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MORAN-Case # 1: VIRGINIA CALANOC vs.

COURT OF APPEALS and THE PHILIPPINE


AMERICAN LIFE INSURANCE CO.
G.R. No. L-8151, December 16, 1955
BAUTISTA ANGELO, J.
SUBJECT MATTER: Petition for Review
FACTS:
Melencio Basilio, a watchman of the Manila Auto Supply, 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. He then died of a gunshot
wound on the occasion of a robbery committed in the house of Atty. Antonio Ojeda which is
just a block away from Basilio's station. Virginia Calanoc, the widow, was paid by the
company the sum of P2,000, face value of the policy, but was denied of the additional sum
of P2,000 representing the value of the supplemental policy, alleging 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:
Was Melencio Basilios death, which is caused by a gunshot on the occasion of a robbery, an
accident and therefore covered by the insurance contract?
RULING:
Yes.
The happening was a pure accident on the part of the victim. There is no proof that the
death of Basilio is the result of an 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.
The circumstance that he was a mere watchman and had no duty to heed the call of Atty.
Ojeda should not be taken as a capricious desire on his part to expose his life to danger
considering the fact that the place he was in duty-bound to guard was only a block away.
When he joined Atty. Ojeda and the policeman, he might have thought, rightly or wrongly,
that to know the truth was in the interest of his employer it being a matter that affects the
security of the neighborhood. Also, he cannot be considered as making an arrest as an
officer of the law 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.
Moreover, the case of the victim does not fall under any of the enumerated risks in the
supplementary contract making the company liable. Pursuant to Article 1377 of the new Civil
Code, if the terms of an insurance contract are doubtful or obscure, the same must of
necessity be interpreted or resolved against the one who has caused the obscurity
DISPOSITIVE PORTION:
Wherefore, reversing the decision appealed from, we hereby order the company to pay
petitioner-appellant the amount of P2,000, with legal interest from January 26, 1951 until
fully paid, with costs.

MORAN-Case # 2: EMILIA T. BIAGTAN, JUAN T. BIAGTAN, JR., MIGUEL T. BIAGTAN, GIL


T. BIAGTAN and GRACIA T. BIAGTAN, plaintiffs-appellees, vs. THE INSULAR LIFE
ASSURANCE COMPANY, LTD., defendant-appellant.
G.R. No. L-25579 March 29, 1972
MAKALINTAL, J.
SUBJECT MATTER: Appeal by Defendant-appellant from the decision of the Court of First
Instance of Pangasinan
FACTS:
A band of robbers entered the house of Juan S. Biagtan who was insured with defendant
Insular Life Assurance Company. The robbers met Biagtan near the door of one of the rooms
in the second floor and the latter received thrusts from sharp-pointed instruments, causing 5
mortal and 4 non-mortal wounds on his body resulting in his death. The insurance company
paid the basic amount of P5,000.00 to the beneficiaries of the insured namely, Emilia, Juan,
Miguel, Gil and Gracia, all surnamed Biagtan, 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:
Are the wounds inflicted by the robbers intentional thereby exempting the insurance
company from paying the additional sum of P5,000.00 under the accidental death benefit
clause of the Insurance Policy?
RULING:
Considering that 9 wounds were inflicted upon Biagtan, all by means of thrusts with bladed
weapons at close range, it cannot be said that there was no intent to kill or injure. The
manner of execution of the crime permits no other conclusion. The act itself of inflicting the
injuries repeatedly was intentional. In the present case the wounds did prove fatal, and the
robbers have been convicted of the crime of robbery with homicide.
American jurisprudence reveals 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. If the
injuries suffered by the insured clearly resulted from the intentional act of a third person the
insurer is relieved from liability as stipulated.
DISPOSITIVE PORTION:
WHEREFORE, the decision appealed from is reversed and the complaint dismissed, without
pronouncement as to costs.

MORAN-Case #3: FINMAN GENERAL ASSURANCE CORPORATION, petitioner, vs.THE


HONORABLE COURT OF APPEALS and JULIA SURPOSA, respondents.
G.R. No. 100970 September 2, 1992
NOCON, J.:
Subject matter: petition for certiorari with a prayer for the issuance of a restraining order
and preliminary mandatory injunction
FACTS:
Carlie Surposa, who was insured with petitioner Finman General Assurance Corporation
under Finman General Teachers Protection Plan Master Policy, died as a result of a stab
wound inflicted by one of the three unidentified men without provocation and warning on the
part of the former as he and his cousin, Winston Surposa, were waiting along the street for a
ride on their way home after attending the celebration of the "Maskarra Annual Festival."
Private respondent Julia Surposa and the other beneficiaries namely Carlos, Christopher,
Charles, Chester and Clifton, all surnamed Surposa, of said insurance policy filed a written
notice of claim with Finman General Assurance Corporation which denied said claim
contending that murder and assault are not within the scope of the coverage of the
insurance policy.
ISSUE:
Is the death of Carlie Surposa which resulted from murder and assault covered by the
personal accident insurance policy when said circumstance of death is not included in the
enumeration of circumstances which exempts the company from liability?
RULING:
Yes.
The happening was a pure accident on the part of the victim, Carlie Surposa. The record is
barren of any circumstance showing how the stab wound was inflicted, or that the
malefactor aimed at the insured precisely because the killer wanted to take his life. The
insured died from an event that took place without his foresight or expectation, an event
that proceeded from an unusual effect of a known cause and, therefore, not expected. It
cannot be said that there was a capricious desire on his part to expose his life to danger
considering that he was just going home after attending a festival. 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.

Also, the principle of "expresso unius exclusio alterius"- the mention of one thing implies the
exclusion of another thing- is applicable in this case. The failure of Finman General
Assurance Corporation to include death resulting from murder or assault among the
prohibited risks in the insurance policy leads inevitably to the conclusion that it did not
intend to limit or exempt itself from liability for such death. Article 1377 of the Civil Code of
the Philippines provides that: The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the obscurity.
Moreover, 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. 7
WHEREFORE, finding no irreversible error in the decision of the respondent Court of Appeals,
the petition for certiorari with restraining order and preliminary injunction is hereby DENIED
for lack of merit.

JIMENEZ-7:FIGURACION VDA. DE MAGLANA, et.al. vs. HONORABLE FRANCISCO Z.


CONSOLACION and AFISCO INSURANCE CORPORATION
G.R. No. 60506 August 6, 1992
ROMERO, J.
Petition for certiorari
FACTS:
Lope Maglana, while driving a motorcycle, was bumped by the PUJ jeep driven by
Pepito Into, operated and owned by Destrajo The accidentt resulted in Magalonas death.
Consequently, the heirs of Lope Maglana, Sr., filed an action for damages and attorney's fees
against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO). An
information for homicide thru reckless imprudence was also filed against Pepito Into, to
which he was found guilty. Likewise, Destrajo was made to pay the heirs of Maglana in the
civil case. The court ordered the insurance company to reimburse Destrajo whatever
amounts the latter shall have paid only up to the extent of its insurance coverage. The heirs
of Maglana, in a motion for the reconsideration, contended 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."
ISSUE:

Is AFISCO primarily liable (not secondarily), on the insurance policy and if so, is it
solidarily liable with Destrajo?
HELD:
The liability of AFISCO based on the insurance contract is direct, but not solidary with
that of Destrajo.
The particular provision of the insurance policy on which the heirs base their claim
provides "SECTION 1 LIABILITY TO THE PUBLIC 1. The Company will, subject to the Limits
of Liability, pay all sums necessary to discharge liability of the insured in respect of. (a)
death of or bodily injury to any THIRD PARTY; xxx 3. In the event of the death of any person
entitled to indemnity under this Policy, the Company will, in respect of the liability incurred
to such person indemnify his personal representatives in terms of, and subject to the terms
and conditions hereof." The above-quoted provision leads to no other conclusion but that
AFISCO can be held directly liable by the heirs.
In Malayan Insurance Co., Inc. v. Court of Appeals, the Court ruled that "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." While in
solidary obligations, the creditor may enforce the entire obligation against one of the
solidary debtors, in an insurance contract, the insurer undertakes for a consideration to
indemnify the insured against loss, damage or liability arising from an unknown or
contingent event." Based on Article 2180 of the Civil Code, the heirs 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.

DISPOSITIVE PORTION:
WHEREFORE, premises considered, the present petition is hereby GRANTED. The award of
P28,800.00 representing loss of income is INCREASED to P192,000.00 and the death
indemnity of P12,000.00 to P50,000.00.
SO ORDERED.

JIMENEZ-8:PERLA COMPANIA DE SEGUROS, INC.


vs. THE COURT OF APPEALS, HERMINIO LIM and EVELYN LIM
G.R. No. 96452 May 7, 1992
NOCON, J.:
Petition for review on certiorari.

FACTS:
The Lim spouses opened a chattel mortgage and bought a Ford Laser from Supercars
for Php 77,000 and insured it with Perla Compania de Seguros. The vehicle was stolen while
Evelyn Lim was driving it with an expired license. The spouses requested for a moratorium
on payments but this was denied by FCP, the assignee of rights over collection of the
mortgage amount of the car. The spouses also called on the insurance company to pay
the balance of the mortgage due to theft but this was denied by the company due to the
spouses violation of the Authorized Driverclause stating (driving with an expired license
before being carnapped): 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 Scheduled Vehicle, or
has been permitted and is not disqualified by order of a Court of Law or by reason of any
enactment or regulation in that behalf.
Since the spouses didnt pay the mortgage, FCP filed suit against them. The trial
court ruled in its favor ordering spouses to pay. The appellate court reversed their decision.
FCP and Perla appealed to the Supreme Court.
ISSUE:
Was there grave abuse of discretion on the part of the appellate court in holding that
private
respondents
did
not
violate the
insurance contract
because
the
authorized driver clause is not applicable to the "Theft" clause of said Contract?
HELD:
No. The car was insured against a malicious act such as theft. Therefore the Theft
clause in the contract should apply and not the authorized driver clause. The risk against
accident is different from the risk against theft.
The appellate court stated: The "authorized driver clause" in a typical insurance
policy is in contemplation or anticipation of accident in the legal sense in which it should be
understood, and not in contemplation or anticipation of an event such as theft. The
distinction often seized upon by insurance companies in resisting claims from their
assureds between death occurring as a result of accident and death occurring as a result
of intent may, by analogy, apply to the case at bar. There was no connection between valid
possession of a license and the loss of a vehicle. Ruling in a different way would render the
policy a sham because the company can then easily cite restrictions not applicable to the
claim.
DISPOSITIVE PORTION:
WHEREFORE, the assailed decision of the Court of Appeals is hereby MODIFIED to require
private respondents to pay petitioner FCP the amount of P55,055.93, with legal interest from

July 2, 1983 until fully paid. The decision appealed from is hereby affirmed as to all other
respects. No pronouncement as to costs. SO ORDERED.

JIMENEZ-9:ARMANDO GEAGONIA vs. COURT OF APPEALS


and COUNTRY BANKERS INSURANCE CORPORATION
G.R. No. 114427 February 6, 1995
DAVIDE, JR., J.
Review under Rule 45 of the Rules of Court
FACTS:
Armando Geagonia, owner of Norman's Mart, obtained from Country Bankers
Insurance Corporation fire insurance policy No. F-14622 2 for P100,000.00 covering the
period from 22 December 1989 to 22 December 1990. On 27 May 1990, fire of accidental
origin broke out and Geagonia's insured stocks-in-trade were completely destroyed
prompting him to file with Country Bankers a claim under the policy. Country Bankers denied
the claim because it found that at the time of the loss, Geagonia's stocks-in-trade were
likewise covered by fire insurance policies GA-28146 and GA-28144, for P100,000.00 each,
issued by the Cebu Branch of the Philippines First Insurance Co., Inc. (PFIC) which named
Geagonia as the assured and contain a mortgage clause which reads: "Loss, if any, shall be
payable to MESSRS. TESING TEXTILES, Cebu City as their interest may appear subject to the
terms of the policy." Geagonia allegedly violated Condition 3 of the policy requiring him to
inform it of the prior policies.
ISSUE:
Is the non-disclosure of other insurance policies a violation of condition 3 of the
policy, so as to deny Geagonia from recovering on the policy?
HELD:
No. The non-disclosure then of the former policies was not fatal to Geagonia's right to
recover on Country Bankers' policy. Condition 3 of Country Bankers's Policy F-14622 is
allowed by Section 75 of the Insurance Code. It 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 interest
therein, and the same risk. The fire insurance policies issued by the PFIC name Geagonia as
the assured and contain a mortgage clause which reads: "Loss, if any, shall be payable to
MESSRS. TESING TEXTILES, Cebu City as their interest may appear subject to the terms of
the policy." This is clearly a simple loss payable clause, not a standard mortgage clause. The
Court concludes that (a) the prohibition in Condition 3 of the subject policy applies only to
double insurance, and (b) the nullity of the policy shall only be to the extent exceeding
P200,000.00 of the total policies obtained. The first conclusion is supported by the portion of
the condition referring to other insurance "covering any of the property or properties
consisting of stocks in trade, goods in process and/or inventories only hereby insured," and
the portion regarding the insured's declaration on the subheading CO-INSURANCE that the
co-insurer is Mercantile Insurance Co., Inc. in the sum of P50,000.00. A double insurance
exists where the same person is insured by several insurers separately in respect of the
same subject and interest. Since the insurable interests of a mortgagor and a mortgagee on
the mortgaged property are distinct and separate; the two policies of the PFIC do not cover
the same interest as that covered by the policy of Country Bankers, no double insurance
exists.

DISPOSITIVE PORTION:

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in
CA-G.R. SP No. 31916 is SET ASIDE and the decision of the Insurance Commission in Case
No. 3340 is REINSTATED.
Costs against private respondent Country Bankers Insurance Corporation.
SO ORDERED.

MORAN-CASE # 13: MAPALAD AISPORNA, petitioner, vs. THE COURT OF APPEALS


and THE PEOPLE OF THE PHILIPPINES, respondents.
G.R. No. L-39419 April 12, 1982
DE CASTRO, J.
Petition for Certiorari
FACTS:
A Personal Accident Policy was issued to Eugene S. Isidro by Perla Compania de Seguros thru
its author representative, Rodolfo S. Aisporna, who is duly licensed by Insurance
Commission. Said policy was issued with active participation of Mapalad Aisporna, Rodolfos
wife, who defended that being the wife of true agent, Rodolfo, she naturally helped him in
his work, as clerk, and that policy was merely a renewal and was issued because Isidro had
called by telephone to renew, and at that time, her husband, Rodolfo, was absent and so she
left a note on top of her husband's desk to renew. Mapalad was charged and was found
guilty by the trial court for having violated the first paragraph of Section 189 of the
Insurance Act (Act No. 2427, as amended), for acting as agent in the solicitation for
insurance without securing first a certificate of authority to act as such agent from the office
of the Insurance Commission. CA affirmed the decision.
ISSUE:
1) Can a person like Mapalad Aisporna 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? Or, Is the agent mentioned in the first paragraph of
Section 189 of the Insurance Act governed by the definition of an insurance agent
found on its second paragraph?
2) Is receipt of compensation an essential element of the crime defined by the first
paragraph of section 189 of the insurance act?
RULING:
1) The first paragraph of Section 189 prohibits a person from acting as agent, sub-agent
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. The second paragraph of Section 189 is a definition and
interpretative clause intended to qualify the term "agent" mentioned in both the first
and third paragraphs of the aforesaid section. Applying the definition of an insurance
agent in the second paragraph to the agent mentioned in the first and second
paragraphs would give harmony to the aforesaid three paragraphs of Section 189.

2) Yes. 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 the section. CA has established that the Mapalad did not receive any
compensation for the issuance of the insurance policy of Eugenio Isidro. The
information does not even allege that the negotiation of an insurance contract by the
accused with Eugenio Isidro was one for compensation. This allegation is essential,
and having been omitted, a conviction of the accused could not be sustained. It is
well-settled in our jurisprudence that to warrant conviction, every element of the
crime must be alleged and proved.
WHEREFORE, the judgment appealed from is reversed and the accused is acquitted of
the crime charged, with costs de oficio.

MORAN-Case # 14: WHITE GOLD MARINE SERVICES, INC., Petitioners, vs. PIONEER
INSURANCE AND SURETY CORPORATION AND THE STEAMSHIP MUTUAL
UNDERWRITING ASSOCIATION (BERMUDA) LTD., Respondents.
G.R. No. 154514. July 28, 2005
QUISUMBING, J.
PETITION FOR REVIEW
FACTS:
White Gold Marine Services, Inc. procured a protection and indemnity coverage for its
vessels from The Steamship Mutual Underwriting Association (Bermuda) Limited through
Pioneer Insurance and Surety Corporation. Subsequently, White Gold was issued a
Certificate of Entry and Acceptance, and Pioneer issued receipts evidencing payments for
the coverage. When White Gold failed to fully pay its accounts, Steamship Mutual refused to
renew the coverage and filed a case for collection of sum of money to recover White Golds
unpaid balance. Meanwhile, White Gold filed a complaint before the Insurance Commission
claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code, while
Pioneer violated Sections 299, 300 and 301 in relation to Sections 302 and 303, thereof.
The Insurance Commission dismissed the complaint, stating that there was no need for
Steamship Mutual to secure a license because it was not engaged in the insurance business;
that Steamship Mutual was a Protection and Indemnity Club (P & I Club); that Pioneer need
not obtain another license as insurance agent and/or a broker for Steamship Mutual because
Steamship Mutual was not engaged in the insurance business; and that Pioneer was already
licensed, hence, a separate license solely as agent/broker of Steamship Mutual was already
superfluous. CA affirmed the decision.
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. 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 as Section 299 of the
Insurance Code clearly states that: 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.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated July 30, 2002 of the
Court of Appeals affirming the Decision dated May 3, 2000 of the Insurance Commission is
hereby REVERSED AND SET ASIDE. The Steamship Mutual Underwriting Association
(Bermuda) Ltd., and Pioneer Insurance and Surety Corporation are ORDERED to obtain
licenses and to secure proper authorizations to do business as insurer and insurance agent,
respectively. The petitioners prayer for the revocation of Pioneers Certificate of Authority
and removal of its directors and officers, is DENIED. Costs against respondents.

MORAN-Case # 15: REPUBLIC OF THE PHILIPPINES, Represented by the


COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. SUNLIFE ASSURANCE
COMPANY OF CANADA, Respondent.
G.R. No. 158085 October 14, 2005
PANGANIBAN, J.
Petition for Review under Rule 45 of the Rules of Court
FACTS:
Sun Life, which is a mutual life insurance company organized and existing under the laws of
Canada, and duly registered and authorized by the Securities and Exchange Commission
and the Insurance Commission to engage in business in the Philippines, filed with the CIR its
insurance premium tax return for the third quarter of 1997 and paid the premium tax in the
amount of P31,485,834.51. For the period covering August 21 to December 18, 1997,
petitioner filed with the CIR its documentary stamp tax (DST) declaration returns and paid
the total amount of P30,000,000.00. Considering the 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, 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.
ISSUES:
1) Is Sun Life Assurance Company of Canada a cooperative?
(Or is respondent a purely cooperative company or association under Section 121 of
the National Internal Revenue Code and a fraternal or beneficiary society, order or
cooperative company on the lodge system or local cooperation plan and organized
and conducted solely by the members thereof for the exclusive benefit of each
member and not for profit under Section 199 of the National Internal Revenue Code?)
2) Is registration with the Cooperative Development Authority a sine qua
non requirement to be entitled to tax exemption?

3) Is Sun Life exempted from payment of tax on life insurance premiums and
documentary stamp tax?
RULING:
1) 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.
2) No. 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.
First, the Tax Code does not require registration with the CDA. No tax provision
requires a mutual life insurance company to register with that agency in order to
enjoy exemption from both percentage and documentary stamp taxes.
Second, the provisions of the Cooperative Code of the Philippines do not apply.
Cooperative insurance under the Cooperative Code is limited in scope and local in
character. It is not the same as mutual life insurance.
Third, not even the Insurance Code requires registration with the CDA. The
provisions of this Code primarily govern insurance contracts; only if a particular
matter in question is not specifically provided for shall the provisions of the Civil Code
on contracts and special laws govern.
3) Yes. Having determined that respondent is a cooperative that does not have to be
registered with the CDA, it is entitled to exemption from both premium taxes and
documentary stamp taxes (DST).
The Tax Code is clear. Section 121 of the Code exempts cooperative companies from the 5
percent percentage tax on insurance premiums. Section 199 also exempts from the DST,
policies of insurance or annuities made or granted by cooperative companies. Being a
cooperative, respondent is thus exempt from both types of taxes.
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution are
AFFIRMED. No pronouncement as to costs. SO ORDERED.

JIMENEZ-19:RAFAEL ENRIQUEZ vs. SUN LIFE ASSURANCE COMPANY OF CANADA


G.R. No. L-15895 November 29, 1920
MALCOLM, J.

Appeal
FACTS:

September 24, 1917: Joaquin Herrer made application to the Sun Life Assurance
Company of Canada through its office in Manila for a life annuity

2 days later: he paid P6,000 to the manager of the company's Manila office and was
given a receipt

according to the provisional receipt, 3 things had to be accomplished by the

insurance company before there was a contract:


1

(1) There had to be a medical examination of the applicant; -check

(2) there had to be approval of the application by the head office of the company;

and - check
3

(3) this approval had in some way to be communicated by the company to the

applicant - ?
November 26, 1917: The head office at Montreal, Canada gave notice

of acceptance by cable to Manila but this was not mailed

December 4, 1917: policy was issued at Montreal

December 18, 1917: attorney Aurelio A. Torres wrote to the Manila office of the
company stating that Herrer desired to withdraw his application
December 19, 1917: local office replied to Mr. Torres, stating that the policy had been

issued, and called attention to the notification of November 26, 1917

December 21, 1917 morning: received by Mr. Torres

December 20, 1917: Mr. Herrer died

Rafael Enriquez, as administrator of the estate of the late Joaquin Ma. Herrer filed to
recover from Sun Life Assurance Company of Canada through its office in Manila for a life
annuity

RTC: favored Sun Life Insurance

ISSUE:
Did Mr. Herrer received notice of acceptance of his application, thereby perfecting his
life annuity?
HELD:
No, because it has not been proved satisfactorily that the acceptance of the
application ever came to the knowledge of the applicant.
The law applicable to the case is found to be the second paragraph of Art. 1319. (formerly
Art. 1262) of the Civil Code providing that an acceptance made by letter shall not bind the
person making the offer except from the time it came to his knowledge. Also, that according
to the provisional receipt, three things had to be accomplished by the insurance
company before there was a contract: (1) There had to be a medical examination of the
applicant; (2) there had to be approval of the application by the head office of the company;
and (3) this approval had in some way to be communicated by the company to the
applicant. The further admitted facts are that the head office in Montreal did accept the
application, did cable the Manila office to that effect, did actually issue the policy and did
actually write the letter of notification and place it in the usual channels for transmission to
the addressee.
The fact as to the letter of notification thus fails to concur with the essential
elements of the general rule pertaining to the mailing and delivery of mail matter
as announced by the American courts, namely, when a letter or other mail matter is
addressed and mailed with postage prepaid there is a rebuttable presumption of fact that it
was received by the addressee as soon as it could have been transmitted to him in the
ordinary course of the mails. But if any one of these elemental facts fails to appear, it is fatal
to the presumption. For instance, a letter will not be presumed to have been received by the
addressee unless it is shown that it was deposited in the post-office, properly addressed and
stamped.

DISPOSITIVE PORTION:
Judgment is reversed, and the plaintiff shall have and recover from the defendant the sum of
P6,000 with legal interest from November 20, 1918, until paid, without special finding as to
costs in either instance. So ordered.

JIMENEZ-20:GREAT PACIFIC LIFE ASSURANCE COMPANY


vs. HONORABLE COURT OF APPEALS,
G.R. No. L-31845 April 30, 1979
DE CASTRO, J.

Petition for certiorari by way of appeal

FACTS:
Ngo Hing filed an application with the Great Pacific for a twenty-year endowment
policy in the amount of P50,000.00 on the life of his one-year old daughter Helen. He
supplied the essential data which petitioner Mondragon, the Branch Manager, wrote on the
form. The latter paid the annual premium the sum of P1,077.75 going over to the Company,
but he retained the amount of P1,317.00 as his commission for being a duly authorized
agent of Pacific Life.
Upon the payment of the insurance premium, the binding deposit receipt was issued
Ngo Hing. Likewise, petitioner Mondragon handwrote at the bottom of the back page of
the application formhis strong recommendation for the approval of the insurance
application. Then Mondragon received a letter from Pacific Life disapproving the insurance
application. The letter stated that the said life insurance application for 20-year endowment
plan is not available for minors below seven years old, but Pacific Life can consider the same
under the Juvenile Triple Action Plan, and advised that if the offer is acceptable, the Juvenile
Non-Medical Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was allegedly not
communicated by petitioner Mondragon to private respondent Ngo Hing. Instead, on May 6,
1957, Mondragon wrote back Pacific Life again strongly recommending the approval of the
20-year endowment insurance plan to children, pointing out that since the customers were
asking for such coverage.
Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the
insurance, but having failed in his effort, he filed the action for the recovery before the Court
of First Instance of Cebu, which ruled against him.
ISSUES:
1. Does the binding deposit receipt constitute a temporary contract of the life
insurance in question?
2. Did Ngo Hing concealed the state of health and physical condition of Helen Go,
which rendered void the policy?
HELD:
1. No. The receipt was intended to be merely a provisional insurance contract. Its
perfection was subject to compliance of the following conditions: (1) that the company shall
be satisfied that the applicant was insurable on standard rates; (2) that if the company does
not accept the application and offers to issue a policy for a different plan, the insurance
contract shall not be binding until the applicant accepts the policy offered; otherwise, the
deposit shall be refunded; and (3) that if the company disapproves the application, the

insurance applied for shall not be in force at any time, and the premium paid shall be
returned to the applicant.

The receipt is merely an acknowledgment that the latter's branch office had received
from the applicant the insurance premium and had accepted the application subject
for processing by the insurance company. There was still approval or rejection the same on
the basis of whether or not the applicant is "insurable on standard rates." Since Pacific Life
disapproved the insurance application of respondent Ngo Hing, the binding deposit receipt in
question had never become in force at any time. The binding deposit receipt is conditional
and does not insure outright. This was held in Lim v Sun.
The deposit paid by private respondent shall have to be refunded by Pacific Life.
2. Ngo Hing had deliberately concealed the state of health of his daughter Helen Go.
When he supplied data, he was fully aware that his one-year old daughter is typically a
mongoloid child. He withheld the fact material to the risk insured.
The contract of insurance is one of perfect good faith uberrima fides meaning good
faith, absolute and perfect candor or openness and honesty; the absence of any
concealment or demotion, however slight.
The concealment entitles the insurer to rescind the contract of insurance.
DISPOSITIVE PORTION:
WHEREFORE, the decision appealed from is hereby set aside, and in lieu thereof, one is
hereby entered absolving petitioners Lapulapu D. Mondragon and Great Pacific Life
Assurance Company from their civil liabilities as found by respondent Court and ordering the
aforesaid insurance company to reimburse the amount of P1,077.75, without interest, to
private respondent, Ngo Hing. Costs against private respondent.
SO ORDERED.

JIMENEZ-21:DEVELOPMENT BANK OF THE PHILIPPINES


vs. COURT OF APPEALS and the ESTATE OF THE LATE JUAN B. DANS
G.R. No. L-109937 March 21, 1994
QUIASON, J.

Petition for review on certiorari under Rule 45 of the Revised Rules of Court
FACTS:
Juan B. Dans, 76 years of age, is the principal mortgagor of a loan, in the reduced amount of
P300,000.00, duly approved by DBP on August 4, 1987 and released on August 11, 1987. Dans obtained a
mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool)
as advised by DBP. From the proceeds of the loan, DBP deducted the amount of P1,476.00 as payment for
the MRI premium. On August 15, 1987, Dans accomplished and submitted the "MRI Application for
Insurance" and the "Health Statement for DBP MRI Pool." On August 20, 1987, the MRI premium of Dans,
less the DBP service fee of 10 percent, was credited by DBP to the savings account of the DBP MRI Pool.
Accordingly, the DBP MRI Pool was advised of the credit.
On September 3, 1987, Dans died of cardiac arrest. The DBP, upon notice, relayed this information
to the DBP MRI Pool. On September 23, 1987, the DBP MRI Pool notified DBP that Dans was not eligible for
MRI coverage, being over the acceptance age limit of 60 years at the time of application. The DBP offered
to refund the premium of P1,476.00 which the deceased had paid, but Candida Dans refused to accept the
same, demanding payment of the face value of the MRI or an amount equivalent to the loan. She, likewise,
refused to accept an ex gratia settlement of P30,000.00, which the DBP later offered.
On February 10, 1989, respondent Estate, through Candida Dans as administratrix, filed a complaint
with against DBP and the insurance pool for "Collection of Sum of Money with Damages." Respondent
Estate alleged that Dans became insured by the DBP MRI Pool when DBP, with full knowledge of Dans' age
at the time of application, required him to apply for MRI, and later collected the insurance premium
thereon. Respondent Estate therefore prayed: (1) that the sum of P139,500.00, which it paid under protest
for the loan, be reimbursed; (2) that the mortgage debt of the deceased be declared fully paid; and (3) that
damages be awarded.
ISSUE:
Is the contract of insurance between Dans and the DBP Mortgage Redemption Insurance Pool
already considered to be perfected so as to hold the latter liable together with DBP?
HELD:
No. When Dans applied for MRI, he filled up and personally signed a "Health Statement for DBP MRI
Pool" (Exh. "5-Bank") with the following declaration:
I hereby declare and agree that all the statements and answers contained herein are true,
complete and correct to the best of my knowledge and belief and form part of my
application for insurance. It is understood and agreed that no insurance coverage shall be
effected unless and until this application is approved and the full premium is paid during my
continued good health (Records, p. 40).
Under the aforementioned provisions, the MRI coverage shall take effect: (1) when the application
shall be approved by the insurance pool; and (2) when the full premium is paid during the continued good
health of the applicant. These two conditions, being joined conjunctively, must concur.
Undisputably, the power to approve MRI applications is lodged with the DBP MRI Pool. The pool,
however, did not approve the application of Dans. There is also no showing that it accepted the sum of
P1,476.00, which DBP credited to its account with full knowledge that it was payment for Dan's premium.
There was, as a result, no perfected contract of insurance; hence, the DBP MRI Pool cannot be held
liable on a contract that does not exist.
DISPOSITIVE PORTION:
WHEREFORE,
the
decision
of
the
Court
of
Appeals
in
CA
G.R.-CV
No. 26434 is MODIFIED and petitioner DBP is ORDERED: (1) to REIMBURSE respondent Estate of Juan B.
Dans the amount of P1,476.00 with legal interest from the date of the filing of the complaint until fully

paid; and (2) to PAY said Estate the amount of Fifty Thousand Pesos (P50,000.00) as moral damages and
the amount of Ten Thousand Pesos (P10,000.00) as attorney's fees. With costs against petitioner.
SO ORDERED.
Digested by: Joseph I. Delovieres
23
Case Title:
Gulf Resorts, Inc. vs. Phil. Charter Insurance Corporation
Docket No. and Date:
G.R. No. 156167, 16 March 2005
Ponente:
PUNO, J.
Nature of the Case:
Petition for certiorari under Rule 45 of the Revised Rules of Court
FACTS:
Petitioner Gulf Resorts, Inc. (Gulf Resorts) offered Philippine Charter Insurance Corporation
(PCIC) to cover their properties against damages caused by earthquake. Gulf Resorts originally had
their Plaza resort Properties insured with American Home Assurance Company (AHAC-AIU) but Gulf
Resorts agreed to insure with PCIC provided that the policy wording are the same from the policies
issued by AHAC-AIU. The property of Gulf resorts was struck by an earthquake, thus, Gulf resorts
manifested that they will claim under policies issued by PCIC, consequently, PCIC denied its claim
that the insurer must pay the damages to all its properties and contended that their policy only
covers the two (2) swimming pools, Gulf Resorts resorted to filing of a complaint with the RTC of
Pasig which ruled in favor of PCIC and Petitioners Motion for reconsideration was denied, petitioner
then appealed to the Court of Appeals which in turn affirmed in Toto the decision of the lower court,
hence, the present petition.
ISSUE:
Is the policy made by PCIC in favor of Gulf resorts only covers two (2) swimming pools
owned by the insured (Gulf Resorts) and does not cover all the properties of the insured?
HELD:
Yes. The policy only covers two (2) swimming pools owned by the insured and not the whole
damaged property. The Court held that, Gulf resorts only paid the premiums of the swimming pools
and in order for a contract of insurance to be perfected, 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. In the
subject policy, no premium payments were made with regard to earthquake shock coverage, except
on the two swimming pools. There is no mention of any premium payable for the other resort
properties with regard to earthquake shock. This is consistent with the history of petitioners
previous insurance policies from AHAC-AIU. The petitioner also cannot invoke the fine print rule, as
the court stated, where the stipulations of the policy are clear and unambiguous, there is no more
room for interpretation but only application.
DISPOSITIVE:
IN VIEW WHEREOF, the judgment of the Court of Appeals is affirmed. The petition for
certiorari is dismissed. No costs.
SO ORDERED.

Digested by: Joseph I. Delovieres


24
Case Title:
Malayan Insurance Co., Inc. vs. Court of Appeals
Docket No. and Date:
G.R. No. L-36413, 26 September 1988
Ponente:
PADILLA, J.
Nature of the Case:
Review on certiorari
FACTS:
Sio Choy insured a Willys Jeepney to Petitioner Malayan Insurance Co., the insured jeep,
while being driven by one Juan P. Campollo an employee of the respondent San Leon Rice Mill, Inc.,
collided with a passenger bus belonging to the respondent Pangasinan Transportation Co., Inc. As a
result, Martin C. Vallejos filed an action for damages against Sio Choy, Malayan Insurance Co., Inc.
and the PANTRANCO before the Court of First Instance of Pangasinan. The CFI of Pangasinan
absolved PANTRANCO of any liability and ruled that Sio Choy, owner of the ill-fated Jeepney, San
Leon rice mill, employer of the driver during the accident and Malayan Insurance company, insurer
of Sio choy are Solidarily liable, this ruling was also affirmed by the Court of appeals which also
ruled that the insurer is not entitled to reimbursement on the ground that respondent is not privy to
the contract of insurance existing between petitioner and respondent Sio Choy, hence, the present
petition.
ISSUE:
1. Is the insurer, Malayan Insurance Co. Solidarily Liable with Sio Choy and San Leon rice
mill?
2. Is Malayan Insurance entitled to reimbursement by San Leon rice mill?
HELD:
1. No. The insurer cannot be held solidarily liable with the owner of the jeepney and the
employer of the driver driving during the accident. The court held that the liability of
Malayan Insurance is only up to the extent of it being the insurer or only up to the extent
of the insurance contract with Sio Choy. Thus, the parties Solidarily liable to Vallejos is
Sio choy, being the owner of the Jeepney, and San Leon Rice mill, being the employer of
the driver which was within the scope of his work during the accident.
2. Yes. Malayan is entitled to reimbursement. The court held that, under the principle of
principle of subrogation Malayan is entitled to reimbursement. Although many policies
including policies in the standard form, now provide for subrogation, and thus determine
the rights of the insurer in this respect, the equitable right of subrogation as the legal
effect of payment inures to the insurer without any formal assignment or any express
stipulation to that effect in the policy" (44 Am. Jur. 2nd 746). Stated otherwise, when the
insurance company pays for the loss, such payment operates as an equitable
assignment to the insurer of the property and all remedies which the insured may have
for the recovery thereof. That right is not dependent upon , nor does it grow out of any
privity of contract (emphasis supplied) or upon written assignment of claim, and
payment to the insured makes the insurer assignee in equity (Shambley v. Jobe-Blackley
Plumbing and Heating Co., 264 N.C. 456, 142 SE 2d 18). It follows, therefore, that
petitioner, upon paying respondent Vallejos the amount of riot exceeding P20,000.00,
shall become the subrogee of the insured, the respondent Sio Choy; as such, it is
subrogated to whatever rights the latter has against respondent San Leon Rice Mill, Inc.
Article 1217 of the Civil Code gives to a solidary debtor who has paid the entire
obligation the right to be reimbursed by his co-debtors for the share which corresponds
to each.
DISPOSITIVE:
WHEREFORE, the petition is GRANTED. The decision of the trial court, as affirmed by the
Court of Appeals, is hereby AFFIRMED, with the modification above-mentioned. Without
pronouncement as to costs.
SO ORDERED.

ADRIANO-26-Pan Malayan vs. CA


GR. No. 81026 April 30, 1990
CORTES, J.
Petitioner for reversal of a decision of the Court of Appeals

FACTS:
Pan Malayan filed a complaint for damages with the RTC against private respondent Erlinda Fabie and her
driver. Pan Malayan insured a vehicle registered in the name of Canlubang. Due to recklessness of the
unknown driver of a pick up owned by Fabie, the insured vehicle was damaged in the amount of Php
42,052. Pan Malayan defrayed the cost of the repair of the insured car and was subrogated to the rights of
Canlubang against the driver and his employer Fabie. Defendants refused to pay the claim of Pan Malayan.
Pan Malayan clarified that the damage caused to the insured car was settled under the own damage
coverage of the policy and the release of claim and subrogation receipt executed by Canlubang in favor of
Pan Malayan. RTC dismissed Pan Malayans complaint. CA up held RTC its decision.
ISSUE:
WON, the insurer Pan Malayan may institute an action to recover the amount it had paid its assured in
settlement of an insurance claim against private respondents.
HELD:
YES. Art. 2207 of the New Civil Code provides for the principle of subrogation. If the insured property is
destroyed or damaged through the fault or negligence of a party other than the assured, the insurer, upon
payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer.
Subrogation accrues upon payment of the insurance claim by the insurer. The own damagecoverage
implies damage to the insured vehicle being repaired, the costs of which are assumed by the insurer.
WHEREFORE, in view of the foregoing, the present petition is GRANTED. Petitioner's complaint for damages
against private respondents is hereby REINSTATED. Let the case be remanded to the lower court for trial on
the merits.

ADRIANO-27
Cebu Shipyard vs. William Lines
306 SCRA 762 GR. NO.132607
May5, 1999
PURISIMA, J.
Petition for Review on Certiorari
FACTS:
Petitioner CSEW is engaged in the business of dry-docking and repairing of marine vessels. William
Lines insured its vessel to respondent Prudential for Php 45 million for hull and machinery. The hull policy
included an Addition Perils clause containing loss or damage to the vessel through the negligence of,
among others, ship repairman. William Lines brought its vessel to CSEW for repair but it caught fire and
sank, resulting to its total loss. William Lines sued CSEW alleging that the fire that broke out was caused by
CSEWs negligence and lack of care. Prudential was impleaded as co-plaintiff, after it paid William Lines,
Prudential was subrograted to the claim of Php 45 million.
ISSUE:
WON, Prudential is entitled to be subrogated to the rights of William Lines.
HELD:
YES. Pursuant to Article 2207 of the New Civil Code, when Prudential, after due verification of the
merit of the insurance claim of William Lines, paid the latter the amount covered by its policy, it was
subrogated to the rights of the latter to recover the insured loss from the liable party, CSEW.
WHEREFORE, for want of merit, the petition is hereby DENIED and the decision, dated September 3, 1997,
and Resolution, dated February 13, 1998, of the Court of Appeals AFFIRMED.

LUNA-Case #29
FEDERAL EXPRESS CORPORATION VS. AMERICAN HOME ASSURANCE COMPANY, ET. AL.
G.R. No. 150094
August 18, 2004
Ponente: Panganiban
Nature of Case: Subrogation of rights
FACTS:
Shipper SMITHKLINE USA delivered to carrier Burlington Air Express, an agent of herein petitioner, a cargo
shipment, insured with respondent which consists of 109 cartons of veterinary biologicals for delivery
to consignee SMITHKLINE and French Overseas Company in Makati City with the words, REFRIGERATE
WHEN NOT IN TRANSIT and PERISHABLE stamp marked on its face however 12 days after the cargoes
arrived in Manila it was found out that the same were stored only in a room with 2 air conditioners running
in the warehouse of Cargohaus Inc., to cool the place instead of a refrigerator.
As a consequence of the result of the veterinary biologics test, SMITHKLINE abandoned the shipment and,
declaring total loss for the unusable shipment, filed a claim with AHAC through its representative in the
Philippines, the Philam Insurance Co., Inc. (PHILAM) which recompensed SMITHKLINE for the whole insured
amount. Thereafter, PHILAM filed an action for damages against the FEDEX imputing negligence on either
or both of them in the handling of the cargo where it was decided that FEDEX is solidarily liable with
Cargohaus Inc.
ISSUE:
Is FEDEX liable for damage to or loss of the insured goods?
HELD:
No. Upon receipt of the insurance proceeds, the consignee (Smithkline) executed a subrogation Receipt in
favor of respondents authorizing them to file claims and begin suit against any such carrier, vessel,
person, corporation or government. Undeniably, the consignee had a legal right to receive the goods in
the same condition it was delivered for transport to petitioner and if that right was violated, the consignee
would have a cause of action against the person responsible therefor.
In the exercise of its subrogatory right, an insurer may proceed against an erring carrier and to all
intents and purposes, it stands in the place and in substitution of the consignee.
WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED insofar as it pertains to
Petitioner Federal Express Corporation. No pronouncement as to costs.

LUNA-Case # 30
ABOITIZ SHIPPING CORPORATION VS. INSURANCE COMPANY OF NORTH AMERICA
GR No. 168402
August 6, 2008
Ponente: Reyes, R. T.
Nature of case: Subrogation of rights

FACTS:
MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS) procured an "allrisk marine insurance policy from ICNA UK Limited of London for its cargo, consisting of wooden work
tools and workbenches purchased by consignee Science Teaching Improvement Project (STIP)which was
later on received by Aboitiz and shipped to Cebu however upon arrival, the checker noted that the crates
were slightly broken or cracked at the bottom causing the cargo to be withdrawn by the representative of
the consignee, STIP and delivered to Don Bosco Technical High School, Punta Princesa, Cebu City where it
was received by Mr. Bernhard Willig who later on reported the damage to Aboitiz.
Consignee filed a claim against ICNA who then paid consignee and a subrogation receipt was duly signed
by Willig. ICNA then advised Aboitiz of the receipt signed in its favor but received no reply so it filed for
collection at the RTC.
ISSUE:
Whether or not ICNA can claim under the right of subrogation
HELD:
YES. Only when that foreign corporation is "transacting" or "doing business" in the country will a license be
necessary before it can institute suits. It may, however, bring suits on isolated business transactions,
which is not prohibited under Philippine law. The policy benefits any subsequent assignee, or holder,
including the consignee, who may file claims on behalf of the assured.
WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED.

OROLFO-39: Sunlife Assurance v. Court of Appeals


245 scra 268, June 22, 1995
QUIASON, J
Petition for Review
FACTS:
Bacani procured a life insurance contract for himself from Sunlife Assurance. Specifically, the policy
included a double indemnity in case of accidental death, designating his mother as beneficiary. After
investigation, Sunlife rejected the claim on ground of non-disclosure of material facts.
The trial court ruled that the facts concealed by the insured were made in good faith and under the belief
that they need not be disclosed. Also, it held that the health history of the insured was immaterial since
the insurance policy was non-medical.
The CA affirmed, stating that the cause of death was unrelated to the facts concealed by the insured.
ISSUE:
Whether or not the concealment made by Bacani warranted the rejection of the insurance claim.
HELD:
Yes, the Court held that the information which the insured failed to disclose was material and relevant to
the approval and issuance of the insurance policy. Good faith is not a defense in determining the
materiality of the information to be disclosed. Waiver of medical examination by insured is not a defense
for such information necessarily constitutes an important factor which the insurer takes into consideration
in deciding whether to issue the policy or not. Cause of death is immaterial in case of concealment. His
non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or
in making inquiries.
WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals is REVERSED and SET
ASIDE.

OROLFO-40:Insular Life Assurance Co., Ltd. vs Serafin Feliciano (1943)


G.R. No. L-47593, December 29, 1943
OZAETA, J
Motion for Reconsideration
FACTS:
From the courts decision rendered in the case of Insular Life Assurance vs Feliciano (1941), Insular Life
filed a motion for reconsideration. Insular avers that Feliciano is not entitled to the claim because the
insurance policy is void ab initio; that he connived with the insurance agent and the medical examiner; and
that at best, Feliciano is only entitled to refund or the reimbursement of what he has paid in premium.
ISSUE:
Whether or not Insular Life is correct.
HELD:
Yes. The Supreme Court held that Insular Lifes contention is correct. When Evaristo Feliciano signed the
application in blank and authorized the soliciting agent and/or medical examiner of Insular to write the
answers for him, he made them his own agents for that purpose, and he was responsible for their acts in
that connection. If they falsified the answers for him, he could not evade the responsibility for the
falsification. He was not supposed to sign the application in blank. He knew that the answers to the
questions therein contained would be the basis of the policy, and for that very reason he was required
with his signature to vouch for truth thereof.
Wherefore, the motion for reconsideration is sustained and the judgment of the Court of Appeals is hereby
reversed. Let another judgment be entered in favor of the respondents and against the petitioner for the
refund of the premiums amounting to P1,389, with legal interest thereon from the date of the complaint,
and without any finding as to costs.

AVANZADO-CASE # 41THELMA VDA. DE CANILANG, petitioner, vs. HON. COURT OF APPEALS and
GREAT PACIFIC LIFE ASSURANCE CORPORATION, respondents.
G.R. No. 92492 June 17, 1993
FELICIANO, J.:
FACT:
Canilang consulted a doctor and was diagnosed suffering from sinus tachycardia. He consulted the same
doctor and this time found to have acute bronchitis. On the next day Canilang Jaime Canilang applied for
a "non-medical" insurance policy with respondent Great Pacific Life Assurance Company ("Great Pacific")
naming his wife, Thelma Canilang, as his beneficiary. Year after the effectivity of the contract he then died
due to congestive "congestive heart failure," "anemia," and "chronic anemia." Petitioner, widow and
beneficiary of the insured, filed a claim with Great Pacific which the insurer denied upon the ground that
the insured had concealed material information from it.Petitioner then filed a complaint against Great
Pacific with the Insurance Commission for recovery of the insurance proceeds.
ISSUEl:
Was canilang guilty of misrepresentation?
Held:
Yes Canilang failed to disclose was material to the ability of the insurer to estimate the probable risk he
presented as a subject of life insurance. If canilang disclose his twice visit to the doctor and the medicines
prescribed in the insurance application. The insurer maybe reasonably refused to issue nonmedical
insurance policy or higher premium for the same coverage. The materiality of the information withheld by
Great Pacific did not depend upon the state of mind of Jaime Canilang. A man's state of mind or subjective
belief is not capable of proof in our judicial process, except through proof of external acts or failure to act
from which inferences as to his subjective belief may be reasonably drawn. Neither does materiality
depend upon the actual or physical events which ensue. Materiality relates rather to the "probable and
reasonable influence of the facts" upon the party to whom the communication should have been made, in
assessing the risk involved in making or omitting to make further inquiries and in accepting the application
for insurance; that "probable and reasonable influence of the facts" concealed must, of course, be
determined objectively, by the judge ultimately.
WHEREFORE, the Petition for Review is DENIED for lack of merit and the Decision of the Court of Appeals
dated 16 October 1989 in C.A.-G.R. SP No. 08696 is hereby AFFIRMED. No pronouncement as to the costs.
SO ORDERED.
Bidin, Davide, Jr., Romero and Melo, JJ., concur.

AVANZADO-CASE # 42
PRUDENTIAL GUARANTEE and ASSURANCE INC., petitioner, vs. TRANS-ASIA SHIPPING LINES,
INC., Respondent.
GR NO 151890 June 20, 2006
CHICO-NAZARIO, J:
This is a consolidation of two separate Petitions for Review on Certiorari filed by petitioner Prudential
Guarantee and Assurance, Inc. in G.R. No. 151890 and Trans-Asia Shipping Lines, Inc. in G.R. No. 151991,
assailing the Decision dated 6 November 2001 of the Court of Appeals in CA G.R. CV No. 68278, which
reversed the Judgment dated 6 June 2000 of the Regional Trial Court, Branch 13, Cebu City in Civil Case No.
CEB-20709. The 29 January 2002 Resolution of the Court of Appeals, denying PRUDENTIALs Motion for
Reconsideration and TRANS-ASIAs Partial Motion for Reconsideration of the 6 November 2001 Decision, is
likewise sought to be annulled and set aside.
FACT:
M/V Asia Korea vessel is owned by TRANS-SIA. In consideration of payment of premiums, PRUDENTIAL
insured M/V Asia Korea for loss/damage of the hull and machinery arising from perils, inter alia, of fire and
explosion for the sum of P40 Million. While, the policy was in force, a fire broke out while M/V Asia Korea
was undergoing repairs at the port of Cebu. TRANS-ASIA filed its notice of claim for damage sustained by
the vessel. This is evidenced by a letter/formal claim of even date. TRANS-ASIA reserved its right to
subsequently notify PRUDENTIAL as to the full amount of the claim upon final survey and determination by
average adjuster Richard Hogg International of the damage sustained by reason of fire. An adjusters
report on the fire in question was submitted by Richard Hogg International together with the U-Marine
Surveyor Report. PRUDENTIAL denied the material allegations of the Complaint and interposed the defense
that TRANS-ASIA breached insurance policy conditions.
ISSUE:
Does Trans-Asia breach the warranty stated in the insurance policy?
Held:
NO. It ruled that a determination of the parties liabilities hinged on whether TRANS-ASIA violated and
breached the policy conditions on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED. It interpreted
the provision to mean that TRANS-ASIA is required to maintain the vessel at a certain class at all times
pertinent during the life of the policy. According to the court a quo, TRANS-ASIA failed to prove compliance
of the terms of the warranty, the violation thereof entitled PRUDENTIAL, the insured party, to rescind the
contract. Further, citing Section 107of the Insurance Code, the court a quo ratiocinated that the
concealment made by TRANS-ASIA that the vessel was not adequately maintained to preserve its class was
a material concealment sufficient to avoid the policy and, thus, entitled the injured party to rescind the
contract. The court a quo found merit in PRUDENTIALs contention that there was nothing in the
adjustment of the particular average submitted by the adjuster that would show that TRANS-ASIA was not
in breach of the policy.
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for its failure to prove a cause of
action.

LONTOK-(CASE 45)
SHERMAN SHAFER vs. HON. JUDGE, REGIONAL TRIAL COURT OF OLONGAPO CITY, BRANCH 75, and MAKATI
INSURANCE COMPANY, INC.
G.R. No. 78848 November 14, 1988
PADILLA, J.
Petition for review on certiorari

FACTS:
Sherman Shafer (petitioner) obtained a private car policy from Makati Insurance Company, Inc. for
third party liability (TPL). The policy was in effect when the car hit and bumped a Volkswagen car owned
and by Felino llano causing damage in the amount of P12,345.00 and injured one Jovencio Poblete, Sr. who
was on board the car that suffer physical injuries.
Felino Ilano filed a separate civil action against Shafer for damages, while Jovencio Poblete, Sr did
not file a separate civil action for damages. Instead he testified on his claim for damages for the serious
physical injuries which he claimed to have sustained as a result of the accident. Upon motion, Shafer file a
third party complaint against Makati Insurance Company, Inc, and the company move to dismiss.
The court dismissed the third party complaint and contended that it was premature because the
third party complaint is without cause of action. The court further stated that the better procedure is for
Shafer to wait for the outcome of the criminal aspect of the case to determine whether or not the accused
has a cause of action against the third party defendant for the enforcement of its TPL under the insurance
contract. Hence, this petition.

ISSUE: Is the third party complaint of the petitioner premature?

HELD:
NO,the action of the petitioner is not premature. Compulsory Motor Vehicle Liability Insurance or
TPL is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third
parties or passengers as a result of a negligent operation and use of motor vehicles. The victims and/or
their dependents are assured of immediate financial assistance, regardless of the financial capacity of
motor vehicle owners.

The liability of the insurance company under the Compulsory Motor Vehicle Liability Insurance is for loss or
damage. 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.
The injured for whom the contract of insurance is intended can sue directly the insurer. The general
purpose of statutes enabling an injured person to proceed directly against the insurer is to protect injured
persons against the insolvency of the insured who causes such injury, and to give such injured person a
certain beneficial interest in the proceeds of the policy, and statutes are to be liberally construed so that
their intended purpose may be accomplished. It has even been held that such a provision creates a
contractual relation which inures to the benefit of any and every person who may be negligently injured by
the named insured as if such injured person were specifically named in the policy.
In the event that the injured fails or refuses to include the insurer as party defendant in his claim for
indemnity against the insured, the latter is not prevented by law to avail of the procedural rules intended
to avoid multiplicity of suits. Not even a "no action" clause under the policy-which requires that a final
judgment be first obtained against the insured and that only thereafter can the person insured recover on
the policy can prevail over the Rules of Court provisions aimed at avoiding multiplicity of suits.
In the instant case, the court a quo erred in dismissing Shafer's third party complaint on the ground that he
had no cause of action yet against Makati Insurance. There is no need on the part of the insured to wait for
the decision of the trial court finding him guilty of reckless imprudence. The occurrence of the injury to the
third party immediately gave rise to the liability of the insurer under its policy.
A third party complaint is a device allowed by the rules of procedure by which the defendant can bring into
the original suit a party against whom he will have a claim for indemnity or remuneration as a result of a
liability established against him in the original suit. Third party complaints are allowed to minimize the
number of lawsuits and avoid the necessity of bringing two (2) or more actions involving the same subject
matter.
In the instant case, the civil aspect of the offense charged, i.e., serious physical injuries allegedly suffered
by Jovencio Poblete, Sr., was impliedly instituted with the criminal case. Shafer may thus raise all defenses
available to him insofar as the criminal and civil aspects of the case are concerned. The claim of Shafer for
payment of indemnity to the injured third party, under the insurance policy, for the alleged bodily injuries
caused to said third party, arose from the offense charged in the criminal case, from which Jovencio
Poblete, Sr. has sought to recover civil damages. Hence, such claim of Shafer against the insurance
company cannot be regarded as not related to the criminal action.

WHEREFORE, the instant petition is GRANTED. The questioned order dated 24 April 1987 is SET ASIDE and
a new one entered admitting petitioner's third party complaint against the private respondent Makati
Insurance Company, Inc. SO ORDERED.

LONTOK-(CASE 46)
Emilio Tan v Court of Appeals
G.R. No. 48049 June 29, 1989
J. Gutierrez Jr.
petition for review on certiorari
Facts:
Tan Lee Siong, Emilio Tans father applied for life insurance in the amount of P 80,000.00 with Philamlife. It
was approved. Tan Lee Siong died of hepatoma. Emilio Tan then filed a claim for the proceeds. The
company denied petitioners' claim and rescinded the policy by reason of the alleged misrepresentation
and concealment of material facts. The premiums paid on the policy were refunded. The petitioners filed a
complaint in the Insurance Commission. The latter dismissed the complaint.

The Court of Appeals dismissed ' the petitioners' appeal from the Insurance Commissioner's decision for
lack of merit. Hence, this petition.
Issue: Did Philam have the right to rescind the contract of insurance?
Held: No,The Insurance Code states in Section 48:
Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this
chapter, such right must be exercised previous to the commencement of an action on the contract.
After a policy of life insurance made payable on the death of the insured shall have been in force during
the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement,
the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent
concealment or misrepresentation of the insured or his agent.
The so-called "incontestability clause" in the second paragraph prevents the insurer from raising the
defenses of false representations insofar as health and previous diseases are concerned if the
insurance has been in force for at least two years during the insured's lifetime.
The policy was in force for a period of only one year and five months. Considering that the insured died
before the two-year period had lapsed, respondent company is not, therefore, barred from proving that the
policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation.
The "incontestability clause" added by the second paragraph of Section 48 is in force for two years. After
this, the defenses of concealment or misrepresentation no longer lie.
The petitioners argue that no evidence was presented to show that the medical terms were explained in a
layman's language to the insured. They also argue that no evidence was presented by respondent
company to show that the questions appearing in Part II of the application for insurance were asked,
explained to and understood by the deceased so as to prove concealment on his part. This couldnt be
accepted because the insured signed the form. He affirmed the correctness of all the entries.
The company records show that the deceased was examined by Dr. Victoriano Lim and was found to
be diabetic and hypertensive. He was also found to have suffered from hepatoma. Because of the
concealment made by the deceased, the company was thus misled into accepting the risk and approving
his application as medically fit.
WHEREFORE, the petition is hereby DENIED for lack of merit. The questioned decision of the Court of
Appeals is AFFIRMED.SO ORDERED.

REYES-#47
Case Title:

DEVELOPMENT INSURANCE CORPORATION, petitioner vs. INTERMEDIATE APPELLATE


COURT, and PHILIPPINE UNION REALTY DEVELOPMENT CORPORATION, respondents.

Docket No. and Date: G.R. No. 71360; July 16, 1986
Ponente: CRUZ, J.
Nature of the Case: Petition for Review

Facts:
A fire occurred in the building of the private respondent and it sued for recovery of damages from the
petitioner on the basis of an insurance contract between them. The petitioner allegedly failed to answer on
time and was declared in default by the trial court. A judgment of default was subsequently rendered on
the strength of the evidence submitted ex parte by the private respondent, which was allowed full
recovery of its claimed damages. On learning of this decision, the petitioner moved to lift the order of
default, invoking excusable neglect, and to vacate the judgment by default. Its motion was denied. It then
went to the respondent court, which affirmed the decision of the trial court in toto.
Issue:
Whether the amount of indemnity due to private respondent is based on the value of the property at the
time of loss.
Held:
The actual loss has been ascertained in this case and the Court respects such factual determination in the
absence of proof that it was arrived at arbitrarily. There is no such showing. Hence, applying the open
policy clause as expressly agreed upon by the parties in their contract as provided for in Section 60 of the
Insurance Code which states that, an open policy is one in which the value of the thing insured is not
agreed upon but is left to be ascertained in case of loss. This means that the actual loss as determined,
represents the total indemnity due the insured from the insurer except only that the total indemnity shall
not exceed the value of the face of the policy. In theis case, the Court held that the private respondent is
entitled to the payment of indemnity under the said contract in the total amount of P508,867.00.
Dispositive Portion:
WHEREFORE, the appealed decision is affirmed in full, with costs against the petitioner.

REYES-#48
Case Title:

SUN INSURANCE OFFICE, LTD., petitioner, vs.COURT OF APPEALS and EMILIO TAN,
respondents.

Docket No. and Date: G.R. No. 89741; March 13, 1991
Ponente: PARAS, J.:

Nature of the Case: Petition for review on certiorari


Facts:
On August 15, 1983, private respondent Tan took from petitioner a property insurance policy to cover his
interest in the electrical supply store of his brother. Four days after the issuance of the policy, the building
was burned including the insured store. On August 20, 1983, Tan filed his claim for the loss with petitioner,
but on February 29, 1984, petitioner wrote Tan denying the latters claim. On April 3, 1984, Tan wrote
petitioner, seeking reconsideration of the denial of his claim. On September 30, 1985, Tans counsel wrote
the insurer inquiring about the status of his request for reconsideration and was informed in a letter on
October 3, 1984 that the denial of the claim remained unchanged. Tans counsel filed a case with the RTC
on November 20, 1985 but the petitioner filed a motion to dismiss on the alleged ground that the action
has prescribed. A motion for reconsideration was filed, but the same was denied by the Court of Appeals
in its resolution of August 22, 1989.
Issue:
1

Whether or not the filing of a motion for reconsideration interrupts the twelve (12) months
prescriptive period to contest the denial of the insurance claim.

When does the cause of action accrue?

Held:
1

The answer to the first issue is in the negative. There is the principle that insurance should be
liberally construed in favor of the insured, yet, contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the terms which the parties themselves have
used. If such terms are clear and unambiguous, they must be taken and understood in their plain,
ordinary and popular sense. The Court had definitely settled the rationale for the necessity of
bringing suits against the Insurer within one year from the rejection of the claim. The contention of
the respondents that the one-year prescriptive period does not start to run until the petition for
reconsideration had been resolved by the insurer, runs counter to the declared purpose for
requiting that an action or suit be filed in the Insurance Commission or in a court of competent
jurisdiction from the denial of the claim. Condition 27 of the Insurance Policy, which is the subject
of the conflicting contentions of the parties, reads:
27. Action or suit clause If a claim be made and rejected and an action or suit be not commenced
either in the Insurance Commission or in any court of competent jurisdiction within twelve (12)
months from receipt of notice of such rejection, or in case of arbitration taking place as provided
herein, within twelve (12) months after due notice of the award made by the arbitrator or
arbitrators or umpire, then the claim shall for all purposes be deemed to have been abandoned and
shall not thereafter be recoverable hereunder.
As the terms are very clear and free from any doubt or ambiguity whatsoever, it must be taken and
understood in its plain, ordinary and popular sense pursuant to the above-cited principle laid down
by this Court.

The right of the insured to the payment of his loss accrues from the happening of the loss.
However, the cause of action in an insurance contract does not accrue until the insured's claim is
finally rejected by the insurer. This is because before such final rejection there is no real necessity
for bringing suit.

Dispositive Portion:
PREMISES CONSIDERED, the questioned decision of the Court of Appeals is REVERSED and SET ASIDE, and
Civil Case No. 16817 filed with the Regional Trial Court is hereby DISMISSED.

Texon-55:American Home Assurance Co. v. Chua


G.R. No. 130421 June 28, 1999

Davide, Jr.: ponente


Nature of the case: petition for review
FACTS:
April 5, 1990: Antonio Chua renewed the fire insurance for its stock-in-trade of his business, Moonlight
Enterprises with American Home Assurance Company by issuing a check of P2,983.50 to its agent James
Uy who delivered the Renewal Certificate to him.
April 6, 1990: Moonlight Enterprises was completely razed by fire with an est. loss of P4,000,000 to
P5,000,000
April 10, 1990: An official receipt was issued and subsequently, a policy was issued covering March 25
1990 to March 25 1991
Antonio Chua filed an insurance claim with American Home and 4 other co-insurers (Pioneer Insurance and
Surety Corporation, Prudential Guarantee and Assurance, Inc. and Filipino Merchants Insurance Co)
American Home refused alleging the no premium was paid.
RTC: favored Antonio Chua for paying by way of check a day before the fire occurred
CA: Affirmed
ISSUE:
1. W/N there was a valid payment of premium considering that the check was cashed after the occurrence
of the fire since the renewal certificate issued containing the acknowledgement receipt
2. W/N Chua violated the policy by his submission of fraudulent documents and non-disclosure of the other
existing insurance contracts or other insurance clause"
HELD:petition is partly GRANTED modified by deleting the awards of P200,000 for loss of profit, P200,000
as moral damages and P100,000 as exemplary damages, and reducing the award of attorneys fees from
P50,000 to P10,000
1. YES.
Section 77 of the Insurance Code
An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril
insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued
by an insurance company is valid and binding unless and until the premium thereof has been paid, except
in the case of life or an industrial life policy whenever the grace period provision applies
Section 66 of the Insurance Code - not applicable since not termination but renewal
renewal certificate issued contained the acknowledgment that premium had been paid
Section 306 of the Insurance Code provides that any insurance company which delivers a policy or
contract of insurance to an insurance agent or insurance broker shall be deemed to have authorized such
agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of
insurance at the time of its issuance or delivery or which becomes due thereon
best evidence of such authority is the fact that petitioner accepted the check and issued the official receipt
for the payment. It is, as well, bound by its agents acknowledgment of receipt of payment
Section 78 of the Insurance Code
An acknowledgment in a policy or contract of insurance of the receipt of premium is conclusive evidence of
its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not
be binding until the premium is actually paid.
This Section establishes a legal fiction of payment and should be interpreted as an exception to Section 77
2. NO.
purpose for the other insurance clause is to prevent an increase in the moral hazard
failure to disclose was not intentional and fraudulent

Section 75
A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise the breach of
an immaterial provision does not avoid the policy.
American Home is estopped because its loss adjusters had previous knowledge of the co-insurers
The loss adjuster, being an employee of petitioner, is deemed a representative of the latter whose
awareness of the other insurance contracts binds petitioner
no legal and factual basis for the award of P200,000 for loss of profit
no such fraud or bad faith = no moral damages
grant of attorneys fees as part of damages is the exception rather than the rule
award attorneys fees where it deems just and equitable that it be so granted
reduced to P10,000.
WHEREFORE, the instant petition is partly GRANTED. The challenged decision of the Court of Appeals in
CA-G.R. No. 40751 is hereby MODIFIED by a) deleting the awards of P200,000 for loss of profit, P200,000 as
moral damages and P100,000 as exemplary damages, and b) reducing the award of attorneys fees from
P50,000 to P10,000.

BANADERA-57-UNION MANUFACTURING CO., INC. and the REPUBLIC BANK, plaintiffs, REPUBLIC
BANK, plaintiff-appellant, vs. PHILIPPINE GUARANTY CO., INC., defendant-appellee.
G.R. No. L-27932 October 30, 1972
FERNANDO, J

In a suit arising from a fire insurance policy, the insurer, Philippine Guaranty Co., Inc., defendant in the
lower court and now appellee, was able to avoid liability upon proof that there was a violation of a
warranty.
Facts:

U ni o n Ma n u f ac t ur i n g C o. , I n c. ob t ai n e d ce rt ai n l oa ns , ov e rd ra ft s an d ot h e r c re di t
accommodations from the Republic Bank for P415,000.00 with interest at 9% per annum
from said date and to secure the payment, Union Manufacturing executed a real and chattel
mortgages on certain properties.
As Union Ma nufac turing failed to secure insur ance coverage on the
m o r t g a g e d properties, Republic Bank procured from the Philippine Guaranty Co., Inc. an
insurance c o v e r a g e o n l o s s a g a i n s t fi r e f o r P 5 0 0 , 0 0 0 . 0 0 o v e r t h e
p r o p e r t i e s o f t h e U n i o n Manufacturing with the annotation that loss or damage, if any,
under is payable to Republic B a nk a s i t s i n te re st m a y a p pe ar , su b j e c t ho w e ve r t o t he
p ri n te d c on d i t i o n s of t h e Fi re Insurance Policy Form.
A fire occurred in the premises of the Union Manufacturing, Union Manufacturing filed its fire claim
with Philippine Guaranty but was denied on the following grounds: (a.)When Philippine Guaranty
issued Fire Insurance Policy No. 43170 ...in the sum of P500,000.00 to cover the properties of
the Union Manufacturing the same properties were already covered by Fire Policy of the
Sincere Insurance Company and by insurance policies of the Oceanic Insurance Agency and (b)
when Fire Insurance Policy No.43170 was already in full force and eff ect, Union
Manufacturing without the consent of Philippine Guaranty Co., Inc., obtained other insurance
policies totaling P305,000.00 over the same properties prior to the fire.

Issue:
Whether or not Republic Bank can recover its interest (as mortgagee) from the Fire Insurance Policy with
Philippine Guaranty.
Ruling:
NO, In as much as the Union Manufacturing has violated the condition of the policy to the effect that it did
not reveal the existence of other insurance policies over the same properties, as r e q u i r e d b y t h e
w a r r a n t y a p p e a r i n g o n t h e f a c e o f t h e p o l i c y a n d t h a t s a i d U n i o n Manufacturing Co.,
Inc. represented that there were no other insurance policies at the time of the issuance of said defendant's
policy, and it appearing furthermore that while the policy of the defendant was in full force and effect the
Union Manufacturing Co., Inc. secured other fire insurance policies without the written consent of the
defendant endorsed on the policy, the conclusion is inevitable that
both the Republic Bank and Union Manufacturing Co., Inc. cannot recover from the same policy of the
defendant because the same is null and void.
WHEREFORE, the decision of the lower court of March 31, 1967 is affirmed. No costs.

BANADERA-57-PIONEER INSURANCE AND SURETY CORPORATION, petitioner-appellant, vs. OLIVA


YAP, represented by her attorney-in-fact, CHUA SOON POON respondent-appellee.
G.R. No. L-36232 December 19, 1974
FERNANDEZ, J
This is an appeal by certiorari from the decision of the Court of Appeals dated December 16, 1972, in CAG.R. No. 36669-R, affirming the judgment of the Court of First Instance of Manila (Branch VI) in Civil Case
No. 54508.
Facts:

Respondent Yap took out Fire Insurance Policy No. 4216 from petitioner Pioneer Insurance & Surety
Corporation with a face value of P25,000.00 covering her stocks, office furniture, fixtures and
fittings of every kind and descriptionAt the time of the insurance on April 19, 1962 of Policy No.
4219 in favor of respondent Yap, an insurance policy for P20,000.00 issued by the Great American
Insurance Company covering the same properties was noted on said policy as co-insurance.

Respondent Oliva Yap took out another fire insurance policy for P20,000.00 covering the same
properties, this time from the Federal Insurance Company, Inc., which new policy was, however,
procured without notice to and the written consent of petitioner Pioneer Insurance & Surety
Corporation and, therefore, was not noted as a co-insurance in Policy No. 4219.

A fire broke out in the building housing respondent Yap's above-mentioned store, and the said store
was burned. Respondent Yap filed an insurance claim, but the same was denied.Oliva Yap filed with
the Court of First Instance of Manila the present complaint.The trial court decided for plaintiff Oliva
Yap; and its judgment was affirmed in full by the Court of Appeals.

Issue:
Whether or not petitioner should be absolved from liability on Fire Insurance Policy No. 4219 on account of
any violation by respondent Yap of the co-insurance clause?
Ruling:
Yes, There was a violation by respondent Oliva Yap of the co-insurance clause contained in Policy No. 4219
that resulted in the avoidance of petitioner's liability. The insured has no right to complain, for he assents
to comply with all the stipulation on his side, in order to entitle himself to the benefit of the contract,
which, upon reason or principle, he has no right to ask the court to dispense with the performance of his
own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulation
would not have been entered into.
WHEREFORE, the appealed judgment of the Court of Appeals is reversed and set aside, and the petitioner
absolved from all liability under the policy. Costs against private respondent.

TAN-59: REPUBLIC BANK vs. PHIL. GUARANTY CO., INC.,


47 SCRA 271 (G.R. No. L-27932) October 30, 1972
FERNANDO, J.:p
FACTS:

On January 12, 1962, the Union Manufacturing Co., Inc. obtained certain loans from the Republic
Bank in the total sum of 415,000.00 and to secure the payment thereof, UMC executed real and
chattel mortgage on certain properties.
The Republic Bank procured from the defendant Philippine Guaranty Co., Inc. an insurance coverage
on loss against fire for 500,000.00 over the properties of the UMC.
On September 6, 1964, a fire occurred in the premises of UMC and on October 6, 1964, UMC filed its
fire claim with the PGC Inc., which was denied by said defendant in its letter dated November 26,
1964 on the following ground: Policy Condition No. 3 and/or the Other Insurance Clause of the
policy was violated because you did not give notice to us of the other insurance which you had
taken from New India for 80,000.00. Sincere Insurance for 25,000.00 and Manila Insurance for
200,000.00 with the result that these insurances, of which we became aware of only after the fire,
were not endorsed on our policy.

ISSUE:

WON Republic Bank can recover from Phil Guaranty Co Inc.?

HELD:

The SC hold that in the absolute absence of such notice when it is one of the conditions specified in
the fire insurance policy, the policy is null and void. If the insured has violated or failed to perform
the conditions of the contract, and such a violation or want of performance has not been waived by
the insurer, then the insured cannot recover. Contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the terms which the parties themselves have
used. If such terms are clear and unambiguous they must be taken and understood in their plain,
ordinary and popular sense. The annotation then, must be deemed to be a warranty that the
property was not insured by any other policy. Violation thereof entitles the insurer to rescind. The
materiality of non-disclosure of other insurance policies is not open to doubt. The insurance
contract may be rather onerous, but that in itself does not justify the abrogation of its express
terms, terms which the insured accepted or adhered to and which is the law between the
contracting parties.

DISPOSITIVE PORTION:

WHEREFORE, the decision of the lower court of March 31, 1967 is affirmed. No costs.

TAN-60: ORIENTAL ASSURANCE CORPORATION, vs. COURT OF APPEALS AND PANAMA SAW MILL
CO., INC.
200 SCRA 459 (G.R. No. 94052) August 9, 1991
MELENCIO-HERRERA, J:p
NATURE OF THE CASE:
An action to recover on a marine insurance policy, issued by petitioner in favor of private respondent,
arising from the loss of a shipment of apitong logs from Palawan to Manila.
FACTS:

Panama bought, in Palawan, 1,208 pieces of apitong logs and insured it against loss for P1-M with
Oriental Assurance.

On 28 January 1986, during the voyage, rough seas and strong winds caused damage to Barge
TPAC-1000 resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon.

Panama demanded payment for the loss but Oriental Assurance refused on the ground that its
contracted liability was for "TOTAL LOSS ONLY." making Panama file a Complaint for Damages
against Ever Insurance Agency (allegedly, also liable), Benito Sy Lee Yong and Oriental Assurance,
before the RTC-Kalookan.

ISSUE:

WON Oriental Assurance is liable?

HELD:

No. The SC held that the terms of the contract constitute the measure of the insurers liability and
compliance therewith is a condition precedent to the insured's right to recovery from the insurer.
That whether a contract is entire or severable is a question of intention to be determined by the
language employed by the parties. The policy in question shows that the subject matter insured
was the entire shipment of 2,000 cubic meters of apitong logs. The fact that the logs were loaded
on two different barges did not make the contract several and divisible as to the items insured. The
logs on the two barges were not separately valued or separately insured. Only one premium was
paid for the entire shipment, making for only one cause or consideration. The insurance contract
must, therefore, be considered indivisible.
The law provides that a constructive total loss, is one which gives to a person insured by a
contract of marine insurance a right to abandon thing insured, or any particular portion thereof
separately valued by the policy, or otherwise separately insured, and recover for a total loss
thereof, when the cause of the loss is a peril injured against: (a) If more than three-fourths thereof
in value is actually lost, or would have to be expended to recover it from the peril; (b) If it is injured
to such an extent as to reduce its value more than three-fourths.

DISPOSITIVE PORTION

WHEREFORE, the judgment under review is hereby SET ASIDE and petitioner, Oriental Assurance
Corporation, is hereby ABSOLVED from liability under its marine insurance policy No. OAC-M-86/002.
No costs.

Maleniza-69: PHILIPPINE PRYCE ASSURANCE CORPORATION, petitioner, vs. THE COURT OF


APPEALS, (Fourteenth Division) and GEGROCO, INC., respondents.
G.R. No. 107062 February 21, 1994
NOCON, J.:
Petition for Review of the Decision of Court of Appeals
Facts:
Petitioner Philippine Pryce Assurance Corporation was the butt of the complaint for collection of sum of
money, filed on May 13, 1988 by respondent, Gegroco, Inc. before the Makati Regional Trial Court, Branch
138. The complaint alleged that petitioner issued two surety bonds (No. 0029, dated July 24, 1987 and No.
0037, dated October 7, 1987) in behalf of its principal Sagum General Merchandise for FIVE HUNDRED
THOUSAND (P500,000.00) PESOS and ONE MILLION (1,000,000.00) PESOS, respectively. In its Answer,
dated July 29, 1988, but filed only on August 4, 1988, petitioner admitted having executed the said bonds,
but denied liability because allegedly 1) the checks which were to pay for the premiums bounced and were
dishonored hence there is no contract to speak of between petitioner and its supposed principal; and 2)
that the bonds were merely to guarantee payment of its principal's obligation, thus, excussion is necessary.
After the issues had been joined, the case was set for pre-trial conference on September 29, 1988. The
petitioner received its notice on September 9, 1988, while the notice addressed to its counsel was returned
to the trial court with the notation "Return to Sender, Unclaimed." On the scheduled date for pre-trial
conference, only the counsel for petitioner appeared while both the representative of respondent and its
counsel were present. The counsel for petitioner manifested that he was unable to contract the VicePresident for operations of petitioner, although his client intended to file a third party complaint against its
principal. On the scheduled conference in October, rescheduled in December and rescheduled conference
on February 1, 1989, the petitioner and its counsel did not appear. The Regional Trial Court rendered a
decision against the Philippine Pryce Assurance Corporation. On an appeal, the Court of Appeals affirmed
the decision of the RTC, and declared that it would be useless and a waste of time to remand the case for
further proceedings as defendant-appellant has no meritorious defense.
Issue:
Does the Court of Appeals erred in ruling that it would be useless and a waste of time to remand the case
for further proceedings as defendant-appellant has no meritorious defense?
Held:
No, the Supreme Court agrees with the Court of Appeals that that it would be useless and a waste of time
to remand the case for further proceedings as defendant-appellant has no meritorious defense. Relying on
Section 1, Rule 20 of the Rules of court, petitioner argues that since the last pleading, which was supposed
to be the third-party defendant's answer has not been filed; the case is not yet ripe for pre-trial. This
argument must fail on three points. First, the trial court asserted, and we agree, that no answer to the third
party complaint is forthcoming as petitioner never initiated the service of summons on the third party

defendant. The court also observed that all copies of notices and orders issued by the court for petitioner's
counsel were returned with the notation "Return to Sender, Unclaimed." Yet when he chose to, he would
appear in court despite supposed lack of notice. And the court of Appeals properly considered the thirdparty complaint as a mere scrap of paper due to petitioner's failure to pay the requisite docket fees.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dismissing the petition before
them and affirming the decision of the trial court and its order denying petitioner's Motion for
Reconsideration are hereby AFFIRMED. The present petition is DISMISSED for lack of merit.
SO ORDERED.
Maleniza

70: DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and the
ESTATE OF THE LATE JUAN B. DANS, represented by CANDIDA G. DANS, and the DBP
MORTGAGE REDEMPTION INSURANCE POOL, respondents.
G.R. No. L-109937 March 21, 1994
QUIASON, J.:
Petition for review on certiorari
Facts:
In May 1987, Juan B. Dans, together with his wife Candida, his son and daughter-in-law, applied for a loan
of P500,000.00 with the Development Bank of the Philippines. As the principal mortgagor, Dans, then 76
years of age, was advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage
Redemption Insurance Pool (DBP MRI Pool). Dans accomplished and submitted the "MRI Application for
Insurance" and the "Health Statement for DBP MRI Pool. On September 3, 1987, Dans died of cardiac
arrest. The DBP, upon notice, relayed this information to the DBP MRI Pool. On September 23, 1987, the
DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit
of 60 years at the time of application. On DBP apprised Candida Dans of the disapproval of her late
husband's MRI application. The DBP offered to refund the premium of P1,476.00 which the deceased had
paid, but Candida Dans refused to accept the same, demanding payment of the face value of the MRI or an
amount equivalent to the loan. She, likewise, refused to accept an ex gratia settlement of P30,000.00,
which the DBP later offered. Respondent Estate, through Candida Dans as administratrix, filed a complaint
with the Regional Trial Court, against DBP and the insurance pool for "Collection of Sum of Money with
Damages." Respondent Estate alleged that Dans became insured by the DBP MRI Pool when DBP, with full
knowledge of Dans' age at the time of application, required him to apply for MRI, and later collected the
insurance premium thereon. Respondent Estate therefore prayed: (1) that the sum of P139,500.00, which
it paid under protest for the loan, be reimbursed; (2) that the mortgage debt of the deceased be declared
fully paid; and (3) that damages be awarded. At the pre-trial, DBP and the DBP MRI Pool admitted all the
documents and exhibits submitted by respondent Estate. As a result of these admissions, the trial court
narrowed down the issues and, without opposition from the parties, found the case ripe for summary
judgment. Consequently, the trial court ordered the parties to submit their respective position papers and
documentary evidence, which may serve as basis for the judgment. On March 10, 1990, the trial court
rendered a decision in favor of respondent Estate and against DBP. The DBP MRI Pool, however, was
absolved from liability, after the trial court found no privity of contract between it and the deceased. The
trial court declared DBP in estoppel for having led Dans into applying for MRI and actually collecting the
premium and the service fee, despite knowledge of his age ineligibility. The DBP appealed to the Court of
Appeals. In a decision dated September 7, 1992, the appellate court affirmed in toto the decision of the
trial court. The DBP's motion for reconsideration was denied in a resolution dated April 20, 1993.
Issue:
Does the DBP exceeds its authority as an agent of the DBP MRI pool in advising and accepting the
application and premium payment of Juan Dans eventhough it is aware of the advance age of Juan Dans?
Held:

Yes, DBP exceeds its authority as an agent of the DBP MRI pool in advising and accepting the application
and premium payment of Juan Dans eventhough it is aware of the advance age of Juan Dans. As an
insurance agent, DBP made Dans go through the motion of applying for said insurance, thereby leading
him and his family to believe that they had already fulfilled all the requirements for the MRI and that the
issuance of their policy was forthcoming. Apparently, DBP had full knowledge that Dan's application was
never going to be approved. The maximum age for MRI acceptance is 60 years as clearly and specifically
provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the
insurance companies concerned.
WHEREFORE, the decision of the Court of Appeals in CA G.R.-CV No. 26434 is MODIFIED and petitioner DBP
is ORDERED: (1) to REIMBURSE respondent Estate of Juan B. Dans the amount of P1,476.00 with legal
interest from the date of the filing of the complaint until fully paid; and (2) to PAY said Estate the amount of
Fifty Thousand Pesos (P50,000.00) as moral damages and the amount of Ten Thousand Pesos (P10,000.00)
as attorney's fees. With costs against petitioner. SO ORDERED.

RIMA-Case No. 71
Case Title: Tio Khe Chio, petitioner, vs. The Honorable Court of Appeals and Eastern Assurance and
Surety Corporation, respondents
Docket Number and Date: G.R. No. 76101-02 September 30, 1991
Ponente: Chief Justice Fernan
Nature of the Case: Petition for Certiorari and Prohibition
Facts:
Petitioner Tio Khe Chio imported a bags of fishmeal valued at $36,000.30 from Agro Implex, Dallas,
Texas, U.S.A. The goods were insured with respondent Eastern Assurance and Surety Corporation and
shipped on board the M/V Peskov, owned by Far Eastern Shipping Company. However, when the said goods
reached Manila as its port of destination, they have found that the said goods were damaged which
rendered the said goods useless. Petitioner sued both the insurer (EASCO) for its refusal to indemnify the
insured petitioner and the shipping company (FESC) for its refusal to pay the petitioner of the goods. The
trial court ordered both the shipping company and the insurer to pay the petitioner solidarily. On appeal,
the shipping company was absolved from the liability. Upon motion, the trial court issued a writ of
execution with a 12% legal interest.
Issue:

Whether sections 243 and 244 of the Insurance Code which imposes 12% interest should be
applied?
Ruling:

No, sections 243 and 244 of the Insurance Code are not applicable in the present case since there
was an unjustified refusal or withholding of payment on petitioners claim. Further, refusal of the EASCO to
settle the claim to herein petitioner was based on some grounds which, while not sufficient to free it from
liability under its policy, nevertheless is sufficient to negate any assertion that in refusing to pay, it acted
unjustifiably. Hence, the abovementioned sections of the insurance code are not the pertinent to the
instant case.
Instead, the Supreme Court affirmed the decision of the Court of Appeals that imposes a 6%
interest citing Art. 2209 of the civil code since the judgment award was based on an action for damages for
personal injury and not use or forbearance of money, goods or credit.
Dispositive Portion: WHEREFORE, in view of the foregoing, the petition is DENIED for lack of merit.

RIMA-Case No. 72
Case Title: Finman General Assurance Corporation, petitioner, vs. Court of Appeals and USIPHIL
Incorporated, respondents
Docket Number and Date: G.R. No. 138737. July 12, 2001
Ponente: Justice Kapunan
Nature of the Case: Petition for Review on Certiorari
Facts:

The private respondent USIPHIL Incorporated obtained a fire insurance policy from Finman General
Assurance Corporation covering certain properties wherein under the said policy, Finman will undertook to
indemnify the private respondent for any damage to or loss of said properties arising from fire. Because of
the fire that took the properties of private respondent, the herein private respondent filed with Finman an
insurance claim instead they are required to file a formal claim and submit the proof of loss. The private
respondent filed those requirements with the petitioner in compliance with their request. During their
meeting, the President of the Finman instructed its finance manager to reconcile the records. As a result,
finance manager and the representative of the Usiphil signed an agreement but despite of the repeated
demands, Finman refused to pay the insurance claim.
Issue:
1 Did the Usiphil comply with the Policy Condition No. 13 in notifying Finman of the loss?
2 Whether the payment of 24% per annum is authorized by sections 243 and 244 of the insurance
code?
Ruling:
1 Yes, Usiphil had substantially complied with Policy Condition 13 which reads "The insured shall give
immediate written notice to the Company of any loss, protect the property from further damage,
forthwith separate the damaged and undamaged personal property, put it in the best possible
order, furnish a complete inventory of the destroyed, damaged, and undamaged property, showing
in detail quantities, costs, actual cash value and the amount of loss claimed; AND WITHIN SIXTY
DAYS AFTER THE LOSS, UNLESS SUCH TIME IS EXTENDED IN WRITING BY THE COMPANY, THE
INSURED SHALL RENDER TO THE COMPANY A PROOF OF LOSS, signed and sworn to by the insured,
stating the knowledge and belief of the insured as to the following: the time and origin of the loss,
the interest of the insured and of all others in the property, the actual cash value of each item
thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance,
whether valid or not, covering any of said property, any changes in the title, use, occupation,
location, possession or exposures of said property since the issuing of this policy by whom and for

what purpose any buildings herein described and the several parts thereof were occupied at the
time of loss and whether or not it then stood on leased ground, and shall furnish a copy of all the
descriptions and schedules in all policies, and if required verified plans and specifications of any
building, fixtures, or machinery destroyed or damaged. The insured, as often as may be reasonably
required, shall exhibit to any person designated by the company all that remains of any property
herein described, and submit to examination under oath by any person named by the Company,
and subscribe the same; and, as often as may be reasonably required, shall produce for
examination all books of account, bills, invoices, and other vouchers or certified copies thereof if
originals be lost, at such reasonable time and place as may be designated by the Company or its
representative and shall permit extracts and copies thereof to be made. No claim under this policy
shall be payable unless the terms of this condition have been complied with." A perusal of the
records shows that Usiphil, after the occurrence of the fire, immediately notified Finman thereof.
Thereafter, Usiphil submitted the following documents: (1) Sworn Statement of Loss and Formal
Claim and; (2) Proof of Loss. The submission of these documents constitutes substantial compliance
with the above provision. Indeed, as regards the submission of documents to prove loss,
substantial, not strict as urged by Finman, compliance with the requirements will always be deemed
sufficient. In any case, Finman itself acknowledged its liability when through its Finance Manager,
Rosauro Maghirang, it signed the document indicating that the amount due Usiphil is P842,683.40.
Yes, the payment of 24% interest per annum computed from 3 May 1985 until fully paid, the same
is authorized by Sections 243 and 244 of the Insurance Code. Notably, under Section 244, a prima
facie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer
to pay the claim within the time fixed in both Sections 243 and 244. Further, Section 29 of the
policy itself provides for the payment of such interest: "Settlement of claim clause. The amount of
any .loss or damage for which the company may be liable, under this policy shall be paid within
thirty days after proof of loss is received by the company and ascertainment of the loss or damage
is made either in an agreement between the insured and the company or by arbitration; but if such
ascertainment is not had or made within sixty days after such receipt by the company of the proof
of loss, then the loss or damage shall be paid within ninety days after such receipt. Refusal or
failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect
interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling
prescribed by the Monetary Board, unless such failure or refusal to pay is based on the grounds (sic)
that the claim is fraudulent." The policy itself obliges Finman to pay the insurance claim within 30
days after proof of loss and ascertainment of the loss made in an agreement between Usiphil and
Finman. Finman and Usiphil signed the agreement indicating that the amount due Usiphil was
P842,683.40 on 2 April 1985. Finman thus had until 2 May 1985 to pay Usiphil's insurance. For its
failure to do so, the Court of Appeals and the trial court rightfully directed Finman to pay, inter alia,
24% interest per annum in accordance with the above quoted provisions.

Dispositive Portion: Wherefore, the instant petition is hereby DENIED for lack of merit. The Decision,
dated January 14, 1999, of the Court of Appeals in CA-G.R. CV No. 46721 and its Resolution, dated May 13,
1999, are AFFIRMED IN TOTO.

TATEL-73: COUNTRY BANKERS INSURANCE CORPORATION, petitioner, vs. LIANGA BAY AND
COMMUNITY MULTI-PURPOSE COOPERATIVE, INC., respondent.
G.R. No. 136914. January 25, 2002
DE LEON, JR., J.
Nature of the case: Petition for review on certiorari
Facts:
Petitioner COUNTRY BANKERS INSURANCE CORPORATION is a domestic corporation principally engaged in
the insurance business while respondent LIANGA BAY AND COMMUNITY MULTI-PURPOSE COOPERATIVE,
INC. is a duly registered cooperative judicially declared insolvent and represented by the elected assignee,
Cornelio Jamero. Sometime in 1989, the petitioner and the respondent entered into a contract of fire
insurance. Under Fire Insurance Policy No. F-1397, the petitioner insured the respondents stocks-in-trade
against fire loss, damage or liability during the period starting from June 20, 1989 at 4:00 p.m. to June 20,
1990 at 4:00 p.m., for the sum of Two Hundred Thousand Pesos (P200,000.00).
On July 1, 1989, at or about 12:40 a.m., the respondents building located at Barangay Diatagon, Lianga,
Surigao del Sur was gutted by fire and reduced to ashes, resulting in the total loss of the respondents
stocks-in-trade, pieces of furnitures and fixtures, equipments and records.
Due to the loss, the respondent filed an insurance claim with the petitioner under its Fire Insurance Policy
No. F-1397Tp, however, the petitioner denied the insurance claim on the ground that, based on the
submitted documents, the building was set on fire by two (2) NPA rebels who wanted to obtain canned
goods, rice and medicines as provisions for their comrades in the forest, and that such loss was an

excepted risk under paragraph No. 6 of the policy conditions of Fire Insurance Policy No. F-1397. The trial
court as well as the court of appeals ruled in favor of the respondent.
Issue:
WHETHER OR NOT THE PETITIONER IS LIABLE FOR ACTUAL AND EXEMPLARY DAMAGES, LITIGATION
EXPENSES, ATTORNEYS FEES AND COST OF SUIT.
Held:
No. There is no justification for the award of actual damages of Fifty Thousand Pesos (P50,000.00). Wellentrenched is the doctrine that actual, compensatory and consequential damages must be proved, and
cannot be presumed. Concerning the award of exemplary damages for Fifty Thousand Pesos (P50,000.00),
we likewise find no legal and valid basis for granting the same. Article 2229 of the New Civil Code provides
that exemplary damages may be imposed by way of example or correction for the public good. Exemplary
damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or
as a negative incentive to curb socially deleterious actions. They are designed to permit the courts to
mould behavior that has socially deleterious consequences, and its imposition is required by public policy
to suppress the wanton acts of an offender. However, it cannot be recovered as a matter of right. It is
based entirely on the discretion of the court. We find no cogent and valid reason to award the same in the
case at bar. With respect to the award of litigation expenses and attorneys fees, Article 2208 of the New
Civil Code enumerates the instances where such may be awarded and, in all cases, it must be reasonable,
just and equitable if the same were to be granted. Attorneys fees as part of damages are not meant to
enrich the winning party at the expense of the losing litigant. They are not awarded every time a party
prevails in a suit because of the policy that no premium should be placed on the right to litigate. The award
of attorneys fees is the exception rather than the general rule. As such, it is necessary for the court to
make findings of facts and law that would bring the case within the exception and justify the grant of such
award. We find none in this case to warrant the award by the trial court of litigation expenses and
attorneys fees in the amounts of Five Thousand Pesos (P5,000.00) and Ten Thousand Pesos (P10,000.00),
respectively, and therefore, the same must also be deleted.

Dispositive portion:
WHEREFORE, the appealed Decision is MODIFIED. The rate of interest on the adjudged principal amount of
Two Hundred Thousand Pesos (P200,000.00) shall be six percent (6%) per annum computed from the date
of filing of the Complaint in the trial court. The awards in the amounts of Fifty Thousand Pesos (P50,000.00)
as actual damages, Fifty Thousand Pesos (P50,000.00) as exemplary damages, Five Thousand Pesos
(P5,000.00) as litigation expenses, and Ten Thousand Pesos (P10,000.00) as attorneys fees are hereby
DELETED. Costs against the petitioner.

TATEL-74: PERLA COMPANIA de SEGUROS, INC., petitioner, vs. HON. CONSTANTE A. ANCHETA,
et al., respondents
G.R. No. L-49699

August 8, 1988

CORTES, J.

Nature of the case: Petition for certiorari and prohibition with preliminary injunction

Facts:

On December 27, 1977, in a collision between the IH Scout in which private respondents were riding and a
Superlines bus along the national highway in Sta. Elena, Camarines Norte, private respondents sustained
physics injuries in varying degrees of gravity. Thus, they filed with the Court of First Instance of Camarines
Norte on February 23,1978 a complaint for damages against Superlines, the bus driver and petitioner, the
insurer of the bus. The bus was insured with petitioner for the amount of P50,000.00 as and for passenger
liability and P50,000.00 as and for third party liability. The vehicle in which private respondents were riding

was insured with Malayan Insurance Co. Even before summons could be served, respondent judge Ancheta
issued an order directing the Insurance Company, Perla Compania de Seguros, Inc., to pay immediately the
P5,000.00 under the "no fault clause" as provided for under Section 378 of the Insurance Code.
Petitioner denied in its Answer its alleged liability under the "no fault indemnity" provision and likewise
moved for the reconsideration of the order. Respondent judge, however, denied reconsideration. A second
motion for reconsideration was filed by petitioner. However, in an order dated January 3, 1979, respondent
judge denied the second motion for reconsideration and ordered the issuance of a writ of execution.
Hence, the instant petition praying principally for the annulment and setting aside of respondent judge's
orders dated March 1, 1978 and January 3, 1979.

Issue:
Whether or not petitioner is the insurer liable to indemnify private respondents under Sec. 378 of the
Insurance Code.

Held:
No. The law is very clear the claim shall lie against the insurer of the vehicle in which the "occupant" ** is
riding, and no other. The claimant is not free to choose from which insurer he will claim the "no fault
indemnity," as the law, by using the word "shall, makes it mandatory that the claim be made against the
insurer of the vehicle in which the occupant is riding, mounting or dismounting from.

Dispositive portion:
WHEREFORE, the petition is GRANTED and respondent judge's order dated March 1, 1978, requiring
petitioner to pay private respondents the amount of P5,000.00 as "no fault indemnity' under Sec. 378 of
the Insurance Code, and that of January 3, 1979, denying the second motion for reconsideration and
issuing a writ of execution, are ANNULLED and SET ASIDE. The temporary restraining order issued by the
Court on January 24, 1979 is made permanent.

TUY-75: FIRST QUEZON CITY INSURANCE COMPANY, INC. vs. THE HON. COURT OF APPEALS and
DE DIOS MARIKINA TRANSPORTATION CO.
G.R. No. 98414 February 8, 1993
GRIO-AQUINO, J.
COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
Facts:
Jose del Rosario was injured while boarding a bus owned by DMTC in the Manila International Airport and
was hospitalized for forty days. He filed suit against the bus company and the court granted him of over
100,000 pesos in damages. First Quezon City, the insurer of DTMC, filed a motion for reconsideration to
limit the damages back to 12,000 pesos, the amount stipulated in the contract.

Issue:
Can the amount of the insurance companys liability be limited to Php 12,000?

Held:
Yes. The contract stipulated liability at Php 12,000 per passenger and at Php 50,000 as the maximum
liability per accident. This means that the insurers liability for a single accident will not exceed 50,000
pesos. The court gave the example of 10 persons injured leaving a total of Php 120,000 in insurance
liability payments. But with the Php 50,000 limit, only such value was to be paid by the company to the
insured.
WHEREFORE, the petition for review is GRANTED. The decision promulgated on February 11, 1991 by the
Court of Appeals in CA-G.R.
No. 24938, ordering the third-party defendant, First Quezon City Insurance Co., to indemnify the private
respondent, De Dios Marikina Transportation Co. Inc. (DMTC), the sum of P50,000.00 for the damages of
the passenger Jose V. Del Rosario, is hereby modified by reducing the award to P12,000.00 only. Costs
against the private respondent, De Dios Marikina Transportation Co., Inc.
SO ORDERED.

TUY-76-PERLA COMPANIA DE SEGUROS, INC. vs. HON. JOSE R. RAMOLETE et al


G.R. No. L-60887 November 13, 1991
FELICIANO, J.
COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
Facts:
The present Petition for Certiorari seeks to annul: (a) the Order dated 6 August 1979 which ordered the
Provincial Sheriff to garnish the third-party liability insurance policy issued by petitioner Perla Compania de
Seguros, Inc. in favor of Nelia Enriquez, judgment debtor in Civil Case No. R-15391; (b) the Order dated 24
October 1979 which denied the motion for reconsideration of the 6 August 1979 Order; and (c) the Order
dated 8 April 1980 which ordered the issuance of an alias writ of garnishment against petitioner.
Issue:
1. W/N there is GADALEJ on the part of the respondent judge

2. W/N there insurance policy may be subject to garnishment


Held:
1. No. The SC found no grave abuse of discretion or act in excess of or without jurisdiction on the part of
respondent Judge Ramolete in ordering the garnishment of the judgment debtors third-party liability
insurance.
2. Yes. Garnishment has been defined as a species of attachment for reaching any property or credits
pertaining or payable to a judgment debtor. In legal contemplation, it is a forced novation by the
substitution of creditors: the judgment debtor, who is the original creditor of the garnishee is, through
service of the writ of garnishment, substituted by the judgment creditor who thereby becomes creditor of
the garnishee. Garnishment has also been described as a warning to a person having in his possession
property or credits of the judgment debtor, not to pay the money or deliver the property to the latter, but
rather to appear and answer the plaintiffs suit.
WHEREFORE, the Petition for Certiorari and Prohibition is hereby DISMISSED for having been filed out of
time and for lack of merit. The assailed Orders of the trial court are hereby AFFIRMED. Costs against
petitioner. This Decision is immediately executory.
SO ORDERED.

Neil Ryan Villareal


Insurance Case Digest # 77
Case Title: Government Service Insurance System VS Court of Appeals
Docket No. and Date: Gr 101439, June 21, 1999
Ponente: Quisumbing, J.
Nature of the Case: Petition for Review on Certiorari
Facts:

National Food Authority, owner of the Chevrolet truck driven by Guillermo Corbeta which was insured with
the GSIS collided with a public utility vehicle, a Toyota Tamaraw, owned and operated by Victor Uy.
All the victims were passengers of the Toyota Tamaraw. Five (5) passengers died while ten (10) others
sustained bodily injuries. Among those injured were private respondents, Victoria Jaime Vda. de Kho and
Gloria Kho Vda. de Calabia. Among the dead were Maxima Ugmad Vda. de Kho, Roland Kho and Willie
Calabia, Sr.
Three (3) cases were filed with the Court of First Instance of Agusan del Norte and Butuan City. The first,
filed by Uy, against NFA and Corbeta, the second, was filed by an injured passenger, Librado Taer, against
Uy, and insurer, Mabuhay Insurance and Guaranty Co. (MIGC). In turn, Uy filed a cross-claim against MIGC
and a third-party complaint against Corbeta and NFA. The third, against the following: NFA and Corbeta;
GSIS as insurer of the truck; Uy for breach of contract of carriage; and MIGC as insurer of the Toyota
Tamaraw.
In the first case, the trial court awarded Uy the total amount of one hundred nine thousand one hundred
(P109,100.00) pesos for damages. In the second case, said court dismissed the case against Uy and
ordered MIGC, Corbeta and NFA to pay plaintiff Taer, jointly and severally, plus damages.
Corbeta and NFA appealed the decision of the trial court to the Court of Appeals. GSIS also elevated the
decision in the third case to the same appellate court.
The Court of Appeals agreed with the conclusions of the trial court.
On February 5 and 6, 1991, GSIS and NFA filed their motions for reconsideration respectively, which were
denied by the respondent court.
On October 4, 1991, only GSIS filed this petition for review on certiorari.
Issue:

1) Whether the respondent court erred in holding GSIS solidarily liable with the negligent insured/owneroperator of the Chevrolet truck for damages awarded to private respondents which are beyond the
limitations of the insurance policy and the Insurance Memorandum Circular No. 5-78.
Held:
No, it is now established that the injured or the heirs of a deceased victim of a vehicular accident may sue
directly the insurer of the vehicle. Note that common carriers are required to secure Compulsory Motor
Vehicle Liability Insurance [CMVLI] coverage as provided under Sec. 374 of the Insurance Code, precisely
for the benefit of victims of vehicular accidents and to extend them immediate relief.
However, although the victim may proceed directly against the insurer for indemnity, the third party
liability is only up to the extent of the insurance policy and those required by law. While it is true that
where the insurance contract provides for indemnity against liability to third persons, and such third
persons can directly sue the insurer, the direct liability of the insurer under indemnity contracts against
third party liability does not mean that the insurer can be held liable in solidum with the insured and/or the
other parties found at fault. For the liability of the insurer is based on contract; that of the insured carrier
or vehicle owner is based on tort. The liability of GSIS based on the insurance contract is direct, but not
solidary with that of the NFA. The latter's liability is based separately on Article 2180 of the Civil Code.
Obviously, the insurer could be held liable only up to the extent of what was provided for by the contract of
insurance, in accordance with CMVLI law. At the time of the incident, the schedule of indemnities for death
and/or bodily injuries, professional fees, hospital and other charges payable under a CMVLI coverage was
provided under the Insurance Memorandum Circular (IMC) No. 5-78 which was approved on November 10,
1978. As therein provided, the maximum indemnity for death was twelve thousand (P12,000.00) pesos per
victim. The schedules for medical expenses were also provided by said IMC, specifically in paragraphs (C)
to (G).
Dispositive Portion:
WHEREFORE, the instant petition is hereby GRANTED, but the decision of the trial court as affirmed by the
Court of Appeals is hereby, MODIFIED.

Neil Ryan Villareal


Insurance Case Digest # 78
Case Title: Philippine American Life Insurance Co. vs. Ansaldo
Docket No. and Date: Gr. 76452, July 26, 1994

Ponente: Quiason, J.
Nature of the Case: Petition for Certiorari and Prohibition with Preliminary Injunction
Facts:
The instant case arose from a letter-complaint of private respondent Ramon M. Paterno, Jr. dated April 17,
1986, to respondent Commissioner, alleging certain problems encountered by agents, supervisors,
managers and public consumers of the Philippine American Life Insurance Company (Philamlife) as a result
of certain practices by said company.
In a letter dated April 23, 1986, respondent Commissioner requested petitioner Rodrigo de los Reyes, in his
capacity as Philamlife's president, to comment on respondent Paterno's letter.
In a letter dated April 29, 1986 to respondent Commissioner, petitioner De los Reyes suggested that
private respondent "submit some sort of a 'bill of particulars' listing and citing actual cases, facts, dates,
figures, provisions of law, rules and regulations, and all other pertinent data which are necessary to enable
him to prepare an intelligent reply". A copy of this letter was sent by the Insurance Commissioner to
private respondent for his comments thereon.
On May 16, 1986, respondent Commissioner received a letter from private respondent maintaining that his
letter-complaint of April 17, 1986 was sufficient in form and substance, and requested that a hearing
thereon be conducted.
Petitioner De los Reyes, in his letter to respondent Commissioner dated June 6, 1986, reiterated his claim
that private respondent's letter of May 16, 1986 did not supply the information he needed to enable him to
answer the letter-complaint.
On July 14, a hearing on the letter-complaint was held by respondent Commissioner on the validity of the
Contract of Agency complained of by private respondent.
In said hearing, private respondent was required by respondent Commissioner to specify the provisions of
the agency contract which he claimed to be illegal.
On August 4, private respondent submitted a letter of specification to respondent Commissioner dated July
31, 1986, reiterating his letter of April 17, 1986 and praying that the provisions on charges and fees stated
in the Contract of Agency executed between Philamlife and its agents, as well as the implementing
provisions as published in the agents' handbook, agency bulletins and circulars, be declared as null and
void. He also asked that the amounts of such charges and fees already deducted and collected by
Philamlife in connection therewith be reimbursed to the agents, with interest at the prevailing rate
reckoned from the date when they were deducted.
Respondent Commissioner furnished petitioner De los Reyes with a copy of private respondent's letter of
July 31, 1986, and requested his answer thereto.
Petitioner De los Reyes submitted an Answer.
In his letter dated September 9, 1986, private respondent asked for the resumption of the hearings on his
complaint.
On October 1, private respondent executed an affidavit, verifying his letters of April 17, 1986, and July 31,
1986.
In a letter dated October 14, 1986, Manuel Ortega, Philamlife's Senior Assistant Vice-President and
Executive Assistant to the President, asked that respondent Commission first rule on the questions of the
jurisdiction of the Insurance Commissioner over the subject matter of the letters-complaint and the legal
standing of private respondent.
On October 27, respondent Commissioner notified both parties of the hearing of the case.
On November 3, Manuel Ortega filed a Motion to Quash Subpoena/Notice on the following grounds;
1. The Subpoena/Notice has no legal basis and is premature
II. The Insurance Commission has no jurisdiction over
In the Order dated November 6, 1986, respondent Commissioner denied the Motion to Quash.
Hence, this petition.

Issue:
Whether or not the resolution of the legality of the Contract of Agency falls within the jurisdiction of the
Insurance Commissioner.
Held:
No, Section 416 of the Code in pertinent part provides:
The Commissioner shall have the power to adjudicate claims and complaints involving any
loss, damage or liability for which an insurer may be answerable under any kind of policy or
contract of insurance, or for which such insurer may be liable under a contract of suretyship,
or for which a reinsurer may be used under any contract or reinsurance it may have entered
into, or for which a mutual benefit association may be held liable under the membership
certificates it has issued to its members, where the amount of any such loss, damage or
liability, excluding interest, costs and attorney's fees, being claimed or sued upon any kind
of insurance, bond, reinsurance contract, or membership certificate does not exceed in any
single claim one hundred thousand pesos.
A reading of the said section shows that the quasi-judicial power of the Insurance Commissioner is limited
by law "to claims and complaints involving any loss, damage or liability for which an insurer may be
answerable under any kind of policy or contract of insurance, . . ." Hence, this power does not cover the
relationship affecting the insurance company and its agents but is limited to adjudicating claims and
complaints filed by the insured against the insurance company.
The Insurance Code does not have provisions governing the relations between insurance companies and
their agents. It follows that the Insurance Commissioner cannot, in the exercise of its quasi-judicial powers,
assume jurisdiction over controversies between the insurance companies and their agents.
The relationship between the insurance company and its agents is governed by the Contract of
Employment and the provisions of the Labor Code, while under the second category, the same is governed
by the Contract of Agency and the provisions of the Civil Code on the Agency. Disputes involving the latter
are cognizable by the regular courts.
Dispositive Portion:
WHEREFORE, the petition is GRANTED. The Order dated November 6, 1986 of the Insurance Commission is
SET ASIDE.