What may be insured against?

Section 3. Any contingent or unknown event, whether past
or future, which may
• damnify a person having an insurable interest, or
• create a liability against him,
may be insured against, subject to the provisions of this
chapter.
Contingent Event
• Event that may or may not happen
Unknown Event
• Event that is certain to happen but the time of
Guingon v. Del Monte
20 SCRA 1043
happening is uncertain
FACTS
• Julio Aguilar owned and operated several jeepneys in
the City of Manila, insuring the same with Capital
Insurance & Surety Co. against accidents with third
party liability.
• Iluminado del Monte, one of the Aguilar’s jeepney
drivers, bumped Gervacio Guingon, subsequently
causing his death.
• Del Monte was then charged with homicide thru
reckless imprudence. Corollary to this action, the
heirs of Guingon filed an action for damages against
del Monte, Aguilar, and Capital Insurance.
• Capitol Insurance alleged that the plaintiff has no
cause of action against it.
Court: asked if there is a stipulation in the
insurance policy where the insured is insured
against liability to third persons who are not
passengers of jeeps.
It was stipulated that there is no
particularization as to the passengers, whether
the passengers of the jeep insured or a
passenger of another jeep or whether it is a
pedestrian.
• From the fact that the insured is liable to the third
person, such third person is entitled to sue the
insurer.
• The right of the injured person to sue the insurer
depends on whether the contract of insurance is
intended to benefit third persons or only the insured.
• TEST: where the contract provides for indemnity
against liability to third persons, then third persons to
whom the insure is liable can sue the insurer.
• BUT, if the contract is for indemnity against actual
loss or payment, then the third persons cannot
sue the insurer because the contract is merely for
the reimbursement of the insured for liability
actually discharged by him through payment to
third persons.
• In this case, the third persons’ recourse is limited
to the insured alone.
Another issue: W/N the third person may sue the insurer
jointly with the insured.
HELD: YES.
• Insurance policy: “No action” clause requires that suit
and final judgment be first obtained against the
insured before the injured person recover on the
policy.
• The “no action” clause cannot prevail over the Rules
of Court provision aimed at avoiding multiplicity of
suits.

ISSUE: Whether or not the heirs of Guingon may sue

Capitol Insurance & Surety Co.

HELD: YES.
• The policy in the present case is one where the insurer
agreed to indemnify the insured “against all
sums…which the insured shall become legally liable to
pay in respect of:
• Death or bodily injury to any person.
• Therefore, it is one for indemnity against liability.
 What may be insured against?
indicates that Mora and Bayne acted for and in
Bonifacio v. Mora
representation of the insurance company.
20 SCRA 261

FACTS: HELD: NO.

• Enrique Mora, who was the owner of an Oldsmobile
sedan model 1956, mortgaged the same to H.S. Reyes
Inc. with the condition that Mora would insure the
automobile with H.S. Reyes as the beneficiary.
• So the vehicle was thereafter insured with State
Bonding & Insurance, Co.
• During the effectivity of the insurance contract, the
car figured into an accident. The damage was then
appraised by Bayne Adjustment Co.
• Mora, without the knowledge and consent of H.S.
Reyes authorized the Bonifacio Bros. Inc. to furnish
the labor and materials, some of which were supplied
by Ayala Autoparts.
• Mora was billed P2,102 through Bayne. The insurance
company drew a check in the amount of P2,002 as
proceeds of the insurance policy, deducting P100 for
franchise and entrusted it to Bayne payable to
Enrique or H.S. Reyes.
• The car was delivered to Mora without the consent of
H.S. Reyes and without payment to Bonifacio Bros.
and the Ayala Autoparts Co.
• Bonifacio Bros. and Ayala Autoparts claimed that the
insurance proceeds should be paid directly to them,
hence they filed a complaint with the Municipal Court
of Manila against Mora and State Bonding for the
collection of P2,002.
• Municipal Court: ruled that H.S. Reyes has a better
right to the disputed amount.
• CFI: affirmed Municipal Court.
• Contracts take effect only between the parties
thereto, except in instances where it contains
stipulations in favor of third persons.
• This is known as stipulation pour autrui (provision
in favor of a third person not a pay to the contract).
So under this doctrine, a third person may
avail himself of benefits that are granted to
him by the contract provided that the
contracting parties clearly and deliberately
conferred such favor to him.
• In order to determine whether a third person has
an enforceable interest in a contract, it should be
determined whether the contracting parties
intended to tender him such an interest by having
deliberately inserted terms in the agreement with
the purpose of conferring a favor upon the third
person.
• In the present case…the insurance contract DOES
NOT contain any words or clauses which show an
intent on the part of the insurance company and
the insured to give any benefit to repairmen or
materialmen in case of repair of the car.
• On the other hand, the “loss payable” clause of the
policy states that losses should be payable to H.S.
Reyes which means that it was only H.S. Reyes
which they intended to benefit.

ISSUE: Whether or not there is privity contract between

Bonifacio Bros. and Ayala Autoparts on one hand and the
insurance company on the other.

Plaintiff’s Arguments:
• Mora and the insurance company are parties to the
repair of the sedan as well as the towage performed.
• This is based on par. 4 of the insurance contract:
• “The insured may authorize the repair of the Motor Vehicle
necessitated by damage for which the company may be liable
under the policy provided that
The estimated cost of such repair does not exceed
the Authorized Repair Limit
A detailed estimeate is forwarded to the company
without delay.
• Bayne Adjustment’s recommendation of payment
which the plaintiffs draw a check for P2,002
 Insurance for or Against Drawing of Lottery
Section 4. The preceding section does not authorize an
insurance for or against the drawing of any lottery, or for or
against any chance or ticket in a lottery drawing a prize.
FACTS:
• Manuel Uy is a duly authorized agent of the Philippine
Charity Sweepstakes Office (PCSO). As such, he is
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.
Uy v. Palomar
27 SCRA 287
engaged in the sale and distribution of sweepstakes
and lottery tickets.
• Uy, upon authority of the PCSO, employs sub-agents
throughout the Philippines.
• A Grand Christmas Sweepstakes Draw was held on
December 1963. In compliance with a directive from
PCSO, Uy devised the “Grand Christmas Bonus Plan.”
According to this plan, the sub-agents and
purchasers of whole sweepstakes tickets may,
in addition to the regular prize money of the
Grand Christmas Sweepstakes Draw, win
bonuses and awards as provided.
• This plan was a modification of the original scheme
presented by Uy which was considered as violative of
the Postal Law by the Assistant Postmaster General.
• Fraud Order No. 3 was hence issued by the
Postmaster General declaring Manuel Uy
Sweepstakes Agency as conducting a lottery or gift
enterprise.
• UY: filed an injunction complaint to restrain the
enforcement of Fraud Order No. 3, alleging that the
Postmaster General acted arbitrarily or gravely
exceeded his authority in issuing the said Fraud Order.
ISSUE: Whether the “Grand Christmas Bonus Plan”
constitutes a lottery, gift enterprise, or similar scheme
which is proscribed by the Postal Law.
HELD:
• For lottery to exist, three elements must concur:
Consideration
Prize
Chance
Palomar’s contention:
• Consideration - to participate and win the contest,
one must buy and resell or buy only “Manuel Uy”
tickets
• Prize - because of the goods to be awarded to the
winners
• Chance - determination of the winners depends upon
the results of the sweepstakes draw which is
decidedly a game of chance.
• El Debate: there is consideration with respect to
persons who will buy Manuel Uy tickets (in preference
to tickets sold by other agents) merely to win prizes in
addition to the regular sweepstakes prize.
Uy’s contention:
• Element of consideration is not present because
except for paying the authorized purchase price,
those entitled to participate in and to benefit from the
plan do not part with any other consideration for the
right to take part and benefit therefrom.
• Even under the test in El Debate, no element of
consideration because the sub-agents would have
continued to sell the tickets regardless of the plan.
• Under another test, there can be no consideration
because the participants pay no money into a fund
which pays for the prize.
HELD: There is NO element of consideration.
• Consideration: payment of something of value or
agreement to pay, for the chance to win the bonus or
award offered.
• While one must buy a sweepstakes ticket sold by
Manuel Uy Sweepstakes Agency or its sub-agents to
participate in the plan, the payment for the price of
the sweepstakes ticket is the consideration for the
chance to win any of the prize offered by PCSO in the
December 1963 sweepstakes draw.
• The said payment cannot be deemed as a
consideration for the chance to win the prizes offered
by Uy.
• Nothing is asked of, or received from, the buyer of the
ticket more than the authorized prize thereof.
• In other words, there is no separate consideration for
the right to win any of the offered bonuses or awards.
FACTS:
• On 1943, the National Life Insurance issued the policy
on the life of Jose Londres where it undertook to pay
its beneficiary P3000 upon his death .
• When Jose Londres died, all premiums were actually
paid. However, when Salvacion Londres, the
 Insurance for or Against Drawing of Lottery
liberation, the obligation shall be paid in the currency
Londres v. National Life Insurance then prevailing, which is the Philippine currency.
March 29, 1954
Another (more important based on TSN): National Life
beneficiary, demanded the payment of the proceeds invokes equity in its favor in view of the nullification of the
of the policy, National Life Insurance refused, hence, deposits made by it with the PNB which was declared
she instituted an action against it. without value by EO No. 49.
• National Life Insurance’s defenses: According to National Life, the indemnity to be paid by it
should be ameliorated.
The policy, having been issued during the
Japanese occupation, it is presumed that its
face value should be paid in Japanese HELD:
currency. • The loss should be suffered by it under Art. 307 of the
The money paid as premiums as well as money Code of Commerce.
received from other policy-holders were all “When the deposits are of cash, with a
deposited in the Philippine National Bank and specification of coins constituting them, the
said deposit was declared without value by EO increase or reduction which their value may
No. 49 of the President of the Philippines. suffer shall, be for the account of the
depositor.”
ISSUE: Whether or not the P3000 which National Life • Moreover, National Life, by entering into an insurance
bound itself to pay should be paid in accordance with the contract, cannot claim, if it suffers loss, that the
present currency or adjusted under the Ballantyne scale beneficiary cannot enrich herself at its expense.
of values. • This is a risk attendant to any wagering contract.
• One who gambles and loses cannot be heard to
HELD: complain of his loss.
• Jose took up the policy on April 1943 for the sum of
P3000. All premiums were paid on the dates of
maturity and the policy was in force when Jose died in
February 1945, when the battle for the liberation of
the City of Manila was still raging.
• Therefore, the policy became due when the City of
Manila was still under Japanese occupation and
became payable only after liberation which took place
in March 10, 1945.
• It was only after liberation that it became payable
even though it matured sometime before, because
the insurance company was not yet in a position to
pay the value of the policy because it had not yet
reopened.
• Salvation submitted her claim formally and
demanded payment thereof on May 16, 1949.
• Following the provisions of the Insurance Law that in
case of maturity by death the proceeds are payable
within 60 days after the presentation of the claim,
from the point of view of the insurance company, the
proceeds of the policy becomes payable only after the
expiration of that period.
• In this sense, the case may be likened to those already
decided by the Court where the parties have agreed
that the payment of the obligation will be made in the
currency that would prevail by the end of the
stipulated period, and this takes place after the
 Kinds of Insurance: Life Insurance
• There is nothing in the policy that relieves the insurer
Sun Insurance v. CA and Nerissa Lim of responsibility to pay indemnity if it is shown that
211 SCRA 554 the insurer contributed to his own negligence.

FACTS:
• Sun Insurance issued Personal Accident Policy No.
05687 to Felix Lim Jr. with a face value of P200,000.
• Two months later, Felix died [with a bullet wound on
his head].
• Nerissa Lim, the beneficiary and his wife, sought
payment of the policy, but the claim was rejected.
While Sun Insurance agreed that there was no suicide,
it argued that there was no accident either.
• Pilar Nalagon, Felix’s secretary and only witness to his
death, stated that Felix was playing with his handgun.
After assuring her that it was not loaded, he pointed
it to his temple, after which there was an explosion
and Lim was slumped to the floor, already dead.

Sun Insurance’s contention:

• One of the four exceptions provided for in the
insurance contract bars petitioner’s claim.
• The company shall not be liable in respect of:
• Bodily injury
• consequent upon
• The insured person attempting to commit
suicide or willfully exposing himself to
needless peril except in an attempt to save
human life.

ISSUE: Whether or not Felix Lim’s death is an accident.

HELD: YES.
• There is no accident when a deliberate act is
performed unless some additional, unexpected,
independent and unforeseen happening occurs
which produces or brings about their injury or death.
• There was such happening. — The firing of the gun.
• Lim had removed the magazine from the gun and
believed that it was no longer dangerous. He
expressly assured his secretary that the gun was not
loaded.
• Lim did not willfully expose himself to needless peril
when he pointed the gun to his temple because the
fact is that he thought it was not unsafe to do so.
• When compared to a person who jumped off a
bridge: the swimmer knew when he dived off the
Quezon Bridge that the currents below were
dangerous; by contrast Lim did not know that the gun
he put to his head was loaded.
 Kinds of Insurance: Life Insurance
• In the present case…while the participation of the
Dela Cruz v. Capital insured in the boxing contest is voluntary, the injury
17 SCRA 559 was sustained when he slipped, which gave an
opportunity to the opponent to deliver the blow that
threw him to the ropes of the ring.
FACTS:
• Without the unintentional slipping, he may not have
• Eduardo dela Cruz, a mucker in the Itogon-Suyoc
received that blow in the head and would not have
Mines, was a holder of an accident insurance policy
died.
underwritten by Capital Insurance.
• In boxing as in other physically rigorous sports, death
• On January 1, 1957, the Itogon-Suyoc mines, in
is not usually an anticipated result. Therefore, if it
connection with the New Year celebration, sponsored
does, the death or injury can only be considered as
a boxing contest which dela Cruz participated in.
accidental or produced by some unforeseen event.
• In the course of his fight, dela Cruz was hit on the left
part of the back of his head, causing him to fall. He
was brought to the hospital where he died the
following day.
• Simon dela Cruz, his father and beneficiary, filed a
claim with the insurance company but was denied.
Hence, he instituted an acton for specific
performance.
• Capital Insurance: The participation in the boxing
contest was the means that produced the injury that
caused the death of the insured. And since his
participation was voluntary, he cannot be considered
to have died by “accidental means” and his death is
therefore not covered by the insurance.

ISSUE: Whether or not there was an accident.

HELD: YES.
• “Accident” or “accidental means”: that which happen
by chance or fortuitously, without intention and
design, and which is unexpected, unusual and
unforeseen.
• Capital Insurance: “accidental means” is the term
used in the insurance policy. To be considered within
the protection of the policy, what is required to be
accidental is the means that caused or brought the
death and not the death itself.
• However, the Court said that court decisions in the
United States in recent years had eliminated the
distinction between the terms “accident” and
“accidental means.”
• Even if the Court were to adopt Capital’s theory, the
death of del Cruz would still be entitled to
indemnification.
• It is a generally-accepted rule that death or injury
does not result from accident or accidental means
within the terms of an accident-policy if it is the
natural result of the insured’s voluntary act
unaccompanied by anything unforeseen.
 Kinds of Insurance: Life Insurance
danger considering that he was just going home after
Finman v. CA attending a festival.
213 SCRA 493
• There are only 10 circumstances enumerated in the
policy wherein no liability attaches to Finman.
Facts: • Since murder and assault are not expressly included
in such enumeration, it is deemed covered by the
• Carlie Surposa was insured with Finman General
policy.
Assurance Corp. under Finman General Teachers
Protection Plan Master Policy and Individual Policy.
• During its effectivity, Carlie died as a result of a stab
wound inflicted by one of 3 unidentified men without
provocation and warning on his part.
He was with his cousin Winston and was
waiting for a ride home after attending the
Maskarra Festival.
• Julia Surposa, Carlie’s mother and one of the
beneficiaries, filed a notice of claim with Finman
which denied the same contending that murder and
assault are not within the coverage of the policy.
• Insurance Commission held Finman liable and this
decision was affirmed by the CA.
• Finman’s contention: death resulting form murder
and/or assault are impliedly excluded in the insurance
policy since the cause of death of the insured was not
accidental but a deliberate and intentional act of the
assailant.

ISSUE: Whether or not Carlie’s death is caused by an

accident.

HELD: YES.
• Citing the CA: it cannot be pretended that Carlie’s
death in the course of an assault or murder is a result
of his voluntary act considering the very nature of
those crimes.
• In the first place, Carlie and his cousin were returning
home from attending a festival when they are
confronted by unidentified persons.
• The record is barren of any circumstance showing
how the stab wound was inflicted.
• It cannot be pretended that the malefactor aimed at
the insured precisely because the killer wanted to
take his life.
• In any event, while the act may not exempt the
perpetrator from unknown liability, the fact remains
that the happening was a pure accident on the part
of the victim.
• The insured died from an event which took place
without his foresight or expectation.
• It can neither be said that there was a capricious
desire on the part of the insured to expose his life to
 Kinds of Insurance: Life Insurance

Gallardo v. CA
107 Phil 903

FACTS:
• In accordance with a compromise agreement
between the parties in the present case, a decision
was rendered by the CFI of Manila sentencing
Hermenegilda Morales to pay Francisca Gallardo the
sum of P7,000.
• The corresponding writ of execution was issued and
the Sheriff of Manila then garnished and levied the
said amount from the P30,000 due to Morales from
Capital Insurance under a personal accident policy
issued by the company to her husband who died by
assassination.
• Morales invoked Rule 39, Section 12, subdivision (k)
of the Rules of Court contending that the policy is a
life insurance policy, exempted by the said rule from
execution for it insured her husband “for injuries
and/or death as a result of murder or assault or
attempted threat.”

Lower Court: There is a fundamental distinction between

a life insurance and accident insurance. The insurance
policy issued to Luis Morales was undoubtedly an accident
insurance

ISSUE: Whether a personal accident insurance which

“insures for injuries and/or death as a result of murder
or assault or attempted threat” is a life insurance,
exempting from execution.

HELD: YES.
• It is undisputed that a life insurance is distinct and
different from an accident insurance.
• However, when one of the risks insured in an accident
insurance is the death of the insured by accident, such
may also be regarded as a life insurance.
• The exemption in the provision of the Rules of Court
applies to ordinary life insurance contracts as well as
to those which, although intended primarily to
indemnify for risks which arise from accidents,
likewise, insure against loss of life due, either to
accidental causes or to the criminal act of another.
 Kinds of Insurance: Classes — Group
Pineda v. CA and The Insular Life Assurance
Company
223 SCRA 754
FACTS:
• Prime Marine Services (PMSI) procured a Group
Policy from Insular Life to provide life assurance
coverage to its sea-based employees.
• During the effectivity of the policy, 6 covered
employees of the PMSI perished at sea. They were
survived by their beneficiaries, the complainants of
this case.
• The complainants seeking to claim death benefits,
approached Capt. Nuval, the President and General
Manager of PMSI.
• The complainants were then made to execute SPAs
authorizing Naval to “follow up, ask, demand, collect
and receive” for their benefit, indemnities for sum of
money due them.
• By virtue of these SPAs, they were able to receive
their respective death benefits. However, unknown to
them, PMSI, in its capacity as employer and
policyholder of the life insurance of its deceased
workers, filed with Insular Life formal claims for and
in behalf of the beneficiaries through Nuval.
• Insular Life drew against its account with the BPI, 6
checks payable to the order of complainants. These
checks were released to the treasurer of PMSI.
• Nuval, upon receipt of these checks from the
treasurer who happened to be his son-in-law,
endorsed and deposited them in his account with the
Commercial Bank (now Boston Bank).
• Upon learning that they were entitled to life insurance
benefits under a group policy, complainants sought to
recover such benefits with Insular Life.
• The claim was however denied on the ground that the
liability to complainants was already extinguished
upon the delivery to PMSI of the 6 checks.
• The complainants filed an administrative complaint
against Insular Life in the Insurance Commission
which ruled in their favor.
• CA: powers of attorney relied upon by Insular Life
were sufficient to authorize Nuval to receive the
proceeds of the insurance pertaining to the
beneficiaries.
I was a reasonable interpretation that Nuval
has the authority to collect the proceeds of the
group insurance policy as an officer of the
insurance company was unschooled in the law.
There is nothing in the law which mandates a
specific or special power of attorney to be
executed to collect insurance proceeds.
ISSUE: Whether or not Nuval had the authority to collect
the proceeds of the group policy on behalf of the
beneficiaries.
HELD: NO.
• The SPAs do not contain in unequivocal terms
authority to Capt. Nuval to obtain, receive, receipt
from Insular Life insurance proceeds arising from the
death of the seamen.
• It would be highly imprudent to read into the SPAs the
power to collect and receive the insurance proceeds.
• Insular Life knew that a power of attorney in favor of
Capt. Nuval was a deviation from its practice with
respect to group policies.
Practice: policyholder is the one who files the
claim fro the beneficiaries
• Group Insurance: essentially a single insurance
contract that provides coverage for many individuals.
• It most commonly provides for life or health insurance
coverage for the employees of one employer.
• The coverage terms for group insurance are usually
stated in a master agreement or policy that is issued
by the insurer
to a representative of the group or
to an administrator of the insurance program,
such as an employer.
• The employer acts as a functionary in the collection
and payment of premiums and in performing related
duties.
• Likewise falling within the ambit of administration of
a group policy is the disbursement of insurance
payments by the employer to the employees.
• Most policies, such as the one in this case, require an
employee to pay a portion of the premium, which the
employer deducts from wages while the remainder is
paid by the employer. This is known as a contributory
plan as compared to a non-contributory plan where
the premiums are solely paid by the employer.
• Although the employer may be the named insured,
the insurance is actually related to the life and health
of the employee.
• Hence, the employee is the real party to the master
policy. Put differently, the labor of the employees is
the true source of the benefits, which are a form of
additional compensation to them.
• In Elfstrom vs. New York Life Insurance Company, the
California Supreme Court explicitly ruled that in group
 Kinds of Insurance: Classes — Group
insurance policies, employer is the agent of the
insurer.
Rationale (just in case): employee has no
knowledge or control over the employer’s
actions in handling the policy or its
administration.
• In Neider v. Continental Assurance Company, the
employer owes to the employee the duty of good
faith and due care in attending to the policy.
• In the light of the forgoing, the Court held that PMSI,
through its President and General Manager, Capt.
Nuval, acted as the agent of Insular Life.
• Insular Life is thus bound by the misconduct of its
agent.
• Insular Life, however, likewise recognized Capt. Nuval
as the attorney-in-fact of the petitioners.
• Unfortunately, through its official, Mr. Urbano, it
acted imprudently and negligently in the premises by
relying without question on the special power of
attorney.
• It is a rule that third persons deal with agents at their
peril and are bound to inquire as to the extent of the
power of the agent with whom they contract.