Fire Insurance (Measure of Indemnity)
Rice Mill liable for P29,103.00. With respect to Malayan Insurance Co.,
1. MALAYAN INSURANCE CO. vs CA (G.R. 36413) *not a fire
insurance, dunno if nagkamali is sir sa syllabus
Facts: On 29 March 1967, Malayan Insurance issued a Private a Car
Comprehensive Policy to Sio Choy, effective from 18 April 1967 to 18
April 1968, covering a Willys jeep. The insurance coverage was for "own
damage" not to exceed P600 and "third-party liability" in the amount of
P20,000.00.
On 19 December 1967, the insured jeep, driven by one Juan P.
Campollo, an employee of San Leon Rice Mill, Inc., collided with a
passenger bus belonging to Pangasinan Transportation Co., Inc.
(PANTRANCO) in Pangasinan, causing damage to the insured vehicle
and injuries to the driver, Juan P. Campollo and the respondent Martin C.
Vallejos, who was riding in jeep.
Martin C. Vallejos filed an action for damages against Sio Choy, Malayan
and the PANTRANCO before the CFI, the amount of P15,000 for
medical and hospital expenses; P6,000.00, for lost income; P51,000.00
as actual, moral and compensatory damages; and P5,000.00, for
attorney's fees.
Sio Choy, filed a separate answer with a cross-claim against the Malayan
(petitioner) wherein he alleged that he had paid Martin C. Vallejos, the
amount of P5,000 for hospitalization and other expenses and that the
Malayan had issued car comprehensive policy wherein Malayan
obligated itself to indemnify Sio Choy for own damage and third-party Article 2184 of the civil code, while SAN LEON is liable as the employer
liability. He also prayed to be reimbursed for the amount he may be
ordered to pay.
Petitioner also filed a third-party complaint against the San Leon Rice
Mill, as the driver was their employee pursuant to Art. 2180 of the civil
code.
After trial, judgment holding Sio Choy, Malayan Insurance and San Leon
Inc., its liability will be up to only P20,000.00. Pantranco was absolved.
On appeal, CA affirmed the trial courts ruling that Sio Choy, San Leon
Rice Mill Malayan Insurance Co are jointly and severally liable for
damages to Vallejos. It ruled, however, that San Leon Rice Mill need not
reimburse Malayan since San Leon Rice Mill is not a privy insurance
contract between Sio Choy and the insurance company.
Hence, the present recourse by petitioner insurance company.
The petitioner prays for the reversal of the appellate court's judgment, or,
in the alternative, to order the San Leon Rice Mill, Inc. to reimburse
petitioner any amount, in excess of one-half (1/2) of the entire amount of
damages, petitioner may be ordered to pay jointly and severally with Sio
Choy.
Issues : (1) Whether or not MALAYAN is solidarily liable to Vallejos,
along with Sio Choy and SAN LEON
(2) Whether or not MALAYAN is entitled to be reimbursed by SAN LEON
for whatever amount petitioner has been adjudged to pay respondent
Vallejos on its insurance policy.
Held:
1. Only Sio Choy and SAN LEON are solidarily liable to Vallejos for the
award of damages. Sio Choy is liable as owner of the jeep pursuant to
of the driver of the jeep at the time of the accident pursuant to Art 2180
of the civil code.
MALAYANs liability, arose out of the insurance policy with Sio Choy.
Petitioner as insurer of Sio Choy, is liable to respondent Vallejos, but it
cannot be made "solidarily" liable with Sio Choy and SAN LEON.
The trial court held Malayan together with Sio Choy and San Leon Rice him to be careful because the gun might be loaded. Lim assured her that
Mills Inc. solidarily liable to respondent Vallejos for a total amount of the magazine was removed and pointed it to his temple. The next
P29,103.00, In the context of a solidary obligation, petitioner may be moment, the gun went off and Lim was dead. Lims widow sued Sun
compelled by respondent Vallejos to pay the entire obligation of Insurance for the P200k. Sun Insurance contended that Lim willfully
P29,013.00, Petitioner be cannot be obliged to pay the entire obligation exposed himself to the danger which caused his death, which was in
when the maximum third party liability of th policy is only P20,000. contrast of the provision in the policy which states: The company shall
not be liable in respect of bodily injury consequent upon the insured
2 MALAYAN is entitled to be reimbursed. Upon payment of the loss, the
person attempting to commit suicide or willfully exposing himself to
insurer is entitled to be subrogated pro tanto to any right of action which
needless peril except in an attempt to save human life. The widow sued
the insured may have against the third person whose negligence or
the petitioner in the Regional Trial Court of Zamboanga City and was
wrongful act caused the loss. When the insurance company pays for the
sustained. The petitioner was sentenced to pay her P200,000.00,
loss, such payment operates as an equitable assignment to the insurer
representing the face value of the policy, with interest at the legal rate;
of the property and all remedies which the insured may have for the
P10,000 as moral damages; P5,000 as exemplary damages; P5,000.00
recovery thereof. That right is not dependent upon, nor does it grow out
as actual and compensatory damages; and P5,000.00 as attorney's
of any privity of contract or upon written assignment of claim, and
fees, plus the costs of the suit.
payment to the insured makes the insurer assignee in equity.
This decision was affirmed on appeal, and the motion for reconsideration
Recap: We hold that only respondents Sio Choy and San Leon Rice Mill,
was denied. The petitioner then came to this Court to fault the Court of
Inc. are solidarily liable to the respondent Martin C. Vallejos for the
Appeals for approving the payment of the claim and the award of
amount of P29,103.00. Vallejos may enforce the entire obligation on only
damages.
one of said solidary debtors. If Sio Choy as solidary debtor is made to
pay for the entire obligation (P29,103.00) and Malayan, as insurer of Sio Issue:
Choy, is compelled to pay P20,000.00 of said entire obligation, petitioner
1. Was Lims widow eligible to receive the benefits?
would be entitled, as subrogee of Sio Choy as against San Leon Rice
Mills, Inc., to be reimbursed by the latter in the amount of P14,551.50 2. Were the other damages valid?
(which is 1/2 of P29,103.00) <-copy paste from what SC said.
Held:

2. SUN INSURANCE OFFICE, LTD. vs. CA (G.R. No. 92383 July 17,
1992) *naulit lang sya, di rin sya fire insurance. (excerpts Jaigest)
Sun Insurance issued a Personal Accident Policy to Felix Lim, Jr. with a
value of P200k. 2 months later, he was found dead with a bullet wound in
his head. Lims secretary was the only eyewitness to his death and
narrated that Lim was playing around with the gun. The secretary told
1. Yes, Both parties agree that Lim did not commit suicide
The main controversy was about the willful exposure to the danger which
caused Lims death.
Suicide- positive act of ending such life
Willful exposure to danger - a reckless risking that is almost suicidal in
intent. Sun Insurance contented that Lim, by mere holding the gun,
willfully exposed himself to the danger because a gun is per se
dangerous by itself. However, the SC said that this is untenable. The SC
upheld the testimony of Lims secretary that Lim removed the magazine
from the gun, believing it was no longer dangerous and that Lim
expressly assured her that it was not loaded. The SC held that the act of
pointing the gun to his temple was precisely intended to assure the
secretary that the gun was harmless. It was settled that Lim was
unquestionably negligent and that negligence cost him his life. However,
Lims negligence does not prevent the widow from recovering from the
insurance policy. Most accidents are caused by the insureds negligence.
Art. 2208. Otherwise, every time a defendant wins, automatically the
plaintiff must pay attorney's fees thereby putting a premium on the right
to litigate which should not be so. For those expenses, the law deems
the award of costs as sufficient.
Petitioner is liable to the private respondent in the sum of P200,000.00
representing the face value of the insurance contract, with interest at the
legal rate from the date of the filing of the complaint until the full amount
is paid, but MODIFIED with the deletion of all awards for damages,
including attorney's fees, except the costs of the suit.

Definitions of accident:
3. BIAGTAN VS. INSULAR LIFE G.R. No. L-25579 March 29, 1972
An event that takes place without one's foresight or expectation
(P.S, I did not include dissenting opinions)
An event that proceeds from an unknown cause, or is an unusual effect
Facts
of a known case, and therefore not expected.
Juan S. Biagtan was insured with defendant Insular Life Assurance
An event which happens without any human agency or, if happening
Company under Policy No. 398075 for the sum of P5,000.00 and, under
through human agency, an event which, under the circumstances, is
a supplementary contract denominated "Accidental Death Benefit
unusual to and not expected by the person to whom it happens. It has
Clause, for an additional sum of P5,000.00 if "the death of the Insured
also been defined as an injury which happens by reason of some
resulted directly from bodily injury effected solely through external and
violence or casualty to the injured without his design, consent, or
violent means sustained in an accident and independently of all other
voluntary co-operation.
causes." The clause, however, expressly provided that it would not apply
2. No, In order that a person may be made liable to the payment of where death resulted from an injury "intentionally inflicted by another
moral damages, the law requires that his act be wrongful. The adverse party."
result of an action does not per se make the act wrongful and subject the
On the night of May 20, 1964 or the first hours of May 21, 1964. The
act or to the payment of moral damages. The law could not have meant
house of insured Juan S. Biagtan was robbed by a band of robbers. The
to impose a penalty on the right to litigate; such right is so precious that
robbers, on reaching the staircase landing on the second floor, rushed
moral damages may not be charged on those who may exercise it
towards the door of the second floor room, where they suddenly met a
erroneously. For these the law taxes costs.
person near the door of one of the rooms who turned out to be the
If a party wins, he cannot, as a rule, recover attorney's fees and litigation insured Juan S. Biagtan who received thrusts from their sharp-pointed
expenses, since it is not the fact of winning alone that entitles him to instruments, causing wounds on the body of said Juan S. Biagtan
recover such damages of the exceptional circumstances enumerated in resulting in his death.
Plaintiffs, as beneficiaries of the insured, filed a claim under the policy.
The insurance company paid the basic amount of P5,000.00 but refused
to pay the additional sum of P5,000.00 under the accidental death
benefit clause, on the ground that the insured's death resulted from
injuries intentionally inflicted by third parties and therefore was not
covered. After due hearing the court a quo rendered judgment in their
favor. Hence the present appeal by the insurer.
Issue:
Whether or not the wounds received by the insured at the hands of the
robbers were inflicted intentionally?
Held: Yes, the trial court committed a plain error in drawing the
conclusion it did from the admitted facts. Nine wounds were inflicted
upon the deceased, all by means of thrusts with sharp-pointed
instruments wielded by the robbers. Five of those wounds caused the
death of the insured. Whether the robbers had the intent to kill or merely
to scare the victim or to ward off any defense he might offer, it cannot be
denied that the act itself of inflicting the injuries was intentional. It should
be noted that the exception in the accidental benefit clause invoked by
the appellant does not speak of the purpose whether homicidal or not
of a third party in causing the injuries, but only of the fact that such
injuries have been "intentionally" inflicted this obviously to distinguish
them from injuries which, although received at the hands of a third party,
are purely accidental.
A gun which discharges while being cleaned and kills a bystander; a
hunter who shoots at his prey and hits a person instead; an athlete in a
competitive game involving physical effort who collides with an opponent
and fatally injures him as a result are instances where the infliction of the
injury is unintentional and therefore would be within the coverage of an
accidental death benefit clause. But where a gang of robbers enter a
house and coming face to face with the owner, even if unexpectedly, stab
him repeatedly, it is contrary to all reason and logic to say that his
injuries are not intentionally inflicted, regardless of whether they prove
fatal or not.
The case of Calanoc is relied upon by the trial court in support of its
decision. The facts in that case are different. The insured there was a
watchman in a certain company, invited by a policeman to come along to
investigate a reported robbery going on in a private house. As the two of
them approached and stood in front of the main gate, a shot was fired
and the watchman was hit in the abdomen causing his death. SC held
that it could not be said that the killing was intentional for there was the
possibility that the malefactor had fired the shot to scare people around
for his own protection and not necessarrily to kill or hit the victim.
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.
FIRE INSURANCE (OTHER INSURANCE CLAUSE)
NEW LIFE ENTERPRISES vs. CA G.R. No. 94071 March 31, 1992
Facts: Julian Sy and Jose Sy Bang formed partnership name New Life
Enterprises. Julian Sy insured the stocks in trade of New Life Enterprises
with Western Guaranty Corporation (P350K), Reliance Surety (300k) and
another valued at (P700k) and Equitable Insurance Corporation (P200k).
The building occupied by the New Life Enterprises was gutted by fire at
about 2:00 o'clock in the morning of October 19, 1982, the stocks in the
trade inside said building were insured against fire in the total amount of
P1,550,000.00. The cause of fire was electrical in nature. Julian Sy
claimed for insurance indemnities, but these were rejected by the three
companies for violation of policy conditions.
Condition No. 3 of said insurance policies, otherwise known as the
"Other Insurance Clause," is uniformly contained in all the insurance
contracts of herein petitioners, as follows:
3. The insured shall give notice to the Company of any insurance or
insurances already effected, or which may subsequently be effected,
covering any of the property or properties consisting of stocks in trade,
goods in process and/or inventories only hereby insured, and unless
such notice be given and the particulars of such insurance or insurances
be stated therein or endorsed on this policy pursuant to Section 50 of the
Insurance Code, by or on behalf of the Company before the occurrence
of any loss or damage, all benefits under this policy shall be deemed
forfeited, provided however, that this condition shall not apply when the
total insurance or insurances in force at the time of loss or damage not
more than P200,000.00.
Sy filed for 3 different suits in the trial court, where he won all suits
against the insurance companies. The court of appeals reversed the
decision of the trial court (cases were consolidated).
ISSUE: whether or not Conditions Nos. 3 and 27 of the insurance
contracts were violated by petitioners thereby resulting in their forfeiture
of all the benefits thereunder.
Held: Petitioners admit that the respective insurance policies issued by
private respondents did not state or endorse thereon the other insurance
coverage obtained or subsequently effected on the same stocks in trade
for the loss of which compensation is claimed by petitioners.The
coverage by other insurance or co-insurance effected or subsequently
arranged by petitioners were neither stated nor endorsed in the policies
of the three (3) private respondents, warranting forfeiture of all benefits
thereunder if we are to follow the express stipulation in the aforequoted
Policy Condition No. 3.
Petitioners contend that insurance agent Leon Alvarez (for Western) and
Yap Kam Chuan (for Reliance and Equitable) knew about the existence
of the additional insurance coverage and that they were not informed
about the requirement that such other or additional insurance should be
stated in the policy, as they have not even read policies. These
contentions cannot pass judicial muster.
The terms of the contract are clear and unambiguous. The insured is
specifically required to disclose to the insurer any other insurance and its
particulars which he may have effected on the same subject matter. The
knowledge of such insurance by the insurer's agents, even assuming the
acquisition thereof by the former, is not the "notice" that would estop the
insurers from denying the claim. Besides, the so-called theory of imputed
knowledge, that is, knowledge of the agent is knowledge of the principal,
aside from being of dubious applicability here has likewise been roundly
refuted by respondent court whose factual findings we find acceptable.
while petitioner Julian Sy claimed that he had informed insurance agent
Alvarez regarding the co-insurance on the property, he contradicted
himself by inexplicably claiming that he had not read the terms of the
policies; that Yap Dam Chuan could not likewise have obtained such
knowledge for the same reason, aside from the fact that the insurance
with Western was obtained before those of Reliance and Equitable; and
that the conclusion of the trial court that Reliance and Equitable are
"sister companies" is an unfounded conjecture drawn from the mere fact
that Yap Kam Chuan was an agent for both companies which also had
the same insurance claims adjuster. Availment of the services of the
same agents and adjusters by different companies is a common practice
in the insurance business and such facts do not warrant the speculative
conclusion of the trial court.
It was incumbent upon petitioner Sy to read the insurance contracts
considering that he has been a businessman since 1965 and the
contract concerns indemnity in case of loss in his money-making trade of
which important consideration he could not have been unaware as it was
pre-in case of loss in his money-making trade of which important
consideration he could not have been unaware as it was precisely the
reason for his procuring the same.
(Extra lang, in case magtanong si sir.)
To further warrant and justify the forfeiture of the benefits under the
insurance contracts involved, we need merely to turn to Policy Condition
No. 15 thereof, which reads in part:
15. . if any false declaration be made or used in support thereof, . . . all
benefits under this Policy shall be forfeited
Insofar as the liability of respondent Reliance is concerned, complaint for
recovery was filed in court by petitioners on January 31, 1984, after one
(1) year elapsed from petitioners' receipt of the insurers' letter of denial
on November 29, 1982. Policy Condition No. 27 of their insurance
contract with Reliance provides:
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
any court of competent jurisdiction 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. 20
Furthermore, assuming arguendo that petitioners felt the legitimate need
to be clarified as to the policy condition violated, there was a
considerable lapse of time from their receipt of the insurer's clarificatory
letter dated March 30, 1983, up to the time the complaint was filed in
court on January 31, 1984. The one-year prescriptive period was yet to
expire on November 29, 1983, or about eight (8) months from the receipt
of the clarificatory letter, but petitioners let the period lapse without
bringing their action in court. We accordingly find no "peculiar
circumstances" sufficient to relax the enforcement of the one-year
prescriptive period and we, therefore, hold that petitioners' claim was
definitely filed out of time.
CASUALTY INSURANCE
1. FAR EASTERN SURETY VS DE MISA G.R. No. L-24377
October 26, 1968
Facts: On 3 September 1957, Socorro Dancel Vda. de Misa and Araceli
Pinto, hired a taxicab operated by respondent La Mallorca in Quezon
City. While proceeding south toward the Archbishop's Palace in Shaw
Boulevard, the taxicab collided with a gravel and sand truck, driven by
one Faustino Nabor, that was proceeding in the opposite direction. As a
result, the two passengers of the La Mallorca taxicab were injured, and
filed suit for damages against the taxicab company in the Court of First
Instance. The operator denied liability, but instituted a third-party
complaint against herein appellant, Far Eastern Surety and Insurance
Company, to recoup from the latter, based on its Common Carrier's
Accident Insurance No. CCA 106, any damages that might be recovered
by the plaintiffs taxicab passengers. The insurer, likewise, denied
responsibility.
The Court of First Instance awarded to plaintiffs Vda. de Misa and Pinto
(now respondents) actual, moral, and exemplary damages and attorney's
fees, payable by the taxicab operator, La Mallorca; and sentenced the
insurance company to pay to La Mallorca P10,000.00 on its third party
liability insurance.
On appeal, the Court of Appeals, while holding that the collision was due
to the fault of the driver of the sand truck nevertheless held the taxicab
operator liable in damages to the passengers of its motor vehicle on the
strength of its representation that the passengers were insured against
accidents and, overruling the defense of the insurance company that it
was not answerable except for whatever amounts the insured might be
legally liable for in the event of accident caused by, or arising out of, the
use of the motor vehicle, the appellate court adjudged the said insurer
answerable to La Mallorca in view of its third party liability insurance
contract.
Unable to secure reconsideration, the insurance company appealed to
this Court, but La Mallorca did not.
Issue: Whether or not the appellant insurer is liable to the insured on its
policy of insurance.
Held: No, The SC agreed with the appellant that the decision of the
Court of Appeals on this point is not legally tenable, for the reason that
the policy of insurance limited the recovery of the insured to "all sums
including claimant's" (passengers in this case) "cost and expenses which
the Insured shall become legally liable" in the "event of accident caused
by or arising out of the use of the Motor Vehicle;" and the appealed
decision itself shows that the indemnity awarded to the passengers of
the La Mallorca taxicab was not because of the accident but was
exclusively predicated on the representation made by the taxicab
company to its passengers that the latter were insured against accidents.
This is plain from the consideranda made in the appealed decision
(pages 10-11):
... indeed, the notice in the sticker evidently being intended in order to
court the riding public into patronizing La Mallorca, and being placed
there right in the taxi, the only meaning that can be given to it and
certainly it must have a meaning for it could not have been there placed
if intended to be useless was that La Mallorca bound itself, in its
contract of carriage, with that additional stipulation therein indicated, that
the passengers were "Insured", and if there be any ambiguity in its
meaning, such ambiguity must be construed most strongly against the
party causing the ambiguity, 1377 New Civil Code; and having that as a
basis, this Court must find that La Mallorca had indeed, insured its
passengers and since such a stipulation was not at all illegal, it must
bind La Mallorca, and would be enough to render it liable for injuries to
the passengers thereof, even though it had not been at fault, i.e., that the
damage had come from & fortuitous event coming from the fault of a
third party for which it was not responsible, since the Law also dictates
that:
"ART. 1174. Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, are
inevitable." (Art. 1174, New Civil Code)
and the result must be that La Mallorca would have to answer just the
same and the 3rd and 4th assignments of error must have to be
overruled; and this will take the discussion to the amount of damages
awarded, subject of the 5th error.
While the decision correctly held that la Mallorca was in estoppel, and
could not be heard to deny that its passengers were insured, it does not
necessarily follow that the estoppel, likewise, applied to the appellant
insurer. The Court of Appeals concurred in the finding of the trial court
that only the negligence of the driver of the sand and gravel truck was
the causative factor of the mishap, and made no pronouncement that the
driver of the taxicab in any way contributed thereto; so that, had it not
been for its representation that its passengers were insured, the taxicab
company would not have been liable at all. As it does not appear that the
insurance company authorized or consented to, or even knew of, the
representation made by the taxicab company to its passengers, it follows
that the source of the award of damages against the taxicab company
was beyond, or outside of, the contemplation of the parties to the
contract of Accident Insurance No. CCA 106, and that the insurer may
not be held liable for such damages.
WHEREFORE, the decision of the Court of Appeals is modified, by
eliminating therefrom the award against the appellant, Far Eastern
Insurance Co., Inc., in favor of the taxicab operator, La Mallorca,
including the sharing of the costs of litigation, which shall be exclusively
borne by the latter entity. Without costs in this instance.
2. DE LA CRUZ vs. CAPITAL INSURANCE G.R. No. L-21574 June
30, 1966
Facts: Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc
Mines, was the holder of an accident insurance policy underwritten by
the Capital Insurance for the period beginning November 13, 1956 to
November 12, 1957. On January 1, 1957, The Itogon-Suyoc Mines, Inc.
sponsored a boxing contest for general entertainment wherein the
insured Eduardo de la Cruz, a non-professional boxer participated. In the
course of his bout with another person, likewise a non-professional, of
the same height, weight, and size, Eduardo slipped and was hit by his
opponent on the left part of the back of the head, causing Eduardo to
fall, with his head hitting the rope of the ring. He was brought to the
Baguio General Hospital the following day. The cause of death was
reported as hemorrhage, intracranial, left.
Simon de la Cruz, the father of the insured and who was named
beneficiary under the policy, thereupon filed a claim with the insurance
company for payment of the indemnity under the insurance policy. As the
claim was denied, De la Cruz instituted the action in the Court of First
Instance for specific performance. Defendant insurer set up the defense
that the death of the insured, caused by his participation in a boxing
contest, was not accidental and, therefore, not covered by insurance.
The court rendered the decision in favor of the plaintiff
Appellant insurer contends that while the death of the insured was due to
head injury, said injury was sustained because of his voluntary
participation in the contest. It is claimed that the participation in the
boxing contest was the "means" that produced the injury which, in turn,
caused the death of the insured. And, since his inclusion in the boxing
card was voluntary on the part of the insured, he cannot be considered
to have met his death by "accidental means"
Issue: Whether or not W/N the cause of death was accident
Held: Yes, the terms "accident" and "accidental", as used in insurance
contracts, have not acquired any technical meaning, and are construed
by the courts in their ordinary and common acceptation. Thus, the terms
have been taken to mean that which happen by chance or fortuitously,
without intention and design, and which is unexpected, unusual, and
unforeseen. An accident is an event that takes place without one's
foresight or expectation an event that proceeds from an unknown
cause, or is an unusual effect of a known cause and, therefore, not
expected.1
What is required to be accidental is the means that caused or brought
the death and not the death itself. It may be mentioned in this
connection, that the tendency of court decisions in the United States in
recent years is to eliminate the fine distinction between the terms
"accidental" and "accidental means" and to consider them as legally
synonymous.
The generally accepted rule is that, death or injury does not result from
accident or accidental means within the terms of an accident-policy if it is
the natural result of the insured's voluntary act, unaccompanied by
anything unforeseen except the death or injury.
In the present case, while the participation of the insured in the boxing
contest is voluntary, the injury was sustained when he slid, giving
occasion to the infliction by his opponent of the blow that threw him to
the ropes of the ring. Without this unfortunate incident, that is, the
unintentional slipping of the deceased, perhaps he could not have
received that blow in the head and would not have died. The fact that
boxing is attended with some risks of external injuries does not make any
injuries received in the course of the game not accidental. In boxing, as
in other equally physically rigorous sports, such as basketball or
baseball, death is not ordinarily anticipated to result. If, therefore, it ever
does, the injury or death can only be accidental or produced by some
unforeseen happening or event as what occurred in this case.
Furthermore, the policy involved herein specifically excluded from its
coverage
(e) Death or disablement consequent upon the Insured engaging in
football, hunting, pigsticking, steeplechasing, polo-playing, racing of any
kind, mountaineering, or motorcycling.
Death or disablement resulting from engagement in boxing contests was
not declared outside of the protection of the insurance contract. Failure
of the defendant insurance company to include death resulting from a
boxing match or other sports among the prohibitive risks leads inevitably
to the conclusion that it did not intend to limit or exempt itself from liability
for such death.
Wherefore, in view of the foregoing considerations, the decision
appealed from is hereby affirmed, with costs against appellant.
SURETYSHIP
1. MERCANTILE INSURANCE VS FELIPE YSMAEL, JR & CO
Facts: Felipe Ysmael, Jr. & Co., Inc. and Magdalena Estate, lnc.
represented by Felipe Ysmael, Jr. as president and in his personal
capacity executed with the plaintiff Mercantile Insurance Co., Inc. an
indemnity agreement. The defendants Felipe Ysmael, Jr. & Co., Inc. and
Felipe Ysmael, Jr. bound jointly and severally to indemnify the plaintiff,
from and against any and all payments, damages, costs, losses,
penalties, charges and expenses which said company as surety
(MERICO Bond No. 0007) shall incur or become liable to pay.
Paragraph 3 of the indemnity agreement expressly provides:
3) ACCRUAL OF ACTION: Notwithstanding the provisions of the next
preceding paragraph, where the obligation involves a liquidated amount
for the payment of which the company has become legally liable under
the terms of the obligation and its suretyship undertaking or by the
demand of the obligee or otherwise and the latter has merely allowed the
COMPANY a term or extension for payment of the latter's demand the
full amount necessary to discharge the COMPANY's aforesaid liability
irrespective of whether or not payment has actually been made by the
COMPANY, the COMPANY for the protection of its interest may forthwith
proceed against the undersigned or either of them by court action or
otherwise to enforce payment even prior to making payment to the
obligee which may hereafter be done by the COMPANY.
Tordesillas and Torres in their official capacities and the defendants
executed another indemnity agreement with the plaintiff in consideration
of the surety bond (MERICO Bond No. G (16) 0030. In the indemnity
agreement the same provisions of paragraph 3 is found.
Later on, the amount of the Bond was reduced by P40,000.00 so that the
total liability of the plaintiff to the Philippine National Bank in view of the
aforesaid reduction is P100,000.00, P60,000.00 on Surety Bond No.
0007 plus P40,000.00 on Surety Bond No. 0030.
The defendants failed to pay the overdraft and credit line with the
Philippine National Bank demanded from Mercantil, settlement of its
obligation under surety bonds No. (G-16)-0007 for P 60,000.00 which
expired on March 6, 1970 and No. G (-16)- 0030 for P 40,000.00 which
expired since September 4, 1968 (Exh. P) Attached to the demand letter
is a statement of account.
By letter of December 17, 1970, plaintiff company wrote a letter of
demand to the defendants regarding the the letter of demand of the
Philippine National Bank sent to the plaintiff and demanding from the
defendants the settlement of said account. The defendants failed to
settle their obligation with the Philippine National Bank, on February 10,
1971, plaintiff brought the present action.
Lower court dismissed case for lack of cause of action, the plaintiff has
paid nothing in the surety bonds, therefore, they have not suffered any
actual damage and held that paragraph 3 of contract is void.
Defendants argued that to allow surety to receive indemnity or
compensation for something it has not paid in its capacity as surety
would constitute unjust enrichment at the expense of another.
Issue: Whether or not surety can be allowed indemnification from the
defendants-appellants, upon the latter's default even before the former
has paid to the creditor.
Held: The overdraft line of Php1M and the credit line of Php1M applied
for by the defendant was granted by the Philippine National Bank on the
strength of the two surety bonds denominated as Bond No. G(16) 0007
and Bond No. G(16) 0030.
As security and in consideration of the execution of the surety bonds, the
defendants executed with the plaintiff identical indemnity agreements
which provide that payment of indemnity or compensation may be
claimed whether or not plaintiff company has actually paid the same as
provided in paragraph 3 of contract.
The cause of action was derived from the terms of the Indemnity
Agreement, paragraph 3 thereof. By virtue of the provisions of the
Indemnity Agreement, defendants-appellants have undertaken to hold
plaintiff-appellee free and harmless from any suit, damage or liability
which may be incurred by reason of non-performance by the defendants-
appellants of their obligation with the Philippine National Bank. The
Indemnity Agreement is principally entered into as security of plaintiff-
appellee in case of default of defendants-appellants; and the liability of
the parties under the surety bonds is joint and several, so that the
obligee PNB may proceed against either of them for the satisfaction of
the obligation.
There is no dispute as to meaning of the terms of the Indemnity
Agreement. Having voluntarily entered into such contract, the appellants
cannot now be heard to complain. Their indemnity agreement have the
force and effect of law.
The principal debtors, defendants-appellants herein, are the same
persons who executed the Indemnity Agreement. Thus, the position
occupied by them is that of a principal debtor and indemnitor at the same
time, and their liability being joint and several with the plaintiff-appellee's,
the Philippine National Bank may proceed against either for fulfillment of
the obligation as covered by the surety bonds. There is no principle of
guaranty involved and, therefore, the provision of Article 2071 of the Civil
Code does not apply. There is no more need for the plaintiff-appellee to
exhaust all the properties of the principal debtor before it may proceed
against defendants-appellants.
2. FIRST LEPANTO-TAISHO vs CHEVRON INC G.R. No. 177839
(January 18,2012)
Facts: Chevron Philippines sued P First Lepanto for the payment of
unpaid oil and petroleum purchases made by its distributor,
Fumitechniks.
Fumitechniks had applied for and was issued a surety bond by First
Lepanto for 15.7M this was in compliancewith the requirement for the
grant of a credit line with Chevron to guarantee payment of the cost of
fuel.(Executed on Oct 15, 2001, will expire on Oct 15, 2002)
Fumitechniks defaulted on its obligation because the check it issued was
dishonored Chevron then notified First Lepanto of Fumitechnik s unpaid
purchases (15.08M) through a letter. Chevron also sent copies of
invoices showing the deliveries of fuel as requested by First Lepanto.
Simultaneously, a letter was sent to Fumitechniks demanding that it
submit to First Lepanto 1)its comment on Chevrons notification letter, 2)
copy of the agreement secured by the Bond plus the delivery receipts,
etc 3) information on the particulars including terms and conditions.
However Fumitechniks replied that it cannot submit the requested
agreement since there was no such agreement executed between
Fumitechniks and Chevron. However, it enclosed a copy of another
surety bond issued by CICI General Insurance Corporation in favor of
Chevron to secure the obligation of Fumitechniks and/or Prime Asia
Sales and Services in the amount of 15M.
First Lepanto then advised Chevron of the non-existence of the principal
agreement as confirmed by Fumitechniks. It explained that being an
accessory contract, the bond cannot exist without a principal agreement
as it is essential that the copy of the basic contract be submitted to the
surety. Chevron then formally demanded from First Lepanto the payment
of its claim under the surety bond. Because First Lepanto refused to pay,
Chevron prayed for judgment ordering First Lepanto to pay the sum of
15,080,030.30 pesos plus interest, cost and attorneys fees
RTC: dismissed the complaint. Terms and conditions of the oral credit
line between Chevron and Fumitechnikshave not been relayed to First
Lepanto. Since the surety bond is a mere accessory contract, the RTC
concludedthat the bond cannot stand in the absence of the written
agreement secured thereby.
CA: reversed the RTCs decision and ruled in favor of Chevron. First
Lepanto is estopped from assailing the oral credit line agreement, having
consented to the same upon presentation by Fumitechniks of the surety
bond it issued. Considering that such oral contract between
Fumitechniks and respondent has been partially executed, the CA ruled
that the provisions of the Statute of Frauds do not apply.
Issue: W/N a surety is liable to the creditor in the absence of a written
contract with the principal
Held: YES
Sec 175 of the Insurance Code defines suretyship as contract or
agreement whereby a party, called the surety, guarantees the
performance by another party, called the principal or obligor, of an
obligation or undertaking in favor of a third party, called the obligee. The
extent of the suretys liability is determined by the language of the
suretyship contract or bond itself. It cannot be extended by implication,
beyond the terms of the contract.
The Surety Bond used by First Lepanto states that Fumitechniks, as
principal and First Lepanto as surety are firmly bound unto Chevron in
the sum of 15.7M. The rider attached to the bond that the principal has
applied for a credit line in the amount of 15.7M pesos
First Lepanto argues that non-compliance with the submission of the
written agreement, which by the express terms of the surety bond,
should be attached and made part thereof, rendered the bond
ineffective.
Since all stipulations and provisions of the surety contract should be
taken and interpreted together, in this case,the unmistakable intention of
the parties was to secure only those terms and conditions of the written
agreement.
A reading of Surety Bond shows that it secures the payment of
purchases on credit by Fumitechniks in accordance with the terms and
conditions of the "agreement" it entered into with respondent. The
word"agreement" has reference to the distributorship agreement, the
principal contract and by implication includedthe credit agreement
mentioned in the rider.
However, it turned out that Chevron has executed written agreements
only with its direct customers but not distributors like Fumitechniks and it
also never relayed the terms and conditions of its distributorship
agreement to the First Lepanto after the delivery of the bond.
The law is clear that a surety contract should be read and interpreted
together with the contract entered into between the creditor and the
principal. Section 176 of the Insurance Code states:
Sec. 176. The liability of the surety or sureties shall be joint and several
with the obligor and shall be limited to the amount of the bond. It is
determined strictly by the terms of the contract of suretyship in relation to
the principal contract between the obligor and the obligee.
A surety contract is merely a collateral one, its basis is the principal
contract or undertaking which it secures. Necessarily, the stipulations in
such principal agreement must at least be communicated or made
known to the surety particularly in this case where the bond expressly
guarantees the payment of respondents fuel products withdrawn by
Fumitechniks in accordance with the terms and conditions of their
agreement. The bond specifically makes reference to a written
agreement.
First Lepanto should have sent notice of the specified form of the
agreement or at least the disclosure of basic terms and conditions of its
distributorship and credit agreements with its client Fumitechniks after its
acceptance of the bond delivered by the latter. However, it never made
any effort to relay those terms and conditions of its contract with
Fumitechniks upon the commencement of its transactions with said
client, which obligations are covered by the surety bond issued by
petitioner."
3. PHILIPPINE PRYCE vs.CA
Facts: Gegroco, Inc filed for a collection of the issued surety bond for
P500K and P1M by Interworld Assurance Corporation (now Philippine
Pryce Assurance Corporation) in behalf of its principal Sagum General
Merchandise
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.
A decision was rendered by the trial court against the defendant
Interworld Assurance Corporation to pay the amount of P1,500,000.00
representing the principal of the amount due
Court of Appeals affirmed the decision of the trial court as well as the
latter's order denying petitioner's motion for reconsideration.
Issue: W/N Interworld Assurance Corp. should be liable for the surety
bond that it issued as payment for the premium? (P.s. other issues were
remedial in nature)
Held:Yes , petitioner hinges its defense on two arguments, namely: a)
that the checks issued by its principal which were supposed to pay for
the premiums, bounced, hence there is no contract of surety to speak of;
and 2) that as early as 1986 and covering the time of the Surety Bond,
Interworld Assurance Company (now Phil. Pryce) was not yet authorized
by the insurance Commission to issue such bonds.
The Insurance Code states that:
Sec. 177. The surety is entitled to payment of the premium as soon as
the contract of suretyship or bond is perfected and delivered to the
obligor. No contract of suretyship or bonding shall be valid and binding
unless and until the premium therefor has been paid, except where the
obligee has accepted the bond, in which case the bond becomes valid
and enforceable irrespective of whether or not the premium has been
paid by the obligor to the surety.
The above provision outrightly negates petitioner's first defense. In a
desperate attempt to escape liability, petitioner asserts that the above
provision is not applicable because the respondent allegedly had not
accepted the surety bond, hence could not have delivered the goods to
Sagum Enterprises.
Petitioner, in its answer, admitted to have issued the bonds subject
matter of the original action. Likewise attached to the record are exhibits
C to C-18 consisting of delivery invoices addressed to Sagum General
Merchandise proving that parts were purchased, delivered and received.
On the other hand, petitioner's defense that it did not have authority to
issue a Surety Bond when it did is an admission of fraud committed
against respondent. No person can claim benefit from the wrong he
himself committed. A representation made is rendered conclusive upon
the person making it and cannot be denied or disproved as against the
person relying thereon.
4. CAPITAL INSURANCE vs. RONQUILLO TRADING. G.R. No. L-
36488 July 25, 1983
Facts: Capital Surety executed and issued a surety bond in the amount
of $14,800.00 in behalf of Ronquillo Trading and in favor of S.S.
Eurygenes under Delgado Shipping Agencies. The bond was a
guarantee for any additional freight which may be determined to be due
on a cargo of 258 surplus army vehicles consigned from Korea to the
Ronquillo Trading on board the S.S. Eurygenes and booked on said
vessel by the Philippine Merchants Steamship Company, Inc.
The appellees executed an indemnity agreement whereby they jointly
and severally promised to pay the appellant the sum of P1,827.00 in
advance as premium and documentary stamps for each period of twelve
months while the surety bond was in effect.
On April 30, 1963 (about five 5 days) before the expiration of the liability
on the bond, P.D. Marchessini and Delgado Shipping Agencies filed Civil
Case in the CFI against the Philippine Merchants Steamship, Jose L.
Bautista (Ronquillo Trading), and Capital Insurance for the sum of
$14,800.00. for the loss they allegedly suffered upon the failure of the
defendants to load U.S. surplus army vehicles. Capital insurance was
made party defendant because of the bond it posted in behalf of
Ronquillo.
Upon the expiration of the 12 months life of the bond, Capital insurance
made a formal demand for the payment of the renewal premiums and
cost of documentary stamps for another year in the amount of
P1,827.00.
The Ronquillo refused to pay, contending that the liability of the Capital
under the surety bond accrued during the period of twelve months the
said bond was originally in force and before its expiration and that the
Ronquillo were under no obligation to renew the surety bond.
Capital, therefore, filed a complaint to recover the sum of P l,827.00
against Ronquillo in the City Court of Manila. The city court rendered
judgment absolving Ronquillo from the complaint.
Capital appealed the judgment to the Court of First Instance of Manila
where the decision of the city court was affirmed and the complaint
dismissed. MR also denied.
Issue: whether or not Ronquillo is obligated to pay the premium
Held: No, Capital insurance contends that the conclusion of the trial
court that "once surety's liability under the bond has accrued, defendants
are under no obligation to pay the premiums for the succeeding period
that it is in effect by reason of existing obligation of surety under the
bond" is erroneous because it contradicts the provision of the indemnity
agreement which provides:
PREMIUMS. As consideration for the Surety, the undersigned, jointly
and severally, agree to pay the COMPANY the sum of ONE THOUSAND
EIGHT HUNDRED ONLY (P1,800.00) PESOS, Philippine Currency, in
advance as premium thereof for every ... twelve (12) months or fraction
thereof, while this bond or any renewal or substitution thereof is in effect.
SC agreed with the contention of the Ronquillo. It must be noted that in
the surety bond it is stipulated that the "liability of surety on this bond will
expire on May 5, 1963 and said bond will be cancelled 15 days after its
expiration, unless surety is notified of any existing obligations
thereunder." Under this stipulation the bond expired on the stated date
and the phrase "unless surety is notified of any existing obligations
thereunder" refers to obligations incurred during the term of the bond.
Furthermore, under the Indemnity Agreement, the appellees "agree to
pay the COMPANY the sum of ONE THOUSAND EIGHT HUNDRED
ONLY (P1,800.00) Pesos, Philippine Currency, in advance as premium
thereof for every twelve (12) months or fraction thereof, while this bond
or any renewal or substitution thereof is in effect." Obviously, the duration
of the bond is for "every twelve (12) months or fraction thereof, while this
bond or any renewal or substitution is in effect." Since the appellees
opted not to renew the contract they cannot be obliged to pay the
premiums. More specifically, where a contract of surety is terminated
under its terms, the liability of the principal for premiums after such
termination ceases notwithstanding the pendency of a lawsuit to enforce
a liability that accrued during its stipulated lifetime.
LIFE INSURANCE
1. VDA. DE GABRIEL vs. CA
Facts: Marcelino Gabriel, the insured, was employed by Emerald
Construction & Development Corporation ("ECDC") at its construction
project in Iraq. He was covered by a personal accident insurance in the
amount of P100,000.00 under a group policy procured from private
respondent by ECDC for its overseas workers. The insured risk was for
"bodily injury caused by violent accidental external and visible means
which injury (would) solely and independently of any other cause" result
in death or disability.
On 22 May 1982, within the life of the policy, Gabriel died in Iraq. A year
later, or on 12 July 1983, ECDC reported Gabriel's death to private
respondent by telephone. Among the documents thereafter submitted to
private respondent were a copy of the death certificate issued by the
Ministry of Health of the Republic of Iraq REASON OF DEATH: UNDER
EXAMINATION NOW NOT YET KNOWN and an autopsy report of
the NBI to the effect that due to advanced state of postmortem
decomposition, cause of death could not be determined." Private
respondent referred the insurance claim to Mission Adjustment Service,
Inc.
Following a series of communications between petitioner and private
respondent, the latter, on 22 September 1983, ultimately denied the
claim of ECDC on the ground of prescription. Petitioner went to the RTC
In her complaint against ECDC and private respondent, she averred that
her husband died of electrocution while in the performance and prayed
for P100,000.00 insurance indemnification and of various damages, plus
attorney's fees and costs of suit.
Private respondent filed its answer, which was not verified, admitting the
genuineness and due execution of the insurance policy; it alleged,
however, that since both the death certificate issued by the Iraqi Ministry
of Health and the autopsy report of the NBI failed to disclose the cause
of Gabriel's death, it denied liability under the policy. In addition, private
respondent raised the defense of "prescription," invoking Section 384 of
the Insurance Code.
The trial court rendered its decision in favor (partly) of petitioner's claim.
In arriving at its conclusion, the trial court held that private respondent
was deemed to have waived the defense, i.e., that the cause of Gabriel's
death was not covered by the policy, when the latter failed to impugn by
evidence petitioner's averment on the matter. With regard to the defense
of prescription, the court considered the complaint to have been timely
filed or within one (1) year from private respondent's denial of the claim.
Petitioner and respondent both appealed to the Court of Appeals
The Court of Appeals reversed the decision of the lower court. The
appellate court observed that the only evidence presented by petitioner,
in her attempt to show the circumstances that led to the death of the
insured, were her own affidavit and a letter allegedly written by a co-
worker of the deceased in Iraq which, were held to be both hearsay. MR
denied.
Issue:
1. Whether or not the actions has prescribed, Yes
2. Whether Vda. De Gabriel is required to present proof that the
insureds demise was from an accidental death yes
Held:
1. Yes On the issue of "prescription," Fortune correctly invoked Section
384 of the Insurance Code which provides that "Any person having any
claim upon the policy issued pursuant to this chapter shall, without any
unnecessary delay, present to the insurance company concerned a
written notice of claim setting forth the nature, extent and duration of the
injuries sustained as certified by a duly licensed physician. Notice of
claim must be filed within six months from date of the accident,
otherwise, the claim shall be deemed waived. Action or suit for recovery
of damage due to loss or injury must be brought, in proper cases, with
the Commissioner or the Courts within one year from denial of the claim,
otherwise, the claimant's right of action shall prescribe." The notice of
death was given to Fortune, concededly, more than a year after the
death of Vda. de Gabriel's husband. Fortune, in invoking prescription,
was not referring to the one-year period from the denial of the claim
within which to file an action against an insurer but obviously to the
written notice of claim that had to be submitted within six months from
the time of the accident. On the other hand, there is absolutely no basis
in fact and in law to hold that the insurance company was deemed to
have waived by failing to have its answers (to the Request for
Admission) duly verified -- the defense, that the death of Vda.de
Gabriel's husband was not caused by violent accidental external and
visible means' as contemplated in the insurance policy. The Death
Certificate and the Autopsy Report, more than controverted the
allegation of Vda. de Gabriel as to the cause of death of her husband
2. YES. The insurance policy expressly provided that to be
compensable, the injury or death should be caused by "violent
accidental external and visible means." In attempting to prove the cause
of her husband's death, all that Vda. de Gabriel could submit were a
letter sent to her by her husband's co-worker, stating that Gabriel died
when he tried to haul water out of a tank while its submerged motor was
still functioning and Vda. de Gabriel's sinumpaang salaysay which
merely confirmed the receipt and stated contents of the letter.
The said affidavit however suffers from procedural infirmity as it was not
even testified to or identified by the affiant (Vda. De Gabriel) herself. This
self-serving affidavit therefore is a mere hearsay under the rules. In like
manner, the letter allegedly written by the deceased's co-worker which
was never identified to in court by the supposed author, suffers from the
same defect as the affidavit of the plaintiff-appellant." Not one of the
other documents submitted, to wit, the POEA decision, dated 06 June
1984, the death certificate issued by the Ministry of Health of Iraq and
the NBI autopsy report, could give any probative value to Vda. de
Gabriel's claim.
Evidence, in fine, is utterly wanting to establish that the insured suffered
from an accidental death, the risk covered by the policy. In an accident
insurance, the insured "beneficiary has the burden of proof in
demonstrating that the cause of death is due to the covered peril. Once
the fact is established, the burden then shifts to the insurer to show any
excepted peril that may have been stipulated by the parties.
An "accident insurance" is not thus to be likened to an ordinary life
insurance where the insured's death, regardless of the cause thereof,
would normally be compensable. The latter is akin in property insurance
to an "all risk" coverage where the insured, on the aspect of burden of
proof, has merely to show the condition of the property insured when the
policy attaches and the fact of loss or damage during the period of the
policy and where, thereafter, the burden would be on the insurer to show
any "excluded peril." When, however, the insured risk is specified, it lies
with the claimant of the insurance proceeds to initially prove that the loss
is caused by the covered peril.
2. THE INSULAR LIFE vs. FELICIANO G.R. No. L-47593 December
29, 1943
Facts: Evaristo Feliciano, who died on September 29, 1935, had a life
insurance policy with Insular life. He was suffering with advanced
pulmonary tuberculosis when he signed his applications for insurance
with the petitioner on October 12, 1934. On that same date Doctor
Trepp, who had taken X-ray pictures of his lungs, informed the
respondent Dr. Serafin D. Feliciano, brother of Evaristo, that the latter
"was already in a very serious ad practically hopeless condition."
Nevertheless the question contained in the application "Have you ever
suffered from any ailment or disease of the lungs, pleurisy, pneumonia or
asthma?" appears to have been answered , "No". The false answer
above referred to, as well as the others, was written by the Company's
soliciting agent Romulo M. David, in collusion with the medical examiner
Dr. Gregorio Valdez who was bribed by David with the advanced
premium of the insured. This is so Insular life will approve the application
and David will get credit for the solicitation, since Insular Life had a prize
for their agent with the most solicitation. It seems also that the insured
had told both David and Valdez that he had gone three times to the
Santol Sanatorium and had X-ray pictures of his lungs taken. but that in
spite of such information the agent and the medical examiner told them
that the applicant was a fit subject for insurance.
Issue: issue whether or not there was concealment, and the collusion
with the insurance agent?
Held: Yes , The Policy is Void Ab Initio
The insured signed the application in blank, this act in effect thereby
giving David, the agent, and Valdez, the medical examiner" the authority
to write what they wrote in the application, they became his agents and
cannot escape the responsibility of their actions. He also paid the agent
in advance despite the statement in the contract " That the agent taking
this application has no authority to make, modify or discharge contracts,
or to waive any of the Company's rights or requirements" and "the
Company shall not be bound by any promise or representation
heretofore or hereafter given by any person other than the above-named
officials, and by them only in writing and signed conjointly as stated."
Also the statement, "and the policy has been delivered to and accepted
by me, while I am in good health." In addition to the two stated above
proves that he was aware of the concealment and he was conniving with
both medical examiner and agent. He cannot hide responsibility by
saying he could not or did not read the photo copy of the applications, he
must have noticed the answers was false, also since he subscribed "My
acceptance of any policy issued on this application will constitute a
ratification by me of any corrections in or additions to this application
made by the Company. The insured, therefore, had no right to rely upon
the oral representation of said agent and medical examiner that he (the
applicant) was a fit subject for insurance notwithstanding that he had
been and was still suffering with advanced pulmonary tuberculosis.
From all the facts and circumstances of this case, Insured was a
coparticipant, and co-responsible with Agent David and Medical
Examiner Valdez, in the fraudulent procurement of the policies in
question and that by reason thereof said policies are void ab initio.
Premium was still returned
3. DEL VAL VS DEL VAL
FACTS: During the lifetime of Gregorio Del Val, he took out insurance on
his life for the sum of P40,000 and made it payable to Andres del Val as
sole beneficiary. After his death, the defendant Andres collected the face
of the policy. He paid the sum of P18,365.20 to redeem certain real
estate which the decedent had sold to third persons with a right to
repurchase. The redemption of said premises was made by the attorney
of the defendant in the name of the plaintiff and the defendant as heirs of
the deceased vendor. Andres, on death of the deceased, took
possession of most of his personal property and that he has also the
balance on the insurance policy amounting to P21,634.80.
Francisco et. al contend that the amount of the insurance policy
belonged to the estate of the deceased and not to the defendant
personally, hence they are entitled to a partition not only of the real and
personal property, but also of the P40,000 life insurance
Andres claimed that the redemption of the real estate sold by his father
was made in the name of the plaintiffs and himself instead of in his name
alone without his knowledge or consent. He also averred that it was not
his intention to use the proceeds of the insurance policy for the benefit of
any person but himself, he alleging that he was and is the sole owner
thereof and that it is his individual property
The trial court refused to give relief to either party and dismissed the
action due to the argument that the action for partition failed to comply
with the Civil Procedure Code sec. 183, in that it does not 'contain an
adequate description of the real property of which partition is demanded.'
ISSUE: W/N the Andres as sole beneficiary should have exclusive right
to the insurance claim.
Held: Yes, the proceeds of an insurance policy belong exclusively to the
beneficiary and not to the estate of the person whose life was insured,
and that such proceeds are the separate and individual property of the
beneficiary, and not of the heirs of the person whose life was insured, is
the doctrine in America. We believe that the same doctrine obtains in
these Islands by virtue of section 428 of the Code of Commerce, which
reads:
The amount which the underwriter must deliver to the person insured, in
fulfillment of the contract, shall be the property of the latter, even against
the claims of the legitimate heirs or creditors of any kind whatsoever of
the person who effected the insurance in favor of the former.
The plaintiffs invoked Article 1035 of the Civil Code, where it reads:
An heir by force of law surviving with others of the same character to a
succession must bring into the hereditary estate the property or
securities he may have received from the deceased during the life of the
same, by way of dowry, gift, or for any good consideration, in order to
compute it in fixing the legal portions and in the account of the division.
They also invoked Article 819. This article provides that "gifts made to
children which are not betterments shall be considered as part of their
legal portion."
The court didnt agree because the contract of life insurance is a special
contract and the destination of the proceeds is determined by special
laws which deal exclusively with that subject. The Civil Code has no
provisions which relate directly and specifically to life- insurance
contracts or to the destination of life insurance proceeds. That was under
the Code of Commerce.
The plaintiffs claim that the property repurchased with the insurance
proceeds belongs to the heirs in common and not to the defendant
alone. This wasnt agreed upon by the court unless the facts appeared
that Andres acted as he did with the intention that the other heirs should
enjoy with him the ownership of the estate.
4. LUZ PINEDA vs. CA
FACTS: This is an action for the payment of insurance claims and prayer
for administrative sanctions.Prime Marine Services, Inc. (PMSI), a
crewing/manning outfit, procured a Group Policy from Insular Life
Assurance Co., Ltd. to provide life insurance coverage to its sea-based
employees. During the effectivity of the policy, six covered employees
perished at sea when their vessel sunk. They were survived by the
complainants-appellees, the beneficiaries under the policy. The
beneficiaries, except the spouses Alarcon, executed special powers of
attorney authorizing Capt. Nuval, President and General Manager of
PMSI, to , among others, follow-up, ask, demand, collect and receive
for their benefit indemnities of sums of money due them relative to the
sinking of the vessel. By virtue of these written powers of attorney,
complainants-appellees were able to receive their respective death
benefits. Unknown to them, however, PMSI, in its capacity as employer
and policyholder of the life insurance of its deceased workers, filed with
Insular Life formal claims for and in behalf of the beneficiaries, through
Capt. Nuval. On the basis of the five special powers of attorney, Insular
Life drew against its account six (6) checks, four for P200,000.00 each,
one for P50,000.00 and another for P40,000.00 payable to the order of
complainants-appellees. Capt. Nuval, upon receipt of these checks
endorsed and deposited them in his own account. When the
complainants-appellees learned that they were entitled, as beneficiaries,
to life insurance benefits under a group policy, they sought to recover
these benefits from Insular Life but the latter denied their claim on the
ground that the liability to complainants-appellees was already
extinguished.
Also, Section 180 of the Insurance Code has been amended by the
Family Code 17 which grants the father and mother joint legal
guardianship over the property of their unemancipated common child
without the necessity of a court appointment; however, when the market
value of the property or the annual income of the child exceeds
P50,000.00, the parent concerned shall be required to put up a bond in
such amount as the court may determine.
Insurance commissions held that Insular Life was liable for violating
Section 180 of the Insurance Code for having released to the surviving
mothers the insurance proceeds pertaining to the beneficiaries who were
still minors despite the failure of the former to obtain a court
authorization or to post a bond.
ISSUE:
1. Whether or not Insular Life is bound by the misconduct of the
employer. yes
2.W/N the minor beneficiaries award should be eliminated yes
Held
1. A cursory reading of the questioned powers of attorney would disclose
that they do not contain in clear and unequivocal terms authority to
Captain Nuval to obtain, receive, receipt from respondent company
insurance proceed arising from the death of the seaman-insured. On the
contrary, the said powers of attorney are couched in terms which could
easily arouse suspicion of an ordinary man.
In Elfstrom vs New York Life Insurance Company
the California Supreme Court explicitly ruled that in group insurance
policies, the employer is the agent of the insurer. Thus: We are
convinced that the employer is the agent of the insurer in performing the
duties of administering group insurance policies. It cannot be said that
the employer acts entirely for its own benefit or for the benefit of its
employees in undertaking administrative functions.
Neider vs Continental Assurance Company, it was held that the
employer owes to the employee the duty of good faith and due care in
attending to the policy, and that the employer should make clear to the
employee anything required of him to keep the policy in effect, and the
time that the obligations are due. In its position as administrator of the
policy, we feel also that the employer should be considered as the agent
of the insurer, and any omission of duty to the employee in its
administration should be attributable to the insurer ..In the light of the
above disquisitions and after an examination of the facts of this case, we
hold that PMSI, through its President and General Manager, Capt. Nuval,
acted as the agent of Insular Life. The latter is thus bound by the
misconduct of its agent.
2. Where the market value of the property or the annual income of the
child exceeds P50,000, the parent concerned shall be required to furnish
a bond in such amount as the court may determine, but not less than ten
per centum (10%) of the value of the property or annual income, to
guarantee the performance of the obligations prescribed for general
guardians.
It is clear from the said Article that regardless of the value of the
unemancipated common child's property, the father and mother ipso jure
become the legal guardian of the child's property. However, if the market
value of the property or the annual income of the child exceeds
P50,000.00, a bond has to be posted by the parents concerned to
guarantee the performance of the obligations of a general guardian.
It must, however, be noted that the second paragraph of Article 225 of
the Family Code speaks of the "market value of the property or the
annual income of the child," which means, therefore, the aggregate of
the child's property or annual income; if this exceeds P50,000.00, a bond
is required.
There is no evidence that the share of each of the minors in the
proceeds of the group policy in question is the minor's only property.
Without such evidence, it would not be safe to conclude that, indeed,
that is his only property.
COMPULSARY MOTOR VEHICLE INSURANCE
1. VILLACORTA vs. IC
FACTS: Villacorta had her Colt Lancer car insured with Empire
Insurance Company against own damage, theft and 3rd party liability.
While the car was in the repair shop, one of the employees of the said
repair shop took it out for a joyride after which it figured in a vehicular
accident. This resulted to the death of the driver and some of the
passengers as well as to extensive damage to the car.
Villacorta filed a claim for total loss with the said insurance company.
However, it denied the claim on the ground that the accident did not fall
within the provisions of the policy either for the Own Damage or Theft
coverage, invoking the policy provision on Authorized Driver Clause.
This was upheld by the Insurance Commission further stating that the
car was not stolen and therefore not covered by the Theft Clause
because it is not evident that the person who took the car for a joyride
intends to permanently deprive the insured of his/ her car.
ISSUE:
Whether or not the insurer company should pay the said claim
HELD:
Yes. Where the insureds car is wrongfully taken without the insureds
consent from the car service and repair shop to whom it had been
entrusted for check-up and repairs (assuming that such taking was for a
joy ride, in the course of which it was totally smashed in an accident),
respondent insurer is liable and must pay insured for the total loss of the
insured vehicle under the Theft Clause of the policy.
Assuming, despite the totally inadequate evidence, that the taking was
temporary and for a joy ride, the Court sustains as the better view that
which holds that when a person, either with the object of going to a
certain place, or learning how to drive, or enjoying a free ride, takes
possession of a vehicle belonging to another, without the consent of its
owner, he is guilty of theft because by taking possession of the personal
property belonging to another and using it, his intent to gain is evident
since he derives therefrom utility, satisfaction, enjoymet and pleasure.
ACCORDINGLY, the appealed decision is set aside and judgment is
hereby rendered sentencing private respondent to pay petitioner the sum
of P35,000.00 with legal interest from the filing of the complaint until full
payment is made and to pay the costs of suit.
2. PALERMO vs. PYRAMID.
FACTS: On March 7, 1969, the insured, appellee Andrew Palermo, filed
a complaint in the Court of First Instance of Negros Occidental against
Pyramid Insurance Co., Inc., for payment of his claim under a Private
Car Comprehensive Policy MV-1251 issued by the defendant (Exh. A). In
its answer, the appellant Pyramid Insurance Co., Inc., alleged that it
disallowed the claim because at the time of the accident, the insured was
driving his car with an expired driver's license. After the trial, the court a
quo rendered judgment on October 29, 1969 ordering the defendant "to
pay the plaintiff the sum of P20,000.00, value of the insurance of the
motor vehicle in question and to pay the costs." On November 26, 1969,
the plaintiff filed a "Motion for Immediate Execution Pending Appeal." It
was opposed by the defendant, but was granted by the trial court on
December 15, 1969.
ISSUE: WON plaintiff was not authorized to drive the insured motor
vehicle because his driver's license had expired.
Held: No, There is no merit in the appellant's allegation that the plaintiff
was not authorized to drive the insured motor vehicle because his
driver's license had expired. The driver of the insured motor vehicle at
the time of the accident was, the insured himself, hence an "authorized
driver" under the policy. While the Motor Vehicle Law prohibits a person
from operating a motor vehicle on the highway without a license or with
an expired license, an infraction of the Motor Vehicle Law on the part of
the insured, is not a bar to recovery under the insurance contract. It
however renders him subject to the penal sanctions of the Motor Vehicle
Law. The requirement that the driver be "permitted in accordance with
the licensing or other laws or regulations to drive the Motor Vehicle and
is not disqualified from driving such motor vehicle by order of a Court of
Law or by reason of any enactment or regulation in that behalf," applies
only when the driver" is driving on the insured's order or with his
permission." It does not apply when the person driving is the insured
himself.
in Villacorta vs. Insurance Commission, 100 SCRA 467, where it was
held that:
The main purpose of the "authorized driver" clause, as may be seen
from its text, is that a person other than the insured owner, who drives
the car on the insured's order, such as his regular driver, or with his
permission, such as a friend or member of the family or the employees of
a car service or repair shop, must be duly licensed drivers and have no
disqualification to drive a motor vehicle.
In an American case, where the insured herself was personally operating
her automobile but without a license to operate it, her license having
expired prior to the issuance of the policy, the Supreme Court of
Massachusetts was more explicit:
... Operating an automobile on a public highway without a license, which
act is a statutory crime is not precluded by public policy from enforcing a
policy indemnifying her against liability for bodily injuries The inflicted by
use of the automobile." (Drew C. Drewfield McMahon vs. Hannah
Pearlman, et al., 242 Mass. 367, 136 N.E. 154, 23 A.L.R. 1467.)
3. FIRST INTEGRATED Bonding vs.HERNANDO
Facts:
Silverio Blanco was the owner of a passenger jeepney which he insured
against liabilities for death and injuries to third persons with First
Integrated Bonding and Insurance Company, Inc. for P30,000. The said
jeepney driven by Blanco himself bumped a five-year old child, claim against the latter. However, since the said decision had already
Deogracias Advincula, causing the latter's death. The boys parents filed become final and executory, it can no longer be corrected or amended.
a complaint for damages against Blanco and First Insurance, which was In the same vein, the claim of petitioner that its liability to third parties
granted by the lower court. First Insurance filed a petition for certiorari under the insurance policy is limited to P20,000.00 only can no longer be
contending that the victims parents have no cause of action against it given consideration at this late stage, when the decision of the trial court
becausethey are not parties to the insurance contract and that they may awarding damages had already become final and executory.
only proceed against the driver based on the provisions of the New Civil
Code.
3. PERLA vs. ANCHETA
Issue: W/N an injured party for whom the contract of insurance is
intended can sue directly the insurer Facts: On December 27, 1977, in a collision between the IH Scout in
which private respondents were riding and a Superlines bus along the
Held: YES, where the insurance contract provides for indemnity against
national highway in Sta. Elena, Camarines Norte, private respondents
liability to a third party, such third party can directly sue the insurer. The
sustained physics injuries in varying degrees of gravity. Thus, they filed
liability of the insurer to such third person is based on contract while the
with the Court of First Instance of Camarines Norte on February 23,1978
liability of the insured to the third party is based on tort. It cannot evade
a complaint for damages against Superlines, the bus driver and
its liability as insurer by hiding under the cloak of the insured. Its liability
petitioner, the insurer of the bus.The bus was insured with Perla
is primary and not dependent on the recovery of judgment from the
Campania for the amount of P50,000.00 as and for passenger liability
insured
and P50,000.00 as and for third party liability. The vehicle in which
Compulsory Motor Vehicle Liability Insurance (third party liability, or TPL) private respondents were riding was insured with Malayan Insurance Co.
is primarily intended to provide compensation for the death or bodily
Even before summons could be served, respondent judge issued an
injuries suffered by innocent third parties or passengers as a result of a
order dated March 1, 1978, which states that Perla Compania de
negligent operation and use of motor vehicles. The victims and/or their
Seguros, Inc., should pay immediately the P5,000.00 under the "no fault
dependents are assured of immediate financial assistance, regardless of
clause" as provided for under Section 378 of the Insurance Code
the financial capacity of the motor vehicle owners.
Sec. 378. Any claim for death or injury to any passenger or third party
It should be noted also that First Insurance was declared in default
pursuant to the provision of this chapter shall be paid without the
because of its failure to file an answer. As far as it was concerned, it
necessity of proving fault or negligence of any kind. Provided, That for
failed to raise any triable issue. It lost its standing in court and judgment
purposes of this section
may be rendered against it on the basis only of the evidence of the
Advincula spouses. (i) The indemnity in respect of any one person shall not exceed five
thousand pesos;
It appears that the award of damages in favor of Blanco has no basis.
The complaint in Civil case 1104 was for damages brought by the (ii) The following proofs of loss, when submitted under oath, shall be
spouses against Blanco and First Insurance. Blanco did not put up any sufficient evidence to substantiate the claim:
(a) Police report of accident, and
(b) Death certificate and evidence sufficient to establish the proper
payee, or
(c) Medical report and evidence of medical or hospital disbursement in
respect of which refund is claimed;
(iii) Claim may be made against one motor vehicle only. In the case of an
occupant of a vehicle, claim shall lie against the insurer of the vehicle in
which the occupant is riding, mounting or dismounting from. In any other
case, claim shall lie against the insurer of the directly offending vehicle.
In all cases, the right of the party paying the claim to recover against the
owner of the vehicle responsible for the accident shall be maintained.
Petitioner denied in its Answer its alleged liability under the "no fault
indemnity" and moved for the reconsideration of the order. Petitioner
held the position that under Sec. 378 of the Insurance Code, the insurer
liable to pay the P5,000.00 is the insurer of the vehicle in which private
respondents were riding, not petitioner, as the provision states that "[i]n
the case of an occupant of a vehicle, claim shall lie against the insurer of
the vehicle in which the occupant is riding, mounting or dismounting
from."
Respondent judge, denied reconsideration.
Issue: whether or not petitioner is the insurer liable to indemnify private
respondents under Sec. 378 of the Insurance Code.
Held: No. The following rules on claims under the "no fault indemnity"
provision, where proof of fault or negligence is not necessary for
payment of any claim for death or injury to a passenger or a third party,
are established:
1. A claim may be made against one motor vehicle only.
2. If the victim is an occupant of a vehicle, the claim shall lie against the
insurer of the vehicle. in which he is riding, mounting or dismounting
from. 3. In any other case (i.e. if the victim is not an occupant of a
vehicle), the claim shall lie against the insurer of the directly offending
vehicle.
4. In all cases, the right of the party paying the claim to recover against
the owner of the vehicle responsible for the accident shall be maintained.
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.
That said vehicle might not be the one that caused the accident is of no
moment since the law itself provides that the party paying the claim
under Sec. 378 may recover against the owner of the vehicle responsible
for the accident. This is precisely the essence of "no fault indemnity"
insurance which was introduced to and made part of our laws in order to
provide victims of vehicular accidents or their heirs immediate
compensation, although in a limited amount, pending final determination
of who is responsible for the accident and liable for the victims' injuries or
death. In turn, the "no fault indemnity" provision is part and parcel of the
Insurance Code provisions on compulsory motor vehicle ability
insurance [Sec. 373-389] and should be read together with the
requirement for compulsory passenger and/or third party liability
insurance [Sec. 377] which was mandated in order to ensure ready
compensation for victims of vehicular accidents.
Irrespective of whether or not fault or negligence lies with the driver of
the Superlines bus, as private respondents were not occupants of the
bus, they cannot claim the "no fault indemnity" provided in Sec. 378 from
petitioner. The claim should be made against the insurer of the vehicle
they were riding. This is very clear from the law. Undoubtedly, in ordering
petitioner to pay private respondents the 'no fault indemnity,' respondent
judge gravely abused his discretion in a manner that amounts to lack of
jurisdiction. The issuance of the corrective writ of certiorari is therefore
warranted.
4. SUMMIT GUARANTY AND INSURANCE CO., INC. VS. DE
GUZMAN
Facts: Jose Ledesma was the owner of a tractor which was bumped by
a minibus insured with petitioner for Third Party Liability. Ledesma
immediately made a notice of claim. Petitioner company advised private
respondent to have car repaired by G.A. Machineries, which was later
estimated at an amount of Php21,000 and made assurance of payment.
Upon repair, respondent made several demands on petitioner company
because of repair shops warning that failure to pay would result in the
auctioning of the tractor to pay expenses. Petitioner company continued
giving assurance and promises to pay. Eventually, private respondent
filed a formal complaint with the Insurance Commission, which petitioner
company moved to dismiss on ground of prescription.
Geronima Pulmano was the owner of a jeep insured with petitioner
company in the amount of Php20,000. The jeep got into a vehicular
accident which resulted in the death of one of the victims and private
respondent immediately filed a notice of accident and claim. Petitioner
company took no steps to process the claim so private respondents
brought their claim to the Insurance Commission, but petitioner company
still failed to settle. A complaint was eventually filed with the Court of
First Instance of Tarlac which petitioner company moved to dismiss on
the ground of prescription.
Amelia Generao owned a passenger jeepney insured with petitioner
under a Vehicle Comprehensive Policy. The jeepney struck the van of a
certain Mr. Hahn and two days later Generao notified petitioner company
and demanded payment on both vehicles. Generao and petitioner
company even had a dialogue at the office of insurance company to
settle the claim. Nonetheless, time passed without petitioner company
taking any final action. Mr. Hahn filed a complaint for damages against
Generao who, in response, filed a third party complaint against petitioner
company which in turn filed a motion to dismiss on the ground of
prescription.
The three cases were then consolidated.
Issue: Did the causes of action of private respondents already
prescribe?
Held: NO. Petitioner company argues that under Section 384 of the
Insurance Code, even if the notice of claim was timely filed with the
insurance company within the six month period, if the action or suit that
follows is filed beyond the one year period it should necessarily be
dismissed on the ground of prescription.
The Supreme Court finds absolutely nothing in the law which mandates
that the two periods must always concur. On the contrary, it is very clear
that the one year period is only required in proper cases. It is very
obvious that petitioner company is trying to use Section 384 of as a
cloak to hide itself from its liabilities. In violation of its duties to adopt and
implement reasonable standards for the prompt investigation of claims
and to effectuate prompt, fair and equitable settlement of claims, and
with manifest bad faith, petitioner company devised means and ways of
stalling the settlement proceedings.
The one year period should be counted from the date of rejection by the
insurer as this is the time the cause of action accrues. Since in these
cases there has yet been no accrual of cause of action, prescription has
not yet set in.
NOTE: Section 384 has been amended as follows, Action or suit for
recovery of damage due to loss or injury must be brought in proper
cases, with the Commissioner or the Courts within one year from denial
of the claim, otherwise the claimants right of action shall prescribe.
ADJUSTER
1. Luminabao vs ICA
Facts: Petitioner is a life insurance underwriter or agent and a member
of a group of insurance underwriters known as Bescon Insurance
Agencies, Inc., representing the Manila Bankers Life Insurance
Corporation.
Sometime in January 1975, petitioner was able to convince Eugenio
Trinidad, the Vice-President of Victory Liner Inc., to take out a life
insurance policy with Manila Bankers Life Insurance Corporation. The
result of a medical examination shows that he was a diabetic, the
insurance company fixed the annual insurance premium at P93,180.00
for a life insurance policy with a face value of P1,000,000.00. In order to
persuade private respondent to take out the policy, petitioner offered to
return to him half of the commission out of the first premium payment
Thus, he issued two checks in favor of the insurance company for
P46,590.00 each or a total of P93,180.00. Both checks were postdated
May 30, 1975 so as to enable petitioner to make arrangements for the
return to private respondent of one check corresponding to the amount
of her commission.
Petitioner received the sum of P51,249.00 from Bescon Insurance
Agencies, Inc. as her commission out of the first annual premium paid by
private respondent. Yet, petitioner failed to comply with her commitment
to pay private respondent P46,590.00. Soon after, private respondent's
attorney sent a demand letter dated July 7,1975. In reply thereto,
petitioner, through her counsel, denied that she had entered into such an
arrangement with private respondent.
Respondent instituted an action against petitioner for specific
performance and damages. In her answer with counterclaim filed on
September 29, 1975, petitioner denied that she had made a verbal
promise to return to private respondent 50% of his premium.
The trial court rendered a decision against. However, the trial court
ordered the dismissal of respondent's complaint because the agreement
entered into between the parties was void for being contrary to the
provisions of Pres. Decree No. 612 [otherwise known as the Insurance
Code] and public policy. The trial court also dismissed petitioner's
counterclaim.
petitioner interposed an appeal with respondent appellate court
Appellate court affirmed the factual findings of the trial court and
sustained the dismissal of petitioner's counterclaim and ordered
petitioner to pay private respondent the sum of P46,590.00, with interest
thereon.
Issues:
1. Whether or not respondent appellate court erred in holding that
petitioner violated Section 361 of Pres. Decree No. 961, No
2. Whether or not respondent appellate court erred in ordering
petitioner to pay private respondent the sum of P46,590.00, with interest
thereon. Yes
Held:
1. Yes, petitioner had induced private respondent to take out a life
insurance policy from Manila Bankers Life Insurance Corporation by
promising him a rebate equivalent to 50% of the first annual premium
payment. These factual findings are, therefore, final and binding upon
the Court.
Petitioner, argues that in new of the last paragraph of Article 1358 of the
New Civil Code, which provides that contracts where the amount
involved exceeds five hundred pesos must appear in writing, the courts
below erred in giving weight and credence to the testimonies of private
respondent and his witnesses which sought to prove that she had
promised such rebate.
This contention is patently erroneous. Petitioner's reliance on Article
1358 is misplaced for the apparent reason that this article does not lay
down any evidentiary rule which precludes oral testimony as a means of
proving that parties have entered into a contract or agreement involving
an amount of more than five hundred pesos.
Neither can it be gainsaid that petitioner, an insurance agent, is enjoined
by law from inducing prospective clients to take out insurance by offering
rebates from the premiums specified in the insurance policies.
Section 361 of Pres. Decree No. 612 states:
No insurance company doing business in the Philippines or any agent
thereof, no insurance broker, and no employee or other representative of
any such insurance company, agent, or broker, shall make, procure or
negotiate any contract of insurance or agreement as to policy contract,
other than is plainly expressed in the policy or other written contract
issued or to be issued as evidence thereof, or shall directly or indirectly,
by giving or sharing a commission or in any manner whatsoever, pay or
allow or offer to pay or allow to the insured or to any employee of such
insured, either as an inducement to the making of such insurance or
after such insurance has been effected, any rebate from the premium
which is specified in the policy, or any special favor or advantage in the
dividends or other benefits to accrue thereon, or shall give or offer to give
any valuable consideration or inducement of any kind, directly or
indirectly, which is not specified in such policy or contract of insurance;
nor shall any such company, or any agent thereof, as to any policy or
contract of insurance issued, make any discrimination against any
Filipino in the sense that he is given less advantageous rates, dividends
or other policy conditions or privileges than are accorded to other
nationals because of his race.
Furthermore, Section 363 of Pres. Decree No. 612 provides that violation
of the above section constitutes a ground for the immediate revocation of
the license issued to the erring insurance company, agent or broker and
the imposition of a fine not exceeding five hundred pesos.
It is evident that petitioner's promise to pay private respondent an
amount equivalent to 50% of the first premium payment, which would be
taken out of her commission on the insurance policy, is covered squarely
by the express provisions of Section 361.
2. Yes
The Supreme Court held that the CA committed reversible error of law in
ordering petitioner to pay private respondent the promised rebate of
P46,590.00. By virtue of Article 1409 (7) of the New Civil Code, the
rebate agreement between the petitioner and private respondent is
deemed a contract void ab initio, and, consequently, does not give rise to
enforceable rights and obligations as between the parties thereto.
Respondent appellate court erred in citing Article 1412, par. (2) of the
New Civil Code as legal basis for compelling petitioner to comply with
her promise to pay private respondent the sum of P46,590.00.
Article 1412, par. (2), states that:
If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
(2) When only one of the contracting parties is at fault, he cannot
recover what he had given by reason of the contract, or ask for the
fulfillment of what has been promised him. The other, who is not at fault,
may demand the return of what he has given without any obligation to
comply with his promise.
The article contemplates of a situation where the party who is not at
fault, in the performance of his undertaking with the party who is at fault,
has paid or delivered property to the latter. This is not the case between
private respondent and petitioner.
Public policy considerations serve to underscore further the Court's
foregoing ruling that petitioner's promise of rebate, which is expressly
prohibited by law, may not be enforced for compliance by the courts.
Section 361 of Pres. Decree No. 612 is similar to the so-called "anti-
discrimination" statutes found in other jurisdictions which regulate the
activities in the insurance industry. The purpose of these statutes is the
prevention of unfair discriminatory practices by insurance companies,
agents and brokers in order to ensure that equal terms are fixed for
policyholders of the same insurable class and equal expectation of life.
The statutes prohibit such practices involving rebates or preferential
treatment with respect to the cost of the policy or the benefits allowed for
the. It follows that to enforce contracts or agreements directly forbidden
under these statutes, thereby allowing recovery thereunder, would be
subversive of the very public policy which the law was designed and
intended to uphold.
2. SMITH BELL & CO vs. CA
FACTS: July 1982: the plaintiffs, doing business under the style of Tic
Hin Chiong, Importer, bought and imported to the Philippines from the
firm Chin Gact Co., Ltd . of Taipei, Taiwan , 50 metric tons of Dicalcium
Phospate , These were contained in 1 , 250 bags and shipped from the
Port of Kaohsiung, Taiwan for the Port of Manila . On July 27, 1982,
this shipment was insured by the defendant First Insurance Co and
stamped by Smith, Bell and Co as claim agent.) `against all-risks. Upon
arrival, the shipped goods were not complete (of the 1,250 bags of the
imported material, 600 were damaged by tearing at the sides of the
container bags and the contents partly empty. Also, the contents of the
damaged bags were found to be 18, 546. 0 kg short).
October 16, the plaintiff filed with Smith, Bell, and Co., Inc a formal
statement of claim with proof of loss and a demand for settlement of the
corresponding value of the losses. But Smith, Bell and Co. denied
liability. They said that a claim agent is not personally liable under a
policy in which it has not even taken part of.
ISSUE: WON a local settling or claim agent of a disclosed principal, a
foreign insurance company, can be held jointly and severally liable with
said principal under the latters marine cargo insurance policy, given that
the agent is not a party to the insurance contract-
HELD: NO.
1. Jurisprudence: Salonga v. Warner, Barnes & Co. An adjustment
and settlement agent is no different from any other agent from the point
of view of his responsibility, for he also acts in a representative capacity.
Whenever he adjusts or settles a claim, he does it in behalf of his
principal, and his action is binding not upon himself but upon his
principal. And here again, the ordinary rule of agency applies. -> Thus,
an adjustment and settlement agent do not include personal liability.
His functions are merely to settle and adjusts claims in behalf of his
principal if those claims are proven and undisputed, and if the claim is
disputed or is disapproved by the principal, like in the instant case, the
agent does not assume any personal liability. The recourse of the
insured is to press his claim against the principal.
2. Absence of Solidary Liability: There is a solidary liability only
when the obligation expressly so states, or when the law or the nature of
the obligation requires solidarity. The Insurance Code is quite clear as to
the purpose and role of a resident agent. Such agent, as a
representative of the foreign insurance company, is tasked only to
receive legal processes on behalf of its principal and not to answer
personally for any insurance claims.
Sec. 190: On whom any notice provided by law or by any insurance
policy, proof of loss, summons and other legal processes may be served
in all actions or other legal proceedings against such company, and
consenting that service upon such general agent shall be admitted and
held as valid as if served upon the foreign company at its home office.
In the case at bar, the trial court had to order the service of summons
upon First Insurance Co., Ltd. which would not have been necessary if
petitioner was its resident agent.
3. Not Real Party - In Interest: Lastly, being a mere agent and commission. The apparentbad faith of the private respondents in
representative, petitioner is also not the real party - in - interest in this terminating the General Agency Agreement of petitioners. The agency
case. involving petitioner and private respondent is one "coupled with an
interest," and, therefore, should not be freely revocable at the unilateral
4. Resort to Equity Misplaced: Finally, respondent Court also
will of the latter. With the termination of the General Agency Agreement,
contends that the interest of justice is better served by holding the
Valenzuela would no longer be entitled to commission on the renewal of
settling agent jointly and severally liable with its principal. As no law
insurance policies of clients sourced from his agency. Despite the
backs up such pronouncement, the appellate Court is thus resorting to
termination of the agency, Philamgen continued to hold Valenzuela
equity. However, equity which has been aptly described as justice
jointly and severally liable with the insured for unpaid premiums.
outside legality , is availed of only in the absence of , and never
Valenzuela had an interest in the continuation of the agency when it was
against , statutory law or judicial pronouncements
unceremoniously terminated not only because of the commissions he
should continue to receive from the insurance business he has solicited
and procured but also for the fact that by the very acts of the
3. VALENZUELA v. COURT OF APPEALS, ARAGON et al. respondents, he was made liable to Philamgen in the event the insured
fail to pay the premiums due. They are estopped by their own positive
Facts: Arturo Valenzuela is a General Agent of Philippine American
averments and claims for damages. Therefore, the respondents cannot
General Insurance (Philamgen)since 1965. He was authorized to solicit
state that the agency relationship between Valenzuela and Philamgen is
and sell in behalf of Philamgen all kinds of non-lifeinsurance, and in
not coupled with interest. There is an exception to the principle that an
consideration of services rendered was entitled to receive the full
agency is revocable at will and that is when the agency has been given
agent'scommission of 32.5% from Philamgen under the scheduled
not only for the interest of the principal but for the interest of third
commission rates. From 1973 to1975, Valenzuela solicited marine
persons or for the mutual interest of the principal and the agent. In these
insurance from one of his clients, the Delta Motors in the amount of P4.4
cases, itis evident that the agency ceases to be freely revocable by the
Million from which he was entitled to a commission of 32%.
sole will of the principal. The factor rendering Philamgen and the private
However,Valenzuela did not receive his full commission which amounted
respondents liable in damages is that the termination by them of the
to P1.6 Million from the P4.4Million insurance coverage of the Delta
General Agency Agreement was tainted with bad faith. If a principal acts
Motors. In 1977, Philamgen started to becomeinterested in and
in bad faith and with abuse of right in terminating the agency, then he is
expressed its intent to share in the commission due Valenzuela on a fifty-
liable in damages. Valenzuela is not liable to Philamgen for the unpaid
fifty basis. Because of the refusal of Valenzuela, Philamgen terminated
and uncollected premiums. Under Section 77 of the Insurance Code, the
the General Agency Agreement of Valenzuela.
remedy for the non-payment of premiums is to put an end to and render
Issue: whether or not Philamgen could continue to hold Valenzuela the insurance policy not binding
jointly and severally liable with the insured for unpaid premiums
Sec. 77 Notwithstanding any agreement to the contrary, no policy or
Held: NO.The principal cause of the termination of Valenzuela as contract of insurance is valid and binding unless and until the premiums
General Agent of Philamgen arosefrom his refusal to share his Delta
thereof have been paid except in the case of a life or industrial life policy
whenever the grace period provision applies
INSURANCE COMMISSION
1. PHILAM VS Ansaldo
Facts: Ramon M. Paterno sent a letter-complaint to the Insurance
Commissioner alleging certain problems encountered by agents,
supervisors, managers and public consumers of the Philamlife as a
result of certain practices by said company.
Commissioner requested petitioner Rodrigo de los Reyes, in his
capacity as Philamlife's president, to comment on respondent Paterno's
letter.
The complaint prays that 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
Manuel Ortega, Philamlife's Senior Assistant Vice-President and
Executive Assistant to the President, asked that the Commissioner 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
Paterno.
Insurance Commissioner set the case for hearing and sent subpoena to
the officers of Philamlife. Ortega filed a motion to quash the subpoena
alleging that the Insurance company has no jurisdiction over the subject
matter of the case and that there is no complaint sufficient in form and
contents has been filed. The motion to quash was denied.
Issue: Whether or not the insurance commissioner had jurisdiction over
the legality of the Contract of Agency between Philamlife and its agents.
Held:
No, it does not have jurisdiction. The general regulatory authority of the
Insurance Commissioner is described in Section 414 of the Insurance
Code, to wit:
"The Insurance Commissioner shall have the duty to see that all laws
relating to insurance, insurance companies and other insurance matters,
mutual benefit associations and trusts for charitable uses are faithfully
executed and to perform the duties imposed upon him by this
Code, . . . ."
On the other hand, Section 415 provides: "In addition to the
administrative sanctions provided elsewhere in this Code, the Insurance
Commissioner is hereby authorized, at his discretion, to impose upon
insurance companies, their directors and/or officers and/or agents, for
any willful failure or refusal to comply with, or violation of any provision of
this Code, or any order, instruction, regulation or ruling of the Insurance
Commissioner, or any commission of irregularities, and/or conducting
business in an unsafe or unsound manner as may be determined by the
Insurance Commissioner, the following:
a) fines not in excess of five hundred pesos a day; and b) suspension, or
after due hearing, removal of directors and/or officers and/or agents."
A plain reading of the above-quoted provisions show that the Insurance this Code; (d) doing or proposing to do any business in substance
Commissioner has the authority to regulate the business of insurance, equivalent to any of the foregoing in a manner designed to evade the
which is defined as follows: provisions of this Code. (Insurance Code, Sec. 2 [2])

"(2) The term 'doing an insurance business' or 'transacting an Since the contract of agency entered into between Philamlife and its
insurance business,' within the meaning of this Code, shall include (a) agents is not included within the meaning of an insurance business,
making or proposing to make, as insurer, any insurance contract; (b) Section 2 of the Insurance Code cannot be invoked to give jurisdiction
making, or proposing to make, as surety, any contract of suretyship as a over the same to the Insurance Commissioner.
vocation and not as merely incidental of the surety; (c) doing any kind of
business, including a reinsurance business, specifically recognized as
constituting the doing of an insurance business within the meaning of