White Gold Marine Services vs Pioneer Insurance

Facts: White Gold procured a protection and indemnity coverage for its vessels from Steamship Mutual through Pioneer Insurance. Subsequently, White Gold was issued a Certificate of Entry and Acceptance. Pioneer also issued receipts evidencing payments for the coverage. When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage. - Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latters unpaid balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code, while Pioneer violated Sections 299, 300 and 301 in relation to Sections 302 and 303, thereof. - The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business. It explained that Steamship Mutual was a Protection and Indemnity Club (P & I Club). Likewise, Pioneer need not obtain another license as insurance agent and/or a broker for Steamship Mutual because Steamship Mutual was not engaged in the insurance business. Moreover, Pioneer was already licensed, hence, a separate license solely as agent/broker of Steamship Mutual was already superfluous. - The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision, the appellate court distinguished between P & I Clubs vis--visconventional insurance. The appellate court also held that Pioneer merely acted as a collection agent of Steamship Mutual. Issues: 1. WON Steamship Mutual, a P & I Club, is engaged in the insurance business in the Philippines 2. WON Pioneer needs a license as an insurance agent/broker for Steamship Mutual

HELD 1. YES - The test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by what it is called. Basically, an insurance contract is a contract of indemnity. In it, one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.

- In particular, a marine insurance undertakes to indemnify the assured against marine losses, such as the losses incident to a marine adventure. Section 99 of the Insurance Code enumerates the coverage of marine insurance. - Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it, the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the profits are divided among themselves, in proportion to their interest. Additionally, mutual insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense costs. - A P & I Club is a form of insurance against third party liability, where the third party is anyone other than the P & I Club and the members. By definition then, Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business. - The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 187 of the Insurance Code. It maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. Thus, to continue doing business here, Steamship Mutual or through its agent Pioneer, must secure a license from the Insurance Commission. - Since a contract of insurance involves public interest, regulation by the State is necessary. Thus, no insurer or insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance Commission. 2. YES - SEC. 299 . . . No person shall act as an insurance agent or as an insurance broker in the solicitation or

procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof, without first procuring a license so to act from the Commissioner, which must be renewed annually on the first day of January, or within six months thereafter.

ALANOC v CA (G.R. L-8151): Melencio Basilio was a securit !uar" w#o "ie" w#ile on "ut . $#e insurance co%&an &ai" #is wi"ow' (ir!inia Calanoc' t#e )ace value o) t#e &olic ' *+',,,' -ut re)use" to !ive t#e a""itional su% o) *+',,, in t#e su&&le%entar contract coverin! "eat# - acci"ent. $#e insurance co%&an sai" #e was .ille" - so%eone &artici&atin! in a ro--er an" w#ile %a.in! an arrest' two contin!encies e/&ressl e/clu"e" in t#e contract. Basilio was .ille" as #e stoo" outsi"e t#e iron !ate o) Att O0e"a' as t#e trie" to !et into t#e #ouse w#ere t#e sus&ecte" a ro--er #a" -ro.en into. $#e Court o) A&&eals u&#el" t#e co%&an ' t#at sai" Basilio1s .illin! was not an acci"ent' -ut rat#er an intentional act on t#e &art o) t#e ro--er. $#e 2u&re%e Court rule" t#at t#ere was no &roo) t#at it was intentional' t#at t#e ro--er #a" ai%e" )or Basilio' -ecause t#ere was not#in! on recor" t#at s#owe" #ow t#e )atal s#ot was )ire" w#ile it was an acci"ent on t#e &art o) Basilio. $#e #ouse -ein! ro--e" was not t#e one #e was !uar"in!' an" #e #a" earlier re)use" to !o to t#e #ouse wit#out a &olice%an. 3nsurer or"ere" to &a .

B3AG$AN v CA (G.R. L-+5545): Bia!tan was .ille" as #is #ouse was -ein! ro--e". $#e insurance co%&an &ai" t#e -asic a%ount o) *5',,, -ut re)use" to &a t#e a""itional *5',,, un"er t#e acci"ental "eat# -ene)it clause' on t#e !roun" t#at #is "eat# was t#e result o) in0uries intentionall in)licte" - t#ir" &arties an" was not covere". $#e trial court rule" t#at t#ere was no &roo) t#at t#e ro--ers inten"e" to .ill Bia!tan' or 0ust to scare #i% awa - t#rustin! at #i% wit# t#eir .nives. $#e 2u&re%e Court #el" ot#erwise' &ointin! out t#at t#ere were nine woun"s in all. $#e e/ce&tion in t#e acci"ental -ene)it clause "oes not s&ea. o) t#e &ur&ose 6 w#et#er #o%ici"al or not 6 o) a t#ir" &art in causin! t#e in0uries' -ut onl o) t#e )act t#at suc# in0uries #ave -een intentionall in)licte". Nine woun"s in)licte" wit# -la"e" wea&ons at close ran!e cannot -e consi"ere" innocent inso)ar as intent is concerne". $#e %anner o) e/ecution o) t#e cri%e &er%its no ot#er conclusion. 7issent: $#e case o) Calanoc is controllin!. $#e t#rusts see%e" to -e a re)le/ action on t#e &art o) t#e ro--ers u&on -ein! sur&rise" - Bia!tan. $#e acci"ental "eat# -ene)it clause carries several e/ce&tions' wit# an a%-i!uous )i)t# &ara!ra&# sa in! t#at in0uries in)licte" intentionall - a t#ir" &art were a%on! t#e e/ce&tions. $#e a%-i!uous clause con)licts wit# all t#e ot#er )our e/ce&tions an" see%in!l e/ce&t all ot#er in0uries' intentionall in)licte" - a t#ir" &art ' re!ar"less o) an violation o) law or &rovocation - t#e insure"' an" "e)eat t#e ver &ur&ose o) t#e &olic o) !ivin! t#e insure" "ou-le in"e%nit in case o) acci"ental "eat# - e/ternal an" violent %eans. A&&l in! t#e rule o) noscitus a sociis' t#e "ou-le in"e%nit &olic covers t#e insure" a!ainst acci"ental "eat#' w#et#er cause" - )ault' ne!li!ence or intent o) a t#ir" &art w#ic# is un)oreseen an" une/&ecte" - t#e insure". All t#e associate" wor"s an" conce&ts in t#e &olic &lainl e/clu"e t#e acci"ental "eat# )ro% t#e covera!e o) t#e &olic onl w#ere t#e in0uries are sel)-in)licte" or atten"e" - so%e &roscri-e" act o) t#e insure" or incurre" in so%e e/&ressl inclu"e" cala%it suc# as riot' war or ato%ic e/&losion. Besi"es' two ot#er insurance co%&anies w#ic# also covere" t#e insure" &ai" t#e -ene)its. 23MON 78 LA CR9:(;;can1t re%e%-er t#e e/act case): 8"uar"o "e la Cru<' a %uc.er at t#e 3to!on-2u oc Mines' was .ille" in a -o/in! -out. $#e insurer re)use" to &a ' sa in! t#at #is "eat# was cause" - #is &artici&ation in t#e -o/in! -out' w#ic# was voluntar an" not acci"ental. $#e trial court rule" in )avor o) "e la Cru<. $#e Court u&#el" t#e "ecision. 1. An acci"ent is an event t#at ta.es &lace wit#out one1s )oresi!#t or e/&ectation 6 an event t#at &rocee"s )ro% an un.nown cause' or is an unusual e))ect o) a .nown cause. $#e )act t#at -o/in! is atten"e" wit# so%e ris.s o) e/ternal in0uries "oes not %a.e an in0uries receive" in t#e course o) t#e !a%e not acci"ental. 3n -o/in!' as in ot#er e=uall &# sicall ri!orous s&orts' suc# as -as.et-all or -ase-all' "eat# is not or"inaril antici&ate" to result. 3) it ever "oes' t#e in0ur or "eat# can onl -e acci"ental or &ro"uce" - so%e un)oreseen #a&&enin! or event. +. 7eat# or in0ur "oes not result )ro% acci"ent or acci"ental %eans wit#in t#e ter%s o) an acci"ent &olic i) it is t#e natural result o) t#e insure"1s voluntar act' unacco%&anie" - an t#in! un)oreseen e/ce&t t#e "eat# or in0ur . >#ere t#e "eat# or in0ur is not t#e natural or &ro-a-le result o) t#e insure"1s voluntar act' or i) so%et#in! un)oreseen occurs in t#e "oin! o) t#e act w#ic# &ro"uces t#e in0ur ' t#e resultin! "eat# is wit#in t#e &rotection o) &olicies insurin! a!ainst "eat# or in0ur )ro% acci"ent. 3n t#is case' "e la Cru< sli&&e" 6 w#ic# !ave #is o&&onent t#e c#ance to lan" t#e #ea" -low t#at eventuall .ille" #i%. ?. $#e &olic s&eci)icall e/clu"e" )ro% its covera!e several s&orts -ut "i" not %ention -o/in!. $#e court #el" t#at )ailure o) t#e insurer to e/&ressl inclu"e -o/in! a%on! t#e &ro#i-itive ris.s %eant it "i" not inten" to e/e%&t itsel) )ro% lia-ilit )or suc# "eat#. 29N 3N29RANC8 O@@3C8 L$7 v CA: @eli/ Li% Ar s#ot #i%sel) "ea" an" t#e )a%il trie" to clai% on t#e &olic . $#e insurer re)use"' sa in! t#at w#en #e &ut a !un to #is #ea"' t#ou!# t#in.in! it was not loa"e"' #e will)ull e/&ose" #i%sel) to nee"less &eril an" re%ove" #i%sel) )ro% t#e covera!e o) t#e insurance &olic . $#e )a%il sai" t#at Li% #a" re%ove" t#e %a!a<ine -e)ore an" )ull -elieve" t#at t#e !un was not loa"e". As suc#' it was an acci"ent t#at s#oul" -e covere" - t#e &olic . $#e court #el" t#at w#ile Li% was un=uestiona-l ne!li!ent' t#at s#oul" not &revent #is wi"ow )ro% recoverin! )ro% t#e insurance &olic #e o-taine" &recisel a!ainst acci"ent. $#ere is not#in! in t#e &olic t#at relieves t#e insurer o) t#e res&onsi-ilit to &a t#e in"e%nit a!ree" u&on i) t#e insure" is s#own to #ave contri-ute" to #is own acci"ent. @3NMAN G8N8RAL A229RANC8 COR* v CA (G.R. 1,,54,): Carlie 2u&osa was .ille" w#ile on #is wa #o%e )ro% a &art . >#en #is )a%il trie" to collect on t#e insurance &rocee"s' t#e insurer "enie" t#e clai% sa in! t#at %ur"er an" assault were not wit#in t#e sco&e o) covera!e o) t#e insurance &olic ' -ecause it was not acci"ental -ut a "eli-erate an" intentional act o) t#e assailant. $#e 3nsurance Co%%ission sai" t#e "eat# was covere" - t#e &olic ' a "ecision u&#el" - t#e CA. $#e CA &ointe" out t#at: 1. $#e recor" is -arren o) #ow t#e sta- woun" was in)licte" +. >#ile t#e act %a not e/e%&t t#e un.nown &er&etrator )ro% cri%inal lia-ilit ' t#e #a&&enin! was a &ure acci"ent on t#e

&art o) t#e victi% ?. $#e &ersonal acci"ent &olic enu%erate" 1, circu%stances w#erein no lia-ilit attac#es to insurer an" %ur"er an" assault were not e/&ressl %entione". @ailure o) t#e insurer to inclu"e t#ese lea"s to t#e conclusion t#at it "i" not inten" to e/e%&t itsel) )ro% lia-ilit )or suc# "eat#. 8$8RNAL GAR78N2 M8MOR3AL *ARB COR* v *C3LAML3@8 (G.R. 1DD+E5): 8ternal Gar"ens too. out a !rou& li)e &olic insurance )or custo%ers -u in! its %e%orial &lots on install%ent -asis. >#en it trie" to clai% on -e#al) o) one o) its lot -u ers' Ao#n C#uan!' *#ila% Li)e "enie" t#e clai%' sa in! t#at at t#e ti%e C#uan! "ie"' it #a" et to receive an a&&lication )or !rou& insurance )or C#uan!' an" so coul" not #ave a&&rove" an . *re%iu%s' t#ou!# &ai"' "o not connote a&&roval o) t#e insurance covera!e -ut are #el" - t#e insurer in trust )or t#e &a or until t#e &rere=uisites )or insurance covera!e are %et. $#e trial court "eci"e" in )avor o) 8ternal' #ol"in! t#at t#e a&&lication )or insurance was acco%&lis#e" -e)ore C#uan! "ie". $#e CA reverse"' )in"in! instea" t#at t#e a&&lication was not su-%itte" an" t#at non-acco%&lis#%ent o) t#e su-%itte" a&&lication )or% violate" sec +D o) t#e 3nsurance Co"e. $#e 2u&re%e Court rule" in )avor o) 8ternal' )in"in! t#at *#ila%li)e receive" a letter statin! t#at t#e insurance )or%s are attac#e" to t#e letter. Alt#ou!# *#ila% "i" not a&&rove t#e a&&lication' an a%-i!uous &rovision sa in! t#at Ft#e insurance o) an eli!i-le lot &urc#aser s#all -e e))ective on t#e "ate #e contracts a loan wit# t#e assure". Cowever' t#ere s#all -e no insurance i) t#e a&&lication o) t#e lot &urc#aser is not a&&rove" - t#e co%&an .G $#e )irst sentence a&&ears to state t#at insurance covera!e o) clients o) 8ternal -eco%e e))ective u&on contractin! a loan wit# 8ternal w#ile t#e secon" sentence i%&lies t#at *#ila%li)e1s a&&roval o) t#e contract is re=uire" )irst. $#e va!ue &rovision %ust -e construe" in )avor o) t#e insure"' an" t#e &rovisions #ar%oni<e" to %ean t#at u&on a &art 1s &urc#ase o) a %e%orial lot on install%ent )ro% 8ternal' an insurance contract coverin! t#e lot &urc#aser is create" an" t#e sa%e is e))ective an" vali" until ter%inate" - *#ila%li)e - "isa&&rovin! t#e insurance a&&lication. 3n or"er to &rotect t#e interest o) insurance a&&licants' insurance co%&anies %ust -e o-li!ate" to act wit# #aste u&on insurance a&&lications' to eit#er "en or a&&rove t#e sa%e' or ot#erwise -e -oun" to #onor t#e a&&lication as vali"' -in"in!' an" e))ective insurance contract. GR8A$ *AC3@3C L3@8 A229RANC8 COR* v CA (G.R. 11?855): 7r. >il)re"o Leuterio' a #ousin! "e-tor o) 7B*' a&&lie" )or %e%-ers#i& in Gre&ali)e1s !rou& li)e insurance &lan 7B* #ousin! loan %ort!a!ors. Gre&ali)e insure" #i% to t#e e/tent o) #is 7B* %ort!a!e in"e-te"ness' *8D'+,,. >#en 8leuterio "ie" o) %assive cere-ral #e%orr#a!e t#e )ollowin! ear' Gre&ali)e "enie" t#e clai% alle!in! t#at Leuterio )aile" to "isclose #e was su))erin! )ro% # &ertension' an" t#at t#e non-"isclosure constitute" conceal%ent t#at 0usti)ie" t#e "enial. Because o) Gre&ali)e1s re)usal to &a ' 7B* )oreclose" on t#e %ort!a!e on t#e &ro&ert to satis) t#e outstan"in! loan. Gre&ali)e raise" several issues on a&&eal: 1.Leuterio1s wi"ow )ile" t#e suit' not 7B*' w#ic# was t#e &art in interest. Leuterio assi!ne" t#e &rocee"s to 7B*' -ut in a %ort!a!e re"e%&tion insurance' t#e %ort!a!ors re%ains t#e &art in interest -ecause t#e insurance also &rotects #is interests. (so wi"ow' as #eir' %a succee" #i% as &art in interest). MOR$GAG8 R878M*$3ON 3N29RANC8. A "evice to &rotect -ot# %ort!a!ee an" %ort!a!or. 3n case t#e %ort!a!or "ies' t#e &rocee"s o) t#e insurance are use" to &a t#e %ort!a!e "e-t' relievin! t#e #eirs o) t#e %ort!a!or )ro% &a in! it. $#e %ort!a!e o-li!ation is e/tin!uis#e" - t#e a&&lication o) t#e insurance &rocee"s to t#e %ort!a!e in"e-te"ness. >#ere t#e %ort!a!or &a s t#e insurance &re%iu% un"er t#e !rou& insurance &olic ' %a.in! t#e loss &a a-le to t#e %ort!a!ee' t#e insurance is on t#e %ort!a!or1s interest' an" t#e %ort!a!or continues to -e a &art to t#e contract. 3n t#is t &e o) &olic insurance' t#e %ort!a!ee is si%&l an a&&ointee o) t#e insurance )un"' suc# loss-&a a-le clause "oes not %a.e t#e %ort!a!ee a &art to t#e contract. $#e insure" %a still -e re!ar"e" as t#e &art in interest' alt#ou!# #e #as assi!ne" t#e &olic )or t#e &ur&ose o) collection' or #as assi!ne" as collateral securit an 0u"!%ent #e %a o-tain. Cowever' w#ere t#e %ort!a!ee un"er a %ort!a!e re"e%&tion insurance #as alrea" )oreclose" on t#e %ort!a!e' it cannot collect t#e insurance &rocee"s 6 t#ese ri!#tl -elon! to t#e #eirs o) t#e %ort!a!or. 2ec. 8. 9nless t#e &olic &rovi"es' w#ere a %ort!a!or o) &ro&ert e))ects insurance in #is own na%e &rovi"in! t#at t#e loss s#all -e &a a-le to t#e %ort!a!ee' or assi!ns a &olic o) insurance to a %ort!a!ee' t#e insurance is "ee%e" to -e u&on t#e interest o) t#e %ort!a!or' w#o "oes not cease to -e a &art to t#e ori!inal contract' an" an act o) #is' &rior to t#e loss' w#ic# woul" ot#erwise avoi" t#e insurance' will #ave t#e sa%e e))ect' alt#ou!# t#e &ro&ert is in t#e #an"s o) t#e %ort!a!ee' -ut an act w#ic#' un"er t#e contract o) insurance' is to -e &er)or%e" - t#e %ort!a!or' %a -e &er)or%e" - t#e %ort!a!ee t#erein na%e"' wit# t#e sa%e e))ect as i) it #a" -een &er)or%e" - t#e %ort!a!or. 2ince a &olic o) insurance u&on li)e or #ealt# %a &ass - trans)er' will or succession to an &erson' w#et#er #e #as insura-le interest or not' an" suc# &erson %a

recover it w#atever t#e insure" %i!#t #ave recovere"' t#e wi"ow o) 7r. Leuterio %a )ile t#e suit a!ainst t#e insurer. +. CONC8ALM8N$. $#e )rau"ulent intent on t#e &art o) t#e insure" %ust -e esta-lis#e" to entitle t#e insurer to rescin" t#e contract. Misre&resentation as a "e)ense o) t#e insurer to avoi" lia-ilit is an a))ir%ative "e)ense an" t#e "ut to esta-lis# suc# "e)ense - satis)actor an" convincin! evi"ence rests u&on t#e insurer. *etitioner )aile" to clearl an" satis)actoril esta-lis# its "e)ense' an" is t#ere)ore lia-le to &a t#e &rocee"s o) t#e insurance. (No auto&s &rovin! t#at 8leuterio "ie" o) # &ertension. 7eat# certi)icate sai" cere-ral #e%orr#a!e' &ro-a-l secon"ar to # &ertension. ) ?. *8C9N3ARH 82$3MA$3ON. A li)e insurance is a value" &olic . 9nless t#e interest o) a &erson insure" is susce&ti-le o) e/act &ecuniar %easure%ent' t#e %easure o) in"e%nit un"er a &olic o) insurance u&on li)e or #ealt# is t#e su% )i/e" in t#e &olic .

4.

PAN MALAYAN INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, ERLINDA FABIE AND HER UNKNO N DRI!ER, ".R. No. #$%&'. AN INSURANCE LA CASE. C Y
Be(o) t*is +i,est is t*e -.(( /0se. FACTS. $. Petitioner P0n10(02 )0s 0n ins.rer o- t*e /0r o- CANLUBAN" AUTOMOTI!E RESOURCE CORP. )*i/* )0s 3.1pt 0n+ +010,e+ 32 t*e priv0te respon+ent t*ro.,* its ne,(i,ent +river. &. Petitioner PANMALA2 p0i+ t*e 01o.nt o- ins.r0n/e to t*e ins.re+. 4. S.3ro,0te+ on t*e ri,*ts o- t*e ins.re+, petitioner +e10n+ p021ent -ro1 t*e priv0te respon+ent )*o re-.se+ to p02 t*e /(0i1 o- t*e petitioner. 5. Petitioner -i(e+ 0 /o1p(0int 0,0inst priv0te respon+ent 3e-ore t*e RTC. 6. Priv0te respon+ent -i(e+ 0 1otion to +is1iss 0r,.in, t*0t p021ent .n+er t*e 7o)n +010,e7 /(0.se o- t*e ins.r0n/e po(i/2 pre/(.+e+ s.3ro,0tion .n+er Arti/(e &&%8 o- t*e Civi( Co+e, sin/e in+e1ni-i/0tion t*ere.n+er )0s 10+e on t*e 0ss.1ption t*0t t*ere )0s no )ron,+oer or no t*ir+ p0rt2 0t -0.(t. '. T*e RTC +is1isse+ t*e /o1p(0int 0s)e(( 0s t*e 1otion -or re/onsi+er0tion 0n+ t*is )0s 0--ir1e+ 32 t*e CA. ISSUE. HETHER OR NOT, THE PETITIONER IS ALLO ED TO RECO!ERED THE AMOUNT OF INSURANCE IT HAD PAID TO THE INSURED FROM PRI!ATE RESPONDENT. A//or+in, to t*e S.pre1e Co.rt, Art. &&%8 o- t*e /ivi( /o+e st0tes t*0t I- t*e p(0inti--s propert2 *0s 3een ins.re+, 0n+ *e *0s re/eive+ in+e1nit2 -ro1 t*e ins.r0n/e /o1p0n2 -or t*e in9.r2 or (oss 0risin, o.t o- t*e )ron, or 3re0/* o- /ontr0/t /o1p(0ine+ o-, t*e ins.r0n/e /o1p0n2 s*0(( 3e s.3ro,0te+ to t*e ri,*ts o- t*e ins.re+ 0,0inst t*e )ron,+oer or t*e person )*o *0s vio(0te+ t*e /ontr0/t. T*is )0s -o.n+e+ on t*e )e((:sett(e+ prin/ip(e o- s.3ro,0tion. I- t*e ins.re+ propert2 is +estro2e+ or +010,e+ t*ro.,* t*e -0.(t or ne,(i,en/e o- 0 p0rt2 ot*er t*0n t*e 0ss.re+, t*e ins.rer, .pon p021ent to t*e 0ss.re+, )i(( 3e s.3ro,0te+ to t*e ri,*ts o- t*e 0ss.re+ to re/over -ro1 t*e )ron,+oer to t*e e;tent t*0t t*e ins.rer *0s 3een o3(i,0te+ to p02. P021ent 32 t*e ins.rer to t*e 0ss.re+ oper0tes 0s 0n e<.it03(e 0ssi,n1ent to t*e -or1er o- 0(( re1e+ies )*i/* t*e (0tter 102 *0ve 0,0inst t*e t*ir+ p0rt2 )*ose ne,(i,en/e or )ron,-.( 0/t /0.se+ t*e (oss. HEREFORE, in vie) o- t*e -ore,oin,, t*e present petition is "RANTED. Petitioner=s /o1p(0int -or +010,es 0,0inst priv0te respon+ents is reinst0te+. So t*e /0se )0s re10n+e+ to t*e Tri0( Co.rt -or t*e tri0( o- t*e 1erit.

I. Construction of Insurance Contracts

By LLBe:LawLifeBuzzEtcetera

! Calanoc vs. Court of "##eals$ %& Phil. '% In construin( a)*i(uous ter)s in an insurance #olicy coverin( accidental death$ the Su#re)e Court held that such ter)s are to *e construed strictly a(ainst the insurer$ and li*erally in favor of the insured so as to effect the do)inant #ur#ose of inde)nity or #ay)ent to the insured. +he ,illin( of the victi) was a #ure accident on his #art since it is #ossi*le that the )alefactor had fired the shot )erely to scare away the #eo#le around for his own #rotection and not necessarily to ,ill or hit the victi). -! Bia(tan vs. +he Insular Life "ssurance Co)#any$ Ltd. .. SC/" 0& 1nli,e the rulin( in the case of Calanoc vs. Court of "##eals$ where the ,illin( of the victi) was held as accidental and thus covered *y the insurance #olicy$ the Su#re)e Court held that in the instant case$ the insured was ,illed intentionally. +he ter) 2intentional3 i)#lies the e4ercise of the reasonin( faculties$ consciousness and volition. 5! 6in)an General "ssurance Cor#. vs. Court of "##eals$ - 5 SC/" .%5 +he ter)s 2accident3 and 2accidental3 are construed *y the courts in their ordinary and co))on acce#tation. +he ter)s have *een ta,en to )ean that which ha##en *y chance$ without intention and desi(n$ and which is une4#ected$ unusual and unforeseen. Where the death or in7ury is not the natural or #ro*a*le result of the insured8s voluntary act$ the resultin( death is within the #rotection of the #olicies insurin( a(ainst death or in7ury fro) accident. .! 9enith Insurance Cor#oration vs. Court of "##eals$ &0 SC/" 5%& 1nder the Insurance Code$ in case of unreasona*le delay in the #ay)ent of the #roceeds of an insurance #olicy$ the da)a(es that )ay *e awarded are: a! attorney8s fees: *! other e4#enses incurred *y the insured #erson *y reason of such unreasona*le denial or withholdin( of #ay)ent: c! interest at twice the ceilin( #rescri*ed *y the Monetary Board of the a)ount of the clai) due the in7ured: and d! the a)ount of the clai). 0! Sun Insurance ;ffice$ Ltd. vs. Court of "##eals$ SC/" 00. "n accident is an event which ha##ens without any hu)an a(ency or$ if ha##enin( throu(h hu)an a(ency$ an event which$ under the circu)stances is unusual to and not e4#ected *y the #erson to who) it ha##ens. +here is no accident when a deli*erate act is #erfor)ed unless so)e additional$ une4#ected$ inde#endent and unforeseen ha##enin( occurs which #roduces or *rin(s a*out their in7ury or death. +here is nothin( in the #olicy that relieves the insurer of the res#onsi*ility to #ay the inde)nity a(reed u#on if the insured is shown to have contri*uted to his own accident. <! =illacorta vs. Insurance Co))ission$ >> SC/" .<' +he )ere ha##enstance that the e)#loyees used the car for their own illicit #ur#ose does not )ean that the 2authorized driver3 clause has *een violated so as to *ar recovery$ #rovided that such e)#loyee is duly ?ualified under a valid driver8s license. Moreover$ when a #erson ta,es #ossession of a vehicle *elon(in( to another$ without the consent of its owner$ he is (uilty of theft *ecause his intent to (ain is evident since he derives utility$ satisfaction$ en7oy)ent and #leasure. @ence$ the insurer )ust inde)nify the insured under the 2theft3 clause$ which #ro#erly a##lies in this case.

'! =da. de Ma(lana vs. Consolacion$ - - SC/" -<& While it is true that where the insurance contract #rovides for inde)nity a(ainst lia*ility to third #ersons$ such third #ersons can directly sue the insurer$ however$ the direct lia*ility of the insurer under inde)nity contracts a(ainst third #arty lia*ility does not )ean that the insurer can *e held solidarily lia*le with the insured and other #arties found at fault. +he reason is *ecause the lia*ility of the insurer is *ased on contract$ while the lia*ility of the insured is *ased on tort. &! Perla Co)#ania de Se(uros$ Inc. vs. Court of "##eals$ ->& SC/" .&' Li,e in the case of =illacorta vs. Insurance Co))ission$ the Su#re)e Court held that the 2theft3 clause a##lies where a car is unlawfully and wron(fully ta,en without the owner8s consent. +he 2authorized driver3 clause does not a##ly. +here is no causal connection *etween the #ossession of a valid driver8s license and the loss of a vehicle. %! Gea(onia vs. Court of "##eals$ -. SC/" 0" #olicy )ay declare that a violation of s#ecified #rovisions thereof shall avoid it$ otherwise$ the *reach of an i))aterial #rovision does not avoid the #olicy. +o constitute a violation of the 2other insurance3 clause$ the other insurance )ust *e u#on the sa)e su*7ect )atter$ the sa)e interest therein$ and the sa)e ris,. >! 6ortune Insurance and Surety Co.$ Inc. vs. Court of "##eals$ -.. SC/" 5>& 1nder the (eneral e4ce#tions clause of the insurance #olicy$ it was clearly shown that the insurer intended to *e e4e)#ted fro) lia*ility for acts of any #erson who ?ualifies as an e)#loyee of the insured. +he #ur#ose of the e4ce#tion is to (uard a(ainst lia*ility should the theft *e co))itted *y one havin( unrestricted access to the #ro#erty. ! Edillon vs. Manila Ban,ers Life Insurance Cor#.$ ' SC/" &' When the #olicy contains a condition which renders it voida*le at its ince#tion$ and this result is ,nown to the insurer$ it will *e #resu)ed that it intended to waive the conditions and to e4ecute a *indin( contract. +he insurance cor#oration is dee)ed to *e in esto##el. -! Perla Co)#ania de Se(uros$ Inc. vs. Court of "##eals$ &0 SC/" '. +he ter)s of the contract constitute the )easure of the insurer8s lia*ility and co)#liance therewith is a condition #recedent to the insured8s ri(ht of recoverin( fro) the insurer. 1nder the Insurance Code$ the lia*ility of the land trans#ortation vehicle o#erators for *odily in7uries sustained *y a #assen(er arisin( out of the use of their vehicles shall not *e less than P -$>>>.

Calanoc vs. CA (98 PHIL 79)

Post under case digests, Commercial Law at Wednesday, February 22, 2012 Posted by Schi o!hrenic "ind

Facts: Basilio was a watc#%an o) t#e Manila Auto 2u&&l locate" at t#e corner o) Aveni"a Ri<al an" :ur-aran. Ce secure" a li)einsurance &olic )ro% t#e *#ili&&ine A%erican Li)e 3nsuranceCo%&an in t#e a%ount o) *+',,, to w#ic# was

attac#e" asu&&le%entar contract coverin! "eat# - acci"ent. On Aanuar +5' 1551' #e "ie" o) a !uns#ot woun" on t#e occasion o) a ro--er co%%itte" in t#e #ouse o) Att . O0e"a at t#e corner o) Oro=uieta an" :ur-aran streets. Calanoc' t#e wi"ow' was &ai" t#e su% o) *+',,,' )ace value o) t#e &olic ' -ut w#en s#e "e%an"e" t#e &a %ent o) t#e a""itional su% o) *+',,, re&resentin! t#e value o) t#e su&&le%ental &olic ' t#e co%&an re)use" alle!in!' as %ain "e)ense' t#at t#e "ecease" "ie" -ecause #e was %ur"ere" - a &erson w#o too. &art in t#e co%%ission o) t#e ro--er an" w#ile %a.in! an arrest as an o))icer o) t#e law w#ic# contin!encies were e/&ressl e/clu"e" in t#e contract an" #ave t#e e))ect o) e/e%&tin! t#e co%&an )ro% lia-ilit . 3t is conten"e" in -e#al) o) t#e co%&an t#at Basilio was .ille" w#ic# I%a.in! an arrest as an o))icer o) t#e lawI or as a result o) an Iassault or %ur"erI co%%itte" in t#e &lace an" t#ere)ore #is "eat# was cause" - one o) t#e ris.s e/clu"e" t#e su&&le%entar contract w#ic# e/e%&ts t#e co%&an )ro% lia-ilit . $#is contention was u&#el" - t#e Court o) A&&eals. Cence' t#is &etition. Issue: >#et#er or not t#e "eat# o) t#e victi% co%es wit#in t#e &urview o) t#e e/ce&tion clause o) t#e su&&le%entar &olic an"' #ence' e/e%&ts t#e co%&an )ro% lia-ilit . Held: NO. Basilio was a watc#%an o) t#e Manila Auto 2u&&l w#ic# was a -loc. awa )ro% t#e #ouse o) Att . O0e"a w#ere so%et#in! sus&icious was #a&&enin! w#ic# cause" t#e latter to as. )or #el&. >#ile at )irst #e "ecline" t#e invitation o) Att . O0e"a to !o wit# #i% to #is resi"ence to in=uire into w#at was !oin! on -ecause #e was not a re!ular &olice%an' #e later

a!ree" to co%e alon! w#en &ro%&te" - t#e tra))ic &olice%an' an" u&on a&&roac#in! t#e !ate o) t#e resi"ence #e was s#ot an" "ie". $#e circu%stance t#at #e was a %ere watc#%an an" #a" no "ut to #ee" t#e call o) Att . O0e"a s#oul" not -e ta.en as a ca&ricious "esire on #is &art to e/&ose #is li)e to "an!er consi"erin! t#e )act t#at t#e &lace #e was in "ut -oun" to !uar" was onl a -loc. awa . 3n volunteerin! to e/ten" #el& un"er t#e situation' #e %i!#t #ave t#ou!#t' ri!#tl or wron!l ' t#at to .now t#e trut# was in t#e interest o) #is e%&lo er it -ein! a %atter t#at a))ects t#e securit o) t#e nei!#-or#oo". No "ou-t t#ere was so%e ris. co%in! to #i% in &ursuin! t#at erran"' -ut t#at ris. alwa s e/iste" it -ein! in#erent in t#e &osition #e was #ol"in!. Ce cannot t#ere)ore -e -la%e" solel )or "oin! w#at #e -elieve" was in .ee&in! wit# #is "ut as a watc#%an an" as a citi<en. An" #e cannot -e consi"ere" as %a.in! an arrest as an o))icer o) t#e law' as conten"e"' si%&l -ecause #e went wit# t#e tra))ic &olice%an' )or certainl #e "i" not !o t#ere )or t#at &ur&ose nor was #e as.e" to "o so - t#e &olice%an. Muc# less can it -e &reten"e" t#at Basilio "ie" in t#e course o) an assault or %ur"er consi"erin! t#e ver nature o) t#ese cri%es. 3n t#e )irst &lace' t#ere is no &roo) t#at t#e "eat# o) Basilio is t#e result o) eit#er cri%e )or t#e recor" is -arren o) an circu%stance s#owin! #ow t#e )atal s#ot was )ire". *er#a&s t#is %a -e clari)ie" in t#ecri%inal case now &en"in! in court as re!ar"s t#e inci"ent -ut -e)ore t#at is "one an t#in! t#at %i!#t -e sai" on t#e &oint woul" -e a %ere con0ecture. Nor can it -e sai" t#at t#e .illin! was intentional )or t#ere is t#e &ossi-ilit t#at t#e %ale)actor #a" )ire" t#e s#ot %erel to scare awa t#e &eo&le aroun" )or #is own &rotection an" not necessaril to .ill or #it t#e victi%. 3n an event' w#ile t#e act

%a not e/e%&t t#e tri!!er%an )ro% lia-ilit )or t#e "a%a!e "one' t#e )act re%ains t#at t#e #a&&enin! was a &ure acci"ent on t#e &art o) t#e victi%. $#e victi% coul" #ave -een eit#er t#e &olice%an or Att . O0e"a )or it cannot -e &reten"e" t#at t#e %ale)actor ai%e" at t#e "ecease" &recisel -ecause #e wante" to ta.e #is li)e.

Biagtan vs. The Insular Life Assurance Company, LT J Ma.alintal' A. Marc# +5' 154+J !AT"#$ A&&eal )ro% C@31s "ecision FACT% - Juan Biagtan was insured with Insular for P5k and a supplementary contract Accidental Death Benefit clause for another P5k if the death of the Insured resulted directly from !odily in"ury effected solely through e#ternal and $iolent means sustained in an accident % % % and independently of all other causes% &he clause' howe$er' e#pressly pro$ided that it would not apply where death resulted from an in"ury intentionally inflicted !y a third party% - (ne night' a !and of ro!!ers entered their house% Juan went out of his room and he was met with ) knife sta!s% *e died% &he ro!!ers were con$icted of ro!!ery with homicide% - &he family was claiming the additional P5k from Insular under the Accidental Death Benefit clause% Insular refused on the ground that the death resulted from in"uries intentionally inflicted !y +rd parties and was therefore not co$ered% - Biagtans filed against Insular% ,-I ruled in fa$or of Biagtans% I%%"$% & A#'"($!T% >ON t#e in0uries were intentionall in)licte" - a t#ir" &art K Hes #ATI)!AL$ - >#et#er t#e ro--ers #a" t#e intent to .ill or %erel to scare t#e victi% or to war" o)) an "e)ense #e %i!#t o))er' it cannot -e "enie" t#at t#e act itsel) o) in)lictin! t#e in0uries was intentional. - $#e e/ce&tion in t#e acci"ental -ene)it clause invo.e" - t#e a&&ellant "oes not s&ea. o) t#e &ur&ose L w#et#er #o%ici"al or not L o) a t#ir" &art in causin! t#e in0uries' -ut onl o) t#e )act t#at suc# in0uries #ave -een Iintentionall I in)licte" L t#is o-viousl to "istin!uis# t#e% )ro% in0uries w#ic#' alt#ou!# receive" at t#e #an"s o) a t#ir" &art ' are &urel acci"ental. - 8/a%&les o) unintentional: MM A !un w#ic# "isc#ar!es w#ile -ein! cleane" an" .ills a - stan"erN MM a #unter w#o s#oots at #is &re an" #its a &erson instea"N MM an at#lete in a co%&etitive !a%e involvin! &# sical e))ort w#o colli"es wit# an o&&onent an" )atall in0ures #i% as a result. - 3n Calanoc vs. CA: >#ere a s#ot was )ire" an" it turne" out a)terwar"s t#at t#e watc#%an was #it in t#e a-"o%en' t#e woun" causin! #is "eat#' t#e Court #el" t#at it coul" not -e sai" t#at t#e .illin! was intentional )or t#ere was t#e &ossi-ilit t#at t#e %ale)actor #a" )ire" t#e s#ot to scare t#e &eo&le aroun" )or #is own &rotection an" not necessaril to .ill or #it t#e victi%. A si%ilar &ossi-ilit is clearl rule" out - t#e )acts in t#is case. @or w#ile a sin!le s#ot )ire" )ro% a "istance' an" - a &erson w#o was not even seen ai%in! at t#e victi%' coul" in"ee" #ave -een )ire" wit#out intent to .ill or in0ure' nine *ounds inflicted *ith +laded *eapons at close range cannot conceiva+ly +e considered as innocent insofar as such intent is concerned. - 3n Hucthcraft's Ex'r vs. Travelers' Ins. Co. (92 case): w#ere t#e insure" was wa lai" an" assassinate" )or t#e &ur&ose o) ro--er ' t#e court ren"ere" 0u"!%ent )or t#e insurance co%&an an" #el" t#at w#ile t#e assassination o) t#e insure" was as to #i% an un)oreseen event an" t#ere)ore acci"ental' It#e clause o) t#e &roviso t#at e/clu"es t#e (insurerOs) lia-ilit ' in case "eat# or in0ur is intentionall in)licte" - an ot#er &erson' a&&lies to t#is case.I T$$HA!,$$ -dissent. - Calanoc v. CA is controllin! in t#is case -ecause t#e insurance co%&an wasn1t a-le to &rove t#at t#e .illin! was intentional. (Bur"en o) &roo) is wit# t#e insurance co%&an ) - 3nsurance' -ein! contracts o) a"#esion' %ust -e construe" strictl a!ainst insurance co%&an in cases o) a%-i!uit . - $#e su&&le%entar contract enu%erate" e/ce&tions. $#e onl e/ce&tion w#ic# is not susce&ti-le o) classi)ication is t#at &rovi"e" in &ar 5(e)' t#e ver e/ce&tion #erein involve"' w#ic# woul" also e/ce&t in0uries Iin)licte" intentionall - a t#ir" &art ' eit#er wit# or wit#out &rovocation on t#e &art o) t#e insure"' an" w#et#er or not t#e attac. or t#e "e)ense - t#e t#ir" &art was cause" - a violation o) t#e law - t#e insure".I - $#is a%-i!uous clause con)licts wit# all t#e ot#er E e/ce&tions in t#e sa%e &ar 5 &articularl t#at i%%e"iatel &rece"in! it in ite% (") w#ic# e/ce&ts in0uries receive" w#ere t#e insure" #as violate" t#e law or &rovo.e" t#e in0ur ' w#ile t#is clause' construe" as t#e insurance co%&an now clai%s' woul" see%in!l e/ce&t also all ot#er in0uries' intentionall in)licte" - a t#ir" &art ' re!ar"less o) an violation o) law or &rovocation - t#e insure"'

an" "e)eat t#e ver &ur&ose o) t#e &olic o) !ivin! t#e insure" "ou-le in"e%nit in case o) acci"ental "eat# Ie/ternal an" violent %eansI L in t#e ver lan!ua!e o) t#e &olic .O 3t is o-vious )ro% t#e ver classi)ication o) t#e e/ce&tions an" a&&l in! t#e rule o) noscitus a sociis' t#at the dou+le/indemnity policy covers the insured against accidental death, *hether caused +y fault, negligence or intent of a third party *hich is unforeseen and une0pected +y the insured. All t#e associate" wor"s an" conce&ts in t#e &olic &lainl e/clu"e t#e acci"ental "eat# )ro% t#e covera!e o) t#e &olic onl w#ere t#e in0uries are sel)-in)licte" or atten"e" - so%e &roscri-e" act o) t#e insure" or are incurre" in so%e e/&ressl e/clu"e" cala%it suc# as riot' war or ato%ic e/&losion. 1 (eren"ia vs. Court o) A&&eals PGR 4D?55' ++ Aanuar 155?QN also @i"elit R 2uret Co. o) t#e *#ili&&ines 3nc. vs. (eren"ia PGR 45D,5Q $#ir" 7ivision' Melo (A): E concur @acts: @i"elit an" 2uret 3nsurance Co%&an o) t#e *#ili&&ines issue" its @ire 3nsurance *olic @-1884D e))ective -etween +? Aune 158, an" +? Aune 1581 coverin! Ra)ael (Re/) (eren"iaOs resi"ential -uil"in! locate" at $uli& 7rive' Beverl Cills' Anti&olo' Ri<al in t#e a%ount o) *?85',,,.,,. 7esi!nate" as -ene)iciar was t#e Monte "e *ie"a" R 2avin!s Ban.. (eren"ia also insure" t#e sa%e -uil"in! wit# two ot#er co%&anies' na%el ' $#e Countr Ban.ers 3nsurance )or *5D',,,.,, un"er *olic No. *7B-8,-151? e/&irin! on 1+ Ma 1581' an" $#e 7evelo&%ent 3nsurance )or *E,,',,,.,, un"er *olic @-E88D4 e/&irin! on ?, Aune 1581. >#ile t#e t#ree )ire insurance &olicies were in )orce' t#e insure" &ro&ert was co%&letel "estro e" )ire on t#e earl %ornin! o) +8 7ece%-er 158,. @i"elit was accor"in!l in)or%e" o) t#e loss an" "es&ite "e%an"s' re)use" &a %ent un"er its &olic ' t#us &ro%&tin! (eren"ia to )ile a co%&laint wit# t#e t#en Court o) @irst 3nstance o) Sue<on Cit ' &ra in! )or &a %ent o) *?85',,,.,,' le!al interest t#ereon' &lus attorne Os )ees an" liti!ation e/&enses. $#e co%&laint was later a%en"e" to inclu"e Monte "e *ie"a" as an Iunwillin! "e)en"ant.I Answerin! t#e co%&laint' @i"elit ' a%on! ot#er t#in!s' averre" t#at t#e &olic was avoi"e" reason o) over-insurance' t#at (eren"ia %aliciousl re&resente" t#at t#e -uil"in! at t#e ti%e o) t#e )ire was lease" un"er a contract e/ecute" on +5 Aune 158, to a certain Ro-erto Garcia' w#en actuall it was a Marcelo Garcia w#o was t#e lessee. On +E Ma 158?' t#e trial court ren"ere" a "ecision' &er Au"!e Ro"ol)o A. Orti<' rulin! in )avor o) @i"elit . 3n sustainin! t#e "e)enses set u& - @i"elit ' t#e trial court rule" t#at *ara!ra&# ? o) t#e &olic was also violate" - (eren"ia in t#at t#e insure" )aile" to in)or% @i"elit o) #is ot#er insurance covera!es wit# Countr Ban.ers 3nsurance an" 7evelo&%ent 3nsurance. (eren"ia a&&eale" to t#e t#en 3nter%e"iate A&&ellate Court an" in a "ecision &ro%ul!ate" on ?1 Marc# 158D' (CA-GR C( ,+855' Co=uia' :osa' Bartolo%e' an" 80ercito (*)' AA.)' t#e a&&ellate court reverse" )or t#e )ollowin! reasons: (a) t#ere was no %isre&resentation concernin! t#e lease )or t#e contract was si!ne" - Marcelo Garcia in t#e na%e o) Ro-erto GarciaN an" (-) *ara!ra&# ? o) t#e &olic contract re=uirin! (eren"ia to !ive notice to @i"elit o) ot#er contracts o) insurance was waive" - @i"elit as s#own - its con"uct in atte%&tin! to settle t#e clai% o) (eren"ia. @i"elit receive" a co& o) t#e a&&ellate courtOs "ecision on E A&ril 158D' -ut instea" o) "irectl )ilin! a %otion )or reconsi"eration wit#in 15 "a s t#ere)ro%' @i"elit )ile" on +1 A&ril 158D' a %otion )or e/tension o) ? "a s wit#in w#ic# to )ile a %otion )or reconsi"eration. $#e %otion )or e/tension was not )ile" on 15 A&ril 158D w#ic# was t#e 15t# "a a)ter recei&t o) t#e "ecision -ecause sai" 15t# "a was a 2atur"a an" o) course' t#e )ollowin! "a was a 2un"a . $#e %otion )or e/tension was !rante" - t#e a&&ellate court on ?, A&ril 158D' -ut @i"elit #a" in t#e %eanti%e )ile" its %otion )or reconsi"eration on +E A&ril 158D. (eren"ia )ile" a %otion to e/&un!e )ro% t#e recor" @i"elit Os %otion )or reconsi"eration on t#e !roun" t#at t#e %otion )or e/tension was )ile" out o) ti%e -ecause t#e 15t# "a )ro% recei&t o) t#e "ecision w#ic# )ell on a 2atur"a was i!nore" - @i"elit ' )or in"ee"' so (eren"ia conten"e"' t#e 3nter%e"iate A&&ellate Court #as &ersonnel receivin! &lea"in!s even on 2atur"a s. $#e %otion to e/&un!e was "enie" on 14 Aune 158D an" a)ter a %otion )or reconsi"eration was si%ilarl -rus#e" asi"e on ++ Aul 158D' a &etition (GR 45D,5) was initiate". 2u-se=uentl ' or %ore s&eci)icall on +1 Octo-er 158D' t#e a&&ellate court "enie" @i"elit Os %otion )or reconsi"eration an" account t#ereo). @i"elit )ile" on ?1 Marc# 158D' t#e &etition )or review on certiorari (GR 4D?55). $#e two &etitions' inter-relate" as t#e are' were consoli"ate" an" t#erea)ter !iven "ue course. 3ssue: >#et#er (eran"ia )or)eite" all -ene)its "ue to #is &resentation o) a )alse "eclaration to su&&ort #is clai%. Cel": $#e contract o) lease u&on w#ic# (eren"ia relies to su&&ort #is clai% )or insurance -ene)its' was entere" into -etween #i% an" one Ro-ert Garcia' %arrie" to Celen Cawinian' on +5 Aune 158,' a cou&le o) "a s a)ter t#e e))ectivit o) t#e insurance &olic . >#en t#e rente" resi"ential -uil"in! was ra<e" to t#e !roun" on +8 7ece%-er 158,' it a&&ears t#at Ro-ert Garcia (or Ro-erto Garcia) was still wit#in t#e &re%ises. Cowever' accor"in! to t#e investi!ation re&ort &re&are" - *at. 8leuterio M. Buenvia0e o) t#e Anti&olo &olice' t#e -uil"in! a&&eare" to #ave Ino occu&antI an" t#at Mr. Ro-erto Garcia was Irentin! on t#e ot#ersi"e

Co%%ercial Law 6 3nsurance Law' +,,D ( 1 )Narratives (Berne Guerrero) (sic) &ortion o) sai" co%&oun".I. $#ese &ieces o) evi"ence -elie (eren"iaOs uncorro-orate" testi%on t#at Marcelo Garcia w#o% #e consi"ere" as t#e real lessee' was occu& in! t#e -uil"in! w#en it was -urne". Ro-ert Garcia "isa&&eare" a)ter t#e )ire. 3t was onl on 5 Octo-er 1581 t#at an a"0uster was a-le to locate #i%. Ro-ert Garcia t#en e/ecute" an a))i"avit -e)ore t#e National 3ntelli!ence an" 2ecurit Aut#orit (N32A) to t#e e))ect t#at #e was not t#e lessee o) (eren"iaOs #ouse an" t#at #is si!nature on t#e contract o) lease was a co%&lete )or!er . $#us' on t#e stren!t# o) t#ese )acts' t#e a"0uster su-%itte" a re&ort "ate" E 7ece%-er 1581 reco%%en"in! t#e "enial o) (eren"iaOs clai%. 3ronicall ' "urin! t#e trial' (eren"ia a"%itte" t#at it was not Ro-ert Garcia w#o si!ne" t#e lease contract. Accor"in! to (eren"ia' it was si!ne" - Marcelo Garcia cousin o) Ro-ert' w#o #a" -een &a in! t#e rentals all t#e w#ile. (eren"ia' #owever' )aile" to e/&lain w# Marcelo #a" to si!n #is cousinOs na%e w#en #e in )act was &a in! )or t#e rent an" w# (eren"ia #i%sel)' t#e lessor' allowe" suc# a ruse. @i"elit Os conclusions on t#ese &roven )acts a&&ear' t#ere)ore' to #ave su))icient -ases: (eren"ia concocte" t#e lease contract to "e)lect res&onsi-ilit )or t#e )ire towar"s an alle!e" IlesseeI' in)late" t#e value o) t#e &ro&ert - t#e alle!e" %ont#l rental o) *D'5,, w#en in )act' t#e *rovincial Assessor o) Ri<al #a" assesse" t#e &ro&ert Os )air %ar.et value to -e onl *E,'?,,.,,' insure" t#e sa%e &ro&ert wit# two ot#er insurance co%&anies )or a total covera!e o) aroun" *5,,',,,' an" create" a "ea"-en" )or t#e a"0uster t#e "isa&&earance o) Ro-ert Garcia. Basicall a contract o) in"e%nit ' an insurance contract is t#e law -etween t#e &arties. 3ts ter%s an" con"itions constitute t#e %easure o) t#e insurerOs lia-ilit an" co%&liance t#erewit# is a con"ition &rece"ent to t#e insure"Os ri!#t to recover )ro% t#e insurer. As it is also a contract o) a"#esion' an insurance contract s#oul" -e li-erall construe" in )avor o) t#e insure" an" strictl a!ainst t#e insurer co%&an w#ic# usuall &re&ares it. Consi"erin!' #owever' t#e )ore!oin! "iscussion &ointin! to t#e )act t#at (eren"ia use" a )alse lease contract to su&&ort #is clai% un"er @ire 3nsurance *olic @-1884D' t#e ter%s o) t#e &olic s#oul" -e strictl construe" a!ainst t#e insure". (eren"ia )aile" to live - t#e ter%s o) t#e &olic ' s&eci)icall 2ection 1? t#ereo) w#ic# is e/&resse" in ter%s t#at are clear an" una%-i!uous' t#at all -ene)its un"er t#e &olic s#all -e )or)eite" Ii) t#e clai% -e in an res&ect )rau"ulent' or i) an )alse "eclaration -e %a"e or use" in su&&ort t#ereo)' or i) an )rau"ulent %eans or "evises are use" - t#e 3nsure" or an one actin! in #is -e#al) to o-tain an -ene)it un"er t#e &olic I. (eren"ia' #avin! &resente" a )alse "eclaration to su&&ort #is clai% )or -ene)its in t#e )or% o) a )rau"ulent lease contract' #e )or)eite" all -ene)its t#erein - virtue o) 2ection 1? o) t#e &olic in t#e a-sence o) &roo) t#at @i"elit waive" suc# &rovision. >orse et' - &resentin! a )alse lease contract' (eren"ia re&re#ensi-l "isre!ar"e" t#e &rinci&le t#at insurance contracts are u-erri%ae )i"ae an" "e%an" t#e %ost a-un"ant !oo" )ait#. + Ri<al 2uret R 3nsurance Co%&an vs. Court o) A&&eals PGR 11+?D,' 18 Aune +,,,Q $#ir" 7ivision' *urisi%a (A): E concur @acts: On 1? Marc# 158,' Ri<al 2uret R 3nsurance Co%&an (Ri<al 3nsurance) issue" @ire 3nsurance *olic E54+4 in )avor o) $ransworl" Bnittin! Mills' 3nc. ($ransworl")' initiall )or *1',,,',,,.,, an" eventuall increase" to *1'5,,',,,.,,' coverin! t#e &erio" )ro% 1E Au!ust 158, to 1? Marc# 1581. $#e sa%e &ieces o) &ro&ert insure" wit# Ri<al 3nsurance were also insure" wit# New 3n"ia Assurance Co%&an ' Lt".' (New 3n"ia). On 1+ Aanuar 1581' )ire -ro.e out in t#e co%&oun" o) $ransworl"' ra<in! t#e %i""le &ortion o) its )our-s&an -uil"in! an" &artl !uttin! t#e le)t an" ri!#t sections t#ereo). A two-store -uil"in! (-e#in" sai" )our-s&an -uil"in!) w#ere )un an" a%use%ent %ac#ines an" s&are &arts were store"' was also "estro e" t#e )ire. $ransworl" )ile" its insurance clai%s wit# Ri<al 3nsurance an" New 3n"ia -ut to no avail. On +D Ma 158+' $rans>orl" -rou!#t a!ainst t#e sai" insurance co%&anies an action )or collection o) su% o) %one an" "a%a!es (Civil Case ED1,D) -e)ore Branc# 1D1 o) t#e t#en Court o) @irst 3nstance o) Ri<alN &ra in! )or 0u"!%ent or"erin! Ri<al 3nsurance an" New 3n"ia to &a t#e a%ount o) *+'4E4'8D4.,, &lus le!al interest' *E,,',,,.,, as attorne Os )ees' e/e%&lar "a%a!es' e/&enses o) liti!ation o) *5,',,,.,, an" costs o) suit. Ri<al 3nsurance countere" t#at its )ire insurance &olic sue" u&on covere" onl t#e contents o) t#e )our-s&an -uil"in!' w#ic# was &artl -urne"' an" not t#e "a%a!e cause" - t#e )ire on t#e two-store anne/ -uil"in!. On E Aanuar 155,' t#e trial court ren"ere" its "ecisionN "is%issin! t#e case as a!ainst New 3n"iaN or"erin! Ri<al 3nsurance to &a $ransworl" t#e a%ount o) *8+D'5,,.,, re&resentin! t#e actual value o) t#e losses su))ere" - itN an" wit# cost a!ainst Ri<al 3nsurance. Bot# Ri<al 3nsurance an" $rans>orl" went to t#e Court Co%%ercial Law 6 3nsurance Law' +,,D ( + )Narratives (Berne Guerrero) o) A&&eals' w#ic# ca%e out wit# its "ecision o) 15 Aul 155?' %o"i) in! t#e lower courtOs "ecision re=uirin! New 3n"ia to &a $ransworl" t#e a%ount o) *1'818'D,E.15N an" Ri<al 2uret to &a $ransworl" *E4,'?+8.D4' -ase" on t#e actual losses sustaine" - $ransworl" in t#e )ire' totallin! *+'45,'?4D.,, as a!ainst t#e a%ounts o) )ire insurance covera!es res&ectivel e/ten"e" - New 3n"ia in t#e a%ount o) *5'8,,',,,.,, an" Ri<al 2uret an" 3nsurance Co%&an in t#e a%ount o) *1'5,,',,,.,,. On +, Au!ust 155?' )ro% t#e a)oresai" 0u"!%ent o) t#e Court o) A&&eals' New 3n"ia a&&eale" to t#e 2u&re%e Court t#eori<in! inter alia t#at t#e $rans>orl" coul" not -e co%&ensate" )or t#e loss o) t#e )un an" a%use%ent %ac#ines an" s&are &arts store" at t#e two-store -uil"in! -ecause it ($ransworl") #a" no insura-le interest in sai" !oo"s or

ite%s. On + @e-ruar 155E' t#e Court "enie" t#e a&&eal wit# )inalit in GR L-111118 (New 3n"ia Assurance Co%&an Lt". vs. Court o) A&&eals). Ri<al 3nsurance an" $rans>orl"' on t#e ot#er #an"' inter&ose" a Motion )or Reconsi"eration -e)ore t#e Court o) A&&eals' an" on ++ Octo-er 155?' t#e Court o) A&&eals reconsi"ere" its "ecision o) 15 Aul 155?' as re!ar"s t#e i%&osition o) interest on t#e assess%ent a!ainst New 3n"ia on t#e a%ount o) *1'818'D,E.15 an" t#at a!ainst Ri<al 3nsurance on t#e a%ount o) *E4,'?+8.D4' co%%ences )ro% +D Ma 158+ w#en t#e co%&laint was )ile" until &a %ent is %a"e. $#e rest o) t#e sai" "ecision was retaine" in all ot#er res&ects. Ri<al 3nsurance )ile" t#e &etition )or review on certiorari. 3ssue P1Q: >#et#er t#e )ire insurance &olic liti!ate" u&on &rotecte" onl t#e contents o) t#e %ain -uil"in! ()our-s&an)' an" "i" not inclu"e t#ose store" in t#e two-store anne/ -uil"in!N or w#et#er t#e so calle" Ianne/I was not an anne/ -ut was actuall an inte!ral &art o) t#e )our-s&an -uil"in! an" t#ere)ore' t#e !oo"s an" ite%s store" t#erein were covere" - t#e sa%e )ire insurance &olic . Cel" P1Q: 3NCL9782 +-2$ORH ANN8T B93L73NG. $#e sti&ulation in su-0ect )ire insurance &olic re!ar"in! its covera!e' rea"s Icontaine" an"Uor store" "urin! t#e currenc o) t#is *olic in t#e &re%ises occu&ie" - t#e% )or%in! &art o) t#e -uil"in!s situate" wit#in own Co%&oun".I $#ere)ro%' it can -e !leane" unerrin!l t#at t#e )ire insurance &olic in =uestion "i" not li%it its covera!e to w#at were store" in t#e )ours&an -uil"in!. $#e two-store -uil"in! involve" a &er%anent structure' w#ic# a"0oins an" interco%%unicates wit# t#e I)irst ri!#t s&an o) t#e lo)t store -uil"in!I' )or%e" &art t#ereo)' an" %eets t#e re=uisites )or co%&ensa-ilit un"er t#e )ire insurance &olic sue" u&on. 2o also' consi"erin! t#at t#e two-store -uil"in! a)ore%entione" was alrea" e/istin! w#en su-0ect )ire insurance &olic contract was entere" into on 1+ Aanuar 1581' #avin! -een constructe" so%eti%e in 1548' Ri<al 3nsurance s#oul" #ave s&eci)icall e/clu"e" t#e sai" two-store -uil"in! )ro% t#e covera!e o) t#e )ire insurance i) %in"e" to e/clu"e t#e sa%e -ut it "i" not' an" instea"' went on to &rovi"e t#at suc# )ire insurance &olic covers t#e &ro"ucts' raw %aterials an" su&&lies store" wit#in t#e &re%ises o) $ransworl" w#ic# was an inte!ral &art o) t#e )our-s&an -uil"in! occu&ie" - $ransworl"' .nowin! )ull well t#e e/istence o) suc# -uil"in! a"0oinin! an" interco%%unicatin! wit# t#e ri!#t section o) t#e )our-s&an -uil"in!. 3ssue P+Q: >#et#er t#e a%-i!uit in )ire insurance &olic s#oul" -e resolve" a!ainst Ri<al 2uret . Cel" P+Q: H82. $#e sti&ulation as to t#e covera!e o) t#e )ire insurance &olic un"er controvers #as create" a "ou-t re!ar"in! t#e &ortions o) t#e -uil"in! insure" t#ere- . Article 1?44 o) t#e New Civil Co"e &rovi"es t#at I$#e inter&retation o) o-scure wor"s or sti&ulations in a contract s#all not )avor t#e &art w#o cause" t#e o-scurit .I Con)or%a-l ' it stan"s to reason t#at t#e "ou-t s#oul" -e resolve" a!ainst Ri<al 3nsurance' w#ose law er or %ana!ers "ra)te" t#e )ire insurance &olic contract un"er scrutin . Citin! t#e a)orecite" &rovision o) law in &oint' t#e Court in Lan"ic#o vs. Govern%ent 2ervice 3nsurance 2 ste%' rule" t#at Ias re!ar"s insurance &olicies' in res&ect o) w#ic# it is settle" t#at t#e Oter%s in an insurance &olic ' w#ic# are a%-i!uous' e=uivocal' or uncertain are to -e construe" strictl an" %ost stron!l a!ainst t#e insurer' an" li-erall in )avor o) t#e insure" so as to e))ect t#e "o%inant &ur&ose o) in"e%nit or &a %ent to t#e insure"' es&eciall w#ere )or)eiture is involve"O (+5 A%. Aur.' 181)' an" t#e reason )or t#is is t#at t#e Oinsure" usuall #as no voice in t#e selection or arran!e%ent o) t#e wor"s e%&lo e" an" t#at t#e lan!ua!e o) t#e contract is selecte" wit# !reat care an" "eli-eration - e/&erts an" le!al a"visers e%&lo e" - ' an" actin! e/clusivel in t#e interest o)' t#e insurance co%&an .O (EE C.A.2.' &. 114E).I 8=uall relevant is t#e )ollowin! "is=uisition o) t#e Court in Co%%ercial Law 6 3nsurance Law' +,,D ( ? )

1enith Insurance Corporation vs. CA -'.#. !o. 23456 (ay 78, 7559.
*ost un"er case "i!ests' Co%%ercial Law at 2atur"a ' @e-ruar +5' +,1+ *oste" - 2c#i<o&#renic Min"

Facts: On Aanuar +5' 158?' &rivate res&on"ent Lawrence @ernan"e< insure" #is car )or Iown "a%a!eI wit# &etitioner :enit# 3nsurance Cor&oration. On Aul D' 158?' t#e car )i!ure" in an acci"ent an" su))ere" actual "a%a!es in t#e a%ount o) *?'DE,.,,. A)ter alle!e"l -ein! !iven a run aroun" - :enit# )or two (+) %ont#s' @ernan"e< )ile" a co%&laint wit# t#e

Re!ional $rial Court o) Ce-u )or su% o) %one an" "a%a!es resultin! )ro% t#e re)usal o) :enit# to &a t#e a%ount clai%e". Asi"e )ro% actual "a%a!es an" interests' @ernan"e< also &ra e" )or %oral "a%a!es in t#e a%ount o) *1,',,,.,,' e/e%&lar "a%a!es o) *5',,,.,,' attorne Os )ees o) *?',,,.,, an" liti!ation e/&enses o) *?',,,.,,. On 2e&te%-er +8' 158?' :enit# )ile" an answer alle!in! t#at it o))ere" to &a t#e clai% o) @ernan"e< &ursuant to t#e ter%s an" con"itions o) t#e contract w#ic#' t#e &rivate res&on"ent re0ecte". On Aune E' 158D' a "ecision was ren"ere" - t#e trial court in )avor o) &rivate res&on"ent @ernan"e<. On Au!ust 14' 1588' t#e Court o) A&&eals ren"ere" its "ecision a))ir%in! in toto t#e "ecision o) t#e trial court. Issue: $#e &ro&riet o) t#e awar" o) %oral "a%a!es' e/e%&lar "a%a!es an" attorne Os )ees is t#e %ain issue raise" #erein - &etitioner. Held: $#e awar" o) "a%a!es in case o) unreasona-le "ela in t#e&a %ent o) insurance clai%s is !overne" - t#e *#ili&&ine 3nsurance Co"e' w#ic# &rovi"es: 2ec. +EE. 3n case o) an liti!ation )or t#e en)orce%ent o) an &olic or contract o) insurance' it s#all -e t#e "ut o) t#e Co%%issioner or t#e Court' as t#e case %a -e' to %a.e a )in"in! as to w#et#er t#e &a %ent o) t#e clai% o) t#e insure" #as -een unreasona-l "enie" or wit##el"N an" in t#e a))ir%ative case' t#e insurance co%&an s#all -e a"0u"!e" to &a "a%a!es w#ic# s#all consist o) attorne Os )ees an" ot#er e/&enses incurre" - t#e insure" &erson - reason o) suc# unreasona-le "enial or wit##ol"in! o) &a %ent &lus interest

o)twice

t#e ceilin! &rescri-e" - t#e Monetar Boar" o) t#e a%ount o) t#e clai% "ue t#e insure"' )ro% t#e "ate )ollowin! t#e ti%e &rescri-e" in section two #un"re" )ort -two or in section two #un"re" )ort -t#ree' as t#e case %a -e' until t#e clai% is )ull satis)ie"N *rovi"e"' $#at t#e )ailure to &a an suc# clai% wit#in t#e ti%e &rescri-e" in sai" sections s#all -e consi"ere" &ri%a )acie evi"ence o) unreasona-le "ela in &a %ent. 3t is clear t#at un"er t#e 3nsurance Co"e' in case o) unreasona-le "ela in t#e &a %ent o) t#e &rocee"s o) an insurance &olic ' t#e"a%a!es t#at %a -e awar"e" are: 1) attorne Os )eesN +) ot#er e/&enses incurre" - t#e insure" &erson - reason o) suc# unreasona-le "enial or wit##ol"in! o) &a %entN ?) interest at twice t#e ceilin! &rescri-e" - t#e Monetar Boar" o) t#e a%ount o) t#e clai% "ue t#e in0ure"N an" E) t#e a%ount o) t#e clai%.