Chapter 1

1. Aboitiz Shipping v. New India Assurance, 488 SCRA 563 (2006)

New India Assurance Company, Ltd. insured a cargo containing textiles and

chemicals that wer to be shipped from France. Said cargo was consigned to

General Textile Inc. in Manila. En route to Manila, the vessel M/V P. Aboitiz,

which was carrying said cargo, foundered after being caught in a typhoon.

The corresponding shipping company informed the consignee of the total loss

of the vessel and the cargo which prompted the latter to lodge a claim with

New India to recover the loss. New India granted the claim and was then

subrogated to the rights of the consignee. In order to recover from the

Aboitiz Shipping, New India hired a surveyor who then found that the loss

of the vessel was due to its questionable seaworthiness and fault &

negligence of its crew. Aboitiz countered that the loss was caused by the

typhoon which was an unforeseen event and therefore they should be

relieved from any liability. Trial court ruled in favor of New India adopting

the ruling in a separate case but involving the same incident that the

shipping company was liable. Court of Appeals affirmed the trial court ruling.

Aboitiz raised the case to the Supreme Court alleging that the doctrine of

limited liability should be applied. Supreme Court denied the petition and

discussed that although the doctrine of limited liability, or the doctrine of

real and hypothecary nature of maritime law, generally applies to maritime

insurance, with the effect being that the damages awarded are limited to

the pro-rata share, such is not applicable to the present case. The exception

to such doctrine is when the damage is due to the fault or concurrent

negligence of the shipowner and captain. As the Court found that the vessel

was not seaworthy, there was a presumption of negligence on the shipowner’s

part which Aboitiz failed to overcome.

2. PHILAM v. Arnaldo, 234 SCRA 505 (1994)

Ramon M. Paterno filed a letter-complaint to the Insurance Commissioner,

Armando Ansaldo, alleging certain issues being encountered by several

stakeholders of Philamlife as a result of certain practices by said company.

Most of the allegations can be traced to Paterno’s contract of agency with

said company. A hearing was to be conducted but Philamlife filed a motion to

quash primarily arguing that the Insurance Commission has no jurisdiction

over the subject matter which concerns the contract of agency between the

parties. Insurance Commission denied the motion hence the case was raised

to the Supreme Court. The Court ruled that the Insurance Commission does

not have jurisdiction over the subject matter as the contract of agency

entered into between Philamlife and its agents is not included within the

meaning of an insurance business under the Insurance Code. The quasi-

judicial power of the Insurance Commission is limited to claims and

complaints for which an insurer may be answerable under any kind of policy

or contract of insurance.

3. Republic (represented by Eduardo T. Malinis as Insurance Commissioner) v. Del

Monte Motors, Inc., 504 SCRA 52 (2006)

In a separate civil case between Vilfran Liner, Inc. and Del Monte Motors,

Inc., the trial court ordered for the execution against the counterbond

posted by Vilfran as issued by Capital Insurance and Surety Co., Inc.

(CISCO). A notice of garnishment was issued on several of CISCO’s

depositary accounts including its security deposit with the Insurance

Commission. Insurance Commissioner, Eduardo T. Malinis, refused to comply

with said execution and notice and was held guilty of indirect contempt. On a

petition for review with the Supreme Court, Comm. Malinis maintains that

security deposits made with the Insurance Commission pursuant to Sec. 203
 of the Insurance Code are exempt from levy or garnishment. The Court

ruled in the commissioner’s favor and declared that said deposit which makes

up the contingency fund with the Insurance Commission shall only be

answerable to the claims of all its policy holders and beneficiaries. A single

claimant is not allowed to claim to the exclusion of others. Only after all

other claimants under subsisting policies have been heard can the share of a

single claimant be determined.

4. Gercio v. Sunlife Assurance, 48 Phil. 53

Hilario Gercio procured a life insurance policy from Sun Life Assurance with

his then wife, Andrea Zialcita, designated as his beneficiary. Said policy did

not include any provision reserving to the insured the right to change the

beneficiary. Gercio was divorced from Zialcita after the latter was

convicted of adultery. He then remarried and notified Sun Life that his new

wife will be his new designated beneficiary. Sun Life refused which

prompted Gercio to file a case in court. Trial Court ruled in Gercio’s favor.

Supreme Court however reversed the ruling after holding that the

Insurance Act and the subject policy does not provide for such right. The

Court then referred to California Law where the Insurance Act is based on

and held that the insured can only change the beneficiary with the latter’s

consent.

5. Ang Giok Chip v. Springfield, 52 Phil. 375

Ang Giok Chip is the owner of a warehouse which was insured with several

insurance companies including Springfield Fire & Marine Insurance Company.

Said warehouse was destroyed in a fire which prompted Ang Giok Chip to

institute an action against Springfield to recover a proportional part of the

loss. Springfield raised as a defense that Ang Giok Chip violated the
 warranty pertaining to the maximum amount of hazardous goods that could

be stored in the warehouse. However, said warranty was only reflected in a

rider to which Ang Giok Chip claims is not part of the actual policy. Trial

court ruled in Ang Giok Chip’s favor. Supreme Court reversed after applying

Sec. 65 of the Insurance Act which effectively provides that warranties are

provided in the policy itself or in another instrument signed by the insured

and is referred to in the policy, are thereby making it a part of the policy.

The Court referred to the construction of the California Law which the

Insurance Act was based on. Said construction affirms generally accepted

doctrines such as that riders attached to a policy is a part of the contract

to the same extent and as if actually embodied therein.

6. Philippine Health Care Products v. Commissioner of Internal Revenue, 600 SCRA

413, at p. 427 and footnote 21 therein (18 September 2009)

Philippine Health Care Provides, Inc. (PHCP) is engaged in providing medical

services to individual who enter into health care agreements with them after

paying its prepaid plans. The Commission on Internal Revenue (CIR) sent

PHCP a notice of their deficiencies in VAT and DST pursuant to Sec. 185 of

the Tax Code which subjects health care agreements to such taxes. PHCP

sought recourse with the Court of Tax Appeals who cancelled the DST

deficiency. On appeal to the Court of Appeals, CIR contended that PHCP’s

health care agreements are contracts of insurance which are subject to DST

as per the Tax Code. Court of Appeals ruled in CIR’s favor. The Supreme

Court however ruled that PHCP is a health maintenance organization who are

not considered as those that are conducting insurance business are

therefore not subject to DST under the concerned provision in the Tax

Code. The Supreme Court based their rulings on US Jurisprudence which

likewise did not recognize HMOs as conducting an insurance business. Such

 application was based on the rationale that the Philippine Insurance Code

was based on California and New York law. So as when a statute has been

adopted from some other state or country and said statute has previously

been construed by the courts of such state or country, the statute is

deemed to have been adopted with the construction given.

Chapter 2
1. UCPB General Insurance vs. Masagana Telamart, 356 SCRA 307 (2001) (see

dissent of J. Vitug)

Masagana Telemart’s property has been insured with UCPB General

Insurance against fire for several years. Under its latest policies, the

insurance covered a period from May 22, 1991 to May 22, 1992. A fire razed

the insured’s property on June 13, 1992. A month after, Masagana issued

checks to UCPB representing their intent to renew their insurance policies.

The following day, Masagana made formal claims for their property loss.

UCPB rejected the claims on the ground that the policies was already

expired and not yet renewed when the fire took place. UCPB’s remains firm

on its stand that the tender of checks made by Masagana did not result in

the renewal of the policies as they were made beyond the effective date of

renewal as per the Renewal Clause. This prompted Masagana to file a case in

court. Both trial court and Court of Appeals ruled in favor of Masagana and

held that it had complied with its obligation to pay the premium thereby

effectively renewing the policy. They also noted that it had been the

practice of UCPB to allow a 60-90 day credit term for the renewal of the

policies. The Supreme Court reversed the lower courts’ ruling applying Sec.

77 of the Insurance Code that provides that an insurance policy is only

binding upon payment of the premium. However, the Court reversed its own

ruling after a motion for reconsideration was filed. It declared that there
 are exceptions to Sec. 77 and this includes when the insurer has been in the

practice of granting credit extensions.

In his dissenting opinion, Justice Vitug discusses how one essential

characteristic of an insurance contract is it being synallagmatic, where the

rights and obligations of the parties correlate and mutually correspond. In

an insurance contract, the insurer assumes the risk of loss in consideration

of the payment of premiums by the insured. Moreover, the business of

insurance is imbued with public interest. Its integrity is threatened and

undermined if a credit arrangement of the payment premium were to be

sanctioned.

2. PHILAMCARE Health Systems v. CA, G.R. 1256781, March 3, 2002; 379 SCRA

356 [2002]

Ernani Trinos applied for a health care coverage with Philamcare Health

Systems. Pursuant to his application, he declared that neither he nor any of

his family members had been treated or diagnosed with certain diseases.

Said health care agreement was granted for a period of one year and had

been renewed thrice. In 1990, while the health care agreement was in

effect, Trinos suffered a heart attack resulting to his confinement. His wife

tried to claim the benefits under his health care agreement but it was

denied as it had been found that Trinos was actually hypertensive, diabetic

and asthmatic, contrary to what he declared in his application form. Trinos

later passed away and his widow then filed an action against Philamcare for

reimbursement of Trinos medical and hospital expenses which they allege

should have been covered by the health care agreement. Trial court ruled

against Philamcare and was affirmed by the Court of Appeals. The Supreme

Court likewise affirmed and held that health care agreements are in the
 nature of non-life insurance contracts. Moreover, it cannot be said that

there was a concealment of material facts that would warrant a cancellation

of the policy as fraudulent intent on the part of the insured was not

established. Lastly, pursuant to the Insurance Code, Philamcare’s right to

rescind was not available as there was no concurrence of the required pre-

conditions, namely:

- Prior notice of cancellation to the insured.

- Notice must be based on the occurrence after effective date of the

policy of one or more of the grounds mentioned.

- Must be in writing, mailed, or delivered to the insured at the address

shown in the policy;

- Must state the grounds relied upon provided in Sec. 64 of the Insurance

Code and upon request of the insured, to furnish facts on which

cancellation is based.

3. Blue Cross Health Care v. Olivares, G.R. 169737, February 12, 2008; 544 SCRA

580 (2008)

Neomi Olivares applied for a health care program with Blue Cross Health

Care. Her application was approved however it was provided that ailments

due to pre-existing conditions were excluded from coverage. Olivarez later

suffered a stroke and was hospitalized. She requested Blue Cross to settle

her hospital expenses as part of her coverage but the latter refused until a

certification from her attending physician was submitted stating that the

stroke was not caused by a pre-existing condition. Olivarez was later

discharged but shouldered the hospital expenses. She then filed an action

for collection of sum of money against Blue Cross. MeTC dismissed the

complaint for lack of cause of action. RTC reversed and held that Blue Cross
 has the burden to prove that the stroke incident was excluded from the

coverage. CA affirmed.

The Supreme Court likewise affirmed and, citing jurisprudence, applied that

the health care agreement is in the nature of a non-life insurance. As such,

the rule in insurance contracts that the terms are to be construed strictly

against the insurer. In order to be relieved from liability, the burden to

prove that the stroke was due to a pre-existing condition was on Blue Cross

which they failed to do. The Court held that Blue Cross’s claim that the

stroke was due to a pre-existing condition due to the refusal to submit a

doctor’s certification is only a disputable presumption at best.

4. Philippine Health Care Providers v. Commission of Internal Revenue, G.R. 167330,

2 June 2008; 554 SCRA 411 (2008)

4.1. Philippine Health Care Providers v. Commission of Internal Revenue, G.R.

167330, 600 SCRA 413 (18 September 2009) resolution of Motion for

Reconsideration

[Supra at page <> of this bluebook.]

In the 2008 case, the Supreme Court held that health care agreements

provided by PHCP are in the nature of non-life insurance contracts.

Additionally, PHCP does not bear the costs of its services alone but

distributes or spreads them out among a large group of persons bearing a

similar risk, to which the Court ruled to be akin to an insurance business. It

is thus therefore subject to documentary stamp tax (DST) pursuant to the

Tax Code.

In the 2009 Motion for Reconsideration, the Court en banc reversed its

earlier ruling. Applying US jurisprudence, it held that the assumption of risk

and indemnification of loss by health maintenance organizations such as

 PHCP is merely incidental to its principal purpose. If such assumption and

indemnification was is principal object of the business, then it would only be

considered as an insurance business. PHCP’s primary purpose is to provide

medical services as needed, with payment made directly to the provider of

these services. Additionally, majority of its services cover preventive and

diagnostic medical services, which are programs that are designed to

prevent or to minimize the possibility of any assumption of risk on its part.

As such, PHCP could not be considered an insurance business that are

covered by DST according to the Tax Code.

5. Pineda v. CA & Insular Life, 226 SCRA 7554 (93)

Prime Marine Services, Inc. (PMSI) procured a group life policy from Insular

Life Assurance for its sea-based employees. While the policy is in effect,

M/V Nemos sank in Morocco resulting to the death of six of PMSI’s

employees. All of the deceased were covered under PMSI’s group policy. The

beneficiaries of the deceased executed special powers of attorney

authorizing PMSI, as represented by its president, Capt. Nuval, to collect

death benefits on their behalf. Unbeknownst to the beneficiaries, PMSI

used the same special powers of attorney to file formal claims before

Insular Life. However, the insurance proceeds were deposited to Capt.

Nuval’s own account. The beneficiaries later learned that they are entitled

to the benefits under the group policy and sought to recover from Insular

Life. Insular Life denied the claims on the ground that it had delivered the

proceeds to PMSI which prompted the beneficiaries to file a case. The

Insurance Commission ruled in favor of the beneficiaries and held that

Insular Life is still liable. It based its decision on the fact that the

executed special powers of attorney did not contain clear and unequivocal

terms that authority has been granted to Capt. Nuval to receive the
 insurance proceeds on their behalf. The Court of Appeals modified the ruling

in so far as eliminating the award to the minor children. The Supreme Court

ruled for the beneficiaries and agreed with the Insurance Commission’s

ruling. The Court, citing US Jurisprudence, also discussed that a group

insurance is essentially a single insurance contract with the employer acting

as the agent of the insurer. The employer acts as a functionary in the

collection and payment of premiums and in performing related duties.

Likewise falling within the ambit of administration of a group policy is the

disbursement of insurance payments by the employer to the employees. In

the present case, Capt. Nuval is an agent of Insular Life who failed to

disburse the proceeds due to the beneficiaries thus making Insular Life still

liable.

6. Cebu Shipyard v. William Lines, 306 SCRA 762 (1999)

William Lines, Inc. owns the luxury passenger-cargo vessel, M/V Manila City,

which was insured with Prudential Guarantee and Assurance, Inc. (Prudential)

.Said vessel was undergoing dry-docking and repairs under Cebu Shipyard

and Engineering Works (CSEW) when it caught fire and sank. William Lines

filed a claim with Prudential which was granted. Prudential, being subrogated

in the rights of William Lines, joined the latter in its complaint for damages

against CSEW. On the other hand, CSEW claims that Prudential has no right

of subrogation against them as under the Marine Hull Insurance Policy of the

sunken vessel, CSEW is co-assured. Trial court ruled against CSEW which

the Court of Appeals affirmed. The Supreme Court disagreed with CSEW’s

claim and held that there was no manifestation of making CSEW as a co-

assured in the subject policy. Such intention is to be gleaned principally from

the policy itself. In the present case, only William Lines is the insured party.
 Hence, there is a valid subrogation on Prudential’s part to which CSEW is

liable.

7. New Life Enterprises v. CA, 207 SCRA 669 (1992)

New Life Enterprises insured their stocks in trade against fire with three

different insurance companies all of which whose policies included an “Other

Insurance Clause” which required the insured to give notice if the subject

stocks were also covered with other insurance policies. Failure to give notice

will result to a forfeiture of the claims under said policies. A fire broke out

at New Life’s building which prompted New Life to file formal claims with its

insurers. However, all three insurance companies denied New Life’s claim on

the ground that it had failed its duty under the “Other Insurance Clause”.

New Life contended that the agents of each insurance company were well

aware of the existence of the multiple coverages and that they were not

informed of such duty as they have not fully read the policies. Trial court

ruled in favor of New Life. Court of Appeals however reversed the judgment.

The Supreme Court affirmed and held that the terms of the contract are

clear and unambiguous and that there is no more room for interpretation. As

such, New Life’s failure to give the required notice forfeits their claims.

8. First Quezon City Insurance v. CA, 218 SCRA 526

Dios Marikina Transportation Co. (DMTC) was held liable to an accident

incurred by Jose del Rosario when he fell as he was boarding one of the

former’s buses and was dragged along the asphalted road. Del Rosario filed a

complaint for damages and in turn DMTC filed a third-party complaint

against its insurer, First Quezon. DMTC’s insurance policy with First Quezon

provides that the maximum limit of First Quezon’s liability for damages

arising from death or bodily injury is at P12,000.00 per passenger and its
 maximum liability per accident at P50,000.00. Trial court ordered First

Quezon to indemnify

DMTC for P12,000.00. Court of Appeals modified the ruling and fixed the

indemnity at P50,000. The Supreme Court held that the stipulation in the

insurance policy is clear that it should be P12,000.00 as there was only one

passenger injured. The limit of P50,000.00 only provides that the insurer’s

maximum liability for any single accident will not exceed P50,000.00

regardless of the number of passengers killed or injured therein.

9. Ty v. First National, 1 SCRA 1324 (1961)*

Diosdado C. Ty is an operator mechanic foreman of the Broadway Cotton

Factory and was insured with 18 insurance companies under a personal

accident policies. A fire broke out in the factory which resulted to Ty’s left

hand being injured by a heavy object when he tried to escape. Following his

hospitalization where he was diagnosed with a temporary total disability on

his left hand, he filed a notice of accident and claim with his insurers. Worth

noting that eight of his insurers all had similar provisions which provides

that the insurance company will pay in total or partial disability of the

insured. Said provision comes with a note that said that the loss of a hand

shall mean the loss by amputation through the bones of the wrist. Due to

said provision, the insurance companies denied Ty’s claim as there was no

severance or amputation of his left hand. Ty contended that amputation is

not necessary but what is important is that his injuries prevented him from

working. Trial court absolved the insurance companies from any liability. The

Supreme Court sustained the ruling and held that the terms of the insurance

policy is clear. As there was no amputation and only a temporary total

disability, Ty could not make any claims.

10. Misamis Lumber v. Capital Inc., 17 SCRA 228 (1966)*

Misamis Lumber Corporation insured its Ford Falcon car with Capital

Insurance & Surety Company. Its policy provided that the authorized repair

limit to be paid by Capital is P150. One day, the vehicle incurred an accident

when it passed over a water hole. The driver of the car was not able to see

the water hole as an oncoming car did not dim its lights. Misamis then had

the car repaired for a total cost of P302.27. It then filed a report of the

accident to Capital Insurance who refused as the latter claims that its

liability is only P150. This prompted Misamis to file a case. Trial court ruled

in favor of Misamis and held Capital Insurance liable to the full cost of

repairs. Supreme Court however held that Capital Insurance is only liable for

P150. The Court held that the corresponding provision in the insurance policy

is clear and leaves no room for interpretation.

11. Sun Insurance v. CA, 195 SCRA 193 (1991)

Emilio Tan procured a procured a property insurance policy for Sun

Insurance Office, Ltd. for his interest in his brother’s electrical supply

store in Iloilo City. Days after, the building where the store was located

burned down. Tan filed a claim with Sun Insurance on Aug. 20, 1983 which

was denied by the latter in a letter dated Feb. 29, 1984. Tan then wrote a

letter seeking reconsideration on Apr. 3, 1984 followed by an inquiry over

said request on Sep. 3, 1985. Sun Insurance replied on Oct. 11, 1985 that his

claim remains denied. It was only in Nov. 20, 1985, a year and a half since

Tan’s claim was first denied, when he filed a civil case against Sun Insurance.

Sun Insurance filed a motion to dismiss on the ground that the action had

already prescribed. However, said motion was denied by both trial court and

Court of Appeals. Worth noting is that under the insurance policy, there is a

condition which provides that if an action or suit be not commenced within 12

 months from when a claim is rejected, then the claim shall be deemed

abandoned. The Supreme Court held that the clear and express condition

bars Tan from filing recovering under the same claim as it took him more

than a year to file an action since receiving the letter denying his claim.

12. Fortune Insurance v. CA 244 SCRA 308 (1995)

Producers Bank of the Philippines has a money, security, and payroll robbery

insurance policy with Fortune Insurance. Under the terms of the policy, an

exception was stipulated where Fortune shall not be liable for any loss

caused by any dishonest, fraudulent, or criminal act of the insured or any of

its officer, employee, partner, director, trustee, or authorized

representative. A robbery took place involving one of Producer’s armored

vehicle that was transferring money from the its Pasay City branch to its

Makati head office. The armored vehicle’s driver and its escort security

guard, together with other persons, were charged for the crime. Producers

demanded indemnity from Fortune Insurance, but the latter refused and

invoked the exception in the insurance policy due to the involvement of the

armored vehicle driver and the security guard in the crime. Producers

contested that at the time of the robbery, the driver and security guard

were not any of the persons of the bank as listed in the exception. Trial

court ruled in favor of Producers and held that the driver and security guard

were not employees or representatives of the bank. Court of Appeals

affirmed the ruling in toto. The Supreme Court reversed the ruling. It held

that although the driver and security guard are contractors of the bank, not

employees, they can be considered as authorized representatives of the

bank as they were tasked with specific duties to safely transfer its money.

13. Perla v. CA, 185 SCRA 741

 Milagros Cayas own a passenger Mazda bus that was insured with Perla

Compania de Seguros, Inc. (PCSI). Said bus figured into an accident resulting

to several of its passengers getting injured. One of the injured passengers

sued then won and was thus entitled to damages amounting to P32,000 from

Cayas. Three other passengers entered into settlement agreements at

P4,000 each. Due to her property being levied and sold in a public auction in

order to answer for her liability to the injured passenger, Cayas then also

filed a complaint for sum of money and damages against PCSI. Under the

subject insurance policy, it was stipulated that PCSI’s liability is at P12,000

per person and P50,000 per accident. Another stipulation provided that any

promise of payment to be made by the insured over an accident must have

the consent of the insurance company. Trial court ruled against PCSI and

held it liable to Cayas for P50,000. Court of Appeals affirmed. The Supreme

Court modified decision and held that PCSI is only liable for P12,000. Said

amount corresponds to only one person who filed a suit against Cayas over

the accident which is in line with the stipulated liability of PCSI at P12,000

per person. The P50,000 per accident is clearly the maximum amount that

PCSI can be held liable of in the event of an accident. Additionally, PCSI

should not be made to reimburse Cayas in the settlement agreements that

she entered into as they were made without the consent of PCSI.

14. Oriental Assurance v. CA, 200 SCRA 459 (1991)

Panama Sawmill hired a carrier to transport 1,208 pieces of apitong logs

from Palawan to Manila. The shipment was insured with Oriental for “TOTAL

LOSS ONLY”. The logs were loaded on two barges and these barges were

towed by one tugboat. During the voyage, rough seas and strong winds

caused damage to one of the barges, resulting in the loss of 497 pieces of

logs out of the 598 pieces loaded thereon. Oriental Assurance refused to
 pay on the ground that its contracted liability was for total loss only. The

trial Court and Court of Appeals both held that Panama should be able to

recover from Oriental as there was constructive total loss since more than

3/4 of the cargo was lost. Court however reversed and held that the lower

courts erred in declaring that there was constructive total loss. Court

declared that there was no constructive total loss in the case based on the

requirements provided in the Insurance Code as the subject insurance policy

was for the total shipment, not only on one of the barges.

15. Malayan Ins. V. CA, 270 SCRA 242 (1997)

TKC Marketing Corp has a cargo of soya bean meal insured with Malayan

Insurance. Said cargo is to be transported from Rio del Grande, Brazil to

Manila. The policies over the cargo included an exception to its perils clause

wherein it is “warranted free of capture, seizure, arrest, restraint or

detainment, and the consequences thereof”. While the vessel that was

carrying the cargo was docked in South Africa, civil authorities arrested and

detained said vessel because of a lawsuit on a question of ownership and

possession. TKC tried to make a formal claim but Malayan refused on the

ground that the arrest of the vessel made by civil authorities was not a peril

covered under the policies. The cargo was then sold at a loss due to its

perishable nature and the subsequent claim made by TKC was still denied on

the same ground. On a complaint for damages made by TKC, the trial court

ruled in their favor which was affirmed by the Court of Appeals. Supreme

Court likewise affirmed and held that although the exception clause which

includes arrests have been deleted, the policy provided for the incorporation

of the Institute War Clauses. With the incorporation of said clauses,

arrests by civil authorities are deemed included among the covered risks.
16. Western Guaranty v. CA, 187 SCRA 652

Priscilla Rodriguez was struck by a De Dios Transport Co. (DDTC) passenger

bus while on the pedestrian lane after the bus driver ignored the stop signal

from an enforcer. The bus company was insured with Western Guaranty for

any third-party liability. In its policy, it was stipulated that Western’s

liability is to pay all sums necessary to discharge liability of the insured.

Additionally, with respect to death of or bodily injury to any third party or

passenger, its payment per victim in any one accident shall not exceed the

limits indicated in the Schedule of Indemnities provided for in the policy. As

the accident caused permanent disfigurement to Rodriguez, she filed a

complaint for damages against DDTC and its driver. DDTC in turn filed a

third-party complaint against its insurer, Western Guaranty. Trial court

ruled in favor of Rodriguez and ordered DDTC to pay compensation with

whatever value they could not pay to be shouldered by Western Guaranty.

Court of Appeals affirmed. On appeal to the Supreme Court, Western

Guaranty is contending that it should not be made liable for paying loss of

earnings, moral damages and attorney’s fees as it is not included in the

Schedule of Indemnities provided in the policy. Supreme Court denied

Western Guaranty’s argument as its liability is clearly marked out in

comprehensive terms, “all sums necessary to discharge liability of the

insured”. According to the Court, the Schedule of Indemnities does not

purport to limit, or to enumerate exhaustively, the species of bodily injury

occurrence of which generate liability for Western Guaranty.

17. Qua Chee Gan v. Law Union 96 Phil. 85 (1955)

Qua Chee Gan owns four bodegas in Albay to store stocks of copra and hemp.

Said bodegas are insured with Law Union with the loss made payable to

Philippine National Bank as mortgage. The policy included warranties

 requiring Qua Chee Gan to install 11 hydrants in his premises but he only

installed 2. Additionally, it was stipulated that oil should never be stored

within the premised of the insured property. Nevertheless, Law Union went

on with the insurance policy and collected Qua Chee Gan’s premium payments.

A fire broke out which destroyed 3 out of the 4 bodegas. Qua Chee Gan

demanded Law Union to pay for the loss but it refused, claiming that the

former violated several warranties and conditions and that he deliberately

caused the fire. Qua Chee Gan was later acquitted from arson and again

demanded Law Union to pay. This time, Law Union contended that the

insurance contract is void for Qua Chee Gan’s failure to install 11 hydrants

and that gasoline was found on the premises. Trial court ruled in favor of

Qua Chee Gan after it held that Law Union was well aware that the

requirements of the warranty were not complied with but still issued the

subject policies. The Supreme Court affirmed the ruling and held that Law

Union’s issuance of the policies, despite having knowledge of existing facts

which should have invalidated the contract from the very beginning,

constitutes as a waiver of condition on their part. As such, Law Union is

estopped from asserting the breach of the conditions and warranties.

18. Del Rosario v. Equitable Ins. 8 SCRA 343 (1963)

Francisco del Rosario was issued with a personal accident policy by Equitable

Insurance. In said policy, Equitable binds itself to pay as indemnity for the

death of the insured the sum of P1000 to P3000, depending on the cause of

death. The minimum amount shall be paid if the cause of the death was not

under any of the specified. Del Rosario died by drowning after he was forced

to jump off a motor launch. Father of the deceased made a formal claim with

Equitable and was only indemnified with P1000 as it viewed that the drowning

as a death was not included in those specified in the policy. Initially,

 drowning was an exception in the policy but a rider to the policy effectively

waived such exception, although the corresponding amount to drowning was

not specified. As such, the amount of P3000 was demanded by the

beneficiaries which Equitable denied. Trial court ruled that P3000 should be

paid. As there have been an ambiguity in the contract, it should be construed

against the insurer. The Supreme Court upheld the ruling on the same

ground.

19. Geagonia v. CA 241 SCRA 152 (1995)

Armando Geagonia procured a fire insurance policy from Country Bankers

Insurance Corporation over the stock-in-trade of his business, Norman’s

Mart. A condition was stipulated in the policy that the insured should give

notice to the insurance company if there are other insurances covering the

same property, failure of which would forfeit the subject policy. A fire

broke out which prompted Geagonia to file for claims. However, Country

Bankers denied as it found that the stocks-in-trade were covered by

another insurance policy, procured by Geagonia’s mortgagee, Cebu Tesing

Textiles. A case was filed before the Insurance Commission and ruled in

favor of Geagonia. The commissioner believed that Geagonia had no

knowledge that its mortgagee procured other insurance policies over the

stocks-in-trade. Court of Appeals reverse after it was found that Geagonia

actually knew of the other insurance policies. The Supreme Court agreed

with the finding of the Court of Appeals that Geagonia had knowledge of the

other insurance policies. However, it still ruled in favor of Geagonia as the

insurance policies actually covered different and separate insurable

interests, that of Geagonia and that of his mortgagee. The condition

provided in the subject policy was held to be free from ambiguity and only

actually bars double insurance on Geagonia’s part.

20. Sun Insurance v. CA 211 SCRA 554 (1992)

Felix Lim was the holder of an accident insurance policy with face value of

P200,000. Following his death due to a bullet wound in the head, Nerissa,

Felix’s wife and beneficiary tried to claim indemnities from Sun Insurance.

Sun Insurance denied the claim holding that Felix’s death, despite ruling out

suicide, was also not an accident as it falls under the exceptions in the policy

that would bar any claim. Trial Court and Court of Appeals ruled in favor

Nerissa and ordered Sun Insurance to pay the amount of the insurance

policy plus damages. The Supreme Court held that Sun Insurance is liable to

indemnify Nerissa the face value of the policy as Felix’s death falls within

the definition of “accidents” as held in the law. The Court however deleted

the award for damages as Sun Insurance was in good faith when it denied

Nerissa’s claim over the policy.

21. Rizal Surety v. CA 336 SCRA 12

Rizal Surety issued a fire insurance policy in favor of Transworld Knitting

Mills. Said policy is stipulated to cover for “Stocks of finished and/or

unfinished products, raw materials and supplies whilst contained and/or

stored…in the premises occupied by them forming part of the buildings

situated within own Compound.” A fire broke out within the compound which

destroyed the two-storey annex building and its contents while only partly

burning the four-span main building. Transworld tried to recover from Rizal

Surety but was denied as the latter claimed that the annex building was not

covered by the policy. Trial court ruled that Rizal Surety was liable. Court of

Appeals modified the ruling by holding another insurer to be also liable. On

appeal to the Supreme Court, it ruled that a proper reading of the policy

contemplates that the coverage is not only limited to the four-span main
 building. Moreover, the two-storey annex building was already constructed

when Transworld entered into an insurance contract with Rizal Surety. The

Court reiterates that interpretation of obscure words or stipulations shall

be strictly construed against the party who caused it.

Chapter 3
1. Filipino Merchants Ins. Co. v. Court of Appeals, 179 SCRA 638 (1989)

Choa Tiek Seng is the consignee of a cargo of fishmeal to be shipped from

Bangkok to Manila. He insured said cargo with Filipino Merchants Insurance

under an “all risks” policy. Upon arrival in Manila, it was found that several

bags were in bad condition which prompted Choa Tiek Seng to file claims.

Filipino Merchants denied resulting a case being filed against them. Both

trial court and Court of Appeals ruled in favor of Choa Tiek Seng. On appeal

to the Supreme Court, Filipino Merchants is contending that Choa Tiek Seng

has no insurable interest over the subject cargo thus the insurance policy

should be void. Additionally, it is contending that the “all risks” policy does

not cover the inherent deterioration of the cargo as it is not attributable to

some fortuity, casualty, or accidental cause. The Supreme Court held that

Choa Tiek Seng has an insurable interest, in accordance with the definition

provided in the Insurance Code. As a consignee, Choa Tiek Seng derives his

insurable interest from a perfected contract of sale which may be the

subject of a valid contract. On the interpretation of the “all risks” clause,

the Court held that it should be read literally as meaning to cover all risks

whatsoever except for certain exceptions in which the burden to prove such

exceptions rests on the insurer. As there was no showing on Filipino

Merchants part that the loss falls under any of the exceptions, the Court

affirmed the lower court rulings.

2. Gaisano Cagayan v. Insurance Co. of North America, 490 SCRA 286 (2006)

Intercapitol Marketing Corporation, maker of Wrangler Blue Jeans, and Levi

Strauss (Phils.), Inc., local distributor of Levi Strauss products, both

possess fire insurance policies issued by Insurance Company of North

America over their book debt endorsements. Said endorsements are related

to their for sale ready-made clothing materials which have been delivered to

its dealers in the Philippines. One of the local dealers, Gaisano Cagayon has a

store in Cagayan de Oro city housing said goods. However, said store was

consumed by a fire including the clothing goods with it. Insurance Co. of

North America indemnified the insured corporations and after being

subrograted to their rights, it filed a complaint for damages against Gaisano

Cagayan. Gaisano Cagayan asserts that it should not be held liable as the

insured goods were destroyed in a fire which is a fortuitous event. Trial

Court held that the corporations must bear the loss as it retained ownership

over the goods under the concept of res perit domino. Court of Appeals

reversed the ruling and held that the sales invoices that the corporations

have are an exception to res perit domino. The Supreme Court distinguished

from the concept of res perit domino and that under property insurance,

one’s interest is not determined by concept of title but whether the insured

has substantial economic interest in the property. The corporations have a

valid interest over the goods and would suffer loss from its destruction.

More importantly, the subject of the policy are not the goods themselves

but the accounts of Gaisano to the corporations over the goods. The

Supreme Court ruled in favor of Insurance Co. that it was validly subrogate

to the rights of Intercapitol Marketing but not to Levi Strauss (Phils.) as no

subrogation receipt was presented.

3. Geagonia v. Court of Appeals, 241 SCRA 152 (1995)

 [Supra at p. <> of this bluebook]

In this case, the Court held that a mortgagor and a mortgagee each have an

independent insurable interest even over the same object. As such, there

would be no double insurance if both mortgagor and mortgagee procured

insurance over the same object.

4. Tai Tong Chuache & Co. v. Insurance Commission, 158 SCRA 366 (1988)

Spouses Palomo acquired a parcel of land and building in Davao City and

assumed its corresponding mortgage in favor of SSS. Said building is also

insured with SSS. Azucena Palomo obtained a loan from Tai Tong Chuache,

Inc. As security for the loan, she executed a mortgage over the land and

building in favor of Tai Tong Chuache. Tai Tong Chuache, in turn, insured the

mortgaged properties with Travellers Multi-Indemnity Corporation. Pedro

Palomo also secured a fire insurance over the building with two other

insurance companies. Following a fire that razed the whole building, all of the

insurers except for Travellers paid for their corresponding shares of the

loss. Spouses Palomo filed a complaint before the Insurance Commission with

Tai Tong Chuache intervening. Travellers contended that Tai Tong Chuache is

not entitled to any indemnity as it has no insurable interest over the

property. Insurance Commission ruled in favor of Travellers on the ground

that Tai Tong Chuache has no insurable interest over the property. Supreme

Court reversed the ruling and held that Tai Tong Chuache has a valid

insurable interest. As a mortgage creditor, Tai Tong Chuache’s insurable

interest is evidenced by the mortgage contract over an unpaid loan obtained

by the owners of the property.