INSURANCE LAW NORSU

1. Rizal Surety vs. CA336 SCRA 12 (2000)

INSURANCE LAW: Interpretation of Insurance Contracts
FACTS:
Rizal Surety & Insurance Company issued a fire insurance policy in favor of Transworld
Knitting Mills, Inc. The subject policy stated that Rizal Surety is responsible in case of loss
whilst contained and/or stored during the currency of this Policy in the premises occupied by
them forming part of the buildings situated within own Compound xxx. The policy also
described therein the four-span building covered by the same.
On Jan. 12, 1981, fire broke out in the compound, razing the middle portion of its four-span
building and partly gutting the left and right sections thereof. A two-storey building (behind
said four-span building) was also destroyed by the fire.

ISSUE:
Whether or not Rizal Surety is liable for loss of the two-storey building considering that the
fire insurance policy sued upon covered only the contents of the four-span building

HELD:
Both the trial court and the CA found that the so-called annex as not an annex building but
an integral and inseparable part of the four-span building described in the policy and
consequently, the machines and spare parts stored therein were covered by the fire
insurance in dispute.
So also, considering that the two-storey building aforementioned was already existing when
subject fire insurance policy contract was entered into on Jan. 12, 1981, having been
constructed some time in 1978, petitioner should have specifically excluded the said two-
storey building from the coverage of the fire insurance if minded to exclude the same but if
did not, and instead, went on to provide that such fire insurance policy covers the products,
raw materials and supplies stored within the premises of Transworld which was an integral
part of the four-span building occupied by Transworld, knowing fully well the existence of
such building adjoining and intercommunicating with the right section of the four-span
building.
Also, in case of doubt in the stipulation as to the coverage of the fire insurance policy, under
Art. 1377 of the New Civil Code, the doubt should be resolved against the Rizal Surety,
whose layer or managers drafted the fire insurance policy contract under scrutiny.
In Landicho vs. Government Service Insurance System, the Court ruled that the terms in an
insurance policy, which are ambiguous, equivocal or uncertain x x x are to be construed
strictly and most strongly against the insurer, and liberally in favor of the insured so as to
effect the dominant purpose of indemnity or payment to the insured, especially where
forfeiture is involved, and the reason for this is that the insured usually has no voice in the
selection or arrangement of the words employed and that the language of the contract is
selected with great care and deliberation by experts and legal advisers employed by, and
acting exclusively in the interest of, the insurance company.

2. SIMEON DEL ROSARIO vs. THE EQUITABLE INSURANCE and CASUALTY
CO., INC.
G.R. No. L-16215, June 29, 1963
8 SCRA 343

FACTS:
The defendant insurance company issued a personal accident policy on the life of Francisco
del Rosario, herein plaintiffs son,binding itself to pay the sum of P1,000.00 to P3,000.00 as
indemnity for the death of the insured. In the said policy, for the different causes of death,
disability of the insured, there is a corresponding is a specific amount as indemnity. As for
death due to drowning, there was no specific amount, hence, an ambiguous provision. Later,
Francisco died of drowning as he was forced to jump off the motor launch on which he was
riding on account of fire that broke out on the said vessel. Simeon then filed a claim for
payment with defendant company which then paid him the sum of P1,000.00. However,
Simeons lawyer, informed the said company that the amount was wrong. In turn, the
defendant company referred the matter to the Insurance Commissioner,who rendered an
opinion that the liability of the company was only P1,000.00. Hence, it refused to pay more
than P1,00.00. A complaint for the recovery of the balance of P2,000.00 was instituted with
the CFI of Rizal.
ISSUE:
Whether or not the amount paid is the correct indemnity
HELD:
And so it has been generally held that the terms in an insurance policy, which are
ambiguous, equivocal or uncertain are to be construed strictly against, the insurer, and
liberally in favor of the insured so as to effect the dominant purpose of indemnity or
payment to the insured, especially where a forfeiture is involved, and the reason for this
rule is that the insured usually has no voice in the selection or arrangement of the words
employed and that the language of the contract is selected with great care and deliberation
by expert and legal advisers employed by, and acting exclusively in the interest of, the
insurance company. Insurance Law case digests SY 2010-2011 Where two interpretations,
equally fair, of languages used in an insurance policy may be made, that which allows the
greater indemnity will prevail. At any event, the policy under consideration, covers death or
disability by accidental means, and the appellant insurance company agreed to pay
P1,000.00 to P3,000.00 is indemnity for death of the insured. In view of the conclusions
reached, it would seem unnecessary to discuss the other issued raised in the appeal. The
judgment appealed from is hereby affirmed. Without costs.

3. TAURUS TAXI CO., INC., FELICITAS V. MONJE, ET AL. vs. THE CAPITAL
INSURANCE & SURETY CO., INC.,
G.R. No. L-23491 July 31, 1968

FACTS:
1. Alfredo Monje, was employed as taxi driver by the Taurus Taxi Co., Inc.
2. The taxi he was driving collided with a Transport Taxicab resulting in his death.
3. At the time of the accident, there was subsisting and in force Commercial Vehicle
Comprehensive Policy No. 101, 737 issued by CAPITAL INSURANCE & SURETY CORP. to
herein Taurus Taxi Co., Inc. The amount for which each passenger, including the driver, is
insured is P5,000.00.
4. The policy was issued to Taurus Taxi Co., Inc.
5. After which Taurus made representations "for the payment of the insurance benefit
corresponding to her and her children since it was issued in its name, benefit corresponding
to her and her children, but despite demands, Capital Insurance company refused and still
refuses to pay them.
6. Capital Insurance & Surety Co. Inc. alleged "that in view of the fact that the deceased
Alfredo Monje was entitled to indemnity under another insurance policy issued by Ed. A.
Keller Co., Ltd., the heirs of the said deceased are not entitled to indemnity under the
insurance policy issued by it for the reason that the latter policy contains a stipulation that
"the company will indemnify any authorized driver provided that such authorized driver is
not entitled to indemnity under any other policy.
ISSUE:
Whether the heirs of ALFREDO MONJE be entitled to the proceeds of the insurance policy
issued by Capital Insurance Company even if there is an existing indemnity contract with
another insurance company at the time of his death.
Held:
Yes.
7. What is prohibited by the insurance policy in question is that any "authorized driver of
plaintiff Taurus Taxi Co., Inc." should not be "entitled to any indemnity under any policy", it
would appear indisputable that the obligation of defendant-appellant under the policy had
not in any wise been extinguished.
8. It is too well-settled to need the citation of authorities that what the law requires enters
into and forms part of every contract. The Workmen's Compensation Act, explicitly requires
that an employee suffering any injury or death arising out of or in the course of employment
be compensated. The fulfillment of such statutory obligation cannot be the basis for evading
the clear, explicit and mandatory terms of a policy.
9. Same way with sickness benefits under the Social Security Act.
10. Assuming however that there is a doubt concerning the liability of defendant-appellant
insurance firm, nonetheless, it should be resolved against its pretense and in favor of the
insured. It was the holding in Eagle Star Insurance, Ltd. v. Chia Yu 6 that courts are to regard
"with extreme jealousy" limitations of liability found in insurance policies and to construe
them in such a way as to preclude the insurer from non-compliance with his obligation. In
other words, to quote a noted authority on the subject, "a contract of insurance couched in
language chosen by the insurer is, if open to the construction contended for by the insured,
to be construed most strongly, or strictly, against the insurer and liberally in favor of the
contention of the insured, which means in accordance with the rule contra proferentem." 7
Enough has been said therefore to dispose of the first assigned error.
11.The other issue made by Capital Insurance is that by joining the heirs of Alfredo Monje as
a party, plaintiff Taurus Taxi Co., Inc. committed a breach of policy condition and thus
forfeited whatever benefits, if any, to which it might be entitled under appellant's policy."
12.The basis for such an allegation is one of the conditions set forth in the policy. Thus: No
admission, offer, promise or payment shall be made by or on behalf of the insured without
the written consent of the Company which shall be entitled if it so desires to take over and
conduct in his name the defense or settlement of any claim or to prosecute in his name for
its own benefit any claim for indemnity or damages or otherwise and shall have full
discretion in the conduct of any proceedings and in the settlement of any claim and the
Insured shall give all such information and assistance as the Company may require .
13.The institution of the action cannot possibly be construed as an admission, offer,
promise, or payment by the company, for it merely seeks to enforce, by court action, the
only legal remedy
available to it, its rights under the contract of insurance to which it is a party.
14. As noted in the decision appealed from: "The institution of the action cannot possibly be
construed as an admission, offer, promise, or payment by the company, for it merely seeks
to enforce, by court action, the only legal remedy available to it, its rights under the contract
of insurance to which it is a party.


4. CCC Insurance Corp. V. CA (1970) G.R. No. L-25920 January 30, 1970
Lessons Applicable: Motor vehicle liability insurance - "Authorized Driver Clause"
(Insurance)
FACTS:
Carlos F. Robes insured with the CCC Insurance Corporation his Dodge Kingsway car
against loss or damage through accident for an amount not exceeding P8,000
June 25 1961: Carlos' driver Domingo Reyes met a vehicular collision along Rizal
Avenue Extension, Potrero, Malabon, Rizal
Ccc Insurance Corporation denied his claim reasoning that the driver was not
an "authorized driver"
Reyes, who cannot read and write, who has never passed any examination for drivers,
and has not applied for a license from the duly constituted government agency
entrusted with the duty of licensing drivers, cannot be considered an authorized driver
AUTHORIZED DRIVER:
Any of the following:
(a) The insured;
(b) Any person driving on the Insured's order or with his permission, provided that the
person driving is permitted in accordance with licensing laws or regulations to drive the
motor vehicle covered by this Policy, or has been so permitted and is not disqualified by
order of a court of law or by reason of any enactment or regulation from driving such Motor
Vehicle.
RTC: favored Robes and CCC was order to pay
ISSUE: W/N Domingo Reyes was an authorized driver
HELD: YES. CA affirmed
Court of Appeals found that the driver's license No. 271703 DP was genuine
Domingo Reyes is in possession of a driver's license issued by the Motor Vehicles Office
which on its face appears to have been regularly issued
Neither Gloria Presa nor the officer-in-charge Marciano A. Monzon was placed on the
witness stand to be examined in order to determine whether said license is indeed void
Section 24 of the Revised Motor Vehicles Law, Act 3992 of the Philippine Legislature, as
amended by Republic Acts Nos. 587, 1204 and 2863,1

An examination or demonstration to show any applicant's ability to operate motor
vehicles may also be required in the discretion of the Chief, Motor Vehicles Office or his
deputies.
Section 26 of the Act prescribes further:

SEC. 26. Issuance of chauffeur's license; professional badge: If, after examination, or
without the same, the Chief, Motor Vehicles Office or his deputies, believe the applicant
to possess the necessary qualifications and knowledge, they shall issue to such
applicant a license to operate as chauffeur ...
There is no proof that the owner of the automobile knew that the circumstance
surrounding such issuance showed that it was irregular
the weight of authority is in favor of a liberal interpretation of the insurance policy for
the benefit of the party insured, and strictly against the insurer


5. SERANO Vs CA 130 SCRA 327 - no file found

6. JEWEL VILLACORTA vs. THE INSURANCE COMMISSION
G.R. No. L-54171, 28 October 1980
100 SCRA 467

FACTS:
Villacorta had her Colt Lancer car insured with Empire Insurance
Company against own damage, theft and 3rd party liability.
While the car was in the repair shop, one of the employees of
the said repair shop took it out for a joyride after which it
figured in a vehicular accident. This resulted to the death of the
driver and some of the passengers as well as to extensive
damage to the car.
Villacorta filed a claim for total loss with the said insurance
company. However, it denied the claim on the ground that the
accident did not fall within the provisions of the policy either for
the Own Damage or Theft coverage, invoking the policy
provision on Authorized Driver Clause.
This was upheld by the Insurance Commission further stating
that the car was not stolen and therefore not covered by the
Theft Clause because it is not evident that the person who took
the car for a joyride intends to permanently deprive the insured
of his/ her car.
ISSUE:
Whether or not the insurer company should pay the said claim
HELD:
Yes. Where the insureds car is wrongfully taken without the
insureds consent from the car service and repair shop to whom
it had been entrusted for check-up and repairs (assuming that
such taking was for a joy ride, in the course of which it was
totally smashed in an accident), respondent insurer is liable and
must pay insured for the total loss of the insured vehicle under
the Theft Clause of the policy.
Assuming, despite the totally inadequate evidence, that the
taking was temporary and for a joy ride, the Court sustains
as the better view that which holds that when a person, either
with the object of going to a certain place, or learning how to
drive, or enjoying a free ride, takes possession of a vehicle
belonging to another, without the consent of its owner, he is
guilty of theft because by taking possession of the personal
property belonging to another and using it, his intent to gain is
Insurance Law case digests SY 2010-2011
evident since he derives therefrom utility, satisfaction,
enjoymet and pleasure.
ACCORDINGLY, the appealed decision is set aside and judgment
is hereby rendered sentencing private respondent to pay
petitioner the sum of P35,000.00 with legal interest from the
filing of the complaint until full payment is made and to pay the
costs of suit.

7. Landicho vs. GSIS
[G.R. No. L-28866 March 17, 1972]

FACTS:
On June 1, 1964, the GSIS issued in favor of Flaviano
Landicho, a civil engineer of the Bureau of Public
Works, stationed at Mamburao, Mindoro Occidental,
optional additional life insurance policy No. OG-136107
in the sum of P7,900. xxx

Before the issuance of said policy, Landicho had filed
an application, by filing and signing a printed form of
the GSIS on the basis of which the policy was issued.
Paragraph 7 of said application States:
7. xxx I hereby agree as follows: xxx
c. That this application serves as a
letter of authority to the Collecting
Officer of our Office thru the GSIS to
deduct from my salary the monthly
premium in the amount of P33.36,
beginning the month of May, 1964,
and every month thereafter until notice
of its discontinuance shall have
beenreceived from the System; .
d. That the failure to deduct from my
salary the month premiums shall not
make the policy lapse, however, the
premium account shall be considered
as indebtedness which, I bind myself to
pay the System; .
e. That my policy shall be made
effective on the first day of the month
next following the month the first
premium is paid; provided, that it is
not more ninety (90) days before or
after the date of the medical
examination, was conducted if
required."
While still an employee of the Bureau of Public Works,
Mr. Landicho died in an airplane crash on June 29,
1966. Mrs. Landicho, in her own behalf and that of her
co-plaintiffs and minor children, Rafael J. and Maria
Lourdes Eugenia, filed with the GSIS a claim for
P15,800, as the double indemnity due under policy No.
OG-136107. GSIS denied the claim, upon the ground
that the policy had never been in force because,
pursuant to subdivision (e) of the above-quoted
paragraph 7 of the application, the policy "shall be ...
effective on the first day of the month next following
the month the first premium is paid," and no premium
had ever been paid on said policy. The Lower Court
decided in favor of the petitioner. GSIS appealed to the
Supreme Court.
ISSUE:
WON the insurance policy in question has ever been in
force, not a single premium having been paid thereon.
RULING: Lower Court decision is sustained.
(T)he language, of subdivisions (c), (d) and (e) is such
as to create an ambiguity that should be resolved
against the party responsible therefor defendant
GSIS, as the party who prepared and furnished the
application form and in favor of the party misled
thereby, the insured employee.
Indeed, our Civil Code provides:
The interpretation of obscure words or
stipulations in a contract shall not favor
the party who caused the obscurity. 2
This is particularly true as regards insurance policies,
in respect of which it is settled that the " "terms in an
insurance policy, which are ambiguous, equivocal, or
uncertain ... are to be construed strictly and most
strongly against the insurer, and liberally in favor of
the insured so as to effect the dominant purpose of
indemnity or payment to the insured, especially where
a forfeiture is involved" (29 Am. Jur., 181), and the
reason for this rule is the "insured usually has no voice
in the selection or arrangement of the words employed
and that the language of the contract is selected with
great care and deliberation by experts and legal
advisers employed by, and acting exclusively in the
interest of, the insurance company." (44 C.J.S., p.
1174.) 3.
The equitable and ethical considerations justifying the
foregoing view are bolstered up by two (2) factors,
namely:
(a) The aforementioned subdivision (c) states "that
this application serves as a letter of authority to the
Collecting Officer of our Office" the Bureau of Public
Works "thru the GSIS to deduct from my salary the
monthly premium in the amount of P33.36." No such
deduction was made and, consequently, not even
the first premium "paid" because the collecting
officer of the Bureau of Public Works was not advised
by the GSIS to make it (the deduction) pursuant to
said authority. Surely, this omission of the GSIS should
not inure to its benefit. .
(b) The GSIS had impliedly induced the insured to
believe that Policy No. OG-136107 was in force, he
having been paid by the GSIS the dividends
corresponding to said policy. Had the insured had the
slightest inkling that the latter was not, as yet,
effective for non-payment of the first premium, he
would have, in all probability, caused the same to be
forthwith satisfied.
WHEREFORE, the decision appealed from should be, it
is hereby affirmed, with costs against the defendantappellant,
Government


8. Gonzales vs PHILAM Life June 21 1976 - no file found

9. American Home Assurance v. Tantuco
G.R. No. 138941, 8 Oct. 2001

INSURANCE LAW: Liberality is the rule of construction in insurance contracts.
FACTS:
Tantuco Enterprises, Inc. is a coconut oil milling and refining company. It owned two mills
(the first oil mill and a new one), both located at its factory compound at Iyam, Lucena City.
The two oil mills are separately covered by fire insurance policies issued by American Home
Assurance Co.
On Sept. 30, 1991, a fire broke out and gutted and consumed the new oil mill. American
Home rejected the claim for the insurance proceeds on the ground that no policy was issued
by it covering the burned oil mill. It stated that the new oil mill was under Building No. 15
while the insurance coverage extended only to the oil mill under Building No. 5.
ISSUE:
Whether or not the new oil mill is covered by the fire insurance policy
HELD:
In construing the words used descriptive of a building insured, the greatest liberality is
shown by the courts in giving effect to the insurance. In view of the custom of insurance
agents to examine buildings before writing policies upon them, and since a mistake as to the
identity and character of the building is extremely unlikely, the courts are inclined to
consider the policy of insurance covers any building which the parties manifestly intended to
insure, however inaccurate the description may be.

Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our
mind, that what the parties manifestly intended to insure was the new oil mill.

If the parties really intended to protect the first oil mill, then there is no need to specify it as
new. Indeed, it would be absurd to assume that the respondent would protect its first oil mill
for different amounts and leave uncovered its second one.

10. MISAMIS LUMBER CORPORATION vs. CAPITAL INSURANCE AND
SURETY CO., INC.
G.R. No. L-21380, May 20, 1966
17 SCRA 228

FACTS:
Misamis Lumber has insured its Ford Falcon motor car for the amount of P14,000.00 with
Capital Insurance & Surety. It is included in the policy that the insured may authorize the
repair of the said vehicle and that the insurance company will be liable for it provided that a
detailed estimate of the cost is forwarded immediately to the insurance company and that
the estimated cost of such repair shall not exceed the authorized Repair Limit which is set at
P150.00. Sometime after, the car figured in a minor accident that broke its crankcase and
flywheel. The plaintiff then had it repaired, the repair costs totaled P302.27. However, the
insurance company refused to pay for the total cost of repairs because it claimed that the
cost exceeded that which was stipulated as the repair limit.

ISSUE:
Whether or not the insurance company is held liable for the cost of repair which exceeded
the stipulated repair limit

HELD:

The Insurance Company is liable for only P150.00. The insurance policy stipulated in
paragraph 4 that if the insured authorizes the repair the liability of the insurer, per its
subparagraph (a) is limited to P150.00. The literal meaning of this stipulation must control, it
being the actual contract, expressly
and plainly provided for in the policy. The insurance contract may be rather onerous (one-
sided as the lower court put it), but that in itself does not justify the abrogation of its
express terms, terms which the insured accepted or adhered to and which is the law
between the contracting parties. Finally, to require the insurer to prove that the cost of the
repairs ordered by the insured is unreasonable, as the appealed decision does, when the
insurer was not given an opportunity to inspect and assess the damage before the repairs
were made, strikes us as contrary to elementary justice and equity. For the foregoing
reasons, the appealed decision is hereby modified by ordering the defendant-appellant
Capital Insurance & Surety Company, Inc. to pay not more than P150.00 to the plaintiff-
appellee Misamis Lumber Corporation. Each party shall bear its own costs and attorneys
fees.

11. TY vs. FIRST NATIONAL SURETY & ASSURANCE CO. INC.
G.R. NO. L-16138, April 29, 961
1 SCRA 1324

Facts:
Petitioner obtained personal accident policies which stipulated,
among others, that for partial disability resulting to the loss of
either hand, the insurer shall be liable for P650.00. It was
further stated in the policies that, That loss of a hand shall
mean the loss by amputation through the bones of the wrist. A
fire broke out which totally destroyed Broadway Cotton Factory,
Tys employer. Fighting his way out of the factory, Ty was
injured on the left hand by a heavy object. As a result, Ty
suffered a temporary total disability of his left hand which
prevented hi from performing his work or labor necessary in the
pursuance of his occupation.
Issue:
Whether or not the insurer is liable
Held:
The insurer was not liable. We cannot go beyond the clear and
express conditions of the insurance policies, all of which defined
partial disability as loss of either hand by amputation through
the bones of the wrist. There was no such amputation. All that
was found was that the physical injuries caused temporary total
disability of Tys left hand. We might add that the agreement
contained in the insurance policies are clear, express and
specific that only amputation of the left hand should be
considered as a loss thereof, an interpretation that would
include the mere fracture or other temporary disability not
covered by the policies would certainly be unwarranted.
WHEREFORE, the decision appealed from is hereby affirmed,
with costs against the plaintiff-appellant.

12. PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS
G.R. No. 125678, 18 March 2002
Health Care agreement is in the nature of non-life insurance

FACTS:
Ernani Trinos obtained a health care coverage with petitioner
Philamcare. Under the agreement, Trinos was entitled to avail
of hospitalization benefits, whether ordinary or emergency,
listed therein. He was entitled to avail of out-patient benefits
such as annual physical examinations, preventive health care
and other out-patient services.
During the period of coverage, Trinos suffered a heart attack
and was hospitalized for one month. During this time, his wife,
Julita Trinos, tried to claim the benefits under the health care
agreement but petitioner company denied her claim on the
ground that the Health Care Agreement was void because there
was concealment regarding Ernanis medical history. Doctors
allegedly discovered at the time of Ernanis confinement that he
was hypertensive, diabetic and asthmatic, contrary to his
answer in the application form. Thus Julita paid the
hospitalization expenses herself.
When Ernani died, Julita instituted with the RTC of Manila an
action for damages against petitioner and its president. She
asked for reimbursement of her expenses plus moral damages
and attorneys fees.
ISSUE:
Whether or not the petitioner is liable
HELD:
YES. The health care agreement was in the nature of non-life
insurance, which is primarily a contract of indemnity. Once the
Insurance Law case digests SY 2010-2011
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.
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.
WHEREFORE, in view of the foregoing, the petition is DENIED.
The assailed decision of the Court of Appeals dated December
14, 1995 is AFFIRMED.

13. Great Pacific life v. CA
89 SCRA 543

Facts:

> On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr
endowment policy for 50T on the life of his one year old daughter Helen Go.

> All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the
branch manager of Grepalife-Cebu. Mondragon then typed the data on the application form
which was later signed by Ngo.

> Ngo then paid the insurance premium and a binding deposit receipt was issued to him.
The binding receipt contained the following provision: If the applicant shall not have been
insurable xxx and the Company declines to approve the application, the insurance applied
for shall not have been in force at any time and the sum paid shall be returned to the
applicant upon the surrender of this receipt.

> Mondragon wrote on the bottom of the application form his strong recommendation for
the approval of the insurance application.

> On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the
insurance application of Ngo for the simple reason that the 20yr endowment plan is not
available for minors below 7 yrs old.

> Mondragon wrote back the main office again strongly recommending the approval of the
endowment plan on the life of Helen, adding that Grepalife was the only insurance company
NOT selling endowment plans to children.

> On may 1957, Helen died of influenza with complication of broncho pneumonia. Ngo filed
a claim with Gepalife, but the latter denied liability on the ground that there was no contract
between the insurer and the insured and a binding receipt is NOT evidence of such contract.

Issue:
Whether or not the binding deposit receipt, constituted a temporary contract of life
insurance.

Held:

NO.
The binding receipt in question was merely an acknowledgement on behalf of the company,
that the latters branch office had received from the applicant, the insurance premium and
had accepted the application subject for processing by the insurance company, and that the
latter will either approve or reject the same on the basis of whether or not the applicant is
insurable on standard rates.

Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt
had never became on force at any time, pursuant to par. E of the said receipt. A binding
receipt is manifestly merely conditional and does NOT insure outright. Where an agreement
is made between the applicant and the agent, NO liability shall attach until the principal
approves the risk and a receipt is given by the agent.

The acceptance is merely conditional, and is subordinated to the act of the company in
approving or rejecting the application. Thus in life insurance, a binding slip or binding
receipt does NOT insure by itself.

14. Enriquez v. SunLife- Insurance Policy
41 PHIL 269

Facts:

> On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for
life annuity.

> 2 days later, he paid the sum of 6T to the companys anager in its Manila office and was
given a receipt.

> On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the
same date, the Manila office prepared a letter notifying Herrer that his application has been
accepted and this was placed in the ordinary channels of transmission, but as far as known
was never actually mailed and never received by Herrer.

> Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrers estate brought
this action to recover the 6T paid by the deceased.

Issue:
Whether or not the insurance contract was perfected.

Held:
NO.

The contract for life annuity was NOT perfected because it had NOT been proved
satisfactorily that the acceptance of the application ever came to the knowledge of the
applicant. An acceptance of an offer of insurance NOT actually or constructively
communicated to the proposer does NOT make a contract of insurane, as the locus
poenitentiae is ended when an acceptance has passed beyond the control of the party.

NOTE: Life annuity is the opposite of a life insurance. In life annuity, a big amount is given
to the insurance company, and if after a certain period of time the insured is stil living, he is
entitled to regular smaller amounts for the rest of his life. Examples of Life annuity are
pensions. Life Insurance on the other hand, the insured during the period of the coverage
makes small regular payments and upon his death, the insurer pays a big amount to his
beneficiaries.

15. The Insular Life Assurance Company vs Ebrado,
80 SCRA 181

Fact:
On September 1, 1968, Buenaventura Ebrado issued by the Insular Life Assurance Policy No
009929 a whole-life plan with a rider for Accidental Death. Buenaventura designated
Carponia Ebrado as the revocable beneficiary in his policy. He referred her as his wife.

On October 21, 1969, Buenaventura Ebrad died as a result of an accident when he was hit
by a falling tree. Carponia filed with the insurer a claim for the proceeds of the policy as the
designated beneficiary therein. Although she admits that she and the insured Buenaventura
were merely living as husband and wife without the benefits of marriage. Pascuala de
Ebrado, valid wife, also filed her claim as the widow of the deceased insured.

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

Ruling:
In essence, a life insurance is no different from a civil donation insofar as the beneficiary is
concerned. Both are founded upon the same consideration: liberality. A beneficiary is like a
donee because from the premiums of the policy which the insured pays out of liberality, the
beneficiary will receive the proceeds or profits of said insurance. As a consequence, the
proscription in Article739 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 a beneficiary in the life insurance policy of the persons who
cannot make the donation.


Note following Articles from the Civil Code:

Article 2011 - "The contract of insurance is governed by special laws. Matters not expressly
provided for in such special laws shall be regulated by this Code."

Article 2012 - "Any person who in forbidden from receiving any donation under Article 739
cannot be named beneficiary of a life insurance policy by the person who cannot be make a
donation to him."

Article 739- "The donations shall be void:

Those made between persons who were guilty of adultery or concubinage at the title of
donation.xx
In the case provided to in No.1, the action for declaration of nullity may be brought by the
spouse of the donor or donee; and the guilt of the donee may be provided by preponderance
of evidence in same action."

16. Gabriel Vs CA 264 Scra 137 - no file found
17. PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS
G.R. No. 125678, 18 March 2002
Health Care agreement is in the nature of non-life insurance

FACTS:
Ernani Trinos obtained a health care coverage with petitioner
Philamcare. Under the agreement, Trinos was entitled to avail
of hospitalization benefits, whether ordinary or emergency,
listed therein. He was entitled to avail of out-patient benefits
such as annual physical examinations, preventive health care
and other out-patient services.
During the period of coverage, Trinos suffered a heart attack
and was hospitalized for one month. During this time, his wife,
Julita Trinos, tried to claim the benefits under the health care
agreement but petitioner company denied her claim on the
ground that the Health Care Agreement was void because there
was concealment regarding Ernanis medical history. Doctors
allegedly discovered at the time of Ernanis confinement that he
was hypertensive, diabetic and asthmatic, contrary to his
answer in the application form. Thus Julita paid the
hospitalization expenses herself.
When Ernani died, Julita instituted with the RTC of Manila an
action for damages against petitioner and its president. She
asked for reimbursement of her expenses plus moral damages
and attorneys fees.
ISSUE:
Whether or not the petitioner is liable
HELD:
YES. The health care agreement was in the nature of non-life
insurance, which is primarily a contract of indemnity. Once the
Insurance Law case digests SY 2010-2011
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.
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.
WHEREFORE, in view of the foregoing, the petition is DENIED.
The assailed decision of the Court of Appeals dated December
14, 1995 is AFFIRMED.

18. Gulf Resorts Inc. vs. Philippine Charter Insurance Corporation
[G.R. No. 156167 May 16, 2005]

Facts: Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union and had its
properties in said resort insured originally with the American Home Assurance Company
(AHAC). In the first 4 policies issued, the risks of loss from earthquake shock was extended
only to petitioners two swimming pools. Gulf Resorts agreed to insure with Phil Charter the
properties covered by the AHAC policy provided that the policy wording and rates in said
policy be copied in the policy to be issued by Phil Charter. Phil Charter issued Policy No.
31944 to Gulf Resorts covering the period of March 14, 1990 to March 14, 1991 for
P10,700,600.00 for a total premium of P45,159.92. the break-down of premiums shows that
Gulf Resorts paid only P393.00 as premium against earthquake shock (ES). In Policy No.
31944 issued by defendant, the shock endorsement provided that In consideration of the
payment by the insured to the company of the sum included additional premium the
Company agrees, notwithstanding what is stated in the printed conditions of this policy due
to the contrary, that this insurance covers loss or damage to shock to any of the property
insured by this Policy occasioned by or through or in consequence of earthquake (Exhs. "1-
D", "2-D", "3-A", "4-B", "5-A", "6-D" and "7-C"). In Exhibit "7-C" the word "included" above
the underlined portion was deleted. On July 16, 1990 an earthquake struck Central Luzon
and Northern Luzon and plaintiffs properties covered by Policy No. 31944 issued by
defendant, including the two swimming pools in its Agoo Playa Resort were damaged.

Petitioner advised respondent that it would be making a claim under its Insurance Policy
31944 for damages on its properties. Respondent denied petitioners claim on the ground
that its insurance policy only afforded earthquake shock coverage to the two swimming
pools of the resort. The trial court ruled in favor of respondent. In its ruling, the schedule
clearly shows that petitioner paid only a premium of P393.00 against the peril of earthquake
shock, the same premium it had paid against earthquake shock only on the two swimming
pools in all the policies issued by AHAC.

Issue: Whether or not the policy covers only the two swimming pools owned by Gulf Resorts
and does not extend to all properties damaged therein

Held: YES. All the provisions and riders taken and interpreted together, indubitably show the
intention of the parties to extend earthquake shock coverage to the two swimming pools
only. An insurance premium is the consideration paid an insurer for undertaking to
indemnify the insured against a specified peril. In fire, casualty and marine insurance, the
premium becomes a debt as soon as the risk attaches. In the subject policy, no premium
payments were made with regard to earthquake shock coverage except on the two
swimming pools. There is no mention of any premium payable for the other resort properties
with regard to earthquake shock. This is consistent with the history of petitioners insurance
policies with AHAC.

19. Great Pacific life v. CA
89 SCRA 543

Facts:
> On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr
endowment policy for 50T on the life of his one year old daughter Helen Go.
> All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the
branch manager of Grepalife-Cebu. Mondragon then typed the data on the application form
which was later signed by Ngo.
> Ngo then paid the insurance premium and a binding deposit receipt was issued to him.
The binding receipt contained the following provision: If the applicant shall not have been
insurable xxx and the Company declines to approve the application, the insurance applied
for shall not have been in force at any time and the sum paid shall be returned to the
applicant upon the surrender of this receipt.
> Mondragon wrote on the bottom of the application form his strong recommendation for
the approval of the insurance application.
> On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the
insurance application of Ngo for the simple reason that the 20yr endowment plan is not
available for minors below 7 yrs old.
> Mondragon wrote back the main office again strongly recommending the approval of the
endowment plan on the life of Helen, adding that Grepalife was the only insurance company
NOT selling endowment plans to children.

> On may 1957, Helen died of influenza with complication of broncho pneumonia. Ngo filed
a claim with Gepalife, but the latter denied liability on the ground that there was no contract
between the insurer and the insured and a binding receipt is NOT evidence of such contract.

Issue:
Whether or not the binding deposit receipt, constituted a temporary contract of life
insurance.

Held:

NO.
The binding receipt in question was merely an acknowledgement on behalf of the company,
that the latters branch office had received from the applicant, the insurance premium and
had accepted the application subject for processing by the insurance company, and that the
latter will either approve or reject the same on the basis of whether or not the applicant is
insurable on standard rates.

Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt
had never became on force at any time, pursuant to par. E of the said receipt. A binding
receipt is manifestly merely conditional and does NOT insure outright. Where an agreement
is made between the applicant and the agent, NO liability shall attach until the principal
approves the risk and a receipt is given by the agent.

The acceptance is merely conditional, and is subordinated to the act of the company in
approving or rejecting the application. Thus in life insurance, a binding slip or binding
receipt does NOT insure by itself.

20. Pineda vs CA 226 Scra 754 -no file found

21. Gaisano Cagayan, Inc. V. Insurance Company Of North America (2006)
G.R. No. 147839 June 8, 2006

Lessons Applicable: Existing Interest (Insurance)
Laws Applicable: Article 1504,Article 1263, Article 2207 of the Civil Code, Section 13 of
Insurance Code

FACTS:

Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi
Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by
Levi Strauss & Co
IMC and LSPI separately obtained from Insurance Company of North America fire insurance
policies for their book debt endorsements related to their ready-made clothing materials
which have been sold or delivered to various customers and dealers of the Insured
anywhere in the Philippines which are unpaid 45 days after the time of the loss
February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano
Cagayan, Inc., containing the ready-made clothing materials sold and delivered by IMC and
LSPI was consumed by fire.
February 4, 1992: Insurance Company of North America filed a complaint for damages
against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims under their
respective fire insurance policies which it paid thus it was subrogated to their rights
Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or
force majeure
RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear
the loss (res perit domino)
CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res
perit domino
ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the
debt that was isnured

HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED

insurance policy is clear that the subject of the insurance is the book debts and NOT goods
sold and delivered to the customers and dealers of the insured
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;
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, but whether insured
has substantial economic interest in the property
Section 13 of our Insurance Code defines insurable interest 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." Parenthetically, under
Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing
interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled
with an existing interest in that out of which the expectancy arises.
Anyone has an insurable interest in property who derives a benefit from its existence or
would suffer loss from its destruction.
it is sufficient that the insured is so situated with reference to the property that he would be
liable to loss should it be injured or destroyed by the peril against which it is insured
an insurable interest in property does not necessarily imply a property interest in, or a lien
upon, or possession of, the subject
matter of the insurance, and neither the title nor a beneficial interest is requisite to the
existence of such an interest
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 - obligation is pecuniary in nature
obligor should be held exempt from liability when the loss occurs thru a fortuitous event only
holds true when the obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event
Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation (Genus nunquan
perit)
The subrogation receipt, by itself, is sufficient to establish not only the relationship of
respondent as insurer and IMC as the insured, but also the amount paid to settle the
insurance claim
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.
As to LSPI, no subrogation receipt was offered in evidence.
Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of
the amount of P535,613

22. Filipinas Cia de Seguros v. Christern Huenfeld & Co. - Enemy Corporation
80 PHIL 54


Facts:
> Oct. 1, 1941, Domestic Corp Christern, after payment of the premium, obtained from
Filipinas, fire policy no. 29333 for P100T covering merchandise contained in a building
located in Binondo.
> On Feb. 27, 1942, during the Jap occupation, the building and the insured merchandise
were burned. Christern submitted to Filipinas its claim
> Salvaged goods were sold and the total loss of Christern was P92T.
> Filipinas denied liability on the ground that Christern was an enemy corporation and
cannot be insured.

Issue:
Whether or not Filipinas is liable to Christern, Huenfeld & Co.

Held:
NO.

Majority of the stockholders of Christern were German subjects. This being so, SC ruled that
said corporation became an enemy corporation upon the war between the US and Germany.
The Phil Insurance Law in Sec. 8 provides that anyone except a public enemy may be
insured. It stands to reason that an insurance policy ceases to be allowable as soon as an
insured becomes a public enemy.

The purpose of the war is to cripple the power ad exhaust the resources of the enemy, and it
is inconsistent that one country should destroy its enemy property and repay in insurance
the value of what has been so destroyed, or that it should in such manner increase the
resources of the enemy or render it aid.

All individuals who compose the belligerent powers, exist as to each other, in a state of utter
exclusion and are public enemies. Christern having become an enemy corporation on Dec.
10. 1941, the insurance policy issued in his favor on Oct. 1, 1941 by Filipinas had ceased to
be valid and enforceable, and since the insured goods were burned after Dec. 10, 1941, and
during the war, Christern was NOT entitled to any indemnity under said policy from Filipinas.

Elementary rules of justice require that the premium paid by Christern for the period
covered by the policy from Dec. 10, 1941 should be returned by Filipinas.

23. Harvardian Colleges v. Country Bankers Insurance Corp.
1 CARA 2

Facts:
> Harvardian is a family corporation, the stockholders of which are Ildefonso Yap, Virginia
King Yap and their children.
> Prior to Aug. 9, 1979, an agent of Country Bankers proposed to Harvardian to insure its
school building. Although at first reluctant, Harvardian agreed.

> Country Banks sent an inspector to inspect the school building and agreed to insure the
same for P500,000 for which Harvardian paid an annual premium of P2,500.
> On Aug. 9, 1979, Country Bankers issued to Harvardian a fire insurance policy. On March
12, 1980, (39 days before I was born hehehehe )during the effectivity of said insurance
policy, the insured property was totally burned rendering it a total loss.
> A claim was made by plaintiff upon defendant but defendant denied it contending that
plaintiff had no insurable interest over the building constructed on the piece of land in the
name of the late Ildefonso Yap as owner.
> It was contended that both the lot and the building were owned by Ildefonso Yap and NOT
by the Harvardian Colleges.

Issue:
Whether or not Harvardian colleges has a right to the proceeds.

Held:
Harvardian has a right to the proceeds.
Regardless of the nature of the title of the insured or even if he did not have title to the
property insured, the contract of fire insurance should still be upheld if his interest in or his
relation to the property is such that he will be benefited in its continued existence or suffer a
direct pecuniary loss from its destruction or injury. The test in determining insurable
interest in property is whether one will derive pecuniary benefit or advantage from its
preservation, or will suffer pecuniary loss or damage from its destruction, termination or
injury by the happening of the event insured against.

Here Harvardian was not only in possession of the building but was in fact using the same
for several years with the knowledge and consent of Ildefonso Yap. It is reasonably fair to
assume that had the building not been burned, Harvardian would have been allowed the
continued use of the same as the site of its operation as an educational institution.
Harvardian therefore would have been directly benefited by the preservation of the
property, and certainly suffered a pecuniary loss by its being burned.

24. Geagonia vs. Court of Appeals, 241 SCRA 152

"A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise,
the breach of an immaterial provision does not avoid the policy. To constitute a violation of
the other insurance clause, the other insurance must be upon the same subject matter,
the same interest therein, and the same risk."

25. RCBC Rizal Commercial Banking Banking vs CA 289 Scra 292
Facts:

> GOYU applied for credit facilities and accommodations with RCBC. After due evaluation, a
credit facility in the amount of P30 million was initially granted. Upon GOYU's application
increased GOYU's credit facility to P50 million, then to P90 million, and finally to P117 million
> As security for its credit facilities with RCBC, GOYU executed two REM and two CM in
favor of RCBC, which were registered with the Registry of Deeds at. Under each of these four
mortgage contracts, GOYU committed itself to insure the mortgaged property with an
insurance company approved by RCBC, and subsequently, to endorse and deliver the
insurance policies to RCBC.
> GOYU obtained in its name a total of 10 insurance policies from MICO. In February 1992,
Alchester Insurance Agency, Inc., the insurance agent where GOYU obtained the Malayan
insurance policies, issued nine endorsements in favor of RCBC seemingly upon instructions
of GOYU
> On April 27, 1992, one of GOYU's factory buildings in Valenzuela was gutted by fire.
Consequently, GOYU submitted its claim for indemnity.
> MICO denied the claim on the ground that the insurance policies were either attached
pursuant to writs of attachments/garnishments issued by various courts or that the
insurance proceeds were also claimed by other creditors of GOYU alleging better rights to
the proceeds than the insured.
> GOYU filed a complaint for specific performance and damages. RCBC, one of GOYU's
creditors, also filed with MICO its formal claim over the proceeds of the insurance policies,
but said claims were also denied for the same reasons that AGCO denied GOYU's claims.
> However, because the endorsements do not bear the signature of any officer of GOYU,
the trial court, as well as the Court of Appeals, concluded that the endorsements are
defective and held that RCBC has no right over the insurance proceeds.

Issue:
Whether or not RCBC has a right over the insurance proceeds.

Held:
RCBC has a right over the insurance proceeds.

It is settled that a mortgagor and a mortgagee have separate and distinct insurable interests
in the same mortgaged property, such that each one of them may insure the same property
for his own sole benefit. There is no question that GOYU could insure the mortgaged
property for its own exclusive benefit. In the present case, although it appears that GOYU
obtained the subject insurance policies naming itself as the sole payee, the intentions of the
parties as shown by their contemporaneous acts, must be given due consideration in order
to better serve the interest of justice and equity.

It is to be noted that 9 endorsement documents were prepared by Alchester in favor of
RCBC. The Court is in a quandary how Alchester could arrive at the idea of endorsing any
specific insurance policy in favor of any particular beneficiary or payee other than the
insured had not such named payee or beneficiary been specifically disclosed by the insured
itself. It is also significant that GOYU voluntarily and purposely took the insurance policies
from MICO, a sister company of RCBC, and not just from any other insurance company.
Alchester would not have found out that the subject pieces of property were mortgaged to
RCBC had not such information been voluntarily disclosed by GOYU itself. Had it not been for
GOYU, Alchester would not have known of GOYU's intention of obtaining insurance coverage
in compliance with its undertaking in the mortgage contracts with RCBC, and verify,
Alchester would not have endorsed the policies to RCBC had it not been so directed by
GOYU.

On equitable principles, particularly on the ground of estoppel, the Court is constrained to
rule in favor of mortgagor RCBC. RCBC, in good faith, relied upon the endorsement
documents sent to it as this was only pursuant to the stipulation in the mortgage contracts.
We find such reliance to be justified under the circumstances of the case. GOYU failed to
seasonably repudiate the authority of the person or persons who prepared such
endorsements. Over and above this, GOYU continued, in the meantime, to enjoy the benefits
of the credit facilities extended to it by RCBC. After the occurrence of the loss insured
against, it was too late for GOYU to disown the endorsements for any imagined or contrived
lack of authority of Alchester to prepare and issue said endorsements. If there had not been
actually an implied ratification of said endorsements by virtue of GOYU's inaction in this
case, GOYU is at the very least estopped from assailing their operative effects.

To permit GOYU to capitalize on its non-confirmation of these endorsements while it
continued to enjoy the benefits of the credit facilities of RCBC which believed in good faith
that there was due endorsement pursuant to their mortgage contracts, is to countenance
grave contravention of public policy, fair dealing, good faith, and justice. Such an unjust
situation, the Court cannot sanction. Under the peculiar circumstances obtaining in this
case, the Court is bound to recognize RCBC's right to the proceeds of the insurance policies
if not for the actual endorsement of the policies, at least on the basis of the equitable
principle of estoppel.

GOYU cannot seek relief under Section 53 of the Insurance Code which provides that the
proceeds of insurance shall exclusively apply to the interest of the person in whose name or
for whose benefit it is made. The peculiarity of the circumstances obtaining in the instant
case presents a justification to take exception to the strict application of said provision, it
having been sufficiently established that it was the intention of the parties to designate
RCBC as the party for whose benefit the insurance policies were taken out. Consider thus
the following:

1. It is undisputed that the insured pieces of property were the subject of mortgage
contracts entered into between RCBC and GOYU in consideration of and for securing GOYU's
credit facilities from RCBC. The mortgage contracts contained common provisions whereby
GOYU, as mortgagor, undertook to have the mortgaged property properly covered against
any loss by an insurance company acceptable to RCBC.

2. GOYU voluntarily procured insurance policies to cover the mortgaged property from
MICO, no less than a sister company of RCBC and definitely an acceptable insurance
company to RCBC.

3. Endorsement documents were prepared by MICO's underwriter, Alchester Insurance
Agency, Inc., and copies thereof were sent to GOYU, MICO and RCBC. GOYU did not assail,
until of late, the validity of said endorsements.

4. GOYU continued until the occurrence of the fire, to enjoy the benefits of the credit
facilities extended by RCBC which was conditioned upon the endorsement of the insurance
policies to be taken by GOYU to cover the mortgaged properties.

This Court can not over stress the fact that upon receiving its copies of the endorsement
documents prepared by Alchester, GOYU, despite the absence written conformity thereto,
obviously considered said endorsement to be sufficient compliance with its obligation under
the mortgage contracts since RCBC accordingly continued to extend the benefits of its credit
facilities and GOYU continued to benefit therefrom. Just as plain too is the intention of the
parties to constitute RCBC as the beneficiary of the various insurance policies obtained by
GOYU. The intention of the parties will have to be given full force and effect in this particular
case. The insurance proceeds may, therefore, be exclusively applied to RCBC, which under
the factual circumstances of the case, is truly the person or entity for whose benefit the
policies were clearly intended.

26. UCPB vs Masagana 308 Scra 259 - no file found
27. Valenzuela V. CA (1990)
G.R. No. 83122 October 19, 1990
Lessons Applicable: Effect of Non-Payment (Insurance)
Laws Applicable: Art. 19,Art. 20,Art. 21, Art. 2200 of the new Civil Code;Section 77
of the Insurance Code


FACTS: Valenzuela, General Agent of Philippine American General Insurance Company, Inc
authorized to sell in behalf of Philamgen solicited marine insurance from Delta Motors, Inc.
amounting to P4.4M entitling him to a 32% commission or P1.6M
1976-1978: premium payments of P1,946,886 were paid directly to Philamgen. Philamgen
wanted a 50% share of Valenzuela's commission but Valenzuela refused.
Because of his refusal, the officers of Philamgen reversed his commission due him, placed
agency transactions on a cash and carry basis thus removing the 60-day credit for
premiums due, threatened to cancel policies issued by his agency and leaked out the news
that he has substantial accounts with Philamgen.
December 27, 1978: His agency with Philamgen was terminated
Valenzuela sought relief from the RTC
RTC: favored Valenzuela with reinstatement, commission with interest, monthly
compensatory damages, moral damages, attorney's fees and cost of suit
CA modified by holding Philamgen and Valenzuela jointly and severally liable for the
premium

ISSUE: W/N Valuenuela should be NOT be held liable since non-payment of the premium
renders the policy invalid

HELD: YES. petition is GRANTED. RTC reinstated with modification that upon satisfaction of
the judgment, contractual relationship is terminated

The principal may not defeat the agent's right to indemnification by a termination of the
contract of agency. Where the principal terminates or repudiates the agent's employment in
violation of the contract of employment and without cause ... the agent is entitled to receive
either the amount of net losses caused and gains prevented by the breach, or the
reasonable value of the services rendered. Thus, the agent is entitled to prospective profits
which he would have made except for such wrongful termination provided that such profits
are not conjectural, or speculative but are capable of determination upon some fairly
reliable basis.
If a principal violates a contractual or quasi-contractual duty which he owes his agent, the
agent may as a rule bring an appropriate action for the breach of that duty. The agent may
in a proper case maintain an action at law for compensation or damages
question of whether or not the agency agreement is coupled with interest is helpful to the
petitioners' cause but is not the primary and compelling reason
Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an
end to and render the insurance policy not binding
unless premium is paid, an insurance contract does not take effect
since admittedly the premiums have not been paid, the policies issued have lapsed
to sue Valenzuela for the unpaid premiums would be the height of injustice and unfair
dealing
Under Article 2200 of the new Civil Code, "indemnification for damages shall comprehend
not only the value of the loss suffered, but also that of the profits which the obligee failed to
obtain."