White Gold v Pioneer G.R. No. 154514.

July 28, 2005

J. Quisimbing

Facts:

White Gold procured a protection and indemnity coverage for its vessels from The Steamship
Mutual through Pioneer Insurance and Surety Corporation. White Gold was issued a Certificate of
Entry and Acceptance. Pioneer also issued receipts. When White Gold failed to fully pay its
accounts, Steamship Mutual refused to renew the coverage.

Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to
recover the unpaid balance. White Gold on the other hand, filed a complaint before the Insurance
Commission claiming that Steamship Mutual and Pioneer violated provisions of the Insurance
Code.

The Insurance Commission dismissed the complaint. It said that there was no need for Steamship
Mutual to secure a license because it was not engaged in the insurance business and that it was
a Protection and Indemnity Club (P & I club). Pioneer was not required to obtain another license
as insurance agent because Steamship Mutual was not engaged in the insurance business.

The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision,
the appellate court distinguished between P & I Clubs vis-à-vis conventional
insurance. The appellate court also held that Pioneer merely acted as a collection agent of
Steamship Mutual.

Hence this petition by White Gold.

Issues:

1. Is Steamship Mutual, a P & I Club, engaged in the insurance business in the Philippines?
2. Does Pioneer need a license as an insurance agent/broker for Steamship Mutual?

Held:

1. Yes. The test to determine if a contract is an insurance contract or not, depends on the nature
of the promise, the act required to be performed, and the exact nature of the agreement in the
light of the occurrence, contingency or circumstances under which the performance becomes
requisite.

Basically, an insurance contract is a contract of indemnity. In particular, a marine insurance

undertakes to indemnity the assured against marine losses incident to a marine adventure.
Relatedly, a mutual insurance company is a cooperative enterprise (association) where the
members are both the insurer and insured. A P&I Club is a form of insurance against third party
liability, where the third party is anyone other than the P&I Club and the members.

The records reveal Steamship Mutual is doing business in the country albeit without the
requisite certificate of authority mandated by Section 187 of the Insurance Code. It maintains a
resident agent in the Philippines to solicit insurance and to collect payments in its
behalf. Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-
payment of the calls. Thus, to continue doing business here, Steamship Mutual or through its
agent Pioneer, must secure a license from the Insurance Commission.

Since a contract of insurance involves public interest, regulation by the State is necessary. Thus,
no insurer or insurance company is allowed to engage in the insurance business without a license
or a certificate of authority from the Insurance Commission.

2. Yes. Pioneer is the resident agent of Steamship Mutual as evidenced by

the certificate of registration issued by the Insurance Commission. It has been licensed to do or
transact insurance business by virtue of the certificate of authority issued by the same
agency. However, a Certification from the Commission states that Pioneer does not have a
separate license to be an agent/broker of Steamship Mutual.

Although Pioneer is already licensed as an insurance company, it needs a separate license to act
as insurance agent for Steamship Mutual. Section 299 of the Insurance Code clearly states:
SEC. 299 No person shall act as an insurance agent or as an insurance broker in the solicitation
or procurement of applications for insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company doing business in the Philippines
or any agent thereof, without first procuring a license so to act from the Commissioner.

United Merchants Corporation vs Country Bankers Insurance Corporation

G.R. No. 198588 July 11, 2012
Facts:

Petitioner United Merchants Corporation (UMC) is engaged in the business of buying, selling, and
manufacturing Christmas lights. UMC leased a warehouse at 19-B Dagot Street, San Jose
Subdivision, Barrio Manresa, Quezon City, where UMC assembled and stored its products.

On 6 September 1995, UMCs General Manager Alfredo Tan insured UMCs stocks in trade of
Christmas lights against fire with defendant Country Bankers Insurance Corporation (CBIC) for P
15,000,000.00. The Fire Insurance Policy No. F-HO/95-576 (Insurance Policy) and Fire Invoice
No. 12959A, valid until 6 September 1996.

On 7 May 1996, UMC and CBIC executed Endorsement F/96-154 and Fire Invoice No. 16583A to
form part of the Insurance Policy. Endorsement F/96-154 provides that UMCs stocks in trade were
insured against additional perils, to wit: typhoon, flood, ext. cover, and full earthquake. The sum
insured was also increased to P50,000,000.00 effective 7 May 1996 to 10 January 1997.

On 9 May 1996, CBIC issued Endorsement F/96-157 where the name of the assured was changed
from Alfredo Tan to UMC.

On 3 July 1996, a fire gutted the warehouse rented by UMC. CBIC designated CRM Adjustment
Corporation (CRM) to investigate and evaluate UMCs loss by reason of the fire. CBICs reinsurer,
Central Surety, likewise requested the National Bureau of Investigation (NBI) to conduct a parallel
investigation. On 6 July 1996, UMC, through CRM, submitted to CBIC its Sworn Statement of
Formal Claim, with proofs of its loss.

UMC demanded for at least fifty percent (50%) payment of its claim from CBIC. CBIC reject UMC's
claim due to breach of Condition No. 15 of the Insurance Policy. Condition No. 15 states:
“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 devices are used by the Insured or anyone acting in his
behalf to obtain any benefit under this Policy; or if the loss or damage... be occasioned by the
willful act, or with the connivance of the Insured, all the benefits under this Policy shall be
forfeited.”
UMC filed a complaint against CBIC with the RTC of Manila. UMC anchored its insurance claim on
the Insurance Policy, and Certificated from BFP that the estimated damage of P55 million to the
building and contents and that the investigation of the fire incident is already closed being
accidental in nature.
In its Answer with Compulsory Counterclaim, CBIC admitted the issuance of the Insurance Policy
to UMC but raised the following defenses: (1) that the Complaint states no cause of action; (2)
that UMC's claim has already prescribed; and (3) that UMC's fire claim is tainted with fraud. CBIC
alleged that UMC's claim was fraudulent because UMC's Statement of Inventory showed that it
had no stocks in trade as of 31 December 1995, and that UMC's suspicious purchases for the year
1996 did not even amount to P25,000,000.00.
The RTC ruled in favour of UMC. Upon appeal, CA ruled in favour of CBIC.

Issue:

Whether or not UMC is entitled to claim from CBIC the full coverage of its fire insurance policy.
Held:

No. Burden of proof is the duty of any party to present evidence to establish his claim or defense
by the amount of evidence required by law, which is preponderance of evidence in civil cases.
The party, whether plaintiff or defendant, who asserts the affirmative of the issue has the burden
of proof to obtain a favorable judgment. Particularly, in insurance cases, once an insured makes
out a prima facie case in its favor, the burden of evidence shifts to the insurer to controvert the
insured prima facie case. In the present case, UMC established a prima facie case against CBIC.
CBIC does not dispute that UMCs stocks in trade were insured against fire under the Insurance
Policy and that the warehouse, where UMCs stocks in trade were stored, was gutted by fire on 3
July 1996, within the duration of the fire insurance. However, since CBIC alleged an excepted
risk, then the burden of evidence shifted to CBIC to prove such exception.’

An insurer who seeks to defeat a claim because of an exception or limitation in the policy has the
burden of establishing that the loss comes within the purview of the exception or limitation. If
loss is proved apparently within a contract of insurance, the burden is upon the insurer to establish
that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a
cause which limits its liability.

In the present case, CBIC’s evidence did not prove that the fire was intentionally caused by the
insured. But, arson and fraud are two separate grounds based on two different sets of evidence,
either of which can void the insurance claim of UMC.
On the allegation of fraud, the SC affirmed the findings of the Court of Appeals.
In Uy Hu & Co. v. The Prudential Assurance Co., Ltd., the Court held that where a fire insurance
policy provides that “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 devices are used by the Insured or
anyone acting on his behalf to obtain any benefit under this Policy,” and the evidence is conclusive
that the proof of claim which the insured submitted was false and fraudulent both as to the kind,
quality and amount of the goods and their value destroyed by the fire, such a proof of claim is a
bar against the insured from recovering on the policy even for the amount of his actual loss.

In the present case, as proof of its loss of stocks in trade amounting to P 50,000,000.00, UMC
submitted its Sworn Statement of Formal Claim together with the following documents: (1) letters
of credit and invoices for raw materials, Christmas lights and cartons purchased; (2) charges for
assembling the Christmas lights; and (3) delivery receipts of the raw materials. However, the
charges for assembling the Christmas lights and delivery receipts could not support its insurance
claim. The Insurance Policy provides that CBIC agreed to insure UMCs stocks in trade. UMC
defined stock in trade as tangible personal property kept for sale or traffic. Applying UMCs
definition, only the letters of credit and invoices for raw materials, Christmas lights and cartons
may be considered.

The invoices, however, cannot be taken as genuine. The invoices reveal the the stock in trade
purchased for 1996 amounts to P20 million were purchased in one month.
In the Statement of Inventory it submitted to the BIR, which is considered an entry in official
records, UMC stated that it has no stocks in trade as of Dec. 31, 1995. And either amount in
UMC’s Income Statement or Financial Report is twenty five times the claim UMC seeks to enforce.

It has long been settled that a false and material statement made with an intent to deceive or
defraud voids an insurance policy.

The most liberal human judgment cannot attribute such difference to mere innocent error in
estimating or counting but to a deliberate intent to demand from insurance companies payment
for indemnity of goods not existing at the time of the fire. This constitutes the so-called fraudulent
claim which, by express agreement between the insurers and the insured, is a ground for the
exemption of insurers from civil liability.

Guingon V. Del Monte,

FACTS:
Julio Aguilar owner and operator of several jeepneys insured them with Capital Insurance & Surety
Co., Inc. On February 20, 1961: Along the intersection of Juan Luna and Moro streets, City of
Manila, the jeepneys operated by Aguilar driven by Iluminado del Monte and Gervacio Guingon
bumped and Guingon died some days after.The driver Iluminado del Monte was charged with
homicide thru reckless imprudence and was penalized 4 months imprisonment. The heirs of
Gervacio Guingon filed an action for damages praying that P82,771.80 be paid to them jointly
and severally by the driver del Monte, owner and operator Aguilar, and the Capital Insurance &
Surety Co., Inc.

RTC rule that Iluminado del Monte and Julio Aguilar jointly and severally to pay plaintiffs the sum
of P8,572.95 as damages for the death of their father, plus P1,000.00 for attorney's fees plus
costs and Capital Insurance and Surety Co., Inc. is hereby sentenced to pay P5,000 plus P500 as
attorney's fees and costs to be applied in partial satisfaction of the judgment rendered against
Iluminado del Monte and Julio Aguilar. On appeal to CA, Appellant contends that the "no action"
clause in the policy closes the avenue to any third party which may be injured in an accident
wherein the jeepney of the insured might have been the cause of the injury of third persons,
alleging the freedom of contracts. CA referred the matter to SC as it deals with pure questions of
law.

ISSUE:
W/N the heirs can sue the insurer and insured jointly? -

Ruling:
YES
The right of the person injured to sue the insurer of the party at fault (insured), depends on
whether the contract of insurance is intended to benefit third persons also or only the insured.
And the test applied has been this: Where the contract provides for indemnity against liability to
third persons, then third persons to whom the insured is liable, can sue the insurer. Where the
contract is for indemnity against actual loss or payment, then third persons cannot proceed
against the insurer, the contract being solely to reimburse the insured for liability actually
discharged by him thru payment to third persons, said third persons' recourse being thus limited
to the insured alone.2
The next question is on the right of the third person to sue the insurer jointly with the insured.
The policy requires, as afore-stated, that suit and final judgment be first obtained against the
insured; that only "thereafter" can the person injured recover on the policy; it expressly disallows
suing the insurer as a co-defendant of the insured in a suit to determine the latter's liability. As
adverted to before, the query is which procedure to follow — that of the insurance policy or the
Rules of Court. The "no action" clause in the policy of insurance cannot prevail over the Rules of
Court provision aimed at avoiding multiplicity of suits.

Eternal Gardens Memorial Park Corp. V. Philippine American Life Insurance Corp. (2008)
FACTS:
 December 10, 1980: Philippine American Life Insurance Company (Philamlife) entered into
an agreement denominated as Creditor Group Life Policy No. P-19202 with Eternal Gardens
Memorial Park Corporation (Eternal)
Under the policy (renewable annually), the clients of Eternal who purchased burial lots
from it on installment basis would be insured by Philamlife
amount of insurance coverage depended upon the existing balance
Eternal complied by submitting a letter dated December 29, 1982, a list of insurable
balances of its lot buyers for October 1982 which includes John Chuang which was stamped as
received by Philam Life
August 2, 1984, Chuang died with a balance of 100,000 php
April 25, 1986: Philamlife had not furnished Eternal with any reply on its insurance claim
so its demanded its claim
According to Philam Life, since the application was submitted only on November 15, 1984,
after his death, Mr. John Uy Chuang was not covered under the Policy since his application was
not approved. Moreover, the acceptance of the premiums are only in trust for and not a sign of
approval.
RTC: favored Eternal
CA: Reversed RTC
ISSUE: W/N Philam's inaction or non-approval meant the perfection of the insurance contract.

HELD: YES. CA ruling is reversed.

Effective date of benefit.

The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with
the Assured. However, there shall be no insurance if the application of the Lot Purchaser is not
approved by the Company

An examination of the above provision would show ambiguity between its two sentences. The
first sentence appears to state that the insurance coverage of the clients of Eternal already
became effective upon contracting a loan with Eternal while the second sentence appears to
require Philamlife to approve the insurance contract before the same can become effective. It
must be remembered that an insurance contract is a contract of adhesion which must be
construed liberally in favor of the insured and strictly against the insurer in order to safeguard
the latter’s interest. Upon a party’s purchase of a memorial lot on installment from Eternal, an
insurance contract covering the lot purchaser is created and the same is effective, valid, and
binding until terminated by Philamlife by disapproving the insurance application.
Moreover, the mere inaction of the insurer on the insurance application must not work to prejudice
the insured. WHEREFORE, the petition is granted.

EASTERN SHIPPING LINES v. PRUDENTIAL GUARANTEE, GR No. 174116, 2009-09-11

Facts:
On November 8, 1995, 56 cases of completely knock-down auto parts of Nissan motor vehicle
(cargoes) were loaded on board M/V Apollo Tujuh (carrier) at Nagoya, Japan, to be shipped to
Manila. The shipment was consigned to Nissan Motor Philippines, Inc. (Nissan) and was covered
by Bill of Lading No. NMA-1. The carrier was owned and operated by petitioner Eastern Shipping
Lines, Inc.

The shipment was then discharged from the vessel onto the custody of the arrastre operator,
Asian Terminals, Inc. (ATI), complete and in good condition, except for four (4) cases.
*Arrastre – person/entities who perform portside cargo handling operations ex. Receiving,
handling, custody, security, etc.
The shipment was withdrawn by Seafront Customs and Brokerage from the pier and delivered to
the warehouse of Nissan in Quezon City.

A survey of the shipment was then conducted by Tan-Gaute Adjustment Company, Inc. (surveyor)
at Nissan's warehouse. On January 16, 1996, the surveyor submitted its report with a finding that
there were "short (missing)" items in Cases Nos. 10/A26/T3K and 10/A26/7K and
"broken/scratched" and "broken" items in Case No. 10/A26/70K"; and that "(i)n (its) opinion, the
"shortage and damage sustained by the shipment were due to pilferage and improper handling,
respectively while in the custody of the vessel and/or Arrastre Contractors."
As a result, Nissan demanded the sum of P1,047,298.34 representing the cost of the damages
sustained by the shipment from petitioner, the owner of the vessel, and ATI, the arrastre
operator. However, the demands were not heeded.
On August 21, 1996, as insurer of the shipment against all risks per Marine Open Policy No. 86-
168 and Marine Cargo Risk Note No. 3921/95, respondent Prudential Guarantee and Assurance
Inc. paid Nissan the sum of P1,047,298.34.

Prudential Guarantee and Assurance Inc. paid Nissan the sum of P1,047,298.34. Respondent (P)
sued petitioner and ATI for reimbursement of the amount it paid to Nissan. Respondent claimed
that it was subrogated to the rights of Nissan by virtue of said payment.
RTC rendered judgment in favor of the plaintiff and against the defendants Eastern Shipping
Lines, Inc. and ATI, and said defendants are hereby ordered to pay jointly and solidarily the
plaintiff. CA AFFIRMED with MODIFICATIONS, in that (i) defendant-appellant Eastern Shipping
Lines, Inc. is ordered to pay appellee (a) the amount of P904,293.75 plus interest thereon at the
rate of 6% per annum from the filing of the complaint up to the finality of this judgment, when
the interest shall become 12% per annum until fully paid, attorney's fees is DELETED.
CA exonerated ATI and ruled that petitioner was solely responsible for the damages caused to
the cargoes. Moreover, the CA relying on Delsan Transport Lines, Inc. vs. Court of Appeals, ruled
that the right of subrogation accrues upon payment by the insurance company of the insurance
claim and that the presentation of the insurance policy is not indispensable before the appellee
may recover in the exercise of its subrogatory right.

Issues:

1. Whether or not the court of appeals erred in affirming the decision of the lower court
finding herein petitioner liable despite the fact that respondent failed to submit any insurance
policy.
2. W/N the court of appeals erred in not applying the us$500.00/package/case package
limitation of liability in accordance with the carriage of goods by sea act.
Ruling:

It must be emphasized that a marine risk note is not an insurance policy. It is only an
acknowledgment or declaration of the insurer confirming the specific shipment covered by its
marine open policy, the evaluation of the cargo and the chargeable premium.
In International Container Terminal Services, Inc. v. FGU Insurance Corporation (International),
the nature of a marine cargo risk note was explained, thus: x x x It is the marine open policy
which is the main insurance contract. In other words, the marine open policy is the blanket
insurance to be undertaken by FGU on all goods to be shipped by RAGC during the existence of
the contract, while the marine risk note specifies the particular goods/shipment insured by FGU
on that specific transaction, including the sum insured, the shipment particulars as well as the
premium paid for such shipment. x x x.
Therefore, other than the marine cargo risk note, respondent should have also presented the
marine insurance policy, as the same also served as the basis for its complaint. Section 7, Rule 9
of the 1997 Rules of Civil Procedure, provide:
SECTION 7. Action or defense based on document. Whenever an action or defense is based upon
a written instrument or document, the substance of such instrument or document shall be set
forth in the pleading, and the original or a copy thereof shall be attached... to the pleading as an
exhibit, which shall be deemed to be a part of the pleading, or said copy may, with like effect, be
set forth in the pleading.
In contrast, unlike in International where there was no issue as regards the provisions of the
marine insurance policy, such that the presentation of the contract itself is necessary for perusal,
herein petitioner had repeatedly objected to the non-presentation of the marine insurance policy
and had manifested its desire to know the specific provisions thereof.
Moreover, and the same is critical, the marine risk note in the case at bar is questionable because:
first, it is dated on the same day the cargoes arrived at the port of Manila and not during the
duration of the voyage; second, without the Marine Insurance Policy to elucidate on the specifics
of the terms and conditions alluded to in the marine risk note, it would be simply guesswork to
know if the same were complied with because of the inadequacy of the Marine Cargo Risk Note
for the reasons already stated, it was incumbent on respondent to present in evidence the Marine
Insurance Policy, and having failed in doing so, its claim of subrogation must necessarily fail.
MALAYAN INSURANCE CO. v. REGIS BROKERAGE CORP., GR No. 172156, 2007-11-23

Facts:

This Petition for Review under Rule 45 was filed by petitioner Malayan Insurance Co., Inc.
(Malayan),[2] assailing the Decision[3] dated 23 December 2005 of the Court of Appeals in C.A.
G.R. SP No. 90505, as well as its

Resolution[4] dated 5 April 2006 denying petitioner's motion for reconsideration.

Around 1 February 1995, Fasco Motors Group loaded 120 pieces of "motors" on board China
Airlines Flight 621 bound for Manila from the United States. The cargo was to be delivered to
consignee ABB Koppel, Inc. (ABB Koppel).[5] When the cargo arrived at the Ninoy Aquino
International Airport, it was discharged without exception and forwarded to People's Aircargo &
Warehousing Corp.'s (Paircargo's) warehouse for temporary storage pending release by the
Bureau of Customs. Paircargo... remained in possession of the cargo until 7 March 1995, at which
point respondent Regis Brokerage Corp. (Regis) withdrew the cargo and delivered the same to
ABB Koppel at its warehouse.[6] When the shipment arrived at ABB Koppel's warehouse, it was...
discovered that only 65 of the 120 pieces of motors were actually delivered and that the remaining
55 motors, valued at US$2,374.35, could not be accounted for.

The shipment was purportedly insured with Malayan by ABB Koppel. Demand was first made
upon Regis and Paircargo for payment of the value of the missing motors, but both refused to
pay.[8] Thus, Malayan paid ABB Koppel the amount of P156,549.55 apparently... pursuant to its
insurance agreement, and Malayan was on that basis subrogated to the rights of ABB Koppel
against Regis and Paircargo.[9] On 24 June 1996, Malayan filed a complaint for damages against
Regis and Paircargo with the Metropolitan Trial Court

(MeTC) of Manila, Branch 9. In the course of trial, Malayan presented Marine Risk Note No. RN-
0001-19832 (Marine Risk Note) dated 21 March 1995 as proof that the cargo was insured by
Malayan

The MeTC rendered a Decision[11] dated 25 May 2001 adjudging Regis alone liable to Malayan
in the amount of P156,549.00 as actual damages, P15,000.00 as attorney's fees, and costs of
suits. With the exception of the award of attorney's fees, the MeTC... decision was affirmed on
appeal to the Regional Trial Court (RTC) of Manila, through a Decision dated 28 February 2005

On 23 December 2005, the Court of Appeals promulgated its decision vacating the RTC judgment
and ordering the dismissal of Malayan's complaint.

The central finding... that formed the Court of Appeals decision was that the Marine Risk Note
presented as proof that the cargo was insured was invalid.

Issues:

We consider whether an insurer, in an action for recoupment instituted in its capacity as the
subrogee of the insured, may be conferred favorable relief even if it failed to introduce in evidence
the insurance contract or policy, or even allege the existence... nay recite the substance and
attach a copy of such document in the complaint.

Ruling:

It is elementary that this Court is not a trier of facts. We generally refer to the trial court and the
Court of Appeals on matters relating to the admission and evaluation of the evidence. In this
case, while the trial courts and the Court of Appeals arrived at differing... conclusions, we
essentially agree with the Court of Appeals' analysis of Malayan's cause of action, and its ordained
result.

It appeared that at the very instance the Marine Risk Note was offered in evidence, Regis already
posed its objection to the admission of said document on... the ground that such was "immaterial,
impertinent and irrelevant to this case because the same was issued on March 21, 1995 which is
after the occurrence of the loss on February 1, 1995."[19] Because the trial courts failed to duly
consider whether the

Marine Risk Note sufficiently established a valid insurance covering the subject motors, the Court
of Appeals acted correctly in the exercise of its appellate jurisdiction in setting aside the appealed
decisions.

Indeed,... since no insurance policy was presented at the trial by Malayan, or even before the
Court of Appeals,[20] there certainly is no basis for this Court to admit or consider the same,
notwithstanding Malayan's attempt to submit such document to us along with... its present
petition.

Since the Marine Insurance Policy was never presented in evidence before the trial court or the
Court of Appeals even, there is no legal basis to consider such document in the resolution of this
case, reflective as that document may have been of the pre-existence of an insurance... contract
between Malayan and ABB Koppel even prior to the loss of the motors.

All told, we hold that Malayan was not able to establish its cause of action as stated in its
complaint, based as it was on its right to be subrogated to ABB Koppel under the insurance
contract which it failed to present as an actionable document, or as evidence before the trial...
court. The result reached by the Court of Appeals the dismissal of the instant complaint is thus
correct. As such, there is no need to consider the other issues raised in the petition.
BLUE CROSS HEALTH CARE, INC., vs. NEOMI OLIVARES et al.

G.R. No. 169737

(Presumption as to evidence willfully suppressed)

FACTS

Neomi Olivares applied for a health care program with Blue Cross Health Care Inc., (Blue Cross)
a health maintenance firm. When her application was approved, the health care agreement
excluded ailments due to “pre-existing conditions” from the coverage. After the effectivity of her
health insurance, she suffered a stroke and was admitted at a hospital. When she requested Blue
Cross to pay her medical expenses, the latter refused due to the pending submission of a
certificate from her attending physician, Dr. Edmundo Saniel, that the stroke suffered was not
caused by a pre-existing condition.

Olivares settled her own medical expenses then filed a complaint for a collection of sum of money
with the Municipal Trial Court (MTC) against Blue Cross. She called Dr. Saniel and invoking
patient-physician confidentiality, she did not allow him to release any medical information to Blue
Cross.

ISSUE

Whether the presumption that evidence willfully suppressed would be adverse if produced would
apply in the case

HELD

No. The burden was on Blue Cross to prove that Olivares’s stroke was excluded from the coverage
of their agreement because it was due to a pre-existing condition. It failed to prove this. Blue
Cross never presented any evidence to prove such. It merely speculated that Dr. Saniel’s report
would be adverse to Olivares, based on her invocation of the doctor-patient privilege. This was a
disputable presumption as described in Sec. 3(e), Rule 131 of the Rules of Court.

The disputable presumption does not apply if (a) the evidence is at the disposal of both parties;
(b) the suppression was not willful; (c) it is merely corroborative or cumulative and (d) the
suppression is an exercise of a privilege. Here, respondents’ refusal to present or allow the
presentation of Dr. Saniel’s report was justified. It was privileged communication between
physician and patient.