicted with bladed weapons at close range cannot conceivably be considered as innocent insofar as such intent is concerned. Ojeda should not be taken as a capricious desire on his part to expose his life to danger considering the fact that the place he was in duty-bound to guard was only a block away. applies to this case. The circumstance that he was a mere watchman and had no duty to heed the call of Atty. >> an athlete in a competitive game involving physical effort who collides with an opponent and fatally injures him as a result. Ojeda where something suspicious was happening which caused the latter to ask for help. but only of the fact that such injuries have been "intentionally" inflicted — this obviously to distinguish them from injuries which. that to know the truth was in the interest of his employer it being a matter that affects the security of the neighborhood. . Travelers' Ins. CA: Where a shot was fired and it turned out afterwards that the watchman was hit in the abdomen. 1972 NATURE Appeal from decision of CFI Pangasinan. In volunteering to extend help under the situation. Co. He died. CA is controlling in this case because the insurance company wasn’t able to prove that the . . >> a hunter who shoots at his prey and hits a person instead. simply because he went with the traffic policeman. CFI ruled in favor of Biagtans.Calanoc v. In any event. in case death or injury is intentionally inflicted by any other person.Examples of unintentional: >> A gun which discharges while being cleaned and kills a bystander. while the act may not exempt the triggerman from liability for the damage done. a band of robbers entered their house. and by a person who was not even seen aiming at the victim. FACTS . No doubt there was some risk coming to him in pursuing that errand.INSURANCE 75 company from liability. but that risk always existed it being inherent in the position he was holding." .Basilio was a watchman of the Manila Auto Supply which was a block away from the house of Atty. the fact remains that the happening was a pure accident on the part of the victim. A similar possibility is clearly ruled out by the facts in this case. The victim could have been either the policeman or Atty. as contended. March 29. In the first place." Disposition CFI decision reversed. under the Accidental Death Benefit clause. exempts the company from liability HELD NO . the wound causing his death. THE INSULAR LIFE ASSURANCE COMPANY.In Hucthcraft's Ex'r vs.The exception in the accidental benefit clause invoked by the appellant does not speak of the purpose — whether homicidal or not — of a third party in causing the injuries. there is no proof that the death of Basilio is the result of either crime for the record is barren of any circumstance showing how the fatal shot was fired. hence. rightly or wrongly. ISSUE WON the injuries were intentionally inflicted HELD YES . The robbers were convicted of robbery with homicide. Perhaps this may be clarified in the criminal case now pending in court as regards the incident but before that is done anything that might be said on the point would be a mere conjecture. Juan went out of his room and he was met with 9 knife stabs. and independently of all other causes.

must be construed strictly against insurance company in cases of ambiguity. that there was no accident either. ISSUE WON what happened was an accident HELD YES Page . that the double-indemnity policy covers the insured against accidental death. under the circumstances. consequent upon. Lim had removed the magazine from the gun and believed it was no longer dangerous. 1957. regardless of any violation of law or provocation by the insured. . with his head hitting the rope of the ring. . 1957. Eduardo slipped and was hit by his opponent on the left part of the back of the head. his wife Nerissa Lim sought payment on the policy but her claim was rejected. or is an unusual effect of a known case. either with or without provocation on the part of the insured. the petitioner contends that the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy. 1992 FACTS . employed in the Itogon-Suyoc Mines.. and whether or not the attack or the defense by the third party was caused by a violation of the law by the insured. the very exception herein involved. and which is unexpected. xxx xxx xxx b. i) The insured persons attempting to commit suicide or wilfully exposing himself to needless peril except in an attempt to save human life. Inc. however. That posture is arguable.INSURANCE 76 killing was intentional. The definition that has usually been adopted by the courts is that an accident is an event that takes place without one's foresight or expectation — an event that proceeds from an unknown cause. was the only eyewitness to his death. He assured her it was not and then pointed it to his temple. negligence or intent of a third party which is unforeseen and unexpected by the insured. Bodily injury. (Burden of proof is with the insurance company) . as the secretary testified. but he died as a result of hemorrhage. causing Eduardo to fall.. the Itogon-Suyoc Mines. She pushed it aside and said it might be loaded. unusual.It is obvious from the very classification of the exceptions and applying the rule of noscitus a sociis. however. Pilar Nalagon. .The term "accident" has been defined as follows: The words "accident" and "accidental" have never acquired any technical signification in law. But what is not is that.This ambiguous clause conflicts with all the other four exceptions in the same paragraph 5 particularly that immediately preceding it in item (d) which excepts injuries received where the insured has violated the law or provoked the injury. In substance. is unusual to and not expected by the person to whom it happens. . war or atomic explosion..The petitioner. Nevertheless.Insurance. The act was precisely intended to assure Nalagon that the gun was indeed harmless. It is there stated: Exceptions —The company shall not be liable in respect of. As she watched the television. he was dead with a bullet wound in his head.' .An accident is an event which happens without any human agency or. and when used in an insurance contract are to be construed and considered according to the ordinary understanding and common usage and speech of people generally. the courts are practically agreed that the words "accident" and "accidental" mean that which happens by change or fortuitously. intracranial. July 17. being contracts of adhesion. was the holder of an accident insurance policy underwritten by the Capital Insurance & Surety Co. 1. construed as the insurance company now claims. It argued. SUN INSURANCE v. sponsored a boxing contest wherein the insured Eduardo de la Cruz participated.On January 1. with a face value of P200. from which he had previously removed the magazine." . . left. The supplementary contract enumerated exceptions.000. the parties agree that Lim did not commit suicide. June 30. CAPITAL INSURANCE 17 SCRA 554 BARRERA. an event which. All the associated words and concepts in the policy plainly exclude the accidental death from the coverage of the policy only where the injuries are self-inflicted or attended by some proscribed act of the insured or are incurred in some expressly excluded calamity such as riot.The untenability of insurer's claim that the insured's death fell within the exception is further heightened by the stipulated fact that two other insurance companies which likewise covered the insured for much larger sums under similar accidental death benefit clauses promptly paid the benefits thereof to plaintiffs beneficiaries. intentionally inflicted by a third party. It is submitted that Lim did not willfully expose himself to needless peril when he pointed the gun to his temple because the fact is that he thought it was not unsafe to do so.In the course of his bout. or voluntary co-operation. According to Nalagon. The petitioner agreed that there was no suicide. and therefore not expected. The next moment there was an explosion and Lim slumped to the floor. which would also except injuries "inflicted intentionally by a third party. Lim was in a happy mood (but not drunk) and was playing with his handgun.Eduardo de la Cruz. 1956 to November 12. CA (LIM) 211 SCRA 554 CRUZ. The only exception which is not susceptible of classification is that provided in paragraph 5(e). As beneficiary.He was brought to the Baguio General Hospital. Inc. Lim's secretary. without intention or design. 1966 NATURE Appeal from the decision of the CFI of Pangasinan FACTS . for the period beginning November 13. and unforeseen. whether caused by fault. Inc.The petitioner issued Personal Accident Policy to Felix Lim. consent. He was dead before he fell. It has also been defined as an injury which happens by reason of some violence or casualty to the insured without his design. Disposition CA Affirmed DE LA CRUZ v. Two months later. would seemingly except also all other injuries. cites one of the four exceptions provided for in the insurance contract and contends that the private petitioner's claim is barred by such provision. Jr. and defeat the very purpose of the policy of giving the insured double indemnity in case of accidental death by "external and violent means" — in the very language of the policy. He expressed assured her that the gun was not loaded. .00. . while this clause. if happening through human agency.To repeat. he stood in front of her and pointed the gun at her. .

. and (d) garments. polo-playing. steeplechasing. not covered by insurance HELD NO . CA (supra p. 2616. June 20. while the participation of the insured in the boxing contest is voluntary. pigsticking. hence.7) PHIL HOME ASSURANCE CORP v. An accident is an event that takes place without one's foresight or expectation. against ESLI to recover the sum paid under protest on the ground that the same were actually damages directly brought about by the fault. (c) 200 bags Glue 300. Section 19 of Act No.While the vessel was off Okinawa. consigned to Pan Oriental Match Company. the resulting death is within the protection of policies insuring against death or injury from accident. the Salvage Law is applicable.He instituted the action in the CFI of Pangasinan for specific performance.Furthermore. Under Article 1266 of the Civil Code.The court rendered the decision in favor of the plaintiff. caused by his participation in a boxing contest. the same are also validly demandable. death is not ordinarily anticipated to result. consigned to Ding Velayo.The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of the consignees. the present appeal. 9 Section 1. have not acquired any technical meaning. and that salvage charges are properly collectible under Act No.In the present case. the physical impossibility of the prestation extinguished defendant's obligation. and which is unexpected. Page . All consignations were made by virtue of a Bill of Lading.RTC: dismissed PHAC's complaint and ruled in favor of ESLI. the following shipment for carriage to Manila and Cebu. thus causing death and severe injuries to the crew and instantly setting fire to the whole vessel. . but it was denied. consigned to William Lines. not covered by insurance . .Simon de la Cruz.ESLI contended that it exercised the diligence required by law in the handling. illegal act and/or breach of contract of ESLI. negligence.The terms "accident" and "accidental". ESLI charged the consignees several amounts corresponding to additional freight and salvage charges. 1996 NATURE . or if something unforeseen occurs in the doing of the act which produces the injury. therefore. (b) 10 metric tons (334 bags) ammonium chloride. therefore. ISSUE WON the death of the insured was not accidental and. . . There is no accident when a deliberate act is performed unless some additional. In other words.Eastern Shipping Lines. as subrogee of the consignees. unexpected. Thus. therefore. hunting. and are construed by the courts in their ordinary and common acceptation. As the crew was trying to extinguish the fire. independent. Failure of the defendant insurance company to include death resulting from a boxing match or other sports among the prohibitive risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death.The generally accepted rule is that. it ever does. and unforeseen. Inc. . unaccompanied by anything unforeseen except the death or injury. custody and carriage of the shipment. or is an unusual effect of a known cause and. . mountaineering. consigned to Orca's Company. known as the Salvage Law. without intention and design. or shall have been abandoned by them. 2616. the cylinder suddenly exploded. the injury was sustained when he slid. freight pre-paid and in good order and condition: (a) 2 boxes internal combustion engine parts.. the father and named beneficiary of the insured. Japan. such as basketball or baseball. filed a claim with the insurance company for payment of the indemnity. racing of any kind. . was not accidental and. a small flame was detected on the acetylene cylinder located in the accommodation area near the engine room. . or motorcycling. loaded on board SS Eastern Explorer in Kobe. the policy involved herein specifically excluded from its coverage: (e) Death or disablement consequent upon the Insured engaging in football. assist in saving a vessel or its cargo from shipwreck. .SS Eastern Explorer was then found to be a constructive total loss and its voyage was declared abandoned. With respect to the additional freight charged by defendant from the consignees of the goods. . and picked up and conveyed to a safe place by other persons. shall be entitled to like reward. that the fire was caused by an unforeseen event. . the latter shall be entitled to a reward for the salvage. Disposition The decision appealed from is affirmed FORTUNE INSURANCE v. not being included in the above paragraph. death or injury does not result from accident or accidental means within the terms of an accident-policy if it is the natural result of the insured's voluntary act. In boxing as in other equally physically rigorous sports.The burning of "EASTERN EXPLORER" while off Okinawa rendered it physically impossible for defendant to comply with its obligation of delivering the goods to their port of destination pursuant to the contract of carriage. that the additional freight charges are due and demandable pursuant to the Bill of Lading.The burning of the vessel was not the fault or negligence of defendant but a natural disaster or calamity. When in case of shipwreck. an event that proceeds from an unknown cause.Defendant insurer set up the defense that the death of the insured. the vessel or its cargo shall be beyond the control of the crew. . the terms have been taken to mean that which happen by chance or fortuitously. the injury or death can only be accidental or produced by some unforeseen happening or event as what occurred in this case. Salvage operations conducted by Fukuda Salvage Company was perfectly a legal operation and charges made on the goods recovered were legitimate charges. unusual. Those who.Death or disablement resulting from engagement in boxing contests was not declared outside of the protection of the insurance contract.After the fire was extinguished.INSURANCE 77 . CA (EASTERN SHIPPING) 257 SCRA 468 KAPUNAN. and unforeseen happening occurs which produces or brings about the result of injury or death. therefore. . Inc. as used in insurance contracts. then filed a complaint before the RTC of Manila. PHAC. not expected. If.The fact that boxing is attended with some risks of external injuries does not make any injuries received in the course of the game not accidental. . giving occasion to the infliction by his opponent of the blow that threw him to the ropes of the ring. the cargoes which were saved were loaded to another vessel for delivery to their original ports of destination. where the death or injury is not the natural or probable result of the insured's voluntary act.

Philamlife exempted from paying margin fee 2.Monetary Board exempted Philamlife from payment of margin fee. consignee or insurer of the goods. Philamlife sought reconsideration but was denied. The lumping of the different agreements under a contract has resulted in the term known to the insurance world as 'treaties.In July 16. as in the reinsurance treaty provided. . On the contrary. in fact. Reasoning . WON Margin Law impairs the obligation of contract 3. reinsurance policies or cessions are contracts of insurance. Reasoning . ISSUE WON the burning of the SS Eastern Explorer rendering it a constructive total loss was a natural disaster or calamity HELD NO Ratio In our jurisprudence. Treaties are contracts for insurance. the Margin Law was approved and became effective. nothing in the treaty obligates Philamlife to remit to Airco a fixed. 1959. . its captain and its crew: (1) The acetylene cylinder which was fully loaded should not have been stored near the engine room where the heat generated therefrom could cause the acetylene cylinder to explode by reason of spontaneous combustion. NO .63 and made subsequent to July 16. fire may not be considered a natural disaster or calamity since it almost always arises from some act of man or by human means. (2) ESLI should have known that by storing the acetylene cylinder in the accommodation area supposed to be reserved for passengers.Central Bank of the Philippines collected P268. even if the transshipment took longer than necessary. In contradistinction.INSURANCE 78 . Page $610.Even if reinsurance treaty preceded the Margin Law by over nine years. and none was alleged by the parties. WON reinsurance contracts abroad would be made impractical by the imposition of the 25% margin fee HELD 1. approved and outstanding as of the date this Act takes place”.998. saying reinsurance treaty NOT EXEMPTED. FACTS . 1968 NATURE PETITION FOR REVIEW of a ruling of the Auditor General. ESLI should have easily foreseen that the acetylene cylinder. it indubitably follows that the cargo consignees cannot be made liable to respondent carrier for additional freight and salvage charges.There was no showing. and American International Reinsurance Company (Airco). (3) The fact that the acetylene cylinder was checked. It cannot be an act of God unless caused by lightning or a natural disaster or casualty not attributable to human agency. In absolving respondent carrier of any liability. . and therefore. WON the premia remitted were in pursuance of the reinsurance treaty between Philamlife and Airco of January 1959. that the fire was caused by a natural disaster. is liable for the additional charges or expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier. containing highly inflammable material. What is at issue therefore is not whether or not the carrier is liable for the loss. JANUARY 18. a "reinsurance cession" which may be automatic or facultative. and therefore exempted. which exempts certain “obligations from payment of margin fees. entered into a REINSURANCE TREATY wherein Philamlife agrees to reinsure with Airco on January 1950. these were all delivered to the consignees. an agreement between insurance companies to cover the different situations described. is ORDERED to return to petitioner Philippine Home Assurance Corporation the amount it paid under protest in behalf of the consignees herein. Auditor of CB refused to pass in audit Philamlife’s claim for refund.48 as foreign exchange margin on Philamlife remittances to Airco purportedly totalling . a domestic life insurance corp. among other things. Philamlife filed a claim for refund on the ground that the reinsurance premiums remitted were paid in pursuant to the January 1950 reinsurance treaty. Disposition Judgment appealed from is REVERSED and SET ASIDE. there is strong evidence indicating that the acetylene cylinder caught fire because of the fault and negligence of respondent ESLI. or deterioration of the goods transported by them but who. However. Ratio A reinsurance policy is thus a contract of indemnity one insurer makes with another to protect the first insurer from a risk it has already assumed.' Such a treaty is.For an exemption to come into play. Reinsurance treaties and reinsurance policies are not synonymous. and PHILIPPINE AMERICAN LIFE INSURANCE COMPANY v. among the carrier.747. was in a real danger of exploding. tested and examined and subsequently certified as having complied with the safety measures and standards by qualified experts before it was loaded in the vessel only shows to a great extent that negligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship. Inc. Respondent Eastern Shipping Lines.Note: The goods subject of the present controversy were neither lost nor damaged in transit by the fire that razed the carrier. THE AUDITOR GENERAL 22 SCRA 135 SANCHEZ. 1959. a corporation organized under the laws of the Republic of Panama. .. The practice of issuing policies by insurance companies includes. damage. a reinsurance treaty is merely an agreement between two insurance companies whereby one agrees to cede and the other to accept reinsurance business pursuant to provisions specified in the treaty. . the issuance of reinsurance policies on standard risks and also on substandard risks under special arrangements.From the foregoing premises. In fact. there must be a reinsurance policy or. particularly contractual obligations calling for payment of foreign exchange issued. . . ISSUES 1. a contract antedating the Margin Law. certain. Philamlife agreed to pay premiums for all reinsurances on an annual premium basis.Philamlife. CA sustained the trial court's finding that the fire that gutted the ship was a natural disaster or calamity. it unnecessarily exposed its passengers to grave danger and injury.

It is only after a reinsurance cession is made that payment of reinsurance premium may be exacted. .implementation of Margin Law in accordance with police power 3. without prejudice to the filing of a proper action between the parties for that purpose. 1961 and obviously bent on avoiding its liability under the reinsurance agreements with ASIAN. 2 The next day. . 9. as the reinsuring company. there is no concrete evidence that such imposition of the 25% margin fee is unreasonable.On Dec. 1961 of the reinsurance treaties had the effect of terminating Reasoning . Such municipal laws constitute part of the obligation of contract. the trial court declared 6 of the 7 reinsurance agreements in question cancelled as of Dec 31. to provide the Central Bank with an additional instrument for effectively coping with the problem and achieving domestic and international stability of our currency.FIELDMEN'S. ASIAN Page liability when the insured property was burned on February 16. entered into 7 reinsurance agreements under which the former.First. Petitioner is not forced to continue its reinsurance treaty indefinitely with Airco. This communication. So ordered. .Meanwhile one of the risks reinsured with FIELDMEN'S issued in favor of the GSIS became a . Disposition For the reasons given. it did so with the understanding that the municipal laws of the Philippines at the time said treaty was executed. FIELDMEN'S sent a new a letter on Feb. if really continuance of the existing reinsurance treaty becomes unbearable. 31 of the year in which the notice was given. and argued that even assuming it did. NO Reasoning . 1961. 1970 INC v. . 4. 1962.On various dates between April 11. 1961. 7. the petition for review is hereby denied.INSURANCE 79 obligatory sum by way of reinsurance premiums. . 1960 and Jan. Existing laws form part of the contract "as the measure of the obligation to perform them by the one party and the right acquired by the other. 2. Philamlife’s obligation to remit reinsurance premiums becomes fixed and definite upon the execution of the reinsurance cession. that contract itself provides that petitioner may potestatively write finis thereto on ninety days' written notice.On Dec. 1962. If the obligation does not inhere and subsist in the contract itself. the cancellation to take effect as of Dec. At the same time. 1961. When petitioner entered into the reinsurance treaty of January 1. filed a petition for declaratory relief with the CFI of Manila to seek a declaration that all the reinsurance contracts entered into between them had terminated as of December 31. 1961. Not having received any formal reply from ASIAN. 19 letter were considered sufficient notice of cancellation — thereby rendering the reinsurance agreements terminated as of December 31. 17. became an unwritten condition thereof. Costs against petitioner. 1961 and to obtain an order directing ASIAN to render final accounting of the transactions between them with respect to said reinsurance treaties as of the cut-off date. NO Ratio. did not elicit any reply from ASIAN. to reduce the excessive demand-for foreign exchange. 1961 FIELDMEN'S sent another letter to ASIAN expressing regrets at alleged violations committed by the latter with respect to the various agreements between them and reiterated its position that it would consider itself "no longer at risk for any reinsurance and/or cession" given by ASIAN which might be in force on Dec. . relying on the sufficiency of its notice of termination dated September 19. a specified portion of the amount of insurance underwritten by ASIAN upon payment to FIELDMEN'S of a proportionate share of the gross rate of the premium applicable with respect to each cession after deducting a commission. July 31. 1961 — the liability of FIELDMEN'S with respect to policies or cessions issued under two of the said agreements prior to their cancellation continued to have full force and effect until the stated expiry dates of such policies or cessions. . Feb. General of October 24. The reinsurance treaty per se cannot give rise to a contractual obligation for the payment of foreign exchange. and the Fieldmen's Insurance Company.. served notice to ASIAN of the former's desire to be relieved from all participation in its various agreements with the latter effective Dec. 1961 the Asian Surety & Insurance Company. and the ruling of the Auditor FACTS .On appeal to the CA. 1961 denying refund is hereby affirmed. . the decision of the trial court was substantially affirmed. 1950 with Airco. 1961 and requested ASIAN to submit its final accounting of all cessions made to the former for the preceding months when the reinsurance agreements were in force. 31. -Rationale of Margin Law: to reduce the excessive demand on and prevent further decline of our international reserves. as the ceding company undertook to cede to the latter. By way of special defense Asian contended that even if the Sep. 31. 1961 because the letter was merely an expression of FIELDMEN'S desire to cancel the treaties and not a formal notice of cancellation as contemplated in their reinsurance agreements.In its answer below ASIAN denied having received FIELDMEN'S letter dated Sep 19. Inc.On Sep. 31. FIELDMEN'S could not have terminated the reinsurance treaties as of Dec 31. it upheld ASIAN'S position that all cessions of reinsurance made by it to FIELDMEN'S prior to the cancellation of the reinsurance treaties continued in full force and effect until expiry dates and ordered FIELDMEN'S to make an accounting of its business transactions with ASIAN within 30 days. 25. Said agreements were to take effect from certain specific dates and were to be in force until cancelled by either party upon previous notice of at least 3 months by registered mail to the other party. propio vigore. ISSUE WON the cancellation as of Dec. as it is only after Philamlife seeks to remit that reinsurance premium that the obligation to pay the margin fee arises. 1962 reminding ASIAN of the cancellation of all the reinsurance treaties and cessions as of Dec. 1961. FIELDMEN'S INSURANCE CO SURETY & INSURANCE CO INC 34 SCRA 36 MAKALINTAL. 19. Second. Since the policy was issued on July 1. but in the law applicable to the contract. Inc. with the slight modification that the order for accounting was eliminated. although admittedly received by ASIAN on Sep. it was supposed to expire on July 1. 17. 1961. by means of registered mail. ASIAN immediately notified FIELDMEN'S of said fire loss. 1961 FIELDMEN'S. 31. 1962.

Such cessions continued to be in force until their respective dates of expiration. Disposition judgment appealed from the TC is affirmed ARTEX DEVELOPMENT CO INC v. The CFI rendered judgment in favor of plaintiff. as pursuant to Art VIII of the Reinsurance Agreement between the parties. 1962 FACTS . if in the course of the settlement of a loss. and it does not appear that any claim by or liability in favor of the insured has actually arisen under any of the reinsurance cessions made prior to such cancellation. insofar as the two reinsurance agreements are concerned.With respect to the other 4 agreements. .INSURANCE 80 also the liability of FIELDMEN'S as reinsurer with respect to policies or cessions issued prior to the termination of the principal reinsurance contracts or treaties HELD NO to the 2 reinsurance contracts . 5880 issued by plaintiff which was later burned. Despite repeated demands by plaintiff. Again. In the instant case. but instead referred it to the Insurance Commissioner. WELLINGTON INSURANCE CO INC 51 SCRA 352 TEEHANKEE. in the stipulation of facts defendant admitted that plaintiff had paid its liability and defendant likewise admitted that it ignored plaintiff’s demands for reimbursement for defendant’s failure to pay its share as reinsurer. . . But once the share is accepted. Inc. RURAL INSURANCE 4 SCRA 343 BARRERA. The Court denied the motion and required defendant to answer. and that said agreement has not yet been abrogated so the liability of either to the other is not yet known.There is no connection between Art 1206 NCC and the agreement of this action. Future conflicts of the same nature as those which have motivated the present action can of course be obviated by using more precise and definite terminology in the reinsurance agreements which the parties may enter into henceforth..00 the buildings. 1973 FACTS Wellington Insurance Co.Of the 6 reinsurance contracts. . the parties submitted their case for decision stipulating the ff facts: defendant admits the allegations of the complaint and that plaintiff admits that the issues of the complaint were not submitted to a Board of Arbitrators as provided in par VIII of the complaint. and that no useful purpose would be served by defining the respective rights and obligations of the parties thereunder. the parties agreed to submit all disputes to a board of arbitrators. alleging that the nature of the agreement is “self-liquidating between the parties”. defendant refused to pay.Plaintiff Equitable Insurance file a complaint with the CFI of Manila against defendant Rural Insurance alleging. against loss or damage by fire or lighting upon payment of the plaintiff of the corresponding premiums. 6062 which also burned.Defendant filed its answer.. Defendant prayed that the complaint be dismissed and plaintiff filed a motion for judgment on the pleadings which the court denied. Since it was under one of said agreements that the reinsurance cession corresponding to the GSIS policy had been made." .Defendant filed a motion to dismiss on the ground that it states no cause of action.024 for which plaintiff sent to defendant a statement of account for payment by the latter.The requirement of submission for decision to 2 arbitrators or an umpire the matter of losses by fire or the liability of the parties thereto under Art VIII of the agreement arises only if the same is disputed by one of the parties." and the 4th paragraph of Article VI of the Personal Accident Reinsurance Treaty states: "4. WON Equitable had no cause of action as the matter was not referred to the decision of arbitrators 2. there is no dispute between the parties. 2 contain provisions. . Page ISSUES 1. and it is so used in this particular case. . before a court action can be brought. that they entered into a reciprocal facultative reinsurance agreement. The said agreements have been cancelled. Pursuant to said agreement. . insured for P24. FIELDMEN'S cannot avoid liability which arose by reason of the burning of the insured property. . plaintiff reinsured for P2k with defendant the stock covered by fire insurance Policy No. the company will be deemed to have waived the condition precedent with reference to arbitration and a suit upon the policy will lie. . that said . there is clearly no merit in FIELDMEN'S claim that their cancellation carried with it ipso facto the termination of all reinsurance cessions thereunder. Inc. The said treaties provide "that in the event of termination of this Agreement .346.509. On the termination of this Agreement from any cause whatever. the obligation is absolute and the liability assumed thereunder can be discharged by only one way—the payment of the share of the losses. as first cause of action. the liability of the REINSURER (Fieldmen's) under any current cession including any amounts due to be ceded under the terms of this Agreement and which are not cancelled in the ordinary course of business shall continue in full force until their expiry unless the COMPANY (Asian) shall. elect to withdraw the existing cessions . defendant refused to pay its share of the loss of P1. the reinsurer becoming the reinsured and vice versa. the share of the loss of defendant as per insurance agreement was computed at P2. NO . wherein they agreed to cede to each other. . stocks and machinery of plaintiff Artex Development Co. EQUITABLE INSURANCE v.On the second cause of action. prior to the thirty-first December next following such notice. June 27. 2. which clearly and expressly recognize the continuing effectivity of policies ceded under them for reinsurance notwithstanding the cancellation of the contracts themselves. the liability of the Fieldmen's under current cessions shall continue in full force and effect until their natural expiry .334 hence said complaint.Instead of going into a formal hearing. the action of the company or its agents amounts to refusal to pay. plaintiff reinsured for P2k with defendant stock covered by fire insurance Policy No. Hence this appeal. WON in a facultative obligation the right to choose an alternative remedy lies only with the debtor (here the defendant) under Art 1206 HELD 1. as it was in the case at bar. January 31.Thus. it would seem that the petition for declaratory relief is moot. merely to define the right of the reinsurer to accept or not to accept participation in the risk insured. NO .. The term “facultative” is used in reinsurance contracts. . As held in Maligad v United Assurance Co.

1982.The comprehensive insurance policy issued by petitioner Perla undertook to indemnify the private respondents against loss or damages to the car (a) by accidental collision or overturning.At around 2:30pm Nov9. or with his permission. It also ordered the dismissal of the Third party complaint against ThirdParty Defendant. P397. 1983. . or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear. the only remaining liability subject of litigation shall be the proportion of the loss reinsured with or through Alexander and Alexander. litigation expenses and attorney's fees HELD 1. namely. who was driving said car before it was carnapped. 1982. Wellington entered into a contract of reinsurance with Alexander and Alexander.000.After petitioners' separate MFRs were denied by CA. With regard the balance unpaid. .554. of New York. 1992 NATURE Petition for certiorari by Perla Compania de Seguros and FOC Credit Corporation seeking to annul and set aside CA decision revering the RTC decision for replevin and damages. USA. TC ordered sps Lim to pay jointly and severally.6M paid by the insurer in full and final settlement of all or any claims of Artex against its insurer.034. in the sum of P77. Supercars. payable in monthly installments according to the schedule of payment indicated in said note. which states.40 and the total business interruption loss was P3. After trial on the merits. 1982 on the ground that Evelyn Lim. Evelyn Lim. demands. stocks and machineries of plaintiffs spinning department were burned.106. Constabulary Highway Patrol Group. 1982. assigned to petitioner FCP Credit Corporation (FCP for brevity) its rights. . USA.683.Private respondents spouses Herminio and Evelyn Lim executed a promissory note in favor of Supercars. Inc. May 7.055. self-ignition or lightning or . title and interest on said promissory note and chattel mortgage as shown by the Deed of Assignment. of New York. denied private respondents' claim. ISSUE WON the insured (Artex) has a cause of action against the reinsurer HELD NO . Provided that the person driving is permitted. who in turn filed an amended third party complaint against petitioner Perla on Dec8. external explosion. respectively.On the same date. petitioner FCP filed a complaint against private respondents. 1983 until fully paid. She also filed a complaint with the Headquarters. leaving a balance of P3. CA reversed said decision . or has been permitted and is not disqualified by order of a Court of Law or by reason of any enactment or regulation in that behalf. petitioners filed these separate petitions for review on certiorari. in accordance with the licensing or Page other laws or regulations. has no cause of action against the reinsurer.43 and P1. WON there was grave abuse of discretion on the part of the appellate court in holding that private respondents did not violate the insurance contract because the authorized driver clause is not applicable to the "Theft" clause of said Contract 2. It discharges its insurer from all actions." . said insurance company should be made to pay the remaining balance of the promissory note and the chattel mortgage contract. private respondent filed a claim for loss with the petitioner Perla but said claim was denied on Nov18.000. WON the loss of the collateral exempted the debtor from his admitted obligations under the promissory note particularly the payment of interest.. which is registered under the name of private respondent Herminio Lim and insured with the petitioner Perla Compania de Seguros. It is expressly provided in Section 91 the Insurance Act 1 that "(T)he original insured has no interest in a contract of insurance.INSURANCE 81 properties were insured for an additional sum of P883. not being privy to the reinsurance contract.Notice of the loss and damage was given the defendant.00.The counsel for Artex filed a Manifestation saying that in view of the Deeds of Discharge and Collateral Agreement. 1983. that as per report of the adjusters. plaintiff the sum of P55. proceedings. since the carnapped vehicle was insured with petitioner Perla. to drive the Scheduled Vehicle. Inc.00. . as well as the cost of suit. went to the nearest police substation to make a police report regarding said incident. said vehicle was carnapped while parked at the back of Broadway Centrum. .08 on its business interruption loss. .On Nov11.00. 1982." PERLA COMPANIA DE SEGUROS v.748. the total property loss of the plaintiff was the sum of P10. the reinsurance contract in favor of the insured or a manifest intention of the contracting parties to the reinsurance contract to grant such benefit or favor to the insured. Consequently. immediately called up the Anti-Carnapping Unit of the Philippine Constabulary to report said incident and thereafter.On Nov10. Inc.Perla.624.200. that defendant insured plaintiff against business interruption (use and occupancy) for P5.That defendant has paid to the plaintiff the sum of P6. .864. Evelyn Lim reported said incident to the LTO in compliance with the insurance requirement. however. the insured. (Perla for brevity) for comprehensive coverage. costs and expenses in respect thereof. NO .On July25. FACTS .The buildings. . petitioner FCP demanded that private respondents pay the whole balance of the promissory note or to return the vehicle but the latter refused. CA(LIM) 208 SCRA 487 NOCON.134.00.870. was in possession of an expired driver's license at the time of the loss of said vehicle which is in violation of the authorized driver clause of the insurance policy. to wit: "AUTHORIZED DRIVER: Any of the following: (a) The Insured (b) Any person driving on the Insured's order.940. claims.813. or assignment of.00. ISSUE 1.Upon appeal. The document recited further that Artex acknowledges receipt of the sum of P3.000. and secured by a chattel mortgage over a brand new red Ford Laser. Inc.07 of the property loss suffered by plaintiff and P1. (b) by fire.460. with notice to private respondents spouses.00. . Wellington contends that Artex should have been directed against the reinsurers to cover the liability and not against Wellington.93 plus interest thereon at the rate of 24% per annum from July 2. private respondents requested from petitioner FCP for a suspension of payment on the monthly amortization agreed upon due to the loss of the vehicle and.481.On Nov17.Unless there is a specific grant in. . . Inc. who was using the vehicle before it was carnapped.

As to the award of moral damages. 1988 NATURE Petition for review on certiorari FACTS . that should apply. it would have paid the proceeds thereof directly to petitioner FCP. this does not mean that private respondents are bound to pay the interest.Because petitioner Perla had unreasonably denied their valid claim. SHAFER v. . Inc. the commission of which was attended by intent. The 'authorized driver clause' in a typical insurance policy as in contemplation or anticipation of accident in the legal sense in which it should be understood. thereby reducing indemnity to a shadow. required private respondents to insure the automobile and to make the proceeds thereof payable to Supercars. housebreaking or theft.In view of the foregoing discussion. To rule otherwise would render car insurance practically a sham since an insurance company can easily escape liability by citing restrictions which are not applicable or germane to the claim. the latter should be ordered to pay petitioner FCP the amount of P55. e. thereby causing damage in the total amount of P12." . representing the unpaid installments from December 30. Because of the peculiar relationship between the three contracts in this case. Such discretion. Besides. and. over the automobile the former purchased from the latter. Therefore. Instead. 2.93. 18 plus legal interest from July 2. We hold that the Court of Appeals did not err in requiring Page petitioner Perla to indemnify private respondents for the loss of their insured vehicle. . .There is no causal connection between the possession of a valid driver's license and the loss of a vehicle. The court agrees with FCP that Lim spouses are not relieved of their obligation to pay the former the installments due on the promissory note on account of the loss of the automobile.055. Inc. in the City of Olongapo. However. for third party liability. November 14.From the abovementioned provision that upon the loss of the insured vehicle. The distinction often seized upon by insurance companies in resisting claims from their assureds between death occurring as a result of accident and death occurring as a result of intent may apply to the case at bar. will not be disturbed on appeal. If the claim on the insurance policy had been approved by petitioner Perla. . the chattel mortgage contract and the insurance policy. who was on board of the said Volkswagen car sustained physical injuries which injuries causing deformity on the face. and (c) by malicious act. with the knowledge of private respondents.. Inc.The risk against accident is distinct from the risk against theft. Lim spouses are obliged to pay Supercars. in the course of the trial . exemplary damages and attorney's fees. awards for moral and exemplary damages. Inc. . in turn. the promissory note.Sherman Shafer obtained a private car policy over his Ford Laser from Makati Insurance Company. The information said that on or about the 17th day of May 1985. The promissory note and chattel mortgage were assigned by Supercars.Private respondents can not be said to have unduly enriched themselves at the expense of FCP since they will be required to pay the latter the unpaid balance of its obligation under the promissory note. the loss in the present case was caused by theft. Inc. private respondents should not be made to pay the interest. 1982 up to July 1.Where a car is unlawfully and wrongfully taken without the owner's consent or knowledge. 1983. private respondents are legally entitled to the same since Perla had acted in bad faith by unreasonably refusing to honor the insurance claim of the private respondents.. the promissory note is unaffected by whatever befalls the subject matter of the accessory contract. Sr. who was a passenger in the Volkswagen car.93.Under the promissory note. and this would have had the effect of extinguishing private respondents' obligation to petitioner FCP. The owner of the damaged Volkswagen car filed a separate civil action against petitioner for damages. The chattel mortgage. the loss of the insured vehicle did not result from an accident where intent was involved. 1983 until fully paid. the contract of indemnity was procured to insure the return of the money loaned from petitioner FCP.INSURANCE 82 burglary. But in the present case. . it is the "THEFT" clause. such taking constitutes theft. did not reserve his right to file a separate civil action for damages. Sr. despite the fact that at first glance there is no relationship whatsoever between the parties thereto. Being the principal contract.055.If the insured vehicle had figured in an accident at the time she drove it with an expired license. 1983 until fully paid. FCP. The chattel mortgage constituted over the automobile is merely an accessory contract to the promissory note. litigation expenses and attorney's fees stipulated in the promissory note.However. as well as attorney's fees are left to the sound discretion of the Court. while Jovencio Poblete. and the unjustified refusal of petitioner Perla to recognize the valid claim of the private respondents should not in any way prejudice the latter. As mentioned above. the Court is compelled to construe all three contracts as intimately interrelated to each other. and not in contemplation or anticipation of an event such as theft. . Shafer hit and bumped a Volkswagen car owned and driven by Felino llano y Legaspi.The unpaid balance on the promissory note should be paid. Private respondents were able to secure an insurance policy from petitioner Perla. if well exercised. the insurance company Perla undertakes to pay directly to the mortgagor or to their assignee. and not just the installments due and payable before the automobile was carnapped. i. therefore. To secure said promissory note. an information for reckless imprudence resulting in damage to property and serious physical injuries was filed against shafer.345. appellee Perla Compania could properly resist appellants' claim for indemnification for the loss or destruction of the vehicle resulting from the accident. as erronously held by the CA . the amount stated therein in accordance with the schedule provided for. The decision appealed from is hereby affirmed as to all other respects. private respondents constituted a chattel mortgage in favor of Supercars.. No pronouncement as to costs. and not the "AUTHORIZED DRIVER" clause.00 and as a result thereof one Jovencio Poblete. During the effectivity of the policy. with legal interest from July 2. then. liquidated damages and attorney's fees as stipulated in the promissory note. and the same was made specifically payable to petitioner FCP. Disposition the assailed decision of the CA is hereby MODIFIED to require private respondents to pay petitioner FCP the amount of P55. the outstanding balance of the mortgage at the time of said loss under the mortgage contract. as shown in the statement of account prepared by petitioner FCP. . JUDGE 167 SCRA 386 PADILLA. to petitioner FCP. . private respondents were justified in asking petitioner FCP to demand the unpaid installments from petitioner Perla.

this petition.A third party complaint is a device allowed by the rules of procedure by which the defendant can bring into the original suit a party against whom he will have a claim for indemnity or remuneration as a result of a liability established against him in the original suit. Sr. and that this result can be avoided by allowing the third party complaint to remain. or TPL) is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles. and to give such injured person a certain beneficial interest in the proceeds of the policy. based on the premise that unless the accused (herein petitioner) is found guilty and sentenced to pay the offended party (Poblete Sr. the insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends. i.Heirs of Lope Maglana.Lope Maglana was an employee of the Bureau of Customs whose work station was at Lasa. and does not depend on the recovery of judgment by the injured party against the insured. The victims and/or their dependents are assured of immediate financial assistance. bumped the motorcycle driven by the deceased.The liability of the insurance company under the Compulsory Motor Vehicle Liability Insurance is for loss or damage. No appeal was . the PUJ jeep was overtaking another passenger jeep that was going towards the city poblacion. One day.. . The court further stated that the better procedure is for the accused (petitioner) to wait for the outcome of the criminal aspect of the case to determine whether or not the accused. . plus five thousand pesos in the concept of moral and exemplary damages with costs. then the motion to dismiss the third party complaint should be denied. Respondent insurance company's contention that the third party complaint involves extraneous matter which will only clutter. The point of impact was on the lane of the motorcycle and the deceased was thrown from the road and met his untimely death. under the insurance policy. also the third party plaintiff. Where an insurance policy insures directly against liability. . operated and owned by defendant Destrajo. but the motion was denied. such claim of petitioner against the insurance company cannot be regarded as not related to the criminal action. in the amount of twelve thousand pesos with subsidiary imprisonment in case of insolvency. The general purpose of statutes enabling an injured person to proceed directly against the insurer is to protect injured persons against the insolvency of the insured who causes such injury. August 6. They are predicated on the need for expediency and the avoidance of unnecessary lawsuits.. Sr. here in Davao City. Hence. It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured as if such injured person were specifically named in the policy. . Into was sentenced to suffer an indeterminate penalty.) has sought to recover civil damages. when he was on his way to his work. CONSOLACION 212 SCRA 268 ROMERO. .Compulsory Motor Vehicle Liability Insurance (third party liability. VDA DE MAGLANA v. He died on the spot. Sr.INSURANCE 83 in the criminal case. . .In the event that the injured fails or refuses to include the insurer as party defendant in his claim for indemnity against the insured. with all the accessory penalties provided by law. The occurrence of the injury to the third party immediately gave rise to the liability of the insurer under its policy. arose from the offense charged in the criminal case. 6 Petitioner moved for reconsideration of said order. .The court issued an order dismissing the third party complaint on the ground that it was premature.During the pendency of the civil case. If it appears probable that a second action will result if the plaintiff prevails. While overtaking. The questioned order dated 24 April 1987 is SET ASIDE and a new one entered admitting petitioner's third party complaint against the private respondent Makati Insurance Company. Petitioner may thus raise all defenses available to him insofar as the criminal and civil aspects of the case are concerned. testified on his claim for damages for the serious physical injuries which he claimed to have sustained as a result of the accident. was impliedly instituted with the criminal case. filed an action for damages and attorney's fees against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO). and statutes are to be liberally construed so that their intended purpose may be accomplished. the PUJ jeep of defendant Destrajo running abreast with the overtaken jeep. for the alleged bodily injuries caused to said third party. The claim of petitioner for payment of indemnity to the injured third party. The civil aspect of the offense charged. from which the injured (Jovencio Poblete. Sr.e. regardless of the financial capacity of motor vehicle owners. has a cause of action against the third party defendant for the enforcement of its third party liability (TPL) under the insurance contract. From the investigation conducted by the traffic investigator. Not even a "no Page action" clause under the policy-which requires that a final judgment be first obtained against the insured and that only thereafter can the person insured recover on the policy can prevail over the Rules of Court provisions aimed at avoiding multiplicity of suits. Poblete. hence.The PUJ jeep that bumped the deceased was driven by Pepito Into. he met an accident that resulted in his death. 13 Third party complaints are allowed to minimize the number of lawsuits and avoid the necessity of bringing two (2) or more actions involving the same subject matter. and to indemnify the heirs of Lope Maglana. Sr. the third party complaint is without cause of action. Inc. serious physical injuries allegedly suffered by Jovencio Poblete.) indemnity or damages. 1992 NATURE Petition for certiorari FACTS . complicate and delay the criminal case is without merit.The injured for whom the contract of insurance is intended can sue directly the insurer. the latter is not prevented by law to avail of the procedural rules intended to avoid multiplicity of suits. An information for homicide thru reckless imprudence was also filed against Pepito Into. Disposition instant petition is GRANTED. .There is no need on the part of the insured to wait for the decision of the trial court finding him guilty of reckless imprudence. ISSUE WON the court a quo erred in dismissing petitioner's third party complaint on the ground that petitioner had no cause of action yet against the insurance company HELD YES .

" Hence. namely respondents Sio Choy and San Leon Rice Mill. and attorney’s fees payable by La Mallorca and sentenced Far Eastern to pay La Mallorca P10. Since under both the law and the insurance policy. The defendant insurance company is ordered to reimburse defendant Destrajo whatever amounts the latter shall have paid only up to the extent of its insurance coverage. We categorically ruled thus: While it is true that where the insurance contract provides for indemnity against liability to third persons. For if petitioner-insurer were solidarily liable with said.00.Similarly. . Br. primary and solidary with the jeepney operator because the petitioners became direct beneficiaries under the provision of the policy which. the insurer's liability accrues immediately upon the occurrence of the injury or even upon which the liability depends. In the case at bar. that of the insured is based on tort. they argued that the P20. the creditor may enforce the entire obligation against one of the solidary debtors.Petitioners filed a motion for the reconsideration of the second paragraph of the decision contending that AFISCO should not merely be held secondarily liable because the Insurance Code provides that the insurer's liability is "direct and primary and/or jointly and severally with the operator of the vehicle. 1957. two (2) respondents by reason of the indemnity contract against third party liability under which an insurer can be directly sued by a third party this will result in a violation of the principles underlying solidary obligation and insurance contracts. the insurer undertakes for a consideration to indemnify the insured against loss. moral and exemplary damages. FAR EASTERN SURETY v. while denying responsibility. Inc. the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault.000. instituted a third party complaint against Far Eastern Surety to recoup from the latter any award for damages that might be recovered by the passengers. is a stipulation pour autrui. and does not depend on the recovery of judgment by the injured party against the insured. AFISCO's liability is only up to P20. funeral and burial expenses of the deceased. found the taxi company liable for damages to the passengers on the strength of its representation contained in the sticker above noted that the passengers were insured against accidents.000.AFISCO argued that since the Insurance Code does not expressly provide for a solidary obligation.00 representing loss of income is INCREASED to P192. Court of Appeals. v. 1968 NATURE Appeal by petition for review from a CA judgment FACTS . and to give such injured person a certain beneficial interest in the proceeds of the policy .000. and attorney's fees and costs of suit. . . This was done to entice the public into patronizing La Mallorca. .The two passengers instituted a suit for damages against La Mallorca who. whose liability under the insurance policy is also P20. as incorrectly held by the trial court.00.901. Judge.000. damage or liability arising from an unknown or contingent event. Inc.The lower court rendered a decision finding that Destrajo had not exercised sufficient diligence as the operator of the jeepney ordering him to pay plaintiffs the sum for loss of income.While in solidary obligations.On appeal.It would appear from the case that a sticker was placed in all the taxis of La Mallorca stating that passengers of the taxis were insured against accidents. the presumption is that the obligation is joint.000.70 in accordance with the decision of the lower court.000.00 under the no-fault clause. however. petitioner as insurer of Sio Choy. In so ruling. we cannot agree that AFISCO is likewise solidarily liable with Destrajo. the CA overruled the defense of the insurance company to the effect that it was . petitioners herein cannot validly claim that AFISCO.However.00.The underlying reason behind the third party liability (TPL) of the Compulsory Motor Vehicle Liability Insurance is "to protect injured persons against the insolvency of the insured who causes such injury.00 to P50.800.de Misa and Araceli Pinto hired a taxi cab operated by La Mallorca on September 3. The award of P28. In Malayan Insurance Co. on its third party liability insurance. can be held solidarily liable with Destrajo for the total amount of P53. Disposition present petition is hereby GRANTED. then the liability of the insurer is secondary only up to the extent of the insurance coverage. this Court had the opportunity to resolve the issue as to the nature of the liability of the insurer and the insured vis-a-vis the third party injured in an accident. such third persons can directly sue the insurer." Petitioners filed a second motion for reconsideration reiterating that the liability of the insurer is direct. "[w]here an insurance policy insures directly against liability. 75. . the second paragraph of the dispositive portion of the decision in question may have unwittingly sown Page confusion among the petitioners and their counsel. although only up to the extent of the insurance coverage. .000. the CA. ISSUE WON AFISCO can be held directly liable HELD YES . in effect.00 coverage of the insurance policy issued by AFISCO. ." Since petitioners had received from AFISCO the sum of P5.Socorro Dancel Vda.00 and the death indemnity of P12.INSURANCE 84 interposed by accused who later applied for probation.As this Court ruled in Shafer vs.000. This motion was likewise denied for lack of merit.00. MISA 25 SCRA 663 REYES. . RTC of Olongapo City. while holding that the collision was due to the fault of the driver of the gravel and sand truck. be made "solidarily" liable with the two principal tortfeasors.000. should have been awarded in their favor. The liability of the insurer is based on contract. ..The trial court awarded to Misa and Pinto actual.The lower court denied the motion for reconsideration ruling that since the insurance contract "is in the nature of suretyship. . but it cannot. in an insurance contract." . The taxi they were riding in collided with a gravel and sand truck resulting to injuries to both Misa and Pinto. is liable to respondent Vallejos (the injured third party). . What should have been clearly stressed as to leave no room for doubt was the liability of AFISCO under the explicit terms of the insurance contract. . October 26. . AFISCO's liability is now limited to P15. moral damages.

YES . provided that. the use of the motor vehicle. Judge Alikpala rendered judgment on the merits.000. but are to be assigned as errors and reviewed in the appeal properly taken from the decision rendered by the trial court on the merits of the case. this would not alter the undisputed fact that Amar's licence had indeed been confiscated and a TVR issued to him. In any event.driver Perfecto Amar. Notice of the judgment was served on the parties in due course. cost and expenses which the insured shall become legally liable.It would seem fairly obvious that whether the LTC agent was correct or not in his opinion that driver Amar had violated some traffic regulation warranting confiscation of his license and issuance of a TVR in lieu thereof. the liability of the said insurance company based on its insurance contract is limited to the recovery by the insured of all sums. the findings of the CA and the trial court that the causative factor of the mishap was the negligence of the gravel and truck driver would have been sufficient to relieve the taxi company of any liability arising from the accident. . 1988 NATURE Motion praying that Judge Alikpala be declared guilty of contempt of court for having decided the case on the merits despite the pendency in this Court of the certiorari action instituted by the plaintiffs FACTS . April 15.e. . and the TVR had already expired at the time that the vehicle being operated by him killed two children by accident. loss by theft excluded.The award for damages made to the passengers was exclusively predicated on the representation made by La Mallorca that its passengers were insured against accidents and not because it was at fault in causing the accident.200.. or (b) any person driving on the insured order or with his permission. not such an error as may be branded a grave abuse of discretion.. La Mallorca.00 as attorney's fees.000. but had been renewed. a fact which it expressly excepted from liability under the policy. whether it was at fault or not. She amended her complaint shortly thereafter to include Diman & Co.. such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.Even positing error in the Judge's analysis of the evidence attempted to be introduced and his rejection thereof. the managing partner of Diman & Co. Neither would proof of the renewal of Amar's license change the fact that it had really been earlier confiscated by the LTC agent. However. under a so-called 'comprehensive coverage" policy. belonging to a partnership known as Diman & Company driven by its driver.000. Peza attempted to neutralize that fact by(1) the issuance of the TVR by the LTC officer to Amar. ISSUE WON Far Eastern Surety is liable to the insured on its insurance policy HELD NO . . WON confiscation of license and expiration of TVR of the driver would serve as bar for Peza in recovering from Empire HELD 1. PEZA v. . A motion for reconsideration was filed in and dismissed by the CA. Disposition The decision of the CA is modified by eliminating the award against Far Eastern. the established principle is "that ruling of the trial court on procedural questions and on admissibility of evidence during the course of the trial are interlocutory in nature and may not be the subject of separate appeal or review on certiorari. P10. Reasoning . The father agreed to accept P6. .In this case. i. La Mallorca accepted the responsibility for damages or injuries to passengers even if it had no fault at all. They were killed. the SC ruled that it neither authorized nor consented to the representations made by the taxi company to its passengers. since the case was then already ripe for adjudication.The taxi company is adjudged to be the sole party responsible for the award.00 as exemplary damages. .. Perfecto Amar. or arising out of. La Mallorca has insured its passengers against accidents.Peza thereafter sued Empire to recover this sum of P6. was involved in accidents caused by.Placida Peza. that the person driving is permited in accordance with the licensing or other laws or regulations to drive the Motor vehicle or has been so permitted and is not disqualified by order of the Court of Law of by reason of any enactment or regulation in that behalf from driving such Motor Vehicle. Laguna. Disposition petition is DISMISSED for lack of merit .00 as moral damages. . The policy was in force at the time of the accident. was not permitted by law and was in truth disqualified to operate any motor vehicle. The judgment ordered dismissal of the case for failure on the part of the plaintiff to prove their cause of action against Empire.INSURANCE 85 responsible only if the insured.In the case of the insurance company.00 in fun settlement of the liability of the vehicles owner and driver. only having a temporary operator's permit (TVR) [already expired] his driver’s license having earlier been confiscated by an agent of the Land Transportation Commission for an alleged violation of Land Transportation and Traffic Rules. The insurance company therefore cannot be held liable for the award. it is clear that it was at most an error of judgment. for payment of compensation to the family of the 2 children who died as a result of the accident. In other words. against which the writ of certiorari will lie.Judge Alikpala did not admit such evidence ISSUES 1. It was insured with the Empire Insurance Co. and Peza paid him this sum.vehicular accident with 2 children running across the path of a Chevrolet "Carry-All". Empire refused to pay on the ground that the driver had no authority to operate the vehicle.. as well as P20. filed a claim with Empire.00 as actual damages. as it was passing a national highway at barrio Makiling Calamba. ALIKPALA 160 SCRA 31 NARVASA. What Peza did was to negotiate directly with the deceased children father for an out-of-court settlement. as alternative party plaintiff. (a) the insured. namely. Inc. in proof of the Page proposition that there was no reason for confiscation of Amar's license (2) Amar's license had not expired. As such. WON Judge Alikapala committed grave abuse of discretion in not admitting evidence 2. in view of the sticker in all of its taxicabs.In the meantime. NO . and P10. 2.200.Empire's basic defense to the suit was anchored on the explicit requirement in the policy limiting the operation of the insured vehicle to the "authorized driver" therein defined.

In no case. Inc. Rodriguez was struck by a De Dios passenger bus owned by respondent De Dios Transportation Co. NATURE Petition for review the decision of CA affirming in toto the damages awarded to private respondent by the trial court. and (b) Death certificate and evidence sufficient to establish. shall be sufficient evidence to substantiate the claim: (a) Police report of accident. Orders of CFI ordering Perla to pay respondents immediately P5000 ANNULLED and SET ASIDE WESTERN GUARANTY CORPORATION (RODRIGUEZ & DE DIOS TRANS) 185 SCRA 652 FELICIANO. Reasoning . If the victim is an occupant of a vehicle.INSURANCE 86 Perla denied its liability under the above provision and said that the insurer of the vehicle that the respondents were riding (Malayan Insurance in this case) should be liable. That for purposes of this section (i) The indemnity in respect of any one person shall not exceed P5. for protection against third party liability. She was treated at the Protacio Emergency Hospital and later on hospitalized at the San Juan De Dios Hospital. among other things. August 8. FACTS . although in a limited amount. or (c) Medical report and evidence of medical or hospital disbursement in respect of which refund is claimed. CA PERLA COMPANIA DE SEGUROS v. shall the Company's total payment under both . as respondents were not occupants of the bus. (ii) The following proofs of loss. Priscilla was thrown to the ground. 378 may recover against the owner of the vehicle responsible for the accident. by using the word “shall”. if the victim is not an occupant of a vehicle). and Perla (as insurer of the bus). 378 from Perla. claim shall lie against the insurer of the directly offending vehicle. Respondent bus company was insured with petitioner Western Guaranty Corporation ("Western") under its Master Policy which provided. 378 HELD NO Ratio The law is very clear – the claim shall lie against the insurer of the vehicle in which the “occupant xxx is riding. In any other case (i. The claimant is not free to choose from which insurer he will claim the “no fault indemnity. In turn..” and no other. the claim shall lie against the insurer of the vehicle in which he is riding. where proof of fault or negligence is not necessary for payment of any claim for death or injury to a passenger or to a 3rd party. 378. the relevant section reading as follows: Section 1. are established: 1.Perla was the insurer of a Superlines bus which figured in a collision with a III Scout (it’s a kind of vehicle). causing her serious anxiety and moral distress. however. (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. CFI Judge Ancheta ordered that Perla should pay the respondents immediately the P5000 under the “no fault clause” as provided in Sec. the claim shall lie against the insurer of the directly offending vehicle. the proper payee. the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. Disposition Petition GRANTED.Respondent Priscilla E. 1990 v. This is precisely the essence of “no fault indemnity” insurance which was introduced to and made part of our laws in order to provide victims of vehicular accidents or their heirs immediate compensation. 2. Liability to the Public ? Company will. mounting or dismounting from. July 20. 3.000. the “no fault indemnity” provision is part and parcel of the Code provisions on compulsory motor vehicle liability insurance and Page should be read together with the requirement for compulsory passenger and/or 3rd party liability insurance (Sec. Provided. 4.” as the law. A claim may be made against one motor vehicle only. ANCHETA 164 SCRA 144 CORTES. 378: Any claim for death or injury to any passenger or 3rd party pursuant to the provisions of this chapter shall be paid without the necessity of proving fault or negligence of any kind. they cannot claim the “no fault indemnity” provided in Sec. In the case of an occupant of a vehicle.the rules on claims under the “no fault indemnity” provision. 377) which was mandated in order to ensure ready compensation for victims of vehicular accidents. subject to the Limits of Liability. 1988 NATURE Petition for certiorari and prohibition with prelim injunction to review orders of CFI Camarines Norte FACTS . Perla filed this action ISSUE WON Perla is the insurer liable to indemnify under Sec. In all cases. pending final determination of who is responsible for the accident and liable for the victims' injuries or death. provided that the liability shall have first been determined. Injured passengers of the latter (and respondents in this case) filed a complaint for damages against Superlines. -That the vehicle ridden might not be the one that caused the accident is of no moment since the law itself provides that the party paying the claim under Sec. pay all sums necessary to discharge liability of the insured in respect of ? (a) death of or bodily injury to or damage to property of any passenger as defined herein. Sec. when submitted under oath. Her face was permanently disfigured.e. claim shall lie against the insurer of the vehicle in which the occupant is riding. mounting or dismounting from. Its 2 MFRs denied. In all cases. mounting or dismounting from. hitting her forehead. The claim should be made against the insurer of the vehicle they were riding. (iii) Claim may be made against one motor vehicle only. In any other case. the bus driver. makes it mandatory that the claim be made against the insurer of the vehicle in which the occupant is riding. -Irrespective of whether or not fault or negligence lies with the driver of the Superlines bus.

. It appears to us self-evident that the Schedule of Indemnities was not intended to be an enumeration. 1976. A car accident may.The Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen. Having been subrogated to the rights and causes of action of Olaso in the said amount FGU formally demanded payment of said amount from Floralde and attempted to verify Floralde's insurance carrier but failed to do so.On appeal. . since they certainly constitute bodily injuries. bodily injuries of. lossof earning and attorney's fees among others. 1978 the payment of the damages sustained by the car of Olaso but to no avail. Rodriguez. . 26. IC-VF-07185 paid Olaso the sum of P2. If what Western now urges is what Western intended to achieve by its Schedule of Indemnities.Respondent Priscilla Rodriguez filed a complaint for damages before the Regional Trial Court of Makati against De Dios Transportation Co.817. filed a third-party complaint against its insurance carrier. 612. It was merely meant to set limits to the amounts the movant would be liable for in cases of claims for death.g.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.00 per person per accident. . ARNALDO 158 SCRA 332 GANCAYCO. of the specific kinds of damages which may be awarded under the Master Policy Western has issued. 1978 FGU filed a case in the Insurance Commissioner's Office against Summit for recovery of said amount.. Disposition Petition denied. FACTS . SUMMIT GUARANTY & INSURANCE COMPANY v. 1978 beyond the one-year period from the time of the accident provided for by the said provision. This result. Saga Respondent De Dios Transportation Co. and the Office of the Insurance Commissioner.50 as its share in the repair cost of the said Ford Pick-up. and Walter A. and such other burial and funeral expenses that might have been incurred. . But such internal injuries are surely covered by Section I of the Master Policy. result in injury to internal organs of a passenger or third party. "nominal damages". Section 1. is apparently P50. awarding moral damages.The Schedule of Indemnities does not purport to restrict the kinds of damages that may be awarded against Western once liability has arisen. Averring that the accident happened on November 26.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. the Court of Appeals affirmed in toto the decision of the trial court. the company's payment per victim in any one accident shall not exceed the limits indicated in the Schedule of indemnities provided for in this policy excluding the cost of additional medicines.000. For Western's reading would drastically and without warning limit the otherwise unlimited and comprehensive scope of liability assumed by the insurer Western under Section 1: "all sums necessary to discharge liability of the insured in respect of [bodily injury to a third party]". The rule is well entrenched in our Page jurisprudence that the terms of such contract are to be construed strictly against the party which prepared the contract. Within this over-all quantitative limit. ISSUE WON petitioner can be held liable for loss of earnings. . FGU Insurance Corporation (FG U) by reason of Motor Vehicle Insurance Policy No. without any accompanying amputation or loss of an external member (e.INSURANCE 87 Section I and Section 11 combined exceed the Limits of Liability set forth herein.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. (Summit) and thus requested the insurance commissioner for a conference with Summit and demanded from Summit through counsel on February 28. much less a closed enumeration.Summit filed a motion to dismiss on the ground of prescription under Section 384 of PD No. does refer to certain "Limits of Liability" which in the case of the third party liability section of the Master Policy. however. "liquidated damages". 1988 NATURE PETITION to review the order of the Insurance Commissioner.It must be stressed.' and not necessarily exclude claims against the insurance policy for other kinds of damages. and the essential requisites or conditions for grant of each species of damages are present. petitioner Western. On 6 August 1985. "temperate or moderate damages". the species of bodily injury occurrence of which generate liability for petitioner Western. a foot or an arm or an eye). and potential purchasers of its Master Policy. ISSUE WON the action must be dismissed on the ground of prescription under Section 384 of PD No. 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. In 1978 FGU was able to ascertain the identity of Floralde's insurance carrier to be the Summit Guaranty and Insurance Company. moral damages and attorney's fees HELD YES . quoted above. professional services and hospital charges.On Nov. for instance. 1976 while the complaint was filed on May 22. in turn. an insurance contract is a contract of adhesion. . for services rendered to traffic accident victims. which in this case happens to be petitioner Western. Inc. that the Schedule of Indemnities does not purport to limit.. 612 HELD NO . quoted above. may be properly informed and act accordingly. so that the insured. all kinds of damages allowable by law" actual or compensatory damages".Moreover. . . a Ford Pick-up truck owned by Marcos Olasco was bumped by a cargo truck owned by Floralde. it was incumbent upon Western to use language far more specific and precise than that used in fact by Western.Hence on May 22. and "exemplary damages" ? may be awarded by a competent court against the insurer once liability is shown to have arisen. . With respect to death of or bodily injury to any third party or passenger. such as those in question.Petitioner contends that it cannot be held liable for loss of earnings. the trial court rendered a decision in favor of respondent Priscilla E. "moral damages'. or to enumerate exhaustively. February 29.

Section 384 of PD 612 (Insurance Code) Any person having any claim upon the policy issued pursuant to this chapter shall. 1978." . the car figured in an accident. Rizal. insured with respondent company for P35. namely: the insured himself or any person on his (insured's) permission. October 30. (b) by fire. at the time of the 'taking'. petitioner company devised means and ways of stalling the settlement proceedings.It is not denied that an extrajudicial demand for payment was made by respondent FGU on petitioner but petitioner failed to respond to the same. In view of the foregoing.00 .' .The court takes note of the dilatory tactics employed by petitioner in this as in the several cases aforecited to avoid payment of its liabilities. the claim shall be deemed waived. In the same case.Petitioner company is trying to use Section 384 of the Insurance Code as a cloak to hide itself from its liabilities.Own Damage. effective May 16. While travelling along Mabini St. the Insurance commission sees the unauthorized taking of the vehicle for a joyride as a violation of the 'Authorized Driver' clause of the policy. Hence. dismissed petitioner's complaint for recovery of the total loss of the vehicle against private respondent. No.INSURANCE 88 .000. sustaining respondent insurer's contention that the accident did not fall within the provisions of the policy either for the Own Damage or Theft coverage. present to the insurance company concerned a written notice of claim setting forth the amount of his loss. Apparently. ruling that "(T)he element of 'taking' in Article 308 of the Revised Penal Code means that the act of depriving another of the possession and dominion of a movable thing is coupled . No. of withholding it with the character of permanency ISSUE . VILLACORTA v. The particular words. the gravel and sand truck veered to the right side of the pavement going south and the car veered to the right side of the pavement going north. invoking the policy provision on "Authorized Driver" clause. in proper cases.R. otherwise. no steps were taken to process the claim and no rejection of said claim was ever made even if private respondent had already complied with all the requirements.R. hitting and bumping a gravel and sand truck parked at the right side of the road going south.The comprehensive motor car insurance policy for P35.The case do not fall within the meaning of proper cases' as contemplated in Section 384 of the Insurance Code. otherwise. fair and equitable settlement of claims. external explosion. No. . suffered extensive damage. the one-year prescriptive period provided for in Section 384 of the Insurance Code has not begun to run. filed a claim for total loss with the respondent company but claim was denied.. as well. . 1978. Notice of claim must be filed within six months from date of the accident. Model 1976. and/or the nature. Barrio Burgos. housebreaking or theft. but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. extent and duration of the injuries sustained as certified by a duly licensed physician. Complainant. the claimant's right of action shall prescribe.The cause of action arises only and starts to run upon the denial of the claim by the insurance company. In G. Had the lawmakers intended it to be the way Petitioner Company assumes it to be. Worse still. or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear.On May 9. The driver. Bearing in mind that if it succeeds in doing so until one year lapses from the date of the accident it could set up the defense of prescription. Sitio Palyasan. complainant was compelled to institute the present action.Respondent insurance commission.Respondent commission likewise upheld private respondent's assertion that the car was not stolen and therefore not covered by the Theft clause. Nevertheless the complaint was filed even before a denial of the claim was made by petitioner.00 . petitioner company made private respondents believe that their claims would be settled in order that the latter will not find it necessary to immediately bring suit. 1978. L50997. assurances of payment were constantly given and petitioner company even said that a check was ready for release. in G. .Third Party Liability. For all legal purposes.In G." .JEWEL VILLACORTA was the owner of a Colt Lancer. vs.000. A statute must be so construed as to harmonize and give effect to all its provisions whenever possible. . . The car. clauses and phrases should not be studied as detached and isolated expressions. L-48679. Court of Appeals: 'Legislative intent must be ascertained from a consideration of the statute as a whole. Action or suit for recovery of damage due to loss or injury must be brought. 1980 FACTS . however. . the vehicle was brought to the Sunday Machine Works.. and with manifest bad faith.00 issued by respondent Empire Insurance Company admittedly undertook to indemnify the petitioner-insured against loss or damage to the car (a) by accidental collision or overturning. The facts of these cases evidently reflect the deliberate efforts of petitioner company to prevent the filing of a formal action against it. for general check-up and repairs. Benito Mabasa. This Court has made the observation that some insurance companies have been inventing excuses to avoid their just obligations and it is only the State that can give the protection which the insuring public needs from possible abuses of the insurers. thereafter. and (c) by malicious act.It is very clear that the one-year period is only required In proper cases. going North at Montalban. with the intention.000. L-48758-petitioner company even provided legal assistance to one of the private respondents in the criminal case filed against him leading Private respondents to believe that it was ready to pay. P30. In violation of its duties to adopt and implement reasonable standards for the prompt investigation of claims and to effectuate prompt. Reasoning .in Aisporna. self-ignition or lightning or burglary. which clause limits the use of the insured vehicle to two (2) persons only. petitioner company admits that it took no final action or adjudication of the claim. and one of the passengers died and the other four sustained physical injuries. . As a consequence. and P30. without any unnecessary delay. .Theft.00 . with the Commissioner or the Courts within one year from date of accident. On May 11. 1977 to May 16. Rizal. Inc. THE INSURANCE COMMISSION 100 SCRA 467 TEEHANKEE.R.000. then the phrase 'in proper cases' would not have been inserted. the car was Page allegedly taken by six (6) persons and driven out to Montalban. while it was in the custody of the Sunday Machine Works.

there must be a common danger. and taken on a long trip to Montalban without the owner's consent or knowledge. averages are classified into simple or particular and general or gross. Reasoning .INSURANCE 89 WON the Insurance commission’s findings are in accord with law HELD NO .the stranding of plaintiff's vessel was due to the sudden shifting of the sandbars at the mouth of the river which the port pilot did not anticipate." a "temporary taking is held not a taking insured against. from a real and known risk" (Art. This last requirement exclude measures undertaken against a distant peril. among them the defendant. it ran aground at the mouth of the Cagayan river. 1949. made a deposit or signed a bond to answer for their contribution to the average.Secondly. The standing may. that the expenses incurred in putting it afloat did not constitute general average.First. but while still in the port. 811). who. . such as a friend or member of the family or the employees of a car service or repair shop must be duly licensed drivers and have no disqualification to drive a motor vehicle. in his commentaries on the Code of Commerce.Defendant denies liability to his amount. are subject to the same danger. alleging. being contracts of adhesion where the only participation of the other party is the signing of his signature or his "adhesion" thereto.The S S "San Antonio". MARINE INSURANCE MAGSAYSAY INC v." . . is that a person other than the insured owner. gross averages are to be borne by the owners of the articles saved (Art. negligence and lack of skill of its master. with the exception of defendant.40.The insurer must therefore indemnify the petitioner owner for the total loss of the insured car in the sum of P35. that applies). that both the ship and the cargo. which. at an agreed compensation. or faults of men. supra. Under that law. amounts to P841. vis Aparri. dispositions of the authority. "obviously call for greater strictness and vigilance on the part of courts of justice with a view of protecting the weaker party from abuse and imposition. and are. AGAN 96 PHIL 504 REYES. left Manila on October 6. such as his regular driver. among other things. Inc. who. with general cargo belonging to different shippers. that the danger arises from the accidents of the sea. who drives the car on the insured's order. therefore.The lower court found for plaintiff ISSUE WON the expenses incurred in floating a vessel so stranded should be considered general average and shared by the cargo owners HELD NO Ratio The law on averages is contained in the Code of Commerce. not the "authorized driver" clause. A car owner who entrusts his car to an established car service and repair shop necessarily entrusts his car key to the shop owner and employees who are presumed to have the insured's permission to drive the car for legitimate purposes of checking or road-testing the car.The main purpose of the "authorized driver" clause.000. 1955 FACTS . to be borne only by the owner of the property gave rise to same (Art. or in the port of loading or unloading. or with his permission. it is the theft clause. simple or particular averages include all expenses and damages caused to the vessel or cargo which have not inured to the common benefit (Art. 810). plaintiff had it refloated by the Luzon Stevedoring Co. Cagayan. was one of the residents of the Sunday Machine Works. . after has been loaded. Page . 812). as may be seen from its text." . be they employees of the car shop or not to whom it had been entrusted. 809). This means. be regarded as accidental. Inc. where a car is admittedly as in this case unlawfully and wrongfully taken by some people.On the theory that the expenses incurred in floating the vessel constitute general average to which both ship and cargo should contribute. or both at the same time. There the cargoes were delivered to their respective owners or consignees. such taking constitutes or partakes of the nature of theft as defined in Article 308 of the Revised Penal Code. gives the following requisites for general average: First. to whom the car had been entrusted for general check-up and repairs was not an "authorized driver" of petitioner-complainant is too restrictive and contrary to the established principle that insurance contracts. vessel owned and operated by plaintiff. and independently of the foregoing (since when a car is unlawfully taken. the port of destination. . Once afloat the vessel returned to Manila to refuel and then proceeded to Basco. while general or gross averages include "all the damages and expenses which are deliberately caused in order to save the vessel. and that the liquidation of the average was not made in accordance with law. CHAPTER VIII. attempts to refloat it under its own power having failed. Being for the common benefit. January 31. plaintiff brought the present action in the CFI of Manila to make defendant pay his contribution. and prevent their becoming traps for the unwary. bound for Basco. Batanes. as determined by the average adjuster. and. according to its own finding. whether during the voyage. provided that the circumstances producing the peril should be ascertained and imminent or may rationally be said to be certain and imminent. .00 under the theft clause of the policy. respondent commission's ruling that the person who drove the vehicle in the person of Benito Mabasa. The mere happenstance that the employee(s) of the shop owner diverts the use of the car to his own illicit or unauthorized purpose in violation of the trust reposed in the shop by the insured car owner does not mean that the "authorized driver" clause has been violated such as to bar recovery. provided that such employee is duly qualified to drive under a valid driver's license. .The Court rejects respondent commission's premise that there must be an intent on the part of the taker of the car "permanently to deprive the insured of his car" and that since the taking here was for a "joy ride" and "merely temporary in nature.Tolentino. that the stranding of the vessel was due to the fault. Generally speaking. The vessel reached Aparri. subject to the filing of such claim for reimbursement or payment as it may have as subrogee against the Sunday Machine Works. its cargo. therefore.

ave. Letters of Mart and Countermart. NO Ratio In case repugnance exists between written and printed portions of a policy.Section 291 of the Code of Civil Procedure provides that “when an instrument consists partly of written words and partly of a printed form and the two are inconsistent. it is true. or Damage of the said Vessel or any part thereof.With respect to the first requisite. and after trial the court below rendered judgment in favor of the plaintiff and ordered the defendant to pay the plaintiff P2. that the expenses or damages should have been incurred or inflicted after taking proper legal steps and authority.In the absence of positive legislation to the contrary. The jettison was therefore as . 859 of the Code of Commerce is still in force: “ART.In the present case it is not disputed that the ship was in grave peril and that the jettison of part of the cargo was necessary. will contribute. the written portion prevails. 1932 NATURE Appeal from judgment of the lower court FACTS . expressly limiting insurer's liability thereunder of the total loss of the wooden vessel Pandan and to proportionate salvage charges 2.610.610. but rests upon the theory that from the relation of the parties and for their benefit.The article is mandatory in its terms. were not in imminent peril.” . among which appears in capitalized type the following clause: “AGAINST THE ABSOLUTE TOTAL LOSS OF THE VESSEL ONLY. the ship ran into very heavy sea and it became necessary to jettison a portion of the cargo. WON lower court erred in concluding that defendant and appellant. AND TO PAY PROPORTIONATE SALVAGE CHARGES OF THE DECLARED VALUE.The final requisite has not been proved.” 2. Restraints and Detainments. SMITH.” ISSUES 1. to the Charges whereof the said Company. Thieves.. Fourth..The insurance contract is printed in the English common form of marine policies. Jettison. The present action was thereupon instituted. Fire.” . 859. and of the cargo shall be obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects respectively. Detriment. the liability of the defendant insurance company on its policy would. and in case of any Loss or Misfortunes. for it does not appear that the expenses here in question were incurred after following the procedure laid down in article 813. of all Kings. or the cargo therein.The insurance company.it is the safety of the property. and to take upon them in this Voyage. the salvage operation. a quasi contract is implied by law. Reasoning . his or their Factors.INSURANCE 90 Second. and recovery of the said Vessel or any part thereof. Safeguard. that from the expenses or damages caused follows the successful saving of the vessel and cargo.. . But as the sacrifice was for the benefit of the vessel to enable it to proceed to destination and not for the purpose of saving the cargo. the evidence does not disclose that the expenses sought to be recovered from defendant were incurred to save vessel and cargo from a common danger. Princes and People of what Nation. the cargo owners are not in law bound to contribute to the expenses. Arrests. the ship must also have been in great danger.With respect to the third requisite. and not of the voyage. that for the common safety part of the vessel or of the cargo or both is sacrificed deliberately. that have or shall come to the Hurt. . labour and travel for. we need only repeat that the expenses in question were not incurred for the common safety of vessel and cargo. Servants. insisting that its obligation did not extend beyond the insurance of the “absolute total loss of the vessel only. and Takings at Sea. 812.Plaintiff’s motorboat.. at the time of the occurrence of the general average and who are compelled to contribute (Art. Art. the insurance was against the “absolute total loss of the vessel only. be limited to “absolute loss of the vessel only. The provision simply places the insurer on the same footing as other persons who have an interest in the vessel. .86 as its contribution to the general average. According to the provisions of a “rider” attached to the policy.” On Oct.” But the policy was executed in this jurisdiction and “warranted to trade within the waters of the Philippine Archipelago only. possibly sufficient to cause its absolute loss. WON the lower court erred in disregarding the typewritten clause endorsed upon the policy. the decision appealed from is reversed. NUFIC is liable to Page contribute to the general average resulting from the jettison of a part of said vessel's cargo HELD 1. Reasoning . Surprisals. or assigns. Disposition Wherefore. NO Ratio The liability for contribution in general average is not based on the express terms of the policy. the NUFIC was assessed P2.As to the second requisite. Men-ofWar. As a result of the jettison. was a success. to sue. . JARQUE v. it shall be lawful for the Assured.” refused to contribute to the settlement of the gen. The insurance company then appealed to the SC. 31. 56 PHIL 758 OSTRAND. .86 as its part of the indemnity for the gen. they are of the Seas.” Here. in and about the Defence. Third. Code of Commerce). . according to the rate and quantity of the sum herein assured. without Prejudice to this Insurance. and of all other Perils. and the insurers (whether for the vessel or for the freight or for the cargo) are bound to contribute to the indemnity of the general average. brought about by the jettison of cargo. and to pay proportionate salvage of the declared value. Pirates. November11. Barratry of the Master and Marines. . The underwriters of the vessel. or at least the cargo. Losses and Misfortunes. since they. If the cargo was in peril to the extent of call for general average. perhaps. Condition or Quality soever. the former controls the latter. which constitutes the true foundation of the general average. and to pay proportionate salvage of the declared value. “Pandan” was insured on a marine insurance policy with National Union Fire Insurance Company (NUFIC) for P45K. BELL & CO. 1928. One of the clauses of the document originally read as follows: “Touching the Adventures and Perils which the said NUFIC is content to bear. of the freight. ave.Attached to the policy over and above the said clause is a “rider” containing typewritten provisions.

On discharging the rice from one of the compartments in the after hold. thus permitting the continued flow of the salt water into the compartment of rice.The policy purports to insure the cargo from the following among other risks: "Perils . 106).INSURANCE 91 much to the benefit of the underwriter as to the owner of the cargo. enemies. . 106). UNION INSURANCE 40 PHIL 40 STREET. Disposition Decision of trial court is affirmed CATHAY INSURANCE CO.The trial court found that the inflow of the sea water during the voyage was due to a defect in one of the drain pipes of the ship and concluded that the loss was not covered by the policy of insurance. sec. as apparently it did in Cullen vs. The effect of loading the boat was to submerge the vent. barratry of the master and mariners. ''According to the ordinary rules of construction. & S. . As applied to the present case it results that the owners of the damaged rice must look to the shipowner for redress and not to the insurer. why should not the insurer be required to do likewise? If no jettison had taken place and if the ship by reason thereof had foundered. X x x" (Thames and Mersey Marine Insurance Co. This rule is accepted in our own Insurance Law (Act No. vs. and an attempt had been made to repair it by filling with cement and bolting over it a strip of iron. of the pipe until it was about 18 inches or 2 feet below the level of the sea. 2427.875. the underwriter's loss would have been many times as large as the contribution now demanded. results from the natural and inevitable action of the sea. but to the failure of the ship's owner properly to repair a defect of the existence of which he was apprised. and in course of time it had become corroded and abraded until a longitudinal opening had appeared in the pipe about one inch in length. For this reason the court held that the ship was unseaworthy. issued a marine insurance policy upon a cargo of rice belonging to the Go Tiaoco Brothers. in order to make the insurer liable. June 30 1987 . in the ordinary course of events. If on the other hand that expression is to receive a limited construction. 1919 FACTS . . Butler (5 M. or orifice. . on the steamship Hondagua from the port of Saigon to Cebu. upon arrival at Cebu.) 151 SCRA 710 PARAS. or from the negligent failure of the ship's owner to Page provide the vessel with proper equipment to convey the cargo under ordinary conditions. which was a part of the wall of the ship. There must. of war. 1915. and of all other perils. The court also found that the repairs that had been made on the pipe were slovenly and defective and that. generally speaking. September 1.25. X x x For example. if the expression 'perils of the seas' is given its widest sense the general words have little or no effect as applied to that case. Owners of Cargo per the Xantho) . . not against events which must happen. by reason of the condition of this pipe. . . Navigation under these conditions resulted in the washing out of the cementfilling from the action of the sea water.Union Insurance Society of Canton. losses. and loss by perils of the seas is to be confined to loss ex marine tempestatis discrimine.. As a consequence the sea water rose in the pipe. men. The loss was P3. It is also well settled that a ship which is seaworthy for the purpose of insurance upon the ship may yet be unseaworthy for the purpose of insurance upon the cargo (Act No. CA (REMINGTON INDUSTRIAL SALES CORP. . This hole had been in existence before the voyage was begun. They were no doubt inserted in order to prevent disputes founded on nice distinctions. vs. sec." ISSUE WON Union Insurance is liable for the loss of the Go Tiaco Brothers HELD NO . detriment. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that which results from perils of the sea. the shipowner excepts the perils of the sea from his engagement under the bill of lading. . and misfortunes" are to be interpreted as covering risks which are of like kind (ejusdem generis) with the particular risks which are enumerated in the preceding part of the same clause of the contract.jettisons. Sons & Co. while this is the very peril against which the insurer intends to give protection. Ltd. which was transported in the early days of May. for. thieves. not against perils of the ship. The joint or elbow where the pipe changed its direction was of cast iron. 2427. It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance. something which could not be foreseen as one of the necessary incidents of the adventure.a loss which. be "some casualty.there is no room to doubt the liability of the shipowner for such a loss as occurred in this case. The purpose of the policy is to secure an indemnity against accidents which may happen. losses. these words must be interpreted with reference to the words which immediately precede them. or damage of the said goods and merchandise or any part thereof. By parity of reasoning the insurer is not liable. the ship was not properly equipped to receive the rice at the time the voyage was begun.the words "all other perils. is not a peril of the sea.In the present case the entrance of the sea water into the ship's hold through the defective pipe already described was not due to any accident which happened during the voyage. v. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. the general words become most important. of the seas.. Hamilton." (Wilson. from the ordinary wear and tear of the ship. and misfortunes that have or shall come to the hurt. . The latter was compelled to contribute to the indemnity. Disposition Appealed judgment is affirmed GO TIACO v. it was discovered that 1473 sacks had been damaged by sea water.The court found in effect that the opening above described had resulted in course of time from ordinary wear and tear and not from the straining of the ship in rough weather on that voyage. Fraser & Co. The same conclusion must be reached if the question be discussed with reference to the seaworthiness of the ship." The insurer undertakes to insure against perils of the sea and similar perils. pirates. rovers. Such a loss is rather due to what has been aptly called the "peril of the ship. . fire.) . The trial court made the ff findings: The drain pipe which served as a discharge from the water closet passed down through the compartment where the rice in question was stowed and thence out to sea through the wall of the compartment. 461).

Based on Sec.Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine insurance.CA said (among other things): 1.INSURANCE 92 FACTS . meters of logs on its vessel Mable 10 from Malampaya Sound. 2. Mable 10 sank. the insurer. . 4. Rust is not an inherent vice of the seamless steel pipes without interference of external factors . a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. 2.It was alleged that Mable 10 was not seaworthy and that it developed a leak .339.000. the risks insured against are classified as 'perils of the sea.’ which includes such losses that are of extraordinary nature.The fact that the un-seaworthiness of the ship was unknown to the insured is immaterial in ordinary marine insurance and may not be used by him as a defense in order to recover on the marine insurance policy. Pioneer appealed the decision. has nothing to do with its seaworthiness.There is no question that the rusting of steel pipes in the course of a voyage is a "peril of the sea" in view of the toll on the cargo of wind. and the assailed decision of the Court of Appeals is hereby AFFIRMED. IAC (PIONEER INSURANCE SURETY CORP. It incurred losses and damages (I gather the steel pipes rusted during the voyage from Japan to the Phils. something which could not be foreseen as one of the necessary incidents of adventure. . A fact capable of unquestionable demonstration or of public knowledge needs no evidence. claiming the full amount of P100. or arise from some overwhelming power.A letter was also sent to Pioneer." but private respondent claims implied coverage from the phrase "perils of the sea" mentioned in the opening sentence of the policy.February 29. The insistence of private respondent that rusting is a peril of the sea is erroneous.March 8. Coverage of private respondent's loss under the insurance policy issued by petitioner is unmistakable. 99 of the Insurance Code. Pioneer and Manila Bay were ordered to pay Roque P100. the term "cargo" can be the subject of marine insurance and that once it is so made. petitioner had introduced the clear cargo receipts or tally sheets indicating that there was no damage on the steel pipes during the voyage. 3. CA affirmed. .000.00 as unrealized profits but the latter ignored the demand.) 139 SCRA 596 GUTIERREZ. Disposition WHEREFORE.00 for the loss of the shipment plus P100. November 11. private respondent has admitted that the questioned shipment is not covered by a "square provision of the contract. Roque insured the logs with Pioneer Insurance for P100.The petitioners state that a mere shipper of cargo. causing water to enter the barge and because the barge was not provided with the necessary cover or tarpaulin. . it becomes the obligation of a cargo owner to look for a reliable common carrier which NATURE Petition for certiorari to review the decision of the IAC FACTS . Besides the precise purpose of insuring cargo during a voyage would be rendered fruitless. . entered into a contract with Roque Timber Enterprises and Chiong. . Alleged contractual limitations contained in insurance policies are regarded with extreme caution by courts and are to be strictly construed against the insurer.TC decided for Remington. Palawan to Manila North Harbor.000. Besides. The contract stated that Manila Bay would carry 422.Cathay contend (among other things): 1. obscure phrases and exceptions should not be allowed to defeat the very purpose for which the policy was procured.1972 – Roque and Chiong wrote a letter to Manila Bay. having no control over the ship. 113 and Sec. the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo whether he be the shipowner or not. Rusting is not a risk insured against. the splash of sea waves brought more water inside the barge.January 30. This fact of unquestionable demonstration or of public knowledge is that heavy rusting of steel or iron pipes cannot occur within a period of a seven (7) day voyage. .000. and the hiring of a sufficient number of competent officers and seamen.After hearing. anchors. In marine insurance. that any ambiguity therein should be construed against the maker/issuer/drafter thereof. namely. At any rate if the insurer cannot be held accountable therefor. ROQUE v. 3. the trial court favored Roque.Remington Industrial Sales Corp insured its shipment of seamless steel pipes. They argue that a cargo owner has no control over the structure of the ship. and salt conditions. since a risk to be insured against should be a casualty or some casualty. demanding payment of P150. Reasoning . namely.February 19. 1984 – Pioneer was absolved from liability after finding that there was a breach of implied warranty of seaworthiness on the part of the petitioners and that the loss of the insured cargo was caused by the "perils of the ship" and not by the "perils of the sea". ISSUE WON rusting is a “peril of the sea” HELD YES .18 cu. ISSUE WON the loss should have been covered by the marine insurance policy HELD NO Ratio It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance. the manner of loading his cargo and the cargo of other shippers. this petition is hereby DENIED.15 . It ruled that the loss is not covered by the marine insurance policy. 1985 AND Page . . which was denied. its cables. . . fuel and provisions. 1972 – 811 logs were loaded in Malampaya but en route to Manila. water. which cannot be guarded against by the ordinary exertion of human skill and prudence. on board vessel SS "Eastern Mariner”) and filed complaint against Cathay Insurance Co seeking collection of the sum of P868.The IAC found that one of the hatches was left open.000. We would fail to observe a cardinal rule in the interpretation of contracts.Petitioners contend that the implied warranty of seaworthiness provided for in the Insurance Code refers only to the responsibility of the shipowner who must see to it that his ship is reasonably fit to make in safety the contemplated voyage.00 under the insurance policy but Pioneer refused to pay on the ground that its liability depended upon the "Total Loss by Total Loss of Vessel only". Cathay filed MR. . 1972 – Common carrier Manila Bay Lighterage Corp.

v.25. vs. 1995 NATURE Petition for review of CA Decision affirming decision of RTC Manila holding that Coastwise is liable to pay PhilGen Insurance the amount of P700thou plus legal interest thereon. he was apprised. or by the violence of the elements. The barges were towed in tandem by the tugboat MT Marica. a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. FACTS . The forward buoyancy compartment was damaged. . Go Tiaoco Brothers. For this reason the court held that the ship was unseaworthy.In the present case the entrance of the sea water into the ship's hold through the defective pipe Page already described was not due to any accident which happened during the voyage. One has reference to the meaning of the expression "perils of the seas and all other perils. ." . . using the latter's dumb barges. The court also found that the repairs that had been made on the pipe were slovenly and defective and that. not against events which must happen. . 106). in the ordinary course of events. but to the failure of the ship's owner properly to repair a defect of the existence of which. one of the barges struck an unknown sunken object. . LA RAZON v." as used in the policy. Judgment was accordingly entered in favor of the defendant and the plaintiffs appealed. and water gushed in through a hole "two inches wide and twenty-two inches long. in order to make the insurer liable. UNION INSURANCE SOCIETY OF CANTON. 1919 FACTS . the risks insured against are 'perils of the sea. . there must. . entered into a contract to transport molasses from the province of Negros to Manila with Coastwise.19) COASTWISE LIGHTERAGE CORP v. is not a peril of the sea. MALAYAN INSURANCE v. in the ordinary course of events. also owned by Coastwise. Owners of Cargo per the Xantho. The shipper of cargo my have no control over the vessel but he has full control in the choice of the common carrier that will transport his goods. the other has reference to the implied warranty.’ The term extends only to losses caused by sea damage. something which could not be foreseen as one of the necessary incidents of the adventure. see. by reason of the condition of this pipe.On discharging the rice from one of the compartments in the after hold. Inc. Upon reaching Manila Bay. ISSUE WON the insurer is liable HELD .The trial court found that the inflow of the sea water during the voyage was due to a defect in one of the drain pipes of the ship and concluded that the loss was not covered by the policy of insurance. losses. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that which results from perils of the sea. Disposition Jjudgment affirmed.The loss so resulting to the owners of rice. 106).INSURANCE 93 keeps its vessels in seaworthy condition. Sons & Co.This is an action on a policy of marine insurance issued by the Union Insurance Society of Canton. 40 PHIL 40 STREET.A loss which. after proper deduction had been made for the portion saved. 2427. which was transported on the steamship Hondagua from the port of Saigon to Cebu.The court found in effect that the opening above described had resulted in course of time from ordinary wear and tear and not from the straining of the ship in rough weather on that voyage. from the ordinary wear and tear of the ship.’ Disposition Decision appealed from is affirmed. and misfortunes. has been the subject of frequent discussion. losses.. another sum of P100thou as attorney's fees and the cost of the suit. . The purpose of the policy is to secure an indemnity against accidents which may happen." used in describing the risks covered by policies of marine insurance.As was said by Lord Herschell in Wilson.The words "all other perils. July 12. CA (supra p. was P3. upon arrival at Cebu. not against perils of the ship. .The meaning of the expression "perils * * * of the seas * * * and all other perils. 2427. on the part of the insured. while approaching Pier 18.473 sacks had been damaged by sea water. .875. and misfortunes" are to be interpreted as covering risks which are of like kind (ejusdem generis) with the particular risks which are enumerated in the preceding part of the same clause of the contract." . This rule is accepted in our own Insurance Law (Act No. CA (supra p. . and does not embrace all losses happening at sea.It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance. Such a loss is rather due to what has been aptly called the "peril of the ship. be "some casualty. CO. It is also well settled that a ship which is seaworthy for the purpose of insurance upon the ship may yet be unseaworthy for the purpose of insurance upon the cargo (Act No.In marine cases. .10) FILIPINO MERCHANTS INS. the ship was not properly equipped to receive the rice at the time the voyage was begun. September 1. Ltd. upon a cargo of rice belonging to the plaintiffs." The insurer undertakes to insure against perils of the sea and similar perils. or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. results from the natural and inevitable action of the sea.Pag-asa Sales. is not a ‘peril of the sea’ but is called ‘peril of the ship.It is quite unmistakable that the loss of the cargo was due to the perils of the ship rather than the perils of the sea.As a consequence. LTD. and misfortunes. losses. the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. CA (PHILIPPINE GENERAL INSURANCE COMPANY) 245 SCRA 796 FRANCISCO.The question whether the insurer is liable on this policy for the loss caused in the manner above stated presents two phases which are in a manner involved with each other. or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions.Loss which. as to the seaworthiness of the ship. This prompted consignee Pag-asa Sales to reject the shipment of molasses as a total . results from the natural and inevitable action of the sea. from the ordinary wear and tear of the ship. see. and certain propositions relative thereto are now so generally accepted as to be considered definitely settled. it was discovered that 1.

Inc. The Code of Commerce. Had the patron been licensed. having failed to overcome the presumption of negligence with the loss and destruction of goods it transported. the carrier was culpably remiss in the observance of its duties. . bareboat or demise and contract of affreightment) is more clearly set out in the case of Puromines. 2. at the helm of the vessel which eventually met the fateful accident. but the latter's insurer.. . It cannot safely claim to have exercised extraordinary diligence. but the possession. but remained a common carrier and was still liable as such. remained unrebutted in this case. The object turned out to be a submerged derelict vessel. by the contract of affreightment. This presumption. As such. which is overcome only by proof of the exercise of extraordinary diligence.Therefore. upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Coastwise is liable for breach of the contract of carriage. by virtue of the contract of affreightment which it entered into with the consignee. and prove the skill capacity and qualifications necessary to command and direct the vessel. An owner who retains possession of the ship though the hold is the property of the charterer.As a common carrier. once the goods it transports are lost. . have legal capacity to contract in accordance with this code. the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier.The distinction between the two kinds of charter parties (i. Coastwise denied the claim and it was PhilGen which paid Pag-asa Sales the amount of P700k representing the value of the damaged cargo of molasses. the patron of the vessel "Coastwise 9" admitted that he was not licensed. command and navigation thereof to the charterer. CA affirmed.e. Payment by the insurer to the assured operated as an equitable assignment to . On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others. then the insurer. 609.INSURANCE 94 loss.Although a charter party may transform a common carrier into a private one. PhilGen now claims to be subrogated to all the contractual rights and claims which the consignee may have against the carrier. as established by marine and navigation laws.The damage to the barge which carried the cargo of molasses was caused by its hitting an unknown sunken object as it was heading for Pier 18. NO . applies to Coastwise. anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all.Coastwise is liable for breach of the contract of carriage it entered into with Pag-asa Sales. Pag-asa Sales. the same however is not true in a contract of affreightment on account of the aforementioned distinctions between the two. wherein SC ruled: “Under the demise or bareboat charter of the vessel. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who violated the contract. It may also logically. Constantino. lacks not just the skill to do so. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. Coastwise. for the damage sustained by the loss of the cargo which petitioner-carrier was transporting.Clearly. but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones.Jesus R. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession. Inc. destroyed or deteriorated. Page Captains. only leased three of petitioner's vessels.PhilGen then filed an action against Coastwise before the RTC Manila.RTC awarded the amount prayed for by PhilGen. subject to liability to others for damages caused by negligence. Hence. However. if it were in fact transformed into a private carrier. herein private respondent PhilGen. . it was not the carrier which paid the value thereof to Pag-asa Sales. was not converted into a private carrier. The presumption of negligence that attaches to common carriers. seeking to recover the P700k which it paid to Pag-asa Sales for the latter's lost cargo. and must not be disqualified according to the same for the discharge of the duties of the position. Inc. did it exercise the ordinary diligence to which a private carrier is in turn bound?) 2. Inc. . by placing a person whose navigational skills are questionable. (Corollarily.” . WON Coastwise Lighterage was transformed into a private carrier.” . Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this rule. or patrons of vessels must be Filipinos. The charterer mans the vessel with his own people and becomes the owner pro hac vice. command and navigation of the vessels remained with Coastwise. and being free from fault. Pag-asa Sales filed a formal claim with the insurer of its lost cargo (PhilGen) and against the carrier (Coastwise). Thereafter. the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. ordinances or regulations. . To create a demise..This legal provision is founded on the well-settled principle of subrogation. WON the insurer was subrogated into the rights of the consignee against the carrier. the charterer will generally be regarded as the owner for the voyage or service stipulated. loading and unloading of the cargo. vs.Article 2207 of the Civil Code: If the plaintiffs property has been insured. by proof of its exercise of extraordinary diligence. .SC agrees with Coastwise's admission that the contract it entered into with the consignee was one of affreightment. . upon payment by the insurer of the value of the consignee's goods lost while on board one of the carrier's vessels HELD 1. Court of Appeals. The evidence on record appeared that far from having rendered service with the greatest skill and utmost foresight. which subsidiarily governs common carriers (which are primarily governed by the provisions of the Civil Code) provides: “Art. he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. which is presumed to have violated the contract of carriage. ISSUES 1. command and navigation of the ship. in order to carry cargo from one point to another.” . remains liable as carrier and must answer for any breach of duty as to the care. YES . this petition. 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. masters. the owner of a vessel must completely and exclusively relinquish possession. Inc. Pag-asa Sales. follow that a person without license to navigate.

..“MV Asilda” was unseaworthy when it left the port of Zamboanga. Inc. respondent court held that the filing of notice of abandonment had absolved the shipowner/agent from liability under the limited liability rule. . as where the loss or injury was due to the fault of the shipowner and the captain. .Undoubtedly. nor does it grow out of. Inc.500 cases of 1-liter Coca-Cola softdrink bottles. evidence shows that approximately 2.FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor of PHILAMGEN was transmitted by the shipper. WON the limited liability under Art. as a legal limitation of a shipowner’s liability..The consignee filed a claim with respondent FELMAN for recovery of damages it sustained as a result of the loss of its softdrink bottles that sank with “MV Asilda. On appeal the Court of Appeals set aside the dismissal and remanded the case to the lower court for trial on the merits. its equipment and freightage as provided in Art.00. THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY INC v. Furthermore. herein petitioner Coastwise Lighterage. there are exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment. 587 of the Code of Commerce.The vessel sank in the waters of Zamboanga del Norte bringing down her entire cargo with her including the subject 7.PHILAMGEN alleged that the sinking and total loss of “MV Asilda” and its cargo were due to the vessel’s unseaworthiness as she was put to sea in an unstable condition. It is settled that carrying a deck cargo raises the presumption of unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the ship. the former was subrogated into all the rights which Pag-asa Sales. PHILAMGEN was not properly subrogated to the rights and interests of the shipper. . FELMAN filed a petition for certiorari with this Court but it was subsequently denied on 13 February 1989.00 to Pag-asa Sales. or to the negligence of the captain and his crew. The shipment was insured with petitioner Philippine American General under Marine Open Policy. does not apply to cases where the injury or average was occasioned by the shipowner’s own fault. upon payment by respondent insurer PhilGen of the amount of P700. loaded on board “MV Asilda. Considering that the ship’s hatches were properly secured.Trial court dismissed the complaint of PHILAMGEN. WON PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN. . and that. ..” Respondent denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN which paid its claim of P755.CA ruled that “MV Asilda” was unseaworthy for being top. PHILAMGEN sued the shipowner for sum of money and damages. Inc.000. . the empty Coca-Cola cases recovered could have come only from the vessel’s deck cargo. 587. 587 of the Code of Commerce should apply. Nonetheless.” a vessel owned and operated by Felman 7. CA (FELMAN SHIPPING LINES) 273 SCRA 226 BELLOSILLO. 2.Trial court rendered judgment in favor of FELMAN. Consequently. 587 of the Code of Commerce should apply 3. The right of subrogation is not dependent upon. the consignee of the cargo of molasses totally damaged while being transported by petitioner Coastwise Lighterage.The doctrine of subrogation has its roots in equity. It accrues simply upon payment of the insurance claim by the insurer. 3.heavy as 2. However. in which case.500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu for consignee Coca-Cola Bottlers Philippines. . Cebu. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice.250. Several days after “MV Asilda” sank. FELMAN had abandoned all its rights. an estimated 2.INSURANCE 95 the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss.500 cases of softdrink bottles were stowed on deck. in any event. Art. Thus the loss of the vessel and its entire shipment could only be attributed to either a fortuitous event. The international rule is to the effect that the right of abandonment of vessels. YES . This liability however can be limited through abandonment of the vessel. . It ruled that “MV Asilda” was seaworthy when it left the port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the shipowner’s surveyor attesting to its seaworthiness. NO . Inc. no liability should attach unless there was a stipulation to the contrary. ISSUES 1. interests and ownership over “MV Asilda” together with her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art. Inc. WON “MV Asilda” was seaworthy when it left the port of Zamboanga 2. the appellate court denied the claim of PHILAMGEN on the ground that the assured’s implied warranty of seaworthiness was not complied with. Perfunctorily. We subscribe to the findings of the Elite Adjusters. Therefore. in which case. Contrary to the ship captain’s allegations. The strong winds and waves encountered by the vessel are but the ordinary vicissitudes of a sea voyage and as such merely contributed to its already unstable and unseaworthy condition. in this case it was established that “MV Asilda” was not designed to carry substantial amount of cargo on deck. . It further alleged that the vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list. 1997 FACTS .Coca-Cola Bottlers Philippines. any privity of contract or upon written assignment of claim. . CA affrimed. Nonetheless.500 cases of Coca-Cola softdrink bottles were improperly stowed on deck. may have had against the carrier. equity and good conscience ought to pay. and the Court of Appeals that the proximate cause of the sinking of “MV Asilda” was its being top-heavy. Disposition Petition denied. The inordinate loading of cargo deck resulted in the decrease of the vessel’s metacentric height thus making it unstable.500 empty Coca-Cola plastic cases were recovered near the vicinity of the sinking. June 11. YES .The ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel.Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which disclaimed any liability for the loss. the shipowner Page HELD 1.

WON the Marine Law of Great Britain applies HELD 1. He may have no control over the vessel but he has full control in the selection of the common carrier that will transport his goods. He also has full discretion in the choice of assurer that will underwrite a particular venture. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO. However. ISSUES 1. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. the cargo was discharged into . CO.The defendant argues that the policy contains the provision that it “shall be of as force and effect as the surest writing or policy of insurance made in London”. 2212 and 2213 of the Civil Code. The goods were insured by the respondent Filipino Merchants' Insurance Co. it was of no value to the owner.The trial court decided in favor of the defendant. 1921 FACTS . Having failed to rebut the presumption of fault. CA (FILIPINO MERCHANTS INSURANCE) 183 SCRA 223 GANCAYO. a ship is “seaworthy when reasonably fit to perform the service. 1990 NATURE Appeal from a decision of the Court of Appeals FACTS . a warranty is implied that the ship is seaworthy. repair and reconstruction was more than the original cost of the ship at the time the policy was issued.The ship was sunk in July 1. the liability of FELMAN for the loss of the 7.882. . 1918. which it was able to do so. the question of seaworthiness cannot be raised by the assurer without showing concealment or misrepresentation by the assured.PHILAMGEN’s action against FELMAN is squarely sanctioned by Art. . Nevertheless. It cannot apply when such proof is lacking. When those questions are considered the testimony is conclusive that the cost of salvage.” Under Sec.35. 2207 of the Civil Code which provides: Art. pursuant to Arts. each bag at 25 kilos net. not a constructive total loss. a ship is a total loss when she has sustained such extensive damages that it would not be reasonably practical to repair her.. UNION INSURANCE SOCIETY OF CANTON 42 PHIL 378 JOHNS.The importation involved fifteen (15) metric tons packed in 600 6-ply paper bags with polythelene inner bags. saying that the policy only covered an actual total loss. for such law to apply to our courts the existence of such law must be proven. Upon arrival at the port of Manila.In policies where the law will generally imply a warranty of seaworthiness. 114. . the equivalent of US$8. YES .500 cases of 1-liter Coca-Cola softdrink bottles is inevitable. The plaintiff demanded payment from the defendant insurance company but the latter refused. 2207. Inc. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. v. in the English practice. it can only be excluded by terms in writing in the policy in the clearest language.765.00) plus legal interest thereon counted from 29 November 1983. reconstruct it and placed it in commission. Inc. The company asked the plaintiff to salvage the ship.Sec. Upon the facts shown here.50. If the plaintiff’s property has been insured.The plaintiff’s steel tank lighter was insured by defendant company for absolute total loss. INC. contemplated by the parties to the policy. and there would not be any consideration for the premium. NO . 20. Disposition Petition is GRANTED. . thus there was an actual total loss. 2. After several futile attempts. against all risks under the terms of the insurance cargo policy. this kind of policy would be worthless.00 plus 50% mark-up or US $13. Disposition Decision reversed CHOA TIEK SENG v. “t is difficult to see how there could have been a more complete loss of the vessel than that which actually occurred”. March 15. 1918. WON there was an absolute total loss that can be covered by the policy 2.147. the defendant insurance company claims that it was only liable for a total absolute loss and that there was no total destruction of the lighter. the lighter sunk in Manila Bay. . As a result of a typhoon.At the time that the lighter was at the bottom of the bay.. the date of judicial demand. or upon anything which is the subject of marine insurance.. Seven Hundred Fifty-five Thousand Two Hundred and Fifty Pesos (P755. (insurance company for short) for the sum of P98. 113 of the Insurance Code provides that “(i)n every marine insurance upon a ship or freight. If the amount paid by the insurance company does not fully cover the injury or loss. and thereafter aboard the feeder vessel "Wesser Broker V-25" of respondent Ben Lines Container. . . any other construction would nullify the statute Page and as applied to the conditions existing in the Manila Bay. or freightage.250. As found by the trial court. and to encounter the ordinary perils of the voyage..INSURANCE 96 the payment made by PHILAMGEN to Coca-Cola Bottlers Philippines. During that time the owner would be deprived of the use of its vessel or the interest on its investment.” Thus it becomes the obligation of the cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition. (Ben Lines for short). It is faitr to assume that in its then condition much further time would be required to make the necessary repairs and install the new machinery before it could again be placed in commission. gave the former the right to bring an action as subrogee against FELMAN.With the plaintiff able to raise the lighter. PHILIPPINE MFTG. The goods were loaded at the port at Rotterdam in sea vans on board the vessel "MS Benalder' as the mother vessel.Petitioner imported some lactose crystals from Holland. Ltd. And where the policy stipulates that the seaworthiness of the vessel as between the assured and the assurer is admitted. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. November 22. it was finally raised on Sept.

made a report that said cargo was pilfered on July 3. PHILAMGEN INSURANCE 179 SCRA 357 GANCAYCO. 1975.00 as well as the costs of the suit. . . When the cargo arrived in Manila. Marinduque. It is the duty of the respondent insurance company to establish that said loss or damage falls within the exceptions provided for by law.The services of the Manila Adjusters and Surveyors Co.63 as damages to petitioner with legal interest from the filing of the complaint.60 and the freight and other charges of $2.73. LTD. U.A. prior to the delivery to petitioner through his broker.419. 1. Petitioner filed a claim for said loss dated February 16.791. The insurer can avoid coverage upon demonstrating that a specific provision expressly excludes the loss from coverage.S. . 403 were in bad order.Respondent insurance company rejected the claim alleging that assuming that spillage took place while the goods were in transit. including pilferage losses during the war. Inc.19) ABOITIZ SHIPPING v. showed that it was pilfered. when inspected. except as otherwise excluded in the policy or due to fraud or intentional misconduct on the part of the insured.Petitioner filed a complaint in the RTC against the insurance company seeking payment of the sum of P33.80 as insurer of the cargo. Phil-Am paid Marinduque the sum of P246. only $7. to pay the sum of P33. The insurance policy covers all loss or damage to the cargo except those caused by delay or inherent vice or nature of the cargo insured.117. CO. vs. CA reversed. thus violating the terms of the insurance policy sued upon. . Appealed in CA but denied. 1980 due to heavy rain at the Aboitiz terminal and that of the total value of the cargo of $42.80 representing the value of the pilfered cargo.S. Inc.117. petitioner and his agent failed to avert or minimize the loss by failing to recover spillage from the sea van. Filipinas Cia.The questioned shipment is covered by a continuing open insurance coverage (which took effect after Sept. MFR was denied as well.An "all risks" provision of a marine policy creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the burden of establishing that the loss was due to peril falling within the policy's coverage. . the van did not carry any evidence of spillage. Razon.The terms of the policy are so clear and require no interpretation. plus attorney's fees and expenses of litigation in the amount of P10. the damage caused to the cargo has not been attributed to any of the exceptions provided for nor is there any pretension to this effect. as contained in Marine Open Policy No. MFR thereof was denied. This insurance is against all risks of loss or damage to the subject matter insured but shall in no case be deemed to extend to cover loss.117..117. (broker for short). damage.430. and that assuming that the spillage did not occur while the cargo was in transit. On the same day Marinduque filed a claim for the same amount against the Phil-Am on the latter's policy. this petition. v. It covers all losses during the voyage whether arising from a marine peril or not.Phil-Am then filed a complaint in RTC Manila against Aboitiz for recovery of same amount alleging that it has been subrogated to the rights of Marinduque. 1980 Marinduque then filed a claim against Aboitiz in the amount of P246. (Phil Am) which came out with the report that the cargo in question.. Singapore PTE. the liability of respondent insurance company is clear.In Gloren Inc. . Complaint dismissed and MFR denied. Insurance company filed a third-party complaint against respondents Ben Lines and broker. which issued the cargo's packing list and Invoice number showing the contents of the carton. to the . Claims recoverable hereunder shall be payable irrespective of percentage.33." . the "all risks" clause of the policy sued upon reads as follows: "5. de Seguros. The shipment was ordered from Jamesbury.In this case. or expense proximately caused by delay or inherent vice or nature of the subject matter insured. . the counterclaim and the third-party complaint with costs against the petitioner. as consignee of the cargo. Disposition the decision appealed from is hereby REVERSED AND SET ASIDE and another judgment is hereby rendered ordering the respondent Filipinas Merchants Insurance Company. otherwise it is liable therefor. The surveys showed that the bad order bags suffered spillage and loss later valued at P33.430. Insurance company denied all the material allegations of the complaint and raised several special defenses as well as a compulsory counterclaim. 1977 against respondent insurance company in the amount of P33. 100184) from the time it was loaded aboard the SS Arthur Maersk in Boston. Of the 600 bags delivered to petitioner. The Philippine Consulate in Singapore issued invoice for the shipment showing the contents and its total price of $39.412.On August 11. Thus. 1989 NATURE Petition for review on certiorari FACTS Marinduque Mining Industrial Corporation (Marinduque) shipped on board SS Arthur Maersk Page from Boston.63 as damages plus attorney's fees and expenses of litigation. .63. the said 400 bags were loaded in bad order. Inc. 12 it was held that an all risk insurance policy insures against all causes of conceivable loss or damage.209. ISSUE WON insurance company should be held liable even if the technical meaning in marine insurance of an “insurance against all risk" is applied HELD YES . FILIPINO MERCHANTS INS. a shipment of 1 skid carton parts for valves.000. U.A. October 5.RTC dismissed the complaint.In July 1980. it was received and deposited in the office of Aboitiz Shipping Corporation (Aboitiz) for transhipment to Nonoc Island. (Manila Adjusters) were engaged by the PhilAmerican General Insurance Co. CA (supra p.00 worth remains of the cargo with the recommendation that the claim be made against Aboitiz.63 as the insured value of the loss. and that in any case. . ISSUE WON petitioner Aboitiz was properly held liable to the private respondent Phil-Am by the appellate court HELD YES .INSURANCE 97 the custody of the arrastre operator respondent E. .In the present case. A confirmatory report was submitted by the Manila Adjusters. Hence.

or otherwise separately insured. only 497 pieces thereof were lost or 41. 1980 after the shipment in question was already pilfered.The requirements for the application of Section 139 of the Insurance Code. Whether a contract is entire or severable is a question of intention to be determined by the language employed by the parties. Since the cost of those 497 pieces does not exceed 75% of the value of all 1. Panama filed a Complaint for Damages against Oriental Assurance before the Regional Trial Court. nor separately insured. It hired Transpacific Towage.208 pieces of logs..000 cubic meters of apitong logs. of the thing insured.208 pieces of apitong logs. and that the logs loaded in the two barges should be treated separately such that the loss sustained by the shipment in one of them may be considered as "constructive total loss" and correspondingly compensable. therefore. the logs lost in the damaged barge in relation to the total number of logs loaded on the same barge cannot be made the basis for determining constructive total loss. [b] TC in dismissing the complaint apparently relied on Marine Risk Note No. CA affirmed in toto. in Palawan. 1980.A constructive total loss is one which gives to a person insured a right to abandon. (c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it. 017545 issued by private respondent Phil-Am only on July 28. a constructive total loss HELD NO . 1.Panama demanded payment for the loss but Oriental Assurance refuse on the ground that its contracted liability was for "TOTAL LOSS ONLY. Insurance Code). the shipment cannot be said to have sustained a constructive total loss under Section 139(a) of the Insurance Code. 1975 and contained in Marine Open Policy No. September 5." A total loss may be either actual or constructive (Sec. be considered indivisible.More importantly. 1991 FACTS . . Its liability is clear.While the logs were being transported. 100185. The logs involved.Sometime in January 1986. Obviously TC mistook said Marine Risk Note as an insurance policy when it is NOT. 1975. 1. pieces of logs. (a) If more than three-fourths thereof in value is actually lost. The insurance contract must.208. petitioner Aboitiz was properly held liable to Phil-Am. Reasoning [a] Records of the case show that Phil-Am executed a continuous and open insurance coverage covering goods of Marinduque imported into and exported from the Philippines which took effect after Sept. the evaluation of the cargo and the chargeable premium.The terms of the contract constitute the measure of the insurer liability and compliance therewith is a condition precedent to the insured's right to recovery from the insurer. making for only one cause or consideration. 129. ORIENTAL ASSURANCE v. ISSUE WON Oriental Assurance can be held liable under its marine insurance policy based on the theory of a divisible contract of insurance and.RTC ordered Oriental Assurance to pay Panama with the view that the insurance contract should be liberally construed in order to avoid a denial of substantial justice. have not been met. Resultantly. when the cause of the loss is a peril injured against. The logs on the two barges were not separately valued or separately insured. Inc. An actual total loss is caused by: (a) A total destruction of the thing insured. (Section 130. with a total volume of 2. This provision reads: SECTION 139. as contained in Marine Open Policy No. 100184. or any particular portion thereof separately valued by the policy. August 9. Page (b) The irretrievable loss of the thing by sinking. or would have to be expended to recover it from the peril. xxx xxx xxx . although placed in two barges.000 cubic meters. were not separately valued by the policy. the correct basis for determining the existence of constructive total loss is the totality of the shipment of logs. Of the entirety of 1. or (d) Any other event which effectively deprives the owner of the possession. The logs having been insured as one inseparable unit. Inc. rough seas and strong winds caused damage to one of the two barges resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon. private respondent Panama Sawmill Co. A person insured by a contract of marine insurance may abandon the thing insured. Aboitiz received cargo when it arrived in Manila at its offices.INSURANCE 98 time it was delivered to the possession of petitioner at its offices at Pier 4 in Manila until it was pilfered when the great majority of the cargo was lost on July 3. A similar insurance coverage was also executed by petitioner in favor of Marinduque for all its goods shipped or moved within the territorial limits of the Philippines also effective after Sept. (b) If it is injured to such an extent as to reduce its value more than three-fourths. at the port of destination. Insurance Code). and recover for a total loss thereof. 1991 NATURE Petition for review on certiorari FACTS . Disposition Petition DISMISSED. under Section 139 of the Insurance Code. . 1." . or by being broken up.45% of the entire shipment.Unable to convince Oriental Assurance to pay its claim. Only one premium was paid for the entire shipment. quoted above. to transport the logs by sea to Manila and insured it against loss for P1-M with petitioner Oriental Assurance Corporation (Oriental Assurance). The policy in question shows that the subject matter insured was the entire shipment of 2.. . (Panama) bought. The fact that the logs were loaded on two different barges did not make the contract several and divisible as to the items insured. Hence. consequently. and it was while in its possession and before loading it in its vessel that the cargo was pilfered. the insurer's liability was for "total loss only. . [c] The contention of the Aboitiz that it could not be liable for the pilferage of the cargo as it was stolen even before it was loaded on its vessel is untenable. CA (THE FOOD AND AGRICULTURAL ORGANIZATION OF THE UNITED NATIONS) 201 SCRA 382 REGALADO. CA (PANAMA SAW MILL) 200 SCRA 459 MELENCIO-HERRERA. Disposition judgment under review is SET ASIDE PAN MALAYAN INSURANCE v. . It is only an acknowledgment or declaration of the private respondent confirming the specific shipment covered by its Marine Open Policy.

And the wetting of said seeds affected the state of seeds. Such a loss may exist where the form and specie of the thing is destroyed.00 . On July 29.FAO.000. Trial court found in favor of FAO and ordered both to pay jointly and severally the full amount of the claim. claims that. ntended and made arrangements to send to Kampuchea 1.270.00 which designated her sister. the assured is entitled to recover from the underwriter the whole amount of his subscription . Pan Malayan likewise failed to pay for the losses and damages sustained by FAO by reason of its inability to recover the value of the shipment from LUZTEVECO . by LUZTEVECO.00 from petitioner. for which reason FAO formally filed its claim with LUZTEVECO for compensation of damage to its cargo . 1988. died of acute pneumonia on September 10. Ed.Y. however. An actual total loss is caused by: (c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it. . Petitioner submits that respondent court erred in ruling that there was total loss of the shipment despite the fact that only 27.On June 26. This was affirmed by CA ISSUE 1. the right of the insured to claim the whole insurance is absolute. or (d) Any other event which effectively deprives the owner of the possession. the seeds were of fragile nature. N. a fact which is not denied nor controverted . later. which declared that the insured.325.Pan Malayan claims that part of the cargo was recovered and thus the claim by FAO was unwarranted. Pan Malayan Insurance Corporation . petitioner received from one Florence Pulido an application for life insurance. Under Sections 129 and 130 of the New Insurance Code. NO . FAO was advised of the sinking of the barge in the China Sea. although the materials of which it consisted still exist (Great Western Ins. as where the cargo by the process of decomposition or other chemical agency no longer remains the same kind of thing as before (Williams vs.SEC.FAO filed a civil case against both LUZTEVECO and Pan Malayan. the insurance premiums on the shipment was paid by FAO petitioner . these were “stained” and not in the same condition it was brought in. In case of total loss in Marine Insurance.000. Although there were bags which were recovered. While this was communicated to private respondent in a letter dated April 29. Total loss may be actual or absolute. recompense for which it has been denied up to the present -Section 135 of the Insurance Code explicitly provides that "(u)pon an actual total loss. it has practically lost its total or entire shipment in this case. 16 Me. The cargo was loaded on board LUZTEVECO Barge No. FAO "has never been compensated for this total loss or damage. Florence Pulido. 19 Wall 640. Because the insurance applied for was non-medical. without need of a notice of abandonment PHILIPPINE AMERICAN LIFE INSURANCE COMPANY v. Cole. however. 1991. their investigation concerning the subject policy yielded the information that the insured.922 bags of rice seeds out of 34.92 in respect of one lot of 1. Florence Pulido. 207). Vietnam to deliver the cargo which. petitioner received private respondent’s claim. 2000 NATURE This petition for review on certiorari seeks to reverse the Decision of the Special Second Division of the Court of Appeals FACTS . 1989.122 bags were rendered valueless to FAO and the shipment sustained only a loss of 78%. despite the alleged recovery by defendant LUZTEVECO. private respondent had already filed her claim earlier that month. FAO gave instructions to LUZTEVECO to leave for Vaung Tau. vs. as its principal beneficiary. private respondent abandoned it and the same was sold or used for the benefit of LUZTEVECO or Pan Malayan Corporation.It is thus clear that FAO suffered actual total loss under Section 130 of the Insurance Code.On January 9.Petitioner withheld payment on the ground that the policy claimed under was void from the start for having been procured in fraud. a person insured is entitled to payment without notice of abandonment.500 metric petitions winch is the subject of the present action. -as said and proven. herein private respondent. 1980. WON respondent court committed a reversible error in holding that the trial court is correct in holding that there is a total loss of the shipment HELD 1. .. inclusive of expenses. died in 1988. . 1992. 216). could not withstand delay because of the inherent risks of termination and/or spoilage. for all intents and purposes. FAO did not receive any compensation for said recovered bags as the same were distributed by LUZVETECO without authorization of FAO .LUZTEVECO failed and refused to pay.LUZTEVECO was to ship the cargo amounting to US$83. 22 L. In another letter dated July 27.FAO secured insurance coverage in the amount of P5. This is evidenced by two surveys upon the cargo wherein it was found that only around 78% was lost. As found by the court below and reproduced with approval by respondent court.122 bags of IR-36 certified rice seeds purchased by FAO from the Bureau of Plant Industry for P4. 1992. It is petitioner’s contention that even before they received private respondent’s claim for death benefits. premium fees. petitioner confirmed to private respondent receipt of the claim papers and assured her that her case was “being given preferential attention and . and so forth. a total loss may either be actual or constructive. LC-3000 and consisted of 34. Thus rendering them useless for FAO. before the application for insurance on her life was made.If there were some cargoes saved. specifically under paragraphs (c) and (d) thereof.INSURANCE 99 . 1980. On the same date. CA (ELIZA PULIDO) 344 SCRA 260 GONZAGA-REYES.On June 16.250. in addition to this. Fogarty.the complete physical destruction of the subject matter is not essential to constitute an actual total loss. by its nature. Co." This is a statutory adoption of a long standing doctrine in maritime insurance law that in case of actual total loss. formally filed its claim under the marine insurance policy. 130. 1989. or it may otherwise be constructive or technical.602. dated December 16.The Food and Agricultural Organization of the United Nations (hereinafter referred to as FAO). hence it informed petitioner thereof and. at the port of destination of the thing insured. November 15.500 metric petitions of IR-36 certified rice seeds to be distributed to the people for seedling purposes .The law classifies loss into either total or partial. in the amount of P100. Page . FAO was informed by LUSTEVECO of the recovery of the lost shipment. 1980. On April 1992. petitioner did not require a medical examination and issued a policy on the sole basis of the application on February 11.

the battle of the liberation of the City of Manila was still raging. This report was petitioner’s basis for treating the disputed policy as void since April 1992.We cannot likewise give credence to petitioner’s submission that the inconsistencies in the testimonies of the witnesses for plaintiff-private respondent are in themselves evidence of fraud. La Union whose signature appeared in the death certificate. Nenita Piganto. This fact is likewise noted in the death certificate. even before receipt of private respondent’s claim. petitioner caused another investigation respecting the subject policy.This the lower courts had effected ruled on. Salvacion V. Benedicto Briones. as a proof of good faith. was dated April 1. and her demand having been refused. plus legal interest thereon from the time of the filing of the complaint until its full payment. the Municipal Health Officer of Bagulin. Gutierrez was not present when Florence Pulido died. A failure to do so would leave intact the presumption of good faith and regularity in the performance of public duties.INSURANCE 100 prompt action”. Mere allegations of fraud could not substitute for the full and convincing evidence that is required to prove it. Philippine currency. hence. . as beneficiary. NATIONAL LIFE INSURANCE 94 PHIL 627 BAUTISTA ANGELO. Florence Pulido. Jose Londres. and knew of Florence’s death only through Ramon Piganto. Philippine currency.Petitioner: the results of its investigations having indicated that the insured was already dead at the time the policy was applied for.The absence of fraud. 1943. 1992. No motive was imputed to Dr. does not merit a conclusion of fraud. together with the money received from other policyholders. are prima facie evidence of facts therein stated.It appears that the deceased took up the policy under consideration on April 15. It may therefore be said that the policy became due when the City of Manila was still under the yoke of the enemy and became LONDRES v. Petitioner still refused to make payment and thus. On November 9. 1991. It also counterclaimed for attorney’s fees. While the northern part may have been liberated. upon a preponderance of the evidence duly received from both parties. . We see no reversible error in the finding of both respondent court and the trial court in favor of the correctness of the entries in Certificate of Death. which was the basis of both respondent court and the trial court in finding the date of Florence Pulido’s death to be as plaintiff-private respondent maintained. A duly-registered death certificate is considered a public document and the entries found therein are presumed correct. will not be reversed and. the allegation that the insured died on February 7.Defendant in its answer denied. there being no provision in the policy from which can be inferred that the parties contemplated payment in any other currency. Petitioner’s contention that the death certificate is suspect because Dr. and (d) that the policy having been issued under abnormal circumstances. Gutierrez for seeking to perpetuate a falsity in public records. 1945. 1954 NATURE Appeal from a decision of the Court of First Instance of Manila ordering defendant to pay to plaintiff the sum of P3. and had attached to it a questionnaire. she instituted the present action against the company in the Court of First Instance of Manila. entirely consistent with the evidence on record. who represented to be the brother-in-law of the insured and the barangay chairman of Cardiz. the insured. Londres. La Union.Death certificates. it should be considered in the light of equity which does not permit anyone to enrich himself at the expense of another. and notes by a municipal health officer prepared in the regular performance of his duties. or the sum of P2. and his two sons were taken by the Japanese soldiers from their house at Singalong Street and were massacred by their captors. March 29. . (b) that the policy having been issued during the Japanese occupation. La Union. . . prepared by one Dr. Pursuant to the findings of this second investigation. as shown from the very affidavits submitted by appellee wherein it was stated that on the aforesaid date. 1945. Such alleged inconsistencies are matters of credibility which had been ably passed upon by the lower court. the National Life Insurance . Irineo Gutierrez. offered to pay the value of the policy in accordance with the Ballantyne scale of values.000. was in fact dead before the application for insurance on her life was made) HELD NO . (c) that the money paid by the insured as premiums. and set up the following special defenses: (a) that plaintiff's claim is covered by the Moratorium Law. Dr. testified in addition that he ministered to the ailing Florence Pulido for two days immediately prior to her death.000. Piganto’s statement was signed by him. unless the party who contests its accuracy can produce positive evidence establishing otherwise. Londres whereby it undertook to pay its beneficiary upon his death the sum of P3. not so the southern part. it is presumed that its face value should be paid in Japanese currency. however. and witnessed by his wife. . The first report. 1943 for the sum of P3. duly registered with the Local Civil Registrar of Bagulin. 1992. ISSUE WON there was fraud (whether the insured. 49 of the President of the Philippines.On April 14. Petitioner was likewise unable to make out any clear motive as to why Ramon Piganto would purposely lie. private respondent enlisted the services of counsel in reiterating her claim for death benefits. responded to by one Ramon Piganto. All the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when the insured died on February 7. 1945. Defendant.Following the filing by private respondent of her claim. is final and conclusive upon this Court. which declared that Florence Pulido died of acute pneumonia on September 10.000. All the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when the insured died on February 7. . Bagulin. but was dead since 1988. On said date. Piganto had replied that Florence Pulido used to live in Cardiz. To the question “Where does [Florence Pulido] reside now?”. FACTS . as a factual finding of the lower court adopted by the Court of Appeals. SUBROGATION CLAIMS SETTLEMENT & Page Company of the Philippines issued a policy on the life of Jose C. Disposition The instant petition is DENIED CHAPTER IX. demanded from the company the payment of the proceeds of the policy.400. petitioner stood by its initial decision to treat the policy as void and not to honor the claim. this action. for lack of sufficient proof. was all deposited by the defendant in the Philippine National Bank and said deposit was declared without value by Executive Order No.

Esteban. or upon receipt and approved at its Office of due proofs of the title of the claimant and of the prior death of the Insured while this Policy is in force to Teresa Duat Vda. . . The policy reads: National Life Insurance Company of the Philippine hereby agrees to pay at its Home Office. Although the record does not disclose the exact date on which the insurance company reopened for this purpose. . with a specification of the coins constituting them. We find nothing immoral or unlawful in it. after realizing the truth about the death of her husband. Ten Thousand Pesos to Juan D. which money was declared without value by Executive Order No. appellants claim that they should be paid P10. and claimed the proceeds of the policy. if the Insured is living and this Policy is in force.INSURANCE 101 payable only after liberation which took place on March 10. De Fernandez. 91-A of the Insurance Law which provides as follows: The proceeds of a life insurance policy shall be paid immediately upon maturity of the policy. 1945 when President Osmena issued Proclamation No.Based on the foregoing provision of law and the aforequoted stipulation as well as on the allegation that the filing of proof of death by the beneficiaries is a condition precedent of the demandability of the obligation of the insurer to pay the proceeds.After more than 7 years. had difficulty in effecting the collection of her claim from the insurance company because at that time it had not yet reopened for business purposes. Reasoning ." Appellant. NLIC said that because the policy matured upon the insured’s death in November. 6 following the restoration of the civil government by General Douglas Mac Arthur. Fernandez’s life for P10. The company said that the status of the policies issued during the . and for that matter other commercial and business firms. . representing the benficiaries of the policy. and the lower court sustained the stand of the company.000 which appellant bound itself to pay to the insured under the policy upon his death should be paid in accordance with the present currency or should be adjusted under the Ballantyne scale of values HELD YES. Fernandez (hereinafter called the insured) on the 15th day of July. the insurance companies. January 27. was not yet in a position to pay the value of the policy for the simple reason that it had not yet reopened. unless such proceeds are made payable in installments or a as an annuity. and Manuela Fernandez.000 in VDA.During those days of liberation. but only upon the receipt and approval by the company. At that time the legal tender was already the present currency. in 1952. That in case of a policy maturing by the death of the insured. This is a risk attendant to any wagering contract. mother and sisters respectively of the Insured (Hereinafter called the Beneficiary) subject to the right of the Insured to change the beneficiary as stated on the second page of this Policy. by entering into an insurance contract. . we can only repeat the following admonition: "The parties herein gambled and speculated on the date of the termination of the war and the liberation of the Philippines by the Americans. 1944. To appellant. Appellant claims that.000 upon his payment of P444 from July 15. while the policy was in force . . the Moratorium Law was declared invalid and unconstitutional.In the case of Rutter vs. considering the unexpected circumstances that developed. ISSUE WON the amount of P3. were still feeling the adverse effects of the sudden fall of values and were uncertain and apprehensive as to the manner the readjustment would be made by the new Government. It is for this reason that the beneficiary. particularly that portion to the effect that redemption could be effected not before the expiration of one year from June 24. and after gathering evidence to substantiate his death. 1944. appellant invokes equity in its favor in view of the nullification of the deposits made by it with the Philippine National Bank of all fiat money received from its policyholders.beneficiaries commenced suit. Tabia) Disposition Wherefore.beneficiaries maintain that the obligation of the company to pay accrued not upon the death of Fernandez. . if it suffers loss. informed the company that Fernandez had died in 1944. 1944 to July 14. . the decision appealed from is affirmed. 68. appellant herein. that the beneficiary cannot enrich herself at its expense. Manila." (Gomez vs. . Refused to pay the claim within the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate of six per centum per annum. 1959 LIFE NATURE Appeal from CFI decision applying the Ballantyne scale of values upon the proceeds of life insurance taken and maturing during the Japanese occupation but claimed after liberation FACTS . this Court can take judicial notice that it only did so after liberation. however. NATIONAL INSURANCE CO OF THE PHILS 105 PHIL 59 ENDENCIA. DE FERNANDEZ v.The insured died on November 2. .. . This kind of agreement is permitted by law. the indemnity to be paid by it should be suffered by it under Article 307 of the Code of Commerce which provides: "When the deposits are of cash. 1945 . which was in 1954. while the people were rejoicing because of the happy event. 1964. Atty de la Torre. This can be gleaned from the stipulation about redemption. the banks. they should compute the value of their claim under the Ballantyne scale of values (which would amount only to P500) . present currency. on proof of death of the insured. because before that eventuality the insurance company. Page Japanese occupation was still pending consideration before the courts. the proceeds thereof shall be paid within sixty days after presentation of the claim and filing of the proof of the death of the insured. Maria T. the increase or reduction which their value may suffer shall be for the account of the depositor. 1944. 93 Phil. in which case the installments or annuities shall be paid as they become due: Provided.As final plea. cannot claim. And we say that the policy became payable only after liberation even if it matured sometime before.The above stipulation is apparently based on Sec. dismissed the complaint. unless such failure or refusal to pay is based on the ground that the claim is fraudulent .National Life Insurance Company (NLIC) insured J. One who gambles and loses cannot be heard to complain of his loss. with costs against appellant. 49 of the President of the Philippines.

000.Trial court rendered judgment in her favor ordering the insurers to pay her a total of P4. The judgment became final as to EASCO but the shipping company appealed to the Court of Appeals and was absolved from liability by the said court. S. Sotto Sts. It is the happening of the suspensive condition of death that renders a life policy matured.. petitioner sued them before the then Court of First Instance of Cebu for damages.The sixty day period fixed by law within which to pay the proceeds after presentation of proof of death Is merely procedural in nature.595.000 to the Cebu Filipina Press owned by Emilia Chan Lugay.000.S.000 as indemnity. Hence.000.The trial court. in which case. Texas. On January 15. The goods were insured with respondent EASCO and shipped on board the M/V Peskov. 1982. for “The rule is already settled that where a debtor could have paid his obligation at any time during the Japanese occupation. Whereupon.Petitioners are 6 insurance companies that issued fire insurance policies for the total sum of P4. .The trial court rendered judgment in favor of petitioner. while not sufficient to free it from liability under its policy.000. this petition. and not ht efiling of proof of death which. which raised the legal rate of interest from 6% to 12% per annum refers only to loans or forbearances of money. the legal interest was properly pegged by the Appellate Court at 6% per cent. as the insurer. upon motion by petitioner. Lugay submitted sworn Statements of Loss and Formal Claims to the insurers. except one policy (Paramount's). the petitioners offered to pay 50% of her claim. Both refused to pay. a vessel owned by Far Eastern Shipping Company. CA(LUGAY) 174 SCRA 11 GRINO-AQUINO. (Collaboration is defined as the acts of working together in a joint project. Clearly.INSURANCE 102 Philippine currency and not under the Ballantyne scale of values. EASCO's refusal to settle the claim to Tio Khe Chio was based on some ground which. Cebu City. payment after liberation must be adjusted in accordance with the Ballantyne schedule (De Asis vs. . the policy matures either upon the expiration of the term set forth therein. but she insisted on full recovery. EASCO. The co-insurers were indicated in each of the policies. CA affirmed. come the pre-trial. the proceeds are payable to his beneficiaries within sixty days after their filing of proof of death. .Sections 243 and 244 of the Insurance Code apply only when there is an unjustified refusal or withholding of payment on the insured’s claim. Reasoning . the applicable law is Article 2209 of the Civil Code. CA (EASTERN ASSURANCE & SURETY) 202 SCRA 119 FERNAN. All. misdeclaration. June 5. and finally. September 30. the proceeds of his policy should be adjusted accordingly. the Court of Appeals reversed the trial court’s denial of EASCO’s motion and ruled that the applicable interest is 6% per annum. 416 of the Central Bank. and also to enable the insurer to verify or check on the fact of death which it may even validly waive. In this case.A. When the goods reached Manila. Page . U. 1989 FACTS . They apply only when the court finds an unreasonable delay or refusal in the payment of the claims. Petitioner filed a claim with EASCO and Far Eastern Shipping. 1981. On appeal. 1982.After nearly 10 months of waiting.On December 18. ISSUE WON the policy matured upon the death of the insured HELD YES Ratio In life insurance. The insured having died during the Japanese occupation. She claimed a total loss of P4. WON sufficient proofs of loss had been presented by the insured .Circular No. . were renewals of earlier policies issued for the same property. evidently to determine the exact amount to be paid and the interest thereon to which the beneficiaries may be entitled to collect in case of unwarranted refusal of the company to pay.Petitioner Tio Khe Chio imported 1.000 bags of fishmeal valued at $36. The sheriff enforcing the writ reportedly fixed the legal rate of interest at 12%. Don V. the said provisions of the Insurance Code are not pertinent to the instant case. WON the insured's cause of action had already accrued before she filed her complaint 2. they were found to have been damaged by sea water which rendered the fishmeal useless.30 from Agro Impex. and even arson which was not seriously pressed for. 1991 FACTS . Dallas.A. nevertheless is sufficient to negate any assertion that in refusing to pay. Mabolo. a separate amount of 20% of the P4. . . as above stated.And in the light of the fact that the contending parties did not allege the rate of interest stipulated in the insurance contract. Respondent EASCO moved to quash the writ alleging that the legal interest to be computed should be 6% per cent per annum in accordance with Article 2209 of the Civil Code.000. Disposition Judgment affirmed TIO KHE CHIO v. P48. Simply put. Agdamag. interests at the rate of twice the ceiling being prescribed by the Monetary Board starting from the time when the case was filed. papers and general merchandise usual to the Assured's trade" stored in a one-storey building of strong materials housing the Cebu Filipina Press located at UNNO Pres. CATHAY INSURANCE v. Quirino cor. it acted unjustifiably. alleging violation of certain conditions of the policy. issued a writ of execution against EASCO. The trial court denied EASCO's motion. goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and loss of property which does not involve a loan.000 representing expenses of the plaintiff. is merely procedural. ISSUES 1.000 representing fees of counsel. ISSUE WON the applicable rate of interest is 12% per annum HELD NO . The insurance companies denied liability. filed a counterclaim against the petitioner for the recovery of the unpaid insurance premiums. through their adjusters. she sued to collect on December 15. among other cases). The fire policies described the insured property as "stocks of Printing materials. the Cebu Filipina Press was razed by electrical fire together with all the stocks and merchandise stored in the premises. or upon his death occuring at any time prior to the expiration of such stipulated term. with costs.

13 of the policy does not require the insured to produce her bank statements. F-03734 with a face value in the aggregate amount of P100k and consisting of Item 1 for P40k on household furniture. when the assured filed her complaint on December 15. 243 Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board. and that petitioner failed to substantiate his claim as to the value of the goods reputedly destroyed by fire.472. Zenith's liability was reduced to P20k.. 13 was prepared by the insurers themselves. that Policy No.666. ISSUES FACTS . fire destroyed petitioner's insured properties at the market site on September 5. it should be taken most strongly against them. Bislig. plus damages. WON attorney's fees awarded were exorbitant HELD 1.While both policies were in force..50. F-03724 was not in full force and effect at the time of the fire because the premium on the policy was not paid. Noda obtained from Zenith Insurance Corporation 2 fire insurance policies: [1] No. Said report concluded that "the sound value of P26. that Zenith's liability under Policy No. Zenith had fully discharged its liability under said policy which covered furniture. a prima facie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within the time fixed in both Sec. F03724 with a face value of P30k covering the goods and stocks in trade in his business establishment at the market site in Mangagoy. . YES . Therefore. including P1k as attorney's fees but excluding the actual. and in the affirmative case. Condition No.472.There is no merit in the petitioners' contention that the proofs of loss were insufficient because Lugay failed to comply with the adjuster's request for the submission of her bank statements. Commissioner placed much weight on the final report prepared by Dela Merced Adjustment Corporation. . 1982 through June 21.When petitioner failed to obtain indemnity on his claims from Zenith. attorney's fees were properly awarded to the private respondents. marine and casualty adjuster contracted by Zenith to investigate the claims of its various policyholders. the insurance company shall be adjudged to pay damages which shall consist of attorney's fees and other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of claim due the insured. F-03734. it shall be the duty of the Commissioner or the Court. but with the application of the three-fourths loss clause.In 1977.50 to petitioner.. 1981 and the proofs of loss were submitted from January 15. 1977 and at Barreda St. fixtures. . .The award of double interest on the claim is lawful and justified under Sections 243 and 244 of the Insurance Code which provide: Sec. fittings and .Insurance Commissioner allowed petitioner to recover under said policy and ordered Zenith to pay him the amount of P20k with legal interest from the date the complaint was filed.An award equivalent to 10% of the proceeds of the policies would be more reasonable than the 20% awarded by the trial court and the CA. YES . . Surigao del Sur and [2] No.472. payment should have been made within 90 days thereafter (Sec 243). and Item 2 for P60k on stocks in trade usual to petitioner's retail business situated in a two-storey building at 039 Barreda St. . 4. 244 In case of any litigation for the enforcement of any policy or contract of insurance. or on or before September 21. Sec. June 22. Disposition Decision of the CA AFFIRMED with MODIFICATION. NODA v. her cause of action had already accrued. YES .As the fire which destroyed the Cebu Filipina Press occurred on December 19. Condition No. 1982. attorney's fees and other expenses of litigation. fixtures. As for petitioner's claim under Policy No.50 in view of the co-insurance.In allowing recovery under Policy No. WON lower court erred in awarding damages to the private respondent in the form of interest equivalent to double the interest ceiling set by the Monetary Board 5. Mangagoy. NO .The petitioners' contention that the charging of double interest was improper because no unreasonable delay in the processing of the fire claim was proven is refuted by the trial court's explicit finding that "there was a delay that was not reasonable in processing the claim and doing payments".In view of the not insubstantial value of the private respondent's claims and the considerable time and effort expended by them and their counsel in prosecuting these claims for the past 8 years. F-03734. 242 and 243 of the IC. . on November 9. the insured was not obligated to produce them and the insurers had no right to ask for them.While the case was pending.INSURANCE 103 3.Zenith interposed that petitioner had no cause of action. hence.Both the trial court and the CA noted that the proofs were ample and more than enough for defendant insurers to do a just assessment supporting the 1981 fire claim for an amount exceeding four million pesos. she held that in view of the payment of P15. Surigao del Sur. if any. 03734 in the amount of P15. 1982. 1982 in compliance with the adjusters' numerous requests for various documents. CRUZ 151 SCRA 227 FERNAN. moral and exemplary damages prayed for. 2. 5. Under Section 244. fittings and other personal belongings of petitioner. to make a finding as to whether the payment of the claim of the insured has been unreasonably denied or withheld. F-03734.67 represented the whole loss and damage" incurred by petitioner. Hence. Bislig. Zenith settled petitioner’s fire loss claim under Item 1 of Policy No. 1987 NATURE Petition to review Commissioner decision of the Insurance Page other personal effects. . 3. an independent fire. WON the private respondents claim for loss was inflated 4. he filed a complaint with the Insurance Commission praying that Zenith be ordered to pay him P130kj representing the value of the 2 policies insured by respondent with interest at 12% per annum. as the case may be. was limited to P15. NO . 1977. .

August 14. FACTS . purchase invoices.096. 592. the act of the private respondent is equivalent to a tacit recognition that the ill-fated vessel was seaworthy.RTC found that the vessel. (Civil Code) 10 Sec.50 which it had earlier paid to petitioner. The vessel sank in the early morning of August 16. WON Insurance Commissioner erred in denying petitioner's demand for P60k under Item 2 of Policy No. .314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. Delsan took on board its vessel. was seaworthy to undertake the voyage. and the Insurance Commissioner for that matter. 1977. . Respondent paid Caltex P5. petitioner submitted his income tax return for 1978. Respondent Commissioner should not have perfunctorily dismissed that particular evidence as a worthless piece of paper. . forcing American home to file a case for collection in the RTC. Disposition Zenith Insurance Corporation ordered to pay petitioner Norman R.A scrutiny of the abovementioned adjuster's report reveals that together with the formal demand for full indemnity. certification from his suppliers as to his purchases. Inc. 2. NO Ratio The fact of payment grants American Home the subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier.592. or upon any thing which is the subject of marine insurance there is an implied warranty by the shipper that the ship is seaworthy. November 15. The shipment was insured by American Home Assurance Corporation (respondent). The foregoing evidence for petitioner preponderantly showed the presence of some P590k worth of goods in his retail store during the fire of November 9.302. Respondent’s Comment > American Home Assurance is entitled to payment by its right of subrogation. the private respondent demanded of the petitioner the same amount it paid Page to Caltex. 2207. thus exempting the common carrier from liability for the loss of its cargo. for a period of one year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. Delsan Transport Lines. .There is no showing that Zenith. 2001 NATURE A petition for review on certiorari of the decision of CA. v.277. Delsan refused to pay. have the right to reject proofs of loss if they are unsatisfactory. WON non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of action HELD 1. Respondent Commissioner however ignored such report. 2. F-03734.592. . and that said report did not even make a recommendation for payment. JR.10. CA (AMERICAN HOME ASSURANCE) 369 SCRA 24 DE LEON. YES . The report even took into account the appraisals of the other adjusters and concluded that the total loss sustained by petitioner in his household effects and stocks in trade reached P379. ISSUES 1. Dela Merced Adjustment Corporation. Being in the nature of an admission against interest. (petitioner). or freightage. petitioner offered his testimony and that of his wife as well as documentary exhibits.Caltex entered into a contract of affreightment with the petitioner.10 with legal interest from the filing of the complaint until full payment. had acted in a wanton. INC. Exercising its right of subrogation under Article 2207 of the New Civil Code.635. NO .Said document was offered as evidence by Zenith itself and could very well be considered as an admission of its liability up to the amount recommended. MT Maysun. thus precluding any action for recovery against the petitioner 2.57 representing the insured value of the lost cargo. MT Maysun. and other supporting papers. F-03734 2. 113 Insurance Code . they may not set up for themselves an arbitrary standard of satisfaction. But after apportioning said amount among petitioner's six different insurers [the co-insurance being known to Zenith]. 1986: MT Maysun set sail from Batangas for Zamboanga City.Zenith introduced in evidence the final report on Policy No. 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil. DELSAN TRANSPORT. Petitioner’s Claim > In every marine insurance upon a ship or freight. waves in the area. reasoning that with regard to Item 2 of Policy No. oppressive or malevolent manner to warrant the imposition of corrective damages. Substantial compliance with the requirements will always be deemed sufficient.INSURANCE 104 1.12. Reasoning Art.To prove the existence of the stocks in trade covered by Policy No. Noda the sum of P60. CA ruled that the petitioner is liable on its obligation as common carrier to respondent insurance company as subrogee of Caltex. and that the incident was caused by an unexpected inclement weather condition or force majeure. WON MT Maysun was seaworthy at the time of the voyage (outline topic) 3. WON Insurance Commissioner erred in not awarding in favor of petitioner exemplary damages for Zenith's unjustified and wanton refusal to pay petitioner's claim under the said two insurance contracts HELD 1. it is the best evidence which affords the greatest certainty of the facts in dispute.While the insurer.472. in contesting payment. F03734 the claim for loss of the stocks in trade was not successfully proven in view of petitioner's failure to present evidence. . the liability of Zenith was placed at P60.10 When private respondent paid Caltex the value of its lost cargo. that the adjuster's report deserved scant consideration since the allegations therein were not substantiated. It therefore recommended that Zenith pay the petitioner the amount of P60. . F-03734 submitted by its own adjuster.CA reversed RTC decision on the basis of evidence from PAG-ASA that there were no 20 ft. but deducting therefrom the amount of P15. WON payment made by American Home to Caltex for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy.10.

. 1989 CORP v.Common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them.Under Insurance Code. 14 bales of FINMAN GENERAL ASSURANCE INOCENCIO 179 SCRA 480 FELICIANO. destruction or deterioration is by force majeure. 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. liability of surety in a surety bond is joint and several with the principal obligor. any privity of contract or upon written assignment of claim. of San Francisco California.INSURANCE 105 If the plaintiff’s property has been insured. however.Pan Pacific moved out and no notice of transfer was furnished to POEA as required. . nor does it grow out of. A/S. CHIA YU 96 PHIL 696 REYES. Palero. There was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank. of the condition of the vessel or her stowage does not establish due diligence if the vessel was in fact unseaworthy.Conditions of a bond specified and required in the provisions of a statute providing for submission of the bond. according to all the circumstances of each case. loaded on the S. FACTS . These pieces of evidence do not necessarily take into account the actual condition of the vessel at the time of the commencement of the voyage. then Finman is liable both to private respondents and to POEA.Pan Pacific is a recruitment and employment agency. 1955 NATURE Certiorari FACTS . Reasoning . Public policy will be effectively negated if POEA and the DoLE were held powerless to compel a surety company to make good on its solidary undertaking. Disposition Petition is denied. The certificates issued. March 31. 3. Secretary upheld the POEA order. POEA and Secretary of Labor can require Pan Pacific to refund the placement fees and to impose the fine. Kroll & Co. and at least one of the conditions for the grant and continued use of the recruitment license. the ship may have appeared fit. If the amount paid by the insurance company does not fully cover the injury or loss.The tale of strong winds and big waves by the said officers of the petitioner however. or his surveyor.Atkin. S.POEA Administrator issued Order that respondents should pay. as the assured shipper of the lost cargo of industrial fuel oil. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. Also securing the approval of the shipper of the cargo. Cash and surety bonds are required from recruitment companies as means of ensuring prompt and effective recourse against such companies when held liable. by itself. Finman appealed to Secretary of Labor. It is not dependent upon. MT Maysun sank with its entire cargo for the reason that it was not seaworthy. . was effectively rebutted and belied by the weather report from PAGASA. .The right of subrogation is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice and good conscience ought to pay. It accrues simply upon payment by the insurance company of the insurance claim. Hernandez filed with POEA complaints against Pan Pacific for violation of Labor Code and for refund of placement fees. . Roeph Silverlight owned and operated by Leigh Hoegh & Co. NO Ratio Seaworthiness relates to a vessel’s actual condition. ISSUE WON Finman can be held liable for complainants’ claims against Pan Pacific HELD YES . EAGLE STAR INSURANCE CO LTD v. jurisdiction is vested in Insurance Commission . do not negate the presumption of unseaworthiness triggered by an unexplained sinking. and if Finman is solidarily liable with Pan Pacific.Inocencio. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. but also the amount paid to settle the insurance claim.Petitioner may not escape liability by presenting in evidence certificates that tend to show that at the time of dry-docking and inspection by the Philippine Coast Guard MT Maysun. Neither the granting of classification or the issuance of certificates establishes seaworthiness. and the decision of the CA is affirmed.Complainants have no cause of action against Finman . There is no liability if the loss. November 15. . At the time of dry-docking and inspection.Finman denied liability and said that POEA had no jurisdiction over surety bonds. is sufficient to establish not only the relationship of respondent as insurer and Caltex. NO Ratio The presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. POEA Administrator motu propio impleaded Finman as surety for Pan Pacific. ..POEA held and Secretary of Labor affirmed that Pan Pacific had violated Labor Code. . The subrogation receipt.. It posted surety bond issued by Finman General Assurance and was granted license to operate by POEA. . Page . 2. for the cargo owner has no obligation in relation to seaworthiness.Amounts claimed were paid as deposits and not as placement fees. . POEA considered that constructive service of complaints had been effected.Finman had not violated Labor Code .If Pan Pacific is liable. . are incorporated into all bonds tendered under that statute even though not set out in printer’s ink. Cardones. was fit for voyage. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract.Authorities are clear that diligence in securing certificates of seaworthiness does not satisfy the vessel owner’s obligation.

Inc.22 of the FACOMA funds. Co.Insular Government vs. Alpha Insurance & Surety Company had issued. first. providing as follows: EIGHT LIMITATION OF ACTION: No action. (This stipulation is but a repetition of a provision in the CA 65 which says that bills of lading covering shipments from the US to the Phils should be brought w/in one year after the delivery of the goods or the date when the goods should have been delivered to hold the carrier liable. limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues. such as the bringing of suit.Contractual limitations contained in insurance policies are regarded with extreme jealousy by courts and will be strictly construed against the Page insurer and should not be permitted to prevent a recovery when their just and honest application would not produce that result. SEC. ACCFA v. 236)~ "matters respecting a remedy.Defendant Alpha Insurance & Surety Co. 1968 FACTS .23 consigned to Chia Yu in the City of Manila.In order to guarantee the Asingan Farmers' Cooperative Marketing Association. S. But the claim was declined. .513.Furthermore. (Insurance Code) ~ Any condition. .3 of those delivered were also found damaged to the extent of 50 per cent. shall be sustainable in any Court of law or equity unless the insured shall have fully complied with all the terms and conditions of this Policy nor unless commenced with twelve (12) months next after the happening of the loss . suit or proceeding shall be had or maintained upon this Bond unless the same be commenced within one year from the time of making claim for the loss upon . first. . This is because. of San Francisco. either by the insurance company in London or its settling agents in the Philippines. . including their respective agents in the Philippines. 273. amounting to larceny or estafa of its SecretaryTreasurer. Frank(13 Phil.Being contrary to the law of the forum. On the same date. Whereupon.The shipment was insured against all risks by Eagle Star Ins. is void. under a policy issued to the shipper and by the latter assigned to the consignee. ALPHA INSURANCE 24 SCRA 151 REYES. No.307. . prescription is 10 years after action accrues. the Asingan FACOMA assigned its rights to the appellant. California. stipulation or agreement in any policy of insurance.INSURANCE 106 assorted underwear valued at P8. and statute of limitations.The vessel arrived in Manila but of the 14 bales (a. ACCFA immediately notified in writing the survey company on 10 October 1958. before such final rejection. J. July 29. to his personal benefit.) No suit action on this Policy. (now appellee) moved to dismiss the complaint for failure to state a cause of action. for the sum of P5. depend upon the law of the place where the suit is brought" TF any policy clause repugnant to this amendment to the Insurance Act cannot be given effect in an action in our courts. the action was resisted by the Atkins and Eagle Star principally on the ground of prescription.. some P11. Having been filed within twelve months form that date. of which P6. .) Disposition Judgment appealed from is REVERSED with respect to the carrier and its agents but AFFIRMED with respect to the insurance company and its agents. admissibility of evidence.) *** INSURER’s claim of prescription is founded upon the terms of the policy and not upon the bill of lading.If so. (46 C. on 14 February 1958. and presented the proof of loss within the period fixed in the bond.For the purpose of this action. Inc. -Chia Yu claimed indemnity for the missing and damaged bales. . he had a right to wait for his claim to be finally decided before going to court. there is nothing in the record to show that the claim was rejected in the year 1947. .a. ACCFA filed suit against appellee on 30 May 1960. by the carrier and afterward by the insurer.33 belonged to the ACCFA. whereupon Chia Yu brought the present action against both. . .The prescription clause could be harmonized with section 61-A of the Insurance Act by taking it to mean that the time given the insured for bringing his suit is twelve months after the cause of action accrues. the stipulation in the policy cannot be given effect as it would reduce the period allowed the insured for bringing his action to less than one year (because the prescription period begins from the “happening of the loss” and that before any suit could be sustained the insured shall have to comply with the terms and conditions of the policy first TF lessening the period to less than a year. Upon discovery of the loss. -TC favored Chia Yu and CA affirmed. *** CARRIER’s defense of prescription is made to rest on the following stipulation of the bill of lading: In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered. but despite repeated demands the surety company refused and failed to pay. with approval of the principal and the surety. Chia Yu's claim was considered to have been finally rejected by the insurer on April 22. contrary to the eighth condition of the bond. Ladines converted and misappropriated. the appellee.During the effectivity of the bond. .. there was no real necessity for bringing suit. with the carrier and then with the insurer. Agricultural Credit Cooperative and Financing Administration (ACCFA for short). giving as reason that (1) the same was filed more than one year after plaintiff made claim for loss. Ladines. freights =p) consigned to Chia Yu only 10 were delivered to him as the remaining 3 could not be found. its bond. (FACOMA) against loss on account of "personal dishonesty.An action was filed at the CFI after more than 2 years after delivery of the damaged bales and the date when the missing bales should have been delivered. ) .085. . . for the recovery of any claim.k.000 with said Ladines as principal and the appellee as solidary surety. as per A1144.As the policy provides that the insured should file his claim. when did the cause of action accrue? Chia Yu’s action did not accrue until his claim was finally rejected by the insurance company. (But in our jurisdiction. the action cannot be deemed to have prescribed even on the supposition that the period given the insured for bringing suit under the prescriptive clause of the policy is twelve months after the accrual of the cause of action. 61-A. 1948. P-FID-15-58. ISSUE WON ATKIN’ s action has prescribed HELD NO .

is valid. .00.Since a "cause of action" requires.The Angs filed against Fulton on May 26. (2) the complaint failed to show that plaintiff had filed civil or criminal action against Ladines. driver as well as the insurance company be held solidarily liable. v. Beyond such notification. 61-A: A condition. and is governed by the same principles of interpretation. . in effect. As a consequence of the foregoing. to pay the amount of the bond). in the nature of a contract of insurance against loss from misconduct. therefore.Condition eight of the bond. TRAVELLERS INSURANCE & SURETY CORP. the filing of the action can serve no other purpose. The court denied the suit and the mfr on Sept.If the claim be in any respect fraudulent. and dismissed the complaint on the ground that the action was filed beyond the contractual limitation period. stipulation or agreement in any policy of insurance. not the rules on the prescription of actions. the court reversed its original stand. the Court of First Instance denied dismissal. but. 1958.Their claim was denied on April 6. 1961 NATURE Appeal from judgment of the CFI ordering the defendant Fulton Fire Insurance Co. and costs. the agent of the defendant company. or. expressly or impliedly. CA (MENDOZA) 272 SCRA 536 HERMOSISIMA. 1997 NATURE The petition herein seeks the review and reversal of the decision of respondent Court of Appeals affirming in toto the judgment of the Regional Trial Court in an action for damages filed by private respondent Vicente Mendoza. and (3) that Ladines was a necessary and indispensable party but had not been joined as such. Disposition The judgment appealed from is hereby set aside and the case dismissed. governs. for that does not import that the surety company will refuse to pay. Later. with costs against plaintiffs-appellees. Besides. 3 and 12. if the loss or damage be occasioned by the wilful act or with the connivance of the Insured. Hence. as condition eight of the bond requires action to be filed within one year from the filing of the claim for loss. ANG v.The Angs brought an action against the agent on May 11. RTC and CA ordered that the owner. is subject to the provisions of Section 61-A of the Insurance Act (No. FULTON FIRE INSURANCE CO. limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues is void. not only a legal right of the plaintiff and a correlative obligation of the defendant but also "an act or omission of the defendant in violation of said legal right. is based. cannot have any legal effect except that of notifying the agent of the claim." ISSUE WON the suit against the agent tolled the prescription period. The year for instituting action in court must be reckoned. and their agreement that an action on a claim denied by the insurer must be brought within one year from the denial. . Jr. such that the filing against Fulton was only 9 months after the claim was rejected HELD NO . limiting the period for bringing action thereon. .The bringing of the action against the Paramount Surety & Insurance Company. there is no condition in the policy that the action must be filed against the agent. The taxicab was later identified and a case was filed against the driver and owner. While the insurance was in force. Article 1144). There is no law giving any effect to such action upon the principal. ISSUE WON the provision of a fidelity bond that no action shall be had or maintained thereon unless commenced within one year from the making of a claim for the loss upon which the action is based. therefore. . if the claim be made and rejected and an action or suit be not commenced within twelve months after such rejection or (in case of arbitration taking place in pursuance of the 18th condition of this Policy) within twelve months after the arbitrator or Page arbitrators or umpire shall have made their award all benefit under this Policy shall be forfeited. The discouraging of unnecessary litigation must be deemed a rule of public policy. to comply with its duty (in this case. suit or proceeding. . 1956. . such stipulation contradicts the public policy expressed in Section 61-A of the Philippine Insurance Act. and an additional sum of P2.000.INSURANCE 107 which such action. 1956. to pay the plaintiffs the sum of P10.A fidelity bond is. 2 SCRA 945 LABRADOR. in view of Section 61-A of the Insurance Act invalidating stipulations limiting the time for commencing an action thereon to less than one year from the time the cause of action accrues HELD NO . fire destroyed the goods.At first. therefore. as amended by Act 4101 of the pre-Commonwealth Philippine Legislature.Their contract is the law between the parties. with interest. action may be brought within the statutory period of limitation for written contracts (New Civil Code. JR.The stocks of general merchandise in the store of the Ang spouses are insured with Fulton. an amendment was filed to include the insurance company. considering the unrelieved congestion in the courts. FACTS .000. is null and void. May 22. it can not be counted from the creditor's filing of the claim of loss." the cause of action does not accrue until the party obligated refuses. or. The Angs filed their first claim immediately after the fire. and the appellant is not bound to comply with its provisions. FACTS -an old lady was hit by a taxicab. the condition of the bond in question. .There was a clause in the policy: 13. or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under this Policy. 1956. from the time of appellee's refusal to comply with its bond. or if any false declaration is made or used in support thereof.00 as attorney's fees. 2427). 1957. in accordance with the fourth section hereof. . this appeal. as required by conditions 4 and 11 of the bond. upon reconsideration. and the Court can not by interpretation extend the clear scope of the agreement beyond what is agreed upon by the parties. In so far. as heir of his mother who was killed in a vehicular accident. Consequently. as essential elements. July 31. prescribing that: SEC. They received notice on April 19.

and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. MLA MAHOGANY argues that it was entitled to go after San Miguel to claim the additional P4. when Manila Mahogany executed another release claim discharging San Miguel from "all actions. CA (ZENITH INSURANCE CORP) 154 SCRA 652 PADILLA. Reasoning . release the wrongdoer who caused the loss.000 being based on the insurance policy .” . to whom partial payment has been made.From 6 March 1970 to 6 March 1971.486. ZENITH thus demanded from petitioner reimbursement of the sum of P4. 1987 NATURE Petition to review CA decision ordering Manila Mahogany Manufacturing Corporation to pay Zenith Insurance Corporation P5. refused reimbursement. The former is based on torts and quasi-delicts while the latter is based on contract. . with the Commissioner or the Courts within one year from denial of the claim. . to have waived his rights as against petitioner-insurer.57) COASTWISE v. the contract being solely to reimburse the insured for liability actually discharged by him thru payment to third persons. and costs of suit FACTS . and much more. Respondent’s Arguments > There was no qualification to its right of subrogation under the Release of Claim executed by petitioner. He is deemed.CA affirned CFI. subrogating respondent company to all its right to action against San Miguel Corporation. For the damage caused. otherwise the claimant's right of action shall prescribe" ). without prejudice to the insurer's right of subrogation.Even assuming arguendo that there was such a contract. MLA MAHOGANY's general manager executed a Release of Claim. CA (supra p. But in the case at bar. and claims a preferred right to retain the amount coming from San Miguel.the compromise agreement of P5. with the modification that petitioner was to pay the total amount of P5.000 with 6% annual interest.On 11 Dec 1972. to demand reimbursement from San Miguel. Inc. then third persons to whom the insured is liable can sue the insurer. 11 Article 2207: “If the plaintiff's property has been insured. Where the contract is for indemnity against actual loss or payment. CA (supra p.500. .City Court ordered petitioner to pay respondent P4.” 12 Article 1305: “A creditor. If the amount paid by the insurance company does not fully cover the injury or loss the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. .000 in amicable settlement. What then was the basis of the RTC and the CA to say that the insurance contract was a thirdparty liability insurance policy? Consequently. demands and rights of action that now exist or hereafter arising out of or as a consequence of the accident" after the insurer had paid the proceeds of the policy . under this legal provision. attorney's fees.500. 130412 of the Civil Code.500. ISSUE WON the insurer may recover the sum of P5.000 was received by petitioner. should the insured. nevertheless.000 to ZENITH as the subrogation in the Release of Claim it executed in favor of respondent was conditioned on recovery of the total amount of damages petitioner had sustained. Insurance Adjusters. despite the subrogation in favor of ZENITH. WILLIAM LINES (supra p. . Petitioner’s Claims > It is not bound to pay P4.On 4 May 1970. Inc. the trial court was confused as it did not distinguish between the private respondent's cause of action against the owner and the driver of the Lady Love taxicab and his cause of action against petitioner. P5. the insurer will be entitled to recover from the insured whatever it has paid to the latter. and he shall be preferred to the person who has been subrogated in his place in virtue of the partial payment of the same credit.CFI affirmed the City Court's decision in toto. claims.Where the contract provides for indemnity against liability to third persons. 220711 and Art.000 it had earlier received from ZENITH. after amendment"action or suit for recovery of damage due to loss or injury must be brought in proper cases. said third persons' recourse being thus limited to the insured alone. ZENITH wrote Insurance Adjusters. as evidenced by a cash voucher and a Release of Claim executed by the General Manager of petitioner.500.the insurer is entitled to recover from the insured the amount of insurance money paid. October 12.500 paid by San Miguel. unless the release was made with the consent of the insurer. ZENITH paid MLA MAHOGANY P5. .Although petitioner’s right to file a deficiency claim against San Miguel is with legal basis. thereby defeating private respondent’s right of subrogation.43 and only P5.000 HELD YES Ratio Since the insurer can be subrogated to only such rights as the insured may have. private respondent's cause of action can not prevail because he failed to file the written claim mandated by the Insurance Code (before it was amended-action must be brought within six months from date of the accident (this is what’s applicable here) . the insurer loses his rights against the latter. after receiving payment from the insurer. the contents having expressed all intents and purposes of the parties. the insured vehicle was bumped and damaged by a truck owned by San Miguel Corporation.INSURANCE 108 ISSUE WON RTC and CA erred HELD YES . the right of action of petitioner against the insurer was also nullified. Since petitioner by its own acts released San Miguel. Since total damages were valued by petitioner at P9. Disposition petition granted SUN INSURANCE v. MLA MAHOGANY insured its Mercedes Benz 4-door sedan with ZENITH. then third persons cannot proceed against the insurer. But in such a case. Page > It cites Art. may exercise his right for the remainder. there was no contract shown.3) MANILA MAHOGANY MANUFACTURING CORP v. alleging that San Miguel had already paid petitioner P4.70) CEBU SHIPYARD v.

Hence the applicable law is Article 2207 of the new Civil Code. (Bormaheco). and Manila Mahogany Manufacturing Corporation v. Old Time Molasses Co.After trial on the merits. Inc.00 to be paid in installments. Pennsylvania Fire Ins. To the extent of the amount he has already received from the insurer enjoys the right of subrogation. then the aggrieved party is the one entitled to recover the deficiency.Pioneer paid a total sum of P298. 2207.On July 19. 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. 1965. a decision was rendered holding Lim liable to pay Pioneer but dismissed Pioneer's complaint against all other defendants. it is provided in said article that the insurer is deemed subrogated to the rights of the insured against the wrongdoer and if the amount paid by the insurer does not fully cover the loss. . **Maglana. sought for damages for being exposed to litigation and for recovery of the sums of money they advanced to Lim for the purchase of the aircrafts in question. Lim. Heald Lumber Co. to wit: Art. Japan Domestic Airlines (JDA) and Lim entered into and executed a sales contract for the sale and purchase of two (2) DC-3A Type aircrafts and one (1) set of necessary spare parts for the total agreed price of US $109. by way of counterclaim.In general a reinsurer. July 28. 1966. The total amount paid by Pioneer to JDA is P299.000. Since Pioneer has collected P295. Air Lines v. the Cervanteses.INSURANCE 109 . . Bormaheco and the Cervanteses. Considering this admitted payment.666. as surety.00 for one of the airplanes and P2.CA modified the trial court's decision in that the plaintiff’s complaint against all the defendants (including Lim) was dismissed. -On May 17. then he may sue the party responsible for the damage for the remainder.On May 22. Co.On June 10. on payment of a loss acquires the same rights by subrogation as are acquired in similar cases where the original insurer pays a loss (Universal Ins. Heald Lumber Co.000. collected the proceeds of such reinsurance in the sum of P295.383.The Cervanteses and Maglana. Air Lines.. Accordingly. They executed two (2) separate indemnity agreements in favor of Pioneer. CA (BORDER MACHINERY & HEAVY EQUIPMENT INC) 175 SCRA 668 GUTIERREZ.The rules of practice in actions on original insurance policies are in general applicable to actions or contracts of reinsurance (Delaware.As held in Phil. Co. Lim was engaged in the airline business as owner-operator of Southern Air Lines (SAL). Disposition Petition DENIED. Court of Appeals) . . . . v. Francisco and Modesto Cervantes (Cervanteses) and Constancio Maglana contributed some funds used in the purchase of the above aircrafts and spare parts. If the plaintiff’s property has been insured. Page This is the amount for which Pioneer may sue defendants. and paid with the said amount the bulk of its alleged liability to JDA under the said surety bond. Pioneer Insurance and Surety Corporation. 6639 in favor of JDA. under this legal provision. Bormaheco and the Cervanteses filed cross-claims against Lim alleging that they were not privies to the contracts signed by Lim and. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury . Pioneer filed an action for judicial foreclosure with an application for a writ of preliminary attachment against Lim and respondents. Japan. SUBROGATION: The right of subrogation can only exist after the insurer has paid the insured. the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured (. v. -Border Machinery and Heavy Equipment Company.000. Evidently.050.29. . at Tokyo.). or P3. one signed by Maglana and the other jointly signed by Lim for SAL. 2207. Lim doing business under the name and style of SAL executed in favor of Pioneer as deed of chattel mortgage as security for the latter's suretyship in favor of the former.Lim defaulted on his subsequent installment payments prompting JDA to request payments from the surety.72. Therefore. Judgment appealed from is AFFIRMED with costs against petitioner..It is clear from the records that Pioneer sued in its own name and not as an attorney-in-fact of the reinsurer. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract.00.If a property is insured and the owner receives the indemnity from the insurer. the only question was the effect of payment made by the reinsurers to the petitioner .666. It was stipulated therein that Lim transfer and convey to the surety the two aircrafts.28. Co.00 for a spare engine.Pioneer then filed a petition for the extrajudicial foreclosure of the said chattel mortgage before the Sheriff of Davao City. Pioneer is still overpaid by P33. If the insurance proceeds are not sufficient to cover the damages suffered by the insured. Jacob S. or a total of P37. v. . . in behalf of its principal. otherwise the insured will be deprived of his right to full indemnity. But since the amount realized from the sale of the mortgaged chattels are P35.050.000. the appellate court did not commit a reversible error in dismissing the petitioner's complaint as against the respondents for the reason that the petitioner was not the real party . the uninsured portion of what it paid to JDA is the difference between the two amounts. . ISSUE WON the petition of Pioneer Insurance and Surety Corporation against all defendants was rightly dismissed HELD YES . Ins. 1965. 1965. Bormaheco and Maglana.). filed a third party claim alleging that they are co-owners of the aircrafts. If the amount paid by the insurance company does not fully cover the injury or loss.The payment to the petitioner made by the reinsurers was not disputed. (this constitutes the second petition but will no longer be discussed because it is not relevant to the topic) . PIONEER INSURANCE v.00 from the reinsurers.In 1965. executed and issued its Surety Bond No. under Art.626.Both the TC and CA made the finding that Pioneer reinsured its risk of liability under the surety bond it had executed in favor of JDA. however. Pioneer has no more claim against defendants. assuming that the indemnity agreement is still valid and effective. for the balance price of the aircrafts and spare parts. . the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured. 1989 NATURE Petitions for review on certiorari of a decision of the CA FACTS . a single proprietorship. JR.. . Inc.12.

(2) where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's claim for loss. Questioned decision of CA affirmed. upon payment to the assured. The right of subrogation is not dependent upon. the insurer and the assured.. i. [Sveriges Angfartygs Assurans Forening v. Petitioner's complaint for damages against private respondents is hereby REINSTATED.INSURANCE 110 in interest in the complaint and. 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. PAN MALAYAN INSURANCE CORPORATION v. thereby effecting "voluntary payment". the insured car was sideswept and damaged by a car owned by Erlinda Fabie. an event that proceeds from an unknown cause. In such an event.Pan Malayan Insurance Company (Panmalay) insured the Mitsubishi Colt Lancer car registered in the name of Canlubang Automotive Resources Corporation (Canlubang) under its motor vehicle insurance policy.EVEN if voluntarily indemnified Canlubang. (3) where the insurer pays the assured for a loss which is not a risk covered by the policy. the policy will be construed by the courts liberally in favor of the assured and strictly against the insurer . In the case of property insurance policies. did not cover damage arising from collision or overturning due to the negligence of third parties as one of the insurable risk) ISSUE WON the insurer PANMALAY may institute an action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents as the parties allegedly responsible for the damage caused to the insured vehicle. . Let the case be remanded to the lower court for trial on the merits. with the latter failing and refusing to pay their claim. or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear”. as interpreted by TC: the insurer who may have no rights of subrogation due to "voluntary" payment may never. theless recover from the third party responsible for the damage to the insured property under Article 1236 of the Civil Code. NCC HELD YES Ratio Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. equivocal or uncertain. ON TC: “Own damage” (not found in the insurance policy) simply meant that Panmalay had assumed to reimburse the cost for repairing the damage to the insured vehicle. the evident intention of the contracting parties. driven by an unknown driver who fled the scene. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. Fabie filed a Motion for Bill of Particulars. defrayed the cost of repair of the insured car and was subrogated to the rights of Canlubang against the driver and owner of the pick-up.] The concept "accident" is not necessarily synonymous with the concept of "no fault". then the insurer. Panmalay then filed a complaint for damages with RTC Makati against Erlinda Fabie and her driver on the grounds of subrogation. therefore. that the courts will intervene. Disposition Petitions dismissed. . the settlement is binding on both the assured and the insurer. It’s different from “Third Party Liability” coverage (liabilities arising from the death of or bodily injuries suffered by 3rd parties) and from Page “Property Damage” coverage (liabilities from damage caused by insured vehicle to properties of 3rd parties) ON CA: the terms of a contract are to be construed according to the sense and meaning of the terms which the parties thereto have used. determine the import of the various terms and provisions embodied in the policy. HER UNKNOWN DRIVER) 184 SCRA 54 CORTES. Panmalay. or is an unusual effect of a known cause and. April 3. and the latter cannot bring an action against the carrier on his right of subrogation.Interpretation given by Panmalay is more in keeping with rationale behind rules on interpretation of insurance contracts in favor of assured or beneficiary: indemnity or payment . . such that the parties themselves disagree about the meaning of particular provisions.Court on several occasions defined “accident” or “accidental” as taking place “without one’s foresight or expectation.Both TC and CA are incorrect.Both Panmalay and Canlubang had the same interpretation regarding the coverage of insured risk regarding “accidental collision or overturning…” to include damages caused by 3rd party to Canlubang so it was improper for CA to ascribe meaning contrary to the clear intention and understanding of the parties. It is only when the terms of the policy are ambiguous.CA: dismissed appeal. from liability. Among the provisions of the policy was a “own-damage” clause whereby Panmalay agrees to indemnify Canlubang in cases of damage caused by “accidental collision or overturning. not expected” [Dela Cruz v. nor does it grow out of.e. CA (FABIE. Qua Chee Gan] Disposition the present petition is GRANTED. 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. the insurer's right of subrogation is defeated. affirmed RTC (applying the ejusdem generis rule held that Section III-1 of the policy. 1990 NATURE PETITION to review the decision of the Court of Appeals FACTS . Capital Insurance & Surety Co. any privity of contract or upon written assignment of claim. which was the basis for settlement of CANLUBANG's claim.RTC: dismissed complaint for lack of cause of action (payment by PANMALAY of CANLUBANG's claim under the "own damage" clause of the insurance policy was an admission by the insurer that the damage was caused by the assured and/or its representatives) – Panmalay appealed .On 1985. the former has no right of subrogation against the third party liable for the loss Reasoning . . has no cause of action against the respondents. It may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man.damage/loss to insured vehicle due to negligence of 3rd parties not listed as exceptions to coverage in the insurance policy . . therefore. in accordance with the policy. It accrues simply upon payment of the insurance claim by the insurer Exceptions (1) if the assured by his own act releases the wrongdoer or third party liable for the loss or damage. in accordance with A2207.

Jamila and its surety. Its basis for its contention were: (1) that the complaint did not allege that Firestone. such payment operates as an equitable assignment to the insurer of the property and all remedies which the insured may have for the recovery thereof. .INSURANCE 111 FIREMAN'S FUND INSURANCE COMPANY JAMILA & COMPANY. It had already been indemnified for the loss which it had sustained. therefore. it joined as a party-plaintiff in order to help Fireman's Fund to recover the amount of the loss from Jamila and First Quezon City. The lower court denied plaintiff's motion. 1997 FACTS Jamila & Co. TABACALERA v. the lower court dismissed the complaint as to Jamila on the ground that there was no allegation that it had consented to the subrogation and. . had investigated the loss and that Jamila was represented in the investigation and (2) that Jamila did not consent to the subrogation of Fireman's Fund to Firestone's right to get reimbursement from Jamila and its surety. calling the lower court's attention to the fact that the issue of subrogation was of no moment because Firestone. April 1976 v. Page . Fireman's Fund had no cause of action against it. . any privity of contract. or the Veterans Philippine Scouts Security Agency contracted to supply security guards to Firestone. That right is not dependent upon. They filed a second MR. Inc. May 16. Upon defendant's motions.Article 2207 is a restatement of a settled principle of American jurisprudence. . . and its operation is governed by principles of equity.Firestone and Fireman's Fund filed an MR on the ground that Fireman's Fund was suing on the basis of legal subrogation whereas the lower court erroneously predicated its dismissal order on the theory that there was no conventional subrogation because the debtor's consent was lacking. the subrogor. The lower court in its order of dismissal had sustained the second ground. executed a bond in the sum of P20. and perfect justice between all the parties without regard to form. Stated otherwise.On May 18. . Firestone is really a nominal party in this case. paid to Firestone the amount of the loss.The plaintiffs cited article 2207 of the Civil Code which provides that "if the plaintiff's property has been insured. 1963 properties of Firestone valued at P11. its basis is the doing of complete. pursuant to the contractual stipulation quoted in the complaint. the lower court did not state in its order why it set aside its prior order dismissing the complaint with respect to Jamila.. First Quezon City failed to pay the amount of the loss in spite of repeated demands. the co-plaintiff of Fireman's Fund. the lower court denied plaintiffs' second MR. NORTH FRONT SHIPPING 272 SCRA 527 BELLOSILLO. INC. Obviously.925 were lost allegedly due to the acts of its employees who connived with Jamila's security guard. and thus determine the rights of the insurer in this respect. The First Quezon City Insurance Co. Jamilla had originally moved for the dismissal of the complaint on the ground of lack of cause of action. The lower court reiterated its order. The loss in the first instance is that of the insured but after reimbursement or compensation. It appears that the same action was previously filed in a civil case which was dismissed because of the failure of the same plaintiffs and their counsel to appear at the pre-trial. Upon payment of the loss. when the insurance company pays for the loss. Subrogation is a normal incident of indemnity insurance.On the other hand. or upon written assignment of claim. ISSUE WON the complaint of Firestone and Fireman's Fund states a cause of action against Jamila HELD YES . Subrogation has been referred to as the doctrine of substitution. completely ignored that first ground. Jamila assumed responsibility for the acts of its security guards. and payment to the insured makes the insurer an assignee in equity. Fireman's Fund is entitled to go after the person or entity that violated its contractual commitment to answer for the loss insured against. the insurer is entitled to be subrogated pro tanto to any right of action which the insured may have against the third person whose negligence or wrongful act caused the loss. Without resolving that contention. The court did not mention Firestone. It is an arm of equity that may guide or even force one to pay a debt for which an obligation was incurred but which was in whole or in part paid by another. that is. Fireman's Fund.000 to guarantee Jamila's obligations under that contract. the equitable right of subrogation as the legal effect of payment inures to the insurer without any formal assignment or any express stipulation to that effect in the policy. As the insurer. Although many policies including policies in the standard form. Fireman's Fund was subrogated to Firestone's right to get reimbursement from Jamila. However.The trial court erred in applying to this case the rules on novation. .. Firestone had tacitly assigned to Fireman's Fund its cause of action against Jamila for breach of contract. essential. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract". Inc. as insurer. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of.Upon an MR. It reverted to the second ground which was relied upon in its order previous order. The plaintiffs in alleging in their complaint that Fireman's Fund "became a party in interest in this case by virtue of a subrogation right given in its favor by" Firestone. It also dismissed the complaint as to First Quezon City on the ground of res judicata. nor does it grow out of. Jamila in its MR invoked the first ground which had never been passed upon by the lower court. is a partyplaintiff and could sue directly Jamila in its own right.Subrogation is founded on principles of justice and equity. were not relying on the novation by change of creditors as contemplated in articles 1291 and 1300 to 1303 of the Civil Code but rather on article 2207. due to inadvertence. stating that Fireman's Fund had no cause of action against Jamila because Jamila did not consent to the subrogation. the lower court set aside its order of dismissal and sustained plaintiff's contention that there was no res judicata as to First Quezon City because the civil case was dismissed without prejudice. . But the lower court in its order granting Jamila's motion for reconsideration. It rests on the principle that substantial justice should be attained regardless of form. 70 SCRA 323 AQUINO.Fireman's Fund's action against Jamila is squarely sanctioned by article 2207. now provide for subrogation. The right of subrogation is of the highest equity. it becomes the loss of the insurer. Sufficient ultimate facts are alleged in the complaint to sustain that cause of action.

433 . Irineo Gutierrez. petitioner received private respondent’s claim.000.20. . Disposition The decision of the CA is REVERSED and SET ASIDE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY v.On January 9.333 metric tons and the rest was already moldy and deteriorating. petitioner did not require a medical examination and Page issued a policy on the sole basis of the application on February 11. . private respondent enlisted the services of counsel in reiterating her claim for death benefitsPetitioner still refused to make payment and thus. 1989. an act/omission of the owner of the goods. or put differently. The clean bill of lading it issued disprove the master of the vessel’s claim that the grains were farm wet when loaded.189. The arrival of the goods at the place of destination in bad order makes a prima facie case against the common carrier. was in fact dead before the application for insurance on her life was made. 001 and insured with Tabacalera. 1992.Petitioner withheld payment on the ground that the policy claimed under was void from the start for having been procured in fraud. ruling that the contract entered into was a charter-party agreement. whether the insured. Prudential Guarantee & Assurance. herein private respondent. We see no reversible error in the finding of both respondent court and the trial court in favor of the correctness of the entries in Certificate of Death. the main issue has always been whether there was fraud in the obtainment of the disputed policy. The hatches on the crates of grain were not sealed and the tarpaulins used in covering them were not new. .While petitioners presented evidence of the vessel’s bad shape and a laboratory analysis revealing that the grains were contaminated with salt water. it should share at least 40% of the loss. only ordinary diligence in the care of the goods was required of North Front Shipping. In another letter. Dr. it is without a doubt a common carrier. .INSURANCE 112 FACTS . 1988.However. Having surveyed the vessel.Republic Flour was advised of the vessel’s arrival in Manila. La Union whose signature appeared in the death certificate.234 sacks of corn grains valued at P3. Unloading was only completed 20 days after the arrival of the barge.Analyses showed that the deterioration was caused by moisture content from salt water. which declared that Florence Pulido died of acute pneumonia on September 10. dated December 16. duly registered with the Local Civil Registrar of Bagulin. they were subrogated to the rights of Republic Flour. On April 1992. ISSUE WON defendant is required to observe extraordinary diligence in its vigilance over the goods it transports HELD YES . defendant’s vessel. which could be arrested by drying. Unloading was sometimes stopped due to varying weather and sometimes for no apparent reason.By virtue of the insurance companies’ payment. However. Petitioners filed a complaint against North Front Shipping. and New Zealand Insurance. La Union. CA (ELIZA PULIDO) 344 SCRA 360 GONZAGA-REYES. under Bill of Lading No. this action. their investigation concerning the subject policy yielded the information that the insured. 2000 NATURE This petition for review on certiorari seeks to reverse the Decision of the Special Second Division of the Court of Appeals FACTS .5M were shipped on board North Front 777.00 which designated her sister. Florence Pulido.As a corporation engaged in the business of transporting cargo offering its services indiscriminately to the public. which declared that the insured. but did not immediately commence the unloading operations. in the amount of P100. Republic Flour is also found to be guilty of contributory negligence for not immediately staring the unloading operations and for providing no explanation for the delay. Republic Flour rejected the entire cargo and demanded that defendant North Front Shipping pay the damages suffered by it. If they were wet. Florence Pulido. destruction or deterioration was due to a fortuitous event.The records bear out that since the onset of this case. before the application for insurance on her life was made. ISSUE WON lower court erred in holding that there was no fraud HELD .Petitioner caused another investigation respecting the subject policy. . it has the burden of proving that it observed extraordinary diligence to avoid responsibility for the lost cargo. This the lower courts had effected ruled on. the character of the goods or defects in their packing. Florence Pulido. petitioner received from one Florence Pulido an application for life insurance. 1991. the cargo was short 26. contrary to North Front Shipping’s claims. . The cargo was consigned to Republic Flour Mills Corp. testified in addition . died of acute pneumonia on September 10. Because the insurance applied for was non-medical. While this was communicated to private respondent in a letter. as such. . defendants failed to rebut said arguments or even endeavor to establish that the loss. as its principal beneficiary. November 15. however. petitioner confirmed to private respondent receipt of the claim papers and assured her that her case was “being given preferential attention and prompt action”. North Front Shipping reiterated that the barge was inspected prior to loading and found seaworthy and were issued a permit to sail by the Coast Guard. It is petitioner’s contention that even before they received private respondent’s claim for death benefits. it was found that the barge had cracks in its bodega. claiming the loss was exclusively attributable to the latter’s fault and negligence. The demands were unheeded and the insurance companies were obliged to pay Republic Flour P2. the master of the vessel should have known that the grains would eventually deteriorate when sealed in hot compartments in hatches of a ship and should have undertaken precautionary measures to avoid this. Pursuant to the findings of this second investigation. As such. by then. which must prove its non-liability. upon a preponderance of the evidence duly received from both parties. died in 1988. On November 9. 1989.The court dismissed the complaint. They further averred that the grains were farm wet and not properly dried before loading. private respondent had already filed her claim earlier that month. or an order or act of a competent public authority. As such. 1991. petitioner stood by its initial decision to treat the policy as void and not to honor the claim. the Municipal Health Officer of Bagulin.

Paul Fire & Marine Insurance Company. St. In the case at bar. value of the damaged cargo. instead of P2. shipped aboard the SS "Tai Ping". which was the basis of both respondent court and the trial court in finding the date of Florence Pulido’s death to be as plaintiff-private respondent maintained. Gutierrez for seeking to perpetuate a falsity in public records. unless the shipper or owner declares a greater value.00 which was the rate existing at that time. However.Winthrop Products. good customs and public policy.The defendants resisted the action. is limited or restricted by the provisions in the bill of lading.F. value of the damaged drum and cartons of medicine with the carrier and the Manila Port Service. but this was denied. this appeal. in case of loss or damage to the goods. provided they are not contrary to law. morals.67 representing the C. Hence.F. provided it is (a) reasonable and just under the circumstances. value of the goods as per contract of sea carriage embodied in the bill of lading. the defendants offered to settle the latter’s claim in full by paying the C. However. Petitioner was likewise unable to make out any clear motive as to why Ramon Piganto would purposely lie. Since the right of the assured. November 29. including other expenses in connection therewith. Disposition the instant petition is DENIED ST. in the name of Winthrop Products. PHILAM v. This limitation of the carrier's liability is sanctioned by the freedom of the contracting parties to establish such stipulations.015 to $1. instituted an action against the defendants for the recovery of said amount of $1.46 or its equivalent in pesos at the rate of P3.60) EQUITABLE v. and (b) has been fairly and freely agreed upon.134. Paul Fire & Marine Insurance Co.134.I. as insurer. does not merit a conclusion of fraud. .S. in the total amount of $1. A stipulation fixing or limiting the sum that may be recovered from the carrier on the loss or deterioration of the goods is valid. No motive was imputed to Dr. the liabilities of the defendantsappellees with respect to the lost or damaged shipments are expressly limited to the C. it can recover only the amount that is recoverable by the latter. RURAL INSURANCE (supra p. both refused to pay such claim. As subrogee.We cannot likewise give credence to petitioner’s submission that the inconsistencies in the testimonies of the witnesses for plaintiff-private respondent are in themselves evidence of fraud. 1976 FACTS . Inc. for the purpose only of avoiding litigation without admitting liability to the consignee. . value of the goods which were lost or damaged 2.INSURANCE 113 that he ministered to the ailing Florence Pulido for two days immediately prior to her death.90. Inc. after paying the claim of the insured for damages under the insurance. 26 SCRA 178 CONCEPCION. March 25. 1968 NATURE Appeal from the decision of the CFI certified by CA FACTS . and notes by a municipal health officer prepared in the regular performance of his duties. The plaintiff filed a MFR contending that it should recover the amount of $1. terms. with arrival notice inManila to consignee Winthrop-Stearns. The stipulation in the bill of lading limiting the common carrier's liability to the value of the goods appearing in the bill. St. ASIAN SURETY (supra p.00. the consignee filed its claim with the insurer. clauses. which were consigned to Winthrop-Stearns.I. on the basis of such claim. as shipper. 34. On the date of the discharge of the cargo. Mere allegations of fraud could not substitute for the full and convincing evidence that is required to prove it.00.46. The peso equivalent was based by the consignee on the exchange rate of P2.. ISSUES 1. The LC rendered judgment ordering the defendants to pay the plaintiff the sum of P300. Inc.109. The said shipment was discharged complete and in good order with the exception of one (1) drum and several cartons which were in bad order condition. INC. owned and operated by Wilhelm Wilhelmsen.The SS "Tai Ping" arrived at the Port of Manila and discharged its aforesaid shipment into the custody of Manila Port Service. Because consignee failed to receive the whole shipment and as several cartons of medicine were received in bad order condition. a suit by the insurer as subrogee necessarily is subject to like limitations and restrictions. are prima facie evidence of facts therein stated. is subrogated merely to the rights of the assured.F. agent of Wilhelm Wilhelmsen issued Bill of Lading No. the insurance company. is valid and binding. or conditions as they may deem convenient. paid to the consignee the insured value of the lost and damagcd goods. with the freight prepaid. WON in case of loss or damage.The plaintiff-appellant. the insurer.59) FIELDMEN’S v. 2. Such alleged inconsistencies are matters of credibility which had been ably passed upon by the lower court. AUDITOR (supra p. YES Page Ratio The purpose of the bill of lading is to provide for the rights and liabilities of the parties in reference to the contract to carry. Barber Steamship Lines. Inc. Inc. currency.I. unless the party who contests its accuracy can produce positive evidence establishing otherwise.PAUL FIRE & MARINE INSURANCE CO v. and knew of Florence’s death only through Ramon Piganto. 218 cartons and drums of drugs and medicine.I. but this offer was declined by the plaintiff. The shipment was insured by the shipper against loss and/or damage with the St.F. Consequently. A duly-registered death certificate is considered a public document and the entries found therein are presumed correct.60) COQUIA v.. WON the insurer who has paid the claim in dollars to the consignee should be reimbursed in its peso equivalent on the date of discharge of the cargo or on the date of the decision HELD 1. A failure to do so would leave intact the presumption of good faith and regularity in the performance of public duties.. Paul Fire & Marine Insurance Co. the arrastre contractor for the Port of Manila. FIELDMEN'S INSURANCE CO. . . Gutierrez was not present when Florence Pulido died.Death certificates. This fact is likewise noted in the death certificate. Petitioner’s contention that the death certificate is suspect because Dr. the liability of the carrier to the consignee is limited to the C.46 U. the consignee filed the corresponding claim in the amount of P1. . . MACONDRAY & CO INC 70 SCRA 122 ANTONIO. plus costs.134.As subrogee of the rights of' the shipper and/or consignee.

Thus. covering the period from December 1. .On September 18. who is riding in the Motor Vehicle insured at the time of accident or injury. to the decision of two arbitrators. to the decision of an umpire who shall have been appointed in writing by the arbitrators before entering on the reference and the costs of and incidental to the reference shall be dealt with in the Award..00 and the costs. reading: "If a contract should contain some stipulation in favor of a third person.00. at its option. inter alia: "Section I — Liability to Passengers. 1962. It was stipulated in said policy that: "The Company will. Inc. as provided in said section.INSURANCE 114 . fulfill and be subject to the Terms of this Policy insofar as they can apply. indemnify his personal representatives in terms of and subject to the limitations of this Policy.000.December 1.TC rendered a decision sentencing the Company to pay to the plaintiffs the sum of P4. Country Bankers Insurance and Lianga Bay entered into a contract of fire . or on February 10. without the assistance of the Insured. In fact. The Company will. . it is clear that the Coquias — who. . it being the true intention of this Policy to protect.While the policy was in force. one of which is found in the Art 1311 CC. 1961 to December . "Section II.Lianga Bay is a duly registered cooperative judicially declared insolvent and is here represented by." . since they could have maintained this action by themselves. Under these conditions. provided. issued. The Insured rejected it and made a counter-offer for P4. in respect of the liability incurred by such person. "8. indemnify the Insured in the event of accident caused by or arising out of the use of Motor Vehicle against all sums which the Insured will become legally liable to pay in respect of: Death or bodily injury to any fare-paying passenger including the Driver. appellant Fieldmen's Insurance Company. which contends that plaintiffs have no cause of action because: 1) the Coquias have no contractual relation with the Company. WON the insured has not complied with the provisions of the policy concerning arbitration HELD 1. January 25. subject to the Limits of Liability and under the Terms of this Policy. COUNTRY BANKERS INSURANCE CORP v. . said policy provides.00. the same shall be referred to the decision of a single arbitrator to be agreed upon by both parties or failing such agreement of a single arbitrator. the Company admitted the existence thereof. Inc. this character being made more manifest by the fact that the deceased driver paid fifty percent (50%) of the corresponding premiums. Based upon Section 17 of the policy: "If any difference or dispute shall arise with respect to the amount of the Company's liability under this Policy.000. Conductor and/or Inspector who is riding in the Motor Vehicle insured at the time of accident or injury. 1961. 2. arbitrators or umpire of the amount of the Company's liability hereunder if disputed shall be first obtained.000. the liabilities of the Insured towards the passengers of the Motor Vehicle and the Public. and.The record shows that none of the parties to the contract invoked this section. Inc. this rule is subject to exceptions. 1962. Although. Fieldmen's Insurance Co. counsel for both parties stipulated. which were deducted from his weekly commissions. The contracting parties must have clearly and deliberately conferred a favor upon a third person." . but the Company did not accept it. but pleaded lack of cause of action on the part of the plaintiffs. Disposition The decision appealed from should be as it is hereby affirmed in toto. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this Policy that the award by such arbitrator. 2002 NATURE Petition for review on certiorari FACTS . In the event of death of any person entitled to indemnify under this Policy. that such representatives shall. even suggested the settlement of the issue between them by arbitration. the Company will indemnify any authorized Driver who is driving the Motor Vehicle ." . . only parties to a contract may bring an action based thereon. In terms of and subject to the limitations of and for the purposes of this Section. A mere incidental benefit or interest of a person is not sufficient. to the extent herein specified and subject always to the Terms of this Policy. observe. it goes without saying that they could Page and did properly join the latter in filing the complaint herein. the policy under consideration is typical of contracts pour autrui. LIANGA BAY DE LEON. indemnify the Insured in the event of accident caused by or arising out of the use of Motor Vehicle against all sums which the Insured will become legally liable to pay in respect of: Death or bodily injury to any fare-paying passenger including the Driver.00 to which the Company replied with an offer to pay P2. Cornelio Jamero. Hence. in favor of the Manila Yellow Taxicab Co.. this appeal by the Company.000. with costs against the herein defendant-appellant. In its answer. as though they were the Insured. admittedly. The Company may.1962. during the negotiations preceding the institution of the present case. ." . The Insured filed therefor a claim for P5. one to be appointed in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties and in case of disagreement between the arbitrators. ISSUES 1. the Insured and Carlito's parents filed a complaint against the Company to collect the proceeds of the policy. make indemnity payable directly to the claimants or heirs of claimants. he may demand its fulfillment provided he communicated his acceptance of the obligor before its revocation. in the trial court. met a vehicular accident to which he died. — Liability to the Public "3. at any time during said negotiations. subject to the Limits of Liability and under the Terms of this Policy. Their aforementioned acts or omissions had the effect of a waiver of their respective right to demand an arbitration. are the sole heirs of the deceased — have a direct cause of action against the Company. a common carrier accident insurance policy. the Company will. or made any reference to arbitration. and 2) the Insured has not complied with the provisions of the policy concerning arbitration. by way of compromise. 1. a taxicab of the Insured. with or without securing the consent of or prior notification to the Insured. " "Conditions "7.Does the policy in question belong to such class of contracts pour autrui? In this connection. driven by Carlito Coquia. in general. WON there was contractual relations between the Coquias and the Company 2. that none of them had.

hostilities. the duty or burden of evidence shifts to the insurer to controvert said prima facie case.Due to the loss. the fire was caused by the members of the Communist Party of the Philippines/New People’s Army. rebellion.000.00) shall be six percent (6%) per annum computed from the date of filing of the Complaint in the trial court. which means those facts which are derived from his perception.00) as actual damages. Respondent sought to recover under two insurance policies but the claims were denied on the basis that the case of the loss was an excepted risk under condition no. to June 20. except to the extent that the Insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions.The petitioner relies on the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo as well as on the Spot Report of Pfc. directly or indirectly.Finding the denial of its claim unacceptable. 1988. 1989. or warlike operations (whether war be declared or not).000. . military or popular uprising. 1989. Arturo V. and that such loss was an excepted risk under paragraph No. Arturo V.000. damage or liability during the period starting from June 20. Hence the refusal to honor their obligations. Juarbal. If a proof is made of a loss apparently within a contract of insurance. ISSUE WON the insurance companies are liable to pay Radio Mindanao Network under the insurance policies HELD YES . rice and medicines as provisions for their comrades in the forest. military or popular uprising.In the evening of July 27. based on the submitted documents. Lianga Bay then instituted in the trial court the complaint for recovery of "loss. Any loss or damage happening during the existence of abnormal conditions (whether physical or otherwise) which are occasioned by or through or in consequence. act of foreign enemies. revolution.00) as exemplary damages.000. at or about 12:40 a. CA affirmed. both courts mentioned the fact that there was no credible evidence presented that the CCP/NPA did in fact cause the fire that gutted the radio station in Bacolod.000. revolution. The rate of interest on the adjudged principal amount of Two Hundred Thousand Pesos (P200. 1990 at 4:00 p.The trial court and the CA found in favor of the respondent. namely: (c) War. the respondent filed an insurance claim with the petitioner under its Fire Insurance Policy. Petition for certiorari Page FACTS . military or usurped power. and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation set up. the building was set on fire by 2 NPA rebels who wanted to obtain canned goods. a witness may not testify as to what he merely learned from others either because he was told or read or heard the same. insurrection. or from a cause which limits its liability. by a preponderance of evidence. Surigao del Sur was gutted by fire. denied the insurance claim on the ground that. of any of said occurrences shall be deemed to be loss or damage which is not covered by this insurance.000. since it has not assumed that risk. ISSUE WON the cause of the loss was an excepted risk under the terms of the fire insurance policy HELD . invasion. Consequently. loss from such a risk constitutes a defense which the insurer may urge.On July 1. .00.Particularly in cases of insurance disputes with regard to excepted risks. damage or liability" against Country Bankers. This insurance does not cover any loss or damage occasioned by or through or in consequence. of any of the following occurrences. INP Investigator. since Country bank here is defending on the ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy it has the burden of proving the facts upon which such excepted risk is based. (d) Mutiny. military or usurped power. . F-1397.INSURANCE 115 insurance.RTC ruled in favor of the cooperative. 1989 at 4:00 p. which provides: This insurance does not cover any loss or damage occasioned by or through or in consequence. the respondent’s building at Barangay Diatagon. Under this mode of review. In its findings. But petitioner failed to do so. January 27. however. Disposition the appealed Decision is MODIFIED. . . 6 (c) and (d). rebellion. 2006 NATURE INSURANCE v. 6 of the policy conditions of Fire Insurance Policy No. Country Bankers insured the respondent’s stocks-in-trade against fire loss.The Court will not disturb the factual findings of the appellant and trial courts absent compelling reason.. Stated else wise. the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted or for which it is not liable.Where a risk is excepted by the terms of a policy which insures against other perils or hazards. it is the insurance companies which have the burden to prove that the loss comes within the purview of the exception or limitation set up.m.The petitioner. resulting in the total loss of the respondent’s stocks-in-trade. and Ten Thousand Pesos (P10. namely: (d) Mutiny. Once the insured makes out a prima facie case in its favor. directly or indirectly. directly or indirectly. dated July 1.m.m. (b) the Sworn Statement of Jose Lomocso.00) as litigation expenses. riot.The insurers maintained that based on witnesses and evidence gathered at the site. submitting: (a) the Spot Report of Pfc. the radio station of Radio Mindanao Network located at the SSS Building in Bacolod City was burned down causing damage in the amount of over one million pesos. riot. Fifty Thousand Pesos (P50. It is sufficient for the insured to prove the fact of damage or loss. Lianga. Five Thousand Pesos (P5. of any of the following consequences. . insurrection. Juarbal. DBP POOL OF ACCREDITED RADIO MINDANAO NETWORK 480 SCRA 314 MARTINEZ. and (c) the Sworn Statement of Ernesto Urbiztondo.. . The awards in the amounts of Fifty Thousand Pesos (P50. A witness can testify only to those facts which he knows of his personal knowledge. . equipments and records. to wit: 6. Such testimony is considered hearsay and may not be received as proof of the truth of what he has learned. civic war.00) as attorney?s fees are hereby DELETED. . . pieces of furnitures and fixtures. the jurisdiction of the court is limited to reviewing only errors of law. for the sum of P200.

The silica sand was placed on board Judy VII. .an exempting circumstance. Inc. “(4) The character of the goods or defects in the packing or in the containers. The trial court explained that in case of loss or destruction of the goods. for the carriage of 65. The shipment was covered by petitioner’s Bill of Lading dated June 23. earthquake.67. January 24. 1986 – PIONEER filed a complaint against LOADSTAR with the RTC Manila alleging that: (1) the M/V Weasel was not seaworthy at the commencement of the voyage.Common carriers are presumed to have been at fault or to have acted negligently for loss or damage to the goods that they have transported. 1993 .INSURANCE 116 Disposition Petition dismissed.June 25. It was not enough for the common carrier to show that there was an unforeseen or unexpected occurrence. . WON LOADSTAR is a common carrier under Article 1732 CC 2. 1984 .To excuse the common carrier fully of any liability. It should have exercised due diligence to prevent or minimize the loss before. storm. WON proximate cause of the loss of cargo was not a fortuitous event but was allegedly due to the failure of petitioner to exercise extraordinary diligence .March 11. 1984 . (MARKET) . bears the burden of proving that it exercised extraordinary diligence in its vigilance over the goods it transported. LOADSTAR refused to reimburse the MARKET despite repeated demands. 1984. registered owner and operator of the vessel M/V Weasel. 1984 .Petitioner Loadstar Shipping Co. covering all shipments made on or after September 30. or that the loss had been occasioned by a fortuitous event -.400. MOP-006 dated September 17.000 plus an additional amount of P500. . a statutory presumption arises that the common carrier was negligent unless it could prove that it had observed extraordinary diligence. the fortuitous event must have been the proximate and only cause of the loss. as required by the nature of their business and for reasons of public policy. PIONEER ASIA INSURANCE CORP GR No. Inc.February 15. 2003 of CA FACTS . In return. Inc. 2002 – CA affirmed RTC Decision with modification ISSUES 1. resulting in the loss of the cargo. the cargo was to be transported from Palawan to Manila.000 bags of cement from Iligan City to Manila.000. . against petitioner. Disposition Petition is DENIED and the assailed Decision and Resolution are AFFIRMED.400. or other natural disaster or calamity. as a common carrier. Extraordinary diligence requires rendering service with the greatest skill and foresight to avoid damage and destruction to the goods entrusted for carriage and delivery.Prior to the voyage. a barge leased by Lea Mer. . “(2) Act of the public enemy in war.Petitioner bore the burden of proving that it had exercised extraordinary diligence to avoid the loss. “(5) Order or act of competent public authority. (LOADSTAR).000. The shipper was Iligan Cement Corporation.. September 30. whether international or civil. This presumption can be rebutted only by proof that they observed extraordinary diligence. the value of the lost shipment of cement. LOADSTAR SHIPPING CO INC v. Consigned to Vulcan Industrial and Mining Corporation. LOASTAR thus failed to deliver the goods to MARKET in Manila.October 15. MARKET demanded from LOADSTAR full reimbursement of the cost of the lost shipment.” . or that the loss or damage was occasioned by any of the following causes: “(1) Flood. during and after the occurrence of the event. 2002 and (2) the Resolution dated February 27. while the consignee in Manila was Market Developers.Captain Montera of M/V Weasel ordered the vessel to be forced aground which rendered the entire shipment of cement as good as Costs Page gone due to exposure to sea water. ISSUE WON Lea Mer is liable for the loss of the cargo HELD YES . 157481 QUISUMBING. 1980.000. was an ordinary peril of the voyage for which the M/V Weasel should have been normally able to cope with. 1980 . the vessel sank.June 24.500 bags of cement were loaded on board M/V Weasel and stowed in the cargo holds for delivery to the consignee. for which it issued Marine Open Policy No.RTC decided in favor of PIONEER and that LOADSTAR . tropical storm “Asiang” had moved away from the Philippines was presented.June 6.October 15. . . the MARKET executed a Loss and Subrogation Receipt in favor of PIONEER concerning the latter’s subrogation rights against LOADSTAR. Assuming it is a common carrier. 2005 NATURE Petition for Review FACTS . Decision of the CA is affirmed. 2006 NATURE Review on certiorari (1) the Decision dated October 15.LOADSTAR alleged that no fault nor negligence could be attributed to it because it exercised due diligence to make the ship seaworthy. LEA MER INDUSTRIES v. . .Common carriers are bound to observe extraordinary diligence in their vigilance over the goods and the safety of the passengers they transport. (2) the weather and sea conditions then prevailing were usual and expected for that time of the year and as such. MALAYAN INSURANCE 471 SCRA 698 PANGANIBAN. the consignee insured the shipment of cement with respondent Pioneer Asia Insurance Corporation (PIONEER) for P1. as well as properly manned and equipped and failure to deliver was due to force majeure. lightning.Ilian Silica Mining entered into a contract of carriage with Lea Mer Industries for the shipment of 900 metric tons of silica sand valued at P565.The evidence presented by petitioner in support of its defense of fortuitous event was sorely insufficient. “(3) Act or omission of the shipper or owner of the goods. entered into a voyagecharter with Northern Mindanao Transport Company. and (3) LOADSTAR was negligent in the selection and supervision of its agents and employees then manning the M/V Weasel. LOADSTAR’S defense of force majeure was found bereft of factual basis as a PAG-ASA report that at the time of the incident. 1985 – PIONEER paid the MARKET P1.

the sea and weather conditions in the vicinity of Negros Occidental were calm. Thus. 2. earthquake. instead of the usual route. . (1) Flood. as in the case of a time-charter or voyagecharter. It is only when the charter includes both the vessel and its crew. without doubt. at least insofar as the particular voyage covering the charterparty is concerned.A1734 CC enumerates the instances when a carrier might be exempt from liability for the loss of the goods.INSURANCE 117 HELD 1. Disposition petition is DENIED Page . LOADSTAR is presumed to have been at fault or to have acted negligently. and to exercise due care in the handling and stowage. or air. . Inc. provided the charter is limited to the ship only. its claim is not substantiated. LOADSTAR has only itself to blame for its misjudgment. (2) Act of the public enemy in war.Compania Maritima V CA . and (5) Order or act of competent public authority . corporations. CA .LOADSTAR claims that the loss of the goods was due to a fortuitous event under paragraph 1. YES .LOADSTAR is a corporation engaged in the business of transporting cargo by water and for compensation. 1984. or other natural disaster or calamity. it did not in any way convert the common carrier into a private carrier. for compensation. It is supported by evidence that the loss of the entire shipment of cement was due to the gross negligence of LOADSTAR . The records reveal that LOADSTAR took a shortcut route. including such methods as their nature requires. Inc. by land. LOADSTAR has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo.Records show that in the evening of June 24. (4) The character of the goods or defects in the packing or in the containers. LOADSTAR is required to observe extraordinary diligence in the vigilance over the goods it transports. Yet. notwithstanding the charter of the whole or portion of a vessel by one or more persons. water.It requires common carriers to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristics of goods tendered for shipment.A1732 CC defines a “common carrier” as follows: Common carriers are persons.public carrier shall remain as such. offering its services indiscriminately to the public. . firms or associations engaged in the business of carrying or transporting passengers or goods or both. offering their services to the public. When the goods placed in its care are lost. > Planters Products.As a common carrier. Even if it entered into a voyage-charter agreement with Northern Mindanao Transport Company. it is a common carrier. storm. YES . whether international or civil. as in a bareboat or demise that a common carrier becomes private. which exposed the voyage to unexpected hazard. v. lightning. (3) Act or omission of the shipper or owner of the goods.

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