Gulf Resorts Inc. v.

Philippine Charter Insurance Corporation

Plaintiff, as the owner of Plaza Resort, insured its two swimming pools with American Home
Assurance Company from the risk of loss from earthquake shock. Thereafter, respondent also
agreed to insure the same swimming pools. In consideration of the payment by plaintiff, the parties
enter into a contract of insurance which also included a “Earthquake Endorsement“ that
the insurance covers loss or damage to shock to any of the property. Thereafter, an earthquake hit
Central Luzon that caused extensive damage to the resort operated by plaintiff including the
swimming pools. Hence, plaintiff made a claim on the insurance for his loss pertaining to the entire
resort. Respondent held that it was only liable for the insurance of the swimming pool. Since parties
were unable to arrive at an agreement, plaintiff instituted an action for the payment of the
insurance.

The lower court held in favor of respondents opining that the insurance was merely on the two
pools as the respondent’s insurance contract was only lifted from the previously executed
insurance contract with American Home. More so, the stipulation was clear and unambiguous
hence it shall be given its plain meaning.

Issue: Whether the insurer’s liability includes that of properties other than the swimming pools.

Ruling:

Contract does not include the insurance of other property other than the swimming pools

Petitioner cannot focus on the earthquake shock endorsement to the exclusion of the other
provisions. All the provisions and riders, taken and interpreted together, indubitably show the
intention of the parties to extend earthquake shock coverage to the two swimming pools only.
Furthermore, the interpretation of the contract in favor of the plaintiff cannot be given due course
under contracts of adhesion. Petitioner cannot claim the principle as the defense that they did not
know the provisions of the policy. From the inception of the policy, petitioner had required the
respondent to copy verbatim the provisions and terms of its latest insurance policy from AHAC-
AIU.

Furthermore, the Court examined the payments made by plaintiff. It was noted that one of the
requirements for the existence of an insurance contract was the payment of insurance premiums .
An insurance premium is the consideration paid an insurer for undertaking to indemnify the
insured against a specified peril. The here is no mention of any premium payable for the other
resort properties with regard to earthquake shock. In contrast, it was established in trial that
plaintiff made payments for the insurance of merely the two swimming pools.