Professional Documents
Culture Documents
Parties in Insurance Contract
Parties in Insurance Contract
Great Pacific Life Assurance Corp. vs. Court of Appeals, Petitioner alleges that the complaint was instituted
316 SCRA 677 by the widow of Dr. Leuterio, not the real party in interest,
hence the trial court acquired no jurisdiction over the case. It
FACTS: argues that when the Court of Appeals affirmed the trial
courts judgment, Grepalife was held liable to pay the
A contract of group life insurance was executed proceeds of insurance contract in favor of DBP, the
between petitioner Great Pacific Life Assurance Corporation indispensable party who was not joined in the suit. To
(hereinafter Grepalife) and Development Bank of the resolve the issue, we must consider the insurable interest in
Philippines (hereinafter DBP). Grepalife agreed to insure the mortgaged properties and the parties to this type of contract.
lives of eligible housing loan mortgagors of DBP. On The rationale of a group insurance policy of mortgagors,
November 11, 1983, Dr. Wilfredo Leuterio, a physician and otherwise known as the mortgage redemption insurance, is a
a housing debtor of DBP applied for membership in the device for the protection of both the mortgagee and the
group life insurance plan. In his application form, Dr. mortgagor. On the part of the mortgagee, it has to enter into
Leuterio answered that he had never consulted a physician such form of contract so that in the event of the unexpected
for a heart condition, high blood pressure, cancer, diabetes, demise of the mortgagor during the subsistence of the
lung, kidney or stomach disorder or any other physical mortgage contract, the proceeds from such insurance will be
impairment, and that he was in good health. applied to the payment of the mortgage debt, thereby
On November 15, 1983, Grepalife approved the insurance relieving the heirs of the mortgagor from paying the
coverage of Dr. Leuterio, to the extent of his DBP mortgage obligation. In a similar vein, ample protection is given to the
indebtedness amounting to (P86,200.00) pesos. mortgagor under such a concept so that in the event of death;
the mortgage obligation will be extinguished by the
On August 6, 1984, Dr. Leuterio died due to application of the insurance proceeds to the mortgage
massive cerebral hemorrhage. Consequently, DBP indebtedness.
submitted a death claim to Grepalife. Grepalife denied the
claim alleging that Dr. Leuterio was not physically healthy Consequently, where the mortgagor pays the
when he applied for an insurance coverage on November 15, insurance premium under the group insurance policy,
1983. Grepalife insisted that Dr. Leuterio did not disclose he making the loss payable to the mortgagee, the insurance is
had been suffering from hypertension, which caused his on the mortgagor’s interest, and the mortgagor continues to
death. Allegedly, such non-disclosure constituted be a party to the contract. In this type of policy insurance,
concealment that justified the denial of the claim. the mortgagee is simply an appointee of the insurance fund,
such loss-payable clause does not make the mortgagee a
On October 20, 1986, the widow of the late Dr. party to the contract. Section 8 of the Insurance Code
Leuterio , filed a complaint with the Regional Trial Court, provides: “Unless the policy provides, where a mortgagor
against Grepalife for Specific Performance with Damages. of property effects insurance in his own name providing that
During the trial, Dr. Hernando Mejia, who issued the death the loss shall be payable to the mortgagee, or assigns a policy
certificate, was called to testify. Dr. Mejias findings, based of insurance to a mortgagee, the insurance is deemed to be
partly from the information given by the respondent widow, upon the interest of the mortgagor, who does not cease to be
stated that Dr. Leuterio complained of headaches a party to the original contract, and any act of his, prior to
presumably due to high blood pressure. The inference was the loss, which would otherwise avoid the insurance, will
not conclusive because Dr. Leuterio was not autopsied, have the same effect, although the property is in the hands of
hence, other causes were not ruled out. the mortgagee, but any act which, under the contract of
insurance, is to be performed by the mortgagor, may be
On February 22, 1988, the trial court rendered a performed by the mortgagee therein named, with the same
decision in favor of respondent widow which was sustained effect as if it had been performed by the mortgagor.”’
by the Court appeals on May 17 1993. Hence, the present
petition. Petitioners argue that “the lower court erred in
holding defendant-appellant liable to DBP, which is not a The insured private respondent did not cede to the
party to the case, for payment of the proceeds of a mortgage mortgagee all his rights or interests in the insurance, the
redemption insurance on the life of Wilfredo Leuterio, policy stating that: In the event of the debtor’s death before
borrowers, instead of dismissing the case against his indebtedness with the Creditor [DBP] shall have been
GREPALIFE for lack of cause of action.” fully paid, an amount to pay the outstanding indebtedness
shall first be paid to the creditor and the balance of sum
ISSUE: assured, if there is any, shall then be paid to the
beneficiary/ies designated by the debtor.
Whether the Court of Appeals erred in holding
petitioner liable to DBP as beneficiary in a group life
insurance contract from a complaint filed by the widow of INTERPRETATION OF INSURANCE CONTRACTS
the decedent/mortgagor?
Rizal Surety & Insurance Company vs. CA, 336 SCRA 12 Pan Malayan Insurance Corporation vs. CA, GR No.
81026
FACTS:
FACTS:
Rizal Surety & Insurance Company issued a fire
insurance policy in favor of Transworld Knitting Mills, Inc. Canlubang Automotive Resources Corporation
The subject policy stated that Rizal Surety is “responsible in [CANLUBANG] insured a Mitsubishi Colt Lancer car with
case of loss whilst contained and/or stored during the plate No. DDZ-431 to petitioner Pan Malayan Insurance
currency of this Policy in the premises occupied by them Company (PANMALAY). On May 26, 1985, due to the
forming part of the buildings situated within own Compound "carelessness, recklessness, and imprudence" of the
xxx.” The policy also described therein the four-span unknown driver of a pick-up with plate no. PCR-220, the
building covered by the same. On Jan. 12, 1981, fire broke insured car was hit and suffered damages in the amount of
out in the compound, razing the middle portion of its four- P42,052.00; that PANMALAY defrayed the cost of repair of
span building and partly gutting the left and right sections the insured car and, therefore, was subrogated to the rights
thereof. A two-storey building (behind said four-span of CANLUBANG against the driver of the pick-up and his
building) was also destroyed by the fire. employer, Erlinda Fabie; and that, despite repeated demands,
defendants, failed and refused to pay the claim of
ISSUE: PANMALAY. The contention of the petitioner was that the
damage caused to the insured car was settled under the "own
Whether or not Rizal Surety is liable for loss of the damage" coverage of the insurance policy, and that the
two-storey building considering that the fire insurance driver of the insured car was, at the time of the accident, an
policy sued upon covered only the contents of the four-span authorized driver duly licensed to drive the vehicle. On the
building other hand, private respondent argued that under the "own
damage" clause of the insurance policy, petitioner was
RULING: precluded to subrogate under Article 2207 of the Civil Code,
since indemnification thereunder was made on the
Yes. Both the trial court and the CA found that the assumption that there was no wrongdoer or no third party at
so-called “annex” as not an annex building but an integral fault.
and inseparable part of the four-span building described in The RTC dismissed the complaint for no cause of action and
the policy and consequently, the machines and spare parts affirmed by CA.
stored therein were covered by the fire insurance in dispute.
So also, considering that the two-storey building
aforementioned was already existing when subject fire
insurance policy contract was entered into on Jan. 12, 1981, ISSUE:
having been constructed sometime in 1978, petitioner should
have specifically excluded the said two-storey building from Whether or not the interpretation of own damage
the coverage of the fire insurance if minded to exclude the is covered with the insurance policy and thus subrogation is
same but if did not, and instead, went on to provide that such allowed as provided in Art. 2207 of the Civil Code.
fire insurance policy covers the products, raw materials and
supplies stored within the premises of Transworld which was RULING:
an integral part of the four-span building occupied by
Transworld, knowing fully well the existence of such YES. It is a basic rule in the interpretation of
building adjoining and intercommunicating with the right contracts that the terms of a contract are to be construed
section of the four-span building. Also, in case of doubt in according to the sense and meaning of the terms which the
the stipulation as to the coverage of the fire insurance policy, parties thereto have used. PANMALAY contends that the
under Art. 1377 of the New Civil Code, the doubt should be coverage of insured risks under the above section,
resolved against the Rizal Surety, whose layer or managers specifically Section III-1(a), is comprehensive enough to
drafted the fire insurance policy contract under scrutiny. include damage to the insured vehicle arising from collision
or overturning due to the fault or negligence of a third party.
In Landicho vs. Government Service Insurance CANLUBANG is apparently of the same understanding.
System, the Court ruled that “the terms in an insurance Considering that the very parties to the policy were not
policy, which are ambiguous, equivocal or uncertain x x x shown to be in disagreement regarding the meaning and
are to be construed strictly and most strongly against the coverage of Section III-1, thus such interpretation which is
insurer, and liberally in favor of the insured so as to effect beneficial to the insured must be given weight. The Court,
the dominant purpose of indemnity or payment to the furthermore, finds it noteworthy that the meaning advanced
insured, especially where forfeiture is involved, and the by PANMALAY regarding the coverage of Section III- 1(a)
reason for this is that the insured usually has no voice in the of the policy is undeniably more beneficial to
selection or arrangement of the words employed and that the CANLUBANG than that insisted upon by respondents
language of the contract is selected with great care and herein. By arguing that this section covers losses or damages
deliberation by experts and legal advisers employed by, and due not only to malicious, but also to negligent acts of third
acting exclusively in the interest of, the insurance company.” parties, PANMALAY in effect advocates for a more
comprehensive coverage of insured risks.
disputed that premium was paid by Pinca to Adora on Dec.
In effect, PANMALAY is subrogated in behalf of 24, 1981 and it would seem from MICO’s theory that the
Canlubang as Article 2207 of the Civil Code, provides: If Policy would have become effective only upon payment and
the plaintiff's property has been insured, and he has received so would have been valid from Dec. 24, 1981 but only up to
indemnity from the insurance company for the injury or loss July 22, 1982. IOW, in would have run for only 8 months
arising out of the wrong or breach of contract complained of, although the premium paid was for one whole year. Hence,
the insurance company shall be subrogated to the rights of we do not share MICO’s view that there was no existing
the insured against the wrongdoer or the person who has insurance at the time of the loss sustained by Pinca.
violated the contract. The right of subrogation is not
dependent upon, nor does it grow out of, any privity of For peace of mind and as a hedge against possible
contract or upon written assignment of claim. It accrues loss, many people now secure fire insurance. This is an
simply upon payment of the insurance claim by the insurer aleatory contract. By such insurance, the insured in effect
as such payment by the insurer to the assured operates as an wagers that his house will be burned, with the insurer
equitable assignment to the former of all remedies which the assuring him against the loss, for a fee. If the house does
latter may have against the third party whose negligence or burn, the insured, while losing his house, wins the wager.
wrongful act caused the loss. The prize is the recompense to be given by the insurer to
make good the loss the insured has sustained. It would be a
CHARACTERISTICS OF INSURANCE CONTRACT pity then if, having lost his house, the insured were also to
lose payment he expects to recover for such loss. In the
Malayan Insurance v. Arnaldo & Pinca, GR No. L-67835 instant case, the respondent has been sustained by the
Insurance Commission in her claim for compensation for her
Topic: Aleatory as a characteristic of an Insurance Contract burned property.