1. Eternal Gardens Memorial Park Corporation vs. Phil. American Life Insurance Co., GR No.

166245, 09 April 2008

DOCTRINE:
1. Since an insurance contract is a contract of adhesion, it must be construed liberally in
favor of the insured, and strictly against the insurer, to safeguard the insured’s interest. This
is because of the exclusive control of the insurer over the terms and phraseology of the
contract, ambiguity must be interpreted against the insurer.
2. To characterize the insurer and the insured as contracting parties on equal footing is
inaccurate at best. Insurance contracts are wholly prepared by the insurer with vast
amounts of experience in the industry purposefully used to its advantage. More often than
not, insurance contracts are contracts of adhesion containing technical terms and
conditions of the industry, confusing if at all understandable to laypersons, that are
imposed on those who wish to avail of insurance. As such, insurance contracts are imbued
with public interest that must be considered whenever the rights and obligations of the
insurer and the insured are to be delineated. Hence, in order to protect the interest of
insurance applicants, insurance companies must be obligated to act with haste upon
insurance applications, to either deny or approve the same, or otherwise be bound to honor
the application as a valid, binding, and effective insurance contract.

FACTS: Respondent Philippine American Life Insurance Company (Philamlife) entered into an
agreement, “Creditor Group Life Policy” with petitioner Eternal Gardens Memorial Park
Corporation wherein clients of Eternal who purchased burial lots on installment basis will be
insudered by Philamlife. The policy was for one year, renewable on a yearly basis, with the
amount of coverage to depend on the balance of the purchased burial lots

The relevant provisions of the policy are

1. Eligibility - Any lot purchaser who is atleast 18-65 years old who has an unpaid balance
with Eternal Gardens, and is accepted for the coverage of the insurance, is eligible for
insurance under the Policy
2. Evidence of Insurability - no medical examinations are required for insurance up to
P50k; however, a declaration of good health shall be required for all lot purchasers as
part of the application; Philamlife may require further evidence of insurablity under the
ff
1. Amount of insurance in excess of P50K
2. Any lot purchaser who is more than 55 years old
2. Life Insurance Benefit - the coverage of the insurance of the lot purchaser shall be the
unpaid balance of his loan OR P100K, whichever is smaller; such shall be paid to Eternal
if the lot purchaser dies while insured under this policy
 3. Effective Date of Benefit - the insurance of any eligible lot purchaser shall be effective on
the date he contracts a loan w/ Eternal; however, there shall be no insurance if the
application is denied by the company

Eternal submitted a list of all new lot purchasers, their application and the amounts of the
unpaid balances. One of those included in the list as “new business” was John Chuang, with
balance of P100,000. On August 2, 1984, Chuang died. Thus, Eternal claimed from Philamlife for
Chuang’s death, as evidenced by (a) death certificate (b) Identification that Chuang is a
naturalized PH citizen (c) certificate of claimant (d) certificate of attending physician (e)
assured’s certificate

Philamlife required Eternal to submitted additional documents which Eternal complied with.
However, after more than one year, Philamlife had not furnished any reply to Eternal,
prompting Eternal to demand from Philamlife the claim for P100,000

Philamlife denied Eternal’s claim allegint that deceased Chuang was 59 years old when he
entered into a two contract w/ Eternal Gardens for the total insurable amount of P100,000
each; that not application for group insurance was submitted to them prior to Chuang’s death;
that under ‘Evidence of Insurability’ provision, a declaration of good health was required; and
that since no application was submitted by Eternal for Philamlife’s approval, Chuang was not
covered under the policy

Philamlife further replies that even though they accepted premiums, these do not connote
approval per se of the coverage and these amounts are held in trust until the prerequisites for
insurance coverage are met. They also promised to return the premiums which were paid on
behalf of Chuang.

RTC: in favor of Eternal; ordered Eternal to pay P100,000 policy proceeds of Chuang
The RTC found out that Eternal submitted the application to Philamlife; that Philamlife’s
inaction from the submission of the group requirements to Chuang’s death, while accepting the
premiums they are deemed to have approved the application. Finally, that since the contract is
a group-life insurance, once proof of death is submitted, payment must follow

CA: In favor of Philamlife; Eternal’s complaint dismissed

The CA based it’s decision on the fact that Chuang’s application was not enclosed in Eternal’s
letter when they submitted the list of lot purchasers to Philamlife; that the non-
accomplishment of the submitted application form violated Sec 26 of Insurance Code; thus,
since there’s no application form, Chuang is not covered.
CONTENTIONS:
Eternal:
a. that they submitted a copy of the insurance application of Chuang before his death
b. that Chuang was included the in the list of insurable interests of buyers which they
submitted to Philamlife
c. That the application forms were received by Philamlife

Philamlife:
a. evidence presented
b. Eternal must present evidence showing that Philamlife received a copy of Chuang’s
application

ISSUE: w/n Philamlife is liable to pay proceeds to Eternal

HELD: YES
The letter containing the list of lot purchasers (w/c also contains their insurable interest) had
the insurance forms attached to it, were stamped as received by Philamlife. Such stamp of
receipt had the effect of acknowledging receipt of the letter, along with the attachments. This is
an admission by Philamlife against it’s own interest. Thus, the burden now shifts to Philamlife to
prove that Chuang’s application is not included. In this case, Philamlife failed to do so, thus,
they are deemed to have received the deceased’s insurance application.

Philamlife had the duty to make sure that before a tramsittal letter is stamped as received, the
contents of the letter are correct and accounted for.

The fact is, Philamlife assumed the risk of loss without approving the application. The provision
on Effective Date of Benefit seems to be ambiguous. The first sentence appears to state that
the insurance coverage of the clients of Eternal already became effective upon contracting a
loan with Eternal while the second sentence appears to require Philamlife to approve the
insurance contract before the same can become effective.

However, since an insurance contract is a contract of adhesion, it must be construed liberally in

favor of the insured, and strictly against the insurer, to safeguard the insured’s interest. This is
because of the exclusive control of the insurer over the terms and phraseology of the contract,
ambiguity must be interpreted against the insurer.

In this case, the vague contractual provision must be construed in favor of Eternal Gardens. To
harmonize the provision, such must mean that 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. Also, the mere inaction of the insurer on the insurance application must
not work to prejudice the insured; it cannot be interpreted as a termination of the insurance
contract. The termination of the insurance contract by the insurer must be explicit and
unambiguous.

To characterize the insurer and the insured as contracting parties on equal footing is inaccurate
at best. Insurance contracts are wholly prepared by the insurer with vast amounts of
experience in the industry purposefully used to its advantage. More often than not, insurance
contracts are contracts of adhesion containing technical terms and conditions of the industry,
confusing if at all understandable to laypersons, that are imposed on those who wish to avail of
insurance. As such, insurance contracts are imbued with public interest that must be
considered whenever the rights and obligations of the insurer and the insured are to be
delineated. Hence, in order to protect the interest of insurance applicants, insurance
companies must be obligated to act with haste upon insurance applications, to either deny or
approve the same, or otherwise be bound to honor the application as a valid, binding, and
effective insurance contract.

2. Philamcare Health Systems, Inc. vs. Court of Appeals, 379 SCRA 356, G.R. No. 125678, March
18, 2002
DOCTRINES:

1. the insurable interest of respondents husband in obtaining the health care agreement
was his own health. The health care agreement was in the nature of non-life insurance,
which is primarily a contract of indemnity. Once the member incurs hospital, medical or
any other expense arising from sickness, injury or other stipulated contingent, the
health care provider must pay for the same to the extent agreed upon under the
contract.
2. The question relating to an applicant’s medical history largely depends on opinion,
rather than fact, especially coming from Ernani, who was not a medical doctor. Where
matters of opinion are called for, answers made in good faith and without intent to
deceive will not avoid a policy even though they are untrue.
FACTS: Ernani Trinos, deceased, husband of respondent Julita Trinos applied for a health care
coverage with petitioner Philamcare Health Systems Inc. In the application form, he answered
“NO” to the question – “Have you or any family member ever consulted or been treated for
high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer?”
The application for was approved for a period of one year, from March 1, 1988 to March 1,
1989, and he was issued Health Care Agreement, wherein the husband Ernani was entitled to
avail of hospitalization benefits; out patient benefits such as annual physical examinations and
preventive health cared.
The agreement was extended with the coverage amount increasing to P75,000 per disability.
During the period, Ernani suffered a heart attack and was confined in Manila Medical Center
(MMC) for one month. While he was at the hospital, Julita tried to claim the benefits under the
health care agreement, but Philamcare denied liability saying that such was void. Apparently,
Ernani concealed his medical history since the Manila Medical doctors discovered that he was
hypertensive, diabetic and asthmatic, which was contrary to his answer in the application form.
Julita paid the expenses amounting to P76,000
RTC: in favor of Julita; ordered Philamcare to pay and reimburse the medical expenses + Moral
Damages + exemplary damages
CA: affirm RTC decision in favor of Julita but removed the damages
ISSUE: (1) w/n a health care agreement is an insurance contract (YES); (2) w/n the alleged
concealment avoided the agreement (NO)
CONTENTION:
PHILAMCARE
a. the agreement grants living benefits like medical check-ups, and hospitalization which a
member may enjoy as long as he is alive
b. that only medical and hospitalization beenfits are given, without any indemnification,
unlike an insurance contract where an insured is indemnified for his loss
c. Health Care Agreements are only for one year unlike an insurance contract which lasts
longer
d. Incontestability clause does not apply since the effectivity period is for atleast 2 years
e. Philamcares is not an insurance company, but an Health Maintenance Organization
under the authority of the DOH
HELD:
(1) YES
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. 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 insurers promise, the insured pays a premium
Section 3 of the Insurance Code states that any contingent or unknown event, whether past or
future, which may damnify a person having an insurable interest against him, may be insured
against. Every person has an insurable interest in the life and health of himself. Section 10
provides:
Every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for education or
support, or in whom he has a pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money,
respecting property or service, of which death or illness might delay or
prevent the performance; and
(4) of any person upon whose life any estate or interest vested in him depends.
In the case at bar, the insurable interest of respondents husband in obtaining the health care
agreement was his own health. The health care agreement was in the nature of non-life
insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical
or any other expense arising from sickness, injury or other stipulated contingent, the health
care provider must pay for the same to the extent agreed upon under the contract.
(2) NO.
The question relating to an applicant’s medical history largely depends on opinion, rather than
fact, especially coming from Ernani, who was not a medical doctor. Where matters of opinion
are called for, answers made in good faith and without intent to deceive will not avoid a policy
even though they are untrue.
Thus, although false, a representation of the expectation, intention, belief, opinion, or
judgment of the insured will not avoid the policy if there is no actual fraud in inducing the
acceptance of the risk, or its acceptance at a lower rate of premium, and this is likewise the rule
although the statement is material to the risk, if the statement is obviously of the foregoing
character, since in such case the insurer is not justified in relying upon such statement, but is
obligated to make further inquiry. There is a clear distinction between such a case and one in
which the insured is fraudulently and intentionally states to be true, as a matter of expectation
or belief, that which he then knows, to be actually untrue, or the impossibility of which is
shown by the facts within his knowledge, since in such case the intent to deceive the insurer is
obvious and amounts to actual fraud.
The fraudulent intent on the part of the insured must be established to warrant rescission of
the insurance contract. Concealment as a defense for the health care provider or insurer to
avoid liability is an affirmative defense and the duty to establish such defense by satisfactory
and convincing evidence rests upon the provider or insurer. In any case, with or without the
authority to investigate, petitioner is liable for claims made under the contract. Having assumed
a responsibility under the agreement, petitioner is bound to answer the same to the extent
agreed upon. In the end, the liability of the health care provider attaches once the member is
hospitalized for the disease or injury covered by the agreement or whenever he avails of the
covered benefits which he has prepaid.
Under Section 27 of the Insurance Code, a concealment entitles the injured party to rescind
a contract of insurance. The right to rescind should be exercised previous to the
commencement of an action on the contract. In this case, no rescission was made. Besides, the
cancellation of health care agreements as in insurance policies require the concurrence of the
following conditions:
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy of one or more of
the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in the policy;
4. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon
request of insured, to furnish facts on which cancellation is based
None of the above pre-conditions was fulfilled in this case. When the terms of insurance
contract contain limitations on liability, courts should construe them in such a way as to
preclude the insurer from non-compliance with his obligation. Being a contract of adhesion, the
terms of an insurance contract are to be construed strictly against the party which prepared the
contract the insurer. By reason of the exclusive control of the insurance company over the
terms and phraseology of the insurance contract, ambiguity must be strictly interpreted against
the insurer and liberally in favor of the insured, especially to avoid forfeiture. This is equally
applicable to Health Care Agreements. The phraseology used in medical or hospital service
contracts, such as the one at bar, must be liberally construed in favor of the subscriber, and if
doubtful or reasonably susceptible of two interpretations the construction conferring coverage
is to be adopted, and exclusionary clauses of doubtful import should be strictly construed
against the provider
As to incontestability:
Under the title Claim procedures of expenses, the Philamcare Health Systems Inc. had twelve
months from the date of issuance of the Agreement within which to contest the membership of
the patient if he had previous ailment of asthma, and six months from the issuance of the
agreement if the patient was sick of diabetes or hypertension. The periods having expired, the
defense of concealment or misrepresentation no longer lie.
As to Julita being the proper claimant:
Finally, petitioner alleges that respondent was not the legal wife of the deceased member
considering that at the time of their marriage, the deceased was previously married to another
woman who was still alive. The health care agreement is in the nature of a contract of
indemnity. Hence, payment should be made to the party who incurred the expenses. She paid
all the hospital and medical expenses. She is therefore entitled to reimbursement.

3. Asian Terminals, Inc. v. First Lepanto-Taisho Insurance Corp., G.R. No. 185964, June 16, 2014

DOCTRINE: "Subrogation is the substitution of one person in the place of another with
reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the
other in relation to a debt or claim, including its remedies or securities."
As a general rule, the marine insurance policy needs to be presented in evidence before the
insurer may recover the insured value of the lost/damaged cargo in the exercise of its
subrogatory right.

Nevertheless, the rule is not inflexible. In certain instances, the Court has admitted exceptions
by declaring that a marine insurance policy is dispensable evidence in reimbursement claims
instituted by the insurer.

In Delsan Transport Lines, Inc. v. CA,49 the Court ruled that the right of subrogation accrues
simply upon payment by the insurance company of the insurance claim. Hence, presentation in
evidence of the marine insurance policy is not indispensable before the insurer may recover
from the common carrier the insured value of the lost cargo in the exercise of its subrogatory
right.

FACTS:
On July 6, 1996, 3,000 bags of sodium tripolyphosphate contained in 100 plain jumbo bags
complete and in good condition were loaded and received on board M/V "Da Feng" owned by
China Ocean Shipping Co. (COSCO) in favor of consignee, Grand Asian Sales, Inc. (GASI).

Based on a Certificate of Insurance, it appears that the shipment was insured against all risks by
GASI with FIRST LEPANTO for ₱7,959,550.50 under Marine Open Policy No. 0123.
The shipment arrived in Manila and was discharged into the possession and custody of ATI, a
domestic corporation engaged in arrastre business. The shipment remained for quite some
time at ATI’s storage area until it was withdrawn by broker, Proven Customs Brokerage
Corporation (PROVEN), for delivery to the consignee.

Upon receipt of the shipment, GASI subjected the same to inspection and found that the
delivered goods incurred shortages of 8,600 kilograms and spillage of 3,315 kg for a total
of11,915 kg of loss/damage valued at ₱166,772.41.

GASI sought recompense from COSCO, thru its Philippine agent Smith Bell Shipping Lines, Inc.
(SMITH BELL), ATI and PROVEN but was denied. Hence, it pursued indemnification from the
shipment’s insurer.

After the requisite investigation and adjustment, FIRST LEPANTO paid GASI the amount of
₱165,772.40 as insurance indemnity.

Thereafter, GASI executed a Release of Claim discharging FIRST LEPANTO from any and all
liabilities pertaining to the lost/damaged shipment and subrogating it to all the rights of
recovery and claims the former may have against any person or corporation in relation to the
lost/damaged shipment.

As such subrogee, FIRST LEPANTO demanded from COSCO, its shipping agency in the
Philippines, SMITH BELL, PROVEN and ATI, reimbursement of the amount it paid to GASI. When
FIRST LEPANTO’s demands were not heeded, it filed on May 29, 1997 a Complaint12 for sum of
money before the Metropolitan Trial Court (MeTC) of Manila, Branch 3. FIRST LEPANTO sought
that it be reimbursed the amount of 166,772.41, twenty-five percent (25%) thereof as
attorney’s fees, and costs of suit.

ATI denied liability for the lost/damaged shipment and claimed that it exercised due diligence
and care in handling the same.13 ATI averred that upon arrival of the shipment, SMITH BELL
requested for its inspection14 and it was discovered that one jumbo bag thereof sustained
loss/damage while in the custody of COSCO as evidenced by Turn Over Survey of Bad Order
Cargo No. 47890 dated August 6, 199615 jointly executed by the respective representatives of
ATI and COSCO. During the withdrawal of the shipment by PROVEN from ATI’s warehouse, the
entire shipment was re-examined and it was found to be exactly in the same condition as when
it was turned over to ATI such that one jumbo bag was damaged.
In the alternative, ATI asserted that even if it is found liable for the lost/damaged portion of the
shipment, its contract for cargo handling services limits its liability to not more than ₱5,000.00
per package. ATI interposed a counterclaim of ₱20,000.00 against FIRST LEPANTO as and for
attorney’s fees.

PROVEN denied any liability for the lost/damaged shipment and averred that the complaint
alleged no specific acts or omissions that makes it liable for damages. PROVEN claimed that the
damages in the shipment were sustained before they were withdrawn from ATI’s custody under
which the shipment was left in an open area exposed to the elements, thieves and vandals.
PROVEN contended that it exercised due diligence and prudence in handling the shipment.
PROVEN also filed a counterclaim for attorney’s fees and damages.

The MeTC absolved ATI and PROVEN from any liability and instead found COSCO to be the party
at fault and hence liable for the loss/damage sustained by the subject shipment.

The Regional Trial Court (RTC) reversed the MeTC’s findings. The RTC remarked that, if, as
alleged by ATI, one jumbo bag was already in bad order condition upon its receipt of the
shipment from COSCO on July 18, 1996, then how come that the Request for Bad Order Survey
and the Turn Over Survey of Bad Order Cargo were prepared only weeks thereafter or on
August 9, 1996 and August 6, 1996, respectively. ATI was adjudged unable to prove that it
exercised due diligence while in custody of the shipment and hence, negligent and should be
held liable for the damages caused to GASI which, in turn, is subrogated by FIRST LEPANTO.
The CA also affirmed the ruling of the RTC that the subject shipment was damaged while in the
custody of ATI.
ISSUE/S:
(1) Whether or not FIRST LEPANTO is validly subrogated to the rights of GASI.
(2) Whether or not FIRST LEPANTO is barred from seeking payment for the lost/damaged
shipment.

HELD:
(1) Yes. "Subrogation is the substitution of one person in the place of another with
reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the
other in relation to a debt or claim, including its remedies or securities." The right of
subrogation springs from Article 2207 of the Civil Code which states:

Art. 2207. 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 wrong-doer or the person who has violated the contract. If the amount paid by the
insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled
to recover the deficiency from the person causing the loss or injury.
As a general rule, the marine insurance policy needs to be presented in evidence before the
insurer may recover the insured value of the lost/damaged cargo in the exercise of its
subrogatory right. In Malayan Insurance Co., Inc. v.Regis Brokerage Corp., the Court stated that
the presentation of the contract constitutive of the insurance relationship between the
consignee and insurer is critical because it is the legal basis of the latter’s right to subrogation.

In Home Insurance Corporation v. CA, the Court also held that the insurance contract was
necessary to prove that it covered the hauling portion of the shipment and was not limited to
the transport of the cargo while at sea. The shipment in that case passed through six stages
with different parties involved in each stage until it reached the consignee. The insurance
contract, which was not presented in evidence, was necessary to determine the scope of the
insurer’s liability, if any, since no evidence was adduced indicating at what stage in the handling
process the damage to the cargo was sustained.

An analogous disposition was arrived at in the Wallem case cited by ATI wherein the Court held
that the insurance contract must be presented in evidence in order to determine the extent of
its coverage. It was further ruled therein that the liability of the carrier from whom
reimbursement was demanded was not established with certainty because the alleged shortage
incurred by the cargoes was not definitively determined.

Nevertheless, the rule is not inflexible. In certain instances, the Court has admitted exceptions
by declaring that a marine insurance policy is dispensable evidence in reimbursement claims
instituted by the insurer.

In Delsan Transport Lines, Inc. v. CA, the Court ruled that the right of subrogation accrues
simply upon payment by the insurance company of the insurance claim. Hence, presentation in
evidence of the marine insurance policy is not indispensable before the insurer may recover
from the common carrier the insured value of the lost cargo in the exercise of its subrogatory
right. The subrogation receipt, by itself, was held sufficient to establish not only the relationship
between the insurer and consignee, but also the amount paid to settle the insurance claim. The
presentation of the insurance contract was deemed not fatal to the insurer’s cause of action
because the loss of the cargo undoubtedly occurred while on board the petitioner’s vessel.
The same rationale was the basis of the judgment in International Container Terminal Services,
Inc. v. FGU Insurance Corporation,51 wherein the arrastre operator was found liable for the lost
shipment despite the failure of the insurance company to offer in evidence the insurance
contract or policy. As in Delsan, it was certain that the loss of the cargo occurred while in the
petitioner’s custody.

Based on the attendant facts of the instant case, the application of the exception is
warranted.1âwphi1 As discussed above, it is already settled that the loss/damage to the GASI’s
shipment occurred while they were in ATI’s custody, possession and control as arrastre
operator. Verily, the Certificate of Insurance and the Release of Claim presented as evidence
sufficiently established FIRST LEPANTO’s right to collect reimbursement as the subrogee of the
consignee, GASI.

With ATI’s liability having been positively established, to strictly require the presentation of the
insurance contract will run counter to the principle of equity upon which the doctrine of
subrogation is premised. Subrogation is designed to promote and to accomplish justice and is
the mode which equity adopts to compel the ultimate payment of a debt by one who in justice,
equity and good conscience ought to pay.

The payment by the insurer to the insured operates as an equitable assignment to the insurer
of all the remedies which the insured may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow
out of any privity of contract or upon payment by the insurance company of the insurance
claim. It accrues simply upon payment by the insurance company of the insurance claim.

(2) No. ATI argued that the consignee, thru its insurer, FIRST LEPANTO is barred from
seeking payment for the lost/damaged shipment because the claim letter of GASI to ATI was
served only on September 27, 1996 or more than one month from the date the shipment was
delivered to the consignee’s warehouse on August 9, 1996. The claim of GASI was thus filed
beyond the 15-day period stated in ATI’s Management Contract with PPA which in turn was
reproduced in the gate passes issued to the consignee’s broker.

The contention is bereft of merit. As clarified in Insurance Company of North America v. Asian
Terminals, Inc.,58substantial compliance with the 15-day time limitation is allowed provided
that the consignee has made a provisional claim thru a request for bad order survey or
examination report, viz:

Although the formal claim was filed beyond the 15-day period from the issuance of the
examination report on the request for bad order survey, the purpose of the time limitations for
the filing of claims had already been fully satisfied by the request of the consignee’s broker for
a bad order survey and by the examination report of the arrastre operator on the result
thereof, as the arrastre operator had become aware of and had verified the facts giving rise to
its liability. Hence, the arrastre operator suffered no prejudice by the lack of strict compliance
with the 15-day limitation to file the formal complaint.

In the present case, ATI was notified of the loss/damage to the subject shipment as early as
August 9, 1996 thru a Request for Bad Order Survey60 jointly prepared by the consignee’s
broker, PROVEN, and the representatives of ATI. For having submitted a provisional claim, GASI
is thus deemed to have substantially complied with the notice requirement to the arrastre
operator notwithstanding that a formal claim was sent to the latter only on September 27,
1996. ATI was not deprived the best opportunity to probe immediately the veracity of such
claims. Verily then, GASI, thru its subrogee FIRST LEPANTO, is not barred by filing the herein
action in court.

4. Cha vs. Court of Appeals, 277 SCRA 690, G.R. No. 124520, August 18, 1997

DOCTRINE: 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 such a case, the contract of insurance is
a mere wager which is void under Section 25 of the Insurance Code.

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; x x x[1]

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.

On 2 June 1992, the Regional Trial Court, Branch 6, Manila, rendered a decision* ordering
therein defendant United to pay CKS the amount of P335,063.11 and defendant Cha spouses to
pay P50,000.00 as exemplary damages, P20,000.00 as attorneys fees and costs of suit.

On appeal, respondent Court of Appeals rendered a decision affirming the trial court decision. A
motion for reconsideration by United was denied on 29 March 1996.

ISSUE:
Whether or not the aforequoted paragraph 18 of the lease contract entered into between CKS
and the Cha spouses is valid insofar as it provides that any fire insurance policy obtained by the
lessee (Cha spouses) over their merchandise inside the leased premises is deemed assigned or
transferred to the lessor (CKS) if said policy is obtained without the prior written of the latter.

HELD:
No. It is, of course, 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.[3]

Sec. 18 of the Insurance Code provides:

Sec. 18. 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.[4] 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
such a case, the contract of insurance is a mere wager which is void under Section 25 of the
Insurance Code, which provides:
SECTION 25. Every stipulation in a policy of Insurance for the payment of loss, whether
the person insured has or has not any interest in the property insured, or that the policy
shall be received as proof of such interest, and every policy executed by way of gaming
or wagering, is void.

In the present case, it cannot be denied that CKS has no insurable interest in the goods and
merchandise inside the leased premises under the provisions of Section 17 of the Insurance
Code which provides:
Section 17. The measure of an insurable interest in property is the extent to which the
insured might be damnified by loss of injury thereof."

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 proceeds
of the fire insurance policy thus rightfully belong to the spouses Nilo Cha and Stella Uy-Cha
(herein co-petitioners). 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.

The liability of the Cha spouses to CKS for violating their lease contract in that Cha spouses
obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a
separate and distinct issue which we do not resolve in this case.

5. Gaisano Cagayan, Inc. vs. Insurance Company of North America

G.R. No. 147839 June 8, 2006

Facts:
IMC and Levi Strauss (Phils.) Inc. (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."
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." The policies also
provide for the following conditions:

1. Warranted that the Company shall not be liable for any unpaid account in respect of the
merchandise sold and delivered by the Insured which are outstanding at the date of loss for a
period in excess of six (6) months from the date of the covering invoice or actual delivery of the
merchandise whichever shall first occur.

2. Warranted that the Insured shall submit to the Company within twelve (12) days after the
close of every calendar month all amount shown in their books of accounts as unpaid and thus
become receivable item from their customers and dealers.

Gaisano 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.

Insurance of America filed a complaint for damages against Gaisano. It alleges that IMC and
LSPI were paid for their claims and that the unpaid accounts of petitioner on the sale and
delivery of ready-made clothing materials with IMC was P2,119,205.00 while with LSPI it was
P535,613.00.

The RTC rendered its decision dismissing Insurance's complaint. It held that the fire was purely
accidental; that the cause of the fire was not attributable to the negligence of the petitioner.
Also, it said that IMC and LSPI retained ownership of the delivered goods and must bear the
loss.

The CA rendered its decision and set aside the decision of the RTC. It ordered Gaisano to pay
Insurance the P 2 million and the P 500,000 the latter paid to IMC and Levi Strauss.
Hence this petition.

Issues:
1. Did the CA erred in construing a fire insurance policy on book debts as one covering the
unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made
clothing materials sold and delivered to petitioner?
2. Did IMC bears the risk of loss because it expressly reserved ownership of the goods by
stipulating in the sales invoices that "[i]t is further agreed that merely for purpose of securing
the payment of the purchase price the above described merchandise remains the property of
the vendor until the purchase price thereof is fully paid.”?

3. Is petitioner is liable for the unpaid accounts?

4. Has it been established that petitioner has outstanding accounts with IMC and LSPI?

Held: No. Yes. Yes. Yes but account with LSPI unsubstantiated. Petition partly granted.

Ratio:
1. 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. The present case clearly falls under paragraph (1), Article 1504 of the Civil Code:
ART. 1504. 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. Petitioner bears the risk of loss of the goods delivered.
IMC and LSPI had 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.

Section 13 of our Insurance Code defines insurable interest as "every interest in property,
whether real or personal, or any relation thereto, or liability in respect thereof, of such nature
that a contemplated peril might directly damnify the insured." Parenthetically, under Section 14
of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b)
an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing
interest in that out of which the expectancy arises.
Anyone has an insurable interest in property who derives a benefit from its existence or would
suffer loss from its destruction. Indeed, a vendor or seller retains an insurable interest in the
property sold so long as he has any interest therein, in other words, so long as he would suffer
by its destruction, as where he has a vendor's lien. In this case, the insurable interest of IMC
and LSPI pertain to the unpaid accounts appearing in their Books of Account 45 days after the
time of the loss covered by the policies.

3. Petitioner's argument that it is not liable because the fire is a fortuitous event under Article
117432 of the Civil Code is misplaced. As held earlier, petitioner bears the loss under Article
1504 (1) of the Civil Code.

Moreover, it must be stressed that the insurance in this case is not for loss of goods by fire but
for petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire.
Accordingly, petitioner's obligation is for the payment of money. As correctly stated by the CA,
where the obligation consists in the payment of money, the failure of the debtor to make the
payment even by reason of a fortuitous event shall not relieve him of his liability. The rationale
for this is that the rule that an obligor should be held exempt from liability when the loss occurs
thru a fortuitous event only holds true when the obligation consists in the delivery of a
determinate thing and there is no stipulation holding him liable even in case of fortuitous
event. It does not apply when the obligation is pecuniary in nature.
Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation." This rule is based
on the principle that the genus of a thing can never perish. An obligation to pay money is
generic; therefore, it is not excused by fortuitous loss of any specific property of the debtor.

4. With respect to IMC, the respondent has adequately established its claim. The P 3 m claim
has been proven. The subrogation receipt, by itself, is sufficient to establish not only the
relationship of respondent as insurer and IMC as the insured, but also the amount paid to settle
the insurance claim. 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 which provides:
Art. 2207. 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.
As to LSPI, respondent failed to present sufficient evidence to prove its cause of action. There
was no evidence that respondent has been subrogated to any right which LSPI may have
against petitioner. Failure to substantiate the claim of subrogation is fatal to petitioner's case
for recovery of P535,613.00.

6. SUN LIFE OF CANADA (PHILIPPINES), INC., v. MA. DAISY'S. SIBYA, JESUS MANUEL S. SIBYA
III, JAIME LUIS S. SIBYA, AND THE ESTATE OF THE DECEASED ATTY. JESUS SIBYA, JR G.R. No.
211212, June 08, 2016

On January 10, 2001, Atty. Jesus Sibya, Jr. (Atty. Jesus Jr.) applied for life insurance with
Sun Life. In his Application for Insurance, he indicated that he had sought advice for kidney
problems. Atty. Jesus Jr. indicated the following in his application:

"Last 1987, had undergone lithotripsy due to kidney stone under Dr. Jesus Benjamin Mendoza
at National Kidney Institute, discharged after 3 days, no recurrence as claimed."

On February 5, 2001, Sun Life approved Atty. Jesus Jr.'s application and issued the
insurance policy. The policy indicated the respondents as beneficiaries and entitles them to a
death benefit of P1,000,000.00 should Atty. Jesus Jr. dies on or before February 5, 2021, or a
sum of money if Atty. Jesus Jr. is still living on the endowment date.

On May 11, 2001, Atty. Jesus Jr. died as a result of a gunshot wound in San Joaquin,
Iloilo. As such, Ma. Daisy filed a Claimant's Statement with Sun Life to seek the death benefits
indicated in his insurance policy.

In a letter dated August 27, 2001, however, Sun Life denied the claim on the ground that
the details on Atty. Jesus Jr.'s medical history were not disclosed in his application.
Simultaneously, Sun Life tendered a check representing the refund of the premiums paid by
Atty. Jesus Jr.

The respondents reiterated their claim against Sun Life thru a letter dated September
17, 2001. Sun Life, however, refused to heed the respondents' requests and instead filed a
Complaint for Rescission before the RTC and prayed for judicial confirmation of Atty. Jesus Jr.'s
rescission of insurance policy.10
In its Complaint, Sun Life alleged that Atty. Jesus Jr. did not disclose in his insurance
application his previous medical treatment at the National Kidney Transplant Institute in May
and August of 1994. According to Sun Life, the undisclosed fact suggested that the insured was
in "renal failure" and at a high risk medical condition. Consequently, had it known such fact, it
would not have issued the insurance policy in favor of Atty. Jesus Jr.

For their defense, the respondents claimed that Atty. Jesus Jr. did not commit
misrepresentation in his application for insurance. They averred that Atty. Jesus Jr. was in good
faith when he signed the insurance application and even authorized Sun Life to inquire further
into his medical history for verification purposes. According to them, the complaint is just a ploy
to avoid the payment of insurance claims.

The RTC held that Atty. Jesus Jr. did not commit material concealment and misrepresentation
when he applied for life insurance with Sun Life. It observed that given the disclosures and the
waiver and authorization to investigate executed by Atty. Jesus Jr. to Sun Life, the latter had all
the means of ascertaining the facts allegedly concealed by the applicant.

The CA ruled that the evidence on records show that there was no fraudulent intent on the part
of Atty. Jesus Jr. in submitting his insurance application. Instead, it found that Atty. Jesus Jr.
admitted in his application that he had sought medical treatment for kidney ailment.

ISSUE: Did the CA erred when it affirmed the RTC decision finding that there was no
concealment or misrepresentation when Atty. Jesus Jr. submitted his insurance application with
Sun Life?

HELD: NO
In Manila Bankers Life Insurance Corporation v. Aban,22 the Court held that if the insured
dies within the two-year contestability period, the insurer is bound to make good its obligation
under the policy, regardless of the presence or lack of concealment or misrepresentation. The
Court held:
chanRoblesvirtualLawlibrary
Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the
insured. Under the provision, an insurer is given two years - from the effectivity of a life
insurance contract and while the insured is alive - to discover or prove that the policy is void ab
initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the
insured or his agent. After the two-year period lapses, or when the insured dies within the
period, the insurer must make good on the policy, even though the policy was obtained by
fraud, concealment, or misrepresentation. This is not to say that insurance fraud must be
rewarded, but that insurers who recklessly and indiscriminately solicit and obtain business must
be penalized, for such recklessness and lack of discrimination ultimately work to the detriment
of bona fide takers of insurance and the public in general.
In the present case, Sun Life issued Atty. Jesus Jr.'s policy on February 5, 2001. Thus, it has two
years from its issuance, to investigate and verify whether the policy was obtained by fraud,
concealment, or misrepresentation. Upon the death of Atty. Jesus Jr., however, on May 11,
2001, or a mere three months from the issuance of the policy, Sun Life loses its right to rescind
the policy. As discussed in Manila Bankers, the death of the insured within the two-year period
will render the right of the insurer to rescind the policy nugatory. As such, the incontestability
period will now set in.

Assuming, however, for the sake of argument, that the incontestability period has not yet set
in, the Court agrees, nonetheless, with the CA when it held that Sun Life failed to show that
Atty. Jesus Jr. committed concealment and misrepresentation.

As correctly observed by the CA, Atty. Jesus Jr. admitted in his application his medical treatment
for kidney ailment. Moreover, he executed an authorization in favor of Sun Life to conduct
investigation in reference with his medical history.Indeed, the intent to defraud on the part of
the insured must be ascertained to merit rescission of the insurance contract. Concealment as a
defense for the insurer to avoid liability is an affirmative defense and the duty to establish such
defense by satisfactory and convincing evidence rests upon the provider or insurer. In the
present case, Sun Life failed to clearly and satisfactorily establish its allegations, and is therefore
liable to pay the proceeds of the insurance.

7. Armando Geagonia v Court of Appeals

G.R. No. 114427
February 6, 1995

Facts:
On December 22, 1989, Amando Geagonia, petitioner, is the owner of Norman’s Mart, located
in the public market of San Francisco, Agusan del Sur. He acquired a Fire Insurance policy for
P100,000 from Country Bankers Insurance Corporation, private respondent, for its stock-in-
trade. In the policy’s subheading, petitioner declared that his creditor, Mercantile Insurance
Co., Inc, was a CO-INSURER for P50,000.

The policy contained the condition (No. 3), among others that the insured shall notify or
endorsed in the policy any insurance or insurances taken or subsequently acquired other than
the policy. Failure to do so would forfeit the benefits under the policy, provided however, that
such condition will not apply if the total insurance to be claimed is not more than P200,000 at
the time of the actual loss or damage.

On May 27, 1990, a fire accident broke out at the market and petitioner’s insured stocks were
completely destroyed. He filed with respondent a claim under the insurance but the same was
denied for it found that at the time of the loss, the stocks-in-trade were also covered by two (2)
more Fire Insurance policies issued by the Cebu branch of the Philippines First Insurance Co.,
Inc (PFIC), thereby violating the condition imposed by the latter.

The denial prompted the petitioner to file a case before the Insurance Commission. It was his
contention, that he was not made aware of the condition because the agent did not inform
him.

The Insurance Commission ruled in favor of petitioner. It found that petitioner did not violated
the condition as he had no knowledge of the existence of the two fire insurance policies
obtained from PFIC.

Upon appeal, the CA reversed the decision of the Insurance Commission because it found that
petitioner knew of the existence of the two other policies and its none disclosure violated the
said condition. Accordingly, this was evidenced by the payment of premiums and a letter
effectively admitting the same, made by petitioner.

Hence, this case.

Issues:

1) Whether petitioner had knowledge of the two insurance policies issued by the PFIC; and
2) If he had, whether or not he may recover.

Ruling:
1) Yes, petitioner had knowledge of the condition. His testimony to the Insurance
Commission cannot prevail over a written admission made ante litem motam.

2) Yes, he may recover. It is a cardinal rule on insurance that a policy or insurance contract
is to be interpreted liberally in favor of the insured and strictly against the company in order to
afford the greatest protection which the insured is endeavoring to secure when he applied for
the insurance. It is also a cardinal principle that forfeiture of the policy benefits of the person
claiming thereunder, will be avoided, if it possible to construe the policy in any manner which
would permit recovery. Or simply provisions, conditions or exceptions in policies which tend to
work a forfeiture of insurance policies should be construed most strictly against those for
whose benefits they are inserted, and most favorably toward those for whose they are
intended to operate.

With these principles in mind, the SC construed that the Conition (No. 3) is not totally free from
ambiguity and must be meticulously analyzed. It concluded that the (a) prohibition applies only
to Double insurance and (b) the nullity shall only be to the extent exceeding P200,000 of the
total policies obtained.

The first conclusion is supported by the sub-heading Co-insurance and that the co-insurer is
Mercantile Insurance Co., Inc. There is no double insurance because such would exist only
where the same persons is insured by several insurers separately in respect of the same subject
and interest.

The SC also concluded that by stating that the condition will not apply if the total insurance if
the total insurance in force at the time of the loss does not exceed P200,000, private
respondent is amenable to assume a co-insurer’s liability up to the loss not exceeding
P200,000. It construed the intent of the latter, which is to discourage over insurance only and
not forfeiture.

8. The Insular Life Assurance Company, LTd v Khuz

GR No. 195176
April 18, 2016

Facts:

On March 6, 1997, Felipe N. khu (Felipe) applied for a life insurance policy with Insular Life. He
accomplished the required medical form wherein he did not declare any illness or adverse
medical condition. Insular Life thereafter issued him a policy with a face value of P1,000,000.
But such policy lapsed because of failure by Felipe to pay the premium.

On September 7, 1999, Felipe applied for the reinstatement of his policy and paid the necessary
premium. But on October 12, 1999, Insular Life advised Felipe that his application for
reinstatement may only be considered if he agreed to paying extra preiums and the
cancellation of certain provisions. Felipe agreed to the conditions and paid the additional
premium on December 27, 1999.

Thereafter, Insular life issued an Endorsement which states that the policy has been approved
by the Company effective June 22, 1999.

On September 22, 2001, Felipe died. His Certificate of Death stated that the underlying cause
was Diabetes.

On October 5, 2001, the respondent beneficiaries filed a claim for benefit under the reinstated
policy. This claim was denied. Instead, Insular life advised Felipe’s beneficiaries that it had
decided to rescind the reinstated policy on the ground of concealment and misrepresentation
by Felipe.

The respondent filed a case before the RTC for specific performance. Petitioner, in its answer,
maintained that Felipe did not disclose his ailments and when he died the policy was still
contestable under the 2-year period reckoned from December 27, 1999 or the date of the last
payment.

RTC ruled in favor of the respondent beneficiaries for the policy was reinstated as stated in the
endorsement letter issued by the Insular Life and accordingly the policy took effect on June 22,
1999, hence it is non-contestable by the time of Felipe’s death on September 22, 2001.

Upon appeal, the CA affirmed the substantial decision of the RTC. It upheld the ruling on non-
contestability of the reinstated insurance policy on the date the insured died.

Hence, this case.

Issue: Whether or not the reinstated policy took effect on June 22, 1999 as stated in Letter of
Acceptance and Endorsement issued by Insular Life or on December 27, 1999 for the the
reckoning point for the 2-year contestability of the policy.

Ruling:
Ruling granted in favor of the respondents.

The SC upheld the ruling of the CA that the policy was reinstated on June 22, 1999. This finding
must be upheld not only because it accords with the evidence, but also because this is
favorable to the insured who was not responsible for causing the ambiguity or obscurity in the
insurance contract.
The insurer is deemed to have the necessary facilities to discover such fraudulent concealment
or misrepresentation within a period of 2 years. It is not fair for the insurer to collect the
premiums as long as the insured is still alive, only to raise the issue of fraudulent concealment
or misrepresentation when the insured dies in order to defeat the right of the beneficiary to
recover under the policy.
9. Vda. de Maglana v. Consolacion
G.R. 60506, August 6, 1992
Romero, J.

Doctrine: Where an insurance policy insures directly against liability, the insurer's liability
accrues immediately upon the occurrence of the injury or event upon which the liability
depends, and does not depend on the recovery of judgment by the injured party against the
insured. The underlying reason behind the third party liability (TPL) of the Compulsory Motor
Vehicle Liability Insurance is to protect injured persons against the insolvency of the insured
who causes such injury, and to give such injured person a certain beneficial interest in the
proceeds of the policy.

Facts: Lope Maglana was an employee of the Bureau of Customs whose work station was at
Lasa, in Davao City. On 20 December 1978, early morning, Lope Maglana was on his way to his
work station, driving a motorcycle owned by the Bureau of Customs. At Km. 7, Lanang, he met
an accident that resulted in his death. He died on the spot. The PUJ jeep that bumped the
deceased was driven by Pepito Into, operated and owned by Destrajo. From the investigation
conducted by the traffic investigator, the PUJ jeep was overtaking another passenger jeep that
was going towards the city poblacion. While overtaking, the PUJ jeep of Destrajo running
abreast with the overtaken jeep, bumped the motorcycle driven by the deceased who was
going towards the direction of Lasa, Davao City. The point of impact was on the lane of the
motorcycle and the deceased was thrown from the road and met his untimely death.
Consequently, the heirs of Lope Maglana, Sr., filed an action for damages and attorney's fees
against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO) before the
then Court of First Instance of Davao, Branch II. An information for homicide thru reckless
imprudence was also filed against Pepito Into. During the pendency of the civil case, Into was
sentenced to suffer an indeterminate penalty of 1 year, 8 months and 1 day of prision
correccional, as minimum, to 4 years, 9 months and 11 days of prision correcional, as
maximum, with all the accessory penalties provided by law, and to indemnify the heirs of Lope
Maglana, Sr. in the amount of P12,000.00 with subsidiary imprisonment in case of insolvency,
plus P5,000.00 in the concept of moral and exemplary damages with costs. No appeal was
interposed by the accused who later applied for probation. On 14 December 1981, the lower
court rendered a decision finding that Destrajo had not exercised sufficient diligence as the
operator of the jeepney. The court ordered Destrajo to pay the heirs of Maglana the sum of
P28,000.00 for loss of income; the sum of P12,000.00 which amount shall be deducted in the
event judgment in Criminal Case 3527-D against the driver, accused Into, shall have been
enforced; the sum of P5,901.70 representing funeral and burial expenses of the deceased; the
sum of P5,000.00 as moral damages which shall be deducted in the event judgment (sic) in
Criminal Case 3527-D against the driver, accused Into; the sum of P3,000.00 as attorney's fees
and to pay the costs of suit. The court ordered the insurance company is ordered to reimburse
Destrajo whatever amounts the latter shall have paid only up to the extent of its insurance
coverage. The heirs of Maglana filed a motion for the reconsideration of the second paragraph
of the dispositive portion of the decision contending that AFISCO should not merely be held
secondarily liable because the Insurance Code provides that the insurer's liability is "direct and
primary and/or jointly and severally with the operator of the vehicle, although only up to the
extent of the insurance coverage." In its Order of February 9, 1982, the lower court denied the
motion for reconsideration ruling that since the insurance contract "is in the nature of
suretyship, then the liability of the insurer is secondary only up to the extent of the insurance
coverage." The heirs filed a second motion for reconsideration reiterating that the liability of
the insurer is direct, primary and solidary with the jeepney operator because the petitioners
became direct beneficiaries under the provision of the policy which, in effect, is a stipulation
pour autrui. This motion was likewise denied for lack of merit. The heirs filed the petition for
certiorari.

Issue [1]: Whether AFISCO is primarily liable, not secondarily liable, on the insurance policy.

Held [1]: The particular provision of the insurance policy on which the heirs base their claim
provides "SECTION 1 — LIABILITY TO THE PUBLIC 1. The Company will, subject to the Limits of
Liability, pay all sums necessary to discharge liability of the insured in respect of. (a) death of or
bodily injury to any THIRD PARTY; xxx 3. In the event of the death of any person entitled to
indemnity under this Policy, the Company will, in respect of the liability incurred to such person
indemnify his personal representatives in terms of, and subject to the terms and conditions
hereof." The above-quoted provision leads to no other conclusion but that AFISCO can be held
directly liable by the heirs. As the Court ruled in Shafer vs. Judge, RTC of Olongapo City, Br. 75,
"[w]here an insurance policy insures directly against liability, the insurer's liability accrues
immediately upon the occurrence of the injury or event upon which the liability depends, and
does not depend on the recovery of judgment by the injured party against the insured." The
underlying reason behind the third party liability (TPL) of the Compulsory Motor Vehicle
Liability Insurance is "to protect injured persons against the insolvency of the insured who
causes such injury, and to give such injured person a certain beneficial interest in the proceeds
of the policy." Since the heirs had received from AFISCO the sum of P5,000.00 under the no-
fault clause, AFISCO's liability is now limited to P15,000.00.

Issue [2]: Whether AFISCO is solidarily liable with Destrajo.

Held [2]: NO. In Malayan Insurance Co., Inc. v. Court of Appeals, the Court had the opportunity
to resolve the issue as to the nature of the liability of the insurer and the insured vis-a-vis the
third party injured in an accident, where it ruled that "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 then proceeded to distinguish the extent of the liability
and manner of enforcing the same in ordinary contracts from that of insurance contracts. While
in solidary obligations, the creditor may enforce the entire obligation against one of the solidary
debtors, in an insurance contract, the insurer undertakes for a consideration to indemnify the
insured against loss, damage or liability arising from an unknown or contingent event." Herein,
the heirs cannot validly claim that AFISCO, whose liability under the insurance policy is also
P20,000.00, can be held solidarily liable with Destrajo for the total amount of P53,901.70 in
accordance with the decision of the lower court. Since under both the law and the insurance
policy, AFISCO's liability is only up to P20,000.00, the second paragraph of the dispositive
portion of the decision in question may have unwittingly sown confusion among the heirs and
their counsel. What should have been clearly stressed as to leave no room for doubt was the
liability of AFISCO under the explicit terms of the insurance contract. The liability of AFISCO
based on the insurance contract is direct, but not solidary with that of Destrajo which is based
on Article 2180 of the Civil Code. As such, the heirs have the option either to claim the P15,000
from AFISCO and the balance from Destrajo or enforce the entire judgment from Destrajo
subject to reimbursement from AFISCO to the extent of the insurance coverage.
10. Tiu v. Arriesgado
G.R. No. 138060, September 1, 2004
Callejo, Sr., J.

Doctrine: In third-party liability insurance, it is possible for a third party to sue the insurer
directly. This is an exception to the rule on mutuality of contract. Whenever a contract contains
stipulation for the benefit of a third person and the moment the third person communicates his
assent thereto, the contract becomes binding upon him. The fact that a third person demands
fulfillment of the insurance policy may be reasonably construed as an assent on his part to the
benefit provided in the policy. This provision arms him with the requisite legal personality to
bring an action on the insurance policy (stipulation pour artrui).

Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor Hollow Blocks
and General Merchandise" bearing plate number GBP-675 was loaded with firewood in Bogo,
Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as
the truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then
parked along the right side of the national highway and removed the damaged tire to have it
vulcanized at a nearby shop, about 700 meters away. Pedrano left his helper, Jose Mitante, Jr.
to keep watch over the stalled vehicle, and instructed the latter to place a spare tire six fathoms
away behind the stalled truck to serve as a warning for oncoming vehicles. The trucks tail lights
were also left on. It was about 12:00 a.m., March 16, 1987.

At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by
Virgilio Te Laspiñas was cruising along the national highway of Sitio Aggies, Poblacion,
Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from Maya,
Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa
Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or four (4)
places from the front seat.

As the bus was approaching the bridge, Laspiñas saw the stalled truck, which was then
about 25 meters away. He applied the brakes and tried to swerve to the left to avoid hitting the
truck. But it was too late; the bus rammed into the trucks left rear. The impact damaged the
right side of the bus and left several passengers injured. Pedro Arriesgado lost consciousness
and suffered a fracture in his right colles. His wife, Felisa, was brought to the Danao City
Hospital. She was later transferred to the Southern Island Medical Center where she died
shortly thereafter.

Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of

carriage, damages and attorney’s fees before the Regional Trial Court of Cebu City, Branch 20,
against the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio Te
Laspiñas on May 27, 1987. The respondent alleged that the passenger bus in question was
cruising at a fast and high speed along the national road, and that petitioner Laspiñas did not
take precautionary measures to avoid the accident.

The petitioners, for their part, filed a Third-Party Complaint against the following: respondent
Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tiu’s insurer; respondent
Benjamin Condor, the registered owner of the cargo truck; and respondent Sergio Pedrano, the
driver of the truck. They alleged that petitioner Laspiñas was negotiating the uphill climb along
the national highway of Sitio Aggies, Poblacion, Compostela, in a moderate and normal speed.
It was further alleged that the truck was parked in a slanted manner, its rear portion almost in
the middle of the highway, and that no early warning device was displayed. Petitioner Laspiñas
promptly applied the brakes and swerved to the left to avoid hitting the truck head-on, but
despite his efforts to avoid damage to property and physical injuries on the passengers, the
right side portion of the bus hit the cargo truck’s left rear.

Issue [1]: In third-party liability insurance, would it be possible for a third party to sue the
insurer directly?

Held [1]: Yes. This is an exception to the rule on mutuality of contract. Whenever a contract
contains stipulation for the benefit of a third person and the moment the third person
communicates his assent thereto, the contract becomes binding upon him. The fact that a third
person demands fulfillment of the insurance policy may be reasonably construed as an assent
on his part to the benefit provided in the policy. This provision arms him with the requisite legal
personality to bring an action on the insurance policy (stipulation pour artrui).

Issue [2]: Would it be possible for an insurance company to be held jointly and severally liable
with the insured?

Held [2]: No. The basis of cause of action is different. The cause of action against the insurer is
based on contract while the cause of action against the insured is based on torts. Considering
that there are two different causes of action, it will be legally impossible for them to be made
as jointly and severally liable to the injured third party.

11. Jaime T. Gaisano Vs. Development Insurance and Surety Corporation

G.R. No. 190702
February 27, 2017
Facts:
Petitioner was the registered owner of a 1992 Mitsubishi Montero with plate number GTJ-777
(vehicle), while respondent is a domestic corporation engaged in the insurance business. On
September 27, 1996, respondent issued a comprehensive commercial vehicle policy to
petitioner in the amount of Pl,500,000.00 over the vehicle for a period of one year commencing
on September 27, 1996 up to September 27, 1997. Respondent also issued two other
commercial vehicle policies to petitioner covering two other motor vehicles for the same
period. To collect the premiums and other charges on the policies, respondent's agent, Trans-
Pacific Underwriters Agency (Trans-Pacific), issued a statement of account to petitioner's
company, Noah's Ark

Merchandising (Noah's Ark). Noah's Ark immediately processed the payments and issued a Far
East Bank check dated September 27, 1996 payable to Trans-Pacific on the same day. The check
bearing the amount of Pl40,893.50 represents payment for the three insurance policies, with
P55,620.60 for the premium and other charges over the vehicle. However, nobody from Trans-
Pacific picked up the check that day (September 27) because its president and general manager,
Rolando Herradura, was celebrating his birthday. Trans-Pacific informed Noah's Ark that its
messenger would get the check the next day, September 28. In the evening of September 27,
1996, while under the official custody of Noah's Ark marketing manager Achilles Pacquing
(Pacquing) as a service company vehicle, the vehicle was stolen in the vicinity of SM Megamall
at Ortigas, Mandaluyong City. Pacquing reported the loss to the Philippine National Police
Traffic Management Command at Camp Crame in Quezon City. Despite search and retrieval
efforts, the vehicle was not recovered. Oblivious of the incident, Trans-Pacific picked up the
check the next day, September 28. It issued an official receipt numbered 124713 dated
September 28, 1996, acknowledging the receipt of P55,620.60 for the premium and other
charges over the vehicle. The check issued to Trans Pacific for Pl40,893.50 was deposited with
Metrobank for encashment on October 1, 1996.

Issue:
Whether there is a binding insurance contract between petitioner and respondent.

Ruling:
The court deny the petition. Insurance is a contract whereby one undertakes for a
consideration to indemnify another against loss, damage or liability arising from an unknown or
contingent event. Just like any other contract, it requires a cause or consideration. The
consideration is the premium, which must be paid at the time and in the way and manner
specified in the policy. If not so paid, the policy will lapse and be forfeited by its own terms. The
law, however, limits the parties' autonomy as to when payment of premium may be made for
the contract to take effect. The general rule in insurance laws is that unless the premium is
paid, the insurance policy is not valid and binding.

Section 77 of the Insurance Code, applicable at the time of the issuance of the policy, provides:
Sec. 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.

12. ISABELA ROQUE,

doing busines under the name and style of
Isabela Roque Timber Enterprises
and ONG CHIONG
vs.
HON. INTERMEDIATE APPELATE COURT
and PIONEER INSURANCE AND SURETY CORPORATION
G.R. No. L-66935
November 11, 1985

DOCTRINE:
● the term "cargo" can be the subject of marine insurance and that once it is so made,
the implied warranty of seaworthiness immediately attaches to whoever is insuring
the cargo whether he be the shipowner or not.
● The insurer undertakes to insure against perils of the sea and similar perils, not
against perils of the ship.
● the term 'perils of the sea' extends only to losses caused by sea damage, or by the
violence of the elements, and does not embrace all losses happening at sea. They
insure against losses from extraordinary occurrences only, such as stress of weather,
winds and waves, lightning, tempests, rocks and the like. These are understood to be
the "perils of the sea" referred in the policy, and not those ordinary perils which every
vessel must encounter.
FACTS:
· Manila Bay Lighterage Corporation (Manila Bay), a common carrier, entered into a contract
with the petitioners whereby the former would load and carry on board its barge Mable 10
about 422.18 cubic meters of logs from Malampaya Sound, Palawan to North Harbor, Manila.
· The petitioners insured the logs against loss with respondent Pioneer Insurance and Surety
Corporation (Pioneer).
· Petitioners loaded on the barge, 811 pieces of logs at Malampaya Sound, Palawan for
carriage and delivery to North Harbor, Port of Manila, but the shipment never reached its
destination because Mable 10 sank with the 811 pieces of logs somewhere off Cabuli Point in
Palawan on its way to Manila.
· As alleged by the petitioners in their complaint and as found by both the trial and appellate
courts, the barge where the logs were loaded was not seaworthy such that it developed a
leak.
· The appellate court further found that one of the hatches was left open causing water to
enter the barge and because the barge was not provided with the necessary cover or
tarpaulin, the ordinary splash of sea waves brought more water inside the barge.
· petitioners wrote a letter to Manila Bay demanding payment for the loss of the shipment
plus P100,000.00 as unrealized profits but the latter ignored the demand.
· Another letter was sent to respondent Pioneer claiming the full amount of P100,000.00
under the insurance policy but respondent refused to pay on the ground that its liability
depended upon the "Total loss by Total Loss of Vessel only".
· Hence, petitioners commenced a civil cae against Manila Bay and respondent Pioneer.
· The trial court found in favor of the petitioners
· The appellate court modified the trial court's decision and absolved Pioneer from liability
after finding that there was a breach of implied warranty of seaworthiness on the part of the
petitioners and that the loss of the insured cargo was caused by the "perils of the ship" and not
by the "perils of the sea". It ruled that the loss is not covered by the marine insurance policy.
· The IAC denied the petitoner’s MR
· Hence, this petition.

ISSUES:
1.) Whether in cases of marine cargo insurance, there is a warranty of seaworthiness by the
cargo owner
2.) Whether the loss of the cargo was caused by “perils of the ship” and not by “perils of the
sea”

HELD:
1.) YES.
· The liability of the insurance company is governed by law.
Section 113 of the Insurance Code provides:
In every marine insurance upon a ship or freight, or freightage, or upon any thing which is the
subject of marine insurance, a warranty is implied that the ship is seaworthy.
Section 99 of the same Code also provides in part,
Marine insurance includes:
(1) Insurance against loss of or damage to:
(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, ...
· From the above-quoted provisions, there can be no mistaking the fact that the term
"cargo" can be the subject of marine insurance and that once it is so made, the implied
warranty of seaworthiness immediately attaches to whoever is insuring the cargo whether he
be the shipowner or not.
· Go Tiaoco y Hermanos v. Union Insurance Society of Canton (40 Phil. 40):
…It is universally accepted that in every contract of insurance upon anything which is the
subject of marine insurance, a warranty is implied that the ship shall be seaworthy at the
time of the inception of the voyage. This rule is accepted in our own Insurance Law (Act No.
2427, sec. 106). ...
· The fact that the unseaworthiness of the ship was unknown to the insured is immaterial
in ordinary marine insurance and may not be used by him as a defense in order to recover on
the marine insurance policy.
· Since the law provides for an implied warranty of seaworthiness in every contract of
ordinary marine insurance, it becomes the obligation of a cargo owner to look for a reliable
common carrier which keeps its vessels in seaworthy condition.
· The shipper of cargo may have no control over the vessel but he has full control in the
choice of the common carrier that will transport his goods.
· Or the cargo owner may enter into a contract of insurance which specifically provides
that the insurer answers not only for the perils of the sea but also provides for coverage of
perils of the ship.

2.) The loss of the cargo was due to the perils of the ship rather than the perils of the sea.
· The facts clearly negate the petitioners' claim under the insurance policy.
· In marine cases, the risks insured against are "perils of the sea"
· The purpose of such insurance is protection against contingencies and against possible
damages and such a policy does not cover a loss or injury which must inevitably take place in
the ordinary course of things.
· the term 'perils of the sea' extends only to losses caused by sea damage, or by the
violence of the elements, and does not embrace all losses happening at sea. They insure
against losses from extraordinary occurrences only, such as stress of weather, winds and
waves, lightning, tempests, rocks and the like. These are understood to be the "perils of the
sea" referred in the policy, and not those ordinary perils which every vessel must encounter.
· "Perils of the sea" has been said to include only such losses as are of extraordinary
nature, or arise from some overwhelming power, which cannot be guarded against by the
ordinary exertion of human skill and prudence. Damage done to a vessel by perils of the sea
includes every species of damages done to a vessel at sea, as distinguished from the ordinary
wear and tear of the voyage, and distinct from injuries suffered by the vessel in consequence
of her not being seaworthy at the outset of her voyage (as in this case).
· It is also the general rule that everything which happens thru the inherent vice of the
thing, or by the act of the owners, master or shipper, shall not be reputed a peril, if not
otherwise borne in the policy.
· Petitioners maintain, that the loss of the cargo was caused by the perils of the sea, not by
the perils of the ship because as found by the trial court, the barge was turned loose from the
tugboat east of Cabuli Point "where it was buffeted by storm and waves."
· Moreover, petitioners also maintain that barratry, against which the cargo was also
insured, existed when the personnel of the tugboat and the barge committed a mistake by
turning loose the barge from the tugboat east of Cabuli Point.
· The trial court also found that the stranding and foundering of Mable 10 was due to
improper loading of the logs as well as to a leak in the barge which constituted negligence.
· Go Tiaoco y Hermanos v. Union Ins. Society of Canton, supra:…The insurer undertakes to
insure against perils of the sea and similar perils, not against perils of the ship.
· In the present case the entrance of the sea water into the ship's hold through the
defective pipe already described was not due to any accident which happened during the
voyage, but to the failure of the ship's owner properly to repair a defect of the existence of
which he was apprised. The loss was therefore more analogous to that which directly results
from simple unseaworthiness than to that which result from the perils of the sea.
· Neither can petitioners allege barratry on the basis of the findings showing negligence on
the part of the vessel's crew.
· Barratry as defined in American Insurance Law is "any willful misconduct on the part of
master or crew in pursuance of some unlawful or fraudulent purpose without the consent of
the owners, and to the prejudice of the owner's interest." (Sec. 171, U.S. Insurance Law,
quoted in Vance, Handbook on Law of Insurance, 1951, p. 929.)
· There is no finding that the loss was occasioned by the willful or fraudulent acts of the
vessel's crew.
· There was only simple negligence or lack of skill. Hence, the second assignment of error
must likewise be dismissed.
 
13. MANULIFE PHILIPPINES, INC., vs.HERMENEGILDA YBAÑEZ
G.R. No. 204736

FACTS:
Manulife Philippines, Inc. (Manulife) instituted a Complaint for Rescission of Insurance
Contracts against Hermenegilda Ybañez (Hermenegilda) and the BPI Family Savings Bank (BPI
Family). It is alleged in the Complaint that Insurance which Manulife issued in favor of Dr.
Gumersindo Solidum Ybañez (insured), were void due to concealment or misrepresentation of
material facts in the latter's applications for life insurance. Hermenegilda, wife of the said
insured, was revocably designated as beneficiary in the subject insurance policies.

On November 17, 2003, when one of the subject insurance policies had been in force for only
one year and three months, while the other for only four months, the insured died. The death
certificate stated that the insured experienced swelling of his right parotid gland and the
presence of a tumor, and was found to have had a history of being hypertensive, and his
kidneys have become shrunken.

Manulife conducted an investigation into the circumstances leading to the said insured's death,
in view of the aforementioned entries in the said insured's Death Certificate. Manulife
thereafter concluded that the insured misrepresented or concealed material facts at the time
the subject insurance policies were applied for. For this reason Manulife accordingly denied
Hermenegilda's death claims and refunded the premiums that the insured paid on the subject
insurance policies.
 
Hermenegilda contends that they have provided the correct information upon applying for
insurance but it was Manulife’s agent who checked all the items in the questionairre to speed
up the approval of the application.

 Ruling of the RTC:

The RTC found no merit at all in Manulife's Complaint for rescission of the subject insurance
policies because it failed to prove that the insured had committed the alleged
misrepresentation/s or concealment/s.

 Ruling of the CA:

Affirmed the ruling of the RTC dismissing the complaint for rescission.

ISSUE:
Whether Manulife’s complaint for rescission should be dismissed.

RULING:
YES, it should be dismissed.
The fraudulent intent on the part of the insured must be established to entitle the insurer to
rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is an
affirmative defense and the duty to establish such defense by satisfactory and convincing
evidence rests upon the insurer. For failure of Manulife to prove intent to defraud on the part
of the insured, it cannot validly sue for rescission of insurance contracts.

14. SUN LIFE OF CANADA VS TAN KIT

GR 183272, October 15, 2014

FACTS:
Respondent Tan Kit is the widow and designated beneficiary of Norberto Tan Kit (Norberto),
whose application for a life insurance policy, with face value of P300,000.00, was granted by
petitioner on October 28, 1999. On February 19, 2001, or within the two-year contestability
period, Norberto died of disseminated gastric carcinoma. Consequently, respondent Tan Kit
filed a claim under the subject policy.
Petitioner denied respondent Tan Kit's claim on account of Norberto's failure to fully and
faithfully disclose in his insurance application certain material and relevant information about
his health and smoking history. Specifically, Norberto answered "No" to the question inquiring
whether he had smoked cigarettes or cigars within the last 12 months prior to filling out said
application. However, the medical report reveals that he was a smoker and had only stopped
smoking in August 1999. According to petitioner, its underwriters would not have approved
Norberto's application for life insurance had they been given the correct information. Believing
that the policy is null and void, petitioner opined that its liability is limited to the refund of all
the premiums paid. 
 Ruling of the RTC:
RTC ruled in favor of Tan Kit and granted her 300,000 php.
 Ruling of the CA:
CA reversed the ruling of the RTC and ordered the reimbursement of the premium paid by the
insured with an interest rate of 12% per annum from the time of death until fully paid.
CONTENTION OF THE PARTIES
 Sun Life of Canada:
Petitioner argues that no interest should have been imposed on the premium to be refunded
because there was no legal or factual basis therefore. They further alleged Sunlife refunded the
premiums on time but Tan Kit refused to accept the same, hence, they should bear the
consequences of their refusal.
 Tan Kit:
Respondents, on the other hand, contend that the reimbursement of premium is clearly a
money obligation or one that arises from forbearance of money, hence, the imposition of 12%
interest per annum is just, proper and supported by jurisprudence.
ISSUE:
Whether petitioner is liable to pay interest on the premium to be refunded to respondents.
RULING:
No, the petitioner is not liable to pay interest on the premium.
The Court finds that Tio Khe Chio is not applicable here as it deals with payment of interest on
the insurance proceeds in which the claim therefor was either unreasonably denied or withheld
or the insurer incurred delay in the payment thereof. In this case, what is involved is an order
for petitioner to refund to respondents the insurance premium paid by Norberto as a
consequence of the rescission of the insurance contract on account of the latter's concealment
of material information in his insurance application. Moreover, petitioner did not unreasonably
deny or withhold the insurance proceeds as it was satisfactorily established that Norberto was
guilty of concealment.
The SC modified the Decision of the CA holding that the petitioner should pay the amount of
the premium within 15 days from the date of finality of the decision. If the amount is not
reimbursed within the said period, then it shall earn an interest of 6% per annum until fully
paid.

15. Lourdes Florentino v PHILAM PLANS G.R. No. 186983

Doctrine: 1. When Manuel signed the application, he adopted as his own the written
representations and declarations embodied in it. Manuel cannot sign the application and
disown the responsibility for having it filled up. By its tenor, the responsibility for preparing
the application belonged to Manuel. It is clear from these representations that he concealed
his chronic heart ailment and diabetes from Philam Plans. If he furnished Perla (agent) the
needed information and delegated to her the filling up of the application, then she acted on
his instruction, not on Philam Plans’ instruction. Pursuant to Section 27 of IC, Manuel’s
concealment entitles Philam Plans to rescind its contract of insurance with him.
2. The 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 eleventh 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.
Facts: On October 23, 1997 Manuel Florendo filed an application for comprehensive pension
plan with respondent Philam Plans, Inc. (Philam Plans). Manuel signed the application and left
to Perla, the respondent, the task of supplying the information needed in the application while
Respondent Ma. Celeste Abcede, Perlas daughter, signed the application as sales counselor.

Aside from pension benefits, the plan also provided life insurance coverage, including
accidental death, to Florendo. If the plan holder died before the maturity of the plan, his
beneficiary – Lourdes (his wife) was to instead receive the proceeds of the life insurance,
equivalent to the pre-need price.

On October 30, 1997 Philam Plans issued Pension Plan Agreement PP43005584 to Manuel,
with petitioner 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. On May 3,
1999 Philam Plans wrote Lourdes a letter, declining her claim because they found that Manuel
was on maintenance medicine for his heart and had an implanted pacemaker and also suffered
from diabetes mellitus and was taking insulin. Lourdes renewed her demand but Philam Plans
rejected it, prompting her to file the present action against the pension plan company.

*The RTC rendered judgment, ordering Philam Plans, Perla and Ma. Celeste, solidarily, to pay
Lourdes all the benefits from her husband’s pension plan and ruled that Manuel was not guilty
of concealing the state of his health from his pension plan application.

*The Court of Appeals (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.

Issues: 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
respondents Perla and Ma. Celeste to declare the condition of Manuels health in the pension
plan application; and
3. Whether or not the CA erred in finding that Philam Plans approval of Manuels pension
plan application and acceptance of his premium payments precluded it from denying Lourdes
claim.

Held:
1. No. 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.

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.

Lourdes insists that Manuel had concealed nothing since Perla, the soliciting agent, knew that
Manuel had a pacemaker implanted on his chest in the 70s or about 20 years before he signed
up for the pension plan. But 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 Perlas knowledge of Manuels 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,
Manuels concealment entitles Philam Plans to rescind its contract of insurance with him.

2. 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, Perlas fault must
be considered solely her own and cannot prejudice Manuel.

But 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.

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.

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.

3. The Court cannot agree. The comprehensive pension plan that Philam Plans issued
contains a one-year incontestability period. The 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 eleventh 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.
16. LOADSTAR SHIPPING CO. VS MALAYAN INSURANCE CO.
GR NO 185565 26 NOV 2014

FACTS:
Loadstar International Shipping, Inc.(Loadstar Shipping) and Philippine Associated Smelting and
Refining Corporation (PASAR) entered into a Contract of Affreightment for domestic bulk
transport of the latter’s copper concentrates for a period of one year from November 1, 1998 to
October 31, 1999. The contract was extended up to the end of October 2000.

The copper concentrates were loaded in MV "Bobcat", a marine vessel owned by Loadstar
International Shipping Co., Inc. (Loadstar International) and operated by Loadstar Shipping
under a charter party agreement. The shipper and consignee under the Bill of Lading are Philex
Mining Corporation (Philex) and PASAR, respectively. The cargo was insured with Malayan
Insurance Company, Inc. (Malayan) under Open Policy. P & I Association is the third party
liability insurer of Loadstar Shipping.

On the same day the copper concentrates were loaded in MV “Bobcat”, The ship sailed from
Poro Point, La Union bound for Isabel, Leyte. During their voyage, the vessel’s chief officer on
routine inspection found a crack on starboard side of the main deck which caused seawater to
enter and wet the cargo inside Cargo hold where the copper concentrates were placed. The
cracks were welded and repaired thereafter.

When they arrived at their destination. PASAR and Philex’s representatives boarded and
inspected the vessel and undertook the sampling of the copper concentrates. The found out
that the sample copper concetrates were contaminated with seawater. Consequently, PASAR
rejected 750T of the 2,300 MT cargo.

PASAR sent a formal notice of claim to Loadstar Shipping. In its final report dated November 16,
2000, Elite Surveyor recommended payment to the. On the basis of such recommendation,
Malayan paid PASAR the amount.

Meanwhile, Malayan wrote Loadstar Shipping informing the latter of a prospective buyer for
the damaged copper concentrates and the opportunity to nominate/refer other salvage buyers
to PASAR.

Malayan wrote Loadstar Shipping informing the latter of the acceptance of PASAR’s proposal to
take the damaged copper concentrates. On December 9, 2000, Loadstar Shipping wrote
Malayan requesting for the reversal of its decision to accept PASAR’s proposal and the conduct
of a public bidding to allow Loadstar Shipping to match or top PASAR’s bid by 10%.
PASAR signed a subrogation receipt in favor of Malayan. To recover the amount paid and in the
exercise of its right of subrogation, Malayan demanded reimbursement from Loadstar Shipping,
which refused to comply. Consequently, Malayan instituted with the RTC a complaint for
damages. The complaint was later amended to include Loadstar International as party
defendant

Malayan’s contention: the direct and natural consequence of the unseaworthiness of the
vessel, PASAR suffered loss of the cargo.

Loadstar’s Contentions:
1. that they are not engaged in the business as common carriers but as private carriers;
2. that the vessel was seaworthy and defendants-appellees exercised the required
diligence under the law;
3. that the entry of water into Cargo Hold must have been caused by force majeure or
heavy weather;
4. that due to the inherent nature of the cargo and the use of water in its production
process, the same cannot be considered damaged or contaminated;
5. that defendants-appellees were denied reasonable opportunity to participate in the
salvage sale;
6. that the claim had prescribed in accordance with the bill of lading provisions and the
Code of Commerce; that plaintiff-appellant’s claim is excessive, grossly overstated,
unreasonable and unsubstantiated

RTC: Dismissed the complaint. The RTC was convinced that the vessel was seaworthy at the
time of loading and that the damage was attributable to the perils of the sea (natural disaster)
and not due to the fault or negligence of Loadstar Shipping. The RTC found that although
contaminated by seawater, the copper concentrates can still be used. Itgave credence to the
testimony of Francisco Esguerra, defendants-appellees’ expert witness, that despite high
chlorine content, the copper concentrates remain intact and will not lose their value. The gold
and silver remain with the grains/concentrates even if soaked with seawater and does not melt.
The RTC observed that the purchase agreement between PASAR and Philex contains a penalty
clause and has no rejection clause. Despite this agreement, the parties failed to sit down and
assess the penalty.

CA: Reversed and set aside the decision of RTC. In lieu thereof, a new judgment ordering the
defendant appellees to pay the plaintiff-appellant.

On appeal, the petitioners contended that:

1. that there was no actual loss or damage to the copper concentrates which would make
loadstar as shipowner liable for a cargo claim.
 2. That M/V Bobcat is a private carrier not a common carrier

3. That CA committed a reversible error in ruling that respondent’s payment to PASAR on

the basis of the latter’s fraudulent claim, entitled the respondent automatic right of
recovery by virtue of subrogation.

Issue:

Whether such contamination resulted to damage, and the costs thereof, if any,incurred by the
insured PASAR.
Whether or not there is a valid subrogation of Malayan to the rights of PASAR

Ruling:

Whether such contamination resulted to damage, and the costs thereof, if any,incurred by the
insured PASAR.

The petitioners argued that the copper concentrates, despite being dampened with seawater, is
neither subject to penalty nor rejection. Under the Philex Mining Corporation (Philex)-PASAR
Purchase Contract Agreement, there is no rejection clause. Instead, there is a pre-agreed
formula for the imposition of penalty in case other elements exceeding the provided minimum
level would be found on the concentrates. 14 Since the chlorine content on the copper
concentrates is still below the minimum level provided under the Philex-PASAR purchase
contract, no penalty may be imposed against the petitioners.15

Malayan opposed the petitioners’ invocation of the Philex-PASAR purchase agreement, stating
that the contract involved in this case is a contract of affreightment between the petitioners
and PASAR, not the agreement between Philex and PASAR, which was a contract for the sale of
copper concentrates.16

Court agrees withMalayan that contrary to the trial court’s disquisition, the petitioners cannot
validly invoke the penalty clause under the Philex-PASAR purchase agreement, where penalties
are to be imposed by the buyer PASAR against the seller Philex if some elements exceeding the
agreed limitations are found on the copper concentrates upon delivery. The petitioners are not
privy tothe contract of sale of the copper concentrates. The contract between PASAR and the
petitioners is a contract of carriage of goods and not a contract of sale. Therefore, the
petitioners and PASAR are bound by the laws on transportation of goods and their contract of
affreightment. Since the Contract of Affreightment 17 between the petitioners and PASAR is
silent as regards the computation of damages, whereas the bill of lading presented before the
trial court is undecipherable, the New Civil Code and the Code ofCommerce shall govern the
contract between the parties.

Malayan paid PASAR the amount of 32,351,102.32 covering the latter’s claim of damage to the
cargo.18 This is based on the recommendation of Elite Adjustors and Surveyors, Inc. (Elite) which
both Malayan and PASAR agreed to

Whether or not there is a valid subrogation of Malayan to the rights of PASAR

Yes. "The right of subrogation is not dependent upon, nor does it grow out of, any privity of
contract or upon written assignment of claim. It accrues simply upon payment of the insurance
claim by the insurer."20 The right of subrogation is however, not absolute. "There are a few
recognized exceptions to this rule. For instance, if the assured by his own act releases the
wrongdoer or third party liable for the loss or damage, from liability, the insurer’s right of
subrogation is defeated. x x x Similarly, where the insurer pays the assured the value of the
lostgoods without notifying the carrier who has in good faith settled the assured’s claim for
loss, the settlement is binding on both the assured and the insurer, and the latter cannot bring
an action against the carrier on his right of subrogation. x x x And where the insurer pays the
assured for a loss which is not a risk covered by the policy, thereby effecting ‘voluntary
payment,’ the former has no right of subrogation against the third party liable for the loss x x
x."21

The rights of a subrogee cannot be superior to the rights possessed by a subrogor. "Subrogation
is the substitution of one person in the place of another with reference to a lawful claim or
right, so that he who is substituted succeeds to the rights of the other in relation to a debt or
claim, including its remedies or securities. The rights to which the subrogee succeeds are the
same as, but not greaterthan, those of the person for whom he is substituted, that is, he cannot
acquire any claim, security or remedy the subrogor did not have. In other words, a subrogee
cannot succeed to a right not possessed by the subrogor. A subrogee in effect steps into the
shoes of the insured and can recover only ifthe insured likewise could have
recovered."22 Consequently, an insurer indemnifies the insured based on the loss or injury the
latter actually suffered from. If there is no loss or injury, then there is no obligation on the part
of the insurer to indemnify the insured. Should the insurer pay the insured and it turns out that
indemnification is not due, or if due, the amount paid is excessive, the insurer takes the risk of
not being able to seek recompense from the alleged wrongdoer. This is because the supposed
subrogor did not possessthe right to be indemnified and therefore, no right to collect is passed
on to the subrogee. As regards the determination of actual damages, "[i]t is axiomatic that
actual damages must be proved with reasonable degree of certainty and a party is entitled only
to such compensation for the pecuniary loss that was duly proven
17. Alpha Insurance and Surety Co. vs Castor 704 SCRA 550

G.R. No. 198174, September 2, 2013 (PERALTA, J.)

FACTS:
Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DLX DSL with
Alpha Insurance and Surety Co (Alpha). The contract of insurance obligates the petitioner to pay
the respondent the amount of P630,000 in case of loss or damage to said vehicle during the
period covered.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to bring the
vehicle to nearby auto-shop for a tune up. However, Lanuza no longer returned the motor
vehicle and despite diligent efforts to locate the same, said efforts proved futile. Resultantly,
respondent promptly reported the incident to the police and concomitantly notified petitioner
of the said loss and demanded payment of the insurance proceeds.
Alpha, however, denied the demand of Castor claiming that they are not liable since the culprit
who stole the vehicle is employed with Castor. Under the Exceptions to Section III of the Policy,
the Company shall not be liable for (4) any malicious damage caused by the insured, any
member of his family or by “A PERSON IN THE INSURED’S SERVICE”.
Castor filed a Complaint for Sum of Money with Damages against Alpha before the Regional
Trial Court of Quezon City. The trial court rendered its decision in favor of Castor which decision
is affirmed in toto by the Court of Appeals. Hence, this Petition for Review on Certiorari.

ISSUE:
Whether or not the loss of respondent’s vehicle is excluded under the insurance policy

HELD:
NO. The words “loss” and “damage” mean different things in common ordinary usage. The
word “loss” refers to the act or fact of losing, or failure to keep possession, while the word
“damage” means deterioration or injury to property. Therefore, petitioner cannot exclude the
loss of Castor’s vehicle under the insurance policy under paragraph 4 of “Exceptions to Section
III”, since the same refers only to “malicious damage”, or more specifically, “injury” to the
motor vehicle caused by a person under the insured’s service. Paragraph 4 clearly does not
contemplate “loss of property”.
A contract of insurance is a contract of adhesion. So, when the terms of the insurance contract
contain limitations on liability, courts should construe them in such a way as to preclude the
insurer from non-compliance with his obligation. Thus, in Eternal Gardens Memorial Park
Corporation vs. Philippine American Life Insurance Company, this Court ruled that it must be
remembered that an insurance contract is a contract of adhesion which must be construed
liberally in favor of the insured and strictly against the insurer in order to safeguard the latter’s
interest.
18. Malayan Insurance Co. vs. Lin GR NO. 207277

facts:

Respondent, Emma Lin is a client of both RCBC and Malayan Insurance Co., Inc. Acquired
through various loans from RCBC, she had insured five of the properties which were six
clustered warehouses located at Plaridel, Bulacan to Malayan Insurance Co. The insurance was
purposed specifically against occurrence of fire for P 56 million and P2 million for the remaining
warehouse.

On February 24, 2008 five warehouses were gutted by fire and 2 months after on April 8, 2008,
the Bureau of Fire Protection (BFP) issued a Fire Clearance Certification to respondent after
having determined that the cause of fire was accidental.

Despite the foregoing, her demand for payment of her insurance claim was denied since the
forensic investigators hired by Malayan claimed that the cause was arson instead of accident.
Respondent then sought assistance from the Insurance Commission (IC) which, after a
reinvestigation into the cause of fire, recommended that Malayan should pay Lin’s insurance
claim to accord with BFP’s findings. Nevertheless, Malayan still refused to do so. 

As against RCBC, Lin averred that notwithstanding of the loss of mortgaged properties, the bank
refused to go after Malayan and instead insisted that she herself must pay the loans to the
RCBC. The latter also added that foreclosure proceedings would ensue if the former would not
comply; to add insult to injury, RCBC has been compounding the interest on her loans, despite
the former’s refusal to after Malayan.

Following the aforementioned, respondent then filed a petition to order the petitioners to pay
her insurance claim plus interest on the amounts owing her; that the loans and mortgage to
RCBC be enjoined from foreclosing the mortgage on the properties put up as collaterals.

Five months Later, Lin filed an administrative case before the Insurance Commission (IC) against
the Malayan represented by Yvonne, thus docketed as Administrative Case No. 431. Lim
claimed that it had been conclusively found that the cause of the fire was "accidental," the only
issue left to be resolved is whether Malayan should be held liable for unfair claim settlement
practice under Section 241 in relation to Section 247 of the Insurance Code due to its
unjustified refusal to settle her claim; and that in consequence of the foregoing failings,
Malayan's license to operate as a non-life insurance company should be revoked or suspended,
until such time that it fully complies with the IC Resolution ordering it to accord more weight to
the BFP's findings.
On the other hand, Malayan filed a motion to dismiss Civil Case No. 10-122738 based on forum
shopping. It argued that the administrative case was instituted to prompt or incite IC into
ordering Malayan to pay her insurance claim; that there is identity of causes of action and
reliefs sought in the two cases since the administrative case is merely disguised as an unfair
claim settlement charge, although its real purpose is to allow Lin to recover her insurance claim
from Malayan; that Lin sought to obtain the same reliefs in the administrative case as in the
civil case; 

RTC ruling: Denied the motion to dismiss. Lin was seeking a relief clearly distinct from that
sought in the civil case; that while in the administrative case Lin prayed for the suspension or
revocation of Malayan's license to operate as a non-life insurance company, in the civil case Lin
prayed for the collection of a sum of money with damages; that it is abundantly clear that any
judgment that would be obtained in either case would not be res judicata to the other, hence,
there is no forum shopping to speak of.

CA RULING: Upheld the decision of RTC. The CA, as did the RTC, found that Lin did not commit
forum shopping chiefly for the reason that the issues raised and the reliefs prayed for in the
civil case were essentially different from those in the administrative case, hence Lin had no duty
at all to inform the RTC about the institution or pendency of the administrative case.

Issue:
WON CA erred in not dismissing the Civil Case on the ground of willful and deliberate [forum
shopping] despite the fact that the civil case and the administrative case both seek the payment
of the same fire insurance claim.

RULING:
No.  as stressed in Go v. Office of the Ombudsman,  24 an administrative case for unfair claim
settlement practice may proceed simultaneously with, or independently of, the civil case for
collection of the insurance proceeds filed by the same claimant since a judgment in one will not
amount to res judicata to the other, and vice versa, due to the variance or differences in the
issues, in the quantum of evidence, and in the procedure to be followed in prosecuting the
cases; that in this case the CA cited the teaching in Go v. Office of the Ombudsman that there
was no grave abuse of discretion in the RTC's dismissal of petitioners' motion to dismiss; that
the CA correctly held that the RTC did not commit grave abuse of discretion in denying
petitioners' motion to dismiss because the elements of forum shopping were absent; that there
is here no identity of parties because while she (respondent) is the plaintiff in the civil case, she
is only a complaining witness in the administrative case since it is the IC that is the real party in
interest in the administrative case; that the cause of action in the civil case consists of
Malayan's failure or refusal to pay her insurance claim, whereas in the administrative case, it
consists of Malayan's unfair claim settlement practice; that the issue in the civil case is whether
Malayan is liable to pay Lin's insurance claim, while the issue in the administrative case is
whether Malayan's license to operate should be revoked or suspended for engaging in unfair
claim settlement practice; and that the relief sought in the civil case consists in the payment of
a sum of money plus damages, while the relief in the administrative case consists of the
revocation or suspension of Malayan's license to operate as an insurance company. According
to Lin, although in the administrative case she prayed that the IC Resolution ordering Malayan
to accord weight to the BFP's findings be declared final, this did not mean that she was therein
seeking payment of her insurance claim, but rather that the IC can now impose the appropriate
administrative sanctions upon Malayan; that if Malayan felt compelled to pay Lin's insurance
claim for fear that its license to operate as an insurance firm might be suspended or revoked,
then this is just a logical result of its failure or refusal to pay the insurance claim; that the
judgment in the civil case will not amount to res judicata in the administrative case, and vice
versa, pursuant to the case law ruling in Go v. Office of the Ombudsman25and in Almendras v.
Office of the Insurance Commission,  26 both of which categorically allowed the insurance
clain1ants therein to file both a civil and an administrative case against insurers; that the rule
against forum shopping was designed to serve a noble purpose, viz., to be an instrument of
justice, hence, it can in no way be interpreted to subvert such a noble purpose.

Go v. Office of the Ombudsman36reiterated the above-stated distinctions vis-a-vis the principles

enunciating that a civil case before the trial court involving recovery of payment of the insured's
insurance claim plus damages, can proceed simultaneously with an administrative case before
the IC.