Philam v Pineda G.R. No.

L-54216 July 19,

1989
J. Paras
petition for review on certiorari
Facts:
On January 15, 1968, private respondentPineda procured an ordinary life insurance policy
from the petitioner company and designated his wife and children as irrevocable
beneficiaries.
Under date February 22, 1980He then filed a petition to amend the designation of the
beneficiaries in his life policy from irrevocable to revocable.
The judge granted the request.
PHILAM - Petitioner promptly filed a Motion for Reconsideration in an Order June 10, 1980.
Hence, this petition raising the following issues for resolution:
I
WHETHER OR NOT THE DESIGNATION OF THE IRREVOCABLE BENEFICIARIES
COULD BE CHANGED OR AMENDED WITHOUT THE CONSENT OF ALL THE
IRREVOCABLE BENEFICIARIES.
II
WHETHER OR NOT THE IRREVOCABLE BENEFICIARIES HEREIN, ONE OF WHOM IS
ALREADY DECEASED WHILE THE OTHERS ARE ALL MINORS, COULD VALIDLY GIVE
CONSENT TO THE CHANGE OR AMENDMENT IN THE DESIGNATION OF THE
IRREVOCABLE BENEFICIARIES.
We are of the opinion that his Honor, the respondent Judge, was in error in issuing the
questioned Orders.
This was denied.
Hence, this petition.
Issues:
1. WON the designation of the irrevocable beneficiaries could be changed or amended
without the consent of all the irrevocable beneficiaries.
2. WON the irrevocable minor beneficiaries could give consent to the change in designation
Held: No to both. Petition dismissed.
Ratio: Needless to say, the applicable law in the instant case is the Insurance Act, otherwise
known as Act No. 2427 as amended, the policy having been procured in 1968. Under the
said law, the beneficiary designated in a life insurance contract cannot be changed without
the consent of the beneficiary because he has a vested interest in the policy

Under the Insurance Act, the beneficiary designated in a life insurance contract cannot be
changed without the consent of the beneficiary because he has a vested interest in the
policy.
There was an express stipulation to this effect: It is hereby understood and agreed that,
notwithstanding the provisions of this policy to the contrary, inasmuch as the designation of
the primary/contingent beneficiary/beneficiaries in this Policy has been made without
reserving the right to change said beneficiary/ beneficiaries, such designation may not be
surrendered to the Company, released or assigned; and no right or privilege under the Policy
may be exercised, or agreement made with the Company to any change in or amendment to
the Policy, without the consent of the said beneficiary/beneficiaries.
The alleged acquiescence of the six (6) children beneficiaries of the policy cannot be
considered an effective ratification due to the fact that they were minors. Neither could they
act through their father insured since their interests are quite divergent from one another.
Therefore, the parent-insured cannot exercise rights and/or privileges pertaining to the
insurance contract, for otherwise, the vested rights of the irrevocable beneficiaries would be
rendered inconsequential.
Of equal importance is the well-settled rule that the contract between the parties is the law
binding on both of them and for so many times, this court has consistently issued
pronouncements upholding the validity and effectivity of contracts. Likewise, contracts which
are the private laws of the contracting parties should be fulfilled according to the literal sense
of their stipulations, for contracts are obligatory, no matter in what form they may be,
whenever the essential requisites for their validity are present
The change in the designation of was not within the contemplation of the parties. The lower
court instead made a new contract for them. It acted in excess of its authority when it did so.

Intestate estate of the late Esperanza J. Villanueva. MARIANO J.

VILLANUEVA, claimant-appellant,
vs.
PABLO ORO, administrator.
FACTS:

West Coast Life Insurance Company issued 2 policies of

insurance on the life of Esperanza J. Villanueva:

2,000 php - maturing on April 1, 1943
if living, on the 1st day of April 1943 - to insured
upon death during the continuance of this policy - to
the beneficiary Bartolome Villanueva, father of the insured, with
right on the part of the insured to change the beneficiary

1940: Bartolome Villanueva died, Mariano J.

Villanueva duly substituted as beneficiary, a brother of the insured
3,000 php - maturing on March 31, 1943
Esperanza J. Villanueva survived the insurance period, for she
died only on October 15, 1944, without, however, collecting the
insurance proceeds.
CFI: estate of the insured Esperanza is entitled to the insurance
proceeds

The West Coast Life Insurance Company issued two policies of insurance on the life of
Esperanza J. Villanueva, one for two thousand pesos and maturing on April 1, 1943, and the
other for three thousand pesos and maturing on March 31, 1943. In both policies (with
corresponding variation in amount and date of maturity) the insurer agreed "to pay two
thousand pesos, at the home office of the Company, in San Francisco, California, to the
insured hereunder, if living, on the 1st day of April 1943, or to the beneficiary Bartolome
Villanueva, father of the insured, immediately upon receipt of due proof of the prior death of
the insured, Esperanza J. Villanueva, of La Paz, Philippine Islands, during the continuance of
this policy, with right on the part of the insured to change the beneficiary.
After the death of Bartolome Villanueva in 1940, the latter was duly substituted as beneficiary
under the policies by Mariano J. Villanueva, a brother of the insured. Esperanza J.
Villanueva survived the insurance period, for she died only on October 15, 1944, without,
however, collecting the insurance proceeds. Adverse claims for said proceeds were
presented by the estate of Esperanza J. Villanueva on the one hand and by Mariano J.
Villanueva on the other, which conflict was squarely submitted in the intestate proceedings of
Esperanza J. Villanueva pending in the Court of First Instance of Iloilo. From an order, dated
February 26, 1947, holding the estate of the insured is entitled to the insurance proceeds, to
the exclusion of the beneficiary, Mariano J. Villanueva, the latter has interposed the present
appeal.
The lower court committed no error. Under the policies, the insurer obligated itself to pay the
insurance proceeds (1) to the insured if the latter lived on the dates of maturity or (2) to the
beneficiary if the insured died during the continuance of the policies. The first contingency of
course excludes the second, and vice versa. In other words, as the insured Esperanza J.
Villanueva was living on April 1, and March 31, 1943, the proceeds are payable exclusively
to her estate unless she had before her death otherwise assigned the matured policies. (It is
not here pretended and much less proven, that there was such assignment.) The beneficiary,
Mariano J. Villanueva, could be entitled to said proceeds only in default of the first
contingency. To sustain the beneficiary's claim would be altogether eliminate from the
policies the condition that the insurer "agrees to pay . . . to the insured hereunder, if living".

ISSUE: W/N the estate of insured Esperanza should be entitled to the insurance
proceeds since she outlived the insurance policy

HELD: YES. appealed order is, therefore, hereby affirmed

To sustain the beneficiary's claim would be altogether eliminate

from the policies the condition that the insurer "agrees to pay . . .
to the insured hereunder, if living
Upon the insured's death, within the period, the beneficiary will
take, as against the personal representative or the assignee of the
insured. Upon the other hand, if the insured survives the
endowment period, the benefits are payable to him or to his
assignee, notwithstanding a beneficiary is designated in the policy

Harvardian Colleges v Country Bankers (CA)

Facts:
>Harvardianisafamilycorporation,thestockholdersofwhichareIldefonsoYap,VirginiaKingYapand
theirchildren.
>PriortoAug.9,1979,anagentofCountryBankersproposedtoHarvardiantoinsureitsschoolbuilding.
Althoughatfirstreluctant,Harvardianagreed.
>CountryBankssentaninspectortoinspecttheschoolbuildingandagreedtoinsurethesamefor
P500,000forwhichHarvardianpaidanannualpremiumofP2,500.
>OnAug.9,1979,CountryBankersissuedtoHarvardianafireinsurancepolicy.OnMarch12,
1980,(39daysbeforeIwasbornhehehehe)duringtheeffectivityofsaidinsurancepolicy,theinsured
propertywastotallyburnedrenderingitatotalloss.
>Aclaimwasmadebyplaintiffupondefendantbutdefendantdenieditcontendingthatplaintiffhadno
insurableinterestoverthebuildingconstructedonthepieceoflandinthenameofthelateIldefonsoYapas
owner.
>ItwascontendedthatboththelotandthebuildingwereownedbyIldefonsoYapandNOTbythe
HarvardianColleges.

Issue:
WhetherornotHarvardiancollegeshasarighttotheproceeds.

Held:

Harvardianhasarighttotheproceeds.
Regardlessofthenatureofthetitleoftheinsuredorevenifhedidnothavetitletothepropertyinsured,the
contractoffireinsuranceshouldstillbeupheldifhisinterestinorhisrelationtothepropertyissuchthat
hewillbebenefitedinitscontinuedexistenceorsufferadirectpecuniarylossfromitsdestructionor
injury.Thetestindetermininginsurableinterestinpropertyiswhetheronewillderivepecuniarybenefitor
advantagefromitspreservation,orwillsufferpecuniarylossordamagefromitsdestruction,terminationor
injurybythehappeningoftheeventinsuredagainst.

HereHarvardianwasnotonlyinpossessionofthebuildingbutwasinfactusingthesameforseveralyears
withtheknowledgeandconsentofIldefonsoYap.Itisreasonablyfairtoassumethathadthebuildingnot
beenburned,Harvardianwouldhavebeenallowedthecontinueduseofthesameasthesiteofitsoperation
asaneducationalinstitution.Harvardianthereforewouldhavebeendirectlybenefitedbythepreservation
oftheproperty,andcertainlysufferedapecuniarylossbyitsbeingburned.

Gaisano v Insurance G.R. No. 147839 June 8, 2006

J. Martinez
Facts:
IMC and Levi Strauss (Phils.) Inc. (LSPI) separately obtained from respondent fire insurance
policies with book debt endorsements. The insurance policies provide for coverage on "book
debts in connection with ready-made clothing materials which have been sold or delivered to
various customers and dealers of the Insured anywhere in the Philippines."
The policies defined book debts as the "unpaid account still appearing in the Book of
Account of the Insured 45 days after the time of the loss covered under this Policy." The
policies also provide for the following conditions:
1. Warranted that the Company shall not be liable for any unpaid account in respect of the
merchandise sold and delivered by the Insured which are outstanding at the date of loss for
a period in excess of six (6) months from the date of the covering invoice or actual delivery of
the merchandise whichever shall first occur.
2. Warranted that the Insured shall submit to the Company within twelve (12) days after the
close of every calendar month all amount shown in their books of accounts as unpaid and
thus become receivable item from their customers and dealers.
Gaisano is a customer and dealer of the products of IMC and LSPI. On February 25, 1991,
the Gaisano Superstore Complex in Cagayan de Oro City, owned by petitioner, was
consumed by fire. Included in the items lost or destroyed in the fire were stocks of readymade clothing materials sold and delivered by IMC and LSPI.
Insurance of America filed a complaint for damages against Gaisano. It alleges that IMC and
LSPI were paid for their claims and that the unpaid accounts of petitioner on the sale and
delivery of ready-made clothing materials with IMC was P2,119,205.00 while with LSPI it was
P535,613.00.

The RTC rendered its decision dismissing Insurance's complaint. It held that the fire was
purely accidental; that the cause of the fire was not attributable to the negligence of the
petitioner. Also, it said that IMC and LSPI retained ownership of the delivered goods and
must bear the loss.
The CA rendered its decision and set aside the decision of the RTC. It ordered Gaisano to
pay Insurance the P 2 million and the P 500,000 the latter paid to IMC and Levi Strauss.
Hence this petition.
Issues:
1. WON the CA erred in construing a fire insurance policy on book debts as one covering the
unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made
clothing materials sold and delivered to petitioner
2. WON IMC bears the risk of loss because it expressly reserved ownership of the goods by
stipulating in the sales invoices that "[i]t is further agreed that merely for purpose of securing
the payment of the purchase price the above described merchandise remains the property of
the vendor until the purchase price thereof is fully paid."
3. WON petitioner is liable for the unpaid accounts
4. WON it has been established that petitioner has outstanding accounts with IMC and LSPI.
Held: No. Yes. Yes. Yes but account with LSPI unsubstantiated. Petition partly granted.
Ratio:
1. Nowhere is it provided in the questioned insurance policies that the subject of the
insurance is the goods sold and delivered to the customers and dealers of the insured.
Thus, what were insured against were the accounts of IMC and LSPI with petitioner which
remained unpaid 45 days after the loss through fire, and not the loss or destruction of the
goods delivered.
2. The present case clearly falls under paragraph (1), Article 1504 of the Civil Code:
ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership
therein is transferred to the buyer, but when the ownership therein is transferred to the buyer
the goods are at the buyer's risk whether actual delivery has been made or not, except that:
(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller
merely to secure performance by the buyer of his obligations under the contract, the goods
are at the buyer's risk from the time of such delivery
Thus, when the seller retains ownership only to insure that the buyer will pay its debt, the risk
of loss is borne by the buyer. Petitioner bears the risk of loss of the goods delivered.
IMC and LSPI had an insurable interest until full payment of the value of the delivered goods.
Unlike the civil law concept of res perit domino, where ownership is the basis for
consideration of who bears the risk of loss, in property insurance, one's interest is not
determined by concept of title, but whether insured has substantial economic interest in the
property.
Section 13 of our Insurance Code defines insurable interest as "every interest in property,
whether real or personal, or any relation thereto, or liability in respect thereof, of such nature

that a contemplated peril might directly damnify the insured." Parenthetically, under Section
14 of the same Code, an insurable interest in property may consist in: (a) an existing interest;
(b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an
existing interest in that out of which the expectancy arises.
Anyone has an insurable interest in property who derives a benefit from its existence or
would suffer loss from its destruction. Indeed, a vendor or seller retains an insurable interest
in the property sold so long as he has any interest therein, in other words, so long as he
would suffer by its destruction, as where he has a vendor's lien. In this case, the insurable
interest of IMC and LSPI pertain to the unpaid accounts appearing in their Books of Account
45 days after the time of the loss covered by the policies.
3. Petitioner's argument that it is not liable because the fire is a fortuitous event under Article
117432 of the Civil Code is misplaced. As held earlier, petitioner bears the loss under Article
1504 (1) of the Civil Code.
Moreover, it must be stressed that the insurance in this case is not for loss of goods by fire
but for petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire.
Accordingly, petitioner's obligation is for the payment of money. As correctly stated by the
CA, where the obligation consists in the payment of money, the failure of the debtor to make
the payment even by reason of a fortuitous event shall not relieve him of his liability. The
rationale for this is that the rule that an obligor should be held exempt from liability when the
loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery
of a determinate thing and there is no stipulation holding him liable even in case of fortuitous
event. It does not apply when the obligation is pecuniary in nature.
Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation." This rule is
based on the principle that the genus of a thing can never perish. An obligation to pay money
is generic; therefore, it is not excused by fortuitous loss of any specific property of the debtor.
4. With respect to IMC, the respondent has adequately established its claim. The P 3 m
claim has been proven. The subrogation receipt, by itself, is sufficient to establish not only
the relationship of respondent as insurer and IMC as the insured, but also the amount paid to
settle the insurance claim. The right of subrogation accrues simply upon payment by the
insurance company of the insurance claim Respondent's action against petitioner is squarely
sanctioned by Article 2207 of the Civil Code which provides:
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract.
As to LSPI, respondent failed to present sufficient evidence to prove its cause of action.
There was no evidence that respondent has been subrogated to any right which LSPI may
have against petitioner. Failure to substantiate the claim of subrogation is fatal to petitioner's
case for recovery of P535,613.00.

G.R. No. 161713.August 20, 2008

LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. LEPANTO
LOCAL STAFF UNION, respondent.

CARPIO,J.:
Facts:
*Note: this case involves interpretation of CBA.
ARTICLE VIIINIGHT SHIFT DIFFERENTIAL
Section3.Night Differential pay.The Company shall continue to pay nightshift differential
for work during the first and third shifts to all covered employees within the bargaining unit as
follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate.
For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00
p.m.), there [will] be no night differential pay added before the overtime pay is calculated.
ARTICLEXIIRIGHTS, PRIVILEGES AND OTHER BENEFITS
Section9.Longevity pay.The company shall grant longevity pay of P30.00 per month
effective July 1, 1998 and every year thereafter.

During the effectivity of the first three CBAs, petitioner paid night
shift differentials to other workers who were members of respondent
for work performed beyond 3:00 p.m. Petitioner also paid night shift
differential for work beyond 3:00 p.m. during the effectivity of the 4th
CBA. However, petitioner alleges that the payment of night shift
differential for work performed beyond 3:00 p.m. during the 4th CBA
was a mistake on the part of its accounting department.
Respondent Union filed a complaint with the National Conciliation
and Mediation Board, alleging that petitioner failed to pay the night
shift differential and longevity pay of respondents members as
provided in the 4th CBA. Petitioner and respondent failed to amicably
settle the dispute so they agreed to submit the issue to a voluntary
arbitrator (VA).
VA ruled in favor of respondent (Union) that the inclusion of
paragraph 3, Section 3, Article VIII of the 4th CBA disclosed the intent
of the parties to grant night shift differential benefits to employees who
rendered work beyond the regular day shift. The Voluntary Arbitrator
ruled that if the intention were otherwise, paragraph 3 would have
been deleted.
CA affirmed VA and held that petitioners act disclosed the
parties intent to include employees in the second shift in the payment
of night shift differential.
Issue:

The issue is whether workers are entitled to night shift

differential for work performed beyond the regular day shift, from 7:00
a.m. to 3:00 p.m.
Held.
YES. SC affirmed CA. The first paragraph of Section 3 provides
that petitioner shall continue to pay night shift differential to workers of
the first and third shifts. It does not provide that workers who
performed work beyond the second shift shall not be entitled to night
shift differential. The inclusion of the third paragraph is not intended to
exclude the regular day shift workers from receiving night shift
differential for work performed beyond 3:00 p.m. It only provides that
the night shift differential pay shall be excluded in the computation of
the overtime pay.
The CA correctly ruled that petitioner failed to present any
convincing evidence to prove that the payment was erroneous. In fact,
the Court of Appeals found that even after the promulgation of the
Voluntary Arbitrators decision and while the case was pending appeal,
petitioner still paid night shift differential for work performed beyond
3:00 p.m. It affirms the intention of the parties to the CBA to grant
night shift differential for work performed beyond 3:00 p.m.
Doctrines:
The terms and conditions of a collective bargaining contract
constitute the law between the parties. If the terms of the CBA are
clear and have no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall prevail.
In order to ascertain the intention of the contracting parties, the
Voluntary Arbitrator shall principally consider their contemporaneous
and subsequent acts as well as their negotiating and contractual
history and evidence of past practices.

Mrs. Henry Harding vs Commercial Union Assurance

Company
In February 1916, Mrs. Harding applied for car insurance for a Studebaker
she received as a gift from her husband. She was assisted by Smith, Bell,
and Co. which was the duly authorized representative (insurance agent) of
Commercial Union Assurance Company in the Philippines. The cars value
was estimated with the help of an experienced mechanic (Mr. Server) of

the Luneta Garage. The car was bought by Mr. Harding for P2,800.00. The
mechanic, considering some repairs done, estimated the value to be at
P3,000.00. This estimated value was the value disclosed by Mrs. Harding
to Smith, Bell, and Co. She also disclosed that the value was an estimate
made by Luneta Garage (which also acts as an agent for Smith, Bell, and
Co).
In March 1916, a fire destroyed the Studebaker. Mrs. Harding filed an
insurance claim but Commercial Union denied it as it insisted that the
representations and averments made as to the cost of the car were false;
and that said statement was a warranty. Commercial Union also stated
that the car does not belong to Mrs. Harding because such a gift [from her
husband] is void under the Civil Code.
ISSUE: Whether or not Mrs. Harding is entitled to the insurance claim.
HELD: Yes. Commercial Union is not the proper party to attack the validity
of the gift made by Mr. Harding to his wife.
The statement made by Mrs. Harding as to the cost of the car is not a
warranty. The evidence does not prove that the statement is false. In fact,
the evidence shows that the cost of the car is more than the price of the
insurance. The car was bought for P2,800.00 and then thereafter, Luneta
Garage made some repairs and body paints which amounted to P900.00.
Mr. Server attested that the car is as good as new at the time the
insurance was effected.
Commercial Union, upon the information given by Mrs. Harding, and after
an inspection of the automobile by its examiner, having agreed that it was
worth P3,000, is bound by this valuation in the absence of fraud on the
part of the insured. All statements of value are, of necessity, to a large
extent matters of opinion, and it would be outrageous to hold that the
validity of all valued policies must depend upon the absolute correctness
of such estimated value.
LampanovJose,GRL9401,30March1915

FACTS:

Mariano R. Barretto, constructed a house for Placida A. Jose sold

the house to Antonina Lampano for P6,000
The house was destroyed by fire during which Lampano still
owed Jose P2,000 as evidenced by a promissory note. Jose also
owed Barretto P2,000 for the construction.

After the completion of the house and before it was destroyed,

Mariano R. Barretto took out an insurance policy upon it in his own
name, with the consent of Placida A. Jose, for the sum of P4,000.
After its destruction, he collected P3,600 from the insurance
company, having paid in premiums the sum of P301.50
Lampano filed a complaint against Barreto and Jose alleging that
Jose in a verbal agreement told her that the policy will be delivered
to her so she should collected P3,600 from each of them
RTC: favored Jose ordering Barreto to pay him P1,298.50 and
offsetting the P2,000
Barreto alone appealed

ISSUE: W/N Barreto had insurable interest in the house and could insure it for
his it for his own protection
HELD: YES. reversed and Barretto is absolved

Where different persons have different interests in the same

property, the insurance taken by one in his own right and in his own
interest does not in any way insure to the benefit of another
A contract of insurance made for the insurer's (insured)
indemnity only, as where there is no agreement, express or implied,
that it shall be for the benefit of a third person, does not attach to
or run with the title to the insured property on a transfer thereof
personal as between the insurer and the insured.
Barretto had an insurable interest in the house. He construed the
building, furnishing all the materials and supplies, and insured it
after it had been completed