VIRGINIA CALANOC vs PHILIPPINE AMERICAN LIFE INSURANCE CO

G.R. No. L-8151        December 16, 1955

FACTS: Melencio Basilio was a watchman of the Manila Auto Supply. He secured a life insurance policy from the Philippine American Life Insurance Company in the amount of P2,000 to which was attached a supplementary contract covering death by accident. On January 25, 1951, he died of a gunshot wound on the occasion of a robbery committed in the house of Atty. Ojeda. Virginia Calanoc, the widow, was paid the sum of P2,000, face value of the policy, but when she demanded the payment of the additional sum of P2,000 representing the value of the supplemental policy, the company refused alleging, as main defense, that the deceased died because he was murdered by a person who took part in the commission of the robbery and while making an arrest as an officer of the law which contingencies were expressly excluded in the contract and have the effect of exempting the company from liability.

ISSUE: Whether Basilio’s death was accidental or caused by one of the risks excluded by the supplementary contract which exempts the company from liability.

HELD: Accidental. There is no proof that the death of Basilio is the result of assault or murder for the record is barren of any circumstance showing how the fatal shot was fired. Nor can it be said that the killing was intentional for there is the possibility that the malefactor had fired the shot merely to scare away the people around for his own protection and not necessarily to kill or hit the victim. The victim could have been either the policeman or Atty. Ojeda for it cannot be pretended that the malefactor aimed at the deceased precisely because he wanted to take his life. Basilio cannot be considered as making an arrest as an officer of the law, as contended, simply because he went with the traffic policeman, for certainly he did not go there for that purpose nor was he asked to do so by the policeman.

While as a general rule the parties may limit the coverage of the policy to certain particular accidents and risks or causes of loss, and may expressly except other risks or causes of loss therefrom, it is to be desired that the terms and phraseology of the exception clause be clearly expressed so as to be within the easy grasp and understanding of the insured. For if the terms are doubtful or obscure the same must of necessity be interpreted or resolved against the one who has caused the obscurity so as to effect the dominant purpose of indemnity or payment to the insured, especially where a forfeiture is involved.

EMILIA T. BIAGTAN vs THE INSULAR LIFE ASSURANCE COMPANY

G.R. No. L-25579 March 29, 1972

FACTS: Juan S. Biagtan was insured with defendant InsularLife Assurance Company for the sum of P5,000.00 and, under a supplementary contract denominated "Accidental Death Benefit Clause, for an additional sum of P5,000.00 if "the death of the Insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident ... and independently of all other causes. The clause, however, expressly provided that it would not apply where death resulted from an injury "intentionally inflicted by another party. On the night of May 20, 1964 a band of robbers entered the house of the insured Juan S. Biagtan. That in committing the robbery, the robbers, on reaching the staircase landing on the second floor, rushed towards the door of the second floor room, where they suddenly met a person near the door of oneof the rooms who turned out to be the insured Juan S. Biagtan who received thrusts from their sharp-pointed instruments, causing wounds on the body of said Juan S. Biagtan resulting in his death. Plaintiffs, as beneficiaries of the insured, filed a claim under the policy. The insurance company paid the basic amount of P5,000.00 but refused to pay the additional sum of P5,000.00 under the accidental death benefit clause, on the ground that the insured's death resulted from injuries intentionally inflicted by third parties and therefore was not covered.

ISSUE: Whether the wounds received by the insured at the hands of the robbers — nine in all, five of them mortal and four non-mortal — were inflicted intentionally.

HELD: Yes. It cannot be denied that the act itself of inflicting the injuries was intentional. Where a gang of robbers enter a house and coming face to face with the owner, even if unexpectedly, stab him repeatedly, it is contrary to all reason and logic to say that his injuries are not intentionally inflicted, regardless of whether they prove fatal or not. Nine wounds inflicted with bladed weapons at close range cannot conceivably be considered as innocent insofar as such intent is concerned. Thus, it has been held that "intentional" as used in an accident policy excepting intentional injuries inflicted by the insured or any other person, etc., implies the exercise of the reasoning faculties, consciousness and volition. Where a provision of the policy excludes intentional injury, it is the intention of the person inflicting the injury that is controlling.

FINMAN GENERAL ASSURANCE CORPORATION vs.THE HONORABLE COURT OF APPEALS

G.R. No. 100970 September 2, 1992

FACTS:

On October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman General Assurance Corporation with his parents, spouses Julia and Carlos Surposa, and brothers Christopher, Charles, Chester and Clifton, all surnamed, Surposa, as beneficiaries. While said insurance policy was in full force and effect, the insured, Carlie Surposa, died on October 18, 1988 as a result of a stab wound inflicted by one of the three (3) unidentified men. Private respondent and the other beneficiaries of said insurance policy filed a written notice of claim with the petitioner insurance company which denied said claim contending that murder and assault are not within the scope of the coverage of the insurance policy. Private respondent filed a complaint with the Insurance Commission which rendered a favorable response for the respondent. The appellate court ruled likewise.

Petitioner filed this petition alleging grave abuse of discretion on the part of the appellate court in applying the principle of "expresso unius exclusio alterius" in a personal accident insurance policy, since death resulting from murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the insured was not accidental but rather a deliberate and intentional act of the assailant. Therefore, said death was committed with deliberate intent which, by the very nature of a personal accident insurance policy, cannot be indemnified.

ISSUE: Whether or not the insurer is liable for the payment of the insurance premiums

HELD: Yes, the insurer is still liable. Contracts of insurance are to be construed liberally in favor of the insured and strictly against the insurer. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its beneficiary. The terms "accident" and "accidental" as used in insurance contracts have not acquired any technical meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms have been taken to mean that which happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. Where the death or injury is not the natural or probable result of the insured's voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the protection of the policies insuring against death or injury from accident. In the case at bar, it cannot be pretended that Carlie Surposa died in the course of an assault or murder as a result of his voluntary act considering the very nature of these crimes. Neither can it be said that where was a capricious desire on the part of the accused to expose his life to danger considering that he was just going home after attending a festival.

Furthermore, the personal accident insurance policy involved herein specifically enumerated only ten (10) circumstances wherein no liability attaches to petitioner insurance company for any injury, disability or loss suffered by the insured as a result of any of the stimulated causes. The principle of " expresso unius exclusio alterius" — the mention of one thing implies the exclusion of another thing — is therefore applicable in the instant case since murder and assault, not having been expressly included in

the enumeration of the circumstances that would negate liability in said insurance policy cannot be considered by implication to discharge the petitioner insurance company from liability for, any injury, disability or loss suffered by the insured. Thus, the failure of the petitioner insurance company to include death resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from liability for such death.

ZENITH INSURANCE vs CA

G.R. No. 85296. May 14, 1990

FACTS: Lawrence Fernandez insured his car for "own damage" with Zenith Insurance. The car figured in an accident and suffered actual damages in the amount of P3,640.00. After allegedly being given a run around by Zenith for two (2) months, Fernandez filed a complaint for sum of money and damages resulting from the refusal of Zenith to pay the amount claimed. Aside from actual damages and interests, Fernandez also prayed for more damages in the amount of P10,000.00, exemplary damages of P5,000.00, attorney's fees of P3,000.00 and litigation expenses of P3,000.00. A decision was rendered by the trial court in favor of private respondent Fernandez. The Court of Appeals rendered its decision affirming in toto the decision of the trial court. Zenith Insurance appeals the case and contends that while the complaint of Fernandez prayed for P10,000.00 moral damages, the lower court awarded twice the amount, or P20,000.00 without factual or legal basis; while Fernandez prayed for P5,000.00 exemplary damages, the trial court awarded P20,000.00; and while Fernandez prayed for P3,000.00 attorney's fees, the trial court awarded P5,000.00.

ISSUE: Whether or not the award of moral damages, exemplary damages and attorney's fees is proper.

HELD: No. Under the Insurance Code, in case of unreasonable delay in the payment of the proceeds of an insurance policy, the damages that may be awarded are: 1) attorney's fees; 2) other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment; 3) interest at twice the ceiling prescribed by the Monetary Board of the amount of the claim due the injured; and 4) the amount of the claim. That in awarding moral damages in case of breach of contract, there must be a showing that the breach was wanton and deliberately injurious or the one responsible acted fraudulently or in bad faith. The act of Zenith Insurance in delaying payment for two months cannot be considered as so wanton or malevolent to justify an award of P20,000.00 as moral damages, taking into consideration also the fact that the actual damage on the car was only P3,460. In the pre-trial of the case, it was shown that there was no total disclaimer by Fernandez. The reason for Zenith Insurance’s failure to indemnify Fernandez within the two-month period was that the parties could not come to an agreement as regards the amount of the actual damage on the car. The amount of P10,000.00 prayed for by private respondent as moral damages is equitable. Exemplary damages will not be awarded as the insurance company had not acted in wanton, oppressive or malevolent manner. The awards due to private respondent Fernandez are as follows: 1)P3,640.00 as actual claim plus interest of twice the ceiling prescribed by the Monetary Board computed from the time of submission of proof of loss; 2)P10,000.00 as moral damages; 3)P5,000.00 as attorney's fees; 4)P3,000.00 as litigation expenses and 5)Costs

SUN INSURANCE OFFICE vs CA; NERISSA LIM

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

FACTS: Nerissa Lim's husband, Felix Lim, Jr., was issued a personal accident policy. Two months later, he was dead with a bullet wound in his head. Pilar Nalagon, Lim's secretary, was the only eyewitness to his death. It happened after his mother's birthday party. According to Nalagon, Lim was in a happy mood (but not drunk) and was playing with his handgun, from which he had previously removed the magazine. As she watched the television, he stood in front of her and pointed the gun at her. She pushed it aside and said it might be loaded. He assured her it was not and then pointed it to his temple. The next moment there was an explosion and Lim slumped to the floor. He was dead before he fell. As beneficiary, Nerissa Lim sought payment on the policy but her claim was rejected. Sun Insurance agreed that there was no

suicide. It argued, however, that there was no accident either. It further argued that there is no accident when a deliberate act is performed unless some additional, unexpected, independent and unforeseen happening occurs which produces or brings about their injury or death. That Felix Li, Jr. willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy.

ISSUE: Whether or not Felix Lim willfully exposed himself to needless peril, thereby removing himself from the coverage of the insurance policy.

HELD: No. Lim did not willfully expose himself to needless peril when he pointed the gun to his temple because the fact is that he thought it was not unsafe to do so. The act was precisely intended to assure Nalagon that the gun was indeed harmless. Lim was unquestionably negligent and that negligence cost him his own life. But it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. Indeed, most accidents are caused by negligence. There are only four exceptions expressly made in the contract to relieve the insurer from liability, and none of these exceptions is applicable in the case at bar. It bears noting that insurance contracts are as a rule supposed to be interpreted liberally in favor of the assured.

VILLACORTA vs INSURANCE COMMISSION

G.R. No. L-54171. October 28, 1980

FACTS: Petitioner Jewel Villacorta vehicle was brought to the Sunday Machine Works, Inc., for general check-up and repairs. While it was in the custody of the shop, the car was allegedly taken by six persons and driven out. While travelling, the car figured in an accident. The driver, Benito Mabasa, and one of the passengers died and the other four sustained physical injuries. The car, as well, suffered extensive damage. Villacorta, thereafter, filed a claim for total loss with Empire Insurance but claim was denied. Hence, Villacorta was compelled to institute an action. Empire Insurance contended 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. The Insurance Commission decided in favor of Empire Insurance holding under "Authorized Driver" clause, if the person driving is other than the insured, he must have been duly authorized by the insured, to drive the vehicle to make the Insurance company liable for the driver's negligence. With the declarations of Villacorta and her husband that they did not Mabasa nor consented to the use of the car, the Commission hold that Mabasa, is not an authorized driver of the Villacorta, thus, a violation of the 'Authorized Driver' clause of the policy. Commission likewise upheld Empire Insurance’s assertion that the car was not stolen and therefore not covered by the Theft clause, ruling that the fact that the car was taken by one of the residents of the Sunday Machine Works, and the withholding of the same, for a joy ride should not be construed to mean 'taking' under the Revised Penal Code. If at all there was a 'taking', the same was merely temporary in nature. A temporary taking is held not a taking insured against.

ISSUE: (1) Whether or not Mabana is an “authorized driver” under the policy; (2) Whether or not Empire Insurance is liable under the theft clause of the policy.

HELD: (1) Yes. A car owner who entrusts his car to an established car service and repair shop necessarily entrusts his car key to the shop owner and employees who are presumed to have the insured's permission to drive the car for legitimate purposes of checking or road-testing the car. The mere happenstance that the employee(s) of the shop owner diverts the use of the car to his own illicit or unauthorized purpose in violation of the trust reposed in the shop by the insured car owner does not mean that the "authorized driver" clause has been violated such as to bar recovery, provided that such employee is duly qualified to drive under a valid driver's license. The situation is no different from the regular or family driver, who instead of carrying out the owner's order to fetch the children from school takes out his girlfriend instead for a joy ride and instead wrecks his girlfriend, este the car.

(2) Yes. 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 evident since he derives therefrom utility, satisfaction, enjoyment and pleasure. It is equally evident that the taking proved to be quite permanent rather than temporary, for the car was totally smashed in the fatal accident and was never returned in serviceable and useful condition to Villacorta.

ANDREW PALERMO vs PYRAMID INSURANCE CO

G.R. No. L-36480. May 31, 1988

FACTS: After having purchased a brand car, Andrew Palermo insured the same with Pyramid Insurance against any loss or damage for P20,000.00 and against third party liability for P10,000.00. Palermo paid Pyramid Insurance P361.34 premium for one year, for which defendant issued Private Car Comprehensive Policy. The automobile was, however, mortgaged by Palermo with the vendor, Ng Sam Bok Motors Co., to secure the payment of the balance of the purchase price. While driving the automobile in question, Palermo met a violent accident. The La Carlota City fire engine crashed head on, and as a consequence, the plaintiff sustained physical injuries, his father, Cesar Palermo, who was with him in the car at the time was likewise seriously injured and died shortly thereafter, and the car in question was totally wrecked. The insurance policy grants an option unto the defendant, in case of accident either to indemnify the plaintiff for loss or damage to the car in cash or to replace the damaged car. Pyramid Insurance, however, refused to take either of the above-mentioned alternatives for the reason as alleged, that the insured himself had violated the terms of the policy when he drove the car in question with an expired driver's license. The court ordered the defendant to pay the plaintiff the sum of P20,000.00, value of the insurance of the motor vehicle. Pyramid Insurance alleges that the court erred in interpreting the provision of the policy regarding 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 the licensing or other laws or regulations to drive the Motor Vehicle and is not disqualified from driving such motor vehicle by order of a Court of law or by reason of any enactment or regulation in that behalf.”

ISSUE: Whether or not Palermo is an authorized driver" under the insurance policy considering that his driver's license had expired at the time of the accident.

HELD: Duh. The driver of the insured motor vehicle at the time of the accident was the insured himself, hence an "authorized driver" under the policy. While the Motor Vehicle Law prohibits a person from operating a motor vehicle on the highway without a license or with an expired license, an infraction of the Motor Vehicle Law on the part of the insured, is not a bar to recovery under the insurance contract. It however renders him subject to the penal sanctions of the Motor Vehicle Law. The requirement that the driver be "permitted in accordance with the licensing or other laws or regulations to drive the Motor Vehicle and is not disqualified from driving such motor vehicle by order of a Court of Law or by reason of any enactment or regulation in that behalf," applies only when the driver "is driving on the insured's order or with his permission." It does not apply when the person driving is the insured himself.

FIGURACION VDA. DE MAGLANA vs CONSOLACION

G.R. No. 60506. August 6, 1992

FACTS: Lope Maglana was on his way to his work station, driving a motorcycle, he met an accident that resulted in his death. He died on the spot. The PUJ jeep that bumped the deceased was driven by Pepito Into, operated and owned by defendant Destrajo. The heirs of Lope Maglana, Sr., here petitioners, filed an action for damages and attorney's fees against operator Patricio Destrajo and AFISCO. An information for homicide thru reckless imprudence was also filed against Pepito Into. The lower court rendered a decision finding that Destrajo had not exercised sufficient diligence as the operator of the jeepney. Destrajo was ordered to pay the plaintiffs the sum of P12,000.00 and P5,000.00 as moral damages, which amount shall be deducted in the event judgment in the criminal case against Into shall have been enforced. AFISCO is also ordered to reimburse defendant Destrajo whatever amounts the latter shall

have paid only up to the extent of its insurance coverage. Petitioners filed a motion for the reconsideration of the second paragraph of the dispositive portion of the decision contending 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." Petitioners argued their position that AFISCO is directly and solidarily liable with Destrajo up to the extent of its insurance coverage.

ISSUE: Whether AFISCO is directly and/or solidarily liable with Destrajo.

HELD: The provision in the insurance contract between AFISCO and Destrajo leads to no other conclusion but that AFISCO can be held directly liable by petitioners. AFISCO will pay all sums of money to discharge the liability of the insured in cases of death or injury to third parties. Where an insurance policy insures directly against liability, the insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends, and does not depend on the recovery of judgment by the injured party against the insured. Since petitioners had received from AFISCO the sum of P5,000.00 under the no-fault clause, AFISCO's liability is now limited to P15,000.00.

However, we cannot agree that AFISCO is likewise solidarily liable with Destrajo. 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. Thus, petitioner therein, which, under the insurance contract is liable only up to P20,000.00, cannot be made solidarily liable with the insured for the entire obligation of P29,013.00 otherwise there would result "an evident breach of the concept of solidary obligation." 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. 12 As such, petitioners 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.

PERLA COMPANIA DE SEGUROS vs. CA, HERMINIO LIM and EVELYN LIM

G.R. No. 96452. May 7, 1992

FACTS: Herminio and Evelyn Lim purchased a Ford Hatchback 1981 model car and insured with Perla Compania de Seguros, Inc. (PERLA) for comprehensive coverage including theft. On November 9, 1982, said vehicle was carnapped. Evelyn Lim, who was driving said car before it was carnapped, immediately called up the Anti- Carnapping Unit of the Philippine Constabulary to report said incident and thereafter, went to the nearest police substation to make a police report regarding said incident. Lim then filed a claim for loss with the Perla Insurance but said claim was denied on the ground that Evelyn Lim, who was using the vehicle before it was carnapped, was in possession of an expired driver's license at the time of the loss of said vehicle which is in violation of the authorized driver clause of the insurance policy.

ISSUE: Whether or not Evelyn Lim violated the insurance contract because the authorized driver clause.

HELD: No. The comprehensive motor car insurance policy issued by Perla Insurance undertook to indemnify the private respondents against loss or damages to the car (a) by accidental collision or overturning, or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear; (b) by fire, external explosion, self-ignition or lightning or burglary, housebreaking or theft; and (c) by malicious act. Where a car is admittedly, as in this case, unlawfully and wrongfully taken without the owner's consent or knowledge, such taking constitutes theft, and, therefore, it is the "THEFT" clause, and not the "AUTHORIZED DRIVER" clause, that should apply. There is no causal connection between the possession of a valid driver's license and the loss of a vehicle. To rule otherwise would render car insurance practically a sham since an insurance company can easily escape liability by citing restrictions which are not applicable or germane to the claim, thereby reducing indemnity to a shadow.

GEAGONIA vs CA and COUNTRY BANKERS INSURANCE CORPORATION

G.R. No. 114427. February 6, 1995

FACTS: Armando Geagonia is the owner of Norman’s Mart and obtained from Country Bankers a fire insurance policy which covered Stock-in-trade consisting of RTW dry goods. The policy contained a provision where the insured must give notice to the insurer of any insurance or insurances already affected or which may be subsequently be effected covering any of the property or properties consisting of stocks in trade, goods in process and/or inventories already insured by such policy otherwise it shall be deemed forfeited, provided that such condition does not apply when the total insurance or insurances in force at the time of the loss is not more than 200k. Subsequently, a fire broke out and destroyed Geagonia’s stocks-in-trade. Country bankers denied the claim because it was found that at the time of the loss, the stocks were likewise covered by two other fire insurances for 100k each by PFIC. It had a mortgage clause which stated that loss, if any, shall be payable to Cebu Tesing Textiles.

ISSUE: Whether or not there was double insurance to justify denial of the claim

HELD: NO (Country Bankers is liable. The condition in the policy is commonly known as the additional or “other insurance” clause and has been upheld as valid and as a warranty that no other insurance exists. Its violation would thus avoid the policy. However, in order to constitute a violation, the other insurance must be upon the same subject matter, the same insurable interest, and the same risk. As to a mortgaged property, the mortgagor and the mortgagee have each an independent insurable interest therein and both interests may be one policy, or each may take out a separate policy covering his interest, either at the same or separate times. The mortgagor’s insurable interest covers the full value of the mortgaged property, even though the mortgage debt is equivalent to the full value of the property. The mortgagee’s insurable interest is to the extent of the debt, since the property is relied upon as security thereof, and in insuring he is not insuring the property but his interest or lien thereon. A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and cover the same interest. Since the two policies of the PFIC do not cover the same interest as that covered by the policy in issue, no double insurance exists. The non-disclosure is not fatal.

FORTUNE INSURANCE vs CA

G.R. No. 115278. May 23, 1995

FACTS: On June 29, 1987, Producer’s Bank of the Philippines’ armored vehicle was robbed, in transit, of seven hundred twenty-five thousand pesos (Php 725,000.00) that it was transferring from its branch in Pasay to its main branch in Makati. To mitigate their loss, they claim the amount from their insurer, namely Fortune Insurance and Surety Co.

Fortune Insurance, however, assails that the general exemption clause in the Casualty Insurance coverage had a general exemption clause, to wit:"GENERAL EXCEPTIONSThe company shall not be liable under this policy in respect of

xxx xxx xxx(b)any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others. ..."

And, since the driver (Magalong) and security guard (Atiga) of the armored vehicle were charged with three others as liable for the robbery, Fortune denies Producer’s Bank of its insurance claim. According to Fortune, when Producers commissioned a guard and a driver to transfer its funds from one branch to another, they effectively and necessarily became its authorized representatives in the care and custody of the money. Assuming that they could not be considered authorized representatives, they were, nevertheless, employees of Producers. Fortune insists that PRC Management System and Unicorn Security Services are but "labor-only" contractors under the Labor Code, and a finding that a contractor is

a "labor-only" contractor is equivalent to a finding that there is an employer-employee relationship between the owner of the project and the employee of the "labor-only" contractor.

ISSUE: Whether or not recovery is precluded under the general exemption clause.

HELD: Yes, recovery is precluded under the general exemption clause. Even granting for the sake of argument that these contracts were not "labor-only" contracts, and PRC Management Systems and Unicorn Security Services were truly independent contractors, we are satisfied that Magalong and Atiga were, in respect of the transfer of Producer's money from its Pasay City branch to its head office in Makati, its "authorized representatives" who served as such with its teller Maribeth Alampay. Howsoever viewed, Producers entrusted the three with the specific duty to safely transfer the money to its head office, with Alampay to be responsible for its custody in transit; Magalong to drive the armored vehicle which would carry the money; and Atiga to provide the needed security for the money, the vehicle, and his two other companions. In short, for these particular tasks, the three acted as agents of Producers. A "representative" is defined as one who represents or stands in the place of another; one who represents others or another in a special capacity, as an agent, and is interchangeable with "agent."

EDILLON vs MANILA BANKERS LIFE

G.R. No. L-34200 September 30, 1982

FACTS: In April 1969, Carmen Lapuz filled out an application form for insurance under Manila Banker Life Assurance Corporation. She stated that her date of birth was July 11, 1904. Upon payment of the Php 20.00 premium, she was issued the insurance policy in April 1969. In May 1969, Carmen Lapuz died in a vehicular accident. Regina Edillon, who was named a beneficiary in the insurance policy sought to collect the insurance claim but Manila Banker denied the claim. Apparently, it is a rule of the insurance company that they were not to issue insurance policies to “persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years ...” Note, that Lapuz was already 65 years old when she was applying for the insurance policy.

ISSUE: Whether or not Edillon is entitled to the insurance claim as a beneficiary.

HELD: Yes. The age of the insured Carmen 0. Lapuz was not concealed to the insurance company. Her application for insurance coverage which was on a printed form furnished by private respondent and which contained very few items of information clearly indicated her age at the time of filing the same to be almost 65 years of age. There was sufficient time for the private respondent to process the application and to notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it was minded to do so. If the private respondent failed to act, it is either because it was willing to waive such disqualification; or, through the negligence or incompetence of its employees for which it has only itself to blame, it simply overlooked such fact. Under the circumstances, the insurance corporation is already deemed in estoppel. Its inaction to revoke the policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such condition.

PERLA COMPANIA DE SEGUROS vs CA, MILAGROS CAYAS

G.R. No. 78860. May 28, 1990

FACTS: Milagros Cayas was the registered owner of a Mazda bus. Said passenger vehicle was insured with Perla Compania de Seguros. On December 17, 1978, the bus figured in an accident injuring several of its passengers. Perea sued Milagros Cayas for damages; while three others agreed to a settlement of P4,000.00 each with Milagros Cayas.

After trial, the court rendered a decision in favor of Perea, Cayas 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 the RTC of Cavite, the dispositive portion of which states: IN VIEW OF THE FOREGOING, judgment is hereby rendered ordering Perla Compania to pay plaintiff Cayas the sum of P50,000.00 under its maximum liability as provided for in the insurance policy;In this petition for review on certiorari, Perla Compania seeks to limit its liability only to the payment made by Cayas 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 totaling P12,000.00.

ISSUE: How much should Perla Compania pay?

HELD: The insurance policy clearly and categorically placed Perla Compania’s liability for all damages arising out of death or bodily injury sustained by one person as a result of any one accident at P12,000.00. The insurance policy also provides:

5. 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 Perla Compania’s written consent be first secured before any payment in settlement of any claim could be made, Cayas is precluded from seeking reimbursement of the payments made to the other 3 victims 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. Although 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.

AISPORNA vs CA

G.R. No. L-39419 April 12, 1982

FACTS: Mapalad Aisporna, wife of a duly licensed insurance agent, was charged for violation of the first paragraph of SECTION 189 of the Insurance Act having acted as agent in the solicitation for insurance in favor of Eugenio Isidro for and in behalf of Perla Compania de Seguros, Inc. without having first secured a certificate of authority to act as such agent from the office of the Insurance Commission. The evidence disclosed at the trial was that petitioner merely left a note on top of her husband's desk informing the latter of Isidro's intention to renew his policy. The trial court found appellant guilty as charged. On appeal, the Court of Appeals construing the first paragraph of SECTION 189 independent from the two succeeding paragraphs, affirmed the judgment of conviction and held that the receipt of compensation for the issuance of an insurance policy is not an essential element for a violation of the first paragraph of SECTION 189 of the Insurance Act.

ISSUE: Whether or not a person can be convicted of having violated the first paragraph of SECTION 189 of the Insurance Act without reference to the second paragraph of the same SECTION.

HELD: No. The first paragraph of SECTION 189 prohibits a person from acting as agent, subagent or broker in the solicitation or procurement of applications for insurance without first procuring a certificate of authority so to act from the Insurance Commissioner, while its second paragraph defines who is an

insurance agent within the intent of this SECTION and, finally, the third paragraph thereof prescribes the penalty to be imposed for its violation. Considering that the definition of an insurance agent as found in the second paragraph is also applicable to the agent mentioned in the first paragraph, to receive compensation by the agent is an essential element for a violation of the first paragraph of SECTION 189; The appellate court has established ultimately that Mapala did not receive any compensation for the issuance of the insurance policy of Eugenio Isidro.

COUNTRY BANKERS INSURANCE vs LIANGA BAY AND COMMUNITY MULTI-PURPOSE COOPERATIVE

G.R. No. 136914            January 25, 2002

FACTS: For the loss it sustained fire as a result of the fire, Lianga Bay Cooperative filed an insurance claim with Country Bankers Insurance. The latter, however, denied the claim on the ground that based on the submitted documents, the building of Lianga Bay was set on fire by two NPA rebels who wanted to obtain provisions. This was an excepted risk under the policy contract.

ISSUE:

HELD: Where a risk is excepted by the terms of a policy which insures against other perils or hazards, loss from such a risk constitutes a defense which the insurer may urge, since it has not assumed that risk, and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation set up. If a proof is made of a loss apparently within a contract of insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is expected or for which it is not liable, or from a cause which limits its liability. Stated elsewise, since the petitioner in this case is defending on the ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy, it has the burden of proving the facts upon which such excepted risk is based, by a preponderance of evidence. But petitioner failed to do so

AMERICAN HOME ASSURANCE COMPANY vs. TANTUCO ENTERPRISES, INC.G.R. No. 138941October 8, 2001

FACTS:Respondent Tantuco Enterprises, Inc. is engaged in the coconut oil milling and refining industry. It owns two oil mills which were separately covered by fire insurance policies issued by petitioner American Home Assurance Co., Philippine Branch. The first oil mill was insured for P3,000,000.00 under Policy No. 306-7432324-3 for the period March 1, 1991 to 1992. The new oil mill was insured for P6,000,000.00 under Policy No. 306-7432321-9 for the same term. Official receipts indicating payment for the full amount of the premium were issued by the petitioner's agent.

A fire that broke out in the early morning of September 30,1991 gutted and consumed the new oil mill. Respondent immediately notified the petitioner of the incident but petitioner rejected respondent's claim for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill. It stated that the description of the insured establishment referred to another building thus: "Our policy nos. 306-7432321-9 (Ps 6M) and 306-7432324-4 (Ps 3M) extend insurance coverage to your oil mill under Building No. 5, whilst the affected oil mill was under Building No. 14. "

ISSUE: Whether or not the Court of Appeals erred in its legal interpretation of 'Fire Extinguishing Appliances Warranty' of the 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 that 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.

 In determining what the parties intended, the courts will read and construe the policy as a whole and if possible, give effect to all the parts of the contract, keeping in mind always, however, the prime rule that in the event of doubt, this doubt is to be resolved against the insurer. In determining the intent of the parties to the contract, the courts will consider the purpose and object of the contract.

White Gold Marine Services Inc. v Pioneer Insurance & Surety Corporation (Insurance)

G.R. No. 154514. July 28, 2005

FACTS: White Gold procured a protection and indemnity coverage for its vessels from The Steamship Mutual through Pioneer Insurance and Surety Corporation. White Gold was issued a Certificate of Entry and Acceptance. Pioneer also issued receipts. When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage.

Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the unpaid balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual and Pioneer violated provisions of the Insurance Code.

The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business and that it was a P & I club. Pioneer was not required to obtain another license as insurance agent because Steamship Mutual was not engaged in the insurance business.

The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision, the appellate court distinguished between P & I Clubs vis-à-vis conventional insurance. The appellate court also held that Pioneer merely acted as a collection agent of Steamship Mutual.Hence this petition by White Gold.

ISSUES: 1. Is Steamship Mutual, a P & I Club, engaged in the insurance business in the Philippines?2. Does Pioneer need a license as an insurance agent/broker for Steamship Mutual?

RULING: 1. Yes. To continue doing business here, Steamship Mutual or through its agent Pioneer, must

secure a license from the Insurance Commission.

Since a contract of insurance involves public interest, regulation by the State is necessary. Thus, no insurer or insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance Commission.

The parties admit that Steamship Mutual is a P & I Club. Steamship Mutual admits it does not have a license to do business in the Philippines although Pioneer is its resident agent. This relationship is reflected in the certifications issued by the Insurance Commission. It cites the definition of a P & I Club in Hyopsung Maritime Co., Ltd. v. Court of Appeals as “an association composed of shipowners in general who band together for the specific purpose of providing insurance

cover on a mutual basis against liabilities incidental to shipowning that the members incur in favor of third parties.”

The test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by what it is called.

Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it, the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the profits are divided among themselves, in proportion to their interest. Additionally, mutual insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense costs. A P & I Club is “a form of insurance against third party liability, where the third party is anyone other than the P & I Club and the members.” By definition then, Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business.

2. Yes. Although Pioneer is already licensed as an insurance company, it needs a separate license to act as insurance agent for Steamship Mutual. Section 299 of the Insurance Code clearly states: SEC. 299 . . .

No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof, without first procuring a license so to act from the Commissioner, which must be renewed annually on the first day of January, or within six months thereafter. 

Republic vs. Sunlife Assurance Company of Canada [GR No. 15805; October 14, 2005]

Facts: On December 29, 1997, the [Court of Tax Appeals] (CTA) rendered its decision in Insular Life Assurance Co. Ltd. v. [CIR], which held that mutual life insurance companies are purely cooperative companies and are exempt from the payment of premium tax and DST. This pronouncement was later affirmed by this court in [CIR] v. Insular Life Assurance Company, Ltd. Sun Life surmised that[,] being a mutual life insurance company, it was likewise exempt from the payment of premium tax and DST. Hence, on August 20, 1999, Sun Life filed with the CIR an administrative claim for tax credit of its alleged erroneously paid premium tax and DST for the aforestated tax periods. 

For failure of the CIR to act upon the administrative claim for tax credit and with the 2-year period to file a claim for tax credit or refund dwindling away and about to expire, Sun Life filed with the CTA a petition for review. The CTA found in favor of Sun Life. 

Seeking reconsideration of the decision of the CTA, the CIR argued that Sun Life ought to have registered, foremost, with the Cooperative Development Authority before it could enjoy the exemptions from premium tax and DST extended to purely cooperative companies or associations under [S]ections 121 and 199 of the Tax Code. For its failure to register, it could not avail of the exemptions prayed for. The CTA denied the CIR’s motion for reconsideration. 

Issue: Whether or not respondent is exempted from payment of tax on life insurance premiums and documentary stamp tax 

Held: YES. The Tax Code defines a cooperative as an association “conducted by the members thereof with the money collected from among themselves and solely for their own protection and not for profit.” Without a doubt, respondent is a cooperative engaged in a mutual life insurance business. 

First, it is managed by its members. Both the CA and the CTA found that the management and affairs of respondent were conducted by its member-policyholders. SUNLIFE has been mutualized or converted

from a stock life insurance company to a nonstock mutual life insurance corporation pursuant to Section 266 of the Insurance Code of 1978. On the basis of its bylaws, its ownership has been vested in its member-policyholders who are each entitled to one vote; and who, in turn, elect from among themselves the members of its board of trustees. 

Second, it is operated with money collected from its members. Since respondent is composed entirely of members who are also its policyholders, all premiums collected obviously come only from them. The member-policyholders constitute “both insurer and insured” who “contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid.” 

Third, it is licensed for the mutual protection of its members, not for the profit of anyone. A mutual life insurance company is conducted for the benefit of its member-policyholders, who pay into its capital by way of premiums. 

Under the Tax Code although respondent is a cooperative, registration with the Cooperative Development Authority (CDA) is not necessary in order for it to be exempt from the payment of both percentage taxes on insurance premiums, under Section 121; and documentary stamp taxes on policies of insurance or annuities it grants, under Section 199. 

Philamcare v CA G.R. No. 125678. March 18, 2002

Facts:Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he or his family members were treated to heart trouble, asthma, diabetes, etc.

The application was approved for 1 year. He was also given hospitalization benefits and out-patient benefits. After the period expired, he was given an expanded coverage for Php 75,000. During the period, he suffered from heart attack and was confined at MMC. The wife tried to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed away. She filed a case in the trial court for the collection of the amount plus damages. She was awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but deleted awards for damages. Hence, this appeal.

Issue: WON a health care agreement is not an insurance contract; hence the “incontestability clause” under the Insurance Code does not apply.

Held: No. Petition dismissed.

Petitioner claimed that it granted benefits only when the insured is alive during the one-year duration. It contended that there was no indemnification unlike in insurance contracts. It supported this claim by saying that it is a health maintenance organization covered by the DOH and not the Insurance Commission. Lastly, it claimed that the Incontestability clause didn’t apply because two-year and not one-year effectivity periods were required.  

Section 2 (1) of the Insurance Code defines a contract of insurance as “an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.”

Section 3 states: every person has an insurable interest in the life and health:(1) of himself, of his spouse and of his children.

In this case, the husband’s health was the insurable interest. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. The provider must pay for the medical expenses resulting from sickness or injury.

While petitioner contended that the husband concealed materialfact of his sickness, the contract stated that:“that any physician is, by these presents, expressly authorized to disclose or give testimony at anytime relative to any information acquired by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members.”

This meant that the petitioners required him to sign authorization to furnish reports about his medical condition. The contract also authorized Philam to inquire directly to his medical history.Hence, the contention of concealment isn’t valid.They can’t also invoke the “Invalidation of agreement” clause where failure of the insured to disclose information was a grounds for revocation simply because the answer assailed by the company was the heart condition question based on the insured’s opinion. He wasn’t a medical doctor, so he can’t accurately gauge his condition.

Henrick v Fire-  “in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry.”Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider.

“Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the extent agreed upon.  In the end, the liability of the health care provider attaches once the member is hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid.”

Section 27 of the Insurance Code- “a concealment entitles the injured party to rescind a contract of insurance.”

As to cancellation procedure- Cancellation requires certain conditions:1.       Prior notice of cancellation to insured;2.       Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned;3.       Must be in writing, mailed or delivered to the insured at the address shown in the policy;4.       Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based

None were fulfilled by the provider.

As to incontestability- The trial court said that “under the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The periods having expired, the defense of concealment or misrepresentation no longer lie.”

CIR v. Lincoln Phil Life - Automatic Increase ClauseG.R. No. 119176. March 19, 2002379 SCRA 423 (2002)

Facts:In the years prior to 1984, Lincoln issued a special kind of life insurance policy known as the "Junior Estate Builder Policy," the distinguishing feature of which is a clause providing for an automatic increase in the amount of life insurance coverage upon attainment of a certain age by the insured without the need of issuing a new policy. The clause was to take effect in the year 1984.Documentary stamp taxes due on the policy were paid to the petitioner only on the initial sum assured.

Subsequently, petitioner issued deficiency documentary stamps tax assessment for the year 1984, corresponding to the amount of automatic increase of the sum assured on the policy issued by

respondent.Lincoln questioned the deficiency assessments and sought their cancellation in a petition filed in the Court of Tax Appeals.  CTA found no basis for the assessment.  CA affirmed.

Issue:Whether or not the automatic increase of the sum assured on the policy is taxable.

Held:YES.CIR claims that the "automatic increase clause" in the subject insurance policy is separate and distinct from the main agreement and involves another transaction; and 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" in 1984; hence, a deficiency assessment based on the additional insurance not covered in the main policy is in order.  The SC agreed with this contention.

The subject insurance policy at the time it was issued contained an "automatic increase clause." Although the clause was to take effect only in 1984, it was written into the policy at the time of its issuance. The distinctive feature of the "junior estate builder policy" called the "automatic increase clause" already formed part and parcel of the insurance contract, hence, there was no need for an execution of a separate agreement for the increase in the coverage that took effect in 1984 when the assured reached a certain age.

It is clear from Section 173 of the NIRC that the payment of documentary stamp taxes is done at the time the act is done or transaction had and the tax base for the computation of documentary stamp taxes on life insurance policies under Section 183 of NIRC is the amount fixed in policy, unless the interest of a person insured is susceptible of exact pecuniary measurement.

Logically, we believe that the amount fixed in the policy is the figure written on its face and whatever increases will take effect in the future by reason of the "automatic increase clause" embodied in the policy without the need of another contract.

Here, although the automatic increase in the amount of life insurance coverage was to take effect later on, the date of its effectivity, as well as the amount of the increase, was already definite at the time of the issuance of the policy. Thus, the amount insured by the policy at the time of its issuance necessarily included the additional sum covered by the automatic increase clause because it was already determinable at the time the transaction was entered into and formed part of the policy.

The "automatic increase clause" in the policy is in the nature of a conditional obligation under Article 1181, 8 by which the increase of the insurance coverage shall depend upon the happening of the event which constitutes the obligation. In the instant case, the additional insurance that took effect in 1984 was an obligation subject to a suspensive obligation, 9 but still a part of the insurance sold to which private respondent was liable for the payment of the documentary stamp tax.