insurance digests

Suretyship

1. Prudential Guarantee Assurance Inc vs. Equinox Land
Corporation GR Nos. 15205-06 September 1, 2007 - Derick Mallari

Facts:Sometime in 1996, Equinox Land Corporation (Equinox),
respondent, decided to construct five (5) additional floors to its
existing building, the Eastgate Centre, located at 169 EDSA,
Mandaluyong City. It then sent invitations to bid to various building
contractors. Four (4) building contractors,

Finding the bid of J’Marc to be the most advantageous,
Equinox offered the construction project to it. On February 22, 1997,
J’Marc accepted the offer. Two days later, Equinox formally awarded
to J’Marc the contract to build the extension for a consideration of
P37,000,000.00.

On February 24, 1997, J’Marc submitted to Equinox two
(2) bonds, namely: (1) a surety bond issued by Prudential Guarantee
and Assurance, Inc. (Prudential), herein petitioner, in the amount of
P9,250,000.00 to guarantee the unliquidated portion of the advance
payment payable to J’Marc; and (2) a performance bond likewise
issued by Prudential in the amount of P7,400,000.00 to guarantee
J’Marc’s faithful performance of its obligations under the
construction agreement.

On March 17, 1997, Equinox and J’Marc signed the
contract and related documents. Under the terms of the contract,
J’Marc would supply all the labor, materials, tools, equipment, and
supervision required to complete the project.

In accordance with the terms of the contract, Equinox paid
J’Marc a downpayment of P9,250,000.00 equivalent to 25% of the
contract price.

J’Marc did not adhere to the terms of the contract. It failed
to submit the required monthly progress billings for the months of
March and April 1997. Its workers neglected to cover the drainpipes,
hence, they were clogged by wet cement. This delayed the work on
the project.

On May 23, 1997, J’Marc requested an unscheduled cash
advance of P300,000.00 from Equinox, explaining it had
encountered cash problems. Equinox granted J’Marc’s request to
prevent delay.

On May 31, 1997, J’Marc submitted its first progress billing
showing that it had accomplished only 7.3825% of the construction
work estimated at P2,731,535.00. After deducting the advanced
payments, the net amount payable to J’Marc was only
P1,285,959.12. Of this amount, Equinox paid J’Marc only
P697,005.12 because the former paid EXAN P588,954.00 for
concrete mix.

Shortly after Equinox paid J’Marc based on its first
progress billing, the latter again requested an advanced payment of
P150,000.00. Again Equinox paid J’Marc this amount. Eventually,
Equinox found that the amount owing to J’Marc’s laborers was only
P121,000.00, not P150,000.00.

In June 1997, EXAN refused to deliver concrete mix to the
project site due to J’Marc’s recurring failure to pay on time. Faced
with a looming delay in the project schedule, Equinox acceded to
EXAN’s request that payments for the concrete mix should be
remitted to it directly.

On June 30, 1997, J’Marc submitted its second progress
billing showing that it accomplished only 16.0435% of the project
after 4 months of construction work. Based on the contract and its
own schedule, J’Marc should have accomplished at least 37.70%.

Faced with the problem of delay, Equinox formally gave
J’Marc one final chance to take remedial steps in order to finish the
project on time. However, J’Marc failed to undertake any corrective
measure. Consequently, on July 10, 1997, Equinox terminated its
contract with J’Marc and took over the project. On the same date,
Equinox sent Prudential a letter claiming relief from J’Marc’s
violations of the contract.

On July 11, 1997, the work on the project stopped. The
personnel of both Equinox and J’Marc jointly conducted an
inventory of all materials, tools, equipment, and supplies at the
construction site. They also measured and recorded the amount of
work actually accomplished. As of July 11, 1997, J’Marc
accomplished only 19.0573% of the work or a shortage of 21.565%
in violation of the contract.

The cost of J’Marc’s accomplishment was only
P7,051,201.00. In other words, Equinox overpaid J’Marc in the sum
of P3,974,300.25 inclusive of the 10% retention on the first progress
billing amounting to P273,152.50. In addition, Equinox also paid the
wages of J’Marc’s laborers, the billings for unpaid supplies, and the
amounts owing to subcontractors of J’Marc in the total sum of
P664,998.09.

On August 25, 1997, Equinox filed with the Regional Trial
Court (RTC), Branch 214, Mandaluyong City a complaint for sum of
money and damages against J’Marc and Prudential. Equinox prayed
that J’Marc be ordered to reimburse the amounts corresponding to
its (Equinox) advanced payments and unliquidated portion of its
downpayment; and to pay damages. Equinox also prayed that
Prudential be ordered to pay its liability under the bonds.


Issue:

Whether or not Prudential solidarily liable with J’Marc to Equinox for
damages?


Held:

Yes, it is not disputed that Prudential entered into a
suretyship contract with J’Marc. Section 175 of the Insurance Code
defines a suretyship as “a contract or agreement whereby a party,
called the suretyship, guarantees the performance by another party,
called the principal or obligor, of an obligation or undertaking in
favor of a third party, called the obligee. It includes official
recognizances, stipulations, bonds, or undertakings issued under Act
536, as amended.” Corollarily, Article 2047 of the Civil Code provides
that suretyship arises upon the solidary binding of a person deemed
the surety with the principal debtor for the purpose of fulfilling an
obligation.

In Castellvi de Higgins and Higgins v. Seliner, 41 Phil. 142
(1920), we held that while a surety and a guarantor are alike in that
each promises to answer for the debt or default of another, the
surety assumes liability as a regular party to the undertaking and
hence its obligation is primary.

In Security Pacific Assurance Corporation v. Tria-Infante,
we reiterated the rule that while a contract of surety is secondary
only to a valid principal obligation, the surety’s liability to the
creditor is said to be direct, primary, and absolute. In other words,
the surety is directly and equally bound with the principal. Thus,
Prudential is barred from disclaiming that its liability with J’Marc is
solidary.


2. DBP Pool of Accredited Insurance Co. vs Radio Mindanao Network
Inc GR No. 147039 January 27, 2006 - Pauline Ollero

G.R. NO. 147039 January 27, 2006

DBP POOL OF ACCREDITED INSURANCE COMPANIES, Petitioner,
vs.
RADIO MINDANAO NETWORK, INC., Respondent.

FACTS:
● Respondent owns several broadcasting stations all over
the country. Provident covered respondent’s transmitter
equipment and generating set for the amount of
P13,550,000.00 under Fire Insurance Policy No. 30354,
while petitioner covered respondent’s transmitter,
furniture, fixture and other transmitter facilities for the
amount of P5,883,650.00.
● Respondent’s radio station was razed by fire causing
damage in the amount of P1,044,040.00. Respondent
sought recovery under the two insurance policies but the
claims were denied on the ground that the cause of loss
was an excepted risk excluded under condition no. 6 (c)
and (d), to wit:
“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) War, invasion, act of foreign enemy,
hostilities, or warlike operations (whether war
be declared or not), civil war.
(d) Mutiny, riot, military or popular rising,
insurrection, rebellion, revolution, military or
usurped power.”
● Insurance companies maintained that the evidence
showed that the fire was caused by members of the
Communist Party of the Philippines/New People’s Army
(CPP/NPA); and consequently, denied the claims. Hence,
respondent was constrained to file Civil Case against
petitioner and Provident.

ISSUES and HELD:
1.) Whether or not Petitioner Insurer is liable for the loss due to
fire. (Petitioner assails the factual finding of both the trial court and
the CA that its evidence failed to support its allegation that the loss
was caused by an excepted risk, i.e., members of the CPP/NPA
caused the fire)

YES!!! The trial court found that:
“The only evidence which the Court can consider to
determine if the fire was due to the intentional act
committed by the members of the New People’s
Army (NPA), are the testimony of witnesses Lt. Col.
Nicolas Torres and SPO3 Leonardo Rochar who were
admittedly not present when the fire occurred. Their
testimony was limited to the fact that an
investigation was conducted and in the course of the
investigation they were informed by bystanders that
"heavily armed men entered the transmitter house,
poured gasoline in it and then lighted it. After that,
they went out shouting "Mabuhay ang NPA". The
persons whom they investigated and actually saw
the burning of the station were not presented as
witnesses. The documentary evidence particularly
Exhibits "5" and "5-C" do not satisfactorily prove that
the author of the burning were members of the NPA.
Exhibit "5-B" which is a letter released by the NPA
merely mentions some dissatisfaction with the
activities of some people in the media in Bacolod.
There was no mention there of any threat on media
facilities.”
The CA went over the evidence on record and sustained the findings
of the trial court, to wit:
“x x x. We examined carefully the report on the police
blotter of the burning of DYHB, the certification
issued by the Integrated National Police of Bacolod
City and the fire investigation report prepared by SFO
III Rochas and there We found that none of them
categorically stated that the twenty (20) armed men
which burned DYHB were members of the CPP/NPA.
The said documents simply stated that the said
armed men were ‘believed’ to be or ‘suspected’ of
being members of the said group. Even SFO III Rochas
admitted that he was not sure that the said armed
men were members of the CPP-NPA, thus:
X x x. In fact the only person who seems
to be so sure that that the CPP-NPA had
a hand in the burning of DYHB was Lt.
Col. Nicolas Torres. However, though
We found him to be persuasive in his
testimony regarding how he came to
arrive at his opinion, We cannot
nevertheless admit his testimony as
conclusive proof that the CPP-NPA was
really involved in the incident
considering that he admitted that he
did not personally see the armed men
even as he tried to pursue them. Note
that when Lt. Col. Torres was presented
as witness, he was presented as an
ordinary witness only and not an expert
witness. Hence, his opinion on the
identity or membership of the armed
men with the CPP-NPA is not admissible
in evidence.
Anent the letter of a certain Celso Magsilang, who
claims to be a member of NPA-NIROC, being an
admission of person which is not a party to the
present action, is likewise inadmissible in evidence
under Section 22, Rule 130 of the Rules of Court. The
reason being that an admission is competent only
when the declarant, or someone identified in legal
interest with him, is a party to the action.”
When supported by substantial evidence, findings of fact of the trial
court as affirmed by the CA are conclusive and binding on the
parties, which this Court will not review unless there are exceptional
circumstances. There are no exceptional circumstances in this case
that would have impelled the Court to depart from the factual
findings of both the trial court and the CA. Both the trial court and
the CA were correct in ruling that petitioner failed to prove that the
loss was caused by an excepted risk.

2.) Whether or not Petitioner Insurer is correct in saying that
private respondent is responsible for proving that the cause of the
damage/loss is covered by the insurance policy, that the burden of
proof is upon the Insured that such loss or damage is covered under
the Policy.

● An insurance contract, being a contract of adhesion,
should be so interpreted as to carry out the purpose for
which the parties entered into the contract which is to
insure against risks of loss or damage to the goods.
Limitations of liability should be regarded with extreme
jealousy and must be construed in such a way as to
preclude the insurer from noncompliance with its
obligations.
● The "burden of proof" contemplated by the aforesaid
provision actually refers to the "burden of evidence"
(burden of going forward).

As applied in this case, it refers
to the duty of the insured to show that the loss or damage
is covered by the policy. The foregoing clause
notwithstanding, the burden of proof still rests upon
petitioner to prove that the damage or loss was caused by
an excepted risk in order to escape any liability under the
contract.
● Burden of proof is the duty of any party to present
evidence to establish his claim or defense by the amount
of evidence required by law, which is preponderance of
evidence in civil cases. The party, whether plaintiff or
defendant, who asserts the affirmative of the issue has the
burden of proof to obtain a favorable judgment. For the
plaintiff, the burden of proof never parts.

For the
defendant, an affirmative defense is one which is not a
denial of an essential ingredient in the plaintiff’s cause of
action, but one which, if established, will be a good
defense – i.e. an "avoidance" of the claim.
● Particularly, in insurance cases, where a risk is excepted by
the terms of a policy which insures against other perils or
hazards, loss from such a risk constitutes a defense which
the insurer may urge, since it has not assumed that risk,
and from this it follows that an insurer seeking to defeat a
claim because of an exception or limitation in the policy
has the burden of proving that the loss comes within the
purview of the exception or limitation set up. If a proof is
made of a loss apparently within a contract of insurance,
the burden is upon the insurer to prove that the loss arose
from a cause of loss which is excepted or for which it is not
liable, or from a cause which limits its liability.
● Consequently, it is sufficient for private respondent to
prove the fact of damage or loss. Once respondent makes
out a prima facie case in its favor, the duty or the burden
of evidence shifts to petitioner to controvert respondent’s
prima facie case. In this case, since petitioner alleged an
excepted risk, then the burden of evidence shifted to
petitioner to prove such exception. It is only when
petitioner has sufficiently proven that the damage or loss
was caused by an excepted risk does the burden of
evidence shift back to respondent who is then under a
duty of producing evidence to show why such excepted
risk does not release petitioner from any liability.
Unfortunately for petitioner, it failed to discharge its
primordial burden of proving that the damage or loss was
caused by an excepted risk.
A witness can testify only to those facts which he knows of his
personal knowledge, which means those facts which are derived
from his perception.

A witness may not testify as to what he merely
learned from others either because he was told or read or heard the
same. Such testimony is considered hearsay and may not be
received as proof of the truth of what he has learned. The hearsay
rule is based upon serious concerns about the trustworthiness and
reliability of hearsay evidence inasmuch as such evidence are not
given under oath or solemn affirmation and, more importantly, have
not been subjected to cross-examination by opposing counsel to test
the perception, memory, veracity and articulateness of the out-of-
court declarant or actor upon whose reliability on which the worth
of the out-of-court statement depends.
Res gestae, as an exception to the hearsay rule, refers to those
exclamations and statements made by either the participants,
victims, or spectators to a crime immediately before, during, or after
the commission of the crime, when the circumstances are such that
the statements were made as a spontaneous reaction or utterance
inspired by the excitement of the occasion and there was no
opportunity for the declarant to deliberate and to fabricate a false
statement. The rule in res gestae applies when the declarant himself
did not testify and provided that the testimony of the witness who
heard the declarant complies with the following requisites: (1) that
the principal act, the res gestae, be a startling occurrence; (2) the
statements were made before the declarant had the time to
contrive or devise a falsehood; and (3) that the statements must
concern the occurrence in question and its immediate attending
circumstances.
The Court is not convinced to accept the declarations as part of res
gestae. While it may concede that these statements were made by
the bystanders during a startling occurrence, it cannot be said
however, that these utterances were made spontaneously by the
bystanders and before they had the time to contrive or devise a
falsehood. Both SFO III Rochar and Lt. Col. Torres received the
bystanders’ statements while they were making their investigations
during and after the fire. It is reasonable to assume that when these
statements were noted down, the bystanders already had enough
time and opportunity to mill around, talk to one another and
exchange information, not to mention theories and speculations, as
is the usual experience in disquieting situations where hysteria is
likely to take place. It cannot therefore be ascertained whether
these utterances were the products of truth. That the utterances
may be mere idle talk is not remote.

Furthermore, admissibility of evidence should not be equated with
its weight and sufficiency.

Admissibility of evidence depends on its
relevance and competence, while the weight of evidence pertains to
evidence already admitted and its tendency to convince and
persuade. Even assuming that the declaration of the bystanders that
it was the members of the CPP/NPA who caused the fire may be
admitted as evidence, it does not follow that such declarations are
sufficient proof. These declarations should be calibrated vis-à-vis the
other evidence on record.

3. Philippine Pryce Assurance Co. vs CA, G.R. No. 107062 February
21, 1994 - Francis Gillean Orpilla

Facts: Interworld Assurance Corporation (now Philippine Pryce
Assurance Corporation), was the butt of the complaint for collection
of sum of money by Gegroco, Inc. The complaint alleged that
petitioner issued two surety bonds in behalf of its principal Sagum
General Merchandise for P500,000.00 and P1,000,000.00,
respectively. Petitioner admitted having executed the said bonds,
but denied liability because allegedly 1) the checks which were to
pay for the premiums bounced and were dishonored hence there is
no contract to speak of between petitioner and its supposed
principal; and 2) that the bonds were merely to guarantee payment
of its principal's obligation, thus, excussion is necessary.

Issue: Whether or not these two defenses of petitioner are tenable.

Ruling: No. Section 177 of the Insurance Code states that "the
surety is entitled to payment of the premium as soon as the contract
of suretyship or bond is perfected and delivered to the obligor. No
contract of suretyship or bonding shall be valid and binding unless
and until the premium therefor has been paid, except where the
obligee has accepted the bond, in which case the bond becomes
valid and enforceable irrespective of whether or not the premium
has been paid by the obligor to the surety." The above provision
outrightly negates petitioner's first defense. In a desperate attempt
to escape liability, petitioner further asserts that the above provision
is not applicable because the respondent allegedly had not accepted
the surety bond, hence could not have delivered the goods to Sagum
Enterprises. This statement clearly intends to muddle the facts as
found by the trial court and which are on record. In the first place,
petitioner, in its answer, admitted to have issued the bonds subject
matter of the original action. Secondly, the testimony of Mr.
Leonardo T. Guzman, witness for the respondent, reveals that as a
condition and terms for the sale of spare parts, it required the
principal Sagum Entrprises to present surety bonds. The surety
bonds presented were the surety bonds issued by Pryce.
Consequently, spare parts were purchased, delivered and received
by Sagum Enterprise as evidenced by invoices on records.
Petitioner's defense that it did not have authority to issue a Surety
Bond when it did is an admission of fraud committed against
respondent.

No person can claim benefit from the wrong he himself committed.
A representation made is rendered conclusive upon the person
making it and cannot be denied or disproved as against the person
relying thereon.

Life Insurance
1. Republic vs Sun Life Assurance Company of Canada GR No.
158085 October 14, 2005 - Krystle Rosales

REPUBLIC vs. SUNLIFE ASSURANCE CO. OF CANADA
G.R. No. 158085 October 14, 2005
PANGANIBAN, J.: p

FACTS: Sunlife, a Canadian-organized mutual life insurance
company is registered and authorized to engage in business in the
Philippines by the SEC and the Insurance Commission. Sunlife
sought a refund of its premium tax and documentary stamp tax
(DST) payments made with the Commissioner of Internal Revenue
(CIR) on the basis of the Dec. 1997 Court decision in Insular Life vs
CIR that “mutual life insurance companies are purely cooperative
companies and are exempt from the payment of premium tax and
DST” but the CIR denied on the ground that Sunlife failed to register
with the Cooperative Development Authority (CDA). Sunlife filed
with the Court of Tax Appeals and later with the CA a petition for
review where both courts ruled in favor of Sunlife holding that
Sunlife had satisfactorily shown with substantial evidence that it is
similarly situated with Insular as a mutual life insurance company as
defined in Sec. 121 of the Tax Code not required to be registered
with the CDA and as such was entitled to exemptions from payment
of premium taxes & DST.

ISSUES:

1. Whether or not Sunlife is a mutual life insurance company
entitled to tax exemptions under the Tax Code?

2. Whether or not registration of Sunlife with the CDA is
necessary to be exempted from payment of percentage taxes on
insurance premiums and documentary stamp taxes on policies of
insurance or annuities it grants under the Tax Code?

HELD:

1. YES. Sunlife being a mutual life insurance corp. does not
operate for profit but for the mutual benefit of its member-
policyholders. It is a non-profit entity where earning profits is merely
secondary; authorized to invest its corporate funds to earn
additional income to pay off its operating expenses and meet the
benefit claims of its members. The economic benefits earned were
distributed among members in correlation with the resources the
association utilized and the excess profit can only be used for the
furtherance of the purpose for which it was organized. Sunlife, being
a cooperative is exempted from the 5% tax on insurance premiums
under Sec. 121 and the DST under Sec. 199 of the Tax Code. Further,
RA 8424 amending the Tax Code has deleted the income tax of 10
percent imposed upon the gross investment income of mutual life
insurance companies -- domestic and foreign – while the provisions
of Sections 121 and 199 remain unchanged.

2. NO. Although a cooperative, Sunlife need not register with
the CDA as “only cooperatives to be formed or organized under the
Cooperative Code needed registration with the CDA (Art. 16, RA
6938). Sunlife already existed before the passage of the new law on
cooperatives and was not even required to organize under the
Cooperative Code, not only because it performed a different set of
functions, but also because it did not operate to serve the same
objectives under the new law -- particularly on productivity,
marketing and credit extension (Art. 7, RA 6938). There was also no
provision in the Tax Code requiring registration with the CDA since
registration is not necessary to be exempted from the payment of
both percentage and documentary stamp taxes (Secs. 121 & 199)

The Court denied the Republic’s petition, affirming the assailed
Decision & Resolution of the CTA and the CA holding that the grant
of a tax credit certificate to respondent was correct. No
pronouncement as to costs.

2. Kanapi vs Insular Life Ass Co., G.R. No. L-5642 February 25, 1954 -
Maria Jennifer Santos

Facts: This is an action on a life insurance policy. (Re: recovery of
additional sum)

Insurer- Insular Life
insured- Henri Kanapi
Beneficiary- herminia Kanapi (wife)

● Insular issued a policy on the life of Henry G. Kanapi,
whereby defendant undertook to pay to Herminia as
beneficiary, upon the death of the insured the sum of
-P5,000 if the death be due to natural causes and
-an additional P5,000 if the death be due to
accidental means

● Payment of this additional sum being provided for in the
"Accidental Death Benefit Policy Clause"
-expressly made subject to the exception that
the clause would not apply where death resulted
from injury "intentionally inflicted by a third
party."

● During the life of the policy, the insured died from a bullet
wound inflicted, without provocation, by one Conrado
Quemosing, who, as author of the killing, was found guilty
of murder and sentenced to prison.

● Upon receiving proof of the insured's death, defendant
paid plaintiff P5,000, but refused to pay the additional
P5,000 claimed upon the accidental death benefit clausE

● Upholding defendant's stand, the lower court dismissed
the action, plaintiff appealed to this Court

Issue: WON Herminia is entitled to the additional P5,000 claimed
under the accident benefit clause.

Held: NO. This clause provide for the payment of the sum upon
proof "that the death of the Insured resulted directly from bodily
injury affected through external and violent means sustained in an
accident . . . and independently of all other clauses."

But far from proving that the insured died from bodily injury
sustained in an accident, the agreed facts are to the effect that the
insured was murdered, thus making it indisputable that his death
resulted from injury "intentionally inflicted by a third party"; which
is one of the exceptions to the accident benefit clause, according to
which the benefit shall not apply to death resulting from "(5) Any
injury received . . . (e) that has been inflicted intentionally by a third
party, either with or without provocation on the part of the Insured,
and whether or not the attack or the defense by the third party was
caused by a violation of the law by the Insured. . . ."
There is nothing to the suggestion that the case comes under
exception 5 (d) or that portion of it which excepts from the benefit
any injury received "in any assault provoked by the Insured", it being
argued that by express mention of provoked assault an unprovoked
one is inferentially excluded. The inference is not admissible
because where the injury is inflicted without provocation the case
comes within the terms of exception 5 (e), which, is, therefore, the
one that should be applied. We find the decision appealed from to
be in accordance with law and the facts. It is, therefore, affirmed,
with costs.

3. Biagtan vs Insular Life Ass Co, G.R. No. L-25579 March 29, 1972 -
Miguel Sebastian C. Soller


INSURANCE Page 74
44 SCRA 58MAKALINTAL; March 29, 1972
NATURE
Appeal from decision of CFI Pangasinan.
FACTS
- Juan Biagtan was insured with Insular for P5k and a supplementary
contract “Accidental Death Benefit” clause for another P5k if "the
death of the Insured resulted directly from bodily injury effected
solely through external and violent means sustained in an accident .
. . and independently of all other causes."The clause, however,
expressly provided that it woul dnot apply where death resulted
from an injury"intentionally inflicted by a third party."- One night, a
band of robbers entered their house.Juan went out of his room and
he was met with 9knife stabs. He died. The robbers were convicted
of robbery with homicide.- The family was claiming the additional
P5k from Insular, under the Accidental Death Benefit clause. Insular
refused on the ground that the death resulted from injuries
intentionally inflicted by 3
rd
parties and was therefore not covered.
Biagtans filed against Insular. CFI ruled in favor of Biagtan.

ISSUE
WON the injuries were intentionally inflicted

HELD
YES- Whether the robbers had the intent to kill or merely to scare
the victim or to ward off any defense he might offer, it cannot be
denied that the act itself of inflicting the injuries was intentional.-
The exception in the accidental benefit clause invoked by the
appellant does not speak of the purpose — whether homicidal or
not — of a third party in causing the injuries, but only of the fact
that such injuries have been "intentionally" inflicted —this obviously
to distinguish them from injuries which, although received at the
hands of a third party, are purely accidental.- Examples of
unintentional:>> A gun which discharges while being cleaned and
kills a bystander;>> a hunter who shoots at his prey and hits a
person instead;>> an athlete in a competitive game involving
gphysical effort who collides with an opponent and fatally injures
him as a result.- In Calanoc vs. CA
: Where a shot was fired and I turned out afterwards that the
watchman was hit int he abdomen, the wound causing his death,
the Court held that it could not be said that the killing was
intentional for there was the possibility that the malefactor had fired
the shot to scare the people around for his own protection and not
necessarily to kill or hit the victim. A similar possibility is clearl ruled
out by the facts in this case. For while a single shot fired from a
distance, and by a person who was not even seen aiming at the
victim, could indeed have been fired without intent to kill or injure,
nine wounds inflicted with bladed weapons at close range cannot
conceivably be considered as innocent insofaras such intent is
concerned.- In
Hucthcraft's Ex'r vs. Travelers' Ins. Co.
(UScase): where the insured was waylaid and assassinated for the
purpose of robbery, the court rendered judgment for the insurance
company and held that while the assassination of the insured wasas
to him an unforeseen event and therefore accidental, "the clause of
the proviso that excludes the (insurer's) liability, in case death or
injury is intentionally inflicted by any other person, applies tothis
case."
Disposition
CFI decision reversed.
4. Calanoc vs CA, G.R. L-8151 December 16, 1955 Chris Val

Calanoc vs. Court of Appeals
G.R. No. L-8151, December 16, 1955

AMBIGUOUS TERMS IN INSURANCE POLICY— While as a general
rule "the parties may limit the coverage of the policy to certain
particular accidents and risks or causes of less, and may expressly
except other risks or causes of loss therefrom", however, it is to be
desired that the terms and phraseology of the exception clause be
clearly expressed so as to be within the easy grasp and
understanding of the insured, for if the terms are doubtful or
obscure the same must of necessity be interpreted or resolved
against the one who has caused the obscurity. The reason for this
rule is that the "insured usually has no voice in the selection or
arrangement of the words employed and that the language of the
contract is selected with great care and deliberation by experts and
legal advisers employed by, and acting exclusively in the interest of,
the insurance company."

FACTS:
Melencio Basilio was a watchman of the Manila Auto Supply located
at the corner of Avenida Rizal and Zurbaran. He secured a life
insurance policy from the Philippine American Life Insurance
Company in the amount of P2,000 to which was attached a
supplementary contract covering death by accident. On January 25,
1951, he died of a gunshot wound on the occasion of a robbery
committed in the house of Atty. Ojeda at the corner of streets.
Virginia Calanoc, the widow, was paid the sum of P2,000, face value
of the policy, but when she demanded the payment of the additional
sum of P2,000 representing the value of the supplemental policy,
the company refused alleging, as main defense, that the deceased
died because he was murdered by a person who took part in the
commission of the robbery and while making an arrest as an officer
of the law which contingencies were expressly excluded in the
contract and have the effect of exempting the company from
liability.

The Municipal Court of Manila ruled in favour of the plaintiff which
was affirmed by the court of first instance. But on appeal to the
Court of Appeals the judgment was reversed and the case is now
before us on a petition for review.

ISSUE:
Whether or not the death of Basilio is an accident covered by the
insurance?


HELD:

Yes. The circumstance that he was a mere watchman and had no
duty to heed the call of Atty. Ojeda should not be taken as a
capricious desire on his part to expose his life to danger considering
the fact that the place he was in duty-bound to guard was only a
block away. In volunteering to extend help under the situation, he
might have thought, rightly or wrongly, that to know the truth was
in the interest of his employer it being a matter that affects the
security of the neighborhood. No doubt there was some risk coming
to him in pursuing that errand, but that risk always existed it being
inherent in the position he was holding. He cannot therefore be
blamed solely for doing what he believed was in keeping with his
duty as a watchman and as a citizen. And he cannot be considered
as making an arrest as an officer of the law, as contended, simply
because he went with the traffic policeman, for certainly he did not
go there for that purpose nor was he asked to do so by the
policeman.

Much less can it be pretended that Basilio died in the course of an
assault or murder considering the very nature of these crimes. Nor
can it be said that the killing was intentional for there is the
possibility that the malefactor had fired the shot merely to scare
away the people around for his own protection and not necessarily
to kill or hit the victim. In any event, while the act may not exempt
the triggerman from liability for the damage done, the fact remains
that the happening was a pure accident on the part of the victim.
The victim could have been either the policeman or Atty. Ojeda for it
cannot be pretended that the malefactor aimed at the deceased
precisely because he wanted to take his life.

The SC take note that these defenses are included among the risks
excluded in the supplementary contract which enumerates the cases
which may exempt the company from liability. While as a general
rule "the parties may limit the coverage of the policy to certain
particular accidents and risks or causes of loss, and may expressly
except other risks or causes of loss therefrom" ,however, it is to be
desired that the terms and phraseology of the exception clause be
clearly expressed so as to be within the easy grasp and
understanding of the insured, for if the terms are doubtful or
obscure the same must of necessity be interpreted or resolved
against the one who has caused the obscurity.

The reason for this rule is that the "insured usually has no voice in
the selection or arrangement of the words employed and that the
language of the contract is selected with great care and deliberation
by experts and legal advisers employed by, and acting exclusively in
the interest of, the insurance company.

Decision of the CA was reversed.


5. Dela Cruz vs Capital Ins & Surety Co, G.R. No. L-21574 June 30,
1966 - Lester Anonuevo

Eduardo de la Cruz, employed as a mucker in Itogon-Suyoc Marines
Inc. in Baguio, was the holder of an accident insurance policy
underwritten by Capital Insurance and Surety Co. Itogon-Suyoc
Marines sponsored a boxing contest, in celebration of New Year, for
general entertainment. Cruz, a non-professional boxer, slipped and
was hit by his opponent on the left part of the back of the head. He
was brought to Baguio General Hospital and was reported as
hemorrhage, intracranial, left.

Simon de la Cruz, the beneficiary, claimed for indemnity under the
policy. It was denied, hence the petition for specific performance.
CISCO set up the defense that the death of the insured, caused by
his participation to boxing, was not accidental and was not covered
by insurance. In the policy, Eduardo was insured against death or
disability caused by accidental means.

WON: De la Cruz can recover from the policy, and that the incident
falls within the definition of accident

HELD: The generally accepted rule is that death or injury does not
result from accident or accidental means within the terms of an
accident-policy if it is the natural result of the insured’s voluntary
act, unaccompanied by anything unforeseen except the death or
injury. There is no accident when the deliberate act is performed
unless some additional, unexpected, independent, and unforeseen
happening occurs which produces or brings about the result of injury
or death. In the present case, while the participation of the insured
in the boxing contest is voluntary, the injury was sustained when he
slid, giving occasion to the infliction by his opponent of the blow that
threw him to the ropes of the ring. Without this incident (the
unintentional slipping of the deceased), perhaps he could not have
received that blow in the head.

The fact that boxing is attended with some risks of external injuries
does not make injuries received in the course of the game not
accidental. Death or disablement resulting from engagement in
boxing contests was not declared outside of the protection of the
insurance contract. Failure of the defendant insurance company to
include death resulting from a boxing match or other sports.

6. Finman General Assurance Corp v CA, G.R. No. 100970 September
2, 1992 - Amiel Arada

FINMAN GENERAL ASSURANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and JULIA SURPOSA,
respondents.

Aquino and Associates for petitioner.

Public Attorney’s Office for private respondent.

Ponente: NOCON

FACTS:


Carlie Suposa was killed while on his way home from a party. When
his family tried to collect on the insurance proceeds, the insurer
denied the claim saying that murder and assault were not within the
scope of coverage of the insurance policy, because it was not
accidental but a deliberate and intentional act of the assailant. The
Insurance Commission said the death was covered by the policy, a
decision upheld by the CA.
The CA pointed out that:
1. The record is barren of how the stab wound was inflicted
2. While the act may not exempt the unknown perpetrator from
criminal liability, the happening was a pure accident on the part of
the victim
3. The personal accident policy enumerated 10 circumstances
wherein no liability attaches to insurer and murder and assault were
not expressly mentioned. Failure of the insurer to include these
leads to the conclusion that it did not intend to exempt itself from
liability for such death.


[P]etitioner filed this petition alleging grave abuse of discretion on
the part of the appellate court in applying the principle of “expresso
unius exclusio alterius” in a personal accident insurance policy since
death resulting from murder and/or assault are impliedly excluded
in said insurance policy considering that the cause of death of the
insured was not accidental but rather a deliberate and intentional
act of the assailant in killing the former as indicated by the location
of the lone stab wound on the insured. Therefore, said death was
committed with deliberate intent which, by the very nature of a
personal accident insurance policy, cannot be indemnified.

ISSUE:

Whether or not death petitioner is correct that results from assault
or murder deemed are not included in the terms “accident” and
“accidental”.

HELD:

NO. Petition for certiorari with restraining order and preliminary
injunction was denied for lack of merit.

RATIO:

The terms “accident” and “accidental” as used in insurance contracts
have not acquired any technical meaning, and are construed by the
courts in their ordinary and common acceptation. Thus, the terms
have been taken to mean that which happen by chance or
fortuitously, without intention and design, and which is unexpected,
unusual, and unforeseen. An accident is an event that takes place
without one’s foresight or expectation — an event that proceeds
from an unknown cause, or is an unusual effect of a known cause
and, therefore, not expected.

[I]t is well settled that contracts of insurance are to be construed
liberally in favor of the insured and strictly against the insurer. Thus
ambiguity in the words of an insurance contract should be
interpreted in favor of its beneficiary.