Gulf Resorts Inc. v.

Philippine Charter Insurance Corporation

Plaintiff, as the owner of Plaza Resort, insured its two swimming pools with
American Home Assurance Company from the risk of loss from earthquake
shock. Thereafter, respondent also agreed to insure the same swimming
pools. In consideration of the payment by plaintiff, the parties enter into a
contract of insurance which also included a “Earthquake Endorsement“ that
the insurance covers loss or damage to shock to any of the property.
Thereafter, an earthquake hit Central Luzon that caused extensive damage
to the resort operated by plaintiff including the swimming pools. Hence,
plaintiff made a claim on the insurance for his loss pertaining to the entire
resort. Respondent held that it was only liable for the insurance of the
swimming pool. Since parties were unable to arrive at an agreement, plaintiff
instituted an action for the payment of the insurance.

The lower court held in favor of respondents opining that the insurance was
merely on the two pools as the respondent’s insurance contract was only
lifted from the previously executed insurance contract with American Home.
More so, the stipulation was clear and unambiguous hence it shall be given
its plain meaning.

Issue: Whether the insurer’s liability includes that of properties other than
the swimming pools.

Ruling:

Contract does not include the insurance of other property other than the
swimming pools

Petitioner cannot focus on the earthquake shock endorsement to the

exclusion of the other provisions. All the provisions and riders, taken and
interpreted together, indubitably show the intention of the parties to extend
earthquake shock coverage to the two swimming pools only. Furthermore,
the interpretation of the contract in favor of the plaintiff cannot be given due
course under contracts of adhesion. Petitioner cannot claim the principle as
the defense that they did not know the provisions of the policy. From the
inception of the policy, petitioner had required the respondent to
copy verbatim the provisions and terms of its latest insurance policy from
AHAC-AIU.
Furthermore, the Court examined the payments made by plaintiff. It was
noted that one of the requirements for the existence of an insurance contract
was the payment of insurance premiums . An insurance premium is the
consideration paid an insurer for undertaking to indemnify the insured
against a specified peril. The here is no mention of any premium payable for
the other resort properties with regard to earthquake shock. In contrast, it
was established in trial that plaintiff made payments for the insurance of
merely the two swimming pools.