Case digests

2. Heirs of Loreto Maramag vs. Eva Guzman Maramag et al.

This is a petition for review on certiorari seeking to set aside the Resolution of
CA in dismissing petitioner’s appeal for lack of jurisdiction.
Facts:
Insurance policies were obtained by Loreto Maramag through Insular life
Assurance Company, Ltd. (Insular), and Great Pacific Life Assurance Corporation
(Grepalife); Eva de Guzman Maramag along with their illegitimate children – Odessa,
Karl Brian and Trisha Angelie were named beneficiaries therein.
After the death of Loreto Maramag, a petition was filed by his legitimate wife
and heirs against Eva and their children for the revocation and/or reduction of
insurance proceeds for being void and inofficious with prayer for a TRO and a writ of
preliminary injunction. The grounds therein being that Eva was a suspect for the
killing of Loreto rendering her disqualified to receive the insurance proceeds, and
their children being illegitimate were entitled only to one half of the legitime of the
legitimate children.
In answer, Insular admitted that Loreto misrepresented Eva as his legitimate
wife and Odessa, Karl, and Trisha as his legitimate children, and that they filed their
claims for the insurance proceeds; that when Insular discovered that Eva was not his
legitimate wife, they disqualified her and divided the proceeds to their children as the
designated beneficiaries.
In its own answer, Grapalife alleged that Eva was not designated as
beneficiary and the claims of their illegitimate children were denied because Loreto
was ineligible for insurance due to a misrepresentation in his application and it
further alleged that the case was premature there being no claim from his legal heirs;
and that the law on succession is inapplicable where the designation of beneficiaries
is clear.
The RTC ruled in favour of Odessa, Karl and Tricia, it ratiocinated Art 2011 of
Civil Code and Section 53 of the Insurance Code. It also discussed that the
proceeds of an insurance policy belongs exclusively to the beneficiary and not to the
estate of the person whose life was insured. Eva de Guzman under Article 739 and
Art 2012 of the Civil Code cannot be named beneficiary of a life insurance. If a
concubine is named beneficiary, the insurance remains valid but the indemnity must
go to the legal heirs and not the concubine.

Issue:
Were the members of his legitimate family entitled to the proceeds of the
insurance for the concubine?
Ruling:
 No. Section 53 of the Insurance Code provides that the insurance proceeds
shall be applied exclusively to the proper interest of the person in whose name or for
whose benefit it is made unless otherwise specified in the policy. It is obvious
therefore, that the only persons entitled to claim the insurance proceeds are either
the insured, if still alive; or the beneficiary if the insured is already deceased. An
exception to this rule is where the insurance contract was intended to benefit the
third persons to the same in the form of favourable stipulations or indemnity.
Because no legal prohibitions exists in naming as beneficiaries the children of illicit
relationships by the insured, the shares of Eva in the insurance proceeds must be
awarded to the said illegitimate children, the designated beneficiaries, to the
exclusion of the petitioners.

3. Tongko vs. Manulife

Facts:
Gregorio Tongko started his professional relationship with Manufacturer’s Life
Insurance Co. (Manulife), a domestic corporation engaged in life insurance business
on 1977 by virtue of a Career Agent’s Agreement he executed with the latter. In the
agreement it is provided that he understood and agreed that as an agent, he is an
independent contractor and nothing contained therein shall be construed or
interpreted as creating an employer-employee relationship between the Company
and the Agent. In 1990, he became Branch Manager.
The problem started sometime in 2001 when Manulife instituted manpower
development programs in the regional sales management level. Renato De Dios the
President and CEO at that time addressed Tongko in a letter regarding Metro North
Sales Managers Meeting. In the letter, it stated that he must increase the number of
agents to at least 1,000 strong. ….
On December 18, 2001, De Dios wrote Tongko another letter terminating
Tongko’s services.
Therefrom Tongko filed a Complaint with the NLRC against Manulife for illegal
dismissal. In the Complaint, Tongko, in a bid to establish an employer-employee
relationship, alleged that De Dios gave him specific directives on how to manage his
area of responsibility in the latter's letter dated November 6, 2001. He also cited the
Manulife Code of Conduct by which his actions were controlled by the company.
In a decision, the Labor Arbiter dismissed the complaint for lack of employee-
employer relationship applying the four fold test in determining the existence of such
relationship .

Issue:
(1) WON there was employer-employee relationship between Tongko and
Manulife
(2) WON Tongko was illegally dismissed
Ruling:
(1) Yes. An employer-employee relationship exists where the person for whom
the services are performed reserves the right to control not only the end to be
achieved but also the means to be used in reaching such end.
The court arrived in this conclusion, first, on the basis of the letter dated
November 6, 2001 addressed by De Dios to Tongko. The letter contained "an
abundance of directives or orders that are intended to directly affect complainant's
authority and manner of carrying out his functions as Regional Sales Manager.
Further, the court ruled that the different codes of conduct that were
applicable to Tongko served as the foundations of the power of control wielded by
Manulife over him that is further manifested in the different administrative and other
tasks that he was required to perform.
Based on the foregoing cases, if the specific rules and regulations that are
enforced against insurance agents or managers are such that would directly affect
the means and methods by which such agents or managers would achieve the
objectives set by the insurance company, they are employees of the insurance
company.

(2) Yes. When there is no showing of a clear, valid and legal cause for the
termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was
for a valid or authorized cause. This burden of proof appropriately lies on the
shoulders of the employer and not on the employee because a worker's job
has some of the characteristics of property rights and is therefore within the
constitutional mantle of protection. Here, Manulife failed to overcome such
burden of proof.

4. Gaisano Cagayan vs. Insurance Company of North Am

Facts:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans.
Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing
trademarks owned by Levi Strauss & Co.. IMC and LSPI separately obtained from
respondent fire insurance policies with book debt endorsements. The insurance
policies provide for coverage on "book debts in connection with ready-made clothing
materials which have been sold or delivered to various customers and dealers of the
Insured anywhere in the Philippines." 2 The policies defined book debts as the
"unpaid account still appearing in the Book of Account of the Insured 45 days after
the time of the loss covered under this Policy."
Petitioner is a customer and dealer of the products of IMC and LSPI. On
February 25, 1991, the Gaisano Superstore Complex in Cagayan de Oro City,
owned by petitioner, was consumed by fire. Included in the items lost or destroyed in
the fire were stocks of ready-made clothing materials sold and delivered by IMC and
LSPI.
On February 4, 1992, respondent filed a complaint for damages against
petitioner. It alleges that IMC and LSPI filed with respondent their claims under their
respective fire insurance policies with book debt endorsements.
In its Answer with Counter Claim dated July 4, 1995, petitioner contends that
it could not be held liable because the property covered by the insurance policies
were destroyed due to fortuities event or force majeure; that respondent's right of
subrogation has no basis inasmuch as there was no breach of contract committed by
it since the loss was due to fire which it could not prevent or foresee; that IMC and
LSPI never communicated to it that they insured their properties; that it never
consented to paying the claim of the insured.6
RTC ruled in favour of petitioner and held that fire is purely accidental; CA
reversed the decision and ordered petitioner to pay respondent.

Issues:
(1) WON CA erred in holding that the insurance in the instant case was one
over credit
(2) WON CA erred in holding that all risk over the subject goods in the instant
case had transferred to petitioner upon delivery thereof
(3) WON CA erred in holding that there was automatic subrogation under Art
2207 of the Civil Code in favour of the respondent.

Rulings:
(1) Yes. In this case, the questioned insurance policies provide coverage for
"book debts in connection with ready-made clothing materials which have
been sold or delivered to various customers and dealers of the Insured
anywhere in the Philippines. Nowhere is it provided in the questioned
insurance policies that the subject of the insurance is the goods sold and
delivered to the customers and dealers of the insured. Thus, what were
insured against were the accounts of IMC and LSPI with petitioner which
remained unpaid 45 days after the loss through fire, and not the loss or
destruction of the goods delivered.
(2) Yes. Article 1504 of the Civil Code provides: Unless otherwise agreed, the
goods remain at the seller's risk until the ownership therein is transferred to
the buyer, but when the ownership therein is transferred to the buyer the
goods are at the buyer's risk whether actual delivery has been made or
not, except that:
(1) Where delivery of the goods has been made to the buyer or to a bailee for
the buyer, in pursuance of the contract and the ownership in the goods
has been retained by the seller merely to secure performance by the buyer
of his obligations under the contract, the goods are at the buyer's risk from
the time of such delivery;
Thus, when the seller retains ownership only to insure that the buyer will pay
its debt, the risk of loss is borne by the buyer. Accordingly, petitioner bears the risk of
loss of the goods delivered.
IMC and LSPI did not lose complete interest over the goods. They have an
insurable interest until full payment of the value of the delivered goods. Unlike the
civil law concept of res perit domino, where ownership is the basis for consideration
of who bears the risk of loss, in property insurance, one's interest is not determined
by concept of title, but whether insured has substantial economic interest in the
property.

(3) Yes. The right of subrogation accrues simply upon payment by the
insurance company of the insurance claim. Respondent's action against
petitioner is squarely sanctioned by Article 2207 of the Civil Code
provides: If the plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of
the wrong or breach of contract complained of, the insurance company
shall be subrogated to the rights of the insured against the wrongdoer or
the person who has violated the contract.

5. Sps. Nilo Cha vs. United Insurance Co.

Facts:
Petitioner-spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a
lease contract with private respondent CKS Development Corporation (hereinafter
CKS), as lessor, on 5 October 1988.
One of the stipulations of the one (1) year lease contract states:
18. x x x. The LESSEE shall not insure against fire the chattels, merchandise,
textiles, goods and effects placed at any stall or store or space in the leased
premises without first obtaining the written consent and approval of the LESSOR. If
the LESSEE obtain(s) the insurance thereof without the consent of the LESSOR
then the policy is deemed assigned and transferred to the LESSOR for its own
benefit.
Notwithstanding the above stipulation in the lease contract, the Cha spouses
insured against loss by fire their merchandise inside the leased premises for Five
Hundred Thousand (P500,000.00) with the United Insurance Co., Inc. (hereinafter
United) without the written consent of private respondents CKS.
On the day that the lease contract was to expire, fire broke out inside the
leased premises.
When CKS learned of the insurance earlier procured by the Cha spouses
(without its consent), it wrote the insurer (United) a demand letter asking that the
proceeds of the insurance contract (between the Cha spouses and United) be paid
directly to CKS, based on its lease contract with Cha spouses.
United refused to pay CKS. Hence, the latter filed a complaint against the Cha
spouses and United.
Issue:
Whether or not the aforequoted paragraph 18 of the lease contract entered
into between CKS and the Cha spouses is valid

Ruling:
 No. basic in the law on contracts that the stipulations contained in a contract
cannot be contrary to law, morals, good customs, public order or public policy.
Sec. 18 of the Insurance Code provides: No contract or policy of insurance on
property shall be enforceable except for the benefit of some person having an
insurable interest in the property insured.
A non-life insurance policy such as the fire insurance policy taken by
petitioner-spouses over their merchandise is primarily a contract of indemnity.
Insurable interest in the property insured must exist at the time the insurance takes
effect and at the time the loss occurs. The basis of such requirement of insurable
interest in property insured is based on sound public policy: to prevent a person from
taking out an insurance policy on property upon which he has no insurable interest
and collecting the proceeds of said policy in case of loss of the property.
In the present case, it cannot be denied that CKS has no insurable interest in
the goods and merchandise inside the leased premises.
Therefore, respondent CKS cannot, under the Insurance Code a special law
be validly a beneficiary of the fire insurance policy taken by the petitioner-spouses
over their merchandise. This insurable interest over said merchandise remains with
the insured, the Cha spouses. The automatic assignment of the policy to CKS under
the provision of the lease contract previously quoted is void for being contrary to law
and/or public policy.
The insurer (United) cannot be compelled to pay the proceeds of the fire
insurance policy to a person (CKS) who has no insurable interest in the property
insured.

*6. Travellers Insurance vs. Mendoza

Facts:
At about 5:30 oclock in the morning of July 20, 1980, a 78-year old woman by
the name of Feliza Vineza de Mendoza was on her way to hear mass at the
Tayuman Cathedral. While walking along Tayuman corner Gregorio Perfecto
Streets, she was bumped by a taxi that was running fast. Several persons witnessed
the accident, among whom were Rolando Marvilla, Ernesto Lopez and Eulogio
Tabalno. After the bumping, the old woman was seen sprawled on the pavement.
Right away, Marvilla ran towards the old woman and held her on his lap to inquire
from her what had happened, but obviously she was already in shock and could not
talk. At this moment, a private jeep stopped. With the driver of that vehicle, the two
helped board the old woman on the jeep and brought her to the Mary Johnston
Hospital in Tondo. The victim was brought to the U.S.T. Hospital where she expired
at 9:00 oclock that same morning. Death was caused by traumatic shock as a result
of the severe injuries she sustained. The evidence shows that at the moment the
victim was bumped by the vehicle, the latter was driving fast and in an imprudent
manner, so much so that because of the strong impact the old woman was thrown
away and she fell on the pavement. The trial court in its decision held Travellers
Insurance to be solidarily liable against private respondent with the taxicab driver
and operator.
Issue: Whether or not the trial court’s decision is proper.
Held: No. The right of the person injured to sue the insurer of the party at fault
(insured), depends on whether the contract of insurance is intended to benefit third
persons also or on the insured. The test applied has been this: Where the contract
provides for indemnity against liability to third persons, then third persons to whom
the insured is liable can sue the insurer. Where the contract is for indemnity against
actual loss or payment, then third persons cannot proceed against the insurer, the
contract being solely to reimburse the insured for liability actually discharged by him
thru payment to third persons, said third persons recourse being thus limited to the
insured alone.

While it is true that where the insurance contract provides for indemnity against
liability to third persons, such third persons can directly sue the insurer, however, the
direct liability of the insurer under indemnity contracts against third party liability does
not mean that the insurer can be held solidarily liable with the insured and/or the
other parties found at fault. The liability of the insurer is based on contract; that of the
insured is based on tort.

The court have certainly ruled with consistency that the prescriptive period to bring
suit in court under an insurance policy, begins to run from the date of the insurers
rejection of the claim filed by the insured, the beneficiary or any person claiming
under an insurance contract. This ruling is premised upon the compliance by the
persons suing under an insurance contract, with the indispensable requirement of
having filed the written claim mandated by Section 384 of the Insurance Code before
and after its amendment. Absent such written claim filed by the person suing under
an insurance contract, no cause of action accrues under such insurance contract,
considering that it is the rejection of that claim that triggers the running of the one-
year prescriptive period to bring suit in court, and there can be no opportunity for the
insurer to even reject a claim if none has been filed in the first place, as in the instant
case

7. Grepalife vs CA
Facts:
A contract of group life insurance was executed between petitioner Great
Pacific Life Assurance Corporation (Grepalife) and Development Bank of the
Philippines (DBP). Grepalife agreed to insure the lives of eligible housing loan
mortgagors of DBP.
On November 11, 1983, Dr. Wilfredo Leuterio, a physician and a housing
debtor of DBP applied for membership in the group life insurance plan. In his
application, he answered that he is in good health and has never consulted a
physician .Thereafter, Grepalife granted his insurance policy, covering an amount to
the extent of his DBP mortgage indebtedness amounting to eighty-six thousand, two
hundred (P86,200.00) pesos.
On August 6, 1984, Dr. Leuterio died due to "massive cerebral hemorrhage."
Consequently, DBP submitted a death claim to Grepalife. Grepalife denied the claim
alleging that Dr. Leuterio was not physically healthy when he applied for an
insurance coverage on November 15, 1983. Grepalife insisted that Dr. Leuterio did
not disclose he had been suffering from hypertension, which caused his death.
Allegedly, such non-disclosure constituted concealment that justified the denial of the
claim.
On October 20, 1986, the widow of the late Dr. Leuterio, respondent Medarda
V. Leuterio, filed a complaint with the Regional Trial Court against Grepalife for
"Specific Performance with Damages.” On February 22, 1988, the trial court
rendered a decision in favor of respondent widow and against Grepalife. On May 17,
1993, the Court of Appeals sustained the trial court’s decision. Hence, the present
petition.
Issues:
(1) WON CA erred in holding petitioner liable to DBP as beneficiary in a group life
insurance contract from a complaint filed by the widow of the
decedent/mortgagor?
(2) Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed
that he had hypertension, which would vitiate the insurance contract?
(3) Whether the Court of Appeals erred in holding Grepalife liable in the amount
of eighty six thousand, two hundred (P86,200.00) pesos without proof of the
actual outstanding mortgage payable by the mortgagor to DBP.
Rulings:
(1)