Insurance Case Digests
Content
-‐
1
-‐
G.R.
No.
L-‐22375
July
18,
1975
THE
CAPITAL
INSURANCE
&
SURETY
CO.,
INC.,
petitioner,
vs.
PLASTIC
ERA
CO.,
INC.,
AND
COURT
OF
APPEALS,
respondents.
FACTS:
On
December
17,
1960,
Capital
Insurance
(insurer)
delivered
to
the
Plastic
Era
(insured)
its
open
Fire
Policy
No.
22760
wherein
the
former
undertook
to
insure
the
latter's
building,
equipment,
raw
materials,
products
and
accessories
located
at
Sheridan
Street,
Mandaluyong,
Rizal.
The
term
of
the
policy
(face
value
=
100,000)
is
December
15,
1960
to
December
15,
1961
1
o’clock
in
the
afternoon.
When
the
policy
was
delivered,
Plastic
Era
failed
to
pay
the
corresponding
insurance
premium.
However,
through
its
duly
authorized
representative,
it
executed
the
an
acknowledgment
receipt.
On
January
8,
1961,
in
partial
payment
of
the
insurance
premium,
Plastic
Era
delivered
to
Capital
Insurance,
a
check
for
the
amount
of
P1,000.00
postdated
January
16,
1961
payable
to
the
order
of
the
latter
and
drawn
against
the
Bank
of
America.
However,
Capital
Insurance
tried
to
deposit
the
check
only
on
February
20,
1961
and
the
same
was
dishonored
by
the
bank
for
lack
of
funds.
The
records
show
that
as
of
January
19,
1961
Plastic
Era
had
a
balance
of
P1,193.41
with
the
Bank
of
America.
On
January
18,
1961
or
two
days
after
the
insurance
premium
became
due,
at
about
4:00
to
5:00
o'clock
in
the
morning,
the
property
insured
by
Plastic
Era
was
destroyed
by
fire.
The
loss
and/or
damage
suffered
by
Plastic
Era
was
estimated
by
the
Manila
Adjustment
Company
to
be
P283,875.
However,
according
to
the
records
the
same
property
has
been
insured
by
Plastic
Era
with
the
Philamgen
Insurance
Company
for
P200,000.00.
In
less
than
a
month
Plastic
Era
demanded
from
Capital
Insurance
the
payment
of
the
sum
of
P100,000.00
as
indemnity
for
the
loss
of
the
insured
property
under
Policy
No.
22760
but
the
latter
refused
for
the
reason
that,
among
others,
Plastic
Era
failed
to
pay
the
insurance
premium.
Thus,
Plastic
Era
filed
a
complaint
against
Capital
Insurance
for
the
recovery
of
the
sum.
DECISION
OF
LOWER
COURTS:
(1)
Court
of
First
Instance
–
Manila:
pay
Plastic
Era
88,325.63.
(2)
Court
of
Appeals:
affirmed
CFI.
ISSUE:
Whether
or
not
a
contract
of
insurance
has
been
duly
perfected
between
the
petitioner,
Capital
Insurance,
and
respondent
Plastic
Era
RULING:
Yes,
the
contract
has
been
perfected.
Capital
Insurance
accepted
the
promise
of
Plastic
Era
to
pay
the
insurance
premium
within
thirty
(30)
days
from
the
effective
date
of
policy.
By
so
doing,
it
has
implicitly
agreed
to
modify
the
tenor
of
the
insurance
policy
and
in
effect,
waived
the
provision
therein
that
it
would
only
pay
for
the
loss
or
damage
in
case
the
same
occurs
after
the
payment
of
the
premium.
Considering
that
the
insurance
policy
is
silent
as
to
the
mode
of
payment,
Capital
Insurance
is
deemed
to
have
accepted
the
promissory
note
in
payment
of
the
premium.
This
rendered
the
policy
immediately
operative
on
the
date
it
was
delivered.
The
acknowledgment
is
deemed
to
be
a
promissory
note.
In
other
words,
a
requirement
for
the
payment
of
the
first
or
initial
premium
in
advance
or
actual
cash
may
be
waived
by
acceptance
of
a
promissory
note
The
fact
that
the
check
issued
by
Plastic
Era
in
partial
payment
of
the
promissory
note
was
later
on
dishonored
did
not
in
any
way
operate
as
a
forfeiture
of
its
rights
under
the
policy,
there
being
no
express
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
stipulation
therein
to
that
effect.
If
the
check
is
accepted
as
payment
of
the
premium
even
though
it
turns
out
to
be
worthless,
there
is
payment
that
will
prevent
forfeiture.
The
payment
of
the
premium
on
the
insurance
policy
therefore
became
an
independent
obligation
the
non-‐fulfillment
of
which
would
entitle
Capital
Insurance
to
recover.
It
could
just
deduct
the
premium
due
and
unpaid
upon
the
satisfaction
of
the
loss
under
the
policy.
-‐
2
–
[G.R.
No.
150751.
September
20,
2004]
CENTRAL
SHIPPING
COMPANY,
INC.,
petitioner,
vs.
INSURANCE
COMPANY
OF
NORTH
AMERICA,
respondent.
FACTS:
On
July
25,
1990
at
Puerto
Princesa,
Palawan,
Central
Shipping
Company
received
on
board
its
vessel,
the
M/V
‘Central
Bohol’,
376
pieces
[of]
Philippine
Apitong
Round
Logs
and
undertook
to
transport
said
shipment
to
Manila
for
delivery
to
Alaska
Lumber
Co.,
Inc.
“The
cargo
was
insured
for
P3,000,000.00
against
total
loss
under
Insurance
Company
of
North
America’s
Marine
Cargo
Policy
No.
MCPB-‐
00170.
The
vessel
completely
sank.
Due
to
the
sinking
of
the
vessel,
the
cargo
was
totally
lost.
The
consignee,
Alaska
Lumber
Co.
Inc.,
presented
a
claim
for
the
value
of
the
shipment
to
Central
Shipping
but
the
latter
failed
and
refused
to
settle
the
claim,
hence
Insurance
company,
being
the
insurer,
paid
said
claim
and
now
seeks
to
be
subrogated
to
all
the
rights
and
actions
of
the
consignee
as
against
Central
Shipping.
Central
Shipping
raised
as
its
main
defense
that
the
proximate
and
only
cause
of
the
sinking
of
its
vessel
and
the
loss
of
its
cargo
was
a
natural
disaster,
a
tropical
storm
which
neither
Central
Shipping
nor
the
captain
of
its
vessel
could
have
foreseen.
DECISION
OF
LOWER
COURTS:
(1)
RTC:
Central
Shipping
Liable.
RTC
was
unconvinced
that
the
sinking
of
M/V
Central
Bohol
had
been
caused
by
the
weather
or
any
other
caso
fortuito.
It
noted
that
monsoons,
which
were
common
occurrences
during
the
months
of
July
to
December,
could
have
been
foreseen
and
provided
for
by
an
ocean-‐going
vessel.
(2)
CA:
affirmed
RTC.
Given
the
season
of
rains
and
monsoons,
the
ship
captain
and
his
crew
should
have
anticipated
the
perils
of
the
sea.
The
CA
found
no
merit
in
petitioner’s
assertion
of
the
vessel’s
seaworthiness.
It
held
that
the
Certificates
of
Inspection
and
Drydocking
were
not
conclusive
proofs
thereof.
In
order
to
consider
a
vessel
to
be
seaworthy,
it
must
be
fit
to
meet
the
perils
of
the
sea.
ISSUES
&
RULING:
(1)
Whether
the
carrier
is
liable
for
the
loss
of
the
cargo;
and
Yes.
A
common
carrier
is
presumed
to
be
at
fault
or
negligent.
It
shall
be
liable
for
the
loss,
destruction
or
deterioration
of
its
cargo,
unless
it
can
prove
that
the
sole
and
proximate
cause
of
such
event
is
one
of
the
causes
enumerated
in
Article
1734
of
the
Civil
Code,
or
that
it
exercised
extraordinary
diligence
to
prevent
or
minimize
the
loss.
In
the
present
case,
the
weather
condition
encountered
by
petitioner’s
vessel
was
not
a
“storm”
or
a
natural
disaster
comprehended
in
the
law.
Given
the
known
weather
condition
prevailing
during
the
voyage,
the
manner
of
stowage
employed
by
the
carrier
was
insufficient
to
secure
the
cargo
from
the
rolling
action
of
the
sea.
The
carrier
took
a
calculated
risk
in
improperly
securing
the
cargo.
Having
lost
that
risk,
it
cannot
now
disclaim
any
liability
for
the
loss.
Established
is
the
fact
that
between
10:00
p.m.
on
July
25,
1990
and
1:25
a.m.
on
July
26,
1990,
M/V
Central
Bohol
encountered
a
southwestern
monsoon
in
the
course
of
its
voyage.
Having
made
such
factual
representation
in
its
Note
of
Marine
Protest,
petitioner
cannot
now
be
allowed
to
retreat
and
claim
that
the
southwestern
monsoon
was
a
“storm.”
Normally
expected
on
sea
voyages,
however,
were
such
monsoons,
during
which
strong
winds
were
not
unusual.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
According
to
PAGASA,
a
storm
has
a
wind
force
of
48
to
55
knots, equivalent
to
55
to
63
miles
per
hour
or
10
to
11
in
the
Beaufort
Scale.
The
second
mate
of
the
vessel
stated
that
the
wind
was
blowing
around
force
7
to
8
on
the
Beaufort
Scale. Consequently,
the
strong
winds
accompanying
the
southwestern
monsoon
could
not
be
classified
as
a
“storm.”
Such
winds
are
the
ordinary
vicissitudes
of
a
sea
voyage.
Also,
even
if
it
were
a
storm,
it
was
not
the
proximate
and
only
cause
of
the
loss.
The
loss
of
the
vessel
was
caused
not
only
by
the
southwestern
monsoon,
but
also
by
the
shifting
of
the
logs
in
the
hold.
Such
shifting
could
been
due
only
to
improper
stowage.
(2)
Whether
the
doctrine
of
limited
liability
is
applicable
No.
The
doctrine
of
limited
liability
under
Article
587
of
the
Code
of
Commerce is
not
applicable
to
the
present
case.
This
rule
does
not
apply
to
situations
in
which
the
loss
or
the
injury
is
due
to
the
concurrent
negligence
of
the
shipowner
and
the
captain.
-‐
3
-‐
[G.R.
No.
137775.
March
31,
2005]
FGU
INSURANCE
CORPORATION,
petitioner,
vs.
THE
COURT
OF
APPEALS,
SAN
MIGUEL
CORPORATION,
and
ESTATE
OF
ANG
GUI,
represented
by
LUCIO,
JULIAN,
and
JAIME,
all
surnamed
ANG,
and
CO
TO,
respondents.
FACTS:
Anco
Enterprises
Company
(ANCO),
a
partnership
between
Ang
Gui
and
Co
To,
was
engaged
in
the
shipping
business.
It
owned
the
M/T
ANCO
tugboat
and
the
D/B
Lucio
barge
that
were
operated
as
common
carriers.
Since
the
D/B
Lucio
had
no
engine
of
its
own,
it
could
not
maneuver
by
itself
and
had
to
be
towed
by
a
tugboat
for
it
to
move
from
one
place
to
another.
On
23
September
1979,
San
Miguel
Corporation
(SMC)
shipped
from
Mandaue
City,
Cebu,
on
board
the
D/B
Lucio,
for
towage
by
M/T
ANCO,
when
the
barge
and
tugboat
arrived
at
San
Jose,
Antique,
in
the
afternoon
of
30
September
1979,
the
clouds
over
the
area
were
dark
and
the
waves
were
already
big.
The
arrastre
workers
unloading
the
cargoes
of
SMC
on
board
the
D/B
Lucio
began
to
complain
about
their
difficulty
in
unloading
the
cargoes.
SMC’s
District
Sales
Supervisor,
Fernando
Macabuag,
requested
ANCO’s
representative
to
transfer
the
barge
to
a
safer
place
because
the
vessel
might
not
be
able
to
withstand
the
big
waves.
ANCO’s
representative
did
not
heed
the
request
because
he
was
confident
that
the
barge
could
withstand
the
waves.
At
around
midnight,
the
barge
run
aground
and
was
broken
and
the
cargoes
of
beer
in
the
barge
were
swept
away.
As
a
consequence
of
the
incident,
SMC
filed
a
complaint
for
Breach
of
Contract
of
Carriage
and
Damages
against
ANCO.
ANCO
admitted
that
the
cases
of
beer
Pale
Pilsen
and
Cerveza
Negra
mentioned
in
the
complaint
were
indeed
loaded
on
the
vessel
belonging
to
ANCO.
It
claimed
however
that
it
had
an
agreement
with
SMC
that
ANCO
would
not
be
liable
for
any
losses
or
damages
resulting
to
the
cargoes
by
reason
of
fortuitous
event.
Third-‐party
defendant
FGU
admitted
the
existence
of
the
Insurance
Policy
under
Marine
Cover
Note
No.
29591
but
maintained
that
the
alleged
loss
of
the
cargoes
covered
by
the
said
insurance
policy
cannot
be
attributed
directly
or
indirectly
to
any
of
the
risks
insured
against
in
the
said
insurance
policy.
DECISION
OF
LOWER
COURTS:
(1)
RTC-‐Cebu:
The
estate
of
Ang
Gui
and
Co
To
is
liable
to
SMC
for
the
amount
of
the
lost
shipment.
With
respect
to
the
Third-‐Party
complaint,
the
court
a
quo
found
FGU
liable
to
bear
Fifty-‐Three
Percent
(53%)
of
the
amount
of
the
lost
cargoes.
While
the
cargoes
were
indeed
lost
due
to
fortuitous
event,
there
was
failure
on
ANCO’s
part,
through
their
representatives,
to
observe
the
degree
of
diligence
required
that
would
exonerate
them
from
liability.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
(2)
CA:
affirmed
RTC
in
toto.
ISSUES:
(1)
Whether
ANCO’s
representatives
was
able
to
exercise
the
extraordinary
degree
of
diligence
required
by
the
law
to
exculpate
them
from
liability
for
the
loss
of
the
cargoes.
(2)
Whether
or
not
FGU
can
be
held
liable
under
the
insurance
policy
to
reimburse
ANCO
for
the
loss
of
the
cargoes
despite
the
findings
of
the
respondent
court
that
such
loss
was
occasioned
by
the
blatant
negligence
of
the
latter’s
employees.
RULING:
(1)
No.
In
this
case,
the
calamity
that
caused
the
loss
of
the
cargoes
was
not
unforeseen
nor
was
it
unavoidable.
In
fact,
the
other
vessels
in
the
port
of
San
Jose,
Antique,
managed
to
transfer
to
another
place,
a
circumstance
which
prompted
SMC’s
District
Sales
Supervisor
to
request
that
the
D/B
Lucio
be
likewise
transferred,
but
to
no
avail.
The
D/B
Lucio
had
no
engine
and
could
not
maneuver
by
itself.
Even
if
ANCO’s
representatives
wanted
to
transfer
it,
they
no
longer
had
any
means
to
do
so
as
the
tugboat
M/T
ANCO
had
already
departed,
leaving
the
barge
to
its
own
devices.
The
captain
of
the
tugboat
should
have
had
the
foresight
not
to
leave
the
barge
alone
considering
the
pending
storm.
(2)
No,
FGU
is
not
liable.
The
ordinary
negligence
of
the
insured
and
his
agents
has
long
been
held
as
a
part
of
the
risk
which
the
insurer
takes
upon
himself,
and
the
existence
of
which,
where
it
is
the
proximate
cause
of
the
loss,
does
not
absolve
the
insurer
from
liability.
But
willful
exposure,
gross
negligence,
negligence
amounting
to
misconduct,
etc.,
have
often
been
held
to
release
the
insurer
from
such
liability.
In
the
case
at
bar,
both
the
trial
court
and
the
appellate
court
had
concluded
from
the
evidence
that
the
crewmembers
of
both
the
D/B
Lucio
and
the
M/T
ANCO
were
blatantly
negligent.
To
wit:
There
was
blatant
negligence
on
the
part
of
the
employees
of
defendants-‐appellants
when
the
patron
(operator)
of
the
tug
boat
immediately
left
the
barge
at
the
San
Jose,
Antique
wharf
despite
the
looming
bad
weather.
The
negligence
of
the
defendants-‐
appellants
is
proved
by
the
fact
that
on
01
October
1979,
the
only
simple
vessel
left
at
the
wharf
in
San
Jose
was
the
D/B
Lucio.
This
Court,
taking
into
account
the
circumstances
present
in
the
instant
case,
concludes
that
the
blatant
negligence
of
ANCO’s
employees
is
of
such
gross
character
that
it
amounts
to
a
wrongful
act
that
must
exonerate
FGU
from
liability
under
the
insurance
contract.
-‐
4
-‐
G.R.
No.
95546
November
6,
1992
MAKATI
TUSCANY
CONDOMINIUM
CORPORATION,
petitioner,
vs.
THE
COURT
OF
APPEALS,
AMERICAN
HOME
ASSURANCE
CO.,
represented
by
American
International
Underwriters
(Phils.),
Inc.,
respondent.
FACTS:
Sometime
in
early
1982,
private
respondent
American
Home
Assurance
Co.
(AHAC),
represented
by
American
International
Underwriters
(Phils.),
Inc.,
issued
in
favor
of
petitioner
Makati
Tuscany
Condominium
Corporation
(TUSCANY)
Insurance
Policy
No.
AH-‐CPP-‐9210452
on
the
latter's
building
and
premises,
for
a
period
beginning
1
March
1982
and
ending
1
March
1983,
with
a
total
premium
of
P466,103.05.
The
premium
was
paid
on
installments
on
12
March
1982,
20
May
1982,
21
June
1982
and
16
November
1982,
all
of
which
were
accepted
by
private
respondent.
Successive
renewals
of
the
policies
were
made
in
the
same
manner.
On
1984,
the
policy
was
again
renewed
and
petitioner
made
two
installment
payments,
both
accepted
by
private
respondent,
the
first
on
6
February
1984
for
P52,000.00
and
the
second,
on
6
June
1984
for
P100,000.00.
Thereafter,
petitioner
refused
to
pay
the
balance
of
the
premium.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
Private
respondent
filed
an
action
to
recover
the
unpaid
balance
of
P314,103.05
for
Insurance
Policy.
Petitioner
explained
that
it
discontinued
the
payment
of
premiums
because
the
policy
did
not
contain
a
credit
clause
in
its
favor.
Petitioner
further
claimed
that
the
policy
was
never
binding
and
valid,
and
no
risk
attached
to
the
policy.
It
then
pleaded
a
counterclaim
for
P152,000.00
for
the
premiums
already
paid
for
1984-‐85,
and
in
its
answer
with
amended
counterclaim,
sought
the
refund
of
P924,206.10
representing
the
premium
payments
for
1982-‐85.
DECISION
OF
LOWER
COURTS:
(1)
Trial
Court:
dismissed
the
complaint
and
counterclaim
(2)
CA:
ordering
herein
petitioner
to
pay
the
balance
of
the
premiums
due
ISSUE:
Whether
payment
by
installment
of
the
premiums
due
on
an
insurance
policy
invalidates
the
contract
of
insurance,
in
view
of
Sec.
77
of
P.D.
612,
otherwise
known
as
the
Insurance
Code,
as
amended,
which
provides:
Sec.
77.
An
insurer
is
entitled
to
the
payment
of
the
premium
as
soon
as
the
thing
is
exposed
to
the
peril
insured
against.
Notwithstanding
any
agreement
to
the
contrary,
no
policy
or
contract
of
insurance
issued
by
an
insurance
company
is
valid
and
binding
unless
and
until
the
premium
thereof
has
been
paid,
except
in
the
case
of
a
life
or
an
industrial
life
policy
whenever
the
grace
period
provision
applies.
RULING:
No,
the
contract
remains
valid
even
if
the
premiums
were
paid
on
installments.
Certainly,
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
excuse
that
the
premiums
were
not
prepared
in
full.
At
the
very
least,
both
parties
should
be
deemed
in
estoppel
to
question
the
arrangement
they
have
voluntarily
accepted.
Moreover,
as
correctly
observed
by
the
appellate
court,
where
the
risk
is
entire
and
the
contract
is
indivisible,
the
insured
is
not
entitled
to
a
refund
of
the
premiums
paid
if
the
insurer
was
exposed
to
the
risk
insured
for
any
period,
however
brief
or
momentary.
The
obligation
to
pay
premiums
when
due
is
ordinarily
as
indivisible
obligation
to
pay
the
entire
premium.
-‐
5
–
G.R.
No.
L-‐67835
October
12,
1987
MALAYAN
INSURANCE
CO.,
INC.
(MICO),
petitioner,
vs.
GREGORIA
CRUZ
ARNALDO,
in
her
capacity
as
the
INSURANCE
COMMISSIONER,
and
CORONACION
PINCA,
respondents.
FACTS:
On
June
7,
1981,
the
petitioner
(hereinafter
called
(MICO)
issued
to
the
private
respondent,
Coronacion
Pinca,
Fire
Insurance
Policy
No.
F-‐001-‐17212
on
her
property
for
the
amount
of
P14,000.00
effective
July
22,
1981,
until
July
22,
1982.
On
October
15,1981,
MICO
allegedly
cancelled
the
policy
for
non-‐payment,
of
the
premium
and
sent
the
corresponding
notice
to
Pinca.
On
December
24,
1981,
payment
of
the
premium
for
Pinca
was
received
by
Domingo
Adora,
agent
of
MICO.
On
January
15,
1982,
Adora
remitted
this
payment
to
MICO,
together
with
other
payments.
On
January
18,
1982,
Pinca's
property
was
completely
burned.
DECISION
OF
LOWER
COURTS:
(1)
Insurance
Commission:
granted
claim
for
compensation
for
burned
property.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
ISSUE:
Whether
there
was
a
valid
insurance
contract
at
the
time
of
the
loss.
RULING:
Yes.
A
valid
cancellation
must,
therefore,
require
concurrence
of
the
following
conditions:
(1)
There
must
be
prior
notice
of
cancellation
to
the
insured;
(2)
The
notice
must
be
based
on
the
occurrence,
after
the
effective
date
of
the
policy,
of
one
or
more
of
the
grounds
mentioned;
(3)
The
notice
must
be
(a)
in
writing,
(b)
mailed,
or
delivered
to
the
named
insured,
(c)
at
the
address
shown
in
the
policy;
(4)
It
must
state
(a)
which
of
the
grounds
mentioned
in
Section
64
is
relied
upon
and
(b)
that
upon
written
request
of
the
insured,
the
insurer
will
furnish
the
facts
on
which
the
cancellation
is
based.
MICO's
claims
it
cancelled
the
policy
in
question
on
October
15,
1981,
for
non-‐payment
of
premium.
To
support
this
assertion,
it
presented
one
of
its
employees,
who
testified
that
"the
original
of
the
endorsement
and
credit
memo"
—presumably
meaning
the
alleged
cancellation
—
"were
sent
the
assured
by
mail
through
our
mailing
section" However,
there
is
no
proof
that
the
notice,
assuming
it
complied
with
the
other
requisites
mentioned
above,
was
actually
mailed
to
and
received
by
Pinca.
We
also
look
askance
at
the
alleged
cancellation,
of
which
the
insured
and
MICO's
agent
himself
had
no
knowledge,
and
the
curious
fact
that
although
Pinca's
payment
was
remitted
to
MICO's
by
its
agent
on
January
15,
1982,
MICO
sought
to
return
it
to
Adora
only
on
February
5,
1982,
after
it
presumably
had
learned
of
the
occurrence
of
the
loss
insured
against
on
January
18,
1982.
These
circumstances
make
the
motives
of
the
petitioner
highly
suspect,
to
say
the
least,
and
cast
serious
doubts
upon
its
candor
and
bona
fides.
-‐
6
-‐
G.R.
No.
81026
April
3,
1990
PAN
MALAYAN
INSURANCE
CORPORATION,
petitioner,
vs.
COURT
OF
APPEALS,
ERLINDA
FABIE
AND
HER
UNKNOWN
DRIVER,
respondents.
FACTS:
On
December
10,
1985,
PANMALAY
filed
a
complaint
for
damages
with
the
RTC
of
Makati
against
private
respondents
Erlinda
Fabie
and
her
driver.
PANMALAY
averred
the
following:
that
it
insured
a
Mitsubishi
Colt
Lancer
car
with
plate
No.
DDZ-‐431
and
registered
in
the
name
of
Canlubang
Automotive
Resources
Corporation
[CANLUBANG];
that
on
May
26,
1985,
due
to
the
"carelessness,
recklessness,
and
imprudence"
of
the
unknown
driver
of
a
pick-‐up
with
plate
no.
PCR-‐220,
the
insured
car
was
hit
and
suffered
damages
in
the
amount
of
P42,052.00;
that
PANMALAY
defrayed
the
cost
of
repair
of
the
insured
car
and,
therefore,
was
subrogated
to
the
rights
of
CANLUBANG
against
the
driver
of
the
pick-‐up
and
his
employer,
Erlinda
Fabie;
and
that,
despite
repeated
demands,
defendants,
failed
and
refused
to
pay
the
claim
of
PANMALAY.
private
respondents
filed
a
Motion
to
Dismiss
alleging
that
PANMALAY
had
no
cause
of
action
against
them.
They
argued
that
payment
under
the
"own
damage"
clause
of
the
insurance
policy
precluded
subrogation
under
Article
2207
of
the
Civil
Code,
since
indemnification
thereunder
was
made
on
the
assumption
that
there
was
no
wrongdoer
or
no
third
party
at
fault.
DECISION
OF
LOWER
COURTS:
(1)
Trial
Court:
dismissed
for
no
cause
of
action
PANMALAY's
complaint
for
damages
against
private
respondents
Erlinda
Fabie
and
her
driver
(2)
CA:
affirmed
trial
court.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
ISSUE:
Whether
or
not
the
insurer
PANMALAY
may
institute
an
action
to
recover
the
amount
it
had
paid
its
assured
in
settlement
of
an
insurance
claim
against
private
respondents
as
the
parties
allegedly
responsible
for
the
damage
caused
to
the
insured
vehicle.
RULING:
PANMALAY
is
correct.
Article
2207
of
the
Civil
Code
is
founded
on
the
well-‐settled
principle
of
subrogation.
If
the
insured
property
is
destroyed
or
damaged
through
the
fault
or
negligence
of
a
party
other
than
the
assured,
then
the
insurer,
upon
payment
to
the
assured,
will
be
subrogated
to
the
rights
of
the
assured
to
recover
from
the
wrongdoer
to
the
extent
that
the
insurer
has
been
obligated
to
pay.
Payment
by
the
insurer
to
the
assured
operates
as
an
equitable
that
the
insurer
has
been
obligated
to
pay.
Payment
by
the
insurer
to
the
assured
operates
as
an
equitable
or
negligence
of
a
third
party.
CANLUBANG
is
apparently
of
the
same
understanding.
Based
on
a
police
report
assignment
to
the
former
of
all
remedies
that
the
latter
may
have
against
the
third
party
whose
negligence
or
wrongful
act
caused
the
loss.
The
right
of
subrogation
is
not
dependent
upon,
nor
does
it
grow
out
of,
any
privity
of
contract
or
upon
written
assignment
of
claim.
It
accrues
simply
upon
payment
of
the
insurance
claim
by
the
insurer.
The
exceptions
are:
(1)
if
the
assured
by
his
own
act
releases
the
wrongdoer
or
third
party
liable
for
the
loss
or
damage,
from
liability,
the
insurer's
right
of
subrogation
is
defeated
(2)
where
the
insurer
pays
the
assured
the
value
of
the
lost
goods
without
notifying
the
carrier
who
has
in
good
faith
settled
the
assured's
claim
for
loss,
the
settlement
is
binding
on
both
the
assured
and
the
insurer,
and
the
latter
cannot
bring
an
action
against
the
carrier
on
his
right
of
subrogation
(3)
where
the
insurer
pays
the
assured
for
a
loss
which
is
not
a
risk
covered
by
the
policy,
thereby
effecting
"voluntary
payment",
the
former
has
no
right
of
subrogation
against
the
third
party
liable
for
the
loss
None
of
the
exceptions
are
availing
in
the
present
case.
Also,
even
if
under
the
above
circumstances
PANMALAY
could
not
be
deemed
subrogated
to
the
rights
of
its
assured
under
Article
2207
of
the
Civil
Code,
PANMALAY
would
still
have
a
cause
of
action
against
private
respondents.
In
the
pertinent
case
of
Sveriges
Angfartygs
Assurans
Forening
v.
Qua
Chee
Gan,
supra.,
the
Court
ruled
that
the
insurer
who
may
have
no
rights
of
subrogation
due
to
"voluntary"
payment
may
nevertheless
recover
from
the
third
party
responsible
for
the
damage
to
the
insured
property
under
Article
1236
of
the
Civil
Code.
WHEREFORE,
in
view
of
the
foregoing,
the
present
petition
is
GRANTED.
Petitioner's
complaint
for
damages
against
private
respondents
is
hereby
REINSTATED.
Let
the
case
be
remanded
to
the
lower
court
for
trial
on
the
merits.
-‐
7
-‐
[G.R.
No.
125678.
March
18,
2002]
PHILAMCARE
HEALTH
SYSTEMS,
INC.,
petitioner,
vs.
COURT
OF
APPEALS
and
JULITA
TRINOS,
respondents.
FACTS:
Ernani
Trinos,
deceased
husband
of
respondent
Julita
Trinos,
applied
for
a
health
care
coverage
with
petitioner.
Philamcare
Health
Systems,
Inc.
In
the
standard
application
form,
he
answered
no
to
the
following
question:
Have
you
or
any
of
your
family
members
ever
consulted
or
been
treated
for
high
blood
pressure,
heart
trouble,
diabetes,
cancer,
liver
disease,
asthma
or
peptic
ulcer?
The
application
was
approved
for
a
period
of
one
year
from
March
1,
1988
to
March
1,
1989
and
was
renewed.
During
the
period
of
his
coverage,
Ernani
suffered
a
heart
attack
and
was
confined
at
the
Manila
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
Medical
Center
(MMC)
for
one
month
beginning
March
9,
1990.
While
her
husband
was
in
the
hospital,
respondent
tried
to
claim
the
benefits
under
the
health
care
agreement.
However,
petitioner
denied
her
claim
saying
that
the
Health
Care
Agreement
was
void.
According
to
petitioner,
there
was
a
concealment
regarding
Ernani’s
medical
history.
Doctors
at
the
MMC
allegedly
discovered
at
the
time
of
Ernani’s
confinement
that
he
was
hypertensive,
diabetic
and
asthmatic,
contrary
to
his
answer
in
the
application
form.
In
the
morning
of
April
13,
1990,
Ernani
had
fever
and
was
feeling
very
weak.
Respondent
was
constrained
to
bring
him
back
to
the
Chinese
General
Hospital
where
he
died
on
the
same
day.
On
July
24,
1990,
respondent
instituted
with
the
Regional
Trial
Court
of
Manila,
Branch
44,
an
action
for
damages
against
petitioner
and
its
president,
Dr.
Benito
Reverente,
which
was
docketed
as
Civil
Case
No.
90-‐
53795.
She
asked
for
reimbursement
of
her
expenses
plus
moral
damages
and
attorney’s
fees.
DECISION
OF
LOWER
COURTS:
(1)
RTC
–
Manila:
rendered
judgment
in
favor
or
Trinos.
(2)
CA:
affirmed
RTC
but
deleted
the
awards
for
damages.
ISSUE:
Whether
a
health
care
agreement
is
an
insurance
contract;
and
whether
hence
the
“incontestability
clause”
under
the
Insurance
Code
applies
RULING:
Yes.
The
insurer
is
liable.
In
the
case
at
bar,
the
insurable
interest
of
respondent’s
husband
in
obtaining
the
health
care
agreement
was
his
own
health.
The
health
care
agreement
was
in
the
nature
of
non-‐life
insurance,
which
is
primarily
a
contract
of
indemnity. Once
the
member
incurs
hospital,
medical
or
any
other
expense
arising
from
sickness,
injury
or
other
stipulated
contingent,
the
health
care
provider
must
pay
for
the
same
to
the
extent
agreed
upon
under
the
contract.
It
appears
that
in
the
application
for
health
coverage,
petitioners
required
respondent’s
husband
to
sign
an
express
authorization
for
any
person,
organization
or
entity
that
has
any
record
or
knowledge
of
his
health
to
furnish
any
and
all
information
relative
to
any
hospitalization,
consultation,
treatment
or
any
other
medical
advice
or
examination.
The
answer
assailed
by
petitioner
was
in
response
to
the
question
relating
to
the
medical
history
of
the
applicant.
This
largely
depends
on
opinion
rather
than
fact,
especially
coming
from
respondent’s
husband
who
was
not
a
medical
doctor.
Where
matters
of
opinion
or
judgment
are
called
for,
answers
made
in
good
faith
and
without
intent
to
deceive
will
not
avoid
a
policy
even
though
they
are
untrue.
The
fraudulent
intent
on
the
part
of
the
insured
must
be
established
to
warrant
rescission
of
the
insurance
contract. Concealment
as
a
defense
for
the
health
care
provider
or
insurer
to
avoid
liability
is
an
affirmative
defense
and
the
duty
to
establish
such
defense
by
satisfactory
and
convincing
evidence
rests
upon
the
provider
or
insurer.
In
any
case,
with
or
without
the
authority
to
investigate,
petitioner
is
liable
for
claims
made
under
the
contract.
Having
assumed
a
responsibility
under
the
agreement,
petitioner
is
bound
to
answer
the
same
to
the
extent
agreed
upon.
In
the
end,
the
liability
of
the
health
care
provider
attaches
once
the
member
is
hospitalized
for
the
disease
or
injury
covered
by
the
agreement
or
whenever
he
avails
of
the
covered
benefits
that
he
has
prepaid.
Anent
the
incontestability
of
the
membership
of
respondent’s
husband,
we
quote
with
approval
the
following
findings
of
the
trial
court:
(U)nder
the
title
Claim
procedures
of
expenses,
the
defendant
Philamcare
Health
Systems
Inc.
had
twelve
months
from
the
date
of
issuance
of
the
Agreement
within
which
to
contest
the
membership
of
the
patient
if
he
had
previous
ailment
of
asthma,
and
six
months
from
the
issuance
of
the
agreement
if
the
patient
was
sick
of
diabetes
or
hypertension.
The
periods
having
expired,
the
defense
of
concealment
or
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
misrepresentation
no
longer
lie.
Finally,
petitioner
alleges
that
respondent
was
not
the
legal
wife
of
the
deceased
member
considering
that
at
the
time
of
their
marriage,
the
deceased
was
previously
married
to
another
woman
who
was
still
alive.
The
health
care
agreement
is
in
the
nature
of
a
contract
of
indemnity.
Hence,
payment
should
be
made
to
the
party
who
incurred
the
expenses.
It
is
not
controverted
that
respondent
paid
all
the
hospital
and
medical
expenses.
She
is
therefore
entitled
to
reimbursement.
-‐
8
-‐
G.R.
No.
L-‐66935
November
11,
1985
ISABELA
ROQUE,
doing
business
under
the
name
and
style
of
Isabela
Roque
Timber
Enterprises
and
ONG
CHIONG,
petitioners,
vs.
HON.
INTERMEDIATE
APPELATE
COURT
and
PIONEER
INSURANCE
AND
SURETY
CORPORATION,
respondent.
FACTS:
On
February
19,
1972,
the
Manila
Bay
Lighterage
Corporation
(Manila
Bay),
a
common
carrier,
entered
into
a
contract
with
the
petitioners
whereby
the
former
would
load
and
carry
on
board
its
barge
Mable
10
about
422.18
cubic
meters
of
logs
from
Malampaya
Sound,
Palawan
to
North
Harbor,
Manila.
The
petitioners
insured
the
logs
against
loss
for
P100,000.00
with
respondent
Pioneer
Insurance
and
Surety
Corporation
(Pioneer).
On
February
29,
1972,
the
petitioners
loaded
on
the
barge,
811
pieces
of
logs
at
Malampaya
Sound,
Palawan
for
carriage
and
delivery
to
North
Harbor,
Port
of
Manila,
but
the
shipment
never
reached
its
destination
because
Mable
10
sank
with
the
811
pieces
of
logs
somewhere
off
Cabuli
Point
in
Palawan
on
its
way
to
Manila.
Hence,
petitioners
commenced
Civil
Case
No.
86599
against
Manila
Bay
and
respondent
Pioneer.
DECISION
OF
LOWER
COURTS:
(1)
Trial
Court:
found
in
favor
of
petitioners.
(2)
Intermediate
Appellate
Court:
absolved
the
respondent
insurance
company
from
liability
on
the
grounds
that
the
vessel
carrying
the
insured
cargo
was
unseaworthy
and
the
loss
of
said
cargo
was
caused
not
by
the
perils
of
the
sea
but
by
the
perils
of
the
ship
ISSUES:
I.
THE
INTERMEDIATE
APPELLATE
COURT
ERRED
IN
HOLDING
THAT
IN
CASES
OF
MARINE
CARGO
INSURANCE,
THERE
IS
A
WARRANTY
OF
SEAWORTHINESS
BY
THE
CARGO
OWNER.
II.
THE
INTERMEDIATE
APPELLATE
COURT
ERRED
IN
HOLDING
THAT
THE
LOSS
OF
THE
CARGO
IN
THIS
CASE
WAS
CAUSED
BY
"PERILS
OF
THE
SHIP"
AND
NOT
BY
"PERILS
OF
THE
SEA.”
RULING:
I.
No.
The
IAC
is
correct.
The
liability
of
the
insurance
company
is
governed
by
law.
Section
113
of
the
Insurance
Code
provides:
In
every
marine
insurance
upon
a
ship
or
freight,
or
freightage,
or
upon
any
thing
that
is
the
subject
of
marine
insurance,
a
warranty
is
implied
that
the
ship
is
seaworthy.
Section
99
of
the
same
Code
also
provides
in
part.
Marine
insurance
includes:
(1)
Insurance
against
loss
of
or
damage
to:
(a)
Vessels,
craft,
aircraft,
vehicles,
goods,
freights,
cargoes,
merchandise,
...
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
From
the
above-‐quoted
provisions,
there
can
be
no
mistaking
the
fact
that
the
term
"cargo"
can
be
the
subject
of
marine
insurance
and
that
once
it
is
so
made,
the
implied
warranty
of
seaworthiness
immediately
attaches
to
whoever
is
insuring
the
cargo
whether
he
be
the
shipowner
or
not.
Since
the
law
provides
for
an
implied
warranty
of
seaworthiness
in
every
contract
of
ordinary
marine
insurance,
it
becomes
the
obligation
of
a
cargo
owner
to
look
for
a
reliable
common
carrier
which
keeps
its
vessels
in
seaworthy
condition.
The
shipper
of
cargo
may
have
no
control
over
the
vessel
but
he
has
full
control
in
the
choice
of
the
common
carrier
that
will
transport
his
goods.
Or
the
cargo
owner
may
enter
into
a
contract
of
insurance
which
specifically
provides
that
the
insurer
answers
not
only
for
the
perils
of
the
sea
but
also
provides
for
coverage
of
perils
of
the
ship.
II.
No,
the
IAC
is
correct.
In
marine
cases,
the
risks
insured
against
are
"perils
of
the
sea"
A
policy
does
not
cover
a
loss
or
injury
that
must
inevitably
take
place
in
the
ordinary
course
of
things.
There
is
no
doubt
that
the
term
'perils
of
the
sea'
extends
only
to
losses
caused
by
sea
damage,
or
by
the
violence
of
the
elements,
and
does
not
embrace
all
losses
happening
at
sea.
They
insure
against
losses
from
extraordinary
occurrences
only,
such
as
stress
of
weather,
winds
and
waves,
lightning,
tempests,
rocks
and
the
like.
These
are
understood
to
be
the
"perils
of
the
sea"
referred
in
the
policy,
and
not
those
ordinary
perils
which
every
vessel
must
encounter.
"Perils
of
the
sea"
has
been
said
to
include
only
such
losses
as
are
of
extraordinary
nature,
encounter.
"Perils
of
the
sea"
has
been
said
to
include
only
such
losses
as
are
of
extraordinary
nature,
or
arise
from
some
overwhelming
power,
which
cannot
be
guarded
against
by
the
ordinary
exertion
of
human
skill
and
prudence.
Damage
done
to
a
vessel
by
perils
of
the
sea
includes
every
species
of
damages
done
to
a
vessel
at
sea,
as
distinguished
from
the
ordinary
wear
and
tear
of
the
voyage,
and
distinct
from
injuries
suffered
by
the
vessel
in
consequence
of
her
not
being
seaworthy
at
the
outset
of
her
voyage
(as
in
this
case).
It
is
also
the
general
rule
that
everything
which
happens
thru
the
inherent
vice
of
the
thing,
or
by
the
act
of
the
owners,
master
or
shipper,
shall
not
be
reputed
a
peril,
if
not
otherwise
borne
in
the
policy.
It
is
quite
unmistakable
that
the
loss
of
the
cargo
was
due
to
the
perils
of
the
ship
rather
than
the
perils
of
the
sea.
The
facts
clearly
negate
the
petitioners'
claim
under
the
insurance
policy.
In
the
present
case
the
entrance
of
the
sea
water
into
the
ship's
hold
through
the
defective
pipe
already
described
was
not
due
to
any
accident
which
happened
during
the
voyage,
but
to
the
failure
of
the
ship's
owner
properly
to
repair
a
defect
of
the
existence
of
which
he
was
apprised.
The
loss
was
therefore
more
analogous
to
that
which
directly
results
from
simple
unseaworthiness
than
to
that
which
result
from
the
perils
of
the
sea.
-‐
9
-‐
[G.R.
No.
154514.
July
28,
2005]
WHITE
GOLD
MARINE
SERVICES,
INC.,
petitioner,
vs.
PIONEER
INSURANCE
AND
SURETY
CORPORATION
AND
THE
STEAMSHIP
MUTUAL
UNDERWRITING
ASSOCIATION
(BERMUDA)
LTD.,
respondents.
FACTS:
White
Gold
Marine
Services,
Inc.
(White
Gold)
procured
a
protection
and
indemnity
coverage
for
its
vessels
from
The
Steamship
Mutual
Underwriting
Association
(Bermuda)
Limited
(Steamship
Mutual)
Corporation
(Pioneer).
Subsequently,
White
Gold
was
issued
a
through
Pioneer
Insurance
and
Surety
Certificate
of
Entry
and
Acceptance. Pioneer
also
issued
receipts
evidencing
payments
for
the
coverage.
When
White
Gold
failed
to
fully
pay
its
accounts,
Steamship
Mutual
refused
to
renew
the
coverage.
Steamship
Mutual
thereafter
filed
a
case
against
White
Gold
for
collection
of
sum
of
money
to
recover
the
latter’s
unpaid
balance.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
DECISION
OF
LOWER
COURTS:
(1)
Insurance
Commissioner:
dismissed
the
complaint.
There
was
no
violation
of
the
Insurance
Code
and
the
respondents
do
not
need
license
as
insurer
and
insurance
agent/broker
because
it
was
not
engaged
in
the
insurance
business.
It
explained
that
Steamship
Mutual
was
a
Protection
and
Indemnity
Club
(P
&
I
Club).
Moreover,
Pioneer
was
already
licensed,
hence,
a
separate
license
solely
as
agent/broker
of
Steamship
Mutual
was
already
superfluous.
(2)
CA:
affirmed
Insurance
Commissioner.
ISSUES:
(1)
Is
Steamship
Mutual,
a
P
&
I
Club,
engaged
in
the
insurance
business
in
the
Philippines?
(2)
Does
Pioneer
need
a
license
as
an
insurance
agent/broker
for
Steamship
Mutual?
RULING:
(1)
Yes.
To
continue
doing
business
here,
Steamship
Mutual
or
through
its
agent
Pioneer,
must
secure
a
license
from
the
Insurance
Commission.
Since
a
contract
of
insurance
involves
public
interest,
regulation
by
the
State
is
necessary.
Thus,
no
insurer
or
insurance
company
is
allowed
to
engage
in
the
insurance
business
without
a
license
or
a
certificate
of
authority
from
the
Insurance
Commission.
The
parties
admit
that
Steamship
Mutual
is
a
P
&
I
Club.
Steamship
Mutual
admits
it
does
not
have
a
license
to
do
business
in
the
Philippines
although
Pioneer
is
its
resident
agent.
This
relationship
is
reflected
in
the
certifications
issued
by
the
Insurance
Commission.
It
cites
the
definition
of
a
P
&
I
Club
in
Hyopsung
Maritime
Co.,
Ltd.
v.
Court
of
Appeals as
“an
association
composed
of
shipowners
in
general
who
band
together
for
the
specific
purpose
of
providing
insurance
cover
on
a
mutual
basis
against
liabilities
incidental
to
shipowning
that
the
members
incur
in
favor
of
third
parties.”
The
test
to
determine
if
a
contract
is
an
insurance
contract
or
not,
depends
on
the
nature
of
the
promise,
the
act
required
to
be
performed,
and
the
exact
nature
of
the
agreement
in
the
light
of
the
occurrence,
contingency,
or
circumstances
under
which
the
performance
becomes
requisite.
It
is
not
by
what
it
is
called.
Relatedly,
a
mutual
insurance
company
is
a
cooperative
enterprise
where
the
members
are
both
the
insurer
and
insured.
In
it,
the
members
all
contribute,
by
a
system
of
premiums
or
assessments,
to
the
liabilities
are
paid,
and
where
the
profits
are
divided
among
creation
of
a
fund
from
which
all
losses
and
r
clubs,
provide
themselves,
in
proportion
to
their
interest. Additionally,
mutual
insurance
associations,
o
three
types
of
coverage,
namely,
protection
and
indemnity,
war
risks,
and
defense
costs. A
P
&
I
Club
is
“a
form
of
insurance
against
third
party
liability,
where
the
third
party
is
anyone
other
than
the
P
&
I
Club
and
the
members.” By
definition
then,
Steamship
Mutual
as
a
P
&
I
Club
is
a
mutual
insurance
association
engaged
in
the
marine
insurance
business.
(2)
Yes.
Although
Pioneer
is
already
licensed
as
an
insurance
company,
it
needs
a
separate
license
to
act
as
insurance
agent
for
Steamship
Mutual.
Section
299
of
the
Insurance
Code
clearly
states:
SEC.
299
.
.
.
No
person
shall
act
as
an
insurance
agent
or
as
an
insurance
broker
in
the
solicitation
or
procurement
of
applications
for
insurance,
or
receive
for
services
in
obtaining
insurance,
any
commission
or
other
compensation
from
any
insurance
company
doing
business
in
the
Philippines
or
any
agent
thereof,
without
first
procuring
a
license
so
to
act
from
the
Commissioner,
which
must
be
renewed
annually
on
the
first
day
of
January,
or
within
six
months
thereafter.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
1
-‐
G.R.
No.
L-‐22375
July
18,
1975
THE
CAPITAL
INSURANCE
&
SURETY
CO.,
INC.,
petitioner,
vs.
PLASTIC
ERA
CO.,
INC.,
AND
COURT
OF
APPEALS,
respondents.
FACTS:
On
December
17,
1960,
Capital
Insurance
(insurer)
delivered
to
the
Plastic
Era
(insured)
its
open
Fire
Policy
No.
22760
wherein
the
former
undertook
to
insure
the
latter's
building,
equipment,
raw
materials,
products
and
accessories
located
at
Sheridan
Street,
Mandaluyong,
Rizal.
The
term
of
the
policy
(face
value
=
100,000)
is
December
15,
1960
to
December
15,
1961
1
o’clock
in
the
afternoon.
When
the
policy
was
delivered,
Plastic
Era
failed
to
pay
the
corresponding
insurance
premium.
However,
through
its
duly
authorized
representative,
it
executed
the
an
acknowledgment
receipt.
On
January
8,
1961,
in
partial
payment
of
the
insurance
premium,
Plastic
Era
delivered
to
Capital
Insurance,
a
check
for
the
amount
of
P1,000.00
postdated
January
16,
1961
payable
to
the
order
of
the
latter
and
drawn
against
the
Bank
of
America.
However,
Capital
Insurance
tried
to
deposit
the
check
only
on
February
20,
1961
and
the
same
was
dishonored
by
the
bank
for
lack
of
funds.
The
records
show
that
as
of
January
19,
1961
Plastic
Era
had
a
balance
of
P1,193.41
with
the
Bank
of
America.
On
January
18,
1961
or
two
days
after
the
insurance
premium
became
due,
at
about
4:00
to
5:00
o'clock
in
the
morning,
the
property
insured
by
Plastic
Era
was
destroyed
by
fire.
The
loss
and/or
damage
suffered
by
Plastic
Era
was
estimated
by
the
Manila
Adjustment
Company
to
be
P283,875.
However,
according
to
the
records
the
same
property
has
been
insured
by
Plastic
Era
with
the
Philamgen
Insurance
Company
for
P200,000.00.
In
less
than
a
month
Plastic
Era
demanded
from
Capital
Insurance
the
payment
of
the
sum
of
P100,000.00
as
indemnity
for
the
loss
of
the
insured
property
under
Policy
No.
22760
but
the
latter
refused
for
the
reason
that,
among
others,
Plastic
Era
failed
to
pay
the
insurance
premium.
Thus,
Plastic
Era
filed
a
complaint
against
Capital
Insurance
for
the
recovery
of
the
sum.
DECISION
OF
LOWER
COURTS:
(1)
Court
of
First
Instance
–
Manila:
pay
Plastic
Era
88,325.63.
(2)
Court
of
Appeals:
affirmed
CFI.
ISSUE:
Whether
or
not
a
contract
of
insurance
has
been
duly
perfected
between
the
petitioner,
Capital
Insurance,
and
respondent
Plastic
Era
RULING:
Yes,
the
contract
has
been
perfected.
Capital
Insurance
accepted
the
promise
of
Plastic
Era
to
pay
the
insurance
premium
within
thirty
(30)
days
from
the
effective
date
of
policy.
By
so
doing,
it
has
implicitly
agreed
to
modify
the
tenor
of
the
insurance
policy
and
in
effect,
waived
the
provision
therein
that
it
would
only
pay
for
the
loss
or
damage
in
case
the
same
occurs
after
the
payment
of
the
premium.
Considering
that
the
insurance
policy
is
silent
as
to
the
mode
of
payment,
Capital
Insurance
is
deemed
to
have
accepted
the
promissory
note
in
payment
of
the
premium.
This
rendered
the
policy
immediately
operative
on
the
date
it
was
delivered.
The
acknowledgment
is
deemed
to
be
a
promissory
note.
In
other
words,
a
requirement
for
the
payment
of
the
first
or
initial
premium
in
advance
or
actual
cash
may
be
waived
by
acceptance
of
a
promissory
note
The
fact
that
the
check
issued
by
Plastic
Era
in
partial
payment
of
the
promissory
note
was
later
on
dishonored
did
not
in
any
way
operate
as
a
forfeiture
of
its
rights
under
the
policy,
there
being
no
express
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
stipulation
therein
to
that
effect.
If
the
check
is
accepted
as
payment
of
the
premium
even
though
it
turns
out
to
be
worthless,
there
is
payment
that
will
prevent
forfeiture.
The
payment
of
the
premium
on
the
insurance
policy
therefore
became
an
independent
obligation
the
non-‐fulfillment
of
which
would
entitle
Capital
Insurance
to
recover.
It
could
just
deduct
the
premium
due
and
unpaid
upon
the
satisfaction
of
the
loss
under
the
policy.
-‐
2
–
[G.R.
No.
150751.
September
20,
2004]
CENTRAL
SHIPPING
COMPANY,
INC.,
petitioner,
vs.
INSURANCE
COMPANY
OF
NORTH
AMERICA,
respondent.
FACTS:
On
July
25,
1990
at
Puerto
Princesa,
Palawan,
Central
Shipping
Company
received
on
board
its
vessel,
the
M/V
‘Central
Bohol’,
376
pieces
[of]
Philippine
Apitong
Round
Logs
and
undertook
to
transport
said
shipment
to
Manila
for
delivery
to
Alaska
Lumber
Co.,
Inc.
“The
cargo
was
insured
for
P3,000,000.00
against
total
loss
under
Insurance
Company
of
North
America’s
Marine
Cargo
Policy
No.
MCPB-‐
00170.
The
vessel
completely
sank.
Due
to
the
sinking
of
the
vessel,
the
cargo
was
totally
lost.
The
consignee,
Alaska
Lumber
Co.
Inc.,
presented
a
claim
for
the
value
of
the
shipment
to
Central
Shipping
but
the
latter
failed
and
refused
to
settle
the
claim,
hence
Insurance
company,
being
the
insurer,
paid
said
claim
and
now
seeks
to
be
subrogated
to
all
the
rights
and
actions
of
the
consignee
as
against
Central
Shipping.
Central
Shipping
raised
as
its
main
defense
that
the
proximate
and
only
cause
of
the
sinking
of
its
vessel
and
the
loss
of
its
cargo
was
a
natural
disaster,
a
tropical
storm
which
neither
Central
Shipping
nor
the
captain
of
its
vessel
could
have
foreseen.
DECISION
OF
LOWER
COURTS:
(1)
RTC:
Central
Shipping
Liable.
RTC
was
unconvinced
that
the
sinking
of
M/V
Central
Bohol
had
been
caused
by
the
weather
or
any
other
caso
fortuito.
It
noted
that
monsoons,
which
were
common
occurrences
during
the
months
of
July
to
December,
could
have
been
foreseen
and
provided
for
by
an
ocean-‐going
vessel.
(2)
CA:
affirmed
RTC.
Given
the
season
of
rains
and
monsoons,
the
ship
captain
and
his
crew
should
have
anticipated
the
perils
of
the
sea.
The
CA
found
no
merit
in
petitioner’s
assertion
of
the
vessel’s
seaworthiness.
It
held
that
the
Certificates
of
Inspection
and
Drydocking
were
not
conclusive
proofs
thereof.
In
order
to
consider
a
vessel
to
be
seaworthy,
it
must
be
fit
to
meet
the
perils
of
the
sea.
ISSUES
&
RULING:
(1)
Whether
the
carrier
is
liable
for
the
loss
of
the
cargo;
and
Yes.
A
common
carrier
is
presumed
to
be
at
fault
or
negligent.
It
shall
be
liable
for
the
loss,
destruction
or
deterioration
of
its
cargo,
unless
it
can
prove
that
the
sole
and
proximate
cause
of
such
event
is
one
of
the
causes
enumerated
in
Article
1734
of
the
Civil
Code,
or
that
it
exercised
extraordinary
diligence
to
prevent
or
minimize
the
loss.
In
the
present
case,
the
weather
condition
encountered
by
petitioner’s
vessel
was
not
a
“storm”
or
a
natural
disaster
comprehended
in
the
law.
Given
the
known
weather
condition
prevailing
during
the
voyage,
the
manner
of
stowage
employed
by
the
carrier
was
insufficient
to
secure
the
cargo
from
the
rolling
action
of
the
sea.
The
carrier
took
a
calculated
risk
in
improperly
securing
the
cargo.
Having
lost
that
risk,
it
cannot
now
disclaim
any
liability
for
the
loss.
Established
is
the
fact
that
between
10:00
p.m.
on
July
25,
1990
and
1:25
a.m.
on
July
26,
1990,
M/V
Central
Bohol
encountered
a
southwestern
monsoon
in
the
course
of
its
voyage.
Having
made
such
factual
representation
in
its
Note
of
Marine
Protest,
petitioner
cannot
now
be
allowed
to
retreat
and
claim
that
the
southwestern
monsoon
was
a
“storm.”
Normally
expected
on
sea
voyages,
however,
were
such
monsoons,
during
which
strong
winds
were
not
unusual.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
According
to
PAGASA,
a
storm
has
a
wind
force
of
48
to
55
knots, equivalent
to
55
to
63
miles
per
hour
or
10
to
11
in
the
Beaufort
Scale.
The
second
mate
of
the
vessel
stated
that
the
wind
was
blowing
around
force
7
to
8
on
the
Beaufort
Scale. Consequently,
the
strong
winds
accompanying
the
southwestern
monsoon
could
not
be
classified
as
a
“storm.”
Such
winds
are
the
ordinary
vicissitudes
of
a
sea
voyage.
Also,
even
if
it
were
a
storm,
it
was
not
the
proximate
and
only
cause
of
the
loss.
The
loss
of
the
vessel
was
caused
not
only
by
the
southwestern
monsoon,
but
also
by
the
shifting
of
the
logs
in
the
hold.
Such
shifting
could
been
due
only
to
improper
stowage.
(2)
Whether
the
doctrine
of
limited
liability
is
applicable
No.
The
doctrine
of
limited
liability
under
Article
587
of
the
Code
of
Commerce is
not
applicable
to
the
present
case.
This
rule
does
not
apply
to
situations
in
which
the
loss
or
the
injury
is
due
to
the
concurrent
negligence
of
the
shipowner
and
the
captain.
-‐
3
-‐
[G.R.
No.
137775.
March
31,
2005]
FGU
INSURANCE
CORPORATION,
petitioner,
vs.
THE
COURT
OF
APPEALS,
SAN
MIGUEL
CORPORATION,
and
ESTATE
OF
ANG
GUI,
represented
by
LUCIO,
JULIAN,
and
JAIME,
all
surnamed
ANG,
and
CO
TO,
respondents.
FACTS:
Anco
Enterprises
Company
(ANCO),
a
partnership
between
Ang
Gui
and
Co
To,
was
engaged
in
the
shipping
business.
It
owned
the
M/T
ANCO
tugboat
and
the
D/B
Lucio
barge
that
were
operated
as
common
carriers.
Since
the
D/B
Lucio
had
no
engine
of
its
own,
it
could
not
maneuver
by
itself
and
had
to
be
towed
by
a
tugboat
for
it
to
move
from
one
place
to
another.
On
23
September
1979,
San
Miguel
Corporation
(SMC)
shipped
from
Mandaue
City,
Cebu,
on
board
the
D/B
Lucio,
for
towage
by
M/T
ANCO,
when
the
barge
and
tugboat
arrived
at
San
Jose,
Antique,
in
the
afternoon
of
30
September
1979,
the
clouds
over
the
area
were
dark
and
the
waves
were
already
big.
The
arrastre
workers
unloading
the
cargoes
of
SMC
on
board
the
D/B
Lucio
began
to
complain
about
their
difficulty
in
unloading
the
cargoes.
SMC’s
District
Sales
Supervisor,
Fernando
Macabuag,
requested
ANCO’s
representative
to
transfer
the
barge
to
a
safer
place
because
the
vessel
might
not
be
able
to
withstand
the
big
waves.
ANCO’s
representative
did
not
heed
the
request
because
he
was
confident
that
the
barge
could
withstand
the
waves.
At
around
midnight,
the
barge
run
aground
and
was
broken
and
the
cargoes
of
beer
in
the
barge
were
swept
away.
As
a
consequence
of
the
incident,
SMC
filed
a
complaint
for
Breach
of
Contract
of
Carriage
and
Damages
against
ANCO.
ANCO
admitted
that
the
cases
of
beer
Pale
Pilsen
and
Cerveza
Negra
mentioned
in
the
complaint
were
indeed
loaded
on
the
vessel
belonging
to
ANCO.
It
claimed
however
that
it
had
an
agreement
with
SMC
that
ANCO
would
not
be
liable
for
any
losses
or
damages
resulting
to
the
cargoes
by
reason
of
fortuitous
event.
Third-‐party
defendant
FGU
admitted
the
existence
of
the
Insurance
Policy
under
Marine
Cover
Note
No.
29591
but
maintained
that
the
alleged
loss
of
the
cargoes
covered
by
the
said
insurance
policy
cannot
be
attributed
directly
or
indirectly
to
any
of
the
risks
insured
against
in
the
said
insurance
policy.
DECISION
OF
LOWER
COURTS:
(1)
RTC-‐Cebu:
The
estate
of
Ang
Gui
and
Co
To
is
liable
to
SMC
for
the
amount
of
the
lost
shipment.
With
respect
to
the
Third-‐Party
complaint,
the
court
a
quo
found
FGU
liable
to
bear
Fifty-‐Three
Percent
(53%)
of
the
amount
of
the
lost
cargoes.
While
the
cargoes
were
indeed
lost
due
to
fortuitous
event,
there
was
failure
on
ANCO’s
part,
through
their
representatives,
to
observe
the
degree
of
diligence
required
that
would
exonerate
them
from
liability.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
(2)
CA:
affirmed
RTC
in
toto.
ISSUES:
(1)
Whether
ANCO’s
representatives
was
able
to
exercise
the
extraordinary
degree
of
diligence
required
by
the
law
to
exculpate
them
from
liability
for
the
loss
of
the
cargoes.
(2)
Whether
or
not
FGU
can
be
held
liable
under
the
insurance
policy
to
reimburse
ANCO
for
the
loss
of
the
cargoes
despite
the
findings
of
the
respondent
court
that
such
loss
was
occasioned
by
the
blatant
negligence
of
the
latter’s
employees.
RULING:
(1)
No.
In
this
case,
the
calamity
that
caused
the
loss
of
the
cargoes
was
not
unforeseen
nor
was
it
unavoidable.
In
fact,
the
other
vessels
in
the
port
of
San
Jose,
Antique,
managed
to
transfer
to
another
place,
a
circumstance
which
prompted
SMC’s
District
Sales
Supervisor
to
request
that
the
D/B
Lucio
be
likewise
transferred,
but
to
no
avail.
The
D/B
Lucio
had
no
engine
and
could
not
maneuver
by
itself.
Even
if
ANCO’s
representatives
wanted
to
transfer
it,
they
no
longer
had
any
means
to
do
so
as
the
tugboat
M/T
ANCO
had
already
departed,
leaving
the
barge
to
its
own
devices.
The
captain
of
the
tugboat
should
have
had
the
foresight
not
to
leave
the
barge
alone
considering
the
pending
storm.
(2)
No,
FGU
is
not
liable.
The
ordinary
negligence
of
the
insured
and
his
agents
has
long
been
held
as
a
part
of
the
risk
which
the
insurer
takes
upon
himself,
and
the
existence
of
which,
where
it
is
the
proximate
cause
of
the
loss,
does
not
absolve
the
insurer
from
liability.
But
willful
exposure,
gross
negligence,
negligence
amounting
to
misconduct,
etc.,
have
often
been
held
to
release
the
insurer
from
such
liability.
In
the
case
at
bar,
both
the
trial
court
and
the
appellate
court
had
concluded
from
the
evidence
that
the
crewmembers
of
both
the
D/B
Lucio
and
the
M/T
ANCO
were
blatantly
negligent.
To
wit:
There
was
blatant
negligence
on
the
part
of
the
employees
of
defendants-‐appellants
when
the
patron
(operator)
of
the
tug
boat
immediately
left
the
barge
at
the
San
Jose,
Antique
wharf
despite
the
looming
bad
weather.
The
negligence
of
the
defendants-‐
appellants
is
proved
by
the
fact
that
on
01
October
1979,
the
only
simple
vessel
left
at
the
wharf
in
San
Jose
was
the
D/B
Lucio.
This
Court,
taking
into
account
the
circumstances
present
in
the
instant
case,
concludes
that
the
blatant
negligence
of
ANCO’s
employees
is
of
such
gross
character
that
it
amounts
to
a
wrongful
act
that
must
exonerate
FGU
from
liability
under
the
insurance
contract.
-‐
4
-‐
G.R.
No.
95546
November
6,
1992
MAKATI
TUSCANY
CONDOMINIUM
CORPORATION,
petitioner,
vs.
THE
COURT
OF
APPEALS,
AMERICAN
HOME
ASSURANCE
CO.,
represented
by
American
International
Underwriters
(Phils.),
Inc.,
respondent.
FACTS:
Sometime
in
early
1982,
private
respondent
American
Home
Assurance
Co.
(AHAC),
represented
by
American
International
Underwriters
(Phils.),
Inc.,
issued
in
favor
of
petitioner
Makati
Tuscany
Condominium
Corporation
(TUSCANY)
Insurance
Policy
No.
AH-‐CPP-‐9210452
on
the
latter's
building
and
premises,
for
a
period
beginning
1
March
1982
and
ending
1
March
1983,
with
a
total
premium
of
P466,103.05.
The
premium
was
paid
on
installments
on
12
March
1982,
20
May
1982,
21
June
1982
and
16
November
1982,
all
of
which
were
accepted
by
private
respondent.
Successive
renewals
of
the
policies
were
made
in
the
same
manner.
On
1984,
the
policy
was
again
renewed
and
petitioner
made
two
installment
payments,
both
accepted
by
private
respondent,
the
first
on
6
February
1984
for
P52,000.00
and
the
second,
on
6
June
1984
for
P100,000.00.
Thereafter,
petitioner
refused
to
pay
the
balance
of
the
premium.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
Private
respondent
filed
an
action
to
recover
the
unpaid
balance
of
P314,103.05
for
Insurance
Policy.
Petitioner
explained
that
it
discontinued
the
payment
of
premiums
because
the
policy
did
not
contain
a
credit
clause
in
its
favor.
Petitioner
further
claimed
that
the
policy
was
never
binding
and
valid,
and
no
risk
attached
to
the
policy.
It
then
pleaded
a
counterclaim
for
P152,000.00
for
the
premiums
already
paid
for
1984-‐85,
and
in
its
answer
with
amended
counterclaim,
sought
the
refund
of
P924,206.10
representing
the
premium
payments
for
1982-‐85.
DECISION
OF
LOWER
COURTS:
(1)
Trial
Court:
dismissed
the
complaint
and
counterclaim
(2)
CA:
ordering
herein
petitioner
to
pay
the
balance
of
the
premiums
due
ISSUE:
Whether
payment
by
installment
of
the
premiums
due
on
an
insurance
policy
invalidates
the
contract
of
insurance,
in
view
of
Sec.
77
of
P.D.
612,
otherwise
known
as
the
Insurance
Code,
as
amended,
which
provides:
Sec.
77.
An
insurer
is
entitled
to
the
payment
of
the
premium
as
soon
as
the
thing
is
exposed
to
the
peril
insured
against.
Notwithstanding
any
agreement
to
the
contrary,
no
policy
or
contract
of
insurance
issued
by
an
insurance
company
is
valid
and
binding
unless
and
until
the
premium
thereof
has
been
paid,
except
in
the
case
of
a
life
or
an
industrial
life
policy
whenever
the
grace
period
provision
applies.
RULING:
No,
the
contract
remains
valid
even
if
the
premiums
were
paid
on
installments.
Certainly,
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
excuse
that
the
premiums
were
not
prepared
in
full.
At
the
very
least,
both
parties
should
be
deemed
in
estoppel
to
question
the
arrangement
they
have
voluntarily
accepted.
Moreover,
as
correctly
observed
by
the
appellate
court,
where
the
risk
is
entire
and
the
contract
is
indivisible,
the
insured
is
not
entitled
to
a
refund
of
the
premiums
paid
if
the
insurer
was
exposed
to
the
risk
insured
for
any
period,
however
brief
or
momentary.
The
obligation
to
pay
premiums
when
due
is
ordinarily
as
indivisible
obligation
to
pay
the
entire
premium.
-‐
5
–
G.R.
No.
L-‐67835
October
12,
1987
MALAYAN
INSURANCE
CO.,
INC.
(MICO),
petitioner,
vs.
GREGORIA
CRUZ
ARNALDO,
in
her
capacity
as
the
INSURANCE
COMMISSIONER,
and
CORONACION
PINCA,
respondents.
FACTS:
On
June
7,
1981,
the
petitioner
(hereinafter
called
(MICO)
issued
to
the
private
respondent,
Coronacion
Pinca,
Fire
Insurance
Policy
No.
F-‐001-‐17212
on
her
property
for
the
amount
of
P14,000.00
effective
July
22,
1981,
until
July
22,
1982.
On
October
15,1981,
MICO
allegedly
cancelled
the
policy
for
non-‐payment,
of
the
premium
and
sent
the
corresponding
notice
to
Pinca.
On
December
24,
1981,
payment
of
the
premium
for
Pinca
was
received
by
Domingo
Adora,
agent
of
MICO.
On
January
15,
1982,
Adora
remitted
this
payment
to
MICO,
together
with
other
payments.
On
January
18,
1982,
Pinca's
property
was
completely
burned.
DECISION
OF
LOWER
COURTS:
(1)
Insurance
Commission:
granted
claim
for
compensation
for
burned
property.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
ISSUE:
Whether
there
was
a
valid
insurance
contract
at
the
time
of
the
loss.
RULING:
Yes.
A
valid
cancellation
must,
therefore,
require
concurrence
of
the
following
conditions:
(1)
There
must
be
prior
notice
of
cancellation
to
the
insured;
(2)
The
notice
must
be
based
on
the
occurrence,
after
the
effective
date
of
the
policy,
of
one
or
more
of
the
grounds
mentioned;
(3)
The
notice
must
be
(a)
in
writing,
(b)
mailed,
or
delivered
to
the
named
insured,
(c)
at
the
address
shown
in
the
policy;
(4)
It
must
state
(a)
which
of
the
grounds
mentioned
in
Section
64
is
relied
upon
and
(b)
that
upon
written
request
of
the
insured,
the
insurer
will
furnish
the
facts
on
which
the
cancellation
is
based.
MICO's
claims
it
cancelled
the
policy
in
question
on
October
15,
1981,
for
non-‐payment
of
premium.
To
support
this
assertion,
it
presented
one
of
its
employees,
who
testified
that
"the
original
of
the
endorsement
and
credit
memo"
—presumably
meaning
the
alleged
cancellation
—
"were
sent
the
assured
by
through
our
mailing
section" However,
there
is
no
proof
that
the
notice,
assuming
it
complied
with
the
other
requisites
mentioned
above,
was
actually
mailed
to
and
received
by
Pinca.
We
also
look
askance
at
the
alleged
cancellation,
of
which
the
insured
and
MICO's
agent
himself
had
no
knowledge,
and
the
curious
fact
that
although
Pinca's
payment
was
remitted
to
MICO's
by
its
agent
on
January
15,
1982,
MICO
sought
to
return
it
to
Adora
only
on
February
5,
1982,
after
it
presumably
had
learned
of
the
occurrence
of
the
loss
insured
against
on
January
18,
1982.
These
circumstances
make
the
motives
of
the
petitioner
highly
suspect,
to
say
the
least,
and
cast
serious
doubts
upon
its
candor
and
bona
fides.
-‐
6
-‐
G.R.
No.
81026
April
3,
1990
PAN
MALAYAN
INSURANCE
CORPORATION,
petitioner,
vs.
COURT
OF
APPEALS,
ERLINDA
FABIE
AND
HER
UNKNOWN
DRIVER,
respondents.
FACTS:
On
December
10,
1985,
PANMALAY
filed
a
complaint
for
damages
with
the
RTC
of
Makati
against
private
respondents
Erlinda
Fabie
and
her
driver.
PANMALAY
averred
the
following:
that
it
insured
a
Mitsubishi
Colt
Lancer
car
with
plate
No.
DDZ-‐431
and
registered
in
the
name
of
Canlubang
Automotive
Resources
Corporation
[CANLUBANG];
that
on
May
26,
1985,
due
to
the
"carelessness,
recklessness,
and
imprudence"
of
the
unknown
driver
of
a
pick-‐up
with
plate
no.
PCR-‐220,
the
insured
car
was
hit
and
suffered
damages
in
the
amount
of
P42,052.00;
that
PANMALAY
defrayed
the
cost
of
repair
of
the
insured
car
and,
therefore,
was
subrogated
to
the
rights
of
CANLUBANG
against
the
driver
of
the
pick-‐up
and
his
employer,
Erlinda
Fabie;
and
that,
despite
repeated
demands,
defendants,
failed
and
refused
to
pay
the
claim
of
PANMALAY.
private
respondents
filed
a
Motion
to
Dismiss
alleging
that
PANMALAY
had
no
cause
of
action
against
them.
They
argued
that
payment
under
the
"own
damage"
clause
of
the
insurance
policy
precluded
subrogation
under
Article
2207
of
the
Civil
Code,
since
indemnification
thereunder
was
made
on
the
assumption
that
there
was
no
wrongdoer
or
no
third
party
at
fault.
DECISION
OF
LOWER
COURTS:
(1)
Trial
Court:
dismissed
for
no
cause
of
action
PANMALAY's
complaint
for
damages
against
private
respondents
Erlinda
Fabie
and
her
driver
(2)
CA:
affirmed
trial
court.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
ISSUE:
Whether
or
not
the
insurer
PANMALAY
may
institute
an
action
to
recover
the
amount
it
had
paid
its
assured
in
settlement
of
an
insurance
claim
against
private
respondents
as
the
parties
allegedly
responsible
for
the
damage
caused
to
the
insured
vehicle.
RULING:
PANMALAY
is
correct.
Article
2207
of
the
Civil
Code
is
founded
on
the
well-‐settled
principle
of
subrogation.
If
the
insured
property
is
destroyed
or
damaged
through
the
fault
or
negligence
of
a
party
other
than
the
assured,
then
the
insurer,
upon
payment
to
the
assured,
will
be
subrogated
to
the
rights
of
the
assured
to
recover
from
the
wrongdoer
to
the
extent
that
the
insurer
has
been
obligated
to
pay.
Payment
by
the
insurer
to
the
assured
operates
as
an
equitable
that
the
insurer
has
been
obligated
to
pay.
Payment
by
the
insurer
to
the
assured
operates
as
an
equitable
or
negligence
of
a
third
party.
CANLUBANG
is
apparently
of
the
same
understanding.
Based
on
a
police
report
assignment
to
the
former
of
all
remedies
that
the
latter
may
have
against
the
third
party
whose
negligence
or
wrongful
act
caused
the
loss.
The
right
of
subrogation
is
not
dependent
upon,
nor
does
it
grow
out
of,
any
privity
of
contract
or
upon
written
assignment
of
claim.
It
accrues
simply
upon
payment
of
the
insurance
claim
by
the
insurer.
The
exceptions
are:
(1)
if
the
assured
by
his
own
act
releases
the
wrongdoer
or
third
party
liable
for
the
loss
or
damage,
from
liability,
the
insurer's
right
of
subrogation
is
defeated
(2)
where
the
insurer
pays
the
assured
the
value
of
the
lost
goods
without
notifying
the
carrier
who
has
in
good
faith
settled
the
assured's
claim
for
loss,
the
settlement
is
binding
on
both
the
assured
and
the
insurer,
and
the
latter
cannot
bring
an
action
against
the
carrier
on
his
right
of
subrogation
(3)
where
the
insurer
pays
the
assured
for
a
loss
which
is
not
a
risk
covered
by
the
policy,
thereby
effecting
"voluntary
payment",
the
former
has
no
right
of
subrogation
against
the
third
party
liable
for
the
loss
None
of
the
exceptions
are
availing
in
the
present
case.
Also,
even
if
under
the
above
circumstances
PANMALAY
could
not
be
deemed
subrogated
to
the
rights
of
its
assured
under
Article
2207
of
the
Civil
Code,
PANMALAY
would
still
have
a
cause
of
action
against
private
respondents.
In
the
pertinent
case
of
Sveriges
Angfartygs
Assurans
Forening
v.
Qua
Chee
Gan,
supra.,
the
Court
ruled
that
the
insurer
who
may
have
no
rights
of
subrogation
due
to
"voluntary"
payment
may
nevertheless
recover
from
the
third
party
responsible
for
the
damage
to
the
insured
property
under
Article
1236
of
the
Civil
Code.
WHEREFORE,
in
view
of
the
foregoing,
the
present
petition
is
GRANTED.
Petitioner's
complaint
for
damages
against
private
respondents
is
hereby
REINSTATED.
Let
the
case
be
remanded
to
the
lower
court
for
trial
on
the
merits.
-‐
7
-‐
[G.R.
No.
125678.
March
18,
2002]
PHILAMCARE
HEALTH
SYSTEMS,
INC.,
petitioner,
vs.
COURT
OF
APPEALS
and
JULITA
TRINOS,
respondents.
FACTS:
Ernani
Trinos,
deceased
husband
of
respondent
Julita
Trinos,
applied
for
a
health
care
coverage
with
petitioner.
Philamcare
Health
Systems,
Inc.
In
the
standard
application
form,
he
answered
no
to
the
following
question:
Have
you
or
any
of
your
family
members
ever
consulted
or
been
treated
for
high
blood
pressure,
heart
trouble,
diabetes,
cancer,
liver
disease,
asthma
or
peptic
ulcer?
The
application
was
approved
for
a
period
of
one
year
from
March
1,
1988
to
March
1,
1989
and
was
renewed.
During
the
period
of
his
coverage,
Ernani
suffered
a
heart
attack
and
was
confined
at
the
Manila
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
Medical
Center
(MMC)
for
one
month
beginning
March
9,
1990.
While
her
husband
was
in
the
hospital,
respondent
tried
to
claim
the
benefits
under
the
health
care
agreement.
However,
petitioner
denied
her
claim
saying
that
the
Health
Care
Agreement
was
void.
According
to
petitioner,
there
was
a
concealment
regarding
Ernani’s
medical
history.
Doctors
at
the
MMC
allegedly
discovered
at
the
time
of
Ernani’s
confinement
that
he
was
hypertensive,
diabetic
and
asthmatic,
contrary
to
his
answer
in
the
application
form.
In
the
morning
of
April
13,
1990,
Ernani
had
fever
and
was
feeling
very
weak.
Respondent
was
constrained
to
bring
him
back
to
the
Chinese
General
Hospital
where
he
died
on
the
same
day.
On
July
24,
1990,
respondent
instituted
with
the
Regional
Trial
Court
of
Manila,
Branch
44,
an
action
for
damages
against
petitioner
and
its
president,
Dr.
Benito
Reverente,
which
was
docketed
as
Civil
Case
No.
90-‐
53795.
She
asked
for
reimbursement
of
her
expenses
plus
moral
damages
and
attorney’s
fees.
DECISION
OF
LOWER
COURTS:
(1)
RTC
–
Manila:
rendered
judgment
in
favor
or
Trinos.
(2)
CA:
affirmed
RTC
but
deleted
the
awards
for
damages.
ISSUE:
Whether
a
health
care
agreement
is
an
insurance
contract;
and
whether
hence
the
“incontestability
clause”
under
the
Insurance
Code
applies
RULING:
Yes.
The
insurer
is
liable.
In
the
case
at
bar,
the
insurable
interest
of
respondent’s
husband
in
obtaining
the
health
care
agreement
was
his
own
health.
The
health
care
agreement
was
in
the
nature
of
non-‐life
insurance,
which
is
primarily
a
contract
of
indemnity. Once
the
member
incurs
hospital,
medical
or
any
other
expense
arising
from
sickness,
injury
or
other
stipulated
contingent,
the
health
care
provider
must
pay
for
the
same
to
the
extent
agreed
upon
under
the
contract.
It
appears
that
in
the
application
for
health
coverage,
petitioners
required
respondent’s
husband
to
sign
an
express
authorization
for
any
person,
organization
or
entity
that
has
any
record
or
knowledge
of
his
health
to
furnish
any
and
all
information
relative
to
any
hospitalization,
consultation,
treatment
or
any
other
medical
advice
or
examination.
The
answer
assailed
by
petitioner
was
in
response
to
the
question
relating
to
the
medical
history
of
the
applicant.
This
largely
depends
on
opinion
rather
than
fact,
especially
coming
from
respondent’s
husband
who
was
not
a
medical
doctor.
Where
matters
of
opinion
or
judgment
are
called
for,
answers
made
in
good
faith
and
without
intent
to
deceive
will
not
avoid
a
policy
even
though
they
are
untrue.
The
fraudulent
intent
on
the
part
of
the
insured
must
be
established
to
warrant
rescission
of
the
insurance
contract. Concealment
as
a
defense
for
the
health
care
provider
or
insurer
to
avoid
liability
is
an
affirmative
defense
and
the
duty
to
establish
such
defense
by
satisfactory
and
convincing
evidence
rests
upon
the
provider
or
insurer.
In
any
case,
with
or
without
the
authority
to
investigate,
petitioner
is
liable
for
claims
made
under
the
contract.
Having
assumed
a
responsibility
under
the
agreement,
petitioner
is
bound
to
answer
the
same
to
the
extent
agreed
upon.
In
the
end,
the
liability
of
the
health
care
provider
attaches
once
the
member
is
hospitalized
for
the
disease
or
injury
covered
by
the
agreement
or
whenever
he
avails
of
the
covered
benefits
that
he
has
prepaid.
Anent
the
incontestability
of
the
membership
of
respondent’s
husband,
we
quote
with
approval
the
following
findings
of
the
trial
court:
(U)nder
the
title
Claim
procedures
of
expenses,
the
defendant
Philamcare
Health
Systems
Inc.
had
twelve
months
from
the
date
of
issuance
of
the
Agreement
within
which
to
contest
the
membership
of
the
patient
if
he
had
previous
ailment
of
asthma,
and
six
months
from
the
issuance
of
the
agreement
if
the
patient
was
sick
of
diabetes
or
hypertension.
The
periods
having
expired,
the
defense
of
concealment
or
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
misrepresentation
no
longer
lie.
Finally,
petitioner
alleges
that
respondent
was
not
the
legal
wife
of
the
deceased
member
considering
that
at
the
time
of
their
marriage,
the
deceased
was
previously
married
to
another
woman
who
was
still
alive.
The
health
care
agreement
is
in
the
nature
of
a
contract
of
indemnity.
Hence,
payment
should
be
made
to
the
party
who
incurred
the
expenses.
It
is
not
controverted
that
respondent
paid
all
the
hospital
and
medical
expenses.
She
is
therefore
entitled
to
reimbursement.
-‐
8
-‐
G.R.
No.
L-‐66935
November
11,
1985
ISABELA
ROQUE,
doing
business
under
the
name
and
style
of
Isabela
Roque
Timber
Enterprises
and
ONG
CHIONG,
petitioners,
vs.
HON.
INTERMEDIATE
APPELATE
COURT
and
PIONEER
INSURANCE
AND
SURETY
CORPORATION,
respondent.
FACTS:
On
February
19,
1972,
the
Manila
Bay
Lighterage
Corporation
(Manila
Bay),
a
common
carrier,
entered
into
a
contract
with
the
petitioners
whereby
the
former
would
load
and
carry
on
board
its
barge
Mable
10
about
422.18
cubic
meters
of
logs
from
Malampaya
Sound,
Palawan
to
North
Harbor,
Manila.
The
petitioners
insured
the
logs
against
loss
for
P100,000.00
with
respondent
Pioneer
Insurance
and
Surety
Corporation
(Pioneer).
On
February
29,
1972,
the
petitioners
loaded
on
the
barge,
811
pieces
of
logs
at
Malampaya
Sound,
Palawan
for
carriage
and
delivery
to
North
Harbor,
Port
of
Manila,
but
the
shipment
never
reached
its
destination
because
Mable
10
sank
with
the
811
pieces
of
logs
somewhere
off
Cabuli
Point
in
Palawan
on
its
way
to
Manila.
Hence,
petitioners
commenced
Civil
Case
No.
86599
against
Manila
Bay
and
respondent
Pioneer.
DECISION
OF
LOWER
COURTS:
(1)
Trial
Court:
found
in
favor
of
petitioners.
(2)
Intermediate
Appellate
Court:
absolved
the
respondent
insurance
company
from
liability
on
the
grounds
that
the
vessel
carrying
the
insured
cargo
was
unseaworthy
and
the
loss
of
said
cargo
was
caused
not
by
the
perils
of
the
sea
but
by
the
perils
of
the
ship
ISSUES:
I.
THE
INTERMEDIATE
APPELLATE
COURT
ERRED
IN
HOLDING
THAT
IN
CASES
OF
MARINE
CARGO
INSURANCE,
THERE
IS
A
WARRANTY
OF
SEAWORTHINESS
BY
THE
CARGO
OWNER.
II.
THE
INTERMEDIATE
APPELLATE
COURT
ERRED
IN
HOLDING
THAT
THE
LOSS
OF
THE
CARGO
IN
THIS
CASE
WAS
CAUSED
BY
"PERILS
OF
THE
SHIP"
AND
NOT
BY
"PERILS
OF
THE
SEA.”
RULING:
I.
No.
The
IAC
is
correct.
The
liability
of
the
insurance
company
is
governed
by
law.
Section
113
of
the
Insurance
Code
provides:
In
every
marine
insurance
upon
a
ship
or
freight,
or
freightage,
or
upon
any
thing
that
is
the
subject
of
marine
insurance,
a
warranty
is
implied
that
the
ship
is
seaworthy.
Section
99
of
the
same
Code
also
provides
in
part.
Marine
insurance
includes:
(1)
Insurance
against
loss
of
or
damage
to:
(a)
Vessels,
craft,
aircraft,
vehicles,
goods,
freights,
cargoes,
merchandise,
...
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
From
the
above-‐quoted
provisions,
there
can
be
no
mistaking
the
fact
that
the
term
"cargo"
can
be
the
subject
of
marine
insurance
and
that
once
it
is
so
made,
the
implied
warranty
of
seaworthiness
immediately
attaches
to
whoever
is
insuring
the
cargo
whether
he
be
the
shipowner
or
not.
Since
the
law
provides
for
an
implied
warranty
of
seaworthiness
in
every
contract
of
ordinary
marine
insurance,
it
becomes
the
obligation
of
a
cargo
owner
to
look
for
a
reliable
common
carrier
which
keeps
its
vessels
in
seaworthy
condition.
The
shipper
of
cargo
may
have
no
control
over
the
vessel
but
he
has
full
control
in
the
choice
of
the
common
carrier
that
will
transport
his
goods.
Or
the
cargo
owner
may
enter
into
a
contract
of
insurance
which
specifically
provides
that
the
insurer
answers
not
only
for
the
perils
of
the
sea
but
also
provides
for
coverage
of
perils
of
the
ship.
II.
No,
the
IAC
is
correct.
In
marine
cases,
the
risks
insured
against
are
"perils
of
the
sea"
A
policy
does
not
cover
a
loss
or
injury
that
must
inevitably
take
place
in
the
ordinary
course
of
things.
There
is
no
doubt
that
the
term
'perils
of
the
sea'
extends
only
to
losses
caused
by
sea
damage,
or
by
the
violence
of
the
elements,
and
does
not
embrace
all
losses
happening
at
sea.
They
insure
against
losses
from
extraordinary
occurrences
only,
such
as
stress
of
weather,
winds
and
waves,
lightning,
tempests,
rocks
and
the
like.
These
are
understood
to
be
the
"perils
of
the
sea"
referred
in
the
policy,
and
not
those
ordinary
perils
which
every
vessel
must
encounter.
"Perils
of
the
sea"
has
been
said
to
include
only
such
losses
as
are
of
extraordinary
nature,
encounter.
"Perils
of
the
sea"
has
been
said
to
include
only
such
losses
as
are
of
extraordinary
nature,
or
arise
from
some
overwhelming
power,
which
cannot
be
guarded
against
by
the
ordinary
exertion
of
human
skill
and
prudence.
Damage
done
to
a
vessel
by
perils
of
the
sea
includes
every
species
of
damages
done
to
a
vessel
at
sea,
as
distinguished
from
the
ordinary
wear
and
tear
of
the
voyage,
and
distinct
from
injuries
suffered
by
the
vessel
in
consequence
of
her
not
being
seaworthy
at
the
outset
of
her
voyage
(as
in
this
case).
It
is
also
the
general
rule
that
everything
which
happens
thru
the
inherent
vice
of
the
thing,
or
by
the
act
of
the
owners,
master
or
shipper,
shall
not
be
reputed
a
peril,
if
not
otherwise
borne
in
the
policy.
It
is
quite
unmistakable
that
the
loss
of
the
cargo
was
due
to
the
perils
of
the
ship
rather
than
the
perils
of
the
sea.
The
facts
clearly
negate
the
petitioners'
claim
under
the
insurance
policy.
In
the
present
case
the
entrance
of
the
sea
water
into
the
ship's
hold
through
the
defective
pipe
already
described
was
not
due
to
any
accident
which
happened
during
the
voyage,
but
to
the
failure
of
the
ship's
owner
properly
to
repair
a
defect
of
the
existence
of
which
he
was
apprised.
The
loss
was
therefore
more
analogous
to
that
which
directly
results
from
simple
unseaworthiness
than
to
that
which
result
from
the
perils
of
the
sea.
-‐
9
-‐
[G.R.
No.
154514.
July
28,
2005]
WHITE
GOLD
MARINE
SERVICES,
INC.,
petitioner,
vs.
PIONEER
INSURANCE
AND
SURETY
CORPORATION
AND
THE
STEAMSHIP
MUTUAL
UNDERWRITING
ASSOCIATION
(BERMUDA)
LTD.,
respondents.
FACTS:
White
Gold
Marine
Services,
Inc.
(White
Gold)
procured
a
protection
and
indemnity
coverage
for
its
vessels
from
The
Steamship
Mutual
Underwriting
Association
(Bermuda)
Limited
(Steamship
Mutual)
Corporation
(Pioneer).
Subsequently,
White
Gold
was
issued
a
through
Pioneer
Insurance
and
Surety
Certificate
of
Entry
and
Acceptance. Pioneer
also
issued
receipts
evidencing
payments
for
the
coverage.
When
White
Gold
failed
to
fully
pay
its
accounts,
Steamship
Mutual
refused
to
renew
the
coverage.
Steamship
Mutual
thereafter
filed
a
case
against
White
Gold
for
collection
of
sum
of
money
to
recover
the
latter’s
unpaid
balance.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
DECISION
OF
LOWER
COURTS:
(1)
Insurance
Commissioner:
dismissed
the
complaint.
There
was
no
violation
of
the
Insurance
Code
and
the
respondents
do
not
need
license
as
insurer
and
insurance
agent/broker
because
it
was
not
engaged
in
the
insurance
business.
It
explained
that
Steamship
Mutual
was
a
Protection
and
Indemnity
Club
(P
&
I
Club).
Moreover,
Pioneer
was
already
licensed,
hence,
a
separate
license
solely
as
agent/broker
of
Steamship
Mutual
was
already
superfluous.
(2)
CA:
affirmed
Insurance
Commissioner.
ISSUES:
(1)
Is
Steamship
Mutual,
a
P
&
I
Club,
engaged
in
the
insurance
business
in
the
Philippines?
(2)
Does
Pioneer
need
a
license
as
an
insurance
agent/broker
for
Steamship
Mutual?
RULING:
(1)
Yes.
To
continue
doing
business
here,
Steamship
Mutual
or
through
its
agent
Pioneer,
must
secure
a
license
from
the
Insurance
Commission.
Since
a
contract
of
insurance
involves
public
interest,
regulation
by
the
State
is
necessary.
Thus,
no
insurer
or
insurance
company
is
allowed
to
engage
in
the
insurance
business
without
a
license
or
a
certificate
of
authority
from
the
Insurance
Commission.
The
parties
admit
that
Steamship
Mutual
is
a
P
&
I
Club.
Steamship
Mutual
admits
it
does
not
have
a
license
to
do
business
in
the
Philippines
although
Pioneer
is
its
resident
agent.
This
relationship
is
reflected
in
the
certifications
issued
by
the
Insurance
Commission.
It
cites
the
definition
of
a
P
&
I
Club
in
Hyopsung
Maritime
Co.,
Ltd.
v.
Court
of
Appeals as
“an
association
composed
of
shipowners
in
general
who
band
together
for
the
specific
purpose
of
providing
insurance
cover
on
a
mutual
basis
against
liabilities
incidental
to
shipowning
that
the
members
incur
in
favor
of
third
parties.”
The
test
to
determine
if
a
contract
is
an
insurance
contract
or
not,
depends
on
the
nature
of
the
promise,
the
act
required
to
be
performed,
and
the
exact
nature
of
the
agreement
in
the
light
of
the
occurrence,
contingency,
or
circumstances
under
which
the
performance
becomes
requisite.
It
is
not
by
what
it
is
called.
Relatedly,
a
mutual
insurance
company
is
a
cooperative
enterprise
where
the
members
are
both
the
insurer
and
insured.
In
it,
the
members
all
contribute,
by
a
system
of
premiums
or
assessments,
to
the
liabilities
are
paid,
and
where
the
profits
are
divided
among
creation
of
a
fund
from
which
all
losses
and
r
clubs,
provide
themselves,
in
proportion
to
their
interest. Additionally,
mutual
insurance
associations,
o
three
types
of
coverage,
namely,
protection
and
indemnity,
war
risks,
and
defense
costs. A
P
&
I
Club
is
“a
form
of
insurance
against
third
party
liability,
where
the
third
party
is
anyone
other
than
the
P
&
I
Club
and
the
members.” By
definition
then,
Steamship
Mutual
as
a
P
&
I
Club
is
a
mutual
insurance
association
engaged
in
the
marine
insurance
business.
(2)
Yes.
Although
Pioneer
is
already
licensed
as
an
insurance
company,
it
needs
a
separate
license
to
act
as
insurance
agent
for
Steamship
Mutual.
Section
299
of
the
Insurance
Code
clearly
states:
SEC.
299
.
.
.
No
person
shall
act
as
an
insurance
agent
or
as
an
insurance
broker
in
the
solicitation
or
procurement
of
applications
for
insurance,
or
receive
for
services
in
obtaining
insurance,
any
commission
or
other
compensation
from
any
insurance
company
doing
business
in
the
Philippines
or
any
agent
thereof,
without
first
procuring
a
license
so
to
act
from
the
Commissioner,
which
must
be
renewed
annually
on
the
first
day
of
January,
or
within
six
months
thereafter.
VILLO,
Viktoria
Mary
Antonette
P.
Insurance
Case
Digests
