Professional Documents
Culture Documents
GASI sought recompense from COSCO, thru its Philippine agent Smith
Bell Shipping Lines, Inc. (SMITH BELL),6ATI7 and PROVEN8 but was
denied. Hence, it pursued indemnification from the shipments insurer. 9
DECISION
REYES, J.:
This is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision2 dated October 10,
2008 of the Court of Appeals (CA) in CA-G.R. SP No. 99021 which
adjudged petitioner Asian Terminals, Inc. (ATI) liable to pay the money
claims of respondent First Lepanto-Taisho Insurance Corporation (FIRST
LEPANTO).
ATI denied liability for the lost/damaged shipment and claimed that it
exercised due diligence and care in handling the same. 13 ATI averred
that upon arrival of the shipment, SMITH BELL requested for its
inspection14 and it was discovered that one jumbo bag thereof
sustained loss/damage while in the custody of COSCO as evidenced by
Turn Over Survey of Bad Order Cargo No. 47890 dated August 6,
199615 jointly executed by the respective representatives of ATI and
COSCO. During the withdrawal of the shipment by PROVEN from ATIs
warehouse, the entire shipment was re-examined and it was found to
be exactly in the same condition as when it was turned over to ATI
such that one jumbo bag was damaged. To bolster this claim, ATI
submitted Request for Bad Order Survey No. 40622 dated August 9,
199616 jointly executed by the respective representatives of ATI and
PROVEN. ATI also submitted various Cargo Gate Passes17 showing that
PROVEN was able to completely withdraw all the shipment from ATIs
warehouse in good order condition except for that one damaged jumbo
bag.
The shipment arrived in Manila on July 18, 1996 and was discharged
into the possession and custody of ATI, a domestic corporation
engaged in arrastre business. The shipment remained for quite some
time at ATIs storage area until it was withdrawn by broker, Proven
Customs Brokerage Corporation (PROVEN), on August 8 and 9, 1996 for
delivery to the consignee. Upon receipt of the shipment, 5 GASI
subjected the same to inspection and found that the delivered goods
incurred shortages of 8,600 kilograms and spillage of 3,315 kg for a
total of11,915 kg of loss/damage valued at P166,772.41.
In the alternative, ATI asserted that even if it is found liable for the
lost/damaged portion of the shipment, its contract for cargo handling
services limits its liability to not more than P5,000.00 per package. ATI
interposed a counterclaim of P20,000.00 against FIRST LEPANTO as
and for attorneys fees. It also filed a cross-claim against its codefendants COSCO and SMITH BELL in the event that it is made liable
to FIRST LEPANTO.18
No pronouncement as to cost.
The counterclaims of [ATI and PROVEN] are likewise dismissed for lack
of legal basis.
SO ORDERED.24
Ruling of the Regional Trial Court
On appeal, the Regional Trial Court (RTC) reversed the MeTCs findings.
In its Decision25 dated January 26, 2007, the RTC of Manila, Branch 21,
in Civil Case No. 06-116237, rejected the contentions of ATI upon its
observation that the same is belied by its very own documentary
evidence. The RTC remarked that, if, as alleged by ATI, one jumbo bag
was already in bad order condition upon its receipt of the shipment
from COSCO on July 18, 1996, then how come that the Request for Bad
Order Survey and the Turn Over Survey of Bad Order Cargo were
prepared only weeks thereafter or on August 9, 1996 and August 6,
1996, respectively. ATI was adjudged unable to prove that it exercised
due diligence while in custody of the shipment and hence, negligent
and should be held liable for the damages caused to GASI which, in
turn, is subrogated by FIRST LEPANTO.
The RTC rejected ATIs contention that its liability is limited only
to P5,000.00 per package because its Management Contract with the
Philippine Ports Authority (PPA) purportedly containing the same was
not presented as evidence. More importantly, FIRST LEPANTO or GASI
cannot be deemed bound thereby because they were not parties
thereto. Lastly, the RTC did not give merit to ATIs defense that any
claim against it has already prescribed because GASI failed to file any
claim within the 15-day period stated in the gate pass issued by ATI to
GASIs broker, PROVEN. Accordingly, the RTC disposed thus:
In a Judgment23 dated May 30, 2006, the MeTC absolved ATI and
PROVEN from any liability and instead found COSCO to be the party at
fault and hence liable for the loss/damage sustained by the subject
shipment. However, the MeTC ruled it has no jurisdiction over COSCO
because it is a foreign corporation. Also, it cannot enforce judgment
upon SMITH BELL because no evidence was presented establishing that
it is indeed the Philippine agent of COSCO. There is also no evidence
attributing any fault to SMITH BELL. Consequently, the complaint was
dismissed in this wise:
SO ORDERED.28
ATI moved for reconsideration but the motion was denied in the CA
Resolution29 dated January 12, 2009. Hence, this petition arguing that:
SO ORDERED.26
Ruling of the CA
In its Decision27 dated October 10, 2008, the CA dismissed the appeal
and held that the Release of Claim and the Certificate of Insurance
presented by FIRST LEPANTO sufficiently established its relationship
with the consignee and that upon proof of payment of the latters claim
for damages, FIRST LEPANTO was subrogated to its rights against
those liable for the lost/damaged shipment.
The CA also affirmed the ruling of the RTC that the subject shipment
was damaged while in the custody of ATI. Thus, the CA disposed as
follows:
WHEREFORE, premises considered, the assailed Decision is hereby
AFFIRMED and the instant petition is DENIED for lack of merit.
There are only specific instances when the Court deviates from the rule
and conducts a review of the courts a quos factual findings, such as
when: (1) the inference made is manifestly mistaken, absurd or
impossible; (2) there is grave abuse of discretion;(3) the findings are
grounded entirely on speculations, surmises or conjectures; (4) the
judgment of the CA is based on misapprehension of facts; (5) the CA, in
making its findings, went beyond the issues of the case and the same
is contrary to the admissions of both appellant and appellee; (6) the
findings of fact are conclusions without citation of specific evidence on
which they are based; (7) the CA manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion; and (8) the findings of
fact of the CA are premised on the absence of evidence and are
contradicted by the evidence on record.33
In a claim for loss filed by the consignee (or the insurer), the burden of
proof to show compliance with the obligation to deliver the goods to
the appropriate party devolves upon the arrastre operator. Since the
safekeeping of the goods is its responsibility, it must prove that the
It is conspicuous from the records that ATI put in issue the submission
of the insurance contract for the first time before the CA. Despite
opportunity to study FIRST LEPANTOs complaint before the MeTC, ATI
failed to allege in its answer the necessity of the insurance contract.
Neither was the same considered during pre-trial as one of the decisive
matters in the case. Further, ATI never challenged the relevancy or
materiality of the Certificate of Insurance presented by FIRST LEPANTO
as evidence during trial as proof of its right to be subrogated in the
consignees stead. Since it was not agreed during the pre-trial
proceedings that FIRST LEPANTO will have to prove its subrogation
rights by presenting a copy of the insurance contract, ATI is barred
from pleading the absence of such contract in its appeal. It is
imperative for the parties to disclose during pre-trial all issues they
intend to raise during the trial because, they are bound by the
delimitation of such issues. The determination of issues during the pretrial conference bars the consideration of other questions, whether
during trial or on appeal.38
While the Court may adopt a liberal stance and relax the rule, no
reasonable explanation, however, was introduced to justify ATIs failure
to timely question the basis of FIRST LEPANTOs rights as a subrogee.
In Home Insurance Corporation v. CA,45 the Court also held that the
insurance contract was necessary to prove that it covered the hauling
portion of the shipment and was not limited to the transport of the
cargo while at sea. The shipment in that case passed through six
stages with different parties involved in each stage until it reached the
consignee. The insurance contract, which was not presented in
evidence, was necessary to determine the scope of the insurers
liability, if any, since no evidence was adduced indicating at what
The fact that the CA took cognizance of and resolved the said issue did
not cure or ratify ATIs faux pas. "[A] judgment that goes beyond the
issues and purports to adjudicate something on which the court did not
hear the parties, is not only irregular but also extrajudicial and
invalid."41 Thus, for resolving an issue not framed during the pre-trial
and on which the parties were not heard during the trial, that portion of
In Delsan Transport Lines, Inc. v. CA,49 the Court ruled that the right of
subrogation accrues simply upon payment by the insurance company
of the insurance claim. Hence, presentation in evidence of the marine
insurance policy is not indispensable before the insurer may recover
from the common carrier the insured value of the lost cargo in the
exercise of its subrogatory right. The subrogation receipt, by itself, was
held sufficient to establish not only the relationship between the
insurer and consignee, but also the amount paid to settle the insurance
claim. The presentation of the insurance contract was deemed not fatal
to the insurers cause of action because the loss of the cargo
undoubtedly occurred while on board the petitioners vessel. 50
Based on the attendant facts of the instant case, the application of the
exception is warranted.1wphi1 As discussed above, it is already
settled that the loss/damage to the GASIs shipment occurred while
they were in ATIs custody, possession and control as arrastre operator.
This Gate pass is subject to all terms and conditions defined in the
Management Contract between the Philippine Port[s] Authority and
Asian Terminals, Inc. and amendment thereto and alterations thereof
particularly but not limited to the [A]rticle VI thereof, limiting the
As correctly imposed by the RTC and the CA, ten percent (10%) of the
judgment award is reasonable as and for attorney's fees considering
the length of time that has passed in prosecuting the claim. 63
Although the formal claim was filed beyond the 15-day period from the
issuance of the examination report on the request for bad order
survey, the purpose of the time limitations for the filing of claims had
already been fully satisfied by the request of the consignees broker for
a bad order survey and by the examination report of the arrastre
operator on the result thereof, as the arrastre operator had become
aware of and had verified the facts giving rise to its liability. Hence, the
arrastre operator suffered no prejudice by the lack of strict compliance
with the 15-day limitation to file the formal complaint. 59 (Citations
omitted)
In the present case, ATI was notified of the loss/damage to the subject
shipment as early as August 9, 1996 thru a Request for Bad Order
Survey60 jointly prepared by the consignees broker, PROVEN, and the
representatives of ATI. For having submitted a provisional claim, GASI
is thus deemed to have substantially complied with the notice
requirement to the arrastre operator notwithstanding that a formal
claim was sent to the latter only on September 27, 1996. ATI was not
deprived the best opportunity to probe immediately the veracity of
such claims. Verily then, GASI, thru its subrogee FIRST LEPANTO, is not
barred by filing the herein action in court.
Under both policies, it was provided that: (a) there must be prior notice
of claim for loss, damage or liability within fourteen (14) days from the
occurrence of the loss or damage;14 (b) all benefits thereunder shall be
forfeited if no action is instituted within twelve(12) months after the
rejection of the claim for loss, damage or liability;15 and (c) if the sum
insured is found to be less than the amount required to be insured, the
amount recoverable shall be reduced tosuch proportion before taking
into account the deductibles stated in the schedule (average clause
provision).16
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 are the Decision2 dated
March 13, 2001 and the Resolution3 dated February 21, 2002 of the
Court of Appeals (CA) in CA-G.R. CV No. 63175, which set aside and
reversed the Judgment4 dated February 3, 1999 of the Regional Trial
Court of Quezon City, Branch 220 (RTC) in Civil Case No. 91-10144, and
dismissed petitioner H.H. Hollero Construction, Inc.' s (petitioner)
Complaint for Sum of Money and Damages under the insurance
policies issued by public respondent, the Government Service
Insurance System (GSIS), on the ground of prescription.
During the construction, three (3) typhoons hit the country, namely,
Typhoon Biring from June 1 to June 4, 1988, Typhoon Huaning on July
29, 1988, and Typhoon Saling on October 11, 1989, which caused
considerable damage to the Project.17 Accordingly, petitioner filed
several claims for indemnity with the GSIS on June 30, 1988, 18 August
25, 1988,19 and October 18, 1989,20 respectively.
In a letter21 dated April 26, 1990, the GSIS rejected petitioners
indemnity claims for the damages wrought by Typhoons Biring and
Huaning, finding that no amount is recoverable pursuant to the
average clause provision under the policies.22 In a letter23 dated June
21, 1990, the GSIS similarly rejected petitioners indemnity claim for
damages wrought by Typhoon Saling on a "no loss" basis, itappearing
from its records that the policies were not renewed before the onset of
the said typhoon.24
The Facts
On April 26, 1988, the GSIS and petitioner entered into a Project
Agreement (Agreement) whereby the latter undertook the
development of a GSIS housing project known as Modesta Village
Section B (Project).5 Petitioner obligated itself to insurethe Project,
including all the improvements, upon the execution of the Agreement
under a Contractors All Risks (CAR) Insurance with the GSIS General
Insurance Department for an amount equal to its cost or sound value,
which shall not be subject to any automatic annual reduction. 6
Dissatisfied, the GSIS elevated the matter to the CA. The CA Ruling In a
Decision38 dated March 13, 2001, the CAset aside and reversed the RTC
Judgment, thereby dismissing the complaint. It ruled that the complaint
filed on September 27, 1991 was barred by prescription, having been
commenced beyond the twelve-month limitation provided under the
policies, reckoned from the final rejection of the indemnity claims on
April 26, 1990 and June 21, 1990. The Issue Before the Court
Here, petitioner insists that the GSISs letters dated April 26, 1990 and
June 21, 1990 did not amount to a "final rejection" ofits claims, arguing
that they were mere tentative resolutions pending further action on
petitioners part or submission of proof in refutation of the reasons for
rejection.42 Hence, its causes of action for indemnity did not accrue on
those dates.
The Court does not agree.
The essential issue for the Courts resolution is whether or not the CA
committed reversible error in dismissing the complaint onthe ground of
prescription.
A perusal of the letter43 dated April 26, 1990 shows that the GSIS
denied petitioners indemnity claims wrought by Typhoons Biring and
Huaning, it appearing that no amount was recoverable under the
policies. While the GSIS gave petitioner the opportunity to dispute its
findings, neither of the parties pursued any further action on the
matter; this logically shows that they deemed the said letter as a
rejection of the claims. Lest it cause any confusion, the statement in
that letter pertaining to any queries petitioner may have on the denial
should be construed, at best, as a form of notice to the former that it
had the opportunity to seek reconsideration of the GSISs rejection.
The same conclusion obtains for the letter 45 dated June 21, 1990
denying petitioners indemnity claim caused by Typhoon Saling on a
"no loss" basis due to the non-renewal of the policies therefor before
the onset of the said typhoon. The fact that petitioner filed a letter 46 of
reconsideration therefrom dated April 18, 1991, considering too the
inaction of the GSIS on the same similarly shows that the June 21, 1990
letter was also a final rejection of petitioners indemnity claim.
and the case of ACCFA vs. Alpha Insurance & Surety Co., Inc. (24 SCRA
151 [1968], holding that:
Since "cause of action" requires as essential elements not only a legal
right of the plaintiff and a correlated obligation of the defendant in
violation of the said legal right, the cause of action does not accrue
until the party obligated (surety) refuses, expressly or impliedly, to
comply with its duty (in this case to pay the amount of the bond)."
The crucial issue in this case is: When does the cause of action accrue?
10
SO ORDERED.
G.R. No. 183272
This Petition for Review on Certiorari1 assails the October 17, 2007
Decision2 of CA in CA-GR. CV No. 86923, which, among others, imposed
a 12% per annum rate of interest reckoned from the time of death of
the insured until fully paid, on the premium to be reimbursed by
petitioner Sun Life of Canada (Philippines), Inc. (petitioner) to
respondents Sandra Tan Kit (respondent Tan Kit) and the Estate of the
Deceased Norberto Tan Kit (respondent estate). Likewise assailed in
this Petition is the CA's June 12, 2008 Resolution3 denying petitioner's
Motion for Reconsideration of the said Decision.
Factual Antecedents
Respondent Tan Kit is the widow and designated beneficiary of
Norberto Tan Kit (Norberto), whose application for a life insurance
policy,4 with face value of P300,000.00, was granted by petitioner on
October 28, 1999. On February 19, 2001, or within the two-year
contestability period,5 Norberto died of disseminated gastric
11
to his claim that he did not smoke cigarettes within 12 months prior to
the said application. The CA thus held that Norberto is guilty of
concealment which misled petitioner in forming its estimates of the
risks of the insurance policy. This gave petitioner the right to rescind
the insurance contract which it properly exercised in this case.
In addition, the CA held that the content of Norbertos medical records
are deemed admitted by respondents since they failed to deny the
same despite having received from petitioner a Request for Admission
pursuant to Rule 26 of the Rules of Court.17 And since an admission is
in the nature of evidence the legal effects of which form part of the
records, the CA discredited the RTCs ruling that the subject medical
records and the affidavits executed by Norbertos physicians attesting
to the truth of the same were hearsay.
Cost de oficio.
SO ORDERED.13
Petitioner moved for reconsideration,14 but was denied in an Order15
dated February 15, 2006.
SO ORDERED.18
On appeal, the CA reversed and set aside the RTCs ruling in its
Decision16 dated October 17, 2007.
However, the appellate court denied the motions in its June 12, 2008
Resolution,20 viz:
From the records, the CA found that prior to his death, Norberto had
consulted two physicians, Dr. Chua on August 19, 2000, and Dr. John
Ledesma (Dr. Ledesma) on December 28, 2000, to whom he confided
that he had stopped smoking only in 1999. At the time therefore that
he applied for insurance policy on October 28, 1999, there is no truth
12
SO ORDERED.21
Only petitioner appealed to this Court through the present Petition for
Review on Certiorari.
Issue
The Court finds, however, that Tio Khe Chio is not applicable here as it
deals with payment of interest on the insurance proceeds in which the
claim therefor was either unreasonably denied or withheld or the
insurer incurred delay in the payment thereof. In this case, what is
involved is an order for petitioner to refund to respondents the
insurance premium paid by Norberto as a consequence of the
rescission of the insurance contract on account of the latters
concealment of material information in his insurance application.
Moreover, petitioner did not unreasonably deny or withhold the
insurance proceeds as it was satisfactorily established that Norberto
was guilty of concealment.
The sole issue in this case is whether petitioner is liable to pay interest
on the premium to be refunded to respondents.
The Parties Arguments
Petitioner argues that no interest should have been imposed on the
premium to be refunded because the CA Decision does not provide any
legal or factual basis therefor; that petitioner directly and timely
tendered to respondents an amount representing the premium refund
but they rejected it since they opted to pursue their claim for the
proceeds of the insurance policy; that respondents should bear the
consequence of their unsound decision of rejecting the refund tendered
to them; and, that petitioner is not guilty of delay or of invalid or unjust
rescission as to make it liable for interest. Hence, following the ruling in
Tio Khe Chio v. Court of Appeals,22 no interest can be assessed against
petitioner.
Our Ruling
13
there can be no other conclusion than that the interest imposed by the
appellate court is in the nature of compensatory interest.
The CA incorrectly imposed compensatory interest on the premium
refund reckoned from the time of death of the insured until fully paid
SO ORDERED.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar
14
Alpha, however, denied the demand of Castor claiming that they are
not liable since the culprit who stole the vehicle is employed with
Castor. Under the Exceptions to Section III of the Policy, the Company
shall not be liable for (4) any malicious damage caused by the insured,
SERVICE.
Castor filed a Complaint for Sum of Money with Damages against Alpha
before the Regional Trial Court of Quezon City. The trial court rendered
latters interest.
insurance policy
HELD:
NO. The words loss and damage mean different things in common
ordinary usage. The word loss refers to the act or fact of losing, or
failure to keep possession, while the word damage means
deterioration or injury to property. Therefore, petitioner cannot exclude
OZAETA, J.:
the loss of Castors vehicle under the insurance policy under paragraph
4 of Exceptions to Section III, since the same refers only to
15
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.
The facts of the case are set forth in the majority and dissenting
opinions heretofore handed down by this Court, the salient points of
which may be briefly restated as follows:
Evaristo Feliciano, who died on September 29, 1935, 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" And
above the signature of the applicant, following the answers to the
various questions propounded to him, is the following printed
statement:1awphil.net
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, for the purpose of securing
the Company's approval of the application so that the policy to be
issued thereon might be credited to said agent in connection with the
inter-provincial contest which the Company was then holding among its
soliciting agents to boost the sales of its policies. Agent David bribed
Medical Examiner Valdez with money which the former borrowed from
the applicant's mother by way of advanced payment on the premium,
according to the finding of the Court of Appeals. Said court also found
that before the insured signed the application he, as well as the
members of his family, told the agent and the medical examiner that
he had been sick and coughing for some time and that he had gone
xxx
xxx
3. That the said policy shall not take effect until the first
premium has been paid and the policy has been delivered to
and accepted by me, while I am in good health.
4. 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.
16
therefore knew that he was not "a proper subject for life insurance."
When he accepted the policy, he knew that he was not in good health.
Nevertheless, he not only accepted the first policy of P20,000 but then
and there applied for and later accepted another policy of P5,000.
We cannot bring ourselves to believe that the insured did not take the
trouble to read the answers contained in the photostatic copy of the
application attached to and made a part of the policy before he
accepted it and paid the premium thereon. He must have notice that
the answers to the questions therein asked concerning his clinical
history were false, and yet he accepted the first policy and applied for
another. In any event, he obligated himself to read the policy when he
subscribed to this statement: "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 . . ." By
accepting the policy he became charged with knowledge of its
contents, whether he actually read it or not. He could not ostrich-like
hide his head from it in order to avoid his part of the bargain and at the
same time claim the benefit thereof. He knew, or was chargeable with
knowledge, from the very terms of the two policies sued upon (one of
which is printed in English and the other in Spanish) that the soliciting
agent and the medical examiner had no power to bind the Company by
any verbal promise or oral representation. The insured, therefore, had
no right to rely and we cannot believe he relied in good faith upon
the oral representation. The insured, therefore, had no right to rely
and we cannot believe he relied in good faith 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.
The petitioner insists that upon the facts of the case the policies in
question are null and void ab initio and that all that the respondents
are entitled to is the refund of the premiums paid thereon. After a
careful re-examination of the facts and the law, we are persuaded that
petitioner's contention is correct. To the reasons adduced in the
dissenting opinion heretofore published, we only desire to add the
following considerations:
When Evaristo Feliciano, the applicant for insurance, signed the
application in blank and authorized the soliciting agent and/or medical
examiner of the Company to write the answers for him, he made them
his own agents for that purpose, and he was responsible for their acts
in that connection. If they falsified the answers for him, he could not
evade the responsibility for he falsification. He was not supposed to
sign the application in blank. He knew that the answers to the
questions therein contained would be "the basis of the policy," and for
that every reason he was required with his signature to vouch for truth
thereof.
Moreover, from the facts of the case we cannot escape the conclusion
that the insured acted in connivance with the soliciting agent and the
medical examiner of the Company in accepting the policies in question.
Above the signature of the applicant is the printed statement or
representation: " . . . I am a proper subject for life insurance." In
another sheet of the same application and above another signature of
the applicant was also printed this statement: "That the said policy
shall not take effect until he first premium has been paid and the policy
as been delivered to and accepted by me, while I am in good health."
When the applicant signed the application he was "having difficulty in
breathing, . . . with a very high fever." He had gone three times to the
Santol Sanatorium and had X-ray pictures taken of his lungs. He
From all the facts and circumstances of this case, we are constrained to
conclude that the insured was a coparticipant, and coresponsible 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.
Wheretofore, the motion for reconsideration is sustained and the
judgment of the Court of Appeals is hereby reversed. Let another
judgment be entered in favor of the respondents and against the
17
covered the period up to September 26, 1942. The plaintiff Paz Lopez
de Constantino was regularly appointed beneficiary. The policy
contained these stipulations, among others:
xxx
xxx
xxx
After that first payment, no further premiums were paid. The insured
died on September 22, 1944.
BENGZON, J.:
These two cases, appealed from the Court of First Instance of Manila,
call for decision of the question whether the beneficiary in a life
insurance policy may recover the amount thereof although the insured
died after repeatedly failing to pay the stipulated premiums, such
failure having been caused by the last war in the Pacific.
18
separated by the lines of war, and it was impossible and illegal for
them to deal with each other. Because the insured had borrowed on
the policy an mount of P234.00 in January, 1941, the cash surrender
value of the policy was sufficient to maintain the policy in force only up
to September 7, 1942. Tomas Ruiz died on February 16, 1945. The
plaintiff Agustina Peralta is his beneficiary. Her demand for payment
met with defendant's refusal, grounded on non-payment of the
premiums.
xxx
In Young vs. Midland Textile Insurance Co. (30 Phil., 617), we said that
"contracts of insurance are contracts of indemnity upon the terms and
conditions specified in the policy. The parties have a right to impose
such reasonable conditions at the time of the making of the contract as
they may deem wise and necessary. The rate of premium is measured
by the character of the risk assumed. The insurance company, for a
comparatively small consideration, undertakes to guarantee the
insured against loss or damage, upon the terms and conditions agreed
upon, and upon no other, and when called upon to pay, in case of loss,
the insurer, therefore, may justly insists upon a fulfillment of these
terms. If the insured cannot bring himself within the conditions of the
policy, he is not entitled for the loss. The terms of the policy constitute
the measure of the insurer's liability, and in order to recover the
insured must show himself within those terms; and if it appears that
the contract has been terminated by a violation, on the part of the
insured, of its conditions, then there can be no right of recovery. The
compliance of the insured with the terms of the contract is a condition
precedent to the right of recovery."
xxx
Defendant on the other hand asserts that the policies had lapsed for
non-payment of premiums, in accordance with the contract of the
parties and the law applicable to the situation.
The lower court absolved the defendant. Hence this appeal.
19
In Glaraga vs. Sun Life Ass. Co. (49 Phil., 737), this court held that a life
policy was avoided because the premium had not been paid within the
time fixed, since by its express terms, non-payment of any premium
when due or within the thirty-day period of grace, ipso facto caused
the policy to lapse. This goes to show that although we take the view
that insurance policies should be conserved 5 and should not lightly be
thrown out, still we do not hesitate to enforce the agreement of the
parties.
The United States rule declares that the contract is not merely
suspended, but is abrogated by reason of non-payments is peculiarly of
the essence of the contract. It additionally holds that it would be unjust
to allow the insurer to retain the reserve value of the policy, which is
the excess of the premiums paid over the actual risk carried during the
years when the policy had been in force. This rule was announced in
the well-known Statham6case which, in the opinion of Professor
Vance, is the correct rule.7
The appellants and some amici curiae contend that the New York rule
should be applied here. The appellee and other amici curiae contend
that the United States doctrine is the orthodox view.
Nevertheless, it is contended for plaintiff that inasmuch as the nonpayment of premium was the consequence of war, it should be
excused and should not cause the forfeiture of the policy.
We have read and re-read the principal cases upholding the different
theories. Besides the respect and high regard we have always
entertained for decisions of the Supreme Court of the United States,
we cannot resist the conviction that the reasons expounded in its
decision of the Statham case are logically and judicially sound. Like the
instant case, the policy involved in the Statham decision specifies that
non-payment on time shall cause the policy to cease and determine.
Reasoning out that punctual payments were essential, the court said:
The first holds the view that "there are two elements in the
consideration for which the annual premium is paid First, the mere
protection for the year, and second, the privilege of renewing the
contract for each succeeding year by paying the premium for that year
at the time agreed upon. According to this view of the contract, the
20
21
The answer to this is that as there are (in the example) one million
policy-holders, the "losses" to be considered will not be the death of
one but the death of ten thousand, since the proportion of 1 to 100
should be maintained. And certainly such losses for 10,000 deaths will
not be "relatively small."
After perusing the Insurance Act, we are firmly persuaded that the nonpayment of premiums is such a vital defense of insurance companies
that since the very beginning, said Act no. 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, non-payment 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 No. 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 non-payment
thereof, was specifically recognized.
22
second had been practically returned to the insured in the form of loan
and advance for premium.
For all the foregoing, the lower court's decision absolving the
defendant from all liability on the policies in question, is hereby
affirmed, without costs.
The present action was filed on August 6, 1946, in the Court of First
Instance of Manila for the purpose of recovering from the respondent
the sum of P92,650 above mentioned. The theory of the petitioner is
that the insured merchandise were burned up after the policy issued in
1941 in favor of the respondent corporation has ceased to be effective
because of the outbreak of the war between the United States and
Germany on December 10, 1941, and that the payment made by the
petitioner to the respondent corporation during the Japanese military
occupation was under pressure. After trial, the Court of First Instance of
Manila dismissed the action without pronouncement as to costs. Upon
appeal to the Court of Appeals, the judgment of the Court of First
Instance of Manila was affirmed, with costs. The case is now before us
on appeal by certiorari from the decision of the Court of Appeals.
The Court of Appeals overruled the contention of the petitioner that the
respondent corporation became an enemy when the United States
declared war against Germany, relying on English and American cases
which held that a corporation is a citizen of the country or state by and
under the laws of which it was created or organized. It rejected the
theory that nationality of private corporation is determine by the
character or citizenship of its controlling stockholders.
PARAS, C.J.:
On October 1, 1941, the respondent corporation, Christern Huenefeld,
& Co., Inc., after payment of corresponding premium, obtained from
the petitioner ,Filipinas Cia. de Seguros, fire policy No. 29333 in the
sum of P1000,000, covering merchandise contained in a building
located at No. 711 Roman Street, Binondo Manila. On February 27,
1942, or during the Japanese military occupation, the building and
insured merchandise were burned. In due time the respondent
submitted to the petitioner its claim under the policy. The salvage
goods were sold at public auction and, after deducting their value, the
total loss suffered by the respondent was fixed at P92,650. The
petitioner refused to pay the claim on the ground that the policy in
favor of the respondent had ceased to be in force on the date the
United States declared war against Germany, the respondent
Corporation (though organized under and by virtue of the laws of the
Philippines) being controlled by the German subjects and the petitioner
23
The United States of America did not adopt the control test
during the First World War. Courts refused to recognized the
concept whereby American-registered corporations could be
considered as enemies and thus subject to domestic legislation
and administrative measures regarding enemy property.
World War II revived the problem again. It was known that
German and other enemy interests were cloaked by domestic
corporation structure. It was not only by legal ownership of
shares that a material influence could be exercised on the
management of the corporation but also by long term loans
and other factual situations. For that reason, legislation on
enemy property enacted in various countries during World War
II adopted by statutory provisions to the control test and
determined, to various degrees, the incidents of control. Court
decisions were rendered on the basis of such newly enacted
statutory provisions in determining enemy character of
domestic corporation.
24
The Court of Appeals, in deciding the case, stated that the main issue
hinges on the question of whether the policy in question became null
and void upon the declaration of war between the United States and
Germany on December 10, 1941, and its judgment in favor of the
respondent corporation was predicated on its conclusion that the policy
did not cease to be in force. The Court of Appeals necessarily assumed
that, even if the payment by the petitioner to the respondent was
involuntary, its action is not tenable in view of the ruling on the validity
of the policy. As a matter of fact, the Court of Appeals held that "any
intimidation resorted to by the appellee was not unjust but the exercise
of its lawful right to claim for and received the payment of the
insurance policy," and that the ruling of the Bureau of Financing to the
effect that "the appellee was entitled to payment from the appellant
was, well founded." Factually, there can be no doubt that the Director
of the Bureau of Financing, in ordering the petitioner to pay the claim
of the respondent, merely obeyed the instruction of the Japanese
Military Administration, as may be seen from the following: "In view of
the findings and conclusion of this office contained in its decision on
Administrative Case dated February 9, 1943 copy of which was sent to
your office and the concurrence therein of the Financial Department of
the Japanese Military Administration, and following the instruction of
said authority, you are hereby ordered to pay the claim of Messrs.
Christern, Huenefeld & Co., Inc. The payment of said claim, however,
should be made by means of crossed check." (Emphasis supplied.)
25
MAKALINTAL, J.:
Plaintiffs, now appellants, filed this action in the Court of First Instance
of Manila to recover the sum of P5,000.00, corresponding to the face
value of an insurance policy issued by defendant on the life of
Estefania A. Saturnino, and the sum of P1,500.00 as attorney's fees.
Defendant, now appellee, set up special defenses in its answer, with a
counterclaim for damages allegedly sustained as a result of the
unwarranted presentation of this case. Both the complaint and the
counterclaim were dismissed by the trial court; but appellants were
declared entitled to the return of the premium already paid; plus
interest at 6% up to January 8, 1959, when a check for the
corresponding amount P359.65 was sent to them by appellee.
The question at issue is whether or not the insured made such false
representations of material facts as to avoid the policy. There can be
no dispute that the information given by her in her application for
insurance was false, namely, that she had never had cancer or tumors,
or consulted any physician or undergone any operation within the
preceding period of five years. Are the facts then falsely represented
material? The Insurance Law (Section 30) provides that "materiality is
to be determined not by the event, but solely by the probable and
reasonable influence of the facts upon the party to whom the
communication is due, in forming his estimate of the proposed
contract, or in making his inquiries." It seems to be the contention of
appellants that the facts subject of the representation were not
material in view of the "non-medical" nature of the insurance applied
for, which does away with the usual requirement of medical
examination before the policy is issued. The contention is without
26
In the application for insurance signed by the insured in this case, she
agreed to submit to a medical examination by a duly appointed
examiner of appellee if in the latter's opinion such examination was
necessary as further evidence of insurability. In not asking her to
submit to a medical examination, appellants maintain, appellee was
guilty of negligence, which precluded it from finding about her actual
state of health. No such negligence can be imputed to appellee. It was
precisely because the insured had given herself a clean bill of health
that appellee no longer considered an actual medical checkup
necessary.
27
premiums and interest thereon due for January and February, 1969, in
the sum of P36.27.
Carponia T. Ebrado 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 C. Ebrado 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 T. Ebrado.
MARTIN, J.:
This is a novel question in insurance law: 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?
28
Buenaventura Ebrado, he was living with his commonwife, Carponia Ebrado, with whom she had 2 children
although he was not legally separated from his legal
wife; 4) that Buenaventura in accident on October 21,
1969 as evidenced by the death Exhibit 3 and affidavit
of the police report of his death Exhibit 5; 5) that
complainant Carponia Ebrado filed claim with the
Insular Life Assurance Co. which was contested by
Pascuala Ebrado who also filed claim for the proceeds
of said policy 6) that in view ofthe adverse claims the
insurance company filed this action against the two
herein claimants Carponia and Pascuala Ebrado; 7) that
there is now due from the Insular Life Assurance Co. as
proceeds of the policy P11,745.73; 8) that the
beneficiary designated by the insured in the policy is
Carponia Ebrado and the insured made reservation to
change the beneficiary but although the insured made
the option to change the beneficiary, same was never
changed up to the time of his death and the wife did
not have any opportunity to write the company that
there was reservation to change the designation of the
parties agreed that a decision be rendered based on
and stipulation of facts as to who among the two
claimants is entitled to the policy.
SO ORDERED.
On September 25, 1972, the trial court rendered judgment declaring
among others, Carponia T. Ebrado disqualified from becoming
beneficiary of the insured Buenaventura Cristor Ebrado and directing
the payment of the insurance proceeds to the estate of the deceased
insured. The trial court held: +.wph!1
29
hold that the mm includes the beneficiary. The word "interest" highly
suggests that the provision refers only to the "insured" and not to the
beneficiary, since a contract of insurance is personal in
character. 2 Otherwise, the prohibitory laws against illicit relationships
especially on property and descent will be rendered nugatory, as the
same could easily be circumvented by modes of insurance. Rather, the
general rules of civil law should be applied to resolve this void in the
Insurance Law. 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. 3 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 fife insurance policy by the
person who cannot make a donation to him. 4 Common-law spouses
are, definitely, barred from receiving donations from each other. Article
739 of the new Civil Code provides: +.wph!1
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.5 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 wins are interpreted. 6
3. Policy considerations and dictates of morality rightly justify the
institution of a barrier between common law spouses in record to
Property relations since such hip ultimately encroaches upon the
nuptial and filial rights of the legitimate family There is every reason to
hold that the bar in donations between legitimate spouses and those
between illegitimate ones should be enforced in life insurance policies
since the same are based on similar consideration As above pointed
out, a beneficiary in a fife insurance policy is no different from a donee.
Both are recipients of pure beneficence. So long as manage remains
the threshold of family laws, reason and morality dictate that the
impediments imposed upon married couple should likewise be imposed
upon extra-marital relationship. If legitimate relationship is
circumscribed by these legal disabilities, with more reason should an
illicit relationship be restricted by these disabilities. Thus,
in Matabuena v. Cervantes, 7 this Court, through Justice Fernando,
said: +.wph!1
30
31
April 15, 1969, she gave the date of her birth as July 11, 1904. On the
same date, she paid the sum of P20.00 representing the premium for
which she was issued the corresponding receipt signed by an
authorized agent of the respondent insurance corporation. (Rollo, p.
27.) Upon the filing of said application and the payment of the
premium on the policy applied for, the respondent insurance
corporation issued to Carmen O. Lapuz its Certificate of Insurance No.
128866. (Rollo, p. 28.) The policy was to be effective for a period of 90
days.
SO ORDERED.
VASQUEZ, J.:
The question of law raised in this case that justified a direct appeal
from a decision of the Court of First Instance Rizal, Branch V, Quezon
City, to be taken directly to the Supreme Court is whether or not the
acceptance by the private respondent insurance corporation of the
premium and the issuance of the corresponding certificate of insurance
should be deemed a waiver of the exclusionary condition of overage
stated in the said certificate of insurance.
The trial court sustained the contention of the private respondent and
dismissed the complaint; ordered the petitioner to pay attorney's fees
in the sum of ONE THOUSAND (P1,000.00) PESOS in favor of the
private respondent; and ordered the private respondent to return the
sum of TWENTY (P20.00) PESOS received by way of premium on the
insurancy policy. It was reasoned out that a policy of insurance being a
contract of adhesion, it was the duty of the insured to know the terms
of the contract he or she is entering into; the insured in this case, upon
learning from its terms that she could not have been qualified under
The material facts are not in dispute. Sometime in April 1969, Carmen
O, Lapuz applied with respondent insurance corporation for insurance
coverage against accident and injuries. She filled up the blank
application form given to her and filed the same with the respondent
insurance corporation. In the said application form which was dated
32
the conditions stated in said contract, what she should have done is
simply to ask for a refund of the premium that she paid. It was further
argued by the trial court that the ruling calling for a liberal
interpretation of an insurance contract in favor of the insured and
strictly against the insurer may not be applied in the present case in
view of the peculiar facts and circumstances obtaining therein.
We REVERSE the judgment of the trial court. The age of the insured
Carmen 0. Lapuz was not concealed to the insurance company. Her
application for insurance coverage which was on a printed form
furnished by private respondent and which contained very few items of
information clearly indicated her age of the time of filing the same to
be almost 65 years of age. Despite such information which could
hardly be overlooked in the application form, considering its
prominence thereon and its materiality to the coverage applied for, the
respondent insurance corporation received her payment of premium
and issued the corresponding certificate of insurance without question.
The accident which resulted in the death of the insured, a risk covered
by the policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS after
the insurance coverage was applied for. There was sufficient time for
the private respondent to process the application and to notice that the
applicant was over 60 years of age and thereby cancel the policy on
that ground if it was minded to do so. If the private respondent failed
to act, it is either because it was willing to waive such disqualification;
or, through the negligence or incompetence of its employees for which
it has only itself to blame, it simply overlooked such fact. Under the
circumstances, the insurance corporation is already deemed in
estoppel. It inaction to revoke the policy despite a departure from the
exclusionary condition contained in the said policy constituted a waiver
of such condition, as was held in the case of "Que Chee Gan vs. Law
Union Insurance Co., Ltd.,", 98 Phil. 85. This case involved a claim on
an insurance policy which contained a provision as to the installation of
fire hydrants the number of which depended on the height of the
external wan perimeter of the bodega that was insured. When it was
determined that the bodega should have eleven (11) fire hydrants in
the compound as required by the terms of the policy, instead of only
two (2) that it had, the claim under the policy was resisted on that
ground. In ruling that the said deviation from the terms of the policy
did not prevent the claim under the same, this Court stated the
following:
33
34
The Court of Appeals certified this appeal to Us, as the same involves
solely a question of law.
On May 12, 1962, Kwong Nam applied for a 20-year endowment
insurance on his life for the sum of P20,000.00, with his wife, appellee
Ng Gan Zee as beneficiary. On the same date, appellant, upon receipt
of the required premium from the insured, approved the application
and issued the corresponding policy. On December 6, 1963, Kwong
Nam died of cancer of the liver with metastasis. All premiums had been
religiously paid at the time of his death.
SO ORDERED.
On January 10, 1964, his widow Ng Gan Zee presented a claim in due
form to appellant for payment of the face value of the policy. On the
same date, she submitted the required proof of death of the insured.
Appellant denied the claim on the ground that the answers given by
the insured to the questions appealing in his application for life
insurance were untrue.
ESCOLIN, J.:
35
The lower court found the argument bereft of factual basis; and We
quote with approval its disquisition on the matterOn the first question there is no evidence that the
Insular Life Assurance Co., Ltd. ever refused any
application of Kwong Nam for insurance. Neither is
there any evidence that any other insurance company
has refused any application of Kwong Nam for
insurance.
36
[2] The Surgical Pathology Report of Dr. Elias Pantangco showing that
the specimen removed from the patient's body was 'a portion of the
stomach measuring 12 cm. and 19 cm. along the lesser curvature with
a diameter of 15 cm. along the greatest dimension.
On the bases of the above undisputed medical data showing that the
insured was operated on for peptic ulcer", involving the excision of a
portion of the stomach, appellant argues that the insured's statement
in his application that a tumor, "hard and of a hen's egg size," was
removed during said operation, constituted material concealment.
It has been held that where, upon the face of the application, a
question appears to be not answered at all or to be imperfectly
answered, and the insurers issue a policy without any further inquiry,
37
they waive the imperfection of the answer and render the omission to
answer more fully immaterial. 6
As aptly noted by the lower court, "if the ailment and operation of
Kwong Nam had such an important bearing on the question of whether
the defendant would undertake the insurance or not, the court cannot
understand why the defendant or its medical examiner did not make
any further inquiries on such matters from the Chinese General
Hospital or require copies of the hospital records from the appellant
before acting on the application for insurance. The fact of the matter is
that the defendant was too eager to accept the application and receive
the insured's premium. It would be inequitable now to allow the
defendant to avoid liability under the circumstances."
On next day, 4 August 1982, Jaime Canilang applied for a "nonmedical" insurance policy with respondent Great Pacific Life Assurance
Company ("Great Pacific") naming his wife, Thelma Canilang, as his
beneficiary. 1 Jaime Canilang was issued ordinary life insurance Policy
No. 345163, with the face value of P19,700, effective as of 9 August
1982.
On 5 August 1983, Jaime Canilang died of "congestive heart failure,"
"anemia," and "chronic anemia." 2 Petitioner, widow and beneficiary of
the insured, filed a claim with Great Pacific which the insurer denied on
5 December 1983 upon the ground that the insured had concealed
material information from it.
SO ORDERED.
38
The medical declaration which was set out in the application for
insurance executed by Jaime Canilang read as follows:
MEDICAL DECLARATION
I hereby declare that:
39
Illegible The Insurance Commissioner had also ruled that the failure of Great
We agree with the Court of Appeals that the information which Jaime
Canilang failed to disclose was material to the ability of Great Pacific to
estimate the probable risk he presented as a subject of life insurance.
Had Canilang disclosed his visits to his doctor, the diagnosis made and
medicines prescribed by such doctor, in the insurance application, it
may be reasonably assumed that Great Pacific would have made
further inquiries and would have probably refused to issue a nonmedical insurance policy or, at the very least, required a higher
premium for the same coverage. 15 The materiality of the information
withheld by Great Pacific did not depend upon the state of mind of
Jaime Canilang. A man's state of mind or subjective belief is not
capable of proof in our judicial process, except through proof of
external acts or failure to act from which inferences as to his
subjective belief may be reasonably drawn. Neither does materiality
depend upon the actual or physical events which ensue. Materiality
relates rather to the "probable and reasonable influence of the facts"
upon the party to whom the communication should have been made,
40
It remains only to note that the Court of Appeals finding that the
parties had not agreed in the pretrial before the Insurance Commission
that the relevant issue was whether or not Jaime Canilang
had intentionally concealed material information from the insurer, was
supported by the evidence of record, i.e., the Pre-trial Order itself
dated 17 October 1984 and the Minutes of the Pre-trial Conference
dated 15 October 1984, which "readily shows that the word
"intentional" does not appear in the statement or definition of the
issue in the said Order and Minutes." 18
WHEREFORE, the Petition for Review is DENIED for lack of merit and
the Decision of the Court of Appeals dated 16 October 1989 in C.A.G.R. SP No. 08696 is hereby AFFIRMED. No pronouncement as to the
costs.
SO ORDERED.
In any case, in the case at bar, the nature of the facts not conveyed to
the insurer was such that the failure to communicate must have
been intentional rather than merely inadvertent. For Jaime Canilang
could not have been unaware that his heart beat would at times rise to
high and alarming levels and that he had consulted a doctor twice in
the two (2) months before applying for non-medical insurance. Indeed,
the last medical consultation took place just the day before the
insurance application was filed. In all probability, Jaime Canilang went
to visit his doctor precisely because of the discomfort and concern
brought about by his experiencing "sinus tachycardia."
41
QUIASON, J.:
EGG?
X-rays?
blood tests?
other tests?
This is a petition for review for certiorari under Rule 45 of the Revised
Rules of Court to reverse and set aside the Decision dated February 21,
1992 of the Court of Appeals in CA-G.R. CV No. 29068, and its
Resolution dated April 22, 1992, denying reconsideration thereof.
42
Petitioner then moved for a summary judgment and the trial court
decided in favor of private respondents. The dispositive portion of the
decision is reproduced as follows:
The rule that factual findings of the lower court and the appellate court
are binding on this Court is not absolute and admits of exceptions,
such as when the judgment is based on a misappreciation of the facts
(Geronimo v. Court of Appeals, 224 SCRA 494 [1993]).
II
We reverse the decision of the Court of Appeals.
The terms of the contract are clear. The insured is specifically required
to disclose to the insurer matters relating to his health.
The information which the insured failed to disclose were material and
relevant to the approval and issuance of the insurance policy. The
matters concealed would have definitely affected petitioner's action on
43
SO ORDERED.
Anent the finding that the facts concealed had no bearing to the cause
of death of the insured, it is well settled that the insured need not die
of the disease he had failed to disclose to the insurer. It is sufficient
that his non-disclosure misled the insurer in forming his estimates of
the risks of the proposed insurance policy or in making inquiries
Before the trial court, the complainant lumped the erring taxicab
driver, the owner of the taxicab, and the alleged insurer of the vehicle
which featured in the vehicular accident into one complaint. The erring
44
x x x Three (3) witnesses who were at the scene at the time identified
the taxi involved, though not necessarily the driver thereof. Marvilla saw
a lone taxi speeding away just after the bumping which, when it passed
by him, said witness noticed to be a Lady Love Taxi with Plate No. 438,
painted maroon, with baggage bar attached on the baggage
compartment and with an antenae[sic] attached at the right rear
side.The same descriptions were revealed by Ernesto Lopez, who further
described the taxi to have x x x reflectorized decorations on the edges
of the glass at the back. x x x A third witness in the person of Eulogio
Tabalno x x x made similar descriptions although, because of the fast
speed of the taxi, he was only able to detect the last digit of the plate
number which is 8. x x x [T]he police proceeded to the garage of Lady
Love Taxi and then and there they took possession of such a taxi and
later impounded it in the impounding area of the agency concerned. x x
x [T]he eyewitnesses x x x were unanimous in pointing to that Lady
Love Taxi with Plate No. 438, obviously the vehicle involved herein.
x x x The evidence shows that at the moment the victim was bumped
by the vehicle, the latter was running fast, so much so that because of
the strong impact the old woman was thrown away and she fell on the
pavement. x x x In truth, in that related criminal case against defendant
Dumlao x x x the trial court found as a fact that therein accused was
45
The right of the person injured to sue the insurer of the party at fault
(insured), depends on whether the contract of insurance is intended to
benefit third persons also or on the insured. And the test applied has
been this: Where the contract provides for indemnity against liability to
third persons, then third persons to whom the insured is liable can sue
the insurer. Where the contract is for indemnity against actual loss or
payment, then third persons cannot proceed against the insurer, the
contract being solely to reimburse the insured for liability actually
discharged by him thru payment to third persons, said third persons
recourse being thus limited to the insured alone.[10]
46
directly sue the insurer, however, the direct liability of the insurer
under indemnity contracts against third-party liability does not mean
that the insurer can be held solidarily liable with the insured and/or the
other parties found at fault. The liability of the insurer is based on
contract; that of the insured is based on tort.[11]
In the case at bar, the trial court held petitioner together with
respondents Sio Choy and San Leon Rice Mills Inc. solidarily liable to
respondent Vallejos for a total amount of P29,103.00, with the
qualification that petitioners liability is only up to P20,000.00. In the
context of a solidary obligation, petitioner may be compelled by
respondent Vallejos to pay the entire obligation of P29,103.00,
notwithstanding the qualification made by the trial court. But, how can
petitioner be obliged to pay the entire obligation when the amount
stated in its insurance policy with respondent Sio Choy for indemnity
against third-party liability is only P20,000.00? Moreover, the
qualification made in the decision of the trial court to the effect that
petitioner is sentenced to pay up to P20,000.00 only when the
obligation to pay P29,103.00 is made solidary is an evident breach of
the concept of a solidary obligation.[12]
We thus find hardly a basis in the records for the trial court to
have validly found petitioner liable jointly and severally with the owner
and the driver of the Lady Love taxicab, for damages accruing to
private respondent.
Apparently, the trial court did not distinguish between the private
respondents cause of action against the owner and the driver of the
Lady Love taxicab and his cause of action against petitioner. The
former is based on torts and quasi-delicts while the latter is based on
contract. Confusing these two sources of obligations as they arise from
the same act of the taxicab fatally hitting private respondents mother,
and in the face of overwhelming evidence of the reckless imprudence
of the driver of the Lady Love taxicab, the trial court brushed aside its
ignorance of the terms and conditions of the insurance contract and
forthwith found all three - the driver of the taxicab, the owner of the
taxicab, and the alleged insurer of the taxicab - jointly and severally
liable for actual, moral and exemplary damages as well as attorneys
fees and litigation expenses. This is clearly a misapplication of the law
by the trial court, and respondent appellate court grievously erred in
not having reversed the trial court on this ground.
47
Petitioner did not tire in arguing before the trial court and the
respondent appellate court that, assuming arguendo that it had issued
the insurance contract over the Lady Love taxicab, private respondents
cause of action against petitioner did not successfully accrue because
he failed to file with petitioner a written notice of claim within six (6)
months from the date of the accident as required by Section 384 of the
Insurance Code.
This Court has made the observation that some insurance companies
have been inventing excuses to avoid their just obligations and it is
only the State that can give the protection which the insuring public
needs from possible abuses of the insurers. [14]
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 amount
of his loss, and/or 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
Commission or the Courts within one year from date of accident,
otherwise the claimants right of action shall prescribe [emphasis and
underscoring supplied].
II
48
Corporation was found jointly and severally liable to pay actual, moral
and exemplary damages, death indemnity, attorneys fees and litigation
expenses in Civil Case No. 135486. The complaint against Travellers
Insurance & Surety Corporation in said case is hereby ordered
dismissed.
No pronouncement as to costs.
In Eagle Star Insurance Co., Ltd., et al. vs. Chia Yu, this Court ruled:
SO ORDERED.
The plaintiffs cause of action did not accrue until his claim was finally
rejected by the insurance company. This is because, before such final
rejection, there was no real necessity for bringing suit.
The philosophy of the above pronouncement was pointed out in the
case of ACCFA vs. Alpha Insurance and Surety Co., viz.:
This petition for review, under Rule 45 of the Rules of Court, assails the
Decision 1 dated May 17, 1993, of the Court of Appeals and its
Resolution 2 dated January 4, 1994 in CA-G.R. CV No. 18341. The
appellate court affirmed in toto the judgment of the Misamis Oriental
Regional Trial Court, Branch 18, in an insurance claim filed by private
respondent against Great Pacific Life Assurance Co. The dispositive
portion of the trial court's decision reads:
WHEREFORE, judgment is rendered adjudging the
defendant GREAT PACIFIC LIFE ASSURANCE
CORPORATION as insurer under its Group policy No. G1907, in relation to Certification B-18558 liable and
ordered to pay to the DEVELOPMENT BANK OF THE
PHILIPPINES as creditor of the insured Dr. Wilfredo
Leuterio, the amount of EIGHTY SIX THOUSAND TWO
49
On October 20, 1986, the widow of the late Dr. Leuterio, respondent
Medarda V. Leuterio, filed a complaint with the Regional Trial Court of
Misamis Oriental, Branch 18, against Grepalife for "Specific
Performance with Damages." 5 During the trial, Dr. Hernando Mejia,
who issued the death certificate, was called to testify. Dr. Mejia's
findings, based partly from the information given by the respondent
widow, stated that Dr. Leuterio complained of headaches presumably
due to high blood pressure. The inference was not conclusive because
Dr. Leuterio was not autopsied, hence, other causes were not ruled out.
50
Petitioner alleges that the complaint was instituted by the widow of Dr.
Leuterio, not the real party in interest, hence the trial court acquired no
jurisdiction over the case. It argues that when the Court of Appeals
affirmed the trial court's judgment, Grepalife was held liable to pay the
proceeds of insurance contract in favor of DBP, the indispensable party
who was not joined in the suit.
51
The insured private respondent did not cede to the mortgagee all his
rights or interests in the insurance, the policy stating that: "In the
event of the debtor's death before his indebtedness with the Creditor
[DBP] shall have been fully paid, an amount to pay the outstanding
indebtedness shall first be paid to the creditor and the balance of sum
assured, if there is any, shall then be paid to the beneficiary/ies
designated by the debtor." 10 When DBP submitted the insurance claim
against petitioner, the latter denied payment thereof, interposing the
defense of concealment committed by the insured. Thereafter, DBP
collected the debt from the mortgagor and took the necessary action
of foreclosure on the residential lot of private
respondent. 11 In Gonzales La O vs. Yek Tong Lin Fire & Marine Ins.
Co. 12 we held:
On the contrary the medical findings were not conclusive because Dr.
Mejia did not conduct an autopsy on the body of the decedent. As the
attending physician, Dr. Mejia stated that he had no knowledge of Dr.
52
evidence rests upon the insurer. 19 In the case at bar, the petitioner
failed to clearly and satisfactorily establish its defense, and is therefore
liable to pay the proceeds of the insurance.1wphi1.nt
And that brings us to the last point in the review of the case at bar.
Petitioner claims that there was no evidence as to the amount of Dr.
Leuterio's outstanding indebtedness to DBP at the time of the
mortgagor's death. Hence, for private respondent's failure to establish
the same, the action for specific performance should be dismissed.
Petitioner's claim is without merit. A life insurance policy is a valued
policy. 20 Unless the interest of a person insured is susceptible of exact
pecuniary measurement, the measure of indemnity under a policy of
insurance upon life or health is the sum fixed in the policy. 21 The
mortgagor paid the premium according to the coverage of his
insurance, which states that:
53
On April 15, 1991, petitioner issued five (5) insurance policies covering
respondent's various property described therein against fire, for the
period from May 22, 1991 to May 22, 1992.
SO ORDERED.
On July 14, 1992, respondent filed with petitioner its formal claim for
indemnification of the insured property razed by fire.
On the same day, July 14, 1992, petitioner returned to respondent the
five (5) manager's checks that it tendered, and at the same time
rejected respondent's claim for the reasons (a) that the policies had
expired and were not renewed, and (b) that the fire occurred on June
13, 1992, before respondent's tender of premium payment.
PARDO, J.:
The case is an appeal via certiorari seeking to set aside the decision of
the Court of Appeals, 1 affirming with modification that of the Regional
Trial Court, Branch 58, Makati, ordering petitioner to pay respondent
the sum of P18,645,000.00, as the proceeds of the insurance coverage
of respondent's property razed by fire; 25% of the total amount due as
attorney's fees and P25,000.00 as litigation expenses, and costs.
On July 21, 1992, respondent filed with the Regional Trial Court, Branch
58, Makati City, a civil complaint against petitioner for recovery of
P18,645,000.00, representing the face value of the policies covering
respondent's insured property razed by fire, and for attorney's fees. 2
On October 23, 1992, after its motion to dismiss had been denied,
petitioner filed an answer to the complaint. It alleged that the
complaint "fails to state a cause of action"; that petitioner was not
liable to respondent for insurance proceeds under the policies because
54
at the time of the loss of respondent's property due to fire, the policies
had long expired and were not renewed. 3
SO ORDERED.
Makati, Metro-Manila, March 10, 1993.
After due trial, on March 10, 1993, the Regional Trial Court, Branch 58,
Makati, rendered decision, the dispositive portion of which reads:
ZOSIMO Z. ANGELES.
Judge. 4
5
55
The basic issue raised is whether the fire insurance policies issued by
petitioner to the respondent covering the period May 22, 1991 to May
22, 1992, had expired on the latter date or had been extended or
renewed by an implied credit arrangement though actual payment of
premium was tendered on a later date after the occurrence of the risk
(fire) insured against.
The application was approved for a period of one year from March 1,
1988 to March 1, 1989. Accordingly, he was issued Health Care
Agreement No. P010194. Under the agreement, respondents husband
was entitled to avail of hospitalization benefits, whether ordinary or
emergency, listed therein. He was also entitled to avail of "out-patient
benefits" such as annual physical examinations, preventive health care
and other out-patient services.
WHEREFORE, the Court hereby REVERSES and SETS ASIDE the decision
of the Court of Appeals in CA-G.R. CV No. 42321. In lieu thereof the
Court renders judgment dismissing respondent's complaint and
petitioner's counterclaims thereto filed with the Regional Trial Court,
Branch 58, Makati City, in Civil Case No. 92-2023. Without
costs.1wphi1.nt
Upon the termination of the agreement, the same was extended for
another year from March 1, 1989 to March 1, 1990, then from March 1,
1990 to June 1, 1990. The amount of coverage was increased to a
maximum sum of P75,000.00 per disability.2
During the period of his coverage, Ernani suffered a heart attack and
was confined at the Manila Medical Center (MMC) for one month
beginning March 9, 1990. While her husband was in the hospital,
respondent tried to claim the benefits under the health care
agreement. However, petitioner denied her claim saying that the
Health Care Agreement was void. According to petitioner, there was a
concealment regarding Ernanis medical history. Doctors at the MMC
allegedly discovered at the time of Ernanis confinement that he was
hypertensive, diabetic and asthmatic, contrary to his answer in the
SO ORDERED.
56
On appeal, the Court of Appeals affirmed the decision of the trial court
but deleted all awards for damages and absolved petitioner
Reverente.4 Petitioners motion for reconsideration was denied.5 Hence,
petitioner brought the instant petition for review, raising the primary
argument that a health care agreement is not an insurance contract;
hence the "incontestability clause" under the Insurance Code6 does not
apply.1wphi1.nt
After her husband was discharged from the MMC, he was attended by a
physical therapist at home. Later, he was admitted at the Chinese
General Hospital. Due to financial difficulties, however, respondent
brought her husband home again. In the morning of April 13, 1990,
Ernani had fever and was feeling very weak. Respondent was
constrained to bring him back to the Chinese General Hospital where
he died on the same day.
On July 24, 1990, respondent instituted with the Regional Trial Court of
Manila, Branch 44, an action for damages against petitioner and its
president, Dr. Benito Reverente, which was docketed as Civil Case No.
90-53795. She asked for reimbursement of her expenses plus moral
damages and attorneys fees. After trial, the lower court ruled against
petitioners, viz:
WHEREFORE, in view of the forgoing, the Court renders
judgment in favor of the plaintiff Julita Trinos, ordering:
1. Defendants to pay and reimburse the medical and hospital
coverage of the late Ernani Trinos in the amount of P76,000.00
plus interest, until the amount is fully paid to plaintiff who paid
the same;
SO ORDERED.3
57
(4) of any person upon whose life any estate or interest vested
in him depends.
In the case at bar, the insurable interest of respondents husband in
obtaining the health care agreement was his own health. The health
care agreement was in the nature of non-life insurance, which is
primarily a contract of indemnity.9 Once the member incurs hospital,
medical or any other expense arising from sickness, injury or other
stipulated contingent, the health care provider must pay for the same
to the extent agreed upon under the contract.
58
answer the same to the extent agreed upon. In the end, the liability of
the health care provider attaches once the member is hospitalized for
the disease or injury covered by the agreement or whenever he avails
of the covered benefits which he has prepaid.
Under Section 27 of the Insurance Code, "a concealment entitles the
injured party to rescind a contract of insurance." The right to rescind
should be exercised previous to the commencement of an action on
the contract.17 In this case, no rescission was made. Besides, the
cancellation of health care agreements as in insurance policies require
the concurrence of the following conditions:
59
DECISION
(U)nder the title Claim procedures of expenses, the defendant
Philamcare Health Systems Inc. had twelve months from the
date of issuance of the Agreement within which to contest the
membership of the patient if he had previous ailment of
asthma, and six months from the issuance of the agreement if
the patient was sick of diabetes or hypertension. The periods
having expired, the defense of concealment or
misrepresentation no longer lie.23
QUISUMBING, J.:
This petition for review assails the Decision[1] dated July 30, 2002
of the Court of Appeals in CA-G.R. SP No. 60144, affirming
the Decision[2] dated May 3, 2000 of the Insurance Commission in I.C.
Adm. Case No. RD-277. Both decisions held that there was no violation
of the Insurance Code and the respondents do not need license as
insurer and insurance agent/broker.
Finally, petitioner alleges that respondent was not the legal wife of the
deceased member considering that at the time of their marriage, the
deceased was previously married to another woman who was still
alive. The health care agreement is in the nature of a contract of
indemnity. Hence, payment should be made to the party who incurred
the expenses. It is not controverted that respondent paid all the
hospital and medical expenses. She is therefore entitled to
reimbursement. The records adequately prove the expenses incurred
by respondent for the deceaseds hospitalization, medication and the
professional fees of the attending physicians.24
60
61
...
The same provision also provides, the fact that no profit is derived
from the making of insurance contracts, agreements or transactions, or
that no separate or direct consideration is received therefor, shall not
preclude the existence of an insurance business. [12]
The test to determine if a contract is an insurance contract or not,
depends on the nature of the promise, the act required to be
performed, and the exact nature of the agreement in the light of the
occurrence, contingency, or circumstances under which the
performance becomes requisite. It is not by what it is called. [13]
62
SEC. 299 . . .
PUNO, J.:
Before the Court is the petition for certiorari under Rule 45 of the
Revised Rules of Court by petitioner GULF RESORTS, INC., against
respondent PHILIPPINE CHARTER INSURANCE CORPORATION. Petitioner
assails the appellate court decision 1 which dismissed its two appeals
and affirmed the judgment of the trial court.
For review are the warring interpretations of petitioner and respondent
on the scope of the insurance companys liability for earthquake
damage to petitioners properties. Petitioner avers that, pursuant to its
earthquake shock endorsement rider, Insurance Policy No. 31944
covers all damages to the properties within its resort caused by
earthquake. Respondent contends that the rider limits its liability for
loss to the two swimming pools of petitioner.
SO ORDERED.
63
Item
P7,691,000.00 -
@ .392%;
Rate-Various
-
1,500,000.00 -
393,000.00 -
116,600.00
a) Tilter House
P19,800.00 -
0.551%
b) Power House
P41,000.00 -
0.551%
c) House Shed
P55,000.00 -
0.540%
P100,000.00 -
P37,420.60 F/L
2,061.52
Typhoon
1,030.76
EC
393.00
ES
Doc. Stamps
3,068.10
F.S.T.
776.89
64
409.05
TOTAL
45,159.92;
Respondent filed its Answer with Special and Affirmative Defenses with
Compulsory Counterclaims.12
On February 21, 1994, the lower court after trial ruled in favor of the
respondent, viz:
65
xxx
No pronouncement as to costs.13
We also find that the Court a quo was correct in not granting
the plaintiff-appellants prayer for the imposition of interest
24% on the insurance claim and 6% on loss of income allegedly
amounting toP4,280,000.00. Since the defendant-appellant has
expressed its willingness to pay the damage caused on the two
(2) swimming pools, as the Court a quo and this Court correctly
found it to be liable only, it then cannot be said that it was in
default and therefore liable for interest.
B. THE TRIAL COURT ERRED IN DETERMINING PLAINTIFFAPPELLANTS RIGHT TO RECOVER UNDER DEFENDANTAPPELLEES POLICY (NO. 31944; EXH "I") BY LIMITING ITSELF
TO A CONSIDERATION OF THE SAID POLICY ISOLATED FROM
THE CIRCUMSTANCES SURROUNDING ITS ISSUANCE AND THE
66
Ninth, there is no basis for the appellate court to hold that the
additional premium was not paid under the extended coverage. The
premium for the earthquake shock coverage was already included in
the premium paid for the policy.
Petitioner contends:
67
Sixth, petitioner did not inform respondent of its requirement that all
of its properties must be included in the earthquake shock coverage.
Petitioners own evidence shows that it only required respondent to
follow the exact provisions of its previous policy from AHAC-AIU.
Respondent complied with this requirement. Respondents only
deviation from the agreement was when it modified the provisions
regarding the replacement cost endorsement. With regard to the issue
under litigation, the riders of the old policy and the policy in issue are
identical.
68
In Insurance Policy No. 31944, four key items are important in the
resolution of the case at bar.
Earthquake Endorsement
PREMIUM RECAPITULATION
ITEM NOS.
AMOUNT
RATES
PREMIUM
Provided always that all the conditions of this Policy shall apply
(except in so far as they may be hereby expressly varied) and
that any reference therein to loss or damage by fire should be
deemed to apply also to loss or damage occasioned by or
through or in consequence of Earthquake.24
xxx
393,000.00
0.100%-E/S
393.0022]
69
pp. 23-26
Q. For the period from March 14, 1988 up to March 14, 1989,
did you personally arrange for the procurement of this policy?
A. Yes, sir.
A. Yes, sir. The final action is still with us although they can
recommend what insurance to take.
70
A. Yes, sir.
Atty. Mejia:
A. Yes, sir.
Q. Now, after this policy was delivered to you did you bother to
check the provisions with respect to your instructions that all
properties must be covered again by earthquake shock
endorsement?
WITNESS:
Yes[,] I remember having gone over these policies at
one point of time, sir.
xxx
WITNESS:
71
A. Yes, sir.
ATTY. MEJIA:
What is your basis for stating that the coverage against
earthquake shock as provided for in each of the six (6)
policies extend to the two (2) swimming pools only?
WITNESS:
Because it says here in the policies, in the enumeration
"Earthquake Shock Endorsement, in the Clauses and
Warranties: Item 5 only (Earthquake Shock
Endorsement)," sir.
WITNESS:
ATTY. MEJIA:
COURT:
They are the same, the premium rates?
WITNESS:
WITNESS:
72
ATTY. ANDRES:
Would you as a matter of practice [insure] swimming
pools for fire insurance?
WITNESS:
A. Yes, sir.
A. I told him that the insurance that they will have to get will
have the same provisions as this American Home Insurance
Policy No. 206-4568061-9.
ATTY. ANDRES:
Will you not also agree with me that these exhibits,
Exhibits G and H which you have pointed to during
your direct-examination, the phrase "Item no. 5 only"
meaning to (sic) the two (2) swimming pools was
deleted from the policies issued by AIU, is it not?
xxx
Q. So, all the provisions here will be the same except that of
the premium rates?
ATTY. ANDRES:
A. Yes, sir. He assured me that with regards to the insurance
premium rates that they will be charging will be limited to this
one. I (sic) can even be lesser.
WITNESS:
My answer to that would be, the deletion of that
particular phrase is inadvertent. Being a company
Atty. Mejia:
73
xxx
Q. Now, may we know from you Engr. de Leon your basis, if
any, for stating that except for the swimming pools all affected
items have no coverage for earthquake shock?
xxx
A. I based my statement on my findings, because upon my
examination of the policy I found out that under Item 3 it was
specific on the wordings that on the two swimming pools only,
then enclosed in parenthesis (against the peril[s] of earthquake
shock only), and secondly, when I examined the summary of
premium payment only Item 3 which refers to the swimming
pools have a computation for premium payment for earthquake
shock and all the other items have no computation for
payment of premiums.
74
Through the years, the courts have held that in these type of contracts,
the parties do not bargain on equal footing, the weaker party's
participation being reduced to the alternative to take it or leave it.
Thus, these contracts are viewed as traps for the weaker party whom
the courts of justice must protect.32Consequently, any ambiguity
therein is resolved against the insurer, or construed liberally in favor of
the insured.33
A. Yes, sir.
Q. What steps did you take?
A. When I examined the policy of the Philippine Charter
Insurance Corporation I specifically told him that the policy and
wordings shall be copied from the AIU Policy No. 206-45680619.
The case law will show that this Court will only rule out blind adherence
to terms where facts and circumstances will show that they are
basically one-sided.34 Thus, we have called on lower courts to remain
careful in scrutinizing the factual circumstances behind each case to
determine the efficacy of the claims of contending parties.
In Development Bank of the Philippines v. National
Merchandising Corporation, et al.,35 the parties, who were acute
businessmen of experience, were presumed to have assented to the
assailed documents with full knowledge.
Q. Did you indicate to Atty. Omlas (sic) what kind of policy you
would want for those facilities in Agoo Playa?
Q. Did you take any step Mr. Witness to ensure that the
provisions which you wanted in the American Home Insurance
policy are to be incorporated in the PCIC policy?
AUSTRIAMARTINEZ,
CALLEJO, SR., and
75
- versus - CHICO-NAZARIO, JJ
The Case
Before us is a Petition for Review [1] under Rule 45 of the Rules of Court,
DECISION
seeking to reverse the January 16, 2003 Order [2] of the Regional Court
PANGANIBAN, CJ:
(RTC) ofQuezon City (Branch 221) in Civil Case No. Q-97-30412. The
RTC found Insurance Commissioner Eduardo T. Malinis guilty of indirect
contempt
for
refusing
to
comply
with
the December
18,
2002 Resolution[3] of the lower court. The January 16, 2003 Order
states in full:
claims. The security deposit must be ratably distributed among all the
insured who are entitled to their respective shares; it cannot be
garnished or levied upon by a single claimant, to the detriment of the
others.
76
On January 15, 2002, the RTC rendered a Decision in Civil Case No. Q-
of
the
Decision
against
by Vilfran Liner on June 10, 1997, and issued by Capital Insurance and
On April 18, 2002, CISCO opposed the Motion for Execution filed by
respondent, claiming that the latter had no record or document
regarding the alleged issuance of the counterbond; thus, the bond was
The Facts
not valid and enforceable.
77
On June 13, 2002, the RTC granted the Motion for Execution and issued
the
corresponding
Writ. Armed
with
this
Writ,
Sheriff
Manuel
the insurance commission was valid. The trial court added that the
letter and spirit of the law made the security deposit answerable for
contractual obligations incurred by CISCO under the insurance
contracts the latter had entered into. The RTC resolved thus:
78
legal
justification
for
his
refusal
to
allow
the
withdrawal
Preliminary Issue:
Issues
Before discussing the principal issue, the Court will first dispose of the
question of mootness.
Prior
to
the
filing
of
the
instant
Petition,
Insurance
dated March 26, 2003, stating that the former had no objection to the
release of the security deposit to Del Monte Motors. Portions of the
fund were consequently released to respondent in July, October, and
December 2003. Thus, the issue arises: whether these circumstances
79
subject to regulation by the State, with respect not only to the relations
between the insurer and the insured, but also to the internal affairs of
and garnished.
interest and involves a matter of public policy, this Court shall not shirk
from its duty to educate the bench and the bar by formulating guiding
and controlling principles, precepts, doctrines and rules. [9]
80
requirement
supplied)
of
the
Commissioner. (Emphasis
81
to answer for the claims against the insurance company by all its
[11]
82
The
which claimants are entitled to the security deposit and in what prorated amounts. Only after all other claimants under subsisting policies
issued by CISCO have been heard can respondents share be
determined.
of
the
insurance
authority
with
regulatory
Commission
general
over
insurance matters.[15]
83
grounds for the revocation or suspension; [17] (3) impose upon insurance
companies, their directors and/or officers and/or agents appropriate
penalties -- fines, suspension or removal from office -- for failing to
comply with the Code or with any of the commissioners orders,
instructions, regulations or rulings, or for otherwise conducting
[19]
84
WHEREFORE,
SO ORDERED.
the
85
Petition
is GRANTED and
the
assailed
June 8, 2006
xxxx
AUSTRIA-MARTINEZ, J.:
Petitioner is a customer and dealer of the products of IMC and LSPI. On
February 25, 1991, the Gaisano Superstore Complex in Cagayan de Oro
City, owned by petitioner, was consumed by fire. Included in the items
lost or destroyed in the fire were stocks of ready-made clothing
materials sold and delivered by IMC and LSPI.
86
goods but the payment of its unpaid account and as such the
obligation to pay is not extinguished, even if the fire is considered a
fortuitous event; that by subrogation, the insurer has the right to go
against petitioner; that, being a fire insurance with book debt
endorsements, what was insured was the vendor's interest as a
creditor.11
THE COURT OF APPEALS ERRED IN HOLDING THAT ALL RISK OVER THE
SUBJECT GOODS IN THE INSTANT CASE HAD TRANSFERRED TO
PETITIONER UPON DELIVERY THEREOF.
Anent the first error, petitioner contends that the insurance in the
present case cannot be deemed to be over credit since an insurance
"on credit" belies not only the nature of fire insurance but the express
terms of the policies; that it was not credit that was insured since
respondent paid on the occasion of the loss of the insured goods to fire
and not because of the non-payment by petitioner of any obligation;
that, even if the insurance is deemed as one over credit, there was no
loss as the accounts were not yet due since no prior demands were
made by IMC and LSPI against petitioner for payment of the debt and
such demands came from respondent only after it had already paid
IMC and LSPI under the fire insurance policies.15
87
the findings of facts are conflicting; (6) when in making its findings the
CA went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee; (7) when the
findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are
based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent;
(10) when the findings of fact are premised on the supposed absence
of evidence and contradicted by the evidence on record; and (11)
when the CA manifestly overlooked certain relevant facts not disputed
by the parties, which, if properly considered, would justify a different
conclusion.21 Exceptions (4), (5), (7), and (11) apply to the present
petition.
For its part, respondent counters that while ownership over the readymade clothing materials was transferred upon delivery to petitioner,
IMC and LSPI have insurable interest over said goods as creditors who
stand to suffer direct pecuniary loss from its destruction by fire; that
petitioner is liable for loss of the ready-made clothing materials since it
failed to overcome the presumption of liability under Article 1265 16 of
the Civil Code; that the fire was caused through petitioner's negligence
in failing to provide stringent measures of caution, care and
maintenance on its property because electric wires do not usually short
circuit unless there are defects in their installation or when there is lack
of proper maintenance and supervision of the property; that petitioner
is guilty of gross and evident bad faith in refusing to pay respondent's
valid claim and should be liable to respondent for contracted lawyer's
fees, litigation expenses and cost of suit.17
Indeed, when the terms of the agreement are clear and explicit that
they do not justify an attempt to read into it any alleged intention of
the parties, the terms are to be understood literally just as they appear
on the face of the contract.25 Thus, what were insured against were the
accounts of IMC and LSPI with petitioner which remained unpaid 45
88
days after the loss through fire, and not the loss or destruction of the
goods delivered.
Petitioner argues that IMC bears the risk of loss because it expressly
reserved ownership of the goods by stipulating in the sales invoices
that "[i]t is further agreed that merely for purpose of securing the
payment of the purchase price the above described merchandise
remains the property of the vendor until the purchase price thereof is
fully paid."26
The present case clearly falls under paragraph (1), Article 1504 of the
Civil Code:
ART. 1504. Unless otherwise agreed, the goods remain at the seller's
risk until the ownership therein is transferred to the buyer, but when
the ownership therein is transferred to the buyer the goods are at the
buyer's risk whether actual delivery has been made or not, except that:
(1) Where delivery of the goods has been made to the buyer or to a
bailee for the buyer, in pursuance of the contract and the ownership in
the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the
goods are at the buyer's risk from the time of such delivery; (Emphasis
supplied)
The next question is: Is petitioner liable for the unpaid accounts?
xxxx
Thus, when the seller retains ownership only to insure that the buyer
will pay its debt, the risk of loss is borne by the buyer. 27 Accordingly,
petitioner bears the risk of loss of the goods delivered.
IMC and LSPI did not lose complete interest over the goods. They have
an insurable interest until full payment of the value of the delivered
goods. Unlike the civil law concept of res perit domino, where
ownership is the basis for consideration of who bears the risk of loss, in
property insurance, one's interest is not determined by concept of title,
Moreover, it must be stressed that the insurance in this case is not for
loss of goods by fire but for petitioner's accounts with IMC and LSPI
that remained unpaid 45 days after the fire. Accordingly, petitioner's
obligation is for the payment of money. As correctly stated by the CA,
where the obligation consists in the payment of money, the failure of
89
Art. 2207. If the plaintiff's property has been insured, and he has
received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract. x x
x
Petitioner failed to refute respondent's evidence.
No pronouncement as to costs.
SO ORDERED.
90
Petitioner,
Present:
This
is
petition
for
review
on
certiorari
assailing
the
Decision[1] dated March 15, 2005 and the Resolution[2] dated May 23,
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
Promulgated:
into a lease[3] of equipment and motor vehicles with JVL Food Products
Respondent.
(JVL). On the same date, Vicente Ong Lim Sing, Jr. (Lim) executed an
June 8, 2007
x------------------------------------------------------------------------------------x
NACHURA, J.:
JVL defaulted in the payment of the monthly rentals. As of July 31,
2000, the amount in arrears, including penalty charges and insurance
premiums, amounted to Three Million Four Hundred Fourteen Thousand
91
In upholding JVL and Lims stance, the trial court stressed the
23, 2000, FEB sent a letter to JVL demanding payment of the said
92
xxxx
93
C.
When it ruled that the Plaintiff-Appellant can
no longer recover the unpaid balance of the price
because of the previous payments made by the
defendants for the reasonable use of the units;
D.
When it failed to make a ruling or
judgment on the Joint and Solidary Liability of Vicente
Ong Lim, Jr. to the Plaintiff-Appellant.[14]
Accordingly,
on January
17,
2003,
the
court
issued
an
Order[13] elevating the entire records of the case to the CA. FEB averred
that the trial court erred:
94
SO ORDERED.[17]
IV
Lim filed the instant Petition for Review on Certiorari under Rule 45
THE HONORABLE COURT OF APPEALS ERRED IN
FINDING THAT THE CONTRACT BETWEEN THE PARTIES
IS ONE OF A FINANCIAL LEASE AND NOT OF A
CONTRACT OF SALE.
contending that:
I
V
THE HONORABLE COURT OF APPEALS ERRED WHEN IT
FAILED TO CONSIDER THAT THE UNDATED COMPLAINT
WAS FILED BY SATURNINO J. GALANG, JR., WITHOUT
ANY AUTHORITY FROM RESPONDENTS BOARD OF
DIRECTORS AND/OR SECRETARYS CERTIFICATE.
II
VI
THE HONORABLE COURT OF APPEALS ERRED WHEN IT
FAILED TO STRICTLY APPLY SECTION 7, RULE 18 OF THE
1997 RULES OF CIVIL PROCEDURE AND NOW ITEM 1,
A(8) OF A.M. NO. 03-1-09 SC (JUNE 8, 2004).
III
95
VII
the first time on appeal are barred by estoppel. Arguments not raised
in the original proceedings cannot be considered on review; otherwise,
it would violate basic principles of fair play.[19]
VIII
Second, there is no legal basis for Lim to question the authority
of the CA to go beyond the matters agreed upon during the pre-trial
conference, or in not dismissing the appeal for failure of FEB to file its
brief on time, or in not ruling separately on the petitioners motion to
dismiss.
IX
Courts have the prerogative to relax procedural rules of even
THE HONORABLE COURT OF APPEALS ERRED IN
CONSTRUING THE INTENTIONS OF THE COURT A
QUO IN ITS USAGE OF THE TERM MERCHANTABILITY. [18]
process. In
numerous
cases,
this
Court
96
without objection, then the contract serves as the law between the
parties.
SECTION
CLAUSE
23. ENTIRE
AGREEMENT;
SEVERABILITY
Petitioners claim that the real intention of the parties was a contract of
sale of personal property on installment basis is more likely a mere
afterthought in order to defeat the rights of the respondent.
Third, while we affirm that the subject lease agreement is a contract of
adhesion, such a contract is not void per se. It is as binding as any
The Lease Contract with corresponding Lease Schedules with Delivery
97
leasing as:
who is unable to pay for such equipment in cash in one lump sum, to
lease such equipment in the meantime for his use, at a fixed rental
sufficient to amortize at least 70% of the acquisition cost (including the
expenses and a margin of profit for the financial lessor) with the
expectation that at the end of the lease period the buyer/financial
lessee will be able to pay any remaining balance of the purchase price.
[23]
The allegation of petitioner that the rent for the use of each
movable constitutes the value of the vehicle or equipment leased is of
no moment. The law on financial lease does not prohibit such a
circumstance and this alone does not make the transaction between
the parties a sale of personal property on installment. In fact, the value
of the lease, usually constituting the value or amount of the property
involved, is a benefit allowed by law to the lessor for the use of the
property by the lessee for the duration of the lease. It is recognized
that the value of these movables depreciates through wear and tear
upon use by the lessee. In Beltran v. PAIC Finance Corporation, [24] we
stated that:
with
the
Lease
Schedules
with
98
law, morals, good customs, public policy, or public order, they shall
have the force of law between the parties. [26] Contracting parties may
stipulate on terms and conditions as they may see fit and these have
the force of law between them.[27]
Fourth, the validity of Lease No. 27:95:20 between FEB and JVL
should be upheld. JVL entered into the lease contract with full
knowledge of its terms and conditions.The contract was in force for
more than four years. Since its inception on March 9, 1995, JVL and Lim
never questioned its provisions. They only attacked the validity of the
contract after they were judicially made to answer for their default in
that the lessor does not warrant the merchantability of the equipment
99
EQUIPMENT
AND
THE
SUPPLIER
THEREOF ANDTHAT THERE ARE NO WARRANTIES,
CONDITIONS,
TERMS,
REPRESENTATION
OR
INDUCEMENTS, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, MADE BY OR ON BEHALF OF THE LESSOR
AS TO ANY FEATURE OR ASPECT OF THE EQUIPMENT
OR ANY PART THEREOF, OR AS TO ITS FITNESS,
SUITABILITY,
CAPACITY,
CONDITION
OR
MERCHANTABILITY, NOR AS TO WHETHER THE
EQUIPMENT
WILL MEET THE REQUIREMENTS OF ANY LAW, RULE,
SPECIFICATIONS OR CONTRACT WHICH PROVIDE FOR
SPECIFIC MACHINERY OR APPARATUS OR SPECIAL
METHODS.[29]
Fifth, petitioner further proffers the view that the real intention
of the parties was to enter into a contract of sale on installment in the
same manner that a previous transaction between the parties over a
1995 Mitsubishi L-200 Strada DC-Pick-Up was initially covered by an
agreement denominated as a lease and eventually became the subject
of a Deed of Absolute Sale.
[31]
altogether
and
should
lease. Furthermore, it
is
not
a
be
included
cardinal
rule
in
as
part
of
the interpretation
the
of
contracts that if the terms of a contract are clear and leave no doubt
of the equipment for any particular use. Thus, the financial lessee was
precisely in a position to enforce such warranty directly against the
supplier of the equipment and not against the financial lessor. We find
arrangement.[30]
dated March
15,
2005 and
Resolution
100
datedMay
23,
SO ORDERED.
Creditor Group Life Policy No. P-1920 [2] with petitioner Eternal Gardens
DECISION
VELASCO, JR., J.:
EVIDENCE OF INSURABILITY.
The Case
101
its insurance claim for Chuangs death: (1) Certificate of Claimant (with
Chuang, while still living; and (4) Statement of Account showing the
dated November
14,
1984,[7] which
was
received
by
Philamlife
with any reply to the latters insurance claim. This prompted Eternal to
a list of insurable balances of its lot buyers for October 1982. One of
demand from Philamlife the payment of the claim for PhP 100,000
those included in the list as new business was a certain John Chuang.
reads:
102
the
submission
of
the
requirements
of
the
group
insurance
Consequently, Eternal filed a case before the Makati City Regional Trial
Court (RTC) for a sum of money against Philamlife, docketed as Civil
SO ORDERED.[11]
Case No. 14736. The trial court decided in favor of Eternal, the
dispositive portion of which reads:
SO ORDERED.
Hence, we have this petition with the following grounds:
The Honorable Court of Appeals has decided a
question of substance, not therefore determined by
this Honorable Court, or has decided it in a way not in
accord with law or with the applicable jurisprudence, in
holding that:
103
I.
II.
In the instant case, the factual findings of the RTC were reversed by the
Eternal claims that the evidence that it presented before the trial court
supports its contention that it submitted a copy of the insurance
application
of
Chuang
before
his
death.
In
Eternals
letter
re-examine factual issues raised before the CA and first level courts,
businesses. Eternal added it was noted at the bottom of said letter that
The fact of the matter is, the letter dated December 29, 1982, which
Philamlife stamped as received, states that the insurance forms for the
attached list of burial lot buyers were attached to the letter. Such
104
Philamlife primarily claims that Eternal did not even know where the
shifted to Philamlife, which must prove that the letter did not contain
[Mendoza:]
application.
Atty. Miranda:
Atty. Arevalo:
value.
overlooked,
misapprehended,
or
if
105
the application form, these are minor inconsistencies that do not affect
the
credibility
of
the
witnesses.
Thus,
we
ruled
in People
v.
106
contract.
insurance contract.[21]
purchaser is created and the same is effective, valid, and binding until
May 29,
The second sentence of Creditor Group Life Policy No. P-1920 on the
1996
Decision
of
the
Makati City
107
RTC,
Branch
138
CHICO-NAZARIO,**
(2) To pay Eternal legal interest at the rate of six percent (6%) per
THE
INSULAR
LIFE
ASSURANCE
COMPANY LIMITED, AS REPRESENTED
BY THE PRESIDENT VICENTE R. AVILON,
Acting Chairperson,
Respondent.
VELASCO, JR.,
(3) To pay Eternal legal interest at the rate of twelve percent (12%) per
annum of PhP 100,000 from June 17, 1996 until full payment of this
NACHURA, and
award; and
PERALTA, JJ.
No costs.
Promulgated:
SO ORDERED.
August 25, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
VIOLETA R. LALICAN,
Petitioner,
Present:
DECISION
CARPIO MORALES,*
- versus -
108
CHICO-NAZARIO, J.:
[2]
Under the terms of Policy No. 9011992, Eulogio was to pay the
Court (RTC) of Gapan City, Branch 34, in Civil Case No. 2177. In its
the end of the 20-year period of the policy. According to the Policy
assailed Decision, the RTC dismissed the claim for death benefits filed
Contract, there was a grace period of 31 days for the payment of each
before the due date, the policy would be in default, and if the premium
Orders dated 10 April 2008 and 3 July 2008, respectively, the RTC
remained unpaid until the end of the grace period, the policy would
[3]
[4]
Notice of Appeal.
even
after
the
lapse
of
the
grace
period
of
31
days. Policy
through
Reinstatement
two
riders
1998,
No. 9011992,together
an
Application
with
the
for
amount
of
Policy
May
on 26
letter[10] dated 17 July 1998, Insular Life notified Eulogio that his
Flexi
Malaluan,
Package
[9]
valued
amount
of
interest
and
to
file
another
application
for
109
Eulogios death, Policy No. 9011992 had already lapsed, and Eulogio
failed
second
Application
the
for
amount
Reinstatement [11] of
ofP17,500.00,
to
reinstate
the
same. According
to
the
Application
for
Policy
representing
1998, and the premiums which became due on 24 April 1998 and 24
Life to Violeta was DBP Check No. 0000309734, for the amount
Violeta returned the letter dated 10 March 1999 and the check
enclosed
therein
to
the
Cabanatuan
District
Office
of
Insular
Life. Violetas counsel subsequently sent a letter [14] dated 8 July 1999 to
Violeta that her claim could not be granted since, at the time of
[12]
110
asserting
that
Violetas
Complaint
had
no
legal
or
factual
Contract between Eulogio and Insular Life and the Application for
of
Life, held that Eulogio was not able to fully comply with the
the 24
January
requirements
1998 premium
for
the
and
reinstatement
non-compliance
of
the
same. By
with
way
xxxx
The RTC found that Policy No. 9011992 had indeed lapsed and
Eulogio needed to have the same reinstated:
111
112
dated 30
August
2007. Despite
already
receiving
on 3
arguments
she
had
previously
made
in
her
Motion
for
113
period for appealing the said judgment. Violeta claims that her former
counsel suffered from poor health, which rapidly deteriorated from the
first week of July 2008 until the latters death just shortly after the filing
of
Violeta filed with the RTC, on 20 May 2008, a Notice of Appeal with
Motion,[26] praying that the Order dated 10 April 2008 be set aside and
Petition
on 8
August
2008. In
light
of
these
Appeal with Motion given that the Decision dated 30 August 2007 had
Violeta directly elevated her case to this Court via the instant Petition
for Review on Certiorari, raising the following issues for consideration:
insurable interest in his own life when he reinstated Policy No. 9011992
just before he passed away on 17 September 1998. The RTC should
have construed the provisions of the Policy Contract and Application for
Reinstatement in favor of the insured Eulogio and against the insurer
Insular Life, and considered the special circumstances of the case, to
rule
2.
instant
course to her appeal even if the same was filed out of time.
1.
the
that
Eulogio
had
complied
with
the
requisites
for
the
reinstatement of Policy No. 9011992 prior to his death, and that Violeta
114
that Violetas former counsel was already suffering from ill health
during these times; or that the illness of Violetas former counsel would
At the outset, the Court notes that the elevation of the case to
us via the instant Petition for Review on Certiorari is not justified. Rule
41, Section 1 of the Rules of Court, [28] provides that no appeal may be
taken from an order disallowing or dismissing an appeal. In such a
case, the aggrieved party may file a Petition for Certiorari under Rule
Appeal within the reglementary period binds Violeta, which failure the
latter cannot now disown on the basis of her bare allegation and self-
serving pronouncement that the former was ill. A client is bound by his
in this Petition, had long become final and executory. Violeta filed a
Motion for Reconsideration thereof, but the RTC denied the same in an
Order dated 8 November 2007. The records of the case reveal that
Violeta
received
copy
of
the 8
November
[30]
2007 Order
on 3
RTC in denying Violetas Notice of Appeal for being filed beyond the
receipt
of
the
RTC
Order
dated 8
RTC Decision dated 30 August 2007 in Civil Case No. 2177 already
November
Violetas claim that her former counsels failure to file the proper
poor
health,
lacking
relevant
details
and
supporting
rapidly deteriorated only by the first week of July 2008. The events
2008, i.e., a copy of the RTC Order dated 8 November 2007, denying
in time.[33]
Appeal was filed on 20 May 2008. There is utter lack of proof to show
115
pro tunc entries, which cause no prejudice to any party, and void
Upon more extensive study of the Petition, it becomes evident that the
judgments.
[34]
exceptions.
actually beyond question that while Eulogio was still alive, he had an
insurable interest in his own life, which he did insure under Policy
Even if the Court ignores the procedural lapses committed herein, and
proceeds to resolve the substantive issues raised, the Petition must still
was able to reinstate the lapsed insurance policy on his life before his
fail.
1998, upon the expiration of the 31-day grace period for payment of
such that the person will derive pecuniary benefit or advantage from
the preservation of the subject matter insured and will suffer pecuniary
insurable interest gives a person the legal right to insure the subject
indeed provides that every person has an insurable interest in his own
admission that Policy No. 9011992 had lapsed by then. Insular Life did
life.
life or health of a person insured must exist when the insurance takes
effect, but need not exist thereafter or when the loss occurs.
the P8,062.00
[37]
[38]
overdue
premium
interests
for 24
January
thereon. On 17
1998,
but
September
not
1998,
116
10. REINSTATEMENT
only
be
Reinstatement
considered
had
been
processed
and
Application
approved
by
for
Insular
submitted, to wit:
117
The Court agrees with the RTC that the conditions for
reinstatement
under
the
Policy
Contract
and
Application
for
Violeta did not adduce any evidence that Eulogio might have
failed to fully understand the import and meaning of the provisions of
his Policy Contract and/or Application for Reinstatement, both of which
were already with Malaluan. Insular Life, through the Policy Contract,
favor of the insured and strictly as against the insurer company, yet,
themselves have used. If such terms are clear and unambiguous, they
must be taken and understood in their plain, ordinary and popular
sense.[45]
that can persuade this Court to already consider Policy No. 9011992
Application
for
Reinstatement
and
accompanying
deposits,
for
118
Petitioner, Present:
the Court commiserates with Violeta, as the tragic and fateful turn of
events
leaves
her
practically
empty-handed,
the
Court
cannot
lapsed insurance policy. Justice and fairness must equally apply to all
parties to a case. Courts are not permitted to make contracts for the
CORONA,
parties. The function and duty of the courts consist simply in enforcing
- v e r s u s - CHICO-NAZARIO,*
Policy No. 9011992 remained lapsed and void, not having been
BERSAMIN, JJ.*
COMMISSIONER OF
Eulogio thereon.
INTERNAL REVENUE,
Respondent. Promulgated:
September 18,
2009
x - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
RESOLUTION
SO ORDERED.
CORONA, J.:
ARTICLE II
PROVIDERS, INC.,
119
ARTICLE XIII
Social Justice and Human Rights
For
resolution
are
motion
for
reconsideration
and
supplemental motion for reconsideration dated July 10, 2008 and July
14, 2008, respectively, filed by petitioner Philippine Health Care
Providers, Inc.[2]
120
SO ORDERED.
SO ORDERED.
121
Unable to accept our verdict, petitioner filed the present motion for
reconsideration
and
supplemental
motion
for
reconsideration,
In a decision dated June 12, 2008, the Court denied the petition
and affirmed the CAs decision. We held that petitioners health care
agreement during the pertinent period was in the nature of non-life
insurance
which
is
contract
of
indemnity,
citing Blue
Cross
beneficiaries
under
their
plans
are
treated
(d) Legislative
intent
to
exclude
health
care
agreements from items subject to DST is clear,
especially in the light of the amendments
made in the DST law in 2002.
as insurance
122
Tax
Amnesty
Act
of
2007)
by
fully
paying
the
amount
Oral arguments were held in Baguio City on April 22, 2009. The
parties submitted their memoranda on June 8, 2009.
123
the health care services. The same agreement contains the various
health care services that can be engaged by the enrolled member, i.e.,
may actually make use of the health care services being offered by
and
other
procedures
for
the
delivery
of
health
provides
hospital
services
such
as
room
and
MAINTENANCE
board
ORGANIZATIONS ARE
NOT
THE
BUSINESS
physicians and other health care providers for the services rendered, at
pre-agreed rates.
ENGAGED
IN
INSURANCE
[14]
124
over that which makes some words idle and nugatory. [17] This principle
choose the interpretation which gives effect to the whole of the statute
its every word.[18]
125
requisites must concur before the DST can apply, namely: (1) the
a)
b)
c)
d)
by
plan
members
for
fixed
prepaid
premium.
services provided.
126
The
rule
was
enunciated
in Jordan
v.
Group
Health
persuasive effect on our decisions, [21] have determined that HMOs are
not in the insurance business. One test that they have applied is
insurance risk.
xxx Although Group Healths activities may be
considered in one aspect as creating security against
loss from illness or accident more truly they constitute
the quantity purchase of well-rounded, continuous
medical service by its members. xxx The functions of
such an organization are not identical with those
of insurance or indemnity companies. The latter
are concerned primarily, if not exclusively, with risk
and the consequences of its descent, not with service,
or its extension in kind, quantity or distribution; with
the unusual occurrence, not the daily routine of living.
Hazard is predominant. On the other hand, the
cooperative is concerned principally with getting
service rendered to its members and doing so at
lower
prices
made
possible
by
quantity
purchasing and economies in operation. Its
primary purpose is to reduce the cost rather
than the risk of medical care; to broaden the
service to the individual in kind and quantity; to
enlarge the number receiving it; to regularize it
as an everyday incident of living, like purchasing
food and clothing or oil and gas, rather than
merely protecting against the financial loss
caused
by
extraordinary
and
unusual
occurrences, such as death, disaster at sea, fire
and tornado. It is, in this instance, to take care of
colds, ordinary aches and pains, minor ills and all the
127
128
to indemnify the insured for medical expenses incurred up to a preagreed limit.Somerset Orthopedic Associates, P.A. v. Horizon Blue
Cross and Blue Shield of New Jersey[27] is clear on this point:
129
purpose test used in the above-quoted U.S. cases, we are not saying
part. Thus, its undertaking under its agreements is not to indemnify its
only prudent and appropriate, taking into account the burdensome and
the insurance industry. This is evident from the fact that it is not
compared
to
its
noninsurance
activities. Therefore,
since
130
CONTRACT
accorded great weight. It is well-settled that the interpretation of an
CONTEMPLATED
OF
laws by the courts. The reason behind this rule was explained in Nestle
1997
THE
NIRC
OF
HEALTH
CARE
AGREEMENT IS NOT
AN
INSURANCE
131
of Section 185:
cases did not involve the interpretation of a tax provision. Instead, they
dealt with the liability of a health service provider to a member under
132
as
an
agreement
whereby
one
undertakes
for
1.
2.
3.
4.
5.
has pointed out that, even if a contract contains all the elements of an
133
reimburse or indemnify the member as the latter does not pay any
pre-agreed rates. The member does not make any such payment.
gives rise to a monetary liability on the part of the member to any third
Program, Inc.,[43] although the health care contracts called for the
134
the insured was not the focal point of the agreement but the extension
the risk that it will shell out more than the prepaid fees, it still will not
it offers to provide health services: the risk that it might fail to earn a
WAS
NO
LEGISLATIVE INTENT
TO IMPOSE DST ON
peculiar only to insurance companies. Insurance risk, also known as
HEALTH
actuarial risk, is the risk that the cost of insurance claims might be
AGREEMENTS
HMOS
135
CARE
OF
On February 27, 1914, Act No. 2339 (the Internal Revenue Law
ARTICLE XI
On December 31, 1916, Section 30 (l), Article III of Act No. 2339 was
again reproduced as Section 1604 (l), Article IV of Act No. 2657
(Administrative Code). Upon its amendment on March 10, 1917, the
136
pertinent DST provision became Section 1449 (l) of Act No. 2711,
On December 23, 1993, under RA 7660, Section 185 was amended but,
Section
1449
(1)
eventually
became
Sec.
222
of
Commonwealth Act No. 466 (the NIRC of 1939), which codified all the
by RA 8424 (or the NIRC of 1997), the subject legal provision was
provisions
untouched.
Thereafter, on June 3, 1977, the same provision with the same DST
in 1974. The same pioneer HMO was later reorganized and renamed
Integrated Health Care Services, Inc. (or Intercare). However, there are
PDs 1457 and 1959, enacted on June 11, 1978 and October 10, 1984
those who claim that Health Maintenance, Inc. is the HMO industry
pioneer, having set foot in the Philippines as early as 1965 and having
been formally incorporated in 1991. Afterwards, HMOs proliferated
quickly and currently, there are 36 registered HMOs with a total
234 of the NIRC of 1977 was renumbered as Section 198. And under
Section 23 of EO[47] 273 dated July 25, 1987, it was again renumbered
We can clearly see from these two histories (of the DST on the
one hand and HMOs on the other) that when the law imposing the DST
was first passed, HMOs were yet unknown in the Philippines. However,
137
when the various amendments to the DST law were enacted, they were
Taking into account that health care agreements are clearly not
already in existence in the Philippines and the term had in fact already
within the ambit of Section 185 of the NIRC and there was never any
legislative intent to impose the same on HMOs like petitioner, the same
need for adequate medical services at a cost which the average wage
earner can afford. HMOs arrange, organize and manage health care
an HMO.[50]
(except for the rate of tax), it would be safe to say that health care
control costs. They protect their members from exposure to the high
A FINAL NOTE
138
Petitioner, Present:
VELASCO, JR., J., Chairperson,
- versus - LEONARDO-DE CASTRO,*
PERALTA,
ABAD, and
MENDOZA, JJ.
the reach of the ordinary wage earner or driving the industry to the
ground. At the end of the day, neither side wins, considering the
WHEREFORE,
the
motion
for
reconsideration
CA-G.R. SP No. 70479 is REVERSED and SET ASIDE. The 1996 and
1997
deficiency
DST
assessment
against
petitioner
is
and SEABOARD-EASTERN
Respondents.
No costs.
SO ORDERED.
x ------------------------------------------------- x
Petitioner,
139
- versus -
DMT
SEABOARD-EASTERN Promulgated:
shipped
the
generator
sets
by
truck
x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
ACX Ruby V/72 that it also owned and operated. On its journey
damages from the loss of insured goods under the Carriage of Goods
Marina Port Services, Inc. (Marina), the Manila South Harbor arrastre or
cargo-handling
operator,
received
the
shipment
on
October
7,
worth US$721,500.00.
the generator sets, two vans bore signs of external damage while the
140
Container Yard under Marinas care pending clearance from the Bureau
processing of the claim.But petitioner New World did not submit what
was required of it, insisting that the insurance policy did not include
contractor)
the Regional Trial Court (RTC) ofMakati City, Branch 62, in Civil Case 94-
and
surveyors
of
petitioner New
Worlds
insurer,
2770.
On August 16, 2001 the RTC rendered a decision absolving the various
International Philippines, Inc. (LEP), Marina, and Serbros. While LEP and
respondents from liability with the exception of NYK. The RTC found
NYK acknowledged receipt of the demand, both denied liability for the
that the generator sets were damaged during transit while in the care
loss.
of NYKs vessel, ACX Ruby. The latter failed, according to the RTC, to
loss
from
respondents
NYK,
DMT,
Advatech,
LEP
Profit,
on
February
14,
1994,
Seaboard
required
141
The RTC ruled, however, that petitioner New World filed its claim
that the one-year prescriptive period under the COGSA did not affect
against the vessel owner NYK beyond the one year provided under the
New Worlds right under the insurance policy since it was the Insurance
Carriage of Goods by Sea Act (COGSA). New World filed its complaint
Code that governed the relation between the insurer and the insured.
on October 11, 1994 when the deadline for filing the action (on or
before October 7, 1994) had already lapsed. The RTC held that the oneyear period should be counted from the date the goods were delivered
to the arrastre operator and not from the date they were delivered to
the CA decision before the Court in G.R. 171468, Seaboard chose to file
the RTC held that the latter cannot be faulted for denying the claim
World. Further, the CA held that the one-year prescriptive period for
against it since New World refused to submit the itemized list that
Worlds right against the vessel owner. New Worlds failure to comply
second petition for review before the Court in G.R. 174241, assailing
31, 2006,[2] affirming the RTCs rulings except with respect to Seaboards
liability. The CA held that petitioner New World can still recoup its loss
from Seaboards marine insurance policy, considering a) that the
The Issues Presented
142
In G.R. 171468 --
DMT, Advatech, LEP, LEP Profit, Marina and Serbros in handling and
Profit, Marina, and Serbros who were at one time or another involved in
for review on certiorari. And petitioner New World has been unable to
that the one-year COGSA prescriptive period for marine claims does
make out an exception to this rule.[3] Consequently, the Court will not
disturb the finding of the RTC, affirmed by the CA, that the generator
sets were totally damaged during the typhoon which beset the vessels
voyage from Hong Kong to Manila and that it was her negligence in
continuing with that journey despite the adverse condition which
caused petitioner New Worlds loss.
The Courts Rulings
143
cause under Article 1734 of the Civil Code, does not automatically
relieve the common carrier of liability. The latter had the burden of
committed by the insured. The policy covered all losses during the
proving that the typhoon was the proximate and only cause of loss and
show
that
petitioner New Worlds loss or damage fell within some or one of the
enumerated exceptions.
In G.R. 174241 --
could not verify the damage that New Worlds goods suffered going by
listing of the damage that the generator sets suffered. The record
Suppliers Invoice KL2504; (2) copy of the Packing List; (3) copy of the
1135, 1222, and 1224; (5) original copy of Marine Insurance Policy MAHO-000266; (6) copies of Damage Report from Supplier and Insurance
Adjusters; (7) Consumption Report from the Customs Examiner; and (8)
The marine open policy that Seaboard issued to New World was
an
a policy
insured
against
all causes
Copies
of
of
Received
Formal
Claim
from
the
following:
a)
LEP
144
But whose fault was it that the suit against NYK, the common
carrier, was not brought to court on time? The last day for filing such a
suit fell on October 7, 1994. The record shows that petitioner New
World filed its formal claim for its loss with Seaboard, its insurer, a
about 11 months before the suit against NYK would have fallen due.
construed strongly against the insurer who prepared it. The Court
cannot read a requirement in the policy that was not there.
petitioner New Worlds right to recover from NYK. And it could have
itemized listing was incumbent on the latter as the seller DMTs local
agent. Petitioner New
World should
not
be
made
to
suffer
for
Advatechs shortcomings.
values when it appeared settled that New Worlds loss was total and
when the insurance policy did not require the production of such a list
in the event of a claim.
one year after delivery of the goods or the date when the goods should
the demand for the list, Seaboard against whom a formal claim was
145
documents if that were the case, and formally rejected it. That would
have at least given petitioner New World a clear signal that it needed
of the claim is created by the failure of the insurer to pay the claim
to promptly file its suit directly against NYK and the others. Ultimately,
the fault for the delayed court suit could be brought to Seaboards
doorstep.
Consequently, Seaboard should pay interest on the proceeds of
the policy for the duration of the delay until the claim is fully satisfied
Section 241 of the Insurance Code provides that no insurance
at the rate of twice the ceiling prescribed by the Monetary Board. The
term ceiling prescribed by the Monetary Board means the legal rate of
policies. And, under Section 243, the insurer has 30 days after proof of
Code also provides for an award of attorneys fees and other expenses
to pay the claim. If such ascertainment is not had within 60 days from
receipt of evidence of loss, the insurer has 90 days to pay or settle the
claim. And, in case the insurer refuses or fails to pay within the
prescribed time, the insured shall be entitled to interest on the
In Prudential
proceeds of the policy for the duration of delay at the rate of twice the
Guarantee
and
Assurance,
Inc.
v.
Trans-
146
with 24% interest per annum for the duration of delay in accordance
with Sections 243 and 244 of the Insurance Code and attorneys fees
equivalent to 10% of the insurance proceeds. Seaboard shall also pay,
Petitioner,
Present:
VELASCO, JR., J., Chairperson,
- versus - PERALTA,
ABAD,
MENDOZA, and
PERLASBERNABE, JJ.
147
x --------------------------------------------------------------------------------------- x
Aside from pension benefits, the comprehensive pension plan
also provided life insurance coverage to Florendo. [4] This was covered
DECISION
ABAD, J.:
of
the
life
insurance,
equivalent
to
the
pre-need
pension plan application of his true state of health and its effect on the
price. Further, the life insurance was to take care of any unpaid
premiums.[9]
for the payment of the benefits under her husbands plan. [10] Because
the application and left to Perla the task of supplying the information
Manuel died before his pension plan matured and his wife was to get
148
only the benefits of his life insurance, Philam Plans forwarded her claim
to Philam Life.[11]
On
[12]
declining
maintenance
May
3,
1999
Philam
for
Life
his
Plans
wrote Lourdes a
found that
heart
and
letter,
Manuel was
had
an
on
Issues Presented
implanted
[13]
her
demand
[14]
for
payment
under
the
action against the pension plan company before the Regional Trial
1. Whether or not the CA erred in finding Manuel guilty of
concealing his illness when he kept blank and did not answer questions
in his pension plan application regarding the ailments he suffered from;
Philam Plans, Perla and Ma. Celeste, solidarily, to pay Lourdes all the
benefits from her husbands pension plan, namely: P997,050.00, the
proceeds of his term insurance, and P2,890,000.00 lump sum pension
benefit upon maturity of his plan; P100,000.00 as moral damages; and
to pay the costs of the suit. The RTC ruled that Manuel was not guilty of
concealing the state of his health from his pension plan application.
decision,[17] holding
that
insurance
policies
are
traditionally
149
One. Lourdes points out that, seeing the unfilled spaces in Manuels
xxxx
queried
Manuel
directly
regarding
the
state
of
his
health. Consequently, it could not blame him for not mentioning it. [19]
(d) I am in good health and physical condition.
But Lourdes is shifting to Philam Plans the burden of putting on the
pension plan application the true state of Manuels health. She forgets
that since Philam Plans waived medical examination for Manuel, it had
to rely largely on his stating the truth regarding his health in his
application. For, after all, he knew more than anyone that he had been
Date
of
____________________________
under treatment for heart condition and diabetes for more than five
years preceding his submission of that application. But he kept those
Name
of
Hospital
____________________________
Name
of
Attending
____________________________
Besides, when Manuel signed the pension plan application, he adopted
confinement :
or
Clinic :
Physician :
Findings : ____________________________
specify) :
150
diabetes, the assumption is that he has never been treated for the said
implanted into the body and connected to the wall of the heart,
illnesses in the last five years preceding his application. This is implicit
heartbeat.[25] That Manuel still had his pacemaker when he applied for
space provided for. But this is untrue since he had been on Coumadin,
under treatment for irregular heartbeat within five years preceding that
a treatment for venous thrombosis, [21] and insulin, a drug used in the
application.
for his heart condition and diabetes when he submitted his pension
plan application. These clearly fell within the five-year period. More,
his chest in the 70s or about 20 years before he signed up for the
pension plan.[23] But by its tenor, the responsibility for preparing the
claimed that Perla was aware of his two other afflictions that needed
else may provide the information that Philam Plans needed. Manuel
cannot sign the application and disown the responsibility for having it
her the filling up of the application, then she acted on his instruction,
Two. Lourdes contends that the mere fact that Manuel signed the
application in blank and let Perla fill in the required details did not
make her his agent and bind him to her concealment of his true state
of health. Since there is no evidence of collusion between them, Perlas
fault must be considered solely her own and cannot prejudice Manuel.
failed to reveal the fact that he had a pacemaker implant in the early
[28]
70s since this did not fall within the five-year timeframe that the
disclosure contemplated.[24] But a pacemaker is an electronic device
151
granting the same, Philam Plans and Philam Life were acting on the
xxxx
of that certification.
Lourdes could not seek comfort from her claim that Perla had
assured Manuel that the state of his health would not hinder the
approval of his application and that what is written on his application
made no difference to the insurance company. But, indubitably, Manuel
was made aware when he signed the pension plan application that, in
152
[35]
additional financial security to him and to his wife in his twilight years.
pension
insufficiency
in
the
information
out
provided
that
by
any
his
defect
pension
or
plan
approved, the policy has been issued, and the premiums have been
issuance of his plan,[36] the one year incontestability period has not yet
collected. [34]
set
in. Consequently,
Philam
Plans
was
not
barred
from
153
CORPORATION,
Petitioner,
Present:
This Petition for Review on Certiorari [1] seeks to reverse the Court of
Appeals Decision[2] dated 16 June 2011 and its Resolution [3] dated 8
September 2011 in CA-G.R. CV No. 85777. The Court of Appeals
CARPIO, J., Chairperson,
reversed the Decision[4] of the Regional Trial Court (RTC) of Manila,
BRION,
Branch 3, and ruled that the claim on the Insurance Policy is void.
PEREZ,
- versus -
The Facts
SERENO, and
REYES, JJ.
Promulgated:
Petitioner United Merchants Corporation (UMC) is engaged in the
COUNTRY BANKERS INSURANCE CORPORATION,
Respondent.
Manresa, Quezon City, where UMC assembled and stored its products.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -----x
DECISION
CARPIO, J.:
154
PHILIPPINE
CURRENCY
xxx
On 20 November 1996, UMC demanded for at least fifty percent (50%)
payment of its claim from CBIC. On 25 February 1997, UMC received
On 19 February 1998, UMC filed a Complaint [7] against CBIC with the
155
false
declaration
because
the
invoices
were
genuine
and
the
Statement of Inventory was for internal revenue purposes only, not for
its insurance claim.
During trial, UMC presented five witnesses. The first witness was Josie
Ebora (Ebora), UMCs disbursing officer. Ebora testified that UMCs
stocks in trade, at the time of the fire, consisted of: (1) raw materials
for its Christmas lights; (2) Christmas lights already assembled; and (3)
1996, UMC had no importations and only bought from its local
suppliers.
In
its
Answer
with
Compulsory
Ebora
identified
the
suppliers
as
Fiber
Technology
March
1998, CBIC admitted the issuance of the Insurance Policy to UMC but
raised the following defenses: (1) that the Complaint states no cause of
action; (2) that UMCs claim has already prescribed; and (3) that UMCs
February 1996; and Tomco Commercial Press from which UMC bought
fire claim is tainted with fraud. CBIC alleged that UMCs claim was
several Christmas boxes. Ebora testified that all these deliveries were
not yet paid. Ebora also presented UMCs Balance Sheet, Income
purchases for the year 1996 did not even amount to P25,000,000.00.
UMCs GIS and Financial Reports further revealed that it had insufficient
and P20,000,000.00 in 1996. Ebora also claimed that UMC had sales
capital, which meant UMC could not afford the alleged P50,000,000.00
only from its fruits business but no sales from its Christmas lights for
No. 15 of the Insurance Policy. UMC claimed that it did not make any
156
lights for UMC from 28 March 1996 to 3 July 1996. The third witness,
arson
was
committed
based
from
their
interview
stated that UMC opened letters of credit with MBTC for the year 1995
only. The fourth witness presented was Ernesto Luna (Luna), the
investigation of the warehouse, nor did they file a case for arson.
adjuster
Dominador
Victorio
testified
that
he
inspected
UMCs
existence of certain documents, to wit: (1) UMCs GIS for 1994-1997; (2)
UMCs Financial Report as of 31 December 1996; (3) SEC Certificate
WHEREFORE, judgment is hereby rendered in favor of
plaintiff and ordering defendant to pay plaintiff:
that UMC did not file GIS or Financial Reports for certain years; and (4)
UMCs Statement of Inventory as of 31 December 1995 filed with the
BIR.
157
SO ORDERED.[11]
The RTC found no dispute as to UMCs fire insurance contract with CBIC.
Thus, the RTC ruled for UMCs entitlement to the insurance proceeds, as
follows:
158
1994- P608,986.00
1995- P827,670.00
SO ORDERED.[13]
The CA ruled that UMCs claim under the Insurance Policy is void. The
CA found that the fire was intentional in origin, considering the array of
evidence submitted by CBIC, particularly the pictures taken and the
Exhibit
We have meticulously gone over the entirety of the
evidence submitted by the parties and have come up
with a conclusion that the claim of the plaintiffappellee was indeed overvalued by transactions which
were fraudulently concocted so that the full coverage
of the insurance policy will have to be fully awarded to
the plaintiff-appellee.
Source
Exhs. P-DD,
Fuze Industries
inclusive
Manufacturer Phils.
Amount (pesos)
19,550,400.00
Dates Covere
January 20, 1996
January 31, 1996
inclusive
Tomco
Press
Commercial1,712,000.00
December 19, 19
January 24, 1996
November 24, 19
Exhs. II-QQ,
159
Precious Belen
2,720,400.00
inclusive
Trading
Wisdom
Services
Manpower361,966.00
materials
September 4, 199
October 2, 1995
February 3, 1996
January 8, 1996
Exhs. GGG-11
April 3, 1996
- GGG-24,
HHH-12, HHH-22,
III-11, III-14,
JJJ-13,
LLL-5
September 4, 199
KKK-11,
September 8, 199
May 3, 1996
September 11, 19
November 10, 19
December 21, 19
June 7, 1996
TOTAL
44,315,024.31
Exhs. GGG-
Costs of Letters of
NNN, inclusive
Credit for
imported raw
July 5, 1995
160
At the outset, CBIC assails this petition as defective since what UMC
ultimately wants this Court to review are questions of fact. However,
UMC argues that where the findings of the CA are in conflict with those
of the trial court, a review of the facts may be made. On this
The Issues
the present case falls under the exception. Since UMC properly raised
the conflicting findings of the lower courts, it is proper for this Court to
resolve such contradiction.
I.
WHETHER THE COURT OF APPEALS MADE A RULING
INCO[N]SISTENT
WITH
LAW,
APPLICABLE
JURISPRUDENCE AND EVIDENCE AS TO THE EXISTENCE
OF ARSON AND FRAUD IN THE ABSENCE OF
MATERIALLY CONVINCING EVIDENCE.
II.
UMC contends that because it had already established a prima
facie case against CBIC which failed to prove its defense, UMC is
entitled to claim the full coverage under the Insurance Policy. On the
other hand, CBIC contends that because arson and fraud attended the
claim, UMC is not entitled to recover under Condition No. 15 of the
Insurance Policy.
161
a criminal act; and (2) the identity of the defendants as the one
responsible for the crime.[25] Corpus delicti means the substance of the
crime, the fact that a crime has actually been committed. [26] This is
ininsurance cases, once an insured makes out a prima facie case in its
satisfied by proof of the bare occurrence of the fire and of its having
that the warehouse, where UMCs stocks in trade were stored, was
gutted by fire on 3 July 1996, within the duration of the fire insurance.
conducted more than four months after the fire. The testimonies of
they did not conduct a forensic investigation of the warehouse nor did
limitation in the policy has the burden of establishing that the loss
they file a case for arson.[28] Second, the Sworn Statement of Formal
Claim submitted by UMC, through CRM, states that the cause of the fire
the insurer to establish that the loss arose from a cause of loss which is
excepted or for which it is not liable, or from a cause which limits its
liability.
Protection states that the fire was accidental in origin. This Certification
[24]
mean that it also failed to prove fraud. Qua Chee Gan v. Law
the evidence establishes: (1) the corpus delicti, that is, a fire caused by
Union[29] does not apply in the present case. InQua Chee Gan,[30] the
162
arson case against the insured, because the evidence was identical in
thereof, to wit:
In Uy Hu & Co. v. The Prudential Assurance Co., Ltd.,[32] the Court held
that where a fire insurance policy provides that if the claim be in any
In the present case, arson and fraud are two separate grounds based
insurance claim of UMC. The absence of one does not necessarily result
Insured or anyone acting on his behalf to obtain any benefit under this
Policy, and the evidence is conclusive that the proof of claim which the
insured submitted was false and fraudulent both as to the kind, quality
and amount of the goods and their value destroyed by the fire, such a
proof of claim is a bar against the insured from recovering on the policy
Court of Appeals.
163
credit and invoices for raw materials, Christmas lights and cartons
purchased; (2) charges for assembling the Christmas lights; and (3)
appearing in the invoices and the records of the Department of Trade &
support its insurance claim. The Insurance Policy provides that CBIC
and
without
any
supporting
contract,
amounted
164
A:
[40]
year
1994
and
1995.
and
support his claim for insurance benefits, the Court held that by its false
duly
executed
during
the
December
2002
hearing,
it
declaration, the insured forfeited all benefits under the policy provision
similar to Condition No. 15 of the Insurance Policy in this case.
recognized
costs of sales are P827,670.00 for 1995 and P1,109,190.00 for 1996 or
that
UMC
padded
its
claim
when
it
only
that:
an
estimated
damage
of
Fifty-
Five
Million
Pesos
165
and in Tuason v. North China Insurance Co.,[45] six times. In the present
insurance policy. Mere filing of such a claim will exonerate the insurer.
case, the claim is twenty five times the actual claim proved.
[50]
not existing at the time of the fire.[46] This constitutes the socalled fraudulent claim which, by express agreement between the
insurers and the insured, is a ground for the exemption of insurers from
While it is a cardinal principle of insurance law that a contract of
civil liability.[47]
UMC
when it stated
the terms which the parties themselves have used. [52] If such terms are
plain, ordinary and popular sense. Courts are not permitted to make
contracts for the parties; the function and duty of the courts is simply
SO ORDERED.
166
We do not agree.
GR NO. 173773
PARAMOUNT INSURANCE V. SPS. YVES AND MARIA REMONDEULAZ
The Facts: On May 26, 1994, spouses Yves and Maria Teresa
(Remondeulaz) insured their 1994 Toyota Corolla sedan under a
comprehensive car insurance policy with . While the contract was in
effect, the spouses car was taken by one Ricardo Sales, to whom they
entrusted the car to add accessories and improvement, but did not
return the same within the agreed three-day period. Thus they filed a
complaint sheet and immediately reported the theft to the Traffic
Management Command of the PNP. They they notified the insurance
company, Paramount Insurance Corporation (Paramount), to claim for
reimbursement, but the latter refused to pay, hence they filed a case
for sum of money against the company before the RTC. Upon
termination of plaintiff evidence, the company filed a Demurrer to
Evidence, which the trial court granted in an Order, ruling that the
spouses cannot recover more than its interest in any property subject
of an insurance, since they already recovered from another company
(Standard Insurance Company, Inc.) in Civil Case No. 95-1524, the
amount for the loss of the same car, albeit under a different insurance
policy and insurance company. On appeal to the Court of Appeals, the
latter reversed and set aside the RTC decision. Holding that the car
subject of the case was a different car from that of Civil Case No.
9501524, the CA said the company is liable to the spouses under the
theft clause of their insurance contract. The company elevated their
case to the Supreme Court via petition for review on certiorari.
1.
a)
The Issue/s: Whether or not the loss of the car of the spouses falls
within the theft clause of the insurance contract, making it
compensable. They argue that it was not stolen but was entrusted to
another person.
167
(b)
(c)
by malicious act;
(d)
168
In the instant case, Sales did not have juridical possession over the
Lauro Santos who owns a repair shop for carburetor repair and
repainting. However, when the owner tried to retrieve her car, she was
Records would show that respondents entrusted possession of their
not able to do so since Santos had abandoned his shop. In the said
vehicle only to the extent that Sales will introduce repairs and
case, the crime that was actually committed was Qualified Theft.
However, the Court held that because of the fact that it was not
alleged in the information that the object of the crime was a car, which
misappropriation, the fact that Sales failed to return the subject vehicle
under the policy for the loss of respondents vehicle under the theft
clause.
x x x The principal distinction between the two crimes is that in theft
the thing is taken while in estafa the accused receives the property and
All told, Sales act of depriving respondents of their motor vehicle at, or
converts it to his own use or benefit. However, there may be theft even
12, 2005 and Resolution dated July 20, 2006 of the Court of Appeals
169