INSURANCE LAW

PRESCRIPTION OF ACTION
The prescriptive period for the insureds action for
indemnity should be reckoned from the "final
rejection" of the claim. "Final rejection" simply
means denial by the insurer of the claims of the
insured and not the rejection or denial by the
insurer of the insureds motion or request for
reconsideration. A perusal of the letter dated April
26, 1990 shows that the GSIS denied Hollero
Constructions indemnity claims. The same
conclusion obtains for the letter dated June 21,
1990 denying Hollero Constructions indemnity
claim. Holler's causes of action for indemnity
respectively accrued from its receipt of the letters
dated April 26, 1990 and June 21, 1990, or the
date the GSIS rejected its claims in the first
instance. Consequently, given that it allowed
more than twelve (12) months to lapse before
filing the necessary complaint before the RTC on
September 27, 1991, its causes of action had
already
prescribed.
H.H.
HOLLERO
CONSTRUCTION, INC. vs. GOVERNMENT
SERVICE INSURANCE SYSTEM and POOL OF
MACHINERY INSURERS, G.R. No. 152334,
September 24, 2014, J. Perlas-Bernabe
Insurance; prohibition against removal of
property. Here, by the clear and express
condition in the renewal policy, the removal of
the insured property to any building or place
required the consent of Malayan. Any transfer
effected by the insured, without the insurers
consent, would free the latter from any liability.
Insurance; rescission. Considering that the
original policy was renewed on an as is basis, it
follows that the renewal policy carried with it the
same stipulations and limitations. The terms and
conditions in the renewal policy provided, among
others, that the location of the risk insured
against is at the Sanyo factory in PEZA. The
subject insured properties, however, were totally
burned at the Pace Factory. Although it was also
located in PEZA, Pace Factory was not the
location stipulated in the renewal policy. There
being an unconsented removal, the transfer was
at PAPs own risk. Consequently, it must suffer
the consequences of the fire. Thus, the Court
agrees with the report of Cunningham Toplis
Philippines, Inc., an international loss adjuster
which investigated the fire incident at the Pace
Factory, which opined that [g]iven that the
location of risk covered under the policy is not the
location affected, the policy will, therefore, not
respond to this loss/claim. It can also be said
that with the transfer of the location of the
subject properties, without notice and without
Malayans consent, after the renewal of the
policy, PAP clearly committed concealment,

misrepresentation and a breach of a material

warranty.
Accordingly, an insurer can exercise its right to
rescind an insurance contract when the following
conditions are present, to wit:
1) the policy limits the use or condition of the
thing insured;
2) there is an alteration in said use or condition;
3) the alteration is without the consent of the
insurer;
4) the alteration is made by means within the
insureds control; and
5) the alteration increases the risk of loss.
In the case at bench, all these circumstances are
present. It was clearly established that the
renewal policy stipulated that the insured
properties were located at the Sanyo factory; that
PAP removed the properties without the consent
of Malayan; and that the alteration of the location
increased the risk of loss. Malayan Insurance
Company, Inc. v. PAP co., Ltd. (Philippine
Branch), G.R. No. 200784, August 7, 2013.
Insurance contracts; contract of adhesion. A
contract of insurance is a contract of adhesion.
When the terms of the insurance contract contain
limitations on liability, courts should construe
them in such a way as to preclude the insurer
from non-compliance with his obligation. Alpha
Insurance and Surety Co. v. Arsenia Sonia
Castor, G.R. No. 198174, September 2, 2013.
Insurance contracts; health care agreement. For
purposes of determining the liability of a
health
care
provider
to
its
members,
jurisprudence
holds
that
a
health
care
agreement is in the nature of non-life
insurance, which is primarily a contract of
indemnity. Once the member incurs hospital,
medical or any other expense arising from
sickness, injury or other stipulated contingent,
the health care provider must pay for the same to
the
extent
agreed
upon
under
the
contract. Fortune Medicare, Inc. v. David Robert
U. Amorin, G.R. No. 195872, March 12, 2014.
Insurance contracts; interpretation. In Philamcare
Health Systems, Inc. v. CA, we ruled that a health
care agreement is in the nature of a non-life
insurance. It is an established rule in insurance
contracts that when their terms contain
limitations on liability, they should be construed
strictly against the insurer. These are contracts
of adhesion the terms of which must be
interpreted and enforced stringently against the
insurer which prepared the contract.
This
doctrine is equally applicable to health care
agreements. Fortune Medicare, Inc. v. David
Robert U. Amorin, G.R. No. 195872, March 12,
2014.