INSURANCE LAW NORSU 1. Rizal Surety vs. CA336 SCRA 12 (2000) INSURANCE LAW: Interpretation of Insurance Contracts FACTS: Rizal Surety & Insurance Company issued a fire insurance policy in favor of Transworld Knitting Mills, Inc. The subject policy stated that Rizal Surety is “responsible in case of loss whilst contained and/or stored during the currency of this Policy in the premises occupied by them forming part of the buildings situated within own Compound xxx.” The policy also described therein the four-span building covered by the same. On Jan. 12, 1981, fire broke out in the compound, razing the middle portion of its four-span building and partly gutting the left and right sections thereof. A two-storey building (behind said four-span building) was also destroyed by the fire. ISSUE: Whether or not Rizal Surety is liable for loss of the two-storey building considering that the fire insurance policy sued upon covered only the contents of the four-span building HELD: Both the trial court and the CA found that the so-called “annex” as not an annex building but an integral and inseparable part of the four-span building described in the policy and consequently, the machines and spare parts stored therein were covered by the fire insurance in dispute. So also, considering that the two-storey building aforementioned was already existing when subject fire insurance policy contract was entered into on Jan. 12, 1981, having been constructed some time in 1978, petitioner should have specifically excluded the said two-storey building from the coverage of the fire insurance if minded to exclude the same but if did not, and instead, went on to provide that such fire insurance policy covers the products, raw materials and supplies stored within the premises of Transworld which was an integral part of the four-span building occupied by Transworld, knowing fully well the existence of such building adjoining and intercommunicating with the right section of the four-span building. Also, in case of doubt in the stipulation as to the coverage of the fire insurance policy, under Art. 1377 of the New Civil Code, the doubt should be resolved against the Rizal Surety, whose layer or managers drafted the fire insurance policy contract under scrutiny. In Landicho vs. Government Service Insurance System, the Court ruled that “the terms in an insurance policy, which are ambiguous, equivocal or uncertain x x x are to be construed strictly and most strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially where forfeiture is involved, and the reason for this is that the insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by experts and legal advisers employed by, and acting exclusively in the interest of, the insurance company.”

2. SIMEON DEL ROSARIO vs. THE EQUITABLE INSURANCE and CASUALTY CO., INC. G.R. No. L-16215, June 29, 1963 8 SCRA 343 FACTS: The defendant insurance company issued a personal accident policy on the life of Francisco del Rosario, herein plaintiff’s son,binding itself to pay the sum of P1,000.00 to P3,000.00 as indemnity for the death of the insured. In the said policy, for the different causes of death, disability of the insured, there is a corresponding is a specific amount as indemnity. As for

death due to drowning, there was no specific amount, hence, an ambiguous provision. Later, Francisco died of drowning as he was forced to jump off the motor launch on which he was riding on account of fire that broke out on the said vessel. Simeon then filed a claim for payment with defendant company which then paid him the sum of P1,000.00. However, Simeon’s lawyer, informed the said company that the amount was wrong. In turn, the defendant company referred the matter to the Insurance Commissioner,who rendered an opinion that the liability of the company was only P1,000.00. Hence, it refused to pay more than P1,00.00. A complaint for the recovery of the balance of P2,000.00 was instituted with the CFI of Rizal. ISSUE: Whether or not the amount paid is the correct indemnity HELD: And so it has been generally held that the “terms in an insurance policy, which are ambiguous, equivocal or uncertain… are to be construed strictly against, the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially where a forfeiture is involved,” and the reason for this rule is that the “insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by expert and legal advisers employed by, and acting exclusively in the interest of, the insurance company”. Insurance Law case digests SY 2010-2011 Where two interpretations, equally fair, of languages used in an insurance policy may be made, that which allows the greater indemnity will prevail. At any event, the policy under consideration, covers death or disability by accidental means, and the appellant insurance company agreed to pay P1,000.00 to P3,000.00 is indemnity for death of the insured. In view of the conclusions reached, it would seem unnecessary to discuss the other issued raised in the appeal. The judgment appealed from is hereby affirmed. Without costs. 3. TAURUS TAXI CO., INC., FELICITAS V. MONJE, ET AL. vs. THE CAPITAL INSURANCE & SURETY CO., INC., G.R. No. L-23491 July 31, 1968 FACTS: 1. Alfredo Monje, was employed as taxi driver by the Taurus Taxi Co., Inc. 2. The taxi he was driving collided with a Transport Taxicab resulting in his death. 3. At the time of the accident, there was subsisting and in force Commercial Vehicle Comprehensive Policy No. 101, 737 issued by CAPITAL INSURANCE & SURETY CORP. to herein Taurus Taxi Co., Inc. The amount for which each passenger, including the driver, is insured is P5,000.00. 4. The policy was issued to Taurus Taxi Co., Inc. 5. After which Taurus made representations "for the payment of the insurance benefit corresponding to her and her children since it was issued in its name, benefit corresponding to her and her children, but despite demands, Capital Insurance company refused and still refuses to pay them. 6. Capital Insurance & Surety Co. Inc. alleged "that in view of the fact that the deceased Alfredo Monje was entitled to indemnity under another insurance policy issued by Ed. A. Keller Co., Ltd., the heirs of the said deceased are not entitled to indemnity under the insurance policy issued by it for the reason that the latter policy contains a stipulation that "the company will indemnify any authorized driver provided that such authorized driver is not entitled to indemnity under any other policy. ISSUE: Whether the heirs of ALFREDO MONJE be entitled to the proceeds of the insurance policy issued by Capital Insurance Company even if there is an existing indemnity contract with another insurance company at the time of his death. Held: Yes.

7. What is prohibited by the insurance policy in question is that any "authorized driver of plaintiff Taurus Taxi Co., Inc." should not be "entitled to any indemnity under any policy", it would appear indisputable that the obligation of defendant-appellant under the policy had not in any wise been extinguished. 8. It is too well-settled to need the citation of authorities that what the law requires enters into and forms part of every contract. The Workmen's Compensation Act, explicitly requires that an employee suffering any injury or death arising out of or in the course of employment be compensated. The fulfillment of such statutory obligation cannot be the basis for evading the clear, explicit and mandatory terms of a policy. 9. Same way with sickness benefits under the Social Security Act. 10. Assuming however that there is a doubt concerning the liability of defendant-appellant insurance firm, nonetheless, it should be resolved against its pretense and in favor of the insured. It was the holding in Eagle Star Insurance, Ltd. v. Chia Yu 6 that courts are to regard "with extreme jealousy" limitations of liability found in insurance policies and to construe them in such a way as to preclude the insurer from non-compliance with his obligation. In other words, to quote a noted authority on the subject, "a contract of insurance couched in language chosen by the insurer is, if open to the construction contended for by the insured, to be construed most strongly, or strictly, against the insurer and liberally in favor of the contention of the insured, which means in accordance with the rule contra proferentem." 7 Enough has been said therefore to dispose of the first assigned error. 11.The other issue made by Capital Insurance is that by joining the heirs of Alfredo Monje as a party, plaintiff Taurus Taxi Co., Inc. committed a breach of policy condition and thus forfeited whatever benefits, if any, to which it might be entitled under appellant's policy." 12.The basis for such an allegation is one of the conditions set forth in the policy. Thus: No admission, offer, promise or payment shall be made by or on behalf of the insured without the written consent of the Company which shall be entitled if it so desires to take over and conduct in his name the defense or settlement of any claim or to prosecute in his name for its own benefit any claim for indemnity or damages or otherwise and shall have full discretion in the conduct of any proceedings and in the settlement of any claim and the Insured shall give all such information and assistance as the Company may require . 13.The institution of the action cannot possibly be construed as an admission, offer, promise, or payment by the company, for it merely seeks to enforce, by court action, the only legal remedy available to it, its rights under the contract of insurance to which it is a party. 14. As noted in the decision appealed from: "The institution of the action cannot possibly be construed as an admission, offer, promise, or payment by the company, for it merely seeks to enforce, by court action, the only legal remedy available to it, its rights under the contract of insurance to which it is a party. 4. CCC Insurance Corp. V. CA (1970) G.R. No. L-25920 January 30, 1970 Lessons Applicable: Motor vehicle liability insurance - "Authorized Driver Clause" (Insurance) FACTS: Carlos F. Robes insured with the CCC Insurance Corporation his Dodge Kingsway car

against loss or damage through accident for an amount not exceeding P8,000 June 25 1961: Carlos' driver Domingo Reyes met a vehicular collision along Rizal

Avenue Extension, Potrero, Malabon, Rizal Ccc Insurance Corporation denied his claim reasoning that the driver was not

an "authorized driver" Reyes, who cannot read and write, who has never passed any examination for drivers,

and has not applied for a license from the duly constituted government agency entrusted with the duty of licensing drivers, cannot be considered an authorized driver

AUTHORIZED DRIVER: Any of the following:

(a) The insured; (b) Any person driving on the Insured's order or with his permission, provided that the person driving is permitted in accordance with licensing laws or regulations to drive the motor vehicle covered by this Policy, or has been so permitted and is not disqualified by order of a court of law or by reason of any enactment or regulation from driving such Motor Vehicle. RTC: favored Robes and CCC was order to pay

ISSUE: W/N Domingo Reyes was an authorized driver HELD: YES. CA affirmed Court of Appeals found that the driver's license No. 271703 DP was genuine Domingo Reyes is in possession of a driver's license issued by the Motor Vehicles Office

which on its face appears to have been regularly issued Neither Gloria Presa nor the officer-in-charge Marciano A. Monzon was placed on the

witness stand to be examined in order to determine whether said license is indeed void Section 24 of the Revised Motor Vehicles Law, Act 3992 of the Philippine Legislature, as

amended by Republic Acts Nos. 587, 1204 and 2863,1 An examination or demonstration to show any applicant's ability to operate motor vehicles may also be required in the discretion of the Chief, Motor Vehicles Office or his deputies.

Section 26 of the Act prescribes further: SEC. 26. Issuance of chauffeur's license; professional badge: If, after examination, or without the same, the Chief, Motor Vehicles Office or his deputies, believe the applicant to possess the necessary qualifications and knowledge, they shall issue to such applicant a license to operate as chauffeur ...

There is no proof that the owner of the automobile knew that the circumstance surrounding such issuance showed that it was irregular

the weight of authority is in favor of a liberal interpretation of the insurance policy for the benefit of the party insured, and strictly against the insurer

5. SERANO Vs CA 130 SCRA 327 - no file found 6. JEWEL VILLACORTA vs. THE INSURANCE COMMISSION G.R. No. L-54171, 28 October 1980 100 SCRA 467 FACTS: Villacorta had her Colt Lancer car insured with Empire Insurance Company against own damage, theft and 3rd party liability. While the car was in the repair shop, one of the employees of the said repair shop took it out for a joyride after which it figured in a vehicular accident. This resulted to the death of the driver and some of the passengers as well as to extensive damage to the car. Villacorta filed a claim for total loss with the said insurance company. However, it denied the claim on the ground that the accident did not fall within the provisions of the policy either for the Own Damage or Theft coverage, invoking the policy provision on “Authorized Driver Clause”. This was upheld by the Insurance Commission further stating that the car was not stolen and therefore not covered by the Theft Clause because it is not evident that the person who took the car for a joyride intends to permanently deprive the insured

of his/ her car. ISSUE: Whether or not the insurer company should pay the said claim HELD: Yes. Where the insured’s car is wrongfully taken without the insured’s consent from the car service and repair shop to whom it had been entrusted for check-up and repairs (assuming that such taking was for a joy ride, in the course of which it was totally smashed in an accident), respondent insurer is liable and must pay insured for the total loss of the insured vehicle under the Theft Clause of the policy. Assuming, despite the totally inadequate evidence, that the taking was “temporary” and for a “joy ride”, the Court sustains as the better view that which holds that when a person, either with the object of going to a certain place, or learning how to drive, or enjoying a free ride, takes possession of a vehicle belonging to another, without the consent of its owner, he is guilty of theft because by taking possession of the personal property belonging to another and using it, his intent to gain is Insurance Law case digests SY 2010-2011 evident since he derives therefrom utility, satisfaction, enjoymet and pleasure. ACCORDINGLY, the appealed decision is set aside and judgment is hereby rendered sentencing private respondent to pay petitioner the sum of P35,000.00 with legal interest from the filing of the complaint until full payment is made and to pay the costs of suit. 7. Landicho vs. GSIS [G.R. No. L-28866 March 17, 1972] FACTS: On June 1, 1964, the GSIS issued in favor of Flaviano Landicho, a civil engineer of the Bureau of Public Works, stationed at Mamburao, Mindoro Occidental, optional additional life insurance policy No. OG-136107 in the sum of P7,900. xxx Before the issuance of said policy, Landicho had filed an application, by filing and signing a printed form of the GSIS on the basis of which the policy was issued. Paragraph 7 of said application States: 7. xxx I hereby agree as follows: xxx c. That this application serves as a letter of authority to the Collecting Officer of our Office thru the GSIS to deduct from my salary the monthly premium in the amount of P33.36, beginning the month of May, 1964, and every month thereafter until notice of its discontinuance shall have beenreceived from the System; . d. That the failure to deduct from my salary the month premiums shall not make the policy lapse, however, the

premium account shall be considered as indebtedness which, I bind myself to pay the System; . e. That my policy shall be made effective on the first day of the month next following the month the first premium is paid; provided, that it is not more ninety (90) days before or after the date of the medical examination, was conducted if required." While still an employee of the Bureau of Public Works, Mr. Landicho died in an airplane crash on June 29, 1966. Mrs. Landicho, in her own behalf and that of her co-plaintiffs and minor children, Rafael J. and Maria Lourdes Eugenia, filed with the GSIS a claim for P15,800, as the double indemnity due under policy No. OG-136107. GSIS denied the claim, upon the ground that the policy had never been in force because, pursuant to subdivision (e) of the above-quoted paragraph 7 of the application, the policy "shall be ... effective on the first day of the month next following the month the first premium is paid," and no premium had ever been paid on said policy. The Lower Court decided in favor of the petitioner. GSIS appealed to the Supreme Court. ISSUE: WON the insurance policy in question has ever been in force, not a single premium having been paid thereon. RULING: Lower Court decision is sustained. (T)he language, of subdivisions (c), (d) and (e) is such as to create an ambiguity that should be resolved against the party responsible therefor — defendant GSIS, as the party who prepared and furnished the application form — and in favor of the party misled thereby, the insured employee. Indeed, our Civil Code provides: The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. 2 This is particularly true as regards insurance policies, in respect of which it is settled that the " "terms in an insurance policy, which are ambiguous, equivocal, or uncertain ... are to be construed strictly and most strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured, especially where a forfeiture is involved" (29 Am. Jur., 181), and the reason for this rule is the "insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by experts and legal advisers employed by, and acting exclusively in the interest of, the insurance company." (44 C.J.S., p. 1174.) 3.

The equitable and ethical considerations justifying the foregoing view are bolstered up by two (2) factors, namely: (a) The aforementioned subdivision (c) states "that this application serves as a letter of authority to the Collecting Officer of our Office" — the Bureau of Public Works — "thru the GSIS to deduct from my salary the monthly premium in the amount of P33.36." No such deduction was made — and, consequently, not even the first premium "paid" — because the collecting officer of the Bureau of Public Works was not advised by the GSIS to make it (the deduction) pursuant to said authority. Surely, this omission of the GSIS should not inure to its benefit. . (b) The GSIS had impliedly induced the insured to believe that Policy No. OG-136107 was in force, he having been paid by the GSIS the dividends corresponding to said policy. Had the insured had the slightest inkling that the latter was not, as yet, effective for non-payment of the first premium, he would have, in all probability, caused the same to be forthwith satisfied. WHEREFORE, the decision appealed from should be, it is hereby affirmed, with costs against the defendantappellant, Government 8. Gonzales vs PHILAM Life June 21 1976 - no file found

9. American Home Assurance v. Tantuco G.R. No. 138941, 8 Oct. 2001 INSURANCE LAW: Liberality is the rule of construction in insurance contracts. FACTS: Tantuco Enterprises, Inc. is a coconut oil milling and refining company. It owned two mills (the first oil mill and a new one), both located at its factory compound at Iyam, Lucena City. The two oil mills are separately covered by fire insurance policies issued by American Home Assurance Co. On Sept. 30, 1991, a fire broke out and gutted and consumed the new oil mill. American Home rejected the claim for the insurance proceeds on the ground that no policy was issued by it covering the burned oil mill. It stated that the new oil mill was under Building No. 15 while the insurance coverage extended only to the oil mill under Building No. 5. ISSUE: Whether or not the new oil mill is covered by the fire insurance policy HELD: In construing the words used descriptive of a building insured, the greatest liberality is shown by the courts in giving effect to the insurance. In view of the custom of insurance agents to examine buildings before writing policies upon them, and since a mistake as to the identity and character of the building is extremely unlikely, the courts are inclined to consider the policy of insurance covers any building which the parties manifestly intended to insure, however inaccurate the description may be. Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our mind, that what the parties manifestly intended to insure was the new oil mill.

If the parties really intended to protect the first oil mill, then there is no need to specify it as new. Indeed, it would be absurd to assume that the respondent would protect its first oil mill for different amounts and leave uncovered its second one. 10. MISAMIS LUMBER CORPORATION vs. CAPITAL INSURANCE AND SURETY CO., INC. G.R. No. L-21380, May 20, 1966 17 SCRA 228 FACTS: Misamis Lumber has insured its Ford Falcon motor car for the amount of P14,000.00 with Capital Insurance & Surety. It is included in the policy that the insured may authorize the repair of the said vehicle and that the insurance company will be liable for it provided that a detailed estimate of the cost is forwarded immediately to the insurance company and that the estimated cost of such repair shall not exceed the authorized Repair Limit which is set at P150.00. Sometime after, the car figured in a minor accident that broke its crankcase and flywheel. The plaintiff then had it repaired, the repair costs totaled P302.27. However, the insurance company refused to pay for the total cost of repairs because it claimed that the cost exceeded that which was stipulated as the repair limit. ISSUE: Whether or not the insurance company is held liable for the cost of repair which exceeded the stipulated repair limit HELD: The Insurance Company is liable for only P150.00. The insurance policy stipulated in paragraph 4 that if the insured authorizes the repair the liability of the insurer, per its subparagraph (a) is limited to P150.00. The literal meaning of this stipulation must control, it being the actual contract, expressly and plainly provided for in the policy. 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. Finally, to require the insurer to prove that the cost of the repairs ordered by the insured is unreasonable, as the appealed decision does, when the insurer was not given an opportunity to inspect and assess the damage before the repairs were made, strikes us as contrary to elementary justice and equity. For the foregoing reasons, the appealed decision is hereby modified by ordering the defendant-appellant Capital Insurance & Surety Company, Inc. to pay not more than P150.00 to the plaintiff-appellee Misamis Lumber Corporation. Each party shall bear its own costs and attorney’s fees. 11. TY vs. FIRST NATIONAL SURETY & ASSURANCE CO. INC. G.R. NO. L-16138, April 29, 961 1 SCRA 1324 Facts: Petitioner obtained personal accident policies which stipulated, among others, that for partial disability resulting to the loss of either hand, the insurer shall be liable for P650.00. It was further stated in the policies that, “That loss of a hand shall mean the loss by amputation through the bones of the wrist.” A fire broke out which totally destroyed Broadway Cotton Factory, Ty’s employer. Fighting his way out of the factory, Ty was

injured on the left hand by a heavy object. As a result, Ty suffered a temporary total disability of his left hand which prevented hi from performing his work or labor necessary in the pursuance of his occupation. Issue: Whether or not the insurer is liable Held: The insurer was not liable. We cannot go beyond the clear and express conditions of the insurance policies, all of which defined partial disability as loss of either hand by amputation through the bones of the wrist. There was no such amputation. All that was found was that the physical injuries caused temporary total disability of Ty’s left hand. We might add that the agreement contained in the insurance 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. WHEREFORE, the decision appealed from is hereby affirmed, with costs against the plaintiff-appellant.

12. PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS G.R. No. 125678, 18 March 2002 Health Care agreement is in the nature of non-life insurance FACTS: Ernani Trinos obtained a health care coverage with petitioner Philamcare. Under the agreement, Trinos was entitled to avail of hospitalization benefits, whether ordinary or emergency, listed therein. He was entitled to avail of “out-patient benefits” such as annual physical examinations, preventive health care and other out-patient services. During the period of coverage, Trinos suffered a heart attack and was hospitalized for one month. During this time, his wife, Julita Trinos, tried to claim the benefits under the health care agreement but petitioner company denied her claim on the ground that the Health Care Agreement was void because there was concealment regarding Ernani’s medical history. Doctors allegedly discovered at the time of Ernani’s confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Thus Julita paid the hospitalization expenses herself. When Ernani died, Julita instituted with the RTC of Manila an action for damages against petitioner and its president. She asked for reimbursement of her expenses plus moral damages and attorney’s fees. ISSUE: Whether or not the petitioner is liable HELD: YES. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the Insurance Law case digests SY 2010-2011 member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health

care provider must pay for the same to the extent agreed upon under the contract. Petitioner alleges that respondent was not the legal wife of the deceased member considering that at the time of their marriage, the deceased was previously married to another woman who was still alive. The health care agreement is in the nature of a contract of indemnity. Hence, payment should be made to the party who incurred the expenses. It is not controverted that respondent paid all the hospital and medical expenses. She is therefore entitled to reimbursement. The records adequately prove the expenses incurred by respondent for the deceased’s hospitalization, medication and the professional fees of the attending physicians. WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals dated December 14, 1995 is AFFIRMED. 13. Great Pacific life v. CA 89 SCRA 543 Facts: > On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr endowment policy for 50T on the life of his one year old daughter Helen Go. > All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the branch manager of Grepalife-Cebu. Mondragon then typed the data on the application form which was later signed by Ngo. > Ngo then paid the insurance premium and a binding deposit receipt was issued to him. The binding receipt contained the following provision: “If the applicant shall not have been insurable xxx and the Company declines to approve the application, the insurance applied for shall not have been in force at any time and the sum paid shall be returned to the applicant upon the surrender of this receipt.” > Mondragon wrote on the bottom of the application form his strong recommendation for the approval of the insurance application. > On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the insurance application of Ngo for the simple reason that the 20yr endowment plan is not available for minors below 7 yrs old. > Mondragon wrote back the main office again strongly recommending the approval of the endowment plan on the life of Helen, adding that Grepalife was the only insurance company NOT selling endowment plans to children. > On may 1957, Helen died of influenza with complication of broncho pneumonia. Ngo filed a claim with Gepalife, but the latter denied liability on the ground that there was no contract between the insurer and the insured and a binding receipt is NOT evidence of such contract. Issue: Whether or not the binding deposit receipt, constituted a temporary contract of life insurance. Held:

NO. The binding receipt in question was merely an acknowledgement on behalf of the company, that the latter’s branch office had received from the applicant, the insurance premium and had accepted the application subject for processing by the insurance company, and that the latter will either approve or reject the same on the basis of whether or not the applicant is insurable on standard rates. Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt had never became on force at any time, pursuant to par. E of the said receipt. A binding receipt is manifestly merely conditional and does NOT insure outright. Where an agreement is made between the applicant and the agent, NO liability shall attach until the principal approves the risk and a receipt is given by the agent. The acceptance is merely conditional, and is subordinated to the act of the company in approving or rejecting the application. Thus in life insurance, a binding slip or binding receipt does NOT insure by itself. 14. Enriquez v. SunLife- Insurance Policy 41 PHIL 269 Facts: > On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity. > 2 days later, he paid the sum of 6T to the company’s anager in its Manila office and was given a receipt. > On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date, the Manila office prepared a letter notifying Herrer that his application has been accepted and this was placed in the ordinary channels of transmission, but as far as known was never actually mailed and never received by Herrer. > Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrer’s estate brought this action to recover the 6T paid by the deceased. Issue: Whether or not the insurance contract was perfected. Held: NO. The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant. An acceptance of an offer of insurance NOT actually or constructively communicated to the proposer does NOT make a contract of insurane, as the locus poenitentiae is ended when an acceptance has passed beyond the control of the party. NOTE: Life annuity is the opposite of a life insurance. In life annuity, a big amount is given to the insurance company, and if after a certain period of time the insured is stil living, he is entitled to regular smaller amounts for the rest of his life. Examples of Life annuity are pensions. Life Insurance on the other hand, the insured during the period of the coverage makes small regular payments and upon his death, the insurer pays a big amount to his beneficiaries.

15. The Insular Life Assurance Company vs Ebrado, 80 SCRA 181 Fact: On September 1, 1968, Buenaventura Ebrado issued by the Insular Life Assurance Policy No 009929 a whole-life plan with a rider for Accidental Death. Buenaventura designated Carponia Ebrado as the revocable beneficiary in his policy. He referred her as his wife. On October 21, 1969, Buenaventura Ebrad died as a result of an accident when he was hit by a falling tree. Carponia filed with the insurer a claim for the proceeds of the policy as the designated beneficiary therein. Although she admits that she and the insured Buenaventura were merely living as husband and wife without the benefits of marriage. Pascuala de Ebrado, valid wife, also filed her claim as the widow of the deceased insured. Issue: Can a common-law wife named as beneficiary in the life insurance policy of legally married man claim the proceeds thereof in case of death of the latter? Ruling: In essence, a life insurance is no different from a civil donation insofar as the beneficiary is concerned. Both are founded upon the same consideration: liberality. A beneficiary is like a donee because from the premiums of the policy which the insured pays out of liberality, the beneficiary will receive the proceeds or profits of said insurance. As a consequence, the proscription in Article739 of the New Civil Code should equally operate in life insurance contracts. The mandate of Article 2012 cannot be laid aside: any person who cannot receive a donation cannot be named a beneficiary in the life insurance policy of the persons who cannot make the donation. Note following Articles from the Civil Code: Article 2011 - "The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this Code." Article 2012 - "Any person who in forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot be make a donation to him." Article 739- "The donations shall be void: Those made between persons who were guilty of adultery or concubinage at the title of donation.xx In the case provided to in No.1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilt of the donee may be provided by preponderance of evidence in same action."

16. Gabriel Vs CA 264 Scra 137 - no file found

17. PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS G.R. No. 125678, 18 March 2002 Health Care agreement is in the nature of non-life insurance FACTS: Ernani Trinos obtained a health care coverage with petitioner

Philamcare. Under the agreement, Trinos was entitled to avail of hospitalization benefits, whether ordinary or emergency, listed therein. He was entitled to avail of “out-patient benefits” such as annual physical examinations, preventive health care and other out-patient services. During the period of coverage, Trinos suffered a heart attack and was hospitalized for one month. During this time, his wife, Julita Trinos, tried to claim the benefits under the health care agreement but petitioner company denied her claim on the ground that the Health Care Agreement was void because there was concealment regarding Ernani’s medical history. Doctors allegedly discovered at the time of Ernani’s confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Thus Julita paid the hospitalization expenses herself. When Ernani died, Julita instituted with the RTC of Manila an action for damages against petitioner and its president. She asked for reimbursement of her expenses plus moral damages and attorney’s fees. ISSUE: Whether or not the petitioner is liable HELD: YES. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the Insurance Law case digests SY 2010-2011 member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract. Petitioner alleges that respondent was not the legal wife of the deceased member considering that at the time of their marriage, the deceased was previously married to another woman who was still alive. The health care agreement is in the nature of a contract of indemnity. Hence, payment should be made to the party who incurred the expenses. It is not controverted that respondent paid all the hospital and medical expenses. She is therefore entitled to reimbursement. The records adequately prove the expenses incurred by respondent for the deceased’s hospitalization, medication and the professional fees of the attending physicians. WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals dated December 14, 1995 is AFFIRMED.

18. Gulf Resorts Inc. vs. Philippine Charter Insurance Corporation [G.R. No. 156167 May 16, 2005] Facts: Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union and had its properties in said resort insured originally with the American Home Assurance Company (AHAC). In the first 4 policies issued, the risks of loss from earthquake shock was extended only to petitioner’s two swimming pools. Gulf Resorts agreed to insure with Phil Charter the properties covered by the AHAC policy provided that the policy wording and rates in said policy be copied in the policy to be issued by Phil Charter. Phil Charter issued Policy No. 31944 to Gulf Resorts covering the period of March 14, 1990 to March 14, 1991 for

P10,700,600.00 for a total premium of P45,159.92. the break-down of premiums shows that Gulf Resorts paid only P393.00 as premium against earthquake shock (ES). In Policy No. 31944 issued by defendant, the shock endorsement provided that “In consideration of the payment by the insured to the company of the sum included additional premium the Company agrees, notwithstanding what is stated in the printed conditions of this policy due to the contrary, that this insurance covers loss or damage to shock to any of the property insured by this Policy occasioned by or through or in consequence of earthquake (Exhs. "1-D", "2-D", "3-A", "4-B", "5-A", "6-D" and "7-C"). In Exhibit "7-C" the word "included" above the underlined portion was deleted. On July 16, 1990 an earthquake struck Central Luzon and Northern Luzon and plaintiff’s properties covered by Policy No. 31944 issued by defendant, including the two swimming pools in its Agoo Playa Resort were damaged. Petitioner advised respondent that it would be making a claim under its Insurance Policy 31944 for damages on its properties. Respondent denied petitioner’s claim on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort. The trial court ruled in favor of respondent. In its ruling, the schedule clearly shows that petitioner paid only a premium of P393.00 against the peril of earthquake shock, the same premium it had paid against earthquake shock only on the two swimming pools in all the policies issued by AHAC. Issue: Whether or not the policy covers only the two swimming pools owned by Gulf Resorts and does not extend to all properties damaged therein Held: YES. 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. An insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril. In fire, casualty and marine insurance, the premium becomes a debt as soon as the risk attaches. In the subject policy, no premium payments were made with regard to earthquake shock coverage except on the two swimming pools. There is no mention of any premium payable for the other resort properties with regard to earthquake shock. This is consistent with the history of petitioner’s insurance policies with AHAC. 19. Great Pacific life v. CA 89 SCRA 543 Facts: > On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr endowment policy for 50T on the life of his one year old daughter Helen Go. > All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the branch manager of Grepalife-Cebu. Mondragon then typed the data on the application form which was later signed by Ngo. > Ngo then paid the insurance premium and a binding deposit receipt was issued to him. The binding receipt contained the following provision: “If the applicant shall not have been insurable xxx and the Company declines to approve the application, the insurance applied for shall not have been in force at any time and the sum paid shall be returned to the applicant upon the surrender of this receipt.” > Mondragon wrote on the bottom of the application form his strong recommendation for the approval of the insurance application. > On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the insurance application of Ngo for the simple reason that the 20yr endowment plan is not available for minors below 7 yrs old. > Mondragon wrote back the main office again strongly recommending the approval of the endowment plan on the life of Helen, adding that Grepalife was the only insurance company NOT selling endowment plans to children.

> On may 1957, Helen died of influenza with complication of broncho pneumonia. Ngo filed a claim with Gepalife, but the latter denied liability on the ground that there was no contract between the insurer and the insured and a binding receipt is NOT evidence of such contract. Issue: Whether or not the binding deposit receipt, constituted a temporary contract of life insurance. Held: NO. The binding receipt in question was merely an acknowledgement on behalf of the company, that the latter’s branch office had received from the applicant, the insurance premium and had accepted the application subject for processing by the insurance company, and that the latter will either approve or reject the same on the basis of whether or not the applicant is insurable on standard rates. Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt had never became on force at any time, pursuant to par. E of the said receipt. A binding receipt is manifestly merely conditional and does NOT insure outright. Where an agreement is made between the applicant and the agent, NO liability shall attach until the principal approves the risk and a receipt is given by the agent. The acceptance is merely conditional, and is subordinated to the act of the company in approving or rejecting the application. Thus in life insurance, a binding slip or binding receipt does NOT insure by itself. 20. Pineda vs CA 226 Scra 754 -no file found

21. Gaisano Cagayan, Inc. V. Insurance Company Of North America (2006) G.R. No. 147839 June 8, 2006 Lessons Applicable: Existing Interest (Insurance) Laws Applicable: Article 1504,Article 1263, Article 2207 of the Civil Code, Section 13 of Insurance Code FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt endorsements related to their ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines which are unpaid 45 days after the time of the loss February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan, Inc., containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire. February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it was subrogated to their rights Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force majeure

RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res perit domino) CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that was isnured HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and delivered to the customers and dealers of the insured ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; 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 Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession of, the subject matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of such an interest 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 - obligation is pecuniary in nature obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation (Genus nunquan perit) 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 Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. As to LSPI, no subrogation receipt was offered in evidence.

Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of P535,613

22. Filipinas Cia de Seguros v. Christern Huenfeld & Co. - Enemy Corporation 80 PHIL 54 Facts: > Oct. 1, 1941, Domestic Corp Christern, after payment of the premium, obtained from Filipinas, fire policy no. 29333 for P100T covering merchandise contained in a building located in Binondo. > On Feb. 27, 1942, during the Jap occupation, the building and the insured merchandise were burned. Christern submitted to Filipinas its claim > Salvaged goods were sold and the total loss of Christern was P92T. > Filipinas denied liability on the ground that Christern was an enemy corporation and cannot be insured. Issue: Whether or not Filipinas is liable to Christern, Huenfeld & Co. Held: NO. Majority of the stockholders of Christern were German subjects. This being so, SC ruled that said corporation became an enemy corporation upon the war between the US and Germany. The Phil Insurance Law in Sec. 8 provides that anyone except a public enemy may be insured. It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy. The purpose of the war is to cripple the power ad exhaust the resources of the enemy, and it is inconsistent that one country should destroy its enemy property and repay in insurance the value of what has been so destroyed, or that it should in such manner increase the resources of the enemy or render it aid. All individuals who compose the belligerent powers, exist as to each other, in a state of utter exclusion and are public enemies. Christern having become an enemy corporation on Dec. 10. 1941, the insurance policy issued in his favor on Oct. 1, 1941 by Filipinas had ceased to be valid and enforceable, and since the insured goods were burned after Dec. 10, 1941, and during the war, Christern was NOT entitled to any indemnity under said policy from Filipinas. Elementary rules of justice require that the premium paid by Christern for the period covered by the policy from Dec. 10, 1941 should be returned by Filipinas.

23. Harvardian Colleges v. Country Bankers Insurance Corp. 1 CARA 2 Facts: > Harvardian is a family corporation, the stockholders of which are Ildefonso Yap, Virginia King Yap and their children. > Prior to Aug. 9, 1979, an agent of Country Bankers proposed to Harvardian to insure its school building. Although at first reluctant, Harvardian agreed.

> Country Banks sent an inspector to inspect the school building and agreed to insure the same for P500,000 for which Harvardian paid an annual premium of P2,500. > On Aug. 9, 1979, Country Bankers issued to Harvardian a fire insurance policy. On March 12, 1980, (39 days before I was born… hehehehe )during the effectivity of said insurance policy, the insured property was totally burned rendering it a total loss. > A claim was made by plaintiff upon defendant but defendant denied it contending that plaintiff had no insurable interest over the building constructed on the piece of land in the name of the late Ildefonso Yap as owner. > It was contended that both the lot and the building were owned by Ildefonso Yap and NOT by the Harvardian Colleges. Issue: Whether or not Harvardian colleges has a right to the proceeds. Held: Harvardian has a right to the proceeds. Regardless of the nature of the title of the insured or even if he did not have title to the property insured, the contract of fire insurance should still be upheld if his interest in or his relation to the property is such that he will be benefited in its continued existence or suffer a direct pecuniary loss from its destruction or injury. The test in determining insurable interest in property is whether one will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination or injury by the happening of the event insured against. Here Harvardian was not only in possession of the building but was in fact using the same for several years with the knowledge and consent of Ildefonso Yap. It is reasonably fair to assume that had the building not been burned, Harvardian would have been allowed the continued use of the same as the site of its operation as an educational institution. Harvardian therefore would have been directly benefited by the preservation of the property, and certainly suffered a pecuniary loss by its being burned. 24. Geagonia vs. Court of Appeals, 241 SCRA 152 "A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise, the breach of an immaterial provision does not avoid the policy. To constitute a violation of the “other insurance” clause, the other insurance must be upon the same subject matter, the same interest therein, and the same risk."

25. RCBC Rizal Commercial Banking Banking vs CA 289 Scra 292

Facts: > GOYU applied for credit facilities and accommodations with RCBC. After due evaluation, a credit facility in the amount of P30 million was initially granted. Upon GOYU's application increased GOYU's credit facility to P50 million, then to P90 million, and finally to P117 million > As security for its credit facilities with RCBC, GOYU executed two REM and two CM in favor of RCBC, which were registered with the Registry of Deeds at. Under each of these four mortgage contracts, GOYU committed itself to insure the mortgaged property with an insurance company approved by RCBC, and subsequently, to endorse and deliver the insurance policies to RCBC. > GOYU obtained in its name a total of 10 insurance policies from MICO. In February 1992, Alchester Insurance Agency, Inc., the insurance agent where GOYU obtained the Malayan insurance policies, issued nine endorsements in favor of RCBC seemingly upon instructions of GOYU

> On April 27, 1992, one of GOYU's factory buildings in Valenzuela was gutted by fire. Consequently, GOYU submitted its claim for indemnity. > MICO denied the claim on the ground that the insurance policies were either attached pursuant to writs of attachments/garnishments issued by various courts or that the insurance proceeds were also claimed by other creditors of GOYU alleging better rights to the proceeds than the insured. > GOYU filed a complaint for specific performance and damages. RCBC, one of GOYU's creditors, also filed with MICO its formal claim over the proceeds of the insurance policies, but said claims were also denied for the same reasons that AGCO denied GOYU's claims. > However, because the endorsements do not bear the signature of any officer of GOYU, the trial court, as well as the Court of Appeals, concluded that the endorsements are defective and held that RCBC has no right over the insurance proceeds. Issue: Whether or not RCBC has a right over the insurance proceeds. Held: RCBC has a right over the insurance proceeds. It is settled that a mortgagor and a mortgagee have separate and distinct insurable interests in the same mortgaged property, such that each one of them may insure the same property for his own sole benefit. There is no question that GOYU could insure the mortgaged property for its own exclusive benefit. In the present case, although it appears that GOYU obtained the subject insurance policies naming itself as the sole payee, the intentions of the parties as shown by their contemporaneous acts, must be given due consideration in order to better serve the interest of justice and equity. It is to be noted that 9 endorsement documents were prepared by Alchester in favor of RCBC. The Court is in a quandary how Alchester could arrive at the idea of endorsing any specific insurance policy in favor of any particular beneficiary or payee other than the insured had not such named payee or beneficiary been specifically disclosed by the insured itself. It is also significant that GOYU voluntarily and purposely took the insurance policies from MICO, a sister company of RCBC, and not just from any other insurance company. Alchester would not have found out that the subject pieces of property were mortgaged to RCBC had not such information been voluntarily disclosed by GOYU itself. Had it not been for GOYU, Alchester would not have known of GOYU's intention of obtaining insurance coverage in compliance with its undertaking in the mortgage contracts with RCBC, and verify, Alchester would not have endorsed the policies to RCBC had it not been so directed by GOYU. On equitable principles, particularly on the ground of estoppel, the Court is constrained to rule in favor of mortgagor RCBC. RCBC, in good faith, relied upon the endorsement documents sent to it as this was only pursuant to the stipulation in the mortgage contracts. We find such reliance to be justified under the circumstances of the case. GOYU failed to seasonably repudiate the authority of the person or persons who prepared such endorsements. Over and above this, GOYU continued, in the meantime, to enjoy the benefits of the credit facilities extended to it by RCBC. After the occurrence of the loss insured against, it was too late for GOYU to disown the endorsements for any imagined or contrived lack of authority of Alchester to prepare and issue said endorsements. If there had not been actually an implied ratification of said endorsements by virtue of GOYU's inaction in this case, GOYU is at the very least estopped from assailing their operative effects. To permit GOYU to capitalize on its non-confirmation of these endorsements while it continued to enjoy the benefits of the credit facilities of RCBC which believed in good faith that there was due endorsement pursuant to their mortgage contracts, is to countenance

grave contravention of public policy, fair dealing, good faith, and justice. Such an unjust situation, the Court cannot sanction. Under the peculiar circumstances obtaining in this case, the Court is bound to recognize RCBC's right to the proceeds of the insurance policies if not for the actual endorsement of the policies, at least on the basis of the equitable principle of estoppel. GOYU cannot seek relief under Section 53 of the Insurance Code which provides that the proceeds of insurance shall exclusively apply to the interest of the person in whose name or for whose benefit it is made. The peculiarity of the circumstances obtaining in the instant case presents a justification to take exception to the strict application of said provision, it having been sufficiently established that it was the intention of the parties to designate RCBC as the party for whose benefit the insurance policies were taken out. Consider thus the following: 1. It is undisputed that the insured pieces of property were the subject of mortgage contracts entered into between RCBC and GOYU in consideration of and for securing GOYU's credit facilities from RCBC. The mortgage contracts contained common provisions whereby GOYU, as mortgagor, undertook to have the mortgaged property properly covered against any loss by an insurance company acceptable to RCBC. 2. GOYU voluntarily procured insurance policies to cover the mortgaged property from MICO, no less than a sister company of RCBC and definitely an acceptable insurance company to RCBC. 3. Endorsement documents were prepared by MICO's underwriter, Alchester Insurance Agency, Inc., and copies thereof were sent to GOYU, MICO and RCBC. GOYU did not assail, until of late, the validity of said endorsements. 4. GOYU continued until the occurrence of the fire, to enjoy the benefits of the credit facilities extended by RCBC which was conditioned upon the endorsement of the insurance policies to be taken by GOYU to cover the mortgaged properties. This Court can not over stress the fact that upon receiving its copies of the endorsement documents prepared by Alchester, GOYU, despite the absence written conformity thereto, obviously considered said endorsement to be sufficient compliance with its obligation under the mortgage contracts since RCBC accordingly continued to extend the benefits of its credit facilities and GOYU continued to benefit therefrom. Just as plain too is the intention of the parties to constitute RCBC as the beneficiary of the various insurance policies obtained by GOYU. The intention of the parties will have to be given full force and effect in this particular case. The insurance proceeds may, therefore, be exclusively applied to RCBC, which under the factual circumstances of the case, is truly the person or entity for whose benefit the policies were clearly intended.

26. UCPB vs Masagana 308 Scra 259 - no file found

27. Valenzuela V. CA (1990) G.R. No. 83122 October 19, 1990 Lessons Applicable: Effect of Non-Payment (Insurance) Laws Applicable: Art. 19,Art. 20,Art. 21, Art. 2200 of the new Civil Code;Section 77 of the Insurance Code

FACTS: Valenzuela, General Agent of Philippine American General Insurance Company, Inc authorized to sell in behalf of Philamgen solicited marine insurance from Delta Motors, Inc. amounting to P4.4M entitling him to a 32% commission or P1.6M 1976-1978: premium payments of P1,946,886 were paid directly to Philamgen. Philamgen wanted a 50% share of Valenzuela's commission but Valenzuela refused. Because of his refusal, the officers of Philamgen reversed his commission due him, placed agency transactions on a cash and carry basis thus removing the 60-day credit for premiums due, threatened to cancel policies issued by his agency and leaked out the news that he has substantial accounts with Philamgen. December 27, 1978: His agency with Philamgen was terminated Valenzuela sought relief from the RTC RTC: favored Valenzuela with reinstatement, commission with interest, monthly compensatory damages, moral damages, attorney's fees and cost of suit CA modified by holding Philamgen and Valenzuela jointly and severally liable for the premium ISSUE: W/N Valuenuela should be NOT be held liable since non-payment of the premium renders the policy invalid HELD: YES. petition is GRANTED. RTC reinstated with modification that upon satisfaction of the judgment, contractual relationship is terminated The principal may not defeat the agent's right to indemnification by a termination of the contract of agency. Where the principal terminates or repudiates the agent's employment in violation of the contract of employment and without cause ... the agent is entitled to receive either the amount of net losses caused and gains prevented by the breach, or the reasonable value of the services rendered. Thus, the agent is entitled to prospective profits which he would have made except for such wrongful termination provided that such profits are not conjectural, or speculative but are capable of determination upon some fairly reliable basis. If a principal violates a contractual or quasi-contractual duty which he owes his agent, the agent may as a rule bring an appropriate action for the breach of that duty. The agent may in a proper case maintain an action at law for compensation or damages question of whether or not the agency agreement is coupled with interest is helpful to the petitioners' cause but is not the primary and compelling reason Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding unless premium is paid, an insurance contract does not take effect since admittedly the premiums have not been paid, the policies issued have lapsed to sue Valenzuela for the unpaid premiums would be the height of injustice and unfair dealing Under Article 2200 of the new Civil Code, "indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain."