PART FOUR

Payment of Proceeds and Filing of Claims

I. In L:ife Insurance 242, 180

Sec. 242. The proceeds of a life insurance policy shall be paid immediately upon
maturity of the policy, unless such proceeds are made payable in installments
or as an annuity, in which case the installments, or annuities shall be paid as
they become due: Provided, however, That in the case of a policy maturing by
the death of the insured, the proceeds thereof shall be paid within sixty days
after presentation of the claim and filing of the proof of the death of the
insured. Refusal or failure to pay the claim within the time prescribed herein
will entitle the beneficiary to collect interest on the proceeds of the policy for
the duration of the delay at the rate of twice the ceiling prescribed by the
Monetary Board, unless such failure or refusal to pay is based on the ground
that the claim is fraudulent.
The proceeds of the policy maturing by the death of the insured payable to the
beneficiary shall include the discounted value of all premiums paid in advance
of their due dates, but are not due and payable at maturity.

Sec. 180. An insurance upon life may be made payable on the death of the person, or on
his surviving a specified period, or otherwise contingently on the continuance
or cessation of life.
Every contract or pledge for the payment of endowments or annuities shall be
considered a life insurance contract for purpose of this Code.
In the absence of a judicial guardian, the father, or in the latter's absence or incapacity,
the mother, or any minor, who is an insured or a beneficiary under a contract
of life, health or accident insurance, may exercise, in behalf of said minor, any
right under the policy, without necessity of court authority or the giving of a
bond, where the interest of the minor in the particular act involved does not
exceed twenty thousand pesos. Such right may include, but shall not be
limited to, obtaining a policy loan, surrendering the policy, receiving the
proceeds of the policy, and giving the minor's consent to any transaction on
the policy.
Sec. 180-A. The insurer in a life insurance contract shall be liable in case of suicides
only when it is committed after the policy has been in force for a period of two
years from the date of its issue or of its last reinstatement, unless the policy
provides a shorter period: Provided, however, That suicide committed in the
state of insanity shall be compensable regardless of the date of
commission. (As amended by Batasang Pambansa Blg. 874).

1. In general
Alabat vs. Alabat, 21 SCRA 14979
G.R. No. L-22169

December 29, 1967

SERGIO ALABAT, PETRONILO ALABAT, NICOLAS ALABAT and FORTUNATO

ALABAT, plaintiffs-appellants,
vs.
TORIBIA TANDOG VDA. DE ALABAT, LEONCIO ALABAT, JARMILO ALABAT, and
PREMIA ALABAT, defendants-appellees.
WENIFREDA ALMEDA, intervenor.
1

Francisco M. Alaba for plaintiffs-appellants.

Ricardo Navarro, Sr. for defendants-appellees.
REYES, J.B.L., J.:
Direct appeal on questions of law from a decision of the Court of First Instance of Surigao (in its Civil
Case No. 1318).
Appellants, who are the four children of the late Escolastico Alabat by his first marriage with Cornelia
Bucayan (also deceased) have instituted this action for partition in the Court below against the four (4)
Alabat appellees, children of the second marriage of Escolastico, and against his surviving widow,
Toribia Tandog. Plaintiffs sought partition of several unregistered parcels of land in Taganaan, Surigao,
and of a cash deposit of P4,000.00 in the Philippine National Bank, Butuan Branch, standing in the
name of Escolastico Alabat. Defendants pleaded in answer that the properties in question originated
from a death benefit payment made by the U.S. Veterans Administration to Escolastico Alabat and his
second wife Toribia Tandog, on account of the death of their son Leonardo Alabat, a full-blood brother
of defendants, who was a USAFFE soldier killed in action during World War II; that said Leonardo
died unmarried but survived by his parents and by a natural daughter, intervenor-appellee, Wenifreda
Alabat.lawphil.net Defendants claimed that the only heirs to the properties sought to be partitioned
were the soldier Leonardo Alabat's surviving mother and his daughter Wenifreda, herein intervenor.
At the trial the parties agreed upon the following facts: (Rec. on Appeal, pp. 14-15)
1. That a certain Wenifreda Alabat, the intervenor, was born to Carmen Almeda with the now
deceased Leonardo Alabat as her father, but Carmen Almeda and Leonardo Alabat were never
legally married altho they were in a capacity to marry at the time that Wenifreda Alabat was
conceived;
2. That Carmen Almeda also filed a claim with the US Veterans Administration for the death
benefit of Leonardo Alabat for the amount of P16,000.00 but this amount was not granted to her
but to the now deceased Escolastico Alabat and the defendant Toribia Tandog, because Carmen
Almeda could not show proof of having been legally married to Leonardo Alabat;
3. That the parcel of land that were purchased with the money received from the US Veterans
Administration as death benefit of Leonardo Alabat are parcels 1, 2, 3, 4 and 5 under
paragraph three of the amended complaint; and
4. That the amount of P4,000.00 mentioned in paragraph 3 of the complaint is also a part of the
P16,000.00 received by the spouses Escolastico Alabat and Toribia Tandog which has been
deposited with the Philippine National Bank, in Butuan City.
In addition, the trial Judge, Hon. Teofilo Buslon, further found from the evidence that Wenifreda
Alabat "enjoyed the status of a recognized natural child from the time she was born until the present
time" (Decision, R. App., p. 16); and on the basis of Article 991 of the new Civil Code, decided that the
only parties entitled to share in the property were the mother, appellee Toribia Tandog and intervenor
Wenifreda Alabat, to the exclusion of the appellants, issue of Escolastico's first marriage. Plaintiffs
appealed.
We agree with appellants that the appealed decision can not stand as it is in error on at least four counts.
First, the Court below erred in applying the new Civil Code to the succession of Leonardo Alabat who
died in 1945, or even before, (the exact date being uncertain) under the regime of the Code of 1889
(Civil Code of the Phil., Art. 2263).
Next, it erred in declaring the natural daughter, Wenifreda Alabat, entitled to succeed her late natural
father, Leonardo Alabat, solely on the basis of her enjoyment of the status of a natural child. It is an
elementary and basic principle in our law of succession that the rights of a natural child spring not from
2

the filiation itself but from the child's acknowledgment by the natural parent, made voluntarily or by
court decree.1 Equally basic and elementary but also ignored by the trial Court, is the fact that
possession or enjoyment of the status of natural child is per se not a sufficient operative
acknowledgment but only a ground to compel the parent to acknowledge the child (Civ. Code of 1889,
Art. 135; new Civil Code, Art. 283).lawphil.net The record of appeal before us nowhere shows, or even
suggests, that intervenor Wenifreda was voluntarily or compulsorily acknowledged in the manner
prescribed by law. Neither does it show that, because her natural father died during her minority, she
has instituted a timely action to compel her acknowledgment. As the case stands now, there is no way
to declare her possessed of hereditary rights in the estate of Leonardo Alabat. Whether she may still
bring an action to compel acknowledgment, we can not decide now, for lack of adequate data.
Third, the trial Court erred in considering the death benefit payment by the U.S. Veterans
Administration as part of the estate of Leonardo Alabat. This money was paid to his parents by the
United States Government by way of indemnity or insurance for the death of the soldier. The latter was
never entitled to it himself, since he died before the payment accrued. The money paid was therefore
exclusive property of Leonardo Alabat's parents, Escolastico Alabat and Toribia Tandog. Considering it
community property, Escolastico was entitled to one half thereof, and, hence, of the property acquired
thereby. Upon his death in 1959 without leaving any testament, that half descended unto all his eight
(8) surviving children of the first and second marriages, with the surviving widow being also entitled to
a share equal to that of each of the children (Civil Code of the Philippines, Art. 996):
Art. 996. If a widow or widower and legitimate children or descendants are left, the surviving
spouse has in the succession the same share as that of each of the children.
In the fourth place, the assumption in the appealed decision that Article 991 of the new Civil Code
applies, is erroneous, in view of the facts previously adverted to. But even if it did apply, the death
benefit payment should belong, in equal shares, to the natural child and the parents of the soldier
Leonardo Alabat and the half of the parents can not belong to the mother alone, for she was not the only
surviving parent of the predeceased Leonardo Alabat. In excluding the father, Escolastico, the lower
Court acted contrary to all logic and common sense.
After all is said, the basic fact is that the estate to be settled is that of Escolastico Alabat, and not that of
his predeceased son, Leonardo Alabat, as mistakenly assumed by the Court a quo.lawphil Hence, the
plaintiffs-appellants being children of Escolastico are clearly entitled to share in the properties
described in their complaint and to maintain this suit for partition.lawphil.net
Whether the natural child, Wenifreda, can succeed to the share of her father, Leonardo, by right of
representation, depends upon whether she has been properly acknowledged as his natural child.
Considering that this point was apparently not litigated, and taking into account that if Leonardo died
during his daughter's minority, the latter had four (4) years after attaining majority, to file an action to
compel acknowledgment,2 both equity and justice demand that Wenifreda be given ample opportunity
to establish in the Court below whatever rights she is entitled to in accordance with law.
IN VIEW OF THE FOREGOING, the decision appealed from is reversed and set aside, and the case is
ordered remanded to the Court of origin for further proceedings conformably to this opinion.lawphil
Costs against defendants-appellees. So ordered.
Concepcion, C.J., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
Dizon and Fernando, JJ., took no part.

Consuegra vs. GSIS, 37 SCRA 315

G.R. No. L-28093 January 30, 1971

BASILIA BERDIN VDA. DE CONSUEGRA; JULIANA, PACITA, MARIA LOURDES, JOSE, JR., RODRIGO,
LINEDA and LUIS, all surnamed CONSUEGRA, petitioners-appellants,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, COMMISSIONER OF PUBLIC HIGHWAYS, HIGHWAY
DISTRICT ENGINEER OF SURIGAO DEL NORTE, COMMISSIONER OF CIVIL SERVICE, and ROSARIO
DIAZ, respondents-appellees.
Bernardino O. Almeda for petitioners-appellants.
Binag and Arevalo, Jr. for respondent-appellee Government Service Insurance System.
Office of the Solicitor General for other respondents-appellees.
ZALDIVAR, J.:
Appeal on purely questions of law from the decision of the Court of First Instance of Surigao del Norte, dated
March 7, 1967, in its Special Proceeding No. 1720.
The pertinent facts, culled from the stipulation of facts submitted by the parties, are the following:
The late Jose Consuegra, at the time of his death, was employed as a shop foreman of the office of the District
Engineer in the province of Surigao del Norte. In his lifetime, Consuegra contracted two marriages, the first with
herein respondent Rosario Diaz, solemnized in the parish church of San Nicolas de Tolentino, Surigao, Surigao,
on July 15, 1937, out of which marriage were born two children, namely, Jose Consuegra, Jr. and Pedro
Consuegra, but both predeceased their father; and the second, which was contracted in good faith while the first
marriage was subsisting, with herein petitioner Basilia Berdin, on May 1, 1957 in the same parish and
municipality, out of which marriage were born seven children, namely, Juliana, Pacita, Maria Lourdes, Jose,
Rodrigo, Lenida and Luz, all surnamed Consuegra.
Being a member of the Government Service Insurance System (GSIS, for short) when Consuegra died on
September 26, 1965, the proceeds of his life insurance under policy No. 601801 were paid by the GSIS to
petitioner Basilia Berdin and her children who were the beneficiaries named in the policy. Having been in the
service of the government for 22.5028 years, Consuegra was entitled to retirement insurance benefits in the
sum of P6,304.47 pursuant to Section 12(c) of Commonwealth Act 186 as amended by Republic Acts 1616 and
3836. Consuegra did not designate any beneficiary who would receive the retirement insurance benefits due to
him. Respondent Rosario Diaz, the widow by the first marriage, filed a claim with the GSIS asking that the
retirement insurance benefits be paid to her as the only legal heir of Consuegra, considering that the deceased
did not designate any beneficiary with respect to his retirement insurance benefits. Petitioner Basilia Berdin and
her children, likewise, filed a similar claim with the GSIS, asserting that being the beneficiaries named in the life
insurance policy of Consuegra, they are the only ones entitled to receive the retirement insurance benefits due
the deceased Consuegra. Resolving the conflicting claims, the GSIS ruled that the legal heirs of the late Jose
Consuegra were Rosario Diaz, his widow by his first marriage who is entitled to one-half, or 8/16, of the
retirement insurance benefits, on the one hand; and Basilia Berdin, his widow by the second marriage and their
seven children, on the other hand, who are entitled to the remaining one-half, or 8/16, each of them to receive an
equal share of 1/16.
1

Dissatisfied with the foregoing ruling and apportionment made by the GSIS, Basilia Berdin and her children filed
on October 10, 1966 a petition for mandamus with preliminary injunction in the Court of First Instance of Surigao,
naming as respondents the GSIS, the Commissioner of Public Highways, the Highway District Engineer of
Surigao del Norte, the Commissioner of Civil Service, and Rosario Diaz, praying that they (petitioners therein) be
declared the legal heirs and exclusive beneficiaries of the retirement insurance of the late Jose Consuegra, and
that a writ of preliminary injunction be issued restraining the implementation of the adjudication made by the
GSIS. On October 26, 1966, the trial court issued an order requiring therein respondents to file their respective
answers, but refrained from issuing the writ of preliminary injunction prayed for. On February 11, 1967, the
parties submitted a stipulation of facts, prayed that the same be admitted and approved and that judgment be
rendered on the basis of the stipulation of facts. On March 7, 1967, the court below rendered judgment, the
pertinent portions of which are quoted hereunder:
This Court, in conformity with the foregoing stipulation of facts, likewise is in full accord with the
parties with respect to the authority cited by them in support of said stipulation and which is
herein-below cited for purposes of this judgment, to wit:
"When two women innocently and in good faith are legally united in holy matrimony to the same
man, they and their children, born of said wedlock, will be regarded as legitimate children and
each family be entitled to one half of the estate. Lao & Lao vs. Dee Tim, 45 Phil. 739; Estrella vs.
Laong Masa, Inc., (CA) 39 OG 79; Pisalbon vs. Bejec, 74 Phil. 88.

WHEREFORE, in view of the above premises, this Court is of the opinion that the foregoing
stipulation of facts is in order and in accordance with law and the same is hereby approved.
Judgment, therefore, is hereby rendered declaring the petitioner Basilia Berdin Vda. de
Consuegra and her co-petitioners Juliana, Pacita, Maria Lourdes, Jose, Jr., Rodrigo, Lenida and
Luis, all surnamed Consuegra, beneficiary and entitled to one-half (1/2) of the retirement benefit
in the amount of Six Thousand Three Hundred Four Pesos and Fourty-Seven Centavos
(P6,304.47) due to the deceased Jose Consuegra from the Government Service Insurance
System or the amount of P3,152.235 to be divided equally among them in the proportional
amount of 1/16 each. Likewise, the respondent Rosario Diaz Vda. de Consuegra is hereby
declared beneficiary and entitled to the other half of the retirement benefit of the late Jose
Consuegra or the amount of P3,152.235. The case with respect to the Highway District Engineer
of Surigao del Norte is hereby ordered dismissed.
Hence the present appeal by herein petitioners-appellants, Basilia Berdin and her children.
It is the contention of appellants that the lower court erred in not holding that the designated beneficiaries in the
life insurance of the late Jose Consuegra are also the exclusive beneficiaries in the retirement insurance of
said deceased. In other words, it is the submission of appellants that because the deceased Jose Consuegra
failed to designate the beneficiaries in his retirement insurance , the appellants who were the beneficiaries
named in the life insurance should automatically be considered the beneficiaries to receive the retirement
insurance benefits, to the exclusion of respondent Rosario Diaz. From the arguments adduced by appellants in
their brief We gather that it is their stand that the system of life insurance and the system of retirement insurance,
that are provided for in Commonwealth Act 186 as amended, are simply complementary to each other, or that
one is a part or an extension of the other, such that whoever is named the beneficiary in the life insurance is also
the beneficiary in the retirement insurance when no such beneficiary is named in the retirement insurance.
The contention of appellants is untenable.
It should be noted that the law creating the Government Service Insurance System is Commonwealth Act 186
which was enacted by the National Assembly on November 14, 1936. As originally approved, Commonwealth
Act 186 provided for the compulsory membership in the Government Service Insurance System of all regularly
and permanently appointed officials and employees of the government, considering as automatically insured on
life all such officials and employees, and issuing to them the corresponding membership policy under the terms
2
and conditions as provided in the Act.
Originally, Commonwealth Act 186 provided for life insurance only. Commonwealth Act 186 was amended by
Republic Act 660 which was enacted by the Congress of the Philippines on June 16, 1951, and, among others,
the amendatory Act provided that aside from the system of life insurance under the Government Service
Insurance System there was also established the system of retirement insurance. Thus, We will note in Republic
Act 660 that there is a chapter on life insurance and another chapter on retirement insurance. 3 Under the
chapter on life insurance are sections 8, 9 and 10 of Commonwealth Act 186, as amended; and under the
chapter on retirement insurance are sections 11, 12, 13 and 13-A. On May 31, 1957, Republic Act 1616 was
enacted by Congress, amending section 12 of Commonwealth Act 186 as amended by Republic Act 660, by
adding thereto two new subsections, designated as subsections (b) and (c). This subsection (c) of section 12 of
Commonwealth Act 186, as amended by Republic Acts 660, 1616 and 3096, was again amended by Republic
Act 3836 which was enacted on June 22, 1963.lwph1.t The pertinent provisions of subsection (c) of Section
12 of Commonwealth Act 186, as thus amended and reamended, read as follows:
(c) Retirement is likewise allowed to a member, regardless of age, who has rendered at least
twenty years of service. The benefit shall, in addition to the return of his personal contributions
plus interest and the payment of the corresponding employer's premiums described in
subsection (a) of Section 5 hereof, without interest, be only a gratuity equivalent to one month's
salary for every year of service, based on the highest rate received, but not to exceed twentyfour months; Provided, That the retiring officer or employee has been in the service of the said
employer or office for at least four years, immediately preceding his retirement.
xxx xxx xxx
The gratuity is payable by the employer or office concerned which is hereby authorized to
provide the necessary appropriation to pay the same from any unexpended items of
appropriations.
Elective or appointive officials and employees paid gratuity under this subsection shall be
entitled to the commutation of the unused vacation and sick leave, based on the highest rate
received, which they may have to their credit at the time of retirement.

Jose Consuegra died on September 26, 1965, and so at the time of his death he had acquired rights under the
above-quoted provisions of subsection (c) of Section 12 of Com. Act 186, as finally amended by Rep. Act 3836
on June 22, 1963. When Consuegra died on September 26, 1965, he had to his credit 22.5028 years of service
in the government, and pursuant to the above-quoted provisions of subsection (c) of Section 12 of Com. Act 186,
as amended, on the basis of the highest rate of salary received by him which was P282.83 per month, he was
entitled to receive retirement insurance benefits in the amount of P6,304.47. This is the retirement benefits that
are the subject of dispute between the appellants, on the one hand, and the appellee Rosario Diaz, on the other,
in the present case. The question posed is: to whom should this retirement insurance benefits of Jose
Consuegra be paid, because he did not, or failed to, designate the beneficiary of his retirement insurance?
If Consuegra had 22.5028 years of service in the government when he died on September 26, 1965, it follows
that he started in the government service sometime during the early part of 1943, or before 1943. In 1943 Com.
Act 186 was not yet amended, and the only benefits then provided for in said Com. Act 186 were those that
proceed from a life insurance . Upon entering the government service Consuegra became a compulsory
member of the GSIS, being automatically insured on his life, pursuant to the provisions of Com. Act 186 which
was in force at the time. During 1943 the operation of the Government Service Insurance System was
suspended because of the war, and the operation was resumed sometime in 1946. When Consuegra designated
his beneficiaries in his life insurance he could not have intended those beneficiaries of his life insurance as also
the beneficiaries of his retirement insurance because the provisions on retirement insurance under the GSIS
came about only when Com. Act 186 was amended by Rep. Act 660 on June 16, 1951. Hence, it cannot be said
that because herein appellants were designated beneficiaries in Consuegra's life insurance they automatically
became the beneficiaries also of his retirement insurance. Rep. Act 660 added to Com. Act 186 provisions
regarding retirement insurance, which are Sections 11, 12, and 13 of Com. Act 186, as amended. Subsection (b)
of Section 11 of Com. Act 186, as amended by Rep. Act 660, provides as follows:
(b) Survivors benefit. Upon death before he becomes eligible for retirement, his beneficiaries
as recorded in the application for retirement annuity filed with the System shall be paid his own
premiums with interest of three per centum per annum, compounded monthly. If on his death he
is eligible for retirement, then the automatic retirement annuity or the annuity chosen by him
previously shall be paid accordingly.
The above-quoted provisions of subsection (b) of Section 11 of Commonwealth Act 186, as amended by Rep.
Act 660, clearly indicate that there is need for the employee to file an application for retirement insurance
benefits when he becomes a member of the GSIS, and he should state in his application the beneficiary of his
retirement insurance. Hence, the beneficiary named in the life insurance does not automatically become the
beneficiary in the retirement insurance unless the same beneficiary in the life insurance is so designated in the
application for retirement insurance.
Section 24 of Commonwealth Act 186, as amended by Rep. Act 660, provides for a life insurance fund and for a
retirement insurance fund. There was no such provision in Com. Act 186 before it was amended by Rep. Act
660. Thus, subsections (a) and (b) of Section 24 of Commonwealth Act 186, as amended by Rep. Act 660, partly
read as follows:
(a) Life insurance fund. This shall consist of all premiums for life insurance benefit and/or
earnings and savings therefrom. It shall meet death claims as they may arise or such equities as
any member may be entitled to, under the conditions of his policy, and shall maintain the
required reserves to the end of guaranteeing the fulfillment of the life insurance contracts issued
by the System ...
(b) Retirement insurance fund. This shall consist of all contributions for retirement insurance
benefit and of earnings and savings therefrom. It shall meet annuity payments and establish
the required reserves to the end of guaranteeing the fulfillment of the contracts issued by the
System. ...
Thus, We see that the GSIS offers two separate and distinct systems of benefits to its members one is the life
insurance and the other is the retirement insurance. These two distinct systems of benefits are paid out from
two distinct and separate funds that are maintained by the GSIS.
In the case of the proceeds of a life insurance, the same are paid to whoever is named the beneficiary in the life
insurance policy . As in the case of a life insurance provided for in the Insurance Act (Act 2427, as amended),
the beneficiary in a life insurance under the GSIS may not necessarily be a heir of the insured. The insured in a
life insurance may designate any person as beneficiary unless disqualified to be so under the provisions of the
4
Civil Code. And in the absence of any beneficiary named in the life insurance policy, the proceeds of the
insurance will go to the estate of the insured.

Retirement insurance is primarily intended for the benefit of the employee to provide for his old age, or
incapacity, after rendering service in the government for a required number of years. If the employee reaches the
age of retirement, he gets the retirement benefits even to the exclusion of the beneficiary or beneficiaries named
in his application for retirement insurance. The beneficiary of the retirement insurance can only claim the
proceeds of the retirement insurance if the employee dies before retirement. If the employee failed or overlooked
to state the beneficiary of his retirement insurance, the retirement benefits will accrue to his estate and will be
given to his legal heirs in accordance with law, as in the case of a life insurance if no beneficiary is named in the
insurance policy.
It is Our view, therefore, that the respondent GSIS had correctly acted when it ruled that the proceeds of the
retirement insurance of the late Jose Consuegra should be divided equally between his first living wife Rosario
Diaz, on the one hand, and his second wife Basilia Berdin and his children by her, on the other; and the lower
court did not commit error when it confirmed the action of the GSIS, it being accepted as a fact that the second
marriage of Jose Consuegra to Basilia Berdin was contracted in good faith. The lower court has correctly applied
the ruling of this Court in the case of Lao, et al. vs. Dee Tim, et al., 45 Phil. 739 as cited in the stipulation of facts
5
6
and in the decision appealed from. In the recent case of Gomez vs. Lipana, L-23214, June 30, 1970, this
Court, in construing the rights of two women who were married to the same man a situation more or less
similar to the case of appellant Basilia Berdin and appellee Rosario Diaz held "that since the defendant's first
marriage has not been dissolved or declared void the conjugal partnership established by that marriage has not
ceased. Nor has the first wife lost or relinquished her status as putative heir of her husband under the new Civil
Code, entitled to share in his estate upon his death should she survive him. Consequently, whether as conjugal
partner in a still subsisting marriage or as such putative heir she has an interest in the husband's share in the
property here in dispute.... " And with respect to the right of the second wife, this Court observed that although
the second marriage can be presumed to be void ab initio as it was celebrated while the first marriage was still
subsisting, still there is need for judicial declaration of such nullity. And inasmuch as the conjugal partnership
formed by the second marriage was dissolved before judicial declaration of its nullity, "[t]he only lust and
equitable solution in this case would be to recognize the right of the second wife to her share of one-half in the
property acquired by her and her husband and consider the other half as pertaining to the conjugal partnership of
the first marriage."
WHEREFORE, the decision appealed from is affirmed, with costs against petitioners-appellants. It is so ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.

2. Death as the suspensive condition

Fernandez vs. National, 105 Phil 59
[G.R. No. L-9146. January 27, 1959.]
TERESA VDA. DE FERNANDEZ, ET AL., Plaintiffs-Appellants, v. THE NATIONAL LIFE
INSURANCE COMPANY OF THE PHILIPPINES, Defendant-Appellee.
Jose G. Macatangay for Appellants.
E. V. Filamor for Appellee.
SYLLABUS
1. INSURANCE; LIFE INSURANCE POLICY WHEN MATURES. In life insurance, the policy mature
either upon the expiration of the term set forth therein, in which case its proceeds are immediately payable to the
insured himself, or upon his death occurring at any time prior to the expiration of such stipulated term, in which
case, the proceeds are payable to his beneficiary, within sixty days after their filing of proof of death (Sec. 91-A
Insurance Law.)
2. ID.; ID.; It is the happening of the suspensive condition of death that renders a life policy matured and not
the filing of proof of death which is merely procedural.
3. ID.; LIFE POLICY MATURED DURING JAPANESE OCCUPATION; PAYMENT UNDER
BALLANTYNE SCALE OF VALUES. An insurance life policy which matured and was payable during the

Japanese occupation under the doctrine in Valero v. Sycip, G. R. No. L-11119, May 23, 1958, payment should
be adjusted in accordance with the Ballantyne scale of Values.

DECISION
ENDENCIA, J.:
Appeal from a decision of the Court of First Instance of Manila applying the Ballantyne scale of values upon the
proceeds of life insurance taken and maturing during the Japanese occupation but claimed after liberation.
It is undisputed that on July 15, 1944, the National Life Insurance Company of the Philippines insured the life
of Juan D. Fernandez for the sum of P10,000 under Policy No. 16346 upon payment by the latter of the amount
of P444 for the period from July 15, 1944, to July 14, 1945, the beneficiaries thereof being his mother Teresa
Duat Vda. de Fernandez and his sisters Maria Teresa Fernandez and Manuela Fernandez. The insured died on
November 2, 1944, at Muntinglupa, Rizal, while the policy was in force.
After a lapse of more than seven years, or on August 1st, 1952, Atty. Alberto L. de la Torre, in representation of
the beneficiaries, wrote the company advising it that the insured had died in 1944, and claimed the proceeds of
the policy. On August 21, 1952, the company answered Atty. De la Torre stating that inasmuch as the status of
the policies issued during the Japanese occupation was still pending consideration before the courts, it would like
to know whether the beneficiaries represented by him were willing to compute the value of their claim under the
Ballantyne scale of values. There was no reply to this inquiry, but on July 9, 1954, the beneficiaries presented
instead proofs of death of the insured and at the same time filed Statement Exhibit G claiming the amount of
P10,000. On July 21, 1954, the company advised the beneficiaries that inasmuch as the policy matured upon the
death of the insured on November 2, 1944, the proceeds should be computed in accordance with the Ballantyne
scale, which amount only to P500. In view of this, the beneficiaries commence suit on August 6, 1954, but the
lower court sustained the stand of the company and dismissed the complaint, awarding however to plaintiffs the
sum of P500 in Philippine currency, without interest; hence the appeal.
Appellants vigorously maintain that the obligation of the company to pay the proceeds of the insurance accrued
not upon the death of the insured on November 2, 1944, but only upon receipt and approval by the company, at
its Home Office, of proof of death of the insured, which was on July 9, 1954, in accordance with the provision of
the policy which reads
"National Life Insurance Company of the Philippines hereby agrees to pay at its Home Office, Manila, Ten
Thousand Pesos to Juan D. Fernandez (hereinafter called the insured) on the 15th day of July, 1964, if the
Insured is living and this Policy is in force, or upon receipt and approval at its Home Office of due proofs of the
title of the claimant and of the prior death of the Insured while this Policy is in force to Teresa Duat Vda. de
Fernandez, Maria T. and Manuela Fernandez, mother and sisters respectively of the Insured (hereinafter called
the Beneficiary) subject to the right of the Insured to change the beneficiary as stated on the second page of this
Policy."
cralaw virtua1aw library

The above stipulation is apparently based on Sec. 91-A of the Insurance Law which provides as follows:

jgc:chanrobles.com.ph

"The proceeds of a life insurance policy shall be paid immediately upon maturity of the policy, unless such
proceeds are made payable in installment or as an annuity, in which case the installments or annuities shall be
paid as they become due: Provided, however, That in case of a policy maturing by the death of the insured, the
proceeds thereof shall be paid within sixty days after presentation of the claim and filing of the proof of the death
of the insured. Refusal to pay the claim within the time prescribed herein will entitle the beneficiary to collect
interest on the proceeds of the policy for the duration of the delay at the rate of six per centum per annum, unless
such failure or refusal to pay is based on the ground that the claim is fraudulent . . . ."
cralaw virtua1aw library

Buttressed on the foregoing provision of law and the aforequoted stipulation as well as on the allegation that the
filing of proof of death by the beneficiaries is a condition precedent to the demandability of the obligation of the
insurer to pay the proceeds, appellants claim that they should be paid P10,000 in Philippine currency and not
under the Ballantyne scale of values.
We find appellants contention untenable. In life insurance, the policy matures either upon the expiration of the
term set forth therein in which case its proceeds are immediately payable to the insured himself, or upon his
8

death occurring at any time prior to the expiration of such stipulated term, in which case, the proceeds are
payable to his beneficiaries within sixty days after their filing of proof of death (Sec. 91-A Insurance Law). In
the case at bar, the policy matured upon the death of the insured on November 2, 1944, and the obligation of the
insurer to pay arose as of that date. The sixty-day period fixed by law within which to pay the proceeds after
presentation of proof of death is merely procedural in nature, evidently to determine the exact amount to be paid
and the interest thereon to which the beneficiaries may be entitled to collect on case of unwarranted refusal of the
company to pay, and also to enable the insurer to verify or check on the fact of death which it may even validly
waive. It is the happening of the suspensive condition of death that renders a life policy mature and not the filing
of proof of death which, as above stated, is merely procedural, for even if such proof were presented but it turns
out later that the insured is alive, such filing does not give maturity to the policy. The insured having died on
November 2, 1944, during the Japanese occupation, the proceeds of his policy should be adjusted accordingly,
for
"The rule is already settled that where a debtor could have paid his obligation at any time during the Japanese
occupation, payment after liberation must be adjusted in accordance with the Ballantyne schedule (De Asis v.
Agdamag, 90 Phil,. 249; Ang Lam v. Peregrina, 92 Phil., 506; Wilson v. Berkenkotter, 92 Phil., 918; 49 Off.
Gaz. No. 4 1401; Samson v. Andal de Aguila, 94 Phil., 402)." (Valero v. Sycip, L-11119. May 23, 1958.)
Appellants vehemently invoke our ruling in the case of Salvacion B. Londres v. The National Life Insurance
Company of the Philippines, 94 Phil., 647, wherein, although the policy mature during the Japanese
occupation, we allowed the proceeds to be paid in the present legal tender. That case, however, is not applicable
to the present. In that case the insured, Jose Londres, and his two sons were massacred by Japanese soldiers on
February 7, 1945, while the battle for the liberation of Manila was still raging and downtown offices, including
that of the appellee, were closed for the duration. Thus we declared:
jgc:chanrobles.com.ph

"It may therefore be said that the policy became due when the city of Manila was still under the yoke of the
enemy and became payable only after liberation which took place on March 10, 1945, when President Osmea
issued Proclamation No. 6 following the restoration of the civil government by General Douglas MacArthur.
And we say that the policy became payable only after liberation even if it matured sometime before that
eventuality the insurance company , appellant herein, was not yet in a position to pay the value of the policy for
the simple reason that it has not yet reopened. . . . ."
cralaw virtua1aw library

In the present case the Home Office of the appellee was open for business until the last days of January, 1945,
and had business transactions not only with the bank but also with its customers before its closure, and as a
matter of fact had been making payments of claims as they were presented. The policy in question having
matured on November 2, 1944, same could have been processed and paid before the company closed its Home
Office in January, 1945. Appellants argue that they could not have presented their claim and proof of death
during the Japanese occupation even if they wanted to because they knew that the deceased was insured only
after liberation when the policy was handed to them by Mr. Pablo P. Gabriel, a business partner of the deceased.
The delay in the presentation of proof of death does not make any difference, for it does not alter the date of
maturity of the policy nor the ability of the company to pay the proceeds of the insurance during the Japanese
occupation. Moreover, it is through no fault of the company that such delay was incurred. At any rate,
irrespective of whether there was delay or not in the filing of proof of death, the hard fact remains that the policy
matured and was payable during the Japanese occupation, and under the doctrine in the Valero v. Sycip case,
supra, payment should be adjusted in accordance with the Ballantyne scale of values.
Finding no error in the decisions appealed from, and there being no question raised as to the adjusted amount of
P500 under the Ballantyne schedule, judgment affirmed with costs.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion and Reyes, J.B.L., JJ.,
concur.

Vda de Gabriel vs. CA, 264 SCRA 137

Vda. De Gabriel v. CA
G.R. No. 103883 November 14, 1996
Vitug, J.
FACTS:
Marcelino Gabriel was employed by Emerald Construction &
D e v e l o p m e n t Corporation (Emerald Construction for brevity) at its construction project in
9

Iraq. He was covered by a personal accident insurance in the amount of P100,000.00 under a
group policy procured from Fortune Insurance & Surety Company (Fortune Insurance for brevity)by Emerald
Construction for its overseas workers. The insured risk was for bodily injury caused by violent
accidental external and visible means which injury would solel y and independently of any other
cause result in death or disability. On 22 May 1982, within the life of the policy, Gabriel died in Iraq.
On 12 July 1983,Emerald Construction reported Gabriels death to Fortune Insurance by telephone. Among
the documents thereafter submitted to Fortune Insurance were a copy of the death
certificate issued by the Ministry of Health of the Republic of Iraq which stated that an autopsy
report by the National Bureau of Investigation was conducted to the effect that due to advanced state of
postmortem decomposition,the cause of death of Gabriel could not be determined (emphasis added)
.B e c a u s e o f t h i s d e v e l o p m e n t F o r t u n e I n s u r a n c e u l t i m a t e l y d e n i e d t h e c l a i m
o f Emerald Construction on the ground of prescription. Gabriels wido w, Jacqueline Jimenez,
went to the to the lower court. In her complaint against Emerald Construction and Fortune Insurance, she averred
that her husband died of electrocution while in the performance of his work. Fortune Insurance alleged that
since both the death certificate issued by the Iraqi Ministry of Health and the autopsy report of the NBI
failed to disclose the cause of Gabriels death, it denied liability under the policy. In addition, private respondent
raised the defense of prescription, invoking Section 384 of the Insurance Code.
ISSUE:
WON Jacqueline Jimenez vda. de Gabriels claim against Fortune Insurance should be denied on the ground of
prescription
HELD:
Yes. Section 384 of the Insurance Code provides: Sec. 384. Any person having any claim upon the policy issued
pursuant to this chapter shall, without any unnecessary delay, present to the insurance company
concerned a written notice of claim setting forth the nature, extent and duration of the injuries sustained
as certified by a d u l y l i c e n s e d p h y s i c i a n . N o t i c e o f c l a i m m u s t b e f i l e d w i t h i n s i x
m o n t h s f r o m d a t e o f t h e a c c i d e n t , o t h e r w i s e , t h e c l a i m s h a l l b e deemed
waived. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases,
with the Commissioner or the C o u r t s w i t h i n o n e y e a r f r o m d e n i a l o f t h e c l a i m ,
o t h e r w i s e , t h e claimants right of action shall prescribe.
The notice of death was given to Fortune Insurance, concededly, more than a year after the death
of vda. de Gabriels husband. Fortune Insu rance, in invoking prescription.
was not referring to the one-year period from the denial of the claim within which to file an a c t i o n a g a i n s t
a n i n s u r e r b u t o b v i o u s l y t o t h e w r i t t e n n o t i c e o f c l a i m t h a t h a d t o b e submitted within six
months from the time of the accident. Vda. de Gabriel argues that Fortune Insurance must be deemed to have
waived its right to show that the cause of death is an excepted peril, by failing to have its answers duly verified.
It is true that a matter of which a written request for admission is made shall be deemed impliedly
admitted unless, within a period designated in the request, which shall not be less than 10 days after service
thereof, or within such further time as the court may allow on motion and notice, the party to whom the request is
directed serves upon the party requesting the admission a sworn statement either denying specifically the matters
of which an admission is requested or setting forth in detail the reasons why he cannot truthfully
either admit or deny those matters; however, the verification, like in most cases required by the rules of
procedure, is a formal, not jurisdictional, requirement, and mainly intended to secure an assurance that matters
which are alleged are done in good faith or are true and correct and not of mere speculation.
When circumstances warrant, the court may simply order the correction of unverified pleadings or act on
it and waive strict compliance with the rules in order that the ends of ju stice may thereby be served. In
the case of answers to w r i t t e n r e q u e s t s f o r a d m i s s i o n p a r t i c u l a r l y , t h e c o u r t c a n a l l o w
t h e p a r t y m a k i n g t h e admission, whether made expressly or deemed to have been made impliedly, to
withdraw or amend it upon such terms as may be just. The insurance policy expressly provided that to be compensable,
the injury or death should be caused by violent accidental external and visible means.
In attempting to prove the cause of her husbands death, all that vda. de Gabriel could submit were a letter sent to
her by her husbands co-worker, stating that Gabriel died when he tried to haul water out of a tank while its
submerged motor was still functioning, and vda. de Gabriels sworn affidavit. The said affidavit, however,
suffers from procedural infirmity as it was not even testified to or identified by vda. de Gabriel herself. This
affidavit therefore is a mere hearsay under the law. In like manner, the letter allegedly written by the deceaseds
co-worker which was never identified to in court by the supposed author, suffers from the same
10

defect as the affidavit of vda. de Gabriel. Not one of the other documents submitted, to wit, the
POEA decision, the death certificate issued by the Ministry of Health of Iraq and the NBI autopsy report, could
give any probative value to vda. de Gabriels claim. The POEA decision did not make any categorical holding on
the specific cause of Gabriels death.In summary, evidence is utterly wanting to establish that the insured
suffered from an accidental death, the risk covered by the policy.

3. Proof of death vs. Notice of death

Londrez vs. National, 94 Phil 627
G.R. No. L-5921

March 29, 1954

SALVACION B. LONDRES, plaintiff-appellee,

vs.
THE NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES, defendant-appellant.
Vicente M. Custodio for appellee.
E. V. Filamor for appellant.
BAUTISTA ANGELO, J.:
This is an appeal from a decision of the Court of First Instance of Manila ordering defendant to pay to plaintiff
the sum of P3,000, Philippine currency, plus legal interest thereon from the time of the filing of the complaint
until its full payment.
On April 14, 1943, the National Life Insurance Company of the Philippines issued a policy on the life of Jose C.
Londres whereby it undertook to pay its beneficiary upon his death the sum of P3,000. All the premiums due
under the policy were actually paid on their dates of maturity and the policy was in force when the insured died
on February 7, 1945. Salvacion V. Londres, as beneficiary, demanded from the company the payment of the
proceeds of the policy, and her demand having been refused, she instituted the present action against the
company in the Court of First Instance of Manila.
Defendant and its answer denied, for lack of sufficient proof, the allegation that the insured died on February 7,
1945, and set up the following special defenses: (a) that plaintiff's claim is covered by the Moratorium Law; (b)
that the policy having been issued during the Japanese occupation, it is presumed that its face value should be
paid in Japanese currency, there being no provision in the policy from which can be inferred that the parties
contemplated payment in any other currency; (c) that the money paid by the insured as premiums, together with
the money received from other policy-holders, was all deposited by the defendant in the Philippine National
Bank and said deposit was declared without value by Executive Order No. 49 of the President of the Philippines;
and (d) that the policy having been issued under abnormal circumstances, it should be considered in the light of
equity which does not permit anyone to enrich himself at the expense of another. Defendant, however, as a proof
of good faith, offered to pay the value of the policy in accordance with the Ballantyne scale of values, or the sum
of P2,400, Philippine currency.
On April 15, 1952, plaintiff filed a motion for summary judgment supported by an affidavit which contains a
restatement of the allegations of the complaint attaching thereto in support of the motion certain annexes and
affidavits which are intended to substantiate and prove said allegations. Defendant, answering this motion, stated
that while it joins the plaintiff in her petition for summary judgment, it does so only in so far as its defense of
moratorium is concerned, but not as regards the merits of the case because its answer raises questions of fact
which should be established, not by mere affidavits, but by evidence duly presented in court. And on May 15,
1952, the court rendered decision not only on the question of moratorium but on the merits of the case,
apparently disregarding the issue raised by defendant as regards the necessity of presenting evidence on the facts
controverted by it in its answer. From this decision, the defendant has appealed.
One of the errors assigned by appellants refers to the fact that the lower court rendered judgment on the merits by
virtue merely of the motion for summary judgment filed by appellee without giving an opportunity to appellant
to present evidence on the facts which, it alleges, its answer and special defenses are predicated. Appellant
contends that the facts raised by its special defenses are "triable issues of facts" which cannot be the subject of

11

summary judgment unless established by sufficient evidence, and that those facts are material to sustain its point
of view that it can only be made to pay under the policy an indemnity in the amount of P2,400.
When appellee filed a motion for summary judgment upon her claim she attached thereto in support of the
motion certain annexes and affidavits which were intended to substantiate and prove her allegations. Appellant
failed not only to interpose opposing affidavits but announced to the court that it was joining the appellee in her
petition for summary judgment although it evinced its desire to present evidence with regard to the questions of
facts raised in its special defenses. And acting on said motion, the lower court, after considering the pleadings
and affidavits submitted in support of the motion for summary judgment, found that there was no substantial
triable issue of facts and concluded that the appellee was entitled to a judgment as a matter of law. We find this
to be in substantial compliance with the rules (sections 1 and 2, Rule 36).
The material averments of the claim as regards the execution of the policy, the payment of the premiums, and the
death of the insured, are not disputed. The only issues of fact which served as basis for the opposition to the
summary judgment are those raised in the special defenses contained in the answer. But these facts are not
material for a decision on the merits, as correctly stated by the lower court, for even if they are taken for granted
the result would not materially change the findings as to the question affecting the main claim. We hold therefore
that the lower court did not err in rendering a summary judgment on the merits of the case.
The issue of moratorium, which was decided against the stand taken by appellant, and which is also raised as one
of the errors, has now moot in view of the ruling in the case of Rutter vs. Esteban, 93 Phil., 68, wherein the
Moratorium Law as declared invalid and unconstitutional.
The main question to be determined refers to the amount to be paid by appellant under the policy by way of
indemnity to the insured. Stated in another way, the question to be determined is whether the amount of P3,000
which appellant bound itself to pay to the insured under the policy upon his death should be paid in accordance
with the present currency or should be adjusted under the Ballantyne scale of values. The answer to the question
would depend upon the interpretation to be placed on the facts surrounding the death of the insured.
It appears that the deceased took up the policy under consideration on April 15, 1943 for the sum of P3,000. All
the premiums due under the policy were actually paid on their dates of maturity and the policy was in force when
the insured died on February 7, 1945. On said date, the battle of the liberation of the City of Manila was still
raging. While the northern part may have been liberated, not so the southern part, as shown from the very
affidavits submitted by appellee wherein it was stated that on the aforesaid date, the insured, Jose Londres, and
his two sons were taken by the Japanese soldiers from their house at Singalong Street and were massacred by
their captors. It may therefore be said that the policy became due when the City of Manila was still under the
yoke of the enemy and became payable only after liberation which took place on March 10, 1945 when President
Osmea issued Proclamation No. 6 following the restoration of the civil government by General Douglas Mac
Arthur. And we say that the policy became payable only after liberation even if it matured sometime before,
because before that eventuality the insurance company, appellant herein, was not yet in a position to pay the
value of the policy for the simple reason that it had not yet reopened. This much the court can take judicial notice
of, for during those days of liberation, while the people were rejoicing because of the happy event, the banks, the
insurance companies, and for that matter other commercial and business firms, were still feeling the adverse
effects of the sudden fall of values and were uncertain and apprehensive as to the manner the readjustment would
be made by the new Government. It is for this reason that the beneficiary, after realizing the truth about the death
of her husband, and after gathering evidence to substantiate his death, had difficulty in effecting the collection of
her claim from the insurance company because at that time it had not yet reopened for business purposes.
Although the record does not disclose the exact date on which the insurance company reopened for this purpose,
this Court can take judicial notice that it only did so after liberation. At that time the legal tender was already the
present currency.
However, it is an undisputed fact that the beneficiary submitted to the company formally her claim and
demanded payment thereof on May 16, 1949, attaching thereto sufficient proof of the death of the insured ,
which claim however the company did not entertain, not because the proof submitted was not sufficient in
contemplation of law, but because the policy was executed during the occupation and the determination of its
value has not yet been passed upon by the Government. And following the provisions of our Insurance Law to
the effect that in case of maturity by death, the conclusion is inescapable that from the point of view of the
insurance company , the proceeds of the policy became payable only upon the expiration of that period.
(Insurance Law, Section 91-A). In this sense, this case may be likened to those already decided by this Court
wherein we said in substance that, where the parties have agreed that the payment of the obligation will be made
in the currency that would prevail by the end of the stipulated period, and this takes place after liberation, the
12

obligation shall be paid in accordance with the currency then prevailing, or Philippine currency. (Roo vs.
Gomez, 83 Phil., 890, 46 Off. Gaz., Sup. 111, 339; Gomez vs. Tabia, 84 Phi;., 269, 47, Off. Gaz., 641.) We are,
therefore, persuaded to conclude, on the strength of these authorities, that the present claim should be paid in
accordance with the present legal tender, or the Philippine currency.
With regard to the sufficiency of the proof presented by appellee as to the death of the insured, we find that the
same has been sufficiently established in view of the death certificate issued by the Civil Register of Manila on
April 15, 1952, which was attached to the motion for summary judgment. This certificate strengthens the proof
submitted by appellee on May 16, 1949 and as such it can serve as basis for the determination of the interest that
the company should pay under the policy as required by law. (Insurance Law, Section 91-A). However, the lower
court, contrary to the claim of appellant, only required said appellant to pay legal interest from the filing of the
complaint until the payment of the judgment.
As final plea, appellant invokes equity in its favor in view of the nullification of the deposits made by it with the
Philippine National Bank of all fiat money received from its policyholders, which money was declared without
value by Executive Order No. 49 of the President of the Philippines. Appellant claims that, considering the
unexpected circumstances that developed, the indemnity to be paid by it should be suffered by it under Article
307 of the Code of Commerce which provides: "When the deposits are of cash, with a specification of the coins
constituting them, . . . the increase or reduction which their value may suffer shall be for the account of the
depositor." Moreover, appellant, by entering into an insurance contract, cannot claim, if it suffers loss, that the
beneficiary cannot enrich herself at its expense. This is a risk attendant to any wagering contract.1 One who
gambles and loses cannot be heard to complain of his loss. To appellant, we can only repeat the following
admonition:
"The parties herein gambled and speculated on the date of the termination of the war and the liberation of the
Philippines by the Americans. This can be gleaned from the stipulation about redemption, particularly that
portion to the effect that redemption could be effected not before the expiration of one year from June 24, 1944.
This kind of agreement is permitted by law. We find nothing immoral or unlawful in it." (Gomez vs. Tabia,
supra.)
Wherefore, the decision appealed from is affirmed, with costs against appellant.
Bengzon, Reyes, Jugo, Labrador, Concepcion and Diokno, JJ., concur.
Paras, C.J., concurs in the result.

4. Facility of payment clause 228 (f), 321 in relation to 230 (m)

Sec. 228. No policy of group life insurance shall be issued and delivered in the
Philippines unless it contains in substance the following provisions, or
provisions which in the opinion of the Commissioner are more favorable to
the persons insured, or at least as favorable to the persons insured and more
favorable to the policy-holders:
(f) A provision that any sum becoming due by reason of death of the person
insured shall be payable to the beneficiary designated by the insured, subject to
the provisions of the policy in the event that there is no designated beneficiary, as
to all or any part of such sum, living at the death of the insured, and subject to
any right reserved by the insurer in the policy and set forth in the certificate to
pay at its option a part of such sum not exceeding five hundred pesos to any
person appearing to the insurer to be equitably entitled thereto by reason of
having incurred funeral or other expenses incident to the last illness or death of
the person insured;

Sec. 321. Any applicant who misrepresents or omits any material fact in his application
for registration as a non-life company underwriter, or commits any dishonest
act in taking or in connection with the qualifying written examination for
underwriters, shall be barred from being registered as such non-life company
underwriter and, if already registered, his registration shall be cancelled and

13

the certificate of registration issued in his favor shall be recalled immediately

by the Commissioner.
In the event that the certificate of authority of a non-life insurance company
to transact business is suspended or revoked due to business failure arising
largely from the imprudent and injudicious acceptance of risks by the
underwriter concerned, the registration of such underwriter shall likewise be
cancelled and his certificate of registration shall be recalled by the
Commissioner, and no similar certificate shall thereafter be issued in his
favor.

Sec. 230. In the case of industrial life insurance, the policy shall contain in substance
the following provisions:
(m) A space on the front or the back of the policy for the name of the beneficiary
designated by the insured with a reservation of the insured's right to designate or
change the beneficiary after the issuance of the policy. The policy may also
provide that no designation or change of beneficiary shall be binding on the
insurer until endorsed on the policy by the insurer, and that the insurer may
refuse to endorse the name of any proposed beneficiary who does not appear to
the insurer to have an insurable interest in the life of the insured. Such policy
may also contain a provision that if the beneficiary designated in the policy does
not surrender the policy with due proof of death within the period stated in the
policy, which shall not be less than thirty days after the death of the insured, or if
the beneficiary is the estate of the insured, or is a minor, or dies before the
insured, or is not legally competent to give valid release, then the insurer may
make any payment thereunder to the executor or administrator of the insured, or
to any of the insured's relatives by blood or legal adoption or connections by
marriage or to any person appearing to the insurer to be equitably entitled thereto
by reason of having incurred expense for the maintenance, medical attention or
burial of the insured; and

II. In non-life Insurance 243 244, 88-91

Sec. 243. The amount of any loss or damage for which an insurer may be liable, under
any policy other than life insurance policy, shall be paid within thirty days
after proof loss is received by the insurer and ascertainment of the loss or
damage is made either by agreement between the insured and the insurer or by
arbitration; but if such ascertainment is not had or made within sixty days
after such receipt by the insurer of the proof of loss, then the loss or damage
shall be paid within ninety days after such receipt. Refusal or failure to pay the
loss or damage within the time prescribed herein will entitle the assured to
collect interest on the proceeds of the policy for the duration of the delay at
the rate of twice the ceiling prescribed by the Monetary Board, unless such
failure or refusal to pay is based on the ground that the claim is fraudulent.
Sec. 244. In case of any litigation for the enforcement of any policy or contract of
insurance, it shall be the duty of the Commissioner or the Court, as the case
may be, to make a finding as to whether the payment of the claim of the
insured has been unreasonably denied or withheld; and in the affirmative case,
the insurance company shall be adjudged to pay damages which shall consist of
attorney's fees and other expenses incurred by the insured person by reason of
such unreasonable denial or withholding of payment plus interest of twice the
ceiling prescribed by the Monetary Board of the amount of the claim due the
insured, from the date following the time prescribed in section two hundred
forty-two or in section two hundred forty-three, as the case may be, until the
claim is fully satisfied; Provided, That the failure to pay any such claim within
the time prescribed in said sections shall be considered prima facie evidence of
unreasonable delay in payment.
NOTICE OF LOSS
Sec. 88. In case of loss upon an insurance against fire, an insurer is exonerated, if
notice thereof be not given to him by an insured, or some person entitled to
the benefit of the insurance, without unnecessary delay.

14

Sec. 89. When a preliminary proof of loss is required by a policy, the insured is not
bound to give such proof as would be necessary in a court of justice; but it is
sufficient for him to give the best evidence which he has in his power at the
time.
Sec. 90. All defects in a notice of loss, or in preliminary proof thereof, which the
insured might remedy, and which the insurer omits to specify to him, without
unnecessary delay, as grounds of objection, are waived.
Sec. 91. Delay in the presentation to an insurer of notice or proof of loss is waived if
caused by any act of him, or if he omits to take objection promptly and
specifically upon that ground.

A. In general
Uy Hu vs. Prudential, 51 Phil 231

EN BANC
[G.R. No. 27778. December 16, 1927.]
UY HU & CO., Plaintiff-Appellant, v. THE PRUDENTIAL ASSURANCE CO., LTD., DefendantAppellant.
Laurel, Alas & De la Rosa,, for Plaintiff-Appellant.
Crossfield & OBrien,, for Defendant-Appellant.
SYLLABUS
1. WHEN PROOF OF CLAIM IS BAR TO RECOVERY. Where a fire insurance policy provides that "If
the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any
fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under
this Policy," and the evidence is conclusive that the proof of claim which the insured submitted was false and
fraudulent both as to the kind, quality and amount of the goods and their value destroyed by the fire, such a proof
of claim is a bar against the insured to recover on the policy even for the amount of his actual loss.
STATEMENT
Plaintiff alleges that it is a general mercantile copartnership duly registered in the mercantile register of the City
of Manila, engaged in the sale and purchase of general merchandise, with its principal office at 1001 Calle
Aceyteros in the City of Manila. That defendant is a foreign insurance company duly licensed to do business in
the Philippine Islands, where it is represented by F. E. Zuellig, Inc., 90 Calle Rosario, Manila. That on April 20,
1926, the defendant undertook to and did insure against loss and damage by fire the property, goods, wares and
merchandise of the plaintiff for the sum of P30,000,-all of which is evidenced by its policy No. 90119. That on
May 10, 1926, and while the policy was in full force and effect, the property therein described was destroyed by
fire without the fault or negligence of the plaintiff. That in accord with the terms and conditions of the policy,
plaintiff notified the defendant of the fire and of its loss, and requested payment of the P30,000, the full amount
of the policy, and at the same time submitted evidence to verify its claim, but that defendant, without any legal or
just ground, refused to pay the claim or any part of it. Wherefore, plaintiff prays for a corresponding judgment
against the defendant, with interest and costs.
For answer the defendant makes a general and specific denial, and as a special defense alleges that in the policy
in question, it was agreed that in the event of loss, should the plaintiff make a fraudulent claim or any false
declaration or use any fraudulent means or devices to obtain payment for its loss, the policy should become null
and void. That after the fire plaintiff did present a claim under oath of its manager for P30,000, the alleged
amount of its loss. That said claim was false and fraudulent, in that it was therein represented that the value of
merchandise at the time of the fire was P32,523.30, whereas in truth and in fact a large part of the merchandise
claimed and represented in plaintiffs proof of loss was not in the building at the time of the fire, and that the
value of the merchandise which was actually consumed or damaged by the fire was a very small part of the claim
made by the plaintiff, "and by reason of such fraudulent claim and false declaration made and used in support
15

thereof, all benefit under said policy has been forfeited." Defendant prays that plaintiffs complaint be dismissed,
and that it have judgment for costs.
As a result of the trial, the lower court rendered judgment for the plaintiff for P16,000, with legal interest from
June 10, 1926, and costs, to which both plaintiff and defendant duly excepted and filed their respective motions
for a new trial which were overruled, and exceptions duly taken, from which both parties appeal, and the plaintiff
assigns the following error:
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"The lower court erred in rendering judgment against the defendant, sentencing it to pay the plaintiff the sum of
sixteen thousand pesos (P16,000) only instead of thirty thousand pesos (P30,000), which is the amount stipulated
in the insurance policy , and to which the plaintiff has a right, in the light of the evidence adduced in this case."
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The defendant assigns the following errors:

jgc:chanrobles.com.ph

"I. The trial court erred in admitting in evidence in this case over the objections of counsel for the defendant the
alleged Chinese books of the plaintiff, Exhibits H and G, and the supposed translations of parts of said books,
Exhibits L and M, the Secret Service report, Exhibit E, the alleged invoices of the plaintiff, Exhibits N-1 to N104, with the supposed translations of those in the Chinese language.
"II. The trial court erred in finding that the reasonable amount of the loss suffered by the plaintiff in this case by
reason of the fire in question was P16,000, instead of the sum of P4,823.20, as claimed by the defendant.
"III. The trial court erred in failing to hold under the evidence in this case that the plaintiffs claim for loss in the
sum of P30,000, under the policy in question, was fraudulent, and that false declarations and proofs had been
made and used in support of said claim, by reason of which all benefits under the policy had been forfeited by
the plaintiff.
"IV. The trial court erred in failing to hold that the plaintiff had violated condition 11, of the policy, Exhibit B,
by refusing to produce and deliver to the defendant the invoices or duplicates thereof of the merchandise upon
demand of the adjusters.
"V. The trial court erred in rendering judgment in this case in favor of the plaintiff and against the defendant for
the sum of P16,000, with legal interest thereon from June 10, 1926, and costs and in not dismissing the
complaint, with costs against the plaintiff."

DECISION
JOHNS, J.:
The policy in question purports to insure plaintiffs goods, wares and merchandise against loss by fire in the
amount of P30,000 between April 20, 1926, and April 20, 1927. Among other conditions, the policy provides:

jgc:chanrobles.com.ph

"11. On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company, and
shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that
behalf, deliver to the Company
"(a) A claim in writing for the loss and damage containing as particular an account as may be reasonably
practicable of all the several articles or items of property damaged or destroyed, and of the amount of the loss or
damage thereto respectively having regard to their value at the time of the loss or damage, not including profit of
any kind.
"12. On the happening of any loss or damage the Company may, so long as the claim is not adjusted and without
incurring any liability, (a) Enter and take and keep possession of the building or premises where the loss or
damage has happened. (b) Take possession of or require to be delivered to it any property of the Insured in the
building or on the premises at the time of the loss or damage. (c) Examine, sort, arrange or remove all or any of
such property. (d) Sell or dispose of, for account of whom it may concern, any salvage or other property taken
possession of or removed.
"13. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if
16

any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit
under this Policy; or, if the loss or damage be occasioned by the willful act, or with the connivance of the
Insured; or, if the Insured or anyone acting on his behalf shall hinder or obstruct the Company in doing any of
the acts referred to in Condition 12; or, if the claim be made and rejected and an action or suit be not commenced
within three months after such rejection or (in case of an Arbitration taking place in pursuance of the 18th
Condition of this Policy) within three months after the Arbitrator or Arbitrators or Umpire shall have made their
award, all benefit under this Policy shall be forfeited."
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The fire in question occurred on the 10th of May, 1926, and on the 14th of May, the plaintiff submitted proof of
its loss in the usual form verified by the oath of its manager, known in the record as Exhibit F, to which was
attached what is known as the "Particulars of the Claim," which among other things recites:
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"When Goods are the subject of the claim the quantities and prices must be verified by Account Books and
Vouchers, or by Independent Persons, the prices being the net market prices immediately before the fire,
exclusive of any profits." And follows a description of the property lost and damaged in the fire, and its "Value
before the fire," amounting to P32,523.30, together with a statement of the "Amount Claimed" as P30,000.
It is vigorously contended by the defendant that this proof of loss and the "Particulars of the Claim" are false and
fraudulent, and that they were made with the intent to mislead and deceive as to the amount and value of the
goods in the building at the time of the fire, and that by reason thereof, under the terms and conditions of the
policy, the plaintiff is not entitled to recover anything. From our point of view, that is the important and decisive
question in this case. If plaintiffs proof of loss was made in good faith and is substantially correct, then it should
have a judgment for the full amount of its policy. If, on the other hand, it is false and fraudulent and was
knowingly and willfully made with intent to deceive and commit a fraud, plaintiff ought not to recover anything
on its policy.
On the morning of the fire the manager of the insurance agent and a Mr. Heintsch, one of its employees, went to
the building in question for the purpose of making an inspection, after which and upon return to their office,
Henry Hunter Bayne & Co., certified public accountants and adjusters of fire losses, were employed to take an
inventory of the damaged merchandise and to adjust the amount of the loss. James R. Herridge and James
Chalmers Glegg of that firm also went at once to the scene of the fire and placed a guard around the premises to
see that nothing was removed. The evidence shows that the fire was an ordinary one, and that it did not start in
plaintiffs bodegas but in those marked M and N on the plan Exhibit D. Plaintiffs bodegas were constructed
mostly of stone, and the roof was of iron and strong materials, to which very little damage was done. In truth and
in fact, plaintiff was damaged much more by water than by fire. May 11th p. m. Glegg and Zulueta of the firm of
Bayne & Company went to the plaintiffs premises where the fire occurred, and took an actual, detailed
inventory of all of the merchandise found in plaintiffs store and bodegas. The merchandise in the store was not
damaged either by fire or water, and all of it was turned over to, and accepted by, the plaintiff, with an estimated
value of P1,453.13. It appears from the inventory which they made, known in the record as Exhibit 8, that the
merchandise and effects in plaintiffs bodegas after the fire was of the value of P4,823.20, and under the heading
of the "Name of Article," is listed all of the different articles and merchandise found in the bodegas after the fire,
and under the heading of "Quantity definitely ascertained" is given the amount of each specific article found
there at that time, and under another heading is a statement of "Quantity estimated including that definitely
ascertained" showing the different estimates as to articles that may have been mutilated or destroyed by the fire,
and under the heading of "Total Loss" is given the value of the amount of each article, making a total of
P4,823.20, as compared with the total of "P32,523.30," as claimed by the plaintiff. For example, in plaintiffs
proof of loss, claim is made for 100 cases of sardines of the value of P915, and under this heading in the
inventory of Glegg and Zulueta, Exhibit 8, appears 15 full cases, 2 broken cases and loose tins 25 cases of the
value of P228.75. Plaintiff claims 60 cases of salmon of the value of P630. There is no salmon at all in Exhibit 8.
Plaintiff claims 30 cases of condensed milk of the value of P523, and on Exhibit 8, there is no condensed milk.
Plaintiff claims 10 cases of Bear milk of the value of P165. On Exhibit 8 appear 2 cases only of Bear brand milk
of the value of P33. Plaintiff claims 500 sacks of Mayaban rice of the value of P4,700, 200 sacks of Makan rice
of the value of P1,840, and 350 sacks of Tikitiki of the value of P1,225. The corresponding entry on Exhibit 8 is
Mayaban rice and Makan rice 20 sacks of both kinds actually found and 150 sacks of both kinds estimated of the
value of P1,380. Tikitiki 492 sacks found and 500 sacks estimated of the value of P1,750. Plaintiff claims
chocolates and candies of the value of P3,500, cigars and cigarettes of the value of P8,500, fixtures in the bodega
of the value of P800. On Exhibit 8, it appears that there are 3 cases of candy figs of the value of P15, and there
are no cigars or cigarettes. Such is a fair comparison between the two statements as to the articles destroyed by
the fire, from which it is very apparent that either plaintiffs claim or the inventory made after the fire is false and
fraudulent.
After Exhibit 8 was completed showing that the value of the merchandise in the bodegas at the time of the fire
17

was P4,823.20, Glegg, Zulueta and Heintsch, as the representative of the insurance company, went with Tan
Chong U, the manager of the plaintiff, and F. M. Britto to plaintiffs bodegas for the purpose of checking the
inventory made by the adjustors and comparing it with the claim made by the plaintiff. Arriving upon the scene,
they asked Tan Chong U to point out to them where the missing merchandise and effects had been stored which
he was unable to do, and the only explanation which he could make was that the missing merchandise and effect
had been completely consumed by the fire, and that no trace of them whatever was left. It also appears that Mr.
Herridge on behalf of the adjustors made demand upon Tan Chong U as the manager of the plaintiff to furnish
him with all the invoices of the merchandise which the plaintiff claims to have stored in his bodegas at the time
of the fire, with the exception of the alleged invoices of the cigars, cigarettes and candies, which were previously
delivered, in response to which Tan Chong U stated that it was impossible for him to deliver the invoices
because many of them were not in his possession as he had made the purchases in cash.
It further appears that immediately after the fire four different photographs were taken of the merchandise as it
appeared after the fire, all of which corroborate the inventory known as Exhibit 8 as to the amount, kind and
quality of the merchandise in the bodegas at the time of the fire, and are conclusive proof that plaintiffs claim
for P30,000 is both false and fraudulent.
While it is true that a small portion of the merchandise might have been consumed, and the evidence of its
existence completely destroyed by the fire, yet in the very nature of things, a large portion of it would not be
destroyed, and some evidence would be left by which the amount, kind and quality of it could be substantially
ascertained and determined.
Photography is an exact science. Witnesses pro and con may testify falsely, but a photograph of a scene is not a
false witness, and is conclusive evidence of the actual facts appearing on the photograph.
Based upon the oral evidence of the defendant, together with the photographs in question, which convincingly
show the actual conditions in the bodegas immediately after the fire, we are clearly of the opinion that plaintiffs
claim is false and fraudulent within the terms and definitions of the policy, and that the value of the merchandise
destroyed by the fire would not exceed P5,000.
Although much latitude should be given to the insured in presenting his proof of claim as to the value of his loss,
in particular as to the price, kind and quality of the property destroyed, yet where the proof is conclusive, as in
this case, that the insured made a claim for a large amount of property which was never in the bodegas at the
time of the fire and for a much larger amount of property than was actually in the bodegas, it makes the whole
claim false and fraudulent, the legal effect of which is to bar plaintiff from the recovery of the amount of its
actual loss.
The judgment of the lower court is reversed and the complaint dismissed, with costs. So ordered.
Avancea C.J., Johnson, Street, Malcolm, Ostrand and Villa-Real, JJ., concur.

Yu chua vs. South, 41 Phil 134

Acriche vs. Law, 48 Phil 592

G.R. Nos. L-24454-24456 January 12, 1926
MOISES ACRICHE, ET AL., Plaintiffs-Appellants, vs. THE LAW UNION AND ROCK INSURANCE
CO., LTD., THE LIVERPOOL AND LONDON AND GLOBE INSURANCE CO., LTD., and THE
GLOBE AND RUTGERS FIRE INSURANCE CO., Defendant-Appellees.
Crossfield and O'Brien and Eugenio Angeles for plaintiffs-appellants.
Gibbs and McDonough for defendants-appellees.
STREET, J.:
These three actions were instituted in the Court of First Instance of the City of Manila by Moises Acriche for the
purpose of recovering certain sums of money from the three defendant insurance companies , namely, the Law
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Union and Rock Insurance Co ., Ltd., the Liverpool and London and Globe Insurance Co . Ltd., and the Globe
and Rutgers Fire Insurance Co., according to their respective proportional liabilities under policies of insurance
issued by them on a stock in trade of Moises Acriche, consisting principally of dry goods, and which had been
damaged by fire on the night of September 21, 1922. In addition to the alleged direct liability of the defendant
insurance companies under the policies of insurance, the plaintiff sought, in the same complaints, to recover
certain proceeds resulting from the sale of the salvaged stock effected by the defendant companies after the fire,
and which proceeds have been retained by the defendants. In their answer the defendants denied liability under
the policies, alleging, among other grounds of defense, that the fire causing the loss was of incendiary origin and
had been set by or with the procurance and connivance of the plaintiff with a view to imposing of a fraudulent
liability on the defendants; and, further, that the defendants had been relieved of all liability by reason of the fact
that the plaintiff had submitted false proofs of loss. After the original pleadings had been submitted, Leon
Acriche was joined in the action as coplaintiff with the original plaintiff, Moises Acriche. In his opinion, the trial
judge passed without deciding the question whether the plaintiff, or plaintiffs had in fact caused or connived at
the setting of the fire which resulted in the loss but absolved the defendants from liability under their several
policies, on the ground that the plaintiff, or plaintiffs, and submitted false proofs of loss. Nevertheless the trial
court recognized the right of the plaintiffs to recover the sum of P8,207 which had been retained in the
possession of the defendant companies from the proceeds of the sale of the salvaged merchandise. He
accordingly gave judgment against the defendants for the last named amount only, dismissing the complaints
with respect to the loss caused by the fire. From this judgment the plaintiffs appealed.
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It appears that, prior to the occurrence with which we are here concerned, a mercantile business had been
conducted in Manila under the name of Acriche and Co., consisting of David Acriche, Marcos Abolafia, Julio
Busto, and one or two others. In November, 1920, Moises Acriche, a Spanish speaking Jew from Gallipoli,
arrived in Manila and here joined his brother, David Acriche. Moises claims to have brought with him a sum of
money with which he was able to purchase an interest in the business of Acriche & Co.,; and later he purchased
from one Eskenazi, a share in the same business that had belonged to Julio Busto, now dead. The principal
establishment of Acriche & Co. was located at 132-134 Escolta, Manila, where miscellaneous merchandise,
principally dry goods, was dealt in. David and Moises Acriche have an uncle, named Leon Acriche, who has
stores in Iloilo and Cebu, as well as an establishment in Manila; and by reason of the intimate relations of the
Acriches among themselves there appears to have been from one place to another. It is to be inferred from the
roof that the principal function of the concern at 132-134 Escolta was the handling of job lots acquired at forced
and bankrupt sales and odds and ends collected from various sources.
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By changes in the membership of Acriches and Co. the ownership of the business at 132-134 Escolta had by
June 1, 1922, come to be vested in Leon Acriche and Moises Acriche; but Moises had the exclusive management
of said business, and the policies of insurance with which we are here concerned were issued in 1921 and 1922 in
his name.
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One of the defenses relied upon in the answer is that the insurable interest in the stock was not vested in Moises
Acriche at the time of the fire, and Leon Acriche was in fact made a party plaintiff in view of his proven interest
in the merchandise which was the subject of loss. We note, however, that the policies sued upon are expressly so
written as to cover property held in trust or on commission by Moises Acriche, or held by him on joint account
with other and for which he was responsible. It is the contention of the defendants that the stick which was
damaged by the fire really belong to the entity, Acriche and Co., and that it cannot be truly said that Moises
Acriche held that the stock in any of the characters indicated in the policy, and in particular that the stock was
not held by Moises Acriche upon joint account with his uncle, Leon Acriche. At the close of his opinion the trial
judge appears to have accepted this view of the case, since he observes that the plaintiffs had not satisfactorily
shown an ownership consistent with the terms of the policy. Nevertheless we note that in the end he placed his
decision on the ground that the defendants were released by the act of the plaintiffs in submitting fraudulent
proof. In the view we take of the case, it is unnecessary to pass upon the precise issue as to the ownership of the
insured stock. It is enough to suggests that if the claim had been in all other respects fair and honest, the
objection referred to would probably not have been a fatal obstacle to a recovery. The really determinative
questions in the case are the two which have relation to the origin of the fire and the nature of the proof
submitted by Moises Acriche in support of the claim.
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The insured merchandise was contained in a store at the corner of the Escolta and David street, in Manila.
Immediately above it was a room occupied for business purposes by one Sam Weingarten, for some time a
resident of Manila prior to the fire but who has since absconded. At about 8.30 on the night of September 21,
1922, pedestrians in the vicinity heard an explosion which appeared to have come from the direction of this
store. Immediately smoke and flames were seen to issue from the window of the room occupied by Weingarten.
The police man who happened to be on duty at the corner of the two streets mentioned immediately turned on the
fire alarm; and a detachment of firemen, with appropriate apparatus, reached a place within two or three minutes.
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As the center of the conflagration appeared to be in Weinsgarten's room, the firemen broke open the door, which
was locked from the outside, and turned on the hose. Admittance was, in like manner gained into Acriche's store,
and water was turned into that apartment. In this way the flames were subjugated before they had attained much
headway.
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An inspection of the premises followed, with the result that the fire was seen to have been indubitably of
incendiary origin; and by putting things together, the following facts have been satisfactorily made out: On the
afternoon preceding the fire, Weingarten brought a large demijohn from his sleeping apartment in another part of
the city to his room above Acriche's store. On the same afternoon a five gallon can of gasoline was delivered to
Weingarten at the same place; and a muchacho carried the tin up by Weingarten's direction, while the driver of
the carretela making the delivery waited below. The can was then opened by Weingarten and the contents poured
into the demijohn, upon which the muchacho was directed to take the empty can back to the person waiting
below. This was done. The same afternoon Moises Acriche had a secret and extended interview with Weingarten
in the latter's room. The fire had evidently originated in Weingarten's room and a quantity of rags of mosquito
netting, saturated with inflammable liquid was found on the floor of this room after the fire was extinguished.
The demijohn was also found to have been shattered.
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The noise of the explosion, which attracted attention at the very beginning of the fire, finds its explanation in the
following facts: The floor of Weingarten's room was made of wood and the planks were not close enough
together to prevent leakage. Moreover, at a certain place in the floor, there was a hole through which any liquid
that might be poured on the floor would readily flow into the space below. The ceiling of Acriches' store was
formed of metal sheets, so closely joined together that any liquid admitted from above would be retained as in a
receptacle. Now, the gasoline which had been in the demijohn had evidently been emptied in the floor of
Weingarten's room, with the result that a considerable quantity had trickled through the floor and had probably
formed a puddle on the metal roofing of the store below. The gasoline, being a substance which evaporates
freely, and quickly saturated with its gas the air in the enclosed space, with the result that when the fire, started in
some unknown manner, and reached the spot an explosion occurred, as in the chamber of a gas engine. The
physical effect of the explosion was to blow a large hole in the metal ceiling, splattering liquid gasoline over the
contents of the store. The hole thus formed was about 2 feet in diameter. Upon examination of the goods found
on the counter and shelves of the store, a smell similar to that emitted by gasoline or petroleum was perceived.
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That the fire was started by an incendiary, who could be none other than Weingarten, is self-evident, and
circumstantial proof points to Moises Acriche as a probable instigator of the Act. Among these circumstances it
may be noted that Weingarten had nothing insured from which he could expect to profit by such a fire, while
Acriche had on his hands an unsalable, stock of self-worn goods, and his sales during the month preceding the
fire had been small in amount. Acriche denies having had any intimacy with Weingarten, but this pretense must
be considered disproved, as he is shown to have visited Weingarten's living room in another part of the city upon
more than one occasion prior to the fire.
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But most convincing of the circumstances suggestive of Acriche's participation in the starting of the fire is found
in what appears to be a preconceived plan on his part for proving a greater loss than such as would probably
result from a destructive fire. The insurance policies which were the subject of suit together cover the amount of
P55,000 and were taken out, as already stated, by Moises Acriche at the end of the year 1921 and beginning of
1922. Upon the demand of the adjuster, the insured supplied a document purporting to be an inventory of stock,
dated May 31, 1922. (Exhibit F.) In addition to this various invoices were produced, showing additions to the
stock between that date and the date of the fire, on September 21. (Exhibits K-1 and K-66.) After the fire had
occurred the stock was examined, and some of the goods, as set forth in the Exhibit L-1, were found to be
injured. These were turned over by the adjuster to the insured. The damaged goods were listed in the Exhibit L,
which shows the character and quantity of the merchandise, as well as its value. The adjuster verified this list as
to kind and quantity of articles listed, and the values shown were either added upon the sole responsibility of the
insured or taken without question from data supplied by him. The Exhibit L, a list of the damaged goods, was
submitted by the insured as the basis of his claims against the defendant insurance companies. According to this
list the value of the damaged stock at the time of the fire was P37,359.77. Not satisfied with the valuation fixed
by Acriche, the insurance companies caused an independent appraisal to be made by two disinterested persons,
with the result that the same goods were appraised by them at P28,537.78, showing that the valuations fixed in
the Exhibit L were probably excessive, due account being taken of the character of the goods.
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A comparison of the inventory and invoices with the lists L and L-1 reveals the fact that goods shown in the
inventory and invoices to the value of P52,708.73 had disappeared from the stock during the interval between
May 31 and September 21; and as the trial court declared, no satisfactory showing has been made by the assured
as to the disposition made of said goods. Certainly they cannot be accounted for on the supposition that they had
20

been sold, since the books show that the gross sales between May 31 and September 21 were about P20,918.43.
(Exhibit J.) Further examination of the same documents reveals the fact that goods to the value of P16,899.22
were found in the stock upon the date of the fire which were not listed at all in the inventory or invoices. The
proper inference to be drawn from this showing in our opinion is that the inventory was in a great measure false,
and it is impossible to believe that the assured has acted in good faith.
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The incredible proof connected with the stock of mosquito netting strongly tends to the same conclusion. The
Exhibit G purports to show that in the month of May, 1922, the Escolta store received from Leon Acriche 116
bales, each containing 100 mosquito nets of the value of P120 per net, and amounting in all to the value of
P13,920. These mosquito nets are not listed in Exhibit F, and their disappearance has not been accounted for.
Other exhibits show that between May 31 and the date of the fire mosquito netting of the value of P9,969.60 was
purchased from Leon Acriche and other small purchases of the same sort of goods were bought from one Epstein
and one Goldstein, amounting (with that purchased from Leon Acriche) to the value of P10,465.56. If to this be
added the mosquito netting received in May from Leon Acriche, we have merchandise of this sort to the value of
P24,385.56. Yet in the lists L and L-1 only a trivial amount of these goods, if any, is listed. Exhibit S, dated
August 8, 1922 shows that upon that date various effects were consigned from the Escolta store to the house of
one Isaac Acriche on Rosario street, in the City of Manila, of a total value of P3,169.10. Among the goods so
consigned appear three bales of mosquito netting of a total value of P435. The Exhibit T shows a similar
consignment in June to Leon Acriche and Marcos Chucran, in Cebu, of thirty bales of mosquito netting valued at
P3,200.
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We believe the Exhibit G to be fictitious, at least as to a great part of the quantity of mosquito netting stated
therein; and upon a review of the whole evidence we find no reason to doubt the correctness of the conclusion of
the trial court that the inventory of May 1 is in great part false and that the plaintiffs have submitted false
evidence in support of their claims. It must also be considered established by a preponderance of evidence,
though only of a circumstantial nature, that the plaintiff, Moises Acriche, is responsible for the fire which gave
rise to this action.
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The insurance policies which are the subject of suit in these cases contain a provision expressly declaring that all
benefit thereunder shall be forfeited if the loss be occasioned by the willful act or with the connivance of the
insured, of if the claim be in any respect fraudulent or if any fraudulent means are used by the insured or any one
acting in his behalf to obtain any benefit under the policy. This provision is fatal to any recovery by the
plaintiffs; and the cause is no aided by the circumstance that the plaintiff, or plaintiffs, in fact suffered loss by the
damage done to the goods listed in Exhibit L. Supposing Moises Acriche to have acted fraudulently, a thing
which is in our opinion established, it must be remembered that the object in view was totally to destroy the
stock at 132-134 Escolta by fire; and it was not designed that the fire should be put out before the work of the
fire was fully accomplished. If the manifest purpose had been attained, the books and documents submitted by
the plaintiffs would have shown a loss far in excess of the amount of the policies, and the companies would have
been defrauded of a large sum of money in excess of the real loss. The situation is to be judged not so much in
the light of what actually happened as in the light of the purpose intended to be affected.
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In our opinion there was no error in the judgment appealed from, and the same is affirmed, with costs against the
appellants. So ordered.

1. Loss 84 87
Sec. 84. Unless otherwise provided by the policy, an insurer is liable for a loss of
which a peril insured against was the proximate cause, although a peril
not contemplated by the contract may have been a remote cause of the
loss; but he is not liable for a loss which the peril insured against was only
a remote cause.
Sec. 85. An insurer is liable where the thing insured is rescued from a peril insured
against that would otherwise have caused a loss, if, in the course of such
rescue, the thing is exposed to a peril not insured against, which
permanently deprives the insured of its possession, in whole or in part; or
where a loss is caused by efforts to rescue the thing insured from a peril
insured against.
Sec. 86. Where a peril is especially excepted in a contract of insurance, a loss,
which would not have occurred but for such peril, is thereby excepted
although the immediate cause of the loss was a peril which was not
excepted.

21

Sec. 87. An insurer is not liable for a loss caused by the willful act or through the
connivance of the insured; but he is not exonerated by the negligence of
the insured, or of the insurance agents or others.

2. Notice and proof of loss 88 92

Title 10
NOTICE OF LOSS
Sec. 88. In case of loss upon an insurance against fire, an insurer is exonerated, if notice

Sec.

Sec.
Sec.
Sec.

thereof be not given to him by an insured, or some person entitled to the

benefit of the insurance, without unnecessary delay.
89. When a preliminary proof of loss is required by a policy, the insured is not
bound to give such proof as would be necessary in a court of justice; but it
is sufficient for him to give the best evidence which he has in his power at
the time.
90. All defects in a notice of loss, or in preliminary proof thereof, which the
insured might remedy, and which the insurer omits to specify to him,
without unnecessary delay, as grounds of objection, are waived.
91. Delay in the presentation to an insurer of notice or proof of loss is waived
if caused by any act of him, or if he omits to take objection promptly and
specifically upon that ground.
92. If the policy requires, by way of preliminary proof of loss, the certificate
or testimony of a person other than the insured, it is sufficient for the
insured to use reasonable diligence to procure it, and in case of the refusal
of such person to give it, then to furnish reasonable evidence to the
insurer that such refusal was not induced by any just grounds of disbelief
in the facts necessary to be certified or testified.

3. Payment of proceeds
Bayview vs. Ker 116 scra 327
G.R. No. L-28237 August 31, 1982
BAY VIEW HOTEL., INC., plaintiff-appellant,
vs.
KER & CO., LTD., and PHOENIX ASSURANCE CO., LTD., defendants-appellees.
Mariano V. Ampil, Jr. for plaintiff-appellant.
Alfonso Felix, Jr. for defendants-appellants.
&
TEEHANKEE, J.:1wph1.t
This appeal was originally brought before the Court of Appeals but was certified to this Court
pursuant to the appellate court's resolution of October 13, 1967 since it involved purely
questions of law.
Sometime in January, 1958, plaintiff-appellant Bay View Hotel, Inc., then the lessee arid
operator of the Manila Hotel, secured a fidelity guarantee bond from defendant-appellee Ker &
Co., Ltd., for its accountable employees against acts of fraud and dishonesty. Said defendantappellee Ker & Co., Ltd., is the Philippine general agent of Phoenix Assurance Co., Ltd. a
foreign corporation duly licensed to do insurance business in the Philippines.
When one of the bonded employees, Tomas E. Ablaza, while acting in his capacity as
cashier, was discovered by plaintiff-appellant to have had a cash shortage and unremitted
collections in the total amount of P42,490.95, it filed claims for payments on the said fidelity
guarantee bond but defendant-appellee Ker & Co. denied and refused indemnification and
22

payment. To enforce its claims, plaintiff-appellant instituted its complaint, dated August 30,
1965 docketed as Civil Case No. 63181 of the Court of First Instance of Manila.
In its answer, defendant-appellee Ker & Co. justified its denial of the claims of plaintiffappellant on various reas ns, such as non-compliance with the conditions stipulated in the
insurance policy ; non-presentation of evidence regarding the various charges of dishonesty
and misrepresentation against Tomas E. Ablaza and non-production of the documents to
prove the alleged loss. Ker & Co. likewise averred that it was merely an agent and- as such it
was not liable under the policy.
On June 22, 1966, counsel for Ker & Co. filed a request for admission, furnishing plaintiffappellant's counsel with a copy thereof requesting admission of the following facts:
1wph1.t
1. On February 14, 1967, the Bay View Hotel, Inc., applied to the Phoenix
Assurance Co., Ltd., for a fidelity guarantee bond through a proposal form, a
true copy of which is annexed to our answer as Annex "A" thereof.
2. Such a policy was actually issued on January 22, 1958 by the Phoenix
Assurance Co., Ltd., in favor of the Bay View Hotel, Inc., and was renewed from
time to time with amendments. A true copy of the policy as it finally stood at the
time of the alleged defalcation is annexed to our answer as Annex 'B ' thereof.
3. This claim filed by the Bay View Hotel, Inc., under this policy was denied on
behalf of the Phoenix Assurance Co., Ltd., by a letter dated 18th June, 1965
sent by registered mail to the Bay View Hotel, Inc. on June 22, 1965. A true
copy of this letter of denial is annexed to the present request as Annex "C"
hereof. "
When plaintiff-appellant failed to make any answer to the request for admission within the
period prescribed by the rules, defendant-appellee Ker & Co. filed a Motion to Dismiss on
Affirmative Defense, dated July 6, 1966, insisting that since under Sec. 2, Rule 26 of the
Rules of Court, plaintiff-appellant was deemed to have impliedly admitted each of the matters
enumerated in the request for admission, it followed that the proper party in interest against
whom plaintiff-appellant might have a claim was the principal Phoenix Assurance Co.
(Phoenix) and not the agent Ker & Co.
Plaintiff-appellant filed an opposition, dated July 19, 1966 arguing that the proper remedy,
under the circumstances was not to dismiss the complaint but to amend it in order to bring the
necessary or indispensable parties to the suit. Defendant-appellee Ker & Co. filed a reply to
the opposition reiterating its stand that since it merely acted as an agent, the case should be
dismissed and plaintiff-appellant should file the necessary action against the principal
Phoenix.
On August 1, 1966, plaintiff-appellant filed a Motion for Leave to Admit Amended Complaint,
attaching copy of the complaint, as amended, this time impleading Phoenix as party
defendant. On August 16, 1966, defendants- appellees filed their joint answer to the amended
complaint. Again, Ker & Co., Ltd., argued that it was merely an agent and therefore not liable
under the policy. On the other hand, Phoenix, averred that under Condition 8 of the insurance
policy , plaintiff-appellant was deemed to have abandoned its claim in view of the fact that it
did not ask for an arbitration of its claim within twelve (12) months from June 22, 1965 the
date of receipt of the denial of the claim.
On August 24, 1966, defendants-appellees filed a motion for summary judgment which the
trial court granted in its decision of November 4, 1966, ordering the dismissal of the case.
After denial of its motion for reconsideration, plaintiff-appellant filed the present appeal, raising
the following assignment of errors: 1wph1.t
23

I
The lower court erred and acted with grave abuse of discretion in extending the
legal effects, if any, of the request for admission filed by Ker & Co., Ltd. to the
Phoenix Assurance Co., Ltd., which was not a party-defendant at the time said
request was filed and for whom no similar request was ever filed.
II
The lower court erred and acted with grave abuse of discretion in giving legal
effects to a request for admission by the defendant-appellee under the original
complaint after the said original complaint was, with leave of court, amended.
III
The lower court erred and acted with grave abuse of discretion in holding that
"Condition No. 8 of the Policy No. FGC-5018-P requires that should there be a
controversy in the payment of the claims, it should be submitted to an
arbitration" despite the admissions by the parties and the established fact that
Condition No. 8 of said Policy No. FGC-5018-P provides for Arbitration if any
dispute shall arise as to the amount of company's liability."
IV
The lower court erred and acted with grave abuse of discretion in granting the
Motion for Summary Judgment and dismissing the complaint.
The first two errors assigned may be taken jointly. Plaintiff-appellant argues that since the
implied admission was made before the amendment of its complaint so as to include Phoenix,
it follows that Phoenix has no right to avail of these admissions, and that the trial court
committed a grave abuse of discretion in extending to Phoenix the legal effects of the request
for admission filed solely by Ker & Co.
The argument is untenable, Admission is in the nature of evidence and its legal effects were
already part of the records of the case and therefore could be availed of by any party even by
one subsequently impleaded. The amendment of the complaint per se cannot set aside the
legal effects of the request for admission since its materiality has not been affected by the
amendment. If a fact is admitted to be true at any stage of the proceedings, it is not stricken
out through the amendment of the complaint. To allow a party to alter the legal effects of the
request for admission by the mere amendment of a pleading would constitute a dangerous
and undesirable precedent. The legal effects of plaintiff- appellant's failure to answer the
request for admission could and should have been corrected below by its filing a motion to be
relieved of the consequences of the implied admission with respect to respondent Phoenix.
Moreover, since an agent may do such acts as may be conducive to the accomplishment of
the purpose of the agency, admissions secured by the agent within the scope of the agency
ought to favor the principal. This has to be the rule, for the act or declarations of an agent of
the party within the scope of the agency and during its existence are considered and treated
in turn as the declarations, acts and representations of his principal 1 and may be given in evidence
against such party.
Plaintiff-appellant insists that since the motion for summary judgment was filed on behalf of defendant-appellee
Ker & Co. alone, there was no motion for summary judgment as far as Phoenix was concerned and the trial
court's decision dismissing the case should not have included the principal Phoenix.
But the motion for summary judgment was filed after the complaint had been amended and answer thereto had
been filed. The issues, therefore, with respect to Phoenix had already been likewise joined. Moreover, a reading
of the said motion for summary judgment, more particularly the prayer thereof, shows that Phoenix did join Ker &

24

Co. in moving for the dismissal of the case and prayed "that the present action be dismissed as against Ker &
Co., Ltd., because being purely and simply the agent of the insurer, it is not liable under the policy and as against
the Phoenix Assurance Co., Ltd. because by failing to seek an arbitration within twelve months from the date of
its receipt of the denial of its claim on June 22, 1965, plaintiff Bay View Hotel, Inc., is deemed under condition 8
of ,, tie policy, to have abandoned its claim against said defendant phoenix Assurance Co., Ltd."
The main issue raised by plaintiff-appellant is with respect to Condition No. 8 of the insurance policy ,
photostatic copy of which was submitted to the trial court and reproduced as follows: 1wph1.t
If any dispute shall arise as to the amount of company's liability under this Policy the matter shall
if required by either party be to the decision of two neutral persons as arbitrators one of, whom
shall be named by each party or of an umpire who shall be appointed by the said arbitrators
before entering on the reference and in case either party or his representative shall neglect or
refuse for the space of two months after request in writing from the other party so to do to name
an arbitrator the arbitrator of the other party may proceed alone. And it is hereby expressly
agreed and declared that it shag be a condition precedent to any right of action or upon this
Policy that the award by such arbitrators, arbitrator or umpire of the amount of the loss shall first
be obtained. The costs of and connected with the arbitration shag be in the discretion of the
2
arbitrators, arbitrator or umpire.
Plaintiff-appellant maintains that Condition No. 8 of the policy provides for arbitration only "if any dispute should
arise as to the amount of company's liability" consequently, the reference to arbitration is not a condition
precedent to the filing of the suit contrary to the insurer company's posture. Plaintiff-appellant points out that in
the instant case, there is a total and complete negation of liability. There is no dispute as to the amount of
company's liability because this presupposes an admission of responsibility although not to the extent of the cost
thereof, while here the insurer denies liability wholly and totally.
We find in favor of plaintiff-appellant. The provisions of Condition No. 8, more specifically the portion thereof
which reads, "if any dispute shall arise as to the amount of company's liability under this policy ...," do not appear
to require any extended interpretation. Condition No. 8 requires arbitration only as to disputes regarding the
amount of the insurer's liability but not as to any dispute as to the existence or non- existence of liability. Thus,
Condition No. 8 comes into play only if the insurer admits liability but cannot agree with the insured as to the
amount thereof and cannot be invoked in cases like that at bar where the insurer completely denies any liability.
Defendants-appellees' contention that plaintiff-appellant's failure to request arbitration proceedings is a bar to its
filing of the suit at bar against the insurer company cannot be sustained, specially considering the established
principle that contracts of adhesion such as the insurance policy in question are to be strictly construed in case
of doubt against the insurer.
As to appellee Ker & Co., Ltd., however, there appears to be no serious contradiction as to the fact that it merely
acted as the agent of its principal, Phoenix. Considering that there was full disclosure of such agency since the
insurance policy was actually issued by Phoenix, We find no error in the dismissal of the case against said
defendant Ker & Co., Ltd.
Accordingly, the dismissal of the case against Ker & Co., Ltd., is hereby affirmed and maintained, while the
dismissal of the case against Phoenix Assurance Co., Ltd. is hereby set aside and the case is remanded to the
court of origin for further proceedings and determination on the merits. No costs.

Galutera vs. Maersk, 11 scra 251

May 30, 1964
G.R. No. L-15056
M. S. GALUTERA, plaintiff-appellant,
vs.
MAERSK LINE CIA GRAL. DE TABACOS DE FILlPINAS and/or DELGADO BROS., INC.,
defendants-appellees.
Ozaeta, Gibbs and Ozaeta for plaintiff-appellant.
Ross, Selph and Carrascoso and Leocadio de Asis for defendants-appellees.
MAKALINTAL, J.:
This case has come directly to us on appeal from the Court of First Instance of Manila (Civil Case No. 30235).
25

In June 1955 a consignment of 12 bales of cotton prints was shipped in New York, for Manila, aboard the SS
"Johannes Maersk," operated by the Maersk Line, one of herein defendants-appellees. The shipment was
consigned to the order of the Bank of the Philippine Islands, with arrival notice to plaintiff-appellant M. S.
Galutera. The shipment arrived in Manila in July 1955, was transferred in due course to the ownership of
plaintiff-appellant, and then cleared by her customs broker through the Tabacalera (Cia. Gral de Tabacos de
Filipinas), as local agent of the Maersk Line, and through defendant-appellee Delgado Brothers Inc., as operator
of the arrastre service. When the shipment was delivered to plaintiff-appellant by the said arrastre operator, one
bale of cotton prints was missing.
In the action filed for the recovery of the sum of P1,459.56 representing the value of the missing merchandise,
the Court a quo found from the evidence and declared that the loss was attributable to defendant-appellee,
Delgado Brothers Inc. The Court, however, denied recovery to plaintiff-appellant on the ground that she had
already been paid the value of the missing bale by the American Insurance Company , with which the shipment
had been insured through its Philippine representative, E.E. Elser, Inc.
It is not denied that plaintiff-appellant received from the insurer the sum now in dispute, but she maintains that
she received it not as payment but merely as a loan "repayable to the extent of any recovery she could make from
the party or parties responsible for the loss of the missing bale of cotton prints." Plaintiff-appellant's position on
this point is supported by Exhibit F, which provides as follows:
Received from the AMERICAN INSURANCE COMPANY One Thousand Four Hundred Fifty Nine and 56/100
(P1,459.56) Pesos as a loan repayable only to the extent of any net recovery, the undersigned may make from
any vessel, carrier, bailee or others, upon or by reason of any claim or loss of or damage to the property
described below, or from any insurance effected by us or by any carrier, bailee or others on said property and as
security for such payment we hereby pledge to the said AMERICAN INSURANCE COMPANY all such claims
and any recovery thereon. We hereby appoint the said AMERICAN INSURANCE COMPANY our agents and
Attorneys in Fact, with irrevocable power to collect any such claim and to begin, prosecute, compromise or
draw, in our name but at the expense of the said AMERICAN INSURANCE COMPANY, any legal proceeding
which they may deem necessary to enforce such claim or claims, and to execute in our name any documents
which may be necessary to carry into effect the purposes of this agreement. In further consideration of the said
advance, we hereby guarantee that we are the person entitled to enforce the terms of the contract of
transportation set forth in the bills of lading covering the said property.
On the other hand, defendant-appellee Delgado Brothers, Inc., refers to plaintiff-appellant's admission in her
testimony at the trial to the effect that she had been "paid" by the insurer, and to said defendant's documentary
evidence, particularly Exhibit 3, which is a letter of E.E. Elser Inc. to Delgado Brothers, Inc., advising the latter
that the former had paid the corresponding amount to M.S. Galutera and was therefore subrogated in her place
for which reason any payment to be made by the Delgado Brother. Inc. should be to E.E. Elser, Inc.
The trial court, as already noted, upheld the position of defendant Delgado Brothers, Inc., and while finding that
the loss was attributable to it declined to give judgment in favor of plaintiff. After the decision was rendered the
latter filed a motion for reconsideration and, in the alternative, for the inclusion of the American Insurance
Company as co-plaintiff pursuant to Section 3 of Rule 3, or for an amendment of the pleadings so as to implead
the said company in order to make them conform to the evidence presented. The motion was denied.
The overriding fact in this case which is not at all controverted in this appeal is that Delgado Brothers,
Inc., is liable for the loss. Whether payment thereof should be made to plaintiff-appellant or to the American
Insurance Company is a technicality that should be, overlooked. In the written agreement between them, Exhibit
F, the amount representing the loss, if recovered by, plaintiff-appellant, should be repaid to the said company.
That agreement is binding upon them, such that a judgment rendered in favor of plaintiff-appellant, is the only
claimant in this case, would relieve defendant-appellee Delgado Brothers, Inc., of any further liability by reason
of such loss. Indeed the terms of Exhibit F do not make for subrogation of the insurer to the rights of the insured,
and hence have not divested the latter of her right to file this suit.
The following citations are pertinent:
For many years it has been customary for insurers, in order to save light of their assureds and to promptly place
them in funds, so that their business might be continued without embarrassment, to lend to their assureds the
amount of the loss repayable only out of money collected on account of the loss. There is a line of cases
approving such arrangements and holding that such loans are not a payment of insurance. (First National Bank of
Ottawa v. Lloyd's of London 116 F. 2d, 221, 226.)
26

The right of the libelant to prosecute the libel under this state of facts is challenged. The transaction with the
insurance company did not divest the libelant of his title to and interest in the properly, and was not a satisfaction
of his claim either against the insurance company or the libelee. If it were, in terms, a satisfaction of the claim for
insurance, it would not avail the libelee. ... . (The Guiding Star, 53 F. 936, 940)
And in Lee v. Barrett (1913) 82 Misc. 475, 144 N.Y. Supp. 941, where, after a loss to a shipper and occurred
because of a carrier's default, an insurer which had issued a policy to the shipper advanced money to the latter,
and took an instrument acknowledging the receipt of the sum advanced "as a loan, and repayable only to the
extent of any net recovery we may make from any carrier, bailee, or others, on account of loss of our property,"
and pledging to the insurer any recovery from the carrier, or from an insurer of the carrier, and agreeing to
deliver the bills of lading and to prosecute suit against the carrier on the claim, at the expense, and under the
exclusive direction and control of the insurer, it was held that the advancement did not constitute a payment of
the loss, and that the insurer was not, therefore, subrogated to insured's rights against the carrier, and an action
was, therefore, held properly brought by an assignor of the insured. (1 A.L.R. 1529)
The insistence of defendant-appellee on the question of who should properly have filed this suit is based on a
technicality that should be brushed aside. To permit plaintiff-appellant to recover, subject of course to her
obligation to the American Insurance Company under Exhibit F, would avoid unnecessary delay and multiplicity
of suits in the attainment of the same result, namely the enforcement of an undisputed liability on the part of one
of the parties.
The judgment appealed from is reversed and defendant-appellee Delgado Brothers, Inc. is ordered to pay
plaintiff-appellant the sum of P1,459.56, as stated in the complaint, with legal interest thereon from the date of
its filing, and costs.

4. Right of subrogation
Manila majogany vs. CA, 154 scra 650
G.R. No. L-52756 October 12, 1987
MANILA MAHOGANY MANUFACTURING CORPORATION, petitioner,
vs.
COURT OF APPEALS AND ZENITH INSURANCE CORPORATION, respondents.

PADILLA, J:
Petition to review the decision * of the Court of Appeals, in CA-G.R. No. SP-08642, dated 21 March 1979, ordering petitioner Manila
Mahogany Manufacturing Corporation to pay private respondent Zenith Insurance Corporation the sum of Five Thousand Pesos (P5,000.00) with 6%
annual interest from 18 January 1973, attorney's fees in the sum of five hundred pesos (P500.00), and costs of suit, and the resolution of the same
Court, dated 8 February 1980, denying petitioner's motion for reconsideration of it's decision.
From 6 March 1970 to 6 March 1971, petitioner insured its Mercedes Benz 4-door sedan with respondent insurance company . On 4 May 1970 the
insured vehicle was bumped and damaged by a truck owned by San Miguel Corporation. For the damage caused, respondent company paid petitioner
five thousand pesos (P5,000.00) in amicable settlement. Petitioner's general manager executed a Release of Claim, subrogating respondent company
to all its right to action against San Miguel Corporation.
On 11 December 1972, respondent company wrote Insurance Adjusters, Inc. to demand reimbursement from San Miguel Corporation of the amount it
had paid petitioner. Insurance Adjusters, Inc. refused reimbursement, alleging that San Miguel Corporation had already paid petitioner P4,500.00 for
the damages to petitioner's motor vehicle, as evidenced by a cash voucher and a Release of Claim executed by the General Manager of petitioner
discharging San Miguel Corporation from "all actions, claims, demands the rights of action that now exist or hereafter [sic] develop arising out of or as
a consequence of the accident."
Respondent insurance company thus demanded from petitioner reimbursement of the sum of P4,500.00 paid by San Miguel Corporation. Petitioner
refused; hence, respondent company filed suit in the City Court of Manila for the recovery of P4,500.00. The City Court ordered petitioner to pay
respondent P4,500.00. On appeal the Court of First Instance of Manila affirmed the City Court's decision in toto, which CFI decision was affirmed by
the Court of Appeals, with the modification that petitioner was to pay respondent the total amount of P5,000.00 that it had earlier received from the
respondent insurance company .

27

Petitioner now contends it is not bound to pay P4,500.00, and much more, P5,000.00 to respondent company as the subrogation in the Release of
Claim it executed in favor of respondent was conditioned on recovery of the total amount of damages petitioner had sustained. Since total damages
were valued by petitioner at P9,486.43 and only P5,000.00 was received by petitioner from respondent, petitioner argues that it was entitled to go after
San Miguel Corporation to claim the additional P4,500.00 eventually paid to it by the latter, without having to turn over said amount to respondent.
Respondent of course disputes this allegation and states that there was no qualification to its right of subrogation under the Release of Claim executed
by petitioner, the contents of said deed having expressed all the intents and purposes of the parties.
To support its alleged right not to return the P4,500.00 paid by San Miguel Corporation, petitioner cites Art. 2207 of the Civil Code, which states:
If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does
not fully cover the injury or loss the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or
injury.
Petitioner also invokes Art. 1304 of the Civil Code, stating.
A creditor, to whom partial payment has been made, may exercise his right for the remainder, and he shall be preferred to the
person who has been subrogated in his place in virtue of the partial payment of the same credit.
We find petitioners arguments to be untenable and without merit. In the absence of any other evidence to support its allegation that a gentlemen's
agreement existed between it and respondent, not embodied in the Release of Claim, such ease of Claim must be taken as the best evidence of the
intent and purpose of the parties. Thus, the Court of Appeals rightly stated:
Petitioner argues that the release claim it executed subrogating Private respondent to any right of action it had against San
Miguel Corporation did not preclude Manila Mahogany from filing a deficiency claim against the wrongdoer. Citing Article 2207,
New Civil Code, to the effect that if the amount paid by an insurance company does not fully cover the loss, the aggrieved party
shall be entitled to recover the deficiency from the person causing the loss, petitioner claims a preferred right to retain the
amount coming from San Miguel Corporation, despite the subrogation in favor of Private respondent.
Although petitioners right to file a deficiency claim against San Miguel Corporation is with legal basis, without prejudice to the
insurer's right of subrogation, nevertheless when Manila Mahogany executed another release claim (Exhibit K) discharging San
Miguel Corporation from "all actions, claims, demands and rights of action that now exist or hereafter arising out of or as a
consequence of the accident" after the insurer had paid the proceeds of the policy- the compromise agreement of P5,000.00
being based on the insurance policy-the insurer is entitled to recover from the insured the amount of insurance money paid
(Metropolitan Casualty Insurance Company of New York vs. Badler, 229 N.Y.S. 61, 132 Misc. 132 cited in Insurance Code and
Insolvency Law with comments and annotations, H.B. Perez 1976, p. 151). Since petitioner by its own acts released San Miguel
Corporation, thereby defeating private respondents, the right of subrogation, the right of action of petitioner against the insurer
was also nullified. (Sy Keng & Co. vs. Queensland Insurance Co., Ltd., 54 O.G. 391) Otherwise stated: private respondent may
recover the sum of P5,000.00 it had earlier paid to petitioner. 1
As held in Phil. Air Lines v. Heald Lumber Co.,

If a property is insured and the owner receives the indemnity from the insurer, it is provided in
[Article 2207 of the New Civil Code] that the insurer is deemed subrogated to the rights of the
insured against the wrongdoer and if the amount paid by the insurer does not fully cover the
loss, then the aggrieved party is the one entitled to recover the deficiency. ... Under this legal
provision, the real party in interest with regard to the portion of the indemnity paid is the insurer
3
and not the insured (Emphasis supplied)
The decision of the respondent court ordering petitioner to pay respondent company, not the P4,500.00 as
originally asked for, but P5,000.00, the amount respondent company paid petitioner as insurance, is also in
accord with law and jurisprudence. In disposing of this issue, the Court of Appeals held:
... petitioner is entitled to keep the sum of P4,500.00 paid by San Miguel Corporation under its
clear right to file a deficiency claim for damages incurred, against the wrongdoer, should the
insurance company not fully pay for the injury caused (Article 2207, New Civil Code). However,
when petitioner released San Miguel Corporation from any liability, petitioner's right to retain the
sum of P5,000.00 no longer existed, thereby entitling private respondent to recover the same.
(Emphasis supplied)
As has been observed:
... The right of subrogation can only exist after the insurer has paid the otherwise the insured will
be deprived of his right to full indemnity. If the insurance proceeds are not sufficient to cover the
damages suffered by the insured, then he may sue the party responsible for the damage for the
the [sic] remainder. To the extent of the amount he has already received from the insurer enjoy's
[sic] the right of subrogation.
Since the insurer can be subrogated to only such rights as the insured may have, should the
insured, after receiving payment from the insurer, release the wrongdoer who caused the loss,
the insurer loses his rights against the latter. But in such a case, the insurer will be entitled to

28

recover from the insured whatever it has paid to the latter, unless the release was made with the
4
consent of the insurer. (Emphasis supplied.)
And even if the specific amount asked for in the complaint is P4,500.00 only and not P5,000.00, still, the
respondent Court acted well within its discretion in awarding P5,000.00, the total amount paid by the insurer. The
Court of Appeals rightly reasoned as follows:
It is to be noted that private respondent, in its companies, prays for the recovery, not of
P5,000.00 it had paid under the insurance policy but P4,500.00 San Miguel Corporation had
paid to petitioner. On this score, We believe the City Court and Court of First Instance erred in
not awarding the proper relief. Although private respondent prays for the reimbursement of
P4,500.00 paid by San Miguel Corporation, instead of P5,000.00 paid under the insurance policy
, the trial court should have awarded the latter, although not prayed for, under the general
prayer in the complaint "for such further or other relief as may be deemed just or equitable, (Rule
6, Sec. 3, Revised Rules of Court; Rosales vs. Reyes Ordoveza, 25 Phil. 495 ; Cabigao vs. Lim,
50 Phil. 844; Baguiro vs. Barrios Tupas, 77 Phil 120).
WHEREFORE, premises considered, the petition is DENIED. The judgment appealed from is hereby AFFIRMED
with costs against petitioner.
SO ORDERED.

Pan Malayan vs. CA, 184 scra 54

Pan Malayan Ins. Corp. v. Court of Appeals184 SCRA 54
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.
On February 12, 1986, 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
.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.
Held:
It cannot be said that the meaning given by PANMALAY and CANLUBANG to the phrase "by accidental collision or
overturning" found in the first paint of sub-paragraph (a) is untenable. Although the terms "accident" or
"accidental" as used in insurance contracts have not acquired a technical meaning, the Court has on several
occasions defined these terms to mean that which 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" [De la Cruz v. The Capital
Insurance &Surety Co., Inc.,]. Certainly, it cannot be inferred from jurisprudence that these terms, without qualification,
exclude events resulting in damage or loss due to the fault, recklessness or negligence of third parties. The concept
"accident" is not necessarily synonymous with the concept of "no fault". It may be utilized simply to distinguish intentional or
malicious acts from negligent or careless acts of man.

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It must be reiterated that in this present case, the insurer PANMALAY as subrogee merely prays that it be allowed to
institute an action to recover from third parties who allegedly caused damage to the insured vehicle, the amount which it had paid its
assured under the insurance policy . Having thus shown from the above discussion that PANMALAY has a cause of action against
third parties whose negligence may have caused damage to CANLUBANG's car, the Court holds that there is no legal
obstacle to the filing by PANMALAY of a complaint for damages against private respondents as the third parties
allegedly responsible for the damage.
Respondent Court of Appeals therefore committed reversible error in sustaining the lower court's order which dismissed
PANMALAY 's complaint against private respondents for no cause of action. Hence, it is now for the trial court to
determine if in fact the damage caused to the insured vehicle was due to the "carelessness, recklessness and
imprudence" of the driver of private respondent Erlinda Fabie.
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.

Coastwise vs. CA, 245 scra 796

B. In marine insurance
1. Loss 127 137, 159, 161, 163
Sub-Title 1-G
LOSS

Sec. 127. A loss may be either total or partial.

Sec. 128. Every loss which is not total is partial.
Sec. 129. A total loss may be either actual or constructive.
Sec. 130. An actual total loss is cause by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the
purpose for which he held it; or
(d) Any other event which effectively deprives the owner of the possession,
at the port of destination, of the thing insured.
Sec. 131. A constructive total loss is one which gives to a person insured a
right to abandon, under Section one hundred thirty-nine.
Sec. 132. An actual loss may be presumed from the continued absence of a ship
without being heard of. The length of time which is sufficient to raise
this presumption depends on the circumstances of the case.
Sec. 133. When a ship is prevented, at an intermediate port, from completing
the voyage, by the perils insured against, the liability of a marine
insurer on the cargo continues after they are thus reshipped.
Nothing in this section shall prevent an insurer from requiring an
additional premium if the hazard be increased by this extension of
liability.
Sec. 134. In addition to the liability mentioned in the last section, a marine
insurer is bound for damages, expenses of discharging, storage,
reshipment, extra freightage, and all other expenses incurred in
saving cargo reshipped pursuant to the last section, up to the amount
insured.
Nothing in this or in the preceding section shall render a marine
insurer liable for any amount in excess of the insured value or, if
there be none, of the insurable value.
Sec. 135. Upon an actual total loss, a person insured is entitled to payment
without notice of abandonment.
Sec. 136. Where it has been agreed that an insurance upon a particular thing,
or class of things, shall be free from particular average, a marine
insurer is not liable for any particular average loss not depriving the
insured of the possession, at the port of destination, of the whole of
such thing, or class of things, even though it becomes entirely
worthless; but such insurer is liable for his proportion of all general
average loss assessed upon the thing insured.

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Sec. 137. An insurance confined in terms to an actual loss does not cover a
constructive total loss, but covers any loss, which necessarily results
in depriving the insured of the possession, at the port of destination,
of the entire thing insured.

Pan Malayan vs. CA, 201 SCRA 382

2. Abandonment 138 155
Sub-Title 1-H
ABANDONMENT
Sec. 138. Abandonment, in marine insurance, is the act of the insured by which,
after a constructive total loss, he declares the relinquishment to the
insurer of his interest in the thing insured.
Sec. 139. A person insured by a contract of marine insurance may abandon the
thing insured, or any particular portion thereof separately valued by the
policy, or otherwise separately insured, and recover for a total loss
thereof, when the cause of the loss is a peril insured against:
(a) If more than three-fourths thereof in value is actually lost, or would have to be
expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than three-fourths;
(c) If the thing insured is a ship, and the contemplated voyage cannot be lawfully
performed without incurring either an expense to the insured of more
than three-fourths the value of the thing abandoned or a risk which a
prudent man would not take under the circumstances; or
(d) If the thing insured, being cargo or freightage, and the voyage cannot be
performed, nor another ship procured by the master, within a reasonable
time and with reasonable diligence, to forward the cargo, without
incurring the like expense or risk mentioned in the preceding subparagraph. But freightage cannot in any case be abandoned unless the
ship is also abandoned.
Sec. 140. An abandonment must be neither partial nor conditional.
Sec. 141. An abandonment must be made within a reasonable time after receipt of
reliable information of the loss, but where the information is of a
doubtful character, the insured is entitled to a reasonable time to make
inquiry.
Sec. 142. Where the information upon which an abandonment has been made
proves incorrect, or the thing insured was so far restored when the
abandonment was made that there was then in fact no total loss, the
abandonment becomes ineffectual.
Sec. 143. Abandonment is made by giving notice thereof to the insurer, which may
be done orally, or in writing; Provided, That if the notice be done orally, a
written notice of such abandonment shall be submitted within seven days
from such oral notice.
Sec. 144. A notice of abandonment must be explicit, and must specify the
particular cause of the abandonment, but need state only enough to show
that there is probable cause therefor, and need not be accompanied with
proof of interest or of loss.
Sec. 145. An abandonment can be sustained only upon the cause specified in the
notice thereof.
Sec. 146. An abandonment is equivalent to a transfer by the insured of his interest
to the insurer, with all the chances of recovery and indemnity.
Sec. 147. If a marine insurer pays for a loss as if it were an actual total loss, he is
entitled to whatever may remain of the thing insured, or its proceeds or
salvage, as if there had been a formal abandonment.
Sec. 148. Upon an abandonment, acts done in good faith by those who were agents
of the insured in respect to the thing insured, subsequent to the loss, are
at the risk of the insurer and for his benefit.

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Sec. 149. Where notice of abandonment is properly given, the rights of the insured
are not prejudiced by the fact that the insurer refuses to accept the
abandonment.
Sec. 150. The acceptance of an abandonment may be either express or implied
from the conduct of the insurer. The mere silence of the insurer for an
unreasonable length of time after notice shall be construed as an
acceptance.
Sec. 151. The acceptance of an abandonment, whether express or implied, is
conclusive upon the parties, and admits the loss and the sufficiency of
the abandonment.
Sec. 152. An abandonment once made and accepted is irrevocable, unless the
ground upon which it was made proves to be unfounded.
Sec. 153. On an accepted abandonment of a ship, freightage earned previous to
the loss belongs to the insurer of said freightage; but freightage
subsequently earned belongs to the insurer of the ship.
Sec. 154. If an insurer refuses to accept a valid abandonment, he is liable as upon
actual total loss, deducting from the amount any proceeds of the thing
insured which may have come to the hands of the insured.
Sec. 155. If a person insured omits to abandon, he may nevertheless recover his
actual loss.

Oriental vs. CA, 200 scra 459

C. In compulsory motor vehicle liability insurance. 385 par. 2 in relation to 378

GSIS vs. CA, 308 scra 559
Perla vs. Ancheta, 164 scra 144
Sec. 385. The insurance company concerned shall forthwith ascertain the truth and extent of

the claim and make payment within five working days after reaching an agreement. If
no agreement is reached, the insurance company shall pay only the "nofault" indemnity provided in section three hundred seventy-eight without prejudice to
the claimant from pursuing his claim further, in which case, he shall not be required or
compelled by the insurance company to execute any quit claim or document releasing
it from liability under the policy of insurance or surety bond issued. (As amended by Presidential
Decree No. 1455).

In case of any dispute in the enforcement of the provisions of any policy issued
pursuant to this chapter, the adjudication of such dispute shall be within the original
and exclusive jurisdiction of the Commissioner, subject to the limitations provided in
section four hundred sixteen.

Sec. 378. Any claim for death or injury to any passenger or third party pursuant to the
provisions of this chapter shall be paid without the necessity of proving fault or
negligence of any kind; Provided, That for purposes of this section:
(i) The total indemnity in respect of any person shall not exceed five thousand
pesos;
(ii) The following proofs of loss, when submitted under oath, shall be sufficient
evidence to substantiate the claim:
(a) Police report of accident; and
(b) Death certificate and evidence sufficient to establish the proper payee;
or
(c) Medical report and evidence of medical or hospital disbursement in
respect of which refund is claimed;
(iii) Claim may be made against one motor vehicle only. In the case of an occupant

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of a vehicle, claim shall lie against the insurer of the vehicle in which the
occupant is riding, mounting or dismounting from. In any other case, claim shall
lie against the insurer of the directly offending vehicle. In all cases, the right of
the party paying the claim to recover against the owner of the vehicle responsible
for the accident shall be maintained.

III. Litigation to satisfy claims; procedure 244; 416

Tia vs. CA, 202 scra 119
Cathay vs. CA, 174 scra 11
Sun Insurance vs. CA, 211 scra 552
Almendras vs. Office of the Insurance Commission, 160 scra 656
Summit vs. CA, 110 scra 241
Sec. 244. In case of any litigation for the enforcement of any policy or contract of
insurance, it shall be the duty of the Commissioner or the Court, as the case may be, to
make a finding as to whether the payment of the claim of the insured has been
unreasonably denied or withheld; and in the affirmative case, the insurance company
shall be adjudged to pay damages which shall consist of attorney's fees and other
expenses incurred by the insured person by reason of such unreasonable denial or
withholding of payment plus interest of twice the ceiling prescribed by the Monetary
Board of the amount of the claim due the insured, from the date following the time
prescribed in section two hundred forty-two or in section two hundred forty-three, as
the case may be, until the claim is fully satisfied; Provided, That the failure to pay any
such claim within the time prescribed in said sections shall be considered prima facie
evidence of unreasonable delay in payment.

Sec. 416. The Commissioner shall have the power to adjudicate claims and complaints
involving any loss, damage or liability for which in insurer may be answerable under
any kind of policy or contract of insurance, or for which such insurer may be liable
under a contract of suretyship, or for which a reinsurer may be sued under any contract
of reinsurance it may have entered into; or for which a mutual benefit association may
be held liable under the membership certificates it has issued to its members, where
the amount of any such loss, damage or liability, excluding interest, cost and attorney's
fees, being claimed or sued upon any kind of insurance, bond, reinsurance contract, or
membership certificate does not exceed in any single claim one hundred thousand
pesos.
The insurer or surety may, in the same action file a counterclaim against the insured or
the obligee.
The insurer or surety may also file a cross-claim against a party for any claim arising
out of the transaction or occurrence that is the subject matter of the original action or
of a counterclaim therein.
With leave of the Commissioner, an insurer or surety may file a third-party complaint
against its reinsurers for indemnification, contribution, subrogation or any other relief,
in respect of the transaction that is the subject matter of the original action filed with
the Commissioner.
The party filing an action pursuant to the provisions of this section thereby submits his
person to the jurisdiction of the Commissioner. The Commissioner shall acquire
jurisdiction over the person of the impleaded party or parties in accordance with and
pursuant to the provisions of the Rules of Court.
The authority to adjudicate granted to the Commissioner under this section shall be
concurrent with that of the civil courts, but the filing of a complaint with the
Commissioner shall preclude the civil courts from taking cognizance of a suit involving
the same subject matter.

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Any decision, order or ruling rendered by the Commissioner after a hearing shall have
the force and effect of a judgment. Any party may appeal from a final order, ruling or
decision of the Commissioner by filing with the Commissioner within thirty days from
receipt of copy of such order, ruling or decision a notice of appeal to the Intermediate
Appellate Court in the manner provided for in the Rules of Court for appeals from the
Regional Trial Court to the Intermediate Appellate Court. (As amended by Batas Pambansa Blg. 874).
As soon as a decision, order or ruling has become final and executory, the
Commissioner shall motu proprio or on motion of the interested party, issue a writ of
execution requiring the sheriff or the proper officer to whom it is directed to execute
said decision, order or award, pursuant to Rule thirty-nine of the Rules of Court.
For the purpose of any proceeding under this section, the Commissioner, or any officer
thereof designated by him, empowered to administer oaths and affirmation, subpoena
witnesses, compel their attendance, take evidence, and require the production of any
books, papers, documents, or contracts or other records which are relevant or material
to the inquiry. In case of contumacy by, or refusal to obey a subpoena issued to any
person, the Commissioner may invoke the aid of any court of first instance within the
jurisdiction of which such proceeding is carried on, where such person resides or
carries on his own business, in requiring the attendance and testimony of witnesses and
the production of books, papers, documents, contracts or other records. And such court
may issue an order requiring such person to appear before the Commissioner, or officer
designated by the Commissioner, there to produce records, if so ordered or to give
testimony touching the matter in question. Any failure to obey such order of the court
may be published by such court as a contempt thereof.
A full and complete record shall be kept of all proceedings had before the
commissioner, or the officers thereof designated by him, and all testimony shall be
taken down and transcribed by a stenographer appointed by the Commissioner.
A transcribed copy of the evidence and proceeding, or any specific part thereof, of any
hearing taken by a stenographer appointed by the Commissioner, being certified by
such stenographer to be a true and correct transcript of the testimony on this hearing
of a particular witness, or of a specific proof thereof, carefully compared by him from
his original notes, and to be a correct statement of evidence and proceeding had in
such hearing so purporting to be taken and subscribed, may be received as evidence by
the Commissioner and by any court with the same effect as if such stenographer were
present and testified to the facts so certified. (As amended by Presidential Decree No. 1455).

IV. Unfair settlement practices 241

CLAIMS SETTLEMENT
Sec. 241. (1) No insurance company doing business in the Philippines shall refuse,
without just cause, to pay or settle claims arising under coverages provided by its
policies, nor shall any such company engage in unfair claim settlement practices. Any
of the following acts by an insurance company, if committed without just cause and
performed with such frequency as to indicate a general business practice, shall
constitute unfair claim settlement practices:
(a) knowingly misrepresenting to claimants pertinent facts or policy provisions
relating to coverage at issue;
(b) failing to acknowledge with reasonable promptness pertinent communications
with respect to claims arising under its policies;
(c) failing to adopt and implement reasonable standards for the prompt
investigation of claims arising under its policies;
(d) not attempting in good faith to effectuate prompt, fair and equitable
settlement of claims submitted in which liability has become reasonably clear; or
(e) compelling policyholders to institute suits to recover amounts due under its
policies by offering without justifiable reason substantially less than the amounts
ultimately recovered in suits brought by them.
(2) Evidence as to numbers and types of valid and justifiable complaints to the
Commissioner against an insurance company, and the Commissioner's complaint
experience with other insurance companies writing similar lines of insurance shall be

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admissible in evidence in an administrative or judicial proceeding brought under this

section.
(3) If it is found, after notice and an opportunity to be heard, that an insurance
company has violated this section, each instance of non-compliance with paragraph (1)
may be treated as a separate violation of this section and shall be considered sufficient
cause for the suspension or revocation of the company's certificate of authority.

35