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Insurance

Melanie P. Mejia

Pan Malayan v. Court of


Appeals
Facts: Canlubang insured its car with Pan Malayan. The
vehicle was involved in an accident allegedly caused by
Fabies driver
1. Pan Malayan defrayed the cost of repair demanded
payment from Fabie, she refused
2. Fabies contention: No cause of action since the own
damage clause of the policy precluded subrogation
3. Pan Malayans argument: since it had indemnified
Canlubang for the damage arising from the negligence
of Fabies driver, it has a cause of action against the
latter under Art. 2207 NCC
Issue: Whether Pan Malayan was subrogated to the rights
of Canlubang against Fabie and her driver

Held: Yes.
Ratio: It is founded on the principle of subrogation
Payment to the assured works as an equitable
assignment
Subject to exceptions:
The assured releases the wrongdoer or 3rd party
from liability
Insurer pays the assured without notifying the
carrier who has already settled the assureds claim
The insurer pays the assured for a loss which is not
a risk covered by the policy (voluntary payment)
None of the exceptions is applicable in this case

As to interpretation of own damage clause:


General rule: If the terms of the contract are clear,
specific and leave no room for interpretation, there
is no need for statutory construction
Exception: If the terms are obscure or ambiguous,
then the courts will apply the rules on statutory
construction
The terms of a contract are to be construed
according to the sense and meaning of the terms
which theparties have used
Interpretation of insurance contracts: strictly
against of the insurer and liberally in favor of the
insured

Philamcare v. Court of Appeals


Facts: Ernani Trinos applied for a health care coverage
with Philamcare.
1. His application was approved for 1 year. He was
given hospitalization and out-patient benefits
2. He renewed his policy and expanded the coverage
for P75,000 per disability.
3. Subsequently, he had a heart attack and was
confined at MMC. His claim for payment was denied
by Philamcare on the grounds of concealment
Issue: Whether a healthcare agreement is in the
nature of an insurance contract

Held: Yes.
Ratio: Elements of an insurance contract (Sec 2 IC)
1. Insured has an insurable interest
2. Insured is subject to a risk of loss by the happening of a
designated peril
3. Insurer assumes the risk
4. Assumption of risk is part of a general scheme to distribute
actual losses among group bearing a similar risk
5. Insured pays a premium (consideration)
CAB: Healthcare agreement is a non-life insurance, a contract
of indemnity. Once member incurs medical expenses arising
from injury or sickness, the health care provider must pay for
the same to the extent agreed in the contract.

Rizal Surety v. Court of Appeals


Facts: Rizal Surety issued a P1.5 million fire
insurance policy with Transworld. A four-span
building was part of the policy
1. A fire broke out and razed the building,
including another building behind it.
2. Transworld filed a claim with Rizal Surety, but
the latter refused to pay.
3. Rizal Suretys contention: the policy covered
damage only on the four-span building and not
the two-storey building behind it.
Issue: Whether Rizal Surety is liable for loss of the
two-storey building considering that the fire
insurance policy sued upon covered only the

Held: Yes.
Ratio: Art 1377 NCC: The interpretation of obscure
words or stipulations in a contract shall not favor the
party who caused the obscurity.
If there is ambiguity in the terms in the policy, it
should be liberally construed in favor of the insured
and strictly against the insurer
Reason: Contract of adhesion; the insured has no
voice in the selection of the words employed and
that the language of the contract is selected with
great care and deliberation by experts and legal
advisers employed by the insurance company