VIRGINIA CALANOC vs PHILIPPINE AMERICAN LIFE INSURANCE CO

G.R. No. L-8151

December 16, 1955

FACTS: Melencio Basilio was a watchman of the Manila Auto Supply. He secured a life insurance policy
from the Philippine American Life Insurance Company in the amount of P2,000 to which was attached a
supplementary contract covering death by accident. On January 25, 1951, he died of a gunshot wound on
the occasion of a robbery committed in the house of Atty. Ojeda. Virginia Calanoc, the widow, was paid
the sum of P2,000, face value of the policy, but when she demanded the payment of the additional sum of
P2,000 representing the value of the supplemental policy, the company refused alleging, as main
defense, that the deceased died because he was murdered by a person who took part in the commission
of the robbery and while making an arrest as an officer of the law which contingencies were expressly
excluded in the contract and have the effect of exempting the company from liability.
ISSUE: Whether Basilios death was accidental or caused by one of the risks excluded by the
supplementary contract which exempts the company from liability.
HELD: Accidental. There is no proof that the death of Basilio is the result of assault or murder for the
record is barren of any circumstance showing how the fatal shot was fired. Nor can it be said that the
killing was intentional for there is the possibility that the malefactor had fired the shot merely to scare
away the people around for his own protection and not necessarily to kill or hit the victim. The victim could
have been either the policeman or Atty. Ojeda for it cannot be pretended that the malefactor aimed at the
deceased precisely because he wanted to take his life. Basilio cannot be considered as making an arrest
as an officer of the law, as contended, simply because he went with the traffic policeman, for certainly he
did not go there for that purpose nor was he asked to do so by the policeman.
While as a general rule the parties may limit the coverage of the policy to certain particular accidents and
risks or causes of loss, and may expressly except other risks or causes of loss therefrom, it is to be
desired that the terms and phraseology of the exception clause be clearly expressed so as to be within
the easy grasp and understanding of the insured. For if the terms are doubtful or obscure the same must
of necessity be interpreted or resolved against the one who has caused the obscurity so as to effect the
dominant purpose of indemnity or payment to the insured, especially where a forfeiture is involved.
EMILIA T. BIAGTAN vs THE INSULAR LIFE ASSURANCE COMPANY
G.R. No. L-25579 March 29, 1972
FACTS: Juan S. Biagtan was insured with defendant InsularLife Assurance Company for the sum of
P5,000.00 and, under a supplementary contract denominated "Accidental Death Benefit Clause, for an
additional sum of P5,000.00 if "the death of the Insured resulted directly from bodily injury effected solely
through external and violent means sustained in an accident ... and independently of all other causes.
The clause, however, expressly provided that it would not apply where death resulted from an injury
"intentionally inflicted by another party. On the night of May 20, 1964 a band of robbers entered the house
of the insured Juan S. Biagtan. That in committing the robbery, the robbers, on reaching the staircase
landing on the second floor, rushed towards the door of the second floor room, where they suddenly met
a person near the door of oneof the rooms who turned out to be the insured Juan S. Biagtan who
received thrusts from their sharp-pointed instruments, causing wounds on the body of said Juan S.
Biagtan resulting in his death. Plaintiffs, as beneficiaries of the insured, filed a claim under the policy. The
insurance company paid the basic amount of P5,000.00 but refused to pay the additional sum of
P5,000.00 under the accidental death benefit clause, on the ground that the insured's death resulted from
injuries intentionally inflicted by third parties and therefore was not covered.
ISSUE: Whether the wounds received by the insured at the hands of the robbers nine in all, five of
them mortal and four non-mortal were inflicted intentionally.

HELD: Yes. It cannot be denied that the act itself of inflicting the injuries was intentional. Where a gang of
robbers enter a house and coming face to face with the owner, even if unexpectedly, stab him repeatedly,
it is contrary to all reason and logic to say that his injuries are not intentionally inflicted, regardless of
whether they prove fatal or not. Nine wounds inflicted with bladed weapons at close range cannot
conceivably be considered as innocent insofar as such intent is concerned. Thus, it has been held that
"intentional" as used in an accident policy excepting intentional injuries inflicted by the insured or any
other person, etc., implies the exercise of the reasoning faculties, consciousness and volition. Where a
provision of the policy excludes intentional injury, it is the intention of the person inflicting the injury that is
controlling.
FINMAN GENERAL ASSURANCE CORPORATION vs.THE HONORABLE COURT OF APPEALS
G.R. No. 100970 September 2, 1992
FACTS:
On October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman General
Assurance Corporation with his parents, spouses Julia and Carlos Surposa, and brothers Christopher,
Charles, Chester and Clifton, all surnamed, Surposa, as beneficiaries. While said insurance policy was in
full force and effect, the insured, Carlie Surposa, died on October 18, 1988 as a result of a stab wound
inflicted by one of the three (3) unidentified men. Private respondent and the other beneficiaries of said
insurance policy filed a written notice of claim with the petitioner insurance company which denied said
claim contending that murder and assault are not within the scope of the coverage of the insurance policy.
Private respondent filed a complaint with the Insurance Commission which rendered a favorable response
for the respondent. The appellate court ruled likewise.
Petitioner filed this petition alleging grave abuse of discretion on the part of the appellate court in
applying the principle of "expresso unius exclusio alterius" in a personal accident insurance policy, since
death resulting from murder and/or assault are impliedly excluded in said insurance policy considering
that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the
assailant. Therefore, said death was committed with deliberate intent which, by the very nature of a
personal accident insurance policy, cannot be indemnified.
ISSUE: Whether or not the insurer is liable for the payment of the insurance premiums
HELD: Yes, the insurer is still liable. Contracts of insurance are to be construed liberally in favor of the
insured and strictly against the insurer. Thus ambiguity in the words of an insurance contract should be
interpreted in favor of its beneficiary. The terms "accident" and "accidental" as used in insurance
contracts have not acquired any technical meaning, and are construed by the courts in their ordinary and
common acceptation. Thus, the terms have been taken to mean that which happen by chance or
fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. Where the
death or injury is not the natural or probable result of the insured's voluntary act, or if something
unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the
protection of the policies insuring against death or injury from accident. In the case at bar, it cannot be
pretended that Carlie Surposa died in the course of an assault or murder as a result of his voluntary act
considering the very nature of these crimes. Neither can it be said that where was a capricious desire on
the part of the accused to expose his life to danger considering that he was just going home after
attending a festival.
Furthermore, the personal accident insurance policy involved herein specifically enumerated only
ten (10) circumstances wherein no liability attaches to petitioner insurance company for any injury,
disability or loss suffered by the insured as a result of any of the stimulated causes. The principle of "
expresso unius exclusio alterius" the mention of one thing implies the exclusion of another thing is
therefore applicable in the instant case since murder and assault, not having been expressly included in

the enumeration of the circumstances that would negate liability in said insurance policy cannot be
considered by implication to discharge the petitioner insurance company from liability for, any injury,
disability or loss suffered by the insured. Thus, the failure of the petitioner insurance company to include
death resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that it
did not intend to limit or exempt itself from liability for such death.
ZENITH INSURANCE vs CA
G.R. No. 85296. May 14, 1990
FACTS: Lawrence Fernandez insured his car for "own damage" with Zenith Insurance. The car figured in
an accident and suffered actual damages in the amount of P3,640.00. After allegedly being given a run
around by Zenith for two (2) months, Fernandez filed a complaint for sum of money and damages
resulting from the refusal of Zenith to pay the amount claimed. Aside from actual damages and interests,
Fernandez also prayed for more damages in the amount of P10,000.00, exemplary damages of
P5,000.00, attorney's fees of P3,000.00 and litigation expenses of P3,000.00. A decision was rendered by
the trial court in favor of private respondent Fernandez. The Court of Appeals rendered its decision
affirming in toto the decision of the trial court. Zenith Insurance appeals the case and contends that while
the complaint of Fernandez prayed for P10,000.00 moral damages, the lower court awarded twice the
amount, or P20,000.00 without factual or legal basis; while Fernandez prayed for P5,000.00 exemplary
damages, the trial court awarded P20,000.00; and while Fernandez prayed for P3,000.00 attorney's fees,
the trial court awarded P5,000.00.
ISSUE: Whether or not the award of moral damages, exemplary damages and attorney's fees is proper.
HELD: No. Under the Insurance Code, in case of unreasonable delay in the payment of the proceeds of
an insurance policy, the damages that may be awarded are: 1) attorney's fees; 2) other expenses incurred
by the insured person by reason of such unreasonable denial or withholding of payment; 3) interest at
twice the ceiling prescribed by the Monetary Board of the amount of the claim due the injured; and 4) the
amount of the claim. That in awarding moral damages in case of breach of contract, there must be a
showing that the breach was wanton and deliberately injurious or the one responsible acted fraudulently
or in bad faith. The act of Zenith Insurance in delaying payment for two months cannot be considered as
so wanton or malevolent to justify an award of P20,000.00 as moral damages, taking into consideration
also the fact that the actual damage on the car was only P3,460. In the pre-trial of the case, it was shown
that there was no total disclaimer by Fernandez. The reason for Zenith Insurances failure to indemnify
Fernandez within the two-month period was that the parties could not come to an agreement as regards
the amount of the actual damage on the car. The amount of P10,000.00 prayed for by private respondent
as moral damages is equitable. Exemplary damages will not be awarded as the insurance company had
not acted in wanton, oppressive or malevolent manner. The awards due to private respondent Fernandez
are as follows: 1)P3,640.00 as actual claim plus interest of twice the ceiling prescribed by the Monetary
Board computed from the time of submission of proof of loss; 2)P10,000.00 as moral damages;
3)P5,000.00 as attorney's fees; 4)P3,000.00 as litigation expenses and 5)Costs
SUN INSURANCE OFFICE vs CA; NERISSA LIM
G.R. No. 92383. July 17, 1992
FACTS: Nerissa Lim's husband, Felix Lim, Jr., was issued a personal accident policy. 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. It happened after his mother's birthday party. 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 the television, he stood in front of her and pointed the gun at her. She pushed it aside
and said it might be 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, Nerissa
Lim sought payment on the policy but her claim was rejected. Sun Insurance agreed that there was no

suicide. It argued, however, that there was no accident either. It further argued that there is no accident
when a deliberate act is performed unless some additional, unexpected, independent and unforeseen
happening occurs which produces or brings about their injury or death. That Felix Li, Jr. willfully exposed
himself to needless peril and thus removed himself from the coverage of the insurance policy.
ISSUE: Whether or not Felix Lim willfully exposed himself to needless peril, thereby removing himself
from the coverage of the insurance policy.
HELD: No. Lim did not willfully expose himself to needless peril when he pointed the gun to his temple
because the fact is that he thought it was not unsafe to do so. The act was precisely intended to assure
Nalagon that the gun was indeed harmless. 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. There are only four exceptions expressly
made in the contract to relieve the insurer from liability, and none of these exceptions is applicable in the
case at bar. It bears noting that insurance contracts are as a rule supposed to be interpreted liberally in
favor of the assured.
VILLACORTA vs INSURANCE COMMISSION
G.R. No. L-54171. October 28, 1980
FACTS: Petitioner Jewel Villacorta vehicle was brought to the Sunday Machine Works, Inc., for general
check-up and repairs. While it was in the custody of the shop, the car was allegedly taken by six persons
and driven out. While travelling, the car figured in an accident. The driver, Benito Mabasa, and one of the
passengers died and the other four sustained physical injuries. The car, as well , suffered extensive
damage. Villacorta, thereafter, filed a claim for total loss with Empire Insurance but claim was denied.
Hence, Villacorta was compelled to institute an action. Empire Insurance contended that the accident did
not fall within the provisions of the policy either for the Own Damage or Theft coverage , invoking the
policy provision on "Authorized Driver" clause. The Insurance Commission decided in favor of Empire
Insurance holding under "Authorized Driver" clause, if the person driving is other than the insured, he
must have been duly authorized by the insured, to drive the vehicle to make the Insurance company liable
for the driver's negligence. With the declarations of Villacorta and her husband that they did not Mabasa
nor consented to the use of the car, the Commission hold that Mabasa, is not an authorized driver of the
Villacorta, thus, a violation of the 'Authorized Driver' clause of the policy. Commission likewise upheld
Empire Insurances assertion that the car was not stolen and therefore not covered by the Theft clause,
ruling that the fact that the car was taken by one of the residents of the Sunday Machine Works, and the
withholding of the same, for a joy ride should not be construed to mean 'taking' under the Revised Penal
Code. If at all there was a 'taking', the same was merely temporary in nature. A temporary taking is held
not a taking insured against.
ISSUE: (1) Whether or not Mabana is an authorized driver under the policy; (2) Whether or not Empire
Insurance is liable under the theft clause of the policy.
HELD: (1) Yes. A car owner who entrusts his car to an established car service and repair shop necessarily
entrusts his car key to the shop owner and employees who are presumed to have the insured's
permission to drive the car for legitimate purposes of checking or road-testing the car. The mere
happenstance that the employee(s) of the shop owner diverts the use of the car to his own illicit or
unauthorized purpose in violation of the trust reposed in the shop by the insured car owner does not
mean that the "authorized driver" clause has been violated such as to bar recovery, provided that such
employee is duly qualified to drive under a valid driver's license. The situation is no different from the
regular or family driver, who instead of carrying out the owner's order to fetch the children from school
takes out his girlfriend instead for a joy ride and instead wrecks his girlfriend, este the car.
(2) Yes. When a person, either with the object of going to a certain place, or learning how to drive, or

enjoying a free ride, takes possession of a vehicle belonging to another, without the consent of its owner,
he is guilty of theft because by taking possession of the personal property belonging to another and using
it, his intent to gain is evident since he derives therefrom utility, satisfaction, enjoyment and pleasure. It is
equally evident that the taking proved to be quite permanent rather than temporary, for the car was totally
smashed in the fatal accident and was never returned in serviceable and useful condition to Villacorta.
ANDREW PALERMO vs PYRAMID INSURANCE CO
G.R. No. L-36480. May 31, 1988
FACTS: After having purchased a brand car, Andrew Palermo insured the same with Pyramid Insurance
against any loss or damage for P20,000.00 and against third party liability for P10,000.00. Palermo paid
Pyramid Insurance P361.34 premium for one year, for which defendant issued Private Car
Comprehensive Policy. The automobile was, however, mortgaged by Palermo with the vendor, Ng Sam
Bok Motors Co., to secure the payment of the balance of the purchase price. While driving the automobile
in question, Palermo met a violent accident. The La Carlota City fire engine crashed head on, and as a
consequence, the plaintiff sustained physical injuries, his father, Cesar Palermo, who was with him in the
car at the time was likewise seriously injured and died shortly thereafter, and the car in question was
totally wrecked. The insurance policy grants an option unto the defendant, in case of accident either to
indemnify the plaintiff for loss or damage to the car in cash or to replace the damaged car . Pyramid
Insurance, however, refused to take either of the above-mentioned alternatives for the reason as alleged,
that the insured himself had violated the terms of the policy when he drove the car in question with an
expired driver's license. The court ordered the defendant to pay the plaintiff the sum of P20,000.00, value
of the insurance of the motor vehicle. Pyramid Insurance alleges that the court erred in interpreting the
provision of the policy regarding AUTHORIZED DRIVER: Any of the following:(a)The Insured; (b)Any
person driving on the Insured's order or with his permission. Provided that the person driving is permitted
in accordance with the licensing or other laws or regulations to drive the Motor Vehicle and is not
disqualified from driving such motor vehicle by order of a Court of law or by reason of any enactment or
regulation in that behalf.
ISSUE: Whether or not Palermo is an authorized driver" under the insurance policy considering that his
driver's license had expired at the time of the accident.
HELD: Duh. The driver of the insured motor vehicle at the time of the accident was the insured himself,
hence an "authorized driver" under the policy. While the Motor Vehicle Law prohibits a person from
operating a motor vehicle on the highway without a license or with an expired license, an infraction of the
Motor Vehicle Law on the part of the insured, is not a bar to recovery under the insurance contract. It
however renders him subject to the penal sanctions of the Motor Vehicle Law. The requirement that the
driver be "permitted in accordance with the licensing or other laws or regulations to drive the Motor
Vehicle and is not disqualified from driving such motor vehicle by order of a Court of Law or by reason of
any enactment or regulation in that behalf," applies only when the driver "is driving on the insured's order
or with his permission." It does not apply when the person driving is the insured himself.
FIGURACION VDA. DE MAGLANA vs CONSOLACION
G.R. No. 60506. August 6, 1992
FACTS: Lope Maglana was on his way to his work station, driving a motorcycle, he met an accident that
resulted in his death. He died on the spot. The PUJ jeep that bumped the deceased was driven by Pepito
Into, operated and owned by defendant Destrajo. The heirs of Lope Maglana, Sr., here petitioners, filed
an action for damages and attorney's fees against operator Patricio Destrajo and AFISCO. An information
for homicide thru reckless imprudence was also filed against Pepito Into. The lower court rendered a
decision finding that Destrajo had not exercised sufficient diligence as the operator of the jeepney.
Destrajo was ordered to pay the plaintiffs the sum of P12,000.00 and P5,000.00 as moral damages,
which amount shall be deducted in the event judgment in the criminal case against Into shall have been
enforced. AFISCO is also ordered to reimburse defendant Destrajo whatever amounts the latter shall

have paid only up to the extent of its insurance coverage. Petitioners filed a motion for the reconsideration
of the second paragraph of the dispositive portion of the decision contending that AFISCO should not
merely be held secondarily liable because the Insurance Code provides that the insurer's liability is "direct
and primary and/or jointly and severally with the operator of the vehicle, although only up to the extent of
the insurance coverage." Petitioners argued their position that AFISCO is directly and solidarily liable with
Destrajo up to the extent of its insurance coverage.
ISSUE: Whether AFISCO is directly and/or solidarily liable with Destrajo.
HELD: The provision in the insurance contract between AFISCO and Destrajo leads to no other
conclusion but that AFISCO can be held directly liable by petitioners. AFISCO will pay all sums of money
to discharge the liability of the insured in cases of death or injury to third parties. Where an insurance
policy insures directly against liability, the insurer's liability accrues immediately upon the occurrence of
the injury or event upon which the liability depends, and does not depend on the recovery of judgment by
the injured party against the insured. Since petitioners had received from AFISCO the sum of P5,000.00
under the no-fault clause, AFISCO's liability is now limited to P15,000.00.
However, we cannot agree that AFISCO is likewise solidarily liable with Destrajo. While it is true that
where the insurance contract provides for indemnity against liability to third persons, such third persons
can directly sue the insurer, however, THE DIRECT LIABILITY OF THE INSURER UNDER INDEMNITY
CONTRACTS AGAINST THIRD PARTY LIABILITY DOES NOT MEAN THAT THE INSURER CAN BE
HELD SOLIDARILY LIABLE WITH THE INSURED AND/OR THE OTHER PARTIES FOUND AT FAULT.
THE LIABILITY OF THE INSURER IS BASED ON CONTRACT; THAT OF THE INSURED IS BASED
ON TORT. Thus, petitioner therein, which, under the insurance contract is liable only up to P20,000.00,
cannot be made solidarily liable with the insured for the entire obligation of P29,013.00 otherwise there
would result "an evident breach of the concept of solidary obligation." The liability of AFISCO based on
the insurance contract is direct, but not solidary with that of Destrajo which is based on Article 2180 of the
Civil Code. 12 As such, petitioners have the option either to claim the P15,000 from AFISCO and the
balance from Destrajo or enforce the entire judgment from Destrajo subject to reimbursement from
AFISCO to the extent of the insurance coverage.
PERLA COMPANIA DE SEGUROS vs. CA, HERMINIO LIM and EVELYN LIM
G.R. No. 96452. May 7, 1992
FACTS: Herminio and Evelyn Lim purchased a Ford Hatchback 1981 model car and insured with Perla
Compania de Seguros, Inc. (PERLA) for comprehensive coverage including theft. On November 9, 1982,
said vehicle was carnapped. Evelyn Lim, who was driving said car before it was carnapped, immediately
called up the Anti- Carnapping Unit of the Philippine Constabulary to report said incident and thereafter,
went to the nearest police substation to make a police report regarding said incident. Lim then filed a
claim for loss with the Perla Insurance but said claim was denied on the ground that Evelyn Lim, who was
using the vehicle before it was carnapped, was in possession of an expired driver's license at the time of
the loss of said vehicle which is in violation of the authorized driver clause of the insurance policy.
ISSUE: Whether or not Evelyn Lim violated the insurance contract because the authorized driver clause.
HELD: No. The comprehensive motor car insurance policy issued by Perla Insurance undertook to
indemnify the private respondents against loss or damages to the car (a) by accidental collision or
overturning, or collision or overturning consequent upon mechanical breakdown or consequent upon wear
and tear; (b) by fire, external explosion, self-ignition or lightning or burglary, housebreaking or theft; and
(c) by malicious act. Where a car is admittedly, as in this case, unlawfully and wrongfully taken without the
owner's consent or knowledge, such taking constitutes theft, and, therefore, it is the "THEFT" clause, and
not the "AUTHORIZED DRIVER" clause, that should apply. There is no causal connection between the
possession of a valid driver's license and the loss of a vehicle. To rule otherwise would render car
insurance practically a sham since an insurance company can easily escape liability by citing restrictions
which are not applicable or germane to the claim, thereby reducing indemnity to a shadow.

GEAGONIA vs CA and COUNTRY BANKERS INSURANCE CORPORATION

G.R. No. 114427. February 6, 1995
FACTS: Armando Geagonia is the owner of Normans Mart and obtained from Country Bankers a fire
insurance policy which covered Stock-in-trade consisting of RTW dry goods. The policy contained a
provision where the insured must give notice to the insurer of any insurance or insurances already
affected or which may be subsequently be effected covering any of the property or properties consisting
of stocks in trade, goods in process and/or inventories already insured by such policy otherwise it shall be
deemed forfeited, provided that such condition does not apply when the total insurance or insurances in
force at the time of the loss is not more than 200k. Subsequently, a fire broke out and destroyed
Geagonias stocks-in-trade. Country bankers denied the claim because it was found that at the time of the
loss, the stocks were likewise covered by two other fire insurances for 100k each by PFIC . It had a
mortgage clause which stated that loss, if any, shall be payable to Cebu Tesing Textiles.
ISSUE: Whether or not there was double insurance to justify denial of the claim
HELD: NO (Country Bankers is liable. The condition in the policy is commonly known as the additional or
other insurance clause and has been upheld as valid and as a warranty that no other insurance exists.
Its violation would thus avoid the policy. However, in order to constitute a violation, the other insurance
must be upon the same subject matter, the same insurable interest, and the same risk. As to a mortgaged
property, the mortgagor and the mortgagee have each an independent insurable interest therein and both
interests may be one policy, or each may take out a separate policy covering his interest, either at the
same or separate times. The mortgagors insurable interest covers the full value of the mortgaged
property, even though the mortgage debt is equivalent to the full value of the property. The mortgagees
insurable interest is to the extent of the debt, since the property is relied upon as security thereof, and in
insuring he is not insuring the property but his interest or lien thereon. A double insurance exists where
the same person is insured by several insurers separately in respect of the same subject and cover the
same interest. Since the two policies of the PFIC do not cover the same interest as that covered by the
policy in issue, no double insurance exists. The non-disclosure is not fatal.
FORTUNE INSURANCE vs CA
G.R. No. 115278. May 23, 1995
FACTS: On June 29, 1987, Producers Bank of the Philippines armored vehicle was robbed, in transit, of
seven hundred twenty-five thousand pesos (Php 725,000.00) that it was transferring from its branch in
Pasay to its main branch in Makati. To mitigate their loss, they claim the amount from their insurer, namely
Fortune Insurance and Surety Co.
Fortune Insurance, however, assails that the general exemption clause in the Casualty Insurance
coverage had a general exemption clause, to wit:"GENERAL EXCEPTIONSThe company shall not be
liable under this policy in respect of
xxx xxx xxx(b)any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer,
employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in
conjunction with others. ..."
And, since the driver (Magalong) and security guard (Atiga) of the armored vehicle were charged with
three others as liable for the robbery, Fortune denies Producers Bank of its insurance claim. According to
Fortune, when Producers commissioned a guard and a driver to transfer its funds from one branch to
another, they effectively and necessarily became its authorized representatives in the care and custody of
the money. Assuming that they could not be considered authorized representatives, they were,
nevertheless, employees of Producers. Fortune insists that PRC Management System and Unicorn
Security Services are but "labor-only" contractors under the Labor Code, and a finding that a contractor is

a "labor-only" contractor is equivalent to a finding that there is an employer-employee relationship

between the owner of the project and the employee of the "labor-only" contractor.
ISSUE: Whether or not recovery is precluded under the general exemption clause.
HELD: Yes, recovery is precluded under the general exemption clause. Even granting for the sake of
argument that these contracts were not "labor-only" contracts, and PRC Management Systems and
Unicorn Security Services were truly independent contractors, we are satisfied that Magalong and Atiga
were, in respect of the transfer of Producer's money from its Pasay City branch to its head office in
Makati, its "authorized representatives" who served as such with its teller Maribeth Alampay. Howsoever
viewed, Producers entrusted the three with the specific duty to safely transfer the money to its head
office, with Alampay to be responsible for its custody in transit; Magalong to drive the armored vehicle
which would carry the money; and Atiga to provide the needed security for the money, the vehicle, and his
two other companions. In short, for these particular tasks, the three acted as agents of Producers. A
"representative" is defined as one who represents or stands in the place of another; one who represents
others or another in a special capacity, as an agent, and is interchangeable with "agent."
EDILLON vs MANILA BANKERS LIFE
G.R. No. L-34200 September 30, 1982
FACTS: In April 1969, Carmen Lapuz filled out an application form for insurance under Manila Banker Life
Assurance Corporation. She stated that her date of birth was July 11, 1904. Upon payment of the Php
20.00 premium, she was issued the insurance policy in April 1969. In May 1969, Carmen Lapuz died in a
vehicular accident. Regina Edillon, who was named a beneficiary in the insurance policy sought to collect
the insurance claim but Manila Banker denied the claim. Apparently, it is a rule of the insurance company
that they were not to issue insurance policies to persons who are under the age of sixteen (16) years of
age or over the age of sixty (60) years ... Note, that Lapuz was already 65 years old when she was
applying for the insurance policy.
ISSUE: Whether or not Edillon is entitled to the insurance claim as a beneficiary.
HELD: Yes. The age of the insured Carmen 0. Lapuz was not concealed to the insurance company. Her
application for insurance coverage which was on a printed form furnished by private respondent and
which contained very few items of information clearly indicated her age at the time of filing the same to be
almost 65 years of age. There was sufficient time for the private respondent to process the application
and to notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it
was minded to do so. If the private respondent failed to act, it is either because it was willing to waive
such disqualification; or, through the negligence or incompetence of its employees for which it has only
itself to blame, it simply overlooked such fact. Under the circumstances, the insurance corporation is
already deemed in estoppel. Its inaction to revoke the policy despite a departure from the exclusionary
condition contained in the said policy constituted a waiver of such condition.
PERLA COMPANIA DE SEGUROS vs CA, MILAGROS CAYAS
G.R. No. 78860. May 28, 1990
FACTS: Milagros Cayas was the registered owner of a Mazda bus. Said passenger vehicle was insured
with Perla Compania de Seguros. On December 17, 1978, the bus figured in an accident injuring several
of its passengers. Perea sued Milagros Cayas for damages; while three others agreed to a settlement of
P4,000.00 each with Milagros Cayas.
After trial, the court rendered a decision in favor of Perea, Cayas ordered to 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 the fact
that her claim was within its contractual liability under the insurance policy. The decision of the CA
affirmed in toto the decision of the RTC of Cavite, the dispositive portion of which states: IN VIEW OF
THE FOREGOING, judgment is hereby rendered ordering Perla Compania to pay plaintiff Cayas the sum
of P50,000.00 under its maximum liability as provided for in the insurance policy;In this petition for review
on certiorari, Perla Compania seeks to limit its liability only to the payment made by Cayas to Perea and
only up to the amount of P12,000.00. It altogether denies liability for the payments made by Cayas to the
other 3 injured passengers totaling P12,000.00.
ISSUE: How much should Perla Compania pay?
HELD: The insurance policy clearly and categorically placed Perla Companias liability for all damages
arising out of death or bodily injury sustained by one person as a result of any one accident at
P12,000.00. The insurance policy also provides:
5. No admission, offer, promise or payment shall be made by or on behalf of the insured without the
written consent of the Company ...
It being specifically required that Perla Companias written consent be first secured before any payment in
settlement of any claim could be made, Cayas is precluded from seeking reimbursement of the payments
made to the other 3 victims in view of her failure to comply with the condition contained in the insurance
policy.
Also, the insurance policy involved explicitly limits petitioners liability to P12,000.00 per person and to
P50,000.00 per accident. Clearly, the fundamental principle that contracts are respected as the law
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 the insurance policy. Although Cayas was able to prove a total loss of only
P44,000.00, petitioner was made liable for the amount of P50,000.00, the 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 as
an instrument of enrichment by reason of an accident.
AISPORNA vs CA
G.R. No. L-39419 April 12, 1982
FACTS: Mapalad Aisporna, wife of a duly licensed insurance agent, was charged for violation of the first
paragraph of SECTION 189 of the Insurance Act having acted as agent in the solicitation for insurance in
favor of Eugenio Isidro for and in behalf of Perla Compania de Seguros, Inc. without having first secured a
certificate of authority to act as such agent from the office of the Insurance Commission. The evidence
disclosed at the trial was that petitioner merely left a note on top of her husband's desk informing the
latter of Isidro's intention to renew his policy. The trial court found appellant guilty as charged. On appeal,
the Court of Appeals construing the first paragraph of SECTION 189 independent from the two
succeeding paragraphs, affirmed the judgment of conviction and held that the receipt of compensation for
the issuance of an insurance policy is not an essential element for a violation of the first paragraph of
SECTION 189 of the Insurance Act.
ISSUE: Whether or not a person can be convicted of having violated the first paragraph of SECTION 189
of the Insurance Act without reference to the second paragraph of the same SECTION.
HELD: No. The first paragraph of SECTION 189 prohibits a person from acting as agent, subagent or
broker in the solicitation or procurement of applications for insurance without first procuring a certificate of
authority so to act from the Insurance Commissioner, while its second paragraph defines who is an

insurance agent within the intent of this SECTION and, finally, the third paragraph thereof prescribes the
penalty to be imposed for its violation. Considering that the definition of an insurance agent as found in
the second paragraph is also applicable to the agent mentioned in the first paragraph, to receive
compensation by the agent is an essential element for a violation of the first paragraph of SECTION 189;
The appellate court has established ultimately that Mapala did not receive any compensation for the
issuance of the insurance policy of Eugenio Isidro.
COUNTRY BANKERS INSURANCE vs LIANGA BAY AND COMMUNITY MULTI-PURPOSE
COOPERATIVE
G.R. No. 136914

January 25, 2002

FACTS: For the loss it sustained fire as a result of the fire, Lianga Bay Cooperative filed an insurance
claim with Country Bankers Insurance. The latter, however, denied the claim on the ground that based on
the submitted documents, the building of Lianga Bay was set on fire by two NPA rebels who wanted to
obtain provisions. This was an excepted risk under the policy contract.
ISSUE:
HELD: Where a risk is excepted by the terms of a policy which insures against other perils or hazards,
loss from such a risk constitutes a defense which the insurer may urge, since it has not assumed that risk,
and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in
the policy has the burden of proving that the loss comes within the purview of the exception or limitation
set up. If a proof is made of a loss apparently within a contract of insurance, the burden is upon the
insurer to prove that the loss arose from a cause of loss which is expected or for which it is not liable, or
from a cause which limits its liability. Stated elsewise, since the petitioner in this case is defending on the
ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy, it
has the burden of proving the facts upon which such excepted risk is based, by a preponderance of
evidence. But petitioner failed to do so
AMERICAN HOME ASSURANCE COMPANY vs. TANTUCO ENTERPRISES, INC.
G.R. No. 138941
October 8, 2001

FACTS: Respondent Tantuco Enterprises, Inc. is engaged in the coconut oil milling and refining industry. It
owns two oil mills which were separately covered by fire insurance policies issued by petitioner American
Home Assurance Co., Philippine Branch. The first oil mill was insured for P3,000,000.00 under Policy No.
306-7432324-3 for the period March 1, 1991 to 1992. The new oil mill was insured for P6,000,000.00
under Policy No. 306-7432321-9 for the same term. Official receipts indicating payment for the full amount
of the premium were issued by the petitioner's agent.
A fire that broke out in the early morning of September 30,1991 gutted and consumed the new oil mill.
Respondent immediately notified the petitioner of the incident but petitioner rejected respondent's claim
for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill. It
stated that the description of the insured establishment referred to another building thus: "Our policy nos.
306-7432321-9 (Ps 6M) and 306-7432324-4 (Ps 3M) extend insurance coverage to your oil mill under
Building No. 5, whilst the affected oil mill was under Building No. 14. "
ISSUE: Whether or not the Court of Appeals erred in its legal interpretation of 'Fire Extinguishing
Appliances Warranty' of the policy.
HELD: In construing the words used descriptive of a building insured, the greatest liberality is shown by
the courts in giving effect to the insurance. In view of the custom of insurance agents to examine buildings

before writing policies upon them, and since a mistake as to the identity and character of the building is
extremely unlikely, the courts are inclined to consider that the policy of insurance covers any building
which the parties manifestly intended to insure, however inaccurate the description may be.
Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our mind, that what the
parties manifestly intended to insure was the new oil mill. If the parties really intended to protect the first
oil mill, then there is no need to specify it as new.
In determining what the parties intended, the courts will read and construe the policy as a whole and if
possible, give effect to all the parts of the contract, keeping in mind always, however, the prime rule that in
the event of doubt, this doubt is to be resolved against the insurer. In determining the intent of the parties
to the contract, the courts will consider the purpose and object of the contract.
White Gold Marine Services Inc. v Pioneer Insurance & Surety Corporation (Insurance)
G.R. No. 154514. July 28, 2005
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 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--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?
RULING:
1. Yes. 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.
The parties admit that Steamship Mutual is a P & I Club. Steamship Mutual admits it does not have a
license to do business in the Philippines although Pioneer is its resident agent. This relationship is
reflected in the certifications issued by the Insurance Commission.
It cites the definition of a P & I Club in Hyopsung Maritime Co., Ltd. v. Court of Appeals as an association
composed of shipowners in general who band together for the specific purpose of providing insurance

cover on a mutual basis against liabilities incidental to shipowning that the members incur in favor of third
parties.
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. It is not by what it is
called.
Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the
insurer and insured. In it, the 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. Additionally, mutual insurance associations, or clubs, provide
three types of coverage, namely, protection and indemnity, war risks, and defense costs. 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. By definition then, Steamship Mutual as a P & I Club is a mutual insurance
association engaged in the marine insurance business.
2. Yes. 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, which must be renewed annually on the
first day of January, or within six months thereafter.
Republic vs. Sunlife Assurance Company of Canada [GR No. 15805; October 14, 2005]
Facts: On December 29, 1997, the [Court of Tax Appeals] (CTA) rendered its decision in Insular Life
Assurance Co. Ltd. v. [CIR], which held that mutual life insurance companies are purely cooperative
companies and are exempt from the payment of premium tax and DST. This pronouncement was later
affirmed by this court in [CIR] v. Insular Life Assurance Company, Ltd. Sun Life surmised that[,] being a
mutual life insurance company, it was likewise exempt from the payment of premium tax and DST. Hence,
on August 20, 1999, Sun Life filed with the CIR an administrative claim for tax credit of its alleged
erroneously paid premium tax and DST for the aforestated tax periods.
For failure of the CIR to act upon the administrative claim for tax credit and with the 2-year period to file a
claim for tax credit or refund dwindling away and about to expire, Sun Life filed with the CTA a petition for
review. The CTA found in favor of Sun Life.
Seeking reconsideration of the decision of the CTA, the CIR argued that Sun Life ought to have
registered, foremost, with the Cooperative Development Authority before it could enjoy the exemptions
from premium tax and DST extended to purely cooperative companies or associations under [S]ections
121 and 199 of the Tax Code. For its failure to register, it could not avail of the exemptions prayed for. The
CTA denied the CIRs motion for reconsideration.
Issue: Whether or not respondent is exempted from payment of tax on life insurance premiums and
documentary stamp tax
Held: YES. The Tax Code defines a cooperative as an association conducted by the members thereof
with the money collected from among themselves and solely for their own protection and not for profit.
Without a doubt, respondent is a cooperative engaged in a mutual life insurance business.
First, it is managed by its members. Both the CA and the CTA found that the management and affairs of
respondent were conducted by its member-policyholders. SUNLIFE has been mutualized or converted

from a stock life insurance company to a nonstock mutual life insurance corporation pursuant to Section
266 of the Insurance Code of 1978. On the basis of its bylaws, its ownership has been vested in its
member-policyholders who are each entitled to one vote; and who, in turn, elect from among themselves
the members of its board of trustees.
Second, it is operated with money collected from its members. Since respondent is composed entirely of
members who are also its policyholders, all premiums collected obviously come only from them. The
member-policyholders constitute both insurer and insured who contribute, by a system of premiums or
assessments, to the creation of a fund from which all losses and liabilities are paid.
Third, it is licensed for the mutual protection of its members, not for the profit of anyone. A mutual life
insurance company is conducted for the benefit of its member-policyholders, who pay into its capital by
way of premiums.
Under the Tax Code although respondent is a cooperative, registration with the Cooperative Development
Authority (CDA) is not necessary in order for it to be exempt from the payment of both percentage taxes
on insurance premiums, under Section 121; and documentary stamp taxes on policies of insurance or
annuities it grants, under Section 199.
Philamcare v CA
G.R. No. 125678. March 18, 2002
Facts:
Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he
or his family members were treated to heart trouble, asthma, diabetes, etc.
The application was approved for 1 year. He was also given hospitalization benefits and out-patient
benefits. After the period expired, he was given an expanded coverage for Php 75,000. During the period,
he suffered from heart attack and was confined at MMC. The wife tried to claim the benefits but the
petitioner denied it saying that he concealed his medical history by answering no to the aforementioned
question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed
away. She filed a case in the trial court for the collection of the amount plus damages. She was awarded
76,000 for the bills and 40,000 for damages. The CA affirmed but deleted awards for damages. Hence,
this appeal.
Issue: WON a health care agreement is not an insurance contract; hence the incontestability clause
under the Insurance Code does not apply.
Held: No. Petition dismissed.
Petitioner claimed that it granted benefits only when the insured is alive during the one-year duration. It
contended that there was no indemnification unlike in insurance contracts. It supported this claim by
saying that it is a health maintenance organization covered by the DOH and not the Insurance
Commission. Lastly, it claimed that the Incontestability clause didnt apply because two-year and not oneyear effectivity periods were required.
Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage or liability arising from an
unknown or contingent event.
Section 3 states: every person has an insurable interest in the life and health:
(1)
of himself, of his spouse and of his children.
In this case, the husbands health was the insurable interest. The health care agreement was in the
nature of non-life insurance, which is primarily a contract of indemnity. The provider must pay for the
medical expenses resulting from sickness or injury.

While petitioner contended that the husband concealed materialfact of his sickness, the contract stated
that:
that any physician is, by these presents, expressly authorized to disclose or give testimony at anytime
relative to any information acquired by him in his professional capacity upon any question affecting the
eligibility for health care coverage of the Proposed Members.
This meant that the petitioners required him to sign authorization to furnish reports about his medical
condition. The contract also authorized Philam to inquire directly to his medical history.
Hence, the contention of concealment isnt valid.
They cant also invoke the Invalidation of agreement clause where failure of the insured to disclose
information was a grounds for revocation simply because the answer assailed by the company was the
heart condition question based on the insureds opinion. He wasnt a medical doctor, so he cant
accurately gauge his condition.
Henrick v Fire- in such case the insurer is not justified in relying upon such statement, but is obligated to
make further inquiry.
Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider.
Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the
extent agreed upon. In the end, the liability of the health care provider attaches once the member is
hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered
benefits which he has prepaid.
Section 27 of the Insurance Code- a concealment entitles the injured party to rescind a contract of
insurance.
As to cancellation procedure- Cancellation requires certain conditions:
1.
Prior notice of cancellation to insured;
2.
Notice must be based on the occurrence after effective date of the policy of one or more of the
grounds mentioned;
3.
Must be in writing, mailed or delivered to the insured at the address shown in the policy;
4.
Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request
of insured, to furnish facts on which cancellation is based
None were fulfilled by the provider.
As to incontestability- The trial court said that under the title Claim procedures of expenses, the
defendant Philamcare Health Systems Inc. had twelve months from the date of issuance of the
Agreement within which to contest the membership of the patient if he had previous ailment of asthma,
and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension .
The periods having expired, the defense of concealment or misrepresentation no longer lie.
CIR v. Lincoln Phil Life - Automatic Increase Clause
G.R. No. 119176. March 19, 2002
379 SCRA 423 (2002)
Facts:
In the years prior to 1984, Lincoln issued a special kind of life insurance policy known as the "Junior
Estate Builder Policy," the distinguishing feature of which is a clause providing for an automatic increase
in the amount of life insurance coverage upon attainment of a certain age by the insured without the need
of issuing a new policy. The clause was to take effect in the year 1984.
Documentary stamp taxes due on the policy were paid to the petitioner only on the initial sum assured.
Subsequently, petitioner issued deficiency documentary stamps tax assessment for the year 1984,
corresponding to the amount of automatic increase of the sum assured on the policy issued by

respondent.
Lincoln questioned the deficiency assessments and sought their cancellation in a petition filed in the Court
of Tax Appeals. CTA found no basis for the assessment. CA affirmed.
Issue:
Whether or not the automatic increase of the sum assured on the policy is taxable.
Held:
YES.
CIR claims that the "automatic increase clause" in the subject insurance policy is separate and distinct
from the main agreement and involves another transaction; and that, while no new policy was issued, the
original policy was essentially re-issued when the additional obligation was assumed upon the effectivity
of this "automatic increase clause" in 1984; hence, a deficiency assessment based on the additional
insurance not covered in the main policy is in order. The SC agreed with this contention.
The subject insurance policy at the time it was issued contained an "automatic increase clause." Although
the clause was to take effect only in 1984, it was written into the policy at the time of its issuance. The
distinctive feature of the "junior estate builder policy" called the "automatic increase clause" already
formed part and parcel of the insurance contract, hence, there was no need for an execution of a
separate agreement for the increase in the coverage that took effect in 1984 when the assured reached a
certain age.
It is clear from Section 173 of the NIRC that the payment of documentary stamp taxes is done at the time
the act is done or transaction had and the tax base for the computation of documentary stamp taxes on
life insurance policies under Section 183 of NIRC is the amount fixed in policy, unless the interest of a
person insured is susceptible of exact pecuniary measurement.
Logically, we believe that the amount fixed in the policy is the figure written on its face and whatever
increases will take effect in the future by reason of the "automatic increase clause" embodied in the policy
without the need of another contract.
Here, although the automatic increase in the amount of life insurance coverage was to take effect later
on, the date of its effectivity, as well as the amount of the increase, was already definite at the time of the
issuance of the policy. Thus, the amount insured by the policy at the time of its issuance necessarily
included the additional sum covered by the automatic increase clause because it was already
determinable at the time the transaction was entered into and formed part of the policy.
The "automatic increase clause" in the policy is in the nature of a conditional obligation under Article 1181,
8 by which the increase of the insurance coverage shall depend upon the happening of the event which
constitutes the obligation. In the instant case, the additional insurance that took effect in 1984 was an
obligation subject to a suspensive obligation, 9 but still a part of the insurance sold to which private
respondent was liable for the payment of the documentary stamp tax.