INSURANCE LAW DIGEST
,
G.R. No. 76145 June 30, 1987 CATHAY
INSURANCE CO., petitioner, vs. HON. COURT
OF APPEALS, and REMINGTON INDUSTRIAL
SALES CORPORATION, respondents.
FACTS:
A complaint was filed by private respondent
corporation against petitioner (then defendant)
company seeking collection of the sum of
P868,339.15 representing private respondent's
losses and damages incurred in a shipment of
seamless steel pipes under an insurance contract in
favor of the said private respondent as the insured,
consignee or importer of aforesaid merchandise
while in transit from Japan to the Philippines on
board vessel SS "Eastern Mariner." The total value
of the shipment was P2,894,463.83 at the prevailing
rate of P7.95 to a dollar in June and July 1984, when
the shipment was made. The trial court decided in
favor of private respondent corporation by ordering
petitioner to pay it the sum of P866,339.15 as its
recoverable insured loss equivalent to 30% of the
value of the seamless steel pipes; ordering petitioner
to pay private respondent interest on the aforecited
amount at the rate of 34% or double the ceiling
prescribed by the Monetary Board per annum from
February 3, 1982 or 90 days from private
respondent's submission of proof of loss to petitioner
until paid as provided in the settlement of claim
provision of the policy; and ordering petitioner to pay
private respondent certain amounts for marine
surveyor's fee, attorney's fees and costs of the suit.
ISSUE: WON the rusting of steel pipes in the course
of a voyage is a "peril of the sea" in view of the toll
on the cargo of wind, water, and salt conditions.
RULING:
There is no question that the rusting of steel pipes in
the course of a voyage is a "peril of the sea" in view
of the toll on the cargo of wind, water, and salt
conditions. At any rate if the insurer cannot be held
accountable therefor, We would fail to observe a
cardinal rule in the interpretation of contracts,
namely, that any ambiguity therein should be
construed against the maker/issuer/drafter thereof,
namely, the insurer. Besides the precise purpose of
insuring cargo during a voyage would be rendered
fruitless. Be it noted that any attack of the 15-day
clause in the policy was foreclosed right in the pre-
trial conference.
JAMES STOKES vs. MALAYAN INSURANCE CO.
INC
JAMES STOKES vs. MALAYAN INSURANCE
CO., INC. G.R. No. L-34768, 24 February 1984
127 SCRA 766
FACTS:
Daniel Adolfson had a subsisting Malayan car
insurance policy with coverage against own damage
as well as 3rd party liability when his car figured in a
vehicular accident with another car, resulting to
damage to both vehicles. At the time of the accident,
Adolfson’s car was being driven by James Stokes,
who was authorized to do so by Adolfson. Stokes,
an Irish tourist who had been in the Philippines for
only 90 days, had a valid and subsisting Irish driver’s
license but without a Philippine driver’s license.
Adolfson filed a claim with Malayan but the latter
refused to pay contending that Stokes was not an
authorized driver under the “Authorized Driver”
clause of the insurance policy in relation to Section
21 of the Land Transportation Office.
ISSUE: Whether or not Malayan is liable to pay the
insurance claim of Adolfson
HELD:
NO. A contract of insurance is a contract of
indemnity upon the terms and conditions specified
therein. When the insurer is called upon to pay in
case of loss or damage, he has the right to insist
upon compliance with the terms of the contract. If the
insured cannot bring himself within the terms and
conditions of the contract, he is not entitled as a rule
to recover for the loss or damage suffered. For the
terms of the contract constitute the measure of the
insurer’s liability, and compliance therewith is a
condition precedent to the right of recovery. At the
time of the accident, Stokes had been in the
Philippines for more than 90 days. Hence, under the
law, he could not drive a motor vehicle without a
Philippine driver’s license. He was therefore not an
“authorized driver” under the terms of the insurance
policy in question, and Malayan was right in denying
the claim of the insured. Acceptance of premium
within the stipulated period for payment thereof,
including the agreed period of grace, merely assures
continued effectivity of the insurance policy in
accordance with its terms. Such acceptance does
not estop the insurer from interposing any valid
defense under the terms of the insurance policy. The
principle of estoppel is an equitable principle rooted
upon natural justice which prevents a person from
going back on his own acts and representations to
the prejudice of another whom he has led to rely
upon them. The principle does not apply to the
instant case. In accepting the premium payment of
the insured, Malayan was not guilty of any
inequitable act or representation. There is nothing
inconsistent between acceptance of premium due
under an insurance policy and the enforcement of its
terms. WHEREFORE, the appealed judgment is
reversed. The complaint is dismissed. Costs against
appellees.
Philamcare Health Systems, Inc. v. Court of
Appeals
G.R. No. 125678, 18 March 2002, 379 SCRA 356
FACTS:
In 1988, Ernani Trinos applied for a health care
insurance under the Philamcare Health Systems,
Inc. He was asked if he was ever treated for high
blood, heart trouble, diabetes, cancer, liver disease,
asthma, or peptic ulcer; he answered no. His
application was approved and it was effective for one
year. His coverage was subsequently renewed twice
for one year each. While the coverage was still in
force in 1990, Ernani suffered a heart attack for
which he was hospitalized. The cost of the
hospitalization amounted to P76,000.00. Julita
Trinos, wife of Ernani, filed a claim before
Philamcare for the latter to pay the hospitalization
cost. Philamcare refused to pay as it alleged that
Ernani failed to disclose the fact that he was diabetic,
hypertensive, and asthmatic. Julita ended up paying
the hospital expenses. Ernani eventually died. In
July 1990, Julita sued Philamcare for damages.
Philamcare alleged that the health coverage is not
an insurance contract; that the concealment made
by Ernani voided the agreement.
ISSUE:
Whether or not Philamcare can avoid the health
coverage agreement.
HELD:
No.
The health coverage agreement (health care
agreement) entered upon by Ernani with Philamcare
is a non-life insurance contract and is covered by the
Insurance Law. It is primarily a contract of indemnity.
Once the member incurs hospital, medical or any
other expense arising from sickness, injury or other
stipulated contingent, the health care provider must
pay for the same to the extent agreed upon under
the contract. There is no concealment on the part of
Ernani. He answered the question with good faith.
He was not a medical doctor hence his statement in
answering the question asked of him when he was
applying is an opinion rather than a fact. Answers
made in good faith will not void the policy.
Further, Philamcare, in believing there was
concealment, should have taken the necessary
steps to void the health coverage agreement prior to
the filing of the suit by Julita. Philamcare never gave
notice to Julita of the fact that they are voiding the
agreement. Therefore, Philamcare should pay the
expenses paid by Julita.
Edillon v. Manila Bankers Life
G.R. No. L-34200, 30 September 1982, 117 SCRA
187
FACTS:
In April 1969, Carmen Lapuz filled out an application
form for insurance under Manila Banker Life
Assurance Corporation. She stated that her date of
birth was July 11, 1904. Upon payment of the Php
20.00 premium, she was issued the insurance policy
in April 1969. In May 1969, Carmen Lapuz died in a
vehicular accident. Regina Edillon, who was named
a beneficiary in the insurance policy sought to collect
the insurance proceeds but Manila Banker denied
the claim. Apparently, it is a rule of the insurance
company that they were not to issue insurance
policies to “persons who are under the age of sixteen
(16) years of age or over the age of sixty (60) years
…” Note, that Lapuz was already 65 years old when
she was applying for the insurance policy.
ISSUE:
Whether or not Edillon is entitled to the insurance
claim as a beneficiary.
HELD:
Yes. Carmen Lapuz did not conceal her true age.
Despite this, the insurance company still received
premium from Lapuz and issued the corresponding
insurance policy to her. When the accident
happened, the insurance policy has been in force for
45 days already and such time was already sufficient
for Manila Banker to notice the fact that Lapuz is
already over 60 years old and thereby cancel the
insurance policy. If Manila Banker failed to act, it is
either because it was willing to waive such
disqualification; or, through the negligence or
incompetence of its employees for which it has only
itself to blame, it simply overlooked such fact. Under
the circumstances, Manila Banker is already
deemed in estoppel.
COMMISSIONER OF INTERNAL REVENUE v.
LINCOLN PHILIPPINE LIFE INSURANCE
COMPANY, INC. (now JARDINE-CMA LIFE
INSURANCE COMPANY, INC.) and THE COURT
OF APPEALS. G.R. No. 119176. March 19, 2002.
379 SCRA 423.
FACTS:
Respondent Lincoln Philippine Life Insurance Co.,
Inc., (now Jardine-CMA Life Insurance Company,
Inc.) is a domestic corporation engaged in life
insurance business. Respondents issued a special
kind of life insurance policy known as the Junior
Estate Builder Policy, in which there is a clause
providing for an automatic increase in the amount of
life insurance coverage upon attainment of a certain
age by the insured without the need of issuing a new
policy.
stamp taxes on life insurance policies is the amount
fixed in policy.
Here, although the automatic increase in the amount
of life insurance coverage was to take effect later on,
the amount of the increase was already definite at
the time of the issuance of the policy. Thus, the
amount insured by the policy at the time of its
issuance necessarily included the additional sum
covered by the automatic increase clause because
it was already determinable at the time the
transaction was entered into and formed part of the
policy.
The additional insurance was an obligation subject
to a suspensive obligation, but still a part of the
insurance sold to which respondent was liable for the
payment of the documentary stamp tax. The
deficiency of documentary stamp tax imposed on
respondent is not on the amount of the original
insurance coverage, but on the increase of the
amount insured upon the effectivity of the Junior
Estate Builder Policy.

CIR then issued deficiency documentary stamps tax

assessment corresponding to the amount of
automatic increase of the sum assured on the policy
issued by respondent.

Respondent filed a petition with the CTA which was

held in their favor. The CIR appealed with the CA
affirming the decision of the CTA.

ISSUE: Whether a new insurance policy is distinct

from the main policy making it liable for additional
taxes.

RULING:

YES.

The subject insurance policy at the time it was

issued contained an automatic increase clause.
Although the clause was to take effect on a later
date, it was written into the policy at the time of its
issuance.

Section 173 of the NIRC provides that the payment

of documentary stamp taxes is done at the time the
act is done. Section 183 of the NIRC provides that
the tax base for the computation of documentary