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INSURANCE CASES

1.

Paz Lopez De Constantino vs Asia Life


Insurance Company G.R. No. L-1669
August 31,
1950

Facts: Respondent Corporation was paid P 176.04 as annual


premium by Arcadio Constantino in exchange for policy no.
93212 on 1941 for P 3,000 which lasted for 20 years. Petitioner
Paz Constantino was made beneficiary. However after the first
payment, no further premiums were made. Thereafter the
insured died on 1944. Later, due to the war (Japanese
occupation) Respondent Corporation had to close down its
branch in the country.
ISSUE: Whether or not the beneficiaries are entitled to the claims.
HELD: No. The Supreme Court adopts the United States Rule. It should be noted
that the parties contracted not only for peacetime conditions but also for times of
war, because the policies contained provisions applicable expressly to wartime
days. The logical inference, therefore, is that the parties contemplated
uninterrupted operation of the contract even if armed conflict should ensue.
II. GENERAL OVERVIEW

FACTS:
Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DLX DSL with
Alpha Insurance and Surety Co (Alpha). The contract of insurance obligates the petitioner to pay
the respondent the amount of P630,000 in case of loss or damage to said vehicle during the
period covered.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to bring the vehicle
to nearby auto-shop for a tune up. However, Lanuza no longer returned the motor vehicle and
despite diligent efforts to locate the same, said efforts proved futile. Resultantly, respondent
promptly reported the incident to the police and concomitantly notified petitioner of the said loss
and demanded payment of the insurance proceeds.
Alpha, however, denied the demand of Castor claiming that they are not liable since the culprit
who stole the vehicle is employed with Castor. Under the Exceptions to Section III of the Policy,
the Company shall not be liable for (4) any malicious damage caused by the insured, any
member of his family or by A PERSON IN THE INSUREDS SERVICE.

Castor filed a Complaint for Sum of Money with Damages against Alpha before the Regional
Trial Court of Quezon City. The trial court rendered its decision in favor of Castor which
decision is affirmed in toto by the Court of Appeals. Hence, this Petition for Review on
Certiorari.

HELD: A contract of insurance is a contract of adhesion.So, when


the terms of the insurance contract contain limitations on liability,
courts should construe them in such a way as to preclude the
insurer from non-compliance with his obligation. Being a contract of
adhesion, the terms of an insurance contract are to be construed strictly
against the party which prepared the contract, the insurer. By reason of the
exclusive control of the insurance company over the terms and phraseology
of the insurance contract, ambiguity must be strictly interpreted against the
insurer and liberally in favor of the insured, especially to avoid forfeiture.

IX. LOSS
63. ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR

G.R. No. 198174, September 2, 2013


FACTS:
Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DLX DSL with
Alpha Insurance and Surety Co (Alpha). The contract of insurance obligates the petitioner to pay
the respondent the amount of P630,000 in case of loss or damage to said vehicle during the
period covered.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to bring the vehicle
to nearby auto-shop for a tune up. However, Lanuza no longer returned the motor vehicle and
despite diligent efforts to locate the same, said efforts proved futile. Resultantly, respondent
promptly reported the incident to the police and concomitantly notified petitioner of the said loss
and demanded payment of the insurance proceeds.
Alpha, however, denied the demand of Castor claiming that they are not liable since the culprit
who stole the vehicle is employed with Castor. Under the Exceptions to Section III of the Policy,
the Company shall not be liable for (4) any malicious damage caused by the insured, any
member of his family or by A PERSON IN THE INSUREDS SERVICE.

Castor filed a Complaint for Sum of Money with Damages against Alpha before the Regional
Trial Court of Quezon City. The trial court rendered its decision in favor of Castor which
decision is affirmed in toto by the Court of Appeals. Hence, this Petition for Review on
Certiorari.
ISSUE:
Whether or not the loss of respondents vehicle is excluded under the insurance policy
HELD:
NO. The words loss and damage mean different things in common ordinary usage. The word
loss refers to the act or fact of losing, or failure to keep possession, while the word damage
means deterioration or injury to property. Therefore, petitioner cannot exclude the loss of
Castors vehicle under the insurance policy under paragraph 4 of Exceptions to Section III,
since the same refers only to malicious damage, or more specifically, injury to the motor
vehicle caused by a person under the insureds service. Paragraph 4 clearly does not contemplate
loss of property.

VII. Policy
50. ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR

G.R. No. 198174, September 2, 2013


FACTS:
Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DLX DSL with
Alpha Insurance and Surety Co (Alpha). The contract of insurance obligates the petitioner to pay
the respondent the amount of P630,000 in case of loss or damage to said vehicle during the
period covered.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to bring the vehicle
to nearby auto-shop for a tune up. However, Lanuza no longer returned the motor vehicle and
despite diligent efforts to locate the same, said efforts proved futile. Resultantly, respondent
promptly reported the incident to the police and concomitantly notified petitioner of the said loss
and demanded payment of the insurance proceeds.
Alpha, however, denied the demand of Castor claiming that they are not liable since the culprit
who stole the vehicle is employed with Castor. Under the Exceptions to Section III of the Policy,
the Company shall not be liable for (4) any malicious damage caused by the insured, any
member of his family or by A PERSON IN THE INSUREDS SERVICE.

Castor filed a Complaint for Sum of Money with Damages against Alpha before the Regional
Trial Court of Quezon City. The trial court rendered its decision in favor of Castor which
decision is affirmed in toto by the Court of Appeals. Hence, this Petition for Review on
Certiorari.

Held: True, 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. In the case of property insurance
policies, the evident intention of the contracting parties, i.e., the insurer and
the assured, determine the import of the various terms and provisions
embodied in the policy. However, when the terms of the insurance policy are
ambiguous, equivocal or uncertain, such that the parties themselves disagree
about the meaning of particular provisions, the policy will be construed by
the courts liberally in favor of the assuredand strictly against the insurer.

VIII. PREMIUM
58. Paz Lopez De Constantino vs Asia Life Insurance Company G.R. No. L-1669

August 31, 1950

Facts: FIRST CASE: Respondent Corporation was paid P


176.04 as annual premium by Arcadio Constantino in exchange
for policy no. 93212 on 1941 for P 3,000 which lasted for 20
years. Petitioner Paz Constantino was made beneficiary.
However after the first payment, no further premiums were
made. Thereafter the insured died on 1944. Later, due to the war
(Japanese occupation) Respondent Corporation had to close
down its branch in the country.
Plaintiff demanded payment but was refused due
to Respondent Corporations refusal on the ground
of non-payment of the premiums. The lower court
favored Respondent.

Issue:Whether or not the periodic payments of the premiums,


those after the first, is not an obligation of the insured so that it
is not a debt enforceable by the action of the insurer.
Held: The annual premium is not a debt, nor is it an obligation
which the insurer can maintain an action against the insured; nor
its settlement governed by the rules on payment of debts.
A contract of insurance is sui generis. This means though the
insured may hold the insurer to the contract by the fulfillment of
the condition, the latter has no power or right to compel the
insured to maintain the contract relation longer than the insured
may desire. It is optional upon the insured.