PAN MALAYAN UNSURANCE CORP. vs.

CA
184 SCRA 54 / April 3, 1990

FACTS:

PANMALAY insured a car registered under the name
of Canlubang Automotive Resources Corporation
(CANLUBANG).

The insured car was hit and it suffered damages.
PANMALAY defrayed the cost of repair of the insured car
under the own damage coverage of the policy and was now
seeking payment from the parties liable under its right of
subrogation.

However, despite repeated demands, private
respondents Erlinda Fabie and her unknown driver refused to
pay the claim.

Private respondents refuted stating that PANMALAY
had no cause of action against them. Payment under the own
damage clause of the insurance policy precluded subrogation
under Art. 2207 of the Civil Code since indemnification
thereunder was made on the assumption that there was no
wrongdoer or no third party at fault.

ISSUE:

Whether or not PANMALAY may institute an action to
recover the amount it had paid to CANLUBANG against private
respondents.

RULING:

PANMALAY may institute an action against private
respondents. The SC held that when PANMALAY used the
phrase own damage a phrase which is not found in the
insurance policy to define the basis for its settlement of
CANLUBANGs claim, it simply meant that it had assumed to
reimburse the costs for repairing the damage to the insured
vehicle.

Article 2207 of the Civil Code is founded on the well-
settled principle of subrogation, and payment by the insurer to
the assured operates as an equitable assignment to the former
of all remedies which the latter may have against the third
party whose negligence or wrongful act caused the loss. The
right of subrogation is not dependent upon, nor does it grow
out of, any privity of contract or upon written assignment of
claim. It accrues simply upon payment of the insurance claim
by the insurer.


PERLA COMPANIA DE SEGUROS, INC. vs. CA
185 SCRA 741 / May 28, 1990

FACTS:

Private respondent Milagros Cayas was the
registered owner of a Mazda bus which was insured with
PerlaCompania de Seguros, Inc. (PCSI).

The bus figured in an accident in Naic, Cavite injuring
several of its passengers. One of them, 19-year old Edgardo
Perea, sued Milagros Cayas for damages in the CFI of Cavite,
Branch, while three others, agreed to a settlement of
P4,000.00 each.

At the pre-trial, Milagros Cayas failed to appear and
hence, she was declared as in default.

After trial, the court rendered a decision in favor of
Perea of which Cayas was ordered to compensate the latter
with damages.

Cayas filed a complaint with the CFI, seeking
reimbursement from PCSI for the amounts she paid to all
victims, alleging that the latter refused to make such
reimbursement notwithstanding the fact that her claim was
within its contractual liability under the insurance policy.

The decision of the CA affirmed in toto the decision of
RTC of Cavite, the dispostive portion of which states:

IN VIEW OF THE FOREGOING, judgment
is hereby rendered ordering defendant PCSI
to pay plaintiff Milagros Cayas the sum of
P50,000.00 under its maximum liability as
provided for in the insurance policy; and the
sum of P5,000.00 as reasonable attorney's
fee with costs against said defendant.

In this petition for review on certiorari, petitioner seeks
to limit its liability only to the payment made by private
respondent to Perea and only up to the amount of P12, 000.00.
It altogether denies liability for the payments made by Cayas to
the other 3 injured passengers totalling to P12, 000.00.


ISSUE:

How much should Petitioner PCSI pay?

RULING:

The decision of the CA is modified, petitioner is only
to pay Cayas P12,000.00. The insurance policy provides: ..no
admission, offer, promise or payment shall be made by or on
behalf of the insured without the written consent of the
Company

It being specifically required that petitioner's written
consent be first secured before any payment in settlement of
any claim could be made, private respondent is precluded from
seeking reimbursement of the payments made the three other
injured passengers in view of her failure to comply with the
condition contained in the insurance policy.

Also, the insurance policy involved explicitly limits
petitioner's liability to P12,000.00 per person and to
P50,000.00 per accident. Clearly, the fundamental principle
that contracts are respected as the law between the
contracting parties finds application in the present case.

Thus, it was error on the part of the trial and appellate
courts to have disregarded the stipulations of the parties and to
have substituted their own interpretation of the insurance
policy.

The court also observed that although Milagros Cayas
was able to prove a total loss of only P44,000.00, petitioner
was made liable for the amount of P50,000.00, the maximum
liability per accident stipulated in the policy. This is patent
error. An insurance indemnity, being merely an assistance or
restitution insofar as can be fairly ascertained, cannot be
availed of by any accident victim or claimant as an instrument
of enrichment by reason of an accident.
DELSAN TRANSPORT LINES vs. COURT OF APPEALS
369 SCRA 24 (2001)

FACTS:

Caltex Phil. (Caltex) entered into a contract of
affreightment with Delsan Transport Lines (Delsan) for a period
of one year whereby Delsan agreed to transport Caltex
industrial fuel oil from Batangas refinery to different parts of the
country.

MT Maysun, carrying Caltexs goods, among others,
set sail for Zamboanga City but sank near Panay Gulf. The
shipment was insured with American Home Assurance
Corporation (American).

Subsequently, American paid Caltex the sum of
Php.5,096,635.57. Exercising its right of subrogation, American
demanded from the Delsan the same amount paid to Caltex
but to no avail.

Due to its failure to collect from the Delsan, American
filed a complaint with the RTC of Makati City but the trial court
dismissed the complaint, finding the vessel to be seaworthy
and that the incident was due to a force majeure, thus
exempting the petitioner from liability.

However, the decision of the trial court was reversed
by the CA, owing to the report of PAGASA that the weather
was normal and that it was impossible for the vessel to sink
that day.

Hence this appeal to the S.C., Delsan contended that
payment made by United for the insured value of the lost cargo
amount to an admission that the vessel was seaworthy, thus
precluding any action for recovery against it.

ISSUE:

Does payment made by United for the insured value
of the lost cargo amount to an admission that the vessel was
seaworthy, thus precluding any action for recovery against
Delsan?

RULING:

No. The payment by the private respondent for the
insured value of the lost cargo operates as waiver of its right to
enforce the term of the implied warranty against Caltex under
the marine insurance policy. However, the same cannot be
validly interpreted as an automatic admission of the vessels
seaworthiness by the private respondent as to foreclose
recourse against the petitioner for any liability under its
contractual obligation as common carrier.

The fact of payment grants the private respondent
subrogatory right which enables it to exercise legal remedies
that otherwise be available to Caltex as owner of the lost cargo
against the petitioner common carrier.










THE CAPITAL INSURANCE & SURETY CO., INC vs.
PLASTIC ERA CO., INC.
65 SCRA 134 / July 18, 1975

FACTS:

Capital Insurance & Surety Co., Inc (Capital
Insurance) delivered to Plastic Era Manufacturing Co., Inc
(Plastic Era) its Open Fire Policy No.22760 wherein the former
undertook to insure the latters building, equipments, raw
materials, products and accessories.

The policy expressly provides that if the property
insured would be destroyed or damaged by fire after the
payment of the premiums, at anytime between the Dec. 15
1960 and one o'clock in the afternoon of the Dec. 15, 1961, the
insurance company shall make good all such loss or damage
in an amount not exceeding P100k.

Plastic Era failed to pay its premium and instead
executed an acknowledgment receipt promising to pay 30 days
after date.

On Jan.8,1961, Plastic Era delivered a check as
partial payment of the insurance premium worth 1k. However,
it was dishonored by the Bank of America for lack of funds on
Feb.20, 1961. (Note: premium due date was on Jan.16,1961)

Unexpectedly, the property insured by Plastic Era was
destroyed by fire on Jan.18, 1961 (thats 2 days after the
premium became due). Plastic Era filed a claim for indemnity.

ISSUE:

Has a contract of insurance been duly perfected
between the petitioner, Capital Insurance, and respondent
Plastic Era?

RULING:

Yes, it has been perfected. In clear and unequivocal
terms the insurance policy provides that it is only upon
payment of the premiums by Plastic Era that Capital Insurance
agrees to insure the properties of the former against loss or
damage in an amount not exceeding P100,000.00.

Significantly, Capital Insurance accepted the promise
of Plastic Era to pay the insurance premium within thirty (30)
days from the effective date of policy. By so doing, it has
implicitly agreed to modify the tenor of the insurance policy and
in effect, waived the provision therein that it would only pay for
the loss or damage in case the same occurs after the payment
of the premium.

Considering that the insurance policy is silent as to
the mode of payment, Capital Insurance is deemed to have
accepted the promissory note in payment of the premium.

The fact that the check issued by Plastic Era in partial
payment of the promissory note was later on dishonored did
not in any way operate as a forfeiture of its rights under the
policy, there being no express stipulation therein to that effect.







GREAT PACIFIC LIFE INSURANCE CORPORATION vs. CA
G.R. No. L-57308 / April 23, 1990

FACTS:

Private respondent Teodoro Cortez, upon the
solicitation of an underwriter for the petitioner Great Pacific
Insurance Corporation, applied for a 20-year endowment policy
for P30,000.

His application, with the requisite medical
examination, was accepted and approved by the company and
in due course, Endowment Policy No. 221944 was issued in
his name.

It was released for delivery on January 24, 1973, and
was actually delivered to him by the underwriter, Mrs. Siega on
January 25, 1973. The effective date indicated on the face of
the policy in question was December 25, 1972. The annual
premium was P1,416.60. Mrs. Siega assured him that the first
premium may be paid within the grace period of thirty (30) days
from date of delivery of the policy.

In a letter dated June 1, 1973 (Exh. E), defendant
advised plaintiff that Policy No. 221944 (Exh. A) was not in
force. To make it enforceable and operative, plaintiff was
asked to remit the balance of P1,015.60 to complete his initial
annual premium due December 15, 1972, and to see Dr.
Felipe V. Remollo for another full medical examination at his
own expense.

Cortez' reaction to the company's act was to
immediately inform it that he was cancelling the policy and he
demanded the return of his premium plus damages.

When the company ignored his demand, Cortez filed
on August 14, 1973, a complaint for damages in the Court of
First Instance of Negros Oriental.

ISSUE:

Is Cortez entitled to a refund of his premium?

RULING:

Yes. When the petitioner advised private respondent
on June 1, 1973, four months after he had paid the first
premium, that his policy had never been in force, and that he
must pay another premium and undergo another medical
examination to make the policy effective, the petitioner
committed a serious breach of the contract of insurance.

Petitioner should have informed Cortez of the
deadline for paying the first premium before or at least upon
delivery of the policy to him, so he could have complied with
what was needful and would not have been misled into
believing that his life and his family were protected by the
policy, when actually they were not.

And, if the premium paid by Cortez was unacceptable
for being late, it was the company's duty to return it. By
accepting his premiums without giving him the corresponding
protection, the company acted in bad faith. Since his policy
was in fact inoperative or ineffectual from the beginning, the
company was never at risk; hence, it is not entitled to keep the
premium.



VALENZUELA VS. CA 191 SCRA 1 Oct. 19,1990

FACTS:
Petitioner Arturo P. Valenzuela is a General Agent of private
respondent Philippine American General Insurance Company, Inc.
(Philamgen) since 1965 authorized to solicit and sell in behalf of
Philamgen all kinds of non-life insurance, and in consideration of
services rendered was entitled to receive the full agent's commission of
32.5% from Philamgen.

Valenzuela solicited marine insurance from one of his
clients, the Delta Motors, Inc. from which he was entitled to a
commission of 32%. However, Valenzuela did not receive his full
commission which amounted to P1.6 Million from the P4.4 Million
insurance coverage of the Delta Motors. During the period 1976 to
1978, premium payments amounting to P1,946,886.00 were paid
directly to Philamgen and Valenzuela's commission to which he is
entitled amounted to P632,737.00.

In 1977, Philamgen started to become interested in and
expressed its intent to share in the commission due Valenzuela on a
fifty-fifty basis. Philamgen insisted on the sharing of the commission
with Valenzuela to which the latter firmly reiterated his objection to the
proposals of respondents.

The pressures and demands, however, continued until the
agency agreement itself was finally terminated. Worse, despite the
termination of the agency, Philamgen continued to hold Valenzuela
jointly and severally liable with the insured for unpaid premiums. The
petitioners sought relief by filing the complaint against the private
respondents in the court a quo.

ISSUE:
Are the petitioners liable to Philamgen for the unpaid and
uncollected premiums of the insured which the respondent court
ordered Valenzuela to pay the latter?

RULING:
No, SC ruled that the respondent court erred in holding
Valenzuela liable. There is no factual and legal basis for the award.
Under 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 Sec. 77 ... Notwithstanding any agreement to the
contrary, no policy or contract of insurance is valid and binding unless
and until the premiums thereof have been paid except in the case of a
life or industrial life policy whenever the grace period provision applies
(P.D. 612, as amended otherwise known as the Insurance Code of
1974)

In addition, the SC cited the ruling made in Philippine
Phoenix Surety and Insurance, Inc. v. Woodworks, Inc. that the non-
payment of premium does not merely suspend but puts an end to an
insurance contract since the time of the payment is peculiarly of the
essence of the contract. Moreover, an insurer cannot treat a contract
as valid for the purpose of collecting premiums and invalid for the
purpose of indemnity.

The foregoing findings are buttressed by Section 776 of the
Insurance Code which now provides that no contract of Insurance by
an insurance company is valid and binding unless and until the
premium thereof has been paid, notwithstanding any agreement to the
contrary.

Perforce, since admittedly the premiums have not been paid,
the policies issued have lapsed. The insurance coverage did not go
into effect or did not continue and the obligation of Philamgen as
insurer ceased. Hence, for Philamgen which had no more liability
under the lapsed and inexistent policies to demand, much less sue
Valenzuela for the unpaid premiums would be the height of injustice
and unfair dealing.

In this instance, with the lapsing of the policies through the
nonpayment of premiums by the insured there were no more insurance
contracts to speak of. As the Court held in the Philippine Phoenix
Surety case "the non-payment of premiums does not merely suspend
but puts an end to an insurance contract since the time of the payment
is peculiarly of the essence of the contract."

PHIL. PRYCE ASSURANCE CORP vs CA
230 SCRA 164/ 21 Feb 1994

FACTS:

Petitioner, Interworld Assurance Corporation (the
company now carries the corporate name Philippine Pryce
Assurance Corporation), was the butt of the complaint for
collection of sum of money, filed on May 13, 1988 by
respondent, Gegroco, Inc. before the Makati Regional Trial
Court, Branch 138.

The complaint alleged that petitioner issued two
surety bonds (No. 0029, dated July 24, 1987 and No. 0037,
dated October 7, 1987) in behalf of its principal Sagum
General Merchandise for FIVE HUNDRED THOUSAND
(P500,000.00) PESOS and ONE MILLION (1,000,000.00)
PESOS, respectively.

Petitioner hinges its defense on two arguments,
namely: a) that the checks issued by its principal which were
supposed to pay for the premiums, bounced, hence there is no
contract of surety to speak of; and 2) that as early as 1986 and
covering the time of the Surety Bond, Interworld Assurance
Company (now Phil. Pryce) was not yet authorized by the
insurance Commission to issue such bonds.

ISSUE:
Is the contract of surety valid?

RULING:
Yes, the contract of surety is valid. The Insurance
Code states that:

Sec. 177. The surety is entitled to payment
of the premium as soon as the contract of
suretyship or bond is perfected and delivered
to the obligor. No contract of suretyship or
bonding shall be valid and binding unless
and until the premium therefor has been
paid, except where the obligee has accepted
the bond, in which case the bond becomes
valid and enforceable irrespective of whether
or not the premium has been paid by the
obligor to the surety. . . .

The petitioner, in its answer, admitted to have issued
the bonds subject matter of the original action.

On the other hand, petitioner's defense that it did not
have authority to issue a Surety Bond when it did is an
admission of fraud committed against respondent. No person
can claim benefit from the wrong he himself committed. A
representation made is rendered conclusive upon the person
making it and cannot be denied or disproved as against the
person relying thereon.













AMERICAN HOME ASSURANCE vs. ANTONIO CHUA
309 SCRA 250 / June 28, 1999

FACTS:

Antonio Chua sought renewal of a fire insurance
policy issued by American Home. As payment for the renewal,
he issued a check to an agent of American Home, James Uy.
The latter then issued a renewal certificate in favor of Antonio
Chua.

A day after he issued the check, the subject matter of
the insurance a building owned by Chua, was totally grazed
by fire. Chua filed to claim the proceeds.

American home denied the claim contending that no
contract of insurance existed at the time of loss since Chua did
not pay the premium. It cited Section 77 which states that
unless and until a premium is paid there is no insurance. The
check issued did not operate as payment since under the Civil
Code, a check can only effect payment the day it is encashed.
Considering that the check was encashed approximately 4
days after its deposit, the policy in question remains expired at
the time of loss.

Moreover, American Home contends that the non-
disclosure of Chua that the same building was insured against
fire by other insurers render the policy void.

ISSUES:

1. WON a valid contract of Insurance exists at the time
of loss
2. What is the effect of non-disclosure of Chua of the
other insurance taken on the same building?

RULING:

1. A valid contract of insurance exists at the time of loss.
A general rule in insurance laws is that unless the
premium has been paid, the insurance policy is not
valid and binding except in life and industrial life
insurance. In the instant case, it is not disputed that
the check issued by Chua was honored when
presented and petitioner forthwith issued a certificate
of renewal categorically stating that the premium has
been paid. Section 78 of the ICP provides that An
acknowledgment in a policy or contract of insurance
of the receipt of premium is conclusive evidence of its
payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not
be binding until the premium is actually paid.

2. Normally, non-disclosure of other insurance on the
same subject matter would avoid the policy however,
in the instant case American Home is estopped from
raising the said argument since it is its own loss
adjuster which admitted that he knows full well prior to
the loss that the same subject matter has been
insured by different insurance companies. Prior
knowledge of other insurances defeats the argument
that the insurer is deceived into entering the contract
of insurance.






UCPB GENERAL INSURANCE v. MASAGANA TELEMART
356 SCRA 307

FACTS:

Masagana Telamarts obtained from UCPB five (5)
insurance policies on its various properties for the period
from 22 May 1991 to 22 May 1992.

On March 1992 or 2 months before policy
expiration, UCPB evaluated the policies and decided not to
renew them upon expiration of their terms on 22 May
1992. UCPB advised Masaganas broker of its intention not to
renew the policies.

On April 1992, UCPB gave written notice to
Masagana of the non-renewal of the policies. On June
1992 [policy already expired], Masaganas property covered by
3 UCPB-issued policies was razed by fire.

On 13 July 1992, Masagana presented to UCPBs
cashier 5 manager's checks, representing premium for the
renewal of the policies for another year.

It was only on the following day, 14 July 1992, when
Masagana filed with UCPB a formal claim for indemnification of
the insured property razed by fire. On the same day, UCPB
returned the 5 manager's checks, and rejected Masaganas
claim since the policies had expired and were not renewed,
and the fire occurred on 13 June 1992 (or before tender of
premium payment).

Masagana filed a civil complaint for recovery of the
face value of the policies covering the insured property razed
by fire.

RTC ruled in favor of Masagana, which is also
affirmed by CA, holding that following previous
practice, Masagana was allowed a 60-90 day credit term for
the renewal of its policies, and that the acceptance of the late
premium payment suggested that payment could be made
later.

ISSUE:

Whether or not the fire insurance policies had expired
and Masaganas claims should be rejected.

RULING:

The fire insurance policies had expired and
Masaganas claims should be rejected. An insurance policy,
other than life is not valid and binding until actual payment of
the premium. Any agreement to the contrary is void. The
parties may not agree expressly or impliedly on the extension
of credit or time to pay the premium and consider the policy
binding before actual payment.

In the present case, the payment of the premium for
renewal of the policies was tendered a month after the fire
occurred. Masagana did not even give UCPB a notice of loss
within a reasonable time after occurrence of the fire.







VDA. DE MAGLANA vs. CONSOLACION
[GR 60506, 6 August 1992], 212 SCRA 268

FACTS:
Lope Maglana was an employee of the Bureau of
Customs whose work station was at Lasa, in Davao City. On 20
December 1978, early morning, Lope Maglana was on his way to
his work station, driving a motorcycle owned by the Bureau of
Customs. At Km. 7, Lanang, he met an accident that resulted in his
death.

The PUJ jeep that bumped the deceased was driven by
Pepito Into, operated and owned by Destrajo. Consequently, the
heirs of Lope Maglana, Sr., filed an action for damages and
attorney's fees against operator Patricio Destrajo and the Afisco
Insurance Corporation (AFISCO) before the then Court of First
Instance. An information for homicide thru reckless imprudence
was also filed against Pepito Into.

During the pendency of the civil case, Into was
sentenced and found guilty in the criminal case and to indemnify
the heirs of Lope Maglana, Sr. plus moral and exemplary
damages.

On the other hand, the lower court rendered a decision
finding that Destrajo had not exercised sufficient diligence as the
operator of the jeepney. The court ordered Destrajo to pay the
heirs of Maglana for loss of income; the sum of P12,000.00 which
amount shall be deducted in the event judgment against the
driver, accused Into.

The court ordered the insurance company to reimburse
Destrajo whatever amounts the latter shall have paid only up to the
extent of its insurance coverage.

The heirs of Maglana contended that AFISCO should not
merely be held secondarily liable because the Insurance Code
provides that the insurer's liability is "direct and primary and/or
jointly and severally with the operator of the vehicle, although only
up to the extent of the insurance coverage."
.
ISSUE:
Whether AFISCO is solidarily liable with Destrajo.

RULING:
No. In Malayan Insurance Co., Inc. v. Court of Appeals,
the Court had the opportunity to resolve the issue as to the nature
of the liability of the insurer and the insured vis-a-vis the third party
injured in an accident, where it ruled that "While it is true that
where the insurance contract provides for indemnity against
liability to third persons, such third persons can directly sue the
insurer, however, the direct liability of the insurer under indemnity
contracts against third party liability does not mean that the insurer
can be held solidarily liable with the insured and/or the other
parties found at fault. The liability of the insurer is based on
contract; that of the insured is based on tort."

The Court then proceeded to distinguish the extent of the
liability and manner of enforcing the same in ordinary contracts
from that of insurance contracts. While in solidary obligations, the
creditor may enforce the entire obligation against one of the
solidary debtors, in an insurance contract, the insurer undertakes
for a consideration to indemnify the insured against loss, damage
or liability arising from an unknown or contingent event."

The liability of AFISCO based on the insurance contract
is direct, but not solidary with that of Destrajo which is based on
Article 2180 of the Civil Code. As such, the heirs have the option
either to claim the P15,000 from AFISCO and the balance from
Destrajo or enforce the entire judgment from Destrajo subject to
reimbursement from AFISCO to the extent of the insurance
coverage.

GSIS vs. CA
308 SCRA 559; June 21, 1999

FACTS:

The National Food Authority (NFA) was the owner of
a Chevrolet truck which was insured against liabilities for death
of and injuries to third persons, GSIS was the insurer.

The said truck driven by Guillermo Corbeta collided
with a Toyota Tamaraw public utility vehicle. Five passengers
of the Toyota vehicle died while ten others sustained bodily
injuries.

An action for damages was filed against NFA and the
truck driver based on quasi-delict, and against GSIS as insurer
of the truck, and MIGC the insurer of the Toyota passenger
vehicle.

The trial court awarded damages to the victims and
injured parties, and held NFA, GSIS, and MIGC jointly and
severally (or solidarily) liable for the payment thereof. GSIS
denies solidary liability with NFA arguing that GSIS and NFA
are liable under different obligations. It asserts that the NFAs
liability is based on quasi-delict, while GSISs liability is based
on the contract of insurance.

ISSUE:

Whether or not GSIS, as insurer, is solidarily liable
with NFA for the damage caused to third persons as a result of
the injuries arising from vehicular accidents caused by the
insured truck.

RULING:

GSIS cannot be made solidarily liable for all the
damage caused by the negligence of the driver of NFA.
Nevertheless, the victims may proceed directly against GSIS
as insurer, but it will be liable only up to the extent of the
amount of the insurance policy. It is now established that the
injured or the heirs of a deceased victim of a vehicular accident
may sue directly the insurer of the vehicle.

Common carriers are required to secure Compulsory
Motor Vehicle Liability Insurance coverage as provided under
Sec. 374 of the Insurance Code, precisely for the benefit of
victims of vehicular accidents and to extend them immediate
relief. The purpose of statutes enabling an injured person to
proceed directly against the insurer is to protect them against
the insolvency of the insured who causes such injury, and to
give such injured person a certain beneficial interest in the
proceeds of the policy.

While it is true that where the insurance contract
provides for indemnity against liability to third persons, and
such third persons can directly sue the insurer, the direct
liability of the insurer under indemnity contracts against third
party liability is only up to the extent of what was provided for
by the contract of insurance. As therein provided, the
maximum indemnity for death was twelve thousand
(P12,000.00) pesos per victim.







TIU vs. ARRIESGADO
437 SCRA 426 / Sept. 1, 2004

FACTS:

A passenger bus owned by Petitioner Tiu collided with
a cargo truck which was parked along the right side of the
national highway with damaged rear tires. The collision injured
Private Respondent Pedro Arriesgado and killed his wife.

Arriesgado then filed a complaint for breach of
contract of carriage, damages and attorneys fees against Tiu.
In turn, Tiu filed a Third-Party Complaint against respondent
Philipine Phonenix Surety and Insurance, Inc. PPSII, stating
that the passenger bus is covered by a common carrier liability
insurance issued by PPSII. Tiu insists that PPSII is liable to
him for contribution, indemnification and/or reimbursement.

PPSII, for its part, admitted that while it had attended
to and settled the claims of the other injured passengers,
respondent Arriesgados claim remained unsettled as it was
beyond the limits of liability as so stated in the contract. The
insurance contract expressly provided therein that the limit of
the insurers liability for each person was P12,000, while the
limit per accident was pegged at P50,000.

Petitioner Tiu contests that respondent PPSII should
have settled the said claim instead of just denying the same.

ISSUE:

What is the liability of PPSII as insurer?

RULING:

As found by the Supreme Court, the insurance
contract was issued pursuant to the Compulsory Motor Vehicle
Liability Insurance Law. It was expressly provided therein that
the limit of the insurers liability for each person was P12,000,
while the limit per accident was pegged at P50,000.

An insurer in an indemnity contract for third party
liability is directly liable to the injured party up to the extent
specified in the agreement but it cannot be held solidarily liable
beyond that amount. The respondent PPSII could not then just
deny petitioner Tius claim; it should have paid respondent
Arrisgados hospitalization expenses of P1,113.80 and
P12,000 for the death of his wife. The total amount of the
claims, even when added to that of the other injured
passengers which PPSII claimed to have settled, would not
exceed the P50,000 limit under the insurance agreement.


















IVOR ROBERT DAYTON GIBSON vs. HON. PEDRO A.
REVILLA, in his official capacity as Presiding Judge of
Branch XIII, Court of First Instance of Rizal, and LEPANTO
CONSOLIDATED MINING COMPANY
29 SCRA 219 / July 30, 1979

FACTS:

A civil suit was instituted by Lepanto against Malayan,
founded on the fact that Malayan issued Marine Open Policy
covering an shipments of copper, gold and silver concentrates
in bulk from Poro, San Fernando, La Union to Tacoma,
Washington or to other places in the United States.
Thereafter, Malayan obtained reinsurance abroad
through Sedgwick, Collins & Co., Limited, a London insurance
brokerage.
The Memorandum of Insurance issued by Sedgwick
to Malayan listed three groups of underwriters or re-insurers,
one of which is the Lloyds with an interest of 62.808%.
At the top of the list of underwriting members of
Lloyds is Syndicate No. 448, assuming 2.48% of the risk
assumed by the reinsurer, which syndicate number petitioner
Ivor Robert Dayton Gibson claims to be himself.
In November, 1971, a cargo of concentrates was
shipped and destined for Tacoma, Washington. During the sea
voyage, it encountered heavy weather and rough seas causing
the ship to list(lean on one side). The captain of the boat,
fearing that the vessel might sink, sailed to Osaka and
unloaded the cargo. Expenses were incurred by Lepanto
relative to the cargo while in Japan but eventually the cargo
was transhipped to Tacoma via another vessel.
In the same yaer, another cargo of concentrates was
shipped also destined for Tacoma, Washington. Similarly,
during the sea voyage it met with heavy weather and rough
seas causing the ship to list. The captain, fearing also that the
vessel might sink, unloaded the cargo and expenses were
incurred relative to the cargo while in Japan. Thereafter, the
cargo was transhipped to Tacoma on board another vessel.
Lepanto notified Malayan of the accidents. Formal
claims under the open policy were also filed by Lepanto with
Malayan.
Malayan rejected Lepanto's insurance claim for the
reason that the cargoes were inherently vicious on loading and
such condition caused the listing of the vessel. Hence, the
complaint filed by Lepanto against Malayan.
Later, petitioner Gibson filed a motion to intervene as
defendant contending among others that he has a legal
interest in the matter in litigation because a contract of
reinsurance between the defendant Malayan Insurance
Company, Inc. and him is a contract of indemnity against
liability, and not merely against damage, and therefore, movant
has a direct and immediate interest in the success of Malayan.
The lower court refused such intervention, hence this
appeal to the S.C.


ISSUE:

Whether the lower court committed reversible error in
refusing the intervention of petitioner Gibson in the suit
between Lepanto and Malayan

RULING:

The respondent judge committed no error of law in
denying petitioners motion to intervene and neither has he
abused his discretion in his denial of petitioners motion for
intervention. The Court agrees with the holding of the
respondent Court that since movant Gibson appears to be only
one of several re-insurers of the risks and liabilities assumed
by Malayan Insurance Company, Inc., it is highly probable that
other re- insurers may likewise intervene. If petitioner is
allowed to intervene, there is good and sufficient basis for the
Court a quoto declare that the trial between Lepanto and
Malayan would be definitely disrupted and would certainly
unduly delay the proceedings between the parties especially at
the stage where Lepanto had already rested its case and that
the issues would also be compounded as more parties and
more matters will have to be litigated.

The Court also holds that respondent Judge
committed no reversible error in further sustaining the fourth
ground of Lepanto's Opposition to the Motion to Intervene that
the rights, if any, of petitioner are not prejudiced by the present
suit and will be fully protected in a separate action against him
and his co-insurers by Malayan.

Petitioner's contention that he has to pay once
Malayan is finally adjudged to pay Lepanto because of the very
nature of a contract of reinsurance and considering that the re-
insurer is obliged 'to pay as may be paid thereon' (referring to
the original policies), although this is subject to other
stipulations and conditions of the reinsurance contract, is
without merit. The general rule in the law of reinsurance is that
the re-insurer is entitled to avail itself of every defense which
the re-insured (which is Malayan) might urge in an action by
the person originally insured (which is Lepanto) as provided in
Sec. 1238 of the insurance code.



























AVON INSURANCE PLC vs. COURT OF APPEALS
278 SCRA 312 (1997)

FACTS:

Yupangco Cotton Mills (Yupangco) engaged to
secure several of its properties totaling P200,000,000.00 with
Worldwide Security and Insurance Co. (Worldwide), the
contracts of which were covered by reinsurance treaties
between Worldwide and several foreign reinsurance
companies, Avon Insurance PLC, et. al. (Avon, et. al.), through
CJ Boatrwright, acting as agent of Worldwide Surety and
Insurance. Fire then razed Yupangcos properties on two
separate occasions covered within the effectivity period of the
policies.

Worldwide and some of the foreign reinsurance
companies made partial payment to Yupangco. Worldwide
then executed a Deed of Assignment to Yupangco,
acknowledging that a remaining balance of P19,444,447.75
was still due and assigned to Yupangco all reinsurance
proceeds still collectible from all the foreign reinsurance
companies.

Yupangco then filed a collection suit against Avon, et.
al, the foreign reinsurers. The service of summons was made
through the office of the Insurance Commissioner. In a Petition
for Certiorari filed with the Court of Appeals, Avon, et. al.
submitted that the Philippine courts have no jurisdiction over
them, being all foreign corporations not doing business in the
Philippines with no office, place of business or agents in the
Philippines.

Yupangco contended that since the reinsurers
question the jurisdiction of the court they are deemed to have
submitted to the jurisdiction of the court.

ISSUE:

Do the Philippine courts have jurisdiction over
international reinsurers who are not doing business in the
Philippines?

RULING:

No. The international reinsurers are not doing
business in the Philippines and the Philippine courts have not
acquired jurisdiction over them.

The reinsurance treaties between the Avon, et. al.
and Worldwide were made through an international insurance
broker, CJ Boatrwright, and not through any entity or means
remotely connected with the Philippines.

Moreover, in Moris & Co. vs. Scandinavia Ins. Co.,
279 U.S. 405 (1929), it was held that a reinsurance company is
not doing business in a certain state merely because the
property or lives which are insured by the original insurer
company are located in that state. The reason for this is that a
contract of reinsurance is generally a separate and distinct
arrangement from the original contract of insurance, whose
contracted risk is insured in the reinsurance agreement.
Hence, the original insured has generally no interest in the
contract of reinsurance.



SUMMIT GUARANTY AND INSURANCE CO., INC. VS. DE GUZMAN
151 SCRA 389 / June 30, 1987

FACTS:
This petition for certiorari stems from three consolidated
complaints filed against petitioner, the facts of the three cases are as
follows:

Jose Ledesma was the owner of a tractor which was
bumped by a minibus insured with petitioner for Third Party Liability.
Ledesma immediately made a notice of claim. Petitioner company
advised private respondent to have car repaired by G.A. Machineries,
which was later estimated at an amount of Php21,000 and made
assurance of payment. Upon repair, respondent made several
demands on petitioner company because of repair shops warning that
failure to pay would result in the auctioning of the tractor to pay
expenses. Petitioner company continued giving assurance and
promises to pay. Eventually, private respondent filed a formal
complaint with the Insurance Commission, which petitioner company
moved to dismiss on ground of prescription.

Geronima Pulmano was the owner of a jeep insured with
petitioner company in the amount of Php20,000. The jeep got into a
vehicular accident which resulted in the death of one of the victims and
private respondent immediately filed a notice of accident and claim.
Petitioner company took no steps to process the claim so private
respondents brought their claim to the Insurance Commission, but
petitioner company still failed to settle. A complaint was eventually filed
with the Court of First Instance of Tarlac which petitioner company
moved to dismiss on the ground of prescription.

Amelia Generao owned a passenger jeepney insured with
petitioner under a Vehicle Comprehensive Policy. The jeepney struck
the van of a certain Mr. Hahn and two days later Generao notified
petitioner company and demanded payment on both vehicles. Generao
and petitioner company even had a dialogue at the office of insurance
company to settle the claim. Nonetheless, time passed without
petitioner company taking any final action. Mr. Hahn filed a complaint
for damages against Generao who, in response, filed a third party
complaint against petitioner company which in turn filed a motion to
dismiss on the ground of prescription.

ISSUE:
Did the causes of action of private respondents already
prescribe?

RULING:
NO. Petitioner company argues that under Section 384 of
the Insurance Code, even if the notice of claim was timely filed with the
insurance company within the six month period, if the action or suit that
follows is filed beyond the one year period it should necessarily be
dismissed on the ground of prescription.

The Supreme Court finds absolutely nothing in the law which
mandates that the two periods must always concur. On the contrary, it
is very clear that the one year period is only required in proper cases.
It is very obvious that petitioner company is trying to use Section 384
of as a cloak to hide itself from its liabilities. In violation of its duties to
adopt and implement reasonable standards for the prompt
investigation of claims and to effectuate prompt, fair and equitable
settlement of claims, and with manifest bad faith, petitioner company
devised means and ways of stalling the settlement proceedings.

The one year period should be counted from the date of
rejection by the insurer as this is the time the cause of action accrues.
Since in these cases there has yet been no accrual of cause of action,
prescription has not yet set in.

NOTE: Section 384 has been amended as follows, 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 claimants right of action shall
prescribe.

Topic: Article 1263 - In an obligation to deliver a generic
thing, the loss or destruction of anything of the same kind does not
extinguish the obligation

COUNTRY BANKERS INSURANCE CORP. (Formerly
Country Bankers Insurance & Surety Co. Inc.) vs. THE
TRAVELLERS INSURANCE AND SURETY CORP., and THE
HONORABLE COURT OF APPEALS
G.R. No. 82509 August 16, 1989

FACTS:

The Toyota Land Cruiser insured to petitioner was
bumped by Isuzu Cargo Truck. Having suffered, the Toyota
Land Cruiser, its owner, declared a total loss and claimed the
proceeds of the insurance policy issued by petitioner Country
Bankers Insurance Corporation.

As subrogee to all rights and causes of action of
PTCI, petitioner demanded reimbursement from the driver and
owner of the Isuzu Cargo truck and from private respondent
travellers Insurance but the latter failed to act on petitioner's
claim forcing the petitioner to file a complaint before the RTC
rendered a decision in favor of the petitioner and ordered
private respondent to pay petitioner the amount paid to PTCI,
but dismissed the complaint as against the other two
defendants.

On appeal, the Court of Appeals (CA) affirmed the
finding of the RTC and private respondent is liable to herein
petitioner as the subrogee to all the rights and causes of action
of the owner of the damaged Toyota Land Cruiser.
Nevertheless, the CA dismissed the complaint on the ground
that petitioner's cause of action had prescribed.

Defendant's defense that the action has prescribed is
found meritorious. The accident occurred on 24 May 1979, but
the complaint was not filed until 14 October 1980, or almost
seventeen (17) months after the accident. Section 384 of the
Insurance Code mandates that the "(a)ction or suit for recovery
of damage due to loss or injury must be brought, in proper
cases, with the courts within one year from the date of the
accident, otherwise the claimant's right of action shall
prescribe.". . .

ISSUE:

Issue of whether the one-year prescriptive period
under Section 384 of the Insurance Code, prior to its
amendment by Batas PambansaBlg. 874, should commence to
run from the date of the accident or from the rejection of the
claim by the insurer.

RULING:

To prevent the insurance company from evading its
responsibility to the insured through this clever scheme, and to
protect the insuring public against similar acts by other
insurance companies, the Court held that the one-year period
under Section 384 should be counted not from the date of the
accident but from the date of the rejection of the claim by the
insurer [Summit, supra, at 397]. The Court further held that it is
only from the rejection of the claim by the insurer that the
insured's cause of action accrued since a cause of action does
not accrue until the party obligated refuse, expressly or
impliedly, to comply with its duty [ACCFA v. Alpha Insurance
and Surety Co., G.R. No. L-24566, July 29,1968, 24 SCRA
151].




TRAVELLERS INSURANCE & SURETY CORPORATION VS.
COURT OF APPEALS
272 SCRA 536 May 22, 1997

FACTS:
The complainant lumped the erring taxicab driver, the owner
of the taxicab, and the alleged insurer of the vehicle which featured in
the vehicular accident (leading to the death of his mother) into one
complaint. The erring taxicab was allegedly covered by a third-party
liability insurance policy issued by petitioner Travellers Insurance &
Surety Corporation.

Private respondent filed a complaint for damages against
Armando Abellon as the owner of the Lady Love Taxi and Rodrigo
Dumlao as the driver of the Lady Love taxicab that bumped private
respondents mother. Subsequently, private respondent amended his
complaint to include petitioner as the compulsory insurer of the said
taxicab under Certificate of Cover No. 1447785-3.

After trial, the trial court rendered judgment in favor of private
respondent and subsequently affirmed by the respondent CA.

Petitioner appealed the decision of the respondent Court of
Appeals mainly contending that it did not issue an insurance policy as
compulsory insurer of the Lady Love Taxi and that,
assuming arguendo that it had indeed covered said taxicab for third-
party liability insurance, private respondent failed to file a written notice
of claim with petitioner as required by Section 384 of P.D. No. 612,
otherwise known as the Insurance Code.

ISSUE:
Whether or not private respondent has a right to implead and
sue the petitioner-insurer as party defendant to the case.

RULING:
The right of the person injured to sue the insurer of the party
at fault (insured), depends on whether the contract of insurance is
intended to benefit third persons also or on the insured. Under the
contract of insurance, a policy whereby the insurer agreed to indemnify
the insured against all sums which the Insured shall become legally
liable to pay in respect of a death of or bodily injury to any person is
one for indemnity against liability; from the fact then that the insured is
liable to the third person, such third person is entitled to sue the
insurer. And the test applied has been this: Where the contract
provides for indemnity against liability to third persons, then third
persons to whom the insured is liable can sue the insurer. Where the
contract is for indemnity against actual loss or payment, then third
persons cannot proceed against the insurer, the contract being solely
to reimburse the insured for liability actually discharged by him thru
payment to third persons, said third persons recourse being thus
limited to the insured alone.

Apparently, the trial court did not distinguish between the
private respondents cause of action against the owner and the driver
of the Lady Love taxicab and his cause of action against
petitioner. While it is true that where the insurance contract provides
for indemnity against liability to third persons, such third persons can
directly sue the insurer, however, the direct liability of the insurer under
indemnity contracts against third-party liability does not mean that the
insurer can be held solidarily liable with the insured and/or the other
parties found at fault. The liability of the insurer is based on contract;
that of the insured is based on tort.

When petitioner asseverates, thus, that no written claim was
filed by private respondent and rejected by petitioner, and private
respondent does not dispute such asseveration through a denial in his
pleadings, we are constrained to rule that respondent appellate court
committed reversible error in finding petitioner liable under an
insurance contract the existence of which had not at all been proven in
court. Even if there were such a contract, private respondents cause
of action cannot prevail because he failed to file the written claim
mandated by Section 384 of the Insurance Code. He is deemed,
under this legal provision, to have waived his rights as against
petitioner-insurer.

Thus, the complaint against Travellers Insurance & Surety
Corporation in said case was ordered dismissed.

PHIL. HOME ASSURANCE CORP v COURT OF APPEALS
301 SCRA 423/ 21 Jan 1999

FACTS:

Petitioners are the Philippine Home Assurance
Corporation (PHAC), the Philippine American Accident
Insurance Company (PAAIC), the Philippine American General
Insurance Company (PAGIC), and the American International
Underwriters (Phils.), Inc. (AIUPI), which are domestic
corporations engaged in the insurance business.

From January to June 1986, they paid under protest
the total amount of P10,456,067.83 as documentary stamp
taxes on various life and non-life insurance policies issued by
them, broken down as follows:

On August 4, 1987, petitioners filed separate claims
for refund from the Bureau of Internal Revenue. They alleged
that the premiums on the insurance policies issued by them
had not been paid thus, in accordance with 77 of the Insurance
Code; no documentary stamp taxes were due on the policies.

ISSUE:

Are life and non-life insurance policies subject to
documentary stamp taxes pursuant to 183 and 184 of the
National Internal Revenue Code by their mere issuance?

RULING:

Yes, they are. The Court of Tax Appeal correctly
characterized a documentary stamp tax as in the nature of an
excise tax. As such, it is imposed on the privilege of conducting
a particular business or transaction and not on the business or
transaction itself.

Thus, the documentary stamp tax on insurance
policies is, in effect, imposed on the privilege to conduct
insurance business and not on the insurance business itself or
on the premiums paid under the said insurance policies. This
means then that the documentary stamp tax accrues when the
said privilege is exercised.

As the respondent court stated, while it is true that a
documentary stamp tax is levied on the document and not on
the property involved, the documentary stamp tax is not
intended to be a tax on the document alone. The law taxes the
document because of the transaction so that the tax becomes
due and payable at the time the transaction is had or
accomplished, in this case, at the time of the issuance of the
document.

















COMMISSIONER OF INTERNAL REVENUE vs LINCOLN
PHIL LIFE INSURANCE
379 SCRA 423 / March 19, 2002

FACTS:

Respondent Lincoln Phil. Issued a special kind of life
insurance known as Junior Estate Builder Policy, the
distinguishing feature of which is its automatic increase
clause which provides for an automatic increase in the amount
of life coverage upon attainment by the insured of a certain age
without the need of issuing a new policy.

CIR contends that while no new policy was issued,
the original policy was essentially re-issued when the
additional obligation was assumed upon the effectivity of this
automatic increase clause. Therefore, the consequent
increase is but a scheme to avoid further tax obligations. As a
result, CIR imposed documentary stamp tax on the original
policy and another documentary stamp tax on the same policy
but upon the effectivity of the automatic increase clause.

ISSUE:

Should the automatic increase clause be considered
as a new and separate policy apart from the original?

RULING:

NO. Section 49 defines a policy as a written
instrument where the contract of insurance is set forth.
Moreover, Section 50 provides that the policy may contain any
word, phrase, CLAUSE necessary to complete the contract
of insurance. It is therefore clear that any rider, clause or
warranties attached to the policy is considered part of the
contract of insurance. Although the clause is to take effect in a
latter time, it is written into the policy at the time of issuance.
The feature providing for an automatic increase has already
formed part of the insurance contract; hence there was no
need for execution of a new agreement for the increase in the
coverage.




























FGU INSURANCE vs. COURT OF APPEALS
454 SCRA 337

FACTS:
Anco Enterprises Company (ANCO), a partnership
between Ang Gui and Co To, was engaged in the shipping
business. It owned the M/T ANCO tugboat and the D/B Lucio
barge which were operated as common carriers. Since the
D/B Lucio had no engine of its own, it could not maneuver by
itself and had to be towed by a tugboat for it to move from one
place to another.

On September 23, 1979, San Miguel Corporation
(SMC) shipped from Mandaue City, Cebu, on board the D/B
Lucio, for towage by M/T ANCO cases of pale pilsen and
cerveza negra to consignee SMCs Sales Office in Iloilo and
San Jose, Antique.

The D/B Lucio was towed by the M/T ANCO all the
way from Mandaue City to San Jose, Antique. When the barge
and tugboat arrived at San Jose, Antique, the clouds over the
area were dark and the waves were already big. The arrastre
workers unloading the cargoes of SMC on board the D/B Lucio
began to complain about their difficulty in unloading the
cargoes.

SMCs Supervisor, Fernando Macabuag, requested
ANCOs representative to transfer the barge to a safer place
because the vessel might not be able to withstand the big
waves, but it refused, so around the midnight, the barge sunk
along with 29,210 cases of Pale Pilsen and 500 cases
of Cerveza Negra totalling to P1,346,197.

When SMC claimed against ANCO it stated that they
agreed that it would not be liable for any losses or damages
resulting to the cargoes by reason of fortuitous event and it
was agreed to be insured with FGU for 20,000 cases
or P858,500.

ANCO filed against FGU but the latter alleged that
ANCO and SMC failed to exercise diligence of a good father of
the family in the care and supervision of the cargoes, thus it
should be exempted from liability.

ISSUE:
Whether or not FGU should be exempted from liability
for the lost cargoes because of negligence of ANCO.

RULING:
FGU should be exempted from liability. To be
exempted from responsibility, the natural disaster should have
been the proximate and only cause of the loss. There must
have been no contributory negligence on the part of the
common carrier.

In the case at bar, there was blatant negligence on
the part of M/T ANCOs crew members, first in leaving the
engine-less barge D/B Lucio at the mercy of the storm without
the assistance of the tugboat, and again in failing to heed the
request of SMCs representatives to have the barge transferred
to a safer place.

When evidence show that the insureds negligence or
recklessness is so gross as to be sufficient to constitute a
willful act, the insurer must be exonerated. ANCOs employees
are of such gross character that it amounts to a wrongful act
which must exonerate FGU from liability under the insurance
contract.

GULF RESORTS INC. vs. PHILIPPINE CHARTER INSURANCE
CORPORATION
[G.R. No. 156167 May 16, 2005] 458 SCRA 550

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 were 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 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 inconsequence of
earthquake.

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:

Did the policy covered only the two swimming pools
owned by Gulf Resorts and did not extend to all properties
damaged therein?

RULING:

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.

PHIL. CHARTER INSURANCE CORP. vs. CHEMOIL
LIGHTERAGE CORP.
462 SCRA 77; June 29, 2005

FACTS:

A shipment of 62.06 metric tons of liquid chemical
Dioctyl Phthalate (or DOP) was shipped to consignee Plastic
Group Phils., Inc. (or PGP) in Manila.

PGP insured the cargo with Philippine Charter
Insurance Corporation as the insurer. The cargo was unloaded
to the tanker barge of Chemoil Lighterage Corp., a common
carrier, which transported the goods to Del Pan Bridge in Pasig
River. When the cargo was received by PGP, the chemical
showed discoloration from yellowish to amber, demonstrating
that it was damaged.

PGP sought recovery from its insurer, Phil. Charter
Insurance, which paid the amount of the loss. PGP, thereafter,
issued a Subrogation Receipt to the Phil. Charter Insurance.

An action for damages was instituted by the
petitioner-insurer (Phil. Charter Insurance) against respondent-
carrier (Chemoil).

Respondent carrier refused to pay the damages to the
insurer, contending that the consignee (PGP) failed to file any
notice, claim or protest within the period required by law which
is a condition precedent to the accrual of a right of action
against the carrier.

The carrier alleged that the telephone call made by a
certain employee of PGP, to one of the Vice Presidents of
Chemoil, informing the latter of the discoloration, is not the
notice required by Article 366 of the Code of Commerce.

ISSUE:

Whether or not a notice of claim filed with the carrier
within the prescribe period is indispensible in order that the
insurer-subrogee can claim damages against the carrier.

RULING:

A notice of claim to the carrier is indispensible before
the insurer-subrogee can recover from the carrier. Art. 366 of
the Code of Commerce requires that a notice or claim must be
made against the carrier of the goods, in case of damage,
within 24 hours following the receipt of the goods.

The telephone call made by the PGP (consignee of
the goods) was not a substantial compliance to the required
notice. Aside from the telephone call, there was no other proof
that a notice was relayed or filed with the carrier immediately or
within 24 hours from the time the goods were received.

The requirement that a notice of claim should be filed
within the period stated by Article 366 of the Code of
Commerce is not an empty or worthless proviso. The filing of a
claim with the carrier within the time limitation therefore
actually constitutes a condition precedent to the accrual of a
right of action against a carrier for loss of, or damage to, the
goods. The shipper or consignee must allege and prove the
fulfillment of the condition. If it fails to do so, no right of action
against the carrier can accrue in favor of the former.



SULPICIO LINES vs. FIRST LEPANTO
462 SCRA 125 / June 29, 2005

FACTS:

Delbros, Inc. (DELBROS) engaged the services of
Sulpicio Lines, Inc. (SULPICIO) to transport shipment of goods
consisting of 3 wooden crates, from Cebu to Manila. The
goods were owned by Taiyo Yuden Philippines, Inc. (owner of
the goods) and were covered by a marine insurance policy
issued by First Lepanto-Taisho Insurance Corporation
(LEPANTO).

However, during the unloading at the pier in Manila,
one crate fell. It was found to be externally damaged and was
no longer usable for their intended purpose hence it was sent
back to Cebu.

The owner of the goods filed a claim with DELBROS
for reimbursement. Upon the latters refusal, the owner then
sought payment from its insurer, LEPANTO. LEPANTO paid
the owner of the goods and then sought for reimbursement
from DELBROS and SULPICIO, which claims were
subsequently denied.

LEPANTO alleges that payment to owner of the
goods subrogated it to whatever right or legal action the owner
of the goods may have against DELBROS and SULPICIO.

DELBROS in its defense claims that assuming the
contents of the crate in question were truly in bad order, the
fault is with SULPICIO which was responsible for the unloading
of the crates.

SULPICIO, however, insists that it was only the
external packaging that was damaged, and that there was no
actual damage to the goods such that would make them liable.
According to it, damage to the packaging is not tantamount to
damage to the cargo.

ISSUE:

Whether or not Sulpicio Lines, Inc. is liable to the
owner of the goods, and if so, to what extent is its liability.

RULING:

Sulpicio Lines, Inc. is liable to the owner of the goods.
The damage sustained by the packaging of cargo while in
SULPICIOs custody resulted in its unfitness to be transported
to Singapore. Such failure to ship the cargo to its final
destination because of the ruined packaging, indeed, resulted
in damages on the part of the owner of the goods.

As to its extent of liability, since insurer LEPANTO
paid the owner of the goods under the insurance policy,
SULPICIO is liable to pay the amount paid by LEPANTO for
the damages sustained by the owner of the goods
(P194,220.31).










PHILIP S. YU vs. HON. COURT OF APPEALS, and VIVECA LIM
YU 476 SCRA 443 / Nov. 29, 2005

FACTS:
Private respondent Viveca Lim Yu brought against her
husband, Petitioner Philip Sy Yu, an action for legal separation and
dissolution of conjugal partnership on the grounds of marital
infidelity and physical abuse.

During trial, Viveca moved for the issuance of
a subpoena duces tecum and ad testificandum to certain officers
of Insular Life Assurance Co. Ltd. to compel production of the
insurance policy and application of a person suspected to be
petitioners illegitimate child.

The trial court denied the motion. It ruled that the
insurance contract is inadmissible evidence in view of Circular
Letter No. 11-2000, issued by the Insurance Commission which
presumably prevents insurance companies/agents from divulging
confidential and privileged information pertaining to insurance
policies. It added that the production of the application and
insurance contract would violate Article 280 of the Civil Code and
Section 5 of the Civil Registry Law, both of which prohibit the
unauthorized identification of the parents of an illegitimate child.

Private respondent sought reconsideration of the Order,
but the motion was denied by the trial court.

Aggrieved, Viveca filed a petition for certiorari before the
Court of Appeals. It declared that petitioners objection to the
admission of the documents was premature, and the trial courts
pronouncement that the documents are inadmissible, precipitate.
Private respondent was merely seeking the production of the
insurance application and contract, and was not yet offering the
same as part of her evidence.

Also, she contends that the insurance application and
insurance documents cannot be considered as privileged
information. Petitioner filed a motion for reconsideration but to no
avail. Hence, this appeals.

ISSUES:
1. Is the trial court correct in denying the motion of
Viveca for issuance of subpoena?

2. Can an application for insurance and an
insurance policy be admissible as evidence?

RULING:
1. No, The insurance application and the
insurance policy were yet to be presented in
court, much less formally offered before it. In
fact, private respondent was merely asking for
the issuance of subpoena
ducestecum and subpoena ad
testificandum when the trial court issued the
assailed Order.

Even assuming that the documents would
eventually be declared inadmissible, the trial
court was not then in a position to make a
declaration to that effect at that point. Thus, it
barred the production of the subject documents
prior to the assessment of its probable worth.
Thus, in declaring that the documents are
irrelevant and inadmissible even before they
were formally offered, much less presented
before it, the trial court acted in excess of its
discretion.



2. Yes, Anent the issue of whether the information
contained in the documents is privileged in
nature, the same was clarified and settled by
the Insurance Commissioners opinion that the
circular on which the trial court based its ruling
was not designed to obstruct lawful court
orders. Hence, there is no more impediment to
presenting the insurance application and policy.



DANZAS CORPORATION VS. ABROGAR
486 SCRA 80 (2005)

FACTS:

Danzas Corporation (Danzas) took a shipment of nine
packages of ICS watches for transport to Manila. The
consignee, International Freeport Traders, Inc. (IFTI) secured a
marine risk note from Seaboard Eastern Insurance (Seaboard).

On arrival via Korean Airlines (KAL), and upon
withdrawal, IFTI discovered that several watches were missing.
Seaboard, as insurer, paid the losses to IFTI, and invoking its
right of subrogation, filed a complaint against KAL.

While the case was pending, IFTI accepted the
proposal of KAL to settle consignees claim and then signed a
release form.

Danzas filed a motion to dismiss the case on the
ground that Seaboards demand had been paid or otherwise
extinguished by KAL. The trial court issued an order denying
the motion to dismiss, hence the certiorari under Rule 65
before the Supreme Court.

ISSUE:

Was Seaboards right of subrogation extinguished
when IFTI received payment from KAL in settlement of its
obligation?

RULING:

No. One of the many exceptions to the rule of
subrogation is if the assured by his own act releases the
wrongdoer or third party liable for the loss or damage from
liability, the insurers right of subrogation is defeated.

However, KAL, the wrongdoer, was fully aware of the
prior payment made by the insurer, Seaboard, to the
consignee, IFTI, evidencing bad faith during the time it made
such settlement. Now there exists a wealth of U.S.
jurisprudence holding that whenever the wrongdoer settles with
the insured without the consent of the insurer and with
knowledge of the insurers payment and right of subrogation,
such right is not defeated by the settlement.












GAISANO CAGAYAN, INC. VS INSURANCE COMPANY OF
NORTH AMERICA
490 SCRA 286 / June 8, 2006

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.

On February 25, 1991, Gaisano Superstore Complex in
Cagayan de Oro City, containing the ready-made clothing
materials sold and delivered by IMC and LSPI was consumed by
fire.

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.

Petitioner argued that it cannot be held liable because it
was destroyed due to fortuities event or force majeure.

RTC decided that IMC and LSPI retained ownership of
the delivered goods until fully paid, it must bear the loss (res perit
domino).

CA Reversed saying that sales invoices is an exception
under Article 1504 (1) of the Civil Code to res perit domino.

ISSUE:
Can Insurance Company of North America claim against
Gaisano Cagayan for the debt that was insured?

RULING:
YES. Petition is partly GRANTED.

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. 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.

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.

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.
Under 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.


PRUDENTIAL GUARANTEE & ASSURANCE vs. TRANS-ASIA
491 SCRA 411 / June 20, 2006

FACTS:
TRANS-Asia is the owner of the vessel M/V Asia Korea.
PRUDENTIAL insured M/V Asia Korea for loss/damage of the hull
and machinery arising from perils, inter alia, of fire and explosion.
This is evidenced by Marine Policy No. MH93/1363.

While the policy was in force, a fire broke out while [M/V
Asia Korea was] undergoing repairs at the port of Cebu which
prompted TRANS-ASIA to file its notice of claim for damage
sustained by the vessel with a reservation of its right to
subsequently notify Prudential to the full amount of the claim upon
final survey and determination by average adjuster of the damage
sustain by reason of fire.

Later, TRANS-Asia executed a document denominated
Loan and Trust Receipt a loan without interest under the Policy
availed by Trans-asia, repayable only in the event and to the
extent that any net recovery is made by the latter.

After the loan was released Prudential sent a letter to
TRANS-ASIA stating that the formers claim under the insurance is
denied for having been in breach of policy conditions, among them
WARRANTED VESSEL CLASSED AND CLASS MAINTAINED
and that the claim is not compensable and demanding the return of
the amount released under loan.

It interpreted the provision to mean that TRANS-ASIA is
required to maintain the vessel at a certain class at all times
pertinent during the life of the policy. According to the court a quo,
TRANS-ASIA failed to prove compliance of the terms of the
warranty, the violation thereof entitled PRUDENTIAL, the insurer,
to rescind the contract.

ISSUE:
Is TRANS-ASIA entitled to claim under the policy?

RULING:
Yes. The supreme court find that the Court of Appeals
was in no error when it held that PRUDENTIAL, in renewing
TRANS-ASIAs insurance policy for two consecutive years after
the loss covered by Policy No. MH93/1363, was considered to
have waived TRANS-ASIAs breach of the subject warranty, if any.

Breach of a warranty or of a condition renders the
contract defeasible at the option of the insurer; but if he so elects,
he may waive his privilege and power to rescind by the mere
expression of an intention so to do. In that event his liability under
the policy continues as before. There can be no clearer intention of
the waiver of the alleged breach than the renewal of the policy
insurance granted by PRUDENTIAL to TRANS-ASIA in
MH94/1595 and MH95/1788, issued in the years 1994 and 1995,
respectively.


CIR vs. PHILHEALTH CARE PROVIDERS INC.
April 24, 2007

FACTS:

The Philippine Health Care Providers, Inc., herein
respondent, is a corporation organized to establish, maintain,
conduct and operate a prepaid group practice health care delivery
system or a health maintenance organization to take care of the
sick and disabled persons enrolled in the health care plan and to
provide for the administrative, legal, and financial responsibilities of
the organization.

On December 10, 1987, respondent wrote the
Commissioner of Internal Revenue (CIR), petitioner, inquiring
whether the services it provides to the participants in its health
care program are exempt from the payment of the VAT.

Petitioner CIR, through the VAT Review Committee of
the Bureau of Internal Revenue (BIR), issued VAT Ruling No. 231-
88 stating that respondent, as a provider of medical services, is
exempt from the VAT coverage. This Ruling was subsequently
confirmed by Regional Director Osmundo G. Umali of Revenue
Region No. 8.

On January 27, 2000, petitioner CIR sent respondent a
letter demanding payment of "deficiency VAT" DST in the amount
of P224,702,641.18 for taxable years 1996 and 1997.

Respondent filed protest questioning the assessment
notices with the Court of Tax Appeals (CTA) to which the latter
partially granted the petition for review and ordered respondent to
pay the deficiency VAT and petitioner is ordered to desist from
collecting the said DST.

ISSUE:

Are the respondent's services subject to VAT?

RULING:

Yes, Section 103 of the the National Internal Revenue
Code of 1977, as amended by E.O. No. 273 (VAT Law) and R.A.
No. 7716 (E-VAT Law specifies the exempt transactions from the
provision of Section 102, thus:

SEC.103. Exempt Transactions. - The following shall be
exempt from the value-added tax:
(l) Medical, dental, hospital and veterinary services
except those rendered by professionals.

The import of the above provision is plain as it
contemplates the exemption from VAT of taxpayers engaged in the
performance of medical, dental, hospital, and veterinary services.

In its letter to the BIR requesting confirmation of its VAT-
exempt status, respondent described its services as a prepaid
group practice health care delivery system where individuals
enrolled in Health Care's health care program are entitled to
preventive, diagnostic, and corrective medical services to be
dispensed by Health Care's duly licensed physicians, specialists,
and other professional technical staff.

To be entitled to receive such medical services from
Health Care, an individual must enroll in Health Care's health care
program and pay an annual fee. Enrollment in Health Care's health
care program is on a year-to-year basis and enrollees are issued
identification cards.

Perforce, as respondent does not actually provide
medical and/or hospital services, as provided under Section 103
on exempt transactions, but merely arranges for the same, its
services are not VAT-exempt.
Ong Lim Sing , Jr. FEB Leasing & Finance Corp
524 SCRA 333 / 8 June 2007

FACTS:

On March 9, 1995, FEB Leasing and Finance
Corporation (FEB) entered into a lease of equipment and
motor vehicles with JVL Food Products (JVL).

On the same date, Vicente Ong Lim Sing, Jr. (Lim)
executed an Individual Guaranty Agreement with FEB to
guarantee the prompt and faithful performance of the terms
and conditions of the aforesaid lease agreement.

Corresponding Lease Schedules with Delivery and
Acceptance Certificates over the equipment and motor
vehicles formed part of the agreement. Under the contract,
JVL was obliged to pay FEB an aggregate gross monthly rental
of One Hundred Seventy Thousand Four Hundred Ninety-Four
Pesos (P170,494.00).

JVL defaulted in the payment of the monthly
rentals. As of July 31, 2000, the amount in arrears, including
penalty charges and insurance premiums, amounted to Three
Million Four Hundred Fourteen Thousand Four Hundred Sixty-
Eight and 75/100 Pesos (P3,414,468.75).

On August 23, 2000, FEB sent a letter to JVL
demanding payment of the said amount. However, JVL failed
to pay.

On December 6, 2000, FEB filed a Complaint with the
Regional Trial Court of Manila, docketed as Civil Case No. 00-
99451, for sum of money, damages, and replevin against JVL,
Lim, and John Doe.

ISSUE:

Does a lessee have an insurable interest in the
equipments?

RULING:

Yes, The stipulation in Section 14 of the lease
contract, that the equipment shall be insured at the cost and
expense of the lessee against loss, damage, or destruction
from fire, theft, accident, or other insurable risk for the full term
of the lease, is a binding and valid stipulation.

Petitioner, as a lessee, has an insurable interest in
the equipment and motor vehicles leased. Section 17 of the
Insurance Code provides that the measure of an insurable
interest in property is the extent to which the insured might be
damnified by loss or injury thereof. It cannot be denied that
JVL will be directly damnified in case of loss, damage, or
destruction of any of the properties leased.












ETERNAL GARDENS VS PHIL. AMERICAN LIFE
FACTS
Eternal and PhilAm Life entered into a Group
Insurance Policy wherein those who purchase burial lots from
Eternal Gardens automatically becomes one of the insured in
the said group insurance policy.
One purchaser of the burial lots named Jhon Chuang
died. Phil Am Life filed a claim for the proceeds.
The claim was denied on the ground that the
application of Jhon Chuang, sent more than a year ago, was
not yet approved by Phil Am Life.
Insurer further avers that mere acceptance of the
premium paid by Eternal did not mean that said application
was already approved.
ISSUE
May the inaction of the insurer on the insurance
application be considered as an approval of the application?
RULING
Yes. mere inaction of the insurer on the insurance
application must not work to prejudice the insured; it cannot be
interpreted as a termination of the insurance contract.
The termination of the insurance contract by the
insurer must be explicit and unambiguous. In order to protect
the interest of insurance applicants, insurance companies must
be obligated to act with haste upon insurance applications, to
either deny or approve the same, or otherwise be bound to
honor the application as a valid, binding, and effective
insurance contract.





























LALICAN vs. THE INSULAR LIFE CO.
597 SCRA 159

FACTS:

Eulogio Lalican applied for insurance with Insular Life
thru the latters agent, Malaluan, with his wife Violeta as the
beneficiary.

A policy was issued in his favor. It is a 20-year
endowment plan with the total value of 1.5M. The premiums
are payable on a quarterly basis until the end of the 20 year
period.

He failed to pay on the due date for the third quarter
and also was not able to tender payment after the lapse of 31
days grace period.

Consequently his policy has lapsed and avoided by
non-payment of premium. Eulogio went to the residence of the
agent Malaluan and applied for reinstatement of the lapsed
policy. He gave all the requirements including the amount
which is enough to cover all the unpaid premiums and
interests.

Unfortunately, on the same day of his application for
reinstatement and few hours thereafter, Eulogio died of cardiac
arrest.

After a few days, Violeta filed a claim of payment of
full proceeds of the policy. Insular Life refused her claim saying
that said policy has lapsed and Elugio has failed to comply with
the requirements of reinstatement one of which states policy is
reinstated upon the approval of the company during the lifetime
and Good health of Eulogio.

Violeta sued to recover the amount with the RTC.
One of her principal contention is that as stated under Section
19 of the Insurance Code, Insurable interest in Life Insurance
policies need not exist in the time of loss.

RTC ruled in favor of Insular Life holding that Violeta
cannot recover from a lapsed and void policy and that mere
payment to the agent does not result into an automatic
reinstatement.

ISSUE:

May Violeta recover the proceeds from the policy?

RULING:

No. The death of Eulogio has made it impossible for
him to comply with the conditions of reinstatement.

The privilege of reinstatement does not give the
insured an absolute right to reinstatement by mere filing of
application. The insurer has the right to deny reinstatement if it
is not satisfied as to the insurability of the insured.

Moreover, after the death of the insured, the
Insurance Company cannot be compelled to accept application
for reinstatement since condition precedent for reinstatement
can no longer be determined or satisfied.