GULF RESORTS INC VS PCIC

GR NO 156167

FACTS :
Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union and had its properties in said
resort insured originally with the American Home Assurance Company (AHAC). In the first 4 policies
issued, the risks of loss from earthquake shock was extended only to petitioners two swimming
pools. Gulf Resorts agreed to insure with Phil Charter the properties covered by the AHAC policy
provided that the policy wording and rates in said policy be copied in the policy to be issued by Phil
Charter. Phil Charter issued Policy No. 31944 to Gulf Resorts covering the period of March 14, 1990
to March 14, 1991 for P10,700,600.00 for a total premium of P45,159.92. the break-down of
premiums shows that Gulf Resorts paid only P393.00 as premium against earthquake shock. In Policy
No. 31944 issued by defendant, the shock endorsement provided that In consideration of the
payment by the insured to the company of the sum included additional premium the Company
agrees, notwithstanding what is stated in the printed conditions of this policy due to the contrary,
that this insurance covers loss or damage to shock to any of the property insured by this Policy
occasioned by or through or in consequence of earthquake. In Exhibit "7-C" the word "included"
above the underlined portion was deleted. On July 16, 1990 an earthquake struck Central Luzon and
Northern Luzon and plaintiffs properties covered by Policy No. 31944 issued by defendant, including
the two swimming pools in its Agoo Playa Resort were damaged.

Petitioner advised respondent that it would be making a claim under its Insurance Policy 31944 for
damages on its properties. Respondent denied petitioners claim on the ground that its insurance
policy only afforded earthquake shock coverage to the two swimming pools of the resort. The trial
court ruled in favor of respondent. In its ruling, the schedule clearly shows that petitioner paid only a
premium of P393.00 against the peril of earthquake shock, the same premium it had paid against
earthquake shock only on the two swimming pools in all the policies issued by AHAC.

Issue:
Whether or not the policy covers only the two swimming pools owned by Gulf Resorts and does not
extend to all properties damaged therein

Held:
YES. All the provisions and riders taken and interpreted together, indubitably show the intention of
the parties to extend earthquake shock coverage to the two swimming pools only. An insurance
premium is the consideration paid an insurer for undertaking to indemnify the insured against a
specified peril. In fire, casualty and marine insurance, the premium becomes a debt as soon as the
risk attaches. In the subject policy, no premium payments were made with regard to earthquake
shock coverage except on the two swimming pools. There is no mention of any premium payable for
the other resort properties with regard to earthquake shock. This is consistent with the history of
petitioners insurance policies with AHAC.