Eternal Gardens Memorial vs. Philamlife Case digest Insurance- Commercial Law

 

Eternal Gardens Memorial vs. Philamlife case digest Insurance- Commercial Law

Eternal Gardens Memorial vs. Philamlife Insurance, GR No. 166245, Apr. 9, 2008

 

FACTS: Philippine American Life Insurance Company (Philamlife) entered into an agreement with Eternal Gardens Memorial Park Corporation (Eternal). Under the policy (renewable annually), the clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. The amount of insurance coverage depended upon the existing balance.

Eternal complied by submitting a a list of insurable balances of its lot buyers for October 1982 which includes John Chuang which was stamped as received by Philam Life.

In 1984, Chuang died with a balance of 100,000 php

In 1986, Philamlife had not furnished Eternal with any reply on its insurance claim so its demanded its claim

According to Philam Life, since the application was submitted only on November 15, 1984, after his death, Mr. John Uy Chuang was not covered under the Policy since his application was not approved. Moreover, the acceptance of the premiums are only in trust for and not a sign of approval.

 

RTC ruled in favor of Eternal. CA Reversed RTC.

ISSUE: W/N Philam's inaction or non-approval meant the perfection of the insurance contract.

HELD: YES. CA is reversed. 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. Thus, in Malayan Insurance Corporation v. CA, this Court held that: Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured, where the contract or policy is prepared by the insurer. A contract of insurance. being a contract of adhesion. par excellence, any ambiguity therein should be resolved against the insurer; in other words, it should be construed liberally in favor of the insured and strictly against the insurer. Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to preclude the insurer from noncompliance with its obligations.

 

Upon a party’s purchase of a memorial lot on installment from Eternal, an insurance contract covering the lot purchaser is created and the same is effective, valid, and binding until terminated by Philamlife by disapproving the insurance application

 

Moreover, the mere inaction of the insurer on the insurance application must not work to prejudice the insured

The termination of the insurance contract by the insurer must be explicit and unambiguous

Gulf Resorts vs. Philippine Charter Insurance Corp - CASE DIGEST - INSURANCE - COMMERCIAL LAW

 Gulf Resorts vs. Philippine Charter Insurance Corp., GR No. 155167, May 16, 2005

 

FACTS: Gulf Resorts, Inc was insured with American Home Assurance Company which includes loss or damage to shock to any of the property insured occasioned by or through or in consequence of earthquake.

In 1990, an earthquake struck damaging the properties and 2 swimming pools in its Agoo Playa Resort.

Gulf's claim was denied on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort

 

Gulf contends that pursuant to this rider, no qualifications were placed on the scope of the earthquake shock coverage. Thus, the policy extended earthquake shock coverage to all of the insured properties.

 

RTC ruled in favor of American Home. The endorsement rider means that only the two swimming pools were insured against earthquake shock

 

ISSUE: W/N Gulf can claim for its properties aside from the 2 swimming pools

HELD: No. American Home is liable only for the damage caused to the 2 swimming pools

 

A contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while the other party merely affixes his signature or his "adhesion" thereto;

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. A contract of adhesion is one wherein a party. usually a corporation. prepares the stipulations in the contract. while the other party merely affixes his signature or his -adhesion" thereto. Through the years, the courts have held that in this type of contracts, the parties do not bargain on equal footing the weaker party's participation being reduced to the alternative to take it or leave it. Thus, these contracts are viewed as traps for the weaker party whom the courts of justice must protect. Consequently, any ambiguity therein is resolved against the insurer. or construed liberally in favor of the insured.

This Court will only rule out blind adherence to terms where facts and circumstances will show that they are basically one-sided. Thus, we have called on lower courts to remain careful in scrutinizing the factual circumstances behind each case to determine the efficacy of the claims of contending parties. In Development Bank of the Philippines v. National Merchandising Corporation, et at, the parties, who were acute businessmen of experience, were presumed to have assented to the assailed documents with full knowledge.

Fortune Insurance and Surety Co. Inc. vs. Court of Appeals CA - CASE DIGEST - INSURANCE - COMMERCIAL LAW

 

Fortune Insurance and Surety Co. Inc. vs. Court of Appeals GR 115278, 23 May 1995

Facts: Producers Bank of the Philippines was insured by the Fortune Insurance and Surety Co Inc and an insurance policy was issued. An armored car of Producers was robbed while in the process of transferring cash in the sum of P725k under the custody of its teller, Alampay. The said armored car was driven by Magalong, escorted by Security Guard Atiga.

After an investigation conducted by the Pasay police authorities the driver Magalong and guard Atiga were charged with violation of PD 532 (Anti-Highway Robbery Law)

Demands were made by Producers upon Fortune to pay the amount of the loss of P725k, but the latter refused to pay as the loss is excluded from the coverage of the insurance policy, under the policy, the insurance company shall not be liable in respect of any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others.

Producers opposed the contention of Fortune and contended that Atiga and Magalong are not its "officer, employee, trustee or authorized representative at the time of the robbery.

Trial court ordered Fortune to pay Producers.

Issue: Whether Fortune is liable under the Money, Security, and Payroll Robbery policy it issued

Held: No. A contract of insurance is a contract of adhesion thus any ambiguity therein should be resolved against the insurer, or it should be construed liberally in favor of the insured and strictly against the insurer. That if the terms of the contract are clear and unambiguous, there is no room construction and such terms cannot be enlarged or diminished by judicial construction.

It is settled that the terms of the policy constitute the measure of the insurer's liability. In the absence of statutory prohibition to the contrary, insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent with public policy.

Insofar as Fortune is concerned it was its intention to exclude and exempt from protection and coverage losses arising from dishonest fraudulent or criminal acts of persons granted or having unrestricted access to Producers' money or payroll. When it used then the term “employee " it must have had in mind any person who qualifies  es such as generally and universally understood or jurisprudentially established in the light of the four  standards in the determination of the employer-employee relationship or as statutorily declared even in a  limited sense which considers the employees under a "labor-only" contract as employees of the party employing them and not of the party who supplied them to the  employer. Still, Producers entrusted the three with the specific duty to safely transfer the  money to its head office with Alampay to be responsible for its custody in transit Magaring to dove the  armored vehicle which would carry the money and Atiga to provide the needed security for the money the  vehicle and his two other companions. In short for these particular tasks the three acted as agents of Producers. A "representative- is defined as one who represents or stands in the place of another one who represents others or another in a special capacity as an agent and is interchangeable with “agent”.

Fortune is exempt from liability under the general exceptions clause of the insurance policy.

 

Rizal Surety and Insurance Co. vs. CA CASE DIGEST - INSURANCE

 Rizal Surety and Insurance Co. vs. CA, 336 SCRA 12, GR No. 112360, June 18, 2000

Facts:  Rizal Surety & Insurance Company issued Fire Insurance Policy in favor of Transworld Knitting Mills for P1.5M. The same pieces of property insured were also insured with New India Assurance Company, Ltd., (New India). In 1981, fire broke out in the compound of Transworld, 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) where fun and amusement machines and spare parts were stored, was also destroyed by the fire.

Transworld filed its insurance claims with Rizal Insurance and New India but to no avail.

Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-span building, which was partly burned, and not the damage caused by the fire on the two-storey annex building. CFI ordered Rizal Insurance to pay Transworld the amount of P826,500.00 representing the actual value of the losses suffered by it and with cost against Rizal Insurance. CA modified the lower court's decision by requiring New India to pay P1.8m; and Rizal Surety to pay Transworld P470k based on the actual losses sustained by Transworld in the fire, totalling P2,790,376.00 as against the amounts of fire insurance coverages respectively extended by New India in the amount of P5,800,000.00 and Rizal Surety and Insurance Company in the amount of P1,500,000.00.

Issue: Whether the ambiguity in fire insurance policy should be resolved against Rizal Surety.

Held: YES. The stipulation as to the coverage of the fire insurance policy under controversy has created a doubt regarding the portions of the building insured thereby. Article 1377 of the New Civil Code provides that 'The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity." Conformably, it stands to reason that the doubt should be resolved against Rizal Insurance, whose lawyer or managers drafted the fire insurance policy contract under scrutiny.

In Landicho vs. GSIS, 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 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.'

In Fieldmen's Insurance Company, Inc. vs. Vda. De Songco, where it was held that the "rigid application of the rule on ambiguities has become necessary in view of current business practices. The courts cannot ignore that nowadays monopolies, cartels and concentration of capital, endowed with overwhelming economic power, manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit, his participation in the 'agreement' being reduced to the alternative to 'take it or leave it' labelled since Raymond Saleilles 'contracts by adherence', in contrast to these entered into by parties bargaining on an equal footing, such contracts (of which policies of insurance and international bills of lading are prime example) obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwary."

STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LIMITED, v. SULPICIO LINES CASE DIGEST - INSURANCE

 

STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LIMITED, v. SULPICIO LINES, INC. GR. No. 196072, September 20, 2017

Facts: Steamship was a Bermuda-based Protection and Indemnity Club, managed outside England. It insures its members-shipowners against "third party risks and liabilities" for claims arising from (a) death or injury to passengers; (b) loss or damage to cargoes; and (c) loss or damage from collisions.

Sulpicio insured its fleet of inter-island vessels with Steamship for Protection & Indemnity risks through local insurance agents, Pioneer Insurance or Seaboard-Eastern Insurance Co., Inc. 1 of these vessels was the M/V Princess of the World.

In 2005, the vessel was gutted by fire resulting in total loss of its cargoes. The fire incident was found to be "accidental" in nature.

Sulpicio claimed indemnity from Steamship. Steamship denied the claim and subsequently rescinded the insurance coverage of Sulpicio's other vessels on the ground that "Sulpicio was grossly negligent in conducting its business regarding safety, maintaining the seaworthiness of its vessels as well as proper training of its crew."

Issue: WON Sulpicio is a member of Steamship

Held: Yes. The contract between Sulpicio and Steamship is more than a contract of insurance between a marine insurer and a shipowner. By entering its vessels in Steamship, Sulpicio not only obtains insurance coverage for its vessels but also becomes a member of Steamship.

A protection and indemnity club is an association composed of shipowners generally formed for the specific purpose of providing insurance cover against third-party liabilities of its members. A protection and indemnity club is a mutual insurance association.

A mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it, the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the profits are divided among themselves, in proportion to their interest. Additionally, mutual insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense costs.

A contract of insurance is perfected between the parties upon Steamship's issuance of the Certificate of Entry and Acceptance.

A contract of insurance, like other contracts, must be assented to by both parties either in person or by their agents. So long as an application for insurance has not been either accepted or rejected, it is merely an offer or proposal to make a contract. The contract, to be binding from the date of application, must have been a completed contract, one that leaves nothing to be done, nothing to be completed, nothing to be passed upon, or determined, before it shall take effect. There can be no contract of insurance unless the minds of the parties have met in agreement.

Insurance policy is the written instrument in which a contract of insurance is set forth. The policy, which is required to be in printed form, "may contain blank spaces; and any word, phrase, clause, mark, sign, symbol, signature, number, or word necessary to complete the contract of insurance shall be written on the blank spaces." Any rider, clause, warranty, or endorsement attached and referred to in the policy by its descriptive title or name is considered part of this policy or contract of insurance and binds the insured.

The information that must be stated in the policy, namely: the parties in the insurance contract, amount insured, premium, property or life insured, risks insured against, and period of insurance. However, there is nothing in the law that prohibits the parties from agreeing to other terms and conditions that would govern their relationship, in which case the general rules of the Civil Code regulating contracts will apply.

The dispute between Sulpicio and Steamship is referred to arbitration in London in accordance with Rule 47 of the 2005/2006 Club Rules.

 

ilipinas Compañia De Seguros vs. Mandanas CASE DIGEST- INSURANCE

 

Filipinas Compañia De Seguros vs. Mandanas, In His Capacity as Insurance Commissioner, G.R. No. L-19638 June 20, 1966

39 non-life insurance companies and Mandanas assailed the validity of Art 22 of the Constitution of the Philippine Rating Bureau upon the ground that it constitutes an illegal or undue restraint of trade.

Mandanas and 39 non-life insurance companies maintains that under Article 22, in order to secure reinsurance, non-life insurance companies should be a member in good standing of the bureau.

Issue: WON Art 22 is void as it limits reinsurance only to a member of the bureau

Held: No. The the purpose of Art. 22 is to maintain a high degree or standard of ethical practice, so that insurance companies may earn and maintain the respect of the public; that to achieve this purpose it is highly desirable to have cooperative action between said companies in the compilation of their total experience in the business, so that the Bureau could determine more accurately the proper rate of premium to be charged from the insured; that, accordingly, non-life insurance companies need an adequate record of losses and premium collections that will enable them to determine the amount of risk involved in each type of risk and, hence, to determine the rates or premiums that should be charged in insuring every type of risk; that this information cannot be compiled without full cooperation on the part of the companies concerned, which cannot be expected from non-members of the Bureau, over which the latter has no control; and that, in addition to submitting information about their respective experience, said Bureau members must, likewise, share in the rather appreciable expenses entailed in compiling the aforementioned data and in analyzing the same.1äwphï1.ñët

The limitation upon reinsurance contained in the aforementioned Article 22 does not affect the public at all, for, whether there is reinsurance or not, the liability of the insurer in favor of the insured is the same. Besides, there are sufficient foreign reinsurance companies operating in the Philippines from which non-members of the Bureau may secure reinsurance. What is more, whatever the Bureau may do in the matter of rate-fixing is not decisive insofar as the public is concerned, for no insurance company in the Philippines may charge a rate of premium that has not been approved by the Insurance Commissioner.