2

2.G.
R.No.48049J
une29,1989
EMILIO TAN,J UANI
TO TAN,ALBERTO TAN and ARTURO
TAN, 
pet
it
ione
rs,
 
vs.
THECOURTOFAPPEALSa ndTHEPHILI
PPI
NEAMERICANLIFE
INSURANCECOMPANY,  
res
ponde
nts
.

GUTI
ERREZ,J
R.,
 J
.:
Thisi sape t
iti
onf orrevi
ew on cer
ti
ora r
i 
oft heCour tofAppe a
ls'
deci
siona f
fi
rmingthede ci
si
onoft heInsuranceCommi ss
ione
rwhich
di
smis se
dt he peti
ti
oner
s'c ompla
inta gainstr e
spondentPhili
ppi
ne
Ame ri
c a
nLi f
eI ns
uranceCompa nyfort her e
cove r
yoft heprocee
ds
fr
om t hei
rlat
ef at
her'
spoli
cy.Thef ac
tsoft hec asea sfoundbythe
CourtofAppealsare:
Pet
it
ioner
sappealfr
om t heDecis
ionoft heI ns
uranceCommi ssi
oner
di
smissi
ngherei
npe t
it
ioners
'complai
ntagainstrespondentPhi
li
ppin
e
America
nLifeInsur
anceCompa nyfortherecoveryoft hepr
ocee
dso f
Pol
icyNo.1082467int
hea mountofP80,000.00.
On Se pt
embe r23,1973,Ta n LeeSi ong,fa
therofhe re
in
peti
tioners
,a ppli
edf orlif
ei nsur
ancei ntheamountofP
80,000.00wi thr e
spondentcompa ny.Sa i
dappli
cati
onwa s
approve da nd Poli
cy No.1082467 wa siss
uede ffe
cti
ve
Nove mbe r6,1973,wi t
hpe t
it
ioner
st hebenef
ici
ari
esthere
of
(ExhibitA).
OnApr il26,
1975,TanLeeSiongdi e
dofhe pa
toma(Exhi
bit
B).Peti
ti
oner
sthenfi
ledwit
hrespondentc
ompanythei
rcla
im
f
ort heproce
edsofthelif
einsurancepol
icy.However
,ina
 let
terdatedSe pte
mbe r11,1975,respondentcompanydenied
petit
ioner
s'claima ndr e
scinde
dt hepolic
ybyr ea
sonoft he
all
ege dmisreprese
ntat
iona ndconcealmentofma ter
ialfa
c t
s
ma debyt hede cease
dTa nLeeSi onginhi sappl
icat
ionfor
ins
ur anc
e( Exhibi
t3).Thepr emiumspa i
dont hepoli
cywe re
there
uponr ef
unde d.
Allegingtha
tr e
sponde
ntcompany'
srefusa
lt opaythemt he
proceedsoft hepolic
y wasunjust
ifi
eda nd unrea
sonable
,
peti
tioner
sfil
edonNove mber27,1975,ac ompla
intagains
t
thef ormerwit
ht heOffi
ceoftheInsura
nceCommi ss
ioner
,
docke t
edasI.
C.Ca s
eNo.218.
Aft
erhe a
ringthee vi
denceofbot hparti
es,theI ns
urance
Commissi
onerr ender
edj udgment on Augus t 9, 1977,
di
smis
singpeti
ti
oners
'complai
nt.(
Rol
lo,pp.91-
92)
TheCourtofAppeal
sdismis
sed'thepeti
ti
one
rs'a
ppe
alf
rom t
he
Ins
ura
nceCommi
ssi
oner
'sde
cis
ionf
orla
ckofmeri
t
He
nce
,thi
spe
ti
ti
on.
Thepet
it
ione
rsr
ais
ethef
oll
owi
ngi
ssue
sint
hei
ras
signme
ntofe
rror
s,
t
owit:
A.Theconcl
usio
ni nlawofres
pondentCour
tthatre
sponde
nt
i
nsur
e rhastherighttor e
sci
ndthepol i
cyc ont
ractwhen
i
nsur
e di
salr
eadyde a
disnotinaccor
dancewit
he xi
sti
ngla
w
andappl
ic
abl
ejuri
spruden
ce.
B.Thec oncl
usioninlawofr espondentCourtthatr
esponde
nt
insur
erma ybea l
lowedt oavoidt hepol i
cyongr oundsof
concealmentby t hede cease
da ssur
e d,iscontra
ryt othe
provi
sions oft he poli
cyc ontra
c titsel
f,as we l
la s,of
appli
cablelegalprovis
ionsandestabli
shedjur
ispr
udence.
 C.Theinfer
enc
eo fres
pondentCourtt
hatre
sponde
ntinsur
er
wasmisle
dinissui
ngthepolic
yarema ni
fes
tl
ymi s
take
na nd
cont
rar
ytoadmit
tedevi
dence
.(Roll
o,p.7)
Thepeti
ti
onerscont
endthattheresponde
ntcompanynolongerhadthe
ri
ghtt
oresci
ndthec ont
rac
tofinsuranceasr
esci
ssi
onmustall
egedl
yb e
donedur
ingthelif
eti
meoft heins
uredwithi
ntwoyearsa
ndp r
iortothe
commencementofacti
on.
Thec
ont
ent
ioni
swi
thoutme
rit
.
Thepe
rti
nents
ect
ioni
ntheI
nsur
anc
eCodepr
ovi
des
:
Secti
on48.Whene
verari
ghttor
e s
cindac ontr
actofinsura
nce
i
sgi vent
otheins
urerbyanyprovisionofthischapter
,such
ri
ghtmustbeexer
cis
edp r
evi
oustot hecomme nceme ntofan
act
iononthec
ontr
act
.
Afterapol i
cyofl i
feinsur
ancema depayableonthedeathof
theinsuredshal
lha vebeeninforceduri
ngt heli
fet
imeofthe
insuredforaperiodoft woyear
sf r
om theda t
eofitsi
ssueor
ofi tslastrei
nst
a t
ement,theinsurercannotprovethatthe
policyisvoi a
d bi nit
io 
orisre s
cinda
blebyr ea
sonoft he
fraudule
ntconcealmentormisrepr
esent
ati
onoft heins
uredor
hisa ge
nt.
Accor
dingtot hepet
iti
oners
,theInsur
anc
eLa w wasamendedandthe
se
condparagraphofSecti
on48a ddedt
opreve
ntthei
nsur
ancecompa
ny
f
rome xer
cisi
ngar i
ghttores
cindaft
ert
hedeat
hofthei
nsur
ed.
Theso-ca
lle
d"inc
ontest
abi
lit
yc l
ause
"precl
udestheinsurerfromr a
ising
t
hede fe
nsesoffals
er e
present
ati
onsorconcealmentofma t
eri
alfa ct
s
i
nsofarasheal
thandpr e
viousdisea
sesareconcernedi ftheinsurance
hasbeeninfor
ceforatl
easttwoyearsdur
ingtheinsur
e d'
sl i
fet
ime.The
phra
se"duri
ngthelif
eti
me "foundinSect
ion48s implyme ansthatthe
p
oli
cyisnolonge
rc ons
ide
redinfor
ceaft
ert
hei
nsuredha
sdied.The
k
eyphras
einthese
condparagr
aphofSe
cti
on48i
s"foraper
iodoftwo
y
ear
s."
Asnot
edbyt
heCour
tofAppe
als
,towi
t:
Thepol i
cywa sissuedonNove mbe r6,1973a ndt heinsur
e d
diedonApr i
l26,1975.Thepol i
cywa st husi nf orc
ef ora
peri
odofonl yoneye arandf ivemont hs.Cons ideri
ngt hatt
he
ins
ureddi edbe f
orethetwo- yearperiodha dlapsed,respondent
compa nyi snot,t
he r
efore,barredfrompr ovingt hatthepoli
c y
is void abi niti
o by r e
a son of t he i nsured'
sf ra
udulent
concealme nt or mi sre
pr e
s e
ntati
on.Mor eover,r espondent
compa nyr es
cindedthec ontractofinsur
a ncea ndre f
unde dt
he
premiumspa ido n Se ptembe r11,1975,pr evi
oust othe
comme ncementoft hisactiononNove mbe r27,1975.( Rol
lo,
pp.99-100)
xxxxxxxxx
Thepeti
ti
onerscont
endthatt
her
ec oul
dha vebe
ennoc once
almentor
misr
epre
sent
ati
onbyt hei
rlat
efat
he rbec
auseTanLe eSion
gdi dnot
havetobuyinsur
ance.Hewasonlypress
uredbyins
ist
entsa
les
me nto
doso.Thepet
iti
oner
sstat
e:
He rethenisac as
eofa nassuredwhosea ppl
icat
ionwa s
submi t
tedbe
caus
eofr ep
eate
dvi si
tsandsoli
cit
at
ionsbyt he
insure
r'sage
nt.Assur
eddidnotknoc katthedooroft h e
insure
rtobuyins
ura
nce.Hewa stheobj
ectofsol
ici
tat
ionsa
nd
visit
s.
Assuredwasamanofmeans.Hecoul
dhaveobt
a i
nedabigge
r
i
nsurance
,notjustP 80,000.
00.Ifhispurposewe reto
misre
prese
ntandtoconc
e alhi
sa i
lment
sina nt
ici
pat
ionof
 dea
thduri
ngthetwo-ye
arper
iod,hec
ert
ai
nlyc
oul
dha
ve
got
tenabi
gge
rins
ura
nce.Hedi
dnot.
Insure
rPhi la
mlif
ec oul
dhavepres
ent
edaswit
nessi
tsMedic
al
Exa minerDr.UrbanoGu i
nto.I
twashewhoaccompli
she
dthe
applic
a t
ion,Par
tII
,me di
cal
.Phil
amli
fedi
dnot
.
Phi
lamli
fecoul
dha veputtot hewitne
ssst
anditsAge
nt
Bie
nveni
do S.Gui nt
o,a rela
tive t
o Dr.Gui
nto,Aga
in
Phi
lamli
fedi
dnot.(
pp.13
8139,Roll
o)
xxxxxxxxx
Thi sHonor abl
eSupr e
meCour tha shadoc c
asiontode nounce
thepr essurea ndpr acti
cei ndulgedi nbya gentsins elli
ng
insurance.Atonet i
meora nothermos tofusha vebe en
subjectedt ot hatpr ess
u r
e,t hatpr acti
ce.Thisc ourtt ook
judici
a lcognizanceoft hewhi rlwindpr es
sureofi nsurance
selli
ng-especia
lly oft hea ge nt
'spr acti
ceof' s
upplying t
he
informa t
ion,pr
  epari
ng an a
d ns wering 
the
applicati
on, s
ubmi tt
ing 
the appli
cati
on to thei
r
compa nies,c
 oncluding 
the trans
acti
ons and
otherwise smoothingouta l
ldiffi
cultie
s.
Wecal
la t
tent
iontowha tt
hisHon or
abl
eCour
tsa
idi
nIns
ula
rLi
fev.
Fe
li
ci
ano,etal
.,73Phi
l.201;atpa
ge205:
I
tisofcommonknowl
edgethatt
hesell
ingofi
nsur
ancetoda
y
i
ssubj
ecte
dtot
hewhir
lwi pr
nd  es
sur
e ofmoder
nsal
esmanshi
p.
I
nsur
ancecompanie
ssenddet
ail
edins
truc
ti
onst
othe
ira
gent
s
t
osol
ici
tandprocur
eappl
ic
ati
ons.
The
sea gent
sar
etobefounda
llove
rthele
ngt
handbre
adt
hof
t
heland.Theyar
est
imula
tedt
omorea c
ti
veef
for
tsb
ycont
est
s
 a
nd by thekeenc omp
eti
ti
on of
fer
ed by t
heot
herr
iva
l
i
nsur
anc
ec ompa
nie
s.
Theys uppl
ya lltheinfor
ma ti
on,prepa
reandanswert
he
appl
ica
tions,submitthe appli
cati
onstothei
rcompani
es,
concl
ude the tr
ansa
cti
ons,a nd othe
rwi
sesmoot
h outall
dif
fi
cult
ies.
Thea
gent
sins
hor
tdowh
att
hec
ompa
nys
ett
hemoutt
odo.
The Insul
arLife
 cas
ewa sdecidedsomefor t
yyear
sa gowhe n
thepressur
eofinsuranc
es a
les
ma ns
hipwa snotover
whe lming
asitisnow;whe nthepopulat
ionofthiscount
rywasl e
ssthan
one-fourt
hofwh atitisnow;whe nt heinsur
anc
ec ompa ni
es
compe ti
ngwi t
honea nothe
rcouldbec ountedbythef i
ngers
.
(pp.140-142,Rol
lo)
xxxxxxxxx
I
nt hefaceofa llt
hea bove
,itwoul dbeunj ustif
,havingbeen
subje
ctedtothewhi rl
windpressureofinsurancesale
sma ns
hip
t
hisCour titsel
fha slongde nounced,thea ssuredwhodi es
withi
nthet wo-yearperi
od,shouldstandcha r
gedoffraudul
ent
conceal
me ntandmi sr
epres
entat
ion."(p.142,Rollo)
Thele
gis
lati
vea ns
wertotheargument
spose
dbyt hepeti
ti
oner
sist
he
"i
nco
ntes
tabi
lit
yc l
aus
e"addedbythese
condpar
agr
a phofSec
ti
on48.
Thei nsurerha stwoye ar
sf rom t heda teofi ss
uanc eofthei nsur a
nc e
contr
a ctorofi tslastrei
ns t
ateme ntwi t
hinwhi chtoc ont
estthepol icy,
whe t
he rornot,theinsuredstilll
ive swithi
ns uchperiod.Aftertwoye a
r s,
t
hede fe ns
e sofconc eal
me ntormi sre
presentati
on,noma t
terhowpa tent
orwe llfounded,nol ongerlie.Congr essfeltthi
swa sas uf
ficie
nta nswe r
t
ot heva ri
oustacti
c semploye dbyi nsurancec ompaniestoavoidl i
a bi
lity.
Thepe tit
ioner
s'i nter
pretat
ion woul d giver isetot hei ncongruous
s
it
uat
ionwheret
hebe nef
ici
ari
esofa ni ns
uredwhodi esri
ghtaft
er
t
aki
ngoutandpa
yingforalif
ei ns
uranc
epol i
cy,woul
dbea l
lowe
dt o
c
oll
ectont
hepol
icyeveni
ftheinsur
edfraudul
entl
yconce
ale
dma t
eri
al
f
act
s.
Thepe t
itioner
sarguet hatnoe videncewa spre
sentedtoshowt hatthe
medicalte r
mswe ree xplai
ne dinal a
yma n'
slanguagetotheins ur
ed.
Theys t
atet ha
ttheinsurershouldha vepresent
editstwome dic
a lfi
eld
examinersa swit
nesse
s .Mor eover,t
hepe t
iti
one
rsa l
leget
hatthepolicy
i
ntendst hattheme dic a
le xamina t
ionmus tbec onduct
edbe foreits
i
ssuance ot he
rwis
et he i nsurer" waive
swha t
everi mper
fect
ion by
ra
tif
icat
ion."
Wea
gre
ewi
tht
heCour
tofAppe
alswhi
chr
ule
d:
Ont heot herha nd,pe t
it
ionersa rguet ha tnoe vide ncewa s
presente dbyr esponde ntcompa nyt os howt hatt
heque stions
appea ringi nPa rtI Ioft hea pplicationf ori ns
ur ancewe re
asked,e xplainedt oa ndunde r
stoodbyt hede ceaseds oa st o
provec onc ealme ntonhi spa r
t.Thes amei snotwe lltaken.
Thede ceased,bya ffi
xinghiss i
gna t
ureont hea ppli
cation
form,a ffi
rme dt hec orrec
tnessofa llthee ntri
esanda nswe r
s
appea ring t herein.I ti s butt o be e xpec t
edt hathe ,a
busine ssma n,woul dnotha vea ffixe dhi ss i
gnatur eont he
applicationf ormu nlesshec l
earlyunde r
stoodi t
ssigni f
icanc e
.
For,t hepr esump ti
oni sthatape r
s oni nte
ndst heor di
na ry
conse que nceofhi svolunt
aryacta ndt akesordinaryc a
reofh i
s
conce rns.[Se c.5(c )and(d),Rule131,Rul esofCour t]
.
The evidenc
ef orre
spondent company shows t
hat on
Sept
embe r19,1972,t
he deceas
ed wa sexamine
d by Dr.
Vict
ori
anoLima ndwasfoundtobedia
beti
candhyper
tens
ive
;
 tha tby J a nuary,1973,t hede cease d wa sc ompl aining of
pr ogr e
s si
ve we ightl ossa nd a bdomi nal pa i
na nd wa s
dia gnos edt obes uffe r
ingf r
om he pa toma,( t.s.n.Augus t23,
1976,pp.8- 10;Exhi bit2).Anot herphys ici
a n,Dr .We nc eslao
Vi tug,t estifi
edt ha tt he de ceas
e dc ame t os ee him on
De cembe r14,19 73f orc ons olati
ona ndc l
aime dt oh avebe en
dia be t
icf orf i
veye a rs.(t
.s.n.,Aug.23, 1976,p.5;Exhi bit6)
Be causeoft hec onc ealme ntma debyt hede ceasedofh i
s
cons ult
ationsa ndt r eatment sf orhype r
tension,di abetesa nd
live rdi sorde r
s,r es ponde ntc ompa nywa st husmi s
ledi nto
ac ceptingt heriska nda ppr ovinghi sa ppli
ca tiona sme dically
sta ndard( Exhibit5-C)a nddi spensingwi thf urtherme dic a
l
inve s t
igationa nde xa mi nation( Exhibit5-A) .Fora slonga sno
adve rs
eme dicalhistor yisr eve a
ledi nthea ppl icat
ionf orm,a n
appl icantf ori nsur ancei s pr es
ume dt o be he a l
thy a nd
phys ical
lyf i
ta nd no f urther me di
cali nve sti
ga ti
on o r
exa mina t
ion i sc o nduc ted by r e
sponde ntc ompa ny.( t
.s.n.
,
Apr il8,1976,pp.6- 8) .(Rollo,pp.96- 98)
Ther
eisnos t
rongshowi
ngt ha
twes houl
da ppl
ythe"finepr
int
"or
"c
ontr
actofadhesi
on"rul
einthi
scase
.(SweetLines
,Inc
.v.Teves
,83
SCRA361[ 1978])
.Thepet
it
ione
rsc
it
e:
Itisama tt
e rofc ommonknowl edget hatla
rgea mountsof
mone yarec oll
e ct
edf rom i gnorantpers onsbyc ompa ni
esa nd
associ
ati
onswhi cha dopthi ghs oundi ngt it
lesandpr i
ntt he
amountofbe nefit
sthe yagr eetopa yinl a r
geblack-
facedtype,
fol
lowings uc hunde r t
akingsbyf inepr intcondit
ionswhi ch
destr
oy the s ubstanc e of t he pr omi s
e.Al l provisi
ons,
conditi
ons,ore xceptionswhi c
hi na nywa ytendt owor ka
for
f e
it
ureoft hepol icys houldbec ons tr
uedmos ts t
rongly
 againstthos
eforwhosebene
fitt
heya r
ei nser
ted,a
ndmos t
favorablytowardt
hoseagai
nstwhom t he ya r
eme antto
operate.(Tr
ini
dadv.Ori
entProt
ect
iveAs sura
nceAssn.,67
Phil.184)
The rei snos howi ngt ha ttheque st
ionsi nt hea pplicati
onf ormf or
i
ns uranc erega rdingt hei nsured'
sme di calhistorya rei ns ma ll
erpr i
nt
t
ha nt her es
toft hepr i
ntedf ormort hatthe ya r
ede signedi ns uchawa y
ast oc oncea lfrom t hea pplica
ntt heirimpor t
anc e
.I fawa r
ni nginbol d
redl etter
soraboxe dwa r
nings i
mi lart otha trequiredf orc i
garet
te
adve r
tiseme ntsbyt heSur geonGe neraloft heUni tedStatesisne cessar
y,
t
ha ti sf orCong ressort heI ns uranceCommi ssion to pr ovidea s
protectionaga insthi ghpr essur
ei nsurances al
esma nship.Wea relimited
i
nt hi
spe t
it
iont oa s
cert
a ini
ngwhe t
he rornott her esponde ntCour tof
Appe a l
sc ommi tt
edr eversibleerror.Itist hepe ti
ti
one rs'burdent oshow
t
ha tt hef actua lf indi
ngsoft her e
sponde ntc ourta renotba sedon
subs t
antiale videnc eort ha titsc onclusionsa rec ontrarytoa pplic
able
l
a wa ndj uri
s prude nce.The yha vef ai
ledt odi s
cha r
get hatburde n.
WHEREFORE,thepet
it
ioni
shere
byDENIED forl
ackofme
rit
.The
que
sti
one
dde
cis
ionoft
heCour
tofAppe
alsi
sAFFIRMED.
SOORDERED.

2
3.G.
R.No.175666,J
uly29,2013]
MANILA BANKERS LI
FE I
NSURANCE CORPORATI
ON,
PETI
TIONER
VS.
CRESENCI
AP.ABAN,RESPONDENT.
DECISION
DELCASTI
LLO,J
.:
Theultima t
ea i
m ofSe ct
ion48o ft heI ns
uranc eCodei stoc ompe l
i
nsurer
st osolic
itbusi
nessfrom orpr ovi
dei nsurancec ove r
a geonlyt o
l
egit
imatea bona f
nd  i
de cl
ient s
,by r equi
ring t hem t ot horoughly
i
nvesti
gatethosetheyinsurewi thi
nt woye arsf rom effec t
ivit
yoft he
poli
cyandwhi l
etheinsuredi ss ti
llali
ve.Ifthe ydonot ,the ywi llbe
obli
gat
edt ohonorclai
msont hepol ic
iestheyiss ue,re
ga r
dl essoff r
a ud,
concea
lme ntormi s
repr
esentation.Thel a wa ssume sthatt heywi l
ldo
j
ustthata ndnots itont heirl aurel
s,indiscri
mi natel
ys oli
c i
ti
nga nd
acce
pti
ngi nsura
ncebusi
nessf roma nyTom,Di cka ndHa r
ry.
[
1]
As
sai
le
dint
his
 Pe
ti
ti
onf
orRe
vie Ce
won  r
ti
ora
ri  
Fa
ctua
lAnt
ece
dent
s
OnJ uly3,1993,Del
iaSot
ero(
Soter
o)tookoutalif
einsurancepol
ic
y
f
rom Ma ni
la Banker
sLifeInsur
ance Cor
porat
ion (Banker
sLi f
e),
[
5]
desi
gnati
ngresponde
ntCre
senc
iaP.Aba n(Aban),herniece,  
asher
benefi
cia
ry.
Pet
it
ioneri
ssuedInsur
ancePoli
cyNo.747411(thepolicy),wit
ha  
face
val
ueofP100,000.00,i
nSot e
ro'
sfavoronAugus t30,1993,a f
tert
h e
[6]
re
quisi
temedic
alexamina
tionandpa
yme ntoft
heinsura
nc epre
mium.
[
7]
OnApr i
l10,1996,  
whentheinsurancepolic
yha dbeeninf or
cefor
morethant woye arsandsevenmont hs,Sot
erodied.
 Res
ponde
ntf i
le
da
cl
aimf orthei ns
uranceproce
edso nJ uly9,1996.Peti
ti
onerc
onduc t
ed
[8]
aninve s
tigat
ioni ntothec l
aim,  andc ameoutwi t
ht hefoll
owing
f
indi
ngs :
 1.Sote
rodidnotpe
rsona
ll
yappl
yfori
nsur
anc
ecove
rage
,ass
hewa
s
i
lli
te
rat
e;
2.Sot
erowa
ssi
ckl
ysi
nce1990;
3.Sote
rodi
dnothavethef
inanc
ialc
apabi
li
tyt
opa
ythei
nsur
anc
e
pre
miumsonI
nsur
anc
ePolic
yNo.747411;
4.Sot
ero did not s
ign t
he J
uly 3, 1993 a
ppl
ic
ati
on f
or
[
9]
i
nsur
ance
;  [a
nd]
5.Re
spondentwast
heone.
whofi
le
dtheins ura
ncea
ppl
ic
ati
on,a
ndx
[10]
xxdesi
gnate
dher
sel
fast
hebe
nefi
ci
ary.
Fortheabovereas
ons
,pet
it
ione
rdeni
edr
espondent
'
sc la
imonApr
il16,
[11]
1997andrefunde
dthepr
emiumspa
idont
hepol i
cy.
OnApr il24,1997,
 pet
it
ione
rf i
ledac ivi
lcaseforresci
ssi
ona nd/or
annulme ntoft
hepolic
y,whichwa sdoc ket
edasCivilCaseNo.97- 867
anda ssi
gne dt
oBr anch134oft heMa kat
iRe gi
onalTri
alCour t
. 
Th e
ma i
nthe si
softheComplai
ntwa sthatthepoli
cywa sobt
ai
nedbyf raud,
concealme nt and/
or mi srepr
esentati
on unde r t he I ns ura
nc e
[
12] [13]
Code ,  whichthusrende
rsitvoi dableunderAr t
icl
e1390   oft he
CivilCode .
[14]
Respondentf
il
edaMotiontoDismiss  cl
ai
mingtha
tpet
it
ione
r'
sca
use
ofa c
tionwasba r
redbyp res
cri
pti
onpur suantt
oSe c
ti
on48oft he
I
nsuranceCode,whi
chprovi
desasfol
lows :
Wheneverari
ghttoresc
indacontr
actofinsura
nceisgi
vento
t
heins
urerbya nyprovis
ionofthischapt
er,suchr i
ghtmustbe
e
xer
cis
edpr e
vioustot hec o
mme nce
me ntofa nacti
onont he
c
ont
ract
.
Afte
rapol
icyofli
fei
nsur
ancemadepaya
bleonthede
athof
t
hei
nsur
edsha
llhavebee
ni nforc
eduringtheli
fet
imeofthe
 ins
uredforape r
iodoftwoye arsf
romt heda t
eofi
tsissueorofit
s
las
tr e
inst
at
eme nt,theinsurercannotpr ovetha
tt hepolicyis
voi a
d bi ni
ti
o or isrescindi
ble by r ea
son of the fra
udule
nt
concea
lmentormi sr
epr
esentat
ionoftheinsure
dorhisagent
.
During the proceedings on t he Mot i
on to Di smis
s,pe ti
tioner'
s
i
nve st
iga
tortest
if
iedi nc ourt,stati
nga mongothersthattheinsurance
underwri
terwhos oli
citedt hei nsura
ncei sac ousi
nofr es
ponde nt'
s
[15]
husband,DindoAba n,   an
dt ha titwastherespondentwhopa i
dt he
[
16]
annualpremiumsont hepol i
cy.
Rul
ingoft
heRe
giona
lTr
ialCour
t
[
17]
On De c
e mber9,1997,t het r
ialcour
ti s
suedan Order  gr
ant
ing
re
spondent'
sMotiont oDismis
s, 
thus
:
WHEREFORE,d efendantCRESENCI AP.ABAN' sMotiontoDi s
miss
i
sherebygrant
ed.Ci vilCas
eNo.97-867ishere
bydis
mis
s ed.
[18]
SOORDERED.
I
ndi smi ssingt hec ase,thetrialc our tfoundt hatSote r
o,a ndno t
r
esponde nt,wa stheonewhopr ocuredt heinsur
anc e
;thus,Soter
oc oul
d
l
egall
yt akeouti nsur
a nceonhe rownl i
f ea
ndva lidl
yde si
gnate-a ss h
e
d
idr esponde ntasthebe nefi
ci
ary. I
the ldfurthe
rt hatunderSection48,
p
etit
ionerha donl ytwoye arsfrom t hee f
fect
ivit
yoft hepol icyto
q
ue s
tiont hes ame;si
nc ethepolic
yha dbe e
ni nforceformor etha ntwo
y
ears,pe tit
ionerisnow ba rr
edf rom c onte
s t
ingthes ameors ee kinga
r
esci
ss i
onora nnul
me ntthere
of.

[19]
Pet
it
ionermove df orreconsi
der
ati
on,buti nanot
herOrde
r  date
d
Oct
obe r20,1998,thetr
ialcour
tst
oodit
sground.
Pet
it
ionerinter
poseda nappealwit
htheCA,doc ket
edasCA-G. R.CV
No.62286.Pe t
it
ionerquest
ionedt
hedis
missalofCi
vilCa
seNo.97- 867,
a
rgui
ngthatthet
ri
alcourterr
edinapplyi
ngSe cti
on48anddecla
ring
t
hatpr
escr
ipti
onhasse
tin.Itcont
endedthatsi
nceitwasre
spondent-
a
ndnotSot er
o-whoobt a
inedtheinsur
ance,thepol
ic
yissuedwa s
r
ender
edvoi a
d bi
nit
io 
forwantofi
nsura
bleint
ere
s t
.

Rul
ingoft
heCour
tofAppe
als
OnSepte
mber28,2005,theCA issue
dthea s
s a
il
edDecis
ion,whi
ch
co
nta
ine
dthefol
lowingdec
ret
alpor
ti
on:
WHEREFORE,i ntheli
ghtofa l
lthefor
egoing,thei
nst
antappe
al
i
s 
DISMISSED f
o rla
ckofmeri
t.
[
20]
SOORDERED.
TheCAt huss ust
ainedthetrialcourt.
 Appl yingSe cti
on48t opetit
ioner
's
case
,theCAhe l
dt hatpetit
ionerma ynol onge rprovethatthesubject
poli
cy wa s void abi nit
io orr escindible by r eason off r
audulent
concea
lmentormi sr
eprese
nt at
iona ft
erthel aps eofmor ethantwoye ars
fr
omi t
sissuance.Itrat
ioci
na tedthatpetiti
one rwa sequippedwitha mple
me a
nstode termine,wi t
hint hef i
rsttwoye arsoft hepolic
y,whe t
her
fr
aud,concealmentormi srepresent
ationwa spr ese
ntwhe ntheinsurance
cover
agewa sobtained.Ifitfaile
dt odos owi thinthes t
at
utor
yt wo-year
peri
od,the
nthei nsuredmus tbepr otecte
da nda ll
owe dtoclai
mupont he
poli
cy.

[
21]
Pet
it
ione
rmovedforr
econs
ider
ation,  
buttheCAde ni
edthesamei
n
[22]
i
tsNovembe
r9,2006Resol
uti
on.  He nce,t
hepre
sentPet
it
ion.
Is
sues
Pet
it
ione
rra
ise
sthef
oll
owi
ngi
ssue
sforr
esol
uti
on:
I[
WHETHER]THECOURTOFAPPEALSERREDINSUSTAI
NING
THE ORDER OF THE TRI
AL COURT DI SMI
SSING THE
COMPLAI NT ON THE GROUND OF PRESCRI PTI
ON I N
CONTRAVENTI ON (
OF)PERTI
NENTLAWSAND APPLI CABLE
JURI
SPRUDENCE.
II [
WHETHER] THE COURT OF APPEALS ERRED I N
SUSTAINING THEAPPLI
CATION OFTHEINCONTESTABILITY
PROVISIONINTHEINSURANCECODEBYTHETRI ALCOURT.
II
I[WHETHER]THECOURTOFAPPEALSERREDI NDENYI NG
[
23]
PETI
TIONER'SMOTIONFORRECONSIDERATION.

Pe
tit
ione
r'
sAr
gume
nts
I
npr a
yingthattheCA De cisi
onber everse dandt hatthec as
eb e
r
emandedt othetrialcour
tf orthec onduc toff urt
herproce
edings,
p
eti
ti
onera r
guesini tsPet
it
iona ndRe ply[24] 
thatSecti
on48c annot
a
pplytoacasewhe r
ethebenefic
iar
yunde rthei nsurancecont
rac
tpos ed
a
stheinsur
edandobt a
inedt
hepol i
cyunde rfraudulentcir
cumsta
nce s
.It
a
ddsthatres
pondent,whowa sme rel
ySot er
o' sniece,hadnoinsurable
i
nte
res
tintheli
feofhe ra
unt
.
Rel
yingont heresul
tsoft heinve s
tigati
ont hati tc onduc t
eda f
terth
e
cl
aim fort hei nsur
ancepr oceedswa sf il
ed,pe titi
oneri nsi
ststhat
r
espondent'
sc lai
m wa ss puri
ous,a si tappeare dt hatSot erodidnot
ac
tual
lya ppl
yf ori
nsurancecoverage,wa sunlettered,sickly,andhadno
vi
sibl
es ourceofincomet opayf ort heinsurancepr emiums ;andthat
r
espondentwa sanimpos t
or,posi
nga sSot er
oa ndf raudulentlyobta
ini
ng
i
nsuranc
ei nthelat
ter
'snamewi thouthe rknowle dgea ndc onsent
.
Peti
ti
one
raddsthatI
nsurancePoli
cyNo.747411wa svoi a
d biniti
o and
coul
dnothavegivenris
et oright
sandobli
gati
ons;assuch,theac t
ion
[
25]
fort
hedecl
ara
ti
onofitsnull
ityori
nexi
st
encedoesnotpresc
ribe.

Re
sponde
nt'
sAr
gume
nts
Responde
nt , on t he other hand, e ss
enti
al
ly a rgues in her
[26]
Comme nt  tha
ttheCAi scorr
ecti
na pplyi
ngSe cti
on48.Sheaddsth
at
pet
iti
oner
'sne wa l
le
gati
oni nitsPetit
iont ha
tt hepolicyisvoi a
d b
i
nit
io mer
itsnoa tt
ent
ion,ha
vingfai
ledtor a
iset
hes amebelow,asi
thad
cl
ai
me doriginal
lythatt
hepoli
cywa sme rel
yvoidable.
On t he iss
ue o fi nsurableinter
est,respondente choe st he CA' s
pronouncementt hatsinceitwa sSoterowhoobt ai
nedt hei nsuranc
e,
i
ns ur
ableint
erestwa spresent
.Und erSecti
on10oft heI nsuranceCode ,
Soterohadinsur
a bleinte
resti
nhe rownl i
fe,andc ouldva l
idlyde signa
te
anyonea sherbene f
icia
ry.RespondentsubmitsthattheCA' sfindingsof
fa
c tl
eadingtosuc hconclusi
onshouldber e
spected.
OurRul
ing
TheCour
tde
nie
sthePe
tit
ion.
TheCour twillnotdepartfromt hetri
alanda ppe l
la
tec ourt
s'fi
ndingt hat
i
twa sSot er
o who obt aine dt heinsurancef orhe rs
elf
,de si
gna ti
ng
res
ponde ntashe rbenefi
ci
a ry.
 Bothcour t
sa r
ei na c
c ordinthisrespect,
andt heCour tisloathtodi st
ur bthi
s.Whi l
epe ti
tionerinsis
tstha tit
s
i
ndepe ndentinvest
igat
iono nt hec l
aimr eveal
st hati twasr e
sponde nt,
posi
nga sSotero,whoobt a i
nedt heinsurance,thisc l
aimi snol onger
fea
siblei nthewa keoft hec ourt
s'findingt hatitwa sSoterowho
obta
ine dthei
ns ur
anceforh ers
elf.Thi
sf i
ndingoff actbindstheCour t.
Withthea bovec rucialfi
ndingoff a
ct-t hatitwasSoterowhoobt ained
t
heins ur
anc eforhe rsel
f-pe ti
ti
oner'
sc aseisseverel
ywe akened,ifnot
t
otal
ly disproved.Al legat
ions off raud,whi cha r
e predicat
ed on
r
espondent'sal
lege dposinga sSoter
oa ndf orge
ryofhe rsi
gnaturei
nt he
i
nsurancea ppl
icat
i on,areatoncebeli
edbyt hetr
ialandappell
atecourts
'
f
indi
ng t ha tSot ero he r
selft ook outt he insur
ancef or herself
.
"
[Fraudulentintentont hepa r
toft hei nsuredmus tbee st
abli
shedt o
 [
27]
e
nti
tl
etheinsur
ertore
sci
ndthecont
rac
t"  Int
hea
bse
nceofpr
oofof
s
uchfr
audule
ntint
ent
,nori
ghtt
oresc
indar
ise
s.
Moreover,t
her e
sul
tsa ndconclus
ionsarr
ivedatduri
ngtheinve
sti
gati
on
c
onduc t
edunilat
era
llybype t
it
ioneraft
erthecla
imwa sfi
ledmaysimply
bedismisse
da sself
-servi
nga ndma ynotf or
mt hebasi
sofac auseof
a
cti
ongi vent heexist
e nc
ea nda ppl
icat
ionofSe ct
ion48,a swillbe
di
scusse
da tle
ngthbelow.
Section48s ervesanobl epurpose,a sitregulat
est hea ct
ionsof
botht heins urerandtheins ured.Unde rtheprovisi
on,ani nsurerisgiven
t
woye a
r s-f r
omt hee ff
ectivityofali f
einsurancecontrac tandwhi lethe
i
ns uredi sa li
ve-t odiscove rorprovet hatthepolicyisvoi a
d biniti
o or
i
s r escindible by r eas on of t he f raudule
nt c onc eal
me nt or
mi sr
epre sentat
ionoft heins uredorhi sagent.Afterthet wo- yearperiod
l
a pses,orwhe ntheinsureddi e
swithinthepe ri
od,theins urermus tma ke
goodont hepol ic
y,e vent hought hepol i
cywa sobt aine dbyf raud,
conc eal
me nt,ormi srepres ent
ati
on. 
Thi sisnott os a
yt hatinsurance
f
ra ud mus tbe r ewa r
de d,butt ha ti nsurer
s who r eckless
lya nd
i
ndi scri
mi na t
elysolic
itandobt ai
nbus inessmus tbepe na lize
d,fors uch
r
e cklessne ssandlackofdi s cri
minati
onul ti
ma te
lywor kt ot hede t
ri
me nt
of bonaf ide t
akersofinsura nceandthepubl icingeneral.
Sect
ion 48 r egulat
es botht he a ct
ions of t he i nsurersa nd
prospecti
vet akersofl i
feinsuranc e
. 
Itgive sins urer
se nought imet o
i
nqui rewhe thert hepol i
c ywa sobt ainedbyf raud,c onc e
a l
me nt,or
misrepresent
ation;ont heotherha nd,itforewa r
nss c
he mingi ndividua l
s
t
ha tthei
ra tt
empt satinsurancefraudwoul dbet ime lyunc ove r
ed-t hus
deterri
ngt hemf r
om ve nturi
ngi ntos uchne fariouse nterprise.Att he
samet i
me ,legitimatepol i
cyhol dersa r
ea bsolutel
ypr otect
e df rom
unwa rra
ntedde nialoftheircl
aimsorde la
yi nthec ollect
ionofi nsur a
nc e
proceeds oc casioned by a ll
ega ti
ons of f r
a ud, c once al
me nt, or
misr
epr
esent
ati
onbyi ns
urer
s,cl
aimswhi
chmaynolonge
rbes
etup
af
tert
hetwo-ye
arpe
riodexpi
resa
sorda
ine
dunde
rthel
aw.
Thus,thes e
lf-
regula
tingfea
tureofSe c
tion48l ie sinthefa ctthat
b
otht hei nsurerandt hei ns
ureda regi vent hea ss ur
ancet ha tany
d
ishonests chemet o obtainli
fei nsurancewoul d bee xposed,a nd
a
ttemptsa tundul y denying ac l
aim woul d bes t
ruck down.Li fe
i
nsurancepolici
esthatpassthest
atutorytwo- yearperioda r
ee s
se nti
ally
t
reat
eda slegit
imateandbeyondque st
ion,andt heindividualswhowi eld
t
hema r
ema desecurebyt hethoughtt hattheywi llbepa i
dpr ompt ly
u
ponc l
aim.Inthisma nner
,Secti
on48c ontr
ibutestot hestabi
li
tyoft he
i
nsuranceindustr
y.
Se c
tion 48 pr eventsas i
tua t
ion whe ret hei ns ure
rknowi ngly
conti
nue stoa cce
pta nnualpr emiumpa yme ntsonl i
fei nsur
a nce,onlyt o
l
a t
eronde nyac la
im ont hepol icyons pe ci
ousc laimsoff raudulent
concealme nta ndmi srepresentat
ion,s uc ha swha tobta insint heins t
ant
case.Thus ,i nst
eadofc onduc t
inga tt hef irstinsta
ncea ni nvest
igation
i
ntot hec i
rc ums t
ancess ur
roundi ngthei ssua nceofi nsurancePol icyNo.
747411whi chwoul dha vet i
me lye xpos e dt hes uppos e
df lawsa nd
i
rregulari
tiesa tt
endingi tasitnowpr ofe s
s es,pe t
iti
one rappe arstoha ve
t
urne dabl inde yeandopt edi nst
e adtoc ontinuec ollec
t i
ngt hepr emiums
onthepol ic y.Forne arlythreeye ars,pe titione rcol
lectedthepr emiums
andde votedt hesamet oitsownpr ofit.Itc annotnow de nyt hec la
im
whe nitisc all
edtoa c
count.Se c t
ion48mus tbea ppliedtoi twi thfull
f
orcea nde ff ect
.

The Courtther
efor
e a
gre
esf
ull
y wi
th t
he a
ppe
ll
at
e c
our
t'
s
pr
onounc
ementt
hat-

[
t]
he"
inc
ont
est
abi
li
tyc
laus
e"i
sapr
ovi
si
oni
nla
wtha
taf
terapol
icyof
li
fei nsura
ncema depaya bl
eont hedeathoftheinsuredshallhavebeen
inf orc
edur ingt
hel i
feti
meoft heinsuredforaperiodoft wo(2)ye a
rs
fr
om t heda t
eofi t
sissueorofi t
slastrei
nstat
ement,theinsure
rc a
nnot
provet hatthepolicyi svoid 
abi ni
tio 
ori sres
cindi
blebyr eas
onof
fr
a udulentconce
almentormi sr
eprese
ntati
onoftheinsuredorhisagent.
Thepur poseofthel a
wi stogiveprote
cti
ont othei nsur
edorhis
benefi
ciar
ybylimit
ingtheres
c i
ndi
ngofthecont
r actofinsur
anceont
he
groundoff r
audul
entconceal
me ntormisr
epres
e nt
a t
iontoape ri
odof
onlyt wo (2)yearsf rom the is
sua
nce oft he policy ori t
slas
t
rei
nsta
tement.
Thei nsurerisdeemedt ohavet henecess
a r
yf a
cil
iti
est odis
coversuch
fra
udul entconce
a l
me ntormisrepres
ent
a t
ionwithinape ri
odoft wo(2)
years.Itisnotfai
rfortheinsurertocol
lectthepremiumsa slongasthe
insuredissti
llal
ive,onlytorai
setheissueoffraudul
e ntconcea
lmentor
mis r
epresent
ati
onwhe ntheinsureddie
si nordertode featt
her i
ghtof
thebe nefi
cia
rytorecoverunderthepoli
cy.
Atl eas
tt wo( 2)ye a
rsf rom thei ss
uanceoft hepolicyori tslas
t
rei
nsta
teme nt
,thebenefi
c i
aryisgiventhes t
abi
lit
yt orecoverunde
rthe
poli
cywhe nt heins
ureddi es
.Thepr ovi
siona l
soma kesc l
earwhenthe
two-yea
rpe ri
odshouldc omme nceincasethepoli
c yshouldlaps
eandis
rei
nsta
ted,thati
s,fr
omt heda t
eofthelastrei
nsta
teme nt
.
Af
tertwoyea
rs,thede
fensesofconc
eal
me ntormisr
epr
ese
nta
tion,no
mat
terhowpa
tentorwe
ll-
founde
d,wil
lnolongerl
ie.
Congres
sf el
tthiswasasuff
ici
entanswertotheva
rioust
act
ics
employedbyins
ura
ncec
ompa
nie
stoavoi
dlia
bil
it
y.
Theso-
call
ed"inc
onte
stabi
lit
yclause
"pre
cludest
heinsur
erfr
omr ai
sing
t
hede f
ensesoffal
serepresent
ati
onsorconceal
mentofma te
ria
lfa ct
s
i
nsof
ara sheal
thandpreviousdisea
sesar
ec onc
ernediftheins
urance
hasbeeninf
orceforatleas
ttwoyearsduri
ngthei
nsure
d'sl
if
eti
me .The
phra
se"duri
ngthelife
time"foundinSecti
on48simplymeansthatthe
poli
cyisnolongerconsider
edinforceaft
e rt
hei
nsuredhasdie
d.The
keyphras
einthesecondparagr
aphofSe c
tion48i
s"foraperi
odoft wo
year
s."

Asbor nebyt herecords,thepol ic

ywa sissuedonAugus t30.1993,t he
i
nsure dd i
edonApr il10,1996,a ndthec lai
m wa sde nie
donApr il16,
1997.Thei nsura
ncepol icywa st husinforcef orape ri
odof3ye ars,7
mont hs,and24da ys .Consideringthatthei nsure
ddi eda f
terthet wo -
yearpe r
iod,t
heplaintif
f-a
p pell
antis,t
he r
efore,barr
edf r
ompr ovingtha t
t
he pol icyis void  abi ni
tio 
by r eason oft he insuredf r
audule nt
conce a
lmentormi srepresent
a t
ionorwa ntofi nsura
blei nt
eres
tont he
partofthebenefi
ciary,herei
nde fendant-a
ppellee.

Well
-sett
ledisther ulethatitist
heplai
ntif
f-
a ppel
la
nt'
sburdentoshow
t
hatthefactualfindingsoft hetri
alcourtarenotba s
edons ubst
antial
e
videnceort ha
ti tsc onclusi
onsarec ont
raryt oappli
cabl
elawa nd
[28]
j
uri
sprudence.Thepl aint
if
f-appel
la
ntfai
ledtodi s
char
gethatbur
den.
Pe ti
tionerc l
aimst hatitsi ns urancea ge nt,whos ol
icite
dt heSot er
o
ac count,happe nst obet hec ousinofr esponde nt'shus band,a ndt hus
i
ns inua t
esthatbot hc onni vedt oc ommi tins urancef raud.I fthiswe r
e
t
r ulyt hecase,the npeti
tionerwoul dha vedi sc overedthes che mee a
rlier
i
fi tha dine arne stconduc t
eda ni nvestigationi ntot hec ircums t
anc e
s
sur r
oundingt heSot eropol ic
y.Butbe c ausei tdidnota nditi nvesti
ga t
ed
t
heSot er
oa ccountonl ya fterac l
aim wa sf iledt hereonmor et hant wo
ye arsl at
er,na turall
yi twa suna blet o de tectt hes cheme .Fori t
s
ne gli
ge nceandi nact
ion,t heCour tc annots ympa thizewi thi t
spl ight.
Ins t
ea d,it
sc asepr ecis
elypr ovidest hes tronga rgume ntf orr equi
r i
ng
i
nsure
rstodili
gent
lyconducti
nve
sti
gat
ionsoneac
hpol
ic
yt he
yis
sue
wit
hinthetwo-yea
rperiodmanda
tedunderSec
ti
on48,andnota
lt
er
cl
aimsfori
nsur
ancepr
oce e
dsar
efi
ledwitht
hem.
Be side s,ifinsur ersc annotvouc hfort hei ntegr i
tya ndhone styoft he i
r
i
ns ura nc eage nts/salesme na ndt hei ns urancepol i
ciestheyi ssue,t he n
t
he ys houldc eas edoi ngbu sine ss.Ifthe yc ouldnotpr oper
lysc reent he i
r
age ntsors a
les me nbe f
oret a
ki ngt hemi ntoma rketthe i
rproduc ts,ori f
t
he ydonott hor ou ghlyinve s
tiga t
ethei ns ur
anc ec ont
r act
stheye nteri nto
witht he i
rclients,t hent heyha veo nlyt hemse lvestobl ame.Ot herwi se
said,i nsure
rsc a nnotbea llowe dt oc olle
ctpr emiumsoni ns uranc e
policie s,uset he sea mountsc ollect
e da ndi nve stthes amet hrought he
yea rs,ge ner
a t
ingp rofit
sa ndr e turnsthe refr
omf orthe i
rownbe ne f
it,a nd
t
he rea fterc onve ni entl
y de ny i nsu r
anc ec l
aimsby que s
tioning t he
author ityori ntegr it
yoft hei
rowna ge ntsort hei nsurancepol i
ciest he y
i
ssue dt othe irp remium- payi ngc li
ent s.Thi si se xa c
tl
yon eoft he
sche me swhichSe ct
ion48a i
mst op reve nt.
I
nsure rsma ynotbea llowe dtode l
ayt hepa yme ntofc la
imsbyf i
ling
f
ri
vol ousc asesinc ourt,ho pi
ngt h
att hei nevitablema ybeputof ffor
y
ea r
s-ore vende ca
de sbyt hep ende ncyoft heseunne c e
ssaryc ourt
c
ases.I nt heme anti
me ,the ybe nef
itfrom c ollec t
ingt hei nterestand/or
r
eturnsonbot ht hepre mi umspr eviouslypa idbyt hei nsureda ndt he
i
nsura ncepr oceedswhi chs houldothe r
wi segot othei rbe nefi
ciari
es.The
b
us i
ne ssofi nsuranceisahi ghlyr egulatedc omme rcialac t
ivit
yi nt he
[
29] [30]
c
ount ry,  and i si mbue d wi th publici nt erest.  "[A]ni nsurance
c
ontra ctisac ontrac
tofa dhesionwhi c hmus tbec ons truedliberall
yi n
f
avoroft hei nsuredands trict
lya gai
nstt heins urerinor dertos afeguard
[31]
t
he[f orme r'
s]interes
t."
WHEREFORE, 
thePe
ti
ti
onis 
DENIED. 
Theass
ail
edSept
embe
r28,
2005De
cis
iona
ndtheNove
mber9,2006Res
olut
ionoft
heCourto
f
Appe
alsi
nCA-
G.R.CVNo.62286a
re 
AFFI
RMED.SOORDERED.

2
4.[G.
R.No.211212,J
une08,2016]
SUNLI
FEOFCANADA(
PHI
LIPPI
NES)
,INC.
,PETI
TIONER,
VS.
MA.DAI SY'
S.SI
BYA,JESUSMANUELS.SI
BYAI
II,J
AIMELUIS
S.SIBYA,ANDTHEESTATEOFTHEDECEASEDATTY.J ESUS
SIBYA,JR.
,RESPONDENTS.

DECI
SION
REYES,J
.:
[
1]
Bef
oret
hisCour
tisapet
it
ionf
orr
evi
e c
won er
ti
ora
ri  
unde
rRul
e45of
t
heRule
sofCourtxxx
St
ate
mentofFa
ctsoft
heCa
se
OnJanuary10,2001,Atty.JesusSibya,Jr.(Att
y.Je
susJ r
.)appli
edfor
l
if
ei nsur
ancewi t
hSunLi f
e.I nhi sAppl ic
ati
onf orInsurance,he
[
5]
i
ndic
a t
edthathehadsoughtadvicef
orki dneyprobl
ems .  
Att
y .Je
susJr
.
i
ndic
a t
edthefol
lowinginhisappli
cati
on:
"Last1987,hadundergoneli
thotri
ps yduetokidneyst
oneunderDr.
Jes
usBe nja
mi nMendozaatNa t
iona lKi
dneyIns
tit
ute
,di
scha
rgedaf
ter
[6]
3days,norecurr
enc
easc l
ai
med."
OnFe bruar
y5,20 01,SunLifeappr
ovedAtty.J
esusJr
.'
sappli
cat
ionand
i
ssuedI nsura
ncePol icy No.031097335.Thepol ic
yi ndi
catedthe
re
sponde nt
sa sbenefi
ciari
esande nt
it
lesthemt oade at
hbe nef
itof
P1,000,
000.00shouldAtty.Je
susJr
.diesonorbefor
eFebruar
y5,2021,
o
ras um ofmone
yifAt
ty.J
esusJ
r.i
sst
il
lli
vingont
hee
ndowme
nt
[
7]
d
ate
.
OnMa y11,2001,At t
y.JesusJ
r.dieda sar esul
tofaguns hotwoundi n
SanJ oaquin,Iloilo.Ass uch,Ma .Da isyf i
ledaCl aimant'
sSt at
eme nt
withSunLi f
et os ee
kt hedeathbe nefit
si ndic
a t
edi nhisi nsura
nc e
[
8]
poli
cy.
Inalett
e rdatedAugus t27,2001,howe ver,SunLi fedeni
edthec lai
mon
t
hegr oundt hatthede tai
lsonAtty.J e
susJ r.
'sme dic
alhist
orywe r
enot
disc
losedi nhisa pplic
ati
on.Simultaneously,SunLi fete
nderedac hec k
[
9]
repr
esentingthere fundofthepre
mi umspa idbyAt t
y.Jes
usJr.
Theres pondentsrei
ter
ate
dthe i
rclai
ma gai
nstSunLif
et hr
ual ett
er
dat
edSe pte
mbe r17,2001.SunLi f
e,however
,ref
use
dt oheedt he
re
sponde nt
s'r e
quest
sa ndinsteadfi
ledaCompl ai
ntforRe s
cis
sion
bef
oreth eRTCa ndprayedf
orjudic
ialc
onfi
rmat
ionofAtt
y.Jes
usJr.'
s
[
10]
re
sci
ssionofi nsur
ancepol
icy
.
InitsCompl a
int,SunLi feall
egedthatAtty.J
e susJr.didnotdi s
c l
osei n
hisinsur
ancea pplicationhispre
viousme dica
lt re
a t
me nta tt
heNa tional
KidneyTr anspla
n tI nsti
tut
einMa ya ndAugus tof1994.Ac cordingt o
SunLi fe
,theund isclosedfac
tsugg e
stedthatthei nsuredwa sin" renal
fai
lure"anda tahi ghr i
skme di
calc ondit
ion.Cons equent
ly,ha di t
knowns uchfa ct
,i twoul dnothaveissuedtheins ura
nc epolic
yi nf avor
[11]
ofAt t
y.Jes
usJ r.
Fortheirdefense
,t herespondentsclaimedthatAt t
y.JesusJ r.didnot
commi tmisr
e pr
esentat
ioninhisa ppl
icati
onforinsura
nce.The ya verred
t
ha tAtty.JesusJr.wa si ngoodf a
it
hwhe nhes i
gnedt hei nsur
a nce
appli
cati
ona nde ve nauthori
zedSunLi fetoi nquir
ef urtherintoh i
s
me di
calhistoryf orve ri
fic
ati
on pur poses
.Ac cording tot hem,t he
[
12]
complainti
sjustapl oytoavoidthepayme ntofi
ns ur
ancec l
a i
ms .
Rul
ingoft
heRTC
OnMa rch16,2009,theRTC i ssueditsDe c
ison[13] 
i di
smi
ssi
ngt he
compl ai
ntforlackofme r
it.TheRTC he l
dthatSunLi feviolat
ed
[14]
Secti
ons241,paragr
aph1(b),(d),and(e)  and242[15] 
oftheInsura
nce
Codewhe ni tre
fuse
dt opa yt her i
ght
fulc lai
m oft heres
pondents.
Mor eover,the RTC or d
ered Su n Li
fet o payt he amounts of
P1,000,000.
00 as deat
hb ene f
its
,P100, 000.00 as mor aldama ges,
P100,000.00asexempla
ryda mages,andP100, 000.
00a sat
tor
ney'sfe
es
andc ost
sofsuit
.
TheRTChe ldthatAtty.JesusJr
.didnotc ommitmateria
lconc e
alment
andmi sreprese
ntat
ionwhe nhea ppli
edf orlif
einsur
ancewi thSunLi fe
.
Itobservedt hatgi
vent hediscl
osuresandt hewaiveranda uthor
izat
ion
t
oi nvesti
ga t
ee xec
utedbyAt t
y.JesusJr.toSunLi fe,thelat
terhada l
l
t
he me ans ofa sce
rtaini
ng the fact
sa lle
gedl
yc onceal
ed by t he
[
16]
appli
cant.
Aggrieved,SunLi feelevat
edthec a
setot heCA.
Rul
ingoft
heCA
Ona ppe a
l,t heCA i ss
ue di t
sDe c
ision[17] da tedNove mbe r18,2013
af
fir
mi ngtheRTCde ci
sioni norderingSunLi fet opayde a
thbe ne fit
s
andda mage si nfavoroft her es
ponde nts.TheCA,howe ver,modi fied
t
heRTCde cisionbya bsolvingSunLi fef romt hec har
gesofvi olat
ionof
[18]
Sect
ions241a nd242oft heI nsuranceCode .
TheCA r uledt hatt hee videnceo nr ecor dss how t ha
tt he
rewa sno
fr
audulentintentont hepa rtofAt ty
.J esusJ r.i ns ubmitti
nghisi ns
ur ance
appl
icati
on.I nst
ead,i tf ound t hatAt t
y.J e susJ r.admi t
tedi n hi s
[19]
appl
icati
ont hatheha ds oughtme di
caltr e
a tme ntforkidneya i
lme nt.
SunLi
fef
il
edaMot
ionf
orPa
rti
alRe
cons
ide
rat
ion[20] 
dat
edDe
cembe
r
 [
21]
1
1,2013butt
hes
amewa
sde
nie
dinaRe
sol
uti
on  
dat
edFe
brua
ry13,
2
014.
Undaunte
d,SunLi f
ef i
le
da nappe
albywa yofpet
it
ionforrevi
ew
o c
n ert
ior
ari
 unde
rRule45oft
heRul
esofCour
tbe
for
ethisCour
t.
TheI
ssue
Ess
enti
all
y,thema i
niss
ueoftheins
tantcas
ei swhet
herornott
heCA
er
redwhe ni taf
fi
rmedt heRTC decis
ionfindi
ngthatther
ewa sno
co
ncealmentormi sr
epr
esent
at
ionwhe nAtty.Jes
usJr.submit
te
dhis
i
nsura
ncea ppl
ic
ati
onwithSunLif
e.
Rul
ingoft
heCour
t
Thepe
ti
ti
onha
snome
rit
.
[
22]
I
n Ma ni
laBa nker
sLi feInsur
anceCor pora
ti
onv.Aba n,  theCou rt
h
eldthatiftheins
ureddieswit
hinthetwo-yearcontes
tabi
lit
ype ri
od,the
i
nsureri
sboundt oma kegoodit
so bl
igat
ionunde rt
hepol i
cy,r egardl
ess
o
ft heprese
nc eorla
ckofc onceal
mentormi sre
pr e
sentat
ion.TheCou rt
h
eld:
Secti
on48s e r
vesanobl epur pos e,a sitregulat
est hea ctions
ofbot hthei nsure
ra ndt heinsured.Unde rtheprovisi
on,a ni nsurer
isgivent woye a
rs-f romt heeffectivityofal i
feinsuranc ec ontract
andwhi let heinsuredi sali
ve-t odi sc overorpr ovetha tt hepol icy
isvoi a
d  bi niti
o ori sr esci
ndibleby r eason oft hef raudulent
conce a
lme ntormi sr
epresenta
tionoft hei nsuredorhi sa ge nt.
 Af t
er
thetwo- yea rperiodl apses,orwhe nt hei nsureddie swi thint he
peri
od,t hei ns
urermus tma kegoodont hepol i
cy,eve nt hought he
poli
c y wa s obt a i
ned by f raud, c onc e
a l
me nt, or
misrepresentat
ion. Thisisnott os ayt hatinsurancef raudmus tbe
rewarded,butt ha tinsurerswhor eckle ss
lya ndi ndiscr i
mi nately
soli
citandobt a i
nbus inessmus tbepe na lized,forsuchr ec klessness
 andlackofd
isc
rimi
nat
ionul
ti
mate
lyworkt
othedet
ri
me ntofbona
 
[
23]
fi
de 
taker
sofinsur
anc
ea ndthepubl
icingener
al.  (Emphasi
s
ours
)
Intheprese ntcase,SunLifeiss
uedAt ty.J e
susJ r
.'
spolicyonFe bruar
y5,
2001.Thus ,i thastwoye ar
sf r
omi tsissuance,toinve s
ti
ga t
ea ndve r
ify
whe t
hert he pol icy wa s obta i
ned by f ra
ud, c onc ea
lme nt, or
misrepresentati
on.Upont hede at
hofAt ty.JesusJr.,howe ver,onMa y
11,2001,orame rethre
emont hsfrom t heissuanceoft hepol ic
y,Sun
Lif
el osesitsr i
ghttoresc
indthepolicy.Asdi s
c ussedi Ma
n  nilaBa nker
s,
t
hed e a
thoft heinsur
e dwit
hinthet wo-ye a
rpe ri
odwi llrenderther i
ght
oft he i ns urert or esci
ndt he pol icy nuga tory. As s uch, the
i
ncont e
stabilit
ype ri
odwi l
lnows etin.
Assuming,however
,forthesakeofa rgument,t
hattheinc
ontes
tabi
li
ty
pe
riodha snotyetseti
n,theCour ta gr
ees,nonet
hele
ss,wit
htheCA
whenitheldtha
tSunLi f
efail
edt oshowt hatAtt
y.Jes
usJr.c
ommi t
ted
co
nc e
almentandmisr
eprese
nta
tion.

Asc orr
ect
lyobse
rvedbyt heCA,At t
y.Jes usJr.admi t
te
di nhi s
ap
pli
c a
ti
onhisme di
caltrea
tmentf orkidne
ya i
lment
.Mor eover
,he
ex
ecutedanaut
hor
izat
ioninfavorofSunLi f
et oconductinvest
igat
ion
i
nrefer
encewit
hhismedic
alhist
ory.Thedeci
sioninpartst
ates:

Recordsshow t hatint heAppl icati

onf orInsurance,[Att
y.
Je
susJr.]admit
tedtha theha dsoughtme dicaltr
eatmentforkidney
ai
lment.Whe na skedt opr ovidede t
ailsont hes ai
dme dic
ati
on,
[
Atty.JesusJr
.]i
ndic ate
dthef oll
owingi nfor
ma t
ion:year("1987")
,
medica
lpr oce
dure( "undergonel i
thot
ripsyduet oki dneys t
one")
,
l
engthofc onfi
neme nt( 3da
" ys"),att
endingphys i
cian("Dr.J e
sus
 Be
nja
minMe
ndoz
a")a
ndt
heh
ospi
ta
l(Na
" t
iona
lKi
dne
yIns
ti
tut
e")
.

Itappea
rst
hat[
At t
y.J
esusJr.
]al
sosi
gnedtheAuthori
zat
ionwhi
ch
gave[SunLif
e]theoppor
tuni
tytoobta
ini
nformati
onont hef
act
s
dis
c l
ose
dby[Att
y.Jes
usJr.
]inhi
sinsur
anc
ea ppl
ica
ti
on.xxx
xxxx

Giventheexpres
sl a
nguageoftheAuthor
iza
ti
on,itcannotbesai
dthat
[
At t
y.Jes
usJr.]concea
ledhi
sme di
calhis
tor
ys i
nce[SunLi f
e]hadthe
meansofascer
tai
ning[Att
y.Je
susJr
.'
s]medicalr
ecor
d.

Withr egardtoa ll
egati
onsofmi srepr
ese
ntat
ion,wenot et hat[At
ty.
J
e s
usJ r
.]wa snotame dicaldoct
or,andhisanswer"norecur
re nce
"ma y
bec onstrueda sa n honestopinion.Whe rema tt
ersofo pini
on or
j
udgme nta recal
ledfor,answersma deingoodf a
it
ha ndwithoutint
ent
t
o de c ei
ve wi ll not a void a pol i
cy e ven though t hey are
[
24]
unt
rue.  (Cit
at
ionsomi t
tedandit
alicsi
ntheorigi
nal)
Indeed,t heintentto defraud on thepa r
toft heinsured mustb e
ascer
ta i
nedtome ri
tres
c i
ssionoftheinsuranc ec ont
ract
.Conc e
almentas
ade f
e nsefortheins
urertoa voidlia
bili
tyisa na ff
irmat
ivedefens
ea nd
t
hedut yt oe st
abli
shs uch de fe
nseby s atisfact
orya nd convi
ncing
[25]
evidencer es
tsuponthepr oviderorinsure
r .  Inthepresentcase
,Sun
Lifefa i
ledtoc l
earl
ya nds ati
sfac
tori
lyestabl i
shi tsal
legat
ions,andis
t
he re
forel i
abl
etopaythepr oceedsoftheinsur ance.

Moreover
,wel
l-
set
tl
edistherul
ethatthisCourti
snotatri
eroff a
cts
.
Fact
ualfi
ndi
ngsofthelowercourt
sa reenti
tl
edtogre
atwe ightand
re
spectonappea
l,andinf a
ctaccordedfinal
it
ywhens upport
edby
 [
26]
s
ubs
tant
ia
levi
denc
eont
her
ecor
d.

WHEREFORE,t hepe
tit
ionforre
viewi
s DENIED.TheDeci
sionda
ted
Nove
mber18,2013a ndRe sol
uti
ondate
dFe br
uar
y13,2014oft he
Cour
tofAppe
alsinCA-G.R.CV.No.93269ar
ehere
by AFFI
RMED.
SOORDERED.

2
5.[
G.R.No.151890.J
une20,2006.
]
PRUDENTI
ALGUARANTEEANDASSURANCEI
NC.
,pe
tit
ione
r,
v
s.
TRANS-
ASI
ASHI
PPI
NGLI
NES,I
NC.
,re
sponde
nt.
SYLLABUS
1. REMEDI AL LAW;APPEALS;PETI TION FOR REVI EW ON
CERTIORARI ;ONLY QUESTI ONS OF LAW MAY BE RAI SED
THEREIN;EXCEPTI ON.— Pr efator
il
y,itmus tbeempha sizedthatin
apeti
ti
onforr evi
ew,onl
yq uest
ionsofl aw,andnotque st
ionsoff act
,
mayber ai
sed.Thisr
ulema ybedi sre
gardedonlywhe nt hefindi
ngsof
fa
ctoftheCourtofAppealsar
econ tra
rytothefindi
ngsa ndc oncl
usions
ofthetri
alc ourt
,ora r
enots up port
edbyt hee vi
denc eonr e cor
d.
ACIESH
2. MERCANTI LE LAW; I NSURANCE; THE PARTY WHO
ASSERTSTHECLAI M FORABREACHOFWARRANTYI NTHE
POLICY BEARSTHEBURDEN OFEVI DENCETO ESTABLI SH
THEFACT;APPLI CATION IN CASEATBAR.— Att heout
set,i
t
mustbeemphasi
zedthatthepart
ywhicha
ll
egesafa
ctasama t
terof
def
enseha
stheburdenofprovi
ngit
.PRUDENTIAL,a
sthepar
tywhich
assertedt hec laimt hatTRANS- ASI A br eache dt hewa rra
ntyi nt he
policy,ha sthebur de nofe vide nc et oe st
a bl
isht hes a me .He nce,ont he
partofPRUDENTI ALl iesthei nitiati
vet os howpr oofi ns upportofi t
s
defense;ot herwi se,fail
ingtoe stabl is
ht hes ame ,i trema inss el
f-serving.
Clearly,ifnoe videnc eont hea ll
e gedbr e achofTRANS- ASIA oft he
subjectwa r r
ant yisshown,af ortiori,TRANS- ASI Awoul dbes ucce s
sful
i
nc laimingont hepol icy.I tf ollowst hatPRUDENTI AL be arst he
burde nofe videnc et oe stablisht hef actofbr ea
c h.I nourr uleon
evidence,TRANS- ASI A,a st hep l
aintiffbe low,ne c essari
lyha st he
burde nofpr ooft os howpr oofofl os s,andt hec ove raget hereof,int he
subjectins uranc epol i
cy.Howe ve r,int hec ours eoft rialinac ivilcas e
,
oncepl aintiffma kesoutap rimaf a ciec aseinhi sfavor ,thed utyort he
burde no fe vi dences hift
st ode fenda ntt oc ontrove rtpl aint
iff'
spr ima
faciec as
e ,ot he r
wi s
e ,ave rdic tmus tber e
turne dinf avorofpl a i
ntiff
.
TRANS- ASI Awa sa bl
et oe s t
a blishpr oofofl os sa ndt hec ove rageof
t
hel oss,i.e .
,25Oc t
obe r1993:Fi r
eonBoa rd.The r
ea fte
r,t hebur denof
evidences hifte dtoPRUDENTI ALt oc ounterTRANS- ASI A'sc ase,a nd
t
opr ovei tss pe c
iala nda f
firma ti
vede fe
ns etha tTRANS- ASIAwa si n
violati
on oft he pa rti
cularc ondi tion on CLASSED AND CLASS
MAI NTAI NED.
3. I D.;ID.;THE PRI VILEGE AND POWER TO RESCI ND AN
INSURANCE CONTRACT BY MERE EXPRESSI ON OF AN
INTENTI ONTODOSOMAYBEWAI VED;PRESENTI NCASEAT
BAR.— Br eac
hofawa rr
antyorofac ondit
ionrendersthecontrac
t
defea
sibl
ea ttheoptionoftheinsur
er;butifhes oel
e ct
s,hemaywa i
ve
hispri
vil
egea ndpowe rtores
cindbytheme reexpres
s i
onofa ni
ntent
ion
sotodo.I nthateventhisli
abil
ityunderthepolic
yc onti
nuesasbefore
.
Therec a
nbenoc l
e ar
erinte
ntionofthewa iveroft hea l
le
gedbreach
t
ha ntherenewa lofthepolicyinsu
rancegrantedbyPRUDENTI ALt o
TRANS- ASI Ai nMH94/ 1595andMH95/ 1788,i ssuedi nthey ears1994
and1995 ,r especti
ve l
y.Toourmi nd,t hea r
gume ntisma dee venmor e
cre
dulousbyPRUDENTI AL'slackofpr ooftos upporti t
sa l
legati
ont hat
t
her enewa lsoft hepolici
eswe r
etakenonl ya ft
erar e
que stwa sma det o
TRANS- ASI At of urnis
ht hem ac opyoft hec erti
ficateattest
ingt hat
"M/V As i
aKor ea"wa sCLASSED AND CLASS MAI NTAI NED.
NotwithstandingPRUDENTI AL'sclaimt hatnoc ert
ifi
c at
ionwa si ssued
t
ot hate f
fect,itrenewe dthepoli
cy,the r
eby,e videncinga nin te
ntiont o
waiveTRANS- ASI A'sa l
lege
dbr e
ac h.Clearly,bygr antingth erene wal
poli
ci
e stwi cea nds uccess
ivel
ya f
terthel oss,thei nt
e ntwa stobe nefi
t
t
hei nsured,TRANS- ASIA,a swe lla st owa i
vec ompl i
anc eoft he
warra
nt y.
4. I D.;I D.;THE DESI GNATI ON OFTHE TRANSACTI ON AS
"LOAN AND TRUST RECEI PT" DOES NOT CONTROL THE
NATUREOFTHETRANSACTI ONASANADVANCEPAYMENT
ONTHEPARTY' SCLAI M OVERTHEPOLI CY.— Not wi thstandi ng
i
tsde si
gnation,t het e
norofthe" Lo ana ndTr ustRe c ei
pt"e vide nce sthat
t
her ealnatureoft het ra
nsact
ionbe twe e
nt hepa rtieswa stha tthea mount
ofP3,000 ,
000. 00wa snotintendeda sal oa nwhe rebyTRANS- ASI Ai s
obli
gatedt opa yPRUDENTI AL,butr ather,t hes amewa sapa rtia
l
payme ntora na dva nceonthepol ic
yoft hec l
aimsduet oTRANS- ASI A.
Firs
t,thea mountofP3, 000,000.00c ons titut
esa na dvancepa yme ntt o
TRANS- ASI AbyPRUDENTI AL,s ubroga ti
ngt hef orme rtot hee xtent
of" a
nyne tr ecove ryma debyTRANSASI ASHI PPINGCORP. ,from
anype rsonorpe r
sons,corporati
onorc or porations,orot he rpa rties,on
accountofl ossbya nyc a
sualt
yf orwhi cht he yma ybel i
abl e,oc cas i
one d
byt he25Oc tobe r1993:Fi reonBoa r
d. "Se cond,wef indt ha tpe rt he
"Loana ndTr us tRe ce
ipt,
"eve na sTRANS- ASI Aa greedt o" pr ompt ly
prosecut
es uita gainstsuchpe r
sons,c or
por ati
onorc or
por at
ionst hrough
whos ene gli
ge ncet hea for esaidl os swa sc ausedorwhoma yot he rwi s
e
ber e spo nsi
blet he ref ore ,wi tha llduedi l
igence "i ni tsna me ,t he
pros ecut ionoft hec lai
msa g ainsts ucht hirdpe r
sonsa ret obec ar ri
e don
"att hee xpens eofa ndun de rt hee xc l
us ivedi r
ec t
iona ndc ont rolo f
PRUDENTI ALGUARANTEEAND ASSURANCE,I NC. "Thec l
e ar
i
mpor toft hephr as e" att hee xpe ns eofa ndunde rthee xclusivedi rection
an dc ont rol"a sus e di nt he" Loa na ndTr ustRe ceipt"gr antss ol elyt o
PRUDENTI ALt h epowe rt opr os ecute,e ve na sthes amei sc a rriedi n
t
hen ameofTRANS- ASI A,t he re byma kingTRANS- ASI A me r elya n
ag entofPRUDENTI AL,t hepr inc ipa l
,i nt hepr os ecuti
ono ft hes uit
ag ainstp a r
tieswhoma yha veoc ca sione dt heloss.Thi rd,pe rthes ubj ect
"Loa na ndTr ustRe ce ipt,"t heobl i
ga ti
onofTRANS- ASI At or e pay
PRUDENTI ALi shi ghl ys pe cula tivea ndc onti
nge nt,i.e.,onl yi nt he
ev enta ndt othee xt entt ha ta nyne tr ecove ryisma debyTRANS- ASI A
froma nype rsonona cc oun tofl os soc casione dbyt hef ir
eof2 5Oc tober
1993.Thet r
ans a
c tion,t he refor e,wa sma det obe nefitTRANS- ASI A,
suc ht ha t,ifnor e cove r yf rom t hirdpa rtiesisma de ,PRUDENTI AL
cannotber epaidt hea mount .Ve rily,wedonott hinkt hatt hisi s
co nstitutiveofal oa n.Thel ibe r
a lityi nt het enoroft he" Loa na ndTr ust
Re ce i
pt "i nf avorofTRANS- ASI Al eadst othec onc l
us i
ont ha tt he
amountofP3, 000, 000. 00wa saf or mofa na dvancepa yme ntonTRANS
-ASI A'sc l
aimonMH93/ 1353. c AEa SC
5. I D.;ID. ;WHENAWARDSOFDAMAGESANDATTORNEY' S
FEESPROPER.— Se c.244oft heIns uranceCodegr antsda ma ges
consi
stingofa ttor
ney'
sfe e
sa ndoth
e rexpense sincur
redbythei nsured
af
teraf indingbyt heInsura
nc eCommis si
one rortheCourt,asthec ase
ma ybe,ofa nunreas
onablede ni
alorwithholdingofthepayme ntoft he
cl
aimsdue .Mor eover
,thelawi mposesa ninte r
estoftwic
ethec e
iling
pr
e sc
ribedbyt heMone t
a r
yBoa rdonthea mountoft heclai
m duet he
i
nsur edf r
omt hed a t
ef ollowingt het imepr es cr
ibedinSe c tion242ori n
Section243,a st hec asema ybe,unt iltheclaimi sfull
ys atisfied.Finally,
Section244c ons ide rsthef ailur et opa yt hec l
aimswi thint het ime
prescribedi nSe ctions242or243,whe na ppli
cable,a spr imaf a cie
evidenc eofunr e
a sona bled el
ayi npa yme nt.Tot hemi ndoft hisCour t,
Section244doe snotr eq ui
reas howi ngofba df ai
thi nor dert hat
at
torne y'
sf eesbegr a nted.Ase arli
e rs tat
ed,unde rSe ct
ion244,apr ima
facieevide nceofunr easonablede l
a yi npa yme ntofthec la imi sc r
ea te
d
byf ail
ur eoft hei ns urertopa yt hec l
a i
m wi thinthetimef ixedinbot h
Sections242a nd243oft heIns ura nceCode .Ase st
abl
is he dinSe c
tion
244,byr easonoft hede layandt hec onseque ntfi
lingoft hes uitbyt he
i
nsur ed,t heins ure r
ss hallbea dj udge dt opa yda mage swhi chs hall
consistofa tt
orne y'
sf eesandot he re xpe nsesincurredbyt hei nsure
d.
6. I D. ;ID. ;PAYMENTOFI NSURANCECLAI MS;SECTI ONS243
AND244OFTHEI NSURANCECODEAPPLYWHENTHECOURT
FINDS AN UNREASONABLE DELAY OR REFUSAL I N THE
PAYMENTOFI NSURANCECLAI MS.— Se cti
ons243a nd244of
t
heI nsur anceCodea ppl
ywhe nthecourtfindsa nunreas
onabledelayor
refusalint hepa ymentoft heinsura
ncec laims .Inthec as
ea tba r,the
factsasf oundbyt heCourtofAp peal
s,a ndc onf
irmedbyt here cords
show t hatt herewa sa nun rea
sonablede l
a ybyPRUDENTI ALi nt he
payme ntoft heunpa idbalanceofP8,395,072. 26toTRANS- ASI A.On
26Oc tobe r1993,ada ya f
tertheo cc
urrenceoft hef i
rein"M/ V As ia
Kor ea,
"TRANS- ASIAf i
leditsnoti
ceofc laim.On13Augus t1996,t he
adjust
e r,Ri char
dsHoggI nt
e r
nati
onal(Phil
s .
),Inc .
,complet
edi t
ss urvey
reportr ec omme nding the a mountofP11, 395,072.26 ast he t ot
al
i
nde mni tyduet oTRANS- ASIA.On21Apr i
l1997,PRUDENTI AL,i n
al ett
era ddr essedt oTRANS- ASIA de ni
e dt hel at
ter'
sclai
mf ort he
amountofP8, 395,072.
26r e
p r
esenti
ngtheba lanc eofthetot
alindemni t
y.
On21J uly1997,PRUDENTI ALs entas e condl ett
e rtoTRANS- ASI A
seekingar et
ur noft hea mountofP3, 000,000. 00.On13Augus t1997,
TRANS- ASIA wa sc onstr
a i
ne dt of ileac ompl ai
ntf ors um ofmone y
againstPRUDENTI ALpr aying,i ntera l
ia,forthes umofP8, 395,072.26
representingtheba lanceoft hepr oc eedsoft hei nsur ancec laim.Asc an
beg leane dfrom t hef oregoing,t he r
ewa sa nunr ea sonablede l
ayont he
partofPRUDENTI ALt op a yTRANS- ASI A,a si nf act,itr ef
ut edthe
l
a t
ter'
sr ighttot hei nsuranc ec laims,f rom t het i
mepr oofofl osswa s
showna ndthea sc
e rt
ainme ntoft hel osswa sma debyt hei nsurance
adjuste
r .Evide ntly,PRUDENTI AL' sunr e asonablede layi ns atis
fying
TRANS- ASIA' sunpa idc laimsc ompe ll
edt hel a
ttert of ileas uitfor
collect
ion.Suc c inctl
y,a na wa rde quivalentt otenpe rcent( 10%)oft he
unpa i
dpr oceedsoft hepol icya sa ttorney'sf eest oTRANS- ASI Ai s
reasonabl eunde rt hec ir
cums tances,orot he r
wi ses tated,t enpe rce
nt
(10%)ofP8, 395, 072.26.I nt hec aseofCa thayI nsur a
nc eCo. ,I nc.v.
Cour tofAppe a ls
,whe reaf indingofa nunr easona blede la
yunde r
Section2 44oft heI nsuranc eCodewa sma debyt hisCour t,wegr antan
awa rdofa tt
orne y'sf eese quiva lentt ot enpe rcent( 10%)oft het ota
l
proceeds .Wef indnor easont ode viatefrom t hisjudi cialpr ec
e dentin
t
hec as
ea tbar.
7. ID.;ID.;I D.;INTEREST ON THE PROCEEDS FOR THE
DURATI ONOFTHEDELAYI NPAYMENT,J USTI FIED.— Se ct
ion
244oftheInsur
anceCodei sc a
tegor
ica
lini mposi
nga ninte res
ttwice
t
hec e
ili
ngpresc
ribe
dbyt heMone tar
yBoa r
dduet hei nsured,f r
omt he
dat
efoll
owingthetimepr esc
ribedinSecti
on242ori nSe ction243,a s
t
hec a
sema ybe,unti
lthec l
aimi sful
lysati
sfi
ed.Inthec asea tbar
,we
f
indSecti
on243t obea ppli
cableaswhatisinvolve
dhe r
e i
ni sama r
ine
i
nsura
nce,cle
arl
y,apol icyotherthanlif
einsurance
.Ass pe cifi
ed,the
ass
uredisenti
tl
edtoi ntere
stont heproceedsforthedur ationoft he
delaya tt her ateoft wi cet h ec ei
lin gpres cri
be dbyt heMone ta ryBoa rd
exceptwhe nt hef ail
ureorr efus alo fthei ns urert opa ywa sf ounde don
t
hegr oun dt hatt hec laimi sf raudulent.I ti ss ett
le dt ha ta na wa rdof
doubl ei nte resti slawf ula ndj us t
ifiedunde rSe c t
ions243a nd244oft he
I
ns uranc eCode .I nFi nma nGe ne r
a lAss uranc eCor por ationv.Cour tof
Appe als ,thi sCour the ldt ha tt hepa yme ntof24% i nte r
e stpe ra nnumi s
authoriz edbyt heI nsura nceCode .The rei snoga i
ns a yingt ha tthet e r
m
"doubl ei nte rest"a sus edi nSe c ti
ons243a nd244c a nonl ybei nt erpreted
t
ome ant wi c e12 % pe ra nnum or24% pe ra nnum i nte rest,t hus :Th e
t
e rm" ce ilingpr es c
ribe dbyt heMone tar
yBoa rd"me anst hel ega lr at
eof
i
nt er
e stoft we lvepe rc entum pe ra nnum ( 12%)a spr e sc r
ibe dbyt he
Mone t
a ryBoa rdi nC. B.Ci r cularNo.416,pur s
ua ntt oP. D.No.116,
ame ndingt heUs uryLa w;s ot ha twhe nSe ctions242,243a nd244oft he
I
ns uranc eCodepr ovi det ha tt hei nsurers ha l
lbel i
a blet opa yi nteres
t
"twicet hec ei
lingpr escr i
be dbyt heMone taryBoa rd,"i tme anst wice
12% pe ra nnum or24% pe ra nnu mi ntere stont hepr ocee dsoft he
i
ns uranc e.Tobes ure ,Se ction243i mpos esi nt er
es tont hepr oc eedsof
t
hepol ic yf ort hedur ationoft hed elaya tt her ateoft wi c ethec ei
ling
prescribe dbyt heMone taryBoa rd.Si gnificantly,Se c t
ion243ma nda t
es
t
hepa yme ntofa nyl ossorda ma gef orwhi c ha ni ns urerma ybel iable
,
unde ra nypol icyo thert hanl ifeins urancepol i
c y,wi thint hi rtyda ysa ft
er
proofofl os si sre cei
ve dbyt hei nsurera nda scertainme ntoft hel ossor
dama gei sma dee itherbya gre eme ntbe twe ent hei ns ureda ndt hei nsurer
orbya rbi tra t
ion.I tisc le art ha tund erSe ction243,t hei ns urerha sunt i
l
t
he30t hda ya fterpr oofofl os sa nda scertainme ntoft hel os sorda ma ge
t
opa yi tsl ia bilit
yunde rt hei nsur ance,a ndonl ya fters uc ht imec ant he
i
ns urerbehe l
dt obei nde l
a y,t he r
ebyne ce ssita
tingt hei mpos itiono f
doubl ei nte rest.
8
. CI
VIL LAW; OBLI
GATI
ONS; I
NTERESTS; RATE OF
I
NTERESTI SDEEMEDEQUI VALENTTOAFORBEARANCEOF
CREDI T.— Thi sCour ti nEa s
ternShi ppi ngLi ne s,Inc.v.Cour to f
Appe als
,insc r
ibedt her uleoft humbi nt hea ppl i
ca t
ionofi nt ere
s ttobe
i
mpos edonobl i
gations ,reg ardle
ssoft he i
rs our ce.Ea s
terne mpha si
zed
beyondc a
vilt hatwhe nt hej udgme ntoft hec our ta wardingas um of
mone ybe come sfina lande xecutory,ther a teofl egalinter
e st,rega r
dles
s
ofwhe thertheobl iga t
ioni nvol ve
sal oanorf or be ara
nc eofmone y,shall
be12% pe ra nnum f r
om s uc hf i
nalit
yunt ili tss ati
sfacti
on,t hisi nte
rim
periodbe i
ngde eme dtobebyt he na ne qui valentt oaf orbe ar
a nceof
cr
e dit
.Wef inda ppl ic
ationo fther ulei nt hec asea tba rprope r,thus,a
r
ateof12% pe ra nnum f r om thef inali
tyofj udgme ntunt ilthef ull
sat
isfact
iont he r
eofmus tbei mpos edont het otala mountofl iabil
it
y
adjudgedtoPRUDENTI AL.I tisc leartha tt hei nterim periodf rom the
f
ina li
tyo fj udgme ntunt ilt hes ati
s fact
ion oft hes amei sde emed
equivalenttoaf or bearanc eofc redi t
,he nc e,t hei mpos itionoft he
af
or esai
dinterest.I HCSET
DECISION
 
CHI
CO-
NAZARI
O,J
 :
 
Thi si sac onsolidation of t wo s epa rat
e Pe ti
tions for Re view
on Cert
iora
r i 
fi
ledbype tit
ione rPrudenti
alGua r
anteea ndAs suranc e,I
nc.
(
PRUDENTI AL)i nG. R.No.1518 90a ndTr a
ns -Asi
aShi ppi ngLi nes,
I
nc .(TRANS- ASIA)i nG. R.No.151991,a ssai
li
ngt heDe cision[1] 
dat
ed
6Nove mbe r2001oft heCour tofAppe alsinCAG. R.CVNo.68278,
[
2]
whichr ev
er sedtheJ udgme nt  date
d6J une2000oft heRe giona lTrial
Cour t(RTC) ,Br anch 13,Ce bu Ci tyi n Ci vilCa se No.CEB-
[3]
20709. 
The  29 Janua r
y 2002Re sol
ut i
on   oft he Cour tofAppe a
ls,
denying PRUDENTI ALsMot i
on f orRe consi
de ra
ti
on a nd TRANS-
ASI As Pa rti
al Mot i
on f or Re c
ons i
de rat
ion of t he
 6 Nove mbe r
2001De ci
sion,isli
ke wi seso ughttobea nnul l
eda nds e
ta s
ide.
 
TheFa
cts
 
Thema t
eri
alant
ece
dent
sasf oundbyt
hec
our
taquo 
  anda
dopt
edby
t
heappe
ll
atecour
tar
easfol
lows: 
Plaintif
f[ TRANS- ASI A]i stheowne roft heve sselM/ VAs ia
Kor ea. 
Inc ons ideratio nofpa yme ntofpr e miums ,de fenda nt
[PRUDENTI AL]i ns uredM/ VAs iaKor eaf orloss/dama geof
thehul la ndma chine rya ri
s in
gf rom pe ri
ls, i
ntera lia,off ire
ande xplos i
onf ort hes um ofP40Mi l
lion,be gi
nni ng[ from]
the pe riod [ of] 
July 1,1993  up t o July 1,1994.  Thi si s
evidenc edbyMa rinePo licyNo.MH93/ 1363( Exhi bit
sAt oA
-11). 
On  Oc to ber25,1993,whi l
et hepol icywa si nf orce,a
fir
ebr okeoutwhi le[ M/ VAs i
aKor e
awa s]unde r
goi ngr epairs
att he por t
 of Ce bu. On  Oc tobe r26,1993  plai
ntif
f[ TRANS-
ASI A]f ile di tsnot iceofc lai
mf orda ma ges ustainedbyt he
vessel. 
Thi si se vide nc edbyal et
ter/
forma lc laimofe ve nda te
(Exhibi tB) .
 Pla i
ntiff[ TRANS- ASIA]r e servedi tsr i
ghtt o
subs e
que nt l
ynot ifyde fenda nt[PRUDENTI AL]a st ot hef ull
amountoft hec l
a i
m uponf inalsurveya ndde te
rmi na t
ionby
averagea djus t
erRi c hardHoggI nternationa l(Phi l.
)oft he
dama ges ustaine dbyr e
a sonoff i
re. 
Ana djus t
ersre portont he
fir
ei nque stionwa ss ubmi tt
e dbyRi cha r
dHoggI nternational
togetherwi tht heU- Ma ri
neSu rveyorRe por t(Exhi bit
s4t o4-
115) .
 On May 29, 1995[,
] pl
ai
nti
ff[TRANS-ASIA] exe
cut
ed a
documentdenomi
nate
dLoanandTr
ustr
ece
ipt,apor
ti
onofwhi
ch
rea
d( s
ic)
: 
Re
cei
vedf
romPr
ude
nti
alGua
rant
eea
ndAs
sur
anc
e,
 Inc.
,t hesum ofPESOSTHREEMI LLIONONLY
(P3,000,000.
00)a sal oanwi thouti nter
estunder
Poli
c yNo.MH93/ 1353[ si
c],re payableonlyinthe
eventa ndtotheextentthatanyne trecover
yisma de
by Tr a
ns-Asia Shipping Cor por at
ion,f r
om a ny
personorpe rs
ons,c orpor
ationorc orpor
ati
ons,or
otherpa rt
ies
,ona ccountoflossbya nyc a
sual
tyfor
whic ht heyma ybel iabl
eoc ca si
onedbyt he25
Oc t
obe r1993:Fir
eonBoa rd.(Exhi bit4) 
Inal e
tt
erdated 
21Apri
l19 97 
defe
ndant[
PRUDENTI
AL]
deni
edpla
int
if
fscl
aim(
Exhibi
t5).
 Thele
tt
err
eads
: 
Afterac a
refulreviewa nde valuat
ionofyourc l
ai
m
ari
singf r
om t hea bove-capti
one di nci
dent
,ithas
beena sce
rta
ine dthatyoua r
ei nbr eac
hofpol i
cy
condit
ions,amongt hem WARRANTED VESSEL
CLASSED AND CLASS
MAI NTAI NED.  Accordingly,wer egrettoadvi
se
thatyourc lai
mi snotc ompe ns
a bleand her
eby
DENI ED. 
Thiswa sf
ollowedbydefendantsle
tte
rdated 
21July
1997 re
questi
ng the re
turn or pa ymentof t he
P3,000,
000.00withi
nape ri
odoft en(10)daysf
rom
[
4]
rec
e i
ptofthelet
te
r(Exhi
bit6). 
Fol
lowingthisde vel
opment
,on 13August1997,TRANS-ASIA
[
5]
fi
le
daCompl a
int  f
orSum ofMoneyaga
instPRUDENTI ALwiththe
RTCofCe buCity,doc ket
edasCivi
lCaseNo.CEB- 20709,wher
ein
TRANS- ASIA s ought the a mount of  
P8,
395,072.
26 f r
om
PRUDENTI AL,a llegingtha
tthesamerepr
esent
stheba la
nceofthe
i
ndemnit
y due upon t he i nsur
ance poli
cyi nt he t
otalamount
o
f P11,
395,072.
26. TRANS- ASI Asimil
arlysoughti
nte
res
tat42% per
a
nnumc it
ingSec t
ion243[6] 
ofPresi
dent
ialDecree
eNo.1460,ot
her
wise
k
nowna stheInsuranceCode ,asamended. 
[
7]
InitsAns we r
,  PRUDENTI ALde niedthema teri
ala l
lega
ti
onsof
t
heCompl a i
ntandi nte r
pos e
dt hede f
enset hatTRANS- ASI Abrea ched
i
ns uranc
epol i
cyc ondi ti
ons ,inp art
icular:WARRANTED VESSEL
CLASSED AND CLASS MAI NTAI NED.  
PRUDENTI AL f ur t
her
allegedthati tact
eda sf actsa ndla wr e
qui r
ea ndincurrednol i
abilit
yt o
TRANS- ASI A;thatTRANS- ASI Aha snoc a
useofa c
ti
on;a nd,tha ti
ts
claim hasbe eneff
e ctivelywa i
veda nd/ora bandoned,ori tisestoppe d
from pur suingt hes ame . Bywa yofac ounter
claim,PRUDENTI AL
soughtar e
fund of  
P3, 000,000.00,whi chi ta l
legedlya dvancedt o
TRANS- ASI Abywa yofal oanwi t
houti nte
restandwi thoutprejudice
t
o t he f inale valua ti
on of t he c l
a i
m, i ncl
uding t he a moun ts
of P500,
000. 00,fors urve yfeesa nd P200,000.00,repres
entingatt
or neys
fees. 
TheRul
ingoft
heTr
ialCour
t 
[8]
On 6J une2000,t hec our
t aquo r
enderedJudgme nt  
fi
ndingf or
(t
hereindefendant
)PRUDENTI AL. 
Itrule
dt hatade t
ermina t
ionoft he
par
ti
e sl ia
bili
ti
es hi nge d on whe therTRANS- ASI
A vi ol
a t
eda nd
bre
ac hedthepolic
yc ondi t
ionsonWARRANTEDVESSELCLASSED
ANDCLASSMAI NTAI NED.  
Itint
erpre
tedthepr ovi
si
ont ome anthat
TRANS- ASIAi srequi redtoma int
ainthevesselatacertainclassata l
l
t
imespe rt
inentduri
ngt helifeofthepoli
cy. 
Ac cor
dingtothec ourt
 aquo,
TRANS- ASIAf ai
ledt opr ovec omplia
nceoft hetermsoft hewa rr
anty,
t
hevi ol
ati
on there
ofe nti
tled PRUDENTI AL,t heinsure d part
y,t o
[9]
re
scindthec ont
ract
. 
 [
10]
Further,citi
n gSe c
ti
on107   oft heI nsuranceCode ,thec ourta
 
quo r
ati
oc i
natedt hatt heconc ealme ntma debyTRANS- ASI At ha tthe
vesse
lwa snota de qua t
el
yma intai
nedt opr eserveitsclasswa sama t
eri
al
conceal
me ntsuf f
icienttoa voidthepol i
c yand,t hus,entit
ledthei njured
part
y to r es
c i
nd t he c ontract
. The c ourt a quo found me riti n
PRUDENTI ALsc ontenti
ont hatthe rewa snot hingint hea djus
tme ntof
thepart
iculara verages ubmi tte
db yt hea djusterthatwoul ds how t hat
TRANS- ASI A wa s noti n br each of t he pol i
cy. Ruling on t he
denomina t
edloa na ndt r
ustreceipt,thec ourtaquo 
  sai
dt hatinsubs tance
andinf orm,t hes a mei sar e cei
ptf oral oan. 
Ithe l
dt hati fTRANS-
ASIAi nt e
ndedt or ecei
vet hea mountof  
P3,000,000.00a sa dva nce
payment,itshouldha vesoc l
e ar
lys t
a t
e dass uch. 
The c our t
 a quo did not a ward PRUDENTI ALs c lai
m
f
or P500,000. 00,repre
senti
nge xper
ts urveyfeesonthegr oundofl ack
o
fs uffi
cientba si
sinsupportther
eof
. Ne i
therdidi
tawa r
da tt
orneysfees
o
nt her ati
ona lizat
ionthatt heins
tantc a
sedoe snotf allunde rthe
e
xc ept
ionss ta tedinAr t
ice2208[11] 
l oft heCi vi
lCode .
 Howe ver,the
c
our t
 aquo  gr ant
edPRUDENTI ALsc ount
ercl
aimstati
ngt hatthereis
f
actuala nd l egalba s
isf orTRANS- ASIA t oreturnt he a mount
o
f P3,000,000. 00bywa yofl oanwit
houti nter
est
. 
Thede
cre
talpor
ti
onoft
heJ
udgme
ntoft
heRTCr
eads
: 
WHEREFORE, judgment is here
by r endere
d
DISMISSI
NGthecompl
ai
ntfo
rit
sfa
il
uret
oproveac
a us
eof
ac
tion.
 
Onde f
endantscounte
rcla
im,plai
nti
ffi
sdire
cte
dt ore
turn
thesum of 
P3,
000,000.00repre
s e
nti
ngtheloa
ne xt
endedtoi t
bythede f
endant,withinaperiodoften(10)daysfrom and
[
12]
aft
erthi
sjudgmentsha l
lhavebecomefi
nalandexecut
ory.  
 TheRul
ingoft
heCour
tofAppe
als
 
OnappealbyTRANS-
ASI A,theCourtofAppe
als
,initsas
sai
led
Dec
isi
onof 
6November2001,re
ve r
sedthe 
6June2000 
Judgmentof
heRTC.
t  
Ont hei ssueofTRANS- ASI Asa l
le gedbr eac
hofwa rrantyoft he
poli
c yc onditionCLASSEDANDCLASSMAI NTAI NED,t heCour tof
Appe alsr ule dt hatPRUDENTI AL,a st hepa rtya sser
ti
ngt henon-
compe ns abil
ityoft hel ossh adt heb urdenofpr ooftos howtha tTRANS-
ASI A br eache d t he wa rranty, whi ch bur den i t f ailed t o
dis
c harge. PRUDENTI ALc a nnotr e l
yont helackofc er
ti
ficat
iont othe
eff
ec tt
ha tTRANS- ASI Awa sCLASSEDANDCLASSMAI NTAI NED
asi tss oleba sisf orr eachingt hec onc lusiont hatthewa rrant
ywa s
breached. TheCo urtofAp pe al
sopi ne dt hatthel ackofac ertif
icat
ion
doesnotne cessaril
yme antha tt hewa rrantywa sbreachedbyTRANS-
ASI A. Instead,t he Cour tof Ap pe al
sc onsider
e d PRUDENTI ALs
admi ss
iont ha ta tt het imet hei nsur anc ec ontr
actwa se nte
r e
di nto
betwe e
nt hepa rti
e s
,t heve ss
e lwa sp r
ope rlyc las
sedbyBur eauVe rit
as,a
cl
ass i
fications ocietyr ecogniz edbyt hei ndus t
ry. 
TheCour tofAppe al
s
si
mi lar
lyga vewe i
ghtt ot hef a ctt hati twa sther es
pons i
bili
tyof
Richa r
dsHoggI nternational( Phi ls
.)I nc.,thea veragea dj
usterhiredby
PRUDENTI AL,t os ecureac opyofs uc hc ert
ifi
cati
ont os upporti t
s
conc l
usiont ha tme rea bs enceofac erti
fic at
iondoe snotwa rr
antde nia
l
ofTRANS- ASI Asc l
a i
munde rthei nsura ncepol i
cy. 
Inthesa metoken,t
heCourto fAppealsfoundthes ubj
ectwa r
ranty
a
ll
e gedly breache
d by TRANS- ASIAt o be a riderwhi ch,whi le
c
ont ai
nedi nt hepol
icy,wasinsertedbyPRUDENTI ALwi t
houtt he
i
nterventi
on ofTRANS- ASIA. 
Ass uch,itpa rt
akesofana tureof
a
 contractdadhesi
on 
whichshouldbec onst
ruedagainstPRUDENTI AL,
t
hepa rtywhichdraft
edthecontr
act. 
Likewis
e,accordingtotheCour tof
Appeals
, PRUDENTI ALs r enewal of the i ns
ura
nc e pol
icy
f
rom noon 
of 
1J uly 1994 
to 
noon 
of 1Jul
y 1995,and thenaga
in,
unt
il 
noon 
of 
1July1996 mustbed e
emedawa i
verbyPRUDENTI AL
ofanybrea
chofwa r
rant
yc o
mmi tt
edbyTRANS-ASIA. 
Further,theCour tofAppe als
,c ont
rarytot herulingofthec ourt
 a
quo, i
nt e
rpretedthet r
a nsact
ionbe twe enPRUDENTI ALa ndTRANS-
ASI Aa soneofs ubroga t
ion,insteadofal oan. TheCour tofAppe al
s
conclude dtha tTRANS- ASIAha snoobl i
gationtopa yba cktheamount
of P3,000.000.00 t o PRUDENTI AL ba sed on i t
sf indi
ng thatt he
aforesaida mountwa sPRUDENTI ALspa rti
alpa yme nttoTRANS-
ASI Asc la
im unde rthepol i
cy. Fi
na ll
y,theCour tofAppe al
sde nied
TRANS- ASIAspr ayerf ora ttorneysf ees,buthe ld TRANS- ASIA
entit
ledt odoubl ei nte
re s
to nthepol icyforthedur ati
onoft hede l
ayo f
payme ntoft heu npa i
dba l
ance,c it
ingSe ct
ion244[13] oftheInsurance
Code . 
Fi
ndingfort
her
eina
ppe
ll
antTRANS-
ASI
A,t
heCour
tofAppe
als
r
ule
dinthiswi
se:
WHEREFORE,t hef ore goingc ons i
dera t
ion,Wef indfor
Appe l
lant
. Thei ns
tantappe alisALLOWEDa ndt heJudgme nt
appeale
df rom REVERSED.  The  
P3,000, 000.00i niti
a l
lypaid
bya ppell
eePr udenti
alGua r
a nt
e eAs sur
anc eI nc orporate
dt o
appell
antTr ans-Asiaandc ove r
e dbyaLoa na ndTr ustRe cei
pt
date
d29Ma y1995i sHELDt obei npa rti
a lsettleme ntofthe
los
ss uffe
redbya ppellanta ndc overedbyMa rinePol i
cyNo.
MH93/ 1363i ssue
dbya ppe ll
ee. 
Fur ther
,a ppelleei she reby
ORDERED t o pa y a ppe ll
a nt t he a dditi
ona la mount
of 
P8,395,072.26r epres
e ntingt heba lanceoft hel osss uff
ered
bythel at
tera srecomme nde dbyt hea veragea dj usterRichard
HoggI nternational(Philippi nes)i ni tsRe port
,wi thdoubl e
 int
ere
sts t
art
ingf r
om thet
imeRichardHoggsSur
veyReport
wascompl et
e d,oron13August1996,unt
ilt
hesa
meisfull
y
pai
d. 
Al l otherc lai
ms a nd counte
rcl
ai
ms are he
reby
DISMI SSED. 
[
14]
Al
lcos
tsa
gai
nsta
ppe
ll
ee.   
Notsa
ti
s f
iedwiththej ud
gme nt,PRUDENTI AL andTRANS- ASIA
f
il
ed a Mot i
on for Re conside
rat
ion and Parti
al Moti
on for
Rec
onsi
derat
ionthe
reon,respect
ivel
y,whic
hmot i
onsweredeniedby
t
heCourtofAppeal
sintheRe s
oluti
ondat
ed 
29Januar
y2002.
TheI
  ssue
s 
Aggri
eved,PRUDENTI ALf i
le
dbefor
ethisCourtaPet
it
ionf
orRevie
w,
doc
ketedasG.R.No.151890,re
lyi
ngonthefol
lowinggr
ounds
,vi
  z
:
I
.THEAWARDI
SGROSSLYUNCONSCI
ONABLE.
 
II
.THECOURTOFAPPEALSERREDI NHOLDINGTHAT
THERE WASNO VIOLATION BY TRANS-
ASIA OFA
MATERIAL WARRANTY, NAMELY, WARRANTY
CLAUSENO.5,OFTHEINSURANCEPOLICY.
 
II
I.THE COURT OF APPEALS ERRED I
N HOLDING
THATPRUDENTIAL,ASI NSURERHADTHEBURDEN
OF PROVING THAT THE ASSURED,TRANS- ASIA,
VIOLATEDAMATERI ALWARRANTY.
 
IV.THE COURT OF APPEALS ERRED I
N HOLDI NG
THATTHEWARRANTY CLAUSEEMBODI ED I
N THE
INSURANCEPOLICYCONTRACTWASAMERERI DER.
 
V.THE COURT OF APPEALS ERRED I
N HOLDING
THAT THE ALLEGED RENEWALS OF THE POLI
CY
CONSTITUTED A WAI VER ON THE PART OF
 PRUDENTI
ALOFTHEBREACH OFTHEWARRANTY
BYTRANS-ASI
A.
 
VI.
THE COURT OF APPEALS ERRED IN HOLDING
THATTHELOANANDTRUSTRECEI PTEXECUTEDBY
TRANS-
ASIAISANADVANCEONTHEPOLI CY,THUS
CONSTI
TUTINGPARTIALPAYMENTTHEREOF.
 
VII.
THE COURT OF APPEALS ERRED I
N HOLDING
THAT THE ACCEPTANCE BY PRUDENTIAL OFTHE
FI
NDI NGSOFRICHARDSHOGGI SINDI
CATIVEOFA
WAIVER ON THE PART OF PRUDENTIAL OF ANY
VIOLATIONBYTRANS-ASIAOFTHEWARRANTY.
 
VIII
.THE COURT OF APPEALS ERRRED ( s
ic)IN
REVERSI NG THE TRIAL COURT,I N FINDING THAT
PRUDENTI ALUNJ USTIFIABLYREFUSEDTOPAYTHE
CLAIM AND I N ORDERI NG PRUDENTI AL TO PAY
TRANS- ASIA P8,
395,
072.26 PLUS DOUBLE INTEREST
FROM 13AUGUST1996,UNTI L[THE]SAMEI SFULLY
[
15]
PAID.  
Simi
lar
ly,TRANS- ASIA,dis
agr
eei
ngi ntherul
ingoftheCour tof
Appeal
sf i
ledaPe t
it
ionforRevi
ew docket
edasG.R.No .151991,
ra
isi
ngthefol
lowi
nggroundsf
ort
heall
owanceoft
hepet
it
ion,towit
: 
I.
THE HONORABLE COURT OFAPPEALSERRED I N
NOTAWARDI NG ATTORNEYSFEESTO PETI
TIONER
TRANS-ASIA ON THE GROUND THAT SUCH CAN
ONLYBEAWARDEDI N 
THECASESENUMERATEDI N
ARTICLE 2208 OF THE CI
VIL CODE,AND THERE
BEING NO BAD FAI TH ON THE PART OF
RESPONDENT PRUDENTI AL I
N DENYING HEREIN
 PETI
TIONERTRANS-
ASI
ASI
NSURANCECLAI
M.
 
II
.THE DOUBLE I
NTEREST REFERRED TO I N THE
DECISI
ON DATED 06 NOVEMBER 2001 
SHOULD BE
CONSTRUED TO MEAN DOUBLE I NTEREST BASED
ONTHELEGALI NTERESTOF12%,ORI NTERESTAT
[
16]
THERATEOF24%PERANNUM.
 
InourRe s
oluti
onof 2Dece mbe r2002,wegr
antedTRANS-ASI
As
Motion f or Consolida
tion[17] of G.R. Nos . 151890 a
nd
[
18]
151991;  hence
,theinst
antc ons oli
dat
edpet
it
ions.
 
Ins um,f orourma inresoluti
on ar
e:( 1)thel ia
bil
ity,i fany,of
PRUDENTI AL toTRANS- ASI Aa r
isi
ngf rom thesubje ctinsur
ance
contrac
t;( 2)t heli
abil
it
y,ifa ny,ofTRANS- ASIAt oPRUDENTI AL
ari
singf rom t hetransa
cti
onbe t
weent hepa rt
ie
sa se videncedbya
docume ntde nominatedasLoa nandTrustRe cei
pt,dat
ed29Ma y1995;
and( 3)thea mountofint
eresttobeimpose dont heli
abili
ty,ifany,of
ei
therorbot hpart
ies
. 
Rul
ingoft
heCour
t 
Pref
a tori
ly,itmu stbee mpha s
izedt hatinape t
it
ionf orr eview,onl y
[
19]
questionsofl aw,andnotq uesti
onsoff ac
t,ma yber ai
sed.  Thisrule
ma ybedi sregar
dedonl ywhe nt h
ef indingsoff ac toft heCour tof
Appe alsarecontrar
ytothef i
ndingsa ndconc l
us i
onsoft het ri
alcourt,or
[
20]
arenots uppor t
edbyt hee vi
denc eonr ecord.  Int hec asea tbar,we
fi
nda ni ncongruencebetwee nt hef i
ndingsoff ac toft heCour tof
Appe alsandt hecourt
 aquo,thus,inourde t
erminationoft hei ss
ues,we
arec onst
r ai
nedtoa ss
essthee videncea dducedbyt hepa r
tiestoma ke
appropriatefi
ndingsoffact
sa saren ece
s s
ary.
x
xx
2
6.[
G.R.No.136914.J
anua
ry25,2002.
]
COUNTRYBANKERSI
NSURANCECORPORATI
ON,pe
tit
ione
r,
v
s.
LI
ANGA BAY AND COMMUNI TY MULTI
-PURPOSE
COOPERATI
VE,I
NC.
,re
sponde
nt.
.
SYNOPSI
S
Fort hel ossi
tsust
ai
nedf i
reasar esultofthefir
e,respondentfi
ledan
i
ns urancec l
ai
mwi t
hpe t
it
ioner
.Pe t
it
ioner,however
,deniedtheclaimon
t
hegr oundt hatbase
dont hes ubmitt
eddoc uments,thebui l
dingof
re
s ponde ntwassetonfirebyt woNPA r ebel
swhowa nt
edt oobtai
n
provisions.Thiswa sa ne xcepte
dr i
sk undert he poli
cyc ontra
ct.
SHECc T
TheRTCde ci
sion,a ffi
rme dbyt heCour tofAppe a ls,orde re dpetit
ioner
t
opa yr espondentP200, 000wi thinteresta t12% pe rannum f r
om t he
dateoft hef i
li
ngoft hec ompl aintuntilpaid,a swe lla sa c tualda mage s
,
exempl aryda ma ges,lit
igatione xpenses,attorne y'sf eesa ndt hec ost
sof
suit
.Inde ed,petiti
one rfail
edt opr ovethef ac t
suponwhi c ht hee xcepted
ri
sk wa sba sed.Pe ti
ti
one rr e l
ied on thes wor ns t
ateme ntsoft wo
witnessesa ndt heSpotRe portofPf c.Jua rbal.Thes wor ns t
ateme nts
,
howe ver,we rei nadmi ssi
blef orbe inghe arsayi nas muc ha st hepe ople
whoe xe c
utedt hem di dnott aket hewi t nesss tanda ndc ouldnot ,
t
he ref
ore,bec ros s
-exami ned.No i nvestigation,i nde pe nde ntoft he
sta
teme nts,wa sc onducted.Thet esti
monyofPf c .J uarba lr elat
ivetot he
sworns t
a t
eme nts, on t he ot her ha nd, ma y be c ons i
dereda s
i
nde pendentlyre levantstat
e me ntsgather
e dint hec our seofi nvesti
gation
a
ndma ybea dmi t
te
da ssuchbutnotne ce
ssari
lytoprovethetrut
h
t
her
e of
.Nevert
he l
ess
,the12% inte
res
tandot
he rmonet
aryawar
dswe r
e
h
eldnotproperforlac
koflegalandvali
dbas
is.Theint
eres
tra
teshoul
d
b
ea ndwassetto6%f romtheda t
eoffi
li
ngofthecompla
int
.
SYLLABUS
1. REMEDI AL LAW;EVI DENCE;BURDEN OF PROOF;A
PARTYMUSTPROVEHI SOWNAFFI RMATI VEALLEGATI ONS.
— Apa rtyi sboundbyhi sowna f
firma t
ivea llegations.Thi si sawe ll
-
knownpos t
ul atee choe dinSe ction1ofRul e131oft heRe visedRul es
ofCour t.Ea chpa rtymus tpr ovehi sowna ffi
rma ti
vea l
lega t i
onsbyt he
amountofe vide nc er equiredbyl awwhi chi nc ivilca ses
,a si nthisc as e
,
i
spr eponde r anc eofe vide nce,toobt ainaf avor ablej udgme nt.Whe rea
ris
ki se xc eptedbyt het ermsofapol icywhi c hi nsuresa ga instot her
peril
sorha z ards ,los sfrom s uc har i
s kc onstitutesade fe ns ewhi cht he
i
ns ur
e rma yur ge ,s i
nc ei tha snota ssume dt ha trisk,a ndf r
om t hisit
foll
owst h ata ni nsur erse ekingt ode featac l
a i
mbe causeofa ne xc eption
orlimitationi nt hepol icyha stheb urde nofpr ovi ngt hatt hel os sc ome s
withinth epur vie w oft hee xce ptionorl imitations etup.I fapr oofi s
ma deofal ossa ppa rentlywi thinac ont r
a ctofi nsurance ,t hebur deni s
upont hei nsur ert opr ovet hatthel ossa ros efromac auseofl osswhi ch
i
se xpe c
te dorf orwhi c hiti snotl iable,orf romac ausewhi chl imi t
si t
s
l
iabili
ty.St atede lsewi se,sincet hepe tit
ione rint hisc asei sde fendi ngon
t
hegr oundofnon- cove ragea ndr e
lyingupona ne xempt ionore xc eption
clauseint hef irei ns urancepol ic y,itha sthebur de nofpr ovi ngt hef ac t
s
uponwhi chs uc he xcepte dr i
skisba sed,byapr eponde r
anc eofe videnc e
.
Butpe ti
tione rfa iledt odos o.EDc IAC
2
. I D.
;ID.;ADMISSIBI
LITY;HEARSAY RULE;ELUCIDATED.
— A wit
nesscante
sti
fyonl
ytothos
efact
swhi
chheknowsofhis
p
ers
onalknowl
edge
,whichmeanst
hosef
act
swhi
charede
rive
dfr
om
hispe rce ption.Cons e que ntly,awi tne ssma ynott esti
fya st owha th e
me rel
yl earne df r om ot he rse ithe rbe causehewa stoldorr ea dorhe ard
t
hes ame .Suc ht e stimonyi sc ons idere dhe arsaya ndma ynotber ece ived
aspr oofoft het rut hofwha theha sl earned.Suc hi st hehe a r
sayr ule
whi cha ppl iesnotonl yt oor alt estimonyors tateme ntsbuta lsot owr itten
evidenc ea swe ll.Thehe arsayr uleisba sedupons eri
ousc onc ernsa bou t
t
het rustwor thine ssa ndr eliabilityofhe arsaye vide nceina smuc ha ss uch
evidenc ea renotgi ve nunde roa thors olemna ff
irma ti
ona nd,mor e
i
mpor t
a ntly,ha venotbe ens ubj ectedt oc ross-exa minationbyoppos ing
couns eltot estthepe rc eption,me mo ry,ve racit
ya nda r
ticula t
e nessoft he
out-of-cour tde c l
a ra ntora ctoruponwhos er eliabi
lit
yonwhi cht he
wor t
h of t he o ut-of -cour ts tateme ntde pends .Thus ,t he Swor n
Stateme nt sofJ os eLomoc soa ndEr ne stoUr biztondoa r
ei na dmi ssiblei n
evidenc e,f orbe inghe arsay,i na smuc ha sthe ydi dnott aket hewi tness
sta
nda ndc ouldnott he reforebec r
os s-exami ned.The rea ree xcept ions
t
ot hehe a rsayr ule ,a mongwhi c ha ree ntriesinof fi
cialr ecor ds.Tob e
admi ssiblei ne vi de nc e,howe ve r,three( 3)requis ite
smus tc onc ur,towi t:
(a)tha tt hee ntrywa sma debyapubl i
cof f i
cer,orbya nothe rpe rson
speciallye njoine dbyl awt odos o;( b)tha titwa sma debyt hepubl i
c
offi
c erint hepe rf orma nceofhi sdut ies,orbys uchot he rpe rsoni nt he
performa nc eofadut ys pe ciallye njoine dbyl aw;a nd( c )tha tthepubl i
c
offi
c erorot herpe rs onha ds uf fi
c i
entknowl edgeoft hef actsbyhi m
sta
ted,whi chmus tha vebe e na cquiredbyhi m pe r
sona llyort hr ough
offi
c i
ali nfor ma tio n.Thet hirdr e quisitewa snotme tinthi sc as esinc eno
i
nve sti
ga tion,i nd e pe nde ntof t hes tateme nts ga theredf rom J ose
Lomoc so,wa sc onduc tedbyPf c.Ar tur oV.J ua r
ba l
.
3. ID.
;ID.
;ID.
;REPORTRELATI
VETO THESTATEMENTOF
ANOTHER MAY BE CONSI DERED AS INDEPENDENTLY
RELEVANTSTATEMENTBUTNOTNECESSARI LY TO PROVE
THETRUTH THEREOF.— TheSpotRe por tofPf c.Ar t
uroJ uarbal
relati
vet othes tat
eme ntofJ oseLo moc sot ot hee ff
ecttha tNPAr ebels
allegedlyse tfi
retot her esp ondent'
sbuildingi sinadmi ssi
bleine vi
dence,
fort hepur poseofpr ovi ngt hetruthoft hes tateme ntscont a
in edint h
e
saidr eport
,f orbeinghe arsay.Thes ai
dSpotRe portisa dmi ssibl
eonly
i
ns ofara sitc onst
itutespa rtofthet es
timonyofPf c.ArturoV.J uarbal
sincehehi ms elftookt hewi tnessstanda ndwa sa vail
a blef orcross-
ex a
mi nati
on.Thepor tionso fhisSpotRe por twhi chwe r
eofhi spersonal
knowl edgeorwhi chc ons i
stedofhispe rce ptionsa ndc onclusionsa r
eno t
he a
r sa
y.Ther es
toft hes ai
dr eportrela t
ivet ot hes t
ateme ntofJ os
e
Lomoc so ma y bec ons idereda sinde pe nde ntl
yr el
eva nts tate
me nts
ga t
he r
edi nt hecours eofJ uarbal
'sinvestiga t
iona ndma ybea dmi t
teda s
suchbutnotne ces
sa ri
lyt opr ovethetrutht he reof.EDCc aS
4. CI VILLAW;DAMAGES;AWARD OFI NTEREST;PROPER
INTERESTRATEI NI NSURANCECLAI MI S6%.— Conc erningt he
ap plicat
ionoft heproperint
er es
tr a
tes ,theguideli
neswe r
es etinEa s
tern
Shi ppingLi nes,Inc.v.CourtofAppe al
sa ndMe rcantil
eI nsuranceCo. ,
Inc .TheCour tobservedthata" forbe arance"inthec ontextoftheus ury
l
a wi sa" contr
a c
tualobli
gationofl e nde rorcredi
tort orefra
in,dur inga
give npe ri
odoft i
me ,fr
om r equi
r i
n gt hebor r
owe rorde btort or epaya
l
oa nord e
btthe nduea ndpa yable."Thei nsurancecla i
mi nt hisc aseis
ev identl
ynotaf orbear
anceofmo ne y,goodsorc redit,andt hust he
i
nt e r
estrateshouldbea sitishe r
e byf ixeda ts
ixpe r
ce nt(6%)c omput ed
fromt heda t
eoff i
li
ngoft hec ompla i
nt .
5
. ID.;ID.;ACTUALDAMAGESMUSTBEPROVED.— Wef ind
n
ojust
if
ica
ti
onfortheawardofact
ualdamagesofFif
tyThousandPesos
(
P50,
000.
00).Well-
ent
renche
disthedoctr
inetha
tactual
,compens
atory
a
ndconse
quenti
aldamagesmustbeprove
d,andcannotbepres
umed.
6
. I
D.;I
D.;EXEMPLARY DAMAGES;WHEN PROPER.—
Conce r
ningt hea wa rdofex emplar
yda ma gesforFi ftyThous a
ndPe sos
(
P50,000. 00),wel ikewisefindnol egalandva l
idba si
sforgr a
nti
ngt he
same.Ar t
icl
e2229oft heNe w Ci vilCodepr ovidesthate xemplary
damage sma ybei mpos edbywa yofe xampl eorc orr
ectionfort he
publi
cgood.Exe mplarydama gesareimpos ednott oe nr
ichonepa rt
yor
i
mpove r
isha not herbutt os er
vea sade t
e rr
enta gai
ns torasane gat
ive
i
nc e
ntivet oc urbs oci
allyde l
ete
riousa cti
ons.The ya r
ede si
gnedt o
permitt hec our t
st o mould behaviort hatha ss oci
al
ly de l
eter
ious
consequenc e
s ,andi tsimpos i
ti
onisrequir
e dbypubl icpolicytosuppress
t
hewa ntona c tso fa noffender.Howe ver,itcannotber ecovere
da sa
ma t
te
rofr i
ght .Itisba s
ede nti
rel
yo nthediscre
tionoft hecour t
.Wef ind
noc ogen ta ndv alidr eas
ont oa wa r
dt hes amei nt hec asea tba r
.
I
c HTED
7. I D. ;ID. ;LITIGATI ON EXPENSESAND ATTORNEY' SFEES;
ELUCI DATED.— Wi threspe cttotheawa r
dofl i
ti
gatione xpensesa nd
at
torne y'sf ees,Ar ti
cle2208oft heNe w Ci vi
lCodee nume r
atest he
i
nsta nceswhe r
es uchma ybea wardeda nd,ina l
lc as es
,i tmus tb e
re
a sona ble,justande quit
ablei fthesamewe r
etobegr ant e
d.At t
orne y'
s
fe
e sa spa r
tofda ma gesarenotme anttoenrichthewinni ngpa r
tya tthe
expe nseoft helosinglit
igant.The ya r
enota wardede veryt imeapa r
ty
preva i
lsi nas uitbecauseoft hepolicytha
tnopr emiums houldbepla ced
ont her ightt olit
igate
.Thea wa r
dofa tt
orney'
sf eesi sthee xception
ra
the rt ha nthege ne r
alrule.Ass uch,itisne c
e s
saryf ort hecour tto
ma kef indi ngsoff actsandl awt hatwoul dbri
ngt hec asewithi
nt he
exceptiona ndjusti
fythegra ntofs uchaward.
DECISION
DELEON,J
R.,
 J
.:
Be
for
eusi
sape
ti
ti
onf
orr
evi
e c
won er
ti
ora
ri 
oft
heDe
cis
ion[1]oft
he
 [
2]
Cour tofAppe al
s da tedDe c ember29,1998i nCA- G. R.CVCa seNo.
36902a f
fir
mi ng i
nt oto theDe cis
ion[3]datedDe cembe r26,1991oft he
Regi ona lTrialCour tofLi anga,Sur iga ode lSur ,Br anch28,i nCi vi
l
Cas eNo .L- 518whi chor de r
edpe ti
ti onerCount ryBa nkersInsurance
Cor pora t
ion t o f ully pa y t he i nsuranc e c l
aim of
responde nt 
Li anga Bay andCommu nityMul t
i-Purpos eCoope r
ati
ve,In c
.,
unde rFi reInsurancePol i
cyNo.F- 1397,f orlosss ustaineda saresultof
t
hef irethatoc curredonJ uly1,1989i nthea mountofTwoHundr ed
Thous andPe sos( P200, 000.
00) ,withi nt
eresta ttwe lvepe rcent(12%)
pera nnum f r
om t heda teoff ili
ngoft hec ompl aintunt ilfull
ypa i
d,a s
we lla sFi ft
yThous andPe sos( P50,000. 00)a sa ctua ldama ges,Fi f
ty
Thous andPe sos (P50,000.00)a se xe mpl aryda ma ges ,FiveThous a nd
Pesos ( P5,000.00)a sl it
igati
on e xpens e
s, Te n Thous and Pe sos
(P10, 000.00)a satt
orneysf ees,andthec ostsofs ui
t.
Thef
act
sar
eundi
sput
ed:
Thep et
it
ionerisadome st
iccorpora
ti
onprincipall
ye ngagedint he
i
nsurance businesswhe r
eini tundert
akes,fora c onsi
derati
on,to
i
ndemni f
ya notheragainstloss,da
ma georli
abil
it
yf roma nun knownor
c
ontingenteventincludingf i
rewhiletheres
pondentisadul yregist
ere
d
c
oope ra
tivejudic
ial
lyde cl
aredinsol
ventandrepr
es e
ntedbyt hee l
ecte
d
a
ssignee,Corneli
oJa me ro.
I
tappearst
hatsome t
imein1989,t hepetiti
onera ndtherespondent
enter
edintoacont
rac
toff i
reins
urance. 
UnderFireI nsuranc
ePol i
cyNo.
F-1397,thepeti
ti
onerinsure
dt herespondentsstoc ks-i
n-t
radea gai
nst
fi
reloss,damageorliabil
it
ydur i
ngt heperiodsta rt
ingf r
om June20,
1989 at
 4:
00p.m. 
to 
June2 0,1990 at
 4:00p.m.,f ort hesum ofTwo
HundredThousandPesos(P200,
000 .
00).
OnJ
uly1,1989,a
tora
bout1
2:40a
.m.
,ther
esponde
ntsbui
ldi
ng
l
ocate
da tBarangayDiat
agon,Li anga,Suri
gaodelSurwasgutte
dby
f
ireandreduc
e dtoashes
,result
ingi nthetot
all
ossofthere
spondent
s
s
tocks-
in-
tr
ade,pie
cesoffur
nitur
e sandfixt
ure
s,e
quipment
sandrecor
ds.
Duet otheloss
,ther espondentfi
ledani ns
uranc
ec lai
m wit
hthe
pet
iti
onerunderit
sFir
eI nsurancePol
icyNo.F-1397,submit
ti
ng:(
a)t
he
SpotRe por
tofPf c
.ArturoV.J uar
bal
,INPI nvest
iga
tor,dat
edJul
y1,
1989;(b)theSwor nSta t
eme ntofJoseLomoc so;and( c)t
heSworn
Stat
ementofErnest
oUr biztondo.
Thepe t
it
ioner,howe ver
,de nie
dt heinsurancec la
im ont hegr ound
t
hat,ba se
dont hes ubmitt
eddoc ume nt
s,t
hebui ldingwa ssetonf ir
eby
t
wo( 2)NPA r ebelswhowa ntedt oobta i
nc a nnedgoods ,r i
cea nd
medicinesasprovisionsfortheircomradesint hef ore
st,andt hatsuch
l
osswa sanexcepte
dr is
kunde rparagra
phNo.6oft hepoli
cyc onditi
ons
ofFir
eI nsur
ancePol ic
yNo.F- 1397 ,whic
hpr ovides:
Thisinsur
ancedoesnotcoveranylossordamageoc
cas
ionedbyor
t
hroughorinconse
quence
,dir
ect
lyorindi
rec
tl
y,ofa
nyoft
hefol
lowi
ng
occur
rence
s,namel
y:
xxx 
xxx 
xxx
(
d)Mutiny,r
iot
,mi l
it
aryorpopul
arupr
isi
ng,i
nsur
rec
ti
on,r
ebe
ll
ion,
r
evol
uti
on,mi
lit
aryorus
urpe
dpower.
Any lossorda ma geha ppening dur ing t
hee xistenceofa bnor
ma l
condi
tions(whet
herphysi
c alorot herwise)whi
c ha reoccasionedbyor
t
hrough ori nc onse
quence,di rectly orindi
re c
tly,ofa ny ofs ai
d
occur
rencessha
llbedeeme dt obel ossorda magewhi c
hi snotcovere
d
bythisinsur
ance,exc
epttot hee xtentthatt
heI nsuredsha l
lp r
ovethat
suchlossordama gehappen edind ependent
lyoft hee xis
tenceofsuch
abnor
ma lcondi
ti
ons.
Fi
ndi
ngt
hede
nia
lofi
tsc
lai
m una
cce
pta
ble
,ther
esponde
ntt
hen
i
nsti
tute
di nthetri
alcourtt
hec ompl
aintf
orrecoveryofloss
,dama geor
l
ia
bilit
ya gains
tp et
it
ioner.
 Thepeti
ti
oneransweredthec omplai
nta nd
r
eit
erate
dt hegrounditearl
iercit
edtodenytheinsura
ncec l
aim,thatis
,
t
hatthel osswa sduet oNPA r ebe
ls,anexcepte
dr is
kunde rthef i
re
i
nsurancepolic
y.
I
nduetime
,thetr
ialcour
trende
redit
sDe ci
si
onda
ted 
Dec
embe
r26,
1
991 i
nfa
vorofther
espondent
,dec
lar
ingtha
t:
Basedoni t
sf i
ndings,itisth
e re
forethec onsidere
dopi ni
onoft hisCour t,
asitsoholds ,thatthede f
ensesraise
dbyde fendant-CountryBa nkersha s
utt
erl
yc rumbl e dona ccountofi tsinhe r
entwe akness,incredibil
it
ya nd
unrel
iabil
it
y,a nda f t
erapplyingthosehe l
pfultoolsli
kec ommons ense,
l
ogica ndt heCour tshone s
ta ppraisaloft her ealanda ctuals i
tuati
on
obtai
ningint hisa rea,suchde fensesr ema i
ns( sic
)uni mpr ess
ivea nd
unconvinci
ng,a ndt heref
ore,thede fendant-CountryBa nkersha stobe
i
rreversi
blya djudgedl iabl
e,a sits houl
d be ,t o plai
ntiff
-Insolvent
Cooperati
ve ,representedinthisacti
onbyi t
sAs signee,Corne l
ioJame ro,
andthus,or derings ai
dde fe
nda nt-
Count ryBa nkerstopa yt heplainti
ff-
I
nsolventCoope rat
ive,asfollows:
1.Tof ull
ypa yt hei nsura
nc ecl
aimf orthel ossthei nsure
d-
pla
int
iffsust
ai
ne da sar e
sultoft
hefireunderitsFireInsura
nc e
Poli
cyNo.F- 1397i ni t
sf ul
lfacevalueof P200,000.0
0wi th
int
ere
s tof12% pe rannum f r
om dat
eoffili
ngoft hec omplaint
unti
lthesamei sful
lypa i
d;
2.Topayasa ndint hec
once
ptofa ct
ualorc
ompe
nsa
tor
y
dama
gesi
nthetot
als
umof 
P50,
000.
00;
3.Topa
ya sa
ndinthec
onc
eptofe
xempl
aryda
mage
sint
het
ota
l
s
umof 
P50,
000.
00;
4.To pa
yint
he c
onc
eptofl
it
iga
ti
on e
xpe
nse
sth
esum
 of
 P5,
000.
00;
5.Topa ybywa yofre
imbur
seme
ntt
hea
tt
orne
ysf
eesi
nth
esum
of
 P10,
000.
00;and
6.Topa
ythec
ost
soft
hes
uit
.
Forbeingunsubs
tant
iat
edwi
thc
redi
blea
ndpos
it
ivee
vide
nce
,the
count
erc
lai
misdis
mi s
sed.
I
TISSOORDERED.
Peti
tioner i nter
pose
d a n a ppe
a l t o t he Cour t o f
Appeal
s .
 On December29 ,1998,the a ppel
la
tec ourtaffi
rmedt he
ch
a l
le
nge dde ci
si
onoft het ri
alcourti
ni t
se nt
ir
ety. 
Pet
iti
one
rnow
co
me sbe for
eusvi atheins
tantpe
ti
ti
ona nchoredont hr
ee(3)as
signe
d
[
4]
er
rors
, t
owi t:
1.THE HONORABLE COURT OF APPEALS FAILED TO
APPRECIATE AND GIVE CREDENCE TO THE SPOT
REPORTOFPFC.ARTUROJ UARBAL( EXH.3)ANDTHE
SWORNSTATEMENTOFJ OSELOMOCSO( EXH.4)THAT
THE RESPONDENTS STOCK-I
N-TRADE WAS BURNED
BY THE NPA REBELS,HENCE AN EXCEPTED RI SK
UNDERTHEFI REI
NSURANCEPOLI CY.
2.THE HONORABLE COURT OF APPEALS ERRED IN
HOLDINGPETI
TIONERLIABLEFOR12% I
NTERESTPER
ANNUM ON THEFACEVALUEOFTHEPOLI CY FROM
THEFILI
NGOFTHECOMPLAI NTUNTILFULLYPAI D.
3.THE HONORABLE COURT OF APPEALS ERRED I
N
HOLDINGTHEPETITI
ONERLIABLEFORACTUALAND
EXEMPLARY DAMAGES, LI TI
GATION EXPENSES,
ATTORNEYSFEESANDCOSTOFSUI T.
 Apartyisboundbyhi sowna ff
ir
mat
iveallegations. 
Thisi sawe ll
-
k
nownpos t
ulat
eec hoedinSect
ion1ofRule131oft heRe visedRules
o
fCourt.Eachpartymus tpr
ovehisownaffi
rma ti
vea l
legat
ionsbyt he
a
mountofevidencerequi
redbylawwhichincivilca s
e s
,a sinthisc
ase,
[
5]
i
spre
ponderanc
eofe vide
nce,t
oobtai
nafavor
ablej udgme nt
.
Intheinstantcase,thepet
iti
one rdoesnotdis
putethattheres
pondents
st
ocks-i
n-tra
dewe r
ei nsur
eda gainstfi
reloss
,dama georl ia
bil
ityunder
Fi
reInsurancePolicyNo.F-1397a ndthatt
herespondentlosti
tsst
ocks-
i
n-t
radei naf irethatoc c
urr
e don  Jul
y1,1989,wi thi
nt hedurati
onof
sa
idf ir
ei nsuranc
e .
 Thepe t
iti
one r
,howe ver,posi
tsthevi ewt hatthe
ca
useoft hel osswa sa ne xceptedr i
skunde rthete r
mso fthefire
i
nsurancepolicy.
xxx

2
7.[
G.R.No.L-
38613.Fe
brua
ry25,1982.
]
PACI
FICTI
MBEREXPORTCORPORATI
ON,pe
tit
ione
r,
v
s.
THE HONORABLE COURT OF APPEALS a
nd WORKMEN'
S
INSURANCECOMPANY,I
NC.
,re
sponde
nts
.
SYNOPSI
S
Afterrespondentinsura
ncec ompanyi ssuedtope t
it
ioneraCo verNote
f
ort he t emporar
yi ns
urance of1, 250,000 boardf eetofl ogsfor
export
ationtoOki nawaa ndJ apa
n,whi chi ncl
udedlossduringloadi
ng
operat
ions,butbeforetheissuanceoft heregularmarinecargopoli
ci
es
whichc overedonlyl os
sdur i
ngt r
ansit
,t hi
rtypiec
esofs a
idlogswe r
e
l
ostwhi lebeing loadedi n pet
it
ioner'sve ss
el.Peti
tionersoughtto
r
ecoverthelossbutpr iva
ter e
sponde ntrefus
edont hegroundt hat
al
thoughsai
dlosswa scover
edunde rtheCove rNote,never
thel
ess
,t he
sa
mebe c
amenul la
ndvoidupont hei ssuanceofthema ri
nepolicies
whichdidnotc oversai
dloss.TheCour tofFirs
tInstanc
eo fMa nila
r
enderedade c
isioninfavorofpeti
tionerbutona ppeal,s
aiddecis
ion
wasrever
sedbyt heCour
tofAppe a
ls.cdtai
Onrevie
w,t heSupr emeCo urtheldthataCoverNoteisnotame re
ap
pli
cati
onforinsurancebutinar ealsens
eacont
rac
ttobeinte
grat
edto
t
heregularpoli
ci
e ss ubs
e q
ue ntl
yissuedandthefac
tthatnos e
para
te
pr
emiumwa spa i
dont heCove rNo t
ebe f
oret
helos
soccurr
eddoesnot
mil
it
ateagai
nstre
c overyther
e under
.
Appe
ale
dde
cis
ion,s
eta
side
.
SYLLABUS
1. COMMERCI AL LAW;I NSURANCE;COVER NOTE;NO
SEPARATEPREMI UMSAREREQUI REDTOBEPAI DTHEREON.
— Thef actt
hatnos eparatep remiumwa spaidont heCove rNotebe f
or e
t
hel ossinsur
eda gainstocc urr
e d,do
esnotmi l
it
a t
ea gai
nstthevalidi
tyof
peti
tioner'
scontent
iont hattheCove rNot ei
snotwi thoutac onsi
dera
tion,
fornos uc hpremium c ouldha vebeenpa i
d,sincebyt hena tur
eoft he
Cove rNot eitdi dnotc ontain,asa llCoverNot esdonotc ontain,
part
icularsoftheshipme ntt h
a twoulds e
rveasbasisforthec omputat
ion
ofthepr emiums .Asal og ic
a lconsequenc
e,nos epa r
atepr emi
umsa re
i
ntende dorrequire
dt obepa idonaCove rNote
.
2. ID.;I D.
;I D.; A CONTRACT AND NOT A MERE
APPLICATION FOR I NSURANCE;DEEMED I NTEGRATED TO
THEREGULAR POLI CIESSUBSEQUENTLY I SSUED.— Whe re
t
henoteistobetr
eateda sasepa
ratepol
icyi
nst
eadofintegr
ati
ngitto
t
heregul
arpol
ic
iessubsequent
lyi
ssued,t
hepur
poseandfunct
ionofthe
CoverNotewoul
dbesetatn
aughtorre
ndere
dme a
ningl
ess
,fori
tisi
na
r
ealsenseacont
rac
t,notame r
ea ppl
ic
ati
onforins
uranc
ewhichisa
mereoff
er.
3. I D.;ID. ;ID. ;RISK INSURED AGAI NSTNOTI NCLUDED I N
THEREGULARMARI NEI NSURANCEPOLI CI ES;I MMATERI AL
ASLOSSCAN BEDETERMI NED I NDEPENDENTLY;CASEAT
BAR.— Whi l
ei tma ybetruet hatthema rinei ns urancepolici
esi ss
ued
wer ef orlogsnol ongerincludingt hosewhi c hha dbe e nlostdur i
ng
l
oa dingope r
ati
ons ,thishadtobes obe causether i
skinsureda gainsti
s
notf orl ossdur ingl oadi
ngope rationsa nymor e ,butf orl os
sdur i
ng
t
ransit,thel ogsha vi
nga l
readybe e ns afelypla ce da board.Thiswoul d
ma kenodi ff
erenc e,however,insofara sthel i
abi l
ityont hec overnoteis
conce r
ned,f ort henumbe rorvol umeofl ogsl os tc a
nbed e
termined
i
nde pende ntl
y,a si nf a
ctitha dbe ens oa scer
ta i
ne da st heinstanceof
pri
va teresponde nti t
sel
fwhe ni tsenti t
sowna dj us t
ertoi nvest
igateand
assessthel ost
,aftertheissua
nc eoft hema ri
nei ns urancepol i
cie
s .
4. I D.;ID.;I D.;FUNCTI ONSASA" BINDER" ;SUPPORTEDBY
PRESUMPTI ON OF VALI DITY OF POLI CY DELI VERED
WI THOUTREQUI RI NG PAYMENTOFTHEPREMI UM.— Now
payme ntofpremi umont heCove rNot eisnoc ausefort hepe titi
one rto
l
osewha tisduei ta sift her
eha dbe enpayme ntofpr emi um,f ornon-
payme ntbyitwa snotc hargea
blea ga i
nstit
sfault.Thisi showt hec over
noteasa" binde r
"s houl dlegal
lyope ra
te;other
wi se,itwoul ds er
veno
pract
icalpurpos eint her ealm ofc omme r
ce,a ndiss uppor t
edbyt he
doctr
inethatwhe reapol i
cyisde l
i veredwithoutr e
qui ringpa yme ntof
t
hep remium,t hepr esumpt i
onistha tac re
ditwa sint
e nde da ndpol i
c yis
vali
d( Mill
ervs .Br ooklynL.I nc.
,Co.( U.S.)12Wa ll,285,20Le d.39
Am.J ur.Ne w' Insurance'Sec.184 5,p.907,not e2;Se c .1079,p.246,
note20.).
5. I D. ;I D. ; CLAI M ON THE I NSURANCE AGREEMENT;
DEFENSE OF DELAY MUST BE PROMPTLY AND
SPECI FICALLY ASSERTED;CASEATBAR.— Se c t
ion84oft he
Ins
uranc eAc trequir
e stha tt
hegr oundofde l
a ymus tbepr ompt lya nd
spec
ifi
c all
ya s s
e r
tedwhe nac lai
m ont hei nsurancea gr eeme ntisma d e
.
Thena tureoft hisspecif
icgr oundfo rresistingac laimpl a cesthei nsurer
ondutyt oi nqui r
ewhe nt helosstookpl ace ,sotha titc ouldde termi ne
whetherde laywoul dbeava lidgrounduponwhi cht oobj ecttoac laim
agai
nsti t.I nt hec asea tba r,wh eret heundi sputedf actss how t hat
i
nsteadofi nvoki ngthegr ou ndofde l
a yinobj ecti
ngt ope ti
tione r
'sclaim
ofrecove ryont hec overnot e,res
ponde ntc ompa nyt ooks tepsc learly
i
ndicati
vet hatt hi
spa rt
iculargroundf orobj ec t
iontot hec lai
mwa sne ver
i
ni t
smi nd,t heSupr emeCour tissa t
isfi
e da ndc onvi nced,e ve nont he
ass
umpt iont hattherewa sde l
ay,thatwa iverc ans ucce s
sfullyber a
i sed
agai
nstp rivater espondent.

DECISION
DECASTRO,J
.:
*
Thispet
iti
ons eekst her eviewoft hede ci
sionoft heCour tofAppea l
s
re
versi
ngt hede c
isionoft h
eCour tofFirstInsta
nc eofMa ni
lainfavor
ofpeti
ti
one randa ga i
ns tpr
ivat
er espondentwhi chor de
re dthelat
te
rt o
paythesumofP11, 042.04wi t
hi nte
restatther a
teof12% f r
omr ec
e i
pt
ofnoti
ceofl ossonApr il15,1963upt othec omple t
epa yme nt
,thesum
[1]
ofP3,000.00 a sa ttorney'
sf eesa nd thec ost
s  ther
e by dis
missing
[2]
pet
iti
oner
'sc omplaintwi thcost
s.
Thefi
ndingsoffac
toft h
eCour tofAppeals
,whi c
ha r
ege ner
all
y
bi
ndi
nguponthi
sCourt
,exce
ptasshal
lbei
ndic
atedint
hedisc
ussi
onof
t
heopini
onofthi
sCourtthesubs
tant
ia
lcor
rect
nessofsuc
hpa r
ti
cula
r
f
indi
ng havi
ng bee
n dispute
d,ther
eby r
ais
ing a que
sti
on ofl
aw
[
3]
r
evie
wablebythi
sCour
t  
areasf
oll
ows:
 
"OnMa rch19,1963,t heplai
ntif
fse c
uredtempor aryinsura
nc efromthe
def
endantforitsexporta
ti
onof1, 250,
000boa r
df ee
tofPhi l
ippineLauan
andApitonglogst obeshippedfromt heDiapitanBa y,QuezonPr ovi
nce
t
oOki nawaa ndTokyo,J apan.Thede fendantissuedons ai
dd ateCover
NoteNo.1010,i nsur
ingthes ai
dc argooft hepl a
inti
ff"Subjecttothe
TermsandCondi t
ionsoftheWORKMEN' SINSURANCECOMPANY,
INC.printe
dMa ri
nePol i
cyf or
ma sf i
ledwi tha nda ppr
ove dbyt he
Offi
ceoftheI nsuranc
eCommi ss
ioner"(ExhibitA). 
"Ther e
gularma r
inec ar
gopoli
cie
swe reis
suedbyt hedef
endanti
nf a
vor
oft heplainti
ffonApr i
l2,1963.Thet woma rinepoli
cie
sbor ethe
numbe rs53HO1032a nd53HO1033( Exhi
bit
sBa ndC,respec
tive
ly)
.
Policy No.53 HO 1032 ( ExhibitB)wa sf or542 piecesofl ogs
equival
entt o499,950boardfeet
.PolicyNo.53HO1033wa sfor853
piecesoflogse quival
entto695,548boardfeet(Exhibi
tC).Thet ota
l
cargoinsuredunde rt
hetwoma rinepoli
ciesaccordi
ngl
yc onsi
stedof
1,395logs,orthee qui
val
entof1,
195,498bd.ft
. 
"Af te
rt heiss uanceofCove rNot eNo.1010( Exhibi
tA) ,butbe f
orethe
i
s suanceoft het woma ri
nepol ic
iesNos .53HO1032a nd53HO1033,
someoft hel ogsi ntendedt obee xportedwe rel ostdur ingl oa di
ng
ope ra
tionsi nt heDi apitanBa y.Th elogswe retobel oa de
do nt he'SS
Woodl ock'whi chdoc keda bout500me te
rsf rom thes horeli
neoft he
Di api
tanBa y.Thel ogswe ret
a kenfromt hel ogpondoft hepl aintif
fand
f
r om whi cht heywe ret owedi nr aft
st ot heve s s
e l
.Ata bout10: 00
o'clocka .
m.onMa rch29 ,1963,whi let hel ogswe rea longs idethe
ve sse
l,ba dwe at
herde velopedr es
ult
ingi n75pi ecesofl ogswhi c
hwe r
e
r
a ftedt oget
he rt obreakl oosef r
om e achot her.45pi ece sofl ogswe r
e
salvage d,but30pi e
c eswe reve r
ifi
edtoha vebe enlostorwa s
he da way
a
sar
esul
toft
hea
cci
dent
. 
"
Inalett
erdatedApri
l4,1963,theplaint
if
finf
orme dt
hedefe
nda
nt
a
boutt
helos
sof'appr
oximat
ely32piece
soflogs'
duringl
oadi
ngoft
he
'
SSWoodloc
k'.Thesa
idlet
te
r(Exhi
bitF)rea
dsasfol
lows:
 
'
Apr
il4,1963 
Wor
kmen'sI
nsur
anc
eCompa
ny,I
nc.
 Ma
nil
a,Phi
li
ppi
nes 
Ge
ntl
eme
n: 
Thishasref
e re
nc etoInsur
anceCove rNoteNo.1010f orshi
pmentof
1,
250,000bd.ft.
,Phili
ppineLauanandApitongLogs .Wewou ldli
ket o
i
nform youthatweha ver ece
ivedadvanc
epr el
iminaryrepor
tfrom our
Offi
ceinDia pi
tan,Quezonthatwehavelostapproxi
ma t
ely32piece
so f
l
ogsdur i
ngloadingoftheS.S.Woodlock.
 
Wewil
lsendyouanaccura
terepo
rta
llt
hede
tai
lsi
ncl
udi
ngva
lue
sas
s
oona
ssamewillber
eport
edtous.
 
Tha
nkyouf
oryoura
tt
ent
ion,wewi
sht
ore
mai
n. 
Veryr
espec
tful
lyyour
s, 
  
 
 PACIFICTIMBEREXPORT
 CORPORATI ON   
  
  
 
 
(Sgd)
.EMMANUELS.ATI
LANO 
As
st.Ge
ner
alMa
nage
r.'
 
  
  
"
Althoughda t
edApr i
l4,1963,t
hel et
terwa srec
eivedintheoff
iceof
t
hedefe ndantonlyonApri
l15,1963,asshownbyt hes t
ampimpress
ion
a
ppearing on t he l
eftbott
om c orne
rofs a
idl et
te
r.The plai
ntif
f
s
ubseque ntl
ys ubmit
te
da'Claim Sta
tement'demandingpaymentofthe
l
ossunde rPolici
esNos.53HO 1032a nd53HO 1033,i nthetota
l
a
mountofP19,
286.
79(
Exhi
bitG)
. 
"On J uly 17,1963,t he de fendantrequestedthe Fi r
stPhi l
ippine
Adjus t
me ntCorporat
iont oinspectthelos
sa nda ss
esstheda mage.Th e
adj
us tmentcompa nys ubmi tt
e dits'
Report
' onAugus t23,1963(Exhibit
H).Ins aidrepor
t,thea djusterfoundthat'
thelossof30pi ece
sofl ogsis
notc overedbyPol iciesNos .53HO 1032a nd1033i nas
muc ha ssaid
poli
ciesc overedthea ctualnumbe rofl ogsl oadedonboa r
dt he'SS
Woodl ock'.Howe ver,t hel ossof30 pi e c
esofl ogsiswi t
hint he
1,
250, 000 bd.f t.c over ed by Cove rNot e No.1010 i nsuredf or
$70,000.00. 
"
On September14,1963,t he adj
ust
mentc ompany submi
tt
eda
c
omputa
ti
onofthedef
enda
nt'
sprobabl
eli
abi
li
tyonthelos
ssust
ai
nedby
t
hes
hipment,i
nthet
ota
lamountofP11,
042.
04(Exhibi
t4)
. 
"OnJ anua r
y13,1964,t hede f
endantwr otet hepl ai
ntiffdenyingt he
l
att
e r'
sc laim,ont hegroun dthatdefenda nt'sinvesti
gationr e
ve al
edt hat
t
hee nti
res hipme ntoflogsc overedbyt het woma ri
ne spolici
esNo.53
HO1032a nd53HO1033we rer e
ceivedi ngoodor de rattheirpoi ntof
dest
ina t
ion.I twa sfurt
hers t
atedthatthes aidl ossma ynotbec ons idered
asc ove r
e dunde rCove rNot eNo .1010be causethes ai
dNot eha d
become' nulla ndvoidbyvi rt
ueoft hei ssua nceofMa rinePol i
cyNos .
53HO 1 032a nd1033'( Exhibi
tJ -
1).Thede nia
loft hec l
aim byt he
def
e ndantwa sbroughtbyt hepl ai
nti
fft ot hea tt
enti
onoft heInsur ance
Commi ssione rbyme ansofal ett
erdate dMa rch21,1964( ExhibitK) .In
arepl yletterda t
edMa r
c h30,1964,I nsura nceCommi s si
onerFr anc i
sco
Y.Ma nda nasobs erve
dt hat'i
tisonlyf airande qui
tabletoinde mnifyt he
i
nsur edunde rCove rNoteNo.1010 '
,a nda dvi sedearl
ys ett
leme ntoft he
sai
dma rinel ossands a
lvagec lai
m( Exhi bitL) .
"
OnJ
une26,1964,t
hede
fenda
nti
nfor
medt
heI
nsur
anc
eCommi
ssi
one
r
t
hat,onadvi
ceoft he
iratt
orne
ys,thecl
ai
m oft heplai
nti
ffisbei
ng
d
eniedonthegroundthatt
hec ov
ernoteisnul
la ndvoi
df orla
ckof
[4]
v
aluabl
econs
ide
rati
on(Exhi
bitM).
"
Pe
ti
ti
one
ras
signe
dase
rror
soft
heCour
tofAppe
als
,thef
oll
owi
ng:
 
I" THECOURTOFAPPEALSERRED I N HOLDI
NG THATTHE
COVERNOTEWASNULLANDVOI DFORLACKOFVALUABLE
CONSI DERATION BECAUSETHECOURTDI SREGARDED THE
PROVENFACTSTHATPREMI UMSFORTHECOMPREHENSI VE
INSURANCECOVERAGETHATI NCLUDEDTHECOVERNOTE
WAS PAI D BY PETITIONER AND THAT NO SEPARATE
PRE¬MI UMSARECOLLECTEDBYPRI VATERESPONDENTON
ALLI TSCOVERNOTES. 
II
 " THE COURT OF APPEALS ERRED I
N HOLDI
NG THAT
PRIVATE RESPONDENT WAS RELEASED FROM LIABILI
TY
UNDERTHECOVERNOTEDUETOUN¬REASONABLEDELAY
IN GI VI
NG NOTI CE OF LOSS BECAUSE THE COURT
DISREGARDED THE PROVEN FACT THAT PRI VATE
RESPONDENT DI D NOT PROMPTLY AND SPECIFICALLY
OBJECT TO THE CLAIM ON THE GROUND OF DELAY IN
GIVINGNOTICEOFLOSSAND,CONSEQUENTLY,OBJECTIONS
ONTHATGROUNDAREWAI VEDUNDERSECTION84OFTHE
[
5]
INSURANCEACT."
x
xx