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.