. Philamcare Health Systems, Inc. vs Court of Appeals and Julita Trinos 379 . Fortune Insurance and Surety Co.
Surety Co., Inc. v. Court of Appeals
SCRA 356
Facts: Julita Trinos was the live-in wife of Ernani Trinos, who had a Health Ca
re Agreement with petitioner company. Under coverage, Mr. Trinos suffered a
heart attack, was twice confined in a hospital, then subsequently died. Julita T
rinos incurred expenses amounting to P76,000.
Philamcare denied the insurance claim on the grounds that a health care agr
eement is not an insurance contract. That there was material concealment th
e insured as it would appear that in the application for health coverage, petitio
ners required respondent's husband to sign an express authorization for any
person, organization or entity that has any record or knowledge of his health t
o furnish any and all information relative to any hospitalization, consultation, t
reatment or any other medical advice or examination. Also, it was contended
that Julita Trinos was not the legal wife.
Issue(s): (1) WON the agreement was an insurance contract. (2) WON there
was material concealment of facts. (3) WON Julita Trinos is entitled to receiv
e.
Ruling:
Yes. An insurance contract exists where the following elements concur: 1. Th
e insured has an insurable interest; 2. The insured is subject to a risk of loss b
y the happening of the designated peril; 3. The insurer assumes the risk; 4. S
uch assumption of risk is part of a general scheme to distribute actual losses
among a large group of persons bearing a similar risk; and 5. In consideration
of the insurer's promise, the insured pays a premium.
No. The answer assailed by petitioner was in response to the question relatin
g to the medical history of the applicant. This largely depends on opinion rath
er than fact, especially coming from respondent's husband who was not a me
dical doctor. Where matters of opinion or judgment are called for, answers m
ade in good faith and without intent to deceive will not avoid a policy even tho
ugh they are untrue. Thus, "(A)lthough false, a representation of the expectati
on, intention, belief, opinion, or judgment of the insured will not avoid the polic
y if there is no actual fraud in inducing the acceptance of the risk, or its accep
tance at a lower rate of premium, and this is likewise the rule although the sta
tement is material to the risk, if the statement is obviously of the foregoing ch
aracter, since in such case the insurer is not justified in relying upon such stat
ement, but is obligated to make further inquiry. There is a clear distinction bet
ween such a case and one in which the insured is fraudulently and intentional
ly states to be true, as a matter of expectation or belief, that which he then kn
ows, to be actually untrue, or the impossibility of which is shown by the facts
within his knowledge, since in such case the intent to deceive the insurer is o
bvious and amounts to actual fraud."
Yes. In a contract of indemnity, payment should be made to the party who inc
urred the expenses.
Facts:
On June 29, 1987, Producer’s Bank of the Philippines’ armored vehicle
was robbed, in transit, of seven hundred twenty-five thousand pesos
(Php 725,000.00) that it was transferring from its branch in Pasay to its
main branch in Makati. To mitigate their loss, they claim the amount
from their insurer, namely Fortune Insurance and Surety Co.
Fortune Insurance, however, assails that the general exemption clause
in the Casualty Insurance coverage had a general exemption clause,
to wit:
GENERAL EXCEPTIONS
The company shall not be liable under this policy in respect of
xxx xxx xxx
(b) any loss caused by any dishonest, fraudulent or criminal act of the
insured or any officer, employee, partner, director, trustee or authorized
representative of the Insured whether acting alone or in conjunction
with others. . . .
And, since the driver (Magalong) and security guard (Atiga) of the
armored vehicle were charged with three others as liable for the
robbery, Fortune denies Producer’s Bank of its insurance claim.
The trial court and the court appeals ruled in favor of recovery, hence,
the case at bar.
Issue:
Whether recovery is precluded under the general exemption clause.
Ruling:
Yes, recovery is precluded under the general exemption clause.
Howsoever viewed, Producers entrusted the three with the specific duty
to safely transfer the money to its head office, with Alampay to be
responsible for its custody in transit; Magalong to drive thearmored
vehicle which would carry the money; and Atiga to provide the needed
security for the money, the vehicle, and his two other companions. In
short, for these particular tasks, the three acted as agents of Producers.
A "representative" is defined as one who represents or stands in the
place of another; one who represents others or another in a special
capacity, as an agent, and is interchangeable with "agent."
In view of the foregoing, Fortune is exempt from liability under the
general exceptions clause of the insurance policy.
. RESORTS, INC., petitioner, vs. PHILIPPINE CHARTER INSURANCE COR
PORATION, respondent. 458 SCRA 550 (2005)
Facts:
Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union and
had its properties in said resort insured originally with the American Home As
surance Company (AHAC). In the first 4 policies issued, the risks of loss from
earthquake shock was extended only to petitioner’s two swimming pools. Gul
f Resorts agreed to insure with Phil Charter the properties covered by the AH
AC policy provided that the policy wording and rates in said policy be copied i
n the policy to be issued by Phil Charter. Phil Charter issued Policy No. 3194
4 to Gulf Resorts covering the period of March 14, 1990 to March 14, 1991 fo
r P10,700,600.00 GULF for a total premium of P45,159.92. the break-down o
f premiums shows that Gulf Resorts paid only P393.00 as premium against e
arthquake shock (ES). On July 16, 1990 an earthquake struck Central Luzon
and Northern Luzon and plaintiff’s properties covered by Policy No. 31944 iss
ued by defendant, including the two swimming pools in its Agoo Playa Resort
were damaged.
Petitioner advised respondent that it would be making a claim under its Insura
nce Policy 31944 for damages on its properties. Respondent denied petitione
r’s claim on the ground that its insurance policy only afforded earthquake sho
ck coverage to the two swimming pools of the resort. The trial court ruled in fa
vor of respondent. In its ruling, the schedule clearly shows that petitioner paid
only a premium of P393.00 against the peril of earthquake shock, the same p
remium it had paid against earthquake shock only on the two swimming pools
in all the policies issued by AHAC.
Issue:
Whether or not the policy covers only the two swimming pools owned by Gulf
Resorts and does not extend to all properties damaged.
RULLING:
YES, it only covers the 2 swimming pools. In sum, there is no ambiguity in the
terms of the contract and its riders. From the inception of the policy, petitioner
had required the respondent to copy verbatim the provisions and terms of its l
atest insurance policy from AHAC-AIU. All the provisions and riders taken an
d interpreted together, indubitably show the intention of the parties to extend
earthquake shock coverage to the two swimming pools only. An insurance pr
emium is the consideration paid an insurer for undertaking to indemnify the in
sured against a specified peril. In fire, casualty and marine insurance, the pre
mium becomes a debt as soon as the risk attaches. In the subject policy, no p
remium payments were made with regard to earthquake shock coverage exc
ept on the two swimming pools. There is no mention of any premium payable
for the other resort properties with regard to earthquake shock.
. MANILA MAHOGANY MFG CORP V CA & ZENITH INSURANCE
FACTS:
Manila Mahogany insured its Mercedes Benz with respondent insurance company. On
e day, the vehicle was bumped and damaged by a truck owned by San Miguel Corp (S
MC).
Zenith paid P5K to petitioner in amicable settlement. Petitioner’s general manager exe
cuted a Release Claim, subrogating respondent company to all its right to action again
st SMC.
Later respondent wrote Insurance Adjusters Inc. to demand reimbursement from SMC.
Insurance Adjusters refused saying that SMC had already paid petitioner P4,500 for th
e damages to petitioner’s vehicle, as evidenced by a cash voucher and Release of Cl
aim executed by the GM of petitioner discharging SMC from “all actions, claims, dema
nds the rights of action that now exist or hereafter develop arising out of or as a conse
quence of the accident.
Respondent demanded the P4.5K amount from petitioner. Petitioner refused. Suit filed
for recovery.
City Court ordered petitioner to pay respondent. CFI affirmed. CA affirmed with modifi
cation that petitioner was to pay respondent the total amount of 5K it had received fro
m respondent.
Petitioner’s argument: Since the total damages were valued at P9,486.43 and only 5K
was received by petitioner from respondent, petitioner argues that it was entitled to go
after SMC to claim the additional which was eventually paid to it.
Respondent’s argument: No qualification to its right of subrogation.
ISSUE:
1.WON petitioner should pay respondent despite the subrogation in the Release of Cl
aim was conditioned on recovery of the total amount of damages petitioner has sustai
ned.
RULING:
1. NO. SC said no other evidence to support its allegation that a gentleman’s agreeme
nt existed between the parties, not embodied in the Release of Claim, such Release o
f Claim must be taken as the best evidence of the intent and purpose of the parties.
CA correct in holding petitioner should reimburse respondent 5K.
When Manila Mahogany executed another release claim discharging SMC from all rig
hts of action after the insurer had paid the proceeds of the policy – the compromise ag
reement of 5K- the insurer is entitled to recover from the insured the amount of insura
nce money paid.
Petitioner by its own acts released SMC, thereby defeating respondent’s right of subro
gation, the right of action against the insurer was also nullified.
Since the insurer can be subrogated to only such rights as the insured may have, sho
uld the insured, after receiving payment from the insurer, release the wrongdoer who c
aused the loss, the insurer losses his rights against the latter. But in such a case, the i
nsurer will be entitled to recover from the insured whatever it has paid to the latter, unl
ess the release was made w/ the consent of the insurer.
Federal Express Corporation vs. American Home Assurance Company and PHILAM Insura
nce Company
FACTS:
On January 26, 1994, SMITHKLINE Beecham of Nebraska, USA delivered to Burlington Ai
r Express (AGENT OF FEDREAL EXPRESS) a shipment of 109 cartons of veterinary biolo
gicals for delivery to consignee SMITHKLINE and French Overseas Company in Makati Cit
y, Metro Manila.
The shipment was covered by Burlington Airway Bill No. 11263825 with the words, ‘REFRI
GERATE WHEN NOT IN TRANSIT’ and ‘PERISHABLE’ stamp marked on its face. That sa
me day, Burlington insured the cargoes in the amount of $39,339.00 with AHAC.
The following day, Burlington turned over the custody of said cargoes to Federal Express w
hich transported the same to Manila. The first shipment, consisting of 92 cartons arrived in
Manila on January 29, 1994 and was immediately stored at Cargohaus Inc.’s warehouse.
While the second, consisting of 17 cartons, came in two (2) days later, or on January 31, 1
994,which was likewise immediately stored at Cargohaus’ warehouse.
12 days later, the Customs Broker who was assigned by Smithkline of Makati to facilitate th
e withdrawal of the Cargoes, did not proceed with such withdrawal for He found out that the
Cartons containing the vaccines were not properly stored as ordered. For this reason, the v
accines were examined, only to find out that they were damaged and unusable. Conseque
ntly Smithkline of Makati abandoned the shipment.
Smithkline of Makati filed a claim with PHILAM, the representative of AHAC in the Philippin
es. By virtue of its right of subrogation, AHAC proceeded against FEDERAL EXPRESS.
Federal Express declined the claim of AHAC contending that the latter had no cause of acti
on against the former. Moreover, Federal Express contended that no notice of claim was fil
ed, hence, not complying with the condition precedent, AHAC was precluded from assertin
g its claim against it.
ISSUES:
1.Whether or not AHAC has legal personality to sue, thus, no cause of action against Fede
ral Express?
2.Whether or not AHAC complied with the necessary condition precedent in order to file cla
ims against Federal Express?
RULING:
First Issue:
Federal Express argued that payment was erroneous for the proper payment should have b
een made to Burlington as agent of Federal Express, and as payee of the bill.
Held, Smithkline of Makatin has the personality to claim for the damages because the Certi
ficate of Insurance is payable to the bearer thereof. Upon payment by AHAC to Smithkline,
the latter executed a subrogation receipt. Hence, AHAC and PHILAM have personality to fil
e claims.
Upon payment to the consignee of an indemnity for the loss of or damage to the insured go
ods, the insurer’s entitlement to subrogation pro tanto — being of the highest equity — equi
ps it with a cause of action in case of a contractual breach or negligence. Further, the insur
er’s subrogatory right to sue for recovery under the bill of lading in case of loss of or damag
e to the cargo is jurisprudentially upheld.”
Second Issue:
Under the Warsaw Convention, Notice of Claim is a condition precedent to the accrual of a
Right of Action against a carrier for loss or damage to the goods. Being a condition precede
nt, it must precede a suit for enforcement. In the instant case, AHAC never complied such r
equirement. Thus, it cannot file claims against Federal Express.
ETERNAL GARDENS MEMORIAL PARK CORPORATION vs. THE PHILIPP
INE AMERICAN LIFE INSURANCE COMPANY
G.R. No. 166245 09 April 2008
Facts:
Respondent Philamlife entered into an agreement denominated as Creditor G
roup Life Policy with petitioner. Under the policy, the clients of Eternal who pu
rchased burial lots from it on installment basis would be insured by Philamlife.
Among those insured was John Chuang who died with a balance of payment
s pf PhP100,000.00. More than a year after complying with the required docu
ments, Philamlife had not furnished Eternal with any reply to the latter’s insur
ance claim. This prompted Eternal to demand from Philamlife the payment of
the claim for PhP 100,000 on April 25, 1986. Only then did Philamlife respond
that the deceased was not covered by the Policy.
The RTC said that since the contract is a group life insurance, once proof of d
eath is submitted, payment must follow. The CA ruled that the non-accomplis
hment of the submitted application form violated Section 26 of the Insurance
Code. Thus, the CA concluded, there being no application form, Chuang was
not covered by Philamlifes insurance.
Issue: May the inaction of the insurer on the insurance application be conside
red approval of the application?
Ruling:
Yes. As earlier stated, Philamlife and Eternal entered into an agreement deno
minated as Creditor Group Life Policy No. P-1920 dated December 10, 1980.
In the policy, it is provided that:
EFFECTIVE DATE OF BENEFIT.
The insurance of any eligible Lot Purchaser shall be effective on the date he c
ontracts a loan with the Assured. However, there shall be no insurance if the
application of the Lot Purchaser is not approved by the Company.
An examination of the above provision would show ambiguity between its two
sentences. A contract of insurance, being a contract of adhesion, par excell
ence, any ambiguity therein should be resolved against the insurer. Moreove
r, the mere inaction of the insurer on the insurance application must not work
to prejudice the insured; it cannot be interpreted as a termination of the insura
nce contract. The termination of the insurance contract by the insurer must be
explicit and unambiguous.
21. Enriquez v Sun Life of Canada 41 Phil 269
FACTS:
September 24, 1917: Joaquin Herrer made application to the Sun Life Assura
nce Company of Canada through its office in Manila for a life annuity
2 days later: he paid P6,000 to the manager of the company's Manila office a
nd was given a receipt
According to the provisional receipt, 3 things had to be accomplished by the i
nsurance company before there was a contract:
(1) There had to be a medical examination of the applicant; -check
(2) there had to be approval of the application by the head office of the comp
any; and - check
(3) this approval had in some way to be communicated by the company to the
applicant
November 26, 1917: The head office at Montreal, Canada gave notice of acc
eptance by cable to Manila but this was not mailed
December 4, 1917: policy was issued at Montreal
December 18, 1917: attorney Aurelio A. Torres wrote to the Manila office of th
e company stating that Herrer desired to withdraw his application
December 19, 1917: local office replied to Mr. Torres, stating that the policy h
ad been issued, and called attention to the notification of November 26, 1917
December 21, 1917 morning: received by Mr. Torres
December 20, 1917: Mr. Herrer died
Rafael Enriquez, as administrator of the estate of the late Joaquin Ma. Herrer
filed to recover from Sun Life Assurance Company of Canada through its offic
e in Manila for a life annuity
RTC: favored Sun Life Insurance
ISSUE:
WON Mr. Herrera received notice of acceptance of his application thereby pe
rfecting his life annuity
RULING:
NO. Not perfected because it has not been proved satisfactorily that the acce
ptance of the application ever came to the knowledge of the applicant.
Art. 1319. Consent is manifested by the meeting of the offer and the acceptan
ce upon the thing and the cause which are to constitute the contract. The offe
r must be certain and the acceptance absolute. A qualified acceptance consti
tutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from t
he time it came to his knowledge. The contract, in such a case, is presumed t
o have been entered into in the place where the offer was made.
Judgment is reversed, and the Enriquez shall have and recover from the Sun
Life the sum of P6,000 with legal interest from November 20, 1918, until paid,
without special finding as to costs in either instance. So ordered.
Development Bank of the Philippines v CA 231 SCRA 370 (1994)
Facts:
Juan B. Dans, together with his family applied for a loan of P500,000 with DBP. As pri
ncipal mortgagor, Dans, then 76 years of age was advised by DBP to obtain a mortga
ge redemption insurance (MRI) with DBP MRI pool. A loan in the reduced amount was
approved and released by DBP. From the proceeds of the loan, DBP deducted the pa
yment for the MRI premium. The MRI premium of Dans, less the DBP service fee of 1
0%, was credited by DBP to the savings account of DBP MRI-Pool. Accordingly, the D
BP MRI Pool was advised of the credit. Dans died of cardiac arrest. DBP MRI Pool no
tified DBP that Dans was not eligible for MRI coverage, being over the acceptance ag
e limit of 60 years at the time of application. DBP apprised Candida Dans of the disap
proval of her late husband’s MRI application. DBP offered to refund the premium whic
h the deceased had paid, but Candida Dans refused to accept the same demanding p
ayment of the face value of the MRI or an amount equivalent of the loan. She, likewis
e, refused to accept an ex gratia settlement which DBP later offered. Hence, the case
at bar.
Issue:
Whether or not the DBP MRI Pool should be held liable on the ground that the contrac
t wasalready perfected?
Held:
No, it is not liable. The power to approve MRI application is lodged with the DBP MRI
Pool. The pool, however, did not approve the application. There is also no showing th
at it accepted the sum which DBP credited to its account with full knowledge that it wa
s payment for the premium. There was as a result no perfected contract of insurance,
hence the DBP MRI Pool cannot be held liable on a contract that does not exist. In de
aling with Dans, DBP was wearing 2 legal hats: the first as a lender and the second as
an insurance agent. As an insurance agent, DBP made Dans go through the motion o
f applying for said insurance, thereby leading him and his family to believe that they h
ad already fulfilled all the requirements for the MRI and that the issuance of their polic
y was forthcoming. DBP had full knowledge that the application was never going to be
approved. The DBP is not authorized to accept applications for MRI when its clients ar
e more than 60 years of age. . Knowing all the while that Dans was ineligible for MRI c
overage because of his advanced age, DBP exceeded the scope of its authority when
it accepted Dan's application for MRI by collecting the insurance premium, and deduct
ing its agent's commission and service fee.
The liability of an agent who exceeds the scope of his authority depends upon whethe
r the third person is aware of the limits of the agent's powers. There is no showing tha
t Dans knew of the limitation on DBP's authority to solicit applications for MRI.
If the third person dealing with an agent is unaware of the limits of the authority confer
red by the principal on the agent and he (third person) has been deceived by the non-
disclosure thereof by the agent, then the latter is liable for damages to him (V Tolentin
o, Commentaries and Jurisprudence on the Civil Code of the Philippines, p. 422 [199
2], citing Sentencia [Cuba] of September 25, 1907). The rule that the agent is liable w
hen he acts without authority is founded upon the supposition that there has been som
e wrong or omission on his part either in misrepresenting, or in affirming, or concealin
g the authority under which he assumes to act (Francisco, V., Agency 307 [1952], citin
g Hall v. Lauderdale, 46 N.Y. 70, 75). Inasmuch as the non-disclosure of the limits of t
he agency carries with it the implication that a deception was perpetrated on the unsu
specting client, the provisions of Articles 19, 20 and 21 of the Civil Code of the Philippi
nes come into play.
Great Pacific Life vs. CA primarily the proper person to bring suit thereon. Subject to some
Facts: exceptions, insured may thus sue, although the policy is taken wholly
Great Pacific Life Assurance Corporation (Grepalife) executed a or in part for the benefit of another person, such as a mortgagee.
contract of group life insurance with Development Bank of the And since a policy of insurance upon life or health may pass by transfer,
Philippines (DBP) wherein Grepalife agreed to insure the lives of will or succession to any person, whether he has an insurable interest
eligible housing loan mortgagors of DBP. or not, and such person may recover it whatever the insured might have
One such loan mortgagor is Dr. Wilfredo Leuterio. In an application recovered, the widow of the decedent Dr. Leuterio may file the suit
form, Dr. Leuterio answered questions concerning his test, attesting against the insurer, Grepalife.
among others that he does not have any heart conditions and that he
is in good health to the best of his knowledge.
However, after about a year, Dr. Leuterio died due to “massive cerebral
hemorrhage.” When DBP submitted a death claim to Grepalife, the
latter denied the claim, alleging that Dr. Leuterio did not disclose he had
been suffering from hypertension, which caused his death. Allegedly,
such non-disclosure constituted concealment that justified the denial of
the claim.
Hence, the widow of the late Dr. Leuterio filed a complaint against
Grepalife for “Specific Performance with Damages.” Both the trial court
and the Court of Appeals found in favor of the widow and ordered
Grepalife to pay DBP.

ISSUE:
Whether the CA erred in holding Grepalife liable to DBP as beneficiary
in a group life insurance contract from a complaint filed by the widow of
the decedent/mortgagor

HELD:
The rationale of a group of insurance policy of mortgagors, otherwise
known as the “mortgage redemption insurance,” is a device for the
protection of both the mortgagee and the mortgagor. On the part of the
mortgagee, it has to enter into such form of contract so that in the event
of the unexpected demise of the mortgagor during the subsistence of
the mortgage contract, the proceeds from such insurance will be
applied to the payment of the mortgage debt, thereby relieving the heirs
of the mortgagor from paying the obligation. In a similar vein, ample
protection is given to the mortgagor under such a concept so that in the
event of death, the mortgage obligation will be extinguished by the
application of the insurance proceeds to the mortgage indebtedness. In
this type of policy insurance, the mortgagee is simply an appointee of
the insurance fund. Such loss-payable clause does not make the
mortgagee a party to the contract.
The insured, being the person with whom the contract was made, is