Simeon del Rosario vs. The Equitable Insuranceand Casualty Co Inc.

(1963)Facts: On February 7, 1957, Equitable Insurance andCasualty Co., Inc., issued Personal Accident Policy No.7136 on the life of Francisco del Rosario, alias PaquitoBolero, son of Simeon, binding itself to pay the sum of P1,000.00 to P3,000.00, as indemnity for the death of the insured.The provisions of the insurance policy pertinent to thecase are as follows: Part I. Indemnity For Death If the insured sustains any bodily injury which iseffected solely through violent, external, visible andaccidental means, and which shall result,independently of all other causes and within sixty (60)days from the occurrence thereof, in the Death of theInsured, the Company shall pay the amount setopposite such injury:Section 1. Injury sustained other than those specifiedbelow unless excepted hereinafter. . . . . . . .P1,000.00Section 2. Injury sustained by the wrecking ordisablement of a railroad passenger car or streetrailway car in or on which the Insured is travelling as afarepaying passenger. . . . . . . P1,500.00 Part VI. Exceptions This policy shall not cover disappearance of theInsured nor shall it cover Death, Disability, Hospitalfees, or Loss of Time, caused to the insured:. . . (h) By drowning except as a consequence of thewrecking or disablement in the Philippine waters of apassenger steam or motor vessel in which the Insuredis travelling as a farepaying passenger; . . . .A rider to the Policy contained the following:IV. DROWNINGIt is hereby declared and agreed that exemption clauseLetter (h) embodied in PART VI of the policy is herebywaived by the company, and to form a part of theprovision covered by the policy.A fire broke out in the motor launch ISLAMA. As aconsequence of which, Francisco del Rosario and 33others were forced to jump off the launch. Thisresulted in the death of Francisco and his beneficiaryRemedios Jayme.Equitable insurance paid Simeon del Rosario, father of Francisco Php1000 pursuant to Sec.1 of Part 1 of thepolicy. On the day of receipt, Atty. Francisco wroteEquitable acknowledging the receipt of Simeon of theamount of Php1000 but informed the company that theamount is incorrect as Simeon was entitled toPhp1,500, under Sec.2 Part 1 of the policy.Equitable referred the matter to the InsuranceCommissioner who opined that the liability of thecompany is only Php1000. Thus, Equitable refused topay. Subsequently, Atty. Francisco asked for Php3000from Equitable. The company refused to pay. Hence acomplaint for the recovery of the balance wasinstituted. Issue: How much should the indemnity be? Ruling: The CFI ruled that:On the face of the policy Exhibit "A" itself, death bydrowning is a ground for recovery apart from thebodily injury because death by bodily injury is coveredby Part I of the policy while death by drowning iscovered by Part VI thereof. But while the policymentions specific amounts that may be recovered fordeath for bodily injury, yet, there is not specificamount mentioned in the policy for death thrudrowning although the latter is, under Part VI of thepolicy, a ground for recovery thereunder. Since thedefendant has bound itself to pay P1000.00 toP3,000.00 as indemnity for the death of the insuredbut the policy does not positively state any definiteamount that may be recovered in case of death bydrowning, there is an ambiguity in this respect in thepolicy, which ambiguity must be interpreted in favor of the insured and strictly against the insurer so as toallow greater indemnity. Thus, del Rosario is entitled toPhp3000. Since Equitable has already paid Php1000, abalance of Php2000 remains to be paid.SC upheld the ruling of the CFI for it is supported bythe generally accepted principles of insurance, whichenunciate that where there is an ambiguity withrespect to the terms and conditions of the policy, thesame will be resolved against the one responsiblethereof.It should be recalled in this connection, that generally,the insured, has little, if any, participation in thepreparation of the policy, together with the drafting of its terms and Conditions. The interpretation of obscurestipulations in a contract should not favor the party who cause the obscurity (Art. 1377, N.C.C.), which, inthe case at bar, is the insurance company.. . . . And so it has been generally held that the "termsin an insurance policy, which are ambiguous, equivocalor uncertain . . . are to be construed strictly against,the insurer, and liberally in favor of the insured so asto effect the dominant purpose of indemnity orpayment to the insured, especially where a forfeiture isinvolved," (29 Am. Jur. 181) and the reason for thisrule is that the "insured usually has no voice in theselection or arrangement of the words employed andthat the language of the contract is selected with greatcare and deliberation by expert and legal advisersemployed by, and acting exclusively in the interest of,the insurance company" (44 C.J.S. 1174). Calanoc v.Court of Appeals, et al., G.R. No. L-8151, Dec. 16,1955.. . . . Where two interpretations, equally fair, of languages used in an insurance policy may be made,that which allows the greater indemnity will prevail.(L'Engel v. Scotish Union & Nat. F. Ins. Co., 48 Fla. 82,37 So. 462, 67 LRA 581 111 Am. St. Rep. 70, 5 Ann.Cas. 749).At any event, the policy under consideration, coversdeath or disability by accidental means, and theappellant insurance company agreed to pay P1,000.00to P3,000.00. is indemnity for death of the insured.

FIELDMENS INSURANCE CO. vs. VDA. DESONGCO FACTS: Federico Songco owned a private jeepney. OnSeptember 15, 1960, he was induced by Fieldmen'sinsurance agent Benjamin Sambat to apply for aCommon Carrier's Liability Insurance Policy coveringhis motor vehicle. He was issued a Common CarriersAccident Insurance Policy. On the next year, herenewed the policy by paying the annual premium.During the effectivity of the renewed

policy, theinsured vehicle collided with another car while beingdriven by Rodolfo Songco, a duly licensed driver andson of Federico (the vehicle owner). As a result,Federico Songco (father) and Rodolfo Songco (son)died, along with other passengers.

A claim was filed but was denied by the insurancecompany on the pretext that what was insured was aprivate vehicle and not a common carrier. During thetrial, it was declared by a witness that when insuranceagent Benjamin Sambat was inducing Songco to insurehis vehicle, the latter butted in saying, Our vehicle isa private vehicle and not for passengers. But theagent replie d: Regardless of whether your vehicle wasan owner -type or for passengers, it could still beinsured because our company is not owned by theGovernment. And the Government has nothing to dowith our company. The Court of Appeals rendered a decision in favor of the claimants. It held that where inequitable conduct isshown by an insurance firm, it is estopped fromenforcing forfeitures in its favor, in order to forestallfraud or imposition on the insured. After Fieldmen'sInsurance Co. had led the insured Songco to believethat he could qualify under the common carrier liabilityinsurance policy, it could not, thereafter, be permittedto change its stand to the detriment of the heirs of theinsured. The failure to apply the Doctrine of Estoppel inthis case would result in a gross travesty of justice. ISSUE: Whether or not the insurance claim is proper? RULING: The fact that the insured owned a private vehicle, nota common carrier, was something which the companyknew all along. In fact, it exerted the utmost pressureon the insured, a man of scant education, to enter intothe contract of insurance. The Court of Appeals alsoheld that since some of the conditions contained in thepolicy were impossible to comply with under theexisting conditions at the time, the insurer is estoppedfrom asserting breach of such conditions. The Supreme Court, in affirming the decision of theCourt of Appeals, took judicial notice of the fact thatnowadays, monopolies, cartels and concentration of capital, endowed with overwhelming economic power,manage to impose upon parties dealing with them cunningly prepared agreementsthat the weakerparty may not change one whit, his participation in theagreement being reduced to the alternative of take itor leave itlabelled since Raymond Saleilles ascontracts by adherence (contrats d'adhesion), incontrast to those entered into by parti es bargaining onan equal footing, such contracts (i.e. insurance policies& international bills of lading) obviously call for greaterstrictness and vigilance on the part of courts of justicewith a view to protecting the weaker party fromabuses.Citing the case of Qua Chee Gan vs. Law Union & RockInsurance, "The contract of insurance is one of perfect good faith(uberima fides) not for the insuredalone but equally so for the insurer; in fact, it is moreso for the latter, since its dominant bargaining positioncarries with it stricter responsibility." Landicho vs. GSIS [G.R. No. L-28866 March 17, 1972] FACTS: On June 1, 1964, the GSIS issued in favor of FlavianoLandicho, a civil engineer of the Bureau of PublicWorks, stationed at Mamburao, Mindoro Occidental,optional additional life insurance policy No. OG-136107in the sum of P7,900. Xxx Before the issuance of said policy, Landicho had filedan application, by filing and signing a printed form of the GSIS on the basis of which the policy was issued.Paragraph 7 of said application States:7. xxx I hereby agree as follows: xxxc. That this application serves as aletter of authority to the CollectingOfficer of our Office thru the GSIS todeduct from my salary the monthlypremium in the amount of P33.36,beginning the month of May, 1964,and every month thereafter until noticeof its discontinuance shall havebeenreceived from the System; .d. That the failure to deduct from mysalary the month premiums shall notmake the policy lapse, however, thepremium account shall be consideredas indebtedness which, I bind myself topay the System; .e. That my policy shall be madeeffective on the first day of the monthnext following the month the firstpremium is paid; provided, that it isnot more ninety (90) days before orafter the date of the medicalexamination, was conducted if required."While still an employee of the Bureau of Public Works,Mr. Landicho died in an airplane crash on June 29,1966. Mrs. Landicho, in her own behalf and that of herco-plaintiffs and minor children, Rafael J. and MariaLourdes Eugenia, filed with the GSIS a claim forP15,800, as the double indemnity due under policy No.OG-136107. GSIS denied the claim, upon the groundthat the policy had never been in force because,pursuant to subdivision (e) of the above-quotedparagraph 7 of the application, the policy "shall be ...effective on the first day of the month next followingthe month the first premium is paid," and no premiumhad ever been paid on said policy. The Lower Courtdecided in favor of the petitioner. GSIS appealed to theSupreme Court. ISSUE: WON the insurance policy in question has ever been inforce, not a single premium having been paid thereon. RULING: Lower Court decision is sustained.(T)he language, of subdivisions (c), (d) and (e) is suchas to create an ambiguity that should be resolvedagainst the party responsible therefor defendantGSIS, as the party who prepared and furnished theapplication form and in favor of the party misledthereby, the insured employee.Indeed, our Civil Code provides:The interpretation of obscure words orstipulations in a contract shall not favorthe party who caused the obscurity.

This is particularly true as regards insurance policies,in respect of which it is settled that the " "terms in aninsurance policy, which are ambiguous, equivocal, oruncertain ...are to be construed strictly and most strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially wherea forfeiture is involved" (29 Am. Jur., 181), and thereason for this rule is the "insured usually has no voicein the selection or arrangement of the words employedand that the language of the contract is selected withgreat care and deliberation by experts and legaladvisers employed by, and acting exclusively in theinterest of, the insurance company." (44 C.J.S., p.1174.).The equitable and ethical considerations justifying theforegoing view are bolstered up by two (2) factors,namely:(a) The aforementioned subdivision (c) states "thatthis application serves as a letter of authority to theCollecting Officer of our Office" the Bureau of PublicWorks "thru theGSIS to deduct from my salary themonthly premium in the amount of P33.36." No suchdeduction was made and, consequently, not eventhe first premium "paid" because the collectingofficer of the Bureau of Public Works was not advisedby the GSIS to make it (the deduction) pursuant tosaid authority. Surely, this omission of the GSIS shouldnot inure to its benefit. .(b) The GSIS had impliedly induced the insured tobelieve that Policy No. OG-136107 was in force, hehaving been paid by the GSIS the dividends corresponding to said policy . Had the insured had the slightest inkling that the latter was not, as yet,effective for non-payment of the first premium, he would have, in all probability, caused the same to beforthwith satisfied. WHEREFORE, the decision appealed from should be, itis hereby affirmed, with costs against the defendant-appellant, Government Service Insurance System. It isso ordered. .

New Life Enterprises V. Court Of Appeals (1992) G.R. No. 94071 March 31, 1992 Lessons Applicable: Requisites of Double insurance (Insurance) FACTS: May 15, 1981: Western Guaranty Corporation issued Fire Insurance Policy to New Life Enterprises foar P350,000 renewed on May, 13, 1982 July 30,1981: Reliance Surety and Insurance Co., Inc. issued Fire Insurance Policy to New Life Enterprises for P300,000 November 12, 1981; Additional P700,000 February 8, 1982: Equitable Insurance Corporation issued Fire Insurance Policy to New Life Enterprises for P200,000 October 19, 1982 2 am: fire electrical in nature destroyed the stock in trade worth P1,550,000 Julian Sy went to Reliance to claim but he was refused. Same thing happened with the others who were sister companies. Sy violated the "Other Insurance Clause" RTC: favored New Life and against the three insurance companies CA: reversed -failure to state or endorse the other insurance coverage ISSUE: W/N Sy can claim against the three insurance companies for violating the "Other Insurance Clause" HELD: NO. The terms of the contract are clear and unambiguous. The insured is specifically required to disclose to the insurer any other insurance and its particulars which he may have effected on the same subject matter. The knowledge of such insurance by the insurer's agents, even assuming the acquisition thereof by the former, is not the "notice" that would estop the insurers from denying the claim. conclusion of the trial court that Reliance and Equitable are "sister companies" is an unfounded conjecture drawn from the mere fact that Yap Kam Chuan was an agent for both companies which also had the same insurance claims adjuster Availmentof the services of the same agents and adjusters by different companies is a common practice in the insurancebusiness and such facts do not warrant the speculative conclusion of the trial court. The conformity of the insured to the terms of the policy isimplied from his failure to express any disagreement with what is provided for a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not, that was deception - guilty of clear fraud total absence of such notice nullifies the policy assuming arguendo that petitioners felt the legitimate need to be clarified as to the policy condition violated, there was a considerable lapse of time from their receipt of the insurer's clarificatory letter dated March 30, 1983, up to the time the complaint was filed in court on January 31, 1984. The oneyear prescriptive period was yet toexpire on November 29, 1983, or about eight (8) months from the receipt of the clarificatory letter, but petitioners let the period lapse without bringing their action in court.

Paramount Insurance Corporation v Hon. Maximo Japzon, et al.GR No. L-68037 July 29, 1992 FACTS: Petitioner insurance company refuses to pay the claims for damages made bytwo persons (Jose Lara and Arsenio Paed), passengers of a jeepney which collidedwith a Ford truck insured by petitioner company, on the ground that the lower courthas not validly acquired jurisdiction over its person, when a certain Atty. SegundoGloria appeared for its behalf but was allegedly unauthorized to file an answer for it,and that petitioner company was not validly served with summons and a copy of thecomplaint, nor did it actually participate in the proceedings. ISSUE: Whether or not jurisdiction of the person of the petitioner insurance companyhave been validly acquired by the lower court.

HELD: Yes. Jurisdiction over the person of the defendant in civil cases is acquiredeither by his voluntary appearance in court and his submission to its authority byservice of summons. The service of summons is intended to give notice to thedefendant that an action has been commenced against it. Petitioners contention thatit was not properly served with summons and that Atty. Gloria was not authorized toappear for and in its behalf are untenable. Although petitioner questioned thepropriety of the service of summons, it however, failed to substantiate its allegationthat it was not properly served with summons. Hence, the disputable presumptionthat official duty has been regularly performed prevails.

Verendia vs. Court of Appeals [GR 76399, 22 January 1993]; also Fidelity & Surety Co. of thePhilippines Inc. vs. Verendia [GR 75605] Third Division, Melo (J): 4 concur Facts: Fidelity and Surety Insurance Company of the Philippines issued its Fire Insurance Policy F-18876effective between 23 June 1980 and 23 June 1981 covering Rafael (Rex) Verendia's residential buildinglocated at Tulip Drive, Beverly Hills, Antipolo, Rizal in the amount of P385,000.00. Designated asbeneficiary was the Monte de Piedad & Savings Bank. Verendia also insured the same building with two othercompanies, namely, The Country Bankers Insurance for P56,000.00 under Policy No. PDB-80-1913 expiringon 12 May 1981, and The Development Insurance for P400,000.00 under Policy F-48867 expiring on 30 June1981. While the three fire insurance policies were in force, the insured property was completely destroyed byfire on the early morning of 28 December 1980. Fidelity was accordingly informed of the loss and despitedemands, refused payment under its policy, thus prompting Verendia to file a complaint with the then Court ofFirst Instance of Quezon City, praying for payment of P385,000.00, legal interest thereon, plus attorney's feesand litigation expenses. The complaint was later amended to include Monte de Piedad as an "unwillingdefendant." Answering the complaint, Fidelity, among other things, averred that the policy was avoided byreason of over-insurance, that Verendia maliciously represented that the building at the time of the fire wasleased under a contract executed on 25 June 1980 to a certain Roberto Garcia, when actually it was a MarceloGarcia who was the lessee. On 24 May 1983, the trial court rendered a decision, per Judge Rodolfo A. Ortiz,ruling in favor of Fidelity. In sustaining the defenses set up by Fidelity, the trial court ruled that Paragraph 3of the policy was also violated by Verendia in that the insured failed to inform Fidelity of his other insurancecoverages with Country Bankers Insurance and Development Insurance. Verendia appealed to the thenIntermediate Appellate Court and in a decision promulgated on 31 March 1986, (CA-GR CV 02895, Coquia,Zosa, Bartolome, and Ejercito (P), JJ.), the appellate court reversed for the following reasons: (a) there was nomisrepresentation concerning the lease for the contract was signed by Marcelo Garcia in the name of RobertoGarcia; and (b) Paragraph 3 of the policy contract requiring Verendia to give notice to Fidelity of othercontracts of insurance was waived by Fidelity as shown by its conduct in attempting to settle the claim ofVerendia. Fidelity received a copy of the appellate court's decision on 4 April 1986, but instead of directlyfiling a motion for reconsideration within 15 days therefrom, Fidelity filed on 21 April 1986, a motion forextension of 3 days within which to file a motion for reconsideration. The motion for extension was not filedon 19 April 1986 which was the 15th day after receipt of the decision because said 15th day was a Saturdayand of course, the following day was a Sunday. The motion for extension was granted by the appellate courton 30 April 1986, but Fidelity had in the meantime filed its motion for reconsideration on 24 April 1986.Verendia filed a motion to expunge from the record Fidelity's motion for reconsideration on the ground thatthe motion for extension was filed out of time because the 15th day from receipt of the decision which fell ona Saturday was ignored by Fidelity, for indeed, so Verendia contended, the Intermediate Appellate Court haspersonnel receiving pleadings even on Saturdays. The motion to expunge was denied on 17 June 1986 andafter a motion for reconsideration was similarly brushed aside on 22 July 1986, a petition (GR 75605) wasinitiated. Subsequently, or more specifically on 21 October 1986, the appellate court denied Fidelity's motionfor reconsideration and account thereof. Fidelity filed on 31 March 1986, the petition for review on certiorari(GR 76399). The two petitions, inter-related as they are, were consolidated and thereafter given due course. Issue: Whether Verandia forfeited all benefits due to his presentation of a false declaration to support hisclaim. Held: The contract of lease upon which Verendia relies to support his claim for insurance benefits, wasentered into between him and one Robert Garcia, married to Helen Cawinian, on 25 June 1980, a couple ofdays after the effectivity of the insurance policy. When the rented residential building was razed to the groundon 28 December 1980, it appears that Robert Garcia (or Roberto Garcia) was still within the premises.However, according to the investigation report prepared by Pat. Eleuterio M. Buenviaje of the Antipolopolice, the building appeared to have "no occupant" and that Mr. Roberto Garcia was "renting on the otherside (sic) portion of said compound.". These pieces of evidence belie Verendia's uncorroborated testimony thatMarcelo Garcia whom he considered as the real lessee, was occupying the building when it was burned.Robert Garcia disappeared after the fire. It was only on 9 October 1981 that an adjuster was able to locatehim. Robert Garcia then executed an affidavit before the National Intelligence and Security Authority (NISA)to the effect that he was not the lessee of Verendia's house and that his signature on the contract of lease was acomplete forgery. Thus, on the strength of these facts, the adjuster submitted a report dated 4 December 1981recommending the denial of Verendia's claim. Ironically, during the trial, Verendia admitted that it was notRobert Garcia who signed the lease contract. According to Verendia, it was signed by Marcelo Garcia cousinof Robert, who had been paying the

rentals all the while. Verendia, however, failed to explain why Marcelohad to sign his cousin's name when he in fact was paying for the rent and why Verendia himself, the lessor,allowed such a ruse. Fidelity's conclusions on these proven facts appear, therefore, to have sufficient bases:Verendia concocted the lease contract to deflect responsibility for the fire towards an alleged "lessee", inflatedthe value of the property by the alleged monthly rental of P6,500 when in fact, the Provincial Assessor ofRizal had assessed the property's fair market value to be only P40,300.00, insured the same property with twoother insurance companies for a total coverage of around P900,000, and created a dead-end for the adjuster bythe disappearance of Robert Garcia. Basically a contract of indemnity, an insurance contract is the lawbetween the parties. Its terms and conditions constitute the measure of the insurer's liability and compliancetherewith is a condition precedent to the insured's right to recovery from the insurer. As it is also a contract ofadhesion, an insurance contract should be liberally construed in favor of the insured and strictly against theinsurer company which usually prepares it. Considering, however, the foregoing discussion pointing to thefact that Verendia used a false lease contract to support his claim under Fire Insurance Policy F-18876, theterms of the policy should be strictly construed against the insured. Verendia failed to live by the terms of thepolicy, specifically Section 13 thereof which is expressed in terms that are clear and unambiguous, that allbenefits under the policy shall be forfeited "if the claim be in any respect fraudulent, or if any falsedeclaration be made or used in support thereof, or if any fraudulent means or devises are used by the Insuredor anyone acting in his behalf to obtain any benefit under the policy". Verendia, having presented a falsedeclaration to support his claim for benefits in the form of a fraudulent lease contract, he forfeited all benefitstherein by virtue of Section 13 of the policy in the absence of proof that Fidelity waived such provision.Worse yet, by presenting a false lease contract, Verendia reprehensibly disregarded the principle thatinsurance contracts are uberrimae fidae and demand the most abundant good faith.

FIRST QUEZON CITY INSURANCE CO. v. CA (DEDIOS MARIKINA TRANSPORT CO) 218 SCRA 526GRINO-AQUINO; February 28, 1993 NATURE PETITION for review of the decision of the Court of Appeals. FQCIC seeks to limit to P12000, the amountspecified in the insurance contract, its liability toindemnify the respomdemt DMTC, for the damagessuffered by a passenger, who accidentally fell off thebug. FACTSAfter sending off certain seamen at the departurearea of MIA, Jose V. del Rosario proceeded to thepublic utility bus stop. While at the bus stop, theplaintiff saw a DMTC bus. While moving at a crawlingpace, it was taking several passengers, all of whommanaged to board the bus while it was already at thebus stop; plaintiff was the last one to board the bus.While the plaintiff was still on the bus with his handon the bus door, the slowly moving bus sped forwardat a high speed, as a result of which, the plaintiff lostbalance and fell from the bus. As plaintiff clunginstinctively to the handle bar, he was dragged bythe bus along the asphalted road. The bus driver, GilAgpalo, abruptly stopped the bus. Then fled from thescene, leaving the bus and the injured plaintiff behind.- The plaintiff was brought to the Manila Sanitariumand Hospital where the doctors performed 2 majorsurgical operations on plaintiffs right leg.Plaintiff was confined at the hospital for (40) days,from June 10, 1984 to August 26, 1984. Medicalexpenses totaled the amount of P69,444.41.Plaintiffs medical expenses were advanced by hisemployer Maglines but he was required to reimburseMaglines on a staggered basis by way of salarydeductions. After his release from the hospital, hereturned to the hospital for further treatment andcheckup. The injuries had left plaintiff with a hugescar on his right leg. Also, the plaintiff incurred lostearning by way of unearned salaries amounting toP7,500.00 due to said physical injuries and theconsequent hospital confinement.- Plaintiff filed on June 26, 1985 the complaintagainst DMTC and its driver. Agpalo was laterdropped as a party defendant because he could notbe served with summons. Upon filing its answer,defendant DMTC filed a thirdparty complaint againstFirst Quezon City Insurance Co., Inc. September 17,1985, third-party defendant filed its answer to thethird-party complaint.- TC held DMTC complaint dismissed for lack of meritand as regards the third-party complaint FirstQuezon City Insurance Co., Inc. was to indemnifythirdparty plaintiff DMTC in the sum of P12,000.00with interest. There being no satisfactory warrant thecourt dismissed the rest of the claims in thecomplaint and third-party complaint.- The bus company appealed to the CA, whichmodified the dispositive as regards the third-partycomplaint, that the third-party defendant FirstQuezon City Insurance Co., Inc. be ordered toindemnify third-party plaintiff DMTC the SUM of P50,000.00 with legal interest. Insurance companyfiled a MFR which was denied.Hence, this petition for review, assailing theappellate courts' interpretation of the provision of theinsurance contract on the limit of the insurer'sliability. ISSUE WON the CA erred in the interpretation of theinsurance contract on the limit of the insurersliability HELD YES- The insurance policy clearly placed the maximumlimit of the petitioner's liability for damages arisingfrom death or bodily injury at P12,000.00 perpassenger and its maximum liability per accident at(P50,000.00. Since only one passenger was injuredin the accident, the insurer's liability for the damagessuffered by said passenger is pegged to the amountof P12,000.00 only.- The limit of P50,000.00 per accident means thatthe insurer's maximum liability for any singleaccident will not exceed P50,000.00 regardless of thenumber of passengers killed or injured therein.The bus company may not recover from theinsurance company more than P12,000.00 perpassenger killed or injured, or (P50,000.00) peraccident even if under the judgment of the court, theerring bus

operator will have to pay more thanP12,000.00 to each injured passenger. The trialcourt's interpretation of the insurance contract wasthe correct interpretation. Disposition petition for review is GRANTED. Thedecision promulgated by the CA, ordering the thirdparty defendent, First Quezon City Insurance Co.,Inc. to indemnify theI private respondent, (DMTC),the sum of P50,000.00 for the damages of thepassenger, Jose V. Del Rosario, is hereby modified byreducing the award to 12,000.00 only. Costs againstthe private respondent De Dios MarikinaTransportation Co., Inc.

Development Bank of the Philippines vs. Court of Appeals [GR 109937, 21 March 1994] First Division, Quiason (J): 4 concur Facts: In May 1987, Juan B. Dans, together with his wife Candida, his son and daughter-in-law, applied for aloan of P500,000.00 with the Development Bank of the Philippines (DBP), Basilan Branch. As the principalmortgagor, Dans, then 76 years of age, was advised by DBP to obtain a mortgage redemption insurance(MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool). A loan, in the reduced amountof P300,000.00, was approved by DBP on 4 August 1987 and released on 11 August 1987. From the proceedsof the loan, DBP deducted the amount of P1,476.00 as payment for the MRI premium. On 15 August 1987,Dans accomplished and submitted the "MRI Application for Insurance" and the "Health Statement for DBPMRI Pool." On 20 August 1987, the MRI premium of Dans, less the DBP service fee of 10%, was credited byDBP to the savings account of the DBP MRI Pool. Accordingly, the DBP MRI Pool was advised of the credit.On 3 September 1987, Dans died of cardiac arrest. The DBP, upon notice, relayed this information to the DBPMRI Pool. On 23 September 1987, the DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit of 60 years at the time of application. On 21 October 1987,DBP apprised Candida Dans of the disapproval of her late husband's MRI application. The DBP offered torefund the premium of P1,476.00 which the deceased had paid, but Candida Dans refused to accept the same,demanding payment of the face value of the MRI or an amount equivalent to the loan. She, likewise, refusedto accept an ex gratia settlement of P30,000.00, which the DBP later offered. On 10 February 1989, the Estateof the Late Juan B. Dans, through Candida Dans as administratrix, filed a complaint with the Regional TrialCourt, Branch I, Basilan, against DBP and the insurance pool for collection of Sum of Money with Damages.On 10 March 1990, the trial court rendered a decision in favor of the Estate and against DBP. The DBP MRIPool, however, was absolved from liability, after the trial court found no privity of contract between it and thedeceased. The trial court declared DBP in estoppel for having led Dans into applying for MRI and actuallycollecting the premium and the service fee, despite knowledge of his age ineligibility. The court ordered DBPto return and reimburse the Estate the amount of P139,500.00 plus legal rate of interest as amortizationpayment paid under protest; to consider the mortgage loan of P300,000.00 including all interest accumulatedor otherwise to have been settled, satisfied or set-off by virtue of the insurance coverage of the late Juan B.Dans; to pay the Estate the amount of P10,000.00 as attorney's fees; to pay the Estate the amount ofP10,000.00 as costs of litigation and other expenses, and other relief just and equitable. The DBP appealed tothe Court of Appeals. In a decision dated 7 September 1992, the appellate court affirmed in toto the decisionof the trial court. The DBP's motion for reconsideration was denied in a resolution dated 20 April 1993. DBPfiled the petition for review on certiorari. Issue [1]: Whether there was a perfected contract of insurance for DBP MRI Pool to be held liable. Held [1]: NO. When Dans applied for MRI, he filled up and personally signed a "Health Statement for DBPPool" with the following declaration: "I hereby declare and agree that all the statements and answerscontained herein are true, complete and correct to the best of my knowledge and belief and form part of myapplication for insurance. It is understood and agreed that no insurance coverage shall be effected unless anduntil this application is approved and the full premium is paid during my continued good health." Under theaforementioned provisions, the MRI coverage shall take effect: (1) when the application shall be approved bythe insurance pool; and (2) when the full premium is paid during the continued good health of the applicant.These two conditions, being joined conjunctively, must concur. Undisputably, the power to approve MRIapplications is lodged with the DBP MRI Pool. The pool, however, did not approve the application of Dans.There is also no showing that it accepted the sum of P1,476.00, which DBP credited to its account with fullknowledge that it was payment for Dan's premium. There was, as a result, no perfected contract of insurance;hence, the DBP MRI Pool cannot be held liable on a contract that does not exist. Issue [2]: Whether DBP is liable for the entire value of the insurance policy, as it led Dans to believe that hehas fulfilled all the requirements for the MRI and that the issuance of his policy was forthcoming. Held [2]:

It was DBP, as a matter of policy and practice, that required Dans, the borrower, to secure MRIcoverage. Instead of allowing Dans to look for his own insurance carrier or some other form of insurancepolicy, DBP compelled him to apply with the DBP MRI Pool for MRI coverage. When Dan's loan wasreleased on 11 August 1987, DBP already deducted from the proceeds thereof the MRI premium. Four dayslatter, DBP made Dans fill up and sign his application for MRI, as well as his health statement. The DBP latersubmitted both the application form and health statement to the DBP MRI Pool at the DBP Main Building,Makati Metro Manila. As service fee, DBP deducted 10% of the premium collected by it from Dans. Indealing with Dans, DBP was wearing two legal hats: the first as a lender, and the second as an insuranceagent. As an insurance agent, DBP made Dans go through the motion of applying for said insurance, therebyleading him and his family to believe that they had already fulfilled all the requirements for the MRI and thatthe issuance of their policy was forthcoming. Apparently, DBP had full knowledge that Dan's application wasnever going to be approved. The maximum age for MRI acceptance is 60 years as clearly and specificallyprovided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned. The DBP is not authorized to accept applications for MRI when its clients are morethan 60 years of age. Knowing all the while that Dans was ineligible for MRI coverage because of hisadvanced age, DBP exceeded the scope of its authority when it accepted Dan's application for MRI bycollecting the insurance premium, and deducting its agent's commission and service fee. The liability of anagent who exceeds the scope of his authority depends upon whether the third person is aware of the limits ofthe agent's powers. There is no showing that Dans knew of the limitation on DBP's authority to solicitapplications for MRI. If the third person dealing with an agent is unaware of the limits of the authorityconferred by the principal on the agent and he (third person) has been deceived by the non-disclosure thereofby the agent, then the latter is liable for damages to him. The DBP's liability, however, cannot be for the entirevalue of the insurance policy. To assume that were it not for DBP's concealment of the limits of its authority,Dans would have secured an MRI from another insurance company, and therefore would have been fullyinsured by the time he died, is highly speculative. Considering his advanced age, there is no absolute certaintythat Dans could obtain an insurance coverage from another company. It must also be noted that Dans diedalmost immediately, i.e., on the nineteenth day after applying for the MRI, and on the twenty-third day fromthe date of release of his loan.

Rizal Surety & Insurance Company vs. Court of Appeals [GR 112360, 18 June 2000] Third Division, Purisima (J): 4 concur Facts: On 13 March 1980, Rizal Surety & Insurance Company (Rizal Insurance) issued Fire Insurance Policy45727 in favor of Transworld Knitting Mills, Inc. (Transworld), initially for P1,000,000.00 and eventuallyincreased to P1,500,000.00, covering the period from 14 August 1980 to 13 March 1981. The same pieces ofproperty insured with Rizal Insurance were also insured with New India Assurance Company, Ltd., (NewIndia). On 12 January 1981, fire broke out in the compound of Transworld, razing the middle portion of itsfour-span building and partly gutting the left and right sections thereof. A two-storey building (behind saidfour-span building) where fun and amusement machines and spare parts were stored, was also destroyed bythe fire. Transworld filed its insurance claims with Rizal Insurance and New India but to no avail. On 26 May1982, TransWorld brought against the said insurance companies an action for collection of sum of money anddamages (Civil Case 46106) before Branch 161 of the then Court of First Instance of Rizal; praying for judgment ordering Rizal Insurance and New India to pay the amount of P2,747,867.00 plus legal interest,P400,000.00 as attorney's fees, exemplary damages, expenses of litigation of P50,000.00 and costs of suit.Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-spanbuilding, which was partly burned, and not the damage caused by the fire on the two-storey annex building.On 4 January 1990, the trial court rendered its decision; dismissing the case as against New India; orderingRizal Insurance to pay Transworld the amount of P826,500.00 representing the actual value of the lossessuffered by it; and with cost against Rizal Insurance. Both Rizal Insurance and TransWorld went to the Court of Appeals, which came out with its decision of 15 July 1993, modifying the lower court's decision byrequiring New India to pay Transworld the amount of P1,818,604.19; and Rizal Surety to pay TransworldP470,328.67, based on the actual losses sustained by Transworld in the fire, totalling P2,790,376.00 as againstthe amounts of fire insurance coverages respectively extended by New India in the amount of P5,800,000.00and Rizal Surety and Insurance Company in the amount of P1,500,000.00. On 20 August 1993, from theaforesaid judgment of the Court of Appeals, New India appealed to the Supreme Court theorizing inter aliathat the TransWorld could not be compensated for the loss of the fun and amusement machines and spareparts stored at the two-storey building because it (Transworld) had no insurable interest in said goods oritems. On 2 February 1994, the Court denied the appeal with finality in GR L-111118 (New India AssuranceCompany Ltd. vs. Court of Appeals). Rizal Insurance and TransWorld, on the other hand, interposed a Motionfor Reconsideration before the Court of Appeals, and on 22 October 1993, the Court of Appeals reconsideredits decision of 15 July 1993, as regards the imposition of interest on the assessment against New India on theamount of P1,818,604.19 and that against Rizal Insurance on the amount of P470,328.67, commences from26 May 1982 when the complaint was filed until payment is made. The rest of the said decision was retainedin all other respects. Rizal Insurance filed the petition for review on certiorari. Issue [1]: Whether the fire insurance policy litigated upon protected only the contents of the main building(four-span), and did not include those stored in the two-storey annex building; or whether the so called"annex" was not an annex but was actually an integral part of the four-span building and therefore, the goodsand items stored therein were covered by the same fire insurance policy.

Held [1]: INCLUDES 2-STORY ANNEX BUILDING. The stipulation in subject fire insurance policyregarding its coverage, reads "contained and/or stored during the currency of this Policy in the premisesoccupied by them forming part of the buildings situated within own Compound." Therefrom, it can be gleanedunerringly that the fire insurance policy in question did not limit its coverage to what were stored in the four-span building. The two-storey building involved a permanent structure, which adjoins and intercommunicateswith the "first right span of the lofty storey building", formed part thereof, and meets the requisites forcompensability under the fire insurance policy sued upon. So also, considering that the two-storey buildingaforementioned was already existing when subject fire insurance policy contract was entered into on 12January 1981, having been constructed sometime in 1978, Rizal Insurance should have specifically excludedthe said two-storey building from the coverage of the fire insurance if minded to exclude the same but it didnot, and instead, went on to provide that such fire insurance policy covers the products, raw materials andsupplies stored within the premises of Transworld which was an integral part of the four-span buildingoccupied by Transworld, knowing fully well the existence of such building adjoining and intercommunicatingwith the right section of the four-span building. Issue [2]: Whether the ambiguity in fire insurance policy should be resolved against Rizal Surety. Held [2]: YES. The stipulation as to the coverage of the fire insurance policy under controversy has createda doubt regarding the portions of the building insured thereby. Article 1377 of the New Civil Code providesthat "The interpretation of obscure words or stipulations in a contract shall not favor the party who caused theobscurity." Conformably, it stands to reason that the doubt should be resolved against Rizal Insurance, whoselawyer or managers drafted the fire insurance policy contract under scrutiny. Citing the aforecited provision oflaw in point, the Court in Landicho vs. Government Service Insurance System, ruled that "as regardsinsurance policies, in respect of which it is settled that the 'terms in an insurance policy, which are ambiguous,equivocal, or uncertain are to be construed strictly and most strongly against the insurer, and liberally in favorof the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially whereforfeiture is involved' (29 Am. Jur., 181), and the reason for this is that the 'insured usually has no voice in theselection or arrangement of the words employed and that the language of the contract is selected with greatcare and deliberation by experts and legal advisers employed by, and acting exclusively in the interest of, theinsurance company.' (44 C.J.S., p. 1174)." Equally relevant is the following disquisition of the Court in Fieldmen's Insurance Company, Inc. vs. Vda. De Songco, where it was held that the "rigid application of therule on ambiguities has become necessary in view of current business practices. The courts cannot ignore thatnowadays monopolies, cartels and concentration of capital, endowed with overwhelming economic power,manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party maynot change one whit, his participation in the 'agreement' being reduced to the alternative to 'take it or leave it'labelled since Raymond Saleilles 'contracts by adherence' (contrats [sic] d'adhesion), in contrast to theseentered into by parties bargaining on an equal footing, such contracts (of which policies of insurance andinternational bills of lading are prime example) obviously call for greater strictness and vigilance on the partof courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent theirbecoming traps for the unwary."

FILIPINAS COMPANIA DE SEGUROS VCHRISTERN, HUENEFELD AND CO INC 89 PHIL 54PARAS; May 25, 1951 FACTS- October 1, 1941 - Christern Huenefeld, & Co., Inc.,after payment of corresponding premium, obtainedfrom the Filipinas Cia. de Seguros a fire policy in thesum of P1000,000, covering merchandise containedin No. 711 Roman Street, Binondo Manila. Section 300. Any person who for compensation solicits or obtains onbehalf of any insurance company transmits for a person other thanhimself an application for a policy or contract of insurance to or fromsuch company or offers or assumes to act in the negotiating of suchinsurance shall be an insurance agent within the intent of this sectionand shall thereby become liable to all the duties, requirements,liabilities, and penalties to which an insurance agent is subject. - February 27, 1942 or during the Japanese militaryoccupation - building and insured merchandise wereburned. In due time the Huenefeld Co submitted tothe Filipinas Cia its claim under the policy. Thesalvage goods were sold at public auction and, afterdeducting their value, the total loss suffered by therespondent was fixed at P92,650.- Filipinas Cia refused to pay the claim on the groundthat the policy in favor of the respondent had ceasedto be in force on the date the United States declaredwar against Germany, the respondent Corporation(though organized under and by virtue of the laws of the Philippines) being controlled by the Germansubjects and the Filipinas Cia being a company underAmerican jurisdiction when said policy was issued onOctober 1, 1941. Filipinas Cia, however, in pursuanceof the order of the Director of Bureau of Financing,Philippine Executive Commission, dated April 9,1943, paid to the Huenefeld Co the sum of P92,650on April 19, 1943.- August 6, 1946 action filed in CFI Manila torecover from the Huenefeld Co the sum of P92,650above mentioned. The theory of the Filipinas Cia isthat the insured merchandise were burned up afterthe policy issued in 1941 in favor of Huenefeld Cohas ceased to be effective because of the outbreak of the war between the United States and Germany onDecember 10, 1941, and that the payment made bythe Filipinas Cia to Huenefeld Co during the Japanesemilitary occupation was under pressure.- CFI: dismissed the action without pronouncementas

to costs.- CA: CFI judgment affirmed, with costs. The case isnow before us on appeal bycertiorari from thedecision of the Court of Appeals. ISSUE: WON the policy in question became null and voidupon the declaration of war between United Statesand Germany HELD: YES Ratio The Philippine Insurance Law (Act No. 2427,as amended,) in section 8, provides that "anyoneexcept a public enemy may be insured." It stands toreason that an insurance policy ceases to beallowable as soon as an insured becomes a publicenemy. > Effect of war, generally. - All intercoursebetween citizens of belligerent powers which isinconsistent with a state of war is prohibited by the law of nations. Such prohibition includes allnegotiations, commerce, or trading with theenemy; all acts which will increase, or tend toincrease, its income or resources; all acts of voluntary submission to it; or receiving itsprotection; also all acts concerning thetransmission of money or goods; and all contractsrelating thereto are thereby nullified. It furtherprohibits insurance upon trade with or by theenemy, upon the life or lives of aliens engaged inservice with the enemy; this for the reason thatthe subjects of one country cannot be permitted tolend their assistance to protect by insurance thecommerce or property of belligerent, aliensubjects, or to do anything detrimental too theircountry's interest. The purpose of war is to cripplethe power and exhaust the resources of theenemy, and it is inconsistent that one countryshould destroy its enemy's property and repay ininsurance the value of what has been sodestroyed, or that it should in such mannerincrease the resources of the enemy, or render itaid, and the commencement of war determines,for like reasons, all trading intercourse with theenemy, which prior thereto may have been lawful.All individuals therefore, who compose thebelligerent powers, exist, as to each other, in astate of utter exclusion, and are public enemies. (6Couch, Cyc. of Ins. Law, pp. 5352-5353.)> In the case of an ordinary fire policy, whichgrants insurance only from year, or for some otherspecified term it is plain that when the partiesbecome alien enemies, the contractual tie isbroken and the contractual rights of the parties, so far as not vested . lost. (Vance, the Law on Insurance, Sec. 44, p. 112.) Reasoning- The Court of Appeals overruled the contention of the petitioner that the respondent corporationbecame an enemy when the United States declaredwar against Germany, relying on English andAmerican cases which held that a corporation is acitizen of the country or state by and under the lawsof which it was created or organized. It rejected thetheory that nationality of private corporation isdetermined by the character or citizenship of itscontrolling stockholders.- There is no question that majority of thestockholders of the respondent corporation wereGerman subjects. Therefore, Huenefeld Co becamean enemy corporation upon the outbreak of the warbetween the United States and Germany. The Englishand American cases relied upon by the Court of Appeals have lost their force in view of the latestdecision of the Supreme Court of the United States in Clark vs. Uebersee Finanz Korporation, decided onDecember 8, 1947, in which the controls test hasbeen adopted. In "Enemy Corporation" by MartinDomke, a paper presented to the SecondInternational Conference of the Legal Profession heldat the Hague (Netherlands) in August. 1948 alsodiscussed this dilemma> In Clarkvs.Uebersee Finanz Korporation, A. G.,dealing with a Swiss corporation allegedlycontrolled by German interest, the Court: "Theproperty of all foreign interest was placed withinthe reach of the vesting power (of the AlienProperty Custodian) not to appropriate friendly orneutral assets but to reach enemy interest whichmasqueraded under those innocent fronts. . . . Thepower of seizure and vesting was extended to allproperty of any foreign country or national so thatno innocent appearing device could become aTrojan horse."- The respondent having become an enemycorporation on December 10, 1941, the insurancepolicy issued in its favor on October 1, 1941, by thepetitioner (a Philippine corporation) had ceased to bevalid and enforcible, and since the insured goodswere burned after December 10, 1941, and duringthe war, the respondent was not entitled to anyindemnity under said policy from the petitioner.However, elementary rules of justice (in the absenceof specific provision in the Insurance Law) requirethat the premium paid by the respondent for theperiod covered by its policy from December 11,1941, should be returned by the petitioner. Disposition the appealed decision is herebyreversed and the respondent corporation is ordered to pay to the petitioner the sum of P77,208.33,Philippine currency, less the amount of the premium, in Philippine currency, that should be returned by thepetitioner for the unexpired term of the policy in question, beginning December 11, 1941.

Geagonia vs. Court of Appeals [GR 114427, 6 February 1995] First Division, Davide Jr. (J): 4 concur Facts: Armando Geagonia is the owner of Norman's Mart located in the public market of San Francisco,Agusan del Sur. On 22 December 1989, he obtained from Country Bankers Insurance Corporation fireinsurance policy No. F-14622 2 for P100,000.00. The period of the policy was from 22 December 1989 to 22December 1990 and covered the following: "Stock-in-trade consisting principally of dry goods such as RTW'sfor men and women wear and other usual to assured's business." Geagonia declared in the policy under thesubheading entitled CO-INSURANCE that Mercantile Insurance Co., Inc. was the co-insurer for P50,000.00.From 1989 to 1990, Geagonia had in his inventory stocks amounting to P392,130.50, itemized as follows:Zenco Sales, Inc., P55,698.00; F.

Legaspi Gen. Merchandise, 86,432.50; and Cebu Tesing Textiles,250,000.00 (on credit); totalling P392,130.50. The policy contained the following condition, that "the insuredshall give notice to the Company of any insurance or insurances already effected, or which may subsequentlybe effected, covering any of the property or properties consisting of stocks in trade, goods in process and/orinventories only hereby insured, and unless notice be given and the particulars of such insurance or insurancesbe stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on behalf ofthe Company before the occurrence of any loss or damage, all benefits under this policy shall be deemedforfeited, provided however, that this condition shall not apply when the total insurance or insurances in forceat the time of the loss or damage is not more than P200,000.00." On 27 May 1990, fire of accidental originbroke out at around 7:30 p.m. at the public market of San Francisco, Agusan del Sur. Geagonia's insuredstocks-in-trade were completely destroyed prompting him to file with Country Bankers a claim under thepolicy. On 28 December 1990, Country Bankers denied the claim because it found that at the time of the loss Geagonia's stocks-in-trade were likewise covered by fire insurance policies GA-28146 and GA-28144, forP100,000.00 each, issued by the Cebu Branch of the Philippines First Insurance Co., Inc. (PFIC). Thesepolicies indicate that the insured was "Messrs. Discount Mart (Mr. Armando Geagonia, Prop.)" with amortgage clause reading ""MORTGAGEE: Loss, if any, shall be payable to Messrs. Cebu Tesing Textiles,Cebu City as their interest may appear subject to the terms of this policy. CO-INSURANCE DECLARED:P100,000. Phils. First CEB/F-24758" The basis of Country Bankers' denial was Geagonia's allegedviolation of Condition 3 of the policy. Geagonia then filed a complaint against Country Bankers with theInsurance Commission (Case 3340) for the recovery of P100,000.00 under fire insurance policy F-14622 andfor attorney's fees and costs of litigation. He attached his letter of 18 January 1991 which asked for thereconsideration of the denial. He admitted in the said letter that at the time he obtained Country Bankers's fireinsurance policy he knew that the two policies issued by the PFIC were already in existence; however, he hadno knowledge of the provision in Country Bankers' policy requiring him to inform it of the prior policies; thisrequirement was not mentioned to him by Country Bankers' agent; and had it been so mentioned, he wouldnot have withheld such information. He further asserted that the total of the amounts claimed under the threepolicies was below the actual value of his stocks at the time of loss, which was P1,000,000.00. In its decisionof 21 June 1993, the Insurance Commission found that Geagonia did not violate Condition 3 as he had noknowledge of the existence of the two fire insurance policies obtained from the PFIC; that it was Cebu TesingTextiles which procured the PFIC policies without informing him or securing his consent; and that CebuTesing Textile, as his creditor, had insurable interest on the stocks. These findings were based on Geagonia'stestimony that he came to know of the PFIC policies only when he filed his claim with Country Bankers andthat Cebu Tesing Textile obtained them and paid for their premiums without informing him thereof. TheInsurance Commission ordered Country Bankers to pay Geagibua the sum of P100,000.00 with legal interestfrom the time the complaint was filed until fully satisfied plus the amount of P10,000.00 as attorney's fees.With costs. Its motion for the reconsideration of the decision having been denied by the InsuranceCommission in its resolution of 20 August 1993, Country Bankers appealed to the Court of Appeals by way ofa petition for review (CA-GR SP 31916). In its decision of 29 December 1993, the Court of Appeals reversedthe decision of the Insurance Commission because it found that Geagonia knew of the existence of the twoother policies issued by the PFIC. His motion to reconsider the adverse decision having been denied,Geagonia filed the petition for review on certiorari. Issue [1]: Whether the non-disclosure of other insurance policies violate condition 3 of the policy, so as todeny Geagonia from recovering on the policy. Held [1]: Condition 3 of Country Bankers's Policy F-14622 is a condition which is not proscribed by law. Itsincorporation in the policy is allowed by Section 75 of the Insurance Code, Such a condition is a provisionwhich invariably appears in fire insurance policies and is intended to prevent an increase in the moral hazard.It is commonly known as the additional or "other insurance" clause and has been upheld as valid and as awarranty that no other insurance exists. Its violation would thus avoid the policy. However, in order toconstitute a violation, the other insurance must be upon the same subject matter, the same interest therein, andthe same risk. The fire insurance policies issued by the PFIC name Geagonia as the assured and contain amortgage clause which reads: "Loss, if any, shall be payable to MESSRS. TESING TEXTILES, Cebu City astheir interest may appear subject to the terms of the policy." This is clearly a simple loss payable clause, not astandard mortgage clause. The Court concludes that (a) the prohibition in Condition 3 of the subject policyapplies only to double insurance, and (b) the nullity of the policy shall only be to the extent exceedingP200,000.00 of the total policies obtained. The first conclusion is supported by the portion of the conditionreferring to other insurance "covering any of the property or properties consisting of stocks in trade, goods inprocess and/or inventories only hereby insured," and the portion regarding the insured's declaration on thesubheading CO-INSURANCE that the co-insurer is Mercantile Insurance Co., Inc. in the sum of P50,000.00.A double insurance exists where the same person is insured by several insurers separately in respect of thesame subject and interest. Since the insurable interests of a mortgagor and a mortgagee on the mortgagedproperty are distinct and separate; the two policies of the PFIC do not cover the same interest as that covered

Rizal Commercial Banking Corporation (RCBC) vs. Court of Appeals [GR 128833, 20 April 1998] ;also RCBC vs. Court of Appeals [GR 128834] Second Division, Melo (J): 4 concur Facts:

Goyu & Sons, Inc. (Goyu) applied for credit facilities and accommodations with Rizal CommercialBanking Corporation (RCBC) at its Binondo Branch. After due evaluation, RCBC Binondo Branch, throughits key officers, petitioners Uy Chun Bing and Eli D. Lao, recommended Goyu's application for approval byRCBC's executive committee. A credit facility in the amount of P30 million was initially granted. UponGoyu's application and Uy's and Lao's recommendation, RCBC's executive committee increased Goyu's creditfacility to P50 million, then to P90 million, and finally to P117 million. As security for its credit facilities withRCBC, Goyu executed two real estate mortgages and two chattel mortgages in favor of RCBC, which wereregistered with the Registry of Deeds at Valenzuela, Metro Manila. Under each of these four mortgagecontracts, Goyu committed itself to insure the mortgaged property with an insurance company approved byRCBC, and subsequently, to endorse and deliver the insurance policies to RCBC. Goyu obtained in its name atotal of 10 insurance policies from MICO. In February 1992, Alchester Insurance Agency, Inc., the insuranceagent where Goyu obtained the Malayan insurance policies, issued 9 endorsements in favor of RCBCseemingly upon instructions of Goyu. On 27 April 1992, one of Goyu's factory buildings in Valenzuela wasgutted by fire. Consequently, Goyu submitted its claim for indemnity on account of the loss insured against.MICO denied the claim on the ground that the insurance policies were either attached pursuant to writs ofattachments/garnishments issued by various courts or that the insurance proceeds were also claimed by othercreditors of Goyu alleging better rights to the proceeds than the insured. Goyu filed a complaint for specificperformance and damages which was docketed at the Regional Trial Court of the National Capital JudicialRegion (Manila, Branch 3) as Civil Case 93-65442. RCBC, one of Goyu's creditors, also filed with MICO itsformal claim over the proceeds of the insurance policies, but said claims were also denied for the samereasons that AGCO denied Goyu's claims. In an interlocutory order dated 12 October 1993, the Regional Trial Court of Manila (Branch 3), confirmed that Goyu's other creditors, namely, Urban Bank, Alfredo Sebastian,and Philippine Trust Company obtained their respective writs of attachments from various courts, covering anaggregate amount of P14,938,080.23, and ordered that the proceeds of the 10 insurance policies be depositedwith the said court minus the aforementioned P14,938,080.23. Accordingly, on 7 January 1994, MICOdeposited the amount of P50,505,594.60 with Branch 3 of the Manila RTC. In the meantime, another notice ofgarnishment was handed down by another Manila RTC sala (Branch 28) for the amount of P8,696,838.75.After trial, Branch 3 of the Manila RTC rendered judgment in a favor of Goyu, ordering Malayan to pay Goyuits fire loss claims in the total amount of P74,040,518.58 less the amount of P50,000,000.00 which isdeposited with the Court; damages by way of interest for the duration of the delay since 27 July 1992 (90 daysafter Malayan's receipt of the required proof of loss and notice of loss) at the rate of twice the ceilingprescribed by the Monetary Board, on the amounts of (1) P50,000,000.00 from 27 July 1992 up to the timesaid amount was deposited with the Court on 7 January 1994; and (2) P24,040,518.58 from 17 July 1992up to the time when the writs of attachments were received by Malayan. The court also ordered RCBC to payGoyu actual and compensatory damages in the amount of P2,000,000.00, and both Malayan and RCBC tosolidarily pay Goyu (1) P1,000,000.00 as exemplary damages; (2) P1,000,000.00 as, and for, attorneys fees;and (3) Costs of suit. The Court, on the Counterclaim of RCBC, ordered Goyu to pay its loan obligations withRCBC in the amount of P68,785,069.04, as of 27 April 1992, with interest thereon at the rate stipulated in therespective promissory notes (without surcharges and penalties). From this judgment, all parties interposedtheir respective appeals. Goyu was unsatisfied with the amounts awarded in its favor. MICO and RCBCdisputed the trial court's findings of liability on their part. The Court of Appeals partly granted Goyu's appeal,but sustained the findings of the trial court with respect to MICO and RCBC's liabilities. The appellate courtmodified the decision by ordering Malayan to pay Goyu its fire loss claim in the total amount ofP74,040,518.58 less than the amount of P50,505,549.60 (per O.R. No. 3649285) plus deposited in court anddamages by way of interest commencing 27 July 1992 until the time Goyu receives the said amount at the rateof 37% per annum which is twice the ceiling prescribed by the Monetary Board; ordering RCBC to pay Goyuactual and compensatory damages in the amount of P5,000,000.00; and Malayan and RCBC, Uy Chun Bingand Eli Lao to pay Goyu solidarily in the amounts of (1) P1,500,000.00 as exemplary damages; and (2)P1,500,000.00 as and for attorney's fees. The Court, on RCBC's Counterclaim, ordered Goyuto pay its loanobligation with RCBC in the amount of P68,785.069.04 as of 27 April 1992 without any interest, surchargesand penalties. RCBC and Malayan appealed separately but, in view of the common facts and issues involved,their individual petitions were consolidated. Issue [1]: Whether RCBC, as mortgagee, has any right over the insurance policies taken by Goyu, themortgagor, in case of the occurrence of loss. Held [1]: YES. It is settled that a mortgagor and a mortgagee have separate and distinct insurable interests inthe same mortgaged property, such that each one of them may insure the same property for his own solebenefit. There is no question that Goyu could insure the mortgaged property for its own exclusive benefit.Herein, although it appears that Goyu obtained the subject insurance policies naming itself as the sole payee,the intentions of the parties as shown by their contemporaneous acts, must be given due consideration in orderto better serve the interest of justice and equity. It is to be noted that nine endorsement documents wereprepared by Alchester in favor of RCBC. The Court is in a quandary how Alchester could arrive at the idea ofendorsing any specific insurance policy in favor of any particular beneficiary or payee other than the insuredhad not such named payee or beneficiary been specifically disclosed by the insured itself. It is also significantthat Goyu voluntarily and purposely took the insurance policies from MICO, a sister company of RCBC, andnot just from any other insurance company. Alchester would not have found out that the subject pieces ofproperty were mortgaged to RCBC had not such information been voluntarily disclosed by Goyu itself. Had itnot been for Goyu, Alchester would not have known of Goyu's intention of obtaining insurance coverage incompliance with its undertaking in the mortgage contracts with RCBC, and verify, Alchester would not haveendorsed the policies to RCBC had it not been so directed by Goyu. On equitable principles, particularly onthe ground of estoppel, the Court is constrained to rule in favor of mortgagor RCBC. RCBC, in good faith,

June 17, 1922 G.R. No. L-17598 HENRY HARDING, plaintiff-appellee, vs. SAN MIGUEL BREWERY CO., defendant-appellant. Fisher and DeWitt for appellant. Kincaid, Perkins and Kincaid for appellee. , J.: The testimony is conclusive that the premiums on an insurance of P15,000 were paid, and the policies kept in force by either Dunn or the plaintiff, and that they fully complied with the provisions of the mortgage above quoted. At the time plaintiff purchased the property from Dunn, the defendant wrote him following letter: We beg to enclose herewith debit note No. 6 for P188.46 as premium paid on P15,000, divided into two policies No. 2366 and No. 174871 of the Filipinas Insurance Co., and the Law Union and Rock Insurance Co., Ltd., respectively, t he same being the amount in which has been insured the premises, furniture, fixtures, etc., of that Club as per agreement with us. Kindly note that in case of fire, we will cash the value of these policies and will withdraw the sum advanced to you, and the remainder will be handed then to you. In substance, this is a statement and representation to the plaintiff that the property was insured for P15,000, and that, in the event of a loss by fire, the defendant would collect the full amount of the policies, out of which it would satisfy its own mortgage debt, and then pay the balance of the loss to the plaintiff. Based upon that letter, the plaintiff paid the full amount of the premium of P188.46 for an insurance of P15,000 on the property, and paid all the premiums and kept the policies, in full force up to and including the date of the fire. After the fire, and under the provisions of the policies, it became necessary to submit proofs of loss, and, in compliance therewith, the defendant requested the plaintiff to make out and submit such proofs. It appears that there was some delay in doing this, as a result of which the defendant wrote the plaintiff the following letter: There has been ample time given you to produce plans and specifications to conform with the requirements of the Insurance Companies. As we cannot wait any longer, you are advised that, if on the 10th of September next, said specifications, also a detailed valuation of the furniture, fixtures, machinery, etc., are not submitted, we will have to file our claim with the Insurance Companies for our interests in the said property, and you will have to attend to the business of obtaining the balance from the Insurance Companies, yourself. This letter clearly shows that, at the time it was written, the defendant then understood t hat the plaintiffs interests were fully insured, and that, under the terms of the policies, he was entitled to receive any amount which would remain after the amount of the insurance for P15,000 due upon defendants mortgage debt was paid in full. This is further evidenced by the fact that after the final proofs were submitted, the defendant commenced an action on the policies against the insurance companies to recover the full amount of P15,000 upon which the plaintiff had paid the premium. The plaintiffs place of business was at Stotsenburg, and the defendants at Manila, who at all times had the physical possession and control of the policies, which were never seen by the plaintiff, and, for aught that appears in the record, all that he knew about their terms and provisions were the statements and representations of the defendant, which were made in the letter above quoted. At the time the mortgage was given, the defendants claim was for P9,000, upon which payments were made from time to time, so that when the fire occurred the amount of the mortgage debt was only P3,600. Yet, during all of this time, the plaintiff was paying premiums to, and a the request of, the defendant on an insurance of P15,000, and made such payments under the provisions of the mortgage, and the defendant alone had possession of the policies. In all things and respects, plaintiff and Dunn complied with the provisions of the mortgage, and kept performed their part of the contract. As a result of payments, the mortgage debt was reduced from P9,000 to P3,600. They paid premiums upon an insurance for P15,000, and it is very apparent that, in the making of such payments, the plaintiff was acting in good faith, and the he relied upon the statements and representations of the defendant, that the property was insured for P15,000, and that, in the event of a destruction by fire, the defendant would retain the amount of its debt, and that any balance of the P15,000 remaining would be paid to the plaintiff, and under the relations existing between them, the plaintiff had a right to rely upon such statements and representations.

It also clearly appears that the defendant itself thought and understood that the property was insured for P15,000, and that, in the event of a loss by fire, the plaintiff would have an receive any amount which remained over and above the defendants mortgage debt. This is clearly evidenced by each of the letters above quoted, and the further fact that the defendant commenced an action against the insurance companies to recover P15,000. The facts are peculiar, and the law of this case is more or less sui generis. It is very apparent that the plaintiff was acting in good faith, and that he was misled and deceived by the statements and representations of the defendant, who had the actual possession of the policies, and that plaintiff relied upon such statements and representations, and that, upon the payment of the premiums, he had a right to rely upon the statements made in the letter, because the policies were in possession of the defendant and never were submitted to the plaintiff for inspection. The contention of the defendant, that plaintiff is estopped and cannot maintain this action, is not tenable. The case of the defendant was brought against the insurance companies to recover the full amount of P15,000, and the only question there involved was the amount of the liability of the companies under the policies. Here, plaintiffs claim is not against the insurance companies, but against the defendant. There is no estoppel. Under the relation existing between them, with the policies in its possession, the defendant had no legal right to make any false statements or to mislead or deceive the plaintiff as to the terms or provisions of the policies. With the policies in its possession, and, under the relations existing between them, the defendant, having made such statements and representations, and the plaintiff relying thereon and having paid premiums to the defendant for an insurance of P15,000, in the interest of justice and fair dealing, the defendant should pay the plaintiff the amount of damages which he sustained by reason of such false statements. Judgment of the lower court is affirmed, with costs. So ordered.

HARDING v. COMMERCIAL UNION ASSURANCE 38 PHIL 464FISHER; August 10, 1918 FACTS - Mrs. Harding was the owner of a Studebakerautomobile; in consideration of the payment to thedefendant of the premium of P150, by said plaintiff,Mrs. Henry E. Harding, with the consent of herhusband, the defendant by its duly authorized agent,Smith, Bell & Company (limited), made its policy of insurance in writing upon said automobile was setforth in said policy to be P3,000 that the value of said automobile was set forth in said policy to beP3,000; that on March 24, 1916, said automobilewas totally destroyed by fire; that the loss thereby toplaintiffs was the sum of P3,000. - The defendants version is that by request of Mrs.Harding, it issued the policy of insurance on anautomobile alleged by the said plaintiff to be herproperty. It was made by means of a proposal inwriting signed and delivered by said plaintiff to thedefendant, guaranteeing the truth of the statementscontained therein which said proposal is referred toin the said policy of insurance made a part thereof;that certain of the statements and representationscontained in said proposal and warranted by saidplaintiff to be true, to wit: ( a ) the price paid by theproposer for the said automobile; ( b ) the value of said automobile at the time of the execution anddelivery of the said proposal and ( c ) the ownership of said automobile, were false and known to be false bythe said plaintiff at the time of signing and deliveringthe said proposal and were made for the purpose of misleading and deceiving the defendant, andinducing the defendant, relying upon the warranties,statements, and representations contained in thesaid proposal and believing the same to be true,issued the said policy of insurance.- The evidence shows that Hermanos, the Manilaagents for the Studebaker automobile, sold theautomobile to Canson for P3,200 (testimony of Mr.Diehl); who sold the said automobile to HenryHarding for the sum of P1,500. Harding sold the saidautomobile to J. Brannigan for the sum of P2,000who sold the said automobile Henry Harding for thesum of P2,800; Henry Harding gave the saidautomobile to his wife as a present; that saidautomobile was repaired and repainted at the LunetaGarage at a cost of some P900; that while the saidautomobile was at the Luneta Garage; the lattersolicited of Mrs. Harding the insurance of saidautomobile by the Company; that a proposal wasfilled out by the said agent and signed by the plaintiff Mrs. Henry E. Harding, and in said proposal underthe heading "Price paid by proposer," is the amountof "3,500" and under another heading "Presentvalue" is the amount of "3,000".- After the said proposal was made a representativeof the Manila agent of defendant went to the LunetaGarage and examined said automobile and Mr.Server, the General Manager of the Luneta Garage,an experienced automobile mechanic, testified thatat the time this automobile was insured it was worthabout P3,000, and the defendant, by and

through itssaid agent Smith, Bell & Company (limited),thereafter issued a policy of insurance upon proposalin which policy the said automobile was described asof the "present value" of P3,000 and the saiddefendant charged the said plaintiff Mrs. Henry E.Harding as premium on said policy the sum of P150,or 5 per cent of the then estimated value of P3,000.- The "Schedule" in said policy of insurance describesthe automobile here in question, and provides in partof follows:"That during the period above set forth and duringany period for which the company may agree torenew this policy the company will subject to theexception and conditions contained herein orendorsed hereon indemnify the insured against lossof or damage to any motor car described in theschedule hereto (including accessories) by whatevercause such loss or damage may be occasioned andwill further indemnify the insured up to the value of the car or P3,000 whichever is the greater againstany claim at common law made by any person (notbeing a person in the said motor car nor in theinsured's service) for loss of life or for accidentalbodily injury or damage to property caused by thesaid motor car including law costs payable inconnection with such claim when incurred with theconsent of the company."- On March 24, 1916, the said automobile was totallydestroyed by fire, and that the iron and steelportions of said automobile which did not burn weretaken into the possession of the defendant by andthrough its agent Smith, Bell & Company (limited),and sold by it for a small sum, which had never beentendered to the plaintiff prior to the trial of this case,but in open court during the trial the sum of P10 asthe proceeds of such sale was tendered to plaintiff and refused.- Trial judge decided that there was no proof of fraudon the part of plaintiff in her statement of the valueof the automobile, or with respect to its ownership;that she had an insurable interest therein; and thatdefendant, having agreed to the estimated value,P3,000, and having insured the automobile for thatamount, upon the basis of which the premium waspaid, is bound by it and must pay the loss inaccordance with the stipulated insured value. ISSUE 1. WON Mrs. Harding was not the owner of theautomobile at the time of the issuance of the policy,and, therefore, had no insurable interest in it2. WON the statement regarding the cost of theautomobile was a warranty, that the statement wasfalse, and that, therefore, the policy never attachedto the risk HELD 1. NO- Article 1334 of the Civil Code which provides that"All gifts between spouses during the marriage shallbe void. Moderate gifts which the spouses bestow oneach other on festive days of the family are notincluded in this rule."- Even assuming that defendant might have invokedarticle 1334 as a defense, the burden would be uponit to show that the gift in question does not fallwithin the exception therein established. We cannotsay, as a matter of law, that the gift of an automobileby a husband to his wife is not a moderate one.Whether it is or is not would depend upon thecircumstances of the parties, as to which nothing isdisclosed by the record.- We are of the opinion that it would be unfair to holdthe policy void simply because the outlayrepresented by the automobile was made by theplaintiff's husband and not by his wife, to whom hehad given the automobile. It cannot be assumed thatdefendant should not have issued the policy unless itwere strictly true that the price representing the costof the machine had been paid by the insured and byno other person that it would no event insure anautomobile acquired by gift, inheritance, exchange,or any other title not requiring the owner to make aspecific cash outlay for its acquisition.2. NO- It has not been shown by the evidence that thestatement was false; on the contrary we believe thatit shows that the automobile had in fact cost morethan the amount mentioned. The court below found,and the evidence shows, that the automobile wasbought by plaintiff's husband a few weeks before theissuance of the policy in question for the sum of P2,800, and that between that time and the issuanceof the policy some P900 was spent upon it in repairsand repainting.- The witness Server, an expert automobilemechanic, testified that the automobile waspractically as good as new at the time the insurancewas effected. The form of proposal upon which thepolicy was issued does not call for a statementregarding the value of the automobile at the time of its acquisition by the applicant for the insurance, butmerely a statement of its cost. The amount statedwas less than the actual outlay which the automobilerepresented to Mr. Harding, including repairs, whenthe insurance policy was issued.- The court below found and the evidence shows,without dispute, that the proposal upon which the policy in question was issued was made out bydefendant's agent by whom the insurance wassolicited, and that appellee simply signed the same.It also appears that an examiner employed by thedefendant made an inspection of the automobilebefore the acceptance of the risk, and that the sumafter this examination. The trial court found that Mrs.Harding, in fixing the value of the automobile atP3,000, acted upon information given her by herhusband and by Mr. Server, the manager of theLuneta Garage. She merely repeated the informationwhich had been given her by her husband, and at thesame time disclosed to defendant's agent the sourceof her information. There is no evidence to sustainthe contention that this communication was made inbad faith. We do not think that the facts stated inthe proposal can be held as a warranty of theinsured, even if it should have been shown that theywere incorrect in the absence of proof of willfulmisstatement. Under such circumstance, theproposal is to be regarded as the act of the insurerand not of the insured.

The Insular Life Assurance Company Ltd. vs. Ebrado [GR L-44059, 28 October 1977] First Division, Martin (J): 5 concur Facts: On 1 September 1968, Buenaventura Cristor Ebrado was issued by the Insular Life Assurance Co.,Ltd., Policy 009929 on a wholelife plan for P5,882.00 with a rider for Accidental Death Benefits for the sameamount. Buenaventura C. Ebrado designated

Carponia T. Ebrado as the revocable beneficiary in his policy.He referred to her as his wife. On 21 October 1969, Buenventura C. Ebrado died as a result of an accidentwhen he was hit by a falling branch of a tree. As the insurance policy was in force, Insular Life stands liableto pay the coverage of the policy in an amount of P11,745.73, representing the face value of the policy in theamount of P5,882.00 plus the additional benefits for accidental death also in the amount of P5,882.00 and therefund of P18.00 paid for the premium due November, 1969, minus the unpaid premiums and interest thereondue for January and February, 1969, in the sum of P36.27. Carponia T. Ebrado filed with the insurer a claimfor the proceeds of the policy as the designated beneficiary therein, although she admits that she and theinsured Buenaventura C. Ebrado were merely living as husband and wife without the benefit of marriage.Pascuala Vda. de Ebrado also filed her claim as the widow of the deceased insured. She asserts that she is theone entitled to the insurance proceeds, not the common-law wife, Carponia T. Ebrado. In doubt as to whomthe insurance proceeds shall be paid, the insurer commenced an action for Interpleader before the Court ofFirst Instance of Rizal on 29 April 1970. On 25 September 1972, the trial court rendered judgment declaring,among others, Carponia T. Ebrado disqualified from becoming beneficiary of the insured BuenaventuraCristor Ebrado and directing the payment of the insurance proceeds to the estate of the deceased insured.From this judgment, Carponia T. Ebrado appealed to the Court of Appeals, but on 11 July 1976, the AppellateCourt certified the case to the Supreme Court as involving only questions of law. Issue [1]: Whether a common-law wife named as beneficiary in the life insurance policy of a legally marriedman can claim the proceeds thereof in case of death of the latter. Held[1]: NO. It is quite unfortunate that the Insurance Act (RA 2327, as amended) or even the new InsuranceCode (PD 612, as amended) does not contain any specific provision grossly resolutory of the prime questionat hand. Section 50 of the Insurance Act which provides that "(t)he insurance shall be applied exclusively tothe proper interest of the person in whose name it is made" cannot be validly seized upon to hold that thesame includes the beneficiary. The word "interest" highly suggests that the provision refers only to the insuredand not to the beneficiary, since a contract of insurance is personal in character. Otherwise, the prohibitorylaws against illicit relationships especially on property and descent will be rendered nugatory, as the samecould easily be circumvented by modes of insurance. Rather, the general rules of civil law should be appliedto resolve this void in the Insurance Law. Article 2011 of the New Civil Code states: "The contract ofinsurance is governed by special laws. Matters not expressly provided for in such special laws shall beregulated by this Code." When not otherwise specifically provided for by the Insurance Law, the contract oflife insurance is governed by the general rules of the civil law regulating contracts. And under Article 2012 ofthe same Code, "any person who is forbidden from receiving any donation under Article 739 cannot be namedbeneficiary of a life insurance policy by the person who cannot make a donation to him." Common-lawspouses are, definitely, barred from receiving donations from each other. Article 739 of the new Civil Codeprovides that "the following donations shall be void: (1) Those made between persons who were guilty ofadultery or concubinage at the time of donation; (2) Those made between persons found guilty of the samecriminal offense, in consideration thereof; (3) Those made to a public officer or his wife, descendants or Narratives (Berne Guerrero) ascendants by reason of his office. In the case referred to in No. 1, the action for declaration of nullity may bebrought by the spouse of the donor or donee; and the guilt of the donee may be proved by preponderance ofevidence in the same action." In essence, a life insurance policy is no different from a civil donation insofar asthe beneficiary is concerned. Both are founded upon the same consideration: liberality. A beneficiary is like adonee, because from the premiums of the policy which the insured pays out of liberality, the beneficiary willreceive the proceeds or profits of said insurance. As a consequence, the proscription in Article 739 of the newCivil Code should equally operate in life insurance contracts. The mandate of Article 2012 cannot be laidaside: any person who cannot receive a donation cannot be named as beneficiary in the life insurance policyof the person who cannot make the donation. Under American law, a policy of life insurance is considered asa testament and in construing it, the courts will, so far as possible treat it as a will and determine the effect ofa clause designating the beneficiary by rules under which wills are interpreted. Policy considerations anddictates of morality rightly justify the institution of a barrier between common-law spouses in regard toproperty relations since such relationship ultimately encroaches upon the nuptial and filial rights of thelegitimate family. There is every reason to hold that the bar in donations between legitimate spouses and thosebetween illegitimate ones should be enforced in life insurance policies since the same are based on similarconsideration. As pointed out, a beneficiary in a life insurance policy is no different from a donee. Both therecipients of pure beneficence. So long as marriage remains the threshold of family laws, reason and moralitydictate that the impediments imposed upon married couple should likewise be imposed upon extramaritalrelationship. If legitimate relationship is circumscribed by these legal disabilities, with more reason should anillicit relationship be restricted by these disabilities. SSS v. DAVAC 17 SCRA 863BARRERA: July 30, 1966 FACTS - Petronilo Davac, became a member of the SocialSecurity System (SSS for short) on September 1,1957. In the Member's Record he designatedrespondent, Candelaria Davac as his beneficiary andindicated his relationship to her as that of "wife".- He died on April 5, 1959. It appears that thedeceased contracted two marriages, the first, withLourdes Tuplano on August 29, 1946, who bore hima child, Romeo Davac, and the second, withCandelaria Davac on January 18, 1949, with whomhe had a minor daughter, Elizabeth Davac. Both filedtheir claims for death benefit with the SSS.- Social Security Commission issued the resolutiondeclaring respondent Candelaria Davac as the personentitled to receive the death benefits payable for thedeath of Petronilo Davac.

ISSUES 1. WON the Social Security Commission CandelariaDavac is entitled to receive the death benefits2. WON a beneficiary under the Social SecuritySystem partakes of the nature of a beneficiary in alife insurance policy and, therefore the designationmade in the person DAVAC as bigamous wife is nulland void, because it contravenes the provisions of the Civil Code3. WON the benefits accruing from membership withSSS forms part of the conjugal property thus theresolution deprives the lawful wife of her share in theconjugal property as well as of her own and herchild's legitime in the inheritance HELD 2. NO- The disqualification mentioned in Article 739 is notapplicable to herein appellee Candelaria Davacbecause she was not guilty of concubinage, therebeing no proof that she had knowledge of theprevious marriage of her husband Petronilo.ART. 2012. Any person who is forbidden fromreceiving any donation under Article 739 cannot benamed beneficiary of a life insurance policy by theperson who cannot make any donation to himaccording to said article.ART. 739. The following donations shall be void:(1) Those made between persons who were guiltyof adultery or concubinage at the time of thedonation; (the court did not decide whether thispartakes the nature of a life insurance policy)

Vda de Consuegra vs. Government Service Insurance System [GR L-28093, 30 January 1971] En Banc, Zaldivar (J): 10 concur Facts: The late Jose Consuegra, at the time of his death, was employed as a shop foreman of the office of theDistrict Engineer in the province of Surigao-del Norte. In his lifetime, Consuegra contracted two marriages,the first with Rosario Diaz, solemnized in the parish church of San Nicolas de Tolentino, Surigao, Surigao, on15 July 1937, out of which marriage were born two children, namely, Jose Consuegra, Jr. and PedroConsuegra, but both predeceased their father; and the second, which was contracted in good faith while the first marriage was subsisting, with Basilia Berdin, on 1 May 1957 in the same parish and municipality, out ofwhich marriage were born seven children, namely, Juliana, Pacita, Maria Lourdes, Jose, Rodrigo, Lenida andLuz, * all surnamed Consuegra. Being a member of the Government Service Insurance System (GSIS) whenConsuegra died on 26 September 1965, the proceeds of his life insurance under policy 601801 were paid bythe GSIS to Basilia Berdin and her children who were the beneficiaries named in the policy. Having been inthe service of the government for 22.5028 years, Consuegra was entitled to retirement insurance benefits inthe sum of P6,304.47 pursuant to Section 12(c) of Commonwealth Act 186 as amended by Republic Acts1616 and 3836. Consuegra did not designate any beneficiary who would receive the retirement insurancebenefits due to him. Rosario Diaz, the widow by the first marriage, filed a claim with the GSIS asking that theretirement insurance benefits be paid to her as the only legal heir of Consuegra, considering that the deceaseddid not designate any beneficiary with respect to his retirement insurance benefits. Basilia Berdin and herchildren, likewise, filed a similar claim with the GSIS, asserting that being the beneficiaries named in the lifeinsurance policy of Consuegra, they are the only ones entitled to receive the retirement insurance benefits duethe deceased Consuegra. Resolving the conflicting claims, the GSIS ruled that the legal heirs of the late JoseConsuegra were Rosario Diaz, his widow by his first marriage who is entitled to one-half, or 8/16, of theretirement insurance benefits, on the one hand; and Basilia Berdin, his widow by the second marriage andtheir seven children, on the other hand, who are entitled to the remaining one-half, or 8/16, each of them toreceive an equal share of 1/16. Dissatisfied with the foregoing ruling and apportionment made by the GSIS,Basilia Berdin and her children filed on 10 October 1966 a petition for mandamus with preliminary injunctionin the Court of First Instance of Surigao del Norte (Special Proceeding 1720) naming as respondents theGSIS, the Commissioner of Public Highways, the Highway District Engineer of Surigao del Norte, theCommissioner of Civil Service, and Rosario Diaz, praying that they (Basilia Berdin, et al.) be declared thelegal heirs and exclusive beneficiaries of the retirement insurance of the late Jose Consuegra, and that writ ofpreliminary injunction be issued restraining implementation of the adjudication made by the GSIS. On 7March 1967, the court of First Instance of Surigao rendered judgment, holding that when two womeninnocently and in good faith are legally united in holy matrimony to the same man, they and their children,born of said wedlock, will be regarded as legitimate children and each family be entitled to one half of theestate. The court thus declared that Basilia Berdin Vda. de Consuegra and Juliana, Pacita, Maria Lourdes, JoseJr., Rodrigo, Lenida and Luis, all surnamed Consuegra, beneficiary and entitled to 1/2 of the retirementbenefit in the amount of P6,304.47) due to the deceased Jose Consuegra from the GSIS or the amount ofP3,152.235 to be divided equally among them in the proportional amount of 1/16 each. Likewise, RosarioDiaz Vda. de Consuegra is hereby declared beneficiary and entitled to the other half of the retirement benefitof the late Jose Consuegra or the amount of P3,152.235. Basilia Berdin and her children appealed (on purelyquestions of law). Issue [2]: Whether the GSIS and the trial court are correct in ruling that each of the wives who contractedmarriage to the same man in good faith are each entitled to half of the retirement insurance benefits. Held [2]:

YES. In the case of the proceeds of a life insurance, the same are paid to whoever is named thebeneficiary in the life insurance policy. As in the case of a life insurance provided for in the Insurance Act(Act 2427, as amended), the beneficiary in a life insurance under the GSIS may not necessarily be an heir ofthe insured. The insured in a life insurance may designate any person as beneficiary unless disqualified to beso under the provisions of the Civil Code. And in the absence of any beneficiary named in the life insurancepolicy, the proceeds of the insurance will go to the estate of the insured. Retirement insurance is primarilyintended for the benefit of the employee to provide for his old age, or incapacity, after rendering service inthe government for a required number of years. If the employee reaches the age of retirement, he gets theretirement benefits even to the exclusion of the beneficiary or beneficiaries named in his application forretirement insurance. The beneficiary of the retirement insurance can only claim the proceeds of theretirement insurance if the employee dies before retirement. If the employee failed or overlooked to state thebeneficiary of his retirement insurance, the retirement benefits will accrue his estate and will be given to hislegal heirs in accordance with law, as in the case of a life insurance if no beneficiary is named in the insurancepolicy. The GSIS, therefore, had correctly acted when it ruled that the proceeds of the retirement insurance ofthe late Jose Consuegra should divided equally between his first living wife Rosario on the one hand, and hissecond wife Basilia Berdin his children by her, on the other; and the lower court did not commit error when itconfirmed the action of the GSIS, it being accepted as a fact that the second marriage of Jose Consuegra toBasilia Berdin was contracted in good faith. The lower court has correctly applied the ruling of this Court inthe case of Lao, et al. vs. Dee Tim, et al., 45 Phil. 739. In the recent case of Gomez vs. Lipana, L-23214, June30, 1970, the Court, in construing the rights of two women who were married to the same man a situationmore or less similar to the case of Basilia Berdin and Rosario Diaz held "that since the defendant's firstmarriage has not been dissolved or declared void the conjugal partnership established by that marriage has notceased. Nor has the first wife lost or relinquished her status as putative heir of her husband under the newCivil Code, entitled to share in his estate upon his death should she survive him. Consequently, whether asconjugal partner in a still subsisting marriage or as such putative heir she has an interest in the husband's sharein the property here in dispute. " And with respect to the right of the second wife, this Court observed thatalthough the second marriage can be presumed to be void ab initio as it was celebrated while the firstmarriage was still subsisting, still there is need for judicial declaration of such nullity. And inasmuch as theconjugal partnership formed by the second marriage was dissolved before judicial declaration of its nullity,"[t]he only just and equitable solution in this case would be to recognize the right of the second wife to hershare of one-half in the property acquired by her and her husband, and consider the other half as pertaining tothe conjugal partnership of the first marriage."

FILIPINO MERCHANTS INS. v. CA (CHOA TIEKSENG) 179 SCRA 638REGALADO; November 28, 1989 NATURE Review of the decision of the CA FACTSPlaintiff insured said shipment with defendantinsurance company under said cargo for the goodsdescribed as 600 metric tons of fishmeal in newgunny bags of 90 kilos each from Bangkok, Thailandto Manila against all risks under warehouse towarehouse terms.- Some of the goods arrived in bad condition. Plaintiff made a claim against Filipino Merchants InsuranceCompany. The latter refused to pay. Plaintiff broughtan action against them. The defendant insurancecompany presented a third party complaint againstthe vessel and the arrastre contractor.- Judgment was rendered against the insurancecompany. On the third party complaint, the thirdparty defendants were ordered to pay the third partyplaintiffs. The CA affirmed, but modified the samewith regard to the adjudication of the third-partycomplaint ISSUES 1. WON some fortuity, casualty or accidental cause isneeded to be proved despite the all risks policy (asasserted by the insurance company)2. WON the respondent has an insurable interest HELD 1. NO- The very nature of the term "all risks" must begiven a broad and comprehensive meaning ascovering any loss other than a willful and fraudulentact of the insured. This is pursuant to the verypurpose of an "all risks" insurance to give protectionto the insured in those cases where difficulties of logical explanation or some mystery surround theloss or damage to property.- Generally, the burden of proof is upon the insuredto show that a loss arose from a covered peril, butunder an "all risks" policy the burden is not on theinsured to prove the precise cause of loss or damagefor which it seeks compensation. The insured underan "all risks insurance policy" has the initial burdenof proving that the cargo was in good condition whenthe policy attached and that the cargo was damagedwhen unloaded from the vessel; thereafter, theburden then shifts to the insurer to show theexception to the coverage. As we held in Paris-ManilaPerfumery Co. vs. Phoenix Assurance Co., Ltd. thebasic rule is that the insurance company has theburden of proving that the loss is caused by the riskexcepted and for want of such proof, the company isliable. In the present case, there being no showingthat the loss was caused by any of the exceptedperils,

the insurer is liable under the policy.2. YES- Section 13 of the Insurance Code defines insurableinterest in property as every interest in property,whether real or personal, or any relation thereto, orliability in respect thereof, of such nature that acontemplated peril might directly damnify theinsured. In principle, anyone has an insurableinterest in property who derives a benefit from itsexistence or would suffer loss from its destructionwhether he has or has not any title in, or lien uponor possession of the property y. Insurable interestin property may consist in (a) an existing interest;(b) an inchoate interest founded on an existinginterest; or (c) an expectancy, coupled with anexisting interest in that out of which the expectancyarises.- Respondents interest over the goods is based onthe perfected contract of sale. The perfected contractof sale between him and the shipper of the goodsoperates to vest in him an equitable title even beforedelivery or before be performed the conditions of thesale.- Further, Article 1523 of the Civil Code provides thatwhere, in pursuance of a contract of sale, the selleris authorized or required to send the goods to thebuyer, delivery of the goods to a carrier, whethernamed by the buyer or not, for, the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, the exceptions to said rulenot obtaining in the present case. The Court hasheretofore ruled that the delivery of the goods onboard the carrying vessels partake of the nature of actual delivery since, from that time, the foreignbuyers assumed the risks of loss of the goods andpaid the insurance premium covering them- Moreover, the issue of lack of insurable interest wasnot raised in petitioners answer. Disposition Petition denied.

Spouses Cha vs. Court of Appeals [GR 124520, 18 August 1997] First Division, Padilla (J): 4 concur Facts: Spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a lease contract with CKS DevelopmentCorporation, as lessor, on 5 October 1988. One of the stipulations of the 1 year lease contract states that "TheLESSEE shall not insure against fire the chattels, merchandise, textiles, goods and effects placed at any stallor store or space in the leased premises without first obtaining the written consent and approval of theLESSOR. If the LESSEE obtain(s) the insurance thereof without the consent of the LESSOR then the policyis deemed assigned and transferred to the LESSOR for its own benefit" Notwithstanding the above stipulationin the lease contract, the Cha spouses insured against loss by fire their merchandise inside the leased premisesfor P500,000.00 with the United Insurance Co., Inc. without the written consent of CKS. On the day that thelease contract was to expire, fire broke out inside the leased premises. When CKS learned of the insuranceearlier procured by the Cha spouses (without its consent), it wrote the insurer (United) a demand letter askingthat the proceeds of the insurance contract (between the Cha spouses and United) be paid directly to CKS,based on its lease contract with the Cha spouses. United refused to pay CKS. Hence, the latter filed acomplaint against the Cha spouses and United. On 2 June 1992, the Regional Trial Court, Branch 6, Manila,rendered a decision ordering United to pay CKS the amount of P335,063.11 and the Cha spouses to payP50,000.00 as exemplary damages, P20,000.00 as attorney's fees and costs of suit. On appeal, the Court ofAppeals in CA GR CV 39328 rendered a decision dated 11 January 1996, affirming the trial court decision,deleting however the awards for exemplary damages and attorney's fees. A motion for reconsideration byUnited was denied on 29 March 1996. The spouses Cha and United filed the petition for review on certiorari. Issue: Whether paragraph 18 of the lease contract entered into between CKS and the Cha spouses is validinsofar as it provides that any fire insurance policy obtained by the lessee (Cha spouses) over theirmerchandise inside the leased premises is deemed assigned or transferred to the lessor (CKS) if said policy isobtained without the prior written consent of the latter. Held: NO. It is basic in the law on contracts that the stipulations contained in a contract cannot be contrary tolaw, morals, good customs, public order or public policy. Section 18 of the Insurance Code provides that "Nocontract or policy of insurance on property shall be enforceable except for the benefit of some person havingan insurable interest in the property insured." A non-life insurance policy such as the fire insurance policytaken by the spouses over their merchandise is primarily a contract of indemnity. Insurable interest in theproperty insured must exist at the time the insurance takes effect and at the time the loss occurs. The basis ofsuch requirement of insurable interest in property insured is based on sound public policy: to prevent a personfrom taking out an insurance policy on property upon which he has no insurable interest and collecting theproceeds of said policy in case of loss of the property. In such a case, the contract of insurance is a merewager which is void under Section 25 of the Insurance Code, which provides that "Every stipulation in apolicy of Insurance for the payment of loss whether the person insured has or has not any interest in theproperty insured, or that the policy shall be received as proof of such interest, and every policy executed byway of gaming or wagering, is void." Herein, it cannot be denied that CKS has no insurable interest in thegoods and merchandise inside the leased premises under the provisions of Section 17 of the Insurance Codewhich provides that "The measure of an insurable interest in property is the extent to which the insured mightbe damnified by loss of injury thereof." Therefore, CKS cannot, under the Insurance Code a special law be validly a beneficiary of the fire insurance policy taken by the spouses over their merchandise. Thisinsurable interest over said merchandise remains with the insured, the Cha spouses. The automatic assignmentof the policy to CKS under the provision of the lease contract previously quoted is void for being contrary tolaw and/or public policy. The proceeds of the fire insurance policy thus rightfully belong to the spouses NiloCha and Stella Uy-Cha. The insurer (United)

cannot be compelled to pay the proceeds of the fire insurancepolicy to a person (CKS) who has no insurable interest in the property insured.

TAI TONG CHUACHE & CO v. INSURANCECOMMISSION and TRAVELLERS MULTI-INDEMNITY CORPORATION 158 SCRA 366GANCAYCO; February 29, 1988 FACTS - Complainants Palomo acquired a parcel of land anda building located in Davao City. They assumed themortgage of the building in favor of SSS, whichbuilding was insured with respondent SSS AccreditedGroup of Insurers for P25K.On April 19, 1975, Azucena Palomo obtained aP100K loan from Tai Tong Chuache Inc. (TTCC) andexecuted a mortgage over the land and the buildingin favor of Tai Tong Chuache & Co. as security of payment .On April 25, 1975, Arsenio Chua,representative of TTCC insured the latter's interestwith Travellers Multi-Indemnity Corporation(Travellers) for P100K (P70K for bldg and P30K forthe contents thereof)- On June 11, 1975, Pedro Palomo secured a FireInsurance Policy, covering the building for P50K withrespondent Zenith Insurance Corporation (ZIC).Another Fire Insurance Policy was later procuredfrom respondent Philippine British AssuranceCompany (PBAC), covering the same building forP50K and contents thereof for P70K. On July 31,1975, the building and the contents were totallyrazed by fire.- Based on the computation of the loss, including theTravellers, respondents, ZIC, PBAC, and SSS paidtheir corresponding shares of the loss. Complainantswere paid the following: P41,546.79 by PBAC,P11,877.14 by ZIC, and P5,936.57 by SSS. Demandwas made from respondent Travellers for its share inthe loss but was refused. Hence, complainantsdemanded from the other 3 respondents the balanceof each share in the loss based on the computationexcluding Travellers Multi-Indemnity in the amount of P30,894.31 (P5,732.79-ZIC: P22,294.62, PBAC: andP2,866.90, SSS) but was refused, hence, this action. ISSUE WON petitioner Tai Tong has insurable interest in thesaid policy HELD YES- First, respondent insurance commission based itsfindings on mere inference. Respondent InsuranceCommission absolved respondent insurance companyfrom liability on the basis of the certification issuedby the then CFI, that in a certain civil action againstthe Palomos, Arsenio Lopez Chua stands as thecomplainant and not Tai Tong Chuache. From saidevidence respondent commission inferred that thecredit extended by herein petitioner to the Palomossecured by the insured property must have beenpaid. Such is a glaring error which this Court cannotsanction.- Second, it has been held in a long line of cases thatwhen the creditor is in possession of the document of credit, he need not prove non-payment for it ispresumed. The validity of the insurance policy takenb petitioner was not assailed by private respondent.Moreover, petitioner's claim that the loan extended tothe Palomos has not yet been paid was corroboratedby Azucena Palomo who testified that they are stillindebted to herein petitioner. So at the time of thefire, petitioner as mortgagee still had insurableinterest therein.- And third, petitioner's declaration that ArsenioLopez Chua acts as the managing partner of thepartnership was corroborated by respondentinsurance company. Thus Chua as the managingpartner of the partnership may execute all acts of administration including the right to sue debtors of the partnership in case of their failure to pay theirobligations when it became due and demandable. Orat the least, Chua being a partner of petitioner TaiTong Chuache & Company is an agent of thepartnership. Being an agent, it is understood that heacted for and in behalf of the firm. Disposition Appealed decision SET ASIDE andANOTHER judgment is rendered order privaterespondent Travellers to pay petitioner the face valueof Fire Insurance Policy in the amount of P100K.Costs against said private respondent