Ng v Asian Crusader
G.R. No. L-30685; May 30, 1983
J. Escolin:
Facts:
Kwong Nam applied for a 20-year endowment insurance on his life for
the sum of P20,000.00, with his wife, appellee Ng Gan Zee as
beneficiary. On the same date, Asian Crusader, upon receipt of the
required premium from the insured, approved the application and
issued the corresponding policy.
Kwong Nam died of cancer of the liver with metastasis. All premiums
had been paid at the time of his death.
Ng Gan Zee presented a claim for payment of the face value of the
policy. On the same date, she submitted the required proof of death of
the insured.
Appellant denied the claim on the ground that the answers given by
the insured to the questions in his application for life insurance were
untrue.
Appellee brought the matter to the attention of the Insurance
Commissioner. The latter, after conducting an investigation, wrote the
appellant that he had found no material concealment on the part of the
insured and that, therefore, appellee should be paid the full face
value of the policy.
The company refused to settle its obligation. Appellant alleged that the
insured was guilty of misrepresentation when he answered "No" to the
following question appearing in the application for life insurance:
Has any life insurance company ever refused
your application for insurance or for reinstatement of a lapsed
policy or offered you a policy different from that applied for? If,
so, name company and date.
The lower court ruled against the company on lack of evidence.
Appellant further maintains that when the insured was examined
in connection with his application for life insurance, he gave the
appellant's medical examiner false and misleading information as to
his ailment and previous operation. The company contended that he
was operated on for peptic ulcer 2 years before the policy was applied
for and that he never disclosed such an operation.
Issue:
WON Asian Crusader was deceived into entering the contract or in accepting
the risk at the rate of premium agreed upon because of insured's
representation?
Held:
No. Petition dismissed.
Ratio:
Section 27 of the Insurance Law:
Sec. 27. Such party a contract of insurance must communicate to the
other, in good faith, all facts within his knowledge which are material
to the contract, and which the other has not the means of ascertaining,
and as to which he makes no warranty.
"Concealment exists where the assured had knowledge of a fact material to
the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assurer, but he designedly and intentionally withholds
the same."
It has also been held "that the concealment must, in the absence of inquiries,
be not only material, but fraudulent, or the fact must have been
intentionally withheld."
Fraudulent intent on the part of the insured must be established to entitle the
insurer to rescind the contract. And as correctly observed by the lower court,
"misrepresentation as a defense of the insurer to avoid liability is an
'affirmative' defense. The duty to establish such a defense by satisfactory and
convincing evidence rests upon the defendant. The evidence before the Court
does not clearly and satisfactorily establish that defense."
It bears emphasis that Kwong Nam had informed the appellant's
medical examiner of the tumor. His statement that said tumor was "associated
with ulcer of the stomach" should be construed as an expression made in good
faith of his belief as to the nature of his ailment and operation.
While the information communicated was imperfect, the same was sufficient
to have induced appellant to make further inquiries about the ailment and
operation of the insured.
Section 32 of Insurance Law:
Section 32. The right to information of material facts may be waived
either by the terms of insurance or by neglect to make inquiries as to
such facts where they are distinctly implied in other facts of which
information is communicated.
Where a question appears to be not answered at all or to be imperfectly
answered, and the insurers issue a policy without any further inquiry, they
waive the imperfection of the answer and render the omission to answer more
fully immaterial.
The company or its medical examiner did not make any further inquiries on
such matters from the hospital before acting on the application for insurance.
The fact of the matter is that the defendant was too eager to accept
the application and receive the insured's premium. It would be inequitable now
to allow the defendant to avoid liability under the circumstances."
White Gold v Pioneer
G.R. No. 154514; July 28, 2005
J. Quisimbing
Facts:
White Gold procured a protection and indemnity coverage for its
vessels from The Steamship Mutual through Pioneer Insurance and
Surety Corporation.
White Gold was issued a Certificate of Entry and Acceptance. Pioneer
also issued receipts.
When White Gold failed to fully pay its accounts, Steamship Mutual
refused to renew the coverage.
Steamship Mutual thereafter filed a case against White Gold for
collection of sum of money to recover the unpaid balance. White Gold
on the other hand, filed a complaint before the Insurance Commission
claiming that Steamship Mutual and Pioneer violated provisions of
the Insurance Code.
The Insurance Commission dismissed the complaint. It said that there
was no need for Steamship Mutual to secure a license because it was
not engaged in the insurance business and that it was a P & I club.
Pioneer was not required to obtain another license as insurance
agent because Steamship Mutual was not engaged in the insurance
business.
The Court of Appeals affirmed the decision of the Insurance
Commissioner. In its decision, the appellate court distinguished
between P & I Clubs vis--vis conventional
insurance. The appellate court also held that Pioneer merely acted as
a collection agent of Steamship Mutual.
Hence this petition by White Gold.
Issues:
1. Is Steamship Mutual, a P & I Club, engaged in the insurance business
in the Philippines?
2. Does Pioneer need a license as an insurance agent/broker for
Steamship Mutual?
Held: Yes. Petition granted.
Ratio:
White Gold insists that Steamship Mutual as a P & I Club is engaged in the
insurance business. To buttress its assertion, it cites the definition as an
association composed of shipowners in general who band together for the
specific purpose of providing insurance cover on a mutual basis against
liabilities incidental to shipowning that the members incur in favor of third
parties.
They argued that Steamship Mutuals primary purpose is to solicit and provide
protection and indemnity coverage and for this purpose, it has engaged the
services of Pioneer to act as its agent.
Respondents contended that although Steamship Mutual is a P & I Club, it is
not engaged in the insurance business in the Philippines. It is merely an
association of vessel owners who have come together to provide mutual
protection against liabilities incidental to shipowning.
1. Is Steamship Mutual engaged in the insurance business?
A P & I Club is a form of insurance against third party liability, where
the third party is anyone other than the P & I Club and the members.
By definition then, Steamship Mutual as a P & I Club is a mutual
insurance association engaged in the marine insurance business.
The records reveal Steamship Mutual is doing business in the country
albeit without the requisite certificate of authority mandated by Section
187 of the Insurance Code. It maintains a resident agent in the
Philippines to solicit insurance and to collect payments in its
behalf. Steamship Mutual even renewed its P & I Club cover until it
was cancelled due to non-payment of the calls. Thus, to
continue doing business here, Steamship Mutual or through its agent
Pioneer, must secure a license from the Insurance Commission.
Since a contract of insurance involves public interest, regulation by the
State is necessary. Thus, no insurer or insurance company is allowed
to engage in the insurance business without a license or a certificate
of authority from the Insurance Commission.
2. Pioneer is the resident agent of Steamship Mutual as evidenced by
the certificate of registration issued by the Insurance Commission. It
has been licensed to do or transact insurance business by virtue of
the certificate of authority issued by the same agency. However, a
Certification from the Commission states that Pioneer does not have
a separate license to be an agent/broker of Steamship Mutual.
Although Pioneer is already licensed as an insurance company, it
needs a separate license to act as insurance agent for Steamship
Mutual. Section 299 of the Insurance Code clearly states:
 SEC. 299 No person shall act as an insurance agent or as
an insurance broker in the solicitation or procurement
of applications for insurance, or receive for services in
obtaining insurance, any commission or other compensation
from any insurance company doing business in the
Philippines or any agent thereof, without first procuring a
license so to act from the Commissioner
Central Shipping Company, Inc v Insurance Company of North America
G.R. No. 150751; September 20, 2004
FACTS:
On July 25, 1990 at Puerto Princesa, Palawan, Central Shipping
Company received on board its vessel, the M/V Central Bohol, 376
pieces [of] Philippine Apitong Round Logs and undertook to transport
said shipment to Manila for delivery to Alaska Lumber Co., Inc.
The cargo was insured for P3,000,000.00 against total loss under
Insurance Company of North Americas Marine Cargo Policy No.
MCPB- 00170.
The vessel completely sank. Due to the sinking of the vessel, the cargo
was totally lost.
The consignee, Alaska Lumber Co. Inc., presented a claim for the
value of the shipment to Central Shipping but the latter failed and
refused to settle the claim, hence Insurance company, being the
insurer, paid said claim and now seeks to be subrogated to all the
rights and actions of the consignee as against Central Shipping.
Central Shipping raised as its main defense that the proximate and
only cause of the sinking of its vessel and the loss of its cargo was a
natural disaster, a tropical storm which neither Central Shipping nor
the captain of its vessel could have foreseen.
RTCs Decision: Central Shipping Liable. RTC was unconvinced that
the sinking of M/V Central Bohol had been caused by the weather or
any other caso fortuito. It noted that monsoons, which were common
occurrences during the months of July to December, could have been
foreseen and provided for by an ocean-going vessel.
CAs Decision: affirmed RTC. Given the season of rains and
monsoons, the ship captain and his crew should have anticipated the
perils of the sea. The CA found no merit in petitioners assertion of the
vessels seaworthiness. It held that the Certificates of Inspection and
Drydocking were not conclusive proofs thereof. In order to consider a
vessel to be seaworthy, it must be fit to meet the perils of the sea.
ISSUES:
1. WON the carrier is liable for the loss of the cargo?
2. WON the doctrine of limited liability is applicable?
RULING & RATIO:
1. Yes. A common carrier is presumed to be at fault or negligent. It shall
be liable for the loss, destruction or deterioration of its cargo, unless it
can prove that the sole and proximate cause of such event is one of
the causes enumerated in Article 1734 of the Civil Code, or that it
exercised extraordinary diligence to prevent or minimize the loss.
In the present case, the weather condition encountered by petitioners
vessel was not a storm or a natural disaster comprehended in the
law. Given the known weather condition prevailing during the voyage,
the manner of stowage employed by the carrier was insufficient to
secure the cargo from the rolling action of the sea. The carrier took a
calculated risk in improperly securing the cargo. Having lost that risk,
it cannot now disclaim any liability for the loss.
Established is the fact that between 10:00 p.m. on July 25, 1990 and
1:25 a.m. on July 26, 1990, M/V Central Bohol encountered a
southwestern monsoon in the course of its voyage. Having made such
factual representation in its Note of Marine Protest, petitioner cannot
now be allowed to retreat and claim that the southwestern monsoon
was a storm. Normally expected on sea voyages, however, were
such monsoons, during which strong winds were not unusual.
According to PAGASA, a storm has a wind force of 48 to 55 knots,
equivalent to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale.
The second mate of the vessel stated that the wind was blowing
around force 7 to 8 on the Beaufort Scale. Consequently, the strong
winds accompanying the southwestern monsoon could not be
classified as a storm. Such winds are the ordinary vicissitudes of a
sea voyage. Also, even if it were a storm, it was not the proximate
and only cause of the loss. The loss of the vessel was caused not
only by the southwestern monsoon, but also by the shifting of
the logs in the hold. Such shifting could been due only to
improper stowage.
2. No. The doctrine of limited liability under Article 587 of the Code of
Commerce is not applicable to the present case. This rule does not
apply to situations in which the loss or the injury is due to the
concurrent negligence of the shipowner and the captain.
CAPITAL INSURANCE VS. PLASTIC ERA, CO.
G.R.No. L-22375; July 18, 1975
FACTS:
December 17, 1960: Capital Insurance & Surety Co., Inc. delivered to
the respondent Plastic Era Manufacturing Co., Inc. its open Fire
Policy insuring its building, equipment, raw materials, products and
accessories located at Sheridan Street, Mandaluyong, Rizal
between December 15, 1960,1pm December 15, 1961 1pm up
to P100,000 but Plastic Era did not pay the premium
January 8, 1961: Plastic Era delivered to Capital Insurance its partial
payment through check P1,000 postdated January 16, 1961.
February 20, 1961: Capital Insurance tried to deposit the check but it
was dishonored due to lack of funds. According to the records,
on January 19, 1961 Plastic Era has had a bank balance of P1,193.41
January 18, 1961: Plastic Eras properties were destroyed by
fire amounting to a loss of P283,875.
The property was also insured to Philamgen Insurance Company for
P200K.
Capital Insurance refused Plastic Eras claim for failing to pay the
insurance premium.
CFIs Decision: Favored Capital Insurance.
CAs Decision: Affirmed.
ISSUE: WON there was a valid insurance contract because there was an
extension of credit despite failing to encash the check payment?
HELD:
YES. SC affirmed.
Article 1249 of the New Civil Code:
The delivery of promissory notes payable to order, or bills of exchange
or other mercantile documents shall produce the effect of
payment only when they have been cashed, or when through the fault
of the creditor they have been impaired.
Capital Insurance accepted the promise of Plastic Era to pay the
insurance premium within 30 days from the effective date of
policy. Considering that the insurance policy is silent as to the mode
of payment, Capital Insurance is deemed to have accepted the promissory
note in payment of the premium. This rendered the policy immediately
operative on the date it was delivered.
By accepting its promise to pay the insurance premium within thirty (30) days
from the effectivity date of the policy December 17, 1960
Capital Insurance had in effect extended credit to Plastic Era.
Where credit is given by an insurance company for the payment of the
premium it has no right to cancel the policy for nonpayment except by putting
the insured in default and giving him personal notice
Having held the check for such an unreasonable period of time,
Capital Insurance was estopped from claiming a forfeiture of its policy for non-
payment even if the check had been dishonored later.
Pan Malayan Ins. Corp. v. Court of Appeals
184 SCRA 54
CORTES, J.:
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:
WON 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 part 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.
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.
Malayan Insurance Co. v. Arnaldo
G.R. No. L-67835 October 12, 1987
FACTS:
On June 7, 1981, the petitioner (hereinafter called (MICO) issued to
the private respondent, Coronacion Pinca, Fire Insurance Policy No.
F-001-17212 on her property for the amount of P14,000.00 effective
July 22, 1981, until July 22, 1982.
On October 15,1981, MICO allegedly cancelled the policy for non-
payment, of the premium and sent the corresponding notice to Pinca.
On December 24, 1981, payment of the premium for Pinca was
received by Domingo Adora, agent of MICO.
On January 15, 1982, Adora remitted this payment to MICO, together
with other payments.
On January 18, 1982, Pinca's property was completely burned.
On February 5, 1982, Pinca's payment was returned by MICO to
Adora on the ground that her policy had been cancelled earlier. But
Adora refused to accept it.
In due time, Pinca made the requisite demands for payment, which
MICO rejected. She then went to the Insurance Commission. It is
because she was ultimately sustained by the public respondent that
the petitioner has come to us for relief. The records show that notice
of the decision of the public respondent dated April 5, 1982, was
received by MICO on April 10, 1982. On April 25, 1982, it filed a motion
for reconsideration, which was denied on June 4, 1982. Notice of this
denial was received by MICO on June 13, 1982, as evidenced by
Annex "1" duly authenticated by the Insurance Commission. The
instant petition was filed with this Court on July 2, 1982.
ISSUE:
1. WON this petition was filed in time and must be given due course
2. Whether or not there was no payment of premium and that the policy
had been cancelled before the occurence of the loss are not
acceptable
RULING:
1. NO. The position of the petition is that the petition is governed by
Section 416 0f the Insurance Code giving it thirty days within
which to appeal by certiorari to this Court. Alternatively, it also
invokes Rule 45 of the Rules of Court. For their part, the public and
private respondents insist that the applicable law is B.P. 129, which
they say governs not only courts of justice but also quasi-judicial
bodies like the Insurance Commission. The period for appeal under
this law is also fifteen days, as under Rule 45. Under Section 416 of
the Insurance Code, the period for appeal is thirty days from notice of
the decision of the Insurance Commission. The petitioner filed its
motion for reconsideration on April 25, 1981, or fifteen days such
notice, and the reglementary period began to run again after June 13,
1981, date of its receipt of notice of the denial of the said motion for
reconsideration. As the herein petition was filed on July 2, 1981, or
nineteen days later, there is no question that it is tardy by four days.
Counted from June 13, the fifteen-day period prescribed under Rule
45, assuming it is applicable, would end on June 28, 1982, or also four
days from July 2, when the petition was filed. If it was filed under B.P.
129, then, considering that the motion for reconsideration was filed on
 the fifteenth day after MICO received notice of the decision, only one
more day would have remained for it to appeal, to wit, June 14, 1982.
That would make the petition eighteen days late by July 2. Indeed,
even if the applicable law were still R.A. 5434, governing appeals from
administrative bodies, the petition would still be tardy. The law
provides for a fixed period of ten days from notice of the denial of a
seasonable motion for reconsideration within which to appeal from the
decision. Accordingly, that ten-day period, counted from June 13,
1982, would have ended on June 23, 1982, making the petition filed
on July 2, 1982, nine days late.
2. MICO's acknowledgment of Adora as its agent defeats its
contention that he was not authorized to receive the premium
payment on its behalf. It is clearly provided in Section 306 of the
Insurance Code that:
SEC. 306. xxx xxx xxx
Any insurance company which delivers to an insurance agent or
insurance broker a policy or contract of insurance shall be deemed to
have authorized such agent or broker to receive on its behalf payment
of any premium which is due on such policy or contract of insurance
at the time of its issuance or delivery or which becomes due thereon.
And it is a well-known principle under the law of agency that:
Payment to an agent having authority to receive or collect
payment is equivalent to payment to the principal himself; such
payment is complete when the money delivered is into the agent's
hands and is a discharge of the indebtedness owing to the principal.
MICO's view that there was no existing insurance at the time of the
loss sustained by Pinca because her policy never became effective for
non-payment of premium is defective. Payment was in fact made,
rendering the policy operative as of June 22, 1981, and removing it
from the provisions of Article 77, Thereafter, the policy could be
cancelled on any of the supervening grounds enumerated in Article 64
(except "nonpayment of premium") provided the cancellation was
made in accordance therewith and with Article 65.
Section 64 reads as follows:
SEC. 64. No policy of insurance other than life shall be cancelled by
the insurer except upon prior notice thereof to the insured, and no
notice of cancellation shall be effective unless it is based on the
occurrence, after the effective date of the policy, of one or more of the
following:
(a) non-payment of premium;
(b) conviction of a crime arising out of acts increasing the hazard
insured against;
(c) discovery of fraud or material misrepresentation;
(d) discovery of willful, or reckless acts or commissions increasing the
hazard insured against;
(e) physical changes in the property insured which result in the
property becoming uninsurable;or
(f) a determination by the Commissioner that the continuation of the
policy would violate or would place the insurer in violation of this Code.
As for the method of cancellation, Section 65 provides as follows:
SEC. 65. All notices of cancellation mentioned in the preceding section
shall be in writing, mailed or delivered to the named insured at the
address shown in the policy, and shall state (a) which of the grounds
set forth in section sixty-four is relied upon and (b) that, upon written
request of the named insured, the insurer will furnish the facts on
which the cancellation is based.
A valid cancellation must, therefore, require concurrence of the
following conditions:
(1) There must be prior notice of cancellation to the insured;
(2) The notice must be based on the occurrence, after the effective
date of the policy, of one or more of the grounds mentioned;
(3) The notice must be (a) in writing, (b) mailed, or delivered to the
named insured, (c) at the address shown in the policy;
(4) It must state (a) which of the grounds mentioned in Section 64 is
relied upon and (b) that upon written request of the insured, the insurer
will furnish the facts on which the cancellation is based.
Considering the strict language of Section 64 that no insurance policy
shall be cancelled except upon prior notice, it behooved MICO's to make
sure that the cancellation was actually sent to and received by the
insured. The presumption cited is unavailing against the positive duty enjoined
by Section 64 upon MICO and the flat denial made by the private respondent
that she had received notice of the claimed cancellation. It stands to reason
that if Pinca had really received the said notice, she would not have made
payment on the original policy on December 24, 1981. Instead, she would have
asked for a new insurance, effective on that date and until one year later, and
so taken advantage of the extended period. The Court finds that if she did pay
on that date, it was because she honestly believed that the policy issued on
June 7, 1981, was still in effect and she was willing to make her payment
retroact to July 22, 1981, its stipulated commencement date. After all, agent
Adora was very accommodating and had earlier told her "to call him up any
time" she was ready with her payment on the policy earlier issued. She was
obviously only reciprocating in kind when she paid her premium for the period
beginning July 22, 1981, and not December 24, 1981. A close study of the
proceedings will show that Pinca meant to renew the policy if it had really been
already cancelled but not if it was still effective. It was all conditional. As it has
not been shown that there was a valid cancellation of the policy, there was
consequently no need to renew it but to pay the premium thereon. Payment
was thus legally made on the original transaction and it could be, and was,
validly received on behalf of the insurer by its agent Adora. Adora incidentally,
had not been informed of the cancellation either and saw no reason not to
accept the said payment.
Finally, there is nothing in the Insurance Code that makes the participation of
an adjuster in the assessment of the loss imperative or indispensable, as
MICO suggests. Section 325, which it cites, simply speaks of the licensing and
duties of adjusters.
Roque v IAC
G.R. No. L-66935; November 11, 1985
FACTS:
On February 19, 1972, the Manila Bay Lighterage Corporation (Manila
Bay), a common carrier, entered into a contract with the petitioners
whereby the former would load and carry on board its barge Mable 10
about 422.18 cubic meters of logs from Malampaya Sound, Palawan
to North Harbor, Manila.
The petitioners insured the logs against loss for P100,000.00 with
respondent Pioneer Insurance and Surety Corporation (Pioneer).
On February 29, 1972, the petitioners loaded on the barge, 811 pieces
of logs at Malampaya Sound, Palawan for carriage and delivery to
North Harbor, Port of Manila, but the shipment never reached its
destination because Mable 10 sank with the 811 pieces of logs
somewhere off Cabuli Point in Palawan on its way to Manila.
Hence, petitioners commenced Civil Case No. 86599 against Manila
Bay and respondent Pioneer.
Trial Court: found in favor of petitioners.
Intermediate Appellate Court: absolved the respondent insurance
company from liability on the grounds that the vessel carrying the
insured cargo was unseaworthy and the loss of said cargo was caused
not by the perils of the sea but by the perils of the ship
ISSUES:
1. WON in cases of marine cargo insurance, there is a warranty of
seaworthiness by the cargo owner.
2. WON the loss of the cargo in this case was caused by "perils of the
ship" and not by "perils of the sea.
RULING:
1. No. The IAC is correct.
The liability of the insurance company is governed by law. Section 113
of the Insurance Code provides:
In every marine insurance upon a ship or freight, or freightage,
or upon any thing that is the subject of marine insurance, a
warranty is implied that the ship is seaworthy.
Section 99 of the same Code also provides in part. Marine insurance
includes:
(1) Insurance against loss of or damage to:
(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes,
merchandise, ...
From the above-quoted provisions, there can be no mistaking the fact
that the term "cargo" can be the subject of marine insurance and
that once it is so made, the implied warranty of seaworthiness
immediately attaches to whoever is insuring the cargo whether
he be the shipowner or not.
Since the law provides for an implied warranty of seaworthiness in
every contract of ordinary marine insurance, it becomes the obligation
of a cargo owner to look for a reliable common carrier which keeps its
vessels in seaworthy condition. The shipper of cargo may have no
control over the vessel but he has full control in the choice of the
common carrier that will transport his goods. Or the cargo owner may
enter into a contract of insurance which specifically provides that the
insurer answers not only for the perils of the sea but also provides for
coverage of perils of the ship.
2. No, the IAC is correct.
In marine cases, the risks insured against are "perils of the sea".
A policy does not cover a loss or injury that must inevitably take place
in the ordinary course of things. There is no doubt that the term 'perils
of the sea' extends only to losses caused by sea damage, or by the
violence of the elements, and does not embrace all losses happening
at sea. They insure against losses from extraordinary
occurrences only, such as stress of weather, winds and waves,
lightning, tempests, rocks and the like. These are understood to be the
"perils of the sea" referred in the policy, and not those ordinary perils
which every vessel must encounter. "Perils of the sea" has been said
 to include only such losses as are of extraordinary nature, encounter.
"Perils of the sea" has been said to include only such losses as are
of extraordinary nature, or arise from some overwhelming power,
which cannot be guarded against by the ordinary exertion of human
skill and prudence. Damage done to a vessel by perils of the sea
includes every species of damages done to a vessel at sea, as
distinguished from the ordinary wear and tear of the voyage,
and distinct from injuries suffered by the vessel in consequence of her
not being seaworthy at the outset of her voyage (as in this case). It is
also the general rule that everything which happens thru the inherent
vice of the thing, or by the act of the owners, master or shipper, shall
not be reputed a peril, if not otherwise borne in the policy.
It is quite unmistakable that the loss of the cargo was due to the perils
of the ship rather than the perils of the sea. The facts clearly negate
the petitioners' claim under the insurance policy.
In the present case the entrance of the sea water into the ship's hold
through the defective pipe already described was not due to any
accident which happened during the voyage, but to the failure of the
ship's owner properly to repair a defect of the existence of which he
was apprised. The loss was therefore more analogous to that which
directly results from simple unseaworthiness than to that which result
from the perils of the sea.
Tibay, et. al v Court of Appeals
GR No. 119655, 24 May 1996
Bellosillo, [J.]
Facts:
In January 22 1987, the Petitioner Violeta Tibay (and Nicolas Roralso)
obtained a fire insurance policy for their 2-storey from the Private
Respondent Fortune Life Insurance Co. The said policy covers the
period from January 23, 1987 until January 23, 1988 or one year for
P600, 000 and at the agreed premium of P2, 983.50. On January 23
or the next day, petitioner made a partial payment of the premium with
P600.
Unfortunately, on March 8 1987, the said building was burned to the
ground. It was only two days after the fire that Petitioner Violeta
advanced the full payment of the policy premium which was
accepted by the insurer. On this same day, petitioner likewise filed
the claim that was then referred to the insurer's adjuster. Investigation
of the cause of fire commenced and the petitioner submitted the
required proof of loss.
Despite that, the private respondent Fortune refused to pay the
insurance claim saying it as not liable due to the non-payment by
petitioner of the full amount of the premium as stated in the policy.
The petitioner then brought the matter to the Insurance Commission
but nothing good came out. Hence this case filed.
The trial court rule in favor of the petitioner.
Upon appeal, the Court of Appeals reversed the lower court's decision
and held that Fortune is not liable but ordered it to return the premium
paid with interest to the petitioner. Hence, this petition for review.
Issue:
WON the partial payment of the premium rendered the insurance policy
ineffective?
Ruling:
Insurance is a contract whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or
contingent event. The consideration is the premium, which must be paid
at the time, way and manner as stated in the policy, and if not so paid as
in this case, the policy is therefore forfeited by its own terms.
In this case, the policy taken out by the petitioner provides for payment of
premium in full. Since the petitioner only made partial payment with the
remaining balance paid only after the fire or peril insured against has occurred,
the insurance contract therefore did not take effect barring the insured from
claiming or collecting from the loss of her building.
Under Section 77 of the Insurance Code (Philippine), it provides therein that
"An insurer is entitled to payment of the premium as soon as the thing insured
is exposed to the peril insured against. Notwithstanding any agreement to the
contrary, no policy or contract of insurance issued by an insurance company
is valid and binding unless and until the premium thereof has been paid, except
in the case of a life or an industrial life policy whenever the grace period
provision applies."
Herein case, the controversy is on the payment of the premium. It cannot be
disputed that premium is the elixir vitae of the insurance business because the
insurer is required by law to maintain a reserve fund to meet its contingent
obligations to the public. Due to this, it is imperative that the premium is paid
fully and promptly. To allow the possibility of paying the premium even
after the peril has ensued will surely undermine the foundation of the
insurance business.
Makati Tuscany Condominium Corporation v CA
G.R. No. 95546; November 6, 1992
FACTS:
Sometime in early 1982, private respondent American Home
Assurance Co. (AHAC), represented by American International
Underwriters (Phils.), Inc., issued in favor of petitioner Makati Tuscany
Condominium Corporation (TUSCANY) Insurance Policy No. AH-
CPP-9210452 on the latter's building and premises, for a period
beginning 1 March 1982 and ending 1 March 1983, with a total
premium of P466,103.05.
The premium was paid on installments on 12 March 1982, 20 May
1982, 21 June 1982 and 16 November 1982, all of which were
accepted by private respondent.
Successive renewals of the policies were made in the same manner.
On 1984, the policy was again renewed and petitioner made two
installment payments, both accepted by private respondent, the first
on 6 February 1984 for P52,000.00 and the second, on 6 June 1984
for P100,000.00.
Thereafter, petitioner refused to pay the balance of the premium.
Private respondent filed an action to recover the unpaid balance of
P314,103.05 for Insurance Policy.
Petitioner explained that it discontinued the payment of premiums
because the policy did not contain a credit clause in its favor. Petitioner
further claimed that the policy was never binding and valid, and no risk
attached to the policy. It then pleaded a counterclaim for P152,000.00
for the premiums already paid for 1984-85, and in its answer with
amended counterclaim, sought the refund of P924,206.10
representing the premium payments for 1982-85.
Trial Court: dismissed the complaint and counterclaim
CA: ordering herein petitioner to pay the balance of the premiums due
ISSUE:
WON payment by installment of the premiums due on an insurance policy
invalidates the contract of insurance?
RULING:
We hold that the subject policies are valid even if the premiums were paid
on installments. The records clearly show that petitioner and private
respondent intended subject insurance policies to be binding and effective
notwithstanding the staggered payment of the premiums. The initial insurance
contract entered into in 1982 was renewed in 1983, then in 1984. In those
three (3) years, the insurer accepted all the installment payments. Such
acceptance of payments speaks loudly of the insurer's intention to honor the
policies it issued to petitioner.
Quoting the CA decision:
While the import of Section 77 is that prepayment of premiums is strictly
required as a condition to the validity of the contract, we are not prepared
to rule that the request to make installment payments duly approved by
the insurer, would prevent the entire contract of insurance from going into
effect despite payment and acceptance of the initial premium or first
installment. Section 78 of the Insurance Code in effect allows waiver by
the insurer of the condition of prepayment by making an
acknowledgment in the insurance policy of receipt of premium as
conclusive evidence of payment so far as to make the policy
binding despite the fact that premium is actually unpaid. Section 77
merely precludes the parties from stipulating that the policy is valid even
if premiums are not paid, but does not expressly prohibit an agreement
granting credit extension. So is an understanding to allow insured to pay
premiums in installments not so proscribed.
Philamcare Health Systems, Inc. vs Court of Appeals
379 SCRA 356
G.R. No. 125678, March 18, 2002
YNARES-SANTIAGO, J.
FACTS:
Ernani Trinos applied for a health care coverage with Philamcare
Health Systems, Inc.
To the question Have you or any of your family members ever
consulted or been treated for high blood pressure, heart trouble,
diabetes, cancer, liver disease, asthma or peptic ulcer?, Ernani
answered No.
Under the agreement, Ernani is entitled to avail of hospitalization
benefits and out-patient benefits.
The coverage was approved for a period of one year from March 1,
1988 to March 1, 1989. The agreement was however extended yearly
until June 1, 1990 which increased the amount of coverage to a
maximum sum of P75,000 per disability.
During the period of said coverage, Ernani suffered a heart attack and
was confined at the Manila Medical Center (MMC) for one month.
While in the hospital, his wife Julita tried to claim the benefits under
the health care agreement.
However, the Philamcare denied her claim alleging that the agreement
was void because Ernani concealed his medical history.
Doctors at the MMC allegedly discovered at the time of Ernanis
confinement that he was hypertensive, diabetic and asthmatic,
 contrary to his answer in the application form. Thus, Julita paid for all
the hospitalization expenses.
After Ernani was discharged from the MMC, he was attended by a
physical therapist at home. Later, he was admitted at the Chinese
General Hospital. Due to financial difficulties, however, respondent
brought her husband home again.
In the morning of April 13, 1990, Ernani had fever and was feeling very
weak. Respondent was constrained to bring him back to the Chinese
General Hospital where he died on the same day.
Julita filed an action for damages and reimbursement of her expenses
plus moral damages attorneys fees against Philamcare and its
president, Dr. Benito Reverente.
The Regional Trial court or Manila rendered judgment in favor of Julita.
On appeal, the decision of the trial court was affirmed but deleted all
awards for damages and absolved petitioner Reverente. Hence, this
petition for review raising the primary argument that a health care
agreement is not an insurance contract; hence the incontestability
clause under the Insurance Code does not apply.
ISSUES:
WON there is concealment of material fact made by Ernani.
HELD:
NO. The answer assailed by petitioner was in response to the question relating
to the medical history of the applicant. This largely depends on opinion rather
than fact, especially coming from respondents husband who was not a
medical doctor. Where matters of opinion or judgment are called for answers
made I good faith and without intent to deceive will not avoid a policy even
though they are untrue.
The fraudulent intent on the part of the insured must be established to warrant
rescission of the insurance contract. Concealment as a defense for the health
care provider or insurer to avoid liability is an affirmative defense and the duty
to establish such defense by satisfactory and convincing evidence rests upon
the provider or insurer. In any case, with or without the authority to investigate,
petitioner is liable for claims made under the contract. Having assumed a
responsibility under the agreement, petitioner is bound to answer to the extent
agreed upon. In the end, the liability of the health care provider attaches once
the member is hospitalized for the disease or injury covered by the agreement
or wherever he avails of the covered benefits which he has prepaid.
Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract the insurer.
By reason of the exclusive control of the insurance company over the terms
and phraseology of the insurance contract, ambiguity must be strictly
interpreted against the insurer and liberally in favor of the insured, especially
to avoid forfeiture. This is equally applicable to Health Care Agreements.
UCPB v Masagana
G.R. No. 137172. April 4, 2001
C.J. Davide
Facts:
Masagana obtained from UCPB five (5) insurance policies on its
Manila properties.
The policies were effective from May 22, 1991 to May 22, 1992.
On June 13, 1992, Masaganas properties were razed by fire.
On July 13, 1992, plaintiff tendered five checks for P225,753.45
as renewal premium payments. A receipt was issued.
On July 14, 1992, Masagana made its formal demand for
indemnification for the burned insured properties.
UCPB then rejected Masaganas claims under the argument that the
fire took place before the tender of payment.
Hence Masagana filed this case.
The Court of Appeals disagreed with UCPBs argument that
Masaganas tender of payment of the premiums on 13 July 1992 did
not result in the renewal of the policies, having been made beyond the
effective date of renewal as provided under Policy Condition No. 26,
which states:
26. Renewal Clause. -- Unless the company at least forty five days in
advance of the end of the policy period mails or delivers to the assured
at the address shown in the policy notice of its intention not to renew
the policy or to condition its renewal upon reduction of limits
or elimination of coverages, the assured shall be entitled to renew the
policy upon payment of the premium due on the effective date
of renewal.
Both the Court of Appeals and the trial court found that sufficient proof
exists that Masagana, which had procured insurance coverage
from UCPB for a number of years, had been granted a 60 to 90-
day credit term for the renewal of the policies. Such a practice
had existed up to the time the claims were filed. Most of the premiums
have been paid for more than 60 days after the issuance. Also, no
timely notice of non-renewal was made by UCPB.
The Supreme Court ruled against UCPB in the first case on the issue
of whether the fire insurance policies issued by petitioner to the
respondent covering the period from May 22, 1991 to May 22, 1992
had been extended or renewed by an implied credit arrangement
though actual payment of premium was tendered on a later date and
after the occurrence of the risk insured against.
 UCPB filed a motion for reconsideration.
The Supreme Court, upon observing the facts, affirmed that there was
no valid notice of non-renewal of the policies in question, as there is
no proof at all that the notice sent by ordinary mail was received by
Masagana. Also, the premiums were paid within the grace period.
Issue:
Whether Section 77 of the Insurance Code of 1978 must be strictly applied to
Petitioners advantage despite its practice of granting a 60- to 90-
day credit term for the payment of premiums.
Held: No. Petition denied.
Ratio:
Section 77 of the Insurance Code provides: No policy or contract of insurance
issued by an insurance company is valid and binding unless and until the
premium thereof has been paid
An exception to this section is Section 78 which provides: Any
acknowledgment in a policy or contract of insurance of the receipt of premium
is conclusive evidence of its payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not be binding until premium
is actually paid.
Makati Tuscany v Court of Appeals- Section 77 may not apply if the parties
have agreed to the payment in installments of the premium and partial
payment has been made at the time of loss.
Section 78 allows waiver by the insurer of the condition of prepayment and
makes the policy binding despite the fact that premium is actually
unpaid. Section 77 does not expressly prohibit an agreement
granting credit extension. At the very least, both parties should be deemed in
estoppel to question the arrangement they have voluntarily accepted.
The Tuscany case has provided another exception to Section 77 that the
insurer may grant credit extension for the payment of the premium. If the
insurer has granted the insured a credit term for the payment of the premium
and loss occurs before the expiration of the term, recovery on the policy should
be allowed even though the premium is paid after the loss but within
the credit term.
Moreover, there is nothing in Section 77 which prohibits the parties in an
insurance contract to provide a credit term within which to pay the
premiums. That agreement is not against the law, morals, good customs,
public order or public policy. The agreement binds the parties.
It would be unjust if recovery on the policy would not be permitted against
Petitioner, which had consistently granted a 60- to 90-day credit term for the
payment of premiums. Estoppel bars it from taking refuge since Masagana
relied in good faith on such practice. Estoppel then is the fifth exception.
FGU Insurance Corporation v CA
G.R. No. 137775. March 31, 2005
FACTS:
Anco Enterprises Company (ANCO), a partnership between Ang Gui
and Co To, was engaged in the shipping business.
It owned the M/T ANCO tugboat and the D/B Lucio barge that were
operated as common carriers.
Since the D/B Lucio had no engine of its own, it could not maneuver
by itself and had to be towed by a tugboat for it to move from one place
to another.
On 23 September 1979, San Miguel Corporation (SMC) shipped from
Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T
ANCO, when the barge and tugboat arrived at San Jose, Antique, in
the afternoon of 30 September 1979, the clouds over the area were
dark and the waves were already big.
The arrastre workers unloading the cargoes of SMC on board the D/B
Lucio began to complain about their difficulty in unloading the cargoes.
SMCs District Sales Supervisor, Fernando Macabuag, requested
ANCOs representative to transfer the barge to a safer place because
the vessel might not be able to withstand the big waves.
ANCOs representative did not heed the request because he was
confident that the barge could withstand the waves.
At around midnight, the barge run aground and was broken and the
cargoes of beer in the barge were swept away.
As a consequence of the incident, SMC filed a complaint for Breach of
Contract of Carriage and Damages against ANCO.
ANCO admitted that the cases of beer Pale Pilsen and Cerveza Negra
mentioned in the complaint were indeed loaded on the vessel
belonging to ANCO.
It claimed however that it had an agreement with SMC that ANCO
would not be liable for any losses or damages resulting to the
cargoes by reason of fortuitous event.
Third-party defendant FGU admitted the existence of the Insurance
Policy under Marine Cover Note No. 29591 but maintained that the
alleged loss of the cargoes covered by the said insurance policy
cannot be attributed directly or indirectly to any of the risks insured
against in the said insurance policy.
 RTC-Cebu: The estate of Ang Gui and Co To is liable to SMC for the
amount of the lost shipment. With respect to the Third-Party complaint,
the court a quo found FGU liable to bear Fifty-Three Percent (53%) of
the amount of the lost cargoes. While the cargoes were indeed lost
due to fortuitous event, there was failure on ANCOs part, through their
representatives, to observe the degree of diligence required that would
exonerate them from liability.
CA: affirmed RTC in toto.
ISSUES:
(1) WON ANCOs representatives was able to exercise the extraordinary
degree of diligence required by the law to exculpate them from liability for the
loss of the cargoes.
(2) WON FGU can be held liable under the insurance policy to reimburse
ANCO for the loss of the cargoes despite the findings of the respondent court
that such loss was occasioned by the blatant negligence of the latters
employees.
RULING:
(1) No. In this case, the calamity that caused the loss of the cargoes was not
unforeseen nor was it unavoidable. In fact, the other vessels in the port of San
Jose, Antique, managed to transfer to another place, a circumstance which
prompted SMCs District Sales Supervisor to request that the D/B Lucio be
likewise transferred, but to no avail. The D/B Lucio had no engine and could
not maneuver by itself. Even if ANCOs representatives wanted to transfer it,
they no longer had any means to do so as the tugboat M/T ANCO had already
departed, leaving the barge to its own devices. The captain of the tugboat
should have had the foresight not to leave the barge alone considering the
pending storm.
(2) No, FGU is not liable. The ordinary negligence of the insured and his agents
has long been held as a part of the risk which the insurer takes upon himself,
and the existence of which, where it is the proximate cause of the loss, does
not absolve the insurer from liability. But willful exposure, gross negligence,
negligence amounting to misconduct, etc., have often been held to release the
insurer from such liability.
In the case at bar, both the trial court and the appellate court had concluded
from the evidence that the crewmembers of both the D/B Lucio and the M/T
ANCO were blatantly negligent. To wit: There was blatant negligence on the
part of the employees of defendants-appellants when the patron (operator) of
the tug boat immediately left the barge at the San Jose, Antique wharf despite
the looming bad weather. The negligence of the defendants- appellants is
proved by the fact that on 01 October 1979, the only simple vessel left at the
wharf in San Jose was the D/B Lucio.
This Court, taking into account the circumstances present in the instant case,
concludes that the blatant negligence of ANCOs employees is of such gross
character that it amounts to a wrongful act that must exonerate FGU from
liability under the insurance contract.
Heirs of Loreto C. Maramag vs Maramag
G.R. No. 181132; June 5, 2009
Lessons Applicable: To whom insurance proceeds payable (Insurance)
FACTS:
Loreto Maramag designated as beneficiary his concubine Eva de
Guzman Maramag
Vicenta Maramag and Odessa, Karl Brian, and Trisha Angelie (heirs
of Loreto Maramag) and his concubine Eva de Guzman Maramag,
also suspected in the killing of Loreto and his illegitimate children are
claiming for his insurance.
Vicenta alleges that Eva is disqualified from claiming
RTC: Granted - civil code does NOT apply
CA: dismissed the case for lack of jurisdiction for filing beyond
reglementary period
ISSUE: WON Eva can claim even though prohibited under the civil code
against donation.
HELD:
Any person who is forbidden from receiving any donation under Article 739
cannot be named beneficiary of a life insurance policy of the person who
cannot make any donation to him.
If a concubine is made the beneficiary, it is believed that the insurance contract
will still remain valid, but the indemnity must go to the legal heirs and not to
the concubine, for evidently, what is prohibited under Art. 2012 is the naming
of the improper beneficiary.
SECTION 53. The insurance proceeds shall be applied exclusively to the
proper interest of the person in whose name or for whose benefit it is made
unless otherwise specified in the policy.
GR: only persons entitled to claim the insurance proceeds are either the
insured, if still alive; or the beneficiary, if the insured is already deceased, upon
the maturation of the policy.
EX: situation where the insurance contract was intended to benefit third
persons who are not parties to the same in the form of favorable stipulations
or indemnity. In such a case, third parties may directly sue and claim from the
insurer.

It is only in cases where the insured has not designated any beneficiary, or
when the designated beneficiary is disqualified by law to receive the proceeds,
that the insurance policy proceeds shall redound to the benefit of the estate of
the insured.