insurance compiled_edited 21-40

8/19/2019 Insurance Compiled_edited 21-40

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DLSU Commercial Law Review Digest G02(2015-2016)

021 Great Pacific Life Ass. Co. vs. CA and Ngo Hing, G.R. No. L-3184, A!ri" 30, 1#$#

%o!ic& Contract of 'ns(rance)Perfection of Contract)Good *ait+

Ponente& e Castro, .

C%R'N/& The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and

perfect candor or openness and honesty; the absence of any concealment or demotion, however slight, not for the alone

but equally so for the insurer. Whether intentional or unintentional the concealment entitles the insurer to rescind the

contract of insurance.

*AC%& Ngo Hing filed an application with the Great acific !ife "ssurance #ompany for a twenty$year endownment on

the life of his one$year old daughter Helen Go. Ngo Hing supplied the essential data and paid the premium retaining the

agent commission. %inding deposit receipt was issued to him and he supplied the necessary information to the branch

&anager &ondragon. 'n "pril () *+-, &ondragon received a letter from acific life disapproving the insurance for the

reason that the plan applied for is not available for minors below seven years old and offered uvenile Triple "ction lan

which allegedly was not communicated to Ngo Hing. 'n &ay /0, *+- Helen Go died of influen1a with complication of

bronchopneumonia. Ngo Hing sought the payment of the proceeds of the insurance, but to no avail. #23 #ebu and #" for

Ngo Hing.

'/& 4*5 Whether the insurance contract was perfected

4/5 Whether private respondent Ngo Hing concealed the state of health and physical condition of Helen Go, which

rendered void the aforesaid receipt

RL'NG& 1 No, t+e contract of ins(rance as not !erfected. %ased on the conditions printed at the bac6 of the

receipt, the binding deposit receipt is intended to be merely a provisional or temporary insurance contract and only upon

compliance of certain conditions.

The binding deposit receipt is merely conditional and is subordinated to the act of the company in approving or

re7ecting the application. 8ince Ngo Hing failed to fulfill the condition, for the application to be accepted by the insurer, the

contract was not perfected.

2ailure of petitioner &ondragon to communicate to respondent, as the respondent alleged, the re7ection of the

insurance application would not have any adverse effect on the allegedly perfected temporary contract. 2irst, there is no

perfected contract. 3n applying for the plan, he is aware, being agent of the petitioner that the plan being applied for is not

available for minors below - years old. 8econd, being the underwriter and having insurable interest over this daughter9slife, must have 6nown and followed the progress on the processing of such application and could not pretend ignorance.

2 5/. Private res!ondent +ad de"i6erate"7 concea"ed t+e state of +ea"t+ and !+7sica" condition of +is

da(g+ter He"en Go. He was fully aware that his one$year old daughter is typically a mongoloid child. Had he

communicated said significant fact in the insurance application form acific !ife would have verified the same and would

have had no choice but to disapprove the application outright.

'P'%'/ PR%'N& WH::2':, the decision appealed from is hereby set aside, and in lieu thereof, one is

hereby entered absolving petitioners !apulapu


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022 'GNAC' A%RN'N, in +is on 6e+a"f and as t+e 'C'AL GAR'AN * CARL A%RN'N, 9inor,

!"aintiffs-a!!e""ants, vs. %H/ PH'L'PP'N/ A:/R'CAN L'*/ 'NRANC/ C:PAN5, defendant-a!!e""ee. G.R. No.

L-1;1;3 *e6r(ar7 28, 1#;3

%o!ic& 'NRANC/< *a"se re!resentations of 9ateria" facts

Ponente& :A=AL'N%AL,

C%R'N/& 3n this 7urisdiction, concealment, whether intentional or unintentional, entitles the insurer to rescind thecontract of insurance, concealment being defined as =negligence to communicate that which a party 6nows and ought to

communicate=.

*AC%& :stefania 8aturnino died of pneumonia, secondary to influen1a. "ppellants here, who are her surviving husband

and minor child, respectively, demanded payment of the face value of the policy which is a /)$year endowment non$

medical insurance. This 6ind of policy dispenses with the medical e>amination of the applicant usually required in ordinary

life policies. However, detailed information is called for in the application concerning the applicant?s health and medica

history.

The claim was re7ected and this suit was subsequently instituted. Two months prior to the issuance of the policy, 8aturnino

was operated on for cancer. Notwithstanding the fact of her operation :stefania ". 8aturnino did not ma6e a disclosure

thereof in her application for insurance. 'n the contrary, she stated therein that she did not have, nor had she ever had,among other ailments listed in the application, cancer or other tumors; that she had not consulted any physician,

undergone any operation or suffered any in7ury within the preceding five years; and that she had never been treated for

nor did she ever have any illness or disease peculiar to her se>, particularly of the breast, ovaries, uterus, and menstrual

disorders. The application also recites that the foregoing declarations constituted =a further basis for the issuance of the

policy.@

'/&

Whether or not the insured made such false representations of material facts as to avoid the policy.

RL'NG&

5/. The information given by her in her application for insurance was false, namely, that she had never had cancer or

tumors, or consulted any physician or undergone any operation within the preceding period of five years.

"re the facts then falsely represented materialA The 3nsurance !aw 48ection ()5 provides that =materiality is to be

determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the

communication is due, in forming his estimate of the proposed contract, or in ma6ing his inquiries.= 3t seems to be the

contention of appellants that the facts sub7ect of the representation were not material in view of the =non$medical= nature

of the insurance applied for, which does away with the usual requirement of medical e>amination before the policy is

issued. The contention is without merit.

The waiver of medical examination renders even more material the information required of the applicant concerning

previous condition of health and diseases suffered, for such information necessarily constitutes an important factor which

the insurer takes into consideration in deciding whether to issue the policy or not. It is logical to assume that if appellee

had been properly apprised of the insured's medical history she would at least have been made to undergo medical

examination in order to determine her insurability .

The concealment of the fact of the operation itself was fraudulent, as there could not have been any mista6e about it, no

matter what the ailment. 8econdly, in order to avoid a policy it is not necessary to show actual fraud on the part of the

insured.

3n the case of Baspr1y6 v. &etropolitan 3nsurance #o., *C) N.D.8. /**, /*C, it was heldE &oreover, if it were the law that

an insurance company could not depend a policy on the ground of misrepresentation, unless it could show actual

6nowledge on the part of the applicant that the statements were false, then it is plain that it would be impossible for it to

protect itself and its honest policyholders against fraudulent and improper claims. 3t would be wholly at the mercy of any

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one who wished to apply for insurance, as it would be impossible to show actual fraud e>cept in the e>tremest cases. 3t

could not rely on an application as containing information on which it could act. There would be no incentive to an

applicant to tell the truth.

3n the case of "rgente v. West #oast !ife 3nsurance #o., * hil. -/, -(/, this #ourt said, quoting from oyce, The !aw

of 3nsurance, /nd ed., Fol. (E

=The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into

accepting the ris6, or accepting it at the rate of premium agreed upon. The insurer, relying upon the belief that the assured

will disclose every material fact within his actual or presumed 6nowledge, is misled into a belief that the circumstance

withheld does not e>ist, and he is thereby induced to estimate the ris6 upon a false basis that it does not e>ist.=

'P'%'/& The 7udgment appealed from, dismissing the complaint and awarding the return to appellants of thepremium already paid, with interest at up to anuary /+, *++, affirmed, with costs against appellants.

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023 G.R. No. L-4;11 ece96er 1$, 1#

>A CH// GAN, plaintiff$appellee,vs.LA? N'N AN RC= 'NRANC/ C., L%., re!resented 67 its agent, ?ARN/R, @ARN/ AN C.L%., defendant$appellant.R/5/, . @. L., J.:%o!ic& =no"edge of :ateria" *acts

DOCTRINE: 3t is usually held that where the insurer, at the time of the issuance of a policy of insurance, has 6nowledge ofe>isting facts which, if insisted on, would invalidate the contract from its very inception, such 6nowledge constitutes awaiver of conditions in the contract inconsistent with the facts, and the insurer is stopped thereafter from asserting thebreach of such conditions.

FACTS: Iua #hee Gan, a merchant of "lbay, instituted in the #ourt of 2irst 3nstance of said province, see6ing to recoverthe proceeds of certain fire insurance policies totalling (-),))), issued by the !aw Jnion K oc6 3nsurance #o., !td.,upon certain bodegas and merchandise of the insured that were burned on une /*, *+C).

The record shows that before the last war, plaintiff$appellee owned four warehouses or bodegas 4designated as %odegasNos. * to C5 in the municipality of Tabaco, "lbay, used for the storage of stoc6s of copra and of hemp, baled and loose, inwhich the appellee dealth e>tensively. They had been, with their contents, insured with the defendant #ompany since*+(-, and the lose 9ade !a7a6"e to t+e P+i"i!!ine Nationa" @an as 9ortgage of t+e +e9! and cro!s, to t+e eBtentof its interest.

2ire of undetermined origin that bro6e out in the early morning of uly /*, *+C), and lasted almost one wee6, gutted andcompletely destroyed %odegas Nos. *, / and C, with the merchandise stored theren. laintiff$appellee informed the insurerby telegram on the same date; and on the ne>t day, the fire ad7usters engaged by appellant insurance company arrivedand proceeded to e>amine and photograph the premises, pored over the boo6s of the insured and conducted ane>tensive investigation. The plaintiff having submitted the corresponding fire claims, totalling (+0,/.0* 4but reduced tothe full amount of the insurance, (-),)))5, t+e 'ns(rance Co9!an7 resisted !a79ent, c"ai9ing vio"ation ofarranties and conditions, fi"ing of fra(d("ent c"ai9s, and t+at t+e fire +ad 6een de"i6erate"7 ca(sed 67 t+e

ins(red or 67 ot+er !ersons in connivance it+ +i9.

With counsel for the insurance company acting as private prosecutor, Iue #hee Gan, with his brother, Iua #hee ao,and some employees of his, were indicted and tried in *+C) for the crime of arson, it being claimed that they had set fireto the destroyed warehouses to collect the insurance. They were, however, acquitted by the trial court in a final decisiondated uly +, *+C* 4:>hibit WW5. %+ereafter, t+e civi" s(it to co""ect t+e ins(rance 9one7 !roceeded to its tria" andter9ination in t+e Co(rt 6e"o, it+ t+e res("t noted at t+e start of t+is o!inion. %+e P+i"i!!ine Nationa" @ansco9!"aint in intervention as dis9issed 6eca(se t+e a!!e""ee +ad 9anaged to !a7 +is inde6tedness to t+e @and(ring t+e !endec7 of t+e s(it, and des!ite t+e fire "osses.

The insurance company alleges that the trial #ourt should have held that the policies were avoided for breach of warrantyspecifically the one appearing on a rider pasted 4with other similar riders5 on the face of the policies 4:>hibits L, D, and!!5. These riders were attached for the first time in *+(+, and the pertinent portions read as followsE

Hydrants in the compound, not less in number than one for each *) feet of e>ternal wall measurement ofbuildingMM.. "N< MMMM.. and a trained brigade of not less than /) men to wor6 the same.

3t is argued that since the bodegas insured had an e>ternal wall perimeter of )) meters or *,C) feet, the appelleeshould have eleven 4**5 fire hydrants in the compound, and that he actually had only two 4/5, with a further pair nearby,belonging to the municipality of Tabaco.

'/& 's t+e ins(rance co9!an7 "ia6"e for t+e !ro!erties 6(rnedD

H/L& Des. "ppellant is barred by waiver 4or rather estoppel5 to claim violation of the so$called fire hydrants warranty, forthe reason that 6nowing fully all that the number of hydrants demanded therein never e>isted from the very beginning, the

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appellant nevertheless issued the policies in question sub7ect to such warranty, and received the correspondingpremiums.

The insurance company was aware, even before the policies were issued, that in the premises insured there were onlytwo fire hydrants installed by Iua #hee Gan and two others nearby, owned by the municipality of T"baco, contrary to the

requirements of the warranty in question. 8uch fact appears from positive testimony for the insured that appellant?s agentsinspected the premises; and the simple denials of appellant?s representative 4amic1on5 can not overcome that proof. Thatsuch inspection was made is moreover rendered probable by its being a prerequisite for the fi>ing of the discount on thepremium to which the insured was entitled, since the discount depended on the number of hydrants, and the fire fightingequipment available 48ee =8cale of "llowances= to which the policies were e>pressly made sub7ect5. The law, supportedby a long line of cases, is e>pressed by "merican urisprudence to be as followsE

3t is usually held that where the insurer, at the time of the issuance of a policy of insurance, has 6nowledge ofe>isting facts which, if insisted on, would invalidate the contract from its very inception, such 6nowledgeconstitutes a waiver of conditions in the contract inconsistent with the facts, and the insurer is stopped thereafterfrom asserting the breach of such conditions.

"s to maintenance of a trained fire brigade of /) men, the record is preponderant that the same was organi1ed, and

drilled, from time to give, altho not maintained as a permanently separate unit, which the warranty did not require. "nywayit would be unreasonable to e>pect the insured to maintain for his compound alone a fire fighting force that manymunicipalities in the 3slands do not even possess.

Jnder the second assignment of error, appellant insurance company avers, that the insured violated the =Hemp Warranty=provisions of olicy No. /(-* 4:>hibit 5, against the storage of gasoline, since appellee admitted that there were (cans 4latas5 of gasoline in the building designed as =%odega No. /= that was a separate structure not affected by the fire.The #ourt sees no reason why the prohibition of 6eeping gasoline in the premises could not be e>pressed clearly andunmista6ably, in the language and terms that the general public can readily understand. 3f the company intended to relyupon a condition of that character, it ought to have been plainly e>pressed in the policy.

The ne>t two defenses pleaded by the insurer, that the insured connived at the loss and that the fraudulently inflatedthe quantity of the insured stoc6 in the burnt bodegas, are closely related to each other. %oth defenses are predicted onthe assumption that the insured was in financial difficulties and set the fire to defraud the insurance company, presumablyin order to pay off the hilippine National %an6, to which most of the insured hemp and copra was pledged. %oth defensesare fatally (nder9ined 67 t+e esta6"is+ed fact t+at, notit+standing t+e ins(rers ref(sa" to !a7 t+e va"(e of t+e!o"icies t+e eBtensive reso(rces of t+e ins(red /B+i6it ?? ena6"ed +i9 to !a7 off t+e Nationa" @an in a s+ortti9e


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24. Geagonia v. Co(rt of A!!ea"s

241 CRA 12, 1;0 FG.R. No. 11442$ *e6r(ar7 ;, 1##

%o!ic& Non-isc"os(re< Prior =no"edge< o(6"e 'ns(rance

Ponente& A'/, R., J.:

C%R'N/& " double insurance e>ists where the same person or property is insured by several insurers separately in

respect of the same sub7ect and interest.

O#ardinal ule on 3nsuranceP " policy or insurance contract is to be interpreted liberally in favor of the insured and strictly

against the company, the reason being, undoubtedly, to afford the greatest protection which the insured was endeavoring

to secure when he applied for insurance. 3t is also a cardinal principle of law that forfeitures are not favored and that any

construction which would result in the forfeiture of the policy benefits for the person claiming thereunder, will be avoided, if

it is possible to construe the policy in a manner which would permit recovery, as, for e>ample, by finding a waiver for such

forfeiture.

*AC%&

The petitioner is the owner of Norman?s &art located in the public mar6et of 8an 2rancisco, "gusan del 8ur. 'n

// tiles, #ebu #ity as their interest may appear

sub7ect to the terms of this policy. #'$3N8J"N#:


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1. ?+et+er t+e !etitioner +ad !rior no"edge of t+e to ins(rance !o"icies iss(ed 67 t+e P*'C +en +e

o6tained t+e fire ins(rance !o"ic7 fro9 t+e !rivate res!ondent, t+ere67, for not disc"osing s(c+ fact,

vio"ating Condition 3 of t+e !o"ic7, and2. 'f +e +ad, +et+er +e is !rec"(ded fro9 recovering t+erefro9. ?N +e is !ro+i6ited fro9 recovering3. 's do(6"e ins(rance a!!"ica6"e in t+is caseD

RL'NG& 1 5/ and 2 N 3 N.

4*5 The 3nsurance #ommission found that the petitioner had no 6nowledge of the previous two policies. The #ourt o

"ppeals disagreed and found otherwise in view of the e>plicit admission by the petitioner in his letter to the private

respondent of *0 anuary *++*. 8# agreed with the #" that the petitioner 6new of the prior policies issued by the

23#. His "etter of 18 an(ar7 1##1 to t+e !rivate res!ondent conc"(sive"7 !roves t+is no"edge. His

testimony to the contrary before the 3nsurance #ommissioner and which the latter relied upon cannot prevail over

a written admission made ante litem motam. 3t was, indeed, incredible that he did not 6now about the prior policies

since these policies were not new or original.4/5 rovisions, conditions or e>ceptions in policies which tend to wor6 a forfeiture of insurance policies should be

construed most strictly against those for whose benefits they are inserted, and most favorably toward those

against whom they are intended to operate. With these principles in mind, Condition 3 of t+e s(6ect !o"ic7 is

not tota""7 free fro9 a96ig(it7 and 9(st 6e 9etic("o(s"7 ana"7Ied. 8uch analysis leads us to conclude tha

4a5 the prohibition applies only to double insurance , and 4b5 the nullity of the policy shall only be to the extent

exceeding !"","""."" of the total policies obtained.4(5 8ince the two policies of the 23# do not cover the same interest as that covered by the policy of the private

respondent, no double insurance e>ists. The non$disclosure then of the former policies was not fatal to the

petitioner?s right to recover on the private respondent?s policy. 3n order to constitute a violation, the other

insurance must be upon same sub7ect matter, the same interest therein, and the same ris6.

3t is apparent from the face of 2ire olicy that the insurance was ta6en in the name of private respondent. The policystates that =


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3n the policy obtained by the mortgagor with loss payable clause in favor of the mortgagee as his interest may appear, themortgagee is only a beneficiary under the contract, and recogni1ed as such by the insurer but not made a party to thecontract himself. Hence, any act of the mortgagor which defeats his right will also defeat the right of the mortgagee. This6ind of policy covers only such interest as the mortgagee has at the issuing of the policy.

'n the other hand, a mortgagee may also procure a policy as a contracting party in accordance with the terms of an

agreement by which the mortgagor is to pay the premiums upon such insurance. 3t has been noted, however, thatalthough the mortgagee is himself the insured, as where he applies for a policy, fully informs the authori1ed agent of hisinterest, pays the premiums, and obtains on the assurance that it insures him, the policy is in fact in the form used toinsure a mortgagor with loss payable clause.

The fire insurance policies issued by the 23#, naming the petitioner as the assured and containing a mortgage

clause, is clearly a si9!"e "oss !a7a6"e c"a(se, not a standard 9ortgage c"a(se.

2urthermore, by stating within #ondition ( itself that such condition shall not apply if the total insurance in force at

the time of loss does not e>ceed /)),))).)), the private respondent was amenable to assume a co$insurer?s liability up

to a loss not e>ceeding /)),))).)). What it had in mind was to discourage over$insurance. 3ndeed, the rationale behind

the incorporation of =other insurance= clause in fire policies is to prevent over$insurance and thus avert the perpetration of

fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that e>ceeds the

property?s value, the insured may have an inducement to destroy the property for the purpose of collecting the insurance.

The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured.

'P'%'/ PR%'N& WH::2':, the instant petition is hereby G"NT:


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2. :ALA5AN 'NRANC/ C., 'NC., etitioner,vs.PH'L'PP'N/ *'R% 'NRANC/ C., 'NC. and R/P%A@L/ *R?AR/R /R'C/, 'NC., espondents.G.R. No. 184300 ("7 11, 2012%o!ic& o(6"e ins(rance< t+er ins(rance via over ins(rance< A6sence of so"idar7 "ia6i"it7 in ins(rance contract

Ponente& R/5/, J.:C%R'N/& @7 t+e eB!ress !rovision of ection #3 of t+e 'ns(rance Code, do(6"e ins(rance eBists +ere t+esa9e !erson is ins(red 67 severa" ins(rers se!arate"7 in res!ect to t+e sa9e s(6ect and interest. %+e reE(isitesin order for do(6"e ins(rance to arise are as fo""os&

1. %+e !erson ins(red is t+e sa9e<2. %o or 9ore ins(rers ins(ring se!arate"7<3. %+ere is identit7 of s(6ect 9atter<4. %+ere is identit7 of interest ins(red< and. %+ere is identit7 of t+e ris or !eri" ins(red against.

*ast *acts& 8ince *+0+, Wyeth hilippines, 3nc. 4Wyeth5 and respondent eputable 2orwarder 8ervices, 3nc. 4eputable5had been annually e>ecuting a contract of carriage, whereby the latter undertoo6 to transport and deliver the former9sproducts to its customers, dealers or salesmen.

'n November *0, *++(, Wyeth procured &arine olicy No. &" *(-+- 4&arine olicy5 from respondent hilippines 2irst

3nsurance #o., 3nc. 4hilippines 2irst5 to secure its interest over its own products. hilippines 2irst thereby insured Wyeth9s

nutritional, pharmaceutical and other products usual or incidental to the insured9s business while the same were being

transported or shipped in the hilippines.

'n ecuted its annual contract of carriage with eputable. 3t turned out, however, that the

contract was not signed by Wyeth9s representativeQs.

Jnder the contract, eputable undertoo6 to answer for =all ris6s with respect to the goods and shall be liable to the#'&"ND 4Wyeth5, for the loss>>> due to any and all causes whatsoever, including theft, robbery,The contract also required eputable to secure an insurance policy on Wyeth9s goods. Thus, eputable signed a 8pecial

is6 3nsurance olicy 48 olicy5 with petitioner &alayan for the amount of *,))),))).)).

es of romil infantformula worth /,(-,0/.-) to be delivered by eputable to &ercury


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insured by any 2ire or &arine policy or policies e>cept in respect of any e>cess beyond the amount which would havebeen payable under the 2ire or &arine policy or policies had this insurance not been effected.

&alayan sought the dismissal of the third$party complaint against it. 3n the alternative, it prayed that it be held liable for nomore than C0,-.-), its alleged pro$rata share of the loss based on the amount covered by the policy, sub7ect to theprovision of 8ection */ of the 8 olicy, which statesE

*/. 'TH: 3N8J"N#: #!"J8:. 3f at the time of any loss or damage happening to any property hereby insured, therebe any other subsisting insurance or insurances, whether effected by the insured or by any other person or personscovering the same property, the company shall not be liable to pay or contribute more than its ratable proportion of suchloss or damage.

'/& 1WQN 8ections and */ of the 8 policy is nugatory; R D:8. ; 4/5WQN eputable should be held solidarily liable

with &alayan for the amount of ++0,))) due to hilippines 2irst$ N'

RL'NG&

ection is act(a""7 t+e ot+er ins(rance c"a(se a"so ca""ed Jadditiona" ins(ranceJ and Jdo(6"e ins(ranceJ, oneain to Condition No. 3 in iss(e in Geagonia v. CA, +ic+ va"idit7 as (!+e"d 67 t+e Co(rt as a arrant7 t+at noot+er ins(rance eBists. %+e Co(rt r("ed t+at Condition No. 3 is a condition +ic+ is not !roscri6ed 67 "a as its

incor!oration in t+e !o"ic7 is a""oed 67 ection $ of t+e 'ns(rance Code. 't as a"so t+e Co(rtKs finding t+at(n"ie t+e ot+er ins(rance c"a(ses, Condition No. 3 does not a6so"(te"7 dec"are void an7 vio"ation t+ereof 6(teB!ress"7 !rovides t+at t+e condition Js+a"" not a!!"7 +en t+e tota" ins(rance or ins(rances in force at t+e ti9eof t+e "oss or da9age is not 9ore t+an P200,000.00.J

3n this case, similar to #ondition No. ( in Geagonia, 8ection does not provide for the nullity of the 8 olicy but simplylimits the liability of &alayan only up to the e>cess of the amount that was not covered by the other insurance policy. 3ninterpreting the =other insurance clause= in Geagonia, the #ourt ruled that the prohibition applies only in case of doubleinsurance. The #ourt ruled that in order to constitute a violation of the clause, the other insurance must be upon samesub7ect matter, the same interest therein, and the same ris6. Thus, even though the multiple insurance policies involvedwere all issued in the name of the same assured, over the same sub7ect matter and covering the same ris6, it was ruledthat there was no violation of the =other insurance clause= since there was no double insurance.

ection 12 of t+e R Po"ic7, on t+e ot+er +and, is t+e over ins(rance c"a(se. :ore !artic("ar"7, it covers t+e

sit(ation +ere t+ere is over ins(rance d(e to do(6"e ins(rance. 'n s(c+ case, ection 1 !rovides t+at :a"a7ans+a"" Jnot 6e "ia6"e to !a7 or contri6(te 9ore t+an its rata6"e !ro!ortion of s(c+ "oss or da9age.J %+is is inaccord it+ t+e !rinci!"e of contri6(tion !rovided (nder ection #4e of t+e 'ns(rance Code, +ic+ states t+atJ+ere t+e ins(red is over ins(red 67 do(6"e ins(rance, eac+ ins(rer is 6o(nd, as 6eteen +i9se"f and t+e ot+erins(rers, to contri6(te rata6"7 to t+e "oss in !ro!ortion to t+e a9o(nt for +ic+ +e is "ia6"e (nder +is contract.J

#learly, both 8ections and */ presuppose the e>istence of a double insurance. The pivotal question that now arises iswhether there is double insurance in this case such that either 8ection or 8ection */ of the 8 olicy may be applied.@7 t+e eB!ress !rovision of ection #3 of t+e 'ns(rance Code, do(6"e ins(rance eBists +ere t+e sa9e !erson isins(red 67 severa" ins(rers se!arate"7 in res!ect to t+e sa9e s(6ect and interest. %+e reE(isites in order fordo(6"e ins(rance to arise are as fo""os&

1. %+e !erson ins(red is t+e sa9e<2. %o or 9ore ins(rers ins(ring se!arate"7<

3. %+ere is identit7 of s(6ect 9atter<4. %+ere is identit7 of interest ins(red< and. %+ere is identit7 of t+e ris or !eri" ins(red against.

3n the present case, while it is true that the &arine olicy and the 8 olicy were both issued over the same sub7ectmatter, i.e. goods belonging to Wyeth, and both covered the same peril insured against, it is, however, beyond cavil thatthe said policies were issued to two different persons or entities. 3t is undisputed that Wyeth is the recogni1ed insured of hilippines 2irst under its &arine olicy, while eputable is the recogni1ed insured of &alayan under the 8 olicy. Thefact that eputable procured &alayan9s 8 olicy over the goods of Wyeth pursuant merely to the stipulated requirementunder its contract of carriage with the latter does not ma6e eputable a mere agent of Wyeth in obtaining the said 8olicy.

10


11/41


The interest of Wyeth over the property sub7ect matter of both insurance contracts is also different and distinct from that ofeputable9s. The policy issued by hilippines 2irst was in consideration of the legal andQor equitable interest of Wyethover its own goods. 'n the other hand, what was issued by &alayan to eputable was over the latter9s insurable interestover the safety of the goods, which may become the basis of the latter9s liability in case of loss or damage to the propertyand falls within the contemplation of 8ection * of the 3nsurance #ode.

Therefore, even though the two concerned insurance policies were issued over the same goods and cover the same ris6,there arises no double insurance since they were issued to two different personsQentities having distinct insurableinterests. Necessarily, over insurance by double insurance cannot li6ewise e>ist.

"part from the foregoing, the #ourt is also wont to strictly construe the controversial provisions of the 8 olicy against&alayan. This is in 6eeping with the rule thatE=3ndemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguitytherein in favor of the insured, where the contract or policy is prepared by the insurer. " contract of insurance, being acontract of adhesion, par e>cellence, any ambiguity therein should be resolved against the insurer; in other words, itshould be construed liberally in favor of the insured and strictly against the insurer. !imitations of liability should beregarded with e>treme 7ealousy and must be construed in such a way as to preclude the insurer from noncompliance withits obligations.=

'n the fourth issue R eputable is not solidarily liable with &alayan to hilippine first.

Where the insurance contract provides for indemnity against liability to third persons, the liability of the insurer is directand such third persons can directly sue the insurer. The direct liability of the insurer under indemnity contracts againstthird partyO$ Pliability does not mean, however, that the insurer can be held solidarily liable with the insured andQor the otherparties found at fault, since they are being held liable under different obligations. The liability of the insured carrier orvehicle owner is based on tort, in accordance with the provisions of the #ivil #ode; while that of the insurer arises fromcontract, particularly, the insurance policy.

8uffice it to say that &alayan?s and eputable?s respective liabilities arose from different obligations$ &alayan?s is basedon the 8 olicy while eputable?s is based on the contract of carriage.

11


12/41

[T!ete"t#

O3N8J"N#: /P PH'L'PP'N/ A:/R'CAN G/N/RAL 'NRANC/ C., 'NC. and %AG: PLA%'C, 'NC. vs?//% L'N/, 'NC., AA /%/RAN ARRA%R/ AN PR% /R'C/, 'NC. and HN. CR% * APP/ALG.. No. 0-C(C "ugust , *++/%o!ic& ights of an insurer $ 8ubrogationPonente& egalado, .

C%R'N/&

Jpon payment of the loss covered by the policy, the insurer?s entitlement to subrogation pro tanto, being of thehighest equity, equips it with a cause of action against a third party in case of contractual breach. 2urther, the insurer?ssubrogatory right to sue for recovery under the bill of lading in case of loss of or damage to the cargo is 7urisprudentiallyupheld. However, if an insurer, in the e>ercise of its subrogatory right, may proceed against the erring carrier and for allintents and purposes stands in the place and in substitution of the consignee, a fortiori such insurer is presumed to 6nowand is 7ust as bound by the contractual terms under the bill of lading as the insured.

*AC%&

3n &arch *+--, the vessel 88 =F38HF" D"8H=, belonging to or operated by the foreign common carrier, too6 on

board / consignments of cargoes for shipment to &anila and later for transhipment to emplary damages, attorney?s feesand costs allegedly due to defendants? negligence.

'/& Whether or not petitioner hilamgen has legal standing, in its capacity as insurer, to bring the action againstrespondents

RL'NG& Des, it does.

OWPe observe that herein petitioners are #ointly pursuing this case, considering their common interest in theshipment sub7ect of the present controversy, to obviate any question as to who the real party in interest is and to protecttheir respective rights as insurer and insured. 3n any case, there is no impediment to the legal standing of etitionerhilamgen, even if it alone were to sue herein private respondents in its own capacity as insurer, it having beensubrogated to all rights of recovery for loss of or damage to the shipment insured under its &arine is6 Note No. C(0-(Cdated &arch (*, *+-- in view of the full settlement of the claim thereunder as evidenced by the subrogation receipt issuedin its favor by 2ar :ast %an6 and Trust #o.,


13/41


Jpon payment of the loss covered by the policy, the insurer?s entitlement to subrogation pro tanto, being of thehighest equity, equips it with a cause of action against a third party in case of contractual breach. 2urther, the insurer?ssubrogatory right to sue for recovery under the bill of lading in case of loss of or damage to the cargo is 7urisprudentiallyupheld. However, if an insurer, in the e>ercise of its subrogatory right, may proceed against the erring carrier and for allintents and purposes stands in the place and in substitution of the consignee, a fortiori such insurer is presumed to 6now

and is 7ust as bound by the contractual terms under the bill of lading as the insured.

'P'%'/ PR%'N&

"##'


14/41

[T!ete"t#

2$ P/R ARC/, !"aintiff-a!!e""ee, vs.

%H/ CAP'%AL 'NRANC/ R/%5 C., 'NC., defendant-a!!e""ant.

G.R. No. L-2801 e!te96er 30, 1#82

%o!ic& Pa79ent of Pre9i(9s

Ponente& A@A AN%,

C%R'N/&Jnless the premium is paid there is no insurance. Time is of the essence in respect of the payment of the insurance

premium so that if it is not paid the contract does not ta6e effect unless there is still another stipulation to the contrary.

*AC%&

edro "rce 43N8J:


15/41


028 :a"a7an 'ns(rance Co., 'nc. :'C v. Cr(I-Arna"doGR no. L-;$83< cto6er 12, 1#8$%o!ic& /ffects of Non-!a79ent of Pre9i(9Ponente& CRM, .

C%R'N/& " fire insurance is an aleatory contract. %y such insurance, the insured in effect wagers that his house will be burned, withthe insurer assuring him against the loss, for a fee. 3f the house does burn, the insured, while losing his house, wins thewagers.;

" valid cancellation must require concurrence of the following conditionsE4*5 There must be prior notice of cancellation to the insured;4/5 The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds

mentioned;4(5 The notice must be 4a5 in writing, 4b5 mailed, or delivered to the named insured, 4c5 at the address shown in the policy;4C5 3t must state 4a5 which of the grounds mentioned in 8ection C is relied upon and 4b5 that upon written request of the

insured, the insurer will furnish the facts on which the cancellation is based.

*AC%&&3#' issued to private respondent 4#oronacion inca5 a 2ire 3nsurance olicy on her property for *C,))) effective )-$

//$*+0*R)-$//$*+0/. 'n 'ctober *+0*, &3#' allegedly cancelled the policy for non$payment of the premium and sentnotice. 'n


16/41

[T!ete"t#

8:#. C. No policy of insurance other than life shall be cancelled by the insurer e>cept upon prior notice thereof to theinsured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of thepolicy, of one or more of the followingE4a5 non$payment of premium;4b5 conviction of a crime arising out of acts increasing the ha1ard insured against;4c5 discovery of fraud or material misrepresentation;

4d5 discovery of willful, or rec6less acts or commissions increasing the ha1ard insured against;4e5 physical changes in the property insured which result in the property becoming uninsurable;or 4f5 a determination by the #ommissioner that the continuation of the policy would violate or would place the insurer in

violation of this #ode.8:#. . "ll notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to thenamed insured at the address shown in the policy, and shall state 4a5 which of the grounds set forth in section si>ty$four isrelied upon and 4b5 that, upon written request of the named insured, the insurer will furnish the facts on which thecancellation is based.

To support &3#'9s assertion, it presented its employee, who testified that =the original of the endorsement and creditmemo were sent the assured by mail=. However, there is no proof that the notice was actually mailed to and received byinca. 'n the other hand, there is the flat denial of inca, who says she never received the claimed cancellation.#onsidering the strict language of 8ec. C that no insurance policy shall be cancelled e>cept upon prior notice, it

behooved &3#'?s to ma6e sure that the cancellation was actually sent to and received by the insured. 3t stands to reasonthat if inca had really received the said notice, she would not have made payment on the original policy. 3nstead, shewould have as6ed for a new insurance, effective on that date and until * year later.

FaluationEThe valuation fi>ed in fire insurance policy is conclusive in case of total loss in the absence of fraud. !oss and its amountmay be determined on the basis of such proof as may be offered by the insured, which need not be of suchpersuasiveness as is required in 7udicial proceedings. 3f, as in this case, the insured files notice and preliminary proof ofloss and the insurer fails to specify to the former all the defects thereof and without unnecessary delay, all ob7ections tonotice and proof of loss are deemed waived under 8ection +) of the 3nsurance #ode. The certification issued by the3ntegrated National olice as to the e>tent of inca?s loss should be considered sufficient. &3#' submitted no evidence tothe contrary nor did it even question the e>tent of the loss in its answer before the 3nsurance #ommission.

'P'%'/ PR%'N&

WH::2':, the petition is


17/41


02# P+i"i!!ine P+oeniB (ret7 'ns(rance, 'nc. vs. ?oodors, 'nc.

G.R. No. L-22;84< A(g(st 31, 1#;$

%o!ic& Perfection of an 'ns(rance Contract< 6"igations of t+e Parties

Ponente& 'MN, .

C%R'N/&

'nce the contract is perfected, the obligation of the insurer to pay the insured the amount for which the policy was issuedin case the conditions therefor had been complied with, arises and becomes binding upon it, while the obligation of theinsured to pay the remainder of the total amount of the premium due becomes demandable. "s such, the parties coulddemand from each other the performance of whatever obligations they had assumed.

*AC%&

laintiff hilippine hoeni> 8urety issued to defendant company a fire insurance policy for the amount of()),))).)).The defendant was obligated to pay ,)*.+ as premium of the said policy. However, the defendant was only able topay(,))).)). clusively in the hands of one of the contracting parties the right to

decide whether the contract should stand or not. ather the correct view would seem to be thisE as the contract had

become perfected, the parties could demand from each other the performance of whatever obligations they had assumed

3n the case of the insurer, it is obvious that it had the right to demand from the insured the completion of the payment of

the premium due or sue for the rescission of the contract. "s it chose to demand specific performance of the insured?s

obligation to pay the balance of the premium, the latter?s duty to pay is indeed indubitable.

'P'%'/ PR%'N&

Wherefore, the appealed decision being in accordance with law and the evidence, the same is hereby affirmed, with costs

1&


18/41

[T!ete"t#

030 P. Antonio A. and io"eta R. %'@A5 et a". v. CA and *ort(ne Life and Genera" 'ns(rance Co. 'nc.GR no. 11#; and :a7 24, 1##;%o!ic& 'ns(rance Po"ic7 +en va"id and 6inding< Pa79ent of Pre9i(9Ponente& @/LL'LL, .

C%R'N/& "s a general rule, partial payment of premium would not ma6e the insurance coverage effective, unless it is

adequately demonstrated that there was a waiver either e>press or implied, of the same by the insurerE

*AC%& n 22 an(ar7 1#8$, 2'TJN: issued a 2ire 3nsurance olicy in favor of F3'!:T" . Tibay andQor Nicolasoraldo on their two$storey residential building in obel o>as 8t., &a6ati #ity, together with all their personal effectstherein. The insurance was for ))6, covering the period from /( "N 90-$00. "s of /( "N 90-, total of the premium was/,+0(., but F3'!:T" only paid )). The insured building was completely destroyed by fire on 8 :AR O8$. F3'!:T"paid the balance of the premium two days later 4*) &" 90-5, and on the same day, filed a claim with 2'TJN: on thefire insurance policy. F3'!:T"9s claim was referred to the ad7uster, G''


19/41


insurance copany is !alid and bindin" unless and until t#e preiu t#ereo$ #as been paid , e>cept in the case oa life or an industrial life policy whenever the grace period provision applies 4emphasis supplied5.The cru> of the controversy lies in the phrase =unless and until t#e preiu t#ereo$ #as been paid .= This leads us tothe manner of payment envisioned by the law to ma6e the insurance policy operative and binding.

@7 eB!ress agree9ent of t+e !arties, no !inculu juris or 6ond of "a as to 6e esta6"is+ed (nti" f("" !a79entwas effected prior to the occurrence of the ris6 insured against. 3n +akati Tuscany (ondominium (orp. v . (ourt of )ppeals, the parties mutually agreed that the premiums could be paid in installments, which in fact they did for three 4(5years, hence, this #ourt refused to invalidate the insurance policy. The cases, hoenix and Tuscany, adequatelydemonstrate the waiver, either e>press or implied, of prepayment in full by the insurerE impliedly, by suing for the balanceof the premium as in hoeni>, and e>pressly, by agreeing to ma6e premiums payable in installments as in Tuscany. %utcontrary to the stance ta6en by petitioners, there is no waiver e>press or implied in the case at bench. Confor9a6"7 it+t+e aforesaid sti!("ations eB!"icit"7 orded and taen in con(nction it+ ec. $$ of t+e 'ns(rance Code t+e!a79ent of !artia" !re9i(9 67 t+e ass(red in this particular instance should not 6e considered t+e !a79entreE(ired 67 t+e "a and t+e sti!("ation of t+e !arties. ather, it must be ta6en in the concept of a deposit to be held intrust by the insurer until such time that the full amount has been tendered and duly receipted for . 3n other words, ase>pressly agreed upon in the contract, f ("" !a79ent 9(st 6e 9ade 6efore t+e ris occ(rs for t+e !o"ic7 to 6econsidered effective and in force.

Thus, no vinculum #uris whereby the insurer bound itself to indemnify the assured according to law ever resulted from thefractional payment of premium. The insurance contract itself e>pressly provided that the policy would be effective onlywhen the premium was paid in full. 3t would have been altogether different were it not so stipulated. :rgo, petitioners hadabsolute freedom of choice whether or not to be insured by 2'TJN: under the terms of its policy and they freely optedto adhere thereto. 3n the desire to safeguard the interest of the assured, it must not be ignored that the contract ofinsurance is primarily a ris6 distributing device, a mechanism by which all members of a group e>posed to a particular ris6contribute premiums to an insurer. 2rom these contributory funds are paid whatever losses occur due to e>posure to theperil insured against. :ach party therefore ta6es a ris6E the insurer, that of being compelled upon the happening of thecontingency to pay the entire sum agreed upon, and the insured, that of parting with the amount required as premium,without receiving anything therefor in case the contingency does not happen. To ensure payment for these losses, the lawmandates all insurance companies to maintain a legal reserve fund in favor of those claiming under their policies. 1 3should be understood that the integrity of this fund cannot be secured and maintained if by 7udicial fiat partial offerings ofpremiums were to be construed as a legal nexus between the applicant and the insurer despite an e>press agreement to

the contrary.

'P'%'/ PR%'N& WH::2':, the petition is


20/41

[T!ete"t#

31 CP@ Gen. 'ns(rance Co. 'nc. vs. :asagana %e"a9art, 'nc.CP@ G/N/RAL 'NRANC/ C'NC., !etitioner, vs. :AAGANA %/LA:AR%, 'NC., res!ondent.G.R. No. 13$1$2< (ne 1, 1###%P'C& 'ns(rance Po"ic7< Pa79ent of Pre9i(9sPN/N%/& PAR, J.

CA/ LA?) C%R'N/E

"n insurance policy, other than life, issued originally or on renewal, is not valid and binding until actual payment of thpremium. "ny agreement to the contrary is void. The parties may not agree e>pressly or impliedly on the e>tension ocreditor time to pay the premium and consider the policy binding before actual payment.

*AC%& c+rono"ogica" order'n "pril *, *++*, petitioner issued five 45 insurance policies covering respondent?s various property described thereiagainst fire, for the period from &ay //, *++* to &ay //, *++/.

3n &arch *++/, petitioner evaluated the policies and decided not to renew them upon e>piration of their terms on &ay //

*++/. etitioner advised respondent?s bro6er, uellig 3nsurance %ro6ers, 3nc. of its intention not to renew the policies.

'n "pril , *++/, petitioner gave written notice to respondent of the non$renewal of the policies at the address stated in thpolicies.

'n une *(, *++/, fire ra1ed respondent?s property covered by three of the insurance policies petitioner issued.'n uly *(, *++/, respondent presented to petitioner?s cashier at its head office five 45 manager?s chec6s in the totaamount of //,-(.+, representing premium for the renewal of the policies from &ay //, *++/ to &ay //, *++(. Nonotice of loss was filed by respondent under the policies prior to uly *C, *++/.

'n uly *C, *++/, respondent filed with petitioner its formal claim for indemnification of the insured property ra1ed by fire'n the same day, uly *C, *++/, petitioner returned to respondent the five 45 manager?s chec6s that it tendered, and athe same time re7ected respondent?s claim for the reasons 4a5 that the policies had e>pired and were not renewed, and 4bthat the fire occurred on une *(, *++/, before respondent?s tender of premium payment.

'n uly /*, *++/, respondent filed with the T# a civil complaint against petitioner for recovery of *0,C,))).))representing the face value of the policies covering respondent?s insured property ra1ed by fire, and for attorney?s fees.

etitioner filed an answer to the complaint. 3t alleged that the complaint =fails to state a cause of action=; that petitioner wanot liable to respondent for insurance proceeds under the policies because at the time of the loss of respondent?s propertdue to fire, the policies had long e>pired and were not renewed.

'/E Whether the fire insurance policies issued by petitioner to the respondent covering the period &ay //, *++* to&ay //, *++/, had e>pired on the latter date or had been e>tended or renewed by an implied credit arrangement thoughactual payment of premium was tendered on a later date after the occurrence of the ris6 4fire5 insured against.

RL'NG& No. The insurance policy did not e>pire on a latter date, e>tended or renewed by an implied credit arrangemen

though actual payment of premium was tendered on a later date after the occurrence of the ris6 4fire5 insured against.

The answer is easily found in the 3nsurance #ode. "n insurance policy, other than life, issued originally or on renewal, isnot valid and binding until actual payment of the premium. "ny agreement to the contrary is void. The parties may noagree e>pressly or impliedly on the e>tension of creditor time to pay the premium and consider the policy binding beforeactual payment. The case of +alayan Insurance (o., Inc. vs. (ru-)rnaldo, cited by the #ourt of "ppeals, is noapplicable. 3n that case, payment of the premium was in fact actually made on


21/41


32 GL* R/R%, 'NC., !etitioner, vs. PH'L'PP'N/ CHAR%/R 'NRANC/ CRPRA%'N, res!ondent. FG.R.No. 1;1;$. :a7 1;, 200%o!ic& 3nterpretation of insurance policy; contract of insurance; contract of adhesion rulePonente& P(no, .

C%R'N/&

3t is basic that all the provisions of the insurance policy should be e>amined and interpreted in consonance with eachother. "ll its parts are reflective of the true intent of the parties. The policy cannot be construed piecemeal. #ertainstipulations cannot be segregated and then made to control; neither do particular words or phrases necessarily determineits character. " contract of insurance is an agreement whereby one underta6es for a consideration to indemnify another against lossdamage or liability arising from an un6nown or contingent event. "n insurance premium is the consideration paid an insurer for underta6ing to indemnify the insured against a specifiedperil. " contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while theother party merely affi>es his signature or his Xadhesion@ thereto; #onsequently, any ambiguity therein is resolved againstthe insurer, or construed liberally in favor of the insured. The 8upreme #ourt will only rule out blind adherence to termswhere facts and circumstances will show that they are basically one$sided.

YYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY

*AC%& etitioner Gulf esorts 3nc. is the owner of the la1a esort. 3t had its properties in said resort insured originallywith the "merican Home "ssurance #ompany 4"H"#$"3J5. 3n the first four insurance policies issued by "H"#$"3J, theris6 of loss from earthqua6e shoc6 was e>tended only to petitioner9s two swimming pools. etitioner then agreed to insurewith respondent hil. #harter 3nsurance #orp. 4#3#5 the properties covered by "H"# 4"3J5 olicy provided that thepolicy wording and rates in said policy be copied in the policy to be issued by respondent. espondent then issued olicyNo. (*+CC to plaintiff covering the period of &arch *C, *++) to &arch *C, *++*.

The brea6$down of premiums shows that petitioner paid only (+(.)) as premium against earthqua6e shoc6. 3n olicyNo. (*+CC issued by #3#, the shoc6 endorsement provideE In consideration of the payment by the insured to thecompany of the sum included additional premium, the (ompany agrees, notwithstanding what is stated in the printedconditions of this policy due to the contrary, that this insurance covers loss or damage to shock to any of the propertyinsured by this olicy occasioned by or through or in consequence of earthquake.

'n uly *, *++) an earthqua6e struc6 #entral !u1on and Northern !u1on. etitioner9s properties covered by olicy No.

(*+CC issued by #3# including the two swimming pools in its "goo laya esort were damaged.

etitioner then filed its claim or formal demand for settlement of the damage to all its properties in the "goo laya esort.However, respondent denied petitioner9s claim on the ground that its insurance policy only afforded earthqua6e shoc6coverage to the two swimming pools of the resort. etitioner and respondent failed to arrive at a settlement. Thus,petitioner filed a complaint with the T#.

The T# ruled in favor of the respondent ruling that that petitioner paid only a premium of (+(.)) against the peril oearthqua6e shoc6, the same premium it paid against earthqua6e shoc6 only on the two swimming pools in all the policiesissued by "H"# 4"3J5. The endorsement rider means that only the two swimming pools were insured against earthqua6eshoc6. The #" affirmed the T# decision.

etitioner avers that, pursuant to its earthqua6e shoc6 endorsement rider 4which states Xthis insurance covers loss or

damage to any of the property insured by this olicy occasioned by or through or in consequence of :arthqua6e.@5,3nsurance olicy No. (*+CC covers all damages to the properties within its resort caused by earthqua6e. espondenthowever, contends that the rider limits its liability for loss to the two swimming pools of petitioner.

'/& Whether under respondent9s 3nsurance olicy No. (*+CC, only the two 4/5 swimming pools, rather than all theproperties covered thereunder, are insured against the ris6 of earthqua6e shoc6. Des.

RL'NGE 3t is basic that all the provisions of the insurance policy should be e>amined and interpreted in consonance witheach other. "ll its parts are reflective of the true intent of the parties. The policy cannot be construed piecemeal. #ertainstipulations cannot be segregated and then made to control; neither do particular words or phrases necessarily determineits character. etitioner cannot focus on the earthqua6e shoc6 endorsement to the e>clusion of the other provisions. "l

21


22/41

[T!ete"t#

the provisions and riders, ta6en and interpreted together, indubitably show the intention of the parties to e>tendearthqua6e shoc6 coverage to the two swimming pools only.

A caref(" eBa9ination of t+e !re9i(9 reca!it("ation i"" s+o t+at it is t+e c"ear intent of t+e !arties to eBtendeart+E(ae s+oc coverage on"7 to t+e to si99ing !oo"s. 8ection /4*5 of the 3nsurance #ode defines a contract ofinsurance as an agreement whereby one underta6es for a consideration to indemnify another against loss, damage or

liability arising from an un6nown or contingent event. Thus, an insurance contract e>ists where the following elementsconcurE

*. The insured has an insurable interest; /. The insured is sub7ect to a ris6 of loss by the happening of the designatedperil; (. The insurer assumes the ris6; C. 8uch assumption of ris6 is part of a general scheme to distribute actual lossesamong a large group of persons bearing a similar ris6; and . 'n consideration of t+e ins(rerKs !ro9ise, t+e ins(red!a7s a !re9i(9. 4:mphasis ours5

"n insurance premium is the consideration paid an insurer for underta6ing to indemnify the insured against a specifiedperil. 3n fire, casualty, and marine insurance, the premium payable becomes a debt as soon as the ris6 attaches. 3n thesub7ect policy, no premium payments were made with regard to earthqua6e shoc6 coverage, e>cept on the two swimmingpools. There is no mention of any premium payable for the other resort properties with regard to earthqua6e shoc6 . This isconsistent with the history of petitioner9s previous insurance policies from "H"#$"3J.

etitioner also cited and relies on the attachment of the phrase %ub#ect to/ 0ther Insurance (lause, Typhoon1ndorsement, 1arthquake %hock 1ndorsement, 1xtended (overage 1ndorsement, 21) 3arranty 4 )nnual ayment

)greement on 5ong Term oliciesQ to the insurance policy as proof of the intent of the parties to e>tend the coverage forearthqua6e shoc6. However, this phrase is merely an enumeration of the descriptive titles of the riders, clauseswarranties or endorsements to which the policy is sub7ect, as required under 8ection ), paragraph / of the 3nsurance#ode. We also hold that no significance can be placed on the deletion of the qualification limiting the coverage to the twoswimming pools. The earthqua6e shoc6 endorsement cannot stand alone.

3n sum, there is no ambiguity in the terms of the contract and its riders. etitioner cannot rely on the general rule thatinsurance contracts are contracts of adhesion which should be liberally construed in favor of the insured and strictlyagainst the insurer company which usually prepares it. We cannot apply the general rule on contracts of adhesion to thecase at bar. etitioner cannot claim it did not 6now the provisions of the policy. 2rom the inception of the policy, petitionerhad required the respondent to copy verbatim the provisions and terms of its latest insurance policy from "H"#$"3J.espondent, in compliance with the condition set by the petitioner, copied "3J olicy No. /)$C0)*$+ in drafting its3nsurance olicy No. (*+CC. 3t is true that there was variance in some terms, specifically in the replacement costendorsement, but the principal provisions of the policy remained essentially similar to "H"#$"3J9s policy. #onsequently,we cannot apply the =fine print= or =contract of adhesion= rule in this case as the parties intent to limit the coverage of thepolicy to the two swimming pools only is not ambiguous.

'P'%'/& 3N F3:W WH::'2, the 7udgment of the #ourt of "ppeals is affirmed. The petition for certiorari isdismissed. No costs. 8' '


23/41


)(( A:/R'CAN H:/ ARANC/ C:PAN5 vs. AN%N' CHAGR No. and ate& G.. No. *()C/* une /0, *+++%o!ic& ayment of remium %y #hec6; 'ther 3nsurance #lausePonente& isting co$insurers, non$disclosurethereof is a violation that entitles the insurer to avoid the policy. This condition is common in fire insurance policies and is6nown as the =other insurance clause.= The purpose for the inclusion of this clause is to prevent an increase in the moraha1ard.

*AC%&

etitioner is a domestic corporation engaged in the insurance business. 8ometime in *++), respondent obtained frompetitioner a fire insurance covering the stoc6$in$trade of his business, &oonlight :nterprises, located at Falencia%u6idnon. The insurance was due to e>pire on / &arch *++).'n A!ri" 1##0 respondent issued a chec6 in the amount of /,+0(.) to petitioner?s agent, ames Jy, as payment forthe renewal of the policy. 3n turn, the latter delivered enewal #ertificate to respondent. The chec6 was drawn against a&anila ban6 and deposited in petitioner?s ban6 account in #agayan de 'ro #ity. The corresponding official receipt wasissued on *) "pril. 8ubsequently, a new insurance policy was issued, whereby petitioner undertoo6 to indemnifyrespondent for any damage or loss arising from fire up to /)),))) for the period 2 :arc+ 1##0 to 2 :arc+ 1##1.'n ; A!ri" 1##0 &oonlight :nterprises was completely ra1ed by fire. Total loss was estimated between C,))),))) and,))),))). espondent filed an insurance claim with petitioner and four other co$insurers, namely, ioneer 3nsuranceand 8urety #orporation, rudential Guarantee and "ssurance, 3nc., 2ilipino &erchants 3nsurance #o. and isting insurance contract when the fire occurred since respondent did notpay the premium. 3t also alleged that even assuming there was a contract, respondent violated several conditions of thepolicy, particularlyE 4*5 his submission of fraudulent income ta> return and financial statements; 4/5 his failure to establishthe actual loss, which petitioner assessed at -),))); and 4(5 his failure to notify to petitioner of any insurance alreadyeffected to cover the insured goods. These violations, petitioner insisted, 7ustified the denial of the claim.!ower #ourt and #" ruled in favour of respondent.

'/& Was there a valid insurance contract between respondent and petitioner when the fire occurredA

RL'NG& Des.

'n the issue of ayment of remium

"ccording to the trial court the renewal certificate issued to respondent contained the ac6nowledgment that premium hadbeen paid. 3t is not disputed that the chec6 drawn by respondent in favor of petitioner and delivered to its agent washonored when presented and petitioner forthwith issued its official receipt to respondent on *) "pril *++) . ection 30; oft+e 'ns(rance Code !rovides t+at an7 ins(rance co9!an7 +ic+ de"ivers a !o"ic7 or contract of ins(rance to anins(rance agent or ins(rance 6roer s+a"" 6e dee9ed to +ave a(t+oriIed s(c+ agent or 6roer to receive on its6e+a"f !a79ent of an7 !re9i(9 +ic+ is d(e on s(c+ !o"ic7 or contract of ins(rance at t+e ti9e of its iss(anceor de"iver7 or +ic+ 6eco9es d(e t+ereon. 3n the instant case, the best evidence of such authority is the fact thatpetitioner accepted the chec6 and issued the official receipt for the payment. 3t is, as well, bound by its agent?sac6nowledgment of receipt of payment.

2$


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[T!ete"t#

'n the 3ssue of Fiolations on the olicy by espondent

The submission of the alleged fraudulent documents pertained to respondent?s income ta> returns for *+0- to *+0+.espondent, however, presented a %3 certification that he had paid the proper ta>es for the said years. The trial courtand the #ourt of "ppeals gave credence to the certification and it being a question of fact, said finding is conclusive.

'rdinarily, +ere t+e ins(rance !o"ic7 s!ecifies as a condition t+e disc"os(re of eBisting co-ins(rers, nondisc"os(re t+ereof is a vio"ation t+at entit"es t+e ins(rer to avoid t+e !o"ic7. %+is condition is co99on in fireins(rance !o"icies and is non as t+e Jot+er ins(rance c"a(se.J %+e !(r!ose for t+e inc"(sion of t+is c"a(se isto !revent an increase in t+e 9ora" +aIard.

To constitute a violation the other e>isting insurance contracts must be upon the same sub7ect matter and with the sameinterest and ris6. 3ndeed, respondent acquired several co$insurers and he failed to disclose this information to petitioner.Nonetheless, petitioner is estopped from invo6ing this argument. The trial court cited the testimony of petitioner?s lossad7uster who admitted previous 6nowledge of the co$insurers.

3ndubitably, it cannot be said that petitioner was deceived by respondent by the latter?s non$disclosure of the otherinsurance contracts when petitioner actually had prior 6nowledge thereof. etitioner?s loss ad7uster had 6nown all along ofthe other e>isting insurance contracts, yet, he did not use that as basis for his recommendation of denial. The loss

ad7uster, being an employee of petitioner, is deemed a representative of the latter whose awareness of the otherinsurance contracts binds petitioner. %+erefore, t+ere as no vio"ation of t+e Jot+er ins(ranceJ c"a(se 67res!ondent.

'P'%'/&WH::2':, the instant petition is partly G"NT:


25/41


034 'NRANC/CP@ Genera" 'ns. Co. 'nc., vs. :asagana %e"a9art, 'nc s(!ra< sa9e as case 31G.R. No. 13$1$2. A!ri" 4, 2001%o!ic& Pa79ent of Pre9i(9

Ponente& A'/, R., C.J

C%R'N/& if the insurer has granted the insured a credit term for the payment of the premium and loss occurs beforethe e>piration of the term, recovery on the policy should be allowed even though the premium is paid after the loss butwithin the credit term.

*AC%& espondent &asagana Telamart, 3nc. obtained from etitioner J#% General 3ns. insurance policies on itsproperties in asay #ity and &anila. "ll policies reflect on their face the effectivity termE =from CE)) .&. of // &ay *++*to CE)) .&. of // &ay *++/.=

'n une *(, *++/, respondent9s properties located in Taft "venue, asay #ity were ra1ed by fire. 'n uly *(, *++/respondent tendered, and petitioner accepted five chec6s as renewal premium payments for which a receipt was issued.'n uly *C, *++/, &asagana made its formal demand for indemnification for the burned insured properties. %ut petitionerreturned manager?s chec6s stating in its letter that it was re7ecting &asagana?s claim on the following groundsE =a5 8aidpolicies e>pired last &ay //, *++/ and were not renewed for another term; b5


26/41

[T!ete"t#

8:#. -/. "n insurer is entitled to payment of premium as soon as the thing insured is e>posed to the peril insuredagainst, unless there is clear agreement to grant the insured credit e>tension of the premium due. No policy issued by aninsurance company is valid and binding unless and until the premium thereof has been paid.

3t can be seen at once that 8ection -- does not restate the portion of 8ection -/ e>pressly permitting an agreementto e>tend the period to pay the premium. %ut are there e>ceptions to 8ection --A The answer is in the affirmative.

The first e>ception is provided by 8ection -- itself, and that is, in case of a life or industrial life policy whenever thegrace period provision applies.

The second is that covered by 8ection -0 of the 3nsurance #ode.

" third e>ception was laid down in +akati Tuscany (ondominium (orporation vs. (ourt of )ppeals, wherein we ruledthat 8ection -- may not apply if the parties have agreed to the payment in installments of the premium and partialpayment has been made at the time of loss. We said therein, thusE We hold that the sub7ect policies are valid even if thepremiums were paid on installments. The records clearly show that the petitioners and private respondent intendedsub7ect insurance policies to be binding and effective notwithstanding the staggered payment of the premiums.

While the import of 8ection -- is that prepayment of premiums is strictly required as a condition to the validity of thecontract, We are not prepared to rule that the request to ma6e installment payments duly approved by the insurer would

prevent the entire contract of insurance from going into effect despite payment and acceptance of the initial premium orfirst installment. 8o is an understanding to allow insured to pay premiums in installments not so prescribed. "t the veryleast, both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted.

%y the approval of the aforequoted findings and conclusion of the #ourt of "ppeals, Tuscany has provided a fourthe>ception to 8ection --, namely, that the insurer may grant credit e>tension for the payment of the premium. This simplymeans that if the insurer has granted the insured a credit term for the payment of the premium and loss occurs before thee>piration of the term, recovery on the policy should be allowed even though the premium is paid after the loss but withinthe credit term.

&oreover, there is nothing in 8ection -- which prohibits the parties in an insurance contract to provide a credit termwithin which to pay the premiums. That agreement is not against the law, morals, good customs, public order or publicpolicy. The agreement binds the parties. "rticle *() of the #ivil #ode providesE

"T. *(). The contracting parties may establish such stipulations clauses, terms and conditions as they may deemconvenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

2inally in the instant case, it would be un7ust and inequitable if recovery on the policy would not be permitted againstetitioner, which had consistently granted a )$ to +)$day credit term for the payment of premiums despite its fullawareness of 8ection --. :stoppel bars it from ta6ing refuge under said 8ection, since espondent relied in good faith onsuch practice. :stoppel then is the fifth e>ception to 8ection --.

'P'%'/ PR%'N& ?H/R/*R/, the


27/41


3 :A=A%' %CAN5 CN:'N': CRPRA%'N, !etitioner, vs. %H/ CR% * APP/AL, A:/R'CAN

H:/ ARANC/ C., re!resented 67 A9erican 'nternationa" nderriters P+i"s., 'nc., res!ondent.

GR no. and ate& G.. No. +C November , *++/

%o!ic& ayment of remiums on 3nstallment

Ponente& %:!!'83!!',6/

C%R'N/&

%asic principles of equity and fairness would not allow the insurer to continue collecting and accepting the premiums,

although paid on installments, and later deny liability on the lame e>cuse that the premiums were not prepared in full.

While the import of 8ection -- is that prepayment of premiums is strictly required as a condition to the validity of the

contract, We are not prepared to rule that the request to ma6e installment payments duly approved by the insurer, would

prevent the entire contract of insurance from going into effect despite payment and acceptance of the initial premium or

first installment. 8ection -0 of the 3nsurance #ode in effect allows waiver by the insurer of the condition of prepayment by

ma6ing an ac6nowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to

ma6e the policy binding despite the fact that premium is actually unpaid. 8ection -- merely precludes the parties from

stipulating that the policy is valid even if premiums are not paid, but does not e>pressly prohibit an agreement granting

credit e>tension, and such an agreement is not contrary to morals, good customs, public order or public policy.

*AC%&

- rivate respondent "merican Home "ssurance #o. 4"H"#5, represented by "merican 3nternational Jnderwriters

4hils.5, 3nc., issued in favor of petitioner &a6ati Tuscany #ondominium #orporation 4TJ8#"ND5 insurance policy

on the latter?s building and premises, for a period beginning * &arch *+0/ and ending * &arch *+0(, with a total

premium of C,*)(.). The premium was paid on installments on */ &arch *+0/, /) &ay *+0/, /* une *+0/

and * November *+0/, all of which were accepted by private respondent.- 'n *) 2ebruary *+0(, private respondent issued to petitioner another insurance policy which replaced and

renewed the previous policy, for a term covering * &arch *+0( to * &arch *+0C. The premium in the amount of

C,*)(.) was again paid on installments on *( "pril *+0(, *( uly *+0(, ( "ugust *+0(, + 8eptember *+0(

and /* November *+0(. "ll payments were li6ewise accepted by private respondent.

-'n /) anuary *+0C, the policy was again renewed and private respondent issued to petitioner another insurance

policy for the period * &arch *+0C to * &arch *+0. 'n this renewed policy, petitioner made two installment

payments, both accepted by private respondent, the first on 2ebruary *+0C for /,))).)) and the second, on

une *+0C for *)),))).)). Thereafter, petitioner refused to pay the balance of the premium.- #onsequently, private respondent filed an action to recover the unpaid balance of (*C,*)(.) for the third

insurance policy.- 3n its answer with counterclaim, petitioner admitted the issuance of insurance policy. 3t e>plained that i

discontinued the payment of premiums because the policy did not contain a credit clause in its favor and the

receipts for the installment payments covering the policy for *+0C$0, as well as the two 4/5 previous policies.- etitioner further claimed that the policy was never binding and valid, and no ris6 attached to the policy. 3t also

asserts that its payment by installment of the premiums for the insurance policies for *+0/, *+0( and *+0C

invalidated said policies because of the provisions of 8ec. -- of the 3nsurance #ode, as amended, and by the

conditions stipulated by the insurer in its receipts, disclaiming liability for loss for occurring before payment of

premiums.

'/& Whether the payment by installment of the premiums due on an insurance policy invalidates the contract of

insurance in view of 8ec. -- of .


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[T!ete"t#

staggered payment of the premiums. The initial insurance contract entered into in *+0/ was renewed in *+0(, then in

*+0C. 3n those three 4(5 years, the insurer accepted all the installment payments. 8uch acceptance of payments spea6s

loudly of the insurer?s intention to honor the policies it issued to petitioner. #ertainly, basic principles of equity and fairness

would not allow the insurer to continue collecting and accepting the premiums, although paid on installments, and later

deny liability on the lame e>cuse that the premiums were not prepared in full.

We therefore sustain the #ourt of "ppeals. We quote with approval the well$reasoned findings and conclusion of the

appellate court contained in its esolution denying the motion to reconsider its


29/41


3; LAL'CAN v. %H/ 'NLAR L'*/ ARANC/ C:PAN5 L':'%/

G.R. No. 1832; < A(g(st 2, 200#

%o!ic& 'ns(ra6"e 'nterest < %+eor7 of '9!(ted =no"edge

Ponente& CH'C-NAMAR', .

C%R'N/&

"n insurable interest is one of the most basic and essential requirements in an insurance contract. 3n general, an

insurable interest is that interest which a person is deemed to have in the sub7ect matter insured, where he has a relation

or connection with or concern in it, such that the person will derive pecuniary benefit or advantage from the preservation

of the sub7ect matter insured and will suffer pecuniary loss or damage from its destruction, termination, or in7ury by the

happening of the event insured against.

*AC%&

Fioleta is the widow of the deceased :ulogio #. !alican, the latter having applied for an insurance policy with 3nsular !ife

during his lifetime. The policy was issued by espondent9s agent &alaluan, and it contained a /)$Dear :ndowment

Fariable 3ncome ac6age 2le>i lan worth )),))).)) with two riders valued at )),))).)) each; Fioleta was named

as the primary beneficiary.

Jnder the terms, the premiums were to be paid on a quarterly basis. :ulogio paid the first two months of the premiums,

but failed to pay the premium due on /C anuary *++0, even after the lapse of the grace period of (* days. Therefore, the

policy lapsed and became void. :ulogio applied for reinstatement and was advised to pay the interests on the lapsed

premiums and pay the premiums that became due; :ulogio did so and prepared the amount. He went to &alaluan9s house

to submit his reapplication. However, as he was about to give the reapplication with payment to &alaluan, &alaluan was

away on business and :ulogio gave the form and payment to her husband; in turn, the husband gave a receipt to :ulogio

for the amount deposited. !ater on the same day, :ulogio died of cardio$respiratory arrest secondary to

electrocution.

Without 6nowing of :ulogio9s death, &alaluan forwarded to the 3nsular !ife egional 'ffice in the #ity of 8an 2ernando,

on *0 8eptember *++0, :ulogio9s second "pplication for einstatement of olicy No. +)**++/ and *-,)).)) deposit.

However, 3nsular !ife no longer acted upon :ulogio9s second "pplication for einstatement, as the former was informed

on /* 8eptember *++0 that :ulogio had already passed away.

Fioleta filed with 3nsular !ife a claim for payment of the full proceeds of the policy. 3nsular !ife informed Fioleta that her

claim could not be granted since, at the time of :ulogio9s death, the policy had already lapsed; and :ulogio failed to

reinstate the same. "ccording to the "pplication for einstatement, the policy would only be considered reinstated upon

approval of the application by 3nsular !ife during the applicant9s =lifetime and good health,= and whatever amount the

applicant paid in connection thereto was considered to be a deposit only until approval of said application. Thus

prompting Fioleta to file a case with the T#.

T# held that the olicy had indeed lapsed and :ulogio needed to have the same reinstated. 8he brought the casedirectly to the 8upreme #ourt.

'/& 1 ?+et+er or not /("ogio +ad an eBisting ins(ra6"e interest in +is on "ife (nti" t+e da7 of +is deat+

5/

2 ?+et+er or not /("ogio as a6"e to reinstate t+e "a!sed ins(rance !o"ic7 on +is "ife 6efore +is deat+-N.

RL'NG&

4*5 "n insurable interest is one of the most basic and essential requirements in an insurance contract. 3n general, an

insurable interest is that interest which a person is deemed to have in the sub7ect matter insured, where he has a relation

2


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[T!ete"t#

or connection with or concern in it, such that the person will derive pecuniary benefit or advantage from the preservation

of the sub7ect matter insured and will suffer pecuniary loss or damage from its destruction, termination, or in7ury by the

happening of the event insured against. The e>istence of an insurable interest gives a person the legal right to insure the

sub7ect matter of the policy of insurance. 8ection *) of the 3nsurance #ode indeed provides that every person has an

insurable interest in his own life. 8ection *+ of the same code also states that an interest in the life or health of a person

insured must e>ist when the insurance ta6es effect, but need not e>ist thereafter or when the loss occurs.3t is actually beyond question that while :ulogio was still alive, he had an insurable interest in his own life, which he did

insure in the policy.

4/5 To reinstate a policy means to restore the same to premium$paying status after it has been permitted to lapse. %oth the

olicy #ontract and the "pplication for einstatement provide for specific conditions for the reinstatement of a lapsed

policy. 'ne of the 6ey provisions in the olicy #ontract regarding reinstatement discussed that for a policy to be

considered reinstated, it has to be processed and approved by 3nsular !ife d(ring :ulogio9s lifetime and good health. The

policy is the law between the two parties. The olicy #ontract between :ulogio and 3nsular !ife identified the following

conditions for reinstatement should the policy lapseE

*). :3N8T"T:&:NT

Dou may reinstate this policy at any time within three years after it lapsed if the following conditions are metE 4*5 the policy has not beensurrendered for its cash value or the period of e>tension as a term insurance has not e>pired; 4/5 evidence of insurability satisfactory toO3nsular !ifeP is furnished; 4(5 overdue premiums are paid with compound interest at a rate not e>ceeding that which would have beenapplicable to said premium and indebtedness in the policy years prior to reinstatement; and 4C5 indebtedness which e>isted at the time

of lapsation is paid or renewed.

"dditional conditions for reinstatement of a lapsed policy were stated in the "pplication for einstatement which

:ulogio signed and submitted, to witE 3QWe agree that said olicy shall not 6e considered reinstated (nti" t+is a!!"ication is a!!roved 67 t+e Co9!an7 d(ring 97)o(r

"ifeti9e and good +ea"t+ and (nti" a"" ot+er Co9!an7 reE(ire9ents for t+e reinstate9ent of said Po"ic7 are f(""7 satisfied.

3QWe further agree that an7 !a79ent 9ade or to 6e 9ade in connection it+ t+is a!!"ication s+a"" 6e considered as de!osit on"7

and s+a"" not 6ind t+e Co9!an7 (nti" t+is a!!"ication is fina""7 a!!roved 67 t+e Co9!an7 d(ring 97)o(r "ifeti9e and good+ea"t+. 3f this application is disapproved, 3QWe also agree to accept the refund of all payments made in connection herewith, without

interest, and to surrender the receipts for such payment.

3n the instant case, :ulogios death rendered impossible full compliance with the conditions for reinstatement of olicyNo. +)**++/. True, :ulogio, before his death, managed to file his "pplication for einstatement and deposit the amountfor payment of his overdue premiums and interests thereon with &alaluan; but olicy No. +)**++/ could only beconsidered reinstated after the "pplication for einstatement had been processed and approved by 3nsular!ife d(ring :ulogios lifetime and good health. The stipulation in a life insurance policy giving the insured the privilege toreinstate it upon written application does not give t+e ins(red a6so"(te rig+t to such reinstatement by the mere filing oan application. The ins(rer +as t+e rig+t to den7 t+e reinstate9ent if it is not satisfied as to the insurability of theinsured and if the latter does not pay all overdue premium and all other indebtedness to the insurer. After t+e deat+ oft+e ins(red t+e ins(rance Co9!an7 cannot 6e co9!e""ed to entertain an a!!"ication for reinstate9ent of the policybecause the conditions precedent to reinstatement can no longer be determined and satisfied. 3t does not matter thatwhen he died, :ulogios "pplication for einstatement and deposits for the overdue premiums and interests were alreadywith &alaluan. 3nsular !ife, through the olicy #ontract, e>pressly limits the power or authority of its insurance agentsthusE

'ur agents have no a(t+orit7 to ma6e or modify this contract, to e>tend the time limit for payment of premiums, to waiveany lapsation, forfeiture or any of our rights or requirements, such powers being limited to our president, vice$president orpersons authori1ed by the %oard of Trustees and only in writing.

&alaluan did not have the authority to approve :ulogios "pplication for einstatement. &alaluan still had to turn over to3nsular !ife :ulogios "pplication for einstatement and accompanying deposits, for processing and approval by the latter.

$0


31/41


The #ourt agrees with the T# that the conditions for reinstatement under the olicy #ontract and "pplication for

einstatement were written in clear and simple language, which could not admit of any meaning or interpretation other

than those that they so obviously embody.

'P'%'/ PR%'N& ?H/R/*R/, !re9ises considered, t+e Co(rt /N'/ t+e instant Petition for Revie on

Certiorari (nder R("e 4 of t+e R("es of Co(rt. %+e Co(rt A**'R: t+e rders dated 10 A!ri" 2008 and 3 ("7 2008

of t+e R%C of Ga!an Cit7, @ranc+ 34, in Civi" Case No. 21$$, den7ing !etitioner io"eta R. La"icanKs Notice of

A!!ea", on t+e gro(nd t+at t+e ecision dated 30 A(g(st 200$ s(6ect t+ereof, as a"read7 fina" and eBec(tor7.

No costs.

$1


32/41

[T!ete"t#

3$ A6oitiI +i!!ing Cor!oration vs. Co(rt f A!!ea"s, et. a"., conso"idation of 3 "ong cases

G.R. No. 121833, ct. 1$, 2008

%o!ic& %rans!ortation La< Li9ited Lia6i"it7 R("e

Ponente& %'NGA, .&

C%R'N/&1) "s a general rule, a ship owner9s liability is merely co$e>tensive with his interest in the vessel, e>cept where actua

fault is attributable to the shipowner. Thus, as an e>ception to the limited liability doctrine, a shipowner or ship agent

may be held liable for damages when the sin6ing of the vessel is attributable to the actual fault or negligence of the

shipowner or its failure to ensure the seaworthiness of the vessel.

2) The real and hypothecary doctrine in maritime law that the shipowner or agent9s liability is merely co$e>tensive withhis interest in the vessel such that a total loss thereof results in its e>tinction. =No vessel, no liability= e>presses in anutshell the limited liability rule.

3n this 7urisdiction, the limited liability rule is embodied in "rticles 0-, +) and 0(- under %oo6 333 of the #ode of#ommerce, thusE

"rt. 0-. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise fromthe conduct of the captain in the care of the goods which he loaded on the vessel; but he may e>empt himselftherefrom by abandoning the vessel with all her equipment and the freight it may have earned during the voyage.

"rt. +). The co$owners of the vessel shall be civilly liable in the proportion of their interests in the common fund forthe results of the acts of the captain referred to in "rt. 0-.

:ach co$owner may e>empt himself from this liability by the abandonment, before a notary, of the part of the vessebelonging to him.

"rt. 0(-. The civil liability incurred by shipowners in the case prescribed in this section, shall be understood as limitedto the value of the vessel with all its appurtenances and freightage served during the voyage.

These articles precisely intend to limit the liability of the shipowner or agent to the value of the vessel, itsappurtenances and freightage earned in the voyage, provided that the owner or agent abandons the vessel. *#ent#e !essel is totally lost in ic# case t#ere is no !essel to abandon+ abandonent is not re,uired. -ecauseo$ suc# total loss t#e liability o$ t#e s#ipo&ner or a"ent $or daa"es is etin"uis#ed. /o&e!er+ despite t#etotal loss o$ t#e !essel+ its insurance ans&ers $or t#e daa"es $or ic# a s#ipo&ner or a"ent ay be #eldliable. 0DOCTRINE RE1ATED TO INS2RANCE3

Nonetheless, there are e>ceptional circumstances wherein the

insurance compiled_edited 21-40

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