Loss and Notice of loss The petitioner, however, denied the insurance claim on the ground that, based
surance claim on the ground that, based on the
Country Bankers Insurance Corp. vs. Lianga Bay and Community, G.R.
No. 136914.  January 25, 2002
-Facts: The petitioner is a domestic corporation principally engaged in the insurance
business wherein it undertakes, for a consideration, to indemnify another against
loss, damage or liability from an unknown or contingent event including fire while the
respondent is a duly registered cooperative judicially declared insolvent and
represented by the elected assignee, Cornelio Jamero.
sometime in 1989, the petitioner and the respondent entered into a contract of fire
insurance. Under Fire Insurance Policy No. F-1397, the petitioner insured the
respondent’s stocks-in-trade against fire loss, damage or liability during the period
starting from June 20, 1989 at 4:00 p.m. to June 20, 1990 at 4:00 p.m., for the sum
of ₱200,000.00
On July 1, 1989, at or about 12:40 a.m., the respondent’s building located at Lianga,
Surigao del Sur was gutted by fire and reduced to ashes, resulting in the total loss of
the respondent’s stocks-in-trade, pieces of furnitures and fixtures, equipments and
records.
Due to the loss, the respondent filed an insurance claim with the petitioner under its
Fire Insurance Policy No. F-1397, submitting: (a) the Spot Report of Pfc. Arturo V.
Juarbal, INP Investigator, dated July 1, 1989; (b) the Sworn Statement of Jose
Lomocso; and (c) the Sworn Statement of Ernesto Urbiztondo.
submitted documents, the building was set on fire by two (2) NPA rebels who wanted
to obtain canned goods, rice and medicines as provisions for their comrades in the
forest, and that such loss was an excepted risk under paragraph No. 6 of the policy
conditions of Fire Insurance Policy No. F-1397, which provides:
“This insurance does not cover any loss or damage occasioned by or through
or in consequence, directly or indirectly, of any of the following occurrences,
namely:
(d) Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution,
military or usurped power.
Any loss or damage happening during the existence of abnormal conditions
(whether physical or otherwise) which are occasioned by or through or in
consequence, directly or indirectly, of any of said occurrences shall be
deemed to be loss or damage which is not covered by this insurance, except
to the extent that the Insured shall prove that such loss or damage happened
independently of the existence of such abnormal conditions.”
Finding the denial of its claim unacceptable, the respondent then instituted in the trial
court the complaint for recovery of "loss, damage or liability" against petitioner. The
petitioner answered the complaint and reiterated the ground it earlier cited to deny
the insurance claim, that is, that the loss was due to NPA rebels, an excepted risk
under the fire insurance policy. RTC rendered a decision in favor of the insured.
-Issue: WON the insured should be indemnified for the loss of the property? (c) that the public officer or other person had sufficient knowledge of the facts
by him stated, which must have been acquired by him personally or through

-Ruling: Yes, the insured should be indemnified for the loss of the property. official information.

Where a risk is excepted by the terms of a policy which insures against other perils
The third requisite was not met in this case since no investigation, independent of the
or hazards, loss from such a risk constitutes a defense which the insurer may urge,
since it has not assumed that risk, and from this it follows that an insurer seeking to statements gathered from Jose Lomocso, was conducted by Pfc. Arturo V. Juarbal.
defeat a claim because of an exception or limitation in the policy has the burden of In fact, as the petitioner itself pointed out, citing the testimony of Pfc. Arturo Juarbal,
proving that the loss comes within the purview of the exception or limitation set up.
the latter’s Spot Report "was based on the personal knowledge of the caretaker Jose
If a proof is made of a loss apparently within a contract of insurance, the burden is Lomocso who witnessed every single incident surrounding the facts and
upon the insurer to prove that the loss arose from a cause of loss which is excepted
or for which it is not liable, or from a cause which limits its liability. circumstances of the case." This argument undeniably weakens the petitioner’s
defense.
since the petitioner in this case is defending on the ground of non-coverage and
relying upon an exemption or exception clause in the fire insurance policy, it has the
burden of proving the facts upon which such excepted risk is based, by a
preponderance of evidence. But petitioner failed to do so.
the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo are inadmissible in
evidence, for being hearsay, inasmuch as they did not take the witness stand and
could not therefore be cross-examined.

There are exceptions to the hearsay rule, among which are entries in official records.
To be admissible in evidence, however, three (3) requisites must concur, to wit:

(a) that the entry was made by a public officer, or by another person specially
enjoined by law to do so;

(b) that it was made by the public officer in the performance of his duties, or
by such other person in the performance of a duty specially enjoined by law;
and
FGU INSURANCE CORPORATION, Petitioners, vs. THE COURT OF
APPEALS, SAN MIGUEL CORPORATION, and ESTATE OF ANG GUI,
represented by LUCIO, JULIAN, and JAIME, all surnamed ANG, and CO
TO, Respondents
-Facts: Anco Enterprises Company (ANCO), a partnership between Ang Gui and
Co To, was engaged in the shipping business. It owned the M/T ANCO tugboat and
the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio
had no engine of its own, it could not maneuver by itself and had to be towed by a
tugboat for it to move from one place to another.
On 23 September 1979, San Miguel Corporation (SMC) shipped from Mandaue City,
Cebu, on board the D/B Lucio, for towage by M/T ANCO, the items to be shipped are
25,000 cases of pale Pilsen beer and 350 cases of cerveza Negra to Ilo Ilo and
15,000 cases of Pale Pilsen and 200 cases of Cerveza Negra to Antique.
While in transit, SMC’s District Sales Supervisor, Fernando Macabuag, requested
ANCO’s representative to transfer the barge to a safer place because the vessel
might not be able to withstand the big waves.
ANCO’s representative did not heed the request and proceeded to ship the cargo.
Thereafter, 29,210 cases of Pale Pilsen and 550 cases of Cerveza Negra were lost.
The value per case of Pale Pilsen was P45.20. The value of a case of Cerveza
Negra was P47.10, hence, SMC’s claim against ANCO amounted to P1,346,197.00.
Upon Ang Gui’s death, ANCO, as a partnership, was dissolved hence, on 26 January
1993, SMC filed a second amended complaint which was admitted by the Court
impleading the surviving partner, Co To and the Estate of Ang Gui represented by
Lucio, Julian and Jaime, all surnamed Ang. The substituted defendants adopted the
original answer with counterclaim of ANCO "since the substantial allegations of the
original complaint and the amended complaint are practically the same."
ANCO admitted that the cases of beer Pale Pilsen and Cerveza Negra mentioned in
the complaint were indeed loaded on the vessel belonging to ANCO. It claimed
however that it had an agreement with SMC that ANCO would not be liable for any
losses or damages resulting to the cargoes by reason of fortuitous event. Since the
cases of beer Pale Pilsen and Cerveza Negra were lost by reason of a storm, a
fortuitous event which battered and sunk the vessel in which they were loaded, they
should not be held liable. ANCO further asserted that there was an agreement
between them and SMC to insure the cargoes in order to recover indemnity in case
of loss. Pursuant to that agreement, the cargoes to the extent of Twenty Thousand
(20,000) cases was insured with FGU Insurance Corporation (FGU) for the total
amount of Eight Hundred Fifty-Eight Thousand Five Hundred Pesos (P858,500.00)
per Marine Insurance Policy No. 29591.
third-party defendant FGU admitted the existence of the Insurance Policy under
Marine Cover Note No. 29591 but maintained that the alleged loss of the cargoes
covered by the said insurance policy cannot be attributed directly or indirectly to any
of the risks insured against in the said insurance policy. According to FGU, it is only
liable under the policy to Third-party Plaintiff ANCO and/or Plaintiff SMC in case of
any of the following:
a) total loss of the entire shipment; constitute no defense on the part of the insurer. This rule however presupposes that
the loss has occurred due to causes which could not have been prevented by the
b) loss of any case as a result of the sinking of the vessel; or
insured, despite the exercise of due diligence.
c) loss as a result of the vessel being on fire.

Furthermore, FGU alleged that the Third-Party Plaintiff ANCO and Plaintiff SMC
failed to exercise ordinary diligence or the diligence of a good father of the family in
the care and supervision of the cargoes insured to prevent its loss and/or
destruction.
There was blatant negligence on the part of the employees of defendants-appellants
when the patron (operator) of the tug boat immediately left the barge at the San
Jose, Antique wharf despite the looming bad weather.

ANCO’s representatives had failed to exercise extraordinary diligence required of

-Issue: WON FGU should indemnify ANCO for the loss of the cargo? common carriers in the shipment of SMC’s cargoes. Such blatant negligence being
the proximate cause of the loss of the cargoes amounting to One Million Three
-Ruling: No, FGU should not indemnify ANCO for the loss of the cargo. Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos

While the loss of the cargoes was admittedly caused by the typhoon Sisang, a
natural disaster, ANCO could not escape liability to respondent SMC. The records
clearly show the failure of petitioners’ representatives to exercise the extraordinary
degree of diligence mandated by law. To be exempted from responsibility, the
natural disaster should have been the proximate and only cause of the loss.

There must have been no contributory negligence on the part of the common carrier. 

One of the purposes for taking out insurance is to protect the insured against the
consequences of his own negligence and that of his agents. Thus, it is a basic rule in
insurance that the carelessness and negligence of the insured or his agents
 -Issue: WON the insurance contract was still in effect during Pinca’s property was
completely burned?
Malayan Ins Co v. Cruz Arnaldo 154 SCRA 672
-Ruling: Yes, the insurance contract was still in effect during Pinca’s property was
-Facts: On June 7, 1981, the petitioner (hereinafter called (MICO) issued to the
completely burned.
private respondent, Coronacion Pinca, Fire Insurance Policy No. F-001-17212 on her
property for the amount of P14,000.00 effective July 22, 1981, until July 22, 1982. 

Section 64 of the Insurance Code reads as follows:

On October 15,1981, MICO allegedly cancelled the policy for non-payment, of the
premium and sent the corresponding notice to Pinca.  SEC. 64. No policy of insurance other than life shall be cancelled by
the insurer except upon prior notice thereof to the insured, and no
On December 24, 1981, payment of the premium for Pinca was received by
notice of cancellation shall be effective unless it is based on the
DomingoAdora, agent of MICO. 
occurrence, after the effective date of the policy, of one or more of the

On January 15, 1982, Adora remitted this payment to MICO,together with other following:

payments. 
(a) non-payment of premium;

On January 18, 1982, Pinca's property was completely burned. 

(b) conviction of a crime arising out of acts increasing the hazard

On February 5, 1982, Pinca's payment was returned by MICO to Adora on the insured against;

ground that her policy had been cancelled earlier. But Adora refused to accept it. 
(c) discovery of fraud or material misrepresentation;

In due time, Pinca made the requisite demands for payment, which MICO rejected.
(d) discovery of willful, or reckless acts or commissions increasing the
She then went to the Insurance Commission. It is because she was ultimately
hazard insured against;
sustained by the public respondent that the petitioner has come to us for relief
 (e) physical changes in the property insured which result in the
property becoming uninsurable;or
(f) a determination by the Commissioner that the continuation of the
policy would violate or would place the insurer in violation of this
Code.
As for the method of cancellation, Section 65 provides as follows:
SEC. 65. All notices of cancellation mentioned in the preceding
section shall be in writing, mailed or delivered to the named insured at
the address shown in the policy, and shall state (a) which of the
grounds set forth in section sixty-four is relied upon and (b) that, upon
written request of the named insured, the insurer will furnish the facts
on which the cancellation is based.
A valid cancellation must, therefore, require concurrence of the following conditions:
(1) There must be prior notice of cancellation to the insured;  at the time of its issuance or delivery or which becomes due thereon.
(2) The notice must be based on the occurrence, after the effective date of the policy,
of one or more of the grounds mentioned
(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured,
(c) at the address shown in the policy;  complete when the money delivered is into the agent's hands and is a
(4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and
(b) that upon written request of the insured, the insurer will furnish the facts on which
the cancellation is based.
Here, Malayan Insurance did not submit a notice to Pinca regarding the cancellation
of such insurance contract.
Furthermore, the late payment done by Pinca to Adora, an agent of Malayan
insurance is valid.
It is clearly provided in Section 306 of the Insurance Code that:
SEC. 306. xxx xxx xxx
Any insurance company which delivers to an insurance agent or
insurance broker a policy or contract of insurance shall be deemed to
have authorized such agent or broker to receive on its behalf payment
of any premium which is due on such policy or contract of insurance
And it is a well-known principle under the law of agency that:
Payment to an agent having authority to receive or collect payment is
equivalent to payment to the principal himself; such payment is
discharge of the indebtedness owing to the principal. 
 expired at 9:00 o’clock that same morning. Death was caused by ‘traumatic shock’
as a result of the severe injuries she sustained.

Travellers Insurance vs. CA and Vicente Mendoza, GR No. 82036, May
22, 1997
-Facts: At about 5:30 o’clock in the morning of July 20, 1980, a 78-year old woman
by the name of Feliza Vineza de Mendoza was on her way to hear mass at the
Tayuman Cathedral. While walking along Tayuman corner Gregorio Perfecto Streets,
she was bumped by a taxi that was running fast. Several persons witnessed the
accident, among whom was Ernesto Lopez. After the bumping, the old woman was
seen sprawled on the pavement.
The evidence shows that at the moment the victim was bumped by the vehicle, the
latter was running fast, so much so that because of the strong impact the old woman
was thrown away and she fell on the pavement. In truth, in that related criminal case
against defendant Dumlao. The trial court found as a fact that therein accused ‘was
driving the subject taxicab in a careless, reckless and imprudent manner and at a
speed greater than what was reasonable and proper without taking the necessary
precaution to avoid accident to persons. considering the condition of the traffic at the
place at the time aforementioned. Moreover, the driver fled from the scene of the
accident and without rendering assistance to the victim.

At this moment, a private jeep stopped. With the driver of that vehicle, helped board
The eyewitnesses were unanimous in pointing to that Lady Love Taxi with Plate No.
the old woman on the jeep and brought her to the Mary Johnston Hospital in Tondo.
438, obviously the vehicle involved herein.
Ernesto Lopez, a driver of a passenger jeepney plying along Tayuman Street from
During the investigation, defendant Armando Abellon, the registered owner of Lady
Pritil, Tondo, to Rizal Avenue and vice-versa, also witnessed the incident. It was on
Love Taxi bearing No. 438-HA Pilipinas Taxi 1980, certified to the fact ‘that the
his return trip from Rizal Avenue when Lopez saw the plaintiff and his brother who
vehicle was driven last July 20, 1980 by one Rodrigo Dumlao.
were crying near the scene of the accident.

Private respondent filed a complaint for damages against Armando Abellon as the
Upon learning that the two were the sons of the old woman, Lopez told them what
owner of the Lady Love Taxi and Rodrigo Dumlao as the driver of the Lady Love
had happened. The Mendoza brothers were then able to trace their mother at the
taxicab that bumped private respondent’s mother. Subsequently, private respondent
Mary Johnston Hospital where they were advised by the attending physician that
amended his complaint to include petitioner as the compulsory insurer of the said
they should bring the patient to the National Orthopedic Hospital because of her
taxicab under Certificate of Cover No. 1447785-3.
fractured bones. Instead, the victim was brought to the U.S.T. Hospital where she
Petitioner, insurer, mainly contends that it did not issue an insurance policy as third persons, said third persons’ recourse being thus limited to the insured
compulsory insurer of the Lady Love Taxi and that, assuming arguendo that it had alone.
indeed covered said taxicab for third-party liability insurance, private respondent
failed to file a written notice of claim with petitioner as required by Section 384 of Since private respondent failed to attach a copy of the insurance contract to

P.D. No. 612, otherwise known as the Insurance Code. his complaint, the trial court could not have been able to apprise itself of the
real nature and pecuniary limits of petitioner’s liability. More importantly, the
-Issue: WON the insurer, travelers insurance, is liable to indemnify trial court could not have possibly ascertained the right of private respondent
Vicente Mendoza? as third person to sue petitioner as insurer of the Lady Love taxicab because

-Ruling: No, the trial court never saw nor read the insurance contract and learned of its
terms and conditions.
private respondent did not attach a copy of the insurance contract to the
amended complaint. Private respondent does not deny this omission.

It is significant to point out at this juncture that the right of a third person to
sue the insurer depends on whether the contract of insurance is intended to While it is true that where the insurance contract provides for indemnity against
benefit third persons also or only the insured.
liability to third persons, such third persons can directly sue the insurer, however, the
The right of the person injured to sue the insurer of the party at fault direct liability of the insurer under indemnity contracts against third-party liability does
(insured), depends on whether the contract of insurance is intended to not mean that the insurer can be held solidarily liable with the insured and/or the
benefit third persons also or on the insured. other parties found at fault. The liability of the insurer is based on contract; that of the
insured is based on tort.
And the test applied has been this: Where the contract provides for indemnity
against liability to third persons, then third persons to whom the insured is
liable can sue the insurer.
Furthermore, Batas Pambansa (B.P.) Blg. 874, Section 384 
Where the contract is for indemnity against actual loss or payment, then third
persons cannot proceed against the insurer, the contract being solely to “Any person having any claim upon the policy issued pursuant to this chapter shall,

reimburse the insured for liability actually discharged by him thru payment to without any unnecessary delay, present to the insurance company concerned a
written notice of claim setting forth the amount of his loss, and/or the nature, extent
and duration of the injuries, sustained as certified by a duly licensed physician.
Notice of claim must be filed within six months from date of the accident, otherwise, Private respondent’s cause of action can not prevail because he failed to file the

the claim shall be deemed waived. Action or suit for recovery of damage due to loss written claim mandated by Section 384 of the Insurance Code. He is deemed, under

or injury must be brought in proper cases, with the Commission or the Courts within this legal provision, to have waived his rights as against petitioner-insurer.

one year from date of accident, otherwise the claimant’s right of action shall
prescribe"

The prescriptive period to bring suit in court under an insurance policy, begins
to run from the date of the insurer’s rejection of the claim filed by the insured,
the beneficiary or any person claiming under an insurance contract.

Absent such written claim filed by the person suing under an insurance contract, no
cause of action accrues under such insurance contract, considering that it is the
rejection of that claim that triggers the running of the one-year prescriptive period to
bring suit in court, and there can be no opportunity for the insurer to even reject a
claim if none has been filed in the first place, as in the instant case.ch

Since a cause of action requires, as essential elements, not only a legal right of the
plaintiff and a correlative obligation of the defendant but also an act or omission of
the defendant in violation of said legal right, the cause of action does not accrue until
the party obligated refuses, expressly or impliedly, to comply with its duty.

Double Insurance and Reinsurance
Union Manufacturing Company, Inc. and Republic Bank vs. Philippine
Guaranty Co., Inc., G.R. No. L-27932, October 30, 1972
-Facts: on January 12, 1962, the Union Manufacturing Co., Inc. obtained certain
loans, overdrafts and other credit accommodations from the Republic Bank in the
total sum of P415,000.00 with interest at 9% per annum from said date and to secure
the payment thereof, said Union Manufacturing Co., Inc. executed a real and chattel
mortgages on certain properties, which are more particularly described and listed at
the back of the mortgage contract.
As additional condition of the mortgage contract, the Union Manufacturing Co., Inc.
undertook to secure insurance coverage over the mortgaged properties for the same
amount of P415,000.00 distributed as follows: (a) Buildings, P30,000.00; (b)
Machineries, P300,000.00; and (c) Merchandise Inventory, P85,000.00, giving a total
of P415,000.00
As Union Manufacturing Co., Inc. failed to secure insurance coverage on the
mortgaged properties since January 12, 1962, despite the fact that Cua Tok, its
general manager, was reminded of said requirement, the Republic Bank procured
from the defendant, Philippine Guaranty Co., Inc. an insurance coverage on loss
against fire for P500,000.00 over the properties of the Union Manufacturing Co., Inc.,
as described in defendant’s ‘Cover Note’ dated September 25, 1962, with the
annotation that loss or damage, if any, under said Cover Note is payable to Republic
Bank as its interest may appear, subject however to the printed conditions of said
defendant’s Fire Insurance Policy Form.
On September 27, 1962, Fire Insurance Policy No. 43170 was issued for the sum of
P500,000.00 in favor of the assured, Union Manufacturing Co., Inc., for which the
corresponding premium in the sum of P8,328.12, which was reduced to P6,688.12,
was paid by the Republic Bank to the defendant, Philippine Guaranty Co., Inc.
Upon the expiration of said fire policy on September 25, 1963, the same was
renewed by the Republic Bank upon payment of the corresponding premium in the
same amount of P6,663.52 on September 26, 1963. in the corresponding
voucher . . ., it appears that although said renewal premium was paid by the
Republic Bank, such payment vas for the account of Union Manufacturing Co., Inc.
and that the cash voucher for the payment of the first premium was paid also by the
Republic Bank but for the account of Union Manufacturing Co., Inc.
Sometime on September 6, 1964, a fire occurred in the premises of the Union
Manufacturing Co., Inc.
on October 6, 1964, the Union Manufacturing Co., Inc. filed its fire claim with the
defendant Philippine Guaranty Co., Inc., thru its adjuster, H. H. Bayne Adjustment
Co., which was denied by said defendant in its letter dated November 27, 1964 . . .,
on the following grounds: ‘a. Policy Condition No. 3 and/or the ‘Other Insurance
Clause’ of the policy was violated because you did not give ,notice to us the other
insurance which you had taken from New India for P80,000.00, Sincere Insurance for
P25,000.00 and Manila Insurance for P200,000.00 with the result that these
insurances, of which we became aware of only after the fire, were not endorsed on
our policy; and (b) Policy Condition No. 11 was not complied with because you have
failed to give to our representatives the required documents and other proofs with
respect to your claim and matters touching on our liability, if any, and the amount of
such liability
As of September, 1962, when the defendant Philippine Guaranty Co., issued Fire
Insurance Policy No. 43170 in the sum of P500,000.00 to cover the properties of the
Union Manufacturing Co., Inc., the same properties were already covered by Fire
Policy No. 1533 of the Sincere Insurance Company for P25,000.00 for the period
from October 7, 1961 to October 7, 1962 and by insurance policies Nos. F-2314 and
F-2590 of the Oceanic Insurance Agency for the total sum of P300,000.00 and for
periods respectively, from January 27, 1962 to January 27, 1963, and from June 1,
1962 to June 1, 1963; and when said defendant’s Fire Insurance Policy No. 43170
was already in full force and effect, the Union Manufacturing Co., Inc. without the
consent of the defendant, Philippine Guaranty Co., Inc., obtained other insurance
policies totalling P305,000.00 over the same properties prior to the fire.
-Issue: WON the Union manufacturing company may receive indemnification from
the insurer?
-Ruling: No, the insured may not recover from the insurer.
Section 95 of the insurance code provides that: “A double insurance exists where the
same person is insured by several insurers separately in respect to the same subject
and interest.”
Here, the insured has taken a subsequent insurance contract with another insurance
company without informing the petitioner. Such is a violation of the contract as with
their indicated tenors.
Without deciding whether notice of other insurance upon the same property must be
given in writing, or whether a verbal notice is sufficient to render an insurance valid
which requires such notice, whether oral or written, we hold that in the absolute
absence of such notice when it is one of the conditions specified in the fire insurance
policy, the policy is null and void.
While it is true, as a general rule, that contracts of insurance are construed most
favorably to the insured, yet contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the terms which the parties
themselves have used. If such terms are clear and unambiguous they must be taken
and understood in their plain, ordinary and popular sense
Phil. American Life vs. Auditor General, G.R. No. L-19255 January 18,
1968
-Facts: On January 1, 1950, Philippine American Life Insurance Company
[Philamlife], a domestic life insurance corporation, and American International
Reinsurance Company [Airco] of Pembroke, Bermuda, a corporation organized
under the laws of the Republic of Panama, entered into an agreement-reinsurance
— treaty which provides in its paragraph 1, Article I, the following:
"ARTICLE I. On and after the 1st day of January 1950, the Ceding Company
[Philamlife] agrees to reinsure with AIRCO the entire first excess of such life
insurance on the lives of persons as may be written by the Ceding Company under
direct application over and above its maximum limit of retention for life insurance,
and AIRCO binds itself, subject to the terms and provisions of this agreement, to
accept such reinsurances on the same terms and for an amount not exceeding its
maximum limit for automatic acceptance of life reinsurance. . . ."
By the third paragraph of the same Article I, it is also stipulated that even though
Philamlife "is already on a risk for its maximum retention under policies previously
issued, when new policies are applied for and issued [Philamlife] can cede
automatically any amount, within the limits . . . specified, on the same terms on which
it would be willing to accept the risk for its own account, if it did not already have its
limit of retention."cralaw virtua1aw li
Reinsurances under said reinsurance treaty of January 1, 1950 may also be had
facultatively upon other cases pursuant to Article II thereof, whereby Airco’s liability
begins from acceptance of the risk. These cases include those set forth in paragraph
2 of the treaty’s Article I which expressly excludes from automatic reinsurance the
following: (a) any application for life insurance with Philamlife which, together with
other papers containing information as to insurability of the risk, shows that "the total
amount of life insurance (including accidental death benefit) applied for to or already
issued by all companies [other life insurance companies which had previously
accepted the risk] exceeds the equivalent of Five Hundred Thousand Dollars
($500,000) United States currency;" and (b) any life on which Philamlife "retains for
its own account less than its regular maximum limit of retention for the age, sex,
plan, rating and occupation of the risk."
Every life insurance policy reinsured under the aforecited agreement "shall be upon
the yearly renewable term plan for the amount at risk under the policy reinsured."
Philamlife agrees to pay premiums for all reinsurances "on an annual premium
basis."
It is conceded that no question ever arose without respect to the remittances made
by Philamlife to Airco before July 16, 1959, the date of approval of the Margin Law.
The Central Bank of the Philippines collected the sum of P268,747.48 as foreign
exchange margin on Philamlife remittances to Airco purportedly totalling $610,998.63
and made subsequent to July 16, 1959.
Philamlife subsequently filed with the Central Bank a claim for the refund of the 1. The thrust of petitioner’s argument is that the premia remitted were in pursuance
above sum of P268,747.48. The ground therefor was that the reinsurance premiums of its reinsurance treaty with Airco of January 1, 1959 a contract antedating the
so remitted were paid pursuant to the January 1, 1950 reinsurance treaty, and, Margin Law, which took effect only on July 16, 1959.
therefore, were pre-existing obligations expressly exempt from the margin fee.
But the validity of such claim must be tested by the provisions of Section 3 of the
On June 7, 1960, the Monetary Board — in line with the opinion of its Acting Legal Margin Law quoted earlier in this opinion. Said Section expressly withholds the
Counsel resolved that "reinsurance contracts entered into and approved by the enforcement of the provisions of said Act on "contractual obligations calling for
Central Bank before July 17, 1959 are exempt from the payment of the 25% foreign payment of foreign exchange issued, approved and outstanding as of the date this
exchange margin, even if remittances thereof are made after July 17, 1959," Act takes effect and the extension thereof, with the same terms and conditions as the
because such remittances "are only made in the implementation of a mother original contractual obligations." library
contract, a continuing contract which is the reinsurance treaty."

True, the reinsurance treaty precedes the Margin Law by over nine years. Nothing in
The foregoing resolution notwithstanding, the Auditor of the Central Bank, on April that treaty, however, obligates Philamlife to remit to Airco a fixed, certain, and
19, 1961, refused to pass in audit Philamlife’s claim for refund. obligatory sum by way of reinsurance premiums. All that the reinsurance treaty
provides on this point is that Philamlife "agrees to reinsure." The treaty speaks of a
On May 17, 1961, Philamlife sought reconsideration with the Auditor General. probability; not a reality. For, without reinsurance, no premium is due. Of course the
reinsurance treaty lays down the duty to remit premiums — if any reinsurance is
On October 24, 1961, the request for reconsideration was denied. The Auditor effected upon the covenants in that treaty written. So, it is that the reinsurance treaty
General in effect expressed the view that the existence of the reinsurance treaty of per se cannot give rise to a contractual obligation calling for the payment of foreign
January 1, 1950 did not place reinsurance premia — on reinsurance effected on or exchange "issued, approved and outstanding as of the date this Act [Republic Act
after the approval of the Margin Law on July 17, 1959 — out of the reach of said 2609] takes effect." virtua1aw library
statute. 

For an exemption to come into play, there must be a reinsurance policy or, as in the
Hence, the present petition for review.
reinsurance treaty provided, a "reinsurance cession" which may be automatic or
facultative.
There should not be any misapprehension as to the distinction between a
reinsurance treaty, on the other hand, and a reinsurance policy or a reinsurance
cession, on the other. The concept of one and the other is well expressed thus:j
". . . A reinsurance policy is thus a contract of indemnity one insurer makes with
another to protect the first insurer from a risk it has already assumed . . . In
contradistinction, a reinsurance treaty is merely an agreement between two
insurance companies whereby one agrees to cede and the other to accept
reinsurance business pursuant to provisions specified in the treaty. The practice of
issuing policies by insurance companies includes, among other things, the issuance
of reinsurance policies on standard risks and also on substandard risks under special
arrangements. The lumping of the different agreements under a contract has
resulted in the term known to the insurance world as ‘treaties.’ Such a treaty is, in
fact, an agreement between insurance companies to cover the different situations
described. Reinsurance treaties and reinsurance policies are not synonymous.
Treaties are contracts for insurance; reinsurance policies or cessions . . . are
contracts of insurance."
Philamlife’s obligation to remit reinsurance premiums becomes fixed and definite
upon the execution of the reinsurance cession. Because, for every life insurance
policy ceded to Airco, Philamlife agrees to pay premium. It is only after a reinsurance
cession is made that payment of reinsurance premium may be exacted, as it is only
after Philamlife seeks to remit that reinsurance premium that the obligation to pay the
margin fee arises.
Upon the premise that the margin fee of P268,747.48 was collected on remittances
made on reinsurance effected on or after the Margin Law took effect, refund thereof
does not come within the coverage of the exemption circumscribed in Section 3 of
the said law.
2. Nor will the argument that the Margin Law impairs the obligation of contract —
constitutionally proscribed — under the reinsurance treaty, carry the day
for Petitioner.
Petitioner’s point is that if the Margin Law were applied, it "would have paid much
more to have the continuing benefit of reinsurance of its risks than it has been
required to do so by the reinsurance treaty in question" and that "the theoretical
equality between the contracting parties . . . would be disturbed and one of them
placed at a distinct disadvantage in relation to the other.”virtua1aw library
This pose at once loses potency on the face of the rule long recognized that existing
laws form part of the contract "as the measure of the obligation to perform them by
the one party and the right acquired by the other." Stated otherwise," [t]he obligation
does not inhere, and subsist in the contract itself, propio vigore, but in the law
applicable to the contract." Indeed, Article 1315 of the Civil Code gives out the
precept that parties to a perfected contract "are bound . . . to all the consequences
which, according to their nature, may be in keeping with . . . law."
 "The international reserves of the Philippines have reached such a low level as to
require remedial action beyond that provided in Republic Act No. 265, in spite of
exchange controls which have been in force since 1949. The decline in the level of
Accordingly, when petitioner entered into the reinsurance treaty of January 1, 1950
our international reserves has persisted. The means and the measures presently
with Airco, it did so with the understanding that the municipal laws of the Philippines
authorized in the Charter of the Central Bank for dealing with the balance of
at the time said treaty was executed, became an unwritten condition thereof. Such
payments problem have been found inadequate.
municipal laws constitute part of the obligations of contract. It is in this context that
we say that Republic Act 265, the Central Bank Act, enacted on June 15, 1948 —
The purpose of this Bill is to provide the Central Bank with an additional instrument
previous to the date of the reinsurance treaty — became a part of the obligation of
for effectively coping with the problem and achieving domestic and international
contract created by the latter. And under Republic Act 265, reasonable restrictions
stability of our currency. The additional instrument of Central Bank action provided
may be imposed by the State through the Central Bank on all foreign exchange
for by this bill consists of a cost restriction on all imports, as well as invisibles, to
transactions "in order to protect the international reserve of the Central Bank during
reduce the excessive demand for foreign exchange. The proceeds that may accrue
an exchange crisis." The Margin Law is nothing more than a supplement to the
to the Central Bank from the margin will be distributed in accordance with the
Central Bank Act; it is a reasonable restriction on transactions in foreign exchange.
provisions of Section 41 of the Bank’s Charter."virtua1aw library
It, too, is an additional arm given the Central Bank to attain its objectives, to wit: (1)"
[t]o maintain monetary stability in the Philippines;" and (2)" [t]o preserve the
That some such law as Republic Act 2609 was envisioned by the contracting parties,
international value of the peso and the convertibility of the peso into other freely
Philamlife and Airco, when the January 1, 1950 reinsurance treaty was executed,
convertible currencies." On top of all these is that statute was enacted in a
may be gleaned from the provisions of Article VI of said treaty whereunder" except in
background of "dangerously low international reserves."
those instances where AIRCO is taxed directly and independently on premiums
collected by it from the Ceding Company, AIRCO shall reimburse the Ceding
The following explanatory note by the Committee on Banks, Currency and
Company for the tax paid on reinsurance premiums paid AIRCO by the Ceding
Corporations on House Bill No. 3663, which later became the Margin Law, Republic
Company which are not allowed the Ceding Company, as a deduction in the tax
Act 2609, is expressive of the purpose of the law, namely, to reduce the excessive
statement of the Ceding Company." virtua1aw library
demand on and prevent further decline of our international reserves, viz:
Petitioner complains that reinsurance contracts abroad would be made impractical by exchange to fall due as policies become reinsurance under said treaty, whenever
the imposition of the 25% margin fee. Reasons there are which should deter us from such remittances would constitute an excessive demand on our international
giving in to this view. First, there is no concrete evidence that such imposition of the reserves."cralaw virtua1aw library
25% margin fee is unreasonable. Second, if really continuance of the existing
reinsurance treaty becomes unbearable, that contract itself provides that petitioner Viewed from this focal point, there cannot be an impairment of the obligation of
may potestatively write finis thereto on ninety days’ written notice. In truth, petitioner contracts. For, the State may, through its police power, adopt whatever economic
is not forced to continue its reinsurance treaty indefinitely with Airco. policy may reasonably be deemed to promote public welfare, and to enforce that
policy by legislation adapted to its purpose. 19 We have, in Abe v. Foster Wheeler
3. Another roadblock is astride petitioner’s route to refund. Corporation, 20 declared that: "The freedom of contract, under our system of
government, is not meant to be absolute. The same is understood to be subject to
To maintain domestic and international stability in currency is a primary concern of reasonable legislative regulation aimed at the promotion of public health, morals,
the State; it is in pursuance of the constitutional mandate, in the preamble ordained, safety and welfare. In other words, the constitutional guaranty of non-impairment of
to "promote the general welfare" ; it is a matter of public policy. This could mean obligations of contract is limited by the exercise of the police power of the State, in
action to forestall a currency debacle, to improve the lower international reserve, or the interest of public health, safety, morals and general welfare." It has been said,
to conserve and even increase such reserve. and we believe correctly, that "the economic interests of the State may justify the
exercise of its continuing and dominant protective power notwithstanding
The Margin Law, Republic Act 2609, it is well to remember, is a remedial currency interference with contracts." It bears repetition to state at this point that the Margin
measure. It was thus passed to reduce as far as is practicable the excessive demand Law is part of the economic "Stabilization Program" of the country. 22
for foreign exchange. Petitioner’s stand that because it had a continuing — though
revocable — reinsurance treaty with Airco, all remittances of reinsurance premia Tersely put then, "the [constitutional] obligation of contracts provision does not bar a
made by it to its foreign reinsurer should be withdrawn from the operation of the proper exercise of the state’s police power." 23 Nebbia v. New York 24 reasons out
Margin Law, we are constrained to state, is at war with the State’s economic policy of that: "Under our form of government the use of property and the making of contracts
preserving the stability of our currency. Petitioner may not, in the words of the are normally matters of private and not of public concern. The general rule is that
Solicitor General, "tie the hands of the State and render it powerless to impose a both shall be free of governmental interference. But neither property rights nor
certain margin or cost restrictions on its remittances of reinsurance premia in foreign contract rights are absolute; for government cannot exist if the citizen may at will use
his property to the detriment of his fellows, or exercise his freedom of contract to Treaties are contracts for insurance while reinsurance policies are contracts of
work them harm. Equally fundamental with the private right is that of the public to insurance.
regulate it in the common interest." As emphatic, if not more, is the following from
Norman v. Baltimore & Ohio Railroad Company, thus: "Contracts, however express,
cannot fetter the constitutional authority of the Congress. Contracts may create rights
of property, but when contracts deal with a subject matter which lies within the
control of the Congress, they have a congenital infirmity. Parties cannot remove their
transactions from the reach of dominant constitutional power by making contracts
about them." More. In another case, pronouncement was made that: "Not only are
existing laws read into contracts in order to fix obligations as between the parties, but
the reservation of essential attributes of sovereign power is also read into contracts
as a postulate of the legal order. The policy of protecting contracts against
impairment presupposes the maintenance of a government by virtue of which
contractual relations are worth while, — a government which retains adequate
authority to secure the peace and good order ofsociety."

For the reasons given, the petition for review is hereby denied, and the ruling of the
Auditor General of October 24, 1961 denying refund is hereby affirmed.

A reinsurance policy is a contract of indemnity one insurer makes with another to

protect the first insurer from a risk it has already assumed, while a reinsurance treaty
is merely an agreement between two insurance companies whereby one agrees to
cede and the other to accept reinsurance business pursuant to provisions specified
in the treaty. Reinsurance treaties and reinsurance policies are not synonymous.
Fieldman’s Ins. Co. vs. Asian Surety & Ins. Co., G.R. No. L-23447 July 31,
1970
-Facts: On various dates, between April 11, 1960 and January 9, 1961, the Asian
Surety & Insurance Company, Inc. and the Fieldmen's insurance Company, Inc.
entered into seven (7) reinsurance agreements or treaties under the general terms of
which the former, as the ceding company undertook to cede to the latter, as the
reinsuring company, a specified portion of the amount of insurance underwritten by
ASIAN upon payment to FIELDMEN'S of a proportionate share of the gross rate of
the premium applicable with respect to each cession after deducting a commission.
Said agreements or treaties were to, take effect from certain specific dates and were
to be in force until cancelled by either party upon previous notice of at least three (3)
months by registered mail to the other party, the cancellation to take effect as of the
31st of December of the year in which the notice was given.
On September 19, 1961 FIELDMEN'S, by means of registered mail, served notice to
ASIAN of the former's desire to be relieved from all participation in its various treaties
with the latter effective December 31, 1961. This communication, although
admittedly received by ASIAN on September 25, 1961, did not elicit any reply from
ASIAN.
On December 7, 1961 FIELDMEN'S sent another letter to ASIAN expressing regrets
at alleged violations committed by the latter with respect to the various treaties
between them; in the same letter, FIELDMENS reiterated its position that it would
consider itself "no longer at risk for any reinsurance and/or cession" given by ASIAN
which might be in force on December 31, 1961. Not having received any formal reply
from ASIAN, FIELDMEN'S sent anew a letter on February 17, 1962 reminding
ASIAN of the December 7 letter regarding the cancellation of all the reinsurance
treaties and cessions as of December 31, 1961. At the same time FIELDMEN'S
requested ASIAN to submit its final accounting of all cessions made to the former for
the preceding months when the reinsurance agreements were in force.
Meanwhile one of the risks reinsured with FIELDMENS under Cession No. 61-87,
Policy No. RI-1236, issued in favor of the Government Service Insurance System,
became a liability when the insured property was burned on February 16, 1962.
Since the policy was issued on July 1, 1961, it was supposed to expire on July 1,
1962. The next day, February 17, ASIAN immediately notified FIELDMEN'S of said
fire loss. And on February 26, 1962 ASIAN sent its reply stating, among other things,
as follows:
 “we beg to reiterate that your letter of December 7, 1961, terminating said
treaties by December 31, 1961, is not in accordance with the terms thereof, since
there was no prior three months' notice. However, considering the attitude express
(sic) in your aforesaid letter of December 7, 1961, we are willing to waive provision
that said treaties may be cancelled on December 31st of any year, and will consider
them cancelled at the end of three (3) months from December 7, 1961, by which time
we shall be able to render the final accounting you desire.”
FIELDMEN'S, relying on the sufficiency of its notice of termination dated September
19, 1961 and obviously bent on avoiding its liability under the reinsurance
agreements with ASIAN, filed a petition for declaratory relief with the Court of First
Instance of Manila to seek a declaration that all the reinsurance contracts entered
into between them had terminated as of December 31, 1961 and to obtain an order
directing ASIAN to render final accounting of the transactions between them with
respect to said reinsurance treaties as of the cut-off date.
In its answer below ASIAN denied having received FIELDMEN'S letter dated
September 19, 1961, and argued that even assuming it did, FIELDMEN'S could not
have terminated the reinsurance treaties as of December 31, 1961 because the letter
was merely an expression of FIELDMEN'S desire to cancel the treaties and not a
formal notice of cancellation as contemplated in their reinsurance agreements. By
way of special defense Asian contended that even if the September 19 letter were
considered sufficient notice of cancellation — thereby rendering the reinsurance
agreements terminated as of December 31, 1961 — the liability of FIELDMEN'S with
respect to policies or cessions issued under two of the said agreements (marked as
Annexes A and B) prior to their cancellation continued to have full force and effect
until the stated expiry dates of such policies or cession.
On December 4, 1962 the trial court rendered a decision declaring six3 of the
seven4 insurance agreements in question cancelled as of December 31, 1961. At the
same time, it upheld ASIAN'S position that all cessions of reinsurance made by it to
FIELDMEN'S prior to the cancellation of the reinsurance treaties continued in full
force and effect until expiry dates. The same decision also ordered FIELDMEN'S to
make an accounting of its business transactions with ASIAN within 30 days, and to
pay the costs.
On Appeal to the Court of Appeals, the decision of the trial court was substantially
affirmed, with the slight modification that the order for accounting was eliminated,
without prejudice to the filing of a proper action between the parties for that purpose.
The cancellation as of December 31, 1961 of the reinsurance treaties involved in this
case is not now in issue. It was declared by both the trial court and the Court of
Appeals, and has not been challenged here. The main controversy between the
parties is on the question of whether or not said cancellation had the effect of
terminating also the liability of FIELDMEN'S as reinsurer with respect to policies or
cessions issued prior to the termination of the principal reinsurance contracts or
treaties.
Of the six reinsurance contracts under consideration two contain provisions, which
clearly and expressly recognize the continuing effectivity of policies ceded under
them for reinsurance notwithstanding the cancellation of the contracts themselves.
Thus, as already noted hereinabove, Article 10 of the Facultative Obligatory
Reinsurance Treaty Fire (Annex A to the petition below) provides "that in the event of
termination of this Agreement ..., the liability of the Fieldmen's under current cessions
shall continue in full force and effect until their natural expiry ...;" and the 4th
paragraph of Article VI of the Personal Accident Reinsurance Treaty (Annex B to the
petition below) states:
4. On the termination of this Agreement from any cause whatever, the
liability of the REINSURER (Fieldmen's) under any current cession
including any amounts due to be ceded under the terms of this
Agreement and which are not cancelled in the ordinary course of
business shall continue in full force until their expiry unless the
COMPANY (Asian) shall, prior to the thirty-first December next
following such notice, elect to withdraw the existing cessions ....
Insofar as the two reinsurance agreements with the express stipulations aforequoted
are concerned there is clearly no merit in FIELDMEN'S claim that their cancellation
carried with it ipso facto the termination of all reinsurance cessions thereunder. Such
cessions continued to be in force until their respective dates of expiration. Since it
was under one of said agreements, namely, the Facultative Obligatory Reinsurance
Treaty-Fire, that the reinsurance cession corresponding to the GSIS policy had been
made, FIELDMEN'S cannot avoid liability which arose by reason of the burning of the
insured property.
With respect to the other four agreements, it would seem that the petition for
declaratory relief is moot, and that no useful purpose would be served by defining the
respective rights and obligations of the parties thereunder. The said agreements
have been cancelled, and it does not appear that any claim by or liability in favor of
the insured has actually arisen under any of the reinsurance cessions made prior to
such cancellation. Future conflicts of the same nature as those which have motivated
the present action can of course be obviated by using mare precise and definite
terminology in the reinsurance agreements which the parties may enter into
henceforth.
It is significant to note in this connection: (1) that in ASIAN'S answer to the petition
below, particularly to the allegation in paragraph III concerning the right of either
party to terminate the reinsurance agreements upon at least three months' notice,
such termination to take effect on the 31st of December of the year in which notice
was given, ASIAN made express reference only to the provisions in the two
agreements marked as Annexes A and B to the petition that "the liability of
FIELDMEN'S under any current cession ... shall continue in full force and effect until
their natural expiry ...; (2) that the same provisions, and no other, were relied upon
as a special defense on the question of FIELDMEN'S continued liability; and (3) that
in ASIAN'S prayer for relief in its answer it was only with respect to those two
agreements that ASIAN asked for a declaration that the cessions on reinsurance
issued prior to their cancellation would continue in full force and effect until their
natural expiry. In other words, ASIAN was quite willing that no similar declaration be
made by the Court with respect to the other agreements, obviously because no risk
reinsured pursuant thereto had become an actual liability. And since those
agreements had been cancelled as of December 31, 1961, there is no point in the
prayer for declaratory judgment concerning them.
FIELDMEN'S insists on its alternative prayer that all cessions under the six
reinsurance agreements be declared rescinded by reason of certain violations
thereof, as stated by FIELDMEN'S in its letter of December 7, 1961.

This action, however, is not one for rescission but merely for declaratory relief, and
the petition contains no averments which would constitute grounds for rescission.
Artex Development Co. vs. Wellington Ins. Co, G.R. No. L-29508 June 27,
Neither are there any findings of fact in the decision of the Court of Appeals upon 1973
which rescission may be predicated. If anything, the thrust of said decision is that
In this appeal from the decision of the court of first instance of Rizal at Caloocan city,
ASIAN was not guilty of any substantial breach of the contracts which would warrant
the Court reiterates the established doctrine that a third party not privy to a contract
such a step. And this Conclusion, being factual in nature, is binding and conclusive
that contains no stipulations pour autrui in its favor may not sue for enforcement of
upon this Court.
the contract.
WHEREFORE, the decision appealed from is affirmed insofar as it refers to the
Facultative-Obligatory, Reinsurance Treaty and the Personal Accident Reinsurance Hence, in this case where the lower court ordered defendant-insurer to pay plaintiff-
Treaty are concerned, and modified with respect to the others by declaring the insured the balance of the insured’s property loss of P3,624,683.43 and its
issues concerning them as moot and academic. No pronouncement as to costs. ascertained business interruption loss of P1,748,460.00 with interest and 15%
attorney’s fees, the Court affirms the correctness of the lower court’s ruling that it is
no defense for the insurer as against the insured that the insurer had obtained
reinsurance from other companies to cover its liability.

Defendant-appellant’s lone assignment of error that the lower court should have
ruled instead "that plaintiff-appellee’s cause of action (as insured) should have been
directed against the reinsurers and not against defendant-appellant" is manifestly
untenable since there is no privity of contract between the insured and the
reinsurers. Plaintiff-appellee as insured can only move for enforcement of its
insurance contract with its insurer, the defendant Appellant.
Unless there is a specific grant in, or assignment of, the reinsurance contract in favor
of the insured or a manifest intention of the contracting parties to the reinsurance
contract to grant such benefit or favor to the insured, the insured, not being privy to
the reinsurance contract, has no cause of action against the reinsurer. It is expressly
provided in section 91 of the Insurance Act 1 that" (T)he original insured has no
interest in a contract of insurance."cralaw virtua1aw library
The lower court’s judgment of April 2, 1968 was rendered on the basis of the parties’
stipulation of facts and there is no dispute as to the property and business
interruption loss of the insured as thus determined nor as to the partial payments
made by defendant-insurer that have greatly reduced the amount still due and owing
under the judgment under appeal.
Briefly, the trial court found that" (F)rom the evidence and stipulation of facts
presented, it appears that the defendant, Wellington Insurance Co., Inc. insured for
P24,346,509.00 the buildings, stocks and machinery of plaintiff Artex Development
Co., Inc., against loss or damage by fire or lighting (Exh. A) upon payment by plaintiff
of the corresponding premiums; that on August 2, 1963, said properties were insured
for an additional sum of P883,034.00 (Exh. A-1); that on May 12, 1963 defendant
insured plaintiff against business interruption (use and occupancy) for P5,200,000.00
(Exh. B); that on September 22, 1963, the buildings, stocks and machineries of
plaintiff’s spinning department were burned; that notice of the loss and damage was
given the defendant, and the loss was referred to the H. H. Bayne Adjustment Co.
and the Allied Adjustment Co.; that as per report of the adjusters, the total property
loss of the plaintiff was the sum of P10,106,554.40 and the total business interruption
loss was P3,000,000.00; that defendant has paid to the plaintiff the sum of
P6,481,870.07 of the property loss suffered by plaintiff and P1,864,134.08 on its
business interruption loss, leaving a balance of P3,624,683.43 and P1,748,460.00,
respectively." 2
On May 29, 1969, counsel for plaintiff-appellee filed a manifestation dated April 10,
1969, bearing the conformity of plaintiff itself under the signature of its president,
Domingo G. Castillo, as follows:jgc:chanrobles.com.ph
"Plaintiff appellee, through counsel, respectfully manifests that, in view of the Deeds
of Discharge dated 10 April 1969 and Collateral Agreement dated 10 April 1969,
hereto attached as Annexes ‘A’ and ‘B’, the only remaining liability subject of
litigation shall be that proportion of the loss reinsured with or through Alexander and
Alexander, Inc. of New York, U.S.A., namely, P397,813.00 — the rest having been
paid and settled per the said deeds.
chanrobles.com.ph
"1. Artex hereby acknowledges receipt of the sum of P3,600,000.00 in Philippine
currency paid by Minet on behalf of itself and Willington and Minet & Co. in full and
final settlement of all or any claims Artex may have against Willington, Minet and
Minet & Co. in respect of the losses resulting from the said fire of 22nd September
1963 the Policies of Insurance and the Contracts of Reinsurance specified in the said
Deeds of Discharge and discharges Willington, Minet and Minet & Co. jointly and
severally from all actions, proceedings, claims, demands, costs and expenses in
respect thereof including the said judgment obtained in the Court of First Instance of
Rizal and additionally Artex waives in favour of Minet and Minet & Co. Artex’s right of
recourse against them under Article 1177 of the Civil Code of the Philippines." 4
Upon the parties’ joint motion dated May 22, 1969 for a temporary suspension of the
proceedings by virtue of such payment, the Court per its resolution of June 30, 1969
resolved to suspend the proceedings until July 30, 1969. 5 The Court also noted
defendant-appellant’s manifestation dated June 18,1969, to the effect that "the
statement in plaintiff-appellee’s Manifestation that the only remaining amount of its
claim subject of litigation is the proportion of the loss reinsured with Alexander and
Alexander, Inc. of New York, U.S.A. in the amount of P397,813.00 because the
reinsurers of defendant-appellant made additional partial payments, is true and
correct but without prejudice to the legal question presented in defendant-appellant’s
brief." 6 Article 1311 of our Civil Code expresses the universal rule that "Contracts take effect
Thereafter, plaintiff-appellee filed on August 8, 1969 its brief, and prayed for
affirmance of the appealed judgment with modification, as
follows:jgc:chanrobles.com.ph
"In the light of the foregoing discussion, the lower court did not commit any error in its
appealed decision, which must accordingly be sustained and affirmed. It is however
respectfully prayed that the same be modified as to the amount of liability adjudged
against defendant appellant in favor of plaintiff-appellee, in accordance with their
Collateral Agreement’ executed by them on April 10, 1969 (Annex ‘B’ of
manifestation of the same date, filed in this Court on 29 May 1969), which should
now be fixed at P397,813.00, plus of course 12% interest per annum thereof for late
payment until 10 April 1969, attorney’s fees of 15% of the recovery, expenses of
litigation and costs of suit, already adjudged by the lower court, no writ of execution
to issue however on any adjudged liability until after three (3) years from 10 April
1969, pursuant to the same ‘Collateral Agreement’ of the parties."cralaw virtua1aw
library
On the sole issue of law raised by defendant appellant in its brief, the Court finds, as
above indicated, that no single clause in the reinsurance contracts has been cited by
defendant-insurer that would justify its claim that they contained a stipulation pour
autrui in favor of plaintiff insured, and whereby "plaintiff-appellee is deemed to have
agreed to look solely to the reinsurers for indemnity in case of loss." 7
only between the parties, their assigns and heirs" (with the heir being "not liable
beyond the value of the property he received from the decedent,") and provides for
the exception of stipulations pour autrui or in favor of a third person not a party to the
contract, in this wise:jgc:chanrobles.com.ph
"If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred a
favor upon a third person." (Art. 1311, Civil Code, second paragraph)
The Court has stressed since the early case of Uy Tam v. Leonard 8 that the intent Assuming that plaintiff-insured could avail of the reinsurance contracts and directly
of the contracting parties to benefit a third party by means of such stipulations pour sue the reinsurers for payment of the loss, still such assumption would not in any
autrui must be clearly expressed, and hence, a clause in a contractor’s bond way affect or cancel out defendant-insurer’s direct contractual liability to plaintiff-
executed solely in favor of the City of Manila and conditioned to pay for all labor and insured under the insurance policy to indemnify plaintiff for the property losses.
materials cannot be construed as a stipulation pour autrui available to materialmen Plaintiff’s right as insured to sue defendant as insurer directly and solely would
who supplied certain materials to the contractor for use in the performance of the thereby not be affected or curtailed in any way, without prejudice to defendant in turn
latter’s contract with the city. filing a third party complaint or separate suit against its reinsurers: Thus, in Naga
Development Corp. v. Court of Appeals 10 the Court held that the contractor remain
In Bonifacio Bros, Inc. v. Mora 9 the Court reiterated the same established doctrine, liable to the supplier for materials delivered, notwithstanding arrangements made on
holding that the clause in a motor vehicle insurance policy authorizing the owner of its GSIS loan for the GSIS to issue treasury warrants on account of such loan,
the damaged vehicle to contract for its repair does not mean that the repairman may directly in favor of the supplier, since "such an arrangement obviously cannot destroy
collect the cost of the repair directly from the insurer, there being no clause "from or modify the direct legal responsibility of the (contractor) to the (supplier) to pay for
which we can infer that there is an obligation on the part of the insurance company to what the latter gave and rendered to the former."cralaw virtua1aw library
pay the cost of repairs directly to them," and that the mortgagee of the car (expressly
named in the insurance policy as beneficiary of any loss payable thereunder) had a On April 4, 1973, plaintiff-appellee filed a manifestation informing the Court that in
better right than the repairman to the insurance proceeds. Republic of the Philippines v. Wellington Insurance Co., Inc., docketed as Civil Case
No. 88046 of the court of first instance of Manila, an order was issued on September
Plaintiff-insured, not being a party or privy to defendant insurer’s reinsurance 18, 1972 for the liquidation of said insurance company, herein defendant-appellant;
contracts, therefore, could not directly demand enforcement of such reinsurance that the Insurance Commissioner was designated receiver and as such issued on
contracts. Defendant-appellant’s contention that the insured should be deemed to November 4, 1972 an order for the filing of claims against said defendant; that
have agreed to look solely to the reinsurers for indemnity in case of loss, since it was accordingly plaintiff filed its verified statement of claim wherein it asked the Insurance
evident that with its mere P500,000 paid-up capital stock, it had to secure Commissioner "to move to dismiss the above entitled appeal as filed only for
reinsurance coverage for the over P24-million fire insurance coverage of the policy delay."cralaw virtua1aw library
issued by it to plaintiff-insured, is manifestly untenable.
Requested by the Court to file their comments, defendant through counsel admitted governing distribution of assets, priorities of payments of proven claims, etc., of
the fact of liquidation proceedings but denied any dilatory motive in its appeal, stating insurance companies under liquidation and with prior authorization of the court in the
that "although it does not raise any issue of fact in (this) appeal, yet the question of liquidation proceedings pending in the Manila court of first instance.
law raised (herein) is of first impression in this jurisdiction" and of "utmost
importance" to insurance companies taking out reinsurance policies. ACCORDINGLY, as prayed for by plaintiff-appellee in its brief, the judgment of the
lower court is affirmed, with the modification that the remaining liability of defendant-
The Insurance Commissioner, in her manifestation of May 18, 1973, confirmed the appellant to plaintiff-appellee in accordance with their "collateral agreement" of April
fact of her taking over "title to all of the property, contracts, rights of action and all of 10, 1969 is fixed at P397,813.00, with twelve (12%) percent interest per annum until
the books and records of the (defendant) insurance company" as receiver-liquidator 10 April 1969, attorney’s fees of fifteen (15%) percent of the recovery, and costs of
pursuant to section 175-B of the Insurance Act, claiming the sole right now to suit.
officially represent and act for defendant company and asserting "exclusive
jurisdiction to determine this claim" even as against this Court which, according to
her, should be deemed to have "ceased to have jurisdiction over the subject of this
pending action," but at the same time not moving to dismiss the appeal, as
suggested by plaintiff, and instead manifesting that "the Insurance Commissioner is
absolutely without any knowledge or information sufficient to form a belief as to the
truth or veracity of Plaintiff Appellee’s imputation to Defendant-Appellant that the
latter had filed the above-entitled appeal only for delay."

Since the claim at bar of plaintiff against defendant is merely for the balance of a
proven undisputed claim (as to amount) — long tried and decided as per the trial
court’s judgment of April 2, 1968 before the liquidation order issued only last year on
September 18, 1972 — the Court has herein resolved and disposed of the sole issue
of law raised in this appeal. Plaintiff’s judgment claim as now judicially determined
will have to be satisfied in compliance with the requirements of the Insurance Act

Avon Insurance PLC vs. CA, G.R. No. 97642.  August 29, 1997
Respondent Yupangco Cotton Mills filed a complaint against several foreign
reinsurance companies (among which are petitioners) to collect their alleged
percentage liability under contract treaties between the foreign insurance companies
and the international insurance broker C.J. Boatright, acting as agent for respondent
Worldwide Surety and Insurance Company. Inasmuch as petitioners are not
engaged in business in the Philippines with no offices, places of business or agents
in the Philippines, the reinsurance treaties having been entered abroad, service of
summons upon motion of respondent Yupangco, was made upon petitioners through
the Office of the Insurance Commissioner. Petitioners, by counsel on special
appearance, seasonably filed motions to dismiss disputing the jurisdiction of
respondent Court and the extra-territorial service of summons. Respondent
Yupangco filed its opposition to the motions to dismiss, petitioners filed their reply,
and respondent Yupangco filed its rejoinder. In an Order dated April 30, 1990,
respondent Court denied the motions to dismiss and directed petitioners to file their
answer. On May 29, 1990, petitioners filed their notice of appeal. In an order dated
June 4, 1990, respondent court denied due course to the appeal.
To this day, trial on the merits of the collection suit has not proceeded as in the
present petition, petitioners continue vigorously to dispute the trial court’s assumption
of jurisdiction over them.
It will be remembered that in the plaintiff’s complaint, 4 it was contended that on July
6, 1979 and on October 1, 1980, Yupangco Cotton Mills engaged to secure with
Worldwide Security and Insurance Co. Inc., several of its properties for the periods
July 6, 1979 to July 6, 1980 as under Policy No. 20719 for a coverage of
P100,000,000.00 and from October 1, 1980 to October 1, 1981, under Policy No.
25896, also for P100,000,000.00. Both contracts were covered by reinsurance
treaties between Worldwide Surety and Insurance and several foreign reinsurance
companies, including the petitioners. The reinsurance arrangements had been made
through international broker C.J. Boatwright and Co. Ltd., acting as agent of
Worldwide Surety and Insurance.
As fate would have it, on December 16, 1979 and May 2, 1981, within the respective
effectivity periods of Policies 20719 and 25896, the properties therein insured were
razed by fire, thereby giving rise to the obligation of the insurer to indemnify the
Yupangco Cotton Mills. Partial payments were made by Worldwide Surety and
Insurance and some of the reinsurance companies.
On May 2, 1983, Worldwide Surety and Insurance, in a Deed of Assignment,
acknowledged a remaining balance of P19,444,447.75 still due Yupangco Cotton
Mills, and assigned to the latter all reinsurance proceeds still collectible from all the
foreign reinsurance companies. Thus, in its interest as assignee and original insured,
Yupangco Cotton Mills instituted this collection suit against the petitioners.
Service of summons upon the petitioners was made by notification to the Insurance
Commissioner, pursuant to Section 14, Rule 14 of the Rules of Court. 5
In a Petition for Certiorari filed with the Court of Appeals, petitioners submitted that
respondent Court has no jurisdiction over them, being all foreign corporations not
doing business in the Philippines with no office, place of business or agents in the
Philippines. The remedy of Certiorari was resorted to by the petitioners on the
premise that if petitioners had filed an answer to the complaint as ordered by the
respondent court, they would risk abandoning the issue of jurisdiction. Moreover,
extra-territorial service of summons on petitioners is null and void because the
complaint for collection is not one affecting plaintiff’s status and not relating to
property within the Philippines.
The Court of Appeals found the petition devoid of merit, stating that:chanrob1es
virtual 1aw library
1. Petitioners were properly served with summons and whatever defect, if any, in the
service of summons were cured by their voluntary appearance in court, via motion to
dismiss.
2. Even assuming that petitioners have not yet voluntarily appeared as co-
defendants in the case below even after having filed the motions to dismiss adverted
to, still the situation does not deserve dismissal of the complaint as far as they are
concerned, since as held by this Court in Lingner Fisher GMBH v. IAC, 125 SCRA
523;
"A case should not be dismissed simply because an original summons was
wrongfully served. It should be difficult to conceive for example, that when a
defendant personally appears before a court complaining that he had not been
validly summoned, that the case filed against him should be dismissed. An alias
summons can be actually served on said defendant."cralaw virtua1aw library
3. Being reinsurers of respondent Worldwide Surety and Insurance of the risk which
the latter assumed when it issued the fire insurance policies in dispute in favor of
respondent Yupangco, petitioners cannot now validly argue that they do not do
business in this country. At the very least, petitioners must be deemed to have
engaged in business in the Philippines no matter how isolated or singular such
business might be, even on the assumption that among the local domestic insurance
corporations of this country, it is only in favor of Worldwide Surety and Insurance that
they have ever reinsured any risk arising from any reinsurance within the territory.
4. The issue of whether or not petitioners are doing business in the country is a
matter best referred to a trial on the merits of the case, and so should be addressed
there.
Maintaining its submission that they are beyond the jurisdiction of Philippine Courts,
petitioners are now before us, stating:jgc:chanrobles.com.ph
"Petitioners, being foreign corporations, as found by the trial court, not doing
business in the Philippines with no office, place of business or agents in the
Philippines, are not subject to the jurisdiction of Philippine courts.
 as to whether or not the petitioners were determined to be "doing business in the
The complaint for sum of money being a personal action not affecting status or Philippines" or not.
relating to property, extraterritorial service of summons on petitioners — all not doing
business in the Philippines — is null and void. To qualify the petitioners’ business of reinsurance within the Philippine forum, resort
must be made to the established principles in determining what is meant by "doing
The appearance of counsel for petitioners being explicitly ‘by special appearance business in the Philippines." In Communication Materials and Design, Inc. et. al. v.
without waiving objections to the jurisdiction over their persons or the subject matter’ Court of Appeals, 8 it was observed that:jgc:chanrobles.com.ph
and the motions to dismiss having excluded non-jurisdictional grounds, there is no
voluntary submission to the jurisdiction of the trial court." 6 "There is no exact rule or governing principle as to what constitutes doing or
engaging in or transacting business. Indeed, such case must be judged in the light of
For its part, private respondent Yupangco counter-submits:jgc:chanrobles.com.ph its peculiar circumstances, upon its peculiar facts and upon the language of the
statute applicable. The true test, however, seems to be whether the foreign
"1. Foreign corporations, such as petitioners, not doing business in the Philippines, corporation is continuing the body or substance of the business or enterprise for
can be sued in Philippine Courts, not withstanding petitioners’ claim to the contrary. which it was organized. cdtech

2. While the complaint before the Honorable Trial Court is for a sum of money, not Article 44 of the Omnibus Investments Code of 1987 defines the phrase to
affecting status or relating to property, petitioners (then defendants) can submit include:chanrob1es virtual 1aw library
themselves voluntarily to the jurisdiction of Philippine Courts, even if there is no
extra-judicial (sic) service of summons upon them. ‘soliciting orders, purchases, service contracts, opening offices, whether called
‘liaison’ offices or branches; appointing representatives or distributors who are
3. The voluntary appearance of the petitioners (then defendants) before the domiciled in the Philippines or who in any calendar year stay in the Philippines for a
Honorable Trial Court amounted, in effect, to voluntary submission to its jurisdiction period or periods totaling one hundred eighty (180) days or more; participating in the
over their persons." 7 management, supervision or control of any domestic business firm, entity or
corporation in the Philippines, and any other act or acts that imply a continuity or
In the decisions of the courts below, there is much left to speculation and conjecture commercial dealings or arrangements and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of, commercial gain or of the purpose and
object of the business organization.’"
The term ordinarily implies a continuity of commercial dealings and arrangements,
and contemplates, to that extent, the performance of acts or works or the exercise of
the functions normally incident to and in progressive prosecution of the purpose and
object of its organization. 9 abroad but in the Philippines as well. It does not appear at all that the petitioners had
A single act or transaction made in the Philippines, however, could qualify a foreign
corporation to be doing business in the Philippines, if such singular act is not merely
incidental or casual, but indicates the foreign corporation’s intention to do business in
the Philippines. 10
There is no sufficient basis in the records which would merit the institution of this
collection suit in the Philippines. More specifically, there is nothing to substantiate the
private respondent’s submission that the petitioners had engaged in business
activities in this country. This is not an instance where the erroneous service of
summons upon the defendant can be cured by the issuance and service of alias
summons, as in the absence of showing that petitioners had been doing business in
the country, they cannot be summoned to answer for the charges leveled against
them.
The Court is cognizant of the doctrine in Signetics Corp. v. Court of Appeals 11 that
for the purpose of acquiring jurisdiction by way of summons on a defendant foreign
corporation, there is no need to prove first the fact that defendant is doing business
in the Philippines. The plaintiff only has to allege in the complaint that the defendant
has an agent in the Philippines for summons to be validly served thereto, even
without prior evidence advancing such factual allegation.
As it is, private respondent has made no allegation or demonstration of the existence
of petitioners’ domestic agent, but avers simply that they are doing business not only
performed any act which would give the general public the impression that it had
been engaging, or intends to engage in its ordinary and usual business undertakings
in the country. The reinsurance treaties between the petitioners and Worldwide
Surety and Insurance were made through an international insurance broker, and not
through any entity or means remotely connected with the Philippines. Moreover,
there is authority to the effect that a reinsurance company is not doing business in a
certain state merely because the property or lives which are insured by the original
insurer company are located in that state. 12 The reason for this is that a contract of
reinsurance is generally a separate and distinct arrangement from the original
contract of insurance, whose contracted risk is insured in the reinsurance agreement.
13 Hence, the original insured has generally no interest in the contract of
reinsurance. 14
A foreign corporation, is one which owes its existence to the laws of another state,
15 and generally, has no legal existence within the state in which it is foreign. In
Marshall Wells Co. v. Elser, 16 it was held that corporations have no legal status
beyond the bounds of the sovereignty by which they are created. Nevertheless, it is
widely accepted that foreign corporations are, by reason of state comity, allowed to As we observed, in so far as the State is concerned, such foreign corporation has no
transact business in other states and to sue in the courts of such fora. In the legal existence. Therefore, to subject such corporation to the courts’ jurisdiction
Philippines foreign corporations are allowed such privileges, subject to certain would violate the essence of sovereignty.
restrictions, arising from the state’s sovereign right of regulation.
In the alternative, private respondent submits that foreign corporations not doing
Before a foreign corporation can transact business in the country, it must first obtain business in the Philippines are not exempt from suits leveled against them in courts,
a license to transact business here 17 and secure the proper authorizations under citing the case of Facilities Management Corporation v. Leonardo Dela Osa, et. al.
existing law. 20 where we ruled "that indeed, if a foreign corporation, not engaged in business in
the Philippines, is not barred from seeking redress from Courts in the Philippines, a
If a foreign corporation engages in business activities without the necessary fortiori, that same corporation cannot claim exemption from being sued in Philippine
requirements, it opens itself to court actions against it, but it shall not be allowed to Courts for acts done against a person or persons in the Philippines."cralaw virtua1aw
maintain or intervene in an action, suit or proceeding for its own account in any court library
or tribunal or agency in the Philippines. 18
We are not persuaded by the position taken by the private Respondent. In Facilities
The purpose of the law in requiring that foreign corporations doing business in the Management case, the principal issue presented was whether the petitioner had
country be licensed to do so, is to subject the foreign corporations doing business in been doing business in the Philippines, so that service of summons upon its agent as
the Philippines to the jurisdiction of the courts, 19 otherwise, a foreign corporation under Section 14, Rule 14 of the Rules of Court can be made in order that the Court
illegally doing business here because of its refusal or neglect to obtain the required of First Instance could assume jurisdiction over it. The Court ruled that the petitioner
license and authority to do business may successfully though unfairly plead such was doing business in the Philippines, and that by serving summons upon its
neglect or illegal act so as to avoid service and thereby impugn the jurisdiction of the resident agent, the trial court had effectively acquired jurisdiction. In that case, the
local courts. court made no prescription as the absolute suability of foreign corporations not doing
business in the country, but merely discounts the absolute exemption of such foreign
The same danger does not exist among foreign corporations that are indubitably not corporations from liabilities particularly arising from acts done against a person or
doing business in the Philippines. Indeed, if a foreign corporation does not do persons in the Philippines.
business here, there would be no reason for it to be subject to the State’s regulation.
As we have found, there is no showing that petitioners had performed any act in the important element in the operation of a court’s jurisdiction upon a party to a suit, as
country that would place it within the sphere of the court’s jurisdiction. A general service of summons upon the defendant is the means by which the court acquires
allegation standing alone, that a party is doing business in the Philippines does not jurisdiction over his person. 24 Without service of summons, or when summons are
make it so. A conclusion of fact or law cannot be derived from the unsubstantiated improperly made, both the trial and the judgment, being in violation of due process,
assertions of parties, notwithstanding the demands of convenience or dispatch in are null and void, 25 unless the defendant waives the service of summons by
legal actions, otherwise, the Court would be guilty of sorcery; extracting substance voluntarily appearing and answering the suit. 26
out of nothingness. In addition, the assertion that a resident of the Philippines will be
inconvenienced by an out-of-town suit against a foreign entity, is irrelevant and When a defendant voluntarily appears, he is deemed to have submitted himself to
unavailing to sustain the continuance of a local action, for jurisdiction is not the jurisdiction of the court. 27 This is not, however, always the case. Admittedly, and
dependent upon the convenience or inconvenience of a party. 21 without subjecting himself to the court’s jurisdiction, the defendant in an action can,
by special appearance object to the court’s assumption on the ground of lack of
It is also argued that having filed a motion to dismiss in the proceedings before the jurisdiction. If he so wishes to assert this defense, he must do so seasonably by
trial court, petitioners have thus acquiesced to the court’s jurisdiction, and they motion for the purpose of objecting to the jurisdiction of the court, otherwise, he shall
cannot maintain the contrary at this juncture. be deemed to have submitted himself to that jurisdiction. 28 In the case of foreign
corporations, it has been held that they may seek relief against the wrongful
This argument is at the most, flimsy. assumption of jurisdiction by local courts. In Time, Inc. v. Reyes, 29 it was held that
the action of a court in refusing to rule or deferring its ruling on a motion to dismiss
In civil cases, jurisdiction over the person of the defendant is acquired either by his for lack or excess of jurisdiction is correctable by a writ of prohibition
voluntary appearance in court and his submission to its authority or by service of or certiorari sued out in the appellate court even before trial on the merits is had. The
summons. 22 same remedy is available should the motion to dismiss be denied, and the court,
over the foreign corporation’s objections, threatens to impose its jurisdiction upon the
Fundamentally, the service of summons is intended to give official notice to the same.
defendant or respondent that an action has been commenced against it. The
defendant or respondent is thus put on guard as to the demands of the plaintiff as If the defendant, besides setting up in a motion to dismiss his objection to the
stated in the complaint. 23 The service of summons upon the defendant becomes an jurisdiction of the court, alleges at the same time any other ground for dismissing the
action, or seeks an affirmative relief in the motion, 30 he is deemed to have
submitted himself to the jurisdiction of the court.

In this instance, however, the petitioners from the time they filed their motions to
dismiss, their submissions have been consistently and unfailingly to object to the trial
court’s assumption of jurisdiction, anchored on the fact that they are all foreign
corporations not doing business in the Philippines.

As we have consistently held, if the appearance of a party in a suit is precisely to

question the jurisdiction of the said tribunal over the person of the defendant, then
this appearance is not equivalent to service of summons, nor does it constitute an
acquiescence to the court’s jurisdiction. 31 Thus, it cannot be argued that the
petitioners had abandoned their objections to the jurisdiction of the court, as their
motions to dismiss in the trial court, and all their subsequent posturings, were all in
protest of the private respondent’s insistence on holding them to answer a charge in
a forum where they believe they are not subject to. Clearly, to continue the
proceedings in a case such as those before Us would just "be useless and a waste
of time." 32

ACCORDINGLY, the decision appealed from dated October 11, 1990, is SET ASIDE
and the instant petition is hereby GRANTED. The respondent Regional Trial Court of
Manila, Branch 51 is declared without jurisdiction to take cognizance of Civil Case
No. 86-37932, and all its orders and issuances in connection therewith are hereby
ANNULLED and SET ASIDE. The respondent court is hereby ORDERED to DESIST
from maintaining further proceeding in the case aforestated