INSURANCE
ISSUE: Whether or not the proceeds should be
1. Enriquez v. Sun Life Assurance Co.
Facts: On Sept. 24 1917, Joaquin Herrer made an
application to Sun Life through its office in Manila
for life annuity. Two (2) days later, he paid the sum
of P6,000 to the company’s manager in its Manila
office and was given a receipt.
On Nov. 26, 1917, the Head Office (HO) gave notice
of acceptance by cable to Manila. On the same date,
the Manila office prepared a letter notifying Herrer
that his application has been accepted and this was
placed in the ordinary channels of transmission, but
as far as known was never actually mailed and
never received by Herrer. Meanwhile, on Dec. 18,
1917, Herrer's attorney wrote to the Manila Office
stating that Herrer wanted to withdraw his
application. Herrer died on Dec. 20, 1917. Rafael
Enriquez, plaintiff, as administrator of Herrer’s
estate brought this action to recover the P6,000
paid by the deceased.
Issue: Whether or not the insurance contract was
perfected.
Ruling: No. The contract for a life annuity was
not perfected because it has not been proved
satisfactorily that the acceptance of the
application ever came to the knowledge of the
applicant. An acceptance of an offer of insurance
NOT actually or constructively communicated to the
proposer does NOT make a contract of insurance as
the locus poenitentiae is ended when an acceptance
has passed beyond the control of the party.
2. HEIRS OF LORETO MARAMAG VS. MARAMAG
588 SCRA 774 (2009)
FACTS: Petitioners in this case are the legitimate heirs
of deceased Loreto. The petitioners were not named
as beneficiaries in the insurance policies issued by
Insular and Grepalife. Petitioners claim that Eva, the
concubine of Loreto and a suspect in his murder, is
disqualified from being designated of the insurance
policies.
They further add that Eva’s children with Loreto, being
illegitimatechildren, are entitled to a lesser share of
the proceeds of the policies.
Thus, they prayed that the share of Eva and portions
of the share
of Loreto’s illegitimate children should be awarded to
them, being thelegitimate heirs of Loreto entitled to
their respective legitimes.
awarded to the petitioners
HELD: No. The insurance contracts are governed by
specials laws. Under SECTION 53. The
insurance proceeds shall be applied
exclusively to the proper interest of the
person in whose name or for whose benefit
it is made unless otherwise specified in the
policy.
Petitioners are third parties to the insurance contracts
with Insular and Grepalife and thus, they are not
entitled to the proceeds thereof.
The Insular and Grepalife have no legal obligation to t
urn over theinsurance proceeds to the petitioner. It is
only in cases where the insured has not designated
any beneficiary,or when the designated beneficiary is
disqualified by law to receive the proceeds, that the
insurance policy proceeds shall redound to the benefit
of the estate of the insured.
3. INSULAR LIFE v. EBRADO
Facts: Cristor Ebrado was issued by The Life Assurance
Co., Ltd., a policy for P5,882.00 with a rider for
Accidental Death. He designated Carponia T. Ebrado as
the revocable beneficiary in his policy. He referred to
her as his wife.
Cristor was killed when he was hit by a failing branch
of a tree. Insular Life was made liable to pay the
coverage in the total amount of P11,745.73,
representing the face value of the policy in the
amount of P5,882.00 plus the additional benefits for
accidental death.
The insured was married to Pascuala Ebrado with
whom she has six legitimate children. He was also
living in with his common-law wife with whom he has
two children.
Carponia T. Ebrado filed with the insurer a claim for
the proceeds as the designated beneficiary therein,
although she admited that she and the insured 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
the one entitled to the insurance proceeds.
Insular commenced an action for Interpleader before
the trial court as to who should be given the proceeds.
The court declared Carponia as disqualified.
Issue: WON a common-law wife named as beneficiary
in the life insurance policy of a legally married man
can claim the proceeds in case of death of the latter.
Ruling: NO. Section 50 of the Insurance Act which
provides that "the insurance shall be applied
exclusively to the proper interest of the person in
whose name it is made". The word "interest" highly
suggests that the provision refers only to the "insured"
and not to the beneficiary, since a contract of
insurance is personal in character. Otherwise, the
prohibitory laws against illicit relationships especially
on property and descent will be rendered nugatory, as
the same could easily be circumvented by modes of
insurance.
When not otherwise specifically provided for by the
Insurance Law, the contract of life insurance is
governed by the general rules of the civil law
regulating contracts. And under Article 2012 of the
same Code, any person who is forbidden from
receiving any donation under Article 739 cannot be
named beneficiary of a life insurance policy by the
person who cannot make a donation to him. Common-
law spouses are barred from receiving donations from
each other.
Article 739 provides that void donations are those
made between persons who were guilty of adultery or
concubinage at the time of donation.
There is every reason to hold that the bar in donations
between legitimate spouses and those between
illegitimate ones should be enforced in life insurance
policies since the same are based on similar
consideration. So long as marriage remains the
threshold of family laws, reason and morality dictate
that the impediments imposed upon married couple
should likewise be imposed upon extra-marital
relationship.
A conviction for adultery or concubinage isn’t required
exacted before the disabilities mentioned in Article
739 may effectuate. The article says that the action for
declaration of nullity may be brought by the spouse of
the donor or donee; and the guilt of the donee may be
proved by preponderance of evidence in the same
action. No criminal conviction for the offense is a
condition precedent. The law plainly states that the
guilt of the party may be proved “in the same acting
for declaration of nullity of donation.” And, it would
be sufficient if evidence preponderates.
4. Mayer Steel Pipe Corp. vs CA, 273 SCRA 432 (1997)
Facts: Hong Kong Government Supplies Department
contracted petitioner Mayer Steel Pipe Corp to
manufacture and supply various steel pipes and
fittings. Mayer shipped the said items to Hong Kong
evidenced by invoices. Prior to shipment, the items
were insured against all risks with respondent South
Sea Surety and Insurance Co. and Charter Insurance
Corp with South Sea and Charter. Petitioners jointly
appointed Industrial Inspection Inc as 3rd party
inspector to examine the items. They certified all the
pipes and fittings to be in good order condition before
they were loaded in the vessel. However, when they
reached Hong Kong, it was revealed that a substantial
portion was damaged. Petitioner now claim for
damages against the respondents for indemnity under
the insurance contract.
Respondents paid part of the petitioner’s demand but
declined the rest claiming that the insurance
surveyor’s report allegedly showed that the damage
was a factory defect and hence not covered by the
insurance policies. The lower court ruled in favor of
the petitioner finding the damage not caused by
manufacturing defects. It also noted that the
insurance contract insured against “all risks” or all
causes of conceivable loss or damage save those
caused by fraud or intentional misconduct. The CA
reversed the decision. It affirmed the finding of the TC
that the damage is not due to factory defect and that
it was covered by the “all risks: insurance policies but
set aside the decision because the complaint had been
bared by a prescription. Sec 3(6) of the COGSA
specifically bared it because it had been more than 1
year since the damage had been done before the
demand was made.
Issue: Whether or not the COGSA applies to the
insurers, and thus, they should not be held liable
because the right to file an action against them had
already prescribed.
Held: No. The COGSA does not apply, thus the right
of action against them did not prescribed. They are
liable. Under the COGSA, only the carrier’s liability is
extinguished if no suit is brought within 1 year. The
insurer’s liability is not extinguished because the
insurer’s liability is based on the contract of
insurance. The COGSA governs the relationship
between the carrier on the one hand and the
shipper, the consignee and/or the insurer on the
other hand. It defines the obligations of the carrier
under the contract of carriage. It does not, however,
affect the relationship between the shipper and the
insurer.
5. GULF RESORTS v. PHILIPPINE CHARTER INSURANCE
CORPORATION
Facts:
Plaintiff is the owner of the Plaza Resort situated at
Agoo, La Union and had its properties in said resort
insured with the American Home Assurance Company.
the risk of loss from earthquake shock was extended
only to plaintiff's two swimming pools. An earthquake
struck Central Luzon and Northern Luzon so the
properties and 2 swimming pools in its Agoo Playa
Resort were damaged
Petitioner avers that, pursuant to its Insurance Policy
No. 31944... covers all damages to the properties
within its resort caused by earthquake. Respondent
contends that the policy limits its liability for loss to
the two swimming pools of petitioner.
After the earthquake, petitioner advised respondent
that it would be making a claim under its Insurance
Policy No. 31944 for damages on its properties. Claim
was denied.
On August 11, 1990, petitioner filed its formal demand
for settlement of the damage to all its properties in
the Agoo Playa Resort. On August 23, 1990,
respondent denied petitioner's claim on the... ground
that its insurance policy only afforded earthquake
shock coverage to the two swimming pools of the
resort.
Petitioner argues that the policy's earthquake shock
endorsement clearly covers all of the properties
insured and not only the swimming pools. It used the
words "any property insured by this policy," and that
the qualification referring to the two swimming pools
had already been deleted in the earthquake shock
endorsement.
Issues:
W/N UNDER RESPONDENT'S INSURANCE POLICY NO.
31944, ONLY THE TWO (2) SWIMMING POOLS,
RATHER THAN ALL THE PROPERTIES COVERED
THEREUNDER, ARE INSURED AGAINST THE RISK OF
EARTHQUAKE SHOCK
Ruling:
Yes. The insurance policy only covers the 2 swimming
pools.
It is basic that all the provisions of the insurance policy
should be examined and interpreted in consonance
with each other. All its parts are reflective of the true
intent of the parties. The policy cannot be construed
piecemeal. Petitioner cannot focus on the earthquake
shock endorsement to the exclusion of the other
provisions. All the provisions and riders, taken and
interpreted... together, indubitably show the
intention of the parties to extend earthquake shock
coverage to the two swimming pools only.
A careful examination of the premium recapitulation
will show that it is the clear intent of the parties to
extend earthquake shock coverage only to the two
swimming pools.
In fire, casualty, and marine insurance, the premium
payable becomes a debt as soon as the risk attaches.
In the subject policy, no premium payments were
made with regard to earthquake shock coverage,
except on the two swimming pools. There is no
mention of any premium payable for the other resort
properties with regard to earthquake shock. This is
consistent with... the history of petitioner's previous
insurance policies from AHAC-AIU.
6. PHILAMCARE HEALTH SYSTEMS, INC., petitioner,
vs. COURT OF APPEALS and JULITA TRINOS,
respondents.
Ernani Trinos, deceased husband of
respondent Julita Trinos, applied for a health care
coverage with petitioner Philamcare Health Systems,
Inc. Under the agreement, respondent’s husband was
entitled to avail of hospitalization benefits. He
answered no to the following question in the
application: Have you or any of your family members
ever consulted or been treated for high blood
pressure, heart trouble, diabetes, cancer, liver disease,
asthma or peptic ulcer? Upon the termination of the
agreement, the same was extended. During the period
of his coverage, Ernani suffered a heart attack and was
confined at the Manila Medical Center (MMC).
Respondent tried to claim the benefits under the
health care agreement. However, petitioner denied
her claim saying that the Health Care Agreement was
void. According to petitioner, there was a
concealment regarding Ernani’s medical history.
Doctors at the MMC allegedly discovered at the time
of Ernani’s confinement that he was hypertensive,
diabetic and asthmatic, contrary to his answer in the
application form. Thus, respondent paid the
hospitalization expenses herself for P76,000.00. After
being discharged he was again admitted at the
Chinese General Hospital. Due to financial difficulties,
respondent brought her husband home again.
However, Respondent was constrained to bring him
back to the Chinese General Hospital where he died.
Respondent instituted with the Regional Trial
Court of Manila, Branch 44, an action for
reimbursement of her expenses against petitioner and
its president, Dr. Beneto Reverente. Lower court ruled
against petitioners to pay P76,000.00 plus interest. CA
affirmed the decision. Petitioner argues that the
agreement grants "living benefits, ie hospitalization
which a member may immediately enjoy so long as he
is alive upon effectivity of the agreement until its
expiration. Petitioner also points out that only medical
and hospitalization benefits are given under the
agreement without any indemnification, unlike in an
insurance contract where the insured is indemnified
for his loss. Petitioner alleges that respondent was not
the legal wife of the deceased member considering
that at the time of their marriage, the deceased was
previously married to another woman who was still
alive.
Issue: Whether or not the respondent is entitled to
the claimed reimbursement
Ruling: Yes. Section 3 of the Insurance Code states
that any contingent or unknown event, whether past
or future, which may damnify a person having an
insurable interest against him, may be insured against.
Every person has an insurable interest in the life and
health of himself. Section 10 provides: Every person
has an insurable interest in the life and health: (1) of
himself, of his spouse and of his children; (2) of any
person on whom he depends wholly or in part for
education or support, or in whom he has a pecuniary
interest; (3) of any person under a legal obligation to
him for the payment of money, respecting property or
service, of which death or illness might delay or
prevent the performance; and (4) of any person upon
whose life any estate or interest vested in him
depends. In the case at bar, the insurable interest of
respondent’s husband in obtaining the health care
agreement was his own health. The health care
agreement was in the nature of non-life insurance,
which is primarily a contract of indemnity. Once the
member incurs hospital, medical or any other expense
arising from sickness, injury or other stipulated
contingent, the health care provider must pay for the
same to the extent agreed upon under the contract.
With regard the alleged concealment of a material
fact in his application. Where matters of opinion are
called for, answers made in good faith and without
intent to deceive will not avoid a policy even though
they are untrue. In such case the insurer is not
justified in relying upon such statement, but is
obligated to make further inquiry. This largely
depends on opinion rather than fact, especially
coming from respondent’s husband who was not a
medical doctor.
The fraudulent intent on the part of the insured must
be established to warrant rescission of the insurance
contract. Concealment as a defense for the health
care provider or insurer to avoid liability is an
affirmative defense and the duty to establish such
defense by satisfactory and convincing evidence rests
upon the provider or insurer
Rescission in insurance Under Section 27 of the
Insurance Code, “a concealment entitles the injured
party to rescind a contract of insurance.” The right to
rescind should be exercised previous to the
commencement of an action on the contract. In this
case, no rescission was made. Elements: 1. Prior
notice of cancellation to insured; 2. Notice must be
based on the occurrence after effective date of the
policy of one or more of the grounds mentioned; 3.
Must be in writing, mailed or delivered to the insured
at the address shown in the policy; 4. Must state the
grounds relied upon provided in Section 64 of the
Insurance Code and upon request of insured, to
furnish facts on which cancellation is based.
With regard the issue of not being the legal wife of
the deceased. Since a health care agreement is in the
nature of a contract of indemnity, payment should be
made to the party who incurred the expenses. The
records adequately prove the expenses incurred by
respondent for the deceased’s hospitalization. It is not
controverted that respondent paid all the hospital and
medical expenses. She is therefore entitled to
reimbursement.
Construction. The rule that by reason of the exclusive
control of the insurance company over the terms and
phraseology of the insurance contract, ambiguity must
be strictly interpreted against the insurer and liberally
in favor of the insured, especially to avoid forfeiture, is
equally applicable to Health Care Agreements.
Insurance and it’s elements Section 2 (1) of the
Insurance Code defines a contract of insurance as an
agreement whereby one undertakes for a
consideration to indemnify another against loss,
damage or liability arising from an unknown or
contingent event. An insurance contract exists where
the following elements concur: 1. The insured has an
insurable interest; 2. The insured is subject to a risk of
loss by the happening of the designated peril; 3. The
insurer assumes the risk; 4. Such assumption of risk is
part of a general scheme to distribute actual losses
among a large group of persons bearing a similar risk;
and 5. In consideration of the insurer’s promise, the
insured pays a premium.
(Sorry guys ang haba, nilagay ko na lahat about
insurance since di xa under specific topic and
particular si doc sa facts.)
7. Alpha Insurance and Surety, Co. v. Arsenia Sonia
Castor [704 SCRA, 550, Sept. 2, 2013]
FACTS: Castor entered into a contract of insurance
with Alpha Insurance—a Motor Car policy involving
her car [Toyota Revo DLX DSL]. Alpha is obligated to
pay Castor P630k in case of loss or damage to said
vehicle during the period of Feb. 26, 2007 to Feb 26,
2008. On Apr. 16, 2007 at 9 am, Castor instructed her
driver, Lanuza, to bring her car to the auto-shop for a
tune-up. Lanuza no longer returned the car to Castor,
and despite diligent efforts to locate the same, such
effort was futile. Castor reported the incident to the
police and notified Alpha of the loss and demanded
payment of the insurance proceeds. Alpha refused,
stating that according to their Policy, specifically the
Exceptions section, it stated that Alpha shall not be
liable for “Any malicious damage caused by the
Insured, any member of his family or by "A PERSON
IN THE INSURED’S SERVICE.” And since Lanuza was
employed by Castor, such was the case. Castor argued
that the exception does not apply because it only
referred to malicious damage to the vehicle and not
loss thereof. RTC ruled in favor of Castor. CA affirmed.
Hence this appeal.
ISSUE: WON the loss of respondent’s vehicle is
excluded under the insurance policy.
HELD: No. The RTC elaborated that theft perpetrated
by the driver of the insured is not an exception to the
coverage from the insurance policy, since Section III
thereof did not qualify as to who would commit the
theft. Thus, theft perpetrated by a driver of the
insured is not an exception to the coverage from the
insurance policy subject of this case. The word "loss"
refers to the act or fact of losing, or failure to keep
possession, while the word "damage" means
deterioration or injury to property.
Contracts of insurance, like other contracts, are to be
construed according to the sense and meaning of the
terms which the parties themselves have used. If
such terms are clear and unambiguous, they must be
taken and understood in their plain, ordinary and
popular sense. Accordingly, in interpreting the
exclusions in an insurance contract, the terms used to
specify the excluded classes therein are to be given
their meaning as understood in common speech.
Violeta R. Lalican v. Insular Life Assurance Co. Ltd.
Facts: Eulogio Lalican applied for an insurance policy
with Insular Life through its agent Josephine Malaluan
who issued him a 20-Year Endowment Variable
Income Package Flexi Plan worth P500,000 with 2
riders at P500,000 each with Violeta (his wife) as the
primary beneficiary. However, he failed to pay and
allowed the policy to be void after the lapse of the 31-
day grace period.
He submitted an application for reinstatement
of policy through Malaluan, together with the
payment of the unpaid premiums. However, the
Insular Life notified him that his application could not
be processed because he failed to pay the overdue
interest of the unpaid premiums. On Sept. 17, 1998,
Eulogio submitted to Malaluan’s house a second
application for reinstatement including the payment
for the overdue interest as well as for the premiums
due for that year, which was received by Malaluan’s
husband on her behalf and was thereby issued a
receipt for the amount Eulogio deposited. However,
on that same day, Eulogio died of cardio- respiratory
arrest secondary to electrocution.
Violeta, Eulogio’s widow filed with the Insular
Life a claim for payment of the full proceeds of the
policy but the latter informed her that the claim could
not be granted since at the time of Eulogio’s death, his
policy has already lapsed and he failed to reinstate the
same. The trial court rendered a decision in favour of
Insular Life and after the former denied her motion for
reconsideration, she directly elevated her case to the
Supreme Court via the petition for review on
Certiorari.
Issue: Whether or not the insurance policy of Eulogio
Lalican reinstated
Ruling: No. To reinstate a policy means to restore the
same to premium-paying status after it has been
permitted to lapse. Both the policy contract and
application for reinstatement provide for specific
conditions for the reinstatement of a lapsed policy.
According to the Application, the policy would only be
considered reinstated upon the approval of the
application by Insular Life during the applicant’s
lifetime and good health and whatever amount the
application paid in connection was considered to be a
deposit only until approval of said application.
Eulogio‘s death rendered impossible full compliance
with the conditions for reinstatement of policy even
though, before his death, he managed to file his
application for reinstatement and deposit the amount
for payment. As expressly provided on the policy
contract, agents of Insular Life have no authority to
approve any application for reinstatement. They still
had to turn over to Insular Life the application for
reinstatement and deposit, for processing and
approval of the latter.
9. Keppel Cebu Shipyard, Inc. vs. Pioneer Insurance
and Surety Corporation September 25, 2009. G.R.
Nos. 180880-81.
Facts:On January 26, 2000, KCSI and WG&A Jebsens
Shipmanagement, Inc. (WG&A) executed a Shiprepair
Agreement5 wherein KCSI would renovate and
reconstruct WG&A’s M/V “Superferry 3” using its dry
docking facilities pursuant to its restrictive safety and
security rules and regulations. Prior to the execution
of the Shiprepair Agreement, “Superferry 3” was
already insured by WG&A with Pioneer for
US$8,472,581.78. On February 8, 2000, in the course
of its repair, M/V “Superferry 3” was gutted by fire.
WG&A declared the vessel’s damage as a “total
constructive loss” and, hence, filed an insurance claim
with Pioneer. On June 16, 2000, Pioneer paid the
insurance claim of WG&A in the amount of $8M.
WG&A executed a Loss and Subrogation Receipt in
favor of Pioneer. Pioneer tried to collect from KCSI,
but the latter denied any responsibility. As KCSI
continuously refused payments, Pioneer filed a
Request for Arbitration in the Construction Industry
Arbitration Commission (CIAC), KCSI and WG&A
reached an amicable settlement, leading the latter to
file a Withdrawal of Claim on April 17, 2001 with the
CIAC. The CIAC granted, thereby dismissing the claim
of WG&A against KCSI. Hence, the arbitration
proceeded with Pioneer as the remaining claimant.
Pioneer asseverates that there existed a total
constructive loss so that it had to pay WG&A the full
amount of the insurance coverage and, by operation
of law, it was entitled to be subrogated to the rights of
WG&A to claim the amount of the loss.
Issue: Won the insured has the option to abandon the
thing insured.
Held: Yes. Properly considered, the word “may” in the
provision is intended to grant the insured (WG&A) the
option or discretion to choose the abandonment of
the thing insured (M/V “Superferry 3”), or any
particular portion thereof separately valued by the
policy, or otherwise separately insured, and recover
for a total loss when the cause of the loss is a peril
insured against. This option or discretion is expressed
as a right in Section 131 of the same Code, to wit: Sec.
131. A constructive total loss is one which gives to a
person insured a right to abandon under Section one
hundred thirty-nine.
10. Eternal Gardens Memorial Park Corporation vs
Philippine American Life Insurance Policy
551 SCRA 1 (2008)
Facts: Respondent Philamlife entered into an
agreement denominated as Creditor Group Life Policy
with petitioner. Under the policy, the clients of Eternal
who purchased burial lots from it on installment basis
would be insured by Philamlife. Among those insured
was John Chuang who died with a balance of
payments pf PhP100,000.00. More than a year after
complying with the required documents, Philamlife
had not furnished Eternal with any reply to the latter’s
insurance claim. This prompted Eternal to demand
from Philamlife the payment of the claim for
100,000php on April 25, 1986. Only then did Philamlife
respond that the deceased was not covered by the
Policy.
The RTC said that since the contract is a group life
insurance, once proof of death is submitted, payment
must follow. The CA ruled that the non-
accomplishment of the submitted application form
violated Section 26 of the Insurance Code. Thus, the
CA concluded, there being no application form,
Chuang was not covered by Philamlifes insurance.
Issue: WON Philamlife assumed the risk of loss
without approving the application, and should pay the
100K insurance proceeds.
Ruling: Yes. Philamlife and Eternal entered into an
agreement denominated as Creditor Group Life Policy
No. P-1920 dated December 10, 1980. In the policy, it
is provided that: EFFECTIVE DATE OF BENEFIT. The
insurance of any eligible Lot Purchaser shall be
effective on the date he contracts a loan with the
Assured. However, there shall be no insurance if the
application of the Lot Purchaser is not approved by the
Company. An examination of the provision of the
POLICY under effective date of benefit, would show
ambiguity between its two sentences. The first
sentence appears to state that the insurance coverage
of the clients of Eternal already became effective upon
contracting a loan with Eternal while the second
sentence appears to require Philamlife to approve the
insurance contract before the same can become
effective. It must be remembered that an insurance
contract is a contract of adhesion which must be
construed liberally in favor of the insured and strictly
against the insurer in order to safeguard the latter’s
interest.
On the other hand, the seemingly conflicting
provisions must be harmonized to mean that upon a
party’s purchase of a memorial lot on installment from
Eternal, an insurance contract covering the lot
purchaser is created and the same is effective, valid,
and binding until terminated by Philamlife by
disapproving the insurance application. The second
sentence of the Creditor Group Life Policy on the
Effective Date of Benefit is in the nature of a
resolutory condition which would lead to the
cessation of the insurance contract. Moreover, the
mere inaction of the insurer on the insurance
application must not work to prejudice the insured; it
cannot be interpreted as a termination of the
insurance contract. The termination of the insurance
contract by the insurer must be explicit and
unambiguous.
11. DBP POOL OF ACCREDITED INSURANCE
COMPANIES VS RADIO MINDANAO NETWORK
FACTS: Respondent’s radio station was razed by
fire thus it sought recovery under the two
insurance policies from petitioner and
Provident Insurance Corp. The insurance
companies maintained that the evidence
showed the fire was caused by members of the
New People’s Army so the claims were denied
on the ground that the cause of loss was an
excepted risk excluded under the insurance. It
does not cover any loss or damage occasioned by
or through or in consequence of war or warlike
operations.
Both the RTC and CA ruled in respondent’s
favor. Hence, herein petition by DBP Pool of
Accredited Insurance Companies. Petitioner
assails the factual finding of both the trial court
and the CA that its evidence failed to support
its allegation that the loss was caused by an
excepted risk. In upholding respondent’s claim
for indemnity, the trial court found that:
“The only evidence which the Court can
consider to determine if the fire was due to the
intentional act committed by the members of
the New People’s Army (NPA), are the
testimony of witnesses Lt. Col. Nicolas Torres
and SPO3 Leonardo Rochar who were
admittedly not present when the fire occurred.
The persons whom they investigated and
actually saw the burning of the station were not
presented as witnesses. The documentary
evidence do not satisfactorily prove that the
author of the burning were members of the
NPA.
Petitioner argues that private respondent is
responsible for proving that the cause of the
damage/loss is covered by the insurance policy,
as stipulated in the insurance policy
ISSUE: Whether or not respondent has the burden of
proof on proving that the loss is covered in the
policy.
RULING: NO. It’s the petitioner.
An insurance contract, being a contract of adhesion,
should be so interpreted as to carry out the purpose
for which the parties entered into the contract which
is to insure against risks of loss or damage to the
goods. Limitations of liability should be regarded with
extreme jealousy and must be construed in such a way
as to preclude the insurer from noncompliance with
its obligations.
The “burden of proof” contemplated by the
aforesaid provision actually refers to the
“burden of evidence” (burden of going
forward). As applied in this case, it refers to the
duty of the insured to show that the loss or
damage is covered by the policy. The foregoing
clause notwithstanding, the burden of proof still
rests upon petitioner to prove that the damage
or loss was caused by an excepted risk in order
to escape any liability under the contract.
Where a risk is excepted by the terms of a
policy which insures against other perils or
hazards, loss from such a risk constitutes a
defense which the insurer may urge, since it
has not assumed that risk, and from this it
follows that an insurer seeking to defeat a claim
because of an exception or limitation in the
policy has the burden of proving that the loss
comes within the purview of the exception or
limitation set up. If a proof is made of a loss
apparently within a contract of insurance, the
burden is upon the insurer to prove that the
loss arose from a cause of loss which is excepted
or for which it is not liable, or from a cause
which limits its liability.
12. AMERICAN HOME ASSURANCE COMPANY,
vs.TANTUCO ENTERPRISES, INC. 366 SCRA 740 (2001)
Facts: Tantuco Enterprises, Inc. is a coconut oil milling
and refining company. It owned two mills (the first oil
mill and a new one), both located at its factory
compound at Iyam, Lucena City. The two oil mills are
separately covered by fire insurance policies issued by
American Home Assurance Co.
On Sept. 30, 1991, a fire broke out and gutted and
consumed the new oil mill. American Home rejected
the claim for the insurance proceeds on the ground
that no policy was issued by it covering the burned oil
mill. It stated that the new oil mill was under Building
No. 15 while the insurance coverage extended only to
the oil mill under Building No. 5.
Issue: Whether or not the new oil mill is covered by
the fire insurance policy
Ruling: YES. In construing the words used descriptive
of a building insured, the greatest liberality is shown
by the courts in giving effect to the insurance. In view
of the custom of insurance agents to examine
buildings before writing policies upon them, and since
a mistake as to the identity and character of the
building is extremely unlikely, the courts are inclined
to consider the policy of insurance covers any building
which the parties manifestly intended to insure,
however inaccurate the description may be.
Notwithstanding, therefore, the misdescription in the
policy, it is beyond dispute, to our mind, that what the
parties manifestly intended to insure was the new oil
mill. If the parties really intended to protect the first
oil mill, then there is no need to specify it as new.
Indeed, it would be absurd to assume that the
respondent would protect its first oil mill for different
amounts and leave uncovered its second one.
It ought to be remembered that not only are
warranties strictly construed against the insurer, but
they should, likewise, by themselves be reasonably
interpreted. That reasonableness is to be ascertained
in light of the factual conditions prevailing in each
case.
13. RIZAL SURETY & INSURANCE COMPANY vs.
COURT OF APPEALS and TRANSWORLD KNITTING
MILLS, INC.
G.R. No. 112360, July 18, 2000, 336 SCRA 12
Facts:
Rizal Surety & Insurance Company issued a fire
insurance policy in favour of Transworld Knitting Mills,
Inc. The subject policy stated that Rizal Surety is
“responsible in case of lost whilst contained and/or
stored during the currency of this policy in the
premises occupied by them forming part of the
buildings situated within own compound.” This policy
also described therein the four-span building covered
by the same.
On Jan. 12, 1981, fire broke out in the compound,
razing the middle portion of its four-span building and
partly gutting the left and right sections thereof. A
two-storey building (behind said four-span building)
was also destroyed by the fire.
Issue:
Whether or not Rizal Surety is liable for loss of the
two-storey building considering that the fire insurance
policy sued upon covered only the contents of the
four-span building
Held:
Yes. Both the trial court and the CA found that so-
called “annex” as not an annex building but an integral
and inseparable part of the four-span building
described in the policy and consequently, the
machines and spare parts stored therein were covered
by the fire insurance in dispute.
So also, considering that the two-storey building
aforementioned already existed when subject fire
insurance policy contract was entered into on Jan. 12,
1981, having been constructed some time in 1978,
petitioner should have specifically excluded the said
two-storey building from the coverage of the fire
insurance if minded to exclude the same but if did not,
and instead, went on to provide that such fire
insurance policy covers the products, raw materials
and supplies stored within the premises of Transworld
which was an integral part of the four-span building
occupied by Transworld, knowing fully well the
existence of such building adjoining and
intercommunicating with the right section of the four-
span building.
Also, in case of doubt in the stipulation as to the
coverage of the fire insurance policy, under Article
1377 of the New Civil Code, the doubt should be
resolved against the Rizal Surety, whose layer or
managers drafted the fire insurance policy under
scrutiny.
14. Malayan Insurance Corp vs CA G.R. 119599 March
20, 1997
Facts: TKC Marketing imported 3,000 metric tons of
soya from Brazil to Manila. It was insured by Malayan
at the value of almost 20 million pesos. The vessel,
however, was stranded on South Africa because of a
lawsuit regarding the possession of the soya. TKC
consulted Malayan on recovery of the amount, but the
latter claimed that it wasn’t covered by the policy. The
soya was sold in Africa for Php 10 million, but TKC
wanted Malayan to shoulder the remaining value of
10 million as well.
Petitioner filed suit due to Malayan’s reticence to
pay. Malayan claimed that arrest by civil authorities
wasn’t covered by the policy. The trial court ruled in
TKC’s favor with damages to boot. The appellate court
affirmed the decision under the reason that clause 12
of the policy regarding an excepted risk due to arrest
by civil authorities was deleted by Section 1.1 of the
Institute War Clauses which covered ordinary arrests
by civil authorities. Failure of the cargo to arrive was
also covered by the Theft, Pilferage, and Non-delivery
Clause of the contract. Hence this petition.
Issues:
1. WON the arrest of the vessel was a risk covered
under the subject insurance policies.
2. WON the insurance policies must strictly construed
against the insurer.
Held: Yes. Petition dismissed
1. Section 12 or the "Free from Capture & Seizure
Clause" states: "Warranted free of capture, seizure,
arrest, restraint or detainment, and the consequences
thereof or of any attempt thereat… Should Clause 12
be deleted, the relevant current institute war clauses
shall be deemed to form part of this insurance.”
This was really replaced by the subsection 1.1 of
section 1 of Institute War Clauses (Cargo) which
included “the risks excluded from the standard form
of English Marine Policy by the clause warranted free
of capture, seizure, arrest, restraint or detainment,
and the consequences thereof of hostilities or warlike
operations, whether there be a declaration of war or
not.”
The petitioner’s claim that the Institute War Clauses
can be operative in case of hostilities or warlike
operations on account of its heading "Institute War
Clauses" is not tenable. It reiterated the CA’s stand
that “its interpretation in recent years to include
seizure or detention by civil authorities seems
consistent with the general purposes of the clause.”
This interpretation was regardless of the fact whether
the arrest was in war or by civil authorities.
The petitioner was said to have confused the Institute
War clauses and the F.C.S. in English law.
“It stated that "the F.C. & S. Clause was "originally
incorporated in insurance policies to eliminate the
risks of warlike operations". It also averred that the
F.C. & S. Clause applies even if there be no war or
warlike operations. In the same vein, it contended
that subsection 1.1 of Section 1 of the Institute War
Clauses (Cargo) "pertained exclusively to warlike
operations" and yet it also stated that "the deletion of
the F.C. & S. Clause and the consequent incorporation
of subsection 1.1 of Section 1 of the Institute War
Clauses (Cargo) was to include "arrest, etc. even if it
were not a result of hostilities or warlike operations."
The court found that the insurance agency tried to
interpret executive and political acts as those not
including ordinary arrests in the exceptions of the FCS
clause , and claims that the War Clauses now included
executive and political acts without including ordinary
arrests in the new stipulation.
“A strained interpretation which is unnatural and
forced, as to lead to an absurd conclusion or to render
the policy nonsensical, should, by all means, be
avoided.”
2. Indemnity and liability insurance policies are
construed in accordance with the general rule of
resolving any ambiguity therein in favor of the
insured, where the contract or policy is prepared by
the insurer. A contract of insurance, being a contract
of adhesion, means that any ambiguity should be
resolved against the insurer.