Vda. DE BATACLAN vs.

MEDINA come under the codal provisions above-reproduced,

particularly, Articles 1733, 1759 and 1763.
FACTS:
Proximate Cause – “‘that cause, which, in natural and
Medina is the owner and operator of a bus. This bus, on
continuous sequence, unbroken by any efficient
Sept. 13, 1952 around 2:00AM somewhere in Imus,
intervening cause, produces the injury, and without
Cavite, crashed and fell into a ditch. Apparently, its front
which the result would not have occurred.’ And more
tire burst, zig-zagged and turned turtle into the ditch.
comprehensively, ‘the proximate legal cause is that
Bataclan was one of the 18 passengers. Most of the
acting first and producing the injury, either immediately
passengers were able to get out, but Bataclan and 3
or by setting other events in motion, all constituting a
others were trapped. It appears that the bus drivers and
natural and continuous chain of events, each having a
the passengers who already got out did not try to help
close causal connection with its immediate predecessor,
Bataclan et al get out, instead, about 10 of the locals in
the final event in the chain immediately effecting the
the area came to their aid, they were carrying a burning
injury as a natural and probable result of the cause
torch for illumination, but then a fierce fire started and
which first acted, under such circumstances that the
engulfed the bus and killed Bataclan et al. It appears that
person responsible for the first event should, as an
there was a gas leak from the bus and it caught fire from
ordinarily prudent and intelligent person, have
the torch the would-be rescuers were using.
reasonable ground to expect at the moment of his act or
The heirs of Bataclan sued Medina. default that an injury to some person might probably
result therefrom.’”
The trial court found that there was a breach of a
contract of carriage where Medina undertook to take
Bataclan to his destination safely. The trial court also
FGU Insurance Corp. v. CA
found that there was negligence on the part of Medina
since at the time of the blow-out, the bus was speeding. Facts:
There is no question that under the circumstances, the
On April 21, 1987, a car owned by private respondent
defendant carrier is liable. The only question is to what
FILCAR Transport Inc., rented to and driven by Dahl-
degree. The trial court argued that Medina is only liable
Jensen, a Danish tourist, swerved into the right and hit
for the injuries suffered by Bataclan and not by his
the car owned by Lydia Soriano and driven by Benjamin
death, the proximate cause of which was the fire, which
Jacildone. Dahl-Jensen did not possess a Philippine
was not caused by Medina.
driver’s license. Petitioner, as the insurer of Soriano’s
ISSUE: Whether or not it was the negligence of Medina, car, paid the latter P25,382.20 and, by way of
owner of the bus company, which was the proximate subrogation, sued FILCAR, Dahl-Jensen, and Fortune
cause of the death of Bataclan. Insurance Corporation, FILCAR’s insurer, for quasi-delict.
The trial court dismissed the petition for failure to
HELD:
substantiate the claim for subrogation. The Court of
Yes. In this case, the proximate cause of the death was Appeals affirmed the decision, but on the ground that
the overturning of the bus, because of the overturning, it only Dahl-Jensen’s negligence was proven, not that of
leaked gas which is not unnatural or unexpected. The FILCAR. Hence, this instant petition.
locals coming to the aid of the trapped passengers was
Issues:
most likely because the driver and the conductor went
out looking for help. It is only natural that the would-be (1) Whether an action based on quasi-delict will prosper
rescuers bring with them a torch because it was 2:30AM against a rent-a-car company and, consequently, its
and the place was unlit. The fire could also be attributed insurer for fault or negligence of the car lessee in driving
to the bus driver and conductor because he should have the rented vehicle
known, from the circumstances, and because he should
(2) Whether the ruling in MYC-Agro-Industrial
have been able to smell gasoline and therefore he
Corporation v. Vda. de Caldo is applicable in the case at
should have warned the rescuers not to bring the torch.
bar
Said negligence on the part of the agents of the carrier
Held:
(1) We find no reversible error committed by respondent
court in upholding the dismissal of petitioner's
complaint. The pertinent provision is Art. 2176 of the
Civil Code which states: "Whoever by act or omission
causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict . . . .
". To sustain a claim based thereon, the following
requisites must concur: (a) damage suffered by the
plaintiff; (b) fault or negligence of the defendant; and, (c)
connection of cause and effect between the fault or
negligence of the defendant and the damage incurred by
the plaintiff. We agree with respondent court that
petitioner failed to prove the existence of the second
requisite, i.e., fault or negligence of defendant FILCAR,
because only the fault or negligence of Dahl-Jensen was
sufficiently established, not that of FILCAR. It should be
noted that the damage caused on the vehicle of Soriano
was brought about by the circumstance that Dahl-Jensen
swerved to the right while the vehicle that he was
driving was at the center lane. It is plain that the
negligence was solely attributable to Dahl-Jensen thus
making the damage suffered by the other vehicle his
personal liability. Respondent FILCAR did not have any
participation therein. Respondent FILCAR being engaged
in a rent-a-car business was only the owner of the car
leased to Dahl-Jensen. As such, there was no vinculum
juris between them as employer and employee.
Respondent FILCAR cannot in any way be responsible for
the negligent act of Dahl-Jensen, the former not being an
employer of the latter.
(2) Petitioner's insistence on MYC-Agro-Industrial
Corporation is rooted in a misapprehension of our ruling
therein. In that case, the negligent and reckless
operation of the truck owned by petitioner corporation
caused injuries to several persons and damage to
property. Intending to exculpate itself from liability, the
corporation raised the defense that at the time of the
collision it had no more control over the vehicle as it was
leased to another; and, that the driver was not its
employee but of the lessee. The trial court was not
persuaded as it found that the true nature of the alleged
lease contract was nothing more than a disguise effected
by the corporation to relieve itself of the burdens and
responsibilities of an employer. We upheld this finding
and affirmed the declaration of joint and several liability
of the corporation with its driver.
FINMAN GENERAL ASSURANCE
CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and JULIA
SURPOSA, respondents.
Aquino and Associates for petitioner.
Public Attorney’s Office for private respondent.
Ponente: NOCON
FACTS:
[P]etitioner filed this petition alleging grove abuse of
discretion on the part of the appellate court in applying
the principle of “expresso unius exclusio alterius” in a
personal accident insurance policy since death resulting
from murder and/or assault are impliedly excluded in
said insurance policy considering that the cause of death
of the insured was not accidental but rather a deliberate
and intentional act of the assailant in killing the former
as indicated by the location of the lone stab wound on
the insured. Therefore, said death was committed with
deliberate intent which, by the very nature of a personal
accident insurance policy, cannot be indemnified.
ISSUE: Whether or not death petitioner is correct that
results from assault or murder deemed are not included
in the terms “accident” and “accidental”.
HELD: nNO. Petition for certiorari with restraining order
and preliminary injunction was denied for lack of merit.
RATIO:
The terms “accident” and “accidental” as used in
insurance contracts have not acquired any technical
meaning, and are construed by the courts in their
ordinary and common acceptation. Thus, the terms have
been taken to mean that which happen by chance or
fortuitously, without intention and design, and which is
unexpected, unusual, and unforeseen. 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 cause and,
therefore, not expected.
[I]t is well settled that contracts of insurance are to be
construed liberally in favor of the insured and strictly
against the insurer. Thus ambiguity in the words of an
insurance contract should be interpreted in favor of its
beneficiary.
FINMAN GENERAL ASSURANCE CORPORATION vs. THE
HONORABLE COURT OF APPEALS 213 SCRA 493,
September 2, 1992 NOCON, J.:
FACTS:
On October 22, 1986, deceased, Carlie Surposa was
insured with petitioner Finman General Assurance
Corporation with his parents, spouses Julia and Carlos
Surposa, and brothers Christopher, Charles, Chester and
Clifton, all surnamed, Surposa, as beneficiaries. While
said insurance policy was in full force and effect, the
insured, Carlie Surposa, died on October 18, 1988 as a
result of a stab wound inflicted by one of the three (3)
unidentified men. Private respondent and the other
beneficiaries of said insurance policy filed a written
notice of claim with the petitioner insurance company
which denied said claim contending that murder and
assault are not within the scope of the coverage of the
insurance policy. Private respondent filed a complaint
with the Insurance Commission which rendered a
favorable response for the respondent. The appellate
court ruled likewise. Petitioner filed this petition alleging
grave abuse of discretion on the part of the appellate
court in applying the principle of "expresso unius
exclusio alterius" in a personal accident insurance policy,
since death resulting from murder and/or assault are
impliedly excluded in said insurance policy considering
that the cause of death of the insured was not accidental
but rather a deliberate and intentional act of the
assailant. Therefore, said death was committed with
deliberate intent which, by the very nature of a personal
accident insurance policy, cannot be indemnified.
ISSUE: Whether or not the insurer is liable for the
payment of the insurance premiums
 HELD:  accidental death which was secured by one Melencio
Yes, the insurer is still liable. Contracts of insurance are
to be construed liberally in favor of the insured and
strictly against the insurer. Thus ambiguity in the words
of an insurance contract should be interpreted in favor
of its beneficiary. The terms "accident" and "accidental"
as used in insurance contracts have not acquired any
technical meaning, and are construed by the courts in
their ordinary and common acceptation. Thus, the terms
have been taken to mean that which happen by chance
or fortuitously, without intention and design, and which
is unexpected, unusual, and unforeseen. Where the
death or injury is not the natural or probable result of
the insured's voluntary act, or if something unforeseen
occurs in the doing of the act which produces the injury,
the resulting death is within the protection of the
policies insuring against death or injury from accident. In
the case at bar, it cannot be pretended that Carlie
Surposa died in the course of an assault or murder as a
result of his voluntary act considering the very nature of
these crimes. Neither can it be said that where was a
capricious desire on the part of the accused to expose
his life to danger considering that he was just going
home after attending a festival. Furthermore, the
personal accident insurance policy involved herein
specifically enumerated only ten (10) circumstances
wherein no liability attaches to petitioner insurance
company for any injury, disability or loss suffered by the
insured as a result of any of the stimulated causes. The
principle of " expresso unius exclusio alterius" — the
mention of one thing implies the exclusion of another
thing — is therefore applicable in the instant case since
murder and assault, not having been expressly included
in the enumeration of the circumstances that would
negate liability in said insurance policy cannot be
considered by implication to discharge the petitioner
insurance company from liability for, any injury,
disability or loss suffered by the insured. Thus, the failure
of the petitioner insurance company to include death
resulting from murder or assault among the prohibited
risks leads inevitably to the conclusion that it did not
intend to limit or exempt itself from liability for such
death.
Calanoc v. Court of Appeals
G.R. No. L-8151, 16 December 1955, 98 Phil. 79
FACTS: This suit involves the collection of P2,000
representing the value of a supplemental policy covering
Basilio from the Philippine American Life Insurance
Company.
Melencio Basilio was a watchman of the Manila Auto
Supply located at the corner of Avenida Rizal and
Zurbaran. He secured a life insurance policy from the
Philippine American Life Insurance Company in the
amount of P2,000 to which was attached a
supplementary contract covering death by accident. On
January 25, 1951, he died of a gunshot wound on the
occasion of a robbery committed in the house of Atty.
Ojeda at the corner of Oroquieta and Zurbaan streets.
Virginia Calanoc, the widow, was paid the sum of P2,000,
face value of the policy, but when she demanded the
payment of the additional sum of P2,000 representing
the value of the supplemental policy, the company
refused alleging, as main defense, that the deceased
died because he was murdered by a person who took
part in the commission of the robbery and while making
an arrest as an officer of the law which contingencies
were expressly excluded in the contract and have the
effect of exempting the company from liability.
ISSUE: Whether the Philippine American Insurance is
liable for the supplemental contract
RULING:
Yes. The circumstance that he was a mere watchman
and had no duty to heed the call of Atty. Ojeda should
not be taken as a capricious desire on his part to expose
his life to danger considering the fact that the place he
was in duty-bound to guard was only a block away. In
volunteering to extend help under the situation, he
might have thought, rightly or wrongly, that to know the
truth was in the interest of his employer it being a
matter that affects the security of the neighborhood. No
doubt there was some risk coming to him in pursuing
that errand, but that risk always existed it being inherent
in the position he was holding. He cannot therefore be
blamed solely for doing what he believed was in keeping
with his duty as a watchman and as a citizen. And he
cannot be considered as making an arrest as an officer of
the law, as contended, simply because he went with the
traffic policeman, for certainly he did not go there for
that purpose nor was he asked to do so by the
policeman.
While as a general rule “the parties may limit the
coverage of the policy to certain particular accidents and
risks or causes of loss, and may expressly except other
risks or causes of loss therefrom” (45 C. J. S. 781-782),
however, it is to be desired that the terms and
phraseology of the exception clause be clearly expressed
so as to be within the easy grasp and understanding of
the insured, for if the terms are doubtful or obscure the
same must of necessity be interpreted or resolved
aganst the one who has caused the obscurity. (Article
1377, new Civil Code) And so it has bene generally held
that the “terms in an insurance policy, which are
ambiguous, equivacal, or uncertain . . . are to be
construed strictly and most strongly against the insurer,
and liberally in favor of the insured so as to effect the
dominant purpose of indemnity or payment to the
insured, especially where a forfeiture is involved” (29
Am. Jur., 181), and the reason for this rule is that he
“insured usually has no voice in the selection or
arrangement of the words employed and that the
language of the contract is selected with great care and
deliberation by experts and legal advisers employed by,
and acting exclusively in the interest of, the insurance
company.” (44 C. J. S., p. 1174.)
We are therefore persuaded to conclude that the
circumstances unfolded in the present case do not
warrant the finding that the death of the unfortunate
victim comes within the purview of the exception clause
of the supplementary policy and, hence, do not exempt
the company from liability.
Wherefore, reversing the decision appealed from, we
hereby order the company to pay petitioner-appellant
the amount of P2,000, with legal interest from January
26, 1951 until fully paid, with costs.
Biagtan v. Insular Life Assurance Co., Ltd.
G.R. No. L-25579, 29 March 1972, 44 SCRA 58
FACTS:
Juan S. Biagtan was insured with defendant InsularLife
Assurance Company under Policy No. 398075 for the
sum of P5,000.00 and, under a supplementary contract
denominated “Accidental Death Benefit Clause, for an
additional sum of P5,000.00 if “the death of the Insured
resulted directly from bodily injury effected solely
through external and violent means sustained in an
accident … and independently of all other causes.” The
clause, however,expressly provided that it would not
apply where death resulted from an injury”intentionally
inflicted by another party.”
On the night of May 20, 1964, or during the first hours of
the following day a band of robbers entered the house
of the insured Juan S. Biagtan. On the night of May 20,
1964 or the first hours of May 21, 1964, while the said
life policy and supplementary contract were in full force
and effect, the house of insured Juan S. Biagtan was
robbed by a band of robbers who were charged in and
convicted by the Court of First Instance of Pangasinan for
robbery with homicide; that in committing the robbery,
the robbers, on reaching the staircase landing on the
second floor, rushed towards the door of the second
floor room, where they suddenly met a person near the
door of oneof the rooms who turned out to be the
insured Juan S. Biagtan who received thrusts from their
sharp-pointed instruments, causing wounds on the body
of said Juan S. Biagtan resulting in his death.
Plaintiffs, as beneficiaries of the insured, filed a claim
under the policy. The insurance company paid the basic
amount of P5,000.00 but refused to pay the additional
sum of P5,000.00 under the accidental death benefit
clause, on the ground that the insured’s death resulted
from injuries intentionally inflicted by third parties and
therefore was not covered. Plaintiffs filed suit to recover,
and after due hearing the court a quo rendered
judgment in their favor. Hence the present appeal by the
insurer.
ISSUE:
Whether under the facts are stipulated and found by the
trial court the wounds received by the insured at the
hands of the robbers were inflicted intentionally.
RULING:
Yes. It should be noted that the exception in the
accidental benefit clause invoked by the appellant does
not speak of the purpose — whether homicidal or not —
of a third party in causing the injuries, but only of the
fact that such injuries have been “intentionally” inflicted
— this obviously to distinguish them from injuries which,
although received at the hands of a third party, are
purely accidental. This construction is the basic idea
expressed in the coverage of the clause itself, namely,
that “the death of the insured resulted directly from
bodily injury effected solely through external and violent
means sustained in an accident … and independently of
all other causes.”
But where a gang of robbers enter a house and coming
face to face with the owner, even if unexpectedly, stab
him repeatedly, it is contrary to all reason and logic to
say that his injuries are not intentionally inflicted,
regardless of whether they prove fatal or not. As it was,
in the present case they did prove fatal, and the robbers
have been accused and convicted of the crime of
robbery with homicide.
EMILIA T. BIAGTAN v. INSULAR LIFE ASSURANCE
COMPANY, GR No. L-25579, 1972-03-29
Facts:
Juan S. Biagtan was insured with defendant Insular Life
Assurance Company under Policy No. 398075 for the
sum of P5,000.00 and, under a supplementary contract
denominated "Accidental Death Benefit Clause, for an
additional sum of P5,000.00 if "the... death of the
Insured resulted directly from bodily injury effected
solely through external and violent means sustained in
an accident * * * and independently of all other causes."
The clause, however, expressly provided that it would
not apply where death resulted from an injury
"intentionally inflicted by a third party."
On the night of May 20, 1964 or during the first hours of
the following day a band of robbers entered the house
of the insured Juan S. Biagtan.
that in committing the robbery, the robbers, on,
reaching the staircase landing of the second floor,
rushed towards the doors of the second floor room,
where they suddenly met a person near the door of one
of the... rooms who turned out to be the insured Juan S.
Biagtan who received thrusts from their sharp-pointed
instruments, causing wounds on the body of said Juan S.
Biagtan resulting in his death at about 7 a.m. on the
same day, May 21, 1964
Plaintiffs, as beneficiaries of the insured, filed a claim
under the policy.
The insurance company paid the basic amount of
P5,000.00 but refused to pay the additional sum of
P5,000.00 under the accidental death benefit clause, on
the ground that the insured's death... resulted from
injuries intentionally inflicted by third parties and
therefore was not covered.
Plaintiffs filed suit to recover, and after due hearing the
court a quo rendered judgment in their favor.
Issues: whether under the facts as stipulated and found
by the trial court the wounds received by the insured at
the hands of the robbers nine in all, five of them mortal
and four non-mortal were inflicted intentionally.
Ruling:
The case of Calanoc vs. Court of Appeals, 98 Phil. 79, is
relied upon by the trial court in support of its decision. 
The facts in that case, however, are different from those
obtaining here.
For while a single shot fired from a distance, and by a
person who was not even seen... aiming at the victim,
could indeed have been fired without intent to kill or
injure, nine wounds inflicted with bladed weapons at
close range cannot conceivably be considered as
innocent insofar as such intent is concerned.  The
manner of execution of the crime permits no... other
conclusion.
Thus, it has been held that "intentional" as used in an
accident policy excepting... intentional injuries inflicted
by the insured or any other person, etc., implies the
exercise of the reasoning faculties, consciousness, and
volition.[1] Where a provision of the policy excludes
intentional injury, it is the intention of the person...
inflicting the injury that is controlling.[2]   If the injuries
suffered by the insured clearly resulted from the
intentional act of a third person the insular is relieved
from liability as stipulated.
DISSENT, Teehankee:
The case of Calanoc cited by the lower court is indeed
controlling here.
the burden of proving that the killing was intentional so
as to have it fall within the stipulated exception of
having resulted from injuries "intentionally inflicted by a
third part"... must' be discharged by the insurance
company.
in such cases where the killing does not amount to
murder, it must be held to be a "pure accident" on the
part of the victim, compensable with double-indemnity,
even though the malefactor is... criminally liable for his
act.
Defendant company patently failed to discharge its
burden of proving that the fatal injuries were inflicted
upon the deceased intentionally, i.e. deliberately.
It has long been an established rule of construction of
so-called contracts of adhesion such as insurance
contracts, where the insured is handed a printed
insurance policy whose fine-print language has long
been selected with great care and deliberation by
specialists and... legal advisers employed by and acting
exclusively in the interest of the insurance company, that
the terms and phraseology of the policy, particularly of
any exception clauses, must be clearly expressed so as to
be easily understood by the insured and any
"ambiguous, equivocal... or uncertain terms" are to be
"construed strictly and most strongly against the insurer
and liberally in favor of the insured so as to effect the
dominant purpose indemnity or payment to the insured,
especially where a forfeiture is involved."
FINALLY , the untenability of herein defendant insurer's
claim that the insured's death fell within the exception is
further heightened by the stipulated fact that two other
insurance companies which likewise covered the insured
for much larger sums under... similar accidental death
benefit clauses promptly paid the benefits thereof to
plaintiffs-beneficiaries.
Sun v CA G.R. No. 92383 July 17, 1992 J. Cruz
Facts: Lim accidentally killed himself with his gun after
removing the magazine, showing off, pointing the gun at
his secretary, and pointing the gun at his temple. The
widow, the beneficiary, sued the petitioner and won
200,000 as indemnity with additional amounts for other
damages and attorney’s fees. This was sustained in the
Court of Appeals then sent to the Supreme court by the
insurance company.
Issue:
1. Was Lim’s widow eligible to receive the benefits?
2. Were the other damages valid?
Held:
1. Yes  2. No
Ratio: 1. There was an accident.
De la Cruz v. Capital Insurance says that "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." This was true when he fired the gun.
Under the insurance contract, the company wasn’t liable
for bodily injury caused by attempted suicide or by one
needlessly exposing himself to danger except to save
another’s life.
Lim wasn’t thought to needlessly expose himself to
danger due to the witness testimony that he took steps
to ensure that the gun wasn’t loaded. He even assured
his secretary that the gun was loaded.
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.
2. “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 a premium on the right to litigate which
should not be so. For those expenses, the law deems the
award of costs as sufficient.”
De La Cruz V. Capital Ins. & Surety Co, Inc. (1966)
G.R. No. L-21574           June 30, 1966
Lessons Applicable: Liability of Insurer for Suicide and
FACTS: Eduardo de la Cruz, employed as a mucker in the
Itogon-Suyoc Mines, Inc. in Baguio, was the holder of an
accident insurance policy "against death or disability
caused by accidental means"
January 1, 1957: For the celebration of the New Year, the
Itogon-Suyoc Mines, Inc. sponsored a boxing contest for
general entertainment wherein Eduardo, a non-
professional boxer participated
In the course of his bout with another non-professional
boxer of the same height, weight, and size, Eduardo
slipped and was hit by his opponent on the left part of
the back of the head, causing Eduardo to fall, with his
head hitting the rope of the ring
He was brought to the Baguio General Hospital the
following day.  He died due to hemorrhage, intracranial.
Simon de la Cruz, the father of the insured and who was
named beneficiary under the policy, thereupon filed a
claim with the insurance company
The Capital Insurance and Surety co., inc denied stating
that the death caused by his participation in a boxing
contest was not accidental
RTC: favored Simon
ISSUE: W/N the cause of death was accident
HELD:YES. Eduardo slipped, which was unintentional
The terms "accident" and "accidental" as used in
insurance contracts, have not acquired any technical
meaning and are construed by the courts in their
ordinary and common acceptation happen by chance or
fortuitously, without intention and design, and which is
unexpected, unusual, and unforeseen event that takes
place without one's foresight or expectation event that
proceeds from an unknown cause, or is an unusual effect
of a known cause and, therefore, not expected where
the death or injury is not the natural or probable result
of the insured's voluntary act, or if something
unforeseen occurs in the doing of the act which
produces the injury, the resulting death is within the
protection of policies insuring against death or injury
from accident while the participation of the insured in
the boxing contest is voluntary, the injury was sustained
when he slid, giving occasion to the infliction by his
opponent of the blow that threw him to the ropes of the
ring is not
The fact that boxing is attended with some risks of
external injuries does not make any injuries received in
the course of the game not accidental In boxing as in
other equally physically rigorous sports, such as
basketball or baseball, death is not ordinarily anticipated
to result. If, therefore, it ever does, the injury or death
can only be accidental or produced by some unforeseen
happening or event as what occurred in this case
Furthermore, the policy involved herein specifically
excluded from its coverage —
(e) Death or disablement consequent upon the Insured
engaging in football, hunting, pigsticking, steeplechasing,
polo-playing, racing of any kind, mountaineering, or
motorcycling.
Death or disablement resulting from engagement in
boxing contests was not declared outside of the
protection of the insurance contract 
Pineda V. CA (1993) G.R. No. 105562  September 27,
1993
Lessons Applicable: Who Exercises Rights of Minor
Insured or Beneficiaries (Insurance) Art. 225 Family Code
FACTS: Prime Marine Services, Inc. (PMSI), a
crewing/manning outfit, procured Group PoIicy
from Insular Life Assurance Co., Ltd. to provide life
insurance coverage to its sea-based employees enrolled
under the plan.  authority to Capt. Nuval to demand, receive and take
February 17 1986: 6 employees of the PMSI perished at
sea when M/V Nemos, a Greek cargo vessel, sunk
somewhere in El Jadida, Morocco
The beneficiaries asked President and General Manager
of PMSI, Capt. Roberto Nuval and issued him special
powers of attorney authorizing him to "follow up, ask,
demand, collect and receive" for their benefit
indemnities.  It only verbally pertained to the sinking of
the fatal vessel
Unknown to them, however, the PMSI, in its capacity as
employer and policyholder of the life insurance of its
deceased workers, filed with formal claims with their
special power of attorney  Ayo and Lucia Lontok
Capt. Nuval, upon receipt of these checks from the
treasurer, who happened to be his son-in-law, endorsed
and deposited them in his account with the Commercial
Bank of Manila, now Boston Bank
Upon learning that they are entitled to the claim, they
sought to recover from Insular Life but it denied on the
ground that they already delivered to PMSI
The fact that there was a verbal agreement between
complainants-appellees and Capt. Nuval limiting the
authority of the latter to claiming specified death
benefits cannot prejudice the insurance company which
relied on the terms of the powers of attorney which on
their face do not disclose such limitation
Section 180 of the Insurance Code has been amended by
the Family Code 17 which grants the father and mother
joint legal guardianship over the property of their
unemancipated common child without the necessity of a
court appointment; however, when the market value of
the property or the annual income of the child exceeds
P50,000.00, the parent concerned shall be required to
put up a bond in such amount as the court may
determine.
Insurance Commission: favored petitioners
The Insular Life Assurance Company appealed stating
that
(a) had no jurisdiction over the case considering that the
claims exceeded P100,000
(b) erred in holding that the powers of attorney relied
upon by Insular Life were insufficient to convey absolute
delivery of the insurance proceeds pertaining to the
petitioners
(c) erred in not giving credit to the version of Insular Life
that the power of attorney supposed to have been
executed in favor of the Alarcons was missing, and
(d) erred in holding that Insular Life was liable for
violating Section 180 of the Insurance Code for having
released to the surviving mothers the insurance
proceeds pertaining to the beneficiaries who were still
minors despite the failure of the former to obtain a court
authorization or to post a bond.
CA: eliminated the award to minor beneficiaries Dina
ISSUE: W/N the minor beneficiaries award should be
eliminated
HELD: YES. petition is GRANTED.  CA Reversed. Insurance
Commission Reinstated.
Being special powers of attorney, they must be strictly
construed.  Insular Life knew that a power of attorney in
favor of Capt. Nuval for the collection and receipt of such
proceeds was a deviation from its practice with respect
to group policies.
Group Insurance
coverage terms for group insurance are usually stated in
a master agreement or policy that is issued by the
insurer to a representative of the group or to an
administrator of the insurance program
employer acts as a functionary in the collection and
payment of premiums and in performing related duties
falling within the ambit of administration of a group
policy is the disbursement of insurance payments by the
employer to the employees
employee is in the position of a real party to the master
policy
employees is the true source of the benefits, which are a
form of additional compensation to them
enables the employees to carry a larger amount of
insurance than they could otherwise, and helps to attract
and hold a permanent class of employees
Even granting for the sake of argument that the special
powers of attorney were in due form, Insular Life was
grossly negligent in delivering the checks, drawn in favor
of the petitioners, to a party who is not the agent
mentioned in the special power of attorney
Nor can we agree with the opinion of the public
respondent that since the shares of the minors in the
insurance proceeds are less than P50,000.00, then under
Article 225 of the Family Code their mothers could
receive such shares without need of either court
appointments as guardian or the posting of a bond
Art. 225.    The father and the mother shall jointly
exercise legal guardianship over the property of their
unemancipated common child without the necessity of a
court appointment. In case of disagreement, the father's
decision shall prevail, unless there is judicial order to the
contrary.
Where the market value of the property or the annual
income of the child exceeds P50,000, the parent
concerned shall be required to furnish a bond in such
amount as the court may determine, but not less than
ten per centum (10%) of the value of the property or
annual income, to guarantee the performance of the
obligations prescribed for general guardians.
It is clear from the said Article that regardless of the
value of the unemancipated common child's property,
the father and mother ipso jure become the legal
guardian of the child's property. However, if the market
value of the property or the annual income of the child
exceeds P50,000.00, a bond has to be posted by the
parents concerned to guarantee the performance of the
obligations of a general guardian.
It must, however, be noted that the second paragraph of
Article 225 of the Family Code speaks of the "market
value of the property or the annual income of the child,"
which means, therefore, the aggregate of the child's
property or annual income; if this exceeds P50,000.00, a
bond is required. 
There is no evidence that the share of each of the minors
in the proceeds of the group policy in question is the
minor's only property. Without such evidence, it would
not be safe to conclude that, indeed, that is his only
property.
Eternal Gardens Memorial Park Corp. V. Philippine
American Life Insurance Corp. (2008)
G.R. No. 166245             April 9, 2008
Exception to Perfection (Insurance)
FACTS: December 10, 1980: Philippine American Life
Insurance Company (Philamlife) entered into an
agreement denominated as Creditor Group Life Policy
No. P-19202 with Eternal Gardens Memorial Park
Corporation (Eternal)
Under the policy (renewable annually), the clients of
Eternal who purchased burial lots from it on installment
basis would be insured by Philamlife
amount of insurance coverage depended upon the
existing balance 
Eternal complied by submitting a letter dated December
29, 1982, a list of insurable balances of its lot buyers for
October 1982 which includes John Chuang which was
stamped as received by Philam Life
August 2, 1984, Chuang died with a balance of 100,000
php
April 25, 1986: Philamlife had not furnished Eternal with
any reply on its insurance claim so its demanded its
claim
According to Philam Life, since the application was
submitted only on November 15, 1984, after his death,
Mr. John Uy Chuang was not covered under the Policy
since his application was not approved.  Moreover, the
acceptance of the premiums are only in trust for and not
a sign of approval.
RTC: favored Eternal
CA: Reversed RTC
ISSUE: W/N Philam's inaction or non-approval meant the
perfection of the insurance contract.
HELD: YES. CA reversed
construed in favor of the insured and in favor of the
effectivity of the insurance contract
Upon a party’s purchase of a memorial lot on installment
from Eternal, an insurance contract covering the lot
purchaser is created and the same is effective, valid, and
binding until terminated by Philamlife by disapproving
the insurance application
Moreover, the mere inaction of the insurer on the
insurance application must not work to prejudice the
insured
The termination of the insurance contract by the insurer
must be explicit and unambiguous
REPUBLIC v. SUNLIFE ASSURANCE COMPANY OF
CANADA, GR NO. 158085, 2005-10-14
Facts:
Sun Life is a mutual life insurance company organized
and existing under the laws of Canada. It is registered
and authorized... to engage in business in the Philippines
as a mutual life insurance... company
Sun Life filed with the
CIR... its insurance premium tax return for the third
quarter of 1997 and paid the premium tax... petitioner...
filed with the CIR its... documentary stamp tax (DST)...
declaration returns... paid the total amount... the [Court
of Tax Appeals... rendered its decision in Insular Life
Assurance Co. Ltd. v. [CIR... which held that mutual life
insurance companies are purely cooperative companies
and are exempt from the payment of premium tax and
DST.
Sun Life surmised that[,] being a mutual life insurance
company, it was likewise exempt from the payment of
premium tax and DST.
Sun Life filed with... the CIR an administrative claim for
tax credit
For failure of the CIR to act upon the administrative
claim
Sun Life filed with the CTA a petition for review... the
CTA found in favor of Sun Life.
Seeking reconsideration of the decision of the CTA, the
CIR argued that Sun Life... ought to have registered,
foremost, with the Cooperative Development Authority
before it could enjoy the exemptions from premium tax
and DST extended to purely cooperative companies
For its failure to register, it could not avail of the
exemptions prayed for.
Issues: Whether or not respondent is exempted from
payment of tax on life insurance premiums and
documentary stamp tax.
Ruling: Having satisfactorily proven to the Court of Tax
Appeals, to the Court of Appeals and to this Court that it
is a bona fide cooperative, respondent is entitled to
exemption from the payment of taxes on life insurance
premiums and documentary stamps. Not being...
governed by the Cooperative Code of the Philippines, it
is not required to be registered with the Cooperative
Development Authority in order to avail itself of the tax
exemptions. Significantly, neither the Tax Code nor the
Insurance Code mandates this administrative...
registration.
The Tax Code defines a cooperative as an association
"conducted by the members thereof with the money
collected from among themselves and solely for their
own protection and not for profit."
Without a doubt, respondent is a cooperative engaged in
a... mutual life insurance business.
Under the Tax Code although respondent is a
cooperative, registration with the Cooperative
Development Authority (CDA)[45] is not necessary in
order for it to be exempt from the payment of both
percentage taxes on insurance premiums, under Section
121; and... documentary stamp taxes on policies of
insurance or annuities it grants, under Section 199.
First, the Tax Code does not require registration with the
CDA.
Second, the provisions of the Cooperative Code of the
Philippines[48] do not apply.
Third, not even the Insurance Code requires registration
with the CDA.
Having determined that respondent is a cooperative that
does not have to be registered with the CDA, we hold
that it is entitled to exemption from both premium taxes
and documentary stamp taxes (DST).
T... he Tax Code is clear
On the one hand,... Section 121 of the Code exempts
cooperative companies from the 5 percent percentage
tax on insurance premiums.
On the other hand, Section 199 also exempts from the
DST, policies of insurance or annuities made or granted
by cooperative... companies.
Being a cooperative, respondent is thus exempt from
both types of taxes.
Thus, the grant of a tax credit certificate to respondent...
was correct.
Whether Respondent Is a Cooperative
The Tax Code defines a cooperative as an association
"conducted by the members thereof with the money
collected from among themselves and solely for their
own protection and not for profit."8 Without a doubt,
respondent is a cooperative engaged in a mutual life
insurance business.
First, it is managed by its members. Both the CA and the
CTA found that the management and affairs of
respondent were conducted by its member-
policyholders.9
A stock insurance company doing business in the
Philippines may "alter its organization and transform
itself into a mutual insurance company."10 Respondent
has been mutualized or converted from a stock life
insurance company to a nonstock mutual life insurance
corporation11 pursuant to Section 266 of the Insurance
Code of 1978.12 On the basis of its bylaws, its ownership
has been vested in its member-policyholders who are
each entitled to one vote;13 and who, in turn, elect from
among themselves the members of its board of
trustees.14 Being the governing body of a nonstock
corporation, the board exercises corporate powers, lays
down all corporate business policies, and assumes
responsibility for the efficiency of management.15
Second, it is operated with money collected from its
members. Since respondent is composed entirely of
members who are also its policyholders, all premiums
collected obviously come only from them.16
The member-policyholders constitute "both insurer and
insured"17 who "contribute, by a system of premiums or
assessments, to the creation of a fund from which all
losses and liabilities are paid."18 The
premiums19 pooled into this fund are earmarked for the
payment of their indemnity and benefit claims.
Third, it is licensed for the mutual protection of its
members, not for the profit of anyone.
As early as October 30, 1947, the director of commerce
had already issued a license to respondent -- a
corporation organized and existing under the laws of
Canada -- to engage in business in the
Philippines.20 Pursuant to Section 225 of Canada’s
Insurance Companies Act, the Canadian minister of state
(for finance and privatization) also declared in its
Amending Letters Patent that respondent would be a
mutual company effective June 1, 1992.21 In the
Philippines, the insurance commissioner also granted it
annual Certificates of Authority to transact life insurance
business, the most relevant of which were dated July 1,
1997 and July 1, 1998.22
A mutual life insurance company is conducted for the
benefit of its member-policyholders,23 who pay into its
capital by way of premiums. To that extent, they are
responsible for the payment of all its losses.24 "The cash
paid in for premiums and the premium notes constitute
their assets x x x."25 In the event that the company itself
fails before the terms of the policies expire, the
member-policyholders do not acquire the status of
creditors.26 Rather, they simply become debtors for
whatever premiums that they have originally agreed to
pay the company, if they have not yet paid those
amounts in full, for "[m]utual companies x x x depend
solely upon x x x premiums."27 Only when the premiums
will have accumulated to a sum larger than that required
to pay for company losses will the member-policyholders
be entitled to a "pro rata division thereof as profits."28
Contributing to its capital, the member-policyholders of
a mutual company are obviously also its
owners.29 Sustaining a dual relationship inter se, they
not only contribute to the payment of its losses, but are
also entitled to a proportionate share30 and participate
alike31 in its profits and surplus.
Where the insurance is taken at cost, it is important that
the rates of premium charged by a mutual company be
larger than might reasonably be expected to carry the
insurance, in order to constitute a margin of safety. The
table of mortality used will show an admittedly higher
death rate than will probably prevail; the assumed
interest rate on the investments of the company is made
lower than is expected to be realized; and the provision
for contingencies and expenses, made greater than
would ordinarily be necessary.32 This course of action is
taken, because a mutual company has no capital stock
and relies solely upon its premiums to meet unexpected
losses, contingencies and expenses.
Certainly, many factors are considered in calculating the
insurance premium. Since they vary with the kind of
insurance taken and with the group of policyholders
insured, any excess in the amount anticipated by a
mutual company to cover the cost of providing for the
insurance over its actual realized cost will also vary. If a
member-policyholder receives an excess payment, then
the apportionment must have been based upon a
calculation of the actual cost of insurance that the
company has provided for that particular member-
policyholder. Accordingly, in apportioning divisible
surpluses, any mutual company uses a contribution
method that aims to distribute those surpluses among
its member-policyholders, in the same proportion as
they have contributed to the surpluses by their
payments.33
Sharing in the common fund, any member-policyholder
may choose to withdraw dividends in cash or to apply
them in order to reduce a subsequent premium,
purchase additional insurance, or accelerate the
payment period. Although the premium made at the
beginning of a year is more than necessary to provide for
the cost of carrying the insurance, the member-
policyholder will nevertheless receive the benefit of the
overcharge by way of dividends, at the end of the year
when the cost is actually ascertained. "The declaration of
a dividend upon a policy reduces pro tanto the cost of
insurance to the holder of the policy. That is its purpose
and effect."34
A stipulated insurance premium "cannot be increased,
but may be lessened annually by so much as the
experience of the preceding year has determined it to
have been greater than the cost of carrying the
insurance x x x."35 The difference between that
premium and the cost of carrying the risk of loss
constitutes the so-called "dividend" which, however, "is
not in any real sense a dividend."36 It is a technical term
that is well understood in the insurance business to be
widely different from that to which it is ordinarily
attached.
The so-called "dividend" that is received by member-
policyholders is not a portion of profits set aside for
distribution to the stockholders in proportion to their
subscription to the capital stock of a corporation.37 One,
a mutual company has no capital stock
to which subscription is necessary; there are no
stockholders to speak of, but only members. And, two,
the amount they receive does not partake of the nature
of a profit or income. The quasi-appearance of profit will
not change its character. It remains an overpayment, a
benefit to which the member-policyholder is equitably
entitled.38
Verily, a mutual life insurance corporation is a
cooperative that promotes the welfare of its own
members. It does not operate for profit, but for the
mutual benefit of its member-policyholders. They
receive their insurance at cost, while reasonably and
properly guarding and maintaining the stability and
solvency of the company.39 "The economic benefits
filter to the cooperative members. Either equally or
proportionally, they are distributed among members in
correlation with the resources of the association
utilized."40
It does not follow that because respondent is registered
as a nonstock corporation and thus exists for a purpose
other than profit, the company can no longer make any
profits.41 Earning profits is merely its secondary, not
primary, purpose. In fact, it may not lawfully engage in
any business activity for profit, for to do so would
change or contradict its nature42 as a non-profit
entity.43 It may, however, invest its corporate funds in
order to earn additional income for paying its operating
expenses and meeting benefit claims. Any excess profit it
obtains as an incident to its operations can only be used,
whenever necessary or proper, for the furtherance of
the purpose for which it was organized.44
Philippine Home Assurance Corp v. CA and Eastern
Shipping Lines (1996)
Kapunan, J.
A boat burned down and its cargo was subsequently
salvaged. The shipping company asked for additional
payment from the people who were supposed to get the
shipment of the cargo (the consignees) for the salvage of
the cargo. The charges were all paid by Phil Home
Assurance. Phil Home Assurance, as subrogee of the
rights of the people who were supposed to get the
shipment, now wants to seek reimbursement from the
shipping company. Issue: Is Phil Assurance entitled to the
reimbursement? SC says yes they are. The fire occurred
because of the negligence of the shipping company and
its captain and crew. It stored a cylinder with flammable
substances close to the engine room, which is heat
producing. This caused an explosion. And so, the fire was
not a natural calamity. Therefore, the liable one is the
shipping company.
 Eastern Shipping Lines loaded the following to boat SS
Eastern Explorer in Kobe, Japan for shipping to Manila
and Cebu, (all with their corresponding Bills of lading):
o 2 boxes internal combustion engine parts, consigned
to William Lines
o 10 tons (or 334 bags) ammonium chloride, consigned
to Orca's Company
o 200 bags of Glue 300, consigned to Pan Oriental Match
Company
o Some garments, consigned to Ding Velayo
 While the boat was in Okinawa, a small flame started
on the “acetylene cylinder” in the accomodation area
near the engine room.
 As the crew tried to extinguish the fire, the “acetylene
cylinder” suddenly exploded, causing fire in the
accommodation area.
 Death and severe injuries happened. The whole boat
was on fire. This forced the master and the crew to
abandon ship.
 Thereafter, the boat was found to be a constructive
total loss and its voyage was declared abandoned.
 After several hours, a tugboat arrived near the boat
and towed the boat for the port of Naha, Japan.
 Fire fighting operations were again conducted at the
port. After the fire was put out, the cargos which were
saved were loaded to another boat for delivery to
Manila and/or Cabu.
 Eastern Shipping charged the consignees some
amounts corresponding to additional freight and salvage
charges,
 The charges were all paid by Philippine Home
Assurance Corp under protest.
 Phil Assurance, as subrogee of the consignees, filed a
complaint in RTC-Manila against Eastern Shipping to
recover the sum paid under protest.
 Phil Assurance says:
o The charges were actually damages directly brought
about by the fault and/or breach of contract of Eastern
Shipping.
 Eastern Shipping says:
o That it exercised the diligence required by law in the
handling of the shipment;
o That the fire was caused by an unforeseen event
o That the additional freight charges are due and
demandable pursuant to the Bill of Lading;
o That salvage charges are properly collectible under the
Salvage Law.
 RTC dismissed Phil Assurance’s complaint.
 CA affirmed.
 In the SC, Phil Assurance questions the finding of the
RTC and CA that the fire was a natural disaster.
Issue: Is Phil Assurance entitled to recover what it had
paid?
Held: Yes.
Ratio: (First, the SC says the assignment of errors by the
petitioners in this case by raising the case to the SC are
challenges to findings of fact. And it is well settled that
this Court is not a trier of factsblah blah blah…)
Re: What is the issue in this case?
 The goods were not lost or damaged by the fire. The
goods were all delivered to the consignees, even if the
transshipment took longer.
 What is at issue, therefore, is NOT whether or not the
carrier is liable for the loss, damage, or deterioration of
the goods but WHO, among the carrier, consignee or
insurer of the goods, is liable for the additional charges
incurred by the owner of the ship in the salvage
operations and in the transshipment of the goods via a
different carrier.
Re: Natural disaster
 CA affirmed RTC ruling that the fire was a natural
disaster or calamity. Phil Assurance questions this, and
SC agrees with Phil Assurance.
 In Phil jurisprudence, fire may not be considered a
natural disaster since it almost always arises from some
act of man. It cannot be an act of God unless caused by
lightning or a natural disaster or casualty not attributable
to human agency.
 In this case, there was no showing, and none was
alleged by the parties, that the fire was caused by a
natural. Actually, there is strong evidence indicating that
the “acetylene cylinder” caught fire because of the
negligence of Eastern Shipping, its captain, and its crew:
o First, the “acetylene cylinder” should not have been
stored in the accommodation area near the engine room
where the heat generated could cause the cylinder to
explode by spontaneous combustion. Eastern Shipping
should have foreseen that since the cylinder contained
highly flammable material it was in danger of exploding,
being close to the engine room.
o Second, Eastern Shipping should have known that by
storing the cylinder in the accommodation area for
passengers, it unnecessarily exposed its passengers to
grave danger. Curious passengers, ignorant might have
handled the cylinder or could have smoked cigarettes
while in the accommodation area.
o Third, the fact that the cylinder was examined and
certified as having complied with the safety measures by
qualified expertsbefore it was loaded in the boat only
shows that negligence was present in the handling of the
cylinder AFTER it was loaded and WHILE it was on board
the ship.
Re: whether or not expenses incurred in saving the cargo
are considered general average,
 SC says yes. As a rule, general or gross averages include
all damages and expenses which are deliberately caused
in order to save the vessel, its cargo, or both at the same
time, from a real and known risk.
 While this case may technically fall within general
averages, the formalities prescribed under Article 813
and 814 of the Code of Commerce in order to incur the
expenses and cause the damage corresponding to gross
average were NOT complied with. Consequently,
respondent ESLI's claim for contribution from the
consignees of the cargo at the time of the occurrence of
the average turns to naught.
In conclusion:
 Cargo consignees cannot be made liable to Eastern
Shipping for additional freight and salvage charges.
 Eastern Shipping must refund to the insurer, Phil
Assurance, the amount it paid under protest
Judgment reversed.
Fortune Insurance And Surety Co., Inc. V. CA (1995)
G.R. No. 115278 May 23, 1995
Lessons Applicable: Stipulations Cannot Be Segregated
FACTS:Producers Bank of the Philippines insured
with Fortune Insurance and Surety Co. P725,000 which
was lost during a robbery of Producer's armored
vehicle while it was in transit from Pasay City City to its
Makati head office.  
The armored car was driven by Benjamin Magalong Y de
Vera, escorted by Security Guard Saturnino Atiga Y
Rosete.
After an investigation conducted by the Pasay police
authorities, the driver Magalong and guard Atiga were
charged, together with Edelmer Bantigue Y Eulalio,
Reynaldo Aquino and John Doe, with violation of P.D.
532 (Anti-Highway Robbery Law)
Upon claiming, Fortune refused stating that it is not
liable since under the general exceptions of the policy:
any loss caused by any dishonest, fraudulent or criminal
act of the insured or any officer, employee, partner,
director, trustee or authorized representative of the
Insured whether acting alone or in conjunction with
others. . . .
RTC: favored Producers Bank since Driver and Security
Guard were merely assigned
CA: Affirmed RTC  
ISSUE: W/N the driver and security guard are employees
under the general exception
HELD: YES. Petition is granted.
It is clear to us that insofar as Fortune is concerned, it
was its intention to exclude and exempt from protection
and coverage losses arising from dishonest, fraudulent,
or criminal acts of persons granted or having
unrestricted access to Producers' money or payroll.
When it used then the term "employee," it must have
had in mind any person who qualifies as such as
generally and universally understood, or jurisprudentially
established in the light of the four standards in the
determination of the employer-employee relationship,
21 or as statutorily declared even in a limited sense as in
the case of Article 106 of the Labor Code which
considers the employees under a "labor-only" contract
as employees of the party employing them and not of
the party who supplied them to the employer

Producers entrusted the three with the specific duty to

safely transfer the money to its head office, with
Alampay to be responsible for its custody in transit;
Magalong to drive the armored vehicle which would
carry the money; and Atiga to provide the needed
security for the money, the vehicle, and his two other
companions.

A "representative" is defined as one who represents or

stands in the place of another; one who represents
others or another in a special capacity, as an agent, and
is interchangeable with "agent."