Professional Documents
Culture Documents
Insurance-Digests Complete PDF
Insurance-Digests Complete PDF
2. The Insurance Code has vested the Office of the Insurance Commission
Insurance Business with both regulatory and adjudicatory authority over insurance matters. Hence,
Insurance Commissioner Malinis’ decision in refusing to release the security
REPUBLIC v DEL MONTE MOTORS, INC deposit pursuant to the writ of garnishment should be given respect since he
(G.R. No. 156956, October 9, 2006) has been given great discretion to regulate the business to protect the public.
Also “An implied trust is created by the law for the benefit of all claimants under
FACTS: subsisting insurance contracts issued by the insurance company.” He
On January 15, 2002, Vilfran Liner lost in a case against Del Monte Motors. believed that the security deposit was exempt from execution to protect the
They were made to pay 11 million pesos for service contracts with Del Monte, policy holders.
and such was sourced from the counterbond posted by Vilfran. It was Capital The business of insurance is imbued with public interest. It is subject to
Insurance and Surety Co., Inc. (CISCO) which issued the counterbond. regulation by the State, with respect not only to the relations between the
insurer and the insured, but also to the internal affairs of insurance companies.
RTC further issued a writ of execution commanding the sheriff to levy the
amount on the property of CISCO. To completely satisfy the amount, the
Insurance Commissioner Malinis was also commanded to withdraw the
security deposit filed by CISCO with the Insurance Commission according to
Sec 203 of the Insurance Code for the payment of the insurance indemnity
won by Del Monte Motor against Vilfran Liner, the insured.
Malinis didn’t obey the order, so the respondent moved to cite him in contempt
of Court.
ISSUE:
1. W/N security deposits made with the Insurance Commission may be levied
and garnished.
2. W/N the Insurance Commissioner has power to withhold the release of the
security deposit.
RULING:
1. NO. As worded in Sec 203, the law expressly & clearly states that the
security deposit shall be (1) answerable for all the obligations of the depositing
insurer under its insurance contracts; (2) at all times free from any liens or
encumbrance; and (3) exempt from levy by any claimant.
To allow the garnishment of that deposit would impair the fund by decreasing
it to less than the percentage of paid-up capital that the law requires to be
maintained. The securities required by the Insurance Code to be deposited
with the Insurance Commissioner are intended to answer for the claims of all
policy holders in the event that the depositing insurance company becomes
insolvent or otherwise unable to satisfy their claims.
The security deposit must be ratably distributed among all the insured who are
entitled to their respective shares; it cannot be garnished or levied upon by a
single claimant, to the detriment of the others.
One test that they have applied is whether the assumption of risk and In short, even if petitioner assumes the risk of paying the cost of these services
indemnification of loss (which are elements of an insurance business) are the even if significantly more than what the member has prepaid, it nevertheless
principal object and purpose of the organization or whether they are merely cannot be considered as being engaged in the insurance business.
incidental to its business. If these are the principal objectives, the business is
that of insurance. But if they are merely incidental and service is the principal Overall, petitioner appears to provide insurance-type benefits to its members
purpose, then the business is not insurance. (with respect to its curative medical services), but these are incidental to the
principal activity of providing them medical care. Therefore, since it
FACTS: substantially provides health care services rather than insurance services, it
Petitioner is a domestic corporation whose primary purpose is "[t]o establish, cannot be considered as being in the insurance business.
maintain, conduct and operate a prepaid group practice health care delivery
system or a health maintenance organization to take care of the sick and In adopting the "principal purpose test" used in the above-quoted U.S. cases,
disabled persons enrolled in the health care plan and to provide for the we are not saying that petitioner's operations are identical in every respect to
administrative, legal, and financial responsibilities of the organization". those of the HMOs or health providers which were parties to those cases.
What we are stating is that, for the purpose of determining what "doing an
Respondent Commissioner of Internal Revenue [CIR] sent petitioner a formal insurance business" means, we have to scrutinize the operations of the
demand letter and the corresponding assessment notices demanding the business as a whole and not its mere components.
payment of deficiency taxes, including surcharges and interest. The deficiency
[documentary stamp tax (DST)] assessment was imposed on petitioner's
health care agreement with the members of its health care program.
ISSUE:
W/N the contract issued by the HMO is subject to documentary stamp tax for
bonds and other insurance contracts?
RULING:
NO. Petitioner is admittedly an HMO. Under RA 7875 (or "The National Health
Insurance Act of 1995"), an HMO is "an entity that provides, offers or arranges
for coverage of designated health services needed by plan members for a
fixed prepaid premium". The payments do not vary with the extent, frequency
or type of services provided.
One test that they have applied is whether the assumption of risk and
indemnification of loss (which are elements of an insurance business) are the
principal object and purpose of the organization or whether they are merely
incidental to its business. If these are the principal objectives, the business is
that of insurance. But if they are merely incidental and service is the principal
purpose, then the business is not insurance.
FACTS:
White Gold marine services procured a protection and indemnity coverage for
its vessels from Steamship Mutual through Pioneer Insurance and Surety
Corporation. When White Gold failed to fully pay its accounts, Steamship
Mutual refused to renew the coverage. Steamship Mutual filed a case against
White Gold for a collection of sum of money while White Gold, filed a complaint
against Steamship Mutual saying that the company has not secured a license
from the Insurance Commission despite its engagement in the insurance
business. They contend that Pioneer Insurance needs to procure a separate
licence as an agent of Steamship Mutual.
ISSUES:
1. Is Steamship Mutual engaging in the insurance business in the Philippines?
2. Does Pioneer Insurance need a separate license as an agent of
Steamship?
RULING:
1. A marine insurance undertakes to indemnify the assured against marine
losses. A mutual insurance company is a cooperative enterprise where the
members are both the insurer and the insured. In it, members all contribute,
by a system of premiums or assessments, to the creation of a fund from which
all losses and liabilities are paid, and where the profits are divided among
themselves, in proportion to their interest. Steamship Mutual is a P & I club,
which is a form of insurance against third party liability, where the third party
is anyone other than the P & I club and the members. By definition, Steamship
Mutual as a P & I Club is a mutual insurance association engaged in the
marine insurance business.
FACTS:
Fidelity and Surety Insurance Company of the Philippines issued Fire
Insurance Policy No. F- 18876 covering Rafael (Rex) Verendia’s residential
building located at Tulip Drive, Beverly Hills, Antipolo, Rizal in the amount of
P385,000.00. Designated as beneficiary was the Monte de Piedad & Savings
Bank. Verendia also insured the same building with two other companies,
namely, The Country Bankers Insurance for P56,000.00 under Policy No.
PDB-80-1913 and The Development Insurance for P400,000.00 under Policy
No. F-48867.
While the three fire insurance policies were in force, the insured property was
completely destroyed by fire on the early morning of December 28, 1980.
Fidelity was accordingly informed of the loss and despite demands, refused
payment under its policy, thus prompting Verendia to file a complaint.
Fidelity, among other things, averred that the policy was avoided by reason of
over-insur-ance; that Verendia maliciously represented that the building at the
time of the fire was leased under a contract executed on June 25, 1980 to a
certain Roberto Garcia, when actually it was a Marcelo Garcia who was the
lessee.
ISSUES:
1. W/N the contract of lease submitted by Verendia to support his claim on the
fire insurance policy constitutes a false declaration which would forfeit his
benefits under Section 13 of the policy
RULING:
1. YES. Verendia used a false lease contract to support his claim under Fire
Insurance Policy No. F-18876, the terms of the policy should be strictly
construed against the insured. Verendia failed to live by the terms of the policy,
specifically Section 13 thereof which is expressed in terms that are clear and
unambiguous, that all benefits under the policy shall be forfeited “If the claim
be in any respect fraudulent, or if any false declaration be made or used in
support thereof, or if any fraudulent means or devises are used by the Insured
On January 12, 1981, fire broke out in the compound of Transworld, razing Conformably, it stands to reason that the doubt should be resolved against
the middle portion of its four-span building and partly gutting the left and right the petitioner, Rizal Surety Insurance Company, whose lawyer or managers
sections thereof. A two-storey building (behind said four-span building) where drafted the fire insurance policy contract under scrutiny. Citing the aforecited
fun and amusement machines and spare parts were stored, was also provision of law in point, the Court in Landicho vs. Government Service
destroyed by the fire. Transworld filed its insurance claims with Rizal Surety & Insurance System, ruled:
Insurance Company and New India Assurance Company but to no avail.
"This is particularly true as regards insurance policies, in respect of which it is
Private respondent brought against the said insurance companies an action settled that the 'terms in an insurance policy, which are ambiguous, equivocal,
for collection of sum of money and damages. Petitioner Rizal Insurance or uncertain . . . are to be construed strictly and most strongly against the
countered that its fire insurance policy sued upon covered only the contents insurer, and liberally in favor of the insured so as to effect the dominant
of the four-span building, which was partly burned, and not the damage purpose of indemnity or payment to the insured, especially where forfeiture is
caused by the fire on the two-storey annex building. involved' (29 Am. Jur., 181), and the reason for this is that the 'insured usually
has no voice in the selection or arrangement of the words employed and that
ISSUE: the language of the contract is selected with great care and deliberation by
W/N the two-storey building was included in the coverage of the insurance experts and legal advisers employed by, and acting exclusively in the interest
policy issued by Rizal Surety to Transworld? of, the insurance company.' (44 C.J.S., p. 1174)."
I. Introduction; 4
RULING:
YES. Resolution of the issues posited here hinges on the proper interpretation PHILAMCARE HEALTH SYSTEMS INC. v CA
of the stipulation in subject fire insurance policy regarding its coverage, which (379 SCRA 356)
reads:
FACTS:
". . . contained and/or stored during the currency of this Policy in the premises Ernani Trinos, deceased husband of respondent Julita Trinos, was issued a
occupied by them forming part of the buildings situate (sic) within own Health Care Agreement for a health coverage with petitioner Philamcare
Compound . . ." Health Systems Inc. During the period of Ernani’s coverage, he suffered a
heart attack and was confined in the hospital. Respondent tried to claim the
Therefrom, it can be gleaned unerringly that the fire insurance policy in benefits under the health care agreement, but petitioner denied her claim.
question did not limit its coverage to what were stored in the four-span Petitioner asserted, among other things, that only medical and hospitalization
building. benefits are given under the agreement without any indemnification – unlike
ISSUE:
W/N the health care agreement was an insurance contract.
RULING:
Yes, the health care agreement was an insurance contract. More particularly,
it was one in the nature of a non-life insurance, which is primarily a contract of
indemnity. An insurance contract exists when the following elements concur:
FACTS: An insurance contract is a contract of indemnity upon the terms and conditions
Producers Bank of the Philippines (Producers) filed a case against Fortune specified therein. It is settled that the terms of the policy constitute the
Insurance and Surety Co., Inc. (Fortune) for recovery of the sum of measure of the insurer's liability. In the absence of statutory prohibition to the
P725,000.00 under the policy issued by Fortune. The sum was allegedly lost contrary, insurance companies have the same rights as individuals to limit
during a robbery of Producer’s armored vehicle while it was in transit. Fortune, their liability and to impose whatever conditions they deem best upon their
in refusing to pay, invokes a provision in their insurance contract which obligations not inconsistent with public policy.
provides:
However, in this case there is a disagreement between the parties on the
"GENERAL EXCEPTIONS correct meaning of the terms "employee" and "authorized representatives." It
is clear to us that insofar as Fortune is concerned, it was its intention to
The company shall not be liable under this policy in respect of exclude and exempt from protection and coverage losses arising from
dishonest, fraudulent, or criminal acts of persons granted or having
xxx xxx xxx unrestricted access to Producers' money or payroll. When it used then the
term "employee," it must have had in mind any person who qualifies as such
(b) any loss caused by any dishonest, fraudulent or criminal act of the insured as generally and universally understood, or jurisprudentially established in the
or any officer, employee, partner, director, trustee or authorized representative light of the four standards in the determination of the employer-employee
of the Insured whether acting alone or in conjunction with others. . . . " relationship, 21 or as statutorily declared even in a limited sense as in the case
of Article 106 of the Labor Code which considers the employees under a
According to Producers, Atiga (Guard) and Magalong (Driver) are not its "labor-only" contract as employees of the party employing them and not of the
“officer, employee, … trustee or authorized representative … at the time of the party who supplied them to the employer. In short, for these particular tasks,
robbery. the driver and security guard acted as agents of Producers. A "representative"
is defined as one who represents or stands in the place of another; one who
RTC ruled in favor of Producers saying that Magalong and Atiga were not represents others or another in a special capacity, as an agent, and is
employees or representatives of Producers but were merely the assigned interchangeable with "agent."
armored car driver and security guard in which the CA affirmed in toto. Hence,
a petition for certiorari was filed alleging loss falls within the general exceptions
clause of the contract. According to them, there exist an employee-employer
relationship between them and Producers.
ISSUE:
W/N the petitioner is liable under the Money, Security, and Payroll Robbery
policy it issued to the private respondent.
RULING:
NO. Fortune is exempt from liability under the general exceptions clause.
Petitioner’s claims were denied prompting them to file a complaint with the
RTC. The RTC ruled in favor of the respondent holding that the insurance
policy only included the two swimming pools. The CA affirmed this ruling.
Hence, this petition.
ISSUE:
Does the insurance policy extend to “any property insured by this policy” and
must thus cover the damage made to all the properties in the resort?
RULING:
NO. The insurance policy only includes the two swimming pools.
It is basic that all the provisions of the insurance policy should be examined
and interpreted in consonance with each other. A careful examination of the
premium recapitulation will show that it is the clear intent of the parties to
extend earthquake shock coverage only to the two swimming pools.
Petitioner’s Contention:
The subrogation in the Release of Claim it executed in favor of respondent
was conditioned on recovery of the total amount of damages petitioner had
sustained. Since total damages were valued by petitioner at P9,486.43 and
only P5,000.00 was received by petitioner from respondent, petitioner argues
that it was entitled to go after San Miguel Corporation to claim the additional
P4,500.00 eventually paid to it by the latter, without having to turn over said
amount to respondent.
Twelve (12) days after the cargoes arrived in Manila, a non-licensed customs
broker who was assigned by GETC to facilitate the release of the subject
cargoes, found out, while he was about to cause the release of the said
cargoes, that the same were stored only in a room with two (2) air conditioners
running, to cool the place instead of a refrigerator.
After examination, it was discovered that the ELISA reading of vaccinates sera
are below the positive reference serum. As a consequence of the foregoing
result of the veterinary biologics test, SMITHKLINE abandoned the shipment
and, declaring total loss for the unusable shipment. The insurance company
paid the loss.
Trial ensued and ultimately concluded with the petitioner being held solidarily
liable for the loss.
ISSUE:
W/N there was legal subrogation on the part of the Insurance Company?
The deceased was 59 years old when he entered into contract #9558 and
9529 with Eternal Gardens Memorial Park in October 1982 for the total
maximum insurable amount of P100,000.00 each. No application for group
Insurance was submitted in out office prior to his death on August 2, 1984.
The check was picked up, and issued receipt on September 28 (the following
day), and encashed on October 1. However, on the evening of September 27
(when the check was not picked up), one of the cars got stolen. Petitioner filed
a claim with the insurance company but the insurance company denied liability
arguing that there was still no insurance contract at the time of loss.
ISSUE:
W/N there was a binding insurance contract between petitioner and
respondent at the time of loss.
Marina, the Manila South Harbor arrastre, received the shipment and Notably, Seaboard already incurred delay when it failed to settle New World’s
inspected that the two vans bore signs of external damage, while the third van claim as required in Sec 243. Under Sec 244, a prima facie evidence of
appeared unscathed. The three generator sets were examined by New World, unreasonable delay in payment of the claim is created by the failure of the
Federal Builders (the project contractor) and New World’s insurer, Seaboard– insurer to pay the claim within the time fixed in Sec 243.
Eastern Insurance Company. It revealed that all three sets suffered extensive
damage and could no longer be repaired. Seaboard should pay interest on the proceeds of the policy for the duration of
the delay until the claim is fully satisfied at the legal rate of interest of 12% p.a.
New World demanded recompense for its loss. LEP and NYK denied liability. as provided in Central Bank Circular. Sec 244 also provides for an award of
Since Seaboard covered the goods with a marine insurance policy, New World attorney’s fees and other expenses incurred by the assured due to the
sent a formal claim against them. For the processing of the claim, Seaboard unreasonable withholding of payment of his claim.
required New World to submit an itemized list of the damaged units, parts, and
accessories, with corresponding values. New World insisted that the
insurance policy did not include such submission for an insurance claim.
Seaboard refused to process the claim. New World filed an action for specific
performance and damages.
RULING:
The marine open policy that Seaboard issued to New World was an all-risk
policy. Such a policy insured against all causes of conceivable loss or damage
except when otherwise excluded or when the loss or damage was due to fraud
or intentional misconduct committed by the insured. The policy covered all
losses during the voyage whether or not arising from a marine peril. The policy
enumerated certain exceptions like unsuitable packaging, inherent vice, delay
in voyage, or vessels unseaworthiness, among others. But Seaboard had
been unable to show that New Worlds loss or damage fell within some or one
of the enumerated exceptions.
FACTS: Thus, Absent such written claim filed by the person suing under an insurance
In the morning of July 20, 1980, Feliza Vineza de Mendoza, 78 years old while contract, no cause of action accrues under such insurance contract,
walking along the streets was bumped by a taxi that was running fast and was considering that it is the rejection of that claim that triggers the running of the
seen was seen sprawled on the pavement by Rolando Marvilla, Ernesto Lopez one-year prescriptive period to bring suit in court, and there can be no
and Eulogio Tabalno who also helped and brought her to the hospital. This opportunity for the insurer to even reject a claim if none has been filed in the
resulted to her death caused by traumatic shock as a result of the severe first place, as in the instant case.
injuries she sustained.
Third, there is a misapplication of law by the trial court. the trial court did not
Her son (respondent) filed a complaint for damages against Armando Abellon distinguish between the private respondent's cause of action against the
as the owner of the Taxi and Rodrigo Dumlao as the driver. And subsequently, owner and the driver of the Lady Love taxicab and his cause of action against
he amended the complaint to include Travellers Insurance as the compulsory petitioner. The former is based on torts and quasi-delicts while the latter is
insurer of the said taxicab. based on contract. While it is true that where the insurance contract provides
for indemnity against liability to third persons, such third persons can directly
RTC, held Travellers Insurance to be solitarily liable against private sue the insurer, however, the direct liability of the insurer under indemnity
respondent with the taxicab driver and operator. CA affirmed RTC’s decision. contracts against third party liability does not mean that the insurer can be
held solidarily liable with the insured and/or the other parties found at fault.
ISSUE: W/N the trial court’s decision is proper. The liability of the insurer is based on contract; that of the insured is based on
tort.
RULING: NO
First, No insurance contract was presented nor a subpoena duces tecum is And lastly, assuming arguendo that it is the insurer of the Lady Love taxicab
issued to have the insurance produced covering the Lady Love taxicab that in question, its liability is limited to only P50, 000.00, this being its standard
could determine the extent of the liability of the Insurer and whether the person amount of coverage in vehicle insurance policies. It bears repeating that no
injured has the right to sue the insurer of the party at fault (insured). copy of the insurance contract was ever proffered before the trial court by the
private respondent, notwithstanding knowledge of the fact that the latter's
The right of the person injured to sue the insurer of the party at fault (insured), complaint against petitioner is one under a written contract. Thus, the trial
depends on whether the contract of insurance is intended to benefit third court proceeded to hold petitioner liable for an award of damages exceeding
persons also or on the insured. And the test applied has been this: Where the its limited liability of P50,000.00. These only shows beyond doubt that the trial
contract provides for indemnity against liability to third persons, then third court was under the erroneous presumption that petitioner could be found
persons to whom the insured is liable can sue the insurer. Where the contract liable absent proof of the contract and based merely on the proof of reckless
is for indemnity against actual loss or payment, then third persons cannot imprudence on the part of the driver of the Lady Love taxicab that fatally hit
proceed against the insurer, the contract being solely to reimburse the insured private respondent's mother.
for liability actually discharged by him thru payment to third persons, said third
persons recourse being thus limited to the insured alone.
The application was forwarded to the head office of the company at Montreal, A letter will not be presumed to have been received by the addressee unless
Canada and on November 26, 1917 a notice of acceptance was sent by cable it is shown that it was deposited in the post-office, properly addressed and
to Manila. (There is no evidence however, whether on the same day the cable stamped.
was received notice was sent by the Manila office of Herrer that the application
had been accepted)
On December 4, 1917, the policy was issued. On December 18, 1917, Herrer
communicated his desire to withdraw his application through his lawyer.
The local office replied to Mr. Torres, stating that the policy had been issued,
and called attention to the notification of November 26, 1917. The reply was
received by Herrer's council a day after the latter died.
ISSUE:
Whether or not the insurance contract between Sun Life and Herrer has been
perfected
RULING:
NO, the contract for a life annuity in the case at bar was not perfected because
it has not been proved satisfactorily that the acceptance of the application ever
came to the knowledge of the applicant.
RULING:
NO. The binding deposit receipt is merely conditional and does not insure
outright.
Where an agreement is made between the applicant and the agent, no liability
shall attach until the principal approves the risk and a receipt is given by the
agent. The acceptance is merely conditional, and is subordinated to the act of
the company in approving or rejecting the application. Thus, in life insurance,
a "binding slip" or "binding receipt" does not insure by itself.
FACTS:
Petitioner purchased a car from MGM Motors (MGM). In purchasing such, he
paid a downpayment of Php200,000 and a reservation fee of Php5,000. Then
the succeeding payments we alleged to be paid in checks. After such
purchase, he registered the car, and have it insured by Ayala Insurance
Corporation (AIC).
One day, petitioner parked the car in a street, and the car was lost. He then
tried to claim for the insurance from AIC, but AIC refused to pay because the
former cannot prove insurable interest over the car. Petitioner then went to
MGM to procure the documents so that he can prove his insurable interest.
MGM failed to render the documents alleging that petitioner failed to pay.
MGM claimed that the agreement was to pay in lump sum, not installments.
Moreover, MGM alleged that the checks petitioner paid bounced. Thus, the
matter was brought to court.
ISSUE:
W/N insurable interest was proven.
RULING:
NO. Insurable interest was not proven. What was proven was merely the
payment of the Php200,000. Partial payment is not conclusive as to the proof
of insurable interest is concerned. The payment of installment basis was not
even proven in this case. Moreover, it was rebutted that MGM presented that
the sales invoice indicated was on Cash on Delivery (COD). In effect, the
evidence presented by the petitioner has failed to substantiate the proof of
insurable interest. The burden of proof lies on the party alleging the existence
of insurable interest. Petitioner failed to overcome such burden.
GOYU cannot seek relief under Section 53 of the Insurance Code which
provides that the proceeds of insurance shall exclusively apply to the interest
of the person in whose name or for whose benefit it is made. The peculiarity
of the circumstances obtaining in the instant case presents a justification to
take exception to the strict application of said provision, it having been
sufficiently established that it was the intention of the parties to designate
RCBC as the party for whose benefit the insurance policies were taken out.
Consider thus the following:
This Court can not over stress the fact that upon receiving its copies of the
endorsement documents prepared by Alchester, GOYU, despite the absence
written conformity thereto, obviously considered said endorsement to be
sufficient compliance with its obligation under the mortgage contracts since
RCBC accordingly continued to extend the benefits of its credit facilities and
GOYU continued to benefit therefrom. Just as plain too is the intention of the
parties to constitute RCBC as the beneficiary of the various insurance policies
obtained by GOYU. The intention of the parties will have to be given full force
and effect in this particular case. The insurance proceeds may, therefore, be
exclusively applied to RCBC, which under the factual circumstances of the
case, is truly the person or entity for whose benefit the policies were clearly
intended.
FACTS:
Petitioner owns a store which offers a variety of goods for sale. Among their
products are jeans and clothes made and distributed by Intercapitol Marketing
Corporation (IMC) and Levi Strauss (Phils.) Inc. (LSPI) which are the local
distributor of products bearing trademarks owned by Levi Strauss & Co. The
controversy arose when a fire gutted the store owned by petitioner. The fire
caused a huge amount of damage and causing the goods in the building,
including those by IMC and LSPI, to perish. However, IMC and LSPI
separately obtained from respondent fire insurance policies with book debt
endorsements which covers "unpaid account still appearing in the Book of
Account of the Insured 45 days after the time of the loss covered under the
Policy. When the respondent was subrogated to the rights of the insured, it
demanded payment from petitioner for the accounts that remained unpaid
even after the loss. Petitioner argues that IMC bears the risk of loss because
it expressly reserved ownership of the goods by stipulating in the sales
invoices that [i]t is further agreed that merely for purpose of securing the
payment of the purchase price the above described merchandise remains the
property of the vendor until the purchase price thereof is fully paid.
ISSUE:
Who bears the risk of loss?
RULING:
Petitioner bears the risk of loss. As a general rule, the goods remain at the
seller's risk until the ownership therein is transferred to the buyer, but when
the ownership therein is transferred to the buyer the goods are at the buyer's
risk whether actual delivery has been made or not. However, where delivery
of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been
retained by the seller merely to secure performance by the buyer of his
obligations under the contract, the goods are at the buyer's risk from the
time of such delivery. Thus, when the seller retains ownership only to insure
that the buyer will pay its debt, the risk of loss is borne by the
buyer. Accordingly, petitioner bears the risk of loss of the goods delivered.
It is evident from the face of the complaint that petitioners are not entitled to a
favorable judgment in light of Article 2011 of the Civil Code which expressly
provides that insurance contracts shall be governed by special laws, i.e., the
Insurance Code. Section 53 of the Insurance Code
Pursuant thereto, it is obvious that the only persons entitled to claim the
insurance proceeds are either the insured, if still alive; or the beneficiary, if the
insured is already deceased, upon the maturation of the policy. The exception
to this rule is a situation where the insurance contract was intended to bene t
third persons who are not parties to the same in the form of favorable
stipulations or indemnity. In such a case, third parties may directly sue and
claim from the insurer.
Petitioners are third parties to the insurance contracts with Insular and
Grepalife and, thus, are not entitled to the proceeds thereof. Accordingly,
respondents Insular and Grepalife have no legal obligation to turn over the
insurance proceeds to petitioners.
The revocation of Eva as a beneficiary in one policy and her disquali cation
as such in another are of no moment considering that the designation of the
illegitimate children as beneficiaries in Loreto's insurance policies remains
valid. Because no legal proscription exists in naming as bene ciaries the
children of illicit relationships by the insured, the shares of Eva in the insurance
proceeds, whether forfeited by the court in view of the prohibition on donations
under Article 739 of the Civil Code or by the insurers themselves for reasons
based on the insurance contracts, must be awarded to the said illegitimate
children, the designated bene ciaries, to the exclusion of petitioners. It is only
ISSUES:
1. W/N Eulogio has insurable interest over his own life under Policy No
9011992.
2. W/N Eulogio was able to reinstate the lapsed insurance policy on his life
In an Amended Answer, JVL and Lim admitted the existence of the lease
agreement but asserted that it is in reality a sale of equipment on instalment
basis, with FEB acting as the financier. On November 22, 2002, the trial court
ruled in favor of JVL and Lim and stressed the contradictory terms found in
the lease agreement. The trial court stated, among others, that if JVL and Lim
(then defendants) were to be regarded as only a lessee, logically the lessor
who asserts ownership will be the one directly benefited or injured and
therefore the lessee is not supposed to be the assured as he has no insurable
interest.
AFPGIC entered the fray by filing before the Labor Arbiter an Omnibus Motion
to Quash Notice/Writ of Garnishment and to Discharge AFPGIC's Appeal
Bond on the ground that said bond "has been cancelled and thus non-existent
in view of the failure of Radon Security to pay the yearly premiums." However,
both Labor Arbiter and NLRC denied the motion. In dismissing the appeal of
AFPGIC, the NLRC pointed out that AFPGIC's theory that the bond cannot
anymore be proceeded against for failure of Radon Security to pay the
premium is untenable, considering that the bond is effective until the finality of
the decision. The NLRC stressed that a contrary ruling would allow
respondents to simply stop paying the premium to frustrate satisfaction of the
money judgment.
ISSUE:
W/N the bond was already cancelled for non-payment of premium.
RULING:
NO, the bond remains enforceable and under the jurisdiction of the NLRC until
it is discharged.
The petitioner contends that under Section 64 of the Insurance Code, which
is deemed written into every insurance contract or contract of surety, an
insurer may cancel a policy upon non-payment of the premium. Said
cancellation is binding upon the beneficiary as the right of a beneficiary is
subordinate to that of the insured. Hence, according to petitioner, the Court of
Appeals committed a reversible error in not holding that under Section 77 of
the Insurance Code, the surety bond between it and Radon Security was not
Petitioner now asserts that its payment by installment of the premiums for the
insurance policies invalidated said policies because of the provisions of Sec.
77 of the Insurance Code, as amended, and by the conditions stipulated by
the insurer in its receipts, disclaiming liability for loss occurring before payment
of premiums.
It argues that where the premium is not actually paid in full, the policy would
only be effective if there is an acknowledgment in the policy of the receipt of
premium pursuant to Sec. 78 of the Insurance Code. The absence of an
express acknowledgment in the policies of such receipt of the corresponding
premium payments, and petitioner's failure to pay said premiums on or before
the effective dates of said policies rendered them invalid. Petitioner thus
concludes that there cannot be a perfected contract of insurance upon mere
partial payment of the premiums because under Sec. 77 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
consequence, petitioner seeks a refund of all premium payments made on the
alleged invalid insurance policies.
ISSUE:
W/N payment by installment of the premiums due on an insurance policy
invalidates the contract of insurance.
RULING:
The SC held that the subject policies are valid even if the premiums were paid
on installments. The records clearly show that petitioner and private
respondent intended subject insurance policies to be binding and effective
notwithstanding the staggered payment of the premiums. The initial insurance
Tuscany case has provided a fourth exception to Section 77, namely, that the
insurer may grant credit extension for the payment of the premium. This simply
means that if the insurer has granted the insured a credit term for the payment
of the premium and loss occurs before the expiration of the term, recovery on
the policy should be allowed even though the premium is paid after the loss
but within the credit term.
American Home filed the petition reiterating its stand that there was no existing A policy may declare that a violation of specified provisions thereof shall avoid
insurance contract between the parties. It invoked Section 77 of the Insurance it, otherwise the breach of an immaterial provision does not avoid the policy.
Code, which provides that no policy or contract of insurance issued by an
insurance company is valid and binding unless and until the premium thereof Respondent acquired several co-insurers and he failed to disclose this
has been paid and the case of Arce v. Capital Insurance that until the premium information to petitioner. Nonetheless, petitioner is estopped from invoking
is paid there is no insurance. this argument due to the loss adjuster’s admission of previous knowledge of
the co-insurers.
3. Yes. Petitioner is liable to pay the loss. But there is merit in petitioner’s
grievance against the damages and attorney’s fees awarded. There was no
basis for an award for loss of profit. This cannot be shouldered by petitioner
whose obligation is limited to the object of insurance.
FACTS:
On April 1, 1960, a fire insurance policy was delivered by Philippine Phoenix
Surety & Insurance Co. (insurer) in favor of Woodworks Inc. (insured). On
September 22 of the same year, Woodworks paid 3,000 pesos on account of
the total premium of 6, 051.95. Woodworks did not pay the remaining balance.
ISSUES:
1. Was there a perfected contract of insurance despite the fact that
Woodworks did not pay the full amount of the premium?
2. Did Woodworks’ failure to pay the unpaid balance of the premium produce
the effect of cancelling the contract of insurance?
RULING:
1. YES, there was a perfected contract of insurance. This is taken from the
fact that Phoenix had already issued the policy in favor of Woodworks and
that the latter had paid 3,000 pesos on account of the total premium of 6, 051.
95. Although it was perfected, it was only partially performed (since
Woodworks did not pay the full premium)
But due to the fact it was perfected, it had already bound both parties. Phoenix
already had the obligation to pay the amount stated on the policy in case
Woodworks should suffer loss under the fire insurance policy while
Woodworks had the obligation to pay the unpaid premium.
2. Woodwork’s failure to pay did not cancel the contract of insurance. This
is because to rule that non – payment of premiums would cancel the contract
of insurance would in effect place exclusively in the hands of one of the
contracting parties the right to decide whether the contract should stand or
not.
Instead, the legal effect produced by Woodwork’s failure to pay is that the
parties to the contract could demand from each other the performance of
whatever obligations they had assumed. In this case, the insurer (Phoenix)
has the option to either sue for specific performance, or sue for the rescission
PTEC informed WIC about the incident. After the adjustment company issued
a report to WIC, WIC denied the claim on the ground that WIC’s investigation
revealed that the entire shipment of logs covered by the two marines policies
were received in good order at their point of destination. Moreso, WIC is in the
position that the claim of PTEC is being denied on the ground that the cover
note is null and void for lack of valuable consideration
ISSUE:
W/N the Cover Notes are null and void for lack of consideration (non-payment
of premiums).
RULING:
The Cover Notes remain to be valid.
PTEC paid in full all the premiums as called for by the statement Issued by
WIC after the issuance of the two regular marine insurance policies, thereby
leaving no account unpaid by PTEC due on the insurance coverage, which
must be deemed to include the Cover Note. If the Note is to be treated as a
separate policy instead of integrating it to the regular policies
The non-acceptance of the insurance plan by Pacific Life was allegedly not
communicated by petitioner Mondragon to private respondent Ngo Hing.
Instead, on May 6, 1957, Mondragon wrote back Pacific life again strongly
recommending the approval of the 20-year endowment life insurance on the
ground that Pacific Life is the only insurance company not selling the 20-year
endowment insurance plan to children, pointing out that since 1954 the
customers, especially the Chinese, were asking for such coverage.
It was when things were in such state that as May 28, 1957 Helen Go died of
influenza with complication of bronchopneumonia. Thereupon, private
respondent sought the payment of the proceeds of the insurance, but having
failed in his effort, he filed the action for the recovery of the same before the
Court of First Instance of Cebu, which rendered the adverse decision.
ISSUE:
W/N the binding deposit receipt constituted a temporary contract of the life
insurance in question.
The RTC denied petitioner's motion to dismiss upholding the claim of private
respondents' counsel that the running of the 10-year period was "stopped" on
May 25, 1983 when private respondents requested for a reconsideration of
the denial and it was only on February 14, 1995 when petitioner finally
decided to deny their claim that the 10-year period began to run.
Petitioner filed a petition for certiorari under Rule 65 of the Rules of Court in
the Court of Appeals but the latter denied the same. Hence, the present
petition for review.
ISSUE:
W/N the complaint filed by private respondents for payment of life insurance
proceeds is already barred by prescription of action.
RULING:
The Supreme Court ruled that the RTC committed a grave abuse of discretion
when, in resolving the motion for reconsideration of petitioner, it arbitrarily
ruled in its Order that the period of ten (10) years had not yet lapsed.
ISSUE:
W/N the automatic increase clause in the policy was an integral part of the
policy and involves only one transaction
RULING:
YES. The “automatic increase clause” in the policy is an integral part of the
policy and does not involve another transaction. Section 50 in the Insurance
Code states that it may contain any word, phrase, clause, mark, sign, symbol,
signature, number, or word necessary to complete the contract of insurance.
It is thus clear that any rider, clause, warranty or endorsement pasted or
attached to the policy is considered part of such policy or contract of
insurance.
ISSUE:
W/N Rizal Surety is liable for loss of the two-storey building considering that
the fire insurance policy sued upon covered only the contents of the four-span
building.
RULING:
Yes, Rizal Surety is liable for the loss of the two-storey building.
The Supreme Court agrees with the findings of the lower courts in contending
that the so-called “annex” of the four-span building is not an annex building
but an integral and inseparable part of the four-span building described in the
policy and consequently, the machines and spare parts stored therein were
covered by the fire insurance in dispute.
GREAT PACIFIC LIFE ASSURANCE CORP v CA Grepalife merely relied on the testimony of Dr. Mejia, as supported by the
(G.R. No. 113899, October 13, 1999) information given by the widow of the decedent. Grepalife asserts that Dr.
Mejias technical diagnosis of the cause of death of Dr. Leuterio was a duly
FACTS: documented hospital record, and that the widows declaration that her husband
A contract of group life insurance was executed between Great Pacific Life had possible hypertension several years ago should not be considered as
Assurance Corporation (Grepalife) and Development Bank of the Philippines hearsay, but as part of res gestae. However, the medical findings were not
(DBP). Grepalife agreed to insure the lives of eligible housing loan mortgagors conclusive because Dr. Mejia did not conduct an autopsy on the body of the
of DBP. One of these mortgagors was Dr. Wilfredo Leuterio. In an application decedent. Dr. Mejia stated that he had no knowledge that the insured
form, Dr. Leuterio answered questions concerning his health condition in decedent had any previous hospital confinement. Dr. Leuterios death
which Grepalife issued the insurance thereafter. certificate stated that hypertension was only the possible cause of death. The
widows statement, as to the medical history of her husband, was due to her
7. Have you ever had, or consulted, a physician for a heart condition, high unreliable recollection of events. Hence, the statement of the physician was
blood pressure, cancer, diabetes, lung, kidney or stomach disorder or any properly considered by the trial court as hearsay.
other physical impairment?
Answer: NO. There was however no sufficient proof that the insured had suffered from
8. Are you now, to the best of your knowledge, in good health? hypertension. Aside from the statement of the insureds widow who was not
Answer: YES even sure if the medicines taken by Dr. Leuterio were for hypertension, the
appellant had not proven nor produced any witness who could attest to Dr.
A year later Dr. Leuterio died due to massive cerebral hemorrhage. DBP Leuterios medical history.
submitted a death claim to Grepalife but Grepalife denied the claim alleging
that Dr. Leuterio was not physically healthy when he applied for an insurance The fraudulent intent on the part of the insured must be established to entitle
coverage. Grepalife alleged that Dr. Leuterio did not disclose that he had been the insurer to rescind the contract. Misrepresentation as a defense of the
suffering from hypertension, which caused his death. Allegedly, such non- insurer to avoid liability is an affirmative defense and the duty to establish such
disclosure constituted concealment that justified the denial of the claim. defense by satisfactory and convincing evidence rests upon the insurer. In the
case at bar, the petitioner failed to clearly and satisfactorily establish its
Dr. Leuterio widow filed a complaint with the RTC against Grepalife for defense, and is therefore liable to pay the proceeds of the insurance.
Specific Performance with Damages. During the trial, Dr. Mejia, who issued
the death certificate, was called to testify. Dr. Mejias findings, based partly
from the information given by the respondent widow, stated that Dr. Leuterio
complained of headaches presumably due to high blood pressure. The
inference was not conclusive because Dr. Leuterio was not autopsied, hence,
other causes were not ruled out.
The RTC rendered a decision in favor of respondent widow. The Court of
Appeals sustained the trial courts decision.
ISSUE: W/N Dr. Leuterio concealed that he had hypertension, which would
vitiate the insurance contract?
RULING:
NO. Concealment exists where the assured had knowledge of a fact material
to the risk, which honesty, good faith, and fair dealing requires that he should
FACTS:
Robert John Bacani procured a life insurance contract for himself from
petitioner-company, designating his mother Bernarda Bacani, herein private
respondent, as the beneficiary. He was issued a policy valued at P100,000.00
with double indemnity in case of accidental death. Sometime after, the insured
died in a plane crash. Bernarda filed a claim with petitioner, seeking the
benefits of the insurance policy taken by her son.
However, said insurance company rejected the claim on the ground that the
insured did not disclose material facts relevant to the issuance of the policy,
thus rendering the contract of insurance voidable. Petitioner discovered that
two weeks prior to his application for insurance, the insured was examined
and confined at the Lung Center of the Philippines, where he was diagnosed
for renal failure.
The RTC, as affirmed by the CA, this fact was concealed, as alleged by the
petitioner. But the fact that was concealed was not the cause of death of the
insured and that matters relating to the medical history of the insured is
deemed to be irrelevant since petitioner waived the medical examination prior
to the approval and issuance of the insurance policy.
ISSUE:
W/N the concealment of such material fact, despite it not being the cause of
death of the insured, is sufficient to render the insurance contract voidable.
RULING:
YES. Section 26 of the Insurance Code is explicit in requiring a party to a
contract of insurance to communicate to the other, in good faith, all facts within
his knowledge which are material to the contract and as to which he makes
no warranty, and which the other has no means of ascertaining.
Anent the finding 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 sufficient that his non-disclosure
misled the insurer in forming his estimates of the risks of the proposed
insurance policy or in making inquiries.
The SC ruled that petitioner properly exercised its right to rescind the contract
of insurance by reason of the concealment employed by the insured. It must
PHILAMCARE HEALTH SYSTEMS INC. v CA The fraudulent intent on the part of the insured must be established to warrant
(379 SCRA 356) rescission of the insurance contract. Concealment as a defense for the health
care provider or insurer to avoid liability is an affirmative defense and the duty
The health care agreement was in the nature of non-life insurance, which is to establish such defense by satisfactory and convincing evidence rests upon
primarily a contract of indemnity. Being a contract of adhesion, the terms of the provider or insurer.
an insurance contract are to be construed strictly against the party which
prepared the contract – the insurer. Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract – the insurer.
FACTS: By reason of the exclusive control of the insurance company over the terms
Ernani Trinos, deceased husband of respondent Julita Trinos, was issued a and phraseology of the insurance contract, ambiguity must be strictly
Health Care Agreement for a health coverage with petitioner Philamcare interpreted against the insurer and liberally in favor of the insured, especially
Health Systems Inc. During the period of Ernani’s coverage, he suffered a to avoid forfeiture. This is equally applicable to Health Care Agreements.
heart attack and was confined in the hospital. Respondent tried to claim the
benefits under the health care agreement, but petitioner denied her claim.
Petitioner asserted, among other things, that only medical and hospitalization
benefits are given under the agreement without any indemnification – unlike
in an insurance contract where the insured is indemnified for his loss. As a
result, respondent wound up paying the hospitalization expenses herself.
ISSUE:
W/N there is concealment of material fact made by Ernani.
RULING:
NO, he did not conceal a material fact.
FACTS:
Jaime Canilang applied for a "non-medical" insurance policy with respondent
Great Pacific Life Assurance Company ("Great Pacific") naming his wife,
petitioner Thelma Canilang, as his beneficiary. Jaime eventually died. As the
beneficiary of Jaime’s insurance policy, petitioner thereafter filed a claim with
Great Pacific. However, Great Pacific denied her claim on the ground that
Jaime had concealed material information from it – that is, that he had twice
consulted a doctor, and that he was found to have been suffering from "sinus
tachycardia" and "acute bronchitis", prior to his insurance policy application.
ISSUE:
W/N Great Pacific’s denial of petitioner’s claim was justified on the ground of
material concealment as to the state of the insured’s health at the time of the
filing of insurance application.
RULING:
YES, the denial of petitioner’s claim was justified. The relevant statutory
provisions at the time Great Pacific issued the insurance contract and at the
time Jaime died, are Sections 26 and 28 of the Insurance Code of 1978. These
provisions read as follows:
"Sec. 26. A neglect to communicate that which a party knows and ought
to communicate, is called a concealment."
xxx xxx xxx
Sec. 28. Each party to a contract of insurance must communicate to the
other, in good faith, all factors within his knowledge which are material
to the contract and as to which he makes no warranty, and which the
other has not the means of ascertaining." (Emphases supplied)
ISSUE:
1. W/N Manuel is guilty of concealing his illness when he kept blank and did
not answer questions in his pension plan application regarding the condition
he suffered from.
2. W/N Manuel was bound by the failure of respondents Perla and Ma. Celeste
to declare the condition of Manuel's health in the pension plan application.
3. W/N or not Philam Plans' approval of Manuel's pension plan application and
acceptance of his premium payments precluded it from denying Lourdes'
claim.
To hold now that the original parties to the insurance contract intended to
BONIFACIO BROS., INC., ET AL. v. MORA confer upon the appellants the benefit claimed by them would require as to
(G.R. No. L-20853, May 29, 1967) ignore the indispensable requisite that a stipulation pour autrui must be
clearly expressed by the parties, which we cannot do.
FACTS:
Enrique Mora, owner of an Oldsmobile sedan, mortgaged the same to the H.S. Another cogent reason for not recognizing a right of action by the appellants
Reyes, Inc., with the condition that the former would insure the automobile, against the insurance company is that "a policy of insurance is a distinct and
with the latter as beneficiary. The automobile was thereafter insured with the independent contract between the insured and insurer, and third persons have
State Bonding & Insurance Co. Inc., and motor car insurance policy A-0615 no right either in a court of equity, or in a court of law, to the proceeds of it,
was issued to Enrique Mora. unless there be some contract of trust, expressed or implied, by the insured
and third person". In this case, no contract of trust, expressed or implied exists.
During the effectivity of an insurance contract, the car met with an accident.
The insurance company then assigned the accident to the H.H. Bayne The appellant's claim, if at all, is merely equitable in nature and must be made
Adjustment Co. for investigation and appraisal of the damage. Enrique Mora, effective through Enrique Mora who entered into a contract with the Bonifacio
without the knowledge and consent of the H.S. Reyes, Inc., authorized the Bros Inc.
Bonifacio Bros. Inc. to furnish the labor and materials, some of which were
supplied by the Ayala Auto Parts Co. The insurance company, after claiming
a franchise in the amount of P100, drew a check in the amount of P2,002.73,
as proceeds of the insurance policy, payable to the order of Enrique Mora or
H.S. Reyes, Inc., and entrusted the check to the H.H. Bayne Adjustment Co.
for disposition and delivery to the proper party. In the meantime, the car was
delivered to Enrique Mora without the consent of the H.S. Reyes, Inc., and
without payment to the Bonifacio Bros. Inc. and Ayala Auto Parts Co. of the
cost of repairs and materials.
Upon the theory that the insurance proceeds should be paid directly to them,
the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. filed a complaint with
the Municipal Court against Enrique Mora and the State Bonding & Insurance
Co. Inc. for the collection of the sum of P2,002.73.
ISSUE:
W/N 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.
RULING:
NO. In the instant case the insurance contract does not contain any words or
clauses to disclose an intent to give any benefit to any repairmen or material
men in case of repair of the car in question. The parties to the insurance
contract omitted such stipulation, which is a circumstance that supports the
said conclusion. On the other hand, the "loss payable" clause of the insurance
FACTS:
Buenaventura Ebrado was issued by The Insular Life Assurance a whole-life
plan with a rider for accidental death benefits and the former designated
Carponia Ebrado, his common-law wife as his revocable beneficiary. Upon his
death, Carponia Ebrado had filed with the insurer a claim for the proceeds of
the policy but she admits that they were merely living as husband and wife
without the benefit of marriage. Pascuala Vda. de Ebrado also filed her claim
as the widow and asserts she is the one entitled to the insurance proceeds.
ISSUE:
Who is entitled to the proceeds of the insurance?
RULING:
The widow, Pascuala Vda. de Ebrado. Section 50 of the Insurance Act
provides that “the insurance shall be applied exclusively to the proper interest
of the person in whose name it is made” but the word “interest” highly suggests
that the provision refers only to the insured and not the beneficiary, since a
contract of insurance is personal in character. Rather, the general rules of civil
law should be applied since Article 2011 states that the contract of insurance
is a special law and matters not expressly provided shall be regulated by the
civil law.
Under Article 2012 of the same Code, “any person who is forbidden from
receiving any donation under Article 739 cannot be named beneficiary of a life
insurance policy by the person who cannot make a donation to him”. Common-
law spouses are barred from receiving donations from each other. The
essence of an insurance policy is no different from a civil donation since both
are founded on liberality. The beneficiary is the done in this matter and as a
consequence, Article 739 of the new Civil Code should equally apply in life
insurance contracts: any person who cannot receive a donation cannot be
named as a beneficiary in the life insurance policy of the person who cannot
make the donation.
There is also no need for a conviction for adultery or concubinage since Article
739 provides that the guilt of the done may be proved by preponderance of
evidence in the same action.
FACTS:
Jose Consuegra was employed as a shop foreman of the Office of the District
Engineer in Surigao Del Norte. In his lifetime, he contracted two marriages;
with Rosario Diaz and Basilia Berdin respectively.
Being a GSIS member when he died, the proceeds of his life insurance were
paid to Berdin and her children who were the named beneficiaries named in
the policy. Likewise, being in government service for 22.5028 years, he was
entitled to retirement insurance benefits, for which no beneficiary was
designated.
Both families filed their clams with the GSIS, which ruled that the legal heirs
were Diaz who is entitled to one-half of the retirement benefits and Berdin,
with her children, the other half.
ISSUE:
To whom should the retirement insurance benefits be paid.
RULING:
Both families are entitled to half of the retirement benefits.
The beneficiary named in the life insurance does not automatically become
the beneficiary in the retirement insurance. When Consuegra, during the early
part of 1943, or before 1943, designated his beneficiaries in his life insurance,
he could not have intended that the same be the beneficiaries of his retirement
insurance because the provisions on retirement insurance under GSIS came
about only when CA 186 was amended by RA 660 on June 1951.
Sec. 11(b) clearly indicates that there is need for the employee to file an
application for retirement insurance benefits when he becomes a GSIS
member and to state his beneficiary. The life insurance and the retirement
insurance are two separate and distinct systems of benefits paid out from two
separate and distinct funds.
ISSUE:
W/N the non-presentation of the insurance contract or policy is fatal to
respondent’s cause of action.
RULING:
No, the non-presentation of the insurance contract or policy is not fatal in the
case.
PHIL-NIPPON KYOEI, CORP. v. GUDELOSAO Upon a petition for certiorari, the CA found that the NLRC erred when it ruled
(G.R. No. 181375, July 13, 2016) that the obligation of petitioner, TEMMPC and TMCL for the payment of death
benefits under the POEA-SEC was ipso facto transferred to SSSICI upon the
death of the seafarers. TEMMPC and TMCL cannot raise the defense of the
FACTS: total loss of the ship because its liability under POEAS-EC is separate and
Phil-Nippon Kyoei, Corp. (Kyoei), a domestic shipping corp., purchased a "Ro- distinct from the liability of the shipowner. The CA then ordered that
Ro" passenger/cargo vessel "MV Mahlia" in Japan in February 2003. For the petitioner's liability will only be extinguished upon payment by SSSICI of the
vessel's one month conduction voyage from Japan to the Philippines, Kyoei, insurance proceeds.
as local principal, and Top Ever Marine Management Maritime Co., Ltd.
(TMCL), as foreign principal, hired Edwin C. Gudelosao, Virgilio A. ISSUES:
Tancontian, and six other crewmembers. They were hired through the local 1. W/N the doctrine of real and hypothecary nature of maritime law (also
manning agency of TMCL, Top Ever Marine Management Philippine known as the limited liability rule) applies in favor of Kyoei.
Corporation (TEMMPC). 2. W/N the CA erred in ruling that the liability of Kyoei is extinguished only
upon SSSICI's payment of insurance proceeds.
Kyoei secured a Marine Insurance Policy (Maritime Policy No. 00001) from
South Sea Surety & Insurance Co., Inc. (SSSICI), over the vessel for RULING:
P10,800,000 against loss, damage, and third party liability or expense, arising 1. NO, the doctrine of limited liability does not apply.
from the occurrence of the perils of the sea for the voyage of the vessel from
Onomichi, Japan to Batangas, Philippines. This Marine Insurance Policy Kyoei (petitioner) was the local principal of the deceased seafarers for the
included Personal Accident Policies for the eight crewmembers for conduction trip of MV Mahlia. Petitioner hired them through TMCL, which
P3,240,000 each in case of accidental death or injury. also acted through its agent, TEMMPC. Petitioner admitted its role as a
principal of its agents TMCL, TEMMPC and Capt. Orbeta in their Joint
On February 24, 2003, while still within Japanese waters, the vessel sank due Partial Appeal before the NLRC. As such, it is solidarily liable with
to extreme bad weather condition. Only Chief Engineer Nilo Macasling TEMMPC and TMCL for the benefits under the POEA-SEC.
survived the incident while the rest of the crewmembers, including Gudelosao
and Tancontian, perished. Doctrine of limited liability is not applicable to claims under POEA-SEC.
The liability of the shipowner or agent under the POEA-SEC has nothing
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed to do with the provisions of the Code of Commerce regarding maritime
separate complaints for death benefits and other damages against Kyoei, commerce. It is a liability created by contract between the seafarers and
TEMMPC, Capt. Orbeta, TMCL, and SSSICI, with the Arbitration Branch of their employers, but secured through the State's intervention. The death
the National Labor Relations Commission (NLRC). benefits under the POEA-SEC are intended to be separate and distinct
from, and in addition to, whatever benefits the seafarer is entitled to under
On August 5, 2004, Labor Arbiter (LA) Pablo S. Magat rendered a Decision Philippine laws, including those benefits which may be claimed from the
finding solidary liability among Kyoei, TEMMPC, TMCL and Capt. Orbeta. The State Insurance Fund.
LA, however, ruled that the liability of petitioner shall be deemed extinguished
only upon SSSICI's payment of the insurance proceeds Moreover, petitioner's claim that the limited liability rule and its
corresponding exception (i.e., where the vessel is insured) apply here is
On appeal, the NLRC modified the LA Decision and absolved Kyoei, irrelevant because petitioner was not found liable under tort or quasi-delict.
TEMMPC and TMCL and Capt. Orbeta from any liability based on the limited Moreover, the insurance proceeds contemplated under the exception in
liability rule. It, however, affirmed SSSICI's liability after finding that the the case of a lost vessel are the insurance over the vessel and pending
Personal Accident Policies answer for the death benefit claims under the
2. YES, the CA erred in ruling that the liability of Kyoei is extinguished only
upon SSSICI's payment of insurance proceeds.
Since petitioner is not the party liable for the value of the insurance
proceeds, it follows that the limited liability rule does not apply as well.
The trial court ruled in favor of petitioners. However, such was modified by the
appellate court when Pioneer appealed the case.
ISSUES:
1. W/N in cases of marine insurance, there is a warranty of seaworthiness
by the cargo owner
2. W/N the loss of the cargo was due to the perils of the sea, not perils of
the ship
RULING:
1. The liability of the marine insurance company is governed by Section 113
of the Insurance Code which provides:
“In every marine insurance upon a ship or freight, or freightage, or upon any
thing which is the subject of the marine insurance, a warranty is implied that
the ship is seaworthy.”
There can be no mistaking that the term “cargo” can be subject of marine
insurance and that once it is so made, the implied warranty of seaworthiness
immediately attaches to whoever is insuring the cargo whether he be the
shipowner or not. Further, the fact that the unseaworthiness of the ship was
unknown to the insured is immaterial in the ordinary marine insurance and
may not be used by him as a defense in order to recover on the marine
insurance policy.
Since this is the case, it becomes the obligation of cargo owner to look for a
reliable common carrier which keeps its vessels in seaworthy condition. The
CATHAY INSURANCE v. CA
(G.R. No. 76145, June 30, 1987.)
FACTS:
A complaint was filed by respondent Remington Industrial Sales Corporation
against petitioner Cathay Insurance company seeking collection of the sum of
P868,339.15 representing private respondent's losses and damages incurred
in a shipment of seamless steel pipes under an insurance contract in favor of
the said private respondent as the insured, consignee or importer of aforesaid
merchandise while in transit from Japan to the Philippines on board vessel SS
"Eastern Mariner." The total value of the shipment was P2,894,463.83 at the
prevailing rate of P7.95 to a dollar in June and July 1984, when the shipment
was made.
The petitioner argues that the insistence of respondent that rusting is a peril
of the sea is erroneous.
ISSUE:
W/N the rusting of steel pipes in the course of a voyage is a "peril of the sea"
in view of the toll on the cargo of wind, water, and salt conditions.
RULING:
There is no question that the rusting of steel pipes in the course of a voyage
is a "peril of the sea" in view of the toll on the cargo of wind, water, and salt
conditions. At any rate if the insurer cannot be held accountable therefor, we
would fail to observe a cardinal rule in the interpretation of contracts, namely,
that any ambiguity therein should be construed against the
maker/issuer/drafter thereof, namely, the insurer. Besides the precise purpose
of insuring cargo during a voyage would be rendered fruitless. Be it noted that
any attack of the 15-day clause in the policy was foreclosed right in the pre-
trial conference.
ISSUE: Institute Cargo Clauses extends to all damages/losses suffered by the insured
1. W/N Filipino Merchants is precluded by the said time-bar rule. cargo except (a) loss or damage or expense proximately caused by delay, and
(b) loss or damage or expense proximately caused by the inherent vice or
2. W/N the "all risks" clause of the marine insurance policy held the petitioner nature of the subject matter insured.
liable to the private respondent for the partial loss of the cargo,
notwithstanding the clear absence of proof of some fortuitous event, casualty, Generally, the burden of proof is upon the insured to show that a loss arose
or accidental cause to which the loss is attributable. from a covered peril, but under an "all risks" policy the burden is not on the
insured to prove the precise cause of loss or damage for which it seeks
3. W/N The Court of Appeals erred in not holding that the private respondent
compensation. The insured under an "all risks insurance policy" has the initial
had no insurable interest in the subject cargo, hence, the marine insurance
burden of proving that the cargo was in good condition when the policy
policy taken out by private respondent is null and void.
attached and that the cargo was damaged when unloaded from the vessel.
The burden then shifts to the insurer to show the exception to the coverage.
RULING:
This creates a special type of insurance which extends coverage to risks not
1.YES. The pertinent provision of the Carriage of Goods by Sea Act does not
usually contemplated and avoids putting upon the insured the burden of
only apply to the shipper but also applies to the insurer. The coverage of the
establishing that the loss was due to the peril falling within the policy's
Carriage of Goods by Sea Act includes the insurer of the goods. Otherwise,
coverage; the insurer can avoid coverage upon demonstrating that a specific
what the Act intends to prohibit after the lapse of the one year prescriptive
provision expressly excludes the loss from coverage.
period can be done indirectly by the shipper or owner of the goods by simply
filing a claim against the insurer even after the lapse of one year. This would
Upon arrival in Manila, the shipment was divided and loaded into two barges
(barge 1 – 610 logs; barge 2 – 598 logs), towed by one tugboat. Unfortunately,
barge 2 was damaged causing the loss of 497 logs.
Lower courts held that Oriental Assurance is liable being that the loss of 497
out of 598 logs is deemed a constructive total loss as provided in Sec 139 of
the insurance code:
Lower courts ratiocinated that the loss of 497 logs out of the 598 logs carried
in the same barge amounted to more than ¼ or 75% loss of value.
ISSUE:
W/N liability attaches to Oriental Assurance.
RULING:
NO.
On November 18, 1993, Wyeth procured Marine Policy No. MAR 13797 In Heirs of George Y. Poe v. Malayan Insurance Company, Inc., 42 the Court
(Marine Policy) from respondent Philippines First Insurance Co., Inc. ruled that:
(Philippines First) to secure its interest over its own products. On December
1, 1993, Wyeth executed its annual contract of carriage with Reputable, “[W]here the insurance contract provides for indemnity against liability to
however, the contract was not signed by Wyeth’s representatives. third persons, the liability of the insurer is direct and such third persons can
Nevertheless, it was admittedly signed by the representatives of Reputable. directly sue the insurer. The direct liability of the insurer under indemnity
contracts against third party[-]liability does not mean, however, that the insurer
Under the contract, Reputable undertook to answer for "all risks with respect can be held solidarily liable with the insured and/or the other parties found at
to the goods and shall be liable to the COMPANY (Wyeth), for the loss, fault, since they are being held liable under different obligations. The liability
destruction, or damage of the goods/products due to any and all causes of the insured carrier or vehicle owner is based on tort, in accordance
whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and with the provisions of the Civil Code; while that of the insurer arises
other force majeure while the goods/products are in transit and until actual from contract, particularly, the insurance policy.”
delivery to the customers, salesmen, and dealers of the COMPANY". The
contract also required Reputable to secure an insurance policy on Wyeth’s The court held that Reputable is a private carrier, primarily based on the
goods. Hence, Reputable signed a Special Risk Policy (SR Policy) with unrebutted testimony of Reputable's Vice President and General Manager,
petitioner Malayan for the amounf of P1M. Mr. William Ang Lian Suan, who expressly stated in open court that Reputable
serves only one customer, Wyeth. As previously held, A common carrier
On October 6, 1994, Reputable received from Wyeth 1,000 boxes of Promil becomes a private carrier when it undertakes to carry a special cargo or
infant formula worth P2,357,582.70 to be delivered by Reputable to Mercury chartered to a special person only. 29 For all intents and purposes, therefore,
Drug Corporation in Libis, Quezon City. Unfortunately, the truck was hijacked Reputable operated as a private/special carrier with regard to its contract of
by about 10 armed men. They threatened to kill the truck driver and two of his carriage with Wyeth.
helpers should they refuse to turn over the truck and its contents to the said
highway robbers. The hijacked truck was recovered two weeks later without Being a private carrier, the extent of its liability is fully governed by the
its cargo. stipulations of the contract of carriage, one of which is that it shall be liable to
Wyeth for the loss of the goods/products due to any and all causes
whatsoever, including theft, robbery and other force majeure while the
GENERAL EXCEPTIONS The three acted as agents of Producers. A "representative" is defined as one
The company shall not be liable under this policy in respect of who represents or stands in the place of another; one who represents others
xxx xxx xxx or another in a special capacity, as an agent, and is interchangeable with
"agent."
(b) any loss caused by any dishonest, fraudulent or criminal act of the
insured or any officer, employee, partner, director, trustee or authorized In view of the foregoing, Fortune is exempt from liability under the general
representative of the Insured whether acting alone or in conjunction with exceptions clause of the insurance policy.
others. . . .
The armored car was driven by Benjamin Magalong Y de Vera and escorted
by Security Guard Saturnino Atiga Y Rosete. Magalong and Atiga with three
others were charged as liable for the robbery. Fortune denies Producer’s Bank
of its insurance claim. The trial court and the court appeals ruled in favor of
recovery, hence, the case at bar.
ISSUE:
W/N Fortune is liable under the Money, Security, and Payroll Robbery policy
it issued to Producer’s Bank or whether recovery thereunder is precluded
under the general exceptions clause.
RULING:
YES, recovery is precluded under the general exemption clause.
The insurance policy entered into by the parties is a theft or robbery insurance
policy which is a form of casualty insurance. In burglary, robbery, and theft
insurance, "the opportunity to defraud the insurer is so great that insurers have
found it necessary to fill up their policies with countless restrictions to reduce
this hazard. Persons frequently excluded under such provisions are those in
the insured's service and employment. The purpose of the exception is to
guard against liability should the theft be committed by one having unrestricted
ISSUE:
W/N PPSII should be held liable for respondent Arriesgado in behalf of
petitioners.
FACTS:
The petitioner issued Personal Accident Policy No. 05687 to Felix Lim, Jr. with
a face value of P200,000.00. Two months later, he was dead with a bullet
wound in his head. Pilar Nalagon, Lim's secretary, was the only eyewitness to
his death. According to Nalagon, Lim was in a happy mood (but not drunk)
and was playing with his handgun, from which he had previously removed the
magazine. As she watched television, he stood in front of her and pointed the
gun at her. She pushed it aside and said it might he loaded. He assured her it
was not and then pointed it to his temple. The next moment there was an
explosion and Lim slumped to the floor. He was dead before he fell.
As beneficiary, his wife Nerissa Lim sought payment on the policy but her
claim was rejected.
The petitioner agreed that there was no suicide. It argued, however that there
was no accident either.
ISSUE:
W/N, there was an “accident” and the beneficiary is entitled to receive the
payment of the policy.
RULING:
YES. 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 expected by the person to whom it happens.
Lim was unquestionably 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. There 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.
"Intentional" as used in an accident policy excepting intentional injuries A gun which discharges while being cleaned and kills a bystander; a hunter
inflicted by the insured or any other person, etc., implies the exercise of the who shoots at his prey and hits a person instead; an athlete in a competitive
reasoning faculties, consciousness, and volition. Where a provision of the game involving physical effort who collides with an opponent and fatally
injures him as a result: these are instances where the infliction of the injury is
policy excludes intentional injury, it is the intention of the person inflicting the
unintentional and therefore would be within the coverage of an accidental
injury that is controlling. death benefit clause such as that in question in this case. But where a gang
of robbers enter a house and coming face to face with the owner, even if
Whether robbers have the intent to kill or merely to scare the victim or to ward unexpectedly, stab him repeatedly, it is contrary to all reason and logic to say
off any defense he might offer, it cannot be denied that the act itself of inflicting that his injuries are not intentionally inflicted, regardless of whether they prove
injuries is intentional. fatal or not. As it was, in the present case they did prove fatal, and the robbers
have been accused and convicted of the crime of robbery with homicide.
FACTS:
Deceased was insured with defendant-insurer under Policy No. 398075 for The case of Calanoc vs. Court of Appeals relied upon by the court are different
the sum of P5,000.00 and, under a supplementary contract denominated from those obtaining here. The insured there was a watchman in a certain
"Accidental Death Benefit Clause, for an additional sum of P5,000.00 if "the company, who happened to be invited by a policeman to come along as the
death of the Insured resulted directly from bodily injury effected solely through latter was on his way to investigate a reported robbery going on in a private
external and violent means sustained in an accident and independently of all house. As the two of them, together with the owner of the house, approached
other causes." The clause, however, expressly provided that it would not apply and stood in front of the main gate, a shot was fired and it turned out
where death resulted from an injury "intentionally inflicted by a third party." afterwards that the watchman was hit in the abdomen, the wound causing his
death. Under those circumstances this Court held that it could not be said that
Thereafter, a band of robbers entered the house of the deceased who the killing was intentional for there was the possibility that the malefactor had
received thrusts from their sharp-pointed instruments, causing wounds on his fired the shot to scare the people around for his own protection and not
body resulting in his death. The band of robbers were charged and convicted necessarily to kill of hit the victim. A similar possibility is clearly ruled out by
with the crime of robber with homicide. the facts in the case now before Us. For while a single shot fired from a
distance, and by a person who was not even seen aiming at the victim, could
Plaintiffs, as beneficiaries of the insured, filed a claim under the policy. The indeed have been fired without intent to kill or injure, nine wounds inflicted with
insurance company paid the basic amount of P5,000.00 but refused to pay bladed weapons at close range cannot conceivably be considered as innocent
the additional sum of P5,000.00 under the accidental death benefit clause, on insofar as such intent is concerned. The manner of execution of the crime
the ground that the insured's death resulted from injuries intentionally inflicted permits no other conclusion.
by third parties and therefore was not covered.
"Intentional" as used in an accident policy excepting intentional injuries
ISSUE: inflicted by the insured or any other person, etc., implies the exercise of the
W/N the injuries were intentionally inflicted. reasoning faculties, consciousness, and volition. Where a provision of the
policy excludes intentional injury, it is the intention of the person inflicting the
RULING: injury that is controlling.
YES. Whether the robbers had the intent to kill or merely to scare the victim
or to ward off any defense he might offer, it cannot be denied that the act itself
of inflicting the injuries was intentional. It should be noted that the exception
in the accidental benefit clause invoked by the appellant does not speak of the
ISSUE:
W/N PPSII should be held liable for respondent Arriesgado in behalf of
petitioners.
FACTS: Also, the insurance policy involved explicitly limits petitioner’s liability to
Cayas was the registered owner of a Mazda bus which was insured with P12,000.00 per person and to P50,000.00 per accident
petitioner PERLA COMPANIA DE SEGUROS, INC (PCSI). The bus figured in
an accident in Cavite, injuring several of its passengers. One of them, Perea,
sued Cayas for damages in the CFI, while three others agreed to a settlement Clearly, the fundamental principle that contracts are respected as the law
of P4,000.00 each with Cayas. between the contracting parties finds application in the present case. Thus, 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
After trial, the court rendered a decision in favor of Perea, Cayas ordered to the insurance policy.
compensate the latter with damages. Cayas filed a complaint with the CFI,
seeking reimbursement from PCSI for the amounts she paid to ALL victims,
alleging that the latter refused to make such reimbursement notwithstanding We observe that although Cayas was able to prove a total loss of only
the fact that her claim was within its contractual liability under the insurance P44,000.00, petitioner was made liable for the amount of P50,000.00, the
policy. maximum liability per accident stipulated in the policy. This 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
The decision of the CA affirmed in toto the decision of the RTC of Cavite, the as an instrument of enrichment by reason of an accident.
dispositive portion of which states:
In this petition for review on certiorari, petitioner seeks to limit its liability only
to the payment made by private respondent to Perea and only up to the
amount of P12,000.00. It altogether denies liability for the payments made by
private respondents to the other 3 injured passengers totaling P12,000.00.
ISSUE:
How much should PCSI pay.
RULING:
The decision of the CA is modified, petitioner only to pay Cayas
P12,000,000.00
FACTS:
This is a case concerning a compulsory motor vehicle liability insurance.
Plaintiff (Jose Del Rosario) was involved in an accident as he was about to
embark on a public utility bus owned by De Dios Marikina Transport Co (herein
private respondent). Due to the injuries he suffered, Plaintiff was confined in
the hospital for 44 days and incurred medical expenses. A case was then filed
against private respondent by plaintiff to which the RTC. On the other hand,
private respondent commenced a third party complaint against herein
petitioner. The RTC rendered a decision ordering herein petitioner to
indemnify private respondent with the amount of P12,000 as the individual
passenger liability embodied on the policy. On appeal, the Court of Appeals
modified the decision of the RTC in terms of the amount of the third party
complaint from P12,000 to P50,000.
ISSUE:
W/N the petitioner is only liable for the individual passenger liability and not
the maximum claimable amount in the policy.
RULING:
YES. As embodied clearly in the insurance policy, the maximum liability of
petitioner for damages arising from death or bodily injury at P12,000.00 per
passenger and its maximum liability per accident at P50,000.00. Clearly,
petitioner can only be held liable for a maximum amount of P50,000 regardless
of the number of passengers and the kind of accident that they figure in.
However, in this case, considering that only one passenger was involved in
an accident, it follows that petitioner can only be held liable for the amount of
individual passenger liability and not the maximum amount.
Thus, the bus company may not recover from the insurance company (herein
petitioner) more than P12,000.00 per passenger killed or injured, or fifty
thousand (P50,000.00) pesos per accident even if under the judgment of the
court, the erring bus operator will have to pay more than P12,000.00 to each
injured passenger.