Insurance Die Gest

G.R. No. 184300 July 11, 2012
MALAYAN INSURANCE CO., INC., Petitioner,
vs.
PHILIPPINES FIRST INSURANCE CO., INC. !" REPUTA#LE FOR$AR%ER SER&ICES,
INC., Respondents.
D E C I S I O N
REYES, J.:
Before the Court is a petitiOn for review on certiorari fled ! petitioner "ala!an Insurance Co., lnc.
#"ala!an$ assailin% the Decision
&
dated 'eruar! (), (**+ and Resolution
(
dated ,u%ust (+, (**+ of
the Court of ,ppeals #C,$ in C,-..R. C/ No. 0&(*1 which a2r3ed with 3odifcation the decision of the
Re%ional 4rial Court #R4C$, Branch 5+ of "anila.
,ntecedent 'acts
Since &)+), 6!eth Philippines, Inc. #6!eth$ and respondent Reputale 'orwarder Services, Inc.
#Reputale$ had een annuall! e7ecutin% a contract of carria%e, where! the latter undertoo8 to
transport and deliver the for3er9s products to its custo3ers, dealers or sales3en.
5
On Nove3er &+, &))5, 6!eth procured "arine Polic! No. ",R &50)0 #"arine Polic!$ fro3 respondent
Philippines 'irst Insurance Co., Inc. #Philippines 'irst$ to secure its interest over its own products.
Philippines 'irst there! insured 6!eth9s nutritional, phar3aceutical and other products usual or
incidental to the insured9s usiness while the sa3e were ein% transported or shipped in the
Philippines. 4he polic! covers all ris8s of direct ph!sical loss or da3a%e fro3 an! e7ternal cause, if !
land, and provides a li3it of P:,***,***.** per an! one land vehicle.
On Dece3er &, &))5, 6!eth e7ecuted its annual contract of carria%e with Reputale. It turned out,
however, that the contract was not si%ned ! 6!eth9s representative;s.
1
Nevertheless, it was
ad3ittedl! si%ned ! Reputale9s representatives, the ter3s thereof faithfull! oserved ! the parties
and, as previousl! stated, the sa3e contract of carria%e had een annuall! e7ecuted ! the parties
ever! !ear since &)+).
<
=nder the contract, Reputale undertoo8 to answer for >all ris8s with respect to the %oods and shall e
liale to the CO"P,N? #6!eth$, for the loss, destruction, or da3a%e of the %oods;products due to an!
and all causes whatsoever, includin% theft, roer!, @ood, stor3, earthAua8es, li%htnin%, and other
force 3aBeure while the %oods;products are in transit and until actual deliver! to the custo3ers,
sales3en, and dealers of the CO"P,N?>.
:
4he contract also reAuired Reputale to secure an insurance polic! on 6!eth9s %oods.
0
4hus, on
'eruar! &&, &))1, Reputale si%ned a Special Ris8 Insurance Polic! #SR Polic!$ with petitioner "ala!an
for the a3ount of P&,***,***.**.
On Octoer :, &))1, durin% the eCectivit! of the "arine Polic! and SR Polic!, Reputale received fro3
6!eth &,*** o7es of Pro3il infant for3ula worth P(,5<0,<+(.0* to e delivered ! Reputale to
"ercur! Dru% Corporation in Diis, EueFon Cit!. =nfortunatel!, on the sa3e date, the truc8 carr!in%
6!eth9s products was hiBac8ed ! aout &* ar3ed 3en. 4he! threatened to 8ill the truc8 driver and
two of his helpers should the! refuse to turn over the truc8 and its contents to the said hi%hwa!
roers. 4he hiBac8ed truc8 was recovered two wee8s later without its car%o.
On "arch +, &))<, Philippines 'irst, after due investi%ation and adBust3ent, and pursuant to the "arine
Polic!, paid 6!eth P(,&55,(<0.** as inde3nit!. Philippines 'irst then de3anded rei3urse3ent fro3
Reputale, havin% een suro%ated to the ri%hts of 6!eth ! virtue of the pa!3ent. 4he latter,
however, i%nored the de3and.
ConseAuentl!, Philippines 'irst instituted an action for su3 of 3one! a%ainst Reputale on ,u%ust &(,
&)):.
+
In its co3plaint, Philippines 'irst stated that Reputale is a >private corporation en%a%ed in the
usiness of a co33on carrier.> In its answer,
)
Reputale clai3ed that it is a private carrier. It also
clai3ed that it cannot e 3ade liale under the contract of carria%e with 6!eth since the contract was
not si%ned ! 6!eth9s representative and that the cause of the loss was force 3aBeure, i.e., the
hiBac8in% incident.
SuseAuentl!, Reputale i3pleaded "ala!an as third-part! defendant in an eCort to collect the
a3ount covered in the SR Polic!. ,ccordin% to Reputale, >it was validl! insured with "ala!an for
P&,***,***.** with respect to the lost products under the latter9s Insurance Polic! No. SR-***&-*(<00
eCective 'eruar! &, &))1 to 'eruar! &, &))<> and that the SR Polic! covered the ris8 of roer! or
hiBac8in%.
&*
Disclai3in% an! liailit!, "ala!an ar%ued, a3on% others, that under Section < of the SR Polic!, the
insurance does not cover an! loss or da3a%e to propert! which at the ti3e of the happenin% of such
loss or da3a%e is insured ! an! 3arine polic! and that the SR Polic! e7pressl! e7cluded third-part!
liailit!.
,fter trial, the R4C rendered its Decision
&&
fndin% Reputale liale to Philippines 'irst for the a3ount of
inde3nit! it paid to 6!eth, a3on% others. In turn, "ala!an was found ! the R4C to e liale to
Reputale to the e7tent of the polic! covera%e. 4he dispositive portion of the R4C decision providesG
6HERE'ORE, on the 3ain Co3plaint, Bud%3ent is here! rendered fndin% IReputaleJ liale for the
loss of the 6!eth products and orders it to pa! Philippines 'irst the followin%G
&. the a3ount of P(,&55,(<0.** representin% the a3ount paid ! Philippines 'irst to 6!eth for
the loss of the products in AuestionK
(. the a3ount of P&<,:<*.** representin% the adBust3ent fees paid ! Philippines 'irst to hired
adBusters;surve!orsK
5. the a3ount of P<*,***.** as attorne!9s feesK and
1. the costs of suit.
On the third-part! Co3plaint, Bud%3ent is here! rendered fndin%
"ala!an liale to inde3nif! IReputaleJ the followin%G
&. the a3ount of P&,***,***.** representin% the proceeds of the insurance polic!K
(. the a3ount of P<*,***.** as attorne!9s feesK and
5. the costs of suit.
SO ORDERED.
&(
Dissatisfed, oth Reputale and "ala!an fled their respective appeals fro3 the R4C decision.
Reputale asserted that the R4C erred in holdin% that its contract of carria%e with 6!eth was indin%
despite 6!eth9s failure to si%n the sa3e. Reputale further contended that the provisions of the
contract are unreasonale, unBust, and contrar! to law and pulic polic!.
'or its part, "ala!an invo8ed Section < of its SR Polic!, which providesG
Section <. INS=R,NCE 6I4H O4HER CO"P,NIES. 4he insurance does not cover an! loss or da3a%e to
propert! which at the ti3e of the happenin% of such loss or da3a%e is insured ! or would ut for the
e7istence of this polic!, e insured ! an! 'ire or "arine polic! or policies e7cept in respect of an!
e7cess e!ond the a3ount which would have een pa!ale under the 'ire or "arine polic! or policies
had this insurance not een eCected.
"ala!an ar%ued that inas3uch as there was alread! a 3arine polic! issued ! Philippines 'irst
securin% the sa3e suBect 3atter a%ainst loss and that since the 3onetar! covera%e;value of the
"arine Polic! is 3ore than enou%h to inde3nif! the hiBac8ed car%o, Philippines 'irst alone 3ust ear
the loss.
"ala!an sou%ht the dis3issal of the third-part! co3plaint a%ainst it. In the alternative, it pra!ed that it
e held liale for no 3ore than P1:+,0::.0*, its alle%ed pro-rata share of the loss ased on the a3ount
covered ! the polic!, suBect to the provision of Section &( of the SR Polic!, which statesG
&(. O4HER INS=R,NCE CD,=SE. If at the ti3e of an! loss or da3a%e happenin% to an! propert! here!
insured, there e an! other susistin% insurance or insurances, whether eCected ! the insured or !
an! other person or persons, coverin% the sa3e propert!, the co3pan! shall not e liale to pa! or
contriute 3ore than its ratale proportion of such loss or da3a%e.
On 'eruar! (), (**+, the C, rendered the assailed decision sustainin% the rulin% of the R4C, the
decretal portion of which readsG
6HERE'ORE, in view of the fore%oin%, the assailed Decision dated () Septe3er (***, as 3odifed in
the Order dated (& Lul! (**&, is ,''IR"ED with "ODI'IC,4ION in that the award of attorne!9s fees in
favor of Reputale is DEDE4ED.
SO ORDERED.
&5
4he C, ruled, a3on% others, thatG #&$ Reputale is estopped fro3 assailin% the validit! of the contract
of carria%e on the %round of lac8 of si%nature of 6!eth9s representative;sK #($ Reputale is liale under
the contract for the value of the %oods even if the sa3e was lost due to fortuitous eventK and #5$
Section &( of the SR Polic! prevails over Section <, it ein% the latter provisionK however, since the
ratale proportion provision of Section &( applies onl! in case of doule insurance, which is not
present, then it should not e applied and "ala!an should e held liale for the full a3ount of the
polic! covera%e, that is, P&,***,***.**.
&1
On "arch &1, (**+, "ala!an 3oved for reconsideration of the assailed decision ut it was denied !
the C, in its Resolution dated ,u%ust (+, (**+.
&<
Hence, this petition.
"ala!an insists that the C, failed to properl! resolve the issue on the >statutor! li3itations on the
liailit! of co33on carriers> and the >diCerence etween an Mother insurance clause9 and an Mover
insurance clause9.>
"ala!an also contends that the C, erred when it held that Reputale is a private carrier and should e
ound ! the contractual stipulations in the contract of carria%e. 4his ar%u3ent is ased on its
assertion that Philippines 'irst Budiciall! ad3itted in its co3plaint that Reputale is a co33on carrier
and as such, Reputale should not e held liale pursuant to ,rticle &01<#:$ of the Civil
Code.
&:
Necessaril!, if Reputale is not liale for the loss, then there is no reason to hold "ala!an liale
to Reputale.
'urther, "ala!an posits that there resulted in an i3pair3ent of contract when the C, failed to appl!
the e7press provisions of Section < #referred to ! "ala!an as over insurance clause$ and Section &(
#referred to ! "ala!an as other insurance clause$ of its SR Polic! as these provisions could have een
read to%ether there ein% no actual con@ict etween the3.
Reputale, 3eanwhile, contends that it is e7e3pt fro3 liailit! for acts co33itted ! thieves;roers
who act with %rave or irresistile threat whether it is a co33on carrier or a private;special carrier. It,
however, 3aintains the correctness of the C, rulin% that "ala!an is liale to Philippines 'irst for the
full a3ount of its polic! covera%e and not 3erel! a ratale portion thereof under Section &( of the SR
Polic!.
'inall!, Philippines 'irst contends that the factual fndin% that Reputale is a private carrier should e
accorded the hi%hest de%ree of respect and 3ust e considered conclusive etween the parties, and
that a review of such fndin% ! the Court is not warranted under the circu3stances. ,s to its alle%ed
Budicial ad3ission that Reputale is a co33on carrier, Philippines 'irst proCered the declaration 3ade
! Reputale that it is a private carrier. Said declaration was alle%edl! reiterated ! Reputale in its
third part! co3plaint, which in turn was dul! ad3itted ! "ala!an in its answer to the said third-part!
co3plaint. In addition, Reputale even presented evidence to prove that it is a private carrier.
,s to the applicailit! of Sections < and &( in the SR Polic!, Philippines 'irst reiterated the rulin% of the
C,. Philippines 'irst, however, pra!ed for a sli%ht 3odifcation of the assailed decision, pra!in% that
Reputale and "ala!an e rendered solidaril! liale to it in the a3ount of P))+,***.**, which
represents the alance fro3 the P&,***.***.** covera%e of the SR Polic! after deductin% P(,***.**
under Section &* of the said SR Polic!.
&0
Issues
4he liailit! of "ala!an under the SR Polic! hin%es on the followin% issues for resolutionG
&$ 6hether Reputale is a private carrierK
($ 6hether Reputale is strictl! ound ! the stipulations in its contract of carria%e with
6!eth, such that it should e liale for an! ris8 of loss or da3a%e, for an! cause whatsoever,
includin% that due to theft or roer! and other force 3aBeureK
5$ 6hether the R4C and C, erred in renderin% >nu%ator!> Sections < and Section &( of the SR
Polic!K and
1$ 6hether Reputale should e held solidaril! liale with "ala!an for the a3ount of
P))+,***.** due to Philippines 'irst.
4he Court9s Rulin%
On the frst issue N Reputale is a private carrier.
4he Court a%rees with the R4C and C, that Reputale is a private carrier. 6ell-entrenched in
Burisprudence is the rule that factual fndin%s of the trial court, especiall! when a2r3ed ! the
appellate court, are accorded the hi%hest de%ree of respect and considered conclusive etween the
parties, save for certain e7ceptional and 3eritorious circu3stances, none of which are present in this
case.
&+
"ala!an relies on the alle%ed Budicial ad3ission of Philippines 'irst in its co3plaint that Reputale is a
co33on carrier.
&)
Invo8in% Section 1, Rule &() of the Rules on Evidence that >an ad3ission veral or
written, 3ade ! a part! in the course of the proceedin% in the sa3e case, does not reAuire proof,> it is
"ala!an9s position that the R4C and C, should have ruled that
Reputale is a co33on carrier. ConseAuentl!, pursuant to ,rticle &01<#:$ of the Civil Code, the liailit!
of Reputale for the loss of 6!eth9s %oods should e dispensed with, or at least di3inished.
It is true that Budicial ad3issions, such as 3atters alle%ed in the pleadin%s do not reAuire proof, and
need not e oCered to e considered ! the court. >4he court, for the proper decision of the case, 3a!
and should consider, without the introduction of evidence, the facts ad3itted ! the parties.>
(*
4he
rule on Budicial ad3ission, however, also states that such alle%ation, state3ent, or ad3ission is
conclusive as a%ainst the pleader,
(&
and that the facts alle%ed in the co3plaint are dee3ed ad3issions
of the plaintiC and indin% upon hi3.
((
In this case, the pleader or the plaintiC who alle%ed that
Reputale is a co33on carrier was Philippines 'irst. It cannot, ! an! stretch of i3a%ination, e 3ade
conclusive as a%ainst Reputale whose nature of usiness is in Auestion.
It should e stressed that Philippines 'irst is not priv! to the SR Polic! etween 6!eth and ReputaleK
rather, it is a 3ere suro%ee to the ri%ht of 6!eth to collect fro3 Reputale under the ter3s of the
contract of carria%e. Philippines 'irst is not in an! position to 3a8e an! ad3ission, 3uch 3ore a
defnitive pronounce3ent, as to the nature of Reputale9s usiness and there appears no other
connection etween Philippines 'irst and Reputale which su%%ests 3utual fa3iliarit! etween the3.
"oreover, records show that the alle%ed Budicial ad3ission of Philippines 'irst was essentiall! disputed
! Reputale when it stated in para%raphs (, 1, and && of its answer that it is actuall! a private or
special carrier.
(5
In addition, Reputale stated in para%raph ( of its third-part! co3plaint that it is >a
private carrier en%a%ed in the carria%e of %oods.>
(1
Such alle%ation was, in turn, ad3itted ! "ala!an
in para%raph ( of its answer to the third-part! co3plaint.
(<
4here is also nothin% in the records which
show that Philippines 'irst persistentl! 3aintained its stance that Reputale is a co33on carrier or
that it even contested or proved otherwise Reputale9s position that it is a private or special carrier.
Hence, in the face of Reputale9s contrar! ad3ission as to the nature of its own usiness, what was
stated ! Philippines 'irst in its co3plaint is reduced to nothin% 3ore than 3ere alle%ation, which 3ust
e proved for it to e %iven an! wei%ht or value. 4he settled rule is that 3ere alle%ation is not proof.
(:
"ore i3portantl!, the fndin% of the R4C and C, that Reputale is a special or private carrier is
warranted ! the evidence on record, pri3aril!, the unreutted testi3on! of Reputale9s /ice
President and .eneral "ana%er, "r. 6illia3 ,n% Dian Suan, who e7pressl! stated in open court that
Reputale serves onl! one custo3er, 6!eth.
(0
=nder ,rticle &05( of the Civil Code, co33on carriers are persons, corporations, fr3s, or associations
en%a%ed in the usiness of carr!in% or transportin% passen%er or %oods, or oth ! land, water or air
for co3pensation, oCerin% their services to the pulic. On the other hand, a private carrier is one
wherein the carria%e is %enerall! underta8en ! special a%ree3ent and it does not hold itself out to
carr! %oods for the %eneral pulic.
(+
, co33on carrier eco3es a private carrier when it underta8es to
carr! a special car%o or chartered to a special person onl!.
()
'or all intents and purposes, therefore,
Reputale operated as a private;special carrier with re%ard to its contract of carria%e with 6!eth.
On the second issue N Reputale is ound ! the ter3s of the contract of carria%e.
4he e7tent of a private carrier9s oli%ation is dictated ! the stipulations of a contract it entered into,
provided its stipulations, clauses, ter3s and conditions are not contrar! to law, 3orals, %ood custo3s,
pulic order, or pulic polic!. >4he Civil Code provisions on co33on carriers should not e applied
where the carrier is not actin% as such ut as a private carrier. Pulic polic! %overnin% co33on carriers
has no force where the pulic at lar%e is not involved.>
5*
4hus, ein% a private carrier, the e7tent of Reputale9s liailit! is full! %overned ! the stipulations of
the contract of carria%e, one of which is that it shall e liale to 6!eth for the loss of the
%oods;products due to an! and all causes whatsoever, includin% theft, roer! and other force 3aBeure
while the %oods;products are in transit and until actual deliver! to 6!eth9s custo3ers, sales3en and
dealers.
5&
On the third issue N other insurance vis-O-vis over insurance.
"ala!an refers to Section < of its SR Polic! as an >over insurance clause> and to Section &( as a
>3odifed Mother insurance9 clause>.
5(
In renderin% inapplicale said provisions in the SR Polic!, the C,
ruled in this wiseG
Since Sec. < calls for "ala!an9s co3plete asolution in case the other insurance would e su2cient to
cover the entire a3ount of the loss, it is in direct con@ict with Sec. &( which provides onl! for a pro-
rated contriution etween the two insurers. Bein% the later provision, and pursuant to the rules on
interpretation of contracts, Sec. &( should therefore prevail.
7 7 7 7
7 7 7 4he intention of oth Reputale and "ala!an should e %iven eCect as a%ainst the wordin%s of
Sec. &( of their contract, as it was intended ! the parties to operate onl! in case of doule insurance,
or where the enefts of the policies of oth plaintiC-appellee and "ala!an should pertain to Reputale
alone. But since the court a Auo correctl! ruled that there is no doule insurance in this case inas3uch
as Reputale was not priv! thereto, and therefore did not stand to eneft fro3 the polic! issued !
plaintiC-appellee in favor of 6!eth, then "ala!an9s stand should e reBected.
4o rule that Sec. &( operates even in the asence of doule insurance would wor8 inBustice to
Reputale which, despite pa!in% pre3iu3s for a P&,***,***.** insurance covera%e, would not e
entitled to recover said a3ount for the si3ple reason that the sa3e propert! is covered ! another
insurance polic!, a polic! to which it was not a part! to and 3uch less, fro3 which it did not stand to
eneft. Plainl!, this unfair situation could not have een the intention of oth Reputale and "ala!an
in si%nin% the insurance contract in Auestion.
55
In Auestionin% said rulin%, "ala!an posits that Sections < and &( are separate provisions applicale
under distinct circu3stances. "ala!an ar%ues that >it will not e co3pletel! asolved under Section <
of its polic! if it were the assured itself who otained additional insurance covera%e on the sa3e
propert! and the loss incurred ! 6!eth9s car%o was 3ore than that insured ! Philippines 'irst9s
3arine polic!. On the other hand, Section &( will not co3pletel! asolve "ala!an if additional
insurance covera%e on the sa3e car%o were otained ! so3eone esides Reputale, in which case
"ala!an9s SR polic! will contriute or share ratale proportion of a covered car%o loss.>
51
"ala!an9s position cannot e countenanced.
Section < is actuall! the other insurance clause #also called >additional insurance> and >doule
insurance>$, one a8in to Condition No. 5 in issue in .ea%onia v. C,,
5<
which validit! was upheld ! the
Court as a warrant! that no other insurance e7ists. 4he Court ruled that Condition No. 5
5:
is a condition
which is not proscried ! law as its incorporation in the polic! is allowed ! Section 0< of the
Insurance Code. It was also the Court9s fndin% that unli8e the other insurance clauses, Condition No. 5
does not asolutel! declare void an! violation thereof ut e7pressl! provides that the condition >shall
not appl! when the total insurance or insurances in force at the ti3e of the loss or da3a%e is not 3ore
than P(**,***.**.>
In this case, si3ilar to Condition No. 5 in .ea%onia, Section < does not provide for the nullit! of the SR
Polic! ut si3pl! li3its the liailit! of "ala!an onl! up to the e7cess of the a3ount that was not
covered ! the other insurance polic!. In interpretin% the >other insurance clause> in .ea%onia, the
Court ruled that the prohiition applies onl! in case of doule insurance. 4he Court ruled that in order
to constitute a violation of the clause, the other insurance 3ust e upon sa3e suBect 3atter, the
sa3e interest therein, and the sa3e ris8. 4hus, even thou%h the 3ultiple insurance policies involved
were all issued in the na3e of the sa3e assured, over the sa3e suBect 3atter and coverin% the sa3e
ris8, it was ruled that there was no violation of the >other insurance clause> since there was no doule
insurance.
Section &( of the SR Polic!, on the other hand, is the over insurance clause. "ore particularl!, it covers
the situation where there is over insurance due to doule insurance. In such case, Section &< provides
that "ala!an shall >not e liale to pa! or contriute 3ore than its ratale proportion of such loss or
da3a%e.> 4his is in accord with the principle of contriution provided under Section )1#e$ of the
Insurance Code,
50
which states that >where the insured is over insured ! doule insurance, each
insurer is ound, as etween hi3self and the other insurers, to contriute ratal! to the loss in
proportion to the a3ount for which he is liale under his contract.>
Clearl!, oth Sections < and &( presuppose the e7istence of a doule insurance. 4he pivotal Auestion
that now arises is whether there is doule insurance in this case such that either Section < or Section
&( of the SR Polic! 3a! e applied.
B! the e7press provision of Section )5 of the Insurance Code, doule insurance e7ists where the sa3e
person is insured ! several insurers separatel! in respect to the sa3e suBect and interest. 4he
reAuisites in order for doule insurance to arise are as followsG
5+
&. 4he person insured is the sa3eK
(. 4wo or 3ore insurers insurin% separatel!K
5. 4here is identit! of suBect 3atterK
1. 4here is identit! of interest insuredK and
<. 4here is identit! of the ris8 or peril insured a%ainst.
In the present case, while it is true that the "arine Polic! and the SR Polic! were oth issued over the
sa3e suBect 3atter, i.e. %oods elon%in% to 6!eth, and oth covered the sa3e peril insured a%ainst,
it is, however, e!ond cavil that the said policies were issued to two diCerent persons or entities. It is
undisputed that 6!eth is the reco%niFed insured of Philippines 'irst under its "arine Polic!, while
Reputale is the reco%niFed insured of "ala!an under the SR Polic!. 4he fact that Reputale procured
"ala!an9s SR Polic! over the %oods of 6!eth pursuant 3erel! to the stipulated reAuire3ent under its
contract of carria%e with the latter does not 3a8e Reputale a 3ere a%ent of 6!eth in otainin% the
said SR Polic!.
4he interest of 6!eth over the propert! suBect 3atter of oth insurance contracts is also diCerent and
distinct fro3 that of Reputale9s. 4he polic! issued ! Philippines 'irst was in consideration of the le%al
and;or eAuitale interest of 6!eth over its own %oods. On the other hand, what was issued ! "ala!an
to Reputale was over the latter9s insurale interest over the safet! of the %oods, which 3a! eco3e
the asis of the latter9s liailit! in case of loss or da3a%e to the propert! and falls within the
conte3plation of Section &< of the Insurance Code.
5)
4herefore, even thou%h the two concerned insurance policies were issued over the sa3e %oods and
cover the sa3e ris8, there arises no doule insurance since the! were issued to two diCerent
persons;entities havin% distinct insurale interests. Necessaril!, over insurance ! doule insurance
cannot li8ewise e7ist. Hence, as correctl! ruled ! the R4C and C,, neither Section < nor Section &( of
the SR Polic! can e applied.
,part fro3 the fore%oin%, the Court is also wont to strictl! construe the controversial provisions of the
SR Polic! a%ainst "ala!an.1âwphi1 4his is in 8eepin% with the rule thatG
>Inde3nit! and liailit! insurance policies are construed in accordance with the %eneral rule of
resolvin% an! a3i%uit! therein in favor of the insured, where the contract or polic! is prepared ! the
insurer. , contract of insurance, ein% a contract of adhesion, par e7cellence, an! a3i%uit! therein
should e resolved a%ainst the insurerK in other words, it should e construed lierall! in favor of the
insured and strictl! a%ainst the insurer. Di3itations of liailit! should e re%arded with e7tre3e
Bealous! and 3ust e construed in such a wa! as to preclude the insurer fro3 nonco3pliance with its
oli%ations.>
1*
"oreover, the C, correctl! ruled thatG
4o rule that Sec. &( operates even in the asence of doule insurance would wor8 inBustice to
Reputale which, despite pa!in% pre3iu3s for a P&,***,***.** insurance covera%e, would not e
entitled to recover said a3ount for the si3ple reason that the sa3e propert! is covered ! another
insurance polic!, a polic! to which it was not a part! to and 3uch less, fro3 which it did not stand to
eneft. 7 7 7
1&
On the fourth issue N Reputale is not solidaril! liale with "ala!an.
4here is solidar! liailit! onl! when the oli%ation e7pressl! so states, when the law so provides or
when the nature of the oli%ation so reAuires.
In Heirs of .eor%e ?. Poe v. "ala!an lnsurance Co3pan!., lnc.,
1(
the Court ruled thatG
6here the insurance contract provides for inde3nit! a%ainst liailit! to third persons, the liailit! of
the insurer is direct and such third persons can directl! sue the insurer. 4he direct liailit! of the
insurer under inde3nit! contracts a%ainst third part!I- Jliailit! does not 3ean, however, that the
insurer can e held solidaril! liale with the insured and;or the other parties found at fault, since the!
are ein% held liale under diCerent oli%ations. 4he liailit! of the insured carrier or vehicle owner is
ased on tort, in accordance with the provisions of the Civil CodeK while that of the insurer arises fro3
contract, particularl!, the insurance polic!G
15
#Citation o3itted and e3phasis supplied$
Su2ce it to sa! that "ala!anPs and ReputalePs respective liailities arose fro3 diCerent oli%ations-
"ala!anPs is ased on the SR Polic! while ReputalePs is ased on the contract of carria%e.
,ll told, the Court fnds no reversile error in the Bud%3ent sou%ht to e reviewed.
6HERE'ORE, pre3ises considered, the petition is DENIED. 4he Decision dated 'eruar! (), (**+ and
Resolution dated ,u%ust (+, (**+ of the Court of ,ppeals in C,-..R. C/ No. 0&(*1 are here!
,''IR"ED.
Cost a%ainst petitioner "ala!an Insurance Co., Inc.
SO ORDERED.
Gul' R()o*+) I!,. -). P./l/00/!( C.*+(* I!)u*!,( Co*0o*+/o! 1G.R. No. 123134 My 13,
20025
F,+)6 .ulf Resorts is the owner of the PlaFa Resort situated at ,%oo, Da =nion and had its properties
in said resort insured ori%inall! with the ,3erican Ho3e ,ssurance Co3pan! #,H,C$. In the frst 1
policies issued, the ris8s of loss fro3 earthAua8e shoc8 was e7tended onl! to petitioner9s
two swi33in% pools. .ulf Resorts a%reed to insure with Phil Charter the properties covered ! the
,H,C polic! provided that the polic! wordin% and rates in said polic! e copied in the polic! to e
issued ! Phil Charter. Phil Charter issued Polic! No. 5&)11 to .ulf Resorts coverin% the period of
"arch &1, &))* to "arch &1, &))& for P&*,0**,:**.** for a total pre3iu3 of P1<,&<).)(. the rea8-
down of pre3iu3s shows that .ulf Resorts paid onl! P5)5.** as pre3iu3 a%ainst earthAua8e shoc8
#ES$. In Polic! No. 5&)11 issued ! defendant, the shoc8 endorse3ent provided that QIn consideration
of the pa!3ent ! the insured to the co3pan! of the su3 included additional pre3iu3 the Co3pan!
a%rees, notwithstandin% what is stated in the printed conditions of this polic! due to the contrar!, that
this insurance covers loss or da3a%e to shoc8 to an! of the propert! insured ! this Polic! occasioned
! or throu%h or in conseAuence of earthAua8e #E7hs. >&-D>, >(-D>, >5-,>, >1-B>, ><-,>, >:-D> and >0-
C>$. In E7hiit >0-C> the word >included> aove the underlined portion was deleted. On Lul! &:, &))* an
earthAua8e struc8 Central DuFon and Northern DuFon and plaintiC9s properties covered ! Polic! No.
5&)11 issued ! defendant, includin% the two swi33in% pools in its ,%oo Pla!a Resort were da3a%ed.
Petitioner advised respondent that it would e 3a8in% a clai3 under its Insurance Polic! 5&)11 for
da3a%es on its properties. Respondent denied petitioner9s clai3 on the %round that its insurance
polic! onl! aCorded earthAua8e shoc8 covera%e to the twoswi33in% pools of the resort. 4he trial court
ruled in favor of respondent. In its rulin%, the schedule clearl! shows that petitioner paid onl! a
pre3iu3 of P5)5.** a%ainst the peril of earthAua8e shoc8, the sa3e pre3iu3 it had paid a%ainst
earthAua8e shoc8 onl! on the two swi33in% pools in all the policies issued ! ,H,C.
I))u(6 6hether or not the polic! covers onl! the two swi33in% pools owned ! .ulf Resorts and does
not e7tend to all properties da3a%ed therein
H(l"6 ?ES. ,ll the provisions and riders ta8en and interpreted to%ether, induital! show the intention
of the parties to e7tend earthAua8e shoc8 covera%e to the two swi33in% pools onl!. ,n insurance
pre3iu3 is the consideration paid an insurer for underta8in% to inde3nif! the insured a%ainst a
specifed peril. In fre, casualt! and 3arine insurance, the pre3iu3 eco3es a det as soon as the ris8
attaches. In the suBect polic!, no pre3iu3 pa!3ents were 3ade with re%ard to earthAua8e shoc8
covera%e e7cept on the two swi33in% pools. 4here is no 3ention of an! pre3iu3 pa!ale for the
other resort properties with re%ard to earthAua8e shoc8. 4his is consistent with the histor! of
petitioner9s insurance policies with ,H,C.
%#P POOL OF ACCRE%ITE% INSURANCE &S RA%IO MIN%ANAO NET$OR7 820039
'actsG
In the evenin% of Lul! (0, &)++, the radio station of Radio "indanao Networ8 located at the SSS
Buildin% in Bacolod Cit! was urned down causin% da3a%e in the a3ount of over one 3illion pesos.
Respondent sou%ht to recover under two insurance policies ut the clai3s were denied on the asis
that the case of the loss was an e7cepted ris8 under condition no. : #c$ and #d$, to witG
6. This insurance does not cover any loss or damage occasioned by or through or in consequence,
directly or indirectly, of any of the following consequences, namely:
(c !ar, invasion, act of foreign enemies, hostilities, or warli"e operations (whether war be declared or
not, civic war.
(d #utiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped
power.
4he insurers 3aintained that ased on witnesses and evidence %athered at the site, the fre was
caused ! the 3e3ers of the Co33unist Part! of the Philippines;New People9s ,r3!. Hence the
refusal to honor their oli%ations.
4he trial court and the C, found in favor of the respondent. In its fndin%s, oth courts 3entioned the
fact that there was no credile evidence presented that the CCP;NP, did in fact cause the fre that
%utted the radio station in Bacolod.
IssueG
6ON the insurance co3panies are liale to pa! Radio "indanao Networ8 under the insurance policiesR
HeldG ?es.
4he Court will not distur the factual fndin%s of the appellant and trial courts asent co3pellin%
reason. =nder this 3ode of review, the Burisdiction of the court is li3ited to reviewin% onl! errors of
law.
- Particularl! in cases of insurance disputes with re%ard to e7cepted ris8s, it is the insurance co3panies
which have the urden to prove that the loss co3es within the purview of the e7ception or li3itation
set up. It is su2cient for the insured to prove the fact of da3a%e or loss. Once the insured 3a8es out a
pri3a facie case in its favor, the dut! or urden of evidence shifts to the insurer to controvert said
pri3a facie case.
Disposition Petition dis3issed. Decision of the C, is a2r3ed.
T! -) CA
nsurance Law – Representation – Concealment – Rescission of an Insurance Contract
In September 1973, Tan Lee Siong applied for a life insurance under Philippine American
Life Insurance Compan! "e stated in the application form that he has no health issues #hatsoe$er
and so in %o$ember 1973 he #as issued a life insurance polic in the amount of P&','''!''! "e
listed his sons as beneficiaries! In April 197(, Tan Lee Siong died due to hepatoma! "is sons filed an
insurance claim but P"ILA)LI*+ denied the same as it alleged that Tan Lee Siong concealed the
fact that he #as hpertensi$e, diabetic, and #as suffering from hepatoma at the time of his
application for the insurance!
The beneficiaries a$erred that P"ILA)LI*+ can no longer rescind the insurance contract because
the insured is alread dead! The in$o,e Section -& of the Insurance Code #hich the interpreted to
mean that an insurer can onl rescind an insurance contract during the lifetime of the insured. and
that such rescission should be done #ithin t#o ears prior to the filing of a suit in$ol$ing the
insurance!
ISSUE: /hether or not the interpretation of the Tan brothers is correct!
HELD: %o! The pertinent section in the Insurance Code pro$ides0
Section -&! /hene$er a right to rescind a contract of insurance is gi$en to the insurer b an
pro$ision of this chapter, such right must be e1ercised pre$ious to the commencement of an action
on the contract!
After a polic of life insurance made paable on the death of the insured shall ha$e been in force
during the lifetime of the insured for a period of t#o ears from the date of its issue or of its last
reinstatement, the insurer cannot pro$e that the polic is $oid ab initio or is rescindable b reason of
the fraudulent concealment or misrepresentation of the insured or his agent!
The so2called 3incontestabilit clause4 precludes the insurer from raising the defenses of false
representations or concealment of material facts insofar as health and pre$ious diseases are
concerned if the insurance has been in force for at least t#o ears during the insured5s lifetime! The
phrase 3during the lifetime4 found in Section -& simpl means that the polic is no longer considered
in force after the insured has died! The ,e phrase in the second paragraph of Section -& is 3for a
period of t#o ears!4
%ote that the polic #as in force for onl one ear and ( months #hen Tan Lee Siong died! This
means that P"ILA)LI*+ can still contest and rescind the polic issued b reason of the
misrepresentation made b Tan Lee Siong!
*urther, because of Tan Lee Siong5s statement that he does not ha$e an health issues,
theinsurance compan #as misled into belie$ing that he #as health and so it did not deem a
medical chec,up to be necessar and that ultimatel led to the issuance of the life insurance polic!