Professional Documents
Culture Documents
1st Case:
GR : G.R. No. 125678
Date : March 18, 2002
Title : Philamcare Health Systems Inc. vs. Court of Appeals
Ponente : J. Ynares-Santiago
Facts:
Ernani Trinos applied for a health care coverage with Philam. He answered no
to a question asking if he or his family members were treated to heart trouble,
asthma, diabetes, etc.
The application was approved for 1 year. He was also given hospitalization
benefits and out-patient benefits. After the period expired, he was given an
expanded coverage for Php 75,000. During the period, he suffered from heart
attack and was confined at MMC. The wife tried to claim the benefits but the
petitioner denied it saying that he concealed his medical history by answering
no to the aforementioned question. She had to pay for the hospital bills
amounting to 76,000. Her husband subsequently passed away. She filed a case
in the trial court for the collection of the amount plus damages. She was
awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but
deleted awards for damages. Hence, this appeal.
Issue: WON a health care agreement is not an insurance contract; hence the
“incontestability clause” under the Insurance Code does not apply.
Ratio:
Petitioner claimed that it granted benefits only when the insured is alive
during the one-year duration. It contended that there was no indemnification
unlike in insurance contracts. It supported this claim by saying that it is a
health maintenance organization covered by the DOH and not the Insurance
Commission. Lastly, it claimed that the Incontestability clause didn’t apply
because two-year and not one-year effectivity periods were required.
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Section 2 (1) of the Insurance Code defines a contract of insurance as “an
agreement whereby one undertakes for a consideration to indemnify another
against loss, damage or liability arising from an unknown or contingent event.”
Section 3 states: every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children.
In this case, the husband’s health was the insurable interest. The health care
agreement was in the nature of non-life insurance, which is primarily a
contract of indemnity. The provider must pay for the medical expenses
resulting from sickness or injury.
While petitioner contended that the husband concealed materialfact of his
sickness, the contract stated that:
“that any physician is, by these presents, expressly authorized to disclose or
give testimony at anytime relative to any information acquired by him in his
professional capacity upon any question affecting the eligibility for health care
coverage of the Proposed Members.”
This meant that the petitioners required him to sign authorization to furnish
reports about his medical condition. The contract also authorized Philam to
inquire directly to his medical history.
Hence, the contention of concealment isn’t valid.
They can’t also invoke the “Invalidation of agreement” clause where failure of
the insured to disclose information was a grounds for revocation simply
because the answer assailed by the company was the heart condition question
based on the insured’s opinion. He wasn’t a medical doctor, so he can’t
accurately gauge his condition.
Henrick v Fire- “in such case the insurer is not justified in relying upon such
statement, but is obligated to make further inquiry.”
Fraudulent intent must be proven to rescind the contract. This was incumbent
upon the provider.
“Having assumed a responsibility under the agreement, petitioner is bound to
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.”
Section 27 of the Insurance Code- “a concealment entitles the injured party to
rescind a contract of insurance.”
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As to cancellation procedure- Cancellation requires certain conditions:
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy
of one or more of the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the address
shown in the policy;
4. Must state the grounds relied upon provided in Section 64 of the
Insurance Code and upon request of insured, to furnish facts on which
cancellation is based
None were fulfilled by the provider.
As to incontestability- The trial court said that “under 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.”
2nd Case
Case : GR No. L-52756
Date : Oct. 12, 1987
Title : MANILA MAHOGANY MFG CORP V CA & ZENITH INSURANCE
Ponente : PADILLA, J
FACTS:
• 4From March 6, 1970 – 1971, petitioner insured its Mercedes Benz 4-
door sedan w/ respondent insurance company. On May 4, 1970, vehicle was
bumped and damaged by a truck owned by San Miguel Corp (SMC).
• Zenith paid P5K to petitioner in amicable settlement. Petitioner’s general
manager executed a Release Claim, subrogating respondent company to all its
right to action against SMC
• Dec. 11, 1972 – respondent co. wrote Insurance Adjusters Inc. To
demand reimbursement from SMC. Insurance Adjusters refused saying that
SMC had already paid petitioner P4,500 for the damages to petitioner’s vehicle,
as evidenced by a cash voucher and Release of Claim executed by the GM of
petitioner discharging SMC from “all actions, claims, demands the rights of
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action that now exist or hereafter develop arising out of or as a consequence of
the accident
• Respondent demanded the P4.5K amount from petitioner. Petitioner
refused. Suit filed for recovery.
• City Court ordered petitioner to pay respondent. CFI affirmed. CA
affirmed with modification that petitioner was to pay respondent the total
amount of 5K it had received from respondent co.
Petitioner’s argument: Since the total damages were valued at P9,486.43 and
only 5K was received by petitioner from respondent, petitioner argues that it
was entitled to go after SMC to claim the additional which was eventually paid
to it
Respondent’s argument: No qualification to its right of subrogation
ISUE: WON petitioner should pay respondent despite the subrogation in the
Release of Claim was conditioned on recovery of the total amount of damages
petitioner has sustained?
HELD/RATIO: NO.
• SC: no other evidence to support its allegation that a gentleman’s
agreement existed between the parties, not embodied in the Release of Claim,
such Release of Claim must be taken as the best evidence of the intent and
purpose of the parties
• CA correct in holding petitioner should reimburse respondent 5K
o When Manila Mahogany executed another release claim discharging SMC
from all rights of action after the insurer had paid the proceeds of the policy –
the compromise agreement of 5K- the insurer is entitled to recover from the
insured the amount of insurance money paid
o Petitioner by its own acts released SMC, thereby defeating respondent’s
right of subrogation, the right of action against the insurer was also nullified
• Since the insurer can be subrogated to only such rights as the insured
may have, should the insured, after receiving payment from the insurer,
release the wrongdoer who caused the loss, the insurer losses his rights
against the latter. But in such a case, the insurer will be entitled to recover
from the insured whatever it has paid to the latter, unless the release was
made w/ the consent of the insurer
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3rd Case
Case : GR No. 147839
Date : June 8, 2006
Title : Gaisano Cagayan Inc. vs. Insurance Company of North America
Ponente : AUSTRIA-MARTINEZ, J
Facts:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans.
Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing
trademarks owned by Levi Strauss & Co.. IMC and LSPI separately obtained from
respondent fire insurance policies with book debt endorsements. The insurance
policies provide for coverage on "book debts in connection with ready-made
clothing materials which have been sold or delivered to various customers and
dealers of the Insured anywhere in the Philippines."2 The policies defined book
debts as the "unpaid account still appearing in the Book of Account of the
Insured 45 days after the time of the loss covered under this Policy."3 The policies
also provide for the following conditions:
1. Warranted that the Company shall not be liable for any unpaid account in
respect of the merchandise sold and delivered by the Insured which are
outstanding at the date of loss for a period in excess of six (6) months from the
date of the covering invoice or actual delivery of the merchandise whichever shall
first occur.
2. Warranted that the Insured shall submit to the Company within twelve (12)
days after the close of every calendar month all amount shown in their books of
accounts as unpaid and thus become receivable item from their customers and
dealers.
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.
On February 4, 1992, respondent filed a complaint for damages against
petitioner. It alleges that IMC and LSPI filed with respondent their claims under
their respective fire insurance policies with book debt endorsements; that as of
February 25, 1991, the unpaid accounts of petitioner on the sale and delivery of
ready-made clothing materials with IMC was P2,119,205.00 while with LSPI it
was P535,613.00; that respondent paid the claims of IMC and LSPI and, by
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virtue thereof, respondent was subrogated to their rights against petitioner; that
respondent made several demands for payment upon petitioner but these went
unheeded.
At the pre-trial conference the parties failed to arrive at an amicable settlement.7
Thus, trial on the merits ensued.
On August 31, 1998, the RTC rendered its decision dismissing respondent's
complaint.8 It held that the fire was purely accidental; that the cause of the fire
was not attributable to the negligence of the petitioner; that it has not been
established that petitioner is the debtor of IMC and LSPI; that since the sales
invoices state that "it is further agreed that merely for purpose of securing the
payment of purchase price, the above-described merchandise remains the
property of the vendor until the purchase price is fully paid", IMC and LSPI
retained ownership of the delivered goods and must bear the loss.
CA reverse the decision.
Issue/s:
a. THE COURT OF APPEALS ERRED IN HOLDING THAT THE INSURANCE
IN THE INSTANT CASE WAS ONE OVER CREDIT.
Ruling:
The Court disagrees with petitioner's stand.
It is well-settled that when the words of a contract are plain and readily
understood, there is no room for construction. In this case, the questioned
insurance policies provide coverage for "book debts in connection with ready-
made clothing materials which have been sold or delivered to various customers
and dealers of the Insured anywhere in the Philippines. ; and defined book debts
as the "unpaid account still appearing in the Book of Account of the Insured 45
days after the time of the loss covered under this Policy." Nowhere is it provided
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in the questioned insurance policies that the subject of the insurance is the
goods sold and delivered to the customers and dealers of the insured.
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 days after the loss through fire, and not
the loss or destruction of the goods delivered.
4TH Case
Case : G.R. No. 151991
Date : June 20, 2006
Title : TRANS-ASIA SHIPPING LINES, INC., vs. PRUDENTIAL
GUARANTEE and ASSURANCE INC., Respondent.
Ponente : CHICO-NAZARIO, J:
FACTS:
Plaintiff [TRANS-ASIA] is the owner of the vessel M/V Asia Korea. In
consideration of payment of premiums, defendant [PRUDENTIAL] insured M/V
Asia Korea for loss/damage of the hull and machinery arising from perils, inter
alia, of fire and explosion for the sum of P40 Million, beginning [from] the period
[of] July 1, 1993 up to July 1, 1994. This is evidenced by Marine Policy No.
MH93/1363 (Exhibits "A" to "A-11"). On October 25, 1993, while the policy was
in force, a fire broke out while [M/V Asia Korea was] undergoing repairs at the
port of Cebu. On October 26, 1993 plaintiff [TRANS-ASIA] filed its notice of claim
for damage sustained by the vessel. This is evidenced by a letter/formal claim of
even date (Exhibit "B"). Plaintiff [TRANS-ASIA] reserved its right to subsequently
notify defendant [PRUDENTIAL] as to the full amount of the claim upon final
survey and determination by average adjuster Richard Hogg International (Phil.)
of the damage sustained by reason of fire. An adjuster’s report on the fire in
question was submitted by Richard Hogg International together with the U-
Marine Surveyor Report. On May 29, 1995[,] plaintiff [TRANS-ASIA] executed a
document denominated "Loan and Trust receipt", a portion of which read (sic):
"Received from Prudential Guarantee and Assurance, Inc., the sum of PESOS
THREE MILLION ONLY (P3,000,000.00) as a loan without interest under Policy
No. MH 93/1353 [sic], repayable only in the event and to the extent that any net
recovery is made by Trans-Asia Shipping Corporation, from any person or
persons, corporation or corporations, or other parties, on account of loss by any
casualty for which they may be liable occasioned by the 25 October 1993: Fire
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on Board." In a letter dated 21 April 1997 defendant [PRUDENTIAL] denied
plaintiff’s claim. Following this development, on 13 August 1997, TRANS-ASIA
filed a Complaint5 for Sum of Money against PRUDENTIAL with the RTC of Cebu
City. On 6 June 2000, the court a quo rendered Judgment8 finding for (therein
defendant) PRUDENTIAL. It ruled that a determination of the parties’ liabilities
hinged on whether TRANS-ASIA violated and breached the policy conditions on
WARRANTED VESSEL CLASSED AND CLASS MAINTAINED. On appeal by
TRANS-ASIA, the Court of Appeals, it ruled that PRUDENTIAL, as the party
asserting the non-compensability of the loss had the burden of proof to show
that TRANS-ASIA breached the warranty, which burden it failed to discharge.
PRUDENTIAL cannot rely on the lack of certification to the effect that TRANS-
ASIA was CLASSED AND CLASS MAINTAINED as its sole basis for reaching the
conclusion that the warranty was breached. The Court of Appeals opined that
the lack of a certification does not necessarily mean that the warranty was
breached by TRANS-ASIA. Instead, the Court of Appeals considered
PRUDENTIAL’s admission that at the time the insurance contract was entered
into between the parties, the vessel was properly classed by Bureau Veritas, a
classification society recognized by the industry. Hence, the instant appeal is
ALLOWED and the Judgment appealed from REVERSED.
Issue/s:
II - THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO
VIOLATION BY TRANS-ASIA OF A MATERIAL WARRANTY, NAMELY, WARRANTY
CLAUSE NO. 5, OF THE INSURANCE POLICY.
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Ruling:
In case of any litigation for the enforcement of any policy or contract of insurance,
it shall be the duty of the Commissioner or the Court, as the case may be, to
make a finding as to whether the payment of the claim of the insured has been
unreasonably denied or withheld; and in the affirmative case, the insurance
company shall be adjudged to pay damages which shall consist of attorney’s fees
and other expenses incurred by the insured person by reason of such
unreasonable denial or withholding of payment plus interest of twice the ceiling
prescribed by the Monetary Board of the amount of the claim due the insured,
from the date following the time prescribed in section two hundred forty-two or
in section two hundred forty-three, as the case may be, until the claim is fully
satisfied; Provided, That the failure to pay any such claim within the time
prescribed in said sections shall be considered prima facie evidence of
unreasonable delay in payment.
In the case at bar, the facts as found by the Court of Appeals, and confirmed by
the records show that there was an unreasonable delay by PRUDENTIAL in the
payment of the unpaid balance of P8,395,072.26 to TRANS-ASIA. On 26 October
1993, a day after the occurrence of the fire in "M/V Asia Korea", TRANS-ASIA
filed its notice of claim. On 13 August 1996, the adjuster, Richards Hogg
International (Phils.), Inc., completed its survey report recommending the
amount of P11,395,072.26 as the total indemnity due to TRANS-ASIA.38 On 21
April 1997, PRUDENTIAL, in a letter39 addressed to TRANS-ASIA denied the
latter’s claim for the amount of P8,395,072.26 representing the balance of the
total indemnity. On 21 July 1997, PRUDENTIAL sent a second letter40 to
TRANS-ASIA seeking a return of the amount of P3,000,000.00. On 13 August
1997, TRANS-ASIA was constrained to file a complaint for sum of money against
PRUDENTIAL praying, inter alia, for the sum of P8,395,072.26 representing the
balance of the proceeds of the insurance claim.
As can be gleaned from the foregoing, there was an unreasonable delay on the
part of PRUDENTIAL to pay TRANS-ASIA, as in fact, it refuted the latter’s right
to the insurance claims, from the time proof of loss was shown and the
ascertainment of the loss was made by the insurance adjuster. Evidently,
PRUDENTIAL’s unreasonable delay in satisfying TRANS-ASIA’s unpaid claims
compelled the latter to file a suit for collection.
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5th Case
Case : GR No. 48049
Date : June 29, 1989
Title : Tan v CA
Ponente : J. Gutierrez Jr.
Facts:
Tan Lee Siong, father of the petitioners, applied for life insurance in the amount
of P 80,000.00 with Philamlife. It was approved. Tan Lee Siong died of hepatoma.
Petitioners then filed a claim for the proceeds. The company denied petitioners'
claim and rescinded the policy by reason of the alleged misrepresentation and
concealment of material facts. The premiums paid on the policy were refunded.
The petitioners filed a complaint in the Insurance Commission. The latter
dismissed the complaint.
The Court of Appeals dismissed ' the petitioners' appeal from the Insurance
Commissioner's decision for lack of merit. Hence, this petition.
Issue:
WON Philam didn’t have the right to rescind the contract of insurance as
rescission must allegedly be done during the lifetime of the insured within two
years and prior to the commencement of action.
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The policy was in force for a period of only one year and five months. Considering
that the insured died before the two-year period had lapsed, respondent
company is not, therefore, barred from proving that the policy is void ab initio by
reason of the insured's fraudulent concealment or misrepresentation.
The "incontestability clause" added by the second paragraph of Section 48 is in
force for two years. After this, the defenses of concealment or misrepresentation
no longer lie.
The petitioners argue that no evidence was presented to show that the medical
terms were explained in a layman's language to the insured. They also argue that
no evidence was presented by respondent company to show that the questions
appearing in Part II of the application for insurance were asked, explained to and
understood by the deceased so as to prove concealment on his part. This couldn’t
be accepted because the insured signed the form. He affirmed the correctness of
all the entries.
The company records show that the deceased was examined by Dr. Victoriano
Lim and was found to be diabetic and hypertensive. He was also found to have
suffered from hepatoma. Because of the concealment made by the deceased, the
company was thus misled into accepting the risk and approving his application
as medically fit.
6th Case
Case : G.R. No. 137172
Date : April 4, 2001
Title : UCPB v Masagana
Ponente : C.J. Davide
Facts:
In our decision of 15 June 1999 in this case, we reversed and set aside the
assailed decision[1] of the Court of Appeals, which affirmed with modification the
judgment of the trial court (a) allowing Respondent to consign the sum of
P225,753.95 as full payment of the premiums for the renewal of the five
insurance policies on Respondent’s properties; (b) declaring the replacement-
renewal policies effective and binding from 22 May 1992 until 22 May 1993; and
(c) ordering Petitioner to pay Respondent P18,645,000.00 as indemnity for the
burned properties covered by the renewal-replacement policies. The
modification consisted in the (1) deletion of the trial court’s declaration that three
of the policies were in force from August 1991 to August 1992; and (2) reduction
of the award of the attorney’s fees from 25% to 10% of the total amount due the
Respondent.
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Masagana obtained from UCPB five (5) insurance policies on its Manila
properties.
The policies were effective from May 22, 1991 to May 22, 1992. On June 13,
1992, Masagana’s properties were razed by fire. On July 13, 1992, plaintiff
tendered five checks for P225,753.45 as renewal premium payments. A receipt
was issued. On July 14, 1992, Masagana made its formal demand for
indemnification for the burned insured properties. UCPB then rejected
Masagana’s claims under the argument that the fire took place before the tender
of payment.
Hence Masagana filed this case.
The Court of Appeals disagreed with UCPB’s argument that Masagana’s tender
of payment of the premiums on 13 July 1992 did not result in the renewal of the
policies, having been made beyond the effective date of renewal as provided
under Policy Condition No. 26, which states:
26. Renewal Clause. -- Unless the company at least forty five days in advance of
the end of the policy period mails or delivers to the assured at the address shown
in the policy notice of its intention not to renew the policy or to condition its
renewal upon reduction of limits or elimination of coverages, the assured shall
be entitled to renew the policy upon payment of the premium due on the effective
date of renewal.
Both the Court of Appeals and the trial court found that sufficient proof exists
that Masagana, which had procured insurance coverage from UCPB for a
number of years, had been granted a 60 to 90-day credit term for the renewal of
the policies. Such a practice had existed up to the time the claims were filed.
Most of the premiums have been paid for more than 60 days after the issuance.
Also, no timely notice of non-renewal was made by UCPB.
The Supreme Court ruled against UCPB in the first case on the issue of whether
the fire insurance policies issued by petitioner to the respondent covering the
period from May 22, 1991 to May 22, 1992 had been extended or renewed by an
implied credit arrangement though actual payment of premium was tendered on
a later date and after the occurrence of the risk insured against.
UCPB filed a motion for reconsideration.
The Supreme Court, upon observing the facts, affirmed that there was no valid
notice of non-renewal of the policies in question, as there is no proof at all that
the notice sent by ordinary mail was received by Masagana. Also, the premiums
were paid within the grace period.
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Issue: Whether Section 77 of the Insurance Code of 1978 must be strictly applied
to Petitioner’s advantage despite its practice of granting a 60- to 90-day credit
term for the payment of premiums.
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7th Case
Case : G.R. No. L-25317
Date : August 6, 1979
Title : Philippine Phoenix Surety Inc. vs. Woodworks Inc.
Ponente : MELENCIO-HERRERA, J.
Facts:
On July 21, 1960, upon defendant's application, plaintiff issued in its favor Fire
Insurance Policy No. 9749 for P500,000.00 whereby plaintiff insured defendant's
building, machinery and equipment for a term of one year from July 21, 1960 to
July 21, 1961 against loss by fire. The premium and other charges including the
margin fee surcharge of P590.76 and the documentary stamps in the amount of
P156.60 affixed on the Policy, amounted to P10,593.36.
It is undisputed that defendant did not pay the premium stipulated in the Policy
when it was issued nor at any time thereafter.
On April 19, 1961, or before the expiration of the one-year term, plaintiff notified
defendant, through its Indorsement No. F-6963/61, of the cancellation of the
Policy allegedly upon request of defendant. 1 The latter has denied having made
such a request. In said Indorsement, plaintiff credited defendant with the
amount of P3,110.25 for the unexpired period of 94 days, and claimed the
balance of P7,483.11 representing, learned premium from July 21, 1960 to 18th
April 1961 or, say 271 days." On July 6, 1961, plaintiff demanded in writing for
the payment of said amount. 2 Defendant, through counsel, disclaimed any
liability in its reply- letter of August 15, 1961, contending, in essence, that it
need not pay premium "because the Insurer did not stand liable for any
indemnity during the period the premiums were not paid. On September 13,
1962, judgment was rendered in plaintiff's favor.
Issue/s:
1. WON the lower court erred in sustaining that Fire Insurance Policy,
Exhibit A, was a binding contract even if the premium stated in the policy
has not been paid.
2. WON that the lower court erred in sustaining that the premium in
Insurance Policy, Exhibit B, became an obligation which was demandable
even after the period in the Policy has expired.
3. WON the lower court erred in not deciding that a premium not paid is not
a debt enforceable by action of the insurer.
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Ruling:
We find the appeal meritorious.
Insurance is "a contract whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or
contingent event." The consideration is the "premium". "The premium must be
paid at the time and in the way and manner specified in the policy and, if not so
paid, the policy will lapse and be forfeited by its own terms.
Clearly, the Policy provides for pre-payment of premium. Accordingly; "when the
policy is tendered the insured must pay the premium unless credit is given or
there is a waiver, or some agreement obviating the necessity for prepayment."
To constitute an extension of credit there must be a clear and express agreement
therefor."
From the Policy provisions, we fail to find any clear agreement that a credit
extension was accorded defendant. And even if it were to be presumed that
plaintiff had extended credit from the circumstances of the unconditional
delivery of the Policy without prepayment of the premium, yet it is obvious that
defendant had not accepted the insurer's offer to extend credit, which is essential
for the validity of such agreement.
8th Case
Case : GR No. 136914
Date : January 25, 2002
Title : Country Bankers Insurance Corporation vs. Lianga Bay
Ponente : De Leon Jr. J
Facts:
Country Bankers Insurance Corporation (CBIC) is a domestic corporation
principally engaged in the insurance business wherein it undertakes, for a
consideration, to indemnify another against loss, damage or liability from an
unknown or contingent event including fire while Lianga Baya and Community
Multipurpose Cooperative Inc. (LBCMCI) is a duly registered cooperative
judicially declared insolvent and represented by the elected assignee, Cornelio
Jamero. It appears that sometime in 1989, the CBIC and LBCMCI entered into
a contract of fire insurance. Under Fire Insurance Policy F-1397, CBIC insured
LBCMCI's stocks-in-trade against fire loss, damage or liability during the period
starting from 20 June 1989 at 4:00 p.m. to 20 June 1990 at 4:00 p.m., for the
sum of P200,000.00. On 1 July 1989, at or about 12:40 a.m.,
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LBCMCI's building located at Barangay Diatagon, Lianga, Surigao del Sur was
gutted by fire and reduced to
ashes, resulting in the total loss of LBCMCI's stocks-in-trade, pieces of furniture
and fixtures, equipments and
records. Due to the loss, LBCMCI filed an insurance claim with CBIC under its
Fire Insurance Policy F-1397,
submitting: (a) the Spot Report of Pfc. Arturo V. Juarbal, INP Investigator, dated
1 July 1989; (b) the Sworn
Statement of Jose Lomocso; and (c) the Sworn Statement of Ernesto Urbiztondo.
CBIC, however, denied the
insurance claim on the ground that, based on the submitted documents, the
building was set on fire by 2 NPA
rebels who wanted to obtain canned goods, rice and medicines as provisions for
their comrades in the forest,
and that such loss was an excepted risk under paragraph 6 of the policy
conditions of Fire Insurance Policy F1397,
which provides that "This insurance does not cover any loss or damage
occasioned by or through or in
consequence, directly or indirectly, of any of the following occurrences, namely:
xxx (d) Mutiny, riot, military
or popular uprising, insurrection, rebellion, revolution, military or usurped
power. Any loss or damage
happening during the existence of abnormal conditions (whether physical or
otherwise) which are occasioned
by or through or in consequence, directly or indirectly, of any of said occurrences
shall be deemed to be loss
or damage which is not covered by this insurance, except to the extent that the
Insured shall prove that such
loss or damage happened independently of the existence of such abnormal
conditions." Finding the denial of
its claim unacceptable, LBCMCI then instituted in the trial court the complaint
for recovery of "loss, damage
or liability" against CBIC. In due time, the trial court rendered its Decision dated
26 December 1991 in favor of LBCMCI, ordering CBIC to pay LBCMCI to fully
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pay the insurance claim for the loss LBCMCI sustained as a result of the fire
under its Fire Insurance Policy F-1397 in its full face value of P200,000.00 with
interest of 12% per annum from date of filing of the complaint until the same is
fully paid; to pay as and in the concept of actual or compensatory damages in
the total sum of P50,000.00; to pay as and in the concept of exemplary damages
in the total sum of P50,000.00; to pay in the concept of litigation expenses the
sum of P5,000.00; to pay by way of reimbursement the attorney's fees in the sum
of P10,000.00; and to pay the costs of the suit. CBIC interposed an appeal to the
Court of Appeals. On 29 December 1998, the appellate court affirmed the
challenged decision of the trial court in its entirety. CBIC filed the petition for
review on certiorari.
Issue:
Whether the burden of proof of loss in this case is upon the insurer, and not the
insured.
Ruling:
YES. CBIC does not dispute that LBCMCI's stocks-in-trade were insured against
fire loss, damage or liability under Fire Insurance Policy F-1397 and that
LBCMCI lost its stocks-in-trade in a fire that occurred on 1 July 1989, within
the duration of said fire insurance. CBIC, however, posits the view that the cause
of the loss was an excepted risk under the terms of the fire insurance policy.
Where a risk is excepted by the terms of a policy which insures against other
perils or hazards, loss from such a risk constitutes a defense which the insurer
may urge, since it has not assumed that risk, and from this it follows that an
insurer seeking to defeat a claim because of an exception or limitation in the
policy has the burden of proving that the loss comes within the purview of the
exception or limitation set up. If a proof is made of a loss apparently within a
contract of insurance, the burden is upon the insurer to prove 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. Stated elsewise, since CBIC in this case is
defending on the ground of non-coverage and relying upon an exemption or
exception clause in the fire insurance policy, it has the burden of proving the
facts upon which such excepted risk is based, by a preponderance of evidence.
But CBIC failed to do so. CBIC relies on the Sworn Statements of Jose Lomocso
and Ernesto Urbiztondo as well as on the Spot Report of Pfc. Arturo V. Juarbal
dated 1 July 1989. The Sworn Statements of Jose Lomocso and Ernesto
Urbiztondo are inadmissible in evidence, for being hearsay, inasmuch as they
did not take the witness stand and could not therefore be cross-examined.
CBIC's evidenceto prove its defense is sadly wanting and thus, gives rise to its
liability to LBCMCI under Fire Insurance Policy.
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9th Case
Case : GR No. 85141
Date : Nov. 28, 1989
Title : Filipino Merchants Insurance Co. vs. CA
Ponente : J. Regalado
Facts:
In December 1976, Choa Tiek Seng insured said shipment with Filipino
Merchants Insurance Company (FMICI) under cargo Policy M-2678 for the sum
of P267,653.59 for the goods described as 600 metric tons of fishmeal in new
gunny bags of 90 kilos each from Bangkok, Thailand to Manila against all risks
under warehouse to warehouse terms. Actually, what was imported was 59.940
metric tons not 600 tons at $395.42 a ton CNF Manila. The fishmeal in 666 new
gunny bags were unloaded from the ship on 11 December 1976 at Manila unto
the arrastre contractor E. Razon, Inc. and FMICI's surveyor ascertained and
certified that in such discharge 105 bags were in bad order condition as jointly
surveyed by the ship's agent and the arrastre contractor. The condition of the
bad order was reflected in the turn over survey report of Bad Order cargoes
120320 to 120322, consisting of 3 pages. The cargo was also surveyed by the
arrastre contractor before delivery of the cargo to the consignee and the condition
of the cargo on such delivery was reflected in E. Razon's Bad Order Certificates
14859, 14863 and 14869 covering a total of 227 bags in bad order condition.
FMICI's surveyor has conducted a final and detailed survey of the cargo in the
warehouse for which he prepared a survey report with the findings on the extent
of shortage or loss on the bad order bags totalling 227 bags amounting to 12,148
kilos. Based on said computation, Choa made a formal claim against FMICI for
P51,568.62 the computation of which claim is contained therein. A formal claim
statement was also presented by the Choa against the vessel dated 21 December
1976, but FMICI refused to pay the claim.
Consequently, an action was brought by the consignee (Choa Tiek Seng) of the
shipment of fishmeal loaded on board the vessel SS Bougainville and unloaded
at the Port of Manila on or about 11 December 1976 and seeks to recover from
FMICI the amount of P51,568.62 representing damages to said shipment which
has been insured by FMICI under Policy M-2678. FMICI brought a third party
complaint against third party defendants Compagnie Maritime Des Chargeurs
Reunis and/or E. Razon, Inc. seeking judgment against the third party
defendants in case judgment is rendered against FMICI. The court below, after
trial on the merits, rendered judgment in favor of Choa, ordering FMICI to pay
Choa the sum of P51,568.62 with interest at legal rate from the date of the filing
of the complaint; and, on the third party complaint, the third party defendant
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Compagnie Maritime Des Chargeurs Reunis and third party defendant E. Razon,
Inc. are ordered to pay FMICI jointly and severally reimbursement of the
amounts paid by FMICI with legal interest from the date of such payment until
the date of such reimbursement; without pronouncement as to costs. On appeal,
and on 18 July 1988, the Court of Appeals affirmed the decision of the lower
court insofar as the award on the complaint is concerned and modified the same
with regard to the adjudication of the third-party complaint. A motion for
reconsideration of the aforesaid decision was denied, hence FMICI filed the
petition for review.
Issue [1]:
Whether an "all risks" marine policy has a technical meaning in insurance in
that before a claim can be compensable it is essential that there must be "some
fortuity," "casualty" or "accidental cause" to which the
alleged loss is attributable.
Held [1]:
NO. The "all risks clause" of the Institute Cargo Clauses read as follows "5. This
insurance is against all risks of logs or damage to the subject-matter insured but
shall in no case be deemed to extend to cover loss, damage, or expense
proximately caused by delay or inherent vice or nature of the subject-matter
insured. Claims recoverable hereunder shall be payable irrespective of
percentage." An "all risks policy" should be read literally as meaning all risks
whatsoever and covering all losses by an accidental cause of any kind. The terms
"accident" and "accidental", as used in insurance contracts, have not acquired
any technical meaning. They are construed by the courts in their ordinary and
common acceptance. Thus, the terms have been taken to mean that which
happens by chance or fortuitously, without intention and design, and which is
unexpected, unusual and unforeseen. An accident is an event that takes place
without one's foresight or expectation; an event that proceeds from an unknown
cause, or is an unusual effect of a known cause and, therefore, not expected.
The very nature of the term "all risks" must be given a broad and comprehensive
meaning as covering any loss other than a willful and fraudulent act of the
insured. This is pursuant to the very purpose of an "all risks" insurance to give
protection to the insured in those cases where difficulties of logical explanation
or some mystery surround the loss or damage to property. An "all risks" policy
has been evolved to grant greater protection than that afforded by the "perils
clause," in order to assure that no loss can happen through the incidence of a
cause neither insured against nor creating liability in the ship; it is written
againstall losses, that is, attributable to external causes. The term "all risks"
cannot be given a strained technical
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meaning, the language of the clause under the Institute Cargo Clauses being
unequivocal and clear, to the effect that it extends to all damages/losses suffered
by the insured cargo except (a) loss or damage or expense proximately caused by
delay, and (b) loss or damage or expense proximately caused by the inherent vice
or nature of the subject matter insured.
Issue [2]:
Whether the failure of Choa to adduce evidence, showing that the alleged loss to
the cargo in question was due to a fortuitous event, precludes his right to recover
from the insurance policy.
Held [2]:
NO. Although generally, the burden of proof is upon the insured to show that a
loss arose from a covered peril, under an "all risks" policy the burden is not on
the insured to prove the precise cause of loss or damage for which it seeks
compensation. The insured under an "all risks insurance policy" has the initial
burden of proving that the cargo was in good condition when the policy attached
and that the cargo was damaged when unloaded from the vessel; thereafter, the
burden then shifts to the insurer to show the exception to the coverage. As held
in Paris-Manila Perfumery Co. vs. Phoenix Assurance Co., Ltd. the basic rule is
that the insurance company has the burden of proving that the loss is caused
by the risks excepted and for want of such proof, the company is liable. Coverage
under an "all risks" provision of a marine insurance policy creates a special type
of insurance which extends coverage to risks not usually contemplated and
avoids putting upon the insured the burden of establishing that the loss was due
to the peril falling within the policy's coverage; the insurer can avoid coverage
upon demonstrating that a specific provision expressly excludes the loss from
coverage. A marine insurance policy providing that the insurance was to be
"against all risks" must be construed as creating a special insurance and
extending to other risks than are usually contemplated and covers all losses
except such as arise from the fraud of the insured. The burden of the insured,
therefore, is to prove merely that the goods he transported have been lost,
destroyed or deteriorated.
Thereafter, the burden is shifted to the insurer to prove that the loss was due to
excepted perils. To impose on the insured the burden of proving the precise cause
of the loss or damage would be inconsistent with the broad protective purpose
of "all risks" insurance.
Issue [3]:
Whether the insurer is liable
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Held [3]:
There being no showing that the loss was caused by any of the excepted perils,
the insurer is liable under the policy. It is believed that in the absence of any
showing that the losses/damages were caused by an excepted peril, i.e. delay or
the inherent vice or nature of the subject matter insured, and there is no such
showing, the loss was covered by the policy. Herein, there is no evidence
presented to show that the condition of the gunny bags in which the fishmeal
was packed was such that they could not hold their contents in the course of the
necessary transit, much less any evidence that the bags of cargo had burst as
the result of the weakness of the bags themselves. Had there been such a
showing that spillage would have been a certainty, there may have been good
reason to plead that there was no risk covered by the policy (See Berk vs. Style
[1956] cited in Marine Insurance Claims, p. 125). Under an “all risks” policy, it
was sufficient to show that there was damage occasioned by some accidental
cause of any kind, and there is no necessity to point to any particular cause.
Contracts of insurance are contracts of indemnity upon the terms and conditions
specified in the policy. The agreement has the force of law between the parties.
The terms of the policy constitute the measure of the insurer's liability. If such
terms are clear and unambiguous, they must be taken and understood in their
plain, ordinary and popular sense.
Issue [4]:
Whether the consignee (Choa) has an insurable interest in said goods.
Held [4]:
Choa, as consignee of the goods in transit under an invoice containing the terms
under "C & F Manila," has insurable interest in said goods. Section 13 of the
Insurance Code defines insurable interest in property as every interest in
property, whether real or personal, or any relation thereto, or liability in respect
thereof, of such nature that a contemplated peril might directly damnify the
insured. In principle, anyone has an insurable interest in property who derives
a benefit from its existence or would suffer loss from its destruction whether he
has or has not any title in, or lien upon or possession of the property. Insurable
interest in property may consist in (a) an existing interest; (b) an inchoate interest
founded on an existing interest; or (c) an expectancy, coupled with an existing
interest in that out of which the expectancy arises. As vendee/consignee of the
goods in transit has such existing interest therein as may be the subject of a
valid contract of insurance. His interest over the goods is based on the perfected
contract of sale. The perfected contract of sale between him and the shipper of
the goods operates to vest in him an equitable title even
21 | P a g e
before delivery or before he performed the conditions of the sale. The contract of
shipment, whether under F.O.B., C.I.F., or C. & F. as in the present case, is
immaterial in the determination of whether the vendee has an insurable interest
or not in the goods in transit. The perfected contract of sale even without delivery
vests in the vendee an equitable title, an existing interest over the goods
sufficient to be the subject of insurance.
Further, Article 1523 of the Civil Code provides that where, in pursuance of a
contract of sale, the seller is authorized or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named by the buyer or not, for,
the purpose of transmission to the buyer is deemed to be a delivery of the goods
to the buyer, the exceptions to said rule not obtaining in the present case. The
Court has heretofore ruled that the delivery of the goods on board the carrying
vessels partake of the nature of actual delivery since, from that time, the foreign
buyers assumed the risks of loss of the goods and paid the insurance premium
covering them. C & F contracts are shipment contracts. The term means that the
price fixed includes in a lump sum the cost of the goods and freight to the named
destination. It simply means that the seller must pay the costs and freight
necessary to bring the goods to the named destination but the risk of loss or
damage to the goods is transferred from the seller to the buyer when the goods
pass the ship's rail in the port of shipment.
10th Case
Case : GR 103883
Date : Nov. 14, 1996
Title : Vda. De Gabriel vs. CA
Ponente : J. Vitug
Facts:
Marcelino Gabriel, the insured, was employed by Emerald Construction &
Development Corporation (ECDC) at its construction project in Iraq. He was
covered by a personal accident insurance in the amount of P100,000.00 under
a group policy procured from Fortune Insurance & Surety Company Inc. by
ECDC for its overseas workers. The insured risk was for "bodily injury caused by
violent accidental external and visible means which injury would solely and
independently of any other cause" result in death or disability. On 22 May 1982,
within the life of the policy, Gabriel died in Iraq. A year later, or on 12 July 1983,
ECDC reported Gabriel's death to Fortune by telephone. Among the documents
thereafter submitted to Fortune were a copy of the death certificate 5 issued by
the Ministry of Health of the Republic of Iraq — which stated "REASON OF
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DEATH: UNDER EXAMINATION NOW — NOT YET KNOWN " and an autopsy
report of the National Bureau of Investigation (NBI) to the effect that "due to
advanced state of postmortem decomposition, cause of death could not be
determined." Fortune referred the insurance claim to Mission Adjustment
Service, Inc. Following a series of communications between Jacqueline Jimenez
vda. de Gabriel and Fortune, the latter, on 22 September 1983, ultimately denied
the claim of ECDC on the ground of prescription. Vda. De Gabriel went to the
Regional Trial Court of Manila. In her complaint against ECDC and Fortune, she
averred that her husband died of electrocution while in the performance of his
work and prayed for the recovery of P100,000.00 for insurance indemnification
and of various other sums by way of actual, moral, and exemplary damages, plus
attorney's fees and costs of suit. Fortune filed its answer, which was not verified,
admitting the genuineness and due execution of the insurance policy; it alleged,
however, that since both the death certificate issued by the Iraqi Ministry of
Health and the autopsy report of the NBI failed to disclose the cause of Gabriel's
death, it denied liability under the policy. In addition, Fortune raised the defense
of "prescription," invoking Section 384 10 of the Insurance Code. Later, Fortune
filed an amended answer, still unverified, reiterating its original defenses but,
this time, additionally putting up a counterclaim and a crossclaim. The trial
court dismissed the case against ECDC for the failure of Vda. de Gabriel to take
steps to cause the service of the fourth alias summons on ECDC. The dismissal
was without prejudice. The case proceeded against Fortune alone. On 28 May
1987, the trial court rendered its decision in favor (partly) of Vda. De Gabriel's
claim. In arriving at its conclusion, the trial court held that Fortune was deemed
to have waived the defense, i.e., that the cause of Gabriel's death was not covered
by the policy, when the latter failed to impugn by evidence Vda. de Gabriel's
averment on the matter. With regard to the defense of prescription, the court
considered the complaint to have been timely filed or within 1 year from
Fortune's denial of the claim. Vda. de Gabriel and Fortune both appealed to the
Court of Appeals. The Court of Appeals, on 18 September 1991, reversed the
decision of the lower court. The appellate court held that Vda. de Gabriel had
failed to substantiate her allegation that her husband's death was caused by a
risk insured against. The motion for reconsideration was denied. Vda. de Gabriel
filed the petition for review on certiorari.
Issue [1]: Whether prescription was properly invoked by Fortune in this case.
Held [1]: YES. On the issue of "prescription," Fortune correctly invoked Section
384 of the Insurance Code which provides that "Any person having any claim
upon the policy issued pursuant to this chapter shall, without any unnecessary
delay, present to the insurance company concerned a written notice of claim
setting forth the nature, extent and duration of the injuries sustained as certified
by a duly licensed physician. Notice
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of claim must be filed within six months from date of the accident, otherwise,
the claim shall be deemed waived. Action or suit for recovery of damage due to
loss or injury must be brought, in proper cases, with the Commissioner or the
Courts within one year from denial of the claim, otherwise, the claimant's right
of action shall prescribe." The notice of death was given to Fortune, concededly,
more than a year after the death of Vda. de Gabriel's husband. Fortune, in
invoking prescription, was not referring to the one-year period from the denial of
the claim within which to file an action against an insurer but obviously to the
written notice of claim that had to be submitted within six months from the time
of the accident. On the other hand, there is absolutely no basis in fact and in
law to hold that the insurance company was deemed to have waived – by failing
to have its answers (to the Request for Admission) duly verified -- the defense,
that the death of Vda. de Gabriel's husband was not caused by violent accidental
external and visible means' as contemplated in the insurance policy. The Death
Certificate and the Autopsy Report, more than controverted the allegation of Vda.
de Gabriel as to the cause of death of her husband.
Issue [2]: Whether Vda. De Gabriel is required to present proof that the insured’s
demise was from an accidental death, unlike in ordinary life insurance where
the insured's death, regardless of the cause thereof, would normally be
compensable.
Held [2]: YES. The insurance policy expressly provided that to be compensable,
the injury or death should be caused by "violent accidental external and visible
means." In attempting to prove the cause of her husband's death, all that Vda.
de Gabriel could submit were a letter sent to her by her husband's co-worker,
stating that Gabriel died when he tried to haul water out of a tank while its
submerged motor was still functioning, and Vda. de Gabriel's sinumpaang
salaysay which merely confirmed the receipt and stated contents of the letter.
Said the appellate court in this regard: "It must be noted that the only evidence
presented by her to prove the circumstances surrounding her husband's death
were her purported affidavit and the letter allegedly written by the deceased co-
worker in Iraq. The said affidavit however suffers from procedural infirmity as it
was not even testified to or identified by the affiant (Vda. De Gabriel) herself. This
self-serving affidavit therefore is a mere hearsay under the rules. In like manner,
the letter allegedly written by the deceased's co-worker which was never
identified to in court by the supposed author, suffers from the same defect as
the affidavit of the plaintiff-appellant." Not one of the other documents
submitted, to wit, the POEA decision, dated 06 June 1984, the death certificate
issued by the Ministry of Health of Iraq and the NBI autopsy report, could give
any probative value to Vda. de Gabriel's claim. The POEA decision did not make
any categorical holding on the specific cause of Gabriel's death. Neither did the
death certificate issued by the health authorities in Iraq nor the NBI autopsy
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report provide any clue on the cause of death. All that appeared to be clear was
the fact of Gabriel's demise on 22 May 1982 in Iraq. Evidence, in fine, is utterly
wanting to establish that the insured suffered from an accidental death, the risk
covered by the policy. In an accident insurance, the insured "s beneficiary has
the burden of proof in demonstrating that the cause of death is due to the covered
peril. Once the fact is established, the burden then shifts to the insurer to show
any excepted peril that may have been stipulated by the parties. An "accident
insurance" is not thus to be likened to an ordinary life insurance where the
insured's death, regardless of the cause thereof, would normally be
compensable. The latter is akin in property insurance to an "all risk" coverage
where the insured, on the aspect of burden of proof, has merely to show the
condition of the property insured when the policy attaches and the fact of loss
or damage during the period of the policy and where, thereafter, the burden
would be on the insurer to show any "excluded peril." When, however, the
insured risk is specified, it lies with the claimant of the insurance proceeds to
initially prove that the loss is caused by the covered peril.
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