WHITE GOLD MARINE SERVICES, INC. vs.

PIONEER INSURANCE AND SURETY CORPORATION AND THE STEAMSHIP MUTUAL

UNDERWRITING ASSOCIATION (BERMUDA) LTD. [G.R. No. 154514. July 28, 2005]
QUISUMBING, J p:
White Gold Marine Services, Inc. (White Gold): procured a protection and indemnity coverage for its vessels from Steamship
Mutual through Pioneer Insurance and Surety Corporation (Pioneer). White Gold was issued a Certificate of Entry and
Acceptance. Pioneer also issued receipts evidencing payments for the coverage. When White Gold failed to fully pay its
accounts, Steamship Mutual refused to renew the coverage.
Steamship Mutual: thereafter filed a case against White Gold for collection of sum of money to recover the latter's unpaid
balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual
violated Sections 186 and 187 of the Insurance Code, while Pioneer violated Sections 299, 300 and 301 in relation to Sections
302 and 303, thereof.
Insurance Commission: dismissed the complaint. It said that there was no need for Steamship Mutual to secure a license
because it was not engaged in the insurance business. It explained that Steamship Mutual was a Protection and Indemnity Club
(P & I Club). Likewise, Pioneer need not obtain another license as insurance agent and/or a broker for Steamship Mutual because
Steamship Mutual was not engaged in the insurance business. Moreover, Pioneer was already licensed, hence, a separate license
solely as agent/broker of Steamship Mutual was already superfluous.
Court of Appeals: affirmed the decision of the Insurance Commissioner. The appellate court distinguished between P & I
Clubs vis-à-vis conventional insurance. The appellate court also held that Pioneer merely acted as a collection agent of
Steamship Mutual.
ISSUE: W/N Steamship Mutual, a P & I Club, is engaged in the insurance business in the Philippines? And consequently,
whether Pioneer needs a license as an insurance agent/broker for Steamship Mutual?
HELD: YES. The parties admit that Steamship Mutual is a P & I Club. Steamship Mutual admits it does not have a license to do
business in the Philippines although Pioneer is its resident agent. This relationship is reflected in the certifications issued by the
Insurance Commission.
A P & I Club is "an association composed of shipowners in general who band together for the specific purpose of providing
insurance cover on a mutual basis against liabilities incidental to shipowning that the members incur in favor of third parties." It
stresses that as a P & I Club, Steamship Mutual's primary purpose is to solicit and provide protection and indemnity coverage
and for this purpose, it has engaged the services of Pioneer to act as its agent.
Section 2(2) of the Insurance Code enumerates what constitutes "doing an insurance business" or "transacting an insurance
business". These are:
(a) making or proposing to make, as insurer, any insurance contract;
(b) making, or proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to any other legitimate business or activity of
the surety;
(c) doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of
this Code;
(d) doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this Code.

The same provision also provides, the fact that no profit is derived from the making of insurance contracts, agreements or
transactions, or that no separate or direct consideration is received therefor, shall not preclude the existence of an insurance
business. The test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act
required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances
under which the performance becomes requisite. It is not by what it is called.
Basically, an insurance contract is a contract of indemnity. In it, one undertakes for a consideration to indemnify another against
loss, damage or liability arising from an unknown or contingent event. In particular, a marine insurance undertakes to indemnify
the assured against marine losses, such as the losses incident to a marine adventure.
Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it,
the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and
liabilities are paid, and where the profits are divided among themselves, in proportion to their interest. Additionally, mutual
insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense
costs. A P & I Club is "a form of insurance against third party liability, where the third party is anyone other than the P & I Club
and the members." By definition then, Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine
insurance business.
The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority
mandated by Section 187 of the Insurance Code. It maintains a resident agent in the Philippines to solicit insurance and to
collect payments in its behalf.
We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. Thus,
to continue doing business here, Steamship Mutual or through its agent Pioneer, must secure a license from the Insurance
Commission. Since a contract of insurance involves public interest, regulation by the State is necessary. Thus, no insurer or
insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the
Insurance Commission.
Does Pioneer, as agent/broker of Steamship Mutual, need a special license?
Pioneer is the resident agent of Steamship Mutual as evidenced by the certificate of registration issued by the Insurance
Commission. It has been licensed to do or transact insurance business by virtue of the certificate of authority issued by the same
agency. However, a Certification from the Commission states that Pioneer does not have a separate license to be an
agent/broker of Steamship Mutual.
Although Pioneer is already licensed as an insurance company, it needs a separate license to act as insurance agent for
Steamship Mutual. Section 299 of the Insurance Code clearly states:
SEC. 299: No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications
for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance
company doing business in the Philippines or any agent thereof, without first procuring a license so to act from the
Commissioner, which must be renewed annually on the first day of January, or within six months thereafter. . .
Finally, White Gold seeks revocation of Pioneer's certificate of authority and removal of its directors and officers. Regrettably,
we are not the forum for these issues.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated July 30, 2002 of the Court of Appeals affirming the
Decision dated May 3, 2000 of the Insurance Commission is hereby REVERSED AND SET ASIDE. The Steamship Mutual
Underwriting Association (Bermuda) Ltd., and Pioneer Insurance and Surety Corporation are ORDERED to obtain licenses and to
secure proper authorizations to do business as insurer and insurance agent, respectively. The petitioner's prayer for the
revocation of Pioneer's Certificate of Authority and removal of its directors and officers, is DENIED. Costs against respondents.
GULF RESORTS, INC. vs. PHILIPPINE CHARTER INSURANCE CORPORATION [G.R. No. 156167. May 16, 2005.]
PUNO, J p:
Gulf Resorts: is the owner of the Plaza Resort situated at Agoo, La Union. It had its properties in said
resort insured originally with the American Home Assurance Company (AHAC-AIU). In the first four
insurance policies issued by AHAC from 1984-1988, the risk of loss from earthquake shock was
extended only to Gulf Resorts’ two swimming pools. Subsequently, AHAC issued in Gulf Resorts’ favor
the Policy covering the period from March 14, 1988 to March 14, 1989. In said policy, the earthquake
endorsement1 clause was deleted and the entry under Endorsements/Warranties at the time of issue
read that Gulf Resorts renewed its policy with AHAC (AIU) for the period of March 14, 1989 to March 14,
1990, which read "Endorsement to Include Earthquake Shock in the amount of [P10,700] and
paid P42,658.14 as premium thereof.
Gulf Resorts agreed to insure with Philippine Charter Insurance the properties covered by AHAC
(AIU) provided that the policy wording and rates in said policy be copied in the policy to be issued by
Philippine Charter. Philippine Charter issued the policy covering the period of March 14, 1990 to March
14, 1991 for P10,700,600 for a total premium of P45,159.92. In the computation of the premium,
Philippine Charter’s Policy shows that Gulf Resorts paid only P393 as premium against earthquake
shock. In all the six insurance policies, the premium against the peril of earthquake shock is the same,
that is P393. In the policy issued by AHAC and in Policy No. 31944 issued by defendant, the shock
endorsement provide:
In consideration of the payment by the insured to the company of the sum included additional
premium, the Company agrees, notwithstanding what is stated in the printed conditions of this policy
due to the contrary, that this insurance covers loss or damage to shock to any of the property insured
by this Policy occasioned by or through or in consequence of earthquake.
In Exhibit "7-C" the word "included" above the underlined portion was deleted.
On July 16, 1990, an earthquake struck Central Luzon and Northern Luzon and Gulf Resorts’
properties covered by the policy issued by Philippine Charter, including the two swimming
pools in its Agoo Playa Resort, were damaged.
After the earthquake, Gulf Resorts advised Philippine Charter that it would be making a claim under its
Insurance Policy for damages on its properties. Philippine Charter instructed Gulf Resorts to file a formal
claim, then assigned the investigation of the claim to an independent claims adjuster, Bayne
Adjusters and Surveyors, Inc. On July 30, 1990, Philippine Charter, through its adjuster, requested
Gulf Resorts to submit various documents in support of its claim. Bayne Adjusters and Surveyors,
Inc. rendered a preliminary report finding extensive damage caused by the earthquake to the
clubhouse and to the two swimming pools, and stated that "except for the swimming pools, all affected
items have no coverage for earthquake shocks."
Gulf Resorts filed its formal demand for settlement of the damage to all its properties in the Agoo Playa
Resort. Philippine Charter denied Gulf Resorts’ claim on the ground that its insurance policy only
afforded earthquake shock coverage to the two swimming pools of the resort. The two failed to arrive at
a settlement, and Gulf Resorts filed a complaint RTC-Pasig praying for the payment of all damages to
the properties within its resort caused by earthquake.
RTC: ruled in favor of Philippine Charter Insurance and held Philippine Charter is liable only for the
damage caused to the two swimming pools. Gulf Resorts paid only a premium of P393 against
the peril of earthquake shock, the same premium it paid against earthquake shock only on
the two swimming pools in all the policies issued by AHAC. From this fact the Court must
consequently agree with the position of Philippine Charter that the endorsement rider means that only
the two swimming pools were insured against earthquake shock.
CA: affirmed the ruling of the RTC. The CA was not convinced that the last two insurance contracts
which Gulf Resorts had with AHAC (AIU) and upon which the subject insurance contract with Philippine
Charter Insurance Corporation is said to have been based and copied, covered an extended earthquake
shock insurance on all the insured properties.
ISSUE: W/N under Philippine Charter’s insurance, only the two swimming pools rather than
all the properties of Gulf Resorts are insured against the risk of earthquake shock.
GULF RESORTS: the policy’s earthquake shock endorsement clearly covers all of the properties
insured and not only the swimming pools. It used the words "any property insured by this policy," and it
should be interpreted as all inclusive.

1
ENDORSEMENT: an amendment or addition to an existing insurance contract which changes the terms or scope of the original policy.
Endorsements may also be referred to as riders. An insurance endorsement may be used to add, delete, exclude or otherwise alter coverage.
An insurance endorsement may be issued mid-term, at the time of purchase, or at renewal.
PHILIPPINE CHARTER: none of the previous policies issued by AHAC-AIU from 1983 to 1990 explicitly
extended coverage against earthquake shock to petitioner’s insured properties other than on the two
swimming pools. Petitioner admitted that from 1984 to 1988, only the two swimming pools were
insured against earthquake shock. From 1988 until 1990, the provisions in its policy were practically
identical to its earlier policies, and there was no increase in the premium paid.
Petitioner anchors its claims on AHAC-AIU’s inadvertent deletion of the phrase "Item 5
Only" after the descriptive name or title of the Earthquake Shock Endorsement. However,
the words of the policy reflect the parties’ clear intention to limit earthquake shock
coverage to the two swimming pools. Before petitioner accepted the policy, it had the opportunity
to read its conditions. It did not object to any deficiency nor did it institute any action to reform the
policy. The policy binds the petitioner.
SC: Petitioner contends that pursuant to this rider, no qualifications were placed on the scope of the
earthquake shock coverage. Thus, the policy extended earthquake shock coverage to all of the insured
properties.
It is basic that all the provisions of the insurance policy should be examined and interpreted in
consonance with each other. All its parts are reflective of the true intent of the parties. The policy
cannot be construed piecemeal. Certain stipulations cannot be segregated and then made to control;
neither do particular words or phrases necessarily determine its character. 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.
A careful examination of the premium recapitulation will show that it is the clear intent of the parties to
extend earthquake shock coverage only to the two swimming pools. Section 2(1) of the Insurance Code
defines a contract of insurance as an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or contingent event. Thus,
an insurance contract exists where the following elements concur:
1. The insured has an insurable interest;
2. The insured is subject to a risk of loss by the happening of the designated peril;
3. The insurer assumes the risk;
4. Such assumption of risk is part of a general scheme to distribute actual losses among a large
group of persons bearing a similar risk; and
5. In consideration of the insurer's promise, the insured pays a premium.26
An INSURANCE PREMIUM is the consideration paid an insurer for undertaking to indemnify the insured
against a specified peril. In fire, casualty, and marine insurance, the premium payable becomes a debt
as soon as the risk attaches. In the subject policy, no premium payments were made with regard to
earthquake shock coverage, except on the two swimming pools. There is no mention of any premium
payable for the other resort properties with regard to earthquake shock. This is consistent with the
history of petitioner’s previous insurance policies from AHAC-AIU.
Petitioner also cited and relies on the attachment of the phrase "Subject to: Other Insurance
Clause, Typhoon Endorsement, Earthquake Shock Endorsement, Extended Coverage
Endorsement, FEA Warranty & Annual Payment Agreement on Long Term Policies" to the
insurance policy as proof of the intent of the parties to extend the coverage for earthquake shock.
However, this phrase is merely an enumeration of the descriptive titles of the riders, clauses,
warranties or endorsements to which the policy is subject, as required under Section 50, paragraph 2 of
the Insurance Code.
We also hold that no significance can be placed on the deletion of the qualification limiting the
coverage to the two swimming pools. The earthquake shock endorsement cannot stand alone.
HELD: In sum, there is no ambiguity in the terms of the contract and its riders. Petitioner cannot rely
on the general rule that insurance contracts are contracts of adhesion which should be liberally
construed in favor of the insured and strictly against the insurer company which usually prepares it. 31 A
contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the
contract, while the other party merely affixes his signature or his "adhesion" thereto. Through the
years, the courts have held that in these type of contracts, the parties do not bargain on equal footing,
the weaker party's participation being reduced to the alternative to take it or leave it. Thus, these
contracts are viewed as traps for the weaker party whom the courts of justice must
protect.32 Consequently, any ambiguity therein is resolved against the insurer, or construed liberally in
favor of the insured.33
The case law will show that this Court will only rule out blind adherence to terms where facts and
circumstances will show that they are basically one-sided. 34 Thus, we have called on lower courts to
remain careful in scrutinizing the factual circumstances behind each case to determine the efficacy of
the claims of contending parties. In Development Bank of the Philippines v. National
Merchandising Corporation, et al.,35 the parties, who were acute businessmen of experience, were
presumed to have assented to the assailed documents with full knowledge.
We cannot apply the general rule on contracts of adhesion to the case at bar. Petitioner cannot claim it
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.
Respondent, in compliance with the condition set by the petitioner, copied AIU Policy No. 206-4568061-
9 in drafting its Insurance Policy No. 31944. It is true that there was variance in some terms, specifically
in the replacement cost endorsement, but the principal provisions of the policy remained essentially
similar to AHAC-AIU’s policy. Consequently, we cannot apply the "fine print" or "contract of
adhesion" rule in this case as the parties’ intent to limit the coverage of the policy to the
two swimming pools only is not ambiguous.

MA. LOURDES FLORENDO vs. PHILAM PLANS, INC., PERLA and MA. CELESTE ABCEDE [G.R. No. 186983. February 22, 2012.]
ABAD, J p:
Manuel Florendo: On October 23, 1997, he filed an application for comprehensive pension plan with Philam Plans, Inc. (Philam
Plans) after some convincing by Perla Abcede. The plan had a pre-need price of P997,050, payable in 10 years, and had a
maturity value of P2,890,000 after 20 years. Manuel signed the application and left to Perla the task of supplying the information
needed in the application. Ma. Celeste Abcede, Perla's daughter, signed the application as sales counselor.
Aside from pension benefits, the comprehensive pension plan also provided life insurance coverage to Florendo. This was
covered by a Group Master Policy that Philippine American Life Insurance Company (Philam Life) issued to Philam Plans. Under
the master policy, Philam Life was to automatically provide life insurance coverage, including accidental death, to all who signed
up for Philam Plans' comprehensive pension plan. If the plan holder died before the maturity of the plan, his beneficiary was to
instead receive the proceeds of the life insurance, equivalent to the pre-need price. Further, the life insurance was to take care of
any unpaid premium until the pension plan matured, entitling the beneficiary to the maturity value of the pension plan.
On October 30, 1997, Philam Plans issued Pension Plan Agreement to Manuel, with Ma. Lourdes S. Florendo, his wife, as
beneficiary. In time, Manuel paid his quarterly premiums. Eleven months later, or on September 15, 1998, Manuel died of blood
poisoning. Subsequently, Lourdes filed a claim with Philam Plans for the payment of the benefits under her husband's
plan. Because Manuel died before his pension plan matured and his wife was to get only the benefits of his life insurance, Philam
Plans forwarded her claim to Philam Life.
Philam Plans: wrote Lourdes a letter, declining her claim. Philam Life found that Manuel was on maintenance medicine for his
heart and had an implanted pacemaker. Further, he suffered from diabetes mellitus and was taking insulin. Lourdes renewed her
demand for payment under the plan but Philam Plans rejected it, prompting her to file the present action.
RTC: rendered judgment, ordering Philam Plans, Perla and Ma. Celeste, solidarily, to pay Lourdes all the benefits from her
husband's pension plan, namely: P997,050, the proceeds of his term insurance, and P2,890,000 lump sum pension benefit upon
maturity of his plan; P100,000 as moral damages, and to pay the costs of the suit. The RTC ruled that Manuel was not guilty of
concealing the state of his health from his pension plan application.
CA: reversed the RTC decision, holding that insurance policies are traditionally contracts uberrimae fidae or contracts of utmost
good faith. As such, it required Manuel to disclose to Philam Plans conditions affecting the risk of which he was aware or
material facts that he knew or ought to know.
ISSUE/S:
1. Whether or not the CA erred in finding Manuel guilty of concealing his illness when he kept blank and did not answer
questions in his pension plan application regarding the ailments he suffered from;
2. Whether or not the CA erred in holding that Manuel was bound by the failure of Perla and Ma. Celeste to declare the
condition of Manuel's health in the pension plan application; and
3. Whether or not the CA erred in finding that Philam Plans' approval of Manuel's pension plan application and acceptance of his
premium payments precluded it from denying Lourdes' claim.
One. Lourdes points out that, seeing the unfilled spaces in Manuel's pension plan application relating to his medical
history, Philam Plans should have returned it to him for completion. Since Philam Plans chose to approve the application just as it
was, it cannot cry concealment on Manuel's part. Further, Lourdes adds that Philam Plans never queried Manuel directly
regarding the state of his health. Consequently, it could not blame him for not mentioning it.
But Lourdes is shifting to Philam Plans the burden of putting on the pension plan application the true state of Manuel's health.
She forgets that since Philam Plans waived medical examination for Manuel, it had to rely largely on his stating the truth
regarding his health in his application. For, after all, he knew more than anyone that he had been under treatment for heart
condition and diabetes for more than five years preceding his submission of that application. But he kept those crucial facts from
Philam Plans.
Besides, when Manuel signed the pension plan application, he adopted as his own the written representations and declarations
embodied in it. It is clear from these representations that he concealed his chronic heart ailment and diabetes from Philam
Plans. The pertinent portion of his representations and declarations read as follows:
I hereby represent and declare to the best of my knowledge that:
(c) I have never been treated for heart condition, high blood pressure, cancer, diabetes, lung, kidney or stomach disorder or any other physical impairment in
the last five years.
(d) I am in good health and physical condition.
If your answer to any of the statements above reveal otherwise, please give details in the space provided for:
Date of confinement : ___________________
Name of Hospital or Clinic : ___________________
Name of Attending Physician : ___________________
Findings : ___________________
Others: (Please specify) : ___________________
Since Manuel signed the application without filling in the details regarding his continuing treatments for heart condition and
diabetes, the assumption is that he has never been treated for the said illnesses in the last five years preceding his application.
This is implicit from the phrase "If your answer to any of the statements above (specifically, the statement: I have never been
treated for heart condition or diabetes) reveal otherwise, please give details in the space provided for." But this is untrue since
he had been on "Coumadin," a treatment for venous thrombosis, and insulin, a drug used in the treatment of diabetes mellitus,
at that time.
By its tenor, the responsibility for preparing the application belonged to Manuel. Nothing in it implies that someone else may
provide the information that Philam Plans needed. Manuel cannot sign the application and disown the responsibility for having it
filled up. If he furnished Perla the needed information and delegated to her the filling up of the application, then she acted on
his instruction, not on Philam Plans' instruction.
Lourdes next points out that it made no difference if Manuel failed to reveal the fact that he had a pacemaker implant in the
early 70s since this did not fall within the five-year timeframe that the disclosure contemplated. But a pacemaker is an electronic
device implanted into the body and connected to the wall of the heart, designed to provide regular, mild, electric shock that
stimulates the contraction of the heart muscles and restores normalcy to the heartbeat. That Manuel still had his pacemaker
when he applied for a pension plan in October 1997 is an admission that he remained under treatment for irregular heartbeat
within five years preceding that application.
Besides, as already stated, Manuel had been taking medicine for his heart condition and diabetes when he submitted his
pension plan application. These clearly fell within the five-year period. More, even if Perla's knowledge of Manuel's pacemaker
may be applied to Philam Plans under the theory of imputed knowledge, it is not claimed that Perla was aware of his two other
afflictions that needed medical treatments. Pursuant to Section 27 of the Insurance Code, Manuel's concealment entitles Philam
Plans to rescind its contract of insurance with him.
Two. Lourdes contends that the mere fact that Manuel signed the application in blank and let Perla fill in the required
details did not make her his agent and bind him to her concealment of his true state of health. Since there is no evidence of
collusion between them, Perla's fault must be considered solely her own and cannot prejudice Manuel. Manuel forgot that in
signing the pension plan application, he certified that he wrote all the information stated in it or had someone do it under his
direction. Thus:
APPLICATION FOR PENSION PLAN
(Comprehensive)
I hereby apply to purchase from PHILAM PLANS, INC. a Pension Plan Program described herein in accordance with the General Provisions set forth in this
application and hereby certify that the date and other information stated herein are written by me or under my direction. . . . .

Assuming that it was Perla who filled up the application form, Manuel is still bound by what it contains since he certified that he
authorized her action. Philam Plans had every right to act on the faith of that certification. Lourdes could not seek comfort from
her claim that Perla had assured Manuel that the state of his health would not hinder the approval of his application and that
what is written on his application made no difference to the insurance company. But, indubitably, Manuel was made aware when
he signed the pension plan application that, in granting the same, Philam Plans and Philam Life were acting on the truth of the
representations contained in that application.
It may be true that . . . insured persons may accept policies without reading them, and that this is not negligence per se. But, this
is not without any exception. It is and was incumbent upon Sy to read the insurance contracts, and this can be reasonably
expected of him considering that he has been a businessman since 1965 and the contract concerns indemnity in case of loss in
his money-making trade of which important consideration he could not have been unaware as it was precisely the reason for his
procuring the same. The same may be said of Manuel, a civil engineer and manager of a construction company. He could be
expected to know that one must read every document, especially if it creates rights and obligations affecting him, before signing
the same. Manuel is not unschooled that the Court must come to his succor. It could reasonably be expected that he would not
trifle with something that would provide additional financial security to him and to his wife in his twilight years.
Three. In a final attempt to defend her claim for benefits under Manuel's pension plan, Lourdes points out that any
defect or insufficiency in the information provided by his pension plan application should be deemed waived after the same has
been approved, the policy has been issued, and the premiums have been collected. The Court cannot agree. The comprehensive
pension plan that Philam Plans issued contains a one-year incontestability period. It states:
VIII. INCONTESTABILITY
After this Agreement has remained in force for one year, we can no longer contest for health reasons any claim for insurance under this Agreement, except for
the reason that installment has not been paid (lapsed), or that you are not insurable at the time you bought this pension program by reason of age. If this
Agreement lapses but is reinstated afterwards, the one year contestability period shall start again on the date of approval of your request for reinstatement.

The above incontestability clause precludes the insurer from disowning liability under the policy it issued on the ground of
concealment or misrepresentation regarding the health of the insured after a year of its issuance. Since Manuel died on the 11th
month following the issuance of his plan, the one year incontestability period has not yet set in. Consequently, Philam Plans was
not barred from questioning Lourdes' entitlement to the benefits of her husband's pension plan.

UCPB GENERAL INSURANCE CO., INC. vs. MASAGANA TELAMART, INC. [G.R. No. 137172; June 15, 1999]
In 1991, UCPB General Insurance Co. issued five insurance policies covering Masagana Telemart’s various property described
therein against fire, for one year, beginning May 22, 1991. In March 1992, UCPB evaluated the policies and decided not to renew
them upon expiration of their terms. UCPB advised Masagana’s broker, Zuellig Insurance Brokers, Inc. of its intention not to
renew the policies, and also gave written notice to Masagano of the non-renewal of the policies at the address stated in the
policies. On June 1992, a fire razed Masagana’s property, covered by three of the insurance policies UCPB issued.
On July 13, 1992, Masagana presented to UCPB’s cashier at its head office five manager's checks in the total amount of
P225,753.95, representing premium for the renewal of the policies from May 22, 1992-May 22, 1993. The next day, Masagana
filed with UCPB its formal claim for indemnification of the insured property razed by fire.
UCPB returned to Masagana the five manager's checks and rejected Masagana’s claim for the reasons: (a) that the policies had
expired and were not renewed, and (b) that the fire occurred on June 13, 1992, before Masagana’s tender of premium
payment. Thus, Masagana filed with RTC a civil complaint against UCPB for recovery of P18,645,000 representing the face value
of the policies covering its insured property razed by fire.
RTC: rendered judgment in favor of Masagana, declaring that Masagana has fully complied with its obligation to pay the
premium, thereby rendering the replacement-renewal of the five insurance policies effective and binding.
CA: affirmed the decision of the RTC with MODIFICATION, allowing Masagana to consign the sum of P225,753.95 as full
payment of the premiums for the renewal of the five insurance policies; (b) declaring the replacement-renewal policies effective
and binding from May 22, 1992 until May 22, 1993; and (c) ordering UCPB to pay Respondent P18,645,000 as indemnity for the
burned properties covered by the renewal-replacement policies.
The Court of Appeals ruled that no timely notice of non-renewal was sent. The notice of non-renewal sent to broker Zuellig,
which claimed that it verbally notified the insurance agency but not Masagana itself, did not suffice. Further, the Court of
Appeals held that following previous practice, there existed a 60-90 day credit term 2 between UCPB and Masagana for the
renewal of its policies, and that the acceptance of the late premium payment suggested an understanding that payment could be
made later.
ISSUE: W/N the fire insurance policies issued by UCPB to the Masagana had expired on May 22, 1992 or had been extended or
renewed by an implied credit arrangement, though actual payment of premium was tendered on a later date after the
occurrence of the risk insured against.
HELD: It had EXPIRED. An insurance policy, other than life, issued originally or on renewal, is not valid and binding until actual
payment of the premium. Any agreement to the contrary is void. The parties may not agree expressly or impliedly on the
extension of creditor time to pay the premium and consider the policy binding before actual payment.
The case of Malayan Insurance Co., Inc. vs. Cruz-Arnaldo, cited by the Court of Appeals, is not applicable. In that case, payment
of the premium was in fact actually made on December 24, 1981, and the fire occurred on January 18, 1982. Here, the payment
of the premium for renewal of the policies was tendered on July 13, 1992, a month after the fire occurred on June 13, 1992.
Masagana did not even give UCPB a notice of loss within a reasonable time after occurrence of the fire.
WHEREFORE, the Court hereby REVERSES and SETS ASIDE the decision of the Court of Appeals. In lieu thereof, the Court
renders judgment dismissing Masagana’s complaint.

2
CREDIT TERM - The length of time a consumer has to repay the amount of debt owed on an obligation.
UCPB GENERAL INSURANCE CO., INC. vs. MASAGANA TELAMART, INC. [G.R. No. 137172; April 4, 2001]
For years, UCPB had been issuing fire insurance policies to Masagana Telemart, and these policies were annually renewed. In
1991, Masagana obtained from UCPB five insurance policies on its properties in Pasay and covering the period of one year,
beginning May 22, 1991. On June 13, 1992, Masagana’s properties in Taft Avenue, Pasay City were razed by fire. On July 13, 1992,
Masagana tendered, and UCPB accepted, five Equitable Bank Manager's Checks in the total amount of P225,753.45 as renewal
premium payments, for which an Official Receipt Direct Premium was issued by UCPB.
On July 14, 1992, Masagana made its formal demand for indemnification for the burned insured properties. On the same day,
UCPB returned the five manager's checks, stating in its letter that it was rejecting Masagana's claim on the grounds that: a) Said
policies expired last May 22, 1992 and were not renewed for another term; b) UCPB had put Masagana and its alleged broker on
notice of non-renewal earlier; and c) The properties covered by the said policies were burned in a fire that took place last June
13, 1992, or before tender of premium payment." Hence Masagana filed this case.
Both the Court of Appeals and the trial court found that sufficient proof exists that Masagana, which had procured insurance
coverage from UCPB for a number of years, had been granted a 60 to 90-day credit term for the renewal of the policies. Such a
practice had existed up to the time the claims were filed.
Moreover, the Court of Appeals found that no timely notice of non-renewal was made by UCPB because Masagana received
the confirmation from Ultramar Reinsurance Brokers that plaintiff's reinsurance facility only on April 15, 1992. Thus, the notice of
non-renewal was not sent within 45 days before the expiry dates of the policies as provided under Policy Condition No. 26 3.
UCPB also unconditionally accepted, and issued an official receipt for, the premium payment on July 13, 1992 which indicates
UCPB’s willingness to assume the risk despite only a 67.5% reinsurance coverage.
In 1999, the SC held that the fire insurance policies issued by UCPB to Masagana covering the period from May 22, 1991 to May
22, 1992 had been NOT been extended nor renewed by an implied credit arrangement in view of Section 77 of the Insurance
Code.
MASAGANA: seasonably filed a motion for reconsideration of the adverse verdict. It alleges that SC had made its own findings
of facts, which are not in accord with those of the trial court and the Court of Appeals. Masagana also contends that most
insurance companies, including UCPB, extend credit terms because Section 77 of the Insurance Code is not a prohibitive
injunction but is merely designed for the protection of the parties to an insurance contract. The Code itself, in Section 78,
authorizes the validity of a policy notwithstanding non-payment of premiums.
Masagana also asserts that the principle of estoppel applies to UCPB. Despite its awareness of Section 77, UCPB persuaded and
induced Masagana to believe that payment of premium on the 60- to 90-day credit term was perfectly alright. By extending
credit and habitually accepting payments 60 to 90 days from the effective dates of the policies, it has implicitly agreed to modify
the tenor of the insurance policy and in effect waived the provision therein that it would pay only for the loss or damage in case
the same occurred after payment of the premium.
UCPB: argues that a reading of Section 66 of the Insurance Code readily shows that in order for an insured to be entitled to a
renewal of a non-life policy, payment of the premium due on the effective date of renewal should first be made. UCPB’s
argument that Section 77 is not a prohibitive provision finds no authoritative support.

3
26. Renewal Clause. — Unless the company at least forty five days in advance of the end of the policy period mails or delivers to the assured at the address
shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverages, the assured
shall be entitled to renew the policy upon payment of the premium due on the effective date of renewal.
ISSUE: W/N Sec. 77 of the Insurance Code of 1978 must be strictly applied to UCPB’s advantage despite its practice of granting
a 60- to 90-day credit term for the payment of premiums.
HELD: NO. Section 77 of the Insurance Code of 1978 (PD 1460) provides:
SECTION 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril
insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an
insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a
life or an industrial life policy whenever the grace period provision applies.
This Section is a reproduction of Section 77 of P.D. No. 612 (The Insurance Code) promulgated on December 18, 1974. In turn,
this Section has its source in Section 72 of Act No. 2427 otherwise known as the Insurance Act as amended by R.A. No. 3540,
approved on 21 June 1963, which read:
SECTION 72. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the peril insured
against, unless there is clear agreement to grant the insured credit extension of the premium due. No policy issued by
an insurance company is valid and binding unless and until the premium thereof has been paid.
Section 77 does not restate the portion of Section 72 expressly permitting an agreement to extend the period to pay the
premium. Nonetheless, there are EXCEPTIONS to Section 77.
The FIRST EXCEPTION is provided by Section 77 itself, in case of a life or industrial life policy whenever the grace period
provision applies. The SECOND EXCEPTION is covered by Section 78 of the Insurance Code, which provides:
SECTION 78. Any acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence
of its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding
until premium is actually paid.
A THIRD EXCEPTION was laid down in Makati Tuscany Condominium Corporation vs. Court of Appeals, where the Court ruled
that Section 77 may not apply if the parties have agreed to the payment in installments of the premium and partial payment
has been made at the time of loss. In the aforesaid case, the Court held that the subject policies are valid even if the premiums
were paid on installments.
Further, Tuscany has provided a FOURTH EXCEPTION to Section 77, namely, that the insurer may grant credit extension for the
payment of the premium. This simply means that if the insurer has granted the insured a credit term for the payment of the
premium and loss occurs before the expiration of the term, recovery on the policy should be allowed even though the premium
is paid after the loss but within the credit term.
Moreover, there is nothing in Section 77 which prohibits the parties in an insurance contract to provide a credit term within
which to pay the premiums. That agreement is not against the law, morals, good customs, public order or public policy. The
agreement binds the parties. Article 1306 of the Civil Code provides:
ARTICLE 1306. The contracting parties may establish such stipulations clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
Finally in the instant case, it would be unjust and inequitable if recovery on the policy would not be permitted against UCPB,
which had consistently granted a 60- to 90-day credit term for the payment of premiums despite its full awareness of Section 77.
Estoppel bars it from taking refuge under said Section, since Masagana relied in good faith on such practice. Estoppel then is the
FIFTH EXCEPTION to Section 77.
WHEREFORE, the Decision in this case of June 15, 1999 is RECONSIDERED and SET ASIDE. A new one is hereby entered DENYING
the instant petition for failure of UCPB to sufficiently show that a reversible error was committed by the Court of Appeals in its
challenged decision, which is hereby AFFIRMED in toto.

EXCEPTIONS TO SECTION 77:

1. When the grace period applies; (Sec. 77)
2. When the insurer makes a written acknowledgment of the receipt premium; (Sec. 78)
3. Section 77 may not apply if the parties have agreed to the payment of the premium in installments and partial payment has
been made oa the time of the loss; (Makati Tuscany Condominium Corp. v. CA)
4. If the insurer granted the insured a credit term for the payment of the premium and the loss occurs before the expiration of
the term, recovery should be allowed even if the premium is paid after the loss but within the credit term;
5. Where the parties are barred by estoppels.
SUN INSURANCE OFFICE, LTD. vs. COURT OF APPEALS and NERISSA LIM [G.R. No. 92383. July 17, 1992.]
CRUZ, J p:
SUN INSURANCE OFFICE, LTD.: issued Personal Accident Policy to Felix Lim, Jr. with a face value of P200,000. Two months later,
he was dead with a bullet wound in his head. As beneficiary, his wife Nerissa Lim sought payment on the policy but her claim
was rejected. SUN INSURANCE agreed that there was no suicide. It argued, however, that there was no accident either.
Pilar Nalagon: was Lim's secretary. She was the only eyewitness to his death. It happened on October 6, 1982, at about 10PM,
after his mother's birthday party. According to Nalagon, Lim was in a happy mood (but not drunk) and was playing with his
handgun, from which he had previously removed the magazine. As she watched the television, he stood in front of her and
pointed the gun at her. She pushed it aside and said it might be loaded. He assured her it was not and then pointed it to his
temple. The next moment there was an explosion and Lim slumped to the floor. He was dead before he fell.
RTC: rendered judgment, ordering Sun Insurance to pay Lim P200,000, representing the face value of the policy, with interest at
the legal rate; P10,000 as moral damages; P5,000 as exemplary damages; P50,000 as actual and compensatory damages; and
P5,000 as attorney's fees, plus the cost of the suit. This decision was affirmed on appeal.
ISSUE: W/N Nerissa Lim is entitled to recover under the Personal Accident Policy of Felix Lim, Jr.
HELD: YES. The words "accident" and "accidental" have never acquired any technical signification in law, and when used in
an insurance contract are to be construed and considered according to the ordinary understanding and common usage and
speech of people generally. In substance, the courts are practically agreed that the words "accident" and "accidental" mean that
which happens by change or fortuitously, without intention or design, and which is unexpected, unusual, and unforeseen. The
definition usually been adopted by the courts is that an accident is an event that takes place without one's foresight or
expectation - an event that proceeds from an unknown cause, or is an unusual effect of a known case, and is not expected.
An accident is an event which happens without any human agency or, if happening through human agency, an event which,
under the circumstances, is unusual to and not expected by the person to whom it happens. It has also been defined as an injury
which happens by reason of some violence or casualty to the insured without his design, consent, or voluntary co-operation. In
light of these definitions, the Court is convinced that the incident that resulted in Lim's death was indeed an accident.
De la Cruz v. Capital Insurance: "there is no accident when a deliberate act is performed unless some additional, unexpected,
independent and unforeseen happening occurs which produces or brings about their injury or death." There was such a
happening. This was the firing of the gun, which was the additional unexpected and independent and unforeseen occurrence
that led to the insured person's death.
The petitioner also cites one of the four exceptions provided for in the insurance contract and contends that the private
petitioner's claim is barred by such provision. It is there stated:
Exceptions — The company shall not be liable in respect of…Bodily injury …consequent upon… The insured persons attempting to commit suicide or wilfully
exposing himself to needless peril except in an attempt to save human life.

To repeat, the parties agree that Lim did not commit suicide. Nevertheless, the petitioner contends that the insured willfully
exposed himself to needless peril and thus removed himself from the coverage of the insurance policy.
It should be noted at the outset that suicide and willful exposure to needless peril are in pari materia because they both signify a
disregard for one's life. The only difference is in degree, as suicide imports a positive act of ending such life whereas the
second act indicates a reckless risking of it that is almost suicidal in intent. To illustrate, a person who walks a tightrope one
thousand meters above the ground and without any safety device may not actually be intending to commit suicide, but his act is
nonetheless suicidal. He would thus be considered as "willfully exposing himself to needless peril" within the meaning of the
exception in question.
The petitioner maintains that by the mere act of pointing the gun to his temple, Lim had willfully exposed himself to needless
peril and so came under the exception. The theory is that a gun is per se dangerous and should therefore be handled cautiously
in every case. That posture is arguable. But what is not is that Lim had removed the magazine from the gun and believed it was
no longer dangerous. He expressly assured her that the gun was not loaded. It is submitted that Lim did not willfully expose
himself to needless peril when he pointed the gun to his temple because the fact is that he thought it was not unsafe to do so.
The act was precisely intended to assure Nalagon that the gun was indeed harmless.
SUN INSURANCE: Accident insurance polices were never intended to reward the insured for his tendency to show off or for his
miscalculations. They were intended to provide for contingencies. Hence, when I miscalculate and jump from the Quezon Bridge
into the Pasig River in the belief that I can overcome the current, I have wilfully exposed myself to peril and must accept the
consequences of my act. If I drown I cannot go to the insurance company to ask them to compensate me for my failure to swim
as well as I thought I could. The insured in the case at bar deliberately put the gun to his head and pulled the trigger. He wilfully
exposed himself to peril.
The Court certainly agrees that a drowned man cannot go to the insurance company to ask for compensation. That might
frighten the insurance people to death. (hahaha!) We also agree that under the circumstances narrated, his beneficiary would
not be able to collect on the insurance policy for it is clear that when he braved the currents below, he deliberately exposed
himself to a known peril. Lim did not. That is where she says the analogy fails. The petitioner's hypothetical swimmer knew when
he dived off the Quezon Bridge that the currents below were dangerous. By contrast, Lim did not know that the gun he put to his
head was loaded. (tanga lang sya.)
Lim was unquestionably negligent and that negligence cost him his own life. But it should not prevent his widow from recovering
from the insurance policy he obtained precisely against accident. There is nothing in the policy that relieves the insurer of the
responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. Indeed, most
accidents are caused by negligence. There are only four exceptions expressly made in the contract to relieve the insurer from
liability, and none of these exceptions is applicable in the case at bar.
It bears noting that insurance contracts are as a rule supposed to be interpreted liberally in favor of the assured. There is no
reason to deviate from this rule, especially in view of the circumstances of this case as above analyzed.
On the second assigned error, however, the Court must rule in favor of the petitioner. The basic issue raised in this case is, as
the petitioner correctly observed, one of first impression. It is evident that the petitioner was acting in good faith when it
resisted the private respondent's claim on the ground that the death of the insured was covered by the exception. The issue was
indeed debatable and was clearly not raised only for the purpose of evading a legitimate obligation. We hold therefore that the
award of moral and exemplary damages and of attorney's fees is unjust and so must be disapproved.
DOCTRINE: In order that a person may be made liable to the payment of moral damages, the law requires that his act be
wrongful. The adverse result of an action does not per se make the act wrongful and subject the act or to the payment of moral
damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages
may not be charged on those who may exercise it erroneously. For these the law taxes costs.
If a party wins, he cannot, as a rule, recover attorney's fees and litigation expenses, since it is not the fact of winning alone that
entitles him to recover such damages of the exceptional circumstances enumerated in Art. 2208. Otherwise, every time a
defendant wins, automatically the plaintiff must pay attorney's fees thereby putting premium on the right to litigate which
should not be so. For those expenses, the law deems the award of costs as sufficient.
WHEREFORE, the challenged decision of the Court of Appeals is AFFIRMED insofar as it holds the petitioner liable to the private
respondent in the sum of P200,000.00 representing the face value of the insurance contract, with interest at the legal rate from
the date of the filing of the complaint until the full amount is paid, but MODIFIED with the deletion of all awards for damages,
including attorney's fees, except the costs of the suit.
TIO KHE CHIO vs. CA and EASTERN ASSURANCE AND SURETY CORP. [G.R. Nos. 76101-02. September 30, 1991.]
FERNAN, C.J p:
Tio Khe Chio: On December 18, 1978, imported 1,000 bags of fishmeal valued at $36,000.30 from Agro Impex, S.A. Dallas, Texas,
U.S.A. The goods were insured with EASCO and shipped on board the M/V Peskov, a vessel owned by Far Eastern Shipping
Company. When the goods reached Manila on January 28, 1979, they were found to have been damaged by sea water which
rendered the fishmeal useless. Chio filed a claim with EASCO and Far Eastern Shipping. Both refused to pay. Whereupon, Chio
sued them before the then CFI Cebu for damages. EASCO, as the insurer, filed a counterclaim against Chio for the
recovery of P18,387.86 representing the unpaid insurance premiums.
CFI: On June 30, 1982, rendered judgment ordering EASCO and Far Eastern Shipping to pay Chio solidarily the sum of
P105,986.68 less the P18,387.86 for unpaid premiums with interest at the legal rate from the filing of the complaint, the
sum of P15,000.00 as attorney's fees and the costs. The judgment became final as to EASCO but the shipping company appealed
to the Court of Appeals and was absolved from liability by the said court.
The trial court, upon motion by Chio, issued a writ of execution against EASCO. The sheriff enforcing the writ reportedly fixed the
legal rate of interest at 12%. EASCO moved to quash the writ alleging that the legal interest to be computed should be 6% per
annum in accordance with Article 2209 of the Civil Code and not 12% as insisted upon by Chio’s.
CFI: In its order of July 30, 1986, denied EASCO's motion. EASCO filed a petition for certiorari and prohibition before the CA.
CA: On July 30, 1986, it rendered the assailed judgment, setting aside the order dated July 30, 1986 in so far as it fixes the
interest at 12% on the principal amount of P87,598.82 from the date of filing of the complaint until the full payment of the
amount, and the interest that the Chio is entitled to collect from EASCO is hereby reduced to 6% per annum.
CHIO: the decision of the Court of Appealsis not only unjust and unfair but it is also contrary to the correct interpretation of the
fixing of interest rates under Sections 243 and 244 of the Insurance Code. Since Chio’s clims is based on an insurance contract,
then it is the Insurance Code which must govern and not the Civil Code.
ISSUE: Whether the legal rate of interest to be imposed in actions for damages arising from unpaid insurance claims should be
12% pursuant to Articles 243 and 244 of the Insurance Code or 6% under Article 2209 of the Civil Code?
SC: We rule for EASCO. The legal rate of interest in the case at bar is 6% per annum as correctly held by the Appellate Court.
Section 243 of the Insurance Code: "The amount of any loss or damage for which an insurer may be liable, under any policy other than life insurance policy, shall
be paid within 30 days after proof of loss is received by the insurer and ascertainment of the loss or damage is made either by agreement between the insured
and the insurer or by arbitration; but if such ascertainment is not had or made within 60 days after such receipt by the insurer of the proof of loss, then the loss
or damage shell be paid within 90 days after such receipt. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured
to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board, unless such
failure or refusal to pay is based on the ground that the claim is fraudulent."
Section 244 of the Insurance Code: "In case of any litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the Commissioner
or the Court, as the case may be, to make a finding as to whether the payment of the claim of the insured has been unreasonably denied or withheld; and in the
affirmative case, the insurance company shall be adjudged to pay damages which shall consist of attorney's fees and other expenses incurred by the insured
person by reason of such undeniable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of the
claim due the insured, from the date following the time prescribed in section two hundred forty-two or in section two hundred forty-three, as the case may be,
until the claim is fully satisfied; Provided, That the failure to pay any such claim within the time prescribed in said sections shall be considered prima facie
evidence of unreasonable delay in payment."

In the case at bar, the Court of Appeals made no finding that there was an unjustified refusal or withholding of payment on
Chio’s claim. In fact, CA held that “EASCO's refusal to settle the claim to Tio Khe Chio was based on some ground which, while
not sufficient to free it from liability under its policy, nevertheless is sufficient to negate any assertion that in refusing to pay, it
acted unjustifiably. "The case posed some genuine issues of interpretation of the terms of the policy as to which persons may
honestly differ. This is the reason the trial court did not say EASCO's refusal was unjustified."
Simply put, the aforecited sections of the Insurance Code are not pertinent to the instant case. They apply only when
the court finds an unreasonable delay or refusal in the payment of the claims. Neither does Circular No. 416 of the Central Bank
which took effect on July 29, 1974 pursuant to Presidential Decree No. 116 (Usury Law) which raised the legal rate of interest
from 6% to 12% apply to the case at bar. The adjusted rate mentioned in the circular refers only to loans or forbearances of
money, goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and
loss of property which does not involve a loan.
The legal rate of interest is 6% per annum, and not 12%, where a judgment award is based on an action for damages for personal
injury, not use or forbearance of money, goods or credit. The rates under the Usury Law (amended by P.D. 116) are applicable
only to interest by way of compensation for the use or forbearance of money, interest by way of damages is governed by Article
2209 of the Civil Code. Clearly, the applicable law is Article 2209 of the Civil Code which reads:
"If the obligation consists in the payment of a sum of money and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of interest agreed upon, and in the absence of stipulation, the legal interest which is six per cent per annum."

And in the light of the fact that the contending parties did not allege the rate of interest stipulated in the insurance contract,
the legal interest was properly pegged by the Appellate Court at 6%.