consulted any doctor or other health practitioner? xxx Materiality of the information withheld does not depend on
the state of mind of the insured. Neither does it depend on
xxx 6. Have you ever had or sought advice for: the actual or physical events which ensue.
b. urine, kidney or bladder disorder? xxx Thus, "good faith" is no defense in concealment. The insured's
failure to disclose the fact that he was hospitalized for two
The deceased answered question No. 5(a) in the affirmative weeks prior to filing his application for insurance, raises grave
but limited his answer to a consultation with a certain Dr. doubts about his bonafides. It appears that such concealment
Reinaldo D. Raymundo of the Chinese General Hospital on was deliberate on his part.
February 1986, for cough and flu complications. The other
questions were answered in the negative . 2. NO. Anent the finding that the facts concealed had no
bearing to the cause of death of the insured, it is well settled
Petitioner discovered that two weeks prior to his application that the insured need not die of the disease he had failed to
for insurance, the insured was examined and confined at the disclose to the insurer. It is sufficient that his non-disclosure
Lung Center of the Philippines, where he was diagnosed for misled the insurer in forming his estimates of the risks of the
renal failure. During his confinement, the deceased was proposed insurance policy or in making inquiries (Henson v.
subjected to urinalysis, ultra-sonography and hematology The Philippine American Life Insurance Co., 56 O.G. No. 48
tests. [1960])
CA affirmed the decision of RTC and also held that petitioner FACTS:
cannot avoid its obligation by claiming concealment because
the cause of death was unrelated to the facts concealed by In April 1969, Carmen Lapuz filled out an application form for
the insured. insurance under Manila Banker Life Assurance Corporation.
She stated that her date of birth was July 11, 1904. Upon
Hence this petition. payment of the Php 20.00 premium, she was issued the
insurance policy in April 1969. In May 1969, Carmen Lapuz
Issue: died in a vehicular accident. Regina Edillon her sister, who
1. Whether or not good faith is a defense to concealment. was named a beneficiary in the insurance policy sought to
2. Whether or not the cause of death of the insured must be collect the insurance proceeds but Manila Banker denied the
related to the facts concealed by him in order for petitioner to claim. Apparently, it is a rule of the insurance company that
rescind the contract of insurance against repsondents. they were not to issue insurance policies to persons who are
under the age of sixteen (16) years of age or over the age of
Held: sixty (60) years Note, that Lapuz was already 65 years old
1. NO. Section 26 of The Insurance Code is explicit in requiring when she was applying for the insurance policy.
a party to a contract of insurance to communicate to the
other, in good faith, all facts within his knowledge which are
material to the contract and as to which he makes no
warranty, and which the other has no means of ascertaining.
Said Section provides: ISSUE:
A neglect to communicate that which a party knows and Whether or not Edillon is entitled to the insurance claim as a
ought to communicate, is called concealment. beneficiary.
Materiality is to be determined not by the event, but solely by
the probable and reasonable influence of the facts upon the
party to whom communication is due, in forming his estimate
of the disadvantages of the proposed contract or in making HELD:
his inquiries (The Insurance Code, Sec. 31).
The terms of the contract are clear. The insured is specifically Yes. Carmen Lapuz did not conceal her true age. Despite this,
required to disclose to the insurer matters relating to his the insurance company still received premium from Lapuz and
health. issued the corresponding insurance policy to her. When the
accident happened, the insurance policy has been in force for
The information which the insured failed to disclose were 45 days already and such time was already sufficient for
material and relevant to the approval and issuance of the Manila Banker to notice the fact that Lapuz is already over 60
insurance policy. The matters concealed would have definitely years old and thereby cancel the insurance policy. If Manila
affected petitioner's action on his application, either by Banker failed to act, it is either because it was willing to waive
approving it with the corresponding adjustment for a higher such disqualification; or, through the negligence or
premium or rejecting the same. Moreover, a disclosure may
have warranted a medical examination of the insured by
incompetence of its employees for which it has only itself to respondent company rescinded the contract of insurance and
blame, it simply overlooked such fact. refunded the premiums paid on September 11, 1975, previous
to the commencement of this action on November 27,1975.
The plain, human justice of this doctrine is perfectly apparent.
To allow a company to accept ones money for a policy of
insurance which it then knows to be void and of no effect, The deceased, by affixing his signature on the application
though it knows as it must, that the assured believes it to be form, affirmed the correctness of all the entries and answers
valid and binding, is so contrary to the dictates of honesty appearing therein. It is but to be expected that he, a
and fair dealing, and so closely related to positive fraud, as to businessman, would not have affixed his signature on the
be abhorrent to fair-minded men. It would be to allow the application form unless he clearly understood its significance.
company to treat the policy as valid long enough to get the For, the presumption is that a person intends the ordinary
premium on it, and leave it at liberty to repudiate it the next consequence of his voluntary act and takes ordinary care of
moment. This cannot be deemed to be the real intention of his concerns.
the parties. Under the circumstances, Manila Banker is
already deemed in estoppel.
Facts: HELD:
These seven cases related to insurance policies covering the (1) No. In this case, Condition 27 of the Insurance Policy of the
goods, wares, and merchandise contained in the building in parties reads:
the Port Area in the City of Manila which was damaged by a
fire of unknown origin the afternoon of Sunday, January 6, 27.Action or suit clause - If a claim be made and rejected and
1929. At the request of the insured, the companies gave an action or suit be not commenced either in the Insurance
additional time for the filing of the claims of loss. These claims Commission or in any court of competent jurisdiction within
were definitely rejected in writing by the insurance companies twelve (12) months from receipt of notice of such rejection, or
through their agents on April 15, 1929. in case of arbitration taking place as provided herein, within
twelve (12) months after due notice of the award made by the
Among the special defenses of the insurance companies is arbitrator or arbitrators or umpire, then the claim shall for all
one based upon a clause in the policies which, with the purposes be deemed to have been abandoned and shall not
exception of those of the Atlas Assurance Company, Ltd., thereafter be recoverable here under. As the terms are very
among other things provides: clear and free from any doubt or ambiguity whatsoever, it
must be taken and understood in its plain, ordinary and
. . . if the claim be made and rejected, and action or suit be popular sense. Tan, in his letter addressed to Sun Insurance
not commenced within three months after such rejection, ... Office dated April 3, 1984, admitted that
all benefit under this Policy shall be forfeited. the received a copy of the letter of rejection on April 2, 1984.
The seven suits were filed between the 3rd and the 15th day Thus, the 12-monthprescriptive period started to run from the
of August, 1929, or more than three months after the said date of April 2, 1984, for such is the plain meaning and
rejection by the defendant companies of plaintiff's claim. Suits intention of Section 27 of the insurance policy. The condition
were brought on the policies covering the building, the first contained in an insurance policy that claims must be
week in June. presented within one year after rejection is not merely a
procedural requirement but an important matter essential to a
Issue: prompt settlement of claims against insurance companies as
Whether or not the forfeiture clause of respondents are valid. it demands that insurance suits be brought by the insured
while the evidence as to the origin and cause of destruction
Held: have not yet disappeared.
Yes. Plaintiff was given such time as it deemed necessary to
formulate and present its claim of loss. That claim was It is apparent that Section 27 of the insurance policy was
investigated by the adjusters for several months, and under stipulated pursuant to Section 63 of the Insurance Code,
the contract of insurance, the insured had three months after which states that:
rejection in which to bring suit. The issues were virtually
joined on the presentation of the claims and their rejection by Sec. 63. A condition, stipulation or agreement in any policy of
the companies in writing, and three months thereafter is not insurance, limiting the time for commencing an action
an unreasonably short time to draft and file in court an thereunder to a period of less than one year from the time
appropriate complaint on a contract of fire insurance. when the cause of action accrues, is void.
Sun Insurance Office, Ltd. v. CA and Emilio Tan It also begs to ask, when does the cause of action accrue? The
G.R. No. 89741 March 13, 1991 insureds cause of action or his right to file a claim either
in the Insurance Commission or in a court of competent
FACTS: jurisdiction commences from the time of the denial of his
August 15, 1983, Emilio Tan took from Sun Insurance Office a claim by the Insurer, either expressly or impliedly. But
P300,000.00 property insurance policy to cover his interest in the rejection referred to should be construed as the rejection
the electrical supply store of his brother. Four days after the in the first instance (i.e. at the first occasion or for the first
issuance of the policy, the building was burned including the time), not rejection conveyed in a resolution of a petition for
insured store. reconsideration.
On August 20, 1983, Tan filed his claim for fire loss with Sun (2) No. The Eagle Star case cited by Tan to defend his theory
Insurance Office, but on February 29, 1984, Sun Insurance that the rejection of the claim shall be deemed final only of it
Office wrote Tan denying the latters claim. contains words to the effect that the denial is final is
inapplicable in the
instant case. Final rejection or denial cannot be taken to mean
therejection of a petition for reconsideration. The Insurance Issues:
policy in the Eagle Star case provides that the insured should 1. WON unrevealed co-insurances Violated policy conditions
file his claim, first, with the carrier and then with the insurer. No. 3 leading to forfeiture of the contract of insurance.
The final rejection being referred to in said case is the 2. WON the insured failed to file the required proof of loss
rejection by the insurance company. prior to court action.
The insured was at the time of the issuance of the policy and Loss, if any, under this policy, shall be payable to the PACIFIC
is up to this time, a debtor of petitioner in the amount of not BANKING CORPORATION Manila mortgagee/trustor as its
less than P800,000.00 and the goods described in the policy interest may appear, it being hereby understood and agreed
were held in trust by the insured for the petitioner under that this insurance as to the interest of the mortgagee/trustor
thrust receipts. only herein, shall not be invalidated by any act or neglect
except fraud or misrepresentation, or arsonof the
Said policy was duly endorsed to petitioner as mortgagee/ mortgagor or owner/trustee of the property insured; provided,
trustor of the properties insured, with the knowledge and that in case the mortgagor or owner/ trustee neglects or
consent of private respondent to the effect that "loss if any refuses to pay any premium, the mortgagee/ trustor shall, on
under this policy is payable to the Pacific Banking demand pay the same.
Corporation".
The paragraph clearly states the exceptions to the general
On January 4, 1964, while the aforesaid policy was in full force rule that insurance as to the interest of the mortgagee,
and effect, a fire broke out on the subject premises destroying cannot be invalidated; namely: fraud, or misrepresentation or
the goods contained in its ground and second floors. arson. As correctly found by the Court of Appeals,
On January 24, 1964, counsel for the petitioner sent a letter of concealment of the aforecited co-insurances can easily be
demand to private respondent for indemnity due to the loss of fraud, or in the very least, misrepresentation.
property by fire under the endorsement of said policy.
Undoubtedly, it is but fair and just that where the insured who
On January 28, 1964, private respondent informed counsel for is primarily entitled to receive the proceeds of the policy has
the petitioner that it was not yet ready to accede to the by its fraud and/or misrepresentation, forfeited said right, with
latter's demand as the former is awaiting the final report of more reason petitioner which is merely claiming as indorsee
the insurance adjuster. of said insured, cannot be entitled to such proceeds.
On March 25, 1964, the said insurance adjuster notified 2. Yes. Generally, the cause of action on the
counsel for the petitioner that the insured under the policy policy accrues when the loss occurs. But when the policy
had not filed any claim with it, nor submitted proof of loss provides that no action shall be brought unless the claim is
which is a clear violation of Policy Condition No.11, and for first presented extrajudicially in the manner provided in the
which reason, determination of the liability of private policy, the cause of action will accrue from the time the
respondent could not be had. insurer finally rejects the claim for payment.
For failure of the insurance company to pay the loss as In the case at bar, policy condition No. 11 specifically provides
demanded, petitioner on April 28, 1964, filed in the court a that the insured shall on the happening of any loss or damage
quo an action for a sum of money against the private give notice to the company and shall within 15 days after
respondent, Oriental Assurance Corporation, in the principal such loss or damage deliver to the private respondent:
sum of P61,000.00 issued in favor of Paramount Shirt
Manufacturing Co. (a) a claim in writing giving particular account as to the
articles or goods destroyed and the amount of the loss or
At the trial, petitioner presented in evidence which is a damage and
communication of the insurance adjuster revealing
undeclared co-insurances undertaken by insured Paramount (b) particulars of all other insurances, if any.
on the same property covered by its policy with private
respondent. 24 days after the fire did petitioner merely wrote letters to
private respondent to serve as a notice of loss. It didnt even
RTC ruled in favor of petitioner. CA reversed RTC, hence this furnish other documents. Instead, petitioner shifted upon
petition. private respondent the burden of fishing out the necessary
information to ascertain the particular account of the articles The trial court rendered judgment in favor of private
destroyed by fire as well as the amount of loss. Since the respondent. Then the petitioner appealed to the Court of
required claim by insured, together with the preliminary Appeals. CA affirmed RTCs decision.
submittal of relevant documents had not been complied with,
it follows that private respondent could not be deemed to
have finally rejected petitioner's claim and therefore there
was no cause of action.
Issue:
It appearing that insured has violated or failed to perform the
conditions under No. 3 and 11 of the contract, and such WON Travellers Insurance & Surety Company is liable for
violation or want of performance has not been waived by the damages to private respondents.
insurer, the insured cannot recover, much less the herein
petitioner.
Held: No.
[G.R. No. 82036. May 22, 1997]
The right of the person injured to sue the insurer of the party
TRAVELLERS INSURANCE & SURETY at fault (insured), depends on whether the contract of
CORPORATION, petitioner, vs. HON. COURT OF APPEALS insurance is intended to benefit third persons also or on the
and VICENTE MENDOZA, respondents. insured. And the test applied has been this: Where the
contract provides for indemnity against liability to third
persons, then third persons to whom the insured is liable can
sue the insurer. Where the contract is for indemnity against
Facts: actual loss or payment, then third persons cannot proceed
against the insurer, the contract being solely to reimburse the
insured for liability actually discharged by him thru payment
At about 5:30 in the morning of July 20, 1980, a 78-year old to third persons, said third persons recourse being thus
woman, Feliza Vineza de Mendoza was on her way to hear limited to the insured alone.
mass at the Tayuman Cathedral. While walking along Tayuman
corner Gregorio Perfecto Streets, she was bumped by a taxi
that was running fast. Several persons witnessed the accident, The RTC did not distinguish between the private respondents
among whom were Rolando Marvilla, Ernesto Lopez and cause of action against the owner and the driver of the Lady
Eulogio Tabalno. After the bumping, the old woman was seen Love taxicab and his cause of action against the petitioner.
sprawled on the pavement. The woman was then brought to Confusing this two sources of obligations as they arise from
Mary Johnston Hospital in Tondo. Upon knowing, Mendoza the same act of the taxicab fatally hitting private
brothers were then able to trace their mother at the Mary respondents mother, and in the face of the evidence of the
Johnston Hospital where they were advised by the attending reckless imprudence of the driver, the trial court brushed
physician that they should bring the patient to the National aside its ignorance of the terms and conditions of the
Orthopedic Hospital because of her fractured bones. Instead, insurance contract found all three- the driver, owner of the
the victim was brought to the U.S.T. Hospital where she expired taxicab and the alleged insurer jointly and severally liable
at 9:00 oclock that same morning. Death was caused by for actual, moral and exemplary damages as well as
traumatic shock as a result of the severe injuries she attorneys fees and litigation expenses. This is clearly a
sustained. misapplication of the law by the trial court on this ground.
The evidence shows that at the moment the victim was While it is true that where the insurance contract
bumped by the vehicle, the latter was running fast, so much so provides for indemnity against liability to third
that because of the strong impact the old woman was thrown persons, such third persons can directly sue the
away and she fell on the pavement. During the investigation, insurer, however, the direct liability of the insurer
defendant Armando Abellon, the registered owner of Lady Love under indemnity contracts against third-party liability
Taxi bearing No. 438-HA Pilipinas Taxi 1980, certified to the fact does not mean that the insurer can be held solidarily
that the vehicle was driven last July 20, 1980 by one Rodrigo liable with the insured and/or the other parties found
Dumlao. It was on the basis of this affidavit of the registered at fault. The liability of the insurer is based on
owner that caused the police to apprehend Rodrigo Dumlao, contract; that of the insured is based on tort.
and consequently to have him prosecuted and eventually
convicted of the offense. Said Dumlao absconded in that In solidary obligation, the creditor may enforce the entire
criminal case, especially at the time of the promulgation of the obligation against one of the solidary debtors. On the other
judgment therein so much so that he is now a fugitive from hand, insurance is defined as a contract whereby one
justice. undertakes for a consideration to indemnify another against
loss, damage or liability arising from an unknown or
Private respondent filed a complaint for damages against contingent event.
Armando Abellon as the owner of the Lady Love Taxi and
Rodrigo Dumlao as the driver of the Lady Love taxicab that At the time of the vehicular incident which resulted in the
bumped private respondents mother. Subsequently, private death of private respondents mother, during which time the
respondent amended his complaint to include petitioner, Insurance Code had not yet been amended by Batas
Travellers Insurance, as the compulsory insurer of the said Pambansa (B.P.) Blg. 874, Section 384 provided as follows:
taxicab.
Any person having any claim upon the policy issued pursuant
to this chapter shall, without any unnecessary delay, present
to the insurance company concerned a written notice of claim Whether or not petitioner liable, for it alleged that the
setting forth the amount of his loss, and/or the nature, extent insurance policy was already cancelled due to non-payment of
and duration of the injuries sustained as certified by a duly premium.
licensed physician. Notice of claim must be filed within six
months from date of the accident, otherwise, the claim shall RULING:
be deemed waived. Action or suit for recovery of damage due On the merits, it must also fail. MICO's arguments that there
to loss or injury must be brought in proper cases, with the was no payment of premium and that the policy had been
Commission or the Courts within one year from date of cancelled before the occurence of the loss are not acceptable.
accident, otherwise the claimants right of action shall Its contention that the claim was allowed without proof of loss
prescribe. is also untenable.
FACTS:
It is not disputed that the premium was actually paid by Pinca
to Adora on December 24, 1981, who received it on behalf of
On June 7, 1981, the petitioner (hereinafter called (MICO) MICO, to which it was remitted on January 15, 1982. What is
issued to the private respondent, P14,000.00 effective July 22, questioned is the validity of Pinca's payment and of Adora's
1981, until July 22, 1982. On October 15,1981, MICO allegedly authority to receive it.
cancelled the policy for non-payment, of the premium and
sent the corresponding notice to Pinca. On December 24,
1981, payment of the premium for Pinca was received by
Domingo Adora, agent of MICO. On January 15, 1982, Adora
remitted this payment to MICO,together with other payments. MICO's acknowledgment of Adora as its agent defeats its
contention that he was not authorized to receive the premium
payment on its behalf. It is clearly provided in Section 306 of
the Insurance Code that:
On January 18, 1982, Pinca's property was completely burned.
On February 5, 1982, Pinca's payment was returned by MICO SEC. 306. xxx xxx xxx
to Adora on the ground that her policy had been cancelled
earlier. But Adora refused to accept it. Any insurance company which delivers to an insurance agant
or insurance broker a policy or contract of insurance shall be
In due time, Pinca made the requisite demands for payment, demmed to have authorized such agent or broker to receive
which MICO rejected. She then went to the Insurance on its behalf payment of any premium which is due on such
Commission. It is because she was ultimately sustained by the policy or contract of insurance at the time of its issuance or
public respondent that the petitioner has come to us for relief. delivery or which becomes due thereon.
the Insured shall give notice to the Company of any insurance Other insurance without the consent of Pioneer would avoid
or insurances already effected, or which may subsequently be the contract. It required no affirmative act of election on the
effected, covering any of the property hereby insured, part of the company to make operative the clause avoiding
and unless such notice be given and the particulars of such the contract, wherever the specified conditions should occur.
insurance or insurances be stated in, or endorsed on this Its obligations ceased, unless, being informed of the fact, it
Policy by or on behalf of the Company before the occurrence consented to the additional insurance.
of any loss or damage, all benefits under this Policy shall be
forfeited. (emphasis supplied) The validity of a clause in a fire insurance policy to the effect
that the procurement of additional insurance without the
It is understood that, except as may be stated on the face of consent of the insurer renders the policy void is
this policy there is no other insurance on the property hereby in American jurisprudence.
covered and no other insurance is allowed except by the
consent of the Company endorsed hereon. Any false Milwaukee Mechanids' Lumber Co., vs. Gibson- "The rule in
declaration or breach or this condition will render this policy this state and practically all of the states is to the effect that a
null and void. clause in a policy to the effect that the procurement of
additional insurance without the consent of the insurer
on April 19, 1962 an insurance policy for P20,000.00 issued by renders the policy void is a valid provision.
the Great American Insurance Company covering the same
properties was noted on said policy as co-insurance. In this jurisdiction, General Insurance & Surety Corporation vs.
Ng Hua- The annotation then, must be deemed to be a
on September 26, 1962, respondent Oliva Yap took out warranty that the property was not insured by any other
another fire insurance policy for P20,000.00 covering the policy. Violation thereof entitled the insurer to rescind.
same properties, this time from the Federal Insurance Furthermore, even if the annotations were overlooked the
Company, Inc., which new policy was, however, procured defendant insurer would still be free from liability because
without notice to and the written consent of petitioner Pioneer there is no question that the policy issued by
Insurance & Surety Corporation and, therefore, was not noted General Indemnity has not been stated in nor endorsed on
as a co-insurance. Policy No. 471 of defendant. The obvious purpose of the
aforesaid requirement in the policy is to prevent over-
At dawn on December 19, 1962, a fire broke out in the insurance and thus avert the perpetration of fraud where a
building housing respondent Yap's store and burned fire would be profitable to the insured.
everything down. Respondent Yap filed an insurance claim,
but the same was denied on the ground of "breach and/or G.R. No. 151991 June 20, 2006
violation of any and/or all terms and conditions".
TRANS-ASIA SHIPPING LINES, INC., petitioner, vs.
On July 17, 1963, Oliva Yap filed with the Court of First PRUDENTIAL GUARANTEE and ASSURANCE
Instance of Manila the present complaint asking for payment INC., Respondent.
of the face value of her fire insurance policy. In its answer,
petitioner alleged that no property belonging to plaintiff Yap Facts
and covered by the insurance policy was destroyed by the Plaintiff [TRANS-ASIA] is the owner of the vessel M/V Asia
fire; that Yap's claim was filed out of time; and that Yap took Korea. In consideration of payment of premiums, defendant
out an insurance policy from another insurance company [PRUDENTIAL] insured M/V Asia Korea for loss/damage of the
without petitioner's knowledge and/or endorsement, in hull and machinery arising from perils, inter alia, of fire and
explosion for the sum of P40 Million, beginning from the Veritas had shifted in violation of the warranty. Unfortunately,
period of July 1, 1993 up to July 1, 1994. This is evidenced by Prudential failed to support allegation
Marine Policy No. MH93/1363.
Consequently, PRUDENTIAL, not having shown that TRANS-
On October 25, 1993, while the policy was in force, a fire ASIA breached the warranty condition, CLASSED AND CLASS
broke out while M/V Asia Korea was undergoing repairs at the MAINTAINED, it remains that TRANS-ASIA must be allowed to
port of Cebu. On October 26, 1993, TRANS-ASIA filed its notice recover its rightful claims on the policy.
of claim for damage sustained by the vessel. This is
evidenced by a letter/formal claim of even date. Trans Asia 1. PRUDENTIAL is DIRECTED to PAY TRANS-ASIA the
reserved its right to subsequently notify defendant amount of P8,395,072.26, representing the balance of
PRUDENTIAL as to the full amount of the claim upon final the loss suffered by TRANS-ASIA and covered by
survey and determination by average adjuster Richard Hogg Marine Policy No. MH93/1363;
International (Phil.) of the damage sustained by reason of fire
2. PRUDENTIAL is DIRECTED further to PAY TRANS-
On May 29, 1995, TRANS-ASIA executed a document ASIA damages in the form of attorneys fees
denominated "Loan and Trust receipt", a portion of which equivalent to 10% of the amount of P8,395,072.26;
read: "Received from Prudential Guarantee and Assurance,
Inc., the sum of PESOS THREE MILLION ONLY (P3,000,000.00) 3. The aggregate amount (P8,395,072.26 plus 10%
as a loan without interest under Policy, repayable only in the thereof as attorneys fees) shall be imposed double
event and to the extent that any net recovery is made by interest at the rate of 24% per annum to be computed
Trans-Asia Shipping Corporation, from any person or persons, from 13 September 1996 until fully paid; and
corporation or corporations, or other parties, on account of
loss by any casualty for which they may be liable occasioned
4. An interest of 12% per annum is similarly imposed
by the 25 October 1993
on the TOTAL amount of liability adjudged as
abovestated in paragraphs (1), (2), and (3) herein,
In a letter dated 21 April 1997, PRUDENTIAL denied plaintiffs computed from the time of finality of judgment until
claim from the fire incident due to the latters breach of policy the full satisfaction thereof.
conditions, among them is "WARRANTED VESSEL CLASSED
AND CLASS MAINTAINED". Which was followed by defendants
---PREMIUM
letter dated 21 July 1997 requesting the return or payment of
the P3,000,000.00 within a period of ten (10) days from
receipt of the letter. *When Insured Entitled to Return of Premium Paid
TRANS-ASIA then filed a Complaint5 for Sum of Money against ARCE vs. THE CAPITAL INSURANCE & SURETY CO., INC.,
PRUDENTIAL with the RTC of Cebu City, wherein TRANS-ASIA
sought the amount of P8,395,072.26 from PRUDENTIAL, FACTS:
alleging that the same represents the balance of the In Civil Case No. 66466 of the Court of First Instance of Manila,
indemnity due upon the insurance policy in the total amount the Capital Insurance and Surety Co., Inc., (COMPANY) was
of P11,395,072.26. TRANS-ASIA similarly sought interest at ordered to pay Pedro Arce (INSURED) the proceeds of a fire
42% per annum citing Section 243 6 of Presidential Decreee insurance policy. Not satisfied with the decision, the company
No. 1460, otherwise known as the "Insurance Code," as appealed to this Court on questions of law.
amended. The INSURED was the owner of a residential house in Tondo,
Manila, which had been insured with the COMPANY since 1961
The RTC dismissed the complaint for its failure to prove a under Fire Policy No. 24204. On November 27, 1965, the
cause of action because Trans Asia failed to prove compliance COMPANY sent to the INSURED Renewal Certificate No. 47302
of the terms of the warranty, the violation thereof entitled the to cover the period December 5, 1965 to December 5, 1966.
Prudential, the insured party to rescind the contract. On The COMPANY also requested payment of the corresponding
appeal the CA reversed the decision of RTC. premium in the amount of P 38.10.
Morever, the parties in this case had stipulated: The burden is on an insured to keep a policy in force by the
payment of premiums, rather than on the insurer to exert
IT IS HEREBY DECLARED AND AGREED that not. withstanding every effort to prevent the insured from allowing a policy to
anything to the contrary contained in the within policy, this elapse through a failure to make premium payments. The
insurance will be deemed valid and binding upon the continuance of the insurers obligation is conditional upon the
Company only when the premium and documentary stamps payment of premiums, so that no recovery can be had upon a
therefor have actually been paid in full and duly lapsed policy, the contractual relation between the parties
acknowledged in an official receipt signed by an authorized having ceased.
official/representative of the Company, "
Moreover, an insurer cannot treat a contract as valid for the
It is obvious from both the Insurance Act, as amended, and purpose of collecting premiums and invalid for the purpose of
the stipulation of the parties that time is of the essence in indemnity.
respect of the payment of the insurance premium so that if it
is not paid the contract does not take effect unless there is [G.R. No. L-34768. February 24, 1984.]
still another stipulation to the contrary. In the instant case, the JAMES STOKES, as Attorney-in-Fact of Daniel Stephen
INSURED was given a grace period to pay the premium but Adolfson and DANIEL STEPHEN ADOLFSON, Plaintiffs-
the period having expired with no payment made, he cannot Appellees, v. MALAYAN INSURANCE CO.,
insist that the COMPANY is nonetheless obligated to him. INC., Defendant
By accepting its promise to pay the insurance premium within The petitioner, however, denied the insurance claim on
thirty (30) days from the effectivity date of the policy the ground that, based on the submitted documents, the
December 17, 1960 Capital Insurance had in effect extended building was set on fire by two (2) NPA rebels who wanted to
credit to Plastic Era. The payment of the premium on the obtain canned goods, rice and medicines as provisions for
insurance policy therefore became an independent obligation their comrades in the forest, and that such loss was an
the non-fulfillment of which would entitle Capital Insurance to excepted risk under paragraph No. 6 of the policy conditions
recover. It could just deduct the premium due and unpaid of Fire Insurance Policy No. F-1397, which provides:
upon the satisfaction of the loss under the policy. 10 It did not
have the right to cancel the policy for nonpayment of the This insurance does not cover any loss or damage occasioned
premium except by putting Plastic Era in default and giving it by or through or in consequence, directly or indirectly, of any
personal notice to that effect. of the following occurrences, namely:
Where credit is given by an insurance company for the (d) Mutiny, riot, military or popular uprising, insurrection,
payment of the premium it has no right to cancel the policy rebellion, revolution, military or usurped power.
for nonpayment except by putting the insured in default and
giving him personal notice Any loss or damage happening during the existence of
abnormal conditions (whether physical or otherwise) which
are occasioned by or through or in consequence, directly or
indirectly, of any of said occurrences shall be deemed to be
loss or damage which is not covered by this insurance, except
to the extent that the Insured shall prove that such loss or
damage happened independently of the existence of such cause of the loss was an excepted risk under the terms of the
abnormal conditions. fire insurance policy.
Finding the denial of its claim unacceptable, the Where a risk is excepted by the terms of a policy
respondent then instituted in the trial court the complaint for which insures against other perils or hazards, loss
recovery of loss, damage or liability against petitioner. The from such a risk constitutes a defense which the
petitioner answered the complaint and reiterated the ground insurer may urge, since it has not assumed that risk,
it earlier cited to deny the insurance claim, that is, that the and from this it follows that an insurer seeking to
loss was due to NPA rebels, an excepted risk under the fire defeat a claim because of an exception or limitation in
insurance policy. the policy has the burden of proving that the loss
comes within the purview of the exception or limitation
In due time, the trial court rendered its Decision set up. If a proof is made of a loss apparently within a
dated December 26, 1991 in favor of the respondent, contract of insurance, the burden is upon the insurer
to prove that the loss arose from a cause of loss which
Petitioner interposed an appeal to the Court of Appeals. is excepted or for which it is not liable, or from a cause
However, CA affirmed RTCs decision which limits its liability.[6]Stated elsewise, since the
petitioner in this case is defending on the ground of non-
coverage and relying upon an exemption or exception clause
Issue: WON the burden of proof of loss in this case is upon
in the fire insurance policy, it has the burden of proving the
the insurer and not the insured.
facts upon which such excepted risk is based, by a
preponderance of evidence.[7]But petitioner failed to do so.
Held:
The burden of proof of loss in this case is upon the
The petitioner relies on the Sworn Statements of Jose
insurer Country Bankers Insurance and not Lianga Bay.
Lomocso and Ernesto Urbiztondo as well as on the Spot
A party is bound by his own affirmative allegations. In
Report of Pfc. Arturo V. Juarbal dated July 1, 1989
Section 1 of Rule 131 of the Revised Rules of Court. Each
party must prove his own affirmative allegations by the
amount of evidence required by law which in civil cases, as in The Sworn Statements of Jose Lomocso and Ernesto
this case, is preponderance of evidence, to obtain a favorable Urbiztondo are inadmissible in evidence, for being hearsay,
judgment.[5] inasmuch as they did not take the witness stand and could
not therefore be cross-examined.
In the instant case, the petitioner does not dispute that
the respondents stocks-in-trade were insured against fire loss, The petitioners evidence to prove its defense is sadly
damage or liability under Fire Insurance Policy No. F- 1397 and wanting and thus, gives rise to its liability to the respondent
that the respondent lost its stocks-in-trade in a fire that under Fire Insurance Policy No. F-1397.
occurred on July 1, 1989, within the duration of said fire
insurance. The petitioner, however, posits the view that the