Makati Tuscany Condominium Corporation v CA (Insurance)

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.

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.
Sps. Antonio Tibay and Violeta Tibay et. al. v. Court of Appeals

G.R. No. 119655, 24 May 1996, 257 SCRA 126

FACTS:

On 22 January 1987 private respondent Fortune Life and General Insurance Co., Inc.
(FORTUNE) issued Fire Insurance Policy in favor of Violeta R. Tibay and/or Nicolas
Roraldo on their two-storey residential building located Makati City, together with all
their personal effects therein. The insurance was for P600,000.00 covering the period
from 23 January 1987 to 23 January 1988. On 23 January 1987, of the total
premium of P2,983.50, petitioner Violeta Tibay only paid P600.00 thus leaving a
considerable balance unpaid.

On 8 March 1987 the insured building was completely destroyed by fire. Two days
later or on 10 March 1987 Violeta Tibay paid the balance of the premium. On the
same day, she filed with FORTUNE a claim on the fire insurance policy. In a letter
dated 11 June 1987 FORTUNE denied the claim of Violeta for violation of Policy
Condition No. 2 and of Sec. 77 of the Insurance Code.

On 3 March 1988 Violeta and the other petitioners sued FORTUNE for damages in the
amount of P600,000.00 representing the total coverage of the fire insurance policy
plus 12% interest per annum, P 100,000.00 moral damages, and attorney’s fees
equivalent to 20% of the total claim.

On 19 July 1990 the trial court ruled for petitioners and adjudged FORTUNE liable for
the total value of the insured building and personal properties in the amount of
P600,000.00 plus interest at the legal rate of 6% per annum from the filing of the
complaint until full payment, and attorney’s fees equivalent to 20% of the total
amount claimed plus costs of suit.

On 24 March 1995 the Court of Appeals reversed the court a quo by declaring
FORTUNE not to be liable to plaintiff-appellees therein but ordering defendant-
appellant to return to the former the premium of P2,983.50 plus 12% interest from 10
March 1987 until full payment.
Hence this petition for review with petitioners contending mainly that contrary to the
conclusion of the appellate court, FORTUNE remains liable under the subject fire
insurance policy inspite of the failure of petitioners to pay their premium in full.

ISSUE:

Whether a fire insurance policy is valid, binding and enforceable upon mere partial
payment of premium?
RULING:

The Supreme Court finds no merit in the petition. Hence, it affirms the decision of the
Court of Appeals.
Insurance is a contract whereby one undertakes for a consideration to indemnify
another against loss, damage or liability arising from an unknown or contingent
event.The consideration is the premium, which must be paid at the time and in the
way and manner specified in the policy, and if not so paid, the policy will lapse and be
forfeited by its own terms.

Clearly the Policy entered into between Sps. Antonio and Violeta Tibay and Fortune
Life and General Insurance Co. provides for payment of premium in full. Accordingly,
where the premium has only been partially paid and the balance paid only after the
peril insured against has occurred, the insurance contract did not take effect and the
insured cannot collect at all on the policy. This is fully supported by Sec. 77 of the
Insurance Code which provides:

SEC. 77. An insurer is entitled to payment of the premium as soon as the thing
insured 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.

Thus, no vinculum juris whereby the insurer bound itself to indemnify the assured
according to law ever resulted from the fractional payment of premium. The insurance
contract itself expressly provided that the policy would be effective only when the
premium was paid in full. It would have been altogether different were it not so
stipulated. Ergo, petitioners had absolute freedom of choice whether or not to be
insured by FORTUNE under the terms of its policy and they freely opted to adhere
thereto.

Malayan Insurance Corp vs CA G.R. 119599 March 20, 1997

J. Romero

Facts:
TKC Marketing imported 3,000 metric tons of soya from Brazil to Manila. It was
insured by Malayan at the value of almost 20 million pesos. The vessel, however, was
stranded on South Africa because of a lawsuit regarding the possession of the soya.
TKC consulted Malayan on recovery of the amount, but the latter claimed that it
wasn’t covered by the policy. The soya was sold in Africa for Php 10 million, but TKC
wanted Malayan to shoulder the remaining value of 10 million as well.
Petitioner filed suit due to Malayan’s reticence to pay. Malayan claimed that arrest by
civil authorities wasn’t covered by the policy. The trial court ruled in TKC’s favor with
damages to boot. The appellate court affirmed the decision under the reason that
clause 12 of the policy regarding an excepted risk due to arrest by civil authorities was
deleted by Section 1.1 of the Institute War Clauses which covered ordinary arrests by
civil authorities. Failure of the cargo to arrive was also covered by the Theft, Pilferage,
and Non-delivery Clause of the contract. Hence this petition.

Issues:
1. WON the arrest of the vessel was a risk covered under the subject insurance
policies.
2. WON the insurance policies must strictly construed against the insurer.

Held: Yes. Yes. Petition dismissed.

Ratio:
1. Section 12 or the "Free from Capture & Seizure Clause" states:
"Warranted free of capture, seizure, arrest, restraint or detainment, and the
consequences thereof or of any attempt thereat… Should Clause 12 be deleted, the
relevant current institute war clauses shall be deemed to form part of this insurance.”
This was really replaced by the subsection 1.1 of section 1 of Institute War Clauses
(Cargo) which included “the risks excluded from the standard form of English Marine
Policy by the clause warranted free of capture, seizure, arrest, restraint or detainment,
and the consequences thereof of hostilities or warlike operations, whether there be a
declaration of war or not.”
The petitioner’s claim that the Institute War Clauses can be operative in case of
hostilities or warlike operations on account of its heading "Institute War Clauses" is
not tenable. It reiterated the CA’s stand that “its interpretation in recent years to
include seizure or detention by civil authorities seems consistent with the general
purposes of the clause.” This interpretation was regardless of the fact whether the
arrest was in war or by civil authorities.
The petitioner was said to have confused the Institute War clauses and the F.C.S. in
English law.
“It stated that "the F.C. & S. Clause was "originally incorporated in insurance policies
to eliminate the risks of warlike operations". It also averred that the F.C. & S.
Clause applies even if there be no war or warlike operations. In the same vein, it
contended that subsection 1.1 of Section 1 of the Institute War Clauses (Cargo)
"pertained exclusively to warlike operations" and yet it also stated that "the deletion of
the F.C. & S. Clause and the consequent incorporation of subsection 1.1 of Section 1
of the Institute War Clauses (Cargo) was to include "arrest, etc. even if it were not a
result of hostilities or warlike operations."
The court found that the insurance agency tried to interpret executive and political
acts as those not including ordinary arrests in the exceptions of the FCS clause , and
claims that the War Clauses now included executive and political acts without
including ordinary arrests in the new stipulation.
“A strained interpretation which is unnatural and forced, as to lead to
an absurd conclusion or to render the policy nonsensical, should, by all means, be
avoided.”
2. Indemnity and liability insurance policies are construed in accordance with the
general rule of resolving any ambiguity therein in favor of the insured, where the
contract or policy is prepared by the insurer. A contract of insurance, being a contract
of adhesion, means that any ambiguity should be resolved against the insurer.
UCPB General Insurance Co. Inc. v. Masagana Telemart, Inc.

G.R. No. 137172, 4 April 2001, 356 SCRA 307

FACTS:
 On April 15, 1991, petitioner issued five (5) insurance policies covering respondent’s
various property described therein against fire, for the period from May 22, 1991 to
May 22, 1992. In March 1992, petitioner evaluated the policies and decided not to
renew them upon expiration of their terms on May 22, 1992. Petitioner advised
respondent’s broker, Zuellig Insurance Brokers, Inc. of its intention not to renew the
policies. On April 6, 1992, petitioner gave written notice to respondent of the non-
renewal of the policies at the address stated in the policies. On June 13, 1992, fire
razed respondent’s property covered by three of the insurance policies petitioner
issued. On July 13, 1992, respondent presented to petitioner’s cashier at its head
office five (5) manager’s checks in the total amount of P225,753.95, representing
premium for the renewal of the policies from May 22, 1992 to May 22, 1993. No notice
of loss was filed by respondent under the policies prior to July 14, 1992. On July 14,
1992, respondent filed with petitioner its formal claim for indemnification of the
insured property razed by fire. On the same day, July 14, 1992, petitioner returned to
respondent the five (5) manager’s checks that it tendered, and at the same time
rejected respondent’s claim for the reasons (a) that the policies had expired and were
not renewed, and (b) that the fire occurred on June 13, 1992, before respondent’s
tender of premium payment.

ISSUE:

Whether or not respondent is entitled to compensation despite the renewal of the

insurance policy after the occurrence of the event insured.

RULING:

No. An insurance policy, other than life, issued originally or on renewal, is not valid
and binding until actual payment of the premium. Any agreement to the contrary is
void. 11 The parties may not agree expressly or impliedly on the extension of creditor
time to pay the premium and consider the policy binding before actual payment.
Here, the payment of the premium for renewal of the policies was tendered on July 13,
1992, a month after the fire occurred on June 13, 1992. The assured did not even give
the insurer a notice of loss within a reasonable time after occurrence of the fire.

AMERICAN HOME VS TANTUCO

G.R. No. 138941, 8 Oct. 2001

o INSURANCE LAW: Liberality is the rule of construction in insurance contracts.

FACTS:

Tantuco Enterprises, Inc. is a coconut oil milling and refining company. It owned two
mills (the first oil mill and a new one), both located at its factory compound at Iyam,
Lucena City. The two oil mills are separately covered by fire insurance policies issued
by American Home Assurance Co.

On Sept. 30, 1991, a fire broke out and gutted and consumed the new oil mill.
 American Home rejected the claim for the insurance proceeds on the ground that no
policy was issued by it covering the burned oil mill. It stated that the new oil mill was
under Building No. 15 while the insurance coverage extended only to the oil mill under
Building No. 5.

ISSUE:

o Whether or not the new oil mill is covered by the fire insurance policy

HELD:

In construing the words used descriptive of a building insured, the greatest liberality
is shown by the courts in giving effect to the insurance. In view of the custom of
insurance agents to examine buildings before writing policies upon them, and since a
mistake as to the identity and character of the building is extremely unlikely, the
courts are inclined to consider the policy of insurance covers any building which the
parties manifestly intended to insure, however inaccurate the description may be.

Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to

our mind, that what the parties manifestly intended to insure was the new oil mill.

If the parties really intended to protect the first oil mill, then there is no need to
specify it as new. Indeed, it would be absurd to assume that the respondent would
protect its first oil mill for different amounts and leave uncovered its second one.

Great Pacific Life Insurance Corp. v. Court of Appeals

G.R.No. 113899, 13 October 1999, 316 SCRA 677

FACTS:

There was an existing group life insurance executed between Great Pacific Life
Assurance (Grepalife) and the Development Bank of the Philippines (DBP). Grepalife
agreed to insure the lives of eligible housing loan mortgagors of DBP. In November
1983, Wilfredo Leuterio, mortgagor of DBP applied to be a member of the group life
insurance. He filled out a form where he indicated he never consulted any physician
regarding any illness (heart condition etc) and that he is in good health. He was
eventually included in the group life insurance and he was covered for the amount of
his indebtedness (P86,200.00).

In August 1984, Wilfredo died. DBP submitted a death claim but it was denied by
Grepalife as it insisted that Wilfredo actually concealed that he was suffering from
hypertension at the time of his insurance application. Grepalife relied on the
statement made by the doctor who issued Wilfredo’s death certificate wherein it was
stated that Wilfredo’s immediate cause of death was massive cerebral hemorrhage
secondary to hypertension or hypertension as a “possible cause of death”.

Since Grepalife refused to pay the insurance claim filed by DBP, Medarda Leuterio
(widow) sued Grepalife. Grepalife assailed the suit and insisted that Medarda is not a
proper party in interest. The lower court ruled in favor of Medarda and the court
ordered Grepalife to pay the amount of the insurance to DBP. The Court of Appeals
affirmed this decision in 1993. Grepalife appealed to the Supreme Court. In 1995,
pending resolution of the case in the SC, DBP foreclosed the property of Medarda.

ISSUE:

Whether or not DBP has insurable interest as creditor.

HELD:

YES. In this type of policy insurance, the mortgagee is simply an appointee of the
insurance fund, such loss-payable clause does not make the mortgagee a party to the
contract.

Section 8 of the Insurance Code provides: “Unless the policy provides, where a
mortgagor of property effects insurance in his own name providing that the loss shall
be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the
insurance is deemed to be upon the interest of the mortgagor, who does not cease to
be a party to the original contract, and any act of his, prior to the loss, which would
otherwise avoid the insurance, will have the same effect, although the property is in
the hands of the mortgagee, but any act which, under the contract of insurance, is to
be performed by the mortgagor, may be performed by the mortgagee therein named,
with the same effect as if it had been performed by the mortgagor.”

The insured Dr. Wilfredo Leuterio did not cede to the mortgagee all his rights or
interests in the insurance. When Grepalife denied payment, DBP collected the debt
from the mortgagor and took the necessary action of foreclosure on the residential lot
of Dr. Wilfredo Leuterio.

Insured may be regarded as the real party in interest, although he has assigned the
policy for the purpose of collection, or has assigned as collateral security any
judgment he may obtain.

JAMES STOKES vs. MALAYAN INSURANCE CO., INC

JAMES STOKES vs. MALAYAN INSURANCE CO., INC. G.R. No. L-34768, 24
February 1984 127 SCRA 766

FACTS:

Daniel Adolfson had a subsisting Malayan car insurance policy with coverage against
own damage as well as 3rd party liability when his car figured in a vehicular accident
with another car, resulting to damage to both vehicles. At the time of the accident,
Adolfson’s car was being driven by James Stokes, who was authorized to do so by
Adolfson. Stokes, an Irish tourist who had been in the Philippines for only 90 days,
had a valid and subsisting Irish driver’s license but without a Philippine driver’s
license. Adolfson filed a claim with Malayan but the latter refused to pay contending
that Stokes was not an authorized driver under the “Authorized Driver” clause of the
insurance policy in relation to Section 21 of the Land Transportation Office.

ISSUE: Whether or not Malayan is liable to pay the insurance claim of Adolfson

HELD:

NO. A contract of insurance is a contract of indemnity upon the terms and conditions
specified therein. When the insurer is called upon to pay in case of loss or damage, he
has the right to insist upon compliance with the terms of the contract. If the insured
cannot bring himself within the terms and conditions of the contract, he is not entitled
as a rule to recover for the loss or damage suffered. For the terms of the contract
constitute the measure of the insurer’s liability, and compliance therewith is a
condition precedent to the right of recovery. At the time of the accident, Stokes had
been in the Philippines for more than 90 days. Hence, under the law, he could not
drive a motor vehicle without a Philippine driver’s license. He was therefore not an
“authorized driver” under the terms of the insurance policy in question, and Malayan
was right in denying the claim of the insured. Acceptance of premium within the
stipulated period for payment thereof, including the agreed period of grace, merely
assures continued effectivity of the insurance policy in accordance with its terms.
Such acceptance does not estop the insurer from interposing any valid defense under
the terms of the insurance policy. The principle of estoppel is an equitable principle
rooted upon natural justice which prevents a person from going back on his own acts
and representations to the prejudice of another whom he has led to rely upon them.
The principle does not apply to the instant case. In accepting the premium payment of
the insured, Malayan was not guilty of any inequitable act or representation. There is
nothing inconsistent between acceptance of premium due under an insurance policy
and the enforcement of its terms. WHEREFORE, the appealed judgment is reversed.
The complaint is dismissed. Costs against appellees.
CAPITAL INSURANCE VS. PLASTIC ERA, CO.
Posted on September 9, 2015

G.R.No. L-22375 July 18, 1975

Lessons Applicable: Estoppel and credit extension (Insurance)
Laws Applicable: Article 1249 of the New Civil Code

FACTS:
December 17, 1960: Capital Insurance & Surety Co., Inc. delivered to the respondent
Plastic Era Manufacturing Co., Inc. its open Fire Policy insuring its building,
equipments, raw materials, products andaccessories located at Sheridan Street,
Mandaluyong, Rizal between December 15, 1960 1 pm – December 15, 1961 1 pm up
to P100,000 but Plastic Era did not pay the premium
January 8, 1961: Plastic Era delivered to Capital Insurance its
partialpayment through check P1,000 postdated January 16, 1961
February 20, 1961: Capital Insurance tried to deposit the check but it was dishonored
due to lack of funds. According to the records, on January 19, 1961 Plastic Era has
had a bank balance of P1,193.41
January 18, 1961: Plastic Era’s properties were destroyed by fire amounting to a loss
of P283,875. The property was also insured to Philamgen Insurance Company for
P200K.
Capital Insurance refused Plastic Era’s claim for failing to pay theinsurance premium
CFI: favored Capital Insurance
CA: affirmed
ISSUE: W/N there was a valid insurance contract because there was an extention of
credit despite failing to encash the check payment

HELD: YES. Affirmed

Article 1249 of the New Civil Code
The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect ofpayment only when they have been
cashed, or when through the fault of the creditor they have been impaired
Capital Insurance accepted the promise of Plastic Era to pay theinsurance premium
within 30 days from the effective date of policy. 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.
By accepting its promise to pay the insurance premium within thirty (30) days from
the effectivity date of the policy — December 17, 1960 Capital Insurance had in effect
extended credit to Plastic Era.
Where credit is given by an insurance company for the payment of the premium it has
no right to cancel the policy for nonpayment except by putting the insured in default
and giving him personal notice
Having held the check for such an unreasonable period of time, Capital Insurance was
estopped from claiming a forfeiture of its policy for non-payment even if the check had
been dishonored later.

Insurance Case Digest: CCC Insurance Corp. V. CA (1970)

G.R. No. L-25920 January 30, 1970

Lessons Applicable: Motor vehicle liability insurance - "Authoried Driver Clause"

(Insurance)

Laws Applicable:

FACTS:

 Carlos F. Robes insured with the CCC Insurance Corporation his Dodge Kingsway
car against loss or damage through accident for an amount not exceeding P8,000
 June 25 1961: Carlos' driver Domingo Reyes met a vehicular collision along Rizal
Avenue Extension, Potrero, Malabon, Rizal
 Ccc Insurance Corporation denied his claim reasoning that the driver was not
an "authorized driver"
 Reyes, who cannot read and write, who has never passed any examination for
drivers, and has not applied for a license from the duly constituted government
agency entrusted with the duty of licensing drivers, cannot be considered an
authorized driver
 AUTHORIZED DRIVER:
Any of the following:

(a) The insured;

(b) Any person driving on the Insured's order or with his permission, provided that
the person driving is permitted in accordance with licensing laws or regulations to
drive the motor vehicle covered by this Policy, or has been so permitted and is not
disqualified by order of a court of law or by reason of any enactment or regulation
from driving such Motor Vehicle.

 RTC: favored Robes and CCC was order to pay

ISSUE: W/N Domingo Reyes was an authorized driver

HELD: YES. CA affirmed

 Court of Appeals found that the driver's license No. 271703 DP was genuine
 Domingo Reyes is in possession of a driver's license issued by the Motor Vehicles
Office which on its face appears to have been regularly issued
 Neither Gloria Presa nor the officer-in-charge Marciano A. Monzon was placed on
the witness stand to be examined in order to determine whether said license is
indeed void
 Section 24 of the Revised Motor Vehicles Law, Act 3992 of the Philippine
Legislature, as amended by Republic Acts Nos. 587, 1204 and 2863,1

An examination or demonstration to show any applicant's ability to operate motor

vehicles may also be required in the discretion of the Chief, Motor Vehicles Office or
his deputies.

 Section 26 of the Act prescribes further:

SEC. 26. Issuance of chauffeur's license; professional badge: If, after examination,
or without the same, the Chief, Motor Vehicles Office or his deputies, believe the
applicant to possess the necessary qualifications and knowledge, they shall issue to
such applicant a license to operate as chauffeur ...

 There is no proof that the owner of the automobile knew that the circumstance
surrounding such issuance showed that it was irregular
 the weight of authority is in favor of a liberal interpretation of the insurance policy
for the benefit of the party insured, and strictly against the insurer
Country Bankers Insurance Corp. v. Lianga Bay and Community Multi-Purpose
Cooperative

G.R.No. 136914, 25 January 2002, 308 SCRA 559

FACTS:

1. Respondent, Llanga Bay and Community Multi-Purpose Cooperative, and petitioner

entered into a contract of fire insurance to protect respondent’s stocks-in-trade
against fire loss, damage or liability for P200,000.00;

2. The respondent’s building was gutted in a fire resulting in the total loss of the
respondent’s stocks-in-trade, pieces of furniture and fixtures, equipment and records.

3. The petitioner denied the insurance claim on the ground that the building was set
on fire by two (2) NPA rebels who wanted to obtain canned goods, rice and medicines
as provisions for their comrades in the forest, and that such loss was an excepted risk
under paragraph No. 6 of the policy conditions of Fire Insurance Policy.

4. Paragraph 6 provides that the insurance does not cover any loss or damage through
or in consequence of mutiny, riot, military or popular uprising, insurrection, rebellion,
revolution, military or usurped power.

5. RTC – Found for the respondent; CA – affirmed RTC’s decision

ISSUE:

Whether the stocks-in-trade were burned by NPA rebels and thus an excepted risk
under the fire insurance policy.

HELD:

NO.

A party is bound by his own affirmative allegations. This is a well-known postulate

echoed in Section 1 of Rule 131 of the Revised Rules of Court. Each party must prove
his own affirmative allegations by the amount of evidence required by law which in
civil cases, as in this case, is preponderance of evidence, to obtain a favorable
judgment. In the instant case, the petitioner does not dispute that the respondent’s
stocks-in-trade were insured against fire loss, damage or liability under Fire Insurance
Policy No. F- 1397 and that the respondent lost its stocks-in-trade in a fire that
occurred on July 1, 1989, within the duration of said fire insurance. The petitioner,
however, posits the view that the cause of the loss was an excepted risk under the
terms of the fire insurance policy. 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. Stated elsewise, since the petitioner in this case is
defending on the ground of non-coverage and relying upon an exemption or exception
clause in the fire insurance policy, it has the burden of proving the facts upon which
such excepted risk is based, by a preponderance of evidence. But petitioner failed to
do so. The Sworn Statements of Jose Lomocso and Ernesto Urbiztondo are
inadmissible in evidence, for being hearsay, inasmuch as they did not take the witness
stand and could not therefore be cross-examined. The petitioner’s evidence to prove its
defense is sadly wanting and thus, gives rise to its liability to the respondent under
Fire Insurance Policy No. F-1397.

Insurance Case Digest: Paris-Manila Perfume Co. V. Phoenix Assurance Co.(1926)

G.R. No. L-25845 December 17, 1926

Lessons Applicable: Loss, the immediate cause of which was the peril insured against,
if the proximate cause thereof was NOT excepted in the contract (Insurance)

Facts:

 May 22, 1924: A fire insurance policy was issued by Phoenix Assurance Company,
Limited to Messrs. Paris-Manila Perfumery Co. (Peter Johnson, Prop.) for P13,000
 also insured with other insurance companies for P1,200 and P5,000 respectively
 July 4, 1924: The Perfumery was burned unknown of the cause totalling a loss
of P38.025.56
 Phoenix refused to pay nor to appoint an arbitrator stating that the policy did not
cover any loss or damage occasioned by explosion and stating that the claim was
fraudulent
 RTC: ordered Phoenix to pay P13,000
 Phoenix appealed
 The insurance policy contains:
Unless otherwise expressly stated in the policy the insurance does not cover

(h) Loss or damage occasioned by the explosion; but loss or damage by explosion of
gas for illuminating or domestic purposes in a building in which gas is not generated
and which does not form a part of any gas works, will be deemed to be loss by fire
within the meaning of this policy.

ISSUE: W/N Phoenix should be liable for the loss because there was no explosion
which is an exemption from the policy

HELD: YES.

 If it be a fact that the fire resulted from an explosion that fact, if proven, would be a
complete defense, the burden of the proof of that fact is upon the defendant, and
upon that point, there is a failure of proof
 lower court found as a fact that there was no fraud in the insurance, and that the
value of the property destroyed by the fire was more than the amount of the
insurance.

FGU Insurance Corp. v. CA

Facts:

On April 21, 1987, a car owned by private respondent FILCAR Transport Inc., rented
to and driven by Dahl-Jensen, a Danish tourist, swerved into the right and hit the car
owned by Lydia Soriano and driven by Benjamin Jacildone. Dahl-Jensen did not
possess a Philippine driver’s license. Petitioner, as the insurer of Soriano’s car, paid
the latter P25,382.20 and, by way of subrogation, sued FILCAR, Dahl-Jensen, and
Fortune Insurance Corporation, FILCAR’s insurer, for quasi-delict. The trial court
dismissed the petition for failure to substantiate the claim for subrogation. The Court
of Appeals affirmed the decision, but on the ground that only Dahl-Jensen’s negligence
was proven, not that of FILCAR. Hence, this instant petition.

Issues:

(1) Whether an action based on quasi-delict will prosper against a rent-a-car company
and, consequently, its insurer for fault or negligence of the car lessee in driving the
rented vehicle

(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo is

applicable in the case at bar

Held:

(1) We find no reversible error committed by respondent court in upholding the

dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of the Civil
Code which states: "Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasi-delict .
. . . ". To sustain a claim based thereon, the following requisites must concur: (a)
damage suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c)
connection of cause and effect between the fault or negligence of the defendant and
the damage incurred by the plaintiff. We agree with respondent court that petitioner
failed to prove the existence of the second requisite, i.e., fault or negligence of
defendant FILCAR, because only the fault or negligence of Dahl-Jensen was
sufficiently established, not that of FILCAR. It should be noted that the damage
caused on the vehicle of Soriano was brought about by the circumstance that Dahl-
Jensen swerved to the right while the vehicle that he was driving was at the center
lane. It is plain that the negligence was solely attributable to Dahl-Jensen thus
making the damage suffered by the other vehicle his personal liability. Respondent
FILCAR did not have any participation therein. Respondent FILCAR being engaged in a
rent-a-car business was only the owner of the car leased to Dahl-Jensen. As such,
there was no vinculum juris between them as employer and employee. Respondent
FILCAR cannot in any way be responsible for the negligent act of Dahl-Jensen, the
former not being an employer of the latter.

(2) Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a

misapprehension of our ruling therein. In that case, the negligent and reckless
operation of the truck owned by petitioner corporation caused injuries to several
persons and damage to property. Intending to exculpate itself from liability, the
corporation raised the defense that at the time of the collision it had no more control
over the vehicle as it was leased to another; and, that the driver was not its employee
but of the lessee. The trial court was not persuaded as it found that the true nature of
the alleged lease contract was nothing more than a disguise effected by the
corporation to relieve itself of the burdens and responsibilities of an employer. We
upheld this finding and affirmed the declaration of joint and several liability of the
corporation with its driver.
Yu Ban Chuan vs. Fieldmen’s Insurance Co
Posted on September 9, 2015

Yu Ban Chuan v Fieldmen’s Insurance Co (1965)

FACTS
Yu Ban Chuan is a chinese man doing business of wholsesale deaing in gereneral
merhcandise and school supplies under the name of CMC Trading. His business was
first situated in Nueva Street, Manila. While at this place, plainitff insured against first
his stock merchandise with open policies from 2 insurance companies. When he
transferred his business to Muelle de Binondo. Manila, his 2 insurers agreed to have
the coverage of his policy transferred to the new premises and acknowledged the
existence of co insurance.

Less than a month after his transfer, Yu Buan’s business establishment in Binondo
was totally destroyed by fire.

Because of Yu Ban’s non-compliance or failure to submit the required documents and

the adjusters’ demand in subsequent letters that he submit additional papers, the
adjusters and Yu Ban engaged in an exchange of communications, until finally
Fieldman’s Insurance rejected Yu Ban’s claims, and denied liability under their
respective policies, evidently upon their respective adjusters’ recommendations.
The plaintiff commenced suit in the Court of First Instance of Manila, and the
defendants answered the complaint with identical special defenses; to wit:
Insured’s failure to prove the loss claimed;
false and fraudulent claim; and
arson or causes not independent of the will of the insured; and counterclaims for the
annulment of the policies.

In proving the value of his loss, the plaintiff relied upon a merchandise inventory as of
31 December 1959, which he had allegedly submitted on 15 January 1960 to the
Bureau of Internal Revenue.

ISSUE
Whether Yu Ban is bound to provide the insurance company a proof of loss.

HELD: NO.
Shielding himself under Section 82 of the Insurance Act, the plaintiff asserts that in
submitting his proof of loss he was “not bound to give such proof as would be
necessary in a court of justice”. The assertion is correct, but does not give him any
justification for submitting false proofs. Their falsity is the best evidence of the
fraudulent character and the unmeritoriousness of plaintiff’s claim.

The fact of the filing of the inventory as of 15 January 1960 should be considered as
true, since there is no evidence to the contrary. However, it was an error of the trial
court of accepting as true the actual existence at the burned premises of the stocks
mentioned in the inventory.

Six (6) of the many copies of the invoices submitted by the plaintiff to the adjusters
uncover a clear case of fraud and misrepresentation

Manager of one of the suppliers denied signing the purchase invoice in favor of
petitioner
There were dubious invoices issued by fictitious companies.
There were invoices indicating that merchandise were delivered to the new place of
business even way before it transferred on 15 January 1960.

The plaintiff, Yu Ban Chuan, adopted a uniform, too uniform, in fact, to be believed,
explanation for all the invoices: that he did not buy the merchandise at the companies’
addresses but bought from the agents who brought the goods to him; that the
originals of the invoices were burned and that he requested for true copies from the
agents whom he met casually in the streets after the fire and these agents delivered
the exhibits to him; but he did not remember, or know the names of these agents, nor
did he know their whereabouts.

In other words, he wants the court to believe also that these agents performed a
vanishing act after each one of them had turned in the copy of each invoice to the
plaintiff.
The plaintiff adheres to the inventory as the immaculate basis for the actual worth of
stocks that were burned, on the ground that it was made from actual count, and in
compliance with law. But this inventory is not binding on the defendants, since it was
prepared without their intervention.

It is well to note that plaintiff had every reason to show that the value of his stock of
goods exceeded the amount of insurance that he carried. And the inventory, having
been made prior to the fire, was no proof of the existence of these goods at the store
when the fire occurred.

True, there were merchandise that were actually destroyed by fire. But when fraud is
conceived, what is true is subtly hidden by the schemer beneath proper and legal
appearances, including the preparation of the inventory.

The filing of collection suits for unpaid purchases against Yu Ban Chuan, however
valid these may be, do not legitimize his fraudulent claim against the insurers in the
present case, nor show that the goods allegedly delivered were at the store when the
fire

FINMAN GENERAL ASSURANCE CORPORATION vs. THE HONORABLE COURT OF

APPEALS
FINMAN GENERAL ASSURANCE CORPORATION vs. THE HONORABLE COURT OF
APPEALS 213 SCRA 493, September 2, 1992 NOCON, J.:

FACTS:

On October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman
General Assurance Corporation with his parents, spouses Julia and Carlos Surposa,
and brothers Christopher, Charles, Chester and Clifton, all surnamed, Surposa, as
beneficiaries. While said insurance policy was in full force and effect, the insured,
Carlie Surposa, died on October 18, 1988 as a result of a stab wound inflicted by one
of the three (3) unidentified men. Private respondent and the other beneficiaries of said
insurance policy filed a written notice of claim with the petitioner insurance company
which denied said claim contending that murder and assault are not within the scope
of the coverage of the insurance policy. Private respondent filed a complaint with the
Insurance Commission which rendered a favorable response for the respondent. The
appellate court ruled likewise. Petitioner 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. 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 the insurer is liable for the payment of the insurance
premiums
HELD:

Yes, the insurer is still liable. 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. 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. Where the death or injury is not the natural or probable result of the
insured's voluntary act, or if something unforeseen occurs in the doing of the act
which produces the injury, the resulting death is within the protection of the policies
insuring against death or injury from accident. In the case at bar, it cannot be
pretended that Carlie Surposa died in the course of an assault or murder as a result of
his voluntary act considering the very nature of these crimes. Neither can it be said
that where was a capricious desire on the part of the accused to expose his life to
danger considering that he was just going home after attending a festival.
Furthermore, the personal accident insurance policy involved herein specifically
enumerated only ten (10) circumstances wherein no liability attaches to petitioner
insurance company for any injury, disability or loss suffered by the insured as a result
of any of the stimulated causes. The principle of " expresso unius exclusio alterius" —
the mention of one thing implies the exclusion of another thing — is therefore
applicable in the instant case since murder and assault, not having been expressly
included in the enumeration of the circumstances that would negate liability in said
insurance policy cannot be considered by implication to discharge the petitioner
insurance company from liability for, any injury, disability or loss suffered by the
insured. Thus, the failure of the petitioner insurance company to include death
resulting from murder or assault among the prohibited risks leads inevitably to the
conclusion that it did not intend to limit or exempt itself from liability for such death.

Pacific Timber v. CA

112 SCRA 199

Facts:

> On March 13, 1963, Pacific secured temporary insurance from the Workemen’s
Insurance Co. for its exportation of logs to Japan. Workmen issued on said date Cover
Note 1010 insuring said cargo.

> The regular marine policies were issued by the company in favor of Pacific on Apr 2,
1963. The 2 marine policies bore the number 53H01032 and 53H01033.

> After the issuance of the cover note but BEFORE the issuance of the 2 policies,
some of the logs intended to be exported were lost due to a typhoon.
> Pacific filed its claim with the company, but the latter refused, contending that said
loss may not be considered as covered under the cover note because such became null
and void by virtue of the issuance of the marine policies.

Issue:

Whether or not the cover not was without consideration, thus null and void.

Held:

It was with consideration.

SC upheld Pacific’s contention that said cover not was with consideration. The fact
that no separate premium was paid on the cover note before the loss was insured
against occurred does not militate against the validity of Pacific’s contention, for no
such premium could have been paid, since by the nature of the cover note, it did not
contain, as all cover notes do not contain, particulars of the shipment that would
serve as basis for the computation of the premiums. As a logical consequence, no
separate premiums are required to be paid on a cover note.

If the note is to be treated as a separate policy instead of integrating it to the regular

policies subsequently issued, its purpose would be meaningless for it is in a real sense
a contract, not a mere application.