REPUBLIC OF THE PHILIPPINES vs. DEL MONTE MOTORS, INC.
taken in the event that the company becomes insolvent or otherwise
G.R. No. 156956
October 9, 2006
FACTS:
RTC rendered a Decision finding Vilfran Liner, Inc. to pay Del Monte
Motors, Inc. the balance of Vilfran Liner's service contracts with Del Monte
Motors, Inc. and further ordered the execution of the Decision against the
counterbond posted by Vilfran Liner which was issued by Capital Insurance
and Surety Co., Inc. (CISCO). RTC released a motion for execution
commanding the sheriff to levy the amount on the property of CISCO. To
satisfy the amount, the Insurance Commissioner was ordered to withdraw
the security deposit filed by CISCO with the Commission according to Sec
203 of the Insurance Code. Malinis was then ordered by the RTC to
withdraw the security bond of CISCO for the payment of the insurance
indemnity won by Del Monte Motor against Vilfran Liner, the insured.
Malinis did not obey the order, so the RTC found him guilty of indirect
contempt. Hence, this Petition for Review under Rule 45 of the ROC.
ISSUE:
1. Whether or not the security deposit held by the Insurance
Commissioner pursuant to Section 203 of the Insurance Code may be
levied or garnished in favor of only one insured.
2. Whether or not the Insurance Commissioner has power to withhold the
release of the security deposit.
HELD:
1. NO. Under Sec 203 of the Insurance Code, no judgment creditor or
other claimant shall have the right to levy upon any of the securities of
the insurer held on deposit pursuant to the requirement of the
Commissioner. The security deposit shall be (1) answerable for all the
obligations of the depositing insurer under its insurance contracts; (2)
at all times free from any liens or encumbrance; and (3) exempt from
levy by any claimant. To allow the garnishment of that deposit would
impair the fund by decreasing it to less than the percentage of paid-up
capital that the law requires to be maintained. Further, this move
would create, in favor of respondent, a preference of credit over the
other policy holders and beneficiaries. The securities are held as a
contingency fund to answer for the claims against the insurance
company by all its policy holders and their beneficiaries. This step is
unable to satisfy the claims against it. Thus, a single claimant may not
lay stake on the securities to the exclusion of all others. The other
parties may have their own claims against the insurance company
under other insurance contracts it has entered into.
2. YES. The Insurance Code has vested the Office of the Insurance
Commission with both regulatory and adjudicatory authority over
insurance matters. The general regulatory authority of the insurance
commissioner is described in Section 414 of the Code and this includes
the duty to hold the security deposits under Sections 191 and 203 of
the Code, for the benefit and security of all policy holders. In relation
to these provisions, Section 192 of the Insurance Code further states
that the securities deposited shall be returned upon the company's
making application therefor and proving to the satisfaction of the
Commissioner that it has no further liability under any of its policies in
the Philippines. Also, an implied trust is created by the law for the
benefit of all claimants under subsisting insurance contracts issued by
the insurance company.
PINEDA vs.CA and THE INSULAR LIFE ASSURANCE COMPANY,
LIMITED
G.R. No. 105562
September 27, 1993
FACTS:
Prime Marine Services, Inc. (PMSI) procured a Group Policy from
Insular Life Assurance Co., Ltd. to provide life insurance coverage to its
sea-based employees. During the effectivity of the policy, six covered
employees perished at sea when their vessel sunk. They were survived by
the complainants-appellees, the beneficiaries under the policy. The
beneficiaries executed special powers of attorney authorizing Capt. Nuval,
President and General Manager of PMSI, to, among others, follow-up,
ask, demand, collect and receive for their benefit indemnities of sums of
money due them relative to the sinking of the vessel. By virtue of these
written powers of attorney, complainants-appellees were able to receive
their respective death benefits. Unknown to them, however, PMSI, in its
capacity as employer and policyholder of the life insurance of its deceased
workers, filed with Insular Life formal claims for and in behalf of the
beneficiaries, through Capt. Nuval. On the basis of the five special powers
of attorney, Insular Life drew against its account six checks payable to the
order of complainants-appellees. Capt. Nuval, upon receipt of these checks
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endorsed and deposited them in his own account. When the complainants-
appellees learned that they were entitled, as beneficiaries, to life insurance
benefits under a group policy, they sought to recover these benefits from
Insular Life but the latter denied their claim on the ground that the liability
to complainants-appellees was already extinguished.
ISSUE: Whether or not Insular Life is bound by the misconduct of the
employer, PMSI.
RULING:
YES. The questioned powers of attorney do not contain in clear
and unequivocal terms authority to Captain Nuval to obtain, receive,
receipt from respondent company insurance proceed arising from the
death of the seaman-insured.
In Elfstrom vs. New York Life Insurance Company, the California
Supreme Court explicitly ruled that in group insurance policies, the
employer is the agent of the insurer. Thus, the employer is the agent of
the insurer in performing the duties of administering group insurance
policies. The most persuasive rationale for adopting the view that the
employer acts as the agent of the insurer, however, is that the employee
has no knowledge of or control over the employer's actions in handling the
policy or its administration. An agency relationship is based upon consent
by one person that another shall act in his behalf and be subject to his
control. It is clear from the evidence regarding procedural techniques here
that the insurer-employer relationship meets this agency test with regard
to the administration of the policy, whereas that between the employer
and its employees fails to reflect true agency. The insurer directs the
performance of the employer's administrative acts, and if these duties are
not undertaken properly the insurer is in a position to exercise more
constricted control over the employer's conduct.
In Neider vs. Continental Assurance Company, which was cited in
Elfstrom, it was held that: the employer owes to the employee the duty of
good faith and due care in attending to the policy, and that the employer
should make clear to the employee anything required of him to keep the
policy in effect, and the time that the obligations are due. In its position as
administrator of the policy, the employer should be considered as the
agent of the insurer, and any omission of duty to the employee in its
administration should be attributable to the insurer.
The SC held that PMSI, through its President and General
Manager, Capt. Nuval, acted as the agent of Insular Life. The latter is thus
bound by the misconduct of its agent.
CEBU SHIPYARD AND ENGINEERING WORKS, INC. v. WILLIAM
LINES, INC. and PRUDENTIAL GUARANTEE and ASSURANCE
COMPANY, INC.
FACTS:
Cebu Shipyard and Engineering Works, Inc. (CSEW) is engaged in the
business of dry-docking and repairing of marine vessels while the
Prudential Guarantee and Assurance, Inc. (Prudential) is in the non-life
insurance business. William Lines, Inc. is in the shipping business and
owner of M/V Manila City, a luxury passenger-cargo vessel, which caught
fire and sank. At the time of the unfortunate occurrence sued upon,
subject vessel was insured with Prudential for P45M for hull and
machinery. The Hull Policy included an Additional Perils (INCHMAREE)
Clause covering loss of or damage to the vessel through the negligence of,
among others, ship repairmen. Petitioner CSEW was also insured by
Prudential for third party liability under a Ship Repairers Legal Liability
Insurance Policy. The policy was for P10M only, under the limited liability
clause.
William Lines, Inc. filed a complaint for damages against CSEW, alleging
that the fire which broke out in M/V Manila City was caused by CSEWs
negligence and lack of care. Prudential was impleaded as co-plaintiff, after
it paid William Lines, Inc. the value of the hull and machinery insurance on
the M/V Manila City. As a result of such payment Prudential was
subrogated to the claim of P45 million, representing the value of the
said insurance it paid. The trial court ordered CSEW to pay William Lines
and Prudential (45M) and the CA affirmed and ordered the partial
dismissal of the case insofar as CSEW and William Lines were concerned.
CSEW claims that the insurance policy does not cover loss resulting from
the fault of negligent charterers that are assured in the same policy and by
virtue of clause 20, it is deemed a co-assured.
ISSUE:
1. Whether or not CSEW is co-assured, thus losses caused by it are
not covered by the policy
2. Whether or not the provisions limiting CSEWs liability for
negligence to a maximum of Php 1 million are valid
HELD:
1. NO. The fact that clause 20 benefited petitioner, does not
automatically make it a co-assured of William Lines. Intention of parties
to make each other co-assured is to be gleaned from the insurance
policy itself and not from any other contract because the policy
denominates the assured and the beneficiaries. Prudential named
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only William Lines, Inc. as the assured. There was no manifestation of any
intention of William Lines Inc to make CSEW a co-assured. When the
terms of a contract are clear, its stipulations control. If CSEW were
deemed co-assured, it would nullify any claim of William Lines Inc. No
shipowner would agree to make ship repairer a co-assured because any
claim it has under the policy would be invalidated. Such result could not
have been intended by William Lines Inc.
2. NO. Although contracts of adhesion have been consistently upheld
as valid, reliance on such contracts cannot be favored especially where the
facts and circumstances warrant that subject stipulations be disregarded.
The facts and circumstances vis-a-vis the nature of the provision
sought to be enforced should be considered, bearing in mind the
principles of equity and fair play. It is rather unconscionable if not
overstrained to allow CSEW to limit its liability to P1M notwithstanding the
fact that the total loss suffered by the assured and paid for by Prudential
amounted to P45M would sanction the exercise of a degree of diligence
short of what is ordinarily required because, then, it would not be difficult
for petitioner to escape liability by the simple expedient of paying an
amount very much lower than the actual damage or loss suffered by
William Lines, Inc.
NEW LIFE ENTERPRISES V CA
G.R. No. 94071
March 31, 1992
FACTS:
Julian Sy, owner of New Life, insured his building in 3 different insurance
agencies: Western Guaranty Corporation for P350,000; Reliance Surety
and Insurance Co., Inc. for P300,000; Equitable Insurance Corporation
for P200,000. When his building and the goods inside burned down, he
claimed for insurance indemnities, but these were rejected by the three
companies for violation of "Other Insurance Clause" uniformly contained in
all the aforestated insurance contracts which states that the i nsured
shall gi ve notice to the company of any i nsurance or insurances
already effected or which may subsequently be effected covering any of
the properties. RTC favored New Life and against the three insurance
companies. CA reversed for failure to state or endorse the other insurance
coverage.
ISSUE: Whether or not Sy can claim against the three insurance
companies for violating the Other Insurance Clause.
HELD:
NO. The coverage by other insurance or co-insurance arranged by
petitioners were neither stated nor endorsed in the policies of the three
private respondents, warranting forfeiture of all benefits following the
express stipulation in the "Other Insurance Clause" of the policies. The
terms of the contract are clear and unambiguous. The insured is
specifically required to disclose to the insurer any other insurance and its
particulars which he may have effected on the same subject matter. The
knowledge of such insurance by the insurer's agents, even assuming the
acquisition thereof by the former, is not the "notice" that would estop the
insurers from denying the claim.
While it is a cardinal principle of insurance law that a policy or
contract of insurance is to be construed liberally in favor of the insured and
strictly against the insurer company, yet contracts of insurance, like other
contracts, are to be construed according to the sense and meaning of the
terms which the parties themselves have used. If such terms are clear and
unambiguous, they must be taken and understood in their plain, ordinary
and popular sense. Moreover, obligations arising from contracts have the
force of law between the contracting parties and should be complied with
in good faith.
SUN INSURANCE OFFICE, LTD vs. CA
G.R. No. 92383
July 17, 1992
FACTS:
The petitioner issued Personal Accident Policy to Felix Lim, Jr. with
a face value of P200,000.00. Two months later, he was dead with a bullet
wound in his head. Pilar Nalagon, Lim's secretary, was the only eyewitness
to his death. According to Nalagon, Lim was in a happy mood (but not
drunk) and was playing with his handgun, from which he had previously
removed the magazine. As she watched television, he stood in front of her
and pointed the gun at her. She pushed it aside and said it might be
loaded. He assured her it was not and then pointed it to his temple. The
next moment there was an explosion and Lim slumped to the floor. He was
dead before he fell. As beneficiary, his wife Nerissa Lim sought payment
on the policy but her claim was rejected. The RTC ruled in favor of the
beneficiary and CA affirmed.
ISSUE: Whether or not the death of Lim was an accident entitling his
beneficiary to claim against Sun Insurance.
HELD:
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 YES. An accident is an event which happens without any human
agency or, if happening through human agency, an event which, under the
circumstances is unusual to and not expected by the person to whom it
happens. There is no accident when a deliberate act is performed unless
some additional, unexpected, independent and unforeseen happening
occurs which produces or brings about their injury or death. There was
such a happening. This was the firing of the gun, which was the additional
unexpected and independent and unforeseen occurrence that led to the
insured person's death.
Lim was unquestionably negligent and that negligence cost him his
own life. But it should not prevent his widow from recovering from the
insurance policy he obtained precisely against accident. There is nothing in
the policy that relieves the insurer of the responsibility to pay the
indemnity agreed upon if the insured is shown to have contributed to his
own accident.
6. G.R. No. 94149 May 5, 1992
AMERICAN HOME ASSURANCE, COMPANY,petitioner,
vs.
THE COURT OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL MARINE
CORPORATION (Manila), respondents.
FACTS:
On or about June 19, 1988, Cheng Hwa Pulp Corporation shipped 5,000 bales of
bleached kraft pulp from Haulien, Taiwan on board "SS Kaunlaran", which is owned and
operated by herein respondent National Marine Corporation .The said shipment was
consigned to Mayleen Paper, Inc. of Manila, which insured the shipment with herein
petitioner American Home Assurance Co.. On June 22, 1988, the shipment arrived in Manila
and was discharged into the custody of the Marina Port Services, Inc., for eventual delivery to
the consignee-assured. However, upon delivery of the shipment to Mayleen Paper, Inc., it
was found that 122 bales had either been damaged or lost. The loss was calculated to be
4,360 kilograms with an estimated value of P61,263.41.
Mayleen Paper, Inc. asked from indemnification from respondent National Marine
Corporation for the damages but the latter for apparently no justifiable reason did not heed
to such demand. As the shipment was insured by American Home Assurance, Mayleen Paper,
Inc. sought recovery from the former. American Home Assurance paid Mayleen Paper, Inc.
the adjusted amount of P31,506.75 for the damages/losses suffered by the shipment, hence,
the former was subrogated to the rights and interests on Mayleen Paper, Inc.The petitioner,
as subrogee brought action against respondent for the recovery of the amount paid. The
respondent filed a motion to dismiss alleging that American Home Assurance Company had
no cause of action based on Article 848 of the Code of Commerce which provides that claims
for averages shall not be admitted if they do not exceed 5% of the interest which the
claimant may have in the vessel or in the cargo if it be gross average and 1% of the goods
damaged if particular average. It contended that the loss claimed is only .18% of the total
value of the cargo.
The Regional Trial Court sustained the private respondents contention. The Court
of Appeals dismissed the petition for certiorari filed by petitioner. Hence, this petition.
ISSUE: WON the law on averages(Articles 806, 809 and 848 of the Code of Commerce) is
applicable in the instant case?
HELD:
No. Common carriers cannot limit their liability for injury or loss of goods where
such injury or loss was caused by its own negligence. Otherwise stated, the law on averages
under the Code of Commerce cannot be applied in determining liability where there is
negligence.The records show that upon delivery of the shipment to Mayleens warehouse,
122 bales were found to be damaged. Instead of presenting proof of the exercise of
extraordinary diligence as required by law, National Marine Corporation (NMC) filed its
Motion to Dismiss, hypothetically admitting the truth of the facts alleged in the complaint to
the effect that the loss or damage to the 122 bales was due to the negligence or fault of
NMC.On the other hand, Article 1734 of the Civil Code provides that common carriers are
responsible for loss, destruction or deterioration of the goods, unless due to any of the
causes enumerated therein. It is obvious that the case at bar does not fall under any of the
exceptions. Thus, American Home Assurance Company is entitled to reimbursement of what
it paid to Mayleen Paper, Inc. as insurer.
7. G.R. No. 114427 February 6, 1995
ARMANDO GEAGONIA, petitioner,
vs.
COURT OF APPEALS and COUNTRY BANKERS INSURANCE CORPORATION, respondents.
FACTS:
The petitioner obtained from the private respondent a fire insurance policy for the
stock-in-trade of his business Normans Mart in the amount of P100,000. Said policy
contained a condition which requires that the insured should give notice to the Company any
insurance or insurances already affected, or which may subsequently be effected, covering
any of the property or properties consisting of stocks in trade, goods in process and/or
inventories insured, and if the notice is not given, all benefits under the policy will be
forfeited. This condition shall not apply when the total insurance or insurances in force at the
time of the loss or damage is not more than P200,000.00.
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 On May 27,1990, a fire broke at the public market of San Francisco, Agusan del Sur
and the petitioners insured stock-in-trade were completely destroyed prompting him to file
with the private respondent a claim under the policy. The respondent denies the claim
because it found that at the time of the loss the petitioner's stocks-in-trade were likewise
covered by two other fire insurance policies. These policies indicate that the insured was the
petitioner and it contains a mortgage clause stating that the loss, if any is payable to the
mortgagee, Cebu Tesing Textiles. The petitioner then filed a complaint against the private
respondent with the Insurance Commission. In its decision, the Insurance Commission found
that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the
two fire insurance policies obtained from the PFIC. The Court of Appeals reversed the
decision of the Insurance Commission because it found that the petitioner knew of the
existence of the two other policies issued by the PFIC by virtue of the respondents letter to
the petitioner.
ISSUES: 1.WON the petitioner had prior knowledge of the two insurance policies thereby
violating the fire insurance policy
2. WON knowledge of the existence of the policies precludes recovery from the
policy.
HELD:
1. Yes.The Court agrees with the Court of Appeals that hat the petitioner knew of
the prior policies issued by the PFIC. His letter of 18 January 1991 to the
private respondent conclusively proves this knowledge. His testimony to the
contrary before the Insurance Commissioner and which the latter relied upon
cannot prevail over a written admission made ante litem motam. It was,
indeed, incredible that he did not know about the prior policies since these
policies were not new or original.
2. No. It is a cardinal rule on insurance that a policy or insurance contract is to be
interpreted liberally in favor of the insured and strictly against the company.It
is also a cardinal principle of law that forfeitures are not favored and that any
construction which would result in the forfeiture of the policy benefits for the
person claiming thereunder, will be avoided. With these principles in mind,
two conclusions arise, that (a) the prohibition applies only to double
insurance, and (b) the nullity of the policy shall only be to the extent
exceeding P200,000.00 of the total policies obtained.A double insurance exists
where the same person is insured by several insurers separately in respect of
the same subject and interest. The insurable interests of a mortgagor and a
mortgagee on the mortgaged property are distinct and separate. Since the
two policies of the PFIC do not cover the same interest as that covered by the
policy of the private respondent, no double insurance exists. The non-
disclosure then of the former policies was not fatal to the petitioner's right to
recover on the private respondent's policy. Furthermore, by stating that the
condition shall not apply if the total loss does not exceed P200,000, concludes
that what it had in mind is only to prevent over-insurance.
8. G.R. No. L-55397 February 29, 1988
TAI TONG CHUACHE & CO., petitioner,
vs.
THE INSURANCE COMMISSION and TRAVELLERS MULTI-INDEMNITY
CORPORATION, respondents.
FACTS
Azucena Palomo obtained a loan from from Tai Tong Chuache Inc. in the amount of
P100,000.00 secured by a mortgage over the land and the building. Arsenio
Chua, representative of Thai Tong Chuache & Co. insured the latter's interest with Travellers
Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for the building and P30,000.00 for
the contents thereof). Pedro Palomo secured a fire insurance policy covering the building for
P50,000.00 with respondent Zenith Insurance Corporation. Another insurance was obtained
from respondent Philippine British Assurance Company, covering the same building for
P50,000.00 and the contents thereof for P70,000.00.
On July 31, 1975, the building and the contents were totally razed by fire. A
computation of the loss was made, respondents, Zenith Insurance, Phil. British Assurance and
S.S.S. Accredited Group of Insurers, paid their corresponding shares of the loss. However,
respondent Travellers Multi-Indemnity refused to pay its share. Hence, the Palomos
demanded from the other three the balance of the loss in the computation excluding
Travellers Multi-Indemnity but the same was refused, hence, this action. The Insurance
Commission dismissed spouses Palomos' complaint on the ground that the insurance policy
subject of the complaint was taken out by Tai Tong Chuache & Company, petitioner herein,
for its own interest only as mortgagee of the insured property and thus complainant as
mortgagors of the insured property have no right of action against herein respondent. It
likewise dismissed the petitioners complaint in intervention..It conclude that at the time of
the occurrence of the peril insured against, petitioner as mortgagee had no more insurable
interest over the insured property. It was based on the inference that the credit secured by
the mortgaged property was already paid by the Palomos before the said property was
gutted down by fire. The foregoing conclusion was arrived at on the basis of the certification
issued by the then Court of First Instance of Davao, Branch II that in a certain civil action
against the Palomos, Antonio Lopez Chua stands as the complainant and not petitioner Tai
Tong Chuache & Company.
ISSUE: WON Tai Tong Chuache& Company had insurable interest.
HELD:
5
 Yes. The insurance company failed to prove its affirmative defense that the
petitioner lacks insurable interest at the time of the peril. The Insurance Commission, erred
in absolving the insurance company on the basis of the certification of the CFI that Arsenio
Lopez Chua stands the complainant and not Tai Tong Chuache and inferring from such
evidence that the credit extended by herein petitioner to the Palomos secured by the insured
property must have been paid. The record of the case shows that the contract of mortgage
was not cancelled nor released. Further, it must be noted that Arsenio Lopez Chua is the
managing partner of the partnership and being such he may sue in his own name the debtors
of the partnership in case of their failure to pay their obligations when it became due and
demandable.
The respondent insurance company having issued a policy in favor of herein
petitioner which policy was of legal force and effect at the time of the fire, it is bound by its
terms and conditions. Upon its failure to prove the allegation of lack of insurable interest on
the part of the petitioner, respondent insurance company is and must be held liable.
9. G.R. No. 147839 June 8, 2006
GAISANO CAGAYAN, INC. Petitioner,
vs.
INSURANCE COMPANY OF NORTH AMERICA,Respondent.
FACTS:
Intercapitol Marketing Corporation (IMC) and Levi Strauss (Phils.) Inc. (LSPI) LSPI
separately obtained from respondent fire insurance policies with book debt endorsements.
The insurance policies provide for coverage on "book debts in connection with ready-made
clothing materials which have been sold or delivered to various customers and dealers of the
Insured anywhere in the Philippines. The policies defined book debts as the "unpaid account
still appearing in the Book of Account of the Insured 45 days after the time of the loss
covered under this Policy.
Petitioner is a customer and dealer of the products of IMC and LSPI. On February
25, 1991, the Gaisano Superstore Complex in Cagayan de Oro City, owned by petitioner, was
consumed by fire. Included in the items lost or destroyed in the fire were stocks of ready-
made clothing materials sold and delivered by IMC and LSPI. The respondent respondent
filed a complaint for damages against petitioner for the claims of IMC and LSPI under their
respective fire insurance policies.
The RTC dismissed the complaint holding that the fire was purely accidental and
that IMC and LSPI retained ownership of the delivered goods and must bear the loss.The CA
reversed the decision of the RTC and held that the the sales invoices are proofs of sale and by
subrogation the insurer has the right to go against petitioner; that, being a fire insurance
with book debt endorsements, what was insured was the vendor's interest as a creditor.
ISSUES: 1. WON the insurance in the instant case was one over credit.
2.WON all the risk over the subject goods in the instant case had transferred to the
petitioner upon delivery thereof.
3. WON petitioner is liable for the unpaid accounts.
4. WON there is automatic subrogation under Article 2207 of the Civil Code in favor of the
petitioner.
HELD:
1. Yes. It is well-settled that when the words of a contract are plain and readily
understood, there is no room for construction. In this case, the questioned
insurance policies provide coverage for book debts and defined it as the "unpaid
account still appearing in the Book of Account of the Insured 45 days after the time
of the loss covered under this Policy." Nowhere is it provided in the questioned
insurance policies that the subject of the insurance is the goods sold and delivered
to the customers and dealers of the insured. Thus, what were insured against were
the accounts of IMC and LSPI with petitioner which remained unpaid 45 days after
the loss through fire, and not the loss or destruction of the goods delivered.
2. Yes. The present case clearly falls under par. 1 of Article 1504 of the Civil Code.
Thus, when the seller retains ownership only to insure that the buyer will pay its
debt, the risk of loss is borne by the buyer.Accordingly, petitioner bears the risk of
loss of the goods delivered. IMC and LSPI did not lose complete interest over the
goods. They have an insurable interest until full payment of the value of the
delivered goods. Unlike the civil law concept of res perit domino, where ownership
is the basis for consideration of who bears the risk of loss, in property insurance,
one's interest is not determined by concept of title, but whether insured has
substantial economic interest in the property
3. Yes. The insurance in this case is not for loss of goods by fire but for petitioner's
accounts with IMC and LSPI that remained unpaid 45 days after the fire.
Accordingly, petitioner's obligation is for the payment of money. . As correctly
stated by the CA, where the obligation consists in the payment of money, the
failure of the debtor to make the payment even by reason of a fortuitous event
shall not relieve him of his liability. An obligation to pay money is generic;
therefore, it is not excused by fortuitous loss of any specific property of the debtor.
4. With respect to IMC, the respondent has adequately established its claim.The
subrogation receipt, by itself, is sufficient to establish not only the relationship of
respondent as insurer and IMC as the insured, but also the amount paid to settle
the insurance claim. The right of subrogation accrues simply upon payment by the
insurance company of the insurance claim.
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 As to LSPI, respondent failed to present sufficient evidence to prove its cause of
action. There was no evidence that respondent had been subrogated to any right
which LSPI may have against petitioner. Failure to substantiate the claim of
subrogation is fatal to petitioners case for recovery of P535,613.00.
10. G.R. No. 85141 November 28, 1989
FILIPINO MERCHANTS INSURANCE CO., INC.,petitioner,
vs.
COURT OF APPEALS and CHOA TIEK SENG,respondents.
FACTS:
Choa Tiek Seng insured with defendant insurance company as 600 metric
tons of fishmeal in new gunny bags of 90 kilos each from Bangkok, Thailand to
Manila against all risks under warehouse to warehouse terms. Actually, what was
imported was 59.940 metric tons not 600 tons at $395.42 a ton CNF Manila. The
cargo was unloaded from the ship and 227 bags were found to be in bad condition by
the arrastre. Choa made a formal claim against the defendant Filipino Merchants
Insurance Company, but the defendant Filipino Merchants Insurance Company
refused to pay the claim. Consequently, Choa brought an action against said
defendant as adverted to above and defendant presented a third party complaint
against the vessel and the arrastre contractor. The court below, after trial on the
merits, rendered judgment in favor of private respondent. The third party defendants
were held jointly and severally liable to reimburse the third party plaintiff. On appeal,
the respondent court affirmed the decision of the lower court insofar as the award on
the complaint is concerned and modified the same with regard to the adjudication of
the third-party complaint.
ISSUES:
1. WON an all risks" marine policy has a technical meaning in insurance in that
before a claim can be compensable it is essential that there must be "some
fortuity, " "casualty" or "accidental cause" to which the alleged loss is
attributable.
2. WON the private respondent had insurable interest in the subject cargo.
HELD:
1. No. A marine insurance policy providing that the insurance was to be
"against all risks" must be construed as creating a special insurance and
extending to other risks than are usually contemplated, and covers all losses
except such as arise from the fraud of the insured. The burden of the
insured, therefore, is to prove merely that the goods he transported have
been lost, destroyed or deteriorated. Thereafter, the burden is shifted to the
insurer to prove that the loss was due to excepted perils. To impose on the
insured the burden of proving the precise cause of the loss or damage would
be inconsistent with the broad protective purpose of "all risks" insurance.
In the present case, there being no showing that the loss was caused by any
of the excepted perils, the insurer is liable under the policy.
2. Yes. The ruling of the respondent court that private respondent, as
consignee of the goods in transit under an invoice containing the terms
under "C & F Manila," has insurable interest in said goods. Herein private
respondent, as vendee/consignee of the goods in transit has such existing
interest therein as may be the subject of a valid contract of insurance. His
interest over the goods is based on the perfected contract of sale. The
perfected contract of sale between him and the shipper of the goods
operates to vest in him an equitable title even before delivery or before be
performed the conditions of the sale.
11. CONSTANTINO VS ASIA LIFE INSURANCE CO.
FACTS
There are two cases consolidated here. First is that of Arcadio Constantino who
acquired a life insurance from Asia Life Insurance Company in September 1941. He
paid the first premium which was good until September 1942. War broke out and he
was not able to pay the second and subsequent premiums. He died in 1944. His
beneficiary was Paz Lopez De Constantino.
The second case was that of Tomas Ruiz who acquired his life insurance from Asia
Life in August 1938. He has been paying his premium religiously but due to the war,
he was not able to pay his subsequent premiums in 1942. He died in 1945. His
beneficiary was Agustina Peralta.
The beneficiaries from both insurance policies filed their claims when the war is over.
They point out that the obligation of the insured to pay premiums was excused
(suspended) during the war owing to impossibility of performance, and that
consequently no unfavorable consequences should follow from such failure (New
York Rule).
Asia Life argued that the nonpayment of premiums cancelled the insurance policy. An
insurance contract is one in which time is material and of the essence. Non-payment
at the day involves absolute forfeiture if such be the terms of the contract (United
States Rule).
ISSUE: Whether or not the beneficiaries are entitled to the claims.
HELD: No. The Supreme Court adopts the United States Rule. It should be noted that
the parties contracted not only for peacetime conditions but also for times of war,
because the policies contained provisions applicable expressly to wartime days. The
logical inference, therefore, is that the parties contemplated uninterrupted operation of
the contract even if armed conflict should ensue.
7
12. Ty vs Filipinas Compania de Seguros, et.al
FACTS
Plaintiff-appellant was an employee of Broadway Cotton Factory in Caloocan City
working as mechanic operator and took Personal Accident Policies from several
insurance companies, among which are herein defendants-appellees. During the
effectivity of these policies, a fire broke out in the factory where plaintiff was working
in which he suffered injuries and resulted to a temporary total disability on his left
hand. As the insurance companies refused to pay his claim for compensation under
the policies, Ty filed motions in the Municipal Court of Manila, which rendered
favorable decision. On appeal to the CFI by the insurance companies, the cases were
dismissed on the ground that under the uniform terms of the insurance policies,
partial disability of the insured caused by loss of either hand to be compensable, the
loss must result in the amputation of that hand. Hence, these appeals by the insured.
ISSUE
Whether or not Ty should be indemnified under his insurance policies
HELD
NO.
There was no such amputation in the case at bar. All that was found by the trial court,
which is not disputed on appeal, was that the physical injuries caused temporary total
disability of plaintiff's left hand. We have to note that the disability of plaintiff's hand
was merely temporary, having been caused by fractures of the index, the middle and
the fourth fingers of the left hand.
The agreement contained in the insurance policies is the law between the parties. As
the terms of the policies are clear, express and specific that only amputation of the
left hand should be considered as a loss thereof, an interpretation that would include
the mere fracture or other temporary disability not covered by the policies would
certainly be unwarranted.
13. Del Rosario vs Equitable Insurance
FACTS
Equitable Insurance and Casualty Co., Inc., issued Personal Accident Policy on the
life of Francisco del Rosario, son of herein plaintiff-appellee, binding itself to pay the
sum of P1,000.00 to P3,000.00, as indemnity for the death of the insured. On
February 24, 1957, the insured Francisco del Rosario, while on board the motor
launch, including his beneficiary in the Policy, were forced to jump off said launch on
account of fire which broke out on said vessel, resulting in the death of drowning of
the insured and beneficiary in the waters of Jolo. The defendant company paid
Simeon Del Rosario P1,000.00 as for indemnity but the plaintiffs lawyer demanded
that Del Rosario is entitled P3,000.00 pursuant to the policy. The defendant company
refused to pay P2,000.00, hence, a complaint for its recovery was filed with the CFI.
The trial court rendered a decision in favor of the plaintiff. Hence, this appeal.
Issue
Whether or not the heir is entitled to recover P3,000.00
Held
YES.
Generally accepted principles or rulings on insurance, enunciate that where there is
an ambiguity with respect to the terms and conditions of the policy, the same will be
resolved against the one responsible thereof. It should be recalled in this connection,
that generally, the insured, has little, if any, participation in the preparation of
the policy, together with the drafting of its terms and Conditions. The interpretation of
obscure stipulations in a contract should not favor the party who cause the obscurity,
which, in the case at bar, is the insurance company.
14. Misamis Lumber v. Capital Insurance
Facts
Misamis Lumber Corporation insured its motor car for P14,000.00 with Capital
Insurance & Surety Company, Inc. The policy stipulated that the insured may
authorize the repair of the vehicle necessitated by damage and the liability of the
insured is limited to P150.00. The insured car met an accident and was repaired by
Morosi Motors at a total cost of P302.27. Misamis made a report of the accident to
Capital who refused to pay the cost of the repairs. A suit was originally filed with the
municipal court which it rendered a decision for the plaintiff which was affirmed by the
CFI. Hence, this direct appeal on point of law.
Issue
Whether or not the insurer is liable for the total amount of the repair
Held
NO.
The literal meaning of the stipulation in the policy must control, it being the actual
contract, expressly and plainly provided for therein. Further, the insurance contract
may be rather onerous ("one-sided", as the lower court put it), but that in itself does
not justify the abrogation of its express terms, terms which the insured accepted or
adhered to and which is the law between the contracting parties.
8
15. Philam Life Insurance v Ansaldo

FACTS

One Ramon Paterno complained about the unfair practices committed by the
company against its agents, employees and consumers. The Commissioner called for
a hearing where Paterno was required to specify which acts were illegal. Paterno then
specified that the fees and charges stated in the Contract of Agency between Philam
and its agents be declared void. Philam, on the other hand, averred that there
Paterno must submit a verified formal complaint and that his letter didnt contain
information Philam was seeking from him. Philam then questioned the Insurance
Commissions jurisdiction over the matter and submitted a motion to quash. The
commissioner denied this. Hence this petition.

ISSUE

Whether or not the resolution of the legality of the Contract of Agency falls within the
jurisdiction of the Insurance Commissioner

HELD

NO. The general regulatory authority of the Insurance Commissioner is described in

Section 414 and 415 of the Insurance Code. Further, since the contract of agency
entered into between Philamlife and its agents is not included within the meaning of
an insurance business, Section 2 of the Insurance Code cannot be invoked to give
jurisdiction over the same to the Insurance Commissioner.

The Insurance Code does not have provisions governing the relations between
insurance companies and their agents. It follows that the Insurance Commissioner
cannot, in the exercise of its quasi-judicial powers, assume jurisdiction over
controversies between the insurance companies and their agents.

It was also held in one case that an insurance company may have two classes of
agents who sell its insurance policies: (1) salaried employees who keep definite hours
and work under the control and supervision of the company; and (2) registered
representatives, who work on commission basis.

Under the first category, the relationship between the insurance company and its
agents is governed by the Contract of Employment and the provisions of the Labor
Code, while under the second category, the same is governed by the Contract of
Agency and the provisions of the Civil Code on the Agency. Disputes involving the
latter are cognizable by the regular courts.