SECOND DIVISION

G.R. No. 175773               June 17, 2013

MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION (MMPSEU), Petitioner, 

DECISION

DEL CASTILLO, J.:

The Collective Bargaining Agreement (CBA) of the parties in this case provides that the company shoulder the
hospitalization expenses of the dependents of covered employees subject to certain limitations and restrictions.
Accordingly, covered employees pay part of the hospitalization insurance premium through monthly salary
deduction while the company, upon hospitalization of the covered employees' dependents, shall pay the
hospitalization expenses incurred for the same. The conflict arose when a portion of the hospitalization expenses
of the covered employees' dependents were paid/shouldered by the dependent's own health insurance. While the
company refused to pay the portion of the hospital expenses already shouldered by the dependents' own health
insurance, the union insists that the covered employees are entitled to the whole and undiminished amount of
said hospital expenses.

By this Petition for Review on Certiorari,1 petitioner Mitsubishi Motors Philippines Salaried Employees Union
(MMPSEU) assails the March 31, 2006 Decision2 and December 5, 2006 Resolution3 of the Court of Appeals (CA) in
CA-G.R. SP No. 75630, which reversed and set aside the Voluntary Arbitrator’s December 3, 2002 Decision 4 and
declared respondent Mitsubishi Motors Philippines Corporation (MMPC) to be under no legal obligation to pay its
covered employees’ dependents’ hospitalization expenses which were already shouldered by other health
insurance companies.

Factual Antecedents

The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 provides for the hospitalization insurance
benefits for the covered dependents, thus:

SECTION 4. DEPENDENTS’ GROUP HOSPITALIZATION INSURANCE – The COMPANY shall obtain group
hospitalization insurance coverage or assume under a self-insurance basis hospitalization for the dependents of
regular employees up to a maximum amount of forty thousand pesos (₱40,000.00) per confinement subject to the
following:

a. The room and board must not exceed three hundred pesos (₱300.00) per day up to a maximum of
thirty-one (31) days. Similarly, Doctor’s Call fees must not exceed three hundred pesos (₱300.00) per day
for a maximum of thirty-one (31) days. Any excess of this amount shall be borne by the employee.

b. Confinement must be in a hospital designated by the COMPANY. For this purpose, the COMPANY shall
designate hospitals in different convenient places to be availed of by the dependents of employees. In
cases of emergency where the dependent is confined without the recommendation of the company
doctor or in a hospital not designated by the COMPANY, the COMPANY shall look into the circumstances
of such confinement and arrange for the payment of the amount to the extent of the hospitalization
benefit.

c. The limitations and restrictions listed in Annex "B" must be observed.

Each employee shall pay one hundred pesos (₱100.00) per month through salary deduction as his share in the
payment of the insurance premium for the above coverage with the balance of the premium to be paid by the
COMPANY. If the COMPANY is self-insured the one hundred pesos (₱100.00) per employee monthly contribution
shall be given to the COMPANY which shall shoulder the expenses subject to the above level of benefits and
subject to the same limitations and restrictions provided for in Annex "B" hereof.

The hospitalization expenses must be covered by actual hospital and doctor’s bills and any amount in excess of the
above mentioned level of benefits will be for the account of the employee.

For purposes of this provision, eligible dependents are the covered employees’ natural parents, legal spouse and
legitimate or legally adopted or step children who are unmarried, unemployed who have not attained twenty-one
(21) years of age and wholly dependent upon the employee for support.

This provision applies only in cases of actual confinement in the hospital for at least six (6) hours.

Maternity cases are not covered by this section but will be under the next succeeding section on maternity
benefits.6

When the CBA expired on July 31, 1999, the parties executed another CBA 7 effective August 1, 1999 to July 31,
2002 incorporating the same provisions on dependents’ hospitalization insurance benefits but in the increased
amount of ₱50,000.00. The room and board expenses, as well as the doctor’s call fees, were also increased to
₱375.00.

On separate occasions, three members of MMPSEU, namely, Ernesto Calida (Calida), Hermie Juan Oabel (Oabel)
and Jocelyn Martin (Martin), filed claims for reimbursement of hospitalization expenses of their dependents.

MMPC paid only a portion of their hospitalization insurance claims, not the full amount. In the case of Calida, his
wife, Lanie, was confined at Sto. Tomas University Hospital from September 4 to 9, 1998 due to Thyroidectomy.
The medical expenses incurred totalled ₱29,967.10. Of this amount, ₱9,000.00 representing professional fees was
paid by MEDICard Philippines, Inc. (MEDICard) which provides health maintenance to Lanie. 8 MMPC only paid
₱12,148.63.9 It did not pay the ₱9,000.00 already paid by MEDICard and the ₱6,278.47 not covered by official
receipts. It refused to give to Calida the difference between the amount of medical expenses of ₱27,427.10 10 which
he claimed to be entitled to under the CBA and the ₱12,148.63 which MMPC directly paid to the hospital.

In the case of Martin, his father, Jose, was admitted at The Medical City from March 26 to 27, 2000 due to Acid
Peptic Disease and incurred medical expenses amounting to ₱9,101.30. 14 MEDICard paid
₱8,496.00.15Consequently, MMPC only paid ₱288.40,16 after deducting from the total medical expenses the
amount paid by MEDICard and the ₱316.90 discount given by the hospital.

Claiming that under the CBA, they are entitled to hospital benefits amounting to ₱27,427.10, ₱6,769.35 and
₱8,123.80, respectively, which should not be reduced by the amounts paid by MEDICard and by Prosper, Calida,
Oabel and Martin asked for reimbursement from MMPC. However, MMPC denied the claims contending that
double insurance would result if the said employees would receive from the company the full amount of
hospitalization expenses despite having already received payment of portions thereof from other health insurance
providers.

This prompted the MMPSEU President to write the MMPC President 17 demanding full payment of the
hospitalization benefits. Alleging discrimination against MMPSEU union members, she pointed out that full
reimbursement was given in a similar claim filed by Luisito Cruz (Cruz), a member of the Hourly Union. In a letter-
reply,18 MMPC, through its Vice-President for Industrial Relations Division, clarified that the claims of the said
MMPSEU members have already been paid on the basis of official receipts submitted. It also denied the charge of
discrimination and explained that the case of Cruz involved an entirely different matter since it concerned the
admissibility of certified true copies of documents for reimbursement purposes, which case had been settled
through voluntary arbitration.

On August 28, 2000, MMPSEU referred the dispute to the National Conciliation and Mediation Board and
requested for preventive mediation.19

Proceedings before the Voluntary Arbitrator

On October 3, 2000, the case was referred to Voluntary Arbitrator Rolando Capocyan for resolution of the issue
involving the interpretation of the subject CBA provision. 20

MMPSEU alleged that there is nothing in the CBA which prohibits an employee from obtaining other insurance or
declares that medical expenses can be reimbursed only upon presentation of original official receipts. It stressed
that the hospitalization benefits should be computed based on the formula indicated in the CBA without deducting
the benefits derived from other insurance providers. Besides, if reduction is permitted, MMPC would be unjustly
benefited from the monthly premium contributed by the employees through salary deduction. MMPSEU added
that its members had legitimate claims under the CBA and that any doubt as to any of its provisions should be
resolved in favor of its members. Moreover, any ambiguity should be resolved in favor of labor. 21

On the other hand, MMPC argued that the reimbursement of the entire amounts being claimed by the covered
employees, including those already paid by other insurance companies, would constitute double indemnity or
double insurance, which is circumscribed under the Insurance Code. Moreover, a contract of insurance is a
contract of indemnity and the employees cannot be allowed to profit from their dependents’ loss. 22

Meanwhile, the parties separately sought for a legal opinion from the Insurance Commission relative to the issue
at hand. In its letter23 to the Insurance Commission, MMPC requested for confirmation of its position that the
covered employees cannot claim insurance benefits for a loss that had already been covered or paid by another
insurance company. However, the Office of the Insurance Commission opted not to render an opinion on the
matter as the same may become the subject of a formal complaint before it. 24 On the other hand, when queried by
MMPSEU,25the Insurance Commission, through Atty. Richard David C. Funk II (Atty. Funk) of the Claims
Adjudication Division, rendered an opinion contained in a letter, 26 viz:

Ms. Cecilia L. ParasPresident

[Salaried] Employees Union

Madam:

We acknowledge receipt of your letter which, to our impression, basically poses the question of whether or not
recovery of medical expenses from a Health Maintenance Organization bars recovery of the same reimbursable
amount of medical expenses under a contract of health or medical insurance.

We wish to opine that in cases of claims for reimbursement of medical expenses where there are two contracts
providing benefits to that effect, recovery may be had on both simultaneously. In the absence of an Other
Insurance provision in these coverages, the courts have uniformly held that an insured is entitled to receive the
insurance benefits without regard to the amount of total benefits provided by other insurance. (INSURANCE LAW,
A Guide to Fundamental Principles, Legal Doctrines, and Commercial Practices; Robert E. Keeton, Alau I. Widiss, p.
261). The result is consistent with the public policy underlying the collateral source rule – that is, x x x the courts
have usually concluded that the liability of a health or accident insurer is not reduced by other possible sources of
indemnification or compensation. (ibid).

Very truly yours,

RICHARD DAVID C. FUNK II

(SGD.)
Attorney IV

On December 3, 2002, the Voluntary Arbitrator rendered a Decision 27 finding MMPC liable to pay or reimburse the
amount of hospitalization expenses already paid by other health insurance companies. The Voluntary Arbitrator
held that the employees may demand simultaneous payment from both the CBA and their dependents’ separate
health insurance without resulting to double insurance, since separate premiums were paid for each contract. He
also noted that the CBA does not prohibit reimbursement in case there are other health insurers.

Proceedings before the Court of Appeals

MMPC filed a Petition for Review with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction28 before the CA. It claimed that the Voluntary Arbitrator committed grave abuse of
discretion in not finding that recovery under both insurance policies constitutes double insurance as both had the
same subject matter, interest insured and risk or peril insured against; in relying solely on the unauthorized legal
opinion of Atty. Funk; and in not finding that the employees will be benefited twice for the same loss. In its
Comment,29 MMPSEU countered that MMPC will unjustly enrich itself and profit from the monthly premiums paid
if full reimbursement is not made.

On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite the lack of a provision which bars
recovery in case of payment by other insurers, the wordings of the subject provision of the CBA showed that the
parties intended to make MMPC liable only for expenses actually incurred by an employee’s qualified dependent.
In particular, the provision stipulates that payment should be made directly to the hospital and that the claim
should be supported by actual hospital and doctor’s bills. These mean that the employees shall only be paid
amounts not covered by other health insurance and is more in keeping with the principle of indemnity in insurance
contracts. Besides, a contrary interpretation would "allow unscrupulous employees to unduly profit from the x x x
benefits" and shall "open the floodgates to questionable claims x x x." 30

The dispositive portion of the CA Decision31 reads:

WHEREFORE, the instant petition is GRANTED. The decision of the voluntary arbitrator dated December 3, 2002 is
REVERSED and SET ASIDE and judgment is rendered declaring that under Art. XI, Sec. 4 of the Collective Bargaining
Agreement between petitioner and respondent effective August 1, 1999 to July 31, 2002, the former’s obligation
to reimburse the Union members for the hospitalization expenses incurred by their dependents is exclusive of
those paid by the Union members to the hospital.

SO ORDERED.32
In its Motion for Reconsideration,33 MMPSEU pointed out that the alleged oppression that may be committed by
abusive employees is a mere possibility whereas the resulting losses to the employees are real. MMPSEU cited
Samsel v. Allstate Insurance Co.,34 wherein the Arizona Supreme Court explicitly ruled that an insured may recover
from separate health insurance providers, regardless of whether one of them has already paid the medical
expenses incurred. On the other hand, MMPC argued in its Comment 35 that the cited foreign case involves a
different set of facts.

The CA, in its Resolution36 dated December 5, 2006, denied MMPSEU’s motion.

Hence, this Petition.

Issues

MMPSEU presented the following grounds in support of its Petition:

A.

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED THE DECISION DATED 03 [DECEMBER] 2002 OF THE
VOLUNTARY ARBITRATOR BELOW WHEN THE SAME WAS SUPPORTED BY SUBSTANTIAL EVIDENCE, INCLUDING THE
OPINION OF THE INSURANCE COMMISSION THAT RECOVERY FROM BOTH THE CBA AND SEPARATE HEALTH CARDS
IS NOT PROHIBITED IN THE ABSENCE OF ANY SPECIFIC PROVISION IN THE CBA.

B.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN OVERTURNING THE DECISION OF THE VOLUNTARY
ARBITRATOR WITHOUT EVEN GIVING ANY LEGAL OR JUSTIFIABLE BASIS FOR SUCH REVERSAL.

C.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO CONSIDER OR EVEN MENTION ANYTHING
ABOUT THE AMERICAN AUTHORITIES CITED IN THE RECORDS THAT DO NOT PROHIBIT, BUT IN FACT ALLOW,
RECOVERY FROM TWO SEPARATE HEALTH PLANS.

D.

THE COURT OF APPEALS GRAVELY ERRED IN GIVING MORE IMPORTANCE TO A POSSIBLE, HENCE MERELY
SPECULATIVE, ABUSE BY EMPLOYEES OF THE BENEFITS IF DOUBLE RECOVERY WERE ALLOWED INSTEAD OF THE
REAL INJURY TO THE EMPLOYEES WHO ARE PAYING FOR THE CBA HOSPITALIZATION BENEFITS THROUGH
MONTHLY SALARY DEDUCTIONS BUT WHO MAY NOT BE ABLE TO AVAIL OF THE SAME IF THEY OR THEIR
DEPENDENTS HAVE OTHER HEALTH INSURANCE.37

MMPSEU avers that the Decision of the Voluntary Arbitrator deserves utmost respect and finality because it is
supported by substantial evidence and is in accordance with the opinion rendered by the Insurance Commission,
an agency equipped with vast knowledge concerning insurance contracts. It maintains that under the CBA,
member-employees are entitled to full reimbursement of medical expenses incurred by their dependents
regardless of any amounts paid by the latter’s health insurance provider. Otherwise, non-recovery will constitute
unjust enrichment on the part of MMPC. It avers that recovery from both the CBA and other insurance companies
is allowed under their CBA and not prohibited by law nor by jurisprudence.

Our Ruling
The Petition has no merit.

Atty. Funk erred in applying the

The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk that the employees may recover benefits
from different insurance providers without regard to the amount of benefits paid by each. According to him, this
view is consistent with the theory of the collateral source rule.

As part of American personal injury law, the collateral source rule was originally applied to tort cases wherein the
defendant is prevented from benefiting from the plaintiff’s receipt of money from other sources. 38 Under this rule,
if an injured person receives compensation for his injuries from a source wholly independent of the tortfeasor, the
payment should not be deducted from the damages which he would otherwise collect from the tortfeasor. 39 In a
recent Decision40 by the Illinois Supreme Court, the rule has been described as "an established exception to the
general rule that damages in negligence actions must be compensatory." The Court went on to explain that
although the rule appears to allow a double recovery, the collateral source will have a lien or subrogation right to
prevent such a double recovery.41 In Mitchell v. Haldar,42 the collateral source rule was rationalized by the Supreme
Court of Delaware:

The collateral source rule is ‘predicated on the theory that a tortfeasor has no interest in, and therefore no right to
benefit from monies received by the injured person from sources unconnected with the defendant’. According to
the collateral source rule, ‘a tortfeasor has no right to any mitigation of damages because of payments or
compensation received by the injured person from an independent source.’ The rationale for the collateral source
rule is based upon the quasi-punitive nature of tort law liability. It has been explained as follows:

The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a
plaintiff is entitled to compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all
damages that proximately result from his wrong. A plaintiff who receives a double recovery for a single tort enjoys
a windfall; a defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall. Because the law
must sanction one windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer.

Thus, the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even if it results in
a windfall for the innocent plaintiff. (Citations omitted)

As seen, the collateral source rule applies in order to place the responsibility for losses on the party causing
them.43Its application is justified so that "'the wrongdoer should not benefit from the expenditures made by the
injured party or take advantage of contracts or other relations that may exist between the injured party and third
persons."44Thus, it finds no application to cases involving no-fault insurances under which the insured is
indemnified for losses by insurance companies, regardless of who was at fault in the incident generating the
losses.45 Here, it is clear that MMPC is a no-fault insurer. Hence, it cannot be obliged to pay the hospitalization
expenses of the dependents of its employees which had already been paid by separate health insurance providers
of said dependents.

The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view that the covered employees are entitled to
full payment of the hospital expenses incurred by their dependents, including the amounts already paid by other
health insurance companies based on the theory of collateral source rule.

The conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability only to actual expenses
incurred by the employees’ dependents, that is, excluding the amounts paid by dependents’ other health
insurance providers.
The Voluntary Arbitrator ruled that the CBA has no express provision barring claims for hospitalization expenses
already paid by other insurers. Hence, the covered employees can recover from both. The CA did not agree, saying
that the conditions set forth in the CBA implied an intention of the parties to limit MMPC’s liability only to the
extent of the expenses actually incurred by their dependents which excludes the amounts shouldered by other
health insurance companies.

We agree with the CA. The condition that payment should be direct to the hospital and doctor implies that MMPC
is only liable to pay medical expenses actually shouldered by the employees’ dependents. It follows that MMPC’s
liability is limited, that is, it does not include the amounts paid by other health insurance providers. This condition
is obviously intended to thwart not only fraudulent claims but also double claims for the same loss of the
dependents of covered employees.

It is well to note at this point that the CBA constitutes a contract between the parties and as such, it should be
strictly construed for the purpose of limiting the amount of the employer’s liability. 46 The terms of the subject
provision are clear and provide no room for any other interpretation. As there is no ambiguity, the terms must be
taken in their plain, ordinary and popular sense. 47 Consequently, MMPSEU cannot rely on the rule that a contract
of insurance is to be liberally construed in favor of the insured. Neither can it rely on the theory that any doubt
must be resolved in favor of labor.

Samsel v. Allstate Insurance Co. is not

MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the Supreme Court of Arizona allowed the insured
to enjoy medical benefits under an automobile policy insurance despite being able to also recover from a separate
health insurer. In that case, the Allstate automobile policy does not contain any clause restricting medical payment
coverage to expenses actually paid by the insured nor does it specifically provide for reduction of medical
payments benefits by a coordination of benefits. 48 However, in the case before us, the dependents’ group
hospitalization insurance provision in the CBA specifically contains a condition which limits MMPC’s liability only up
to the extent of the expenses that should be paid by the covered employee’s dependent to the hospital and
doctor. This is evident from the portion which states that "payment by MMPC shall be direct to the hospital and
doctor."49 In contrast, the Allstate automobile policy expressly gives Allstate the authority to pay directly to the
insured person or on the latter’s behalf all reasonable expenses actually incurred. Therefore, reliance on Samsel is
unavailing because the facts therein are different and not decisive of the issues in the present case.

To allow reimbursement of amounts paid

MMPSEU insists that MMPC is also liable for the amounts covered under other insurance policies; otherwise,
MMPC will unjustly profit from the premiums the employees contribute through monthly salary deductions.

This contention is unmeritorious.

To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense that the term
unjustly could mean illegally or unlawfully.50 A claim for unjust enrichment fails when the person who will benefit
has a valid claim to such benefit.51

The CBA has provided for MMPC’s limited liability which extends only up to the amount to be paid to the hospital
and doctor by the employees’ dependents, excluding those paid by other insurers. Consequently, the covered
employees will not receive more than what is due them; neither is MMPC under any obligation to give more than
what is due under the CBA.

Moreover, since the subject CBA provision is an insurance contract, the rights and obligations of the parties must
be determined in accordance with the general principles of insurance law. 52 Being in the nature of a non-life
insurance contract and essentially a contract of indemnity, the CBA provision obligates MMPC to indemnify the
covered employees’ medical expenses incurred by their dependents but only up to the extent of the expenses
actually incurred.53 This is consistent with the principle of indemnity which proscribes the insured from recovering
greater than the loss.54 Indeed, to profit from a loss will lead to unjust enrichment and therefore should not be
countenanced. As aptly ruled by the CA, to grant the claims of MMPSEU will permit possible abuse by employees.

WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006 and Resolution dated December 5, 2006
of the Court of Appeals in CA-G.R. SP No. 75630, are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO