Payment of premium in the Philippines is enough to establish that the insurer is doing

insurance business in the Philippines, irrespective of the place of its establishment.

Manufacturer’ Life Insurance v Meer

G.R. No. L-2910 June 29, 1951

FACTS:
Manufacturer Life Insurance Company was engaged in such business in the
Philippines for more than five years before and including the year 1941. But due to war it
closed the branch office at Manila during 1942 up to 1945.

Plaintiff issued a number of life insurance policies in the Philippines containing

stipulations known as non-forfeiture clauses.

Since the insured failed to pay from 1942 to 1946, the company applied the
provision of the automatic premium loan clauses; and the net amount of premiums so
advanced or loaned totaled P1,069,254.98. On this sum the defendant Collector of
Internal Revenue assessed P17,917.12. The assessment was made pursuant to section
255 of the NIRC which put taxes on insurance premiums paid by money, notes, credits
or any substitutes for money.

Manufacturer contended that when it made premium loans or premium advances

by virtue of the non-forfeiture clauses, it did not collect premiums within the meaning of
the above sections of the law, and therefore it is not amendable to the tax provided.

ISSUE:
Was the making of premium advances, granting for the sake of argument that it
amounted to collection of premiums, done in Toronto, Canada, or in the Philippines?

RULING:
Since the advances were done internationally, the petitioner contended that those
payments were not subject to local taxation. This can’t be sustained because the loans
were made to policyholders in the Philippines, who pay the premium in the Manila branch.
Approving this point would allow foreign insurers to evade the tax by requiring that
premium payments shall be made at their head offices. It is enough that the insurer is
doing insurance business in the Philippines, irrespective of the place of its establishment.
Risks and Coverage

James McGuire vs. The manufacturers Life Insurance Co.

G.R. No. L-3581, September 21, 1950

FACTS:
On August 18, 1932, the defendant issued an insurance policy on the life of Jaime McGuire
for the sum of $5,000, and an additional sum of $5,000 as double indemnity accident benefit,
payable to the plaintiff as beneficiary. The insured paid the premiums on said policy up to and
including that due on July 19, 1940. On June 22, 1940, the insured secured from the defendant a
loan of $760 on said insurance policy. The insured failed to pay the loan with the interest thereon
on January 1, 1941, when it became due, or on any other date thereafter. He likewise failed to
pay the premiums which fell due on July 19, 1941, as well as those payable thereafter.

Paragraphs 6, 7, and 8 of the stipulation of facts read as follows:

"(6) That upon the default of the insured to pay the premiums due on July 19, 1941, and
subsequent ones, the defendant insurance company applied the stipulation contained in clause
8 (Automatic Premium Loan) of the provisions of the policy Exhibit A and said policy was carried
on under said nonforfeiture clause of the policy up to and including March 1, 1942, the date said
policy lapsed, as shown in the letter of the defendant company of January 17, 1946, to plaintiff,
a copy of which is hereto attached, marked Exhibit B and is made a part hereof;

"(7) That the insured Jaime McGuire died on August 4, 1943, in a motorcycle accident at
Borongan, Samar, Philippines;

"(8) That during the interim period between March 1, 1942, the date the policy lapsed, to
August 4, 1943, the date of the death of the insured, the insured attempted to reinstate the
policy under the stipulation contained in clause 3 of the ’Provisions’ of the same but his attempts
failed because of his inability to communicate with defendant’s branch office at Manila due to
the then existence of war and the occupation of the Philippines by enemy forces from January 1,
1942, to February, 1945."cra

The plaintiff’s theory is that, although the policy lapsed on March 1, 1942, the insured had
the privilege of reinstating it so as to keep it in force up to the time of his death upon a written
application within three years from the date of lapse and upon production of evidence of
insurability satisfactory to the company and the payment of all overdue premiums and any other
indebtedness to the company, but that the insured was unable to exercise that privilege because
of the war.

ISSUE:
Was the policy validly reinstated?
RULING:

No. Even if the insured had applied for reinstatement within three years after the policy
had lapsed, his right thereto was not absolute under the terms of the policy but discretionary on
the part of the insurance company, which had the right to deny the reinstatement if it was not
satisfied as to the insurability of the insured and if the latter did not pay all overdue premiums
and all other indebtedness to the company. After the death of the insured the insurance company
could not be compelled to entertain an application for reinstatement of the policy because the
conditions precedent to reinstatement could no longer be determined and satisfied.

After pursuing the Insurance Act, the court is firmly persuaded that the nonpayment of
premiums is such a vital defense of insurance companies that since the very beginning, said Act
2427 expressly preserved it, by providing that after the policy shall have been in force for two
years, it shall become incontestable (i. e., the insurer shall have no defense) except for fraud,
nonpayment of premiums, and military or naval service in time of war (sec. 184 [b], Insurance
Act). And when Congress recently amended this section (Rep. Act 171), the defense of fraud was
eliminated, while the defense of nonpayment of premiums was preserved. Thus the fundamental
character of the undertaking to pay premiums and the high importance of the defense of
nonpayment thereof, was specifically recognized.
Risks and Coverages – Life Insurance

Rufino D. Andres vs. The Crown Life Insurance Company

G.R. No. L-l0874 January 28, 1958

FACTS:
Plaitiff Rufino D. Andres filed a complaint against respondent, the Crown Life
Insurance Company for the recovery of the amount of P5,000, as the face value of a joint 20-
year endowment insurance policy issued in favor of the plaintiff Rufino D. Andres and his
wife Severa G. Andres on the 13th of February, 1950, by said insurance company.

On June 7, 1951, Rufino Andres presented his death claim as survivor-beneficiary of

the deceased Severa G. Andres, who died May 3, 1951. Payment was nonetheless denied by
the insurance company. According to the defendant, a letter was sent to Mr. and Mrs. Rufino
D. Andres advising them that the policy lapsed on December 25, 1950 and the amount
overdue was P165.15, giving them a period of sixty (60) days from the date of lapse to file an
application for reinstatement. Another letter was sent to petitioner on January 1951,
informing them that the policy was no longer in force. It was admitted that on February 1951,
plaintiff executed a Statement of Health which is at the same time an Application for
Reinstatement of the aforesaid policy, which was approved. Plaintiff however, failed to pay
the premiums.

The trial court issued a Decision absolving the defendant from any liability on the
ground that the policy having lapsed, it was not reinstated at the time the plaintiff's wife died.

ISSUE:
Was there a perfected contract of reinstatement after the policy lapsed due to non-
payment of premiums?

RULING:
No.

The conditions set forth in the policy for reinstatement are the following: (a)
application shall be made within three years from the date of lapse; (b) there should be a
production of evidence of the good health of the insured: (c) if the rate of premium depends
upon the age of the Beneficiary, there should likewise be a production of evidence of his or
her good health; (d) there should be presented such other evidence of insurability at the date
of application for reinstatement; (e) there should be no change which has taken place in such
good health and insurability subsequent to the date of such application and before the policy
is reinstated; and (f) all overdue premiums and other indebtedness in respect of the policy,
together with interest at six per cent, compounded annually, should first be paid.

The plaintiff-appellant did not comply with the last condition; for he only paid P100
(on account of the overdue semi-annual premium of P165.15) on February 20, 1951, before
his wife's death; and, despite the Company's reminders on, he remitted the balance of P65
on May 5, 1951 (received by the Company's agency on May 11), two days after his wife died.
On the face of such facts, the Company had the right to treat the contract as lapsed and refuse
payment of the policy.

The stipulation in a life insurance policy giving the insured the privilege to reinstate
it upon written application does not give the insured absolute right to such reinstatement by
the mere filing of an application. The Company has the right to deny the reinstatement if it is
not satisfied as to the insurability of the insured and if the latter does no pay all overdue
premium and all other indebtedness to the Company. After the death of the insured the
insurance Company cannot be compelled to entertain an application for reinstatement of the
policy because the conditions precedent to reinstatement can no longer be determined and
satisfied.
 SIMON DE LA CRUZ v.
THE CAPITAL INSURANCE and SURETY CO., INC.,

G.R. No. L-21574; June 30, 1966

FACTS:

Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc Mines, Inc. in Baguio, was
the holder of an accident insurance policy underwritten by the Capital Insurance & Surety Co.
from November 1956-1957. January 1957, in celebration with the New Year, Itogon Suyoc Mines
sponsored a boxing contest where Eduardo participated in. In the course of his bout with another
person, 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, father of the insured and beneficiary of the insurance policy claimed for
indemnity based on the insurance policy but was denied. Thus the filing of complaint before the
trial court. The insurance company 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 trial court held in favor of plaintiff thus the filing of the petition.

ISSUE:

Whether or not the insurance company is liable under the insurance policy.

HELD:

YES. It is not disputed that during the ring fight with another non-professional boxer,
Eduardo slipped, which was unintentional. Eduardo was insured "against death or disability
caused by accidental means". 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.

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. There is no
accident when a deliberate act is performed unless some additional, unexpected, independent,
and unforeseen happening occurs which produces or brings about the result of injury or death.
In other words, where the death or injury is not the natural or probable result of the insured's
voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury,
the resulting death is within the protection of policies insuring against death or injury from
accident.

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.

Hence the accident is still covered by the insurance policy. The insurance company is to
pay the beneficiary the proceeds of the insurance policy.
Risks and Coverages: Life Insurance

THE INSULAR LIFE ASSURANCE COMPANY, LTD. vs. CARPONIA T. EBRADO and PASCUALA
VDA. DE EBRADO
G.R. No. L-44059 October 28, 1977

FACTS:
In 1968, Buenaventura Cristor Ebrado was issued by The Insular Life Assurance Co., Ltd.,
Policy No. 009929 on a whole-life plan for P5,882.00 with a rider for Accidental Death Benefits
for the same amount. He designated Carponia T. Ebrado as the revocable beneficiary in his policy
which he referred to as his wife.
In 1969, Buenaventura died as a result of an accident when he was hit by a falling branch
of a tree. Carponia filed with the insurer a claim for the proceeds of the policy as the designated
beneficiary therein, although she admits that she and the insured Buenaventura were merely
living as husband and wife without the benefit of marriage. Pascuala Vda. de Ebrado also filed
her claim as the widow of the deceased insured. She asserts that she is the one entitled to the
insurance proceeds, not the common-law wife, Carponia.
In doubt as to whom the insurance proceeds shall be paid, the insurer commenced an
action for Interpleader before the Court. The trial court rendered judgment declaring Carponia
disqualified from becoming a beneficiary of the insured and directing the payment of the
insurance proceeds to the estate of the deceased insured.

ISSUE:
Can a common-law wife named as beneficiary in the life insurance policy of a legally
married man claim the proceeds thereof in case of death of the latter?

RULING:
Carponia T. Ebrado is disqualified to be the beneficiary. As a consequence, the proceeds
of the policy are payable to the estate of the deceased insured.
Article 2011 of the New Civil Code states: "The contract of insurance is governed by
special laws. Matters not expressly provided for in such special laws shall be regulated by this
Code." When not otherwise specifically provided for by the Insurance Law, the contract of life
insurance is governed by the general rules of the civil law regulating contracts. And under Article
2012 of the same Code, "any person who is forbidden from receiving any donation under Article
739 cannot be named beneficiary of a life insurance policy by the person who cannot make a
donation to him." Common-law spouses are, definitely, barred from receiving donations each
other. Article 739 of the new Civil Code provides:
"The following donations shall be void:
1. Those made between persons who were guilty of adultery or concubinage at
the time of donation;
2. Those made between persons found guilty of the same criminal offense, in
consideration thereof;
3. Those made to a public officer or his wife, descendants or ascendants by reason
of his office.
 In essence, a life insurance policy is no different from a civil donation insofar as the
beneficiary is concerned. Both are founded upon the same consideration: liberality. A
beneficiary is like a donee, because from the premiums of the policy which the insured pays out
of liberality, the beneficiary will receive the proceeds or profits of said insurance. As a
consequence, the proscription in Article 739 of the new Civil Code should equally operate in life
insurance contracts. The mandate of Article 2012 cannot be laid aside: any person who cannot
receive a donation cannot be named as beneficiary in the life insurance policy of the person who
cannot make the donation. Under American law, a policy of life insurance is considered as a
testament and in construing it, the courts will, so far as possible treat it as a will and determine
the effect of a clause designating the beneficiary by rules under which wills are interpreted.
A conviction for adultery or concubinage is not necessary before the disabilities
mentioned in Article 739 may effectuate. More specifically, with regard to the disability on
''persons who were guilty of adultery or concubinage at the time of the donation," Article 739
itself provides:
"In the case referred to in No. 1, the action for declaration of nullity may be brought by
the spouse of the donor or donee; and the guilt of the donee may be proved by
preponderance of evidence in the same action."
Accidental Death and Death by Accidental Means

SUN Insurance vs Court of Appeals

G.R. No. 92383 July 17, 1992

FACTS:
The petitioner issued Personal Accident Policy No. 05687 to Felix Lim, Jr. with a
face value of P200,000.00. Two months later, he was dead with a bullet wound in his
head. As beneficiary, his wife Nerissa Lim sought payment on the policy but her claim
was rejected. The petitioner agreed that there was no suicide. It argued, however that
there was no accident either.
Pilar Nalagon, Lim's secretary, was the only eyewitness to his death. It happened
on October 6, 1982, at about 10 o'clock in the evening, after his mother's birthday party.
According to Nalagon, Lim was in a happy mood (but not drunk) and was playing with his
handgun, from which he had previously removed the magazine. As she watched
television, he stood in front of her and pointed the gun at her. She pushed it aside and
said it might he loaded. He assured her it was not and then pointed it to his temple. The
next moment there was an explosion and Lim slumped to the floor. He was dead before
he fell.

ISSUE:
Is the widow eligible to receive the proceeds?

RULING:

YES. There was an accident.

There is no accident when a deliberate act is performed unless some additional,

unexpected, independent and unforeseen happening occurs which produces or brings about
their injury or death. This was true when he fired the gun. Under the insurance contract, the
company wasn’t liable for bodily injury caused by attempted suicide or by one needlessly
exposing himself to danger except to save another’s life. Lim wasn’t thought to needlessly expose
himself to danger due to the witness testimony that he took steps to ensure that the gun wasn’t
loaded. He even assured his secretary that the gun was loaded. There is nothing in the policy that
relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown
to have contributed to his own accident.
Measure of Indemnity

GREAT PACIFIC LIFE ASSURANCE CORP. v. CA

G.R. No. 113899; October 13, 1999

FACTS:

Great Pacific Life Assurance Corporation (Grepalife) executed a contract of group life
insurance with Development Bank of the Philippines (DBP) wherein Grepalife agreed to insure
the lives of eligible housing loan mortgagors of DBP.

One such loan mortgagor is Dr. Wilfredo Leuterio. In an application form, Dr. Leuterio
answered questions concerning his test, attesting 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:

Is Grepalife liable to DBP as beneficiary in a group life insurance contract from a complaint
filed by the widow of the decedent/mortgagor?

RULING:

Yes. 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 primarily the proper
person to bring suit thereon. Subject to some exceptions, insured may thus sue, although the
policy is taken wholly or in part for the benefit of another person, such as a mortgagee. And since
a policy of insurance upon life or health may pass by transfer, will or succession to any person,
whether he has an insurable interest or not, and such person may recover it whatever the insured
might have recovered, the widow of the decedent Dr. Leuterio may file the suit against the
insurer, Grepalife. Grepalife failed to establish that there was concealment made by the insured,
hence, it cannot refuse payment of the claim. fraudulent intent on the part of the insured must
be established to entitle the insurer to rescind the contract. Misrepresentation as a defense of
the insurer to avoid liability is an affirmative defense and the duty to establish such defense by
satisfactory and convincing evidence rests upon the insurer
Risks and Coverages – Life Insurance

The Insular Life Assurance Company, Ltd. v. Khu, et. al.

G.R. No. 195176, April 18, 2016

FACTS:
On March 6, 1997, Felipe Khu, Sr. (Felipe) applied for a life insurance policy with
Insular Life, where thereafter, it issued him a Policy with a face value of P1 million, which
took effect on June 22, 1997. On June 23, 1999, Felipe’s policy lapsed due to non-
payment of the premium covering the period from June 22, 1999 to June 23, 2000.
However, on September 7, 1999, Felipe applied for the reinstatement of his policy and
paid P25,020.00 as premium.

On October 12, 1999, Insular Life advised Felipe that his application for
reinstatement may only be considered if he agreed to certain conditions such as payment
of additional premium and the cancellation of the riders. Felipe agreed to such conditions
and on December 27, 1999, he paid the agreed additional premium. On January 7, 2000,
Insular Life issued an Endorsement certifying that the reinstatement of the policy has
been approved by the Company on the understanding of the changes made on the policy
effective June 22, 1999.

On September 22, 2001, Felipe died, and on October 5, 2001, Paz Khu, Felipe
Khu, Jr. and Frederick Khu (collectively, Felipe’s beneficiaries or respondents) filed with
Insular Life a claim for benefit under the reinstated policy. However, this claim was denied
as Insular Life had decided to rescind the reinstated policy on the grounds of concealment
and misrepresentation by Felipe. Hence, respondents instituted a complaint for specific
performance with damages.

The RTC ruled in favor of Felipe’s beneficiaries agreeing with the latter’s claim that
the insurance policy was reinstated on June 22, 1999. It also held that the reinstated
insurance policy had already become incontestable by the time of Felipe’s death on
September 22, 2001 since more than two years had already lapsed from the date of the
policy’s reinstatement on June 22, 1999.

On appeal, the CA upheld the RTC’s ruling on the non-contestability of the

reinstated insurance policy on the date the insured died. It declared that contrary to Insular
Life’s contention, there in fact exists a genuine ambiguity or obscurity in the language of
the two documents prepared by Insular Life itself, Felipe’s Letter of Acceptance and
Insular Life’s Endorsement; that given the obscurity/ambiguity in the language of these
two documents, the construction/interpretation that favors the insured’s right to recover
should be adopted; and that in keeping with this principle, the insurance policy in dispute
must be deemed reinstated as of June 22, 1999.

Insular Life basically argues that respondents should not be allowed to recover on
the reinstated insurance policy because the two-year contestability period had not yet
lapsed inasmuch as the insurance policy was reinstated only on December 27, 1999,
whereas Felipe died on September 22, 2001.

Respondents maintain that the phrase "effective June 22, 1999" found in both the
Letter of Acceptance and in the Endorsement is unclear whether it refers to the subject
of the sentence, the "reinstatement of this policy" or to the subsequent phrase "changes
are made on the policy;" that granting that there was any obscurity or ambiguity in the
insurance policy, the same should be laid at the door of Insular Life as it was this
insurance company that prepared the necessary documents that make up the same; and
that given the CA’s finding which effectively affirmed the RTC’s finding on this particular
issue, it stands to reason that the insurance policy had indeed become incontestable upon
the date of Felipe’s death.

ISSUE:
Is Felipe’s reinstated life insurance policy already incontestable at the time of his
death?

RULING: Yes.
Section 48 of the Insurance Code Whenever a right to rescind a contract of
insurance is given to the insurer by any provision of this chapter, such right must be
exercised previous to the commencement of an action on the contract. After a policy of
life insurance made payable on the death of the insured shall have been in force during
the lifetime of the insured for a period of two years from the date of its issue or of its last
reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable
by reason of the fraudulent concealment or misrepresentation of the insured or his agent.

Section 48 regulates both the actions of the insurers and prospective takers of life
insurance. It gives insurers enough time to inquire whether the policy was obtained by
fraud, concealment, or misrepresentation; on the other hand, it forewarns scheming
individuals that their attempts at insurance fraud would be timely uncovered – thus
deterring them from venturing into such nefarious enterprise. At the same time, legitimate
policy holders are absolutely protected from unwarranted denial of their claims or delay
in the collection of insurance proceeds occasioned by allegations of fraud, concealment,
or misrepresentation by insurers, claims which may no longer be set up after the two-year
period expires as ordained under the law.

The Court therefore agrees fully with the CA’s pronouncement that “the insurer is
deemed to have the necessary facilities to discover such fraudulent concealment or
misrepresentation within a period of two (2) years. It is not fair for the insurer to collect
the premiums as long as the insured is still alive, only to raise the issue of fraudulent
concealment or misrepresentation when the insured dies in order to defeat the right of the
beneficiary to recover under the policy. At least two (2) years from the issuance of the
policy or its last reinstatement, the beneficiary is given the stability to recover under the
policy when the insured dies. The provision also makes clear when the two-year period
should commence in case the policy should lapse and is reinstated, that is, from the date
of the last reinstatement.”
 The reinstatement of the insured’s policy is to be reckoned from the date when the
application was processed and approved by the insurer. To reinstate a policy means to
restore the same to premium-paying status after it has been permitted to lapse. Thus, it
is settled that the reinstatement of an insurance policy should be reckoned from the date
when the same was approved by the insurer.

Hence, the CA did not commit any error in holding that the subject insurance policy
be considered as reinstated on June 22, 1999. This finding must be upheld not only
because it accords with the evidence, but also because this is favorable to the insured
who was not responsible for causing the ambiguity or obscurity in the insurance contract.
Accordingly, the subject policy is deemed reinstated as of June 22, 1999. Thus, the period
of contestability has lapsed.
Risks and Coverages
Fire Insurance

MALAYAN INSURANCE COMPANY, INC. v. PAP CO., LTD. (PHIL. BRANCH)

G.R. No. 200784; August 7, 2013

FACTS:
Malayan issued A Fire Insurance Policy to PAP Co. for the latter’s machineries and
equipment located at Sanyo Building. The insurance, which was for Fifteen Million Pesos
and effective for a period of one year, was procured by PAP Co. for RCBC, the mortgagee
of the insured machineries and equipment. Prior to the expiration of the insurance
coverage, PAP Co. renewed the policy on an "as is" basis. Pursuant thereto, a renewal
policy was issued by Malayan to PAP Co. During the subsistence of the renewal policy,
the insured machineries and equipment were totally lost by fire. Hence, PAP Co. filed a
fire insurance claim with Malayan in the amount insured. Malayan denied the claim upon
the ground that, at the time of the loss, the insured machineries and equipment were
transferred by PAP Co. to a location different from that indicated in the policy. PAP Co.
filed the complaint against Malayan with the RTC. The lower court ruled in favor of PAP
Co. On appeal, the Court of Appeals affirmed the decision of the RTC. Hence, this
petition.

ISSUE:
Is Malayan liable for the loss although PAP Co. failed to notify the former of the transfer?

RULING:
No. The policy forbade the removal of the insured properties unless sanctioned by
Malayan. Condition No. 9(c) of the renewal policy provides:
9. Under any of the following circumstances the insurance ceases to attach
as regards the property affected unless the insured, before the occurrence
of any loss or damage, obtains the sanction of the company signified by
endorsement upon the policy, by or on behalf of the Company:
xxx xxx xxx
(c) If property insured be removed to any building or place other than in that
which is herein stated to be insured.

Evidently, by the clear and express condition in the renewal policy, the removal of
the insured property to any building or place required the consent of Malayan. Any transfer
effected by the insured, without the insurer’s consent, would free the latter from any
liability. The respondent failed to notify, and to obtain the consent of, Malayan regarding
the removal. The records are bereft of any convincing and concrete evidence that
Malayan was notified of the transfer of the insured properties from the Sanyo factory to
the Pace factory.

What PAP did to prove that Malayan was notified was to show that it relayed the fact of
transfer to RCBC, the entity which made the referral and the named beneficiary in the policy.
Malayan and RCBC might have been sister companies, but such fact did not make one an agent
of the other. The fact that RCBC referred PAP to Malayan did not clothe it with authority to
represent and bind the said insurance company. After the referral, PAP dealt directly with
Malayan.
In the absence of express valuation in a fire insurance policy, the insured is only entitled to
recover the amount of actual loss sustained and the burden is upon him to establish such
amount.

TAN CHUCO V. YORKSHIRE FIRE AND LIFE INSURANCE

14 PHIL. 346 (1909)

FACTS:

Tan Chuco files a claim under an open fire insurance policy for the alleged loss by fire of
certain stock of goods insured by Yorkshire. The evidence did not sustain Yorkshire’s allegation
that Tan Chuco or his agents had intentionally and fraudulently set the building on fire. But was
of the opinion that the Tan Chuco failed to establish the value of the goods he alleges were
destroyed by the fire. He submitted fabricated written evidence and false testimony in support
of his claim that the insured goods actually destroyed were worth more than the total amount of
the insurance thereon. CFI was of the opinion that the submitted inventory was not genuine and
was fraudulently prepared. Tan Chuco’s representatives and employees who were in the building
when the fire took place, not only made no effort to extinguish the fire, or to save the goods from
destruction, but also failed to save any of the books or papers connected with the business of
which he was in charge of—those could have corroborated with the data in the alleged inventory

The inventory submitted was dated January 1, not of custom to Tan Chuco who were of
Chinese decent. No explanation was offered which would account for the remarkable conduct of
Tan Chuco’s manager in preparing an inventory two months after his employer had left for China
and then instead of forwarding such inventory to his principal by mail, entrusted it for
transmission to a friend who had not even left for China when the fire took place. Indication that
Tan Chuco had been experiencing adverse business conditions before the fire

ISSUE:

May Tan Chuco may claim under the fire insurance policy?

RULING:

NO.

The court thinks that the action of the trial court in rejecting the proof offered by Tan
Chuco as to the amount of the loss must be sustained.
 The contract of fire insurance being a contract of indemnity, Tan Chuco is only entitled to
recover the amount of actual loss sustained by him. There being no express valuation in the
policy, the judgment was properly entered against him for lack of satisfactory proof of the
amount of loss.

In the absence of express valuation in a fire insurance policy, the insured is only entitled
to recover the amount of actual loss sustained and the burden is upon him to establish such
amount.
Breach of warranties

E. M. Bachrach vs. British American Assurance Company

G.R. No. L-5715, December 20, 1910

FACTS:

Bachrach insured his building against fire with the British-American Assurance Company.
After the effectivity of the policy, the insured stored gasoline, paints and varnishes within the
premises insured. The building was burned and the insurer refused to pay the loss on the ground
that the risk of fire was increased by the storage of gasoline, paints and varnishes. The insurer
also claimed that the plaintiff transferred his interest in and to the property covered by the policy
to H. W. Peabody & Co. to secure certain indebtedness due and owing to said company, and also
that the plaintiff had transferred his interest in certain of the goods covered by the said policy to
one Macke, to secure certain obligations assumed by the said Macke for and on behalf of the
insured. Such execution of a chattel mortgage on the insured property without consent to the
insurer violated what is known as the "alienation clause,".

ISSUE:

1. Did the use of the building as a paint and varnish shop annul the policy insurance?
2. Did the execution of the chattel mortgages without the knowledge and consent of the
insurance company annul the policy insurance?

RULING:
1. No. The property insured consisted mainly of household furniture kept for the purpose
of sale. The preservation of the furniture in a salable condition by retouching or otherwise was
incidental to the business.

The evidence offered by the plaintiff is to the effect that alcohol was used in preparing
varnish for the purpose of retouching, though he also says that the alcohol was kept in store and
not in the bodega where the furniture was. It is well settled that the keeping of inflammable oils
on the premises, though prohibited by the policy, does not void it if such keeping is incidental to
the business.
Thus, where a furniture factory keeps benzine for the purposes of operation (Davis vs.
Pioneer Furniture Company, 78 N. W. Rep., 596; Faust vs. American Fire Insurance Company, 91
Wis., 158), or where it is used for the cleaning machinery (Mears vs. Humboldt Insurance
Company, 92 Pa. St., 15; 37 Am. Rep., 647), the insurer can not on that ground avoid payment of
loss, though the keeping of the benzine on the premises is expressly prohibited It may be added
that there was no provision in the policy prohibiting the keeping of paints and varnishes upon
the premises where the insured property was stored. If the company intended to rely upon a
condition of that character, it ought to have been plainly expressed in the policy.
 2. No. Upon reading the policy of insurance issued by the defendant to the plaintiff, it will
be noted that there is no provision in said policy prohibiting the plaintiff from placing a mortgage
upon the property insured, but, admitting that such a provision was intended, we think the lower
court has completely answered this contention of the defendant. He said, in passing upon this
question as it was presented:

It is claimed that the execution of a chattel mortgage on the insured property violated
what is known as the "alienation clause," which is now found in most policies, and which is
expressed in the policies involved in cases 6496 and 6497 by a purchase imposing forfeiture if the
interest in the property pass from the insured. (Cases 6496 and 6497, in which are involved other
action against other insurance companies for the same loss as in the present action.)

This clause has been the subject of a vast number of judicial decisions (13 Am. & Eng.
Encyc. of Law, 2d ed., pp. 239 et seq.), and it is held by the great weight of authority that the
interest in property insured does not pass by the mere execution of a chattel mortgage and that
while a chattel mortgage is a conditional sale, there is no alienation within the meaning of the
insurance law until the mortgage acquires a right to take possession by default under the terms
of the mortgage. No such right is claimed to have accrued in the case at bar, and the alienation
clause is therefore inapplicable
Risks and Coverages – Fire Insurance

Development Insurance Corporation vs. Intermediate Appellate Court

G.R. No. 71360 July 16, 1986

FACTS:
A fire occurred in the building of the private respondent Philippine Union Realty
Development Corporation and it sued for recovery of damages from the petitioner
Development Insurance Corporation on the basis of an insurance contract between them.

The petitioner argues that since at the time of the fire the building insured was worth
P5,800,000.00, the private respondent should be considered its own insurer for the
difference between that amount and the face value of the policy and should share pro rata in
the loss sustained. Accordingly, the private respondent is entitled to an indemnity of only
P67,629.31, the rest of the loss to be shouldered by it alone.

ISSUE:
Is respondent entitled to indemnity under the insurance policy?

RULING:
Yes.
There is no evidence on record that the building was worth P5,800,000.00 at the time
of the loss. On the contrary, the building was insured at P2,500,000.00, and this must be
considered, by agreement of the insurer and the insured, the actual value of the property
insured on the day the fire occurred. This valuation becomes even more believable if it is
remembered that at the time the building was burned it was still under construction and not
yet completed.

The Court notes that the subject policy is an open policy. Under Section 60 of the
Insurance Code, "an open policy is one in which the value of the thing insured is not agreed
upon but is left to be ascertained in case of loss. " This means that the actual loss, as
determined, will represent the total indemnity due the insured from the insurer except only
that the total indemnity shall not exceed the face value of the policy.

Private respondent is therefore, entitled to the payment of indemnity under the said
contract in the total amount of P508,867.00.
CO-INSURANCE CLAUSE

NEW LIFE ENTERPRISES and JULIAN SY v.

HON. COURT OF APPEALS, EQUITABLE INSURANCE CORPORATION, RELIANCE SURETY AND
INSURANCE CO., INC. and WESTERN GUARANTY CORPORATION

G.R. No. 94071; March 31, 1992

FACTS:

ulian Sy and Jose Sy Bang have formed a business partnership named New Life
Enterprises, the partnership engaged in the sale of construction
materials at its place of business, a two storey building situated at Iyam, Lucena City.

Julian sy insured the stocks in trade with Western Guaranty Corporation, Reliance Surety
and Insurance. Co., Inc., and Equitable Insurance Corporation.

May 1981, Western issued fire insurance policy in the amount of 350k.

July 1981, Reliance Surety and Insurance Co., Inc. issued Fire insurance policy worth 300k
with additional 700k on another fire insurance hence total of 1M.

February 1982, Equitable Insurance Corporation issued Fire Insurance Policy worth 200k.

When the stocks insured were gutted by fire in the partnership building, all the insurance
policy was worth 1.55M. The cause of fire was electrical in nature. Julian Sy went to claim for the
proceeds based on the insurance policy but was referred to the other co-insurers since the 3
were sister companies. Eventually the three insurance companies denied Sy’s claims for
payment.

Both insurance policies denied the claim contending that Julian Sy violated certain policy
condition 3 which requires the insured to give notice of any insurance or insurances already
effected covering the stocks in trade.

Thus the filing of individual cases against the insurance companies

The RTC ruled in favor of Julian Sy ordering the insurance company to indemnify Sy of the
amount hbased on the insurance contracts. Upon appeal, CA reversed the decision stating that
Sy cannot be indemnified because of the violation of the condition in the insurance policy.

ISSUE:

Are the three insurance companies liable under the insurance policy?
RULING:

No. Condition No. 3 of said insurance policies, otherwise known as the "Other Insurance
Clause," is uniformly contained in all the aforestated insurance contracts of herein petitioners.

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 xxx

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.

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.

Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith. It is and was incumbent upon petitioner Sy to read
the insurance contracts, and this can be reasonably expected of him 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.

Hence, the three insurance companies are not liable for the insurance policies issued to
Julian Sy for the latter had violated the conditions provided for in the policies.
Risks and Coverages: Fire Insurance

PHILIPPINE HOME ASSURANCE CORPORATION vs. COURT OF APPEALS and EASTERN

SHIPPING LINES, INC.
G.R. No. 106999 June 20, 1996

FACTS:

Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan,
cargoes for carriage to Manila and Cebu, freight pre-paid and in good order and condition. The
ship caught fire and its cargoes were subsequently salvaged. ESLI asked for additional payment
from the people who were supposed to get the shipment of the cargo (the consignees) for the
salvage of the cargo. The charges were all paid by Phil Home Assurance Corp. (PHAC). PHAC, as
subrogee of the consignees, thereafter filed a complaint against ESLI to recover the sum it paid
under protest on the ground that the same were actually damages directly brought about by the
fault, negligence, illegal act and/or breach of contract of ESLI.

ESLI contended that it exercised the diligence required by law in the handling, custody
and carriage of the shipment; that the fire was caused by an unforeseen event; that the additional
freight charges are due and demandable pursuant to the Bill of Lading; and that salvage charges
are properly collectible under Act No. 2616, known as the Salvage Law.

The trial court ruled in favour of ESLI, which was affirmed by the CA.

ISSUE:
Who, among the carrier, consignee or insurer of the goods, is liable for the additional
charges or expenses incurred by the owner of the ship in the salvage operations and in the trans-
shipment of the goods via a different carrier?

RULING:
ESLI was ordered to return to PHAC the amount it paid under protest in behalf of the
consignees.

In our jurisprudence, fire may not be considered a natural disaster or calamity since it
almost always arises from some act of man or by human means. It cannot be an act of God unless
caused by lightning or a natural disaster or casualty not attributable to human agency.

In this case, it is not disputed that a small flame was detected on the acetylene cylinder and that
by reason thereof, the same exploded despite efforts to extinguish the fire. Neither is there any
doubt that the acetylene cylinder, obviously fully loaded, was stored in the accommodation area
near the engine room and not in a storage area considerably far, and in a safe distance, from the
engine room. Moreover, there was no showing, and none was alleged by the parties, that the fire
was caused by a natural disaster or calamity not attributable to human agency. On the contrary,
there is strong evidence indicating that the acetylene cylinder caught fire because of the fault
and negligence of respondent ESLI, its captain and its crew.

On the issue of whether or not respondent court committed an error in concluding that
the expenses incurred in saving the cargo are considered general average, the court ruled in the
affirmative. As a rule, general or gross averages include all damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real
and known risk. While the instant case may technically fall within the purview of the said
provision, the formalities prescribed under Articles 813 and 814 of the Code of Commerce in
order to incur the expenses and cause the damage corresponding to gross average were not
complied with. Consequently, respondent ESLI's claim for contribution from the consignees of
the cargo at the time of the occurrence of the average turns to naught.
Basis and Extent of Insurer’s Liability

Pan Malayan Insurance Corporation vs Court of Appeals

G.R. No. 81026 April 3, 1990

FACTS:
Canlubang Automotive Resources Corp. obtained from PanMalay a motor vehicle
insurance policy for its Mitsubishi Colt Lancer. While the policy was still in effect, the insured car
was allegedly hit by a pick-up owned by Erlinda Fabie but driven by another person. The car
suffered damages in the amount of P42K. PanMalay defrayed the cost of repair of the insured
car. It then demanded reimbursement from Fabie and her driver of said amount, but to no avail.
PanMalay filed a complaint for damages with the RTC of Makati against Fabie and the driver. It
averred that the damages caused to the insured car was settled under the “own damage”
coverage of the insurance policy. Private respondents filed a motion to dismiss alleging that
PanMalay had no cause of action since the “won damage” clause of the policy precluded
subrogation under Art. 2207 of the Civil Code. They contended that indemnification under said
article is on the assumption that there was no wrongdoer or no 3rd party at fault. The RTC
dismissed PanMalay’s complaint and ruled that payment under the “own damage” clause was an
admission by the insurer that the damage was caused by the assured and/or its representatives.
CA affirmed but on different ground. Applying the ejusdem generis rule, CA held that Section III-
I of the policy, which was the basis for the settlement of the claim against insurance, did not
cover damage arising from collision or overturning due to the negligence of 3rd parties as one of
the insurable risks.

ISSUE:

Was PanMalay subrogated to the rights of Canlubang against the driver and his employer?

RULING:

Yes.

Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If
the insured property is destroyed or damaged through the fault or negligence of a party other
than the assured, then the insurer, upon payment to the assured, will be subrogated to the rights
of the assured to recover from the wrongdoer to the extent that the insurer has been obligated
to pay.

Payment by the insurer to the assured operates as an equitable assignment to the former
of all remedies which the latter may have against the third party whose negligence or wrongful
act caused the loss.
 The right of subrogation is not dependent upon, nor does it grow out of, any privity of
contract or upon written assignment of claim. It accrues simply upon payment of the insurance
claim by the insurer.

There are three exceptions to this rule:

1. where the assured by his own act releases the wrongdoer or third party liable for
the loss or damage
2. where the insurer pays the assured the value of the lost goods without notifying
the carrier who has in good faith settled the assured's claim for loss
3. where the insurer pays the assured for a loss which is not a risk covered by the
policy, thereby effecting "voluntary payment"

None of these exceptions are present in this case.

It cannot be said that the meaning given by PANMALAY and CANLUBANG to the phrase
"by accidental collision or overturning" found in the first part of sub paragraph (a) is
untenable. Although the terms "accident" or "accidental" as used in insurance contracts have
not acquired a technical meaning, the Court has on several occasions defined these terms to
mean that which 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".
Certainly, it cannot be inferred from jurisprudence that these terms, without qualification,
exclude events resulting in damage or loss due to the fault, recklessness or negligence of third
parties. The concept of "accident" is not necessarily synonymous with the concept of "no
fault". It may be utilized simply to distinguish intentional or malicious acts from negligent or
careless acts of man.

Moreover, a perusal of the provisions of the insurance policy reveals that damage to, or
loss of, the insured vehicle due to negligent or careless acts of third parties is not listed under the
general and specific exceptions to the coverage of insured risks which are enumerated in detail
in the insurance policy itself.

The Court, furthermore, finds it noteworthy that the meaning advanced by PANMALAY
regarding the coverage of Section III-1 (a) of the policy is undeniably more beneficial to
CANLUBANG than that insisted upon by respondents herein. By arguing that this section covers
losses or damages due not only to malicious, but also to negligent acts of third parties,
PANMALAY in effect advocates for a more comprehensive coverage of insured risks. And this, in
the final analysis, is more in keeping with the rationale behind the various rules on the
interpretation of insurance contracts favoring the assured or beneficiary so as to effect the
dominant purpose of indemnity or payment.

Parenthetically, even assuming for the sake of argument that Section III-1 (a) of the
insurance policy does not cover damage to the insured vehicle caused by negligent acts of third
parties, and that PANMALAY's settlement of CANLUBANG's claim for damages allegedly arising
from a collision due to private respondents' negligence would amount to unwarranted or
"voluntary payment", dismissal of PANMALAY's complaint against private respondents for no
cause of action would still be a grave error of law.

For even if under the above circumstances PANMALAY could not be deemed subrogated
to the rights of its assured under Article 2207 of the Civil Code, PANMALAY would still have a
cause of action against private respondents. Under Jurisprudence, the Court ruled that the
insurer who may have no rights of subrogation due to "voluntary" payment may nevertheless
recover from the third party responsible for the damage to the insured property under Article
1236 of the Civil Code.29
Basis and extent of Insurance Policy

SIMON DE LA CRUZ v. THE CAPITAL INSURANCE and SURETY CO., INC.,

G.R. No. L-21574 June 30, 1966

FACTS:

Eduardo de la Cruz, employed as a mucker in the Itogon-Suyoc Mines, Inc. in Baguio, was
the holder of an accident insurance policy (No. ITO-BFE-170) underwritten by the Capital
Insurance & Surety Co., Inc., 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. 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, 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 of Pangasinan 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.
After due hearing the court rendered the decision in favor of the plaintiff which is the subject of
the present appeal. Eduardo was insured "against death or disability caused by accidental
means".

Appellant insurer now 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:

Is the death of Eduardo de la Cruz is covered by accident insurance policy?

RULING:

Yes. 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. Where the death or injury is not the natural or probable result
of the insured's voluntary act, or if something unforeseen occurs in the doing of the act which
produces the injury, the resulting death is within the protection of policies insuring against death
or injury from accident.

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.

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.

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.
Risks and Coverages – Casualty Insurance: Meaning of Accident and Accidental

Sun Insurance Office, Ltd. v. CA and Nerissa Lim

G.R. No. 92383, July 17, 1992

FACTS:
The petitioner issued a Personal Accident Policy to Felix Lim, Jr. with a face value
of P200,000.00. Two months later, he was dead with a bullet wound in his head. As
beneficiary, his wife, Nerissa Lim, sought payment on the policy but her claim was
rejected. The petitioner agreed that there was no suicide, however, it argued that there
was no accident either.

According to Pilar Nalagon, Lim's secretary, the only eyewitness to Lim’s death,
the latter was in a happy mood, but not drunk, and was playing with his handgun, from
which he had previously removed the magazine. As she watched television, he stood in
front of her and pointed the gun at her. She pushed it aside and said it might be loaded.
He assured her it was not and then pointed it to his temple. The next moment there was
an explosion and Lim slumped to the floor. He was dead before he fell.

The widow sued petitioner, and the RTC ruled in favor of private respondent. On
appeal, the RTC’s decision was affirmed by the CA.

ISSUE:
Was there an accident in which the widow can claim under the Personal Accident
Policy?

RULING: Yes.
The words "accident" and "accidental" have never acquired any technical
signification in law, and when used in an insurance contract are to be construed and
considered according to the ordinary understanding and common usage and speech of
people generally. In-substance, the courts are practically agreed that the words "accident"
and "accidental" mean that which happens by chance or fortuitously, without intention or
design, and which is unexpected, unusual, and unforeseen. The definition that has usually
been adopted by the courts is that 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 case, and therefore not expected.

An accident is an event which happens without any human agency or, if happening
through human agency, an event which, under the circumstances, is unusual to and not
expected by the person to whom it happens. It has also been defined as an injury which
happens by reason of some violence or casualty to the injured without his design,
consent, or voluntary co-operation.

In light of these definitions, the Court is convinced that the incident that resulted in
Lim's death was indeed an accident. The petitioner says that "there is no accident when
a deliberate act is performed unless some additional, unexpected, independent and
unforeseen happening occurs which produces or brings about their injury or death." There
was such a happening. This was the firing of the gun, which was the additional
unexpected and independent and unforeseen occurrence that led to the insured person's
death.

The petitioner also cites one of the four exceptions provided for in the insurance
contract that “attempting to commit suicide or willfully exposing himself to needless peril
except in an attempt to save human life,” and contends that the private respondent's claim
is barred by such provision.

It should be noted at the outset that suicide and willful exposure to needless peril
are in pari materia because they both signify a disregard for one's life. The only difference
is in degree, as suicide imports a positive act of ending such life whereas the second act
indicates a reckless risking of it that is almost suicidal in intent. To illustrate, a person who
walks a tightrope one thousand meters above the ground and without any safety device
may not actually be intending to commit suicide, but his act is nonetheless suicidal. He
would thus be considered as "willfully exposing himself to needless peril" within the
meaning of the exception in question.

Lim was unquestionably negligent and that negligence cost him his own life. But it
should not prevent his widow from recovering from the insurance policy he obtained
precisely against accident. There is nothing in the policy that relieves the insurer of the
responsibility to pay the indemnity agreed upon if the insured is shown to have contributed
to his own accident. Indeed, most accidents are caused by negligence. There are only
four exceptions expressly made in the contract to relieve the insurer from liability, and
none of these exceptions is applicable in the case.
Risks and Coverages
Casualty Insurance

FORTUNE INSURANCE AND SURETY CO., INC. v. COURT OF APPEALS and PRODUCERS BANK OF
THE PHILIPPINES
G.R. No. 115278 May 23, 1995

FACTS:
Producers Bank was insured with a theft or robbery insurance policy by Fortune. An
armored car of Producers Bank, while in the process of transferring cash in the sum of P725,
000.00 under the custody of its teller Maribeth Alampay, from its Pasay Branch to its Head Office
at Makati, was robbed of the said cash. The said armored car was driven by Benjamin Magalong,
escorted by Security Guard Saturnino Atiga. Driver Magalong was assigned by PRC Management
Systems with Producers Bank by virtue of an Agreement. The Security Guard Atiga was assigned
by Unicorn Security Services, Inc. with Producers Bank by virtue of a contract of Security Service.
Demands were made by Producers Bank upon Fortune to pay the amount of the loss of
P725,000.00, but the latter refused to pay as the loss is excluded from the coverage of the
insurance policy, which reads as follows:
GENERAL EXCEPTIONS
The company shall not be liable under this policy in report 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. . . .

Producers Bank contends that Atiga and Magalong are not its "officer, employee... trustee
or authorized representative ... at the time of the robbery. The trial court ruled in favor of
Producers. On appeal, the Court of Appeals affirmed the decision of the trial court.

ISSUE:
Is Fortune liable under the General Exceptions Clause?

RULING:
No. The Supreme Court is satisfied that Magalong and Atiga were, in respect of the
transfer of Producer's money from its Pasay City branch to its head office in Makati, its
"authorized representatives" who served as such with its teller Maribeth Alampay. Howsoever
viewed, Producers entrusted the three with the specific duty to safely transfer the money to its
head office, with Alampay to be responsible for its custody in transit; Magalong to drive the
armored vehicle which would carry the money; and Atiga to provide the needed security for the
money, the vehicle, and his two other companions. In short, for these particular tasks, the three
acted as agents of Producers. A "representative" is defined as one who represents or stands in
the place of another; one who represents others or another in a special capacity, as an agent,
and is interchangeable with "agent."
 In view of the foregoing, Fortune is exempt from liability under the general exceptions
clause of the insurance policy.