NAME : JOSE B.

BUENO
JD-3
SUBJECT : INSURANCE LAW

CASE DIGESTS 1

1. PHILIPPINE HEALTH CARE PROVIDERS, INC., petitioner, vs.

COMMISSIONER OF INTERNAL REVENUE, respondent GR No.
167330 June 12, 2008

FACTS : Petitioner is a domestic corporation whose primary

purpose is to establish, maintain, conduct and operate a prepaid group
practice health care delivery system or a health maintenance organization
to take care of the sick and disabled persons enrolled in the health care
plan and to provide for the administrative, legal, and financial
responsibilities of the organization.

On January 27, 2000, Commissioner of Internal Revenue sent petitioner a

formal demand letter and the corresponding assessment notices
demanding the payment of deficiency taxes, including surcharges and
interest in the amount of P224,702,641.18. Petitioner protested the
assessment in a letter dated February 23, 2000. As respondent did not act
on the protest, petitioner filed a petition for review in the Court of Tax
Appeals (CTA) seeking the cancellation of the deficiency VAT and DST
assessments. CTA ordered the respondent to desist from collecting the said
DST deficiency taxes. On appeal, CA held that petitioner’s health care
agreement was in the nature of a non-life insurance contract subject to
DST. Petitioner moved for reconsideration but the CA denied the motion.

ISSUE : Whether or not petitioner’s health agreement is subject to

DST

HELD : Yes. The DST under section 185 of the 1997 Tax code is
imposed on the privileges of making or renewing any policy of insurance,
bond or obligation in the nature of indemnity for loss, damage, or liability.
Under the law, a contract of insurance is an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage
or liability arising from an unknown or contingent event. Contracts
between companies like petitioner and the beneficiaries under their plans
are treated as insurance contracts. Thus, petitioner's health care
agreement is primarily a contract of indemnity.
 2. WHITE GOLD MARINE SERVICES, INC., petitioner,vs. PIONEER
INSURANCE AND SURETY CORPORATION AND THE
STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA)
LTD., respondent
GR No. 154514 July 28,2005

FACTS : Petitioner White Gold secure a protection and

indemnity coverage for its vessels from respondents Steamship Mutual
through Pioneer. When the former failed to fully pay its accounts,
Steamship Mutual refuses to renew the coverage. Thereafter, Steamship
Mutual filed a case for collection of sum of money to recover the unpaid
balance of White Gold. On the other hand, White Gold filed a complaint
before the Insurance Commission claiming that Steamship Mutual violated
Sections 186 and 187 of the Insurance Code, while Pioneer violated
Sections 299, 300 and 301 in relation to Sections 302 and 303. Insurance
Commission dismissed the complaint which was affirmed by the CA and
the appellate court distinguished between P & I Clubs vis-a-vis
conventional insurance. The appellate court also held that Pioneer merely
acted as a collection agent of Steamship Mutual.

ISSUES : (1) Whether or not Steamship Mutual, a P & I Club,

engaged in the insurance business in the Philippines
(2) Whether or not Pioneer need a license as an insurance agent/broker for
Steamship Mutual

HELD : (1) Yes. Section 2(2) of the Insurance Code

enumerates what constitutes "doing an insurance business" or
"transacting an insurance business. The test to determine if a contract is
an insurance contract or not, depends on the nature of the promise, the
act required to be performed, and the exact nature of the agreement in the
light of the occurrence, contingency, or circumstances under which the
performance becomes requisite. Steamship Mutual as a P & I Club is a
mutual insurance association engaged in the marine insurance business.
The records reveal Steamship Mutual is doing business in the country
albeit without the requisite certificate of authority mandated by Section
187 of the Insurance Code. Thus, to continue doing business here,
Steamship Mutual or through its agent Pioneer, must secure a license
from the Insurance Commission.
(2) Yes. Pioneer is the resident agent of Steamship Mutual as evidenced by
the certificate of registration issued by the Insurance Commission.
Although Pioneer is already licensed as an insurance company, it needs a
separate license to act as insurance agent for Steamship Mutual as
provided in Section 299 of the Insurance Code.
 3. PHILAMCARE HEALTH SYSTEMS, INC., petitioner, vs. COURT OF
APPEALS and JULITA TRINOS, respondents GR No. 125678
March 18, 2002

FACTS : Respondent Julita’s husband Ernani Trinos, now

deceased, applied for a health care coverage with petitioner Philamcare
which was approved for a period of one year.Upon the termination of the
agreement, the same was extended for another year from March 1, 1989 to
March 1, 1990, then from March 1, 1990 to June 1, 1990. During the
period of his coverage, Ernani suffered a heart attack and was confined at
the Manila Medical Center (MMC) for one month beginning March 9, 1990.
While her husband was in the hospital, respondent tried to claim the
benefits under the health care agreement but it was denied by the
petitioner saying that the Health Care Agreement was void on the ground
of concealment regarding Ernani’s medical history. After her husband was
discharged from the MMC, he was later brought to Chinese General
Hospital. Due to financial constraints, respondent brought her husband
home again but on April 13, 1990, the respondent was constrained to
brought Ernani to the CGH but died eventually on the same day.

ISSUE : Whether or not the agreement is a contract of indemnity

HELD : Yes. Section 2 (1) of the Insurance Code defines a

contract of insurance as an agreement whereby one undertakes for a
consideration to indemnify another against loss, damage or liability arising
from an unknown or contingent event. In the case at bar, the insurable
interest of respondent’s husband in obtaining the health care agreement
was his own health. The health care agreement was in the nature of non-
life insurance, which is primarily a contract of indemnity. Once the
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.
Concealment as a defense for the health care provider or insurer to avoid
liability is an affirmative defense and the duty to establish such defense
by satisfactory and convincing evidence rests upon the provider or insurer.
 4. VIOLETA R. LALICAN, petitioner, vs. THE INSULAR LIFE
ASSURANCE COMPANY LIMITED, AS REPRESENTED BY THE
PRESIDENT VICENTE R. AVILON, respondent
GR No. 183526 August 25, 2009

FACTS : During his lifetime, Eulogio applied for an insurance

policy with Insular Life. Eulogio paid the premiums due on July 24, 1997
and October 24, 1997. However, he failed to pay the premium due on
January 24, 1998 even after the lapse of the 31 days grace period,
therefore, the policy lapsed and became void. The latter submitted an
Application for Reinstatement of Policy No. 9011992, together with the
amount of ₱8,062.00 to pay for the premium due on January 24, 1998,
even after the lapse of the grace period of 31 days. The policy, therefore,
lapsed and became void. Eulogio submitted to the Insular an Application
for Reinstatement together with the amount of P8062.00 to pay for the
premium due on January 24, 1988 but could not be fully processed
because he left an overdue interest amounting to P322.48. On September
17, 1998, Eulogio went to Malaluan’s house and submitted a second
Application for Reinstatement, including the amount of ₱17,500.00,
representing payments for the overdue interest on the premium. A while
later, on the same day, September 17, 1998, Eulogio died of cardio-
respiratory arrest secondary to electrocution.

ISSUE : Whether or not Eulogio Eulogio was able to reinstate the

lapsed insurance policy on his life before his death

HELD : No. To reinstate a policy means to restore the same to

premium-paying status after it has been permitted to lapse. Both the
Policy Contract and the Application for Reinstatement provide for specific
conditions for the reinstatement of a lapsed policy. The Court agrees with
the RTC that the conditions for reinstatement under the Policy Contract
and Application for Reinstatement were written in clear and simple
language, which could not admit of any meaning or interpretation other
than those that they so obviously embody. A construction in favor of the
insured is not called for, as there is no ambiguity in the said provisions in
the first place. The words thereof are clear, unequivocal, and simple
enough so as to preclude any mistake in the appreciation of the same.
 5. ALPHA INSURANCE AND SURETY CO., petitioner, vs. ARSENIA
SONIA CASTOR, respondent
G.R. No. 198174 September 2, 2013

FACTS : On February 21, 2007, respondent entered into a

contract of insurance involving her motor vehicle with the petitioner. The
contract of insurance obligates the petitioner to pay the respondent in case
of loss or damage to said vehicle during the period covered, which is from
February 26, 2007 to February 26, 2008. On April 16, 2007, respondent
instructed her driver, Jose Joel Salazar Lanuza, to bring the above-
described vehicle to a nearby auto-shop for a tune-up.
However, Lanuza no longer returned the motor vehicle to respondent
and despite diligent efforts to locate the same, said efforts proved futile.
Respondent promptly reported the incident to the police and concomitantly
notified petitioner of the said loss and demanded payment of the insurance
proceeds in the total sum of ₱630,000.00.

ISSUE : Whether or not the loss of respondent’s vehicle is excluded

under the insurance policy

HELD : No. Petitioner cannot exclude the loss of respondent’s

vehicle under the insurance policy under paragraph 4 of "Exceptions to
Section III," since the same refers only to "malicious damage," or more
specifically, "injury" to the motor vehicle caused by a person under the
insured’s service. Paragraph 4 clearly does not contemplate "loss of
property," as what happened in the instant case. It is a basic rule in the
interpretation of contracts that the terms of a contract are to be construed
according to the sense and meaning of the terms which the parties thereto
have used. It must be remembered that an insurance contract is a
contract of adhesion which must be construed liberally in favor of the
insured and strictly against the insurer in order to safeguard the latter’s
interest.

6. GULF RESORTS, INC., petitioner, v. PHILIPPINE CHARTER

INSURANCE CORPORATION, respondent GR. No. 156167 May 16,
2005

FACTS : Plaintiff 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. 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 avers
that, pursuant to its earthquake shock endorsement rider, Insurance
Policy No. 31944 covers all damages to the properties within its resort
caused by earthquake. Respondent contends that the rider limits its
liability for loss to the two swimming pools of petitioner.

ISSUE : Whether or not under respondent's insurance policy,

only the two (2) swimming pools, rather than all the properties covered
thereunder, are insured against the risk of earthquake shock.

HELD : Yes. It is basic that all the provisions of the insurance

policy should be examined and interpreted in consonance with each other.
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. A
careful examination of the premium recapitulation will show that it is the
clear intent of the parties to extend earthquake shock coverage only to the
two swimming pools. In sum, there is no ambiguity in the terms of the
contract and its riders. Petitioner cannot rely on the general rule that
insurance contracts are contracts of adhesion which should be liberally
construed in favor of the insured and strictly against the insurer company
which usually prepares it.

7. FORTUNE MEDICARE, INC., petitioner, vs. DAVID ROBERT U.

AMORIN, respondent G.R. No. 195872 March 12, 2014

FACTS : Amorin was a cardholder/member of Fortune Care, a

corporation engaged in providing health maintenance services to its
members. The terms of Amorin's medical coverage were provided in a
Corporate Health Program Contract which was executed on January 6,
2000 by Fortune Care and the House of Representatives, where Amorin
was a permanent employee. While on vacation in Honolulu, Hawaii, United
States of America in May 1999, Amorin underwent an emergency surgery,
specifically appendectomy, at the St. Francis Medical Center, causing him
to incur professional and hospitalization expenses of US$7,242.35 and
US$1,777.79, respectively. He attempted to recover from Fortune Care the
full amount thereof upon his return to Manila, but the company merely
approved a reimbursement of ₱12,151.36, an amount that was based on
the average cost of appendectomy, net of medicare deduction, if the
procedure were performed in an accredited hospital in Metro Manila.

ISSUE : Whether or not Fortune Care is liable to pay under the

policy given to Amorin

HELD : Yes. The Court finds no cogent reason to disturb the

CA’s finding that Fortune Care’s liability to Amorin under the subject
Health Care Contract should be based on the expenses for hospital and
professional fees which he actually incurred, and should not be limited by
the amount that he would have incurred had his emergency treatment
been performed in an accredited hospital in the Philippines. The court
emphasize that, for purposes of determining the liability of a health care
provider to its members, jurisprudence holds that a health care agreement
is in the nature of non-life insurance, which is primarily a contract of
indemnity. Once the 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.
 8. AIME T. GAISANO, petitioner, vs. DEVELOPMENT INSURANCE
AND SURETY CORPORATION, respondent
G.R. No. 190702, February 27, 2017

FACTS : Petitioner was the registered owner of a vehicle while

respondent is a domestic corporation engaged in the insurance business.
On September 27, 1996, respondent issued a comprehensive commercial
vehicle policy to petitioner in the amount of P1,500,000.00 over the vehicle
for a period of one year commencing on September 27, 1996 up to
September 27, 1997. Respondent also issued two other commercial vehicle
policies to petitioner covering two other motor vehicles for the same
period. To collect the premiums and other charges on the policies,
respondent's agent, Trans-Pacific Underwriters Agency, issued a statement
of account to petitioner's company, Noah's Ark Merchandising. Noah's Ark
immediately processed the payments and issued a check dated September
27, 1996 payable to Trans-Pacific on the same day. However, nobody from
Trans-Pacific picked up the check that day (September 27) because its
president and general manager, Rolando Herradura, was celebrating his
birthday. Trans-Pacific informed Noah's Ark that its messenger would get
the check the next day, September 28. In the evening of September 27,
1996, while under the official custody of Noah's Ark marketing manager
Achilles Pacquing, as a service company vehicle, the vehicle was stolen.
Pacquing reported the loss to the Philippine National Police Traffic
Management Command at Camp Crame in Quezon City, however, despite
search and retrieval efforts, the vehicle was not recovered.

ISSUE : Whether or not there was a valid and binding insurance

contract between him and respondent

HELD : No. Insurance is a contract whereby one undertakes

for a consideration to indemnify another against loss, damage or liability
arising from an unknown or contingent event. Just like any other contract,
it requires a cause or consideration. The consideration is the premium,
which must be paid at the time and in the way and manner specified in
the policy. If not so paid, the policy will lapse and be forfeited by its own
terms. Trans-Pacific could not be considered in delay in accepting the
check because when it informed petitioner that it will only be able to pick-
up the check the next day, petitioner did not protest to this, but instead
allowed Trans-Pacific to do so. Thus, at the time of loss, there was no
payment of premium yet to make the insurance policy effective.
 9. NEW WORLD INTERNATIONAL DEVELOPMENT (PHILS.), INC.,
petitioner, vs. NYK-FILJAPAN SHIPPING CORP., et.
al., respondents.
G.R. No. 171468 August 24, 2011

FACTS : Petitioner New World bought from DMT Corporation

through its agent, Advatech Industries, Inc. three emergency generator
sets worth US$721,500.00. DMT shipped the generator sets by truck from
Wisconsin, United States, to LEP Profit International, Inc. in Chicago,
Illinois. From there, the shipment went by train to Oakland, California,
where it was loaded on S/S California Luna V59, owned and operated by
NYK for delivery to petitioner New World in Manila. NYK issued a bill of
lading, declaring that it received the goods in good condition. NYK
unloaded the shipment in Hong Kong and transshipped it to S/S ACX
Ruby that it also owned and operated. On its journey to Manila, however,
ACX Ruby encountered typhoon Kadiang whose captain filed a sea protest
on arrival at the Manila South Harbor on October 5, 1993 respecting the
loss and damage that the goods on board his vessel suffered. Marina Port
Services, Inc., the Manila South Harbor arrastre or cargo-handling
operator, received the shipment on October 7, 1993. Upon inspection of
the three container vans separately carrying the generator sets, two vans
bore signs of external damage while the third van appeared unscathed.
The shipment remained at Pier 3’s Container Yard under Marina’s care
pending clearance from the Bureau of Customs. Eventually, on October
20, 1993 customs authorities allowed petitioner’s customs broker, Serbros
Carrier Corporation, to withdraw the shipment and deliver the same to
petitioner New World’s job site in Makati City.

On October 11, 1994, petitioner New World filed an action for specific
performance and damages against all the respondents before the RTC of
Makati City. The court rendered a decision absolving the various
respondents from liability with the exception of NYK. The RTC found that
the generator sets were damaged during transit while in the care of NYK’s
vessel, ACX Ruby. The latter failed, according to the RTC, to exercise the
degree of diligence required of it in the face of a foretold raging typhoon in
its path. On appeal, the CA rendered judgment on January 31, 2006,
affirming the RTC’s rulings except with respect to Seaboard’s liability.

ISSUE : Whether or not the CA erred in affirming the RTC’s

release from liability of respondents DMT, Advatech, LEP, LEP Profit,
Marina, and Serbros who were at one time or another involved in handling
the shipment

HELD : No. The Court affirms the Court of Appeals decision

insofar as petitioner New World International Development (Phils.), Inc. is
not allowed to recover against respondents DMT Corporation, Advatech
Industries, Inc., LEP International Philippines, Inc., LEP Profit
International, Inc., Marina Port Services, Inc. and Serbros Carrier
Corporation. The issue regarding which of the parties to a dispute incurred
negligence is factual and is not a proper subject of a petition for review on
certiorari. Petitioner New World has been unable to make out an exception
to this rule. Consequently, the Court will not disturb the finding of the
RTC, affirmed by the CA, that the generator sets were totally damaged
during the typhoon which beset the vessel’s voyage from Hong Kong to
Manila and that it was her negligence in continuing with that journey
despite the adverse condition which caused petitioner New World’s loss.
The loss was occasioned by a typhoon, an exempting cause under Article
1734 of the Civil Code, does not automatically relieve the common carrier
of liability. The latter had the burden of proving that the typhoon was the
proximate and only cause of loss and that it exercised due diligence to
prevent or minimize such loss before, during, and after the disastrous
typhoon. As found by the RTC and the CA, NYK failed to discharge this
burden.

10. HEIRS OF LORETO C. MARAMAG, represented by surviving

spouse VICENTA PANGILINAN MARAMAG, petitioners, vs. EVA
VERNA DE GUZMAN MARAMAG, et.al., respondents.
G.R. NO. 181132 June 5, 2009

FACTS : Petitioners were the legitimate wife and children of

Loreto, while respondents were Loreto's illegitimate family. Eva was a
concubine of Loreto and a suspect in the killing of the latter, thus, she is
disqualified to receive any proceeds from his insurance policies from
Insular Life Assurance Company, Ltd. and Great Pacific Life Assurance
Corporation. However, Petitioners contend that Loreto’s illegitimate
children, Odessa, Karl Brian, and Trisha Angelie, were only entitled to one-
half of the legitime of the legitimate children, thus, the proceeds released
to Odessa and those to be released to Karl Brian and Trisha Angelie were
in-officious and should be reduced and that the petitioners could not be
deprived of their legitimes, which should be satisfied first.

ISSUE : Whether or not legitimate heirs of Loreto, who were

not named as beneficiaries in the insurance policies issued by Insular and
Grepalife, are entitled to received portions of the shares of Loreto's
illegitimate children

HELD : No. It is evident from the face of the complaint that

petitioners are not entitled to a favorable judgment in light of Article 2011
of the Civil Code which expressly provides that insurance contracts shall
be governed by special laws, i.e., the Insurance Code. Pursuant to Section
53 of the Insurance Code, it is obvious that the only persons entitled to
claim the insurance proceeds are either the insured, if still alive or the
beneficiary, if the insured is already deceased, upon the maturation of the
policy. Petitioners are third parties to the insurance contracts with Insular
and Grepalife and, thus, are not entitled to the proceeds thereof.
Accordingly, respondents Insular and Grepalife have no legal obligation to
turn over the insurance proceeds to petitioners. The revocation of Eva as a
beneficiary in one policy and her disqualification as such in another are of
no moment considering that the designation of the illegitimate children as
beneficiaries in Loreto's insurance policies remains valid.

11. SPS. ANTONIO A. TIBAY, et. al., petitioners, vs. CA, et. al.
Respondents G.R. No. 119655 May 24, 1996

FACTS : On January 22, 1987 private respondent Fortune Life

and General Insurance Co., Inc. issued Fire Insurance Policy in favor of
Violeta R. Tibay and/or Nicolas Roraldo on their two-storey residential
building, together with all their personal effects therein. On January 23,
1987, of the total premium of P2,983.50, petitioner Violeta only paid
P600.00 thus leaving a considerable balance unpaid. On March 8, 1987
the insured building was completely destroyed by fire. Two days later or
on March 10, 1987, Violeta paid the balance of the premium. On the same
day, she filed with FORTUNE a claim on the fire insurance policy.

ISSUE : Whether or not respondent Fortune insurance is liable

HELD : No. Insurance is a contract whereby one undertakes

for a consideration to indemnify another against loss, damage or liability
arising from an unknown or contingent event. The consideration is the
premium, which must be paid at the time and in the way and manner
specified in the policy, and if not so paid, the policy will lapse and be
forfeited by its own terms. Clearly the Policy provides for payment of
premium in full. Accordingly, where the premium has only been partially
paid and the balance paid only after the peril insured against has
occurred, the insurance contract did not take effect and the insured
cannot collect at all on the policy.