INSURANCE CASE DIGEST CONSTRUCTION OF INSURANCE CONTRACT Calanoc vs. Court of Appeals, 98 !"l. #9 $%9&&' Facts( Facts( Melenc Melencio io Basilio Basilio,, a watchm watchman an and, and, secure secured d a life life insura insurance nce policy policy from from the Philip Philippin pine e American Insurance Company in the amount of P2,000 which had a supplemental supplemental contract covering death by accident !e later died from a gunshot wound on the occasion of a robbery committed"
his widow was paid P2,000 for the face value of the policy but the company refused to give the other 2000 for the death by accident because the deceased died by murder during the robbery and while ma#ing an arrest arrest as an o$cer of the law which were were e%pressly e%cluded e%cluded in the contract &he Court of Appeals upheld the Company and said that the circumstances surrounding Basilio's death was caused by one of the ris#s e%cluded by the supplementary contract which e%empts the company from liability Issue( Is the Philippine Philippine American )ife Insurance Co liable to the petitioner petitioner for the amount covered by the supplemental contract* )el*( +es
&he circumstances of Basilio's Basilio's death cannot be ta#en ta#en as purely intentional on the part of Basilio to e%pose himself to the danger o proof that his death was the result of intentional #illing because there is the possibility that the malefactor had -red the shot merely to scare away the people around &he terms and phraseology of the e%ception clause should be clearly e%pressed within the understanding of the insured Art ./ of the ew Civil Code provides that in case ambiguity in the terms of the contract, it will be construed against the party who caused such obscurity obscurity &herefore ambiguous or obscure terms in the insurance policy are to be construed strictly against the insurer and liberally in favor of the insured party to ensure the protection of the insured since these insurance contracts are usually arranged and employed by e%perts and legal advisers acting e%clusively in the interest of the insurance company +"atan vs Insular -"fe Assurance Co., -t*., SCRA &8 Facts( 1uan Biagtan was insured with defendant Insular )ife Assurance Company under Policy Policy o /3405 for the sum of P5,00000 and, under a supplementary contract denominated 6Accidental 7eath Bene-t Clause, for an additional sum of P5,00000 if 6the death of the Insured resulted directly from bodily bodily in8ury in8ury e9ecte e9ected d solely solely through through e%ter e%ternal nal and violen violentt means means sustai sustained ned in an accide accident nt and independently of all other causes6 &he clause, however, e%pressly provided that it would not apply where death resulted from an in8ury 6intentionally in:icted by another party6 party6 ;n the night of May 20, .3<=, or during the -rst hours of the following day a band of robbers entered the house of the insured 1uan Biagtan Biagtan was #illed as his house was being robbed &he insurance company paid the basic amount of P5,000 but refused to pay the additional P5,000 under the accidental death bene-t clause, on the ground that his death was the result of in8uries intentionally in:icted by third parties and was not covered &he trial court ruled that there was no proof that the robbers intended to #ill Biagtan, or 8ust to scare him away by thrusting at him with their #nives Issue( >hether or not, the wounds received by the insured at the hands of the robbers were in:icted intentionally* Rul"n( +? @nli#e the ruling in the case of Calanoc vs Court of Appeals, where the #illing of the victim was held as accidental and thus covered by the insurance policy, the upreme Court held that in the instant case, case, the insur insured ed was #illed #illed intent intention ionall ally y &he term term inten intentio tional nal implie implies s the e%er e%ercis cise e of the reasoning faculties, consciousness and volition &he upreme Court held pointing out that there were nine wounds in all &he e%ception in the accidental bene-t clause does not spea# of the purpose whether homicidal or not of a third party in causing the in8uries, but only of the fact that such in8uries have been intentionally in:icted ine wounds in:icted with bladed weapons at close range cannot be considered innocent insofar as intent is concerned &he manner of e%ecution e%ecution of the crime permits no other conclusion >here a provision of the policy e%cludes intentional in8ury, it is the intention of the person in:icting the in8ury in8ury that that is contr controlli olling ng If the in8uries in8uries su9ere su9ered d by the insur insured ed clearl clearly y resul resulted ted from from the
intentional act of a third party the insurer is relieved from liability liability @nder the circumstance, the insurance company was correct in refusing to pay the additional sum of P2,00000 under the accidental death bene-t clause which e%pressly provided that it would not apply where death resulted from an in8ury 6intentionally6 in:icted by a third party party DIMA E??FA) A@FAC? C;FP;FA&I; vs&!? !;;FAB)? C;@F&;D APP?A) 2./ CFA =3/, eptember 2, .332;C;, 1( DAC&( ;n ;ctober ;ctober 22, .34<, .34<, deceas deceased, ed, Carlie Carlie urposa urposa was insur insured ed with with petiti petitione onerr DinmanE inmanEene eneral ral Assurance Corporation with his parents, spouses 1ulia and Carlos urposa, and brothers Christopher, Charles, Chester and Clifton, all surnamed, urposa, as bene-ciaries >hile said insurance policy was in full force and e9ect, the insured, Carlie urposa, died on ;ctober .4,.344 as a result of a stab wound wound in:i in:ict cted ed by one one of the the thre three e G/H G/H un unid iden enti ti-e -ed d men men Priv Privat ate e resp respond onden entt and and the the othe otherr bene-ciaries of said insurance policy -led a written notice of claim with the petitioner insurance company which denied said claim contending that murder and assault are not within the scope of the covera coverage ge of the insura insurance nce policy policy Priva Private te respo responde ndent nt -led -led a compla complaint int with with the Insura Insurance nce Commission which rendered a favorable response for the respondent &he appellate court ruled li#ewise Petitioner -led this petition alleging grave abuse of discretion on the part of the appellate court in applying the principle of 6e%presso unius e%clusio alterius6 in a personal accident insurance policy, since death resulting from murder andor assault are impliedly e%cluded in said insurance policy considering that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the assailant &herefore, said death was committed with deliberate intent which, by the very nature of a personal accident insurance policy, cannot be indemni-ed I@?( >hether or not the insurer is liable for the payment of the insurance premiums F@)IE( +es, +es, the insurer is still liable Contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer &hus ambiguity in the words of an insurance contract should be interpreted in favor of its bene-ciary &he terms 6accident6 and 6accidental6 as used in insurance contracts have not acJuired any technical meaning, and are construed by the courts in their ordinary and common acceptation &hus, the terms have been ta#en to mean that which happen by chance or fortuitously, without intention and design, and which is une%pected, unusual, and unforeseen >here the death or in8ury is not the natural or probable result of the insuredKs voluntary act, or if something unforeseen occurs in the doing of the act which produces the in8ury, the resulting death is within the protection of the policies insuring against death or in8ury from accident In the case at bar, it cannot be pretended that Carlie urposa died in the course of an assault or murder as a result of his voluntary act considering the very nature of these crimes L?I&! L?I&! I@F I@FAC AC? ? C;FP C;FP vs C;@F& C;@F& ;D APP?A) APP?A),, ?& A) EF o 4523< 4523< May .=, .330 .330 A I@FAC? )A> CA? CA? B+ C + DAC& . Private respondent respo ndent Dernande insured his hi s car with the L?I& L?I&! ! I@FAC? C;MPA+ C;MPA+ 2 &he car was w as dis-gured in an accidents / Private respondent try to recover the amount of the insurance policy with the petitioner but the latter they cannot agree on how much the petitioner will pay to the private respondent = Private respondent -le a complaint against the petitioner before the trial court of Cebu who order the petitioner to pay the private respondent the amount of 20000 as moral damages, .0000 as e%emplary and 5000 as an attorney 5 Petitioner appealed to the CA who a$rm the decision of the trial court < Petitioner -led a petition for review to the upreme Court claiming that the CA acted in e%cess of its 8urisdiction when it a$rmed the decision of the trial court on the ground that while private respo responde ndent nt as# for moral moral damage damages s of .,0000 .,0000 only, only, he was awarded awarded with with 2,0000, 2,0000, e%empla e%emplary ry damages of 5,000 and he was awarded .,0000, an attorney's fee of /,000 but he was given 5 ,000 I@? >!?&!?F ;F ;& &!? CA AC&?7 I ?NC? ;D I& 1@FI7IC&I; >!? I& ADDIFM &!? 7?CII; ;D &!? &FIA) C;@F& I A>AF7IE &!? 7AMAE? F@)IE( According to the upreme Court, the act of petitioner of delaying payment for two months cannot be considered as so wanton or malevolent to 8ustify an award of P20,00000 as moral damages, ta#ing into consideration con sideration the fact that the actual damage on the car was only P/,=<0 &he reason for petitionerKs failure failure to indemnify private respondent respondent within the twoOmonth period was that the parties could not come to an agreement as regards the amount of the actual damage on the car car &he amount of P.0,00000
prayed for by private respondent as moral damages is eJuitable @ I@F I@FAC AC? ? ;DDIC? ;DDIC?,, )&7, &7, petiti petitione oner, r, vs &!? !; !; C;@F C;@F& ;D APP?A) APP?A) and ?FIA ?FIA )IM, )IM, respondents Dacts of the case( &he sun insurance issued Personal Accident Policy to Deli% )im, 1r 1 r with a face value of P200,00000 &wo &wo months later, the deceased died with a bullet wound in his head As bene-ciary, his wife erissa )im sought payment on the policy but her claim was re8ected Both parties petitioner agreed that there was no suicide !owever the insurance co stated that there was no accident either Pilar alagon, )imKs secretary, was the only eyewitness to his death he testi-ed that on ;ctober <, .342, at about .0 oKcloc# in the evening, after his motherKs birthday party According to alagon, )im was in a happy mood Gbut not drun#H and was playing with his handgun, from which he had previously removed the magaine As she watched television, he stood in front of her and pointed the gun at her he pushed it aside and said it might he loaded !e assured her it was not and then pointed it to his temple &he ne%t moment there was an e%plosion and )im slumped to the :oor :oor !e was dead before he fell . &he nerissa lim sued the insurance co, in the F&C of Lamboanga City and was sustained 2 &he petitioner was sentenced to pay her P200,00000, representing the face value of the policy, with interest at the legal rate" &his decision was a$rmed on appeal, and the motion for reconsideration was was deni denied ed / henc hence e the the pres presen entt peti petiti tion on by sun sun insu insura ranc nce e to faul faultt the the Cour Courtt of Appe Appeal als s for for approving the payment of the claim and the award of damages I@?( >; there was an accident that occurred which entitles the widow of the deceased to recover from the insurance policy* And >; the petitioner acted in bad faith for resisting a lawful and 8ust claim C 7?CII;( An accident is an event which happens without any human agency or, if happening through human agency, an event which, under the circumstances, is unusual to and not e%pected by the person to whom it happens It has also been de-ned as an in8ury which happens by reason of some violence or casualty to the in8ured without his design, consent, or voluntary coO operation 5 , the Court is convinced that there was truly an accident that which resulted in lim's death )im was unJuestionably negligent and that negligence cost him his own life But it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident &here is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident Indeed, most accidents are caused by negligence &here are only four e%ceptions e%pressly made in the contract to relieve the insurer from liability, and none of these e%ceptions is applicable in the case at bar bar . ;n the second issue, petitioner is not guilty of bad faith in resisting a legitimate obligation, believing, on the ground that the death of the insured was covered by the e%ception the issue, as for the court, was highly debatable Petition is 7?I?7 1?>?) QI))AC;F&A QI))AC;F&A vs vs &!? I@FAC? C;MMII; C;MMII; EF o )O5=.., 24 ;ctober .340 .00 CFA =< DAC&( Qillacorta had her Colt )ancer car insured with ?mpire Insurance Company against own damage, theft and /rd party liability >hile the car was in the repair shop, one of the employees of the said repair shop too# it out for a 8oyride after which it -gured in a vehicular accident &his resulted to the death of the driver and some of the passengers as well as to e%tensive damage to the car car Qillacorta -led a claim for total loss l oss with the said insurance company company !owever, it denied the claim on the ground that the accident did not fall within the provisions of the policy either for the ;wn 7amage or &heft coverage, invo#i invo#ing ng the policy policy provi provisio sion n on Authori Authoried ed 7river 7river Clause Clause &his &his was upheld upheld by the Insura Insurance nce Commission further stating that the car was not stolen and therefore not covered by the &heft Clause because it is not evident that the person who too# the car for a 8oyride intends to permanently deprive the insured of his her car I@?( >hethe >hetherr or not the insur insurer er compan company y should should pay the said said claim, claim, C;I7 C;I7?FI ?FIE E &!? 7FIQ?F 7FIQ?F I R@?&I; >A ;& A@&!;FIL?7 B+ &!? I@F?7 ;>?F !?)7( +es +es >here the insured's car is wrongfully ta#en without the insured's consent from the car service and repair shop to whom it had been entrusted for chec#Oup and repairs Gassuming that such ta#ing was for a 8oy ride, in the course of which it was totally smashed in an accidentH, respondent insurer is liable and must pay insured for the total loss of the insured vehicle under
the &heft Clause of the policy Assuming, despite the totally inadeJuate evidence, that the ta#ing was temporary and for a 8oy ride, the Court sustains as the better view that which holds that when a person, either with the ob8ect of going to a certain place, or learning how to drive, or en8oying a free ride, ta#es possession of a vehicle belonging to another, without the consent of its owner, he is guilty of theft because by ta#ing possession of the personal property belonging to another and using it, his intent to gain is evident since he derives there from utility, satisfaction, en8oyment and pleasure ACC;F7IE)+, the appealed decision is set aside and 8udgment is hereby rendered sentencing private respondent to pay petitioner the sum of P/5,00000 with legal interest from the -ling of the complaint until full payment is made and to pay the costs of suit Palermo v Pyramid Insurance DAC&( ;n ;ctober .2,.3<4, after having purchased a brand new issan Cedric de )u%e edan car bearing Motor o 043 from the g am Bo# Motors Co in Bacolod City, plainti9 insured the same with the defendant insurance company against any loss or damage for P 20,00000 and against third party liability for P .0,00000 &he automobile was, however, mortgaged by the plainti9 with the vendor, g am Bo# Motors Co, to secure the payment of the balance of the purchase price, which e%plains why the registration certi-cate in the name of the plainti9 remains in the hands of the mortgagee, g am Bo# Motors Co ;n April ., .3<4, while driving the automobile in Juestion, the plainti9 met a violent accident &he ) a Carlota City -re engine crashed head on, and as a conseJuence, the plainti9 sustained physical in8uries, his father, Cesar Palermo, who was with am in the car at the time was li#ewise seriously in8ured and died shortly thereafter, and the car in Juestion was totally wrec#ed Palermo, -led a complaint in the Court of Dirst Instance of egros ;ccidental against Pyramid Insurance Co, Inc, for payment of his claim Pyramid Insurance Co, I nc, disallowed the claim because at the time of the accident, the insured was driving his car with an e%pired driverKs license I@?( >; Palermo is entitled to the claim !?)7( +? A@&!;FIL?7 7FIQ?F( Any of the following( GaH &he Insured GbH Any person driving on the InsuredKs order or with his permission Provided that the person driving is permitted in accordance with the licensing or other laws or regulations to drive the Motor Qehicle and is not disJuali-ed from driving such motor vehicle by order of a Court of law or by reason of any enactment or regulation in that behalf G?%h 6A6H &here is no merit in the appellantKs allegation that the plainti9 was not authoried to drive the insured motor vehicle because his driverKs license had e%pired &he driver of the insured motor vehicle at the time of the accident was, the insured himself, hence an 6authoried driver6 under the policy >hile the Motor Qehicle )aw prohibits a person from operating a motor vehicle on the highway without a license or with an e%pired license, an infraction of the Motor Qehicle )aw on the part of the insured, is not a bar to recovery under the insurance contract It however renders him sub8ect to the penal sanctions of the Motor Qehicle )aw &he reJuirement that the driver be 6permitted in accordance with the licensing or other laws or regulations to drive the Motor Qehicle and is not disJuali-ed from driving such motor vehicle by order of a Court of )aw or by reason of any enactment or regulation in that behalf,6 applies only when the driver6 is driving on the insuredKs order or with his permission6 It does not apply when the person driving is the insured himself Diguracion vda 7e Maglana v Consolacion DAC&( )ope Maglana was an employee of the Bureau of Customs whose wor# station was at )asa, here in 7avao City ;ne morning, while on his way to his wor# station, driving a motorcycle owned by the Bureau of Customs At Sm , )anang, he met an accident that resulted in his death &he 8eep that bumped the deceased was owned by 7estra8o 7estra8o, had an insurance policy issued by ADIC; Insurance &he trial court ordered that ADIC; should reimburse 7estra8o for the amount paid to the plainti9 as a result of the accident but only to the e%tent of the insurance coverage Petitioners contend that ADIC;'s liability should be direct and primary, and not merely secondary as provided under the insurance code !ence, they argued that the P20,00000 coverage of the insurance policy issued by ADIC;, should have been awarded in their favor I@?( >; ADIC;'s liability is dependent upon the recovery of 8udgment by the in8ured party against the insured
!?)7( ; &he particular provision of the insurance policy on which petitioners base their claim is as follows( ec . T )IABI)I&+ &; &!? P@B)IC . &he Company will, sub8ect to the )imits of )iability, pay all sums necessary to discharge liability of the insured in respect of GaH death of or bodily in8ury to any &!IF7 PAF&+ %NN / In the event of the death of any person entitled to indemnity under this Policy, the Company will, in respect of the liability incurred to such person indemnify his personal representatives in terms of, and sub8ect to the terms and conditions hereof &he aboveOJuoted provision leads to no other conclusion but that ADIC; can be held directly liable by petitioners As this Court ruled in hafer vs 1udge, F&C of ;longapo City, Br 5, 6UwVhere an insurance policy insures directly against liability, the insurerKs liability accrues immediately upon the occurrence of the in8ury or even upon which the liability depends, and does not depend on the recovery of 8udgment by the in8ured party against the insured6 4 &he underlying reason behind the third party liability G&P)H of the Compulsory Motor Qehicle )iability Insurance is 6to protect in8ured persons against the insolvency of the insured who causes such in8ury, and to give such in8ured person a certain bene-cial interest in the proceeds of the policy 6 3 ince petitioners had received from ADIC; the sum of P5,00000 under the noOfault clause, ADIC;Ks liability is now limited to P.5,00000 !owever, we cannot agree that ADIC; is li#ewise solidarily liable with 7estra8o where the insurance contract provides for indemnity against liability to third persons, such third persons can directly sue the insurer, however, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured andor the other parties found at fault &he liability of the insurer is based on contract" that of the insured is based on tort >hile in solidary obligations, the creditor may enforce the entire obligation against one of the solidary debtors, in an insurance contract, the insurer underta#es for a consideration to indemnify the insured against loss, damage or liability arising from an un#nown or contingent event PCI vs CA, 204 CFA, =4 DAC&( pouses !erminio and ?vely )im e%ecuted a promissory note in favor of upercars secured by a chattel mortgage over a brand new Dord )aser registered under the name of !erminio and insured with PCI upercars with notice to the spouses assigned to DCP Credit Corp its rights, title and interest on the promissory note and chattel mortgage ubseJuently, the vehicle was carnapped ?velyn, was the one driving before it was stolen &he spouses -led a claim for loss with PCI but was denied on the ground that ?velyn's driver's license was e%pired at the time of the loss in violation of the authoried driver clause I@?( >; PCI is liable !?)7( +? Clearly, the ris# against accident is distinct from the ris# against theft &he authoried driver clause in an insurance policy is in contemplation or anticipation of accident in the legal sense in which it should be understood, and not in in contemplation or anticipation of an event such as theft &hus, if the insured vehicle had -gured in an accident at the time she drove it with an e%pired license, then PCI could properly resist the claim for indemni-cation resulting from the accident But in the present case, the loss of the vehicle did not result from an accident where intent was involved" the loss in the present case was caused by theft, the commission of which was attended by intent It is worthy to note that there is no causal connection between the possession of a valid driver's license and the loss of the vehicle &o rule otherwise would render car insurance practically a sham since an insurance company can easily escape liability by citing restrictions which are not applicable or germane to the claim, thereby reducing indemnity to a shadow E?AE;IA vs CA, C;@&F+ BAS?F I@FAC? C;FP, EF ..==2, 2<35 DAC&( Armando Eeagonia is the owner of orman's Mart and obtained from Country Ban#ers a -re insurance policy which covered toc#OinOtrade consisting o f F&> dry goods &he policy contained a provision where the insured must give notice to the insurer of any insurance or insurances already a9ected or which may be subseJuently be e9ected covering any of the property or properties consisting of stoc#s in trade, goods in process andor inventories already
insured by such policy otherwise it shall be deemed forfeited, provided that such condition does not apply when the total insurance or insurances in force at the time of the loss is not more than 200# ubseJuently, a -re bro#e out and destroyed Eeagonia's stoc#sOinOtrade Country ban#ers denied the claim because it was found that at the time of the loss, the stoc#s were li#ewise covered by two other -re insurances for .00# each by PDIC It had a mortgage clause which stated that loss, if any, shall be payable to Cebu &esing &e%tiles I@?( >; there was double insurance to 8ustify denial of the claim !?)7( ; GCountry Ban#ers is liableH It is a cardinal rule on insurance that a policy or insurance contract is to be interpreted liberally in favor of the insured and strictly against the company, the reason being, undoubtedly, to a9ord the greatest protection which the insured was endeavoring to secure when he applied for insurance Provisions, conditions, or e%ceptions in policies which tend to wor# a forfeiture of insurance policies should be construed most strictly against those for whose bene-ts they are inserted, and most favorably toward those against whom they are intended to operate &he condition in the policy is commonly #nown as the additional or other insurance clause and has been upheld as valid and as a warranty that no other insurance e%ists Its violation would thus avoid the policy !owever, in order to constitute a violation, the other insurance must be upon the same sub8ect matter, the same insurable interest, and the same ri s# As to a mortgaged property, the mortgagor and the mortgagee have each an independent insurable interest therein and both interests may be one policy, or each may ta#e out a separate policy covering his interest, either at the same or separate times &he mortgagor's insurable interest covers the full value of the mortgaged property, even though the mortgage debt is eJuivalent to the full value of the property &he mortgagee's insurable interest is to the e%tent of the debt, since the property is relied upon as security thereof, and in insuring he is not insuring the property but his interest or lien thereon A double insurance e%ists where the same person is insured by several insurers separately in respect of the same sub8ect and cover the same interest ince the two policies of the PDIC do not cover the same interest as that covered by the policy in issue, no double insurance e%ists &he nonOdisclosure is not fatal Dortune Insurance and urety Co, Inc v Court of Appeals Dacts( ;n 1une 23, .34, Producer's Ban# of the Philippines' armored vehicle was robbed, in transit, of seven hundred twentyO-ve thousand pesos GPhp 25,00000H that it was transferring from its branch in Pasay to its main branch in Ma#ati &o mitigate their loss, they claim the amount from their insurer, namely Dortune Insurance and urety Co Dortune Insurance, however, assails that the general e%emption clause in the Casualty Insurance coverage had a general e%emption clause, to wit( E??FA) ?NC?P&I; &he company shall not be liable under this policy in respect of %%% %%% %%% GbH any loss caused by any dishonest, fraudulent or criminal act of the insured or any o$cer, employee, partner, director, trustee or authoried representative of the Insured whether acting alone or in con8unction with others And, since the driver GMagalongH and security guard GAtigaH of the armored vehicle were charged with three others as liable for the robbery, Dortune denies Producer's Ban# of its insurance claim &he trial court and the court appeals ruled in favor of recovery, hence, the case at bar Issue( >hether recovery is precluded under the general e%emption clause Fuling( +es, recovery is precluded under the general e%emption clause !owsoever viewed, Producers entrusted the three with the speci-c duty to safely transfer the money to its head o$ce, with Alampay to be responsible for its custody in transit" Magalong to drive thearmored vehicle which would carry the money" and Atiga to provide the needed security for the money, the vehicle, and his two other companions In short, for these particular tas#s, the three acted as agents of Producers A 6representative6 is de-ned as one who represents or stands in the place of another" one who represents others or another in a special capacity, as an agent, and is interchangeable with 6agent6
In view of the foregoing, Dortune is e%empt from liability under the general e%ceptions clause of the insurance policy ?dillon v Manila Ban#ers )ife Dacts( In April .3<3, Carmen )apu -lled out an application form for insurance under Manila Ban#er )ife Assurance Corporation he stated that her date of birth was 1uly .., .30= @pon payment of the Php 2000 premium, she was issued the insurance policy in April .3<3 In May .3<3, Carmen )apu died in a vehicular accident Fegina ?dillon, who was named a bene-ciary in the insurance policy sought to collect the insurance claim but Manila Ban#er denied the claim Apparently, it is a rule of the insurance company that they were not to issue insurance policies to persons who are under the age of si%teen G.hether or not ?dillon is entitled to the insurance claim as a bene-ciary Fuling( +es Carmen )apu did not conceal her true age 7espite this, the insurance company still received premium from )apu and issued the corresponding insurance policy to her >hen the accident happened, the insurance policy has been in force for =5 days already and such time was already su$cient for Manila Ban#er to notice the fact that )apu is already over <0 years old and thereby cancel the insurance policy If Manila Ban#er failed to act, it is either because it was willing to waive such disJuali-cation" or, through the negligence or incompetence of its employees for which it has only itself to blame, it simply overloo#ed such fact @nder the circumstances, Manila Ban#er is already deemed in estoppel P?F)A C;MPAIA 7? ?E@F;, IC vs CA and CA+A DAC&( Cayas was the registered owner of a Mada bus which was insured with petitioner P?F)A C;MPAIA 7? ?E@F;, IC GPCIH &he bus -gured in an accident in Cavite, in8uring several of its passengers ;ne of them, Perea, sued Cayas for damages in the CDI, while three others agreed to a settlement of P=,00000 each with Cayas After trial, the court rendered a decision in favor of Perea, Cayas ordered to compensate the latter with damages Cayas -led a complaint with the CDI, see#ing reimbursement from PCI for the amounts she paid to A)) victims, alleging that the latter refused to ma#e such reimbursement notwithstanding the fact that her claim was within its contractual liability under the insurance policy &he decision of the CA a$rmed in toto the decision of the F&C of Cavite, the dispositive portion of which states( I QI?> ;D &!? D;F?E;IE, 8udgment is hereby rendered ordering defendant PCI to pay plainti9 Cayas the sum of P50,00000 under its ma%imum liability as provided for in the insurance policy" W In this petition for review on certiorari, petitioner see#s to limit its liability only to the payment made by private respondent to Perea and only up to the amount of P.2,00000 It altogether denies liability for the payments made by private respondents to the other / in8ured passengers totaling P.2,00000 I@?( !ow much should PCI pay* !?)7( &he decision of the CA is modi-ed, petitioner only to pay Cayas P.2,000,00000 &he insurance policy provides( 5 o admission, o9er, promise or payment shall be made by or on behalf of the insured without the written consent of the Company W It being speci-cally reJuired that petitioner's written consent be -rst secured before any payment in settlement of any claim could be made, private respondent is precluded from see#ing reimbursement of the payments made to the other / victims in view of her failure to comply with the condition contained in the insurance policy Also, the insurance policy involved e%plicitly limits petitioner's liability to P.2,00000 per person and to P50,00000 per accident Clearly, the fundamental principle that contracts are respected as the law between the contracting parties -nds application in the present case &hus, it was error on the part of the trial and appellate courts to have disregarded the stipulations of the parties and to have substituted their own interpretation of the insurance policy >e observe that although Cayas was able to prove a total loss of only P==,00000, petitioner was made liable for the amount of P50,00000, the ma%imum liability per accident stipulated in the
policy &his is patent error An insurance indemnity, being merely an assistance or restitution insofar as can be fairly ascertained, cannot be availed of by any accident victim or claimant as an instrument of enrichment by reason of an accident Aisporna v CA G.342H Dacts Mapalad Aisporna, the wife of one Fodolfo Aisporna, an insurance agent, solicited the application of ?ugenio Isidro in behalf of Perla Compana de eguros without the certi-cate of authority to act from the insurance commissioner Isidro passed away while his wife was issued Php 5000 fromthe insurance policy After the death, the -scal instigated criminal action against Mapalad for violating sec .43 of the Insurance code for feloniously acting as agent when she solicited theapplication form In the trial court, she claimed that she helped Fodolfo as cler# and that she solicited a renewal, not a new policy from Isidro through the phone he did this because her husband was absent when he called he only left a note on top of her husband's des# to inform him of what transpired Ghe did not accept compensation from Isidro for her servicesH Aisporna was sentenced to pay Php 500 with subsidiary costs in case of insolvency in .3. in the Cabanatuan city court In the appellate court, she was found guilty of having violating par . of sec .43 of the insurance code &he ;E #ept on repeating that she didn't violate sec .43 of the insurance code In see#ing reversal of the 8udgment, Aisporna assigned errors of the appellate court( . the receipt of compensation was not a necessary element of the crime in par . of sec .43 of the insurance code 2 CA erred in giving due weight to e%hibits D, D., D. inclusive su$cient to establish petitioner's guilt beyond reasonable doubt / &he CA erred in not acJuitting the petitioner Issues( >on a person can be convicted of having violated the .st par of the sec .43 of the IC without reference to the 2nd paragraph of the said section ;r Is it necessary to determine >; the agent mentioned in the .st paragraph of the aforesaid section is governed by the de-nition of an insurance agent found on its second paragraph 7ecision( Aisporna acJuitted Fuling( ect .43 of the IC, par . states that o insurance company doing business with the Philippine Islands nor l any agent thereof shall pay any commission or other compensation to any person for services in obtaining new insurance unless such person shall have -rst procured from the Insurance Commissioner a certi-cate of authority to act as an agent of such company as herein after provided o person shall act as agent, subOagent, or bro#er in the solicitation of procurement of applications for insurance without obtaining a certi-cate from the Insurance Commissioner Par2 Any person who for C;MP?A&I; solicits or obtains insurance for any for any insurance compna or o9ers or assumes to act in the negotiating of such insurance shall be an insurance agent in the intent of this section and shall thereby become liable to all liabilities to which an insurance agent is sub8ect Par / 500 pseo -ne for person or company violating the provisions of the section &he court held that the .st par prohibited a person to act as agent without certi-cate of authorityfrom the commissioner In the 2nd par, the de-nition of an insurance agent is stipulated &he third paragraph provided the penalty for violating the .st 2 rules &he appellate court said that the petitioner was penalied under the.st paragraph and not the .nd &he fact that she didn't receive compensation wasn't an e%cuse for her acJuittal because she was actually punished separately under sec . because she did not have a certi-cate of authority as under par . &he C held that the de-nition of an insurance agent was made by CA to be limited to paragraph 2 and not applicable to the .st paragraph &he appellate court said that a person was an insurance agent under par 2 if she solicits insurance for compensation, but in the .st paragraph, there was no necessity that a person solicits an insurance compensation in order to be called an agent &he C said that this was a reversible error &he CA said that Aisporna didn't receive compensation &he C said that the de-nition of an insurance agent was found in the 2nd par of ec .43 Gchec# the lawH &he de-nition in the 2nd paragraph Juali-ed the de-nition of an agent used in the .st and third paragraphs 7;C&FI?( &he court held that legislative intent must be ascertained from the consideration of the statute as a whole &he words shouldn't be studied in isolated e%planations but the whole and every
part of the statute must be considered in -%ing the meaning of any of its parts in order to pronounce the harmonious whole oscitur a sociis provides that where a particular word or phrase in a statement is ambiguous in itself, the true meaning may be made clear in the company it is -%ed in In applying this, the court held that the de-nition of an insurance agent in the 2nd paragraph was applicable in the .stparagraph &o receive compensation be the agent is an essential element for violation of the .st paragraph &he appellate court said that she didn't receive compensation by the receipt of compensation wasn't an essential element for violation of the .st paragraph &he C said that this view wasn't correct owing to the American insurance laws which Juali-ed compensation as a Jualifying factor in penaliing unauthoried persons who solicited insurance G&e%as code and snyder's lawH C;@&F+ BAS?F I@FAC? C;FP;FA&I;, vs )IAEA BA+ A7 C;MM@I&+ M@)&IOP@FP;? C;;P?FA&IQ?EF o ./<3.= 1anuary 25, 20027? )?; 1F 1( Dacts( &he petitioner is a domestic corporation principally engaged in the insurance business wherein it underta#es, for aconsideration, to indemnify another against loss, damage or liability from an un#nown or contingent event including -re whilethe respondent is a duly registered cooperative 8udicially declared insolvent and represented by the elected assignee,Cornelio 1ameroometime in.343, the petitioner and the respondent entered into a contract of -re insurance, Dire Insurance Policy o DO./3 @nder Dire Insurance, the petitioner insured the respondent's stoc#sOinOtrade against -re loss, damage or liabilityduring the period starting from 1une 20, .343 to 1une 20, .330 for the sum of &wo !undred &housand Pesos;n 1uly ., .343, the respondent's building located at urigao del ur was gutted by -re and reduced to ashes, resulting inthe total loss of the respondent's stoc#sOinOtrade, pieces of furnitures and -%tures, eJuipments and records 7ue to the loss,the respondent -led an insurance claim with the petitioner under its Dire Insurance&he petitioner, however, denied the insurance claim on the ground that, based on the submitted documents, the buildingwas set on -re by two PA rebels who wanted to obtain canned goods, rice and medicines as provisions for their comradesin the forest, and that such loss was an e%cepted ris# under the policy conditions of Dire Insurance Policy which provides(&his insurance does not cover any loss or damage occasioned by or through or in conseJuence, directly or indirectly, of anyof the following occurrences, namely(GdH Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped powerFespondent then instituted in the trial court the complaint for recovery of 6loss, damage or liability6 against petitioner &hepetitioner answered the complaint and reiterated the ground it earlier cited to deny the insurance claim&he trial court rendered its 7ecision in favor of the respondent declaring that the defendantOCountry Ban#ers was liable toplainti9OInsolvent Cooperative and to fully pay the insurance claim for the loss the insuredOplainti9 sustained as a result of the -re under its Dire Insurance in its full face value of P 200,00000 with interest of .2X per annum from date of -ling of thecomplaint until the same is fully paidPetitioner appealed to the Court of Appeals which a$rmed the decision of the trial court in its entirety !ence, this petition Issue( >hether Country Ban#ers in liable Fuling( +es Country ban#ers is liable &he petitioner does not dispute that the respondent's stoc#sOinOtrade were insured against -re loss, damage or liability under Dire Insurance Policy and that the respondent lost its stoc#sOinOtrade in a -re that occurred within the duration of said -reinsurance &he petitioner, however, posits the view that the cause of the loss was an e%cepted ris# under the terms of the-re insurance policy > he re a ri s# is e%cepted by the terms of a policy which insures against other perils or haards, loss from such a ris# constitutes a defense which the insurer may urge, since it has not assumed that ris#, and from this it follows that an insurer see#ing to defeat a claim because of an e%ception or limitation in the policy has the burden of proving that the loss comes within the purview of the e%ception or limitation set up If a proof is made of a loss apparently within a contract of insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is e%cepted or for which it is not liable, or from a cause which limits its liability tated else wise, since the petitioner in this case is defending on the ground of nonOcoverage and relying upon an e%emption or e%ception clause in the -re insurance policy, it has the burden of proving the facts upon which such e%cepted ris# is based, by a preponderance of evidence But petitioner failed to do so &he petitioner relies on the worn tatements of 1ose )omocso and ?rnesto @rbitondo and
on the pot Feport of Pfc Arturo Q 1uarbal speci-cally that( investigation revealed by 1ose )omocso that those armed men wanted to get can goodsand rice for their consumption in the forest P7 investigation further disclosed that the perpetrator are members of the PA uch testimony is considered hearsay and may not be received as proof of the truth of what he has learned AM?FICA !;M? A@FAC? C;MPA+ vs &A&@C; ?&?FPFI?, IC DAC&( Fespondent &antuco ?nterprises, Inc is engaged in the coconut oil milling and re-ning industryIt owns two oil mills which were separately covered by -re insurance policies issued by petitionerAmerican !ome Assurance Co, Philippine Branch &he -rst oil mill was insured for P/,000,00000 under Policy o /0hether or not respondent can claim from the petitioner insurance company !?)7( In construing the words used descriptive of a building insured, the greatest liberality is shown by the courts in giving e9ect to the insurance In view of the custom of insurance agents to e%amine buildings before writing policies upon them, and since a mista#e as to the identity and character of the building is e%tremely unli#ely, the courts are inclined to consider that the policy of insurance covers any building which the parties manifestly intended to insure, however inaccurate the description may be otwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our mind, that what the parties manifestly intended to insure was the new oil mill If the parties really intended to protect the -rst oil mill, then there is no need to specify it as new In determining what the parties intended, the courts will read and construe the policy as a whole and if possible, give e9ect to all the parts of the contract, #eeping in mind always, however, the prime rule that in the event of doubt, this doubt is to be resolved against the insurer In determining the intent of the parties to the contract, the courts will consider the purpose and ob8ect of the contract >hite Eold Marine vs Pioneer Insurance Dacts Petitioner procured a protection and indemnity coverage for its vessels from &he teamship Mutual @nderwriting Association )td through Pioneer Insurance and urety Corp by virtue of a Certi-cate of ?ntry and Acceptance >hen >hite Eold failed topay its account, teamship Mutual refused to renew its coverage so it -led a collection case against the latter Petitioner contends in defense that it didn't have the reJuisite certi-cate of authority from the Insurance Commissioner under ec .4 of the Insurance Code Issue >; Pioneer still needs a license as an insurance agentbro#er for teamship Mutual" >; teamship Mutual's Protection and Indemnity club is engaged in insurance business in the Philippines Fuling +? on both issues .H A Protection and Indemnity Club is a form of insurance against third party liability where the third party is anyone other than the P Y I Club and the members teamship Mutual, as PYI club, is a mutual insurance association engaged in marine insurance business 2H Although Pioneer is already a licensed insurance company, it still needs a separate license to act as an insurance agent for teamship Mutual as provided by ection 233 of the Insurance Code
Fepublic GCIFH vs un )ife Assurance of Canada Dacts ;n 7ecember 23, .33, the UCourt of &a% AppealsV GC&AH rendered its decision in Insular )ife Assurance Co )td v UCIFV, which held that mutual life insurance companies are purely cooperative companies and are e%empt from the payment of premium ta% and 7& &his pronouncement was later a$rmed by this court in UCIFV v Insular )ife Assurance Company, )td un )ife surmised thatU,V being a mutual life insurance company, it was li#ewise e%empt from the payment of premium ta% and 7& !ence, on August 20, .333, un )ife -led with the CIF an administrative claim for ta% credit of its alleged erroneously paid premium ta% and 7& for the aforestated ta% periods Dor failure of the CIF to act upon the administrative claim for ta% credit and with the 2Oyear period to -le a claim for ta% credit or refund dwindling away and about to e%pire, un )ife -led with the C&A a petition for review &he C&A found in favor of un )ife ee#ing reconsideration of the decision of the C&A, the CIF argued that un )ife ought to have registered, foremost, with the Cooperative 7evelopment Authority before it could en8oy the e%emptions from premium ta% and 7& e%tended to purely cooperative companies or associations under UVections .2. and .33 of the &a% Code Dor its failure to register, it could not avail of the e%emptions prayed for &he C&A denied the CIF's motion for reconsideration Issue( >; respondent is e%empted from payment of ta% on life insurance premiums and documentary stamp ta% Fuling( +? &he &a% Code de-nes a cooperative as an association conducted by the members thereof with the money collected from among themselves and solely for their own protection and not for pro-t >ithout a doubt, respondent is a cooperative engaged in a mutual life insurance business Dirst, it is managed by its members Both the CA and the C&A found that the management and a9airs of respondent were conducted by its memberOpolicyholders @)ID? has been mutualied or converted from a stoc# life insurance company to a nonstoc# mutual life insurance corporation pursuant to ection 2<< of the Insurance Code of .34 ;n the basis of its bylaws, its ownership has been vested in its memberOpolicyholders who are each entitled to one vote" and who, in turn, elect from among themselves the members of its board of trustees econd, it is operated with money collected from its members ince respondent is composed entirely of members who are also its policyholders, all premiums collected obviously come only from them &he memberOpolicyholders constitute both insurer and insured who contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid &hird, it is licensed for the mutual protection of its members, not for the pro-t of anyone A mutual life insurance company is conducted for the bene-t of its memberOpolicyholders, who pay into its capital by way of premiums @nder the &a% Code although respondent is a cooperative, registration with the Cooperative 7evelopment Authority GC7AH is not necessary in order for it to be e%empt from the payment of both percentage ta%es on insurance premiums, under ection .2." and documentary stamp ta%es on policies of insurance or annuities it grants, under ection .33 .3 P!I)AMCAF? !?A)&! +&?M, IC vs C;@F& ;D APP?A) and 1@)I&A &FI; EF o .25<4 Z March .4, 2002 Dacts( ?rnani &rinos, deceased husband of respondent 1ulita &rinos, applied for a health care coverage with petitioner Philamcare !ealth ystems, Inc &he application was approved for a period of one year from March ., .344 to March ., .343 and e%tended until 1une ., .330 &he amount of coverage was increased to a ma%imum sum of P5,00000 per disability 7uring the period of his coverage, ?rnani su9ered a heart attac# and was con-ned for one month >hile her husband was in the hospital, respondent tried to claim the bene-ts under the health care agreement !owever, petitioner denied her claim saying that the !ealth Care Agreement was void &hus, respondent paid the hospitaliation e%penses herself, amounting to about P<,00000 After her husband was discharged from the MMC, he was later admitted at the Chinese Eeneral !ospital In the morning of April ./, .330, ?rnani had fever and was feeling very wea#" he died on the same day Fespondent instituted with the Fegional &rial Court GF&CH an action for damages against petitioner &he F&C ruled against petitioner, which was a$rmed by the Court of Appeals Petitioner -led a petition for review arguing that the agreement grants 6living bene-ts,6 such as medical chec#Oups and hospitaliation which a member may immediately en8oy so long as he is alive
upon e9ectivity of the agreement until its e%piration oneOyear thereafter Petitioner also points out that only medical and hospitaliation bene-ts are given under the agreement without any indemni-cation, unli#e in an insurance contract where the insured is indemni-ed for his loss Moreover, since !ealth Care Agreements are only for a period of one year, as compared to insurance contracts which last longer, petitioner argues that the incontestability clause does not apply, as the same reJuires an e9ectivity period of at least two years Petitioner further argues that it is not an insurance company, which is governed by the Insurance Commission, but a !ealth Maintenance ;rganiation under the authority of the 7epartment of !ealth Issue( >hether or not a health care agreement is not an insurance contract Fuling( A health care agreement is an insurance contract @nder ection 2 of the Insurance Code de-nes a contract of insurance as an agreement whereby one underta#es for a consideration to indemnify another against loss, damage or liability arising from an un#nown or contingent event An insurance contract e%ists where the following elements concur( G.H &he insured has an insurable interest" G2H &he insured is sub8ect to a ris# of loss by the happening of the designated peril" G/H &he insurer assumes the ris#" G=H uch assumption of ris# is part of a general scheme to distribute actual losses among a large group of persons bearing a similar ris#" and G5H In consideration of the insurer's promise, the insured pays a premium Durther, ection .0 of the Insurance Code provides that every person has an insurable interest in the life and health of himself In the case at bar, the insurable interest of respondent's husband in obtaining the health care agreement was his own health &he health care agreement was in the nature of nonOlife insurance, which is primarily a contract of indemnity3 ;nce the member incurs hospital, medical or any other e%pense arising from sic#ness, in8ury or other stipulated contingent, the health care provider must pay for the same to the e%tent agreed upon under the contract 20C;MMII;?F ;D I&?FA) F?Q?@? vs )IC;) P!I)IPPI? )ID? I@FAC? C;MPA+, IC Gnow 1AF7I?OCMA )ID? I@FAC? C;MPA+, ICH and &!? C;@F& ;D APP?A) EF o ..3.< Z March .3, 2002 Dacts( In the years prior to .34=, private respondent issued a special #ind of life insurance policy #nown as the 61unior ?state Builder Policy,6 the distinguishing feature of which is a clause providing for an automatic increase in the amount of life insurance coverage upon attainment of a certain age by the insured without the need of issuing a new policy &he clause was to ta#e e9ect in the year .34= 7ocumentary stamp ta%es due on the policy w ere paid by petitioner only on the initial sum assured ubseJuently, petitioner issued de-ciency documentary stamps ta% assessment for the year .34= in the amount of P=<=,4345 corresponding to the amount of automatic increase of the sum assured on the policy issued by respondent Private respondent Juestioned the de-ciency assessments and sought their cancellation in a petition -led in the Court of &a% Appeals &he Court of &a% Appeals found no valid basis for the de-ciency ta% assessment on the insurance policy &he Court of Appeals a$rmed the decision of the Court of &a% Appeals decision insofar as it nulli-ed the de-ciency assessment on the insurance policy &he Commissioner of Internal Fevenue -led the present petition Juestioning that portion of the Court of Appeals' decision which invalidated the de-ciency assessment on the insurance policy Petitioner claims that the 6automatic increase clause6 in the sub8ect insurance policy is separate and distinct from the main agreement and involves another transaction" and that, while no new policy was issued, the original policy was essentially reOissued when the additional obligation was assumed upon the e9ectivity of this 6automatic increase clause6 in .34=" hence, a de-ciency assessment based on the additional insurance not covered in the main policy is in order Issues( . >hether or not the automatic increase clause is a single agreement embodied in the policy or a separate agreement 2 >hether or not the Court of Appeals erred in not computing the amount of ta% on the total value of the insurance assured in the policy including the additional increase assured by the automatic increase clause Fuling( &he petition is impressed with merit It is clear from ection ./ that the payment of documentary stamp ta%es is done at the time the act is done or transaction had and the ta% base for the computation of documentary stamp ta%es on life insurance policies under ection .4/ is the amount -%ed in policy, unless the interest of a person insured is susceptible of e%act pecuniary measurement &he amount -%ed in the policy is the -gure written on its face and whatever increases will ta#e e9ect in the future by reason of the 6automatic
increase clause6 embodied in the policy without the need of another contract !ere, although the automatic increase in the amount of life insurance coverage was to ta#e e9ect later on, the date of its e9ectivity, as well as the amount of the increase, was already de-nite at the time of the issuance of the policy &hus, the amount insured by the policy at the time of its issuance necessarily included the additional sum covered by the automatic increase clause because it was already determinable at the time the transaction was entered into and formed part of the policy &he de-ciency of documentary stamp ta% imposed on private respondent is de-nitely not on the amount of the original insurance coverage, but on the increase of the amount insured upon the e9ectivity of the 61unior ?state Builder Policy6 &o claim that the increase in the amount insured Gby virtue of the automatic increase clause incorporated into the policy at the time of issuanceH should not be included in the computation of the documentary stamp ta%es due on the policy would be a clear evasion of the law reJuiring that the ta% be computed on the basis of the amount insured by the policy P?FD?C&I; ;D I@FAC? C;&FAC& 2.?nriJue v un )ife DAC&( eptember 2=, .3.( 1oaJuin !errer made application to the un )ife Assurance Company of Canada through its o$ce in Manila for a life annuity 2 days later( he paid P<,000 to the manager of the companyKs Manila o$ce and was given a receipt According to the provisional receipt, / things had to be accomplished by the insurance company before there was a contract( G.H &here had to be a medical e%amination of the applicant" Ochec# G2H there had to be approval of the application by the head o$ce o f the company" and O chec# G/H this approval had in some way to be communicated by the company to the applicant ovember 2<, .3.( &he head o$ce at Montreal, Canada gave notice of acceptance by cable to Manila but this was not mailed 7ecember =, .3.( policy was issued at Montreal 7ecember .4, .3.( attorney Aurelio A &orres wrote to the Manila o$ce of the company stating that !errer desired to withdraw his application 7ecember .3, .3.( local o$ce replied to Mr &orres, stating that the policy had been issued, and called attention to the noti-cation of ovember 2<, .3. 7ecember 2., .3. morning( received by Mr &orres 7ecember 20, .3.( Mr !errer died Fafael ?nriJue, as administrator of the estate of the late 1oaJuin Ma !errer -led to recover from un )ife Assurance Company of Canada through its o$ce in Manila for a life annuity F&C( favored un )ife Insurance I@?( >; Mr !errera received notice of acceptance of his application thereby perfecting his life annuity F@)IE( ; ot perfected because it has not been proved satisfactorily that the acceptance of the application ever came to the #nowledge of the applicant Art ./.3 Consent is manifested by the meeting of the o9er and the acceptance upon the thing and the cause which are to constitute the contract &he o9er must be certain and the acceptance absolute A Juali-ed acceptance constitutes a counterOo9er Acceptance made by letter or telegram does not bind the o9erer e%cept from the time it came to his #nowledge &he contract, in such a case, is presumed to have been entered into in the place where the o9er was made 1udgment is reversed, and the ?nriJue shall have and recover from the un )ife the sum of P<,000 with legal interest from ovember 20, .3.4, until paid, without special -nding as to costs in either instance o ordered 22Ereat Paci-c v CA DAC&( Fespondent go !ing -led an application with petitioner Ereat Paci-c )ife Assurance Company GPaci-c )ifeH for a twentyOyear endowment policy in the life of !elen Eo, his one year old daughter Petitioner )apulapu 7 Mondragon, the branch manager, prepared application form using the essential data supplied by respondent &he latter paid the annual premium and Mondragon retained a portion of it as his commission &he binding deposit receipt was issued to respondent Mondragon wrote his strong recommendation for the approval of the insurance application !owever, Paci-c )ife disapproved the application since the plan was not available for minors below years old but it can consider the same under another plan &he nonOacceptance of the insurance plan was allegedly not communicated by Mondragon to respondent Mondragon again asserted his strong recommendation
!elen Eo died of in:uena &hereupon, respondent sought the payment of the proceeds of the insurance, but having failed in his e9ort, he -led an action for the recovery of the same !ence the case at bar I@?( >; the binding deposit receipt constituted a temporary contract and thus negate the claim that the insurance contract was perfected F@)IE( +? &he provisions printed on the binding deposit receipt show that the binding deposit receipt is intended to be merely a provisional or temporary insurance contract and only upon compliance of the following conditions( G.H that the company shall be satis-ed that the applicant was insurable on standard rates" G2H that if the company does not accept the application and o9ers to issue a policy for a di9erent plan, the insurance contract shall not be binding until the applicant accepts the policy o9ered" otherwise, the deposit shall be refunded" and G/H that if the applicant is not insurable according to the standard rates, and the company disapproves the application, the insurance applied for shall not be in force at any time, and the premium paid shall be returned to the applicant Clearly implied from the aforesaid conditions is that the binding deposit receipt in Juestion is merely an ac#nowledgment, on behalf of the company, that the latterKs branch o$ce had received from the applicant the insurance premium and had accepted the application sub8ect for processing by the insurance company" and that the latter will either approve or re8ect the same on the basis of whether or not the applicant is 6insurable on standard rates6 ince Paci-c )ife disapproved the insurance application of go !ing, the binding deposit receipt in Juestion had never become in force at any time @pon this premise, the binding deposit receipt is, manifestly, merely conditional and does not insure outright >here an agreement is made between the applicant and the agent, no liability shall attach until the principal approves the ris# and a receipt is given by the agent &he acceptance is merely conditional, and is subordinated to the act of the company in approving or re8ecting the application &hus, in life insurance, a 6binding slip6 or 6binding receipt6 does not insure by itself It bears repeating that through the intraOcompany communication of /0 April .35, Paci-c )ife disapproved the insurance application in Juestion on the ground that it is not o9ering the 20Oyear endowment insurance policy to children less than years of age >hat it o9ered instead is another plan #nown as the 1uvenile &riple Action, which go !ing failed to accept In the absence of a meeting of the minds between Paci-c )ife and go !ing over the 20Oyear endowment life insurance in the amount of P50,00000 in favor of the latterKs oneOyear old daughter, and with the nonOcompliance of the aboveJuoted conditions stated in the disputed binding deposit receipt, there could have been no insurance contract duly perfected between them Accordingly, the deposit paid by go !ing shall have to be refunded by Paci-c )ife 2/7evelopment Ban# of the Philippines v CA Dacts( 1uan B 7ans, together with his family applied for a loan of P500,000 with 7BP As principal mortgagor, 7ans, then < years of age was advised by 7BP to obtain a mortgage redemption insurance GMFIH with 7BP MFI pool A loan in the reduced amount was approved and released by 7BP Drom the proceeds of the loan, 7BP deducted the payment for the MFI premium &he MFI premium of 7ans, less the 7BP service fee of .0X, was credited by 7BP to the savings account of 7BP MFIOPool Accordingly, the 7BP MFI Pool was advised of the credit 7ans died of cardiac arrest 7BP MFI Pool noti-ed 7BP that 7ans was not eligible for MFI coverage, being over the acceptance age limit of <0 years at the time of application 7BP apprised Candida 7ans of the disapproval of her late husband's MFI application 7BP o9ered to refund the premium which the deceased had paid, but Candida 7ans refused to accept the same demanding payment of the face value of the MFI or an amount eJuivalent of the loan he, li#ewise, refused to accept an e% gratia settlement which 7BP later o9ered !ence, the case at bar Issue( >hether or not the 7BP MFI Pool should be held liable on the ground that the contract wasalready perfected* !eld( o, it is not liable &he power to approve MFI application is lodged with the 7BP MFI Pool &he pool, however, did not approve the application &here is also no showing that it accepted the sum which 7BP credited to its account with full #nowledge that it was payment for the premium &here was as a result no perfected contract of insurance, hence the 7BP MFI Pool cannot be held liable on a contract that does not e%ist In dealing with 7ans, 7BP was wearing 2 legal hats( the -rst as a lender and the second as an insurance agent As an insurance agent, 7BP made 7ans go through the motion of applying for said insurance, thereby leading him and his family to believe that they had already ful-lled all the reJuirements for the MFI and that the issuance of their policy was forthcoming 7BP had full #nowledge that the application was never going to be approved &he 7BP
is not authoried to accept applications for MFI when its clients are more than <0 years of age Snowing all the while that 7ans was ineligible for MFI coverage because of his advanced age, 7BP e%ceeded the scope of its authority when it accepted 7anKs application for MFI by collecting the insurance premium, and deducting its agentKs commission and service fee &he liability of an agent who e%ceeds the scope of his authority depends upon whether the third person is aware of the limits of the agentKs powers &here is no showing that 7ans #new of the limitation on 7BPKs authority to solicit applications for MFI If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he Gthird personH has been deceived by the nonOdisclosure thereof by the agent, then the latter is liable for damages to him GQ &olentino, Commentaries and 1urisprudence on the Civil Code of the Philippines, p =22 U.332V, citing entencia UCubaV of eptember 25, .30H &he rule that the agent is liable when he acts without authority is founded upon the supposition that there has been some wrong or omission on his part either in misrepresenting, or in a$rming, or concealing the authority under which he assumes to act GDrancisco, Q, Agency /0 U.352V, citing !all v )auderdale, =< + 0, 5H Inasmuch as the nonOdisclosure of the limits of the agency carries with it the implication that a deception was perpetrated on the unsuspecting client, the provisions of Articles .3, 20 and 2. of the Civil Code of the Philippines come into play 2=Pere v CA EF o ..2/23 1anuary 24, 2000 Dacts( Primitivo B Pere had been insured with the BD )ifeman Insurance Corporation for P20,00000 ometime in ;ctober .34, an agent of the insurance corporation, visited Pere in Rueon and convinced him to apply for additional insurance coverage of P50,00000 Qirginia A Pere, Primitivo's wife, paid P2,0500 to the agent &he receipt issued indicated the amount received was a 6deposit6 @nfortunately, the agent lost the application form accomplished by Pere and he as#ed the latter to -ll up another application form &he agent sent the application for additional insurance of Pere to the Rueon o$ce uch was supposed to forwarded to the Manila o$ce Pere drowned !is application papers for the additional insurance of P50,00000 were still with the Rueon It was only after some time that the papers were brought to Manila >ithout #nowing that Pere died, BD )ifeman Insurance Corporation approved the application and issued the corresponding policy for the P50,00000 Petitioner Qirginia Pere went to Manila to claim the bene-ts under the insurance policies of the deceased he was paid P=0,00000 under the -rst insurance policy for P20,00000 but the insurance company refused to pay the claim under the additional policy coverage of P50,00000, the proceeds of which amount to P.50,00000 &he insurance company maintained that the insurance for P50,00000 had not been perfected at the time of the death of Primitivo Pere ConseJuently, the insurance company refunded the amount paid BD )ifeman Insurance Corporation -led a complaint against Qirginia Pere see#ing the rescission and declaration of nullity of the insurance contract in Juestion Petitioner Qirginia A Pere, on the other hand, averred that the deceased had ful-lled all his prestations under the contract and all the elements of a valid contract are present ;n ;ctober 25, .33., the trial court rendered a decision in favor of petitioner ordering respondent to pay .50,000 pesos &he Court of Appeals, however, reversed the decision of the trial court saying that the insurance contract for P50,00000 could not have been perfected since at the time that the policy was issued, Primitivo was already dead Petitioner's motion for reconsideration having been denied by respondent court, the instant petition for certiorari was -led on the ground that there was a consummated contract of insurance between the deceased and BD )ifeman Insurance Co rporation Issue( >; the widow can receive the proceeds of the 2nd insurance policy !eld( o Petition dismissed Fatio( Pere's application was sub8ect to the acceptance of private respondent BD )ifeman Insurance Corporation &he perfection of the contract of insurance between the deceased and respondent corporation was further conditioned with the following reJuisites stated in the application form( 6there shall be no contract of insurance unless and until a policy is issued on this application and that the said policy shall not ta#e e9ect until the premium has been paid and the policy delivered to and accepted by meus in person while I>e, amare in good health6 BD )ifeman didn't give its assent when it merely received the application form and all the reJuisite supporting papers of the applicant &his happens only when it gives a policy
It is not disputed, however, that when Primitivo died on ovember 25, .34, his application papersfor additional insurance coverage were still with the branch o$ce of respondent corporation in Rueon ConseJuently, there was absolutely no way the acceptance of the application could have been communicated to the applicant for the latter to accept inasmuch as the applicant at the time was already dead Petitioner insists that the condition imposed by BD that a policy must have been delivered to and accepted by the proposed insured in good health is potestative, being dependent upon the will of the corporation and is therefore void &he court didn't agree A potestative condition depends upon the e%clusive will of one of the parties and is considered void &he Civil Code states( >hen the ful-llment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void &he following conditions were imposed by the respondent company for the perfection of the contract of insurance( a policy must have been issued, the premiums paid, and the policy must have been delivered to and accepted by the applicant while he is in good health &he third condition isn't potestative, because the health of the applicant at the time of the deliveryof the policy is beyond the control or will of the insurance company Father, the condition is a suspensive one whereby the acJuisition of rights depends upon the happening of an event which constitutes the condition In this case, the suspensive condition was the policy must have been delivered and accepted by the applicant while he is in good health &here was nonOful-llment of the condition, because the applicant was already dead at the time the policy was issued As stated above, a contract of insurance, li#e other contracts, must be assented to by both parties either in person or by their agents o long as an application for insurance has not been either accepted or re8ected, it is merely an o9er or proposal to ma#e a contract &he contract, to be binding from the date of application, must have been a completed contract &he insurance company wasn't negligent because delay in acting on the application does not constitute acceptance even after payment &he corporation may not be penalied for the delay in the processing of the application papers due to the fact that process in a wee# wasn't the usual timeframe in -%ing the application 7elay could not be deemed unreasonable so as to constitute gross negligence 25 P!I)AMCAF? !?A)&! +&?M, IC, petitioner, vs C;@F& ;D APP?A) and 1@)I&A &FI;, respondents Dacts ?rnani &rinos, deceased husband of respondent 1ulita &rinos, applied for a health care coverage with petitioner Philamcare !ealth ystems, Inc Accordingly, he was issued !ealth Care Agreement o P0.0.3= @nder the agreement, respondentKs husband was entitled to avail of hospitaliation bene-ts, whether ordinary or emergency, listed therein &he amount of coverage was increased to a ma%imum sum of P5,00000 per disability 7uring the period of his coverage, ?rnani su9ered a heart attac# and was con-ned at the Manila Medical Center GMMCH for one month beginning March 3, .330 >hile her husband was in the hospital, respondent tried to claim the bene-ts under the health care agreement !owever, petitioner denied her claim saying that the !ealth Care Agreement was void According to petitioner, there was a concealment regarding ?rnaniKs medical history 7octors at the MMC allegedly discovered at the time of ?rnaniKs con-nement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form &hus, respondent paid the hospitaliation e%penses herself, amounting to about P<,00000 After her husband was discharged from the MMC, he was attended by a physical therapist at home Fespondent was constrained to bring him bac# to the Chinese Eeneral !ospital where he died on the same day After trial, the lower court ruled against petitioners ;n appeal, the Court of Appeals a$rmed the decision of the trial court but deleted all awards for damages and absolved petitioner Feverente Issue( >; a health care agreement is an insurance contract Fuling( An insurance contract e%ists where the following elements concur( . &he insured has an insurable interest" 2 &he insured is sub8ect to a ris# of loss by the happening of the designated peril" / &he insurer assumes the ris#" = uch assumption of ris# is part of a general scheme to distribute actual losses among a large group of persons bearing a similar ris#" and 5 In consideration of the insurerKs promise, the insured pays a premium In the case at bar, the insurable interest of respondentKs husband in obtaining the health care agreement was his own health &he health care agreement was in the nature of nonOlife insurance, which is primarily a contract of indemnity ;nce the member incurs hospital, medical or any other e%pense arising from sic#ness, in8ury or other stipulated contingent, the health care provider must pay for the same to the e%tent agreed upon under the contract 2< E@)D F?;F&, IC, petitioner, vs P!I)IPPI? C!AF&?F I@FAC? C;FP;FA&I;, respondent
Dacts( Eulf Fesorts is the owner of the Plaa Fesort situated at Agoo, )a @nion and had its properties in said resort insured originally with the American !ome Assurance Company GA!ACH In the -rst = policies issued, the ris#s of loss from earthJua#e shoc# was e%tended only to petitioner's two swimming pools Eulf Fesorts agreed to insure with Phil Charter the properties covered by the A!AC policy provided that the policy wording and rates in said policy be copied in the policy to be issued by Phil Charter Phil Charter issued Policy o /.3== to Eulf Fesorts covering the period of March .=, .330 to March .=, .33. for P.0,00,<0000 for a total premium of P=5,.5332 the brea#Odown of premiums shows that Eulf Fesorts paid only P/3/00 as premium against earthJua#e shoc# G?H ;n 1uly .<, .330 an earthJua#e struc# Central )uon and orthern )uon and plainti9's properties covered by Policy o /.3== issued by defendant, including the two swimming pools in its Agoo Playa Fesort were damaged Petitioner advised respondent that it would be ma#ing a claim under its Insurance Policy /.3== for damages on its properties Fespondent denied petitioner's claim on the ground that its insurance policy only a9orded earthJua#e shoc# coverage to the two swimming pools of the resort &he trial court ruled in favor of respondent In its ruling, the schedule clearly shows that petitioner paid only a premium of P/3/00 against the peril of earthJua#e shoc#, the same premium it had paid against earthJua#e shoc# only on the two swimming pools in all the policies issued by A!AC Issue( >hether or not the policy covers only the two swimming pools owned by Eulf Fesorts and does not e%tend to all properties damaged F@))IE( +?, it only covers the 2 swimming pools In sum, there is no ambiguity in the terms of the contract and its riders Drom the inception of the policy, petitioner had reJuired the respondent to copy verbatim the provisions and terms of its latest insurance policy from A!ACOAI@ All the provisions and riders ta#en and interpreted together, indubitably show the intention of the parties to e%tend earthJua#e shoc# coverage to the two swimming pools only An insurance premium is the consideration paid an insurer for underta#ing to indemnify the insured against a speci-ed peril In -re, casualty and marine insurance, the premium becomes a debt as soon as the ris# attaches In the sub8ect policy, no premium payments were made with regard to earthJua#e shoc# coverage e%cept on the two swimming pools &here is no mention of any premium payable for the other resort properties with regard to earthJua#e shoc# @BF;EA&I; MA)A+A I@FAC? C;, IC vs &!? !; C;@F& ;D APP?A) DAC&( io Choy insured his 8eep with Malayan Insurance against /rd party liability ;ne day the 8eep, driven by an employee of an )eon Fice Mill, -gured in an accident with Pantranco Bus &he passenger of the 8eep, Qalle8o, who was in8ured due to the accident, claimed damages from io Choy, Malayan and Pantranco Pantranco was held not liable Malayan insurance paid Qalle8o and as#ed for reimbursement from an )eon as the latter driver caused the alleged accident &he latter, however denied liability F&C ruled that io Choy, Malayan and an )eon are solidary liable, thus, the former is entitled to reimbursement CA said although 8ointly and severally liable, Malayan is not entitled to reimbursement I@?( . >; io Choy, Malayan and an )eon Fice Mill are solidary liable 2 >; Malayan can see# reimbursement F@)IE( . ;nly respondents io Choy and an )eon Fice Mill, Inc, Gto the e%clusion of the petitionerH that are solidarily liable to respondent Qalle8os for the damages awarded to Qalle8os io Choy and an )eon Fice Mill, Inc are the principal tortfeasors who are primarily liable to respondent Qalle8os &he law states that the responsibility of two or more persons who are liable for a JuasiOdelict is solidarily ;n the other hand, the basis of petitionerKs liability is its insurance contract with respondent io Choy >hile it is true that where the insurance contract provides for indemnity against liability to third persons, such third persons can directly sue the insurer, < however, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held solidarily liable with the insured andor the other parties found at fault &he liability of the insurer is based on contract" that of the insured is based on tort
In the case at bar, petitioner as insurer of io Choy, is liable to respondent Qalle8os, but it cannot, as incorrectly held by the trial court, be made 6solidarily6 liable with the two principal tortfeasors namely respondents io Choy and an )eon Fice Mill, Inc Dor if petitionerOinsurer were solidarily liable with said two G2H respondents by reason of the indemnity contract against third party liabilityO under which an insurer can be directly sued by a third party T this will result in a violation of the principles underlying solidary obligation and insurance contracts 2 Malayan is entitled to reOimbursement from an )eon by virtue of @BF;EA&I; Article .2. says, Art .2. Payment made by one of the solidary debtors e%tinguishes the obligation If two or more solidary debtors o9er to pay, the creditor may choose which o9er to accept !e who made the payment may claim from his coOdebtors only the share which corresponds to each, with the interest for the payment already made If the payment is made before the debt is due, no interest for the intervening period may be demanded In accordance with Article .2., MA)A+A, upon payment to Qalle8os and thereby becoming the subrogee of solidary debtor io Choy, is entitled to reimbursement from respondent an )eon Fice Mill, Inc MAI)A MA!;EA+ MDE C;FP Q CA Y L?I&! I@FAC? DAC&( Manila Mahogany insured its Mercedes Ben with respondent insurance company ;ne day, the vehicle was bumped and damaged by a truc# owned by an Miguel Corp GMCH Lenith paid P5S to petitioner in amicable settlement Petitioner's general manager e%ecuted a Felease Claim, subrogating respondent company to all its right to action against MC )ater respondent wrote Insurance Ad8usters Inc to demand reimbursement from MC Insurance Ad8usters refused saying that MC had already paid petitioner P=,500 for the damages to petitioner's vehicle, as evidenced by a cash voucher and Felease of Claim e%ecuted by the EM of petitioner discharging MC from all actions, claims, demands the rights of action that now e%ist or hereafter develop arising out of or as a conseJuence of the accident Fespondent demanded the P=5S amount from petitioner Petitioner refused uit -led for recovery City Court ordered petitioner to pay respondent CDI a$rmed CA a$rmed with modi-cation that petitioner was to pay respondent the total amount of 5S it had received from respondent Petitioner's argument( ince the total damages were valued at P3,=4<=/ and only 5S was received by petitioner from respondent, petitioner argues that it was entitled to go after MC to claim the additional which was eventually paid to it Fespondent's argument( o Juali-cation to its right of subrogation I@?( .>; petitioner should pay respondent despite the subrogation in the Felease of Claim was conditioned on recovery of the total amount of damages petitioner has sustained F@)IE( . ; C said no other evidence to support its allegation that a gentleman's agreement e%isted between the parties, not embodied in the Felease of Claim, such Felease of Claim must be ta#en as the best evidence of the intent and purpose of the parties CA correct in holding petitioner should reimburse respondent 5S >hen Manila Mahogany e%ecuted another release claim discharging MC from all rights of action after the insurer had paid the proceeds of the policy the compromise agreement of 5SO the insurer is entitled to recover from the insured the amount of insurance money paid Petitioner by its own acts released MC, thereby defeating respondent's right of subrogation, the right of action against the insurer was also nulli-ed ince the insurer can be subrogated to only such rights as the insured may have, should the insured, after receiving payment from the insurer, release the wrongdoer who caused the loss, the insurer losses his rights against the latter But in such a case, the insurer will be entitled to recover from the insured whatever it has paid to the latter, unless the release was made w the consent of the insurer PA MA)A+A I@FAC? C;FP Q C;@F& ;D APP?A) DAC&( Pan Malayan -led a complaint for damages with the F&C of Ma#ati against private respondents ?rlinda Dabie and her driver Pan Malayan insured a Mitsubishi Colt )ancer car registered in the name of Canlubang 7ue to the carelessness, rec#lessness and imprudence of the un#nown driver of a pic#Oup, the insured car was hit and su9ered damages in the amount of P=2,05200 Pan Malayan defrayed the cost of repair of the insured car, and therefore was subrogated to the rights of Canlubang against the driver of the pic#Oup and his employer, ?rlinda Dabie 7espite repeated demands, defendants failed and refused to pay the claim of Pan Malay 7efendantsPrivate
Fespondents alleged that Pan Malay had no cause of action against them because payment under the own damage clause of the insurance policy precluded subrogation under Article 220 of the Civil Code, since indemni-cation thereunder was made on the assumption that there was no wrongdoer or no third party at fault F&C dismissed the case for no cause of action and denied its motion for reconsideration &he CA a$rmed the trial courts decision !ence, this petition I@?( >hether or not the insurer Pan Malayan may institute ac action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents F@)IE( Pan Malayan is correct If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured, will be subrogated to the rights of the assured to recover from the wrongdoer to the e%tent that the insurer has been obligated to pay Payment by the insurer to the assured operates as an eJuitable assignment to the former of all remedies, which the latter ma have against the third party whose negligence or wrongful act caused the loss &he right of subrogation is not dependent upon, nor does it grow out of any privity of contract or upon written assignment of claim It accrues simply upon payment of the insurance claim by the insurer C?B@ !IPPIE A7 ?EI??FIE >;FS, IC Q >I))IAM )I? IC A7 PF@7?&IA) E@AFA&?? A7 A@FAC? C;MPA+, IC DAC&( >illiam )ines, Inc brought its vessel MQ Manila City to the Cebu hipyard in )apulapu City for annual dryOdoc#ing and repair ub8ect vessel was insured with Prudential Euarantee for P=5,000,00000 for hull and machinery &he !ull Policy included an Additional Perils clause covering loss of or damage to the vessel through the negligence of, among others, ship repairmen C?> was also insured by Prudential Euarantee for third party liability under s hiprepairs )egal )iability Insurance Policy for P.0,000,00000 only After sub8ect vessel was transferred to the doc#ing Juay, it caught -re and san#, resulting to its eventual total loss >illiam )ines, Inc -led a complaint for damages against C?>, alleging that the -re which bro#e out in MQ Manila City was caused by C?>'s negligence and lac# of care An amended complaint, impleading Prudential Euarantee as coOplainti9, was -led after the latter had paid >illiam )ines, Inc the value of the hull and machinery insurance of MQ Manila City F&C ruled that the cause of the -re was through the negligence of C?> CA a$rmed the appealed decision !ence this petition I@?( >hether or not Prudential has the right of subrogation against its own insured and whether or not the parties intended for them to be a coOassured in the insurance policy F@)IE( &he petition is unmeritorious @pon proof of payment by Prudential Euarantee to >illiam )ines, the former was subrogated to the right of the latter to indemni-cation from C?> &hus, when Prudential, after due veri-cation of the merit and validity of the insurance claim of >illiam )ines, paid the latter the total amount covered by its insurance policy, it was subrogated to the right of the latter to recover the insured loss from C?>, the liable party A stipulation in the wor# order that reJuires >illiam )ines to maintain insurance on the vessel during the period of dryOdoc#ing or repair, wor#s to the bene-t of C?> !owever, the fact that C?> bene-ts from the said stipulation does not automatically ma#e it as a coOassured of >illiam )ines &he hull and machinery insurance procured by >illiam )ines, Inc from Prudential named only 6>illiam )ines, Inc6 as the assured &hus, when the insurance policy involved named only >illiam )ines, Inc as the assured thereunder, the claim of C?> that it is a coOassured is unfounded 7elsan &ransport )ines, Inc vs Court of Appeals and American !ome Assurance Corporation DAC&( Calte% Philippines entered into a contract of a9reightment with the petitioner, 7elsan &ransport )ines, Inc, whereby the said common carrier agreed to transport Calte%Ks industrial fuel oil from the BatangasOBataan Fe-nery to di9erent parts of the country &he shipment was insured with the private respondent, American !ome Assurance Corporation ;n August .=, .34<, petitionerKs vessel, the M& Maysun, set sail from Batangas for Lamboanga City @nfortunately, the vessel san# in the early morning of August .<, .34< near Panay Eulf in the Qisayas ta#ing with it the entire cargo of fuel oil A!AC paid Calte% the sum of P5,03<,
?%ercising its right of subrogation under Article 220 of the ew Civil Code, A!AC demanded from 7elsan the same amount it paid to Calte% 7ue to its failure to collect from the petitioner despite prior demand, private respondent -led a complaint with the Fegional &rial Court of Ma#ati City, Branch ./, for collection of a sum of money &he trial court rendered a decision dismissing the complaint against herein petitioner &he trial court found that the vessel, M& Maysun, was seaworthy to underta#e the voyage and that the incident was caused by une%pected inclement weather condition or force ma8eure, thus e%empting petitioner from liability for the loss of its cargo &he decision of the trial court, however, was reversed, on appeal, by the Court of Appeals I@?( Gpertaining to subrogationH .>hether or not the payment made by the private respondent to Calte% for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy, thus precluding any action for recovery against the petitioner* 2>hether or not the nonOpresentation of the marine insurance policy bars A!AC's right of subrogation* F@)IE( Dirst Issue( Before the Court, petitioner theoried that when private respondent paid Calte% the value of its lost cargo, the act of the private respondent is eJuivalent to a tacit recognition that the illOfated vessel was seaworthy" otherwise, private respondent was not legally liable to Calte% due to the latterKs breach of implied warranty under the marine insurance policy that the vessel was seaworthy &he upreme Court re8ected petitionerKs theory According to the Court, the payment made by the private respondent for the insured value of the lost cargo operates as a waiver of private respondentKs right to enforce the term of the implied warranty against Calte% under the marine insurance policy !owever, the same cannot be validly interpreted as an automatic admission of the vesselKs seaworthiness by the private respondent as to foreclose recourse against the petitioner for any liability under its contractual obligation as a common carrier &he fact of payment grants the private respondent subrogatory right which enables it to e%ercise legal remedies that would otherwise be available to Calte% as owner of the lost cargo against the petitioner common carrier &he Court also stressed that the right of subrogation is designed to promote and to accomplish 8ustice and is the mode which eJuity adopts to compel the ultimate payment of a debt by one who in 8ustice and good conscience ought to pay It is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim It accrues simply upon payment by the insurance company of the insurance claim ConseJuently, the payment made by A!AC GinsurerH to Calte% GassuredH operates as an eJuitable assignment to the former of all the remedies which the latter may have against the petitioner econd Issue( Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the e%ercise of its subrogatory right &he subrogation receipt, by itself, is su$cient to establish not only the relationship of herein private respondent as insurer and Calte%, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim &he right of subrogation accrues simply upon payment by the insurance company of the insurance claim Dederal ?%press Corporation vs American !ome Assurance Company and P!I)AM Insurance Company DAC&( ;n 1anuary 2<, .33=, MI&!S)I? Beecham of ebras#a, @A delivered to Burlington Air ?%press GAE?& ;D D?7F?A) ?NPF?H a shipment of .03 cartons of veterinary biologicals for delivery to consignee MI&!S)I? and Drench ;verseas Company in Ma#ati City, Metro Manila &he shipment was covered by Burlington Airway Bill o ..2!? ;& I &FAI&' and \P?FI!AB)?' stamp mar#ed on its face &hat same day, Burlington insured the cargoes in the amount of ]/3,//300 with A!AC &he following day, Burlington turned over the custody of said cargoes to Dederal ?%press which transported the same to Manila &he -rst shipment, consisting of 32 cartons arrived in Manila on 1anuary 23, .33= and was immediately stored at Cargohaus Inc's warehouse >hile the second, consisting of . cartons, came in two G2H days later, or on 1anuary /., .33=,which was li#ewise immediately stored at Cargohaus' warehouse .2 days later, the Customs Bro#er who was assigned by mith#line of Ma#ati to facilitate the withdrawal of the Cargoes, did not proceed with such withdrawal for !e found out that the Cartons containing the vaccines were not properly stored as ordered Dor this reason, the vaccines were
e%amined, only to -nd out that they were damaged and unusable ConseJuently mith#line of Ma#ati abandoned the shipment mith#line of Ma#ati -led a claim with P!I)AM, the representative of A!AC in the Philippines By virtue of its right of subrogation, A!AC proceeded against D?7?FA) ?NPF? Dederal ?%press declined the claim of A!AC contending that the latter had no cause of action against the former Moreover, Dederal ?%press contended that no notice of claim was -led, hence, not complying with the condition precedent, A!AC was precluded from asserting its claim against it I@?( .>hether or not A!AC has legal personality to sue, thus, no cause of action against Dederal ?%press* 2>hether or not A!AC complied with the necessary condition precedent in order to -le claims against Dederal ?%press* F@)IE( Dirst Issue( Dederal ?%press argued that payment was erroneous for the p roper payment should have been made to Burlington as agent of Dederal ?%press, and as payee of the bill !eld, mith#line of Ma#atin has the personality to claim for the damages because the Certi-cate of Insurance is payable to the bearer thereof @pon payment by A!AC to mith#line, the latter e%ecuted a subrogation receipt !ence, A!AC and P!I)AM have personality to -le claims @pon payment to the consignee of an indemnity for the loss of or damage to the insured goods, the insurer's entitlement to subrogation pro tanto T being of the highest eJuity T eJuips it with a cause of action in case of a contractual breach or negligence Durther, the insurer's subrogatory right to sue for recovery under the bill of lading in case of loss of or damage to the cargo is 8urisprudentially upheld econd Issue( @nder the >arsaw Convention, otice of Claim is a condition precedent to the accrual of a Fight of Action against a carrier for loss or damage to the goods Being a condition precedent, it must precede a suit for enforcement In the instant case, A!AC never complied such reJuirement &hus, it cannot -le claims against Dederal ?%press I@FAB)? I&?F?& pouses Cha vs CA )essons Applicable( ?9ect of )ac# of Insurable Interest GInsuranceH )aws Applicable( ec ., ec .4, ec 25 of the Insurance Code DAC&( pouses ilo Cha and tella @yOCha and CS 7evelopment Corporation entered a . year lease contract with a stipulation not to insure against -re the chattels, merchandise, te%tiles, goods and e9ects placed at any stall or store or space in the leased premises without -rst obtaining the written consent and approval of the lessor But it insured against loss by -re their merchandise inside the leased premises for P500,000 with the @nited Insurance Co, Inc without the written consent of CS ;n the day the lease contract was to e%pire, -re bro#e out inside the leased premises and CS learning that the spouses procured an insurance wrote to @nited to have the proceeds be paid directly to them But @nited refused so CS -led against pouses Cha and @nited F&C( @nited to pay CS the amount of P//5,0 the CS has insurable interest because the spouses Cha violated the stipulation !?)7( ; CA set aside Awarding the proceeds to spouses Cha ec .4 o contract or policy of insurance on property shall be enforceable e%cept for the bene-t of some person having an insurable interest in the property insured A nonOlife insurance policy such as the -re insurance policy ta#en by petitionerOspouses over their merchandise is primarily a contract of indemnity Insurable interest in the property insured must e%ist a t the time the insurance ta#es e9ect and at the time the loss occurs &he basis of such reJuirement of insurable interest in property insured is based on sound public policy( to prevent a person from ta#ing out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property In such a case, the contract of
insurance is a mere wager which is void under ection 25 of the I nsurance Code ?C&I; 25 ?very stipulation in a policy of Insurance for the payment of loss, whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, and every policy e%ecuted by way of gaming or wagering, is void ection . &he measure of an insurable interest in property is the e%tent to which the insured might be damni-ed by loss of in8ury thereof &he automatic assignment of the policy to CS under the provision of the lease contract previously Juoted is void for being contrary to law andor public policy &he proceeds of the -re insurance policy thus rightfully belong to the spouses &he liability of the Cha spouses to CS for violating their lease contract in that Cha spouses obtained a -re insurance policy over their own merchandise, without the consent of CS, is a separate and distinct issue which we do not resolve in this case ErePa)ife vs CA Dacts( Ereat Paci-c )ife Assurance Corporation GErepalifeH e%ecuted a contract of group life insurance with 7evelopment Ban# of the Philippines G7BPH wherein Erepalife agreed to insure the lives of eligible housing loan mortgagors of 7BP ;ne such loan mortgagor is 7r >ilfredo )euterio In an application form, 7r )euterio answered Juestions concerning his test, attesting among others that he does not have any heart conditions and that he is in good health to the best of his #nowledge !owever, after about a year, 7r )euterio died due to massive cerebral hemorrhage >hen 7BP submitted a death claim to Erepalife, the latter denied the claim, alleging that 7r )euterio did not disclose he had been su9ering from hypertension, which caused his death Allegedly, such nonO disclosure constituted concealment that 8usti-ed the denial of the claim !ence, the widow of the late 7r )euterio -led a complaint against Erepalife for peci-c Performance with 7amages Both the trial court and the Court of Appeals found in favor of the widow and ordered Erepalife to pay 7BP I@?( >hether the CA erred in holding Erepalife liable to 7BP as bene-ciary in a group life insurance contract from a complaint -led by the widow of the decedentmortgagor !?)7( &he rationale of a group of insurance policy of mortgagors, otherwise #nown as the mortgage redemption insurance, is a device for the protection of both the mortgagee and the mortgagor ;n the part of the mortgagee, it has to enter into such form of contract so that in the event of the une%pected demise of the mortgagor during the subsistence of the mortgage contract, the proceeds from such insurance will be applied to the payment of the mortgage debt, thereby relieving the heirs of the mortgagor from paying the obligation In a similar vein, ample protection is given to the mortgagor under such a concept so that in the event of death, the mortgage obligation will be e%tinguished by the application of the insurance proceeds to the mortgage indebtedness In this type of policy insurance, the mortgagee is simply an appointee of the insurance fund uch lossO payable clause does not ma#e the mortgagee a party to the contract &he insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon ub8ect to some e%ceptions, insured may thus sue, although the policy is ta#en wholly or in part for the bene-t of another person, such as a mortgagee And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or not, and such person may recover it whatever the insured might have recovered, the widow of the decedent 7r )euterio may -le the suit against the insurer, Erepalife !arvardian Colleges c Country Ban#ers Insurance Dacts( !arvardian Colleges is a family corporation whose stoc#holders are Ildefonso +ap, Qirginia Sing +ap and their children !arvardian Colleges insured the school for -re with CBI for Php500,000 !owever, the insured property was burned which resulted to its total loss !arvardian Colleges made claims but was denied by CBI on the ground that there was no insurable interest iver the building on the piece of land which was in the name of Ildefonso +ap, and not of !arvardian Colleges Issue( >hether or not !arvardian has insurable interest and can collect from the insurance Fuling( +es Fegardless of the nature of the title of the insures, or even if he did not have title to the property insured, the contract of -re insurance should still be upheld if his interest in or his relation to the property is such that he will be bene-ted in its continuing e%istence or su9er a direct
pecuniary loss from its destruction or in8ury &he test in determining insurable interest in property is whether one will derive pecuniary bene-t or advantage from its preservation or will su9er pecuniary loss or damage from it destruction by the happening of the event insured against Ang Sa +u v Phoeni% Assurance Dacts( Ang Sa +u had a piece of property in his possession !e insured it with Phoeni% &he property was lost, so Ang Sa +u sought to claim the proceeds Phoeni% denied liability on the ground that Ang was not the owner but a mere possessor and as such, had no insurable interest over the property Issue( >; a mere possessor has insurable interest over the property !eld( +es A person having a mere right or possession of property may insure it to its full value and in his own name, even when he is not responsible for its safe#eeping &he reason is that even if a person is ;& interested in the safety and preservation of material in his possession because they belong to /rd parties, said person still has insurable interest, because he stands either to bene-t from their continued e%istence or to be pre8udiced by their destruction ?C;C?A)M?& A7 F?PF??&A&I; &!? I@)AF )ID? A@FAC? C;, )&7, petitioner, vs ?FADI 7 D?)ICIA; and AE?), D);F?7A, ?@E?I;, !?FMII; and )?&ICIA, all surnamed D?)ICIA;, represented by their guardian ad litem ?FADI 7 D?)ICIA;, respondents GEF o )O=53/, eptember ./, .3=.H DAC&( O ;ne ?varisto Deliciano -led an application for insurance with the herein petitioner upon the solicitation of one of its agents &wo insurance policies to the aggregate amount of P25,000 were issued to him O Deliciano died on eptember 23, .3/5 &he defendant company GpetitionerH refused to pay on the ground that the policies were fraudulently obtained, the insured having given false answers and statements in the application as well as in the medical report O &he present action was brought to recover on said policies O )ower court in favor of plainti9 GrespondentH-nding that( ^ Deliciano was made to sign the application and the e%aminerKs report in blan#, and that afterwards the blan# spaces therein were -lled in by the agent GFomulo M 7avid H and the medical e%aminer G7r Eregorio QaldeH, who made it appear therein that Deliciano was a -t sub8ect for insurance ^ neither the insured nor any member of his family concealed the real state of health of the insured" that as a matter of fact the insured, as well as the members of his family, told the agent and the medical e%aminer that the applicant had been sic# and coughing for sometime and that he had also gone three times to the antol anatarium O CA a$rmed !ence, this petition I@?( >; the policy remains to be valid in spite of the fact that the agent, without fraud, collusion or bad faith on the part of the insured, falsi-ed the answers given by the insured !?)7( +? O Insurance companies send detailed instructions to their agents to solicit and procure applications &hese agents are to be found all over the length and breadth of the land &he agents, in short, do what the company set them to do O In the present case, the agent #new all the time the true state of health of the insured &he insurerKs medical e%aminer approve the application #nowing full well that the applicant was sic# O &he situation is one in which one of two innocent parties must bear a loss for his reliance upon a third person O In this case, it was the insurer who gave the agent authority to deal with the applicant It was the one who selected the agent, thus implying that the insured could put his trust on him It seems reasonable that as between the two of them, the one who employed and gave character to the third person as its agent should be the one to bear the loss O If the policy should be avoided, it must be because it was void from the very beginning O &he insurer cannot assert the falsity of such answers as a defense to liability on the policy O &he fact that the insured did not read the application which he signed, is not indicative of bad faith It has been held that it is not negligence for the insured to sign an application without -rst reading it if the insurer by its conduct in appointing the agent in:uenced the insured to place trust and con-dence in the agent
O In the instant case, it has been proved that the insured could not read ?nglish, the language in which the application was written, and that after the contract was signed, it was #ept by his mother As a conseJuence, the insured had no opportunity to read or correct any misstatement therein O Petition dismissed &!? I@)AF )ID? A@FAC? C;, )&7, petitioner, vs?FADI 7 D?)ICIA; ?& A), respondents GEF o )O=53/ 7ecember 23, .3=/H M;&I; D;F F?C;I7?FA&I; DAC&( O A motion to reconsider and set aside said decision has been -led by the petitioner, and both parties have submitted e%haustive and luminous written arguments in support of their respective contentions O Agent's reason for falsifying the application( for the purpose of securing the CompanyKs approval of the application so that the policy to be issued thereon might be credited to said agent in connection with the interOprovincial contest which the Company was then holding among its soliciting agents to boost the sales of its policies O Moreover, Agent 7avid bribed Medical ?%aminer Qalde with money which the former borrowed from the applicantKs mother by way of advanced payment on the premium, according to the -nding of the Court of Appeals O petitioner insists( that upon the facts of the case the policies in Juestion are null and void ab initio and that all that the respondents are entitled to is the refund of the premiums paid thereon I@? >; Policy still valid !?)7( O >hen the applicant for insurance, signed the application in blan# and authoried the soliciting agent andor the medical e%aminer of the Company to write the answers for him, he made them his own agents for that purpose, and he was responsible for their acts in that connection If they falsi-ed the answers for him, he could not evade the responsibility for the falsi-cation !e was not supposed to sign the application in blan# !e #new that the answers to the Juestions therein contained would be 6the basis of the policy,6 and for that very reason he was reJuired with his signature to vouch for the truth thereof O By accepting the policy he became charged with #nowledge of its contents, whether he actually read it or not O >e cannot bring ourselves to believe that the insured did not ta#e the trouble to read the answers contained in the photostatic copy of the application attached to and made a part of the policy before he accepted it and paid the premium thereon !e must have notice that the answers to the Juestions therein as#ed concerning his clinical history were false, and yet he accepted the -rst policy and applied for another O &he insured, therefore, had no right to rely T and we cannot believe he relied in good faith T upon the oral representation of said agent and medical e%aminer that he Gthe applicantH was a -t sub8ect for insurance notwithstanding that he had been and was still su9ering with advanced pulmonary tuberculosis O Altho the agent and the medical e%aminer #new that statement to be false, no valid contract of insurance was entered into because there was no real meeting of the minds of the parties O Drom all the facts and circumstances of this case, we are constrained to conclude that the insured was a coparticipant, and coresponsible with Agent 7avid and Medical ?%aminer Qalde, in the fraudulent procurement of the policies in Juestion and that by reason thereof said policies are void ab initio O MF sustained CA reversed in favor of Petitioner Company @)ID? A@FAC? C;MPA+ ;D CAA7A, petitioner, vs &he !on C;@F& ;D APP?A) and pouses F;)A7; and B?FAF7A BACAI, respondents DAC& ( ;n April .5, .34<, Fobert 1ohn B Bacani procured a life insurance contract for himself from petitioner and was issued a policy valued at P.00,00000, with double indemnity in case of accidental death &he designated bene-ciary was his mother, respondent Bernarda Bacani ;n 1une 2<, .34, the insured died in a plane crash Fespondent Bernarda Bacani -led a claim with petitioner, see#ing the bene-ts of the insurance policy ta#en by her son Petitioner conducted an investigation and its -ndings prompted it to re8ect the claim on the ground that the insured did not disclosed material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable A chec# representing the total premiums paid in the amount of P.0,.200 was attached to said letter
Petitioner claimed that the insured gave false statements in his application when he limited his answer to a consultation with a certain 7r Feinaldo 7 Faymundo of the Chinese Eeneral !ospital on Debruary .34<, for cough and :u complications only but did not disclose that two wee#s prior to his application for insurance, the insured was e%amined and con-ned at the )ung Center of the Philippines, where he was diagnosed for renal failure I@? ( >; there was concealment made by the insured F@)IE ( C disagrees with the F&CKs -ndings that while indeed there was concealment and misrepresentation, the same was made in 6good faith6 and the facts concealed or misrepresented were irrelevant since the policy was 6nonOmedical6 ection 2< of the Insurance Code is e%plicit in reJuiring a party to a contract of insurance to communicate to the other, in good faith, all facts within his #nowledge which are material to the contract and as to which he ma#es no warranty, and which the other has no means of ascertaining &he information which the insured failed to disclose were material and relevant to the approval and the issuance of the insurance policy &he matters concealed would have de-nitely a9ected petitionerKs action on his application, either by approving it with the corresponding ad8ustment for a higher premium or re8ecting the same Moreover, a disclosure may have warranted a medical e%amination of the insured by petitioner in order for it to reasonably assess the ris# involved in accepting the application &hus, 6good faith6 is no defense in concealment &he argument, that petitionerKs waiver of the medical e%amination of the insured debun#s the materiality of the facts concealed, is untenable &he waiver of a medical e%amination Uin a nonO medical insurance contractV renders even more material the information reJuired of the applicant concerning previous condition of health and diseases su9ered, for such information necessarily constitutes an important factor which the insurer ta#es into consideration in deciding whether to issue the policy or not Anent the -nding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need not die of the disease he had failed to disclose to the insurer It is su$cient that his nonOdisclosure misled the insurer in forming his estimates of the ris#s of the proposed insurance policy or in ma#ing inJuiries >e, therefore, rule that petitioner properly e%ercised its right to rescind the contract of insurance by reason of the concealment employed by the insured >!?F?D;F?, the petition is EFA&?7 and the 7ecision of the Court of Appeals is F?Q?F?7 and ?& AI7? &!?)MA Q7A 7? CAI)AE, petitioner, vs !; C;@F& ;D APP?A) and EF?A& PACIDIC )ID? I@FAC? C;FP;FA&I;, respondents DAC&( ;n .4 1une .342, 1aime Canilang consulted 7r >ilfredo B Claudio and was diagnosed as su9ering from 6sinus tachycardia6 &he doctor prescribed the following for him( &raepam, a tranJuilier" and Aptin, a betaObloc#er drug Mr Canilang consulted the same doctor again on / August .342 and this time was found to have 6acute bronchitis6 ;n the ne%t day, = August .342, 1aime Canilang applied for a 6nonOmedical6 insurance policy with respondent Ereat Paci-c )ife Assurance Company naming his wife, petitioner &helma Canilang, as his bene-ciary 1aime Canilang was issued a policy, with the face value of P.3,00, e9ective as of 3 August .342 ;n 5 August .34/, 1aime Canilang died of 6congestive heart failure,6 6anemia,6 and 6chronic anemia6 Petitioner, widow and bene-ciary of the insured, -led a claim with Ereat Paci-c which the insurer denied on 5 7ecember .34/ upon the ground that the insured had concealed material information from it Petitioner then -led a complaint against Ereat Paci-c with the Insurance Commission for recovery of the insurance proceeds A deposition given by 7r >ilfredo Claudio was presented by petitioner &here 7r Claudio stated that he was the family physician of the deceased 1aime Canilang and that he had previously treated him for 6sinus tachycardia6 and 6acute bronchitis6 Ereat Paci-c for its part presented 7r ?sperana Ruismorio, a physician and a medical underwriter wor#ing for Ereat Paci-c he testi-ed that the deceasedKs insurance application had been approved on the basis of his medical declaration he e%plained that as a rule, medical e%aminations are reJuired only in cases
where the applicant has indicated in his application for insurance coverage that he has previously undergone medical consultation and hospitaliation Insurance Commissioner Armando Ansaldo ordered Ereat Paci-c to pay P.3,0000 plus legal interest and P2,00000 as attorneyKs fees ;n appeal by Ereat Paci-c, the Court of Appeals reversed and set aside the decision of the Insurance Commissioner &he Court of Appeals also found that the failure of 1aime Canilang to disclose previous medical consultation and treatment constituted material information which should have been communicated to Ereat Paci-c to enable the latter to ma#e proper inJuiries I@? ( >; there was concealment made by the insured !?)7( &he upreme Court agrees with the Court of Appeals that the information which 1aime Canilang failed to discloses was material to the ability of Ereat Paci-c to estimate the probable ris# he presented as a sub8ect of life insurance !ad Canilang disclosed his visits to his doctor, the diagnosis made and the medicines prescribed by such doctor, in the insurance application, it may be reasonably assumed that Ereat Paci-c would have made further inJuiries and would have probably refused to issue a nonOmedical insurance policy or, at the very least, reJuired a higher premium for the same coverage &he materiality of the information withheld by Ereat Paci-c did not depend upon the state of mind of 1aime Canilang A manKs state of mind or sub8ective belief is not capable of proof in our 8udicial process, e%cept through proof of e%ternal acts or failure to act from which inferences as to his sub8ective belief may be reasonably drawn either does materiality depend upon the actual or physical events which ensue Materiality relates rather to the 6probable and reasonable in:uence of the facts6 upon the party to whom the communication should have been made, in assessing the ris# involved in ma#ing or omitting to ma#e further inJuiries and in accepting the application for insurance ection 2 of the Insurance Code of .34 is properly read as referring to 6any concealment6 without regard to whether such concealment is intentional or unintentional &he net result therefore of the phrase 6whether intentional or unintentional6 is precisely to leave unJuali-ed the term 6concealment6 In any case, in the case at bar, the nature of the facts not conveyed to the insurer was such that the failure to communicate must have been intentional rather than merely inadvertent >!?F?D;F?, the Petition for Feview is 7?I?7 for lac# of merit and the 7ecision of the Court of Appeals dated .< ;ctober .343 in CAOEF P o 04<3< is hereby ADDIFM?7 o pronouncement as to costs Philamcare !ealth ystems, Inc vs Court of Appeals and 1ulita &rinos
/3 CFA /5<
Dacts( 1ulita &rinos was the liveOin wife of ?rnani &rinos, who had a !ealth Care Agreement with petitioner company @nder coverage, Mr &rinos su9ered a heart attac#, was twice con-ned in a hospital, then subseJuently died 1ulita &rinos incurred e%penses amounting to P<,000 Philamcare denied the insurance claim on the grounds that a health care agreement is not an insurance contract &hat there was material concealment the insured as it would appear that in the application for health coverage, petitioners reJuired respondentKs husband to sign an e%press authoriation for any person, organiation or entity that has any record or #nowledge of his health to furnish any and all information relative to any hospitaliation, consultation, treatment or any other medical advice or e%amination Also, it was contended that 1ulita &rinos was not the legal wife IssueGsH( G.H >; the agreement was an insurance contract G2H >; there was material concealment of facts G/H >; 1ulita &rinos is entitled to receive Fuling( +es An insurance contract e%ists where the following elements concur( . &he insured has an insurable interest" 2 &he insured is sub8ect to a ris# of loss by the happening of the designated peril" / &he insurer assumes the ris#" = uch assumption of ris# is part of a general scheme to distribute actual losses among a large group of persons bearing a similar ris#" and 5 In consideration of the insurerKs promise, the insured pays a premium
o &he answer assailed by petitioner was in response to the Juestion relating to the medical history of the applicant &his largely depends on opinion rather than fact, especially coming from respondentKs husband who was not a medical doctor >here matters of opinion or 8udgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue &hus, 6GAHlthough false, a representation of the e%pectation, intention, belief, opinion, or 8udgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the ris#, or its acceptance at a lower rate of premium, and this is li#ewise the rule although the statement is material to the ris#, if the statement is obviously of the foregoing character, since in such case the insurer is not justifed in relying upon such statement, but is obligated to make urther inquiry &here is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of e%pectation or belief, that which he then #nows, to be actually untrue, or the impossibility of which is shown by the facts within his #nowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud6 +es In a contract of indemnity, payment should be made to the party who incurred the e%penses
DP?F; ?&I&)?7 &; F?C?IQ? @7?F &!? P;)IC+ Bonifacio Brothers, Inc vs Mora 20 CFA 2<. Dacts( ?nriJue Mora mortgaged his ;dlsmobile sedan car to ! Feyes Inc with the condition that Mora would insure the car with ! Feyes as bene-ciary &he car was then insured with tate Insurance Company and the policy delivered to Mora 7uring the e9ectivity of the insurance contract, the car -gured in an accident &he company then assigned the accident to an insurance appraiserfor investigation and appraisal of the damage Mora without the #nowledge and consent of ! Feyes, authoried Bonifacio Bros to -% the car, using materials supplied by the Ayala Auto Parts Company Dor the cost of )abor and materials, Mora was billed P2,.02/ &he bill was sent to the insurer's appraiser &he insurance company drew a chec# in the amount of the insurance proceeds and entrusted the chec# to its appraiser for delivery to the proper party &he car was delivered to Mora without the consent of ! Feyes, and without payment to Bonifacio Bros and Ayala @pon the theory that the insurance proceeds should be directly paid to them, Bonifacio and Ayala -led a complaint against Mora and the insurer with the municipal court for the collection of P2,.02/ &he insurance company -led its answer with a counterclaim for interpleader, reJuiring Bonifacio and ! Feyes to interplead in order to determine who has a better right to the proceeds Issue( &he main issue raised is whether there is privity of contract between the Bonifacio Bros Inc and the Ayala Auto Parts Co on the one hand and the insurance company on the other Fuling( o Privity It is fundamental that contracts ta#e e9ect only between the parties thereto, e%cept on some speci-c instances provided by law where the contract contains some stipulation in favor of a third person GArt ./.., Civil CodeH uch stipulation is #nown as stipulation pour autrui or a provision in favor of a third person not a party to the contract @nder this doctrine, a third person is allowed to avail himself of a bene-t granted to him by the terms of the contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such person GArt ./.., Civil Code" @y &am, et al vs. )eonard, /0 Phil =. H ConseJuently, a third person not a party to the contract has no action against the parties thereto, and cannot generally demand the enforcement of the same GManila Failroad Co vs. Compa_ia &ransatlantica, /4 Phil <
Dirst Integrated Bonding Y Insurance Company, Inc, petitioner, vs !on !arold M !ernando, Qictorino Advincula, Fomana Advicula, ilverio Blanco Y &he heri9 of Manila and his 7eputy heri9s, respondents Dacts( ilverio Blanco was the owner of a passenger 8eepney which he insured against liabilities for death and in8uries to third persons with Dirst Integrated Bonding and Insurance Company, Inc with the face value of P/0,000 ;n ovember 25, .3<, the said 8eepney driven by Blanco himself bumped a -veO year old child, 7eogracias Advincula, causing the latter's death &he child's parents, the Advincula spouses brought a complaint for damages in the Fegional &rial Court of Abra against ilverio Blanco as well as impleading Dirst Insurance in the complaint as insurer ;n the basis of the evidence presented by the Advincula spouses, 8udgment was rendered by the trial court in favour of the spouses &he court ad8udicated Dirst Integrated Bonding and Insurance Company liable in the amount of P2/,<hether the trial court erred in holding petitioner liable in e%cess of the limits of liability as provided for in the policy contract >hether the trial court erred in deciding for the respondent spouseGsH where there e%ists no cause of action against herein petitioner Fuling( It is the contention of the petitioner that the Advincula spouses have no cause of action against it Durther as contended, as parents of the victim, they may proceed against the driver, Blanco on the basis of the provisions of the ew Civil Code !owever, they have no cause of action against Dirst Insurance, because they are not parties to the insurance contract It is settled that where the insurance contract provides for indemnity against liability to a third party, such third party can directly sue the insurer &he liability of the insurer to such third person is based on contract while the liability of the insured to the third party is based on tort uch is to protect in8ured persons against the insolvency of the insured who causes such in8ury, and to give such in8ured person a certain bene-cial interest in the proceeds of the policy It has been held that such created a contractual relation which inures to the bene-t of any and every person who may be negligently in8ured by the named insured as if such in8ured person were speci-cally named in the policy In the event that the in8ured fails or refuses to include the insurer as party defendant in his claim for indemnity against the insured, the latter is not prevented by law to avail of the procedural rules intended to avoid multiplicity of suits ot even a \no action' clause under the policy which reJuires that a -nal 8udgment be -rst obtained against the insured and that only thereafter can the person insured recover on the policy can prevail over the Fuled of Court provisions aimed at avoiding multiplicity of suits Petitioner cannot evade liability as insurer by hiding under the cloa# of the insured It liability is primary and not dependent on the recovery of 8udgment from the insured &he insurer's liability accrues immediately upon the occurrence of the in8ury or event upon which the liability depends, and does not depend on the recovery of 8udgment by the in8ured party against the insured !owever, it appears that the award of damages in favour of Blanco has no basis as it was not put up as a claim against the insurer !owever, since the decision of the trial court had become -nal and e%ecutory, it can no longer be corrected or amended Petition dismissed herman hafer, petitioner, vs !on 1udge, Fegional &rial Court of ;longapo City, Branch 5, and Ma#ati Insurance Company, Inc, respondents Dacts( Petitioner herman obtained a private car policy over his Dord )aser car from Ma#ati Insurance Company, Inc, for third party liability 7uring the e9ectivity of the policy, information for rec#less imprudence resulting in damage to property and serious physical in8uries was -led against petitioner &he complaint alleged that herman rec#lessly drove his car which bumped a Qol#swagen owned and driven by Delino Ilano y )egaspi, thereby causing damage to the car GQol#swagenH and physical in8uries were su9ered by one 1ovencio Poblete, r as a result of such accident who was on board of the said Qol#swagen &he owner of the damaged Qol#swagen car -led a separate civil action against petitioner for damages while 1ovencio did not reserve his right to -le a separate civil action for
damages Petitioner ten -led a third party complaint against herein private respondent, Ma#ati Insurance Company, Inc &he court however issued an order dismissing the third party complaint on the ground that it was premature, based on the premise that unless the herein petitioner GaccusedH is found guilty and sentenced to pay the o9ended party GPoblete, rH indemnity for damages, the third party complaint is without cause of action &he better procedure is for accused to wait for the outcome of the criminal aspect of the case to determine whether or not accused, also the third party plainti9, has a cause of action against the third party defendant for the enforcement of its third party liability under the insurance contract Issues( >hether the court a Juo erred in dismissing the third party complaint of herein petitioner herman against Ma#ati Insurance Company Inc Fuling( Compulsory Motor Qehicle )iability Insurance Gthird party liabilityH is primarily intended to provide compensation for the death or bodily in8uries su9ered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles &he victims andor their defendants are assured of immediate -nancial assistance, regardless of the -nancial capacity of motor vehicle owners >here an insurance policy insures directly against liability, the insurer's liability accrues immediately upon the occurrence of the in8ury or event upon which the liability depends, and does not depend on the recovery of 8udgment by the in8ured party against the insured &he in8ured for whom the contract of insurance is intended can sue directly the insurer &he liability of the insurance company under the Compulsory Motor Qehicle )iability insurance is for loss or damage &he court a Juo erred in dismissing petitioner's third party complaint on the ground that petitioner had no cause of action yet against the insurance company Gthird party defendantH &here is no need on the part of the insured to wait for the decision of the trial court -nding him guilty of rec#less imprudence &he occurrence of the in8ury to the third party immediately gave rise to the liability of the insurer under its policy Petition granted IC;&?&AB)? C)A@? ?milio &an, et al vs Court of Appeals and Philam )ife Dacts( &his is a petition for review on certiorari of the CAKs decision a$rming the Insurance Commission in dismissing petitionersK complaint for the recovery of the proceeds of their late father &heir father, &an )ee iong, applied for )ife Insurance with respondent in the amount of 40000 in ept 2/, .3/ It was issued on ov <, .3/ ubseJuently he died of !epatoma on April 2<, .35 Fespondent company denied payment and rescinded the policy, returning only the amount of premium paid, on the ground of misrepresentation and concealment &he policy in Juestion contained an incontestability clause PetitionerKs -led a case with the Insurance Commission, but was dismissed &he dismissal was a$rmed by the CA Petitioners argue that the insurance law on incontestability prevents the insurer from e%ercising the right to rescind after the death of the insured &hey also Juestion the -nding of concealment, saying that no evidence was presented to show that it was e%plained in a laymanKs language, and that failure of the insurer to conduct medical e%amination, the insurer waived whatever imperfection by rati-cation &hey also argue that the application form for insurance pertaining to the medical history were so small as to necessitate the application of the -ne print rule Issues 7oes the death of the insured preclude the insurer from rescinding the policy* 7id the insurer waive the concealment by rati-cation by not conducting medical e%amination* 7oes the 6-ne print6 or contract of adhesion rule apply in this case* Fuling
P?&I&I; 7?I?7 o &he soOcalled 6incontestability clause6 precludes the insurer from raising the defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has been in force for at least two years during the insuredKs lifetime &he phrase 6during the lifetime6 found in ection =4 simply means that the policy is no longer considered in force after the insured has died &he #ey phrase in the second paragraph of ection =4 is 6for a period of two years6 &he policy was issued on ovember <, .3/ and the insured died on April 2<, .35 &he policy was thus in force for a period of only one year and -ve months Considering that the insured died before the twoOyear period had lapsed, respondent company is not, therefore, barred from proving that the policy is void ab initio by reason of the insuredKs fraudulent concealment or misrepresentation Moreover, respondent company rescinded the contract of insurance and refunded the premiums paid on eptember .., .35, previous to the commencement of this action on ovember 2, .35 &he insurer has two years from the date of issuance of the insurance contract or of its last reinstatement within which to contest the policy, whether or not, the insured still lives within such period After two years, the defenses of concealment or misrepresentation, no matter how patent or well founded, no longer lie Congress felt this was a su$cient answer to the various tactics employed by insurance companies to avoid liability &he petitionersK interpretation would give rise to the incongruous situation where the bene-ciaries of an insured who dies right after ta#ing out and paying for a life insurance policy, would be allowed to collect on the policy even if the insured fraudulently concealed material facts 2 o &he presumption is that a person intends the ordinary conseJuence of his voluntary act and ta#es ordinary care of his concerns &he evidence for respondent company shows that on eptember .3, .32, the deceased was e%amined by 7r Qictoriano )im and was found to be diabetic and hypertensive" that by 1anuary, .3/, the deceased was complaining of progressive weight loss and abdominal pain and was diagnosed to be su9ering from hepatoma Another physician, 7r >enceslao Qitug, testi-ed that the deceased came to see him on 7ecember .=, .3/ for consultation and claimed to have been diabetic for -ve years Because of the concealment made by the deceased of his consultations and treatments for hypertension, diabetes and liver disorders, respondent company was thus misled into accepting the ris# and approving his application as medically standard and dispensing with further medical investigation and e%amination Dor as long as no adverse medical history is revealed in the application form, and applicant for insurance is presumed to be healthy and physically -t and no further medical investigation or e%amination is conducted by respondent company / Dine print rule ee weet )ines v &eves .34 G&ranspoH for further study 6All provisions, conditions, or e%ceptions which in any way tend to wor# a forfeiture of the policy should be construed most strongly against those for whose bene-t they are inserted, and most favorably toward those against whom they are meant to operate6 &here is no showing that the Juestions in the application form for insurance regarding the insuredKs medical history are in smaller print than the rest of the printed form or that they are designed in such a way as to conceal from the applicant their importance
)IABI)I&+ @7?F ;P? P;)IC+ =< 7?Q?);PM?& I@FAC? C;FP v IAC and P!I)IPPI? @I; F?A)&+ 7?Q?);PM?& C;FP procedurally heavy case
Dacts( A -re occurred in the building of the private respondent and it sued for recovery of damages from the petitioner on the basis of an insurance contract between them &he petitioner allegedly failed to answer on time and was declared in default by the trial court A 8udgment of default was subseJuently rendered on the strength of the evidence submitted e% parte by the private respondent, which was allowed full recovery of its claimed damages ;n learning of this decision, the petitioner moved to lift the order of default, invo#ing e%cusable neglect, and to vacate the 8udgment by default Its motion was denied It then went to the respondent court, which a$rmed the decision of the trial court in toto &he amount of the policy in Juestion is for 2500000 Petitioner Juestions the actual amount of indemnity based on Condition . of the policy ma#ing the insured as its own insurer in case the property at the time of the -re be collectively of greater value than the sum insured, and shall bear a ratable proportion of the loss accordingly &he value of the building at the time of the -re was allegedly st 5400000 &he policy in Juestion is an ;pen Policy Issue >as there e%cusable neglect 8ustifying the motion to lift the order of default* >hat is the amount of indemnity* Fuling P?&I&I; 7?I?7 7?CII; ADDIFM?7 I D@)) +es It is indisputable that summons was served on it, through its senior viceOpresident, on 1une .3, .340 ;n 1uly .=, .340, ten days after the e%piration of the original .5Oday period to answer Ge%cluding 1uly =H, its counsel -led an e% parte motion for an e%tension of -ve days within which to -le its answer ;n 1uly .4, .340, the last day of the reJuested e%tension T which at the time had not yet been granted T the same counsel -led a second motion for another 5Oday e%tension, fourteen days after the e%piry of the original period to -le its answer &he trial court nevertheless gave it -ve days from 1uly .=, .340, or until 1uly .3, .340, within which to -le its answer But it did not It did so only on 1uly 2<, .340, after the e%piry of the original and e%tended periods, or twentyOone days after the 1uly 5, deadline As a conseJuence, the trial court, on motion of the private respondent -led on 1uly 24, .340, declared the petitioner in default &his was done almost one month later, on August 25, .340 ?ven so, the petitioner made no move at all for two months thereafter It was only on ;ctober 2, .340, more than one month after the 8udgment of default was rendered by the trial court on eptember 2<, .340, that it -led a motion to lift the order of default and vacate the 8udgment by default &he pattern of ine%cusable neglect, if not deliberate delay, is all too clear &he petitioner has slumbered on its right and awa#ened too late >hile it is true that in &ra8ano v Cru, which it cites, this Court declared 6that 8udgments by default are generally loo#ed upon with disfavor,6 the default 8udgment in that case was set aside precisely because there was e%cusable neglect Besides, the petitioners in &ra8ano had a valid defense against the complaint -led against them, and this 8usti-ed a rela%ation of the procedural rules to allow full hearing on the substantive issues raised In the instant case, by contrast, the petitioner must 8ust the same fail on the merits even if the default orders were to be lifted As the respondent Court observed, 6othing would be gained by having the order of default set aside considering the appellant has no valid defense in its favor 2 >ith regards to the condition in the policy &here is no evidence on record that the building was worth P5,400,00000 at the time of the loss" only the petitioner says so and it does not bac# up its selfOserving estimate with any independent corroboration ;n the contrary, the building was insured at P2,500,00000, and this must be considered, by agreement of the insurer and the insured, the actual value of the property insured on
the day the -re occurred &his valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed ;pen policy ec <0 of the Insurance code 6an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss6 &his means that the actual loss, as determined, will represent the total indemnity due the insured from the insurer e%cept only that the total indemnity shall not e%ceed the face value of the policy &he actual loss has been ascertained in this case and, to repeat, this Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily &here is no such showing !ence, applying the open policy clause as e%pressly agreed upon by the parties in their contract, we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of P504,4<00 i PF?CFIP&I; ;D AC&I; = @ I@FAC? ;DDIC?, )&7vs C;@F& ;D APP?A) and ?MI)I; &A UEF o 43=. March ./, .33.V Dacts( ;n August .5, .34/, herein private respondent ?milio &an too# from herein petitioner a P/00,00000 property insurance policy to cover his interest in the electrical supply store of his brother housed in a building in Iloilo City Dour G=H days after the issuance of the policy, the building was burned including the insured store ;n August 20, .34/, &an -led his claim for -re loss with petitioner, but on Debruary 23, .34=, petitioner wrote &an denying the latterKs claim ;n April /, .34=, &an wrote petitioner, see#ing reconsideration of the denial of his claim ;n eptember /, .345, &anKs counsel wrote the Insurer inJuiring about the status of his April /, .34= reJuest for reconsideration Petitioner answered the letter on ;ctober .., .345, advising &anKs counsel that the InsurerKs denial of &anKs claim remained unchanged Issue( >hether or not the -ling of a motion for reconsideration interrupts the twelve G.2H months prescriptive period to contest the denial of the insurance claim Fuling( o &he -ling of a motion for reconsideration does not interrupt the twelve G.2H months prescriptive period to contest the denial of the insurance claim &he insured was de-nitely advised of the re8ection of his claim through the letter of petitioner dated Debruary 23, .34= of the denial of &anKs claim which was clearly manifested in said letter, the pertinent portion of which reads( 6>e refer to your claim for -re loss of 20th August, .34/ at !uervana t, )a Pa, Iloilo City 6>e now have the report of our ad8usters and after a thorough and careful review of the same and the accompanying documents at hand, we are re8ecting, much to our regret, liability for the claim under our policies for one or more of the following reasons( . 2 6Dor your information, we have referred all these matters to our lawyers for their opinion as to the compensability of your claim, particularly referring to the above violations It is their opinion and in fact their strong recommendation to us to deny your claim By this letter, we do not intend to waive or relinJuish any of our rights or defenses under our policies of insurance6 Condition 2 of the Insurance Policy, which is the sub8ect of the con:icting contentions of the parties, reads( 62Action or suit clause T If a claim be made and re8ected and an action or suit be not commenced either in the Insurance Commission or in any court of competent 8urisdiction within twelve G.2H months from receipt of notice of such re8ection, or in case of arbitration ta#ing place as provided herein, within twelve G.2H months after due notice of the award made by the arbitrator or arbitrators or umpire, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder In enunciating the aboveOcited principle, this Court had de-nitely settled the rationale for the necessity of bringing suits against the Insurer within one year from the re8ection of the claim &he
contention of the respondents that the oneOyear prescriptive period does not start to run until the petition for reconsideration had been resolved by the insurer, runs counter to the declared purpose for reJuiring that an action or suit be -led in the Insurance Commission or in a court of competent 8urisdiction from the denial of the claim &o uphold respondentsK contention would contradict and defeat the very principle which this Court had laid down Moreover, it can easily be used by insured persons as a scheme or device to waste time until any evidence which may be considered against them is destroyed 1ACR@?)I? 1IM??L Q7A 7? EABFI?) vs !; C;@F& ;D APP?A) and D;F&@? I@FAC? Y @F?&+ C;MPA+, IC UEF o .0/44/ ovember .=, .33<V Dacts( Marcelino Eabriel, the insured, was employed by ?merald Construction Y 7evelopment Corporation G6?C7C6H at its construction pro8ect in IraJ !e was covered by a personal accident insurance in the amount of P.00,00000 under a group policy 2 procured from private respondent by ?C7C for its overseas wor#ers &he insured ris# was for 6GbHodily in8ury caused by violent accidental e%ternal and visible means which in8ury GwouldH solely and independently of any other cause6 / result in death or disability ;n 22 May .342, within the life of the policy, Eabriel died in IraJ A year later, or on .2 1uly .34/, ?C7C reported EabrielKs death to private respondent by telephone= Among the documents thereafter submitted to private respondent were a copy of the death certi-cate 5 issued by the Ministry of !ealth of the Fepublic of IraJ T which stated 6F?A; ;D 7?A&!( @7?F ?NAMIA&I; ;> T ;& +?& S;> 6< and an autopsy report of the BI to the e9ect that 6GdHue to advanced state of postmortem decomposition, cause of death GcouldH not be determined6 4 Dollowing a series of communications between petitioner and private respondent, the latter, on 22 eptember .34/, ultimately denied the claim of ?C7C on the ground of prescription 3 Petitioner went to the Fegional &rial Court of Manila In her complaint against ?C7C and private respondent, she averred that her husband died of electrocution while in the performance of his wor# Issue( >hether or not the petitioner timely -led her notice of claim within the prescriptive period Fuling( ; &he petitioner did not timely -le her claim on the insurance proceeds Private respondent correctly invo#ed ection /4= of the Insurance Code" vi( 6ec /4=Any person having any claim upon the policy issued pursuant to this chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim setting forth the nature, e%tent and duration of the in8uries sustained as certi-ed by a duly licensed physician otice of claim must be -led within si% months from date of the accident, otherwise, the claim shall be deemed waived Action or suit for recovery of damage due to loss or in8ury must be brought, in proper cases, with the Commissioner or the Courts within one year from denial of the claim, otherwise, the claimantKs right of action shall prescribe6 &he notice of death was given to private respondent, concededly, more than a year after the death of petitionerKs husband Private respondent, in invo#ing prescription, was not referring to the oneO year period from the denial of the claim within which to -le an action against an insurer but obviously to the written notice of claim that had to be submitted within si% months from the time of the accident J. Premium Payments - Abellana =3H Malayan Insurance Co v Cru Arnaldo, .5= CFA <2 Dacts( ;n 1une , .34., the Malayan Insurance GMIC;H issued to, Coronacion Pinca, Dire Insurance Policy on her property for the amount of P.=,000 e9ective 1uly 22, .34., until 1uly 22, .342
;n ;ctober .5, .34., MIC; allegedly cancelled the policy for nonOpayment, of the premium and sent the corresponding notice to Pinca Payment of the premium for Pinca was received by 7omingo Adora, agent of MIC; ;n 1anuary .5, .342, Adora remitted this payment to MIC;, together with other payments ;n 1anuary .4, .342, PincaKs property was completely burned ;n Debruary 5, .342, PincaKs payment was returned by MIC; to Adora on the ground that her policy had been cancelled earlier But Adora refused to accept it In due time, Pinca made the reJuisite demands for payment, which MIC; re8ected he then went to the Insurance Commission It is because she was ultimately sustained by the Arnaldo GInsurance CommissionerH that MIC; has come to us for relief Issue( >;, there was a valid cancellation of the policy
!eld( o, there was none ;n procedural aspect( &he appeal -led by MIC; was beyond the reglementary period as between the two dates, the court chooses to believe 1une ./, .342, not only because the numbers 6hatever the reason for the delay in transmitting it to the legal department need not detain us here @nder ection =.< of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission &he MIC; -led its motion for reconsideration on April 25, .34., or -fteen days such notice, and the reglementary period began to run again after 1une ./, .34., date of its receipt of notice of the denial of the said motion for reconsideration As the herein petition was -led on 1uly 2, .34., or nineteen days later, there is no Juestion that it is tardy by four days Counted from 1une ./, the -fteenOday period prescribed under Fule =5, assuming it is applicable, would end on 1une 24, .342, or also four days from 1uly 2, when the petition was -led If it was -led under BP .23 , then, considering that the motion for reconsideration was -led on the -fteenth day after MIC; received notice of the decision, only one more day would have remained for it to appeal, to wit, 1une .=, .342 &hat would ma#e the petition eighteen days late by 1uly 2 Indeed, even if the applicable law were still FA 5=/=, governing appeals from administrative bodies, the petition would still be tardy &he law provides for a -%ed period of ten days from notice of the denial of a seasonable motion for reconsideration within which to appeal from the decision Accordingly, that tenOday period, counted from 1une ./, .342, would have ended on 1une 2/, .342, ma#ing the petition -led on 1uly 2, .342, nine days late >hichever law is applicable, therefore, the petition can and should be dismissed for late -ling ;n substantial aspect( MIC;Ks arguments that there was no payment of premium and that the policy had been cancelled before the occurence of the loss are not acceptable Its contention that the claim was allowed without proof of loss is also untenable &he petitioner relies heavily on ection of the Insurance Code providing that( ?C An insurer is entitled to payment of the premium as soon as the thing is e%posed to the peril insured against otwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, e%cept in the case of a life or an industrial life policy whenever the grace period provision applies &he above provision is not applicable because payment of the premium was in fact eventually made in this case &he payment was made on 7ecember 2=, .34., and the -re occured on 1anuary .4, .342 ;ne wonders( suppose the payment had been made and accepted in, say, August .34., would the commencement date of the policy have been changed to the date of the payment, or would the payment have retroacted to 1uly 22, .34.* If MIC; accepted the payment in 7ecember .34. and the insured property had not been burned, would that policy not have e%pired 8ust the same on 1uly 22, .342, pursuant to its original terms, and not on 7ecember 2=, .342* It would seem from MIC;Ks own theory that the policy would have become e9ective only upon payment, if accepted and so would have been valid only from 7ecember 2=, .34. but only up to 1uly 22, .34., according to the original terms In others words, the policy would have run for only eight months although the premium paid was for one whole year MIC;Ks ac#nowledgment of Adora as its agent defeats its contention that he was not authoried to receive the premium payment on its behalf It is clearly provided in ection /0< of the Insurance Code that(
?C /0< %%% %%% %%% Any insurance company which delivers to an insurance agent or insurance bro#er a policy or contract of insurance shall be deemed to have authoried such agent or bro#er to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon And it is a wellO#nown principle under the law of agency that( Payment to an agent having authority to receive or collect payment is eJuivalent to payment to the principal himself" such payment is complete when the money delivered is into the agentKs hands and is a discharge of the indebtedness owing to the principal Payment was in fact made, rendering the policy operative as of 1une 22, .34., and removing it from the provisions of Article , &hereafter, the policy could be cancelled on any of the supervening grounds enumerated in Article <= Ge%cept 6nonpayment of premium6H provided the cancellation was made in accordance therewith and with Article <5 ection <= reads as follows( o policy of insurance other than life shall be cancelled by the insurer e%cept upon prior notice thereof to the insured, and no notice of cancellation shall be e9ective unless it is based on the occurrence, after the e9ective date of the policy, of one or more of the following( GaH nonOpayment of premium" GbH conviction of a crime arising out of acts increasing the haard insured against" GcH discovery of fraud or material misrepresentation" GdH discovery of willful, or rec#less acts or commissions increasing the haard insured against" GeH physical changes in the property insured which result in the property becoming uninsurable"or GfH 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, ection <5 provides as follows( 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 GaH which of the grounds set forth in section si%tyOfour is relied upon and GbH that, upon written reJuest of the named insured, the insurer will furnish the facts on which the cancellation is based A valid cancellation must, therefore, reJuire concurrence of the following conditions( G.H &here must be prior notice of cancellation to the insured" G2H &he notice must be based on the occurrence, after the e9ective date of the policy, of one or more of the grounds mentioned" G/H &he notice must be GaH in writing, GbH mailed, or delivered to the named insured, GcH at the address shown in the policy" G=H It must state GaH which of the grounds mentioned in ection <= is relied upon and GbH that upon written reJuest of the insured, the insurer will furnish the facts on which the cancellation is based MIC;Ks claims it cancelled the policy in Juestion on ;ctober .5, .34., for nonOpayment of premium &o support this assertion, it presented one of its employees, who testi-ed that 6the original of the endorsement and credit memo6 T presumably meaning the alleged cancellation T 6were sent the assured by mail through our mailing section6 !owever, there is no proof that the notice, assuming it complied with the other reJuisites mentioned above, was actually mailed to and received by Pinca ;n the other hand, there is the :at denial of Pinca, who says she never received the claimed cancellation and who, of course, did not have to p rove such denial 50H Ma#ati &uscany Condominium Corp v Court of Appeals, 2.5 CFA =<2 Dacts( ometime in early .342, American !ome Assurance Co GA!ACH, represented by American International @nderwriters GPhilsH, Inc, issued in favor of Ma#ati &uscany Condominium Corporation G&@CA+H Insurance Policy o A!OCPPO32.0=52 on the latterKs building and premises, for a period beginning . March .342 and ending . March .34/, with a total premium of P=<<,.0/05 &he premium was paid on installments on .2 March .342, 20 May .342, 2. 1une .342 and .< ovember .342, all of which were accepted by private respondent ;n .0 Debruary .34/, A!AC issued to &uscany Insurance Policy o A!OCPPO32.053<, which replaced and renewed the previous policy, for a term covering . March .34/ to . March .34= &he premium in the amount of P=<<,.0/05 was again paid on installments on ./ April .34/, ./ 1uly .34/, / August .34/, 3 eptember .34/, and 2. ovember .34/ All payments were li#ewise accepted by A!AC
;n 20 1anuary .34=, the policy was again renewed and A!AC issued to &uscany Insurance Policy o A!OCPPO32.0<5. for the period . March .34= to . March .345 ;n this renewed policy, &uscany made two installment payments, both accepted by A!AC, the -rst on < Debruary .34= for P52,00000 and the second, on < 1une .34= for P.00,00000 &hereafter, &uscany refused to pay the balance of the premium ConseJuently, A!AC -led an action to recover the unpaid balance of P/.=,.0/05 for Insurance Policy o A!OCPPO32.0<5. In its answer with counterclaim, &uscany admitted the issuance of Insurance Policy o A!OCPPO 32.0<5. It e%plained that it discontinued the payment of premiums because the policy did not contain a credit clause in its favor and the receipts for the installment payments covering the policy for .34=O45, as well as the two G2H p revious policies, stated the following reservations( 2 Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising before such payments or after the e%piration of the credit clause of the policy" and / ub8ect to no loss prior to premium payment If there be any loss such is not covered &uscany further claimed that the policy was never binding and valid, and no ris# attached to the policy It then pleaded a counterclaim for P.52,00000 for the premiums already paid for .34=O45, and in its answer with amended counterclaim, sought the refund of P32=,20<.0 representing the premium payments for .342O45 ;n 4 ;ctober .34, the trial court dismissed the complaint and the counterclaim upon the following -ndings( >hile it is true that the receipts issued to the defendant contained the aforementioned reservations, it is eJually true that payment of the premiums of the three aforementioned policies Gbeing sought to be refundedH were made during the lifetime or term of said policies, hence, it could not be said, inspite of the reservations, that no ris# attached under the policies ConseJuently, defendantKs counterclaim for refund is not 8usti-ed As regards the unpaid premiums on Insurance Policy o A!OCPPO32.0<5., in view of the reservation in the receipts ordinarily issued by the A!AC on premium payments the only plausible conclusion is that A!AC has no right to demand their payment after the lapse of the term of said policy on March ., .345 &herefore, the &uscany was 8usti-ed in refusing to pay the same &he CA modi-ed the decision and held &uscany to pay the balance of the premiums plus legal interest and a$rmed the denial of the counterclaim &he CA rationcinated that the obligation to pay premiums when due is ordinarily as indivisible obligation to pay the entire premium !ere, the parties herein agreed to ma#e the premiums payable in installments, and there is no pretense that the parties never envisioned to ma#e the insurance contract binding between them It was renewed for two succeeding years, the second and third policies being a renewalreplacement for the previous one And the insured never informed the insurer that it was terminating the pol icy because the terms were unacceptable Issue( >;, the payment by installment of the premiums due on an insurance policy invalidates the contract of insurance, in view of ec of P7 <.2, otherwise #nown as the Insurance Code, as amended !eldFatio( o, while it may be true that under ection of the Insurance CodeGAn insurer is entitled to the payment of the premium as soon as the thing is e%posed to the peril insured against otwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, e%cept in the case of a life or an industrial life policy whenever the grace period provision appliesH, the parties may not agree to ma#e the insurance contract valid and binding without payment of premiums, there is nothing in said section which suggests that the parties may not agree to allow payment of the premiums in installment, or to consider the contract as valid and binding upon payment of the -rst premium ;therwise, we would allow the insurer to renege on its liability under the contract, had a loss incurred GsicH before completion of payment of the entire premium, despite its voluntary acceptance of partial payments, a result eschewed by a basic considerations of fairness and eJuity &o our mind, the insurance contract became valid and binding upon payment of the -rst premium, and the plainti9 could not have denied liability on the ground that payment was not made in full, for the reason that it agreed to accept installment payment
&uscany now asserts that its payment by installment of the premiums for the insurance policies for .342, .34/ and .34= invalidated said policies because of the provisions of ec of the Insurance Code, as amended, and by the conditions stipulated by the insurer in its receipts, disclaiming liability for loss for occurring before payment of premiums It argues that where the premiums is not actually paid in full, the policy would only be e9ective if there is an ac#nowledgment in the policy of the receipt of premium pursuant to ec 4 of the Insurance Code &he absence of an e%press ac#nowledgment in the policies of such receipt of the corresponding premium payments, and petitionerKs failure to pay said premiums on or before the e9ective dates of said policies rendered them invalid &uscany thus concludes that there cannot be a perfected contract of insurance upon mere partial payment of the premiums because under ec of the Insurance Code, no contract of insurance is valid and binding unless the premium thereof has been paid, notwithstanding any agreement to the contrary As a conseJuence, petitioner see#s a refund of all premium payments made on the alleged invalid insurance policies >e hold that the sub8ect policies are valid even if the premiums were paid on installments &he records clearly show that petitioner and private respondent intended sub8ect insurance policies to be binding and e9ective notwithstanding the staggered payment of the premiums &he initial insurance contract entered into in .342 was renewed in .34/, then in .34= In those three G/H years, the insurer accepted all the installment payments uch acceptance of payments spea#s loudly of the insurerKs intention to honor the policies it issued to petitioner Certainly, basic principles of eJuity and fairness would not allow the insurer to continue collecting and accepting the premiums, although paid on installments, and later deny liability on the lame e%cuse that the premiums were not prepared in full >e therefore sustain the Court of Appeals >e Juote with approval the wellOreasoned -ndings and conclusion of the appellate court contained in its Fesolution denying the motion to reconsider its 7ecision T >hile the import of ection is that prepayment of premiums is strictly reJuired as a condition to the validity of the contract, >e are not prepared to rule that the reJuest to ma#e installment payments duly approved by the insurer, would prevent the entire contract of insurance from going into e9ect despite payment and acceptance of the initial premium or -rst installment ection 4 of the Insurance Code in e9ect allows waiver by the insurer of the condition of prepayment by ma#ing an ac#nowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to ma#e the policy binding despite the fact that premium is actually unpaid ection merely precludes the parties from stipulating that the policy is valid even if premiums are not paid, but does not e%pressly prohibit an agreement granting credit e%tension, and such an agreement is not contrary to morals, good customs, public order or public policy G7e )eon, the Insurance Code, at p .5H o is an understanding to allow insured to pay premiums in installments not so proscribed At the very least, both parties should be deemed in estoppel to Juestion the arrangement they have voluntarily accepted &he reliance by petitioner on Arce vs Capital urety and Insurance Co is unavailing because the facts therein are substantially di9erent from those in the case at bar In Arce, no payment was made by the insured at all despite the grace period given In the case before @s, petitioner paid the initial installment and thereafter made staggered payments resulting in full payment of the . 342 and .34/ insurance policies Dor the .34= policy, petitioner paid two G2H installments although it refused to pay the balance It appearing from the peculiar circumstances that the parties actually intended to ma#e three G/H insurance contracts valid, e9ective and binding, &uscany may not be allowed to renege on its obligation to pay the balance of the premium after the e%piration of the whole term of the third policy Go A!OCPPO32.0<5.H in March .345 Moreover, as correctly observed by the appellate court, where the ris# is entire and the contract is indivisible, the insured is not entitled to a refund of the premiums paid if the insurer was e%posed to the ris# insured for any period, however brief or momentary 5.H outh ea urety and Insurance Co v Court of Appeals, 2== CFA == Dacts( It appears that on .< 1anuary .34=, plainti9 UQalenuela !ardwood and Industrial upply, IncV entered into an agreement with the defendant even Brothers whereby the latter undertoo# to load on board its vessel MQ even Ambassador the formerKs lauan round logs numbering 3=0 at the port of Maconacon, Isabela for shipment to Manila
;n 20 1anuary .34=, Qalenuela insured the logs, against loss andor, damage with defendant outh ea urety and Insurance Co, Inc for P2,000,00000 and the latter issued its Marine Cargo Insurance Policy o 4=2=223 for P2,000,00000 on said date ;n 2= 1anuary .34=, the Qalenuela !ardwood gave the chec# in payment of the premium on the insurance policy to Mr Qictorio Chua ;n 25 1anuary .34=, MQ even Ambassador san# that resulted in the loss of Qalenuela !ardwood's insured logs ;n /0 1anuary .34=, a chec# for P5,<2500 G?%h 6?6H to cover payment of the premium and documentary stamps due on the policy was tendered to the insurer but was not accepted Instead, the outh ea urety and Insurance Co, Inc cancelled the insurance policy it issued as of the date of inception for nonOpayment of the premium due in accordance with ection of the Insurance Code ;n 2 Debruary .34=, Qalenuela !ardwood demanded from defendant outh ea urety and Insurance Co, Inc the payment of the proceeds of the policy but the latter denied liability under the policy Qalenuela li#ewise -led a formal claim with defendant even Brothers hipping Corporation for the value of the lost logs but the latter denied the claim &he F&C ruled in favor of Qalenuela !ardwood &he CA a$rmed but only as against the insurance corporation Gouthsea uretyH It absolved the shipping entity because of the stipulation in the charter party that the ship owner Geven BrothersH would be e%empted from liability in case of loss !ence, this petition Issue( >;, outhsea should also be absolved based on nonOpayment of premiums as Qictorio Chua acted not its agent GIn other words, was Qictorio Chua its agent* Because he delivered the chec# for the payment of the premium to outhsea only AD&?F the loss occurredH !eldFatio( outhsea should not be absolved as Chua was its agent ection of the Insurance Code provides( ec An insurer is entitled to payment of the premium as soon as the thing insured is e%posed to the peril insured against otwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, e%cept in the case of a life or an industrial life policy whenever the grace period provision applies @ndoubtedly, the payment of the premium is a condition precedent to, and essential for, the e$caciousness of the contract &he only two statutorily provided e%ceptions are GaH in case the insurance coverage relates to life or industrial life GhealthH insurance when a grace period applies and GbH when the insurer ma#es a written ac#nowledgment of the receipt of premium, this ac#nowledgment being declared by law to be then conclusive evidence of the premium payment Gecs O4, Insurance CodeH &he appellate court, contrary to what the petition suggests, did not ma#e any pronouncement to the contrary Indeed, it has said( Concerning the issue as to whether there is a valid contract of insurance between plainti9Oappellee and defendantOappellant outh ea urety and Insurance Co, Inc, ection of the Insurance Code e%plicitly provides that notwithstanding any agreement to the contrary, no policy issued by an insurance company is valid and binding unless and until premium thereof has been paid It is therefore important to determine whether at the time of the loss, the premium was already paid o attempt becloud the issues can disguise the fact that the sole Juestion raised in the instant petition is really evidentiary in nature, ie, whether or not Qictorio Chua, in receiving the chec# for the insurance premium prior to the occurrence of the ris# insured against has so acted as an agent of petitioner &he appellate court, li#e the trial court, has found in the a$rmative aid the appellate court( In the instant case, the Marine Cargo Insurance Policy o 4=2=223 was issued by defendant insurance company on 20 1anuary .34= At the time the vessel san# on 25 1anuary .34= resulting in the loss of the insured logs, the insured had already delivered to Qictorio Chua the chec# in payment of premium But, as Qictorio Chua testi-ed, it was only in the morning of /0 1anuary .34= or 5 days after the vessel san# when his messenger tendered the chec# to defendant outh ea urety and Insurance Co, Inc G&, pp /O2, .
and an agent for less than ten years of the Columbia Insurance Bro#ers, )td !e is paid a salary as a administrative assistant and a commission as agent based on the premiums he turns over to the bro#er outhsea therefore argues that Mr Chua, having received the insurance premiums as an agent of the Columbia Insurance Bro#er, acted as an agent of the insured under ection /0. of the Insurance Code which provides as follo ws( ec /0. Any person who for any compensation, commission or other thing of value, acts, or aids in soliciting, negotiating or procuring the ma#ing of any insurance contract or in placing ris# or ta#ing out insurance, on behalf of an insured other than himself, shall be an insurance bro#er within the intent of this Code, and shall thereby become liable to all the duties reJuirements, liabilities and penalties to which an insurance bro#er is sub8ect Qalenuela !ardwood, upon the other hand, claim that the second paragraph of ection /0< of the Insurance Code provide as follows( ec /0< Any insurance company which delivers to an insurance agent or insurance bro#er a policy or contract of insurance shall be deemed to have authoried such agent or bro#er to receive on its behalf payment of any premium which is due on such policy of contract of insurance at the time of its issuance or delivery or which becomes due thereon ;n crossOe%amination in behalf of outh ea urety and Insurance Co, Inc Mr Chua testi-ed that the marine cargo insurance policy for the plainti9Ks logs was delivered to him on 2. 1anuary .34= at his o$ce to be delivered to the plainti9 >hen the appellant outh ea urety and Insurance Co, Inc delivered to Mr Chua the marine cargo insurance policy for the plainti9s logs, he is deemed to have been authoried by the outh ea urety and Insurance Co, Inc to receive the premium which is due on its behalf >hen therefore the insured logs were lost, the insured had already paid the premium to an agent of the outh ea urety and Insurance Co, Inc, which is conseJuently liable to pay the insurance proceeds under the policy it issued to the insured 52H P &IBA+ v C;@F& ;D APP?A) and D;F&@? )ID? A7 E??FA) I@FAC? C;, IC O Abril Dacts( 1an 22 .34, D;F&@? issued a Dire Insurance Policy in favor of ps &ibay on their 2Ostorey residential bldg located in Ma#ati city, together with all their personal e9ects therein &he insurance was for P<00,000 covering the period from1an 2/ .34 to 1an 2/ .344 ;n 1an 2/ .34, of the total premium of P234/50, Qioleta &ibay only paid P<00 thus leaving a considerable balance unpaid Mar 4 .34, the insured bldg was completely destroyed by -re 2 days later Gmar .0 .34H Qioleta oaid the balance of the premium ;n the same day, she -led with Dortune a claim on the -re insurance policy &he claim was referred to EAI which immediately wrote Qioleta reJuesting her to furnish it with the necessary documents for the investigation and processing of her claim Complied, she signed Gmar 24 .34H a nonOwaiver agreement with EAI to the e9ect that any action ta#en by the companies or their representatives in investigating the claim made by the claimant or his loss hich occurred at !"!! #obel $o%as, &akati on &arch ", '("), or in the investigating or ascertainment o the amount o actual cash value and loss, shall not aive or invalidate any condition o the policies o such companies held by said claimant, nor the rights o either or any o the parties to this agreement, and such action shall not be, or be claimed to be, an admission o liability on the part o said companies or any o them. Dortune denied the claim for violation of Policy condition no 2 and sec of the Insurance Code ?9orts to settle the case before the Commission proved futile Mar / .344, Qioleta and the other petitioners sued Dortune in the amount of P<00,000 plus .2X interest per annum, P.00,000 moral damages, and atty's fees eJuivalent to 20X of the total claim &C ad8udged Dortune liable for the total value of the insured bldg and personal properties GP<00,000H CA reversed the decision declaring Dortune not liable to the sps But to return to the sps the premium plus .2X interest from Mar .0 .34 until full payment Issue( >hether or not Dortune remains liable under the -re insurance policy despite the spouses' failure to pay their premium in full Fuling( o Insurance is a contract whereby one underta#es for a consideration to indemnify another against loss, damage or liability arising from an un#nown or contingent event &he consideration is the premium, which must be paid at the time and in the way and manner speci-ed in the policy, and if not so paid, the policy will lapse and be forfeited by its own terms &he pertinent provisions in the Policy on premium read( &!I P;)IC+ ;D I@FAC? >I&??&!, &!A& only ater payment to the *ompany in accordance
ith Policy *ondition +o. o the total premiums by the insured as stipulated above for the period aforementioned for insuring against )oss or 7amage by Dire or )ightning as herein appears, the Property herein described %%% 2 &his policy including any renewal thereof andor any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein Any supplementary agreement see#ing to amend this condition prepared by agent, bro#er or Company o$cial, shall be deemed invalid and o no eect. %%% ?%cept only in those speci-c cases where corresponding rules and regulations which are or may hereafter be in force provide for the payment of the stipulated premiums in periodic installments at -%ed percentage, it is hereby declared, agreed and warranted that this policy shall be deemed eective, valid and binding upon the *ompany only hen the premiums thereor have actually been paid in ull and duly acknoledged in a receipt signed by any authoried o$cial or representativeagent of the Company in such manner as provided herein, GItalics suppliedH Clearly the Policy provides for payment of premium in full Accordingly, where the premium has only been partially paid and the balance paid only after the peril insured against has occurred, the insurance contract did not ta#e e9ect and the insured cannot collect at all on the policy &his is fully supported by ec of the Insurance Code which provides ?C An insurer is entitled to payment of the premium as soon as the thing insured is e%posed to the peril insured against +otithstanding any agreement to the contrary, no policy or contract o insurance issued by an insurance company is valid and binding unless and until the premium thereo has been paid, e%cept in the case of a life or an industrial life policy whenever the grace period provision applies GItalics suppliedH Apparently the cru% of the controversy lies in the phrase unless and until the premium thereo has &his leads us to the manner of payment envisioned by the law to ma#e the insurance been paid. policy operative and binding Dor whatever 8udicial construction may be accorded the disputed phrase must ultimately yield to the clear mandate of the law &he principle that where the law does not distinguish the court should neither distinguish assumes that the legislature made no Juali-cation on the use of a general word or e%pression In scosura v. /an &iguel 0reery, inc.,V the Court through Mr 1ustice 1esus E Barrera, interpreting the phrase with pay used in connection with leaves of absence with pay granted to employees, ruled O % % % the legislative practice seems to be that when the intention is to distinguish between full and partial payment, the modifying term is used % % % Citing C A o <= governing maternity leaves of married women in government, F A o <3 regulating employment of women and children, FA o 4=/ granting vacation and sic# leaves to 8udges of municipal courts and 8ustices of the peace, and -nally, Art .<35 of the ew Civil Code providing that every househelp shall be allowed four G=H days vacation each month, which laws simply stated with pay, the Court concluded that it was undisputed that in all these laws the phrase with pay used without any Jualifying ad8ective meant that the employee was entitled to full compensation during his leave of absence Petitioners maintain otherwise Insisting that D;F&@? is liable on the policy despite partial payment of the premium due and the e%press stipulation thereof to the contrary, petitioners rely heavily on the .3< case of Philippine Phoeni% and 1nsurance *o., 1nc. v. 2oodorks, 1nc. where the Court through Mr 1ustice Arsenio P 7ion sustained the ruling of the trial court that partial payment of the premium made the policy e9ective during the whole period of the policy In that case, the insurance company commenced action against the insured for the unpaid balance on a -re insurance policy In its defense the insured claimed that nonpayment of premium produced the cancellation of the insurance contract Fuling otherwise the Court held It is clear % % % that on April ., .3<0, Dire Insurance Policy o 3<52 was issued by appellee and delivered to appellant, and that on eptember 22 of the same year, the latter paid to the former the sum of P/,00000 on account of the total premium of P<,05.35 due thereon &here is, conseJuently, no doubt at all that, as between the insurer and the insured, there was not only a perfected contract of insurance but a partially performed one as far as the payment of the agreed premium was concerned &hereafter the obligation of the insurer to pay the insured the amount, for which the policy was issued in case the conditions therefor had been complied with, arose and became binding upon it, while the obligation of the insured to pay the remainder of the total amount of the premium due became demandable &he .3< Phoeni% case is not persuasive" neither is it decisive of the instant dispute Dor one, the factual scenario is di9erent In Phoeni% it was the insurance company that sued for the balance of the premium, ie, it recognied and admitted the e%istence of an insurance contract with the insured In the case before us, there is, Juite unli#e in Phoeni%, a speci-c stipulation that 3t4his policy %%% is not in orce until the premium has been ully paid and duly receipted by the *ompany % % % Fesultantly, it is correct to say that in Phoeni% a contract was perfected upon partial payment of the
premium since the parties had not otherwise stipulated that prepayment of the premium in full was a condition precedent to the e%istence of a contract In Phoeni%, by accepting the initial payment of P/,00000 and then later demanding the remainder of the premium without any other precondition to its enforceability as in the instant case, the insurer in e9ect had shown its intention to continue with the e%isting contract of insurance, as in fact it was enforcing its right to collect premium, or e%act speci-c performance from the insured &his is not so here By e%press agreement of the parties, no vinculum juris or bond of law was to be established until full payment was e9ected prior to the occurrence of the ris# insured against In &akati 5uscany *ondominium *orp. v. *ourt o Appeals the parties mutually agreed that the premiums could be paid in installments, which in fact they did for three G/H years, hence, this Court refused to invalidate the insurance policy In giving e9ect to the policy, the Court Juoted with approval the Court of Appeals &he obligation to pay premiums when due is ordinarily an indivisible obligation to pay the entire premium !ere, the parties % % % agreed to ma#e the premiums payable in installments, and there is no pretense that the parties never envisioned to ma#e the insurance contract binding between them It was renewed for two succeeding years, the second and third policies being a renewalreplacement for the previous one And the insured never informed the insurer that it was terminating the policy because the terms were unacceptable >hile it maybe true that under ection of the Insurance Code, the parties may not agree to ma#e the insurance contract valid and binding without payment of premiums, there is nothing in said section which suggests that the parties may not agree to allow payment of the premiums in installment, or to consider the contract as valid and binding upon payment of the -rst premium ;therwise we would allow the insurer to renege on its liability under the contract, had a loss incurred GsicH before completion of payment of the entire premium, despite its voluntary acceptance of partial payments, a result eschewed by basic considerations of fairness and eJuity % % % &hese two G2H cases, Phoeni% and 5uscany, adeJuately demonstrate the waiver, either e%press or implied, of prepayment in full by the insurer( impliedly, by suing for the balance of the premium as inPhoeni%, and e%pressly, by agreeing to ma#e premiums payable in installments as in 5uscany. But contrary to the stance ta#en by petitioners, there is no waiver e%press or implied in the case at bench Precisely, the insurer and the insured e%pressly stipulated that 3t4his policy including any reneal thereo and6or any indorsement thereon is not in orce until the premium has been ully paid to and duly receipted by the *ompany % % % and that this policy shall be deemed eective, valid and binding upon the *ompany only hen the premiums thereor have actually been paid in ull and duly acknoledged. Conformably with the aforesaid stipulations e%plicitly worded and ta#en in con8unction with ec of the Insurance Code the payment of partial premium by the assured in this particular instance should not be considered the payment reJuired by the law and the stipulation of the parties Father, it must be ta#en in the concept of a deposit to be held in trust by the insurer until such time that the full amount has been tendered and duly receipted for In other words, as e%pressly agreed upon in the contract, full payment must be made before the ris# occurs for the policy to be considered e9ective and in force &hus, no vinculum juris whereby the insurer bound itself to indemnify the assured according to law ever resulted from the fractional payment of premium &he insurance contract itself e%pressly provided that the policy would be e9ective only when the premium was paid in full It would have been altogether di9erent were it not so stipulated ?rgo, petitioners had absolute freedom of choice whether or not to be insured by D;F&@? under the terms of its policy and they freely opted to adhere thereto Indeed, and far more importantly, the cardinal polestar in the construction of an insurance contract is the intention of the parties as e%pressed in the policy Courts have no other function but to enforce the same &he rule that contracts of insurance will be construed in favor of the insured and most strongly against the insurer should not be permitted to have the e9ect of ma#ing a plain agreement ambiguous and then construe it in favor of the insured Qerily, it is elemental law that the payment of premium is reJuisite to #eep the policy of insurance in force If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ine9ective Partial payment even when accepted as a partial payment will not #eep the policy alive even for such fractional part of the year as the part payment bears to the whole payment Interpreting the contract of insurance stringently against the insurer but liberally in favor of the insured despite clearly de-ned obligations of the parties to the policy can be carried out to e%tremes that there is the danger that we may, so to spea#, #ill the goose that lays the golden egg >e are well aware of insurance companies falling into the despicable habit of collecting premiums promptly yet resorting to all #inds of e%cuses to deny or delay payment of 8ust insurance claims But, in this case, the law is manifestly on the side of the insurer Dor as long as the current 1nsurance *ode remains unchanged and partial payment of premiums is not mentioned at all as among the e%ceptions provided in ecs and 4, no policy of insurance can ever pretend to be e$cacious or
e9ective until premium has been fully paid And so it must be Dor it cannot be disputed that premium is the eli%ir vitae of the insurance business because by law the insurer must maintain a legal reserve fund to meet its contingent obligations to the public, hence, the imperative need for its prompt payment and full satisfaction It must be emphasied here that all actuarial calculations and various tabulations of probabilities of losses under the ris#s insured against are based on the sound hypothesis of prompt payment of premiums @pon this bedroc# insurance -rms are enabled to o9er the assurance of security to the public at favorable rates But once payment of premium is left to the whim and caprice of the insured, as when the courts tolerate the payment of a mere P<0000 as partial underta#ing out of the stipulated total premium of P2,34/50 and the balance to be paid even after the ris# insured against has occurred, as petitioners have done in this case, on the principle that the strength of the vinculum juris is not measured by any speci-c amount of premium payment, we will surely wrea# havoc on the business and set to naught what has ta#en actuarians centuries to devise to arrive at a fair and eJuitable distribution of ris#s and bene-ts between the insurer and the insured &he terms of the insurance policy constitute the measure of the insurers liability In the absence of statutory prohibition to the contrary, insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent with public policy &he validity of these limitations is by law passed upon by the Insurance Commissioner who is empowered to approve all forms of policies, certi-cates or contracts of insurance which insurers intend to issue or deliver &hat the policy contract in the case at bench was approved and allowed issuance simply rea$rms the validity of such policy, particularly the provision in Juestion 5/H PA@)I v I@)AF &ried my best to loo# for this case, but unfortunately, cannot be found in the net as well as in C7 Asia 5=H @CPB E??FA) I@FAC? C; v MAAEAA &?)?MAF& G.333H Dacts( Apr .5 .33., @CPB issued 5 insurance policies covering Masagana's various properties against -re, for the period from May 22 .33. to May 22 .332 March .332, @CPB evaluated the policies and decided not to renew them upon e%piration of their terms on May 22 .332 @CPB advised Masagana's bro#er, Luellig of its intention not to renew the policies Apr < .332 @CPB gave written notice to Masagana of the nonOrenewal of the policies at the address stated in the policies 1un ./ .332, -re raed Masagana's property covered by / of the insurance policies @CPB issued 1ul ./ .332, Masagana presented to @CPB's cashier 5 manager's chec#s in the total amount of P225,5/35, representing premium for the renewal of the policies from May 22 .332 to May 22 .33/ o notice of loss was -led by Masagana under the policies prior to 1ul .= .332 1ul .= .332, Masagana -led with @CPB its formal claim for indemni-cation of the insured property ;n the same day, @CPB retuned to Masagana the 5 chec#s that it tendered, and re8ected its claim for the reasons GaH that the policies had e%pired and were not renewed, and GbH that the -re occurred on 1un ./ .332, before Masagana's tender of premium payment 1ul 2. .332, Masagana -led with F&C against @CPB for recover of P.4,<=5,000, representing the face value of the policies, ;ct 2/ .332, motion to dismiss denied, -led an answer alleging that the complaint fails to state a cause of action" that @CPB was not liabel to Masagana for insurance proceeds under the policies because at the time of the loss of the property due to -re, the policies had long e%pired and were not renewed F&C( ruled in favor of Masagana, allowing it to consign with the court full payment of the corresponding premiums, declaring Masagana to have fully complied with its obligation to pay the premium thereby rendering the replacementOrenewal policy, and ordering @CPB to pay the sums of P.4,<=5,000, 25X of the total amount due as and for attys fees, and P25,000 for litigation e%penses and the costs of suit CA( a$rmed the decision of the F&C, held that Masagana was allowed a <0 to 30 day credit term for the renewal of its policies, and that the acceptance of the late premium payment suggested an understanding that payment could be made later Issue( >hether or not the -re insurance policies had e%pired on the May 22 .332 or had been e%tended or renewed by an implied credit arrangement through actual payment of premium was tendered on a later date after the o ccurrence of the -re insured against Fuling( &hey e%pired and were not e%tended &he answer is easily found in the Insurance Code o, an insurance policy, other than life, issued originally or on renewal, is not valid and binding until actual payment of the premium Any
agreement to the contrary is void &he parties may not agree e%pressly or impliedly on the e%tension of credit or time to pay the premium and consider the policy binding before actual payment &he case of Malayan Insurance Co, Inc vs CruOArnaldo ciited by the Court of Appeals, is not applicable In that case, payment of the premium was in fact actually made on 7ecember 2=, .34., and the -re occurred on 1anuary .4, .342 !ere, the payment of the premium for renewal of the policies was tendered on 1uly ./, .332, a month after the -re occurred on 1une ./, .332 &he assured did not even give the insurer a notice of loss within a reasonable time after occurrence of the -re
55H @CPB E??FA) I@FAC? C; v MAAEAA &?)?MAF& G200.H Dacts( &he C in its 1ue .5 .333 decisions reversed and set aside the assailed decision of the CA which a$rmed with modi-cation the 8udgment of the F&C GaH allowing Masagana to consign the sum of P225,/535 as full payment of the premiums for the renewal of the 5 insurance policies on its properties" GbH declaring the replacementOrenewal policies e9ective and binding from May 22 .332 until May 22 .33/" and GcH ordering @CPB to pay Masagana indemnity for the said properties ;perative facts( All -ve G5H policies re:ect on their face the e9ectivity term( 6from =(00 PM of 22 May .33. to =(00 PM of 22 May .3326 ;n 1une ./, .332, plainti9Ks properties located at 2=.0O2=/2 and 2==2O2=50 &aft Avenue, Pasay City were raed by -re ;n 1uly ./, .332, plainti9 tendered, and defendant accepted, -ve G5H ?Juitable Ban# ManagerKs Chec#s in the total amount of P225,5/=5 as renewal premium payments for which ;$cial Feceipt 7irect Premium o <232< G?%hibit 6R6, Fecord, p .3.H was issued by defendant ;n 1uly .=, .332, Masagana made its formal demand for indemni-cation for the burned insured properties ;n the same day, defendant returned the -ve G5H managerKs chec#s stating in its letter G?%hibit 6F6646, Fecord, p .32H that it was re8ecting MasaganaKs claim on the following grounds( 6aH aid policies e%pired last May 22, . 332 and were not renewed for another term" bH 7efendant had put plainti9 and its alleged bro#er on notice of nonOrenewal earlier" and cH &he properties covered by the said policies were burned in a -re that too# place last 1une ./, .332, or before tender of premium payment6 &he Court of Appeals disagreed with Petitioners stand that Fespondents tender of payment of the premiums on ./ 1uly .332 did not result in the renewal of the policies, having been made beyond the e9ective date of renewal as provided under Policy Condition o 2<, which states( 2< $eneal *lause OO @nless the company at least forty -ve days in advance of the end of the policy period mails or delivers to the assured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverages, the assured shall be entitled to renew the policy upon payment of the premium due on the e9ective date of renewal Both the Court of Appeals and the trial court found that su$cient proof e%ists that Masagana, which had procured insurance coverage from @CPB for a number of years, had been granted a <0 to 30O day credit term for the renewal of the policies uch a practice had e%isted up to the time the claims were -led In the C's .333 7ecision it de-ned the main issue whether the -re insurance policies issued by @CPB to Masagana covering the period had been e%tended or renewed by an implied credit arrangement thru actual payment of premium was tendered on a later date and after the occurrence of the -re insured against &he C ruled in the negative, and accordingly set aside and reversed the decision of the CA Masagana -led a MF( that the C made in the decision it own -ndings of facts, which are not in accord with those of the &C and the CA &he courts below correctly found that no notice of nonO renewal was made within =5 days before May 22 .332, or before the e%piration date of the -re insurance policies &hus, the same were renewed by operation of law thus were e9ective and valid on 1un /0 .332 when the -re occurred Masagana also disagrees that parties may neither agree e%pressly or impliedly on the e%tension of credit or time to pay the premium nor consider a policy binding before actual payment" that despite the e%press provision of sec of the IC, e%tension of credit terms in premium payment has been the prevalent practice in the insurance industry" that e%tension of credit terms is not a prohibitive in8unction but merely designed for the protection of parties to an insurance contract @CPB' opposition( both the &C and CA overloo#ed the fact that on Apr < .332 @CPB sent by ordinary mail to Masagana a notice of nonOrenewal and sent by personal delivery a copy thereof to Masagana's bro#er, Luellig" that the courts ignored the fact that Masagana was fully aware of the notice of nonOrenewal" that a reading of ection << of the Insurance Code readily shows that in order for an insured to be entitled to a renewal of a nonOlife policy, payment of the premium due on the e9ective date of renewal should -rst be made, thus, Masagana's argument that ection is not a prohibitive provision -nds no authoritative support @pon a meticulous review of the records and reevaluation of the issues raised in the motion for reconsideration and the pleadings -led thereafter by the parties, we resolved to grant the motion for reconsideration &he following facts, as found by the trial court and the Court of Appeals, are indeed duly established( . Dor years, Petitioner had been issuing -re policies to the Fespondent, and these policies were annually renewed 2 Petitioner had been granting Fespondent a <0O to 30Oday credit term within which to pay the premiums on the renewed policies / &here was no valid notice of nonOrenewal of the policies in Juestion, as there is no proof at all that the notice sent by ordinary mail was received by Fespondent, and the copy thereof allegedly sent to
Luellig was ever transmitted to Fespondent = &he premiums for the policies in Juestion in the aggregate amount of P225,5/35 were paid by Fespondent within the <0O to 30Oday credit term and were duly accepted and received by Petitioners cashier Issue( >hether or not sec of the Insurance Code of .34 must be strictly applied to @CPB's advantage despite its practice of granting a <0O30 day credit term for the payment of premiums Fuling( ection of the Insurance Code of .34 provides( ?C An insurer is entitled to payment of the premium as soon as the thing insured is e%posed to the peril insured against otwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, e%cept in the case of a life or an industrial life policy whenever the grace period provision applies &his ection is a reproduction of ection of P7 o <.2 G&he Insurance CodeH promulgated on .4 7ecember .3= In turn, this ection has its source in ection 2 of Act o 2=2 otherwise #nown as the Insurance Act as amended by FA o /5=0, approved on 2. 1une .3e said therein, thus( >e hold that the sub8ect policies are valid even if the premiums were paid on installments &he records clearly show that the petitioners and private respondent intended sub8ect insurance policies to be binding and e9ective notwithstanding the staggered payment of the premiums &he initial insurance contract entered into in .342 was renewed in .34/, then in .34= In those three years, the insurer accepted all the installment payments uch acceptance of payments spea#s loudly of the insurers intention to honor the policies it issued to petitioner Certainly, basic principles of eJuity and fairness would not allow the insurer to continue collecting and accepting the premiums, although paid on installments, and later deny liability on the lame e%cuse that the premiums were not prepaid in full By the approval of the aforeJuoted -ndings and conclusion of the Court of Appeals, 5uscany has provided a fourth e%ception to ection , namely, that the insurer may grant credit e%tension for the payment of the premium &his simply means that if the insurer has granted the insured a credit term for the payment of the premium and loss occurs before the e%piration of the term, recovery on the policy should be allowed even though the premium is paid after the loss but within the credit term Moreover, there is nothing in ection which prohibits the parties in an insurance contract to provide a credit term within which to pay the premiums &hat agreement is not against the law, morals, good customs, public order or public policy &he agreement binds the parties Article ./0< of the Civil Code provides( AF& ./0< &he contracting parties may establish such stipulations clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy Dinally in the instant case, it would be un8ust and ineJuitable if recovery on the policy would not be permitted against @CPB, which had consistently granted a <0O to 30Oday credit term for the payment of premiums despite its full awareness of ection ?stoppel bars it from ta#ing refuge under said ection, since Fespondent relied in good faith on such practice ?stoppel then is the -fth e%ception to ection
5hether or not there was a valid payment of premium, considering that Chua's chec# was cashed after the -re >hether or not Chua violated the policy by his submission of fraudulent documents and nonO disclosure of other insurance contracts Fuling( +es &he renewal certi-cate issued to respondent contained the ac#nowledgment that premium had been paid It is not disputed that the chec# drawn by respondent in favor of petitioner and delivered to its agent was honored when presented and petitioner forthwith issued its o$cial receipt to respondent on .0 April .330 ection /0< of the Insurance Code provides that any insurance company which delivers a policy or contract of insurance to an insurance agent or insurance bro#er shall be deemed to have authoried such agent or bro#er to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon In the instant case, the best evidence of such authority is the fact that petitioner accepted the chec# and issued the o$cial receipt for the payment It is, as well, bound by its agent's ac#nowledgment of receipt of payment In the instant case, the best evidence of such authority is the fact that petitioner accepted the chec# and issued the o$cial receipt for the payment It is, as well, bound by its agent's ac#nowledgment of receipt of payment ection 4 of the Insurance Code e%plicitly provides( An ac#nowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of its payment, so far as to ma#e the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid o ubmission of the alleged fraudulent documents pertained to respondent's income ta% returns for .34 to .343 Fespondent, however, presented a BIF certi-cation that he had paid the proper ta%es for the said years ince this is a Juestion of fact, the -nding is conclusive ;rdinarily, where the insurance policy speci-es as a condition the disclosure of e%isting coOinsurers,
nonOdisclosure is a violation that entitles the insurer to avoid the policy &he purpose for the inclusion of this clause is to prevent an increase in the moral haard &he relevant provision is ection 5, which provides that( A policy may declare that a violation of speci-ed provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy Fespondent acJuired several coOinsurers and he failed to disclose this information to petitioner onetheless, petitioner is estopped from invo#ing this argument due to the loss ad8uster's admission of previous #nowledge of the coOinsurers It cannot be said that petitioner was deceived by respondent by the latter's nonOdisclosure of the other insurance contracts when petitioner actually had prior #nowledge thereof &he loss ad8uster, being an employee of petitioner, is deemed a representative of the latter whose awareness of the other insurance contracts binds petitioner 7. 8ouble 1nsurance - *ebrecus 5H PI;??F I@FAC? A7 @F?&+ C;FP;FA&I; Q ;)IQA +AP, EF ; )O/<2/2 Dacts( Fespondent ;liva +ap was the owner of a store in a 2 storey building where she sold shopping bags and footwear Chua oon Poon, ;liva +ap's sonOinOlaw, was in charge of the store Fespondent +ap too# out a -re insurance policy from petitioner Pioneer insurance and surety corporation Among the conditions in the policy e%ecuted by the parties are the following( &he Insured shall give notice to the Company of any insurance or insurances already e9ected, or which may subseJuently be e9ected, covering any of the property hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated in, or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all bene-ts under this Policy shall be forfeited Gemphasis suppliedH It is understood that, e%cept as may be stated on the face of this policy there is no other insurance on the property hereby covered and no other insurance is allowed e%cept by the consent of the Company endorsed hereon Any false declaration or breach or this condition will render this policy null and void At the time of the insurance, an insurance policy issued by the Ereat American Insurance Company covering the same properties was noted on said policy as coOinsurance )ater, the parties e%ecuted an endorsement on the policy, stating( It is hereby declared and agreed that the coOinsurance e%isting at present under this policy is as follows( P20,00000 T orthwest Ins, and not as originally stated Gemphasis suppliedH ?%cept as varied by this endorsement, all other terms and conditions remain unchanged till later, ;liva +ap too# out another -re insurance policy covering the same properties, this time from Dederal Insurance Company, which new policy was, however, procured without notice to and the written consent of petitioner Pioneer Insurance Y urety Corporation and therefore, was not noted as a coOinsurance on the policy )ater, a -re bro#e out in the building housing +ap's store and the said store was burned Fespondent +ap -led an insurance claim but the same was denied on the ground of breach andor violation of any andor terms and conditions of the policy ;liva +ap -led the present complaint Issue( >; petitioner should be absolved from liability on -re insurance policy on account of any violation by respondent +ap of the coOinsurance clause T +es !eld( &here was a violation by respondent ;liva +ap of the coOinsurance clause contained in Policy o =2.3 that resulted in the avoidance of petitionerKs liability &he insurance policy for P20,00000 issued by the Ereat American Insurance Company covering the same properties of respondent +ap and duly noted on Policy o =2.3 as cOinsurance, ceased, by agreement of the parties G?%hibit 6.O )6H, to be recognied by them as a coOinsurance policy &he Court of Appeals says that the Ereat American Insurance policy was substituted by the Dederal Insurance policy for the same amount, and because it was a mere case of substitution, there was no necessity for its endorsement on Policy o =2.3 &his -nding, as well as reasoning, su9ers from several :aws &here is no evidence to establish and prove such a substitution If anything was substituted for the Ereat American Insurance policy, it could only be the orthwest Insurance policy for the same amount of P20,00000 &he endorsement G?%hibit 6.OS6H Juoted above shows the clear intention of the parties to recognie on the date the endorsement was made GAugust 23, .3<2H, the e%istence of only one coOinsurance, and that is the orthwest Insurance policy, which according to the stipulation of the parties during the hearing, was issued on August 20, .3<2 Gtsn, 1anuary .2, .3<5, pp /O=H and endorsed only on August 20, .3<2 &he -nding of the Court of Appeals that the Ereat American Insurance policy was substituted by the Dederal Insurance policy is unsubstantiated by the evidence of record and indeed contrary to said stipulation and admission of respondent, and is grounded entirely on speculation, surmises or con8ectures, hence, not binding on the upreme Court &he Court of Appeals would consider petitioner to have waived the formal reJuirement of endorsing
the policy of coOinsurance 6since there was absolutely no showing that it was not aware of said substitution and preferred to continue the policy6 &he fallacy of this argument is that, contrary to ection ., Fule ./. of the Fevised Fules of Court, which reJuires each party to prove his own allegations, it would shift to petitioner, respondentKs burden of proving her proposition that petitioner was aware of the alleged substitution, and with such #nowledge preferred to continue the policy Fespondent +ap cites 9on:ales ;a < vs. =ek 5ong ;in >ire and &arine 1nsurance *o., ;td to 8ustify the assumption but in that case, unli#e here, there was #nowledge by the insurer of violations of the contract, to wit( 6If, with the #nowledge of the e%istence of other insurances which the defendant deemed violations of the contract, it has preferred to continue the policy, its action amounts to a waiver of the annulment of the contract 6 A waiver must be e%press If it is to be implied from conduct mainly, said conduct must be clearly indicative of a clear intent to waive such right ?specially in the case at bar where petitioner is assumed to have waived a valuable right, nothing less than a clear, positive waiver, made with full #nowledge of the circumstances, must be reJuired By the plain terms of the policy, other insurance without the consent of petitioner would ipso acto avoid the contract It reJuired no a$rmative act of election on the part of the company to ma#e operative the clause avoiding the contract, wherever the speci-ed conditions should occur Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance &he validity of a clause in a -re insurance policy to the e9ect that the procurement of additional insurance without the consent of the insurer renders ipso acto the policy void is wellOsettled( In Milwau#ee MechanidsK )umber Co, vs Eibson, .33 Ar# 5=2, ./= > 2d 52., 522, a substantially identical clause was sustained and enforced, the court saying( 6&he rule in this state and practically all of the states is to the e9ect that a clause in a policy to the e9ect that the procurement of additional insurance without the consent of the insurer renders the policy void is a valid provision &he earlier cases of Planters Mutual Insurance Co, vs Ereen, 2 Ar# /05, 40 > 32, are to the same e9ect6 And see Qance, Insurance, 2nd ?d, 25 GFeach vs Ar#ansas Darmers Mut Dire Ins Co, UAr# ov .=, .3=3V 22= > 2d =4, =3H &he annotation then, must be deemed to be a warranty that the property was not insured by any other policy Qiolation thereof entitled the insurer to rescind Gec <3, Insurance ActH uch misrepresentation is fatal in the light of our views in anta Ana vs Commercial @nion Assurance Company, )td, 55 Phil /23 &he materiality of nonOdisclosure of other insurance policies is not open to doubt Durthermore, even if the annotations were overloo#ed the defendant insurer would still be free from liability because there is no Juestion that the policy issued by Eeneral Indemnity has not been stated in nor endorsed on Policy o =. of defendant And as stipulated in the aboveOJuoted provisions of such policy 6all bene-t under this policy shall be forfeited G?mphasis suppliedH &he obvious purpose of the aforesaid reJuirement in the policy is to prevent overOinsurance and thus avert the perpetration of fraud &he public, as well as the insurer, is interested in preventing the situation in which a -re would be pro-table to the insured According to 1ustice tory( 6&he insured has no right to complain, for he assents to comply with all the stipulation on his side, in order to entitle himself to the bene-t of the contract, which, upon reason or principle, he has no right to as# the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulation would not have been entered into6 In view of the above conclusion, >e deem it unnecessary to consider the other defenses interposed by petitioner 54H @I; MA@DAC&@FIE C;, IC A7 &!? F?P@B)IC BAS Q P!I)IPPI? E@AFA&+ C;, IC, EF ; )O23/2, ;C&;B?F /0, .32 Dacts( ;n 1anuary .2, .3<2, @nion Manufacturing obtained certain loans, overdrafts and other credit accommodations from Fepublic ban# and to secure payment thereof, said @nion Manufacturing e%ecuted a real and chattel mortgages on certain properties, which are more particularly described and listed at the bac# of the mortgage contract &hat as additional condition of the mortgage contract, @nion Manufacturing undertoo# to secure insurance coverage over the mortgaged properties @nion manufacturing failed to secure insurance coverage on the mortgaged properties despite the fact that Cua &o#, its general manager, was reminded of said reJuirement, Fepublic Ban# procured from Philippine Euaranty an insurance coverage on loss against -re over the properties of @nion Manufacturing as described in Philippine Euaranty's Cover ote with the annotation that the loss or damage, if any, under said cover note, is payable to republic ban# as its interest may appear, sub8ect however to the printed conditions of said defendant's -re insurance policy form A -re insurance policy was issued in favor of assured, @nion Manufacturing for which a premium was paid by the republic ban# to Phil Euaranty It appears that although said renewal premium was paid by the Fepublic Ban#, such payment was for the account of @nion Manufacturing and that the cash voucher for the payment of the -rst premium was paid also by the Fepublic Ban# but for the account of @nion Manufacturing
A -re occurr occurred ed in the premise premises s of @nion @nion Manuf Manufact acturi uring ng &hey then then -led -led a -re -re claim claim with with the Philippine Euaranty which was denied on the ground that( Policy condition no / andor the \;ther Insurance Clause' of the policy violated because you did not give notice to us the other insurance which you had ta#en from ew India and Manila Insurance with the results that these insurances, of which we became aware of only after the -re, were not endorsed on our policy" and Policy condition no . was not complied complied with because because you have failed failed failed failed to give give to our repr represe esenta ntativ tives es the reJuir reJuired ed docume documents nts and other other proofs proofs with with respe respect ct to your your claim claim and matte matters rs touchin touching g on our liability, if any, and the amount of such liability liability &hat when the defendant Philippine Euaranty issued a -re -re insurance policy to cover the properties of the @nion Manufacturing Co, the same properties were already covered by -re policy of the incere insurance company and ;ceanic Insurance &hat when said Philippine Euaranty's -re insurance policy was already in full force and e9ect, the @nion Manufacturing without the consent of the Philippine Euaranty, obtained another insurance policy over the same property prior to the -re from ew india Assurance, incere Insurance company and Manila Insurance Co Issue( >; Fepublic Ban# can recover from the Philippine Euaranty T o !eld( >hy the appellant appellant Fepublic Fepublic Ban# could not recover, as payee, in case of loss as its 6interest 6interest may may appe appear ar sub8 sub8ec ectt to the the term terms s and and cond condit itio ions ns,, clau clause ses s and and warr warran anti ties es66 of the the poli policy cy was was e%pressed in the appealed decision thus( 6!owever, inasmuch as the @nion Manufacturing Co, Inc has violated the condition of the policy to the e9ect that it did not reveal the e%istence of other insurance policies over the same properties, as reJuired by the warranty appearing on the face of the policy issued by the defendant and that on the other hand said @nion Manufacturing Co, Inc repre represen sented ted that that there there were no other other insura insurance nce polici policies es at the time of the issuance issuance of said said defendantKs policy, and it appearing furthermore that while the policy of the defendant was in full force and e9ect the @nion Manufacturing Co, Inc secured other -re insurance policies without the written consent of the defendant endorsed on the policy, the conclusion is inevitable that both the Fepublic epublic Ban# Ban# and @nion @nion Manuf Manufact acturi uring ng Co, Co, Inc Inc cannot cannot recov recover er from from the same same policy policy of the defendant because the same is null and void6 &he tone of con-dence apparent in the above e%cerpts from the lower court decision is understandable &he conclusion reached by the lower court -nds support in authoritative precedents It is far from easy, therefore, for appellant Fepublic Ban# to impute to such a decision a failure to abide by the law !ence, as noted at the outset, the appeal cannot prosper prosper An a$rmance is indicated It is to /anta Ana v. *ommercial ?nion Assurance *o., a .3/0 decision, that one turns to for the -rst e%plicit formulation as to the controlling principle As was made clear in the opinion of this Court, penned by 1ustice QillaOFeal( 6>ithout deciding whether notice of other insurance upon the same property must be given in writing, or whether a verbal notice is su$cient to render an insurance valid which reJuires reJuires such notice, whether oral or written, written, we hold that in the absolute absence absence of such notice when it is one of the conditions speci-ed in the -re insurance policy, the policy is null and void6 &he ne%t year, in Ang 9iok *hip v. /pringfeld >ire @ &arine 1ns. *o., the conformity of the insured to the terms of the policy, implied from the failure to e%press any disagreement with what is provided for, was stressed in these words of the ponente, 1ustice Malcolm( 6It is admitted that the policy before us was accepted by the plainti9 &he receipt of this policy by the insured without ob8ect ob8ection ion binds binds both both the accep acceptor tor and the insured insured to the terms terms there thereof of &he insur insured ed may not thereafter be heard to say that he did not read the policy or #now its terms, since it is his duty to read read his policy and it will will be assumed assumed that that he did so As far bac# bac# as .3.5, in =oung v. &idland 5e%tile 1nsurance *ompany , it was categorically set forth that as a condition precedent to the right of recovery, there must be compliance on the part of the insured with the terms of the policy policy As stated in the opinion of the Court through 1ustice 1ohnson( 6If the insured has violated or failed to perform the conditions of the contract, and such a violation or want of performance has not been waived by the insurer, then the insured cannot recover Courts are not permitted to ma#e contracts for the partie parties s &he function function and duty of the courts courts consis consistt simply simply in enforc enforcing ing and carryi carrying ng out the contracts actually made >hile it is true, as a general rule, that contracts of insurance are construed most favorably to the insured, yet contracts of insurance, li#e 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 ta#en and understood in their plain, ordinary and popular sense6 More speci-cally, there was a reiteration of this anta Ana ruling in a decision by the then 1ustice, 1ustice, later later Chief 1ustice, 1ustice, Bengon, in 9eneral 1nsurance @ /urety *orp. v. +g ua .2 &hus( 6&he annotation then, must be deemed to be a warranty that the property was not insured by any other other policy policy Qiola Qiolatio tion n there thereof of entitl entitles es the insur insurer er to resci rescind nd Gec Gec <3, Insura Insurance nce ActH ActH uch uch misre misrepr prese esenta ntatio tion n is fatal fatal in the light of our views in /anta Ana v. *ommercial ?nion Assurance *ompany, ;td. &he materiality of nonOdisclosure of other insurance policies is not open to doubt As a matter matter of fact, fact, in a .3<< .3<< decisi decision, on, &isamis ;umber *orp. v. *apital 1ns. @ /urety *o., 1nc., 1ustice 1B) Feyes, for this Court, made manifest anew its adherence to such a principle in i n the face of an assertion that thereby a highly unfavorable provision for the insured would be accorded recognition &his is the language used( 6&he insurance contract may be rather onerous GKone sidedK,
as the lower court put itH, but that in itself does not 8ustify the abrogation of its e%press terms, terms which the insured accepted or adhered to and which is the law between the contracting parties &here is no escaping the conclusion then that the lower court could not have disposed of this case in a way other than it did !ad it acted otherwise, it clearly would have disregarded pronouncements of this Court, the compelling force of which cannot be denied &here is, to repeat, no 8usti-cation for a reversal
;. &arine 1nsurance B *ebrecus, as modifed 53H ;FI?&A) A@FAC? C;FP;FA&I; Q C;@F& ;D APP?A) A7 PAAMA A>MI)), EF ; 3=052, A@E@& 3, .33.
Dacts( Panama awmill bought .,204 pieces of apitong log which it transported by sea to Manila through &ranspaci-c &ranspaci-c towage and insured it against loss with ;riental Assurance corporation ;riental assura assurance nce issued issued a marine marine insura insurance nce policy policy which which stated stated,, among among others others,, that that the insura insurance nce warranted against total loss only only &he 2 barges were towed by . tugOboat but b ut during the voyage, rough seas and strong winds caused damage to the barge resulting in the total loss of =3 pieces of logs out of the 534 pieces loaded thereon Panama demanded payment for the loss but ;riental assurance refused on the ground that its contracted liability was for total loss only &he re8ection was upon the recommendation of the &an &an Eatue Ad8ustment Company Company Panama -led a Complaint for 7amages against ;riental Assurance et al with F&C F&C Issue( >; ;riental Assurance can be held liable under its marine insurance policy based on the theory of a divisible contract of insurance and, conseJuently, a constructive total loss !eld( o, as no liability attaches In the absence of either actual or constructive total loss, there can be no recovery by the insured Panama against the insurer, ;riental Assurance &he terms of the contract constitute the measure of the insurer's liability and compliance therewith is a condition condition precedent precedent to the insuredKs insuredKs right to recovery recovery from the insurer insurer >hether >hether a contract contract is entire or severable is a Juestion of intention to be determined by the language employed by the parties &he policy in Juestion shows that the sub8ect matter insured was the entire shipment of 2,000 cubic meters of apitong logs ;nly one premium was paid for the entire shipment, ma#ing for only one cause or consideration &he insurance contract must, therefore, be considered indivisible More importantly, the insurerKs liability was for 6total loss only6 A total loss may be either actual or constructive An actual total loss is caused by( A total destruction of the thing insured" &he irretrievable loss of the the thing by sin#ing, or by being bro#en up" Any damage to the thing which renders it valueless to the owner for the purpose for which he held it" or Any other event which e9ectively deprives the owner of the possession, at the port of destination, of the thing insured A constructive total loss is one which gives to a person insured a right to abandon, under ection ./3 of the Insurance Code &his provision reads( A person insured by a contract of marine insurance may abandon the thing insured, or any particular portion thereof separately valued by the policy, or otherise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril in8ured against, GaH If more than threeOfourths thereof in value is actually lost, or would have to be e%pended to recover it from the peril" GbH If it is in8ured to such an e%tent as to reduce its value more than threeOfourths %%% &he CA treated the loss as a constructive total loss, and for the purpose of computing the more than threeOfourths value of the logs actually lost, considered the cargo in one barge as separate from the logs in the other &hus, it concluded that the loss of =3 pieces of logs from barge &PACO.000, mathematically spea#ing, is more than threeOfourths G`H of the 534 pieces of logs loaded in that barge and may, therefore, be considered as constructive total loss ?rroneous &he reJuirements for the application of ection ./3 of the Insurance Code, have not been met &he logs logs involve involved, d, althou although gh placed placed in two barges barges,, were were not separa separatel tely y valued valued by the policy, policy, nor separately insured Fesultantly, the logs lost in barge &PACO.000 in relation to the total number of logs loaded therein on the same barge cannot be made the basis for determining constructive total loss &he logs having been insured as one inseparable unit, the correct basis for determining the constructive total loss is the totality of the shipment of logs o, out of the .,204, pieces of logs, only =3 pieces were lost or =.=5X of the entire shipment ince it is less than 5X of the value of all .,204 pieces of logs, the shipment cannot be said to have sustained a constructive total loss <0H IAB?)A F;R@? A7 ;E C!I;E Q !; I&?FM?7IA&? APP?))A&? C;@F& A7 PI;??F I@FAC? A7 @F?&+ C;FP;FA&I;, C;FP;FA&I;, EF ; )O<<3/5, ;Q?MB?F .., .345 Dacts( acts( Manila Manila Bay )ighte )ighterag rage e Corpora Corporatio tion, n, a common common carrie carrier, r, enter entered ed into into a contra contract ct with with the petiti petitione oners rs whereby whereby the former former would would load and carry carry on board logs in its barge barge &arble 'C &he petitioners insured the logs against loss with Pioneer Insurance and urety Corporation !owever, the shipment of pieces of logs never reached its destination because the barge san# As found by both the trial court and appellate courts, the barge where the logs were loaded was not seaworthy such that it developed a lea# &he appellate court further found that one of the hatches was left open causing water to enter the barge and because the barge was not provided with the necessary cover or tarpaulin, the ordinary splash of sea waves brought more water inside the barge
&he petitioners wrote to Manila Bay a letter demanding payment for the loss and another letter was sent to Pioneer claiming the amount under the insurance policy but latter refused on the ground that its ability depended upon the &otal loss by &otal loss of vessel only !ence, petitioner commenced the civil case Petitioners( &he implied warranty of seaworthiness provided for in the Insurance Code refers only to the responsibility of the shipowner who must see to it that his ship is reasonably -t to ma#e in safety the contemplated voyage A mere shipper of cargo, having no control over the ship, has nothing to do with its seaworthiness A cargo owner has no control over the structure of the ship, its cables, anchors, fuel and provisions, the manner of loading his cargo and the cargo of other shippers, and the hiring of a su$cient number of competent o$cers and seamen C( @nmeritorious &here is no dispute over the liability of the common carrier Manila Bay In fact, it did not bother to appeal the Juestioned decision !owever, the petitioners state that Manila Bay has ceased operating as a -rm and nothing may be recovered from it &hey are, therefore, trying to recover their losses from the insurer &he liability of the insurance company is governed by law ection ../ of the Insurance Code provides( In every marine insurance upon a ship or freight, or freightage, or upon anything which is the sub8ect of marine insurance, a warranty is implied that the ship is seaworthy ection 33 of the same Code also provides in part( Marine insurance includes( G.H Insurance against loss of or damage to( GaH Qessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise % % % &he term 6cargo6 can be the sub8ect of marine insurance and that once it is so made, the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo whether he be the shipowner or not In every contract of insurance upon anything which is the sub8ect of marine insurance, a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage Moreover, the fact that the unseaworthiness of the ship was un#nown to the insured is immaterial in ordinary marine insurance and may not be used by him as a defense in order to recover on the marine insurance policy ince the law provides for an implied warranty of seaworthiness in every contract of ordinary marine insurance, it becomes the obligation of a cargo owner to loo# for a reliable common carrier which #eeps its vessels in seaworthy condition &he shipper of cargo may have no control over the vessel but he has full control in the choice of the common carrier that will transport his goods ;r the cargo owner may enter into a contract of insurance which speci-cally provides that the insurer answers not only for the perils of the sea but also provides for coverage of perils of the ship >e are constrained to apply ection ../ of the Insurance Code to the facts of this case In marine cases, the ris#s insured against are 6perils of the sea6 &he purpose of such insurance is protection against contingencies and against possible damages and such a policy does not cover a loss or in8ury which must inevitably ta#e place in the ordinary course of things Perils of the sea( e%tends only to losses caused by sea damage, or by the violence of the elements, and does not embrace all losses happening at sea losses from e%traordinary occurrences only, such as stress of weather, winds and waves, lightning, tempests, roc#s and the li#e include only such losses as are of e%traordinary nature, orarise rom some overhelming poer , which cannot be guarded against by the ordinary e%ertion of human s#ill and pr udence damage done to a vessel by perils of the sea includes every species of damages done to a vessel at sea, as distinguished from the ordinary wear and tear of the voyage, and distinct rom injuries su9ered by the vessel in conseJuence of her not being seaworthy at the outset of her voyage Gas in this caseH everything which happens thru the inherent vice of the thing, or by the act of the owners, master or shipper, shall ;& be reputed a peril, if not otherwise borne in the policy Petitioners( &he loss of the cargo was caused by the perils of the sea, not by the perils of the ship As found by the trial court, the barge was turned loose from the tugboat east of Cabuli Point 6where it was bu9eted by storm and waves6 Moreover, barratry G any illul misconduct on the part o the master or cre, in pursuance o an unlaul or raudulent purpose, ithout consent o the oner and to the prejudice o the onerDs interestE still covered under perils o the seaH against which the cargo was also insured, e%isted when the personnel of the tugboat and the barge committed a mista#e by turning loose the barge from the tugboat east of Cabuli Point C( @nmeritorious &he facts clearly negate the petitionersK claim under the insurance policy &he loss of the cargo was due to the perils of the ship rather than the perils of the sea &he entrance of the sea water into the shipKs hold through the defective pipe was not due to any accident which happened during the voyage, but to the failure of the shipKs owner properly to repair a defect of the e%istence of which he was apprised &he loss was therefore more analogous to that which directly
results from simple unseaworthiness than to that which result from the perils of the sea Perils of the ship( loss in the ordinary course of events results from the natural and inevitable action of the sea, from the ordinary wear and tear of the ship, or from the negligent failure of the shipKs owner to provide the vessel with proper eJuipment to convey the cargo under ordinary conditions EF( &he insurer does not underta#e to insure against perils of the ship N( &o ma#e insurer liable, there must some casualty something which could not be foreseen as one of the necessary incidents of the adventure &he purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen &herefore, the insurer is not liable &he shipowner e%cepts the perils of the sea from his engagement under the bill of lading, while this is the very perils against which the insurer intends to give protection &he owners of the lost logs must loo# to the shipowner for redress and not to the insurer <.H DI)IPI; M?FC!A& I@FAC? C;, IC Q C;@F& ;D APP?A) A7 C!;A &I?S ?E, EF ; 45.=., ;Q?MB?F 24, .343 Dacts( Choa &ie# eng insured with Dilipino Merchants Insurance the shipment of <00 metric tons Gbut actually was only 533= m tonsH of -shmeal in new gunny bags of 30 #ilos each against all ris#s under warehouse to warehouse terms &he -shmeal were unloaded from the ship unto the arrastre contractor &he condition of the bad order was re:ected in the turn over survey report &he cargo was also surveyed by the arrastre contractor before delivery of the cargo to the consignee and the condition in such delivery was re:ected covering a total of 22 bags in bad order condition Choa &ie# ieng -led a formal claim statement against the vessel but the Dilipino Merchants Insurance refused to pay the claim Choa -led an action with F&C F&C rendered decision in favor of Choa &he CA a$rmed decision Petitioners( An 6all ris#s6 marine policy has a technical meaning in insurance in that before a claim can be compensable it is essential that there must be 6some fortuity, 6 6casualty6 or 6accidental cause6 to which the alleged loss is attributable and the failure of herein private respondent, upon whom lay the burden, to adduce evidence showing that the alleged loss to the cargo in Juestion was due to a fortuitous event precludes his right to recover from the insurance policy C( @ntenable &he 6all ris#s clause6 o f the Institute Cargo Clauses read as follows( 5 &his insurance is against all ris#s of loss or damage to the sub8ectOmatter insured but shall in no case be deemed to e%tend to cover loss, damage, or e%pense pro%imately caused by delay or inherent vice or nature of the sub8ectOmatter insured Claims recoverable hereunder shall be payable irrespective of percentage An 6all ris#s policy6 should be read literally as meaning all ris#s whatsoever and covering all losses by an accidental cause of any #ind &he terms 6accident6 and 6accidental6, as used in insurance contracts, have not acJuired any technical meaning &hey are construed by the courts in their ordinary and common acceptance &hus, the terms have been ta#en to mean that which happens by chance or fortuitously, without intention and design, and which is une%pected, unusual and unforeseen An accident is an event that ta#es place without oneKs foresight or e%pectation" an event that proceeds from an un#nown cause, or is an unusual e9ect of a #nown cause and, therefore, not e%pected &he very nature of the term 6all ris#s6 must be given a broad and comprehensive meaning as covering any loss other than a willful and fraudulent act of the insured &his is pursuant to the very purpose of an 6all ris#s6 insurance to give protection to the insured in those cases where di$culties of logical e%planation or some mystery surround the loss or damage to property An 6all as#s6 policy has been evolved to grant greater protection than that a9orded by the 6perils clause,6 in order to assure that no loss can happen through the incidence of a cause neither insured against nor creating liability in the ship" it is written against all losses, that is, attributable to e%ternal causes Eenerally, the burden of proof is upon the insured to show that a loss arose from a covered peril, but under an 6all ris#s6 policy the initial burden is on the insured to prove that the cargo was in good condition when the policy attached and that the cargo was lost, destroyed or deteriorated when unloaded from the vessel" thereafter, the burden then shifts to the insurer to prove that the loss was due to e%cepted perils &here being no showing that the loss was caused by any of the e%cepted perils, the insurer is liable under the policy &here is no evidence presented to show that the condition of the gunny bags in which the -shmeal was pac#ed was such that they could not hold their contents in the course of the necessary transit, much less any evidence that the bags of cargo had burst as the result of the wea#ness of the bags themselves !ad there been such a showing that spillage would have been a certainty, there may have been good reason to plead that there was no ris# covered by the policy @nder an Kall ris#sK policy, it was su$cient to show that there was damage occasioned by some accidental cause of any #ind, and there is no necessity to point to any particular cause
Dilipino Merchants is to pay Choa P5.,5<4<2 with interest at legal rate from the date of the -ling of the complaint <2H C!;A &I?S ?E, doing business under the name and style of ?EK C;MM?FCIA) ?&?FPFI? vs !; C;@F& ;D APP?A), DI)IPI; M?FC!A&K I@FAC? C;MPA+, IC, B? )I? C;&AI?F, )&7 A7 ? FAL;, IC, EF o 4=50, UMarch .5, .330V O 7eogracias DAC&( ;n ovember =, .3< petitioner imported some lactose crystals from !olland &he importation involved <00 hether or not an 6all ris#s6 coverage covers only losses occasioned by or resulting from 6e%tra and fortuitous events6 despite the clear and uneJuivocal de-nition of the term made and contained in the policy sued upon !?)7( o CA erred An all risk insurance policy insures against all causes of conceivable loss or damage, e%cept as otherwise e%cluded in the policy or due to fraud or intentional misconduct on the part of the insured It covers all losses during the voyage whether arising from a marine peril or not, including pilferage losses during the war In the present case, the 6all ris#s6 clause of the policy sued upon reads as follows( &his insurance is against all ris#s of loss or damage to the sub8ect matter insured but shall in no case be deemed to e%tend to cover loss, damage, or e%pense pro%imately caused by delay or inherent vice or nature of the sub8ect matter insured Claims recoverable hereunder shall be payable irrespective of percentage &he insurance policy covers all loss or damage to the cargo e%cept those caused by delay or inherent vice or nature of the cargo insured It is the duty of the respondent insurance company to establish that said loss or damage falls within the e%ceptions provided for by law, otherwise it is liable therefor In this case, the damage caused to the cargo has not been attributed to any of the e%ceptions provided for nor is there any pretension to this e9ect &hus, respondent insurance company must pay
;n appeal, CA reversed decision 7elsan( >hen American !omes paid Calte%, it was eJuivalent to a tacit recognition that the illOfated vessel was seaworthy" otherwise, the former was not legally liable to latter due to the latterKs breach of implied warranty under the marine insurance policy that the vessel was seaworthy I@?( >; the payment made by American !ome to Calte% for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy, thus precluding any action for recovery against the petitioner >; the nonOpresentation of the marine insurance policy bars the complaint for recovery of sum of money for lac# of cause of action !?)7( ; &he payment made by American !ome for the insured value of the lost cargo operates as waiver of its right to enforce the term of the implied warranty against Calte% under the marine insurance policy !owever, the same cannot be validly interpreted as an automatic admission of the vessel's seaworthiness by American !ome as to foreclose recourse against 7elsan for any liability under its contractual obligation as a common carrier &he fact of payment grants American !ome subrogatory right which enables it to e%ercise legal remedies that would otherwise be available to Calte% as owner of the lost cargo against 7elsan, the common carrier Drom the nature of their business and for reasons of public policy, common carriers are bound to observe e%traordinary diligence in the vigilance over the goods and for the safety of passengers transported by them, according to all the circumstances of each case In the event of loss, destruction or deterioration of the insured goods, common carriers shall be responsible unless the same is brought about, among others, by :ood, storm, earthJua#e, lightning or other natural disaster or calamity In all other cases, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove they observed e%traordinary diligence In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Calte%, 7elsan attributes the sin#ing of M& Maysun to fortuitous event or force ma8eure But the testimony of the captain and chief mate that there were strong winds and waves 20 feet high was e9ectively rebutted and belied by the weather report of PAEAA &hus, as the CA correctly ruled, 7elsan's vessel, M& Maysun, san# with its entire cargo for the reason that it was not seaworthy &here was no sJuall or bad weather or e%tremely poor sea condition in the vicinity where the said vessel san# Additionally, the e%oneration of M& Maysun's o$cers and crew merely concern their respective administrative liabilities It does not in any way operate to absolve 7elsan the common carrier from its civil liability arising from its failure to observe e%traordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of its employees, the determination of which properly belongs to the courts In the case at bar, 7elsan is liable for the insured value of the lost cargo of industrial fuel oil belonging to Calte% for its failure to rebut the presumption of fault or negligence as common carrier occasioned by the une%plained sin#ing of its vessel, M& Maysun, while in transit ; &he presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the e%ercise of its subrogatory right &he subrogation receipt, by itself, is su$cient to establish not only the relationship of American !ome as insurer and Calte%, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim &he right of subrogation accrues simply upon payment by the insurance company of the insurance claim <=H DFACIC; 7?) QA), ?& A) vs A7F? 7?) QA),, EF o 3/=, UDebruary .<, .3.5V DAC&( &he parties are siblings who were the only heirs at law and ne%t of #in of Eregorio del Qal, who passed away intestate 7uring the lifetime of the deceased he too# out insurance on his life for the sum of P=0,000 and made it payable to Andres del Qal as sole bene-ciary After his death, the defendant Andres collected the face of the policy !e paid the sum of P.4,/<520 to redeem certain real estate which the decedent had sold to third persons with a right to repurchase &he redemption of said premises was made by the attorney of the defendant in the name of the petitioners and Andres as heirs of the deceased vendor Andres, on death of the Eregorio, too# possession of most of the latter's personal property and also the balance on the insurance policy amounting to P2.,
7efendant Andres( Fedemption of the real estate sold by his father was made in the name of the plainti9s and himself instead of in his name alone without his #nowledge or consent !e also averred that it was not his intention to use the proceeds of the insurance policy for the bene-t of any person but himself, he alleging that he was and is the sole owner thereof and that it is his individual property I@?( Can the proceeds of the policy be divided among the heirs* !?)7( ; &he proceeds of the lifeOinsurance policy belong e%clusively to the defendant as his individual and separate property &he proceeds of an insurance policy belong e%clusively to the bene-ciary and not to the estate of the person whose life was insured, and such proceeds are the separate and individual property of the bene-ciary, and not of the heirs of the person whose life was insured &his doctrine in America is embedded in the Code of Commerce where( &he amount which the underwriter must deliver to the person insured, in ful-llment of the contract, shall be the property of the latter, even against the claims of the legitimate heirs or creditors of any #ind whatsoever of the person who e9ected the insurance in favor of the former &he contract of life insurance is a special contract and the destination of the proceeds is determined by special laws which deal e%clusively with that sub8ect &he Civil Code has no provisions which relate directly and speci-cally to lifeO insurance contracts or to the destination of life insurance proceeds &hat was under the Code of Commerce &he plainti9s claim that the property repurchased with the insurance proceeds belongs to the heirs in common and not to the defendant alone &his wasn't agreed upon by the court unless the facts appeared that Andres acted as he did with the intention that the other heirs should en8oy with him the ownership of the estate <5H &!? BAS ;D &!? P!I)IPPI? I)A7, administrator of the estate of the late Adolphe ;scar chuete, vs 1@A P;A7A, 1F, Collector of Internal Fevenue, 1r, EF o /=54/, U.3/.V DAC&( BPI, as administrator, appealed to CDI absolving defendant, Collector of Internal Fevenue, from the complaint -led against it in recovering the inheritance ta% amounting to P.,203 paid by Fosario Eelano Qda de chuete, under protest, and sum of P20,.50 representing the proceeds of the insurance policy of the deceased Fosario and Adolphe were married in 1anuary .3.= &he wife was actually residing and living in Eermany when Adolphe died in 7ecember .32 &he latter while in Eermany, e%ecuted a will in March .32<, pursuant with its law wherein Fosario was named his universal heir &he deceased possessed not only real property situated in the Philippines but also personal property consisting of shares of stoc#s in .3 domestic corporations Included in the personal property is a life insurance policy issued at Manila on 1anuary .3./ for the sum of ].0,000 by the un )ife Assurance Company of Canada, Manila Branch In the insurance policy, the estate of the deceased was named the bene-ciary without any Juali-cation Fosario is the sole and only heir of the deceased BPI, as administrator of the decedent's estate and attorney in fact of Fosario, having been demanded by Posadas to pay the inheritance ta%, paid under protest otwithstanding various demands made by plainti9, Posadas refused to refund such amount I@?( >hether the proceeds of the life insurance policy is paraphernal or community property Gif community, then not sub8ect to inheritance ta%H !?)7( As all the premiums on the lifeOinsurance policy ta#en out by the late Adolphe ;scar chuete, were paid out of the con8ugal funds, with the e%ception of the -rst, t!e proceeds of t!e policy, e%cluding the proportional part corresponding to the -rst premium, constitute community property, notwithstanding the fact that the policy was made payable to the deceasedKs estate, so that oneO of said proceeds belongs to t!e estate, and t!e other half to t!e deceasedKs widow, Fosario half CIF is ordered to return to BPI the oneOhalf of the ta% collected upon the amount of P20,.50, being the proceeds of the insurance policy on the life of the late Adolphe, after deducting the proportional part corresponding to the -rst premium Both according to our Civil Code and to the ruling of those orth American tates where the panish Civil Code once governed, the proceeds of a lifeOinsurance policy whereon the premiums were paid with con8ugal money, belong to the con8ugal partnership A lifeOinsurance policy belongs e%clusively to the bene-ciary upon the death of the person insured, and that in the present case, as Adolphe named his own estate as t!e sole bene-ciary of t!e insurance on his life, upon his death t!e latter became t!e sole owner of t!e proceeds, which therefore became sub8ect to t!e inheritance ta% An heir appointed bene-ciary to a lifeO insurance policy ta#en out by the deceased, becomes the absolute owner of the proceeds of such policy upon the death of the insured &he proceeds of a lifeOinsurance policy payable to the insuredKs estate, on which the premiums were paid by the con8ugal partnership, constitute community property, and belong oneOhalf to the husband and the other half to the wife, e%clusively But if the premiums were paid partly with paraphernal and partly con8ugal funds, the proceeds are li#ewise in li#e proportion paraphernal in part and con8ugal in part
&he proceeds of a lifeOinsurance policy payable to the insuredKs estate as the bene-ciary, if delivered to the testamentary administrator of the former as part of the assets of said estate under probate administration, are sub8ect to the inheritance ta% according to the law on the matter, if they belong to the assured e%clusively, and it is immaterial that the insured was domiciled in these Islands or outside <
&. *ash /urrender Galue - errera GEF o )O23.0, .35.H <H &!? MA@DAC&@F?F )ID? I@FAC? C;, plainti-appellant, vs BIBIA; ) M??F, in the capacity as Collector of Internal Fevenue, deendant-appellee
Dacts( &he Manufacturers )ife Insurance Company is duly registered and licensed to engage in life insurance business in the Philippines for more than -ve years until .3=. But due to the e%igencies of the war it closed the branch o$ce at Manila during .3=2 up to eptember .3=5 In the course of its operations before the war, plainti9 issued a number of life insurance policies in the Philippines containing nonforfeiture clauses, vi( 4 Automatic Premium ;oan T &his Policy shall not lapse for nonOpayment of any premium after it has been three full years in force, if, at the due date of such premium, the Cash Qalue of this Policy and of any bonus additions and dividends left on accumulation Gafter deducting any indebtedness to the Company and the interest accrued thereonH shall e%ceed the amount of said premium In which event the company will, without further reJuest, treat the premium then due as paid, and the amount of such premium, with interest from its actual due date at si% per cent per annum, compounded yearly, and one per cent, compounded yearly, for e%penses, shall be a -rst lien on this Policy in the CompanyKs favour in priority to the claim of any assignee or any other person &he accumulated lien may at any time, while the Policy is in force, be paid in whole or in part %%% Drom 1anuary ., .3=2 to 7ecember /., .3=< for failure of the insured under the above policies to pay the corresponding premiums for one or more years, the plainti9Ks head o$ce at &oronto, applied the provisions of the automatic premium loan clauses" and the net amount of premiums so advanced or loaned totalled P.,0<3,25=34 ;n this sum the defendant CIF assessed P.,3..2 T which plainti9 paid supra protest &he assessment was made pursuant to section 255 of the ational Internal Fevenue Code as amended, which partly provides( ?C 255 5a%es on insurance premiums T &here shall be collected from every person, company, or corporation Ge%cept purely cooperative companies or associationsH doing insurance business of any sort in the Philippines a ta% of one per centum of the total premiums collected whether such premiums are paid in money, notes, credits, or any substitute for money but premiums refunded within si% months after payment on account of re8ection of ris# or returned for other reason to person insured shall not be included in the ta%able receipts Planti9( >hen there are premium loans or premium advances, as above stated, by virtue of the nonO forfeiture clauses, it did not collect premiums within the meaning of the above sections of the law, and therefore it is not amenable to the ta% therein provided Issues( >; premium advances made by plainti9Oappellant under the automatic premium loan clause of its policies are Kpremiums collectedK by the Company sub8ect to ta% >; in the application of the automatic premium loan clause of plainti9OappellantKs policies, there is \payment in money, notes, credits, or any substitutes for money' >; the collection of the alleged de-ciency premium ta%es constitutes double ta%ation >hether the ma#ing of premium advances, granting for the sa#e of argument that it amounted to collection of premiums, were done in &oronto, Canada, or in the Philippines >; the fact that plainti9Oappellant was not doing business in the Philippines from 1anuary ., .3=2 to eptember /0, .3=5 e%empts it from payment of premium ta%es corresponding to said period !eld( Illustration( uppose that KAK, /0 years of age, secures a 20Oyear endowment policy for P5,000 from plainti9Oappellant Company and pays an annual premium of P250 KAK pays the -rst ten yearly premiums amounting to P2,500 and on this amount plainti9Oappellant pays the corresponding ta%es under section 255 of the IFC uppose also that the cash value of said policy after the payment of the .0th annual premium amounts to P.,000 >hen on the ..th year the annual premium fell due and the insured remitted no money within the monthKs grace, the insurer treated the premium then over due as paid from the cash value, the amount being a loan to the policyholder who could discharge it at any time with interest at < per cent &he insurance contract, therefore, continued in force for the ..th year +es 6!ow could there be such a collection6 plainti9 argues 6when as a result thereof, insurer becomes a creditor, acJuires a lien on the policy and is entitled to collect interest on the amount of the unpaid premiums*6 >ittingly or unwittingly, the 6premium6 and the 6loan6 have been interchanged in the argument &he insurer 6became a creditor6 o the loan, but not of the premium that had already been paid And it is entitled to collect interest on the loan, not on the premium. In other words, 6A6 paid the premium for the eleventh year" but in turn he became a debtor of the company for the sum of P250 &his debt he could repay either by later remitting the money to the
insurer or by letting the cash value compensate for it &he debt may also be deducted from the amount of the policy should 6A6 die thereafter during the continuance of the policy &he debt may also be deducted from the amount of the policy should the insured die thereafter during the continuance of the policy &here was an increase in the assets of the insurer . &here was the newcredit for the advances made &rue, the plainti9 could not sue the insured to enforce that credit But it has means of satisfaction out of the cash surrender value If the credit is paid out of the cash surrender value, there were no new funds added to the companyKs assets Cash surrender value 6as applied to a life insurance policy, is the amount of money the company agrees to pay to the holder of the policy if he surrenders it and releases his claims upon it &he more premiums the insured has paid the greater will be the surrender value" but the surrender value is always a lesser sum than the total amount of premiums paid6 &he cash value or cash surrender value is therefore an amount which the insurance company holds in trust for the insured to be delivered to him upon demand It is therefore a liability of the company to the insured ow then, when the companyKs credit for advances is paid out of the cash value or cash surrender value, that value and the companyKs liability is thereby diminished pro tanto &he decrease of a personKs liabilities means a corresponding increase in his net assets +es &he insurer agreed to consider the premium paid on the strength of the automatic loan &he premium was therefore paid by means of a 6note6 or 6credit6 or 6other substitute for money6 and the ta% is due because section 255 above Juoted levies ta%es according to the total premiums collected by the insurer 6whether such premiums are paid in money, notes, credits or any substitute or money. o Appellant goes bac# to the illustration, 6A failed to pay the premium on the ..th year and the insurer advanced P250 from the cash value If the amount of P250 is deducted from the cash value of P.,000 of the policy, then ta%ing this P250 anew as premium collected, as was done in the present case, will amount to double ta%ation since ta%es had already been collected on the cash value of P.,000 as part of the P2,500 collected as premiums for the -rst ten years6 &he trouble with the argument is that it assumes all advances are necessarily repaid from the cash value &hat is true in some cases In others the insured subseJuently remits the money to repay the advance and to #eep unimpaired the cash reserve of his policy ;f the total amount advanced GP.,0<3,255H P.54,<< had actually been repaid at the time of assessment notice Besides, the premiums paid and on which ta%es had already been collected, were those for the .0 years &he ta% demanded is on the premium for the ..th year Durther, there is no constitutional prohibition against double ta%ation Philippines Appellant( as the advances of premiums were made in &oronto, such premiums are deemed to have been paid there T not in the Philippines T and therefore those payments are not sub8ect to local ta%ation &he law does not contemplate premiums collected in the Philippines ubscribing to this would ma#e foreign insurers evade the ta% by contriving to reJuire that premium payments shall be made at their head o$ces It is enough that the insurer is doing insurance business in the Philippines, irrespective of the place of its organiation or establishment In any event there is no constitutional prohibition against double ta%ation @ntenable Although during those years the appellant was not open for new business because its branch o$ce was closed, still it was practically and legally, operating in this country by collecting premiums on its outstanding policies, incurring the ris#s andor en8oying the bene-ts conseJuent thereto, without having previously ta#en any steps indicating withdrawal in good faith from this -eld of economic activity Durther, in ob8ecting to the payment of the ta%, plainti9Oappellant never insisted, before the BIF that it was not engaged in business in this country during those years +. /uretyship EF o .033/, .33= <4H 7?Q?);PM?& BAS ;D &!? P!I)IPPI? , petitioner, vs. C;@F& ;D APP?A) and the ?&A&? ;D &!? )A&? 1@A B 7A, represented by CA7I7A E 7A, and the 7BP M;F&EAE? F?7?MP&I; I@FAC? P;;) , respondents
Dacts( In May .34, 1uan B 7ans, together with his family, applied for a loan of P500,000 with 7BP Basilan Branch As the principal mortgagor, 7ans, then < years of age, was advised by 7BP to obtain a mortgage redemption insurance with the 7BP Mortgage Fedemption Insurance Pool G7BP MFI PoolH A loan, in the reduced amount of P/00,000, was approved and released by 7BP Drom the proceeds of the loan, 7BP deducted the amount of P.,=< as payment for the MFI premium 7ans accomplished and submitted the 6MFI Application for Insurance6 and the 6!ealth tatement for 7BP
MFI Pool6 &he MFI premium of 7ans, less the 7BP service fee of .0 percent, was credited by 7BP to the savings account of the 7BP MFI Pool Accordingly, the 7BP MFI Pool was advised of the credit ;n eptember /, .34, 7ans died of cardiac arrest &he 7BP, upon notice, relayed this information to the 7BP MFI Pool ;n eptember 2/, .34, the 7BP MFI Pool noti-ed 7BP that 7ans was not eligible for MFI coverage, being over the acceptance age limit of <0 years at the time of application 7BP apprised Candida 7ans of the disapproval of her late husbandKs MFI application &he 7BP o9ered to refund the premium of P.,=<, but Candida refused to accept it, demanding payment of the face value of the MFI or an amount eJuivalent to the loan he, li#ewise, refused to accept an e% gratia settlement of P/0,000, which the 7BP later o9ered Fespondent ?state, through Candida 7ans as administratri%, -led a complaint with F&C against 7BP and the insurance pool for 6Collection of um of Money with 7amages6 F&C decided in favor of respondent ?state and against 7BP &he 7BP MFI Pool, however, was absolved from liability, after the trial court found no privity of contract between it and the deceased &he trial court declared 7BP in estoppel for having led 7ans into applying for MFI and actually collecting the premium and the service fee, despite #nowledge of his age ineligibility &he CA a$rmed in toto Issue( >; 7BP and 7BP MFI Pool are liable !eld( 7BP, yes and 7BP MFI Pool, no As to 7BP MFI Pool, it did not approve the application of 7ans &here is also no showing that it accepted the sum of P.,=<, which 7BP credited to its account with full #nowledge that it was payment for 7anKs premium @nder the provisions of the !ealth tatement for 7BP Pool, the MFI coverage shall ta#e e9ect( G.H when the application shall be approved by the insurance pool" and G2H when the full premium is paid during the continued good health of the applicant &hese two conditions, being 8oined con8unctively, must concur &here was no perfected contract of insurance" hence, the 7BP MFI Pool cannot be held liable on a contract that does not e%ist As to 7BP, it was wearing two legal hats( the -rst as a lender, and the second as an insurance agent In dealing with 7ans, 7BP As an insurance agent, 7BP made 7ans go through the motion of applying for said insurance, thereby leading him and his family to believe that they had already ful-lled all the reJuirements for the MFI and that the issuance of their policy was forthcoming Apparently, 7BP had full #nowledge that 7anKs application was never going to be approved &he ma%imum age for MFI acceptance is <0 years as clearly and speci-cally provided in the Eroup Mortgage Fedemption Insurance Policy @nder Article .34 of the Civil Code of the Philippines, 6the agent who acts as such is not personally liable to the party with whom he contracts, unless he e%pressly binds himself or e%ceeds the limits of his authority without giving such party su$cient notice of his powers6 &he 7BP is not authoried to accept applications for MFI when its clients are more than <0 years of age Snowing all the while that 7ans was ineligible for MFI coverage because of his advanced age, 7BP e%ceeded the scope of its authority when it accepted 7anKs application for MFI by collecting the insurance premium, and deducting its agentKs commission and service fee &here is no showing that 7ans #new of the limitation on 7BPKs authority to solicit applications for MFI If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he Gthird personH has been deceived by the nonOdisclosure thereof by the agent, then the latter is liable for damages to him Inasmuch as the nonOdisclosure of the limits of the agency carries with it the implication that a deception was perpetrated on the unsuspecting client, the provisions of Articles .3, 20 and 2. of the Civil Code of the Philippines come into play Article .3 ?very person must, in the e%ercise of his rights and in the performance of his duties, act with 8ustice give everyone his due and observe honesty and good faith Article 20 ?very person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same Article 2. Any person, who willfully causes loss or in8ury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage &he 7BPKs liability, however, cannot be for the entire value of the insurance policy &o assume that were it not for 7BPKs concealment of the limits of its authority, 7ans would have secured an MFI from another insurance company, and therefore would have been fully insured by the time he died, is highly speculative Considering his advanced age, there is no absolute certainty that 7ans could obtain an insurance coverage from another company It must also be noted that 7ans died almost immediately, ie, on the nineteenth day after applying for the MFI, and on the twentyOthird day from the date of release of his loan ;ne is entitled to an adeJuate compensation only for such pecuniary loss su9ered by him as he has duly proved 7amages, to be recoverable, must not only be capable of proof, but must be actually proved with a reasonable degree of certainty peculative damages are too remote to be included in an accurate estimate of damages >!?F?D;F?, the decision of the Court of Appeals is M;7IDI?7 and petitioner 7BP is ;F7?F?7( G.H to F?IMB@F? respondent ?state of 1uan B 7ans the amount of P.,=< with legal interest from the date of the -ling of the complaint until fully paid" and G2H to PA+ said ?state P50,000 as moral damages and P.0,000 as attorneyKs fees >ith costs against petitioner +oteH 2a bita ko kasabot ngano ni-all under /uretyship ni siya nga topic, kay a jud na namention
maski kausa. 0asin ang pgconstitute sa &ortgage $edemption 1nsurance *ontractI 2hich in this case as not perected.
<. *laims /ettlement - errera EF o <.0.O02, .33. <3H &I; S!? C!I;, petitioner, vs. &!? !;;FAB)? C;@F& ;D APP?A) and ?A&?F A@FAC? A7 @F?&+ C;FP;FA&I; , respondents
Dacts( ;n 7ecember .4, .34, &io She Chio imported .,000 bags of -shmeal valued at ]/<,000/0 from Agro Impe%, &e%as, @A &he goods were insured with respondent ?AC; and shipped on board the MQ Pes#ov, a vessel owned by Dar ?astern hipping Company >hen the goods reached Manila, they were found to have been damaged by sea water which rendered the -shmeal useless Petitioner -led a claim with ?AC; and Dar ?astern hipping Both refused to pay Petitioner sued them before the then CDI for damages ?AC;, as the insurer, -led a counterclaim against the petitioner for the recovery of P.4,/44< representing the unpaid insurance premiums CDI ordered ?AC; and Dar ?astern hipping to pay petitioner solidarily the sum of P.05,34<<4 less the amount of P.4,/44< for unpaid premiums with interest at the legal rate from the -ling of the complaint, the sum of P.5,00000 as attorneyKs fees and the costs &he 8udgment became -nal as to ?AC; but the shipping company appealed to the CA and was absolved from liability by the said court &he trial court, upon motion by petitioner, issued a writ of e%ecution against ?AC; &he sheri9 enforcing the writ reportedly -%ed the legal rate of interest at .2X Fespondent ?AC; moved to Juash the writ alleging that the legal interest to be computed should be hat is the legal rate of interest to be imposed in actions for damages arising from unpaid insurance claims* Petitioner &io She Chio claims that it should be .2X pursuant to Articles 2=/ and 2== of the Insurance Code while ?AC; claims that it should be
ection 2== of the aforementioned Code also provides( In case of any litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the Commissioner or the Court, as the case may be, to ma#e a -nding as to whether the payment of the claim of the insured has been unreasonably denied or withheld" and in the a$rmative case, the insurance company shall be ad8udged to pay damages which shall consist of attorneyKs fees and other e%penses incurred by the insured person by reason of such undeniable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of the claim due the insured %%% &he CA made no -nding that there was an un8usti-ed refusal or withholding of payment on petitionerKs claim In fact, the CA had this to say( %%% ?AC;Ks refusal to settle the claim to &io She Chio was based on some ground which, while not su$cient to free it from liability under its policy, nevertheless is su$cient to negate any assertion that in refusing to pay, it acted un8usti-ably %%% &he case posed some genuine issues of interpretation of the terms of the policy as to which persons may honestly di9er &his is the reason the trial court did not say ?AC;Ks refusal was un8usti-ed o the aforecited sections of the Insurance Code are not pertinent to the instant case &hey apply only when the court -nds an unreasonable delay or refusal in the payment of the claims either does Circular o =.< of the Central Ban# which too# e9ect on 1uly 23, .3= pursuant to P7 ..< G@sury )awH which raised the legal rate of interest from
agreed upon, and in the absence of stipulation, the legal interest which is si% per cent per annum ince the contending parties did not allege the rate of interest stipulated in the insurance contract, the legal interest was properly pegged by the Appellate Court at
EF o ./4/, 200. 0H DIMA E??FA) A@FAC? C;FP;FA&I;, petitioner, vs C;@F& ;D APP?A) and @IP!I) IC;FP;FA&?7, respondents Dacts( @siphil Inc insured certain properties Go$ce, furniture, -%tures, shop machinery and other trade eJuipmentH from -re with Dinman Gthen doing business under the name umma Insurance CorporationH ometime in .342, @siphil -led an insurance claim amounting to P34,.2<.. for the loss of the insured properties due to -re Dinman appointed Ad8uster !! Bayne to underta#e the valuation and ad8ustment of the loss @siphil submitted its worn tatement of )oss and Dormal Claim, signed by Feynaldo Cayetano, @siphil's Manager, and a Proof of )oss signed by its Accounting Manager Pedro Palallos and countersigned by !! BayneKs Ad8uster DC Medina Palallos personally followedOup private respondentKs claim with Dinman's President 1oaJuin ;rtega 7uring their meeting, ;rtega instructed their Dinance Manager, Fosauro Maghirang, to reconcile the records &hereafter, Maghirang and Palallos signed a tatementAgreement, dated Debruary 24, .345, which indicated that the amount due respondent was P4=2,<4/=0 7espite repeated demands, petitioner refused to pay the insurance claim &hus, private respondent was constrained to -le a complaint against petitioner for the unpaid insurance claim Dinman maintained that @siphil cannot recover because it failed to comply with Policy Condition o ./ regarding the submission of certain documents to prove the loss F&C ruled in favor of @siphil CA modi-ed decision as to . below, but a$rmed in toto the others( Dinman is . &o pay the plainti9 the sum of P4=2,<4/=0 and to pay 2=X interest per annum from 0/ May .345 until fully paid" 2 &o pay the plainti9 the sum eJuivalent to .0X of the principal obligation as and for attorneyKs fees, plus P.,50000 per court appearance of counsel" / &o pay the plainti9 the amount of P/0,00000 as e%emplary damages in addition to the actual and compensatory damages awarded %%% Issues( >as there compliance by @siphil of Condition o ./* >as the 2=X interest rate proper* !eld( +es Both the trial court and the CA concur in holding that private respondent had substantially complied with Policy Condition o ./ FeJuirements under which were allegedly communicated to private respondent in the two letters of !! Bayne to private respondent &he letter stated, among others( &o be able to e%pedite ad8ustment of this case, please submit to us without delay the following documents andor particulars( >or >>>, &achineries6quipment *laims and >or /tock *laim . +our formal claim Gwhich may be accomplished in the enclosed formH accompanied by a detailed inventory of the documents submitted 2 Certi-cation from the appropriate government o$ce indicating the date of the occurrence of the -re, the property involved, its location and possible point of origin / Proof of premium payment = &hree color photographs of the debris properly captionedidenti-eddated and initiated by the claimant at the bac# &hough our ad8usters will also ta#e photographs in the manner prescribed above, please do not rely on his photographs in the preservations of your evidence of loss thru pictures 5 Copies of purchase invoices %%% Dactual -ndings and conclusions of the trial court and the CA are entitled to great weight and respect, and will not be disturbed on appeal in the absence of any clear showing that the trial court overloo#ed certain facts or circumstances which would substantially a9ect the disposition of the case &here is no cogent reason to deviate from this salutary rule in the present case Policy Condition o ./ reads( &he insured shall give immediate written notice to the Company of any loss, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged, and undamaged property, showing in detail Juantities, costs, actual cash value and the amount of loss claimed" A7 >I&!I IN&+ 7A+ AD&?F &!? );, @)? @C! &IM? I ?N&?7?7 I >FI&IE B+ &!? C;MPA+, &!? I@F?7 !A)) F?7?F &; &!? C;MPA+ A PF;;D ;D );, signed and sworn to by the insured, stating the #nowledge and belief of the insured as to the following( the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or e%posures of said property since the issuing of this policy by whom and for what purpose any buildings herein described and the several parts thereof were
occupied at the time of loss and whether or not it then stood on leased ground, and shall furnish a copy of all the descriptions and schedules in all policies, and if reJuired veri-ed plans and speci-cations of any building, -%tures, or machinery destroyed or damaged &he insured, as often as may be reasonably reJuired, shall e%hibit to any person designated by the company all that remains of any property herein described, and submit to e%amination under oath by any person named by the Company, and subscribe the same" and, as often as may be reasonably reJuired, shall produce for e%amination all boo#s of account, bills, invoices, and other vouchers or certi-ed copies thereof if originals be lost, at such reasonable time and place as may be designated by the Company or its representative and shall permit e%tracts and copies thereof to be made o claim under this policy shall be payable unless the terms of this condition have been complied with @siphil, after the occurrence of the -re, immediately noti-ed petitioner thereof &hereafter, private respondent submitted the following documents( G.H worn tatement of )oss and Dormal Claim and" G2H Proof of )oss &he submission of these documents, to the CourtKs mind, constitutes substantial compliance with the above provision As regards the submission of documents to prove loss, substantial, not strict, compliance with the reJuirements will always be deemed su$cient In any case, Dinman Gformerly umma InsuranceH itself ac#nowledged its liability when through its Dinance Manager, Fosauro Maghirang, it signed the document indicating that the amount due @siphil is P4=2,<4/=0 ?ven assuming that plainti9Oappellee indeed failed to submit certain reJuired documents as proof of loss per ection ./, such violation was waived by the insurer umma when it signed the documentObrea#down of the amount due to plainti9Oappellee on the insurance claim By such act, defendantOappellant ac#nowledged its liability under the insurance policy Dinman alleges that Maghirang was without authority to sign and therefore without authority to bind Dinman @ntenable At a meeting between @siphilKs corporate president Pedro Pallalos and Dinman's 1oaJuin ;rtega, the latter summoned Fosauro Maghirang to reconcile the claims of plainti9Oappellee ;ne who clothes another with apparent authority as his agent and holds him to the public as such, cannot later be allowed to deny the authority of such person to act as his agent when such third person entered into the contract in good faith and in an honest belief that he is such agent +es It is authoried by ections 2=/ and 2== of the Insurance Code ?C&I; 2=/ &he amount of any loss or damage for which an insurer may be liable, under any policy other than life insurance policy, shall be paid within thirty days after proof of loss is received by the insurer and ascertainment of the loss or damage is made either by agreement between the insured and the insurer or by arbitration" but if such ascertainment is not had or made within si%ty days after such receipt by the insurer of the proof of loss, then the loss or damage shall be paid within ninety days after such receipt Fefusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the ground that the claim is fraudulent ?C&I; 2== In case of any litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the Commissioner or the Court, as the case may be, to ma#e a -nding as to whether the payment of the claim of the insured has been unreasonably denied or withheld" and in the a$rmative case, the insurance company shall be ad8udged to pay damages which shall consist of attorneyKs fees and other e%penses incurred by the insured person by reason of such unreasonable denial or withholding of payment plus interest of twice the ceiling prescribed by the Monetary Board of the amount of the claim due the insured, from the date following the time prescribed in section two hundred fortyOtwo or in section two hundred fortyOthree, as the case may be, until the claim is fully satis-ed( Provided, &hat the failure to pay any such claim within the time prescribed in said sections shall be considered prima acie evidence of reasonable delay in p ayment otably, under ection 2==, a prima acie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within the time -%ed in both ections 2=/ and 2== Durther, ection 23 of the policy itself provides for the payment of such interest( /ettlement o claim clause &he amount of any loss or damage for which the company may be liable, under this policy shall be paid ithin thirty days ater proo o loss is received by the company and ascertainment o the loss or damage is made either in an agreement beteen the insured and the company or by arbitration" but if such ascertainment is not had or made within si%ty days after such receipt by the company of the proof of loss, then the loss or damage shall be paid within ninety days after such receipt $eusal or ailure to pay the loss or damage ithin the time prescribed herein ill entitle the assured to collect interest on the proceeds o the policy or the duration o the delay at the rate o tice the ceiling prescribed by the &onetary 0oard unless such ailure or reusal to pay is based on the grounds 3sic4 that the claim is raudulent &he policy itself obliges petitioner to pay the insurance claim within /0 days after proof of loss and ascertainment of the loss made in an agreement &he amount due private respondent was P4=2,<4/=0 on April 2, .345 Dinman had until May 2, .345 to pay @siphil's insurance Dor its failure to do so, the CA and the trial court rightfully directed petitioner to pay, inter alia, 2=X interest per
annum
P. *ompulsory &otor Gehicle ;iability 1nsurance EF o )O=3<33, .344 .H P?F)A C;MPAIA de ?E@F;, IC, petitioner, vs !; C;&A&? A AC!?&A, Presiding 1udge of the Court of Dirst Instance of Camarines orte, Branch III, ?F?&; A FAM; and E;+?A L?AF;AOFAM;, for themselves and as Euardian Ad )item for Minors 1;B?&, BA1;, 7AQI7 and EFAC? all surnamed FAM;, D?FA7; M ABC?7?, F, for himself and Euardian Ad )item for minor D?FA7; E ABC?7?, 1F, MIE@?) 1?F?L MAE; as Euardian Ad )item for minors AF)?? F MAE;, and AAC)?&A 1 L?AF;A, respondents
Dacts( ;n 7ecember 2, .3, the I! cout Gin which private respondents were ridingH collided with a uperlines bus along the national highway in ta ?lena, Camarines orte Private respondents sustained physical in8uries in varying degrees of gravity &hus, they -led with the CDI a complaint for damages against uperlines, the bus driver and petitioner, the insurer of the bus &he bus was insured with Perla Compania for P50,000 as and for passenger liability and P50,00000 as and for third party liability &he I! cout was insured with Malayan Insurance Co ?ven before summons could be served, respondent 8udge issued an order( &he second incident is the prayer for an order of this court for the Insurance Company, Perla Compania de eguros, Inc, to pay immediately the P5,000 under the 6no fault clause6 as provided for under ection /4 of the Insurance Code, and -nding that the reJuisite documents to be attached in the record, the said Insurance Company is therefore directed to pay the plainti9s Gprivate respondents hereinH within 5 days from receipt of this order Perla denied in its Answer its alleged liability under the 6no fault indemnity6 provision It held that under ec /4 of the Insurance Code, the insurer liable to pay the P5,000 is the insurer of the vehicle in which private respondents were riding, not petitioner, as the provision states that 6in the case of an occupant of a vehicle, claim shall lie against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from6 Fespondent 8udge, however, denied reconsideration &he 8udge ordered the issuance of a writ of e%ecution !ence, the instant petition praying principally for the annulment and setting aside of respondent 8udgeKs orders C issued &F; Issue( >; Perla is the insurer liable to indemnify private respondents under ec /4 of the Insurance Code !eld( o Irrespective of whether or not fault or negligence has with the driver of the uperlines bus, as private respondents were not occupants of the bus, they cannot claim the 6no fault indemnity6 provided in ec /4 from Perla &he claim should be made against the insurer of the vehicle they were riding Gie, MalayanH &his is very clear from the law In ordering Perla to pay private respondents the 6no fault indemnity,6 respondent 8udge gravely abused his discretion in a manner that amounts to lac# of 8urisdiction &he issuance of the corrective writ of certiorari is therefore warranted &he #ey to the resolution of the issue is ec /4, which provides( Any claim for death or in8ury to any passenger or third party pursuant to the provisions of this chapter shall be paid without the necessity of proving fault or negligence of any #ind Provided, that for purposes of this section T GiH &he indemnity in respect of any one person shall not e%ceed -ve thousand pesos" GiiH &he following proofs of loss, when submitted under oath, shall be su$cient evidence to substantiate the claim( GaHPolice report of accident, and GbH7eath certi-cate and evidence su$cient to establish the proper payee, o r GcHMedical report and evidence of medical or hospital disbursement in respect of which refund is claimed" GiiiH Claim may be made against one motor vehicle only In the case of an occupant of a vehicle, claim shall lie against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from In any other case, claim shall lie against the insurer of the directly o9ending vehicle In all cases, the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained Drom a reading of the provision, the following rules on claims under the 6no fault indemnity6 provision, where proof of fault or negligence is not necessary for payment of any claim for death or in8ury to a passenger or a third party, are established( A claim may be made against one motor vehicle only If the victim is an occupant of a vehicle, the claim shall lie against the insurer of the vehicle in which he is riding, mounting or dismounting from
In any other case Gie if the victim is not an occupant of a vehicleH, the claim shall lie against the insurer of the directly o9ending vehicle In all cases, the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained &he law is very clear T the claim shall lie against the insurer of the vehicle in which the 6occupant6 is riding, and no other &he claimant is not free to choose from which insurer he will claim the 6no fault indemnity,6 as the law, by using the word 6shall6, ma#es it mandatory that the claim be made against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from &hat said vehicle might not be the one that caused the accident is of no moment since the law itself provides that the party paying the claim under ec /4 may recover against the owner of the vehicle responsible for the accident &his is precisely the essence of 6no fault indemnity6 insurance which was introduced to and made part of our laws in order to provide victims of vehicular accidents or their heirs immediate compensation, although in a limited amount, pending -nal determination of who is responsible for the accident and liable for the victimsK in8uries or death In turn, the 6no fault indemnity6 provision is part and parcel of the Insurance Code provisions on compulsory motor vehicle liability insurance Uec //O/43V and should be read together with the reJuirement for compulsory passenger andor third party liability insurance Uec /V which was mandated in order to ensure ready compensation for victims of vehicular accidents 2H DIF& R@?L; CI&+ I@FAC? C;MPA+, IC vs &!? !; C;@F& ;D APP?A) and 7? 7I; MAFISIA &FAP;F&A&I; C; / --ORAD DAC&( ;n 1une .0, .34=, Plainti9 1ose Q del Fosario proceeded to the loading and unloading one for public utility bus stop As it approach the bus stop, the bus slowed down with all its doors wide open( while moving at a crawling pace, ie, as slow as an 6ordinary wal#,6 it was ta#ing several passengers, about -ve or seven of them including the plainti9, all of whom managed to board the bus while it was already at the bus stop" plainti9 was the last one to board the bus >hile the plainti9 was still on the busK running board with his hand on the bus doorKs handle bar, the slowly moving bus sped forward at a high speed, as a result of which, the plainti9 lost his balance and fell from the bus As plainti9 clung instinctively to the handle bar, he was dragged by the bus along the asphalted road for about two G2H seconds &hereafter, the plainti9 was brought to the Manila anitarium and !ospital where he was given immediate medical treatment at the emergency ward &he doctors performed a ma8or surgical operation on plainti9Ks right leg Plainti9 was con-ned at the hospital for a total period of forty G=0H 7uring his stay at the hospital, plainti9 incurred medical e%penses in the total amount of P<3,====. Also, the plainti9 incurred lost earning by way of unearned salaries amounting to P,500 due to said physical in8uries and the conseJuent hospital con-nement I@?( @p to what e%tent is the insurer's liability* F@)IE( &he insurance company clearly passed the ma%imum limit of the petitionerKs liability for damages arising from death or bodily in8ury at P.2,000 per passenger and its ma%imum liability per accident at P50,00000 ince only one passenger was in8ured in the accident, the insurerKs liability for the damages su9ered by said passenger is pegged to the amount of P.2,000 only >hat does the limit of P50,000 per accident mean* It means that the insurerKs liability for any single accident will not e%ceed P50,000 regardless of the number of passengers #illed or in8ured therein Dor e%ample, if ten G.0H passengers had been in8ured by the operation of the insured bus, the insurerKs liability for the accident would not be P.20,000 Gat the rate of P.2,000 per passengerH but would be limited to only P50,00000 for the entire accident, as provided in the insurance contract &he bus company may not recover from the insurance company Gherein petitionerH more than P .2,00000 per passenger #illed or in8ured, or -fty thousand GP50,00000H pesos per accident even if under the 8udgment of the court, the erring bus operator will have to pay more than P.2,00000 to each in8ured passenger &he trial courtKs interpretation of the insurance contract was the correct interpretation /H P?F)A C;MPAIA 7? ?E@F;, IC, petitioner, vs !; 1;? F FAM;)?&?, PFIMI&IQA + PA)M?, !;;FA&; B;FB;, F, ;DDIC? ;D &!? PF;QICIA) !?FIDD, PF;QIC? ;D C?B@, respondents Dacts( ;n 1une .3<, a Cimarron P@1 owned by elia ?nriJue, and driven by Cosme Casas, was travelling from Cebu City to 7anao City >hile passing through )iloan, Cebu, the Cimarron P@1 collided with a private 8eep owned by the late Cali%to Palmes Ghusband of private respondent Primitiva PalmesH who was then driving the private 8eep &he impact of the collision was such that the private 8eep was :ung away to a distance of about thirty G/0H feet and then fell on its right side pinning down Cali%to Palmes !e died as a result of cardioOrespiratory arrest due to a crushed chest &he accident also caused physical in8uries on the part of 2OyearOold Adeudatus Borbon Private
respondents
Primitiva
and
!onorato
Borbon,
r
Gfather
of
AdeudatusH
-led
a
complaint against Cosme and elia before the then Cebu CDI claiming actual, moral, nominal and e%emplary damages as a result of the accident &he claim of Borbon, r was e%cluded from the complaint due to 8urisdiction &he CDI ruled in favor of Primitiva, ordering common carrier elia to pay her damages and attorney's fees &he 8udgment of the trial court became -nal and e%ecutory and a writ of e%ecution was issued, which however, returned unsatis-ed, prompting the court to summon and e%amine elia he declared that the Cimarron P@1 was covered by a thirdOparty liability insurance policy issued by petitioner Perla Palmes then -led a motion for garnishment praying that an order of garnishment be issued against the insurance policy issued by petitioner in favor of the 8udgment debtor Fespondent 1udge then issued an ;rder directing the Provincial heri9 or his deputy to garnish the thirdOparty liability insurance policy Petitioner -led for MF and Juashal of the writ of garnishment on the ground that Perla was not a party to the case and that 8urisdiction over its person had never been acJuired by the trial court by service of summons or by any process &he trial court denied petitioner's motionAn ;rder for issuance of an alias writ of garnishment was subseJuently issued More than two G2H years later, the present Petition for *ertiorari and Prohibition was -led with this Court alleging grave abuse of discretion on the part of respondent 1udge Famolete in ordering garnishment of the thirdOparty liability insurance contract issued by petitioner Perla in favor of the 8udgment debtor, elia ?nriJue &he Petition should have been dismissed forthwith for having been -led way out of time but, for reasons which do not appear on the record, was nonetheless entertained Issues( > there is EA7A)?1 on the part of the respondent 8udge > there insurance policy may be sub8ect to garnishment !eld( . o &he C found no grave abuse of discretion or act in e%cess of or without 8urisdiction on the part of respondent 1udge Famolete in ordering the garnishment of the 8udgment debtor's thirdOparty liability insurance 2 +es Earnishment has been de-ned as a species of attachment for reaching any property or credits pertaining or payable to a 8udgment debtor In legal contemplation, it is a forced novation by the substitution of creditors( the 8udgment debtor, who is the original creditor of the garnishee is, through service of the writ of garnishment, substituted by the 8udgment creditor who thereby becomes creditor of the garnishee Earnishment has also been described as a warning to a person having in his possession property or credits of the 8udgment debtor, not to pay the money or deliver the property to the latter, but rather to appear and answer the plainti9's suit In order that the trial court may validly acJuire 8urisdiction to bind the person of the garnishee, it is not necessary that summons be served upon him &he garnishee need not be impleaded as a party to the case All that is necessary for the trial court lawfully to bind the person of the garnishee or any person who has in his possession credits belonging to the 8udgment debtor is service upon him of the writ of garnishment Fule /3, ection .5 and Fule 5, ection GeH of the F;C themselves do not reJuire that the garnishee be served with summons or impleaded in the case in order to ma#e him liable In the present case, there can be no doubt, therefore, that the trial court actually acJuired 8urisdiction over petitioner Perla when it was served with the writ of garnishment of the thirdOparty liability insurance policy it had issued in favor of 8udgment debtor elia ?nriJue Perla cannot successfully evade liability thereon by such a contention In a thirdOparty liability insurance contract, the insurer assumes the obligation of paying the in8ured third party to whom the insured is liable &he insurer becomes liable as soon as the liability of the insured to the in8ured third person attaches Prior payment by the insured to the in8ured third person is not necessary in order that the obligation of the insurer may arise Drom the moment that the insured became liable to the third person, the insured acJuired an interest in the insurance contract, which interest may be garnished li#e any other credit A separate action is not necessary to establish petitioner's liability Petition for Certiorari and Prohibition is hereby 7IMI?7 for having been -led out of time and for lac# of merit 1udgment ADDIFM?7 =H EI Q CA /04 CFA 53, 1une 2., .333 DAC&( ational Dood Authority GDA, formerly ational Erains AuthorityH was the owner of a Chevrolet truc# which was insured against liabilities for death of and in8uries to third persons with the EI aid truc# driven by Euillermo Corbeta collided with a public utility vehicle, a &oyota &amaraw &he &oyota &amaraw was owned and operated by Qictor @y, under the name and style of
Qictory )ine As a result, Dive G5H passengers diedU=V while ten G.0H others sustained bodily in8uries Among those in8ured were private respondents, Qictoria 1aime Qda de Sho and Eloria Sho Qda de Calabia Among the dead were Ma%ima @gmad Qda de Sho, Foland Sho and >illie Calabia, r &hree G/H cases were -led with the Court of Dirst Instance( G.H commenced by @y against DA and Corbeta G2H Dor damages, was -led by an in8ured passenger, )ibrado &aer, against @y, the operator of the public utility vehicle, and insurer, Mabuhay Insurance and Euaranty Co GMIECH G/HInstituted by herein private respondents against the following( DA and Corbeta for damages due to JuasiOdelict" EI as insurer of the truc#" @y for breach of contract of carriage" and MIEC as insurer of the &oyota &amaraw &hese cases were later on transferred to Branch II of the Fegional &rial Court of Butuan City &he court rendered its decisionU5V holding that Corbetas negligence was the pro%imate cause of the collision &he -ndings of the trial court stated that the truc# which crossed over to the other lane was speeding because after the collision, its left front wheel was detached and the truc# traveled for about -fty G50H meters and fell into a ravine I@?( >hether the respondent court erred in holding EI solidarily liable with the negligent insuredownerOoperator of the Chevrolet truc# for damages awarded to private respondents which are beyond the limitations of the insurance policy and the Insurance Memorandum Circular o 5O4 F@)IE( Petitioners position insofar as 8oint liability is concerned is not tenable It is now established that the in8ured or the heirs of a deceased victim of a vehicular accident may sue directly the insurer of the vehicle ote that common carriers are reJuired to secure Compulsory Motor Qehicle )iability Insurance UCMQ)IV coverage as provided under ec /= U./V of the Insurance Code, precisely for the bene-t of victims of vehicular accidents and to e%tend them immediate relief Compulsory Motor Qehicle )iability Insurance Gthird party liability, or &P)H is primarily intended to provide compensation for the death or bodily in8uries su9ered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles &he victims andor their defendants UdependentsV are assured of immediate -nancial assistance, regardless of the -nancial capacity of motor vehicle owners %%% &he in8ured for whom the contract of insurance is intended can sue directly the insurer &he general purpose of statutes enabling an in8ured person to proceed directly against the insurer is to protect in8ured persons against the insolvency of the insured who causes such in8ury, and to give such in8ured person a certain bene-cial interest in the proceeds of the policy, and statutes are to be liberally construed so that their intended purpose may be accomplished It has even been held that such a provision creates a contractual relation which inures to the bene-t of any and every person who may be negligently in8ured by the named insured as if such in8ured person were speci-cally named in the policy !owever, although the victim may proceed directly against the insurer for indemnity, the third party liability is only up to the e%tent of the insurance policy and those reJuired by law >hile it is true that where the insurance contract provides for indemnity against liability to third persons, and such third persons can directlyU.V sue the insurer, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held liable in U.4V Dor the liability of the insurer is solidum with the insured andor the other parties found at fault based on contract" that of the insured carrier or vehicle owner is based on tort U.3V &he liability of EI based on the insurance contract is direct, but not solidary with that of the DA &he latters U2.V liability is based separately on Article 2.40 U20V of the Civil Code ;bviously, the insurer could be held liable only up to the e%tent of what was provided for by the contract of insurance, in accordance with CMQ)I law At the time of the incident, the schedule of indemnities for death andor bodily in8uries, professional fees, hospital and other charges payable under a CMQ)I coverage was provided under the Insurance Memorandum Circular GIMCH o 5O4 which was approved on ovember .0, .34, at twelve thousand GP.2,00000H pesos per victim ConseJuently, heirs of the victims who died in the May 3, .33 vehicular incident, could proceed G.H against EI for the indemnity of P.2,000 for each dead victim, and against DA and Euillermo Corbeta for any other damages or e%penses claimed" or G2H against DA and Corbeta to pay them all their claims in full It follows also that in8ured victims, Eloria Sho Qda de Calabia and Qictoria Sho, could claim their medical e%penses for eight thousand nine hundred thirtyO-ve pesos and si% centavos GP4,3/50
. Jurisdiction o 1nsurance *ommission 5H P!I)IPPI? AM?FICA )ID? I@FAC? C;MPA+ and F;7FIE; 7? ); F?+?vs !; AFMA7; AA)7;, in his capacity as Insurance Commissioner, and FAM; M;&I))A PA&?F;, 1F DAC&( April ., .34hether or not the resolution of the legality of the Contract of Agency falls within the 8urisdiction of the Insurance Commissioner Private respondent contends that the Insurance Commissioner has 8urisdiction to ta#e cogniance of the complaint in the e%ercise of its JuasiO8udicial powers &he olicitor Eeneral, upholding the 8urisdiction of the Insurance Commissioner, claims that under ections =.= and =.5 of the Insurance Code, the Commissioner has authority to nullify the alleged illegal provisions of the Contract of Agency F@)IE( &he general regulatory authority of the Insurance Commissioner is described in ection =.= of the Insurance Code, to wit( &he Insurance Commissioner shall have the duty to see that all laws relating to insurance, insurance companies and other insurance matters, mutual bene-t associations and trusts for charitable uses are faithfully e%ecuted and to perform the duties imposed upon him by this Code, ;n the other hand, ection =.5 provides( In addition to the administrative sanctions provided elsewhere in this Code, the Insurance Commissioner is hereby authoried, at his discretion, to impose upon insurance companies, their directors andor o$cers andor agents, for any willful failure or refusal to comply with, or violation of any provision of this Code, or any order, instruction, regulation or ruling of the Insurance Commissioner, or any commission of irregularities, andor conducting business in an unsafe and unsound manner as may be determined by the the Insurance Commissioner, the following( GaH -nes not in e%cess of -ve hundred pesos a day" and GbH suspension, or after due hearing, removal of directors andor o$cers andor agents A plain reading of the aboveOJuoted provisions show that the Insurance Commissioner has the authority to regulate the business of insurance, which is de-ned as follows( G2H 5he term Kdoing an insurance businessK or Ktransacting an insurance business,K ithin the meaning o this *ode, shall include making or proposing to make, as insurer, any insurance contractE making, or proposing to make, as surety, any contract o suretyship as a vocation and not as merely incidental to any other legitimate business or activity o the suretyE
