COMPAÑIA MARITIMA vs. INSURANCE COMPANY OF NORTH AMERICA G.R. No. L-18965 October 30, ST.
ST. PAUL FIRE & MARINE INSURANCE CO. vs. MACONDRAY & CO., INC., BARBER STEAMSHIP LINES,
1964. AN INSURANCE LAW CASE. BY C Y.
FACTS.
1. Macleod and Company of the Philippines contracted by telephone the services of the Compañia Maritima, a
shipping corporation,
for the shipment of 2,645 bales of hemp from the former's Sasa private pier at Davao City to Manila and for
their subsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel Navigator.
2. Petitioner sent to Macleod's private wharf LCT Nos. 1023 and 1025 which was manned by a patron to Get
the cargo.
3. They issued a receipt which show that they have transported the cargo from Davao to Manila for further
transshipment to U,S,A.
4. One of the barge was sank resulting in the loss and damages of its cargo.
5. Macloud filed its claim of insurance which was paid by the insurance company.
6. Subrogated in the right of Macloud, the insurance company demand from the petitioner its liability but the
latter refused to comply.
7. The insurance company filed a complaint against the petitioner before the trial court who order the
petitioner to pay the plaintiff insurance company and this was affirmed by the CA.
ISSUE.
Can the insurance company maintain this suit without proof of its personality to do so?
According to the Supreme Court, since the contract between the shipper and the carrier in this case was valid
and properly established, when macloud suffered damages because of the doing of petitioner, the insurer who
pay the insurance claim was subrogated on behalf of Macloud giving the insurance company a personality to
institute this case.
WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.
INC., WILHELM WILHELMSEN MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY
(J.Antonio;1976)
RELEVANT PROVISIONS:
FACTS:
 06/29/1960 — Winthrop Products, Inc., of NY, U.S.A., shipped aboard the SS Tai Ping, owned and operated
by Wilhelm Wilhelmsen,
218 cartons and drums of drugs and medicine, with the
freight prepaid, which were consigned to Winthrop - Stearns Inc., Manila, Philippines.
 Barber Steamship Lines, Inc., agent of Wilhelm Wilhelmsen issued Bill of Lading No. 34, in the
name of Winthrop Products, Inc. as shipper, with arrival notice in Manila to consignee.
 The shipment was insured by the shipper against loss and/or damage with the St. Paul Fire &
Marine Insurance Company
 08/07/1960 — SS Tai Ping arrived at the Port of Manila and discharged its aforesaid shipment
into the custody of Manila Port Service; 1 drum and several cartons of medicine were in bad
condition (but most of the shipment was in good condition)
 Consignee filed claim of the value of the damaged drum and cartons of medicine from the carrier and Manila
Port Service, who both refused to pay.
 Consignee then filed its claim with the insurer (St. Paul) who, on the basis of such claim, paid to the
consignee the insured value of the lost and damaged goods, including other expenses in
connection therewith, in the total amount of $1,134.46
08/05/1961 — Insurer (as subrogee of the rights of the consignee) instituted with CFI Manila the present
action against the defendants for the recovery of said amount of $1,134.46, plus costs
 All defendants said they were not agents of the carrying vessel and they only delivered the shipment in the
state they receive them in, in their defense
 Lower Court Judgement:
(1) Macondray & Co., Inc., Barber Steamship Lines, Inc. and Wilhelm
Wilhelmsen = jointly pay P300.00 w/ legal interest thereon from the filing of the complaint until
fully paid;
(2) Manila Railroad Company and Manila Port Service = jointly pay P809.67 w/ legal
interest thereon from the filing of the complaint until fully paid
 Plaintiff appealed saying they should be paid $1,134.46 or its equivalent in pesos at the rate of P3.90 (rate at
the date of the decision) instead of P2.00 (rate at the date of discharge of the cargo) for every US $
ISSUES:
WON in case of loss or damage, the liability of the carrier to the consignee is limited to the C.I.F. value of the
goods which were lost or damaged
Whether the insurer who has paid the claim in dollars to the consignee should be reimbursed in its peso
equivalent on the date of discharge of the cargo or on the date of the decision.
HELD:
YES. The purpose of the bill of lading is to provide for the rights and liabilities of the parties in reference to the
contract to carry. The stipulation in the bill of lading limiting the common carrier's liability to the value of the
goods appearing in the bill, unless the shipper or owner declares a greater value, is valid and binding. This
limitation of the carrier's liability is sanctioned by the freedom of the contracting parties to establish such
stipulations, clauses, terms, or conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs and public policy. A stipulation fixing or limiting the sum that may be recovered from
the carrier on the loss or deterioration of the goods is valid, provided it is
(a) reasonable and just under the circumstances, and
(b) has been fairly and freely agreed upon. In this case, the liabilities of the defendants-appellees with respect
to the lost or damaged shipments are expressly limited to the C.I.F. value of the goods as per contract of sea
carriage embodied in the bill of lading. As an insurer, Plaintiffs ubrogated merely to the rights of the assured,
thus it can recover only the amount that is recoverable by the latter. Since the right of the assured, in case of
loss or damage to the goods, is limited or restricted by the provisions in the bill of lading, a suit by the insurer
as subrogee necessarily is subject to like limitations and restrictions.
DATE OF DISCHARGE OF THE CARGO.
The obligation of the carrier to pay for the damage
commenced on the date it failed to deliver the shipment in good condition to the consignee. The
C.I.F. Manila value of the goods which were lost or damaged, according to the claim of the consignee dated
September 26, 1960 is $226.37 and $324.3 or P456.14 and P653.53, respectively, in Philippine Currency. The
peso equivalent was based by the consignee on the
exchange rate of P2.015 to $1.00 which was the rate existing at that time.
PAUL FIRE & MARINE INSURANCE v MACONDRAY & CO
Facts:
-Winthrop Products, Inc., of New York shipped aboard the SS “Tai Ping”, owned and operated by Wilhelm
Wilhelmsen218 cartons and drums of drugs and medicine with Winthrop-Stearns Inc., Manila, Philippines as
consingee. BarberSteamship Lines, Inc., agent of Wilhelm Wilhelmsen issued Bill of Lading No. 34, in the name
of Winthrop Products.
-The shipment was insured by the shipper against loss and/or damage with the St. Paul Fire & Marine
InsuranceCompany.
-“Tai Ping” arrived at the Port of Manila.
-The said shipment was discharged complete and in good order with the exception of one (1) drum and
several cartonswhich were in bad condition.
-Because consignee failed to receive the whole shipment and as several cartons of medicine were received in
badorder condition, Winthrop-Sterns Philippines filed the corresponding claim in the amount of Pl,109.67
representingthe C.I.F. value of the damaged drum and cartons of medicine with the carrier and the arrestre.
-However, both refused to pay.
-Winthrop-Sterns Philippines filed its claim with the insurer, St. Paul Fire & Marine insurance.
-The insurance company, on the basis of such claim, paid to the consignee the insured value of the lost and
damagedgoods, including other expenses in connection therewith, in the total amount of $1,134.46.
-As subrogee of the rights of the shipper and/or consignee, the insurer, St. Paul Fire & Marine Insurance
Co., instituted with the Court of First Instance the present action against the defendants for the recovery of
said amount of $1,134.46, plus costs.
-The Lower court rendered judgment ordering defendants Macondray & Co., Inc., Barber Steamship Lines, Inc.
andWilhelm Wilhelmsen to pay to the plaintiff P300.00. It also held defendants Manila Railroad Company
and Manila PortService to pay to plaintiff, jointly and severally, the sum of P809.67.
-The Insurer, , contending that it should recover the amount of $1,134.46 or its equivalent in pesos (the rate of
P3.90,instead of P2.00, for every US$1.00), filed a motion for reconsideration, but this was denied.
-The Insurer argues that, as subrogee of the consignee, it should be entitled to recover from the defendants-
appelleesthe amount of $1,134.46 which it actually paid to the consignee and which represents the value of the
lost anddamaged shipment as well as other legitimate expenses such as the duties and cost of survey of said
shipment, andthat the exchange rate on the date of the judgment, which was P3.90 for every US$1.00.
-Defendants-appellees countered that:
o Their liability is limited to the C.I.F. value of the goods, pursuant to contract of sea carriage embodied in the
bill of lading that the consignee’s (Winthrop-Stearns Inc.) claim against the carrier (Macondray & Co.,
Inc.,Barber Steamship Lines, Inc., Wilhelm Wilhelmsen and the arrastre operators (Manila Port Service and
Manila Railroad Company) was only for the sum of Pl,109.67
ISSUE(S):
1.Whether or not, in case of loss or damage, the liability of the carrier to the consignee is limited to the C.I.F
value of the goods which were lost or damaged
2.Whether the insurer who has paid the claim in dollars to the consignee should be reimbursed in its peso
equivalent on the date of discharge of the cargo or on the date of the decision.
HELD:
The appeal is without merit and the judgement of the lower court is affirmed.
-The purpose of the bill of lading is to provide for the rights and liabilities of the parties in reference to the
contract tocarry.
-The stipulation in the bill of lading limiting the common carrier’s liability to the value of the goods appearing
in thebill, unless the shipper or owner declares a greater value, is valid and binding.
-This limitation of the carrier’s liability is sanctioned by the freedom of the contracting parties to establish
suchstipulations, clauses, terms, or conditions as they may deem convenient, provided they are not contrary to
law,morals, good customs and public policy.
BAY VIEW HOTEL, INC.
v. KER & CO.and PHOENIX ASSURANCE CO.
FACTS:
A cash shortage and unremitted collection of a substantial amount was discovered upon a cashier and
Petitioner Bay View filed a claim upon a fidelity guarantee bond from Respondent Ker & Co. secured by
Petitioner Bay View Hotel against acts of fraud and dishonesty of its accountable employees. Respondent
refused payment and Petitioner subsequently instituted a complaint for collection of a sum of money.
Respondent filed a Request for Admission furnished upon Petitioner’s counsel. Respondent Ker moved
for the dismissal of the complaint for failure to answer said request as well as on the ground of implied
admission of the facts contained therein. Also, the proper party for collection is Petitioner’s principal,
Respondent Phoenix Assurance Co. Petitioner opposed the motion contending that the proper action is not
for the dismissal but for amendment of the complaint in order to bring the necessary or indispensable
parties to the suit. Amended was made, impleading Phoenix. The trial court dismissed the case.
ISSUE:
Whether or not admissions made prior to impleading additional parties extend to such parties.
HELD: An admission is in the nature of evidence and form part of the records of the case and therefore could
be availed of by any party even by one subsequently impleaded. Amendments per se cannot set aside
the legal effects of a request for admission for its significance has not been affected by the amendment.
Petitioner's failure to answer the request for admission should have been corrected by filing a motion to
be relieved of the consequences of the implied admission with respect to respondent
Phoenix.
Manila Mahogany Manufacturing Corporation vs. Court of Appeals and Zenith Insurance Corporation (G.R. No.
L-52756)
Facts:
Petitioner Manila Mahogany Manufacturing Corporation insured its Mercedes Benz 4-door sedan
with respondent Zenith Insurance Corporation. The insured vehicle was bumped and damaged by a truck
owned by San Miguel Corporation. For the damage caused, respondent company paid petitioner 5,000 pesos
in amicable settlement. Petitioner’s general manager executed a release claim, subrogating respondent
company to all its right to action against San Miguel Corporation.
Thereafter, respondent company wrote Insurance Adjusters, Inc. top demand reimbursement from
San Miguel Corporation of the amount it had paid the petitioner. Insurance Adjusters, Inc. refused
reimbursement, alleging that San Miguel Corporation had already paid petitioner 4,500 pesos for damages to
petitioner’s motor vehicle, as evidenced by a cash voucher and Release of Claim executed by the General
Manager of petitioner discharging San Miguel Corporation from “all actions, claims, demands, and rights of
action that now exist or thereafter develop arising out of or as a consequence of the accident.”
Respondent insurance company thus demanded from petitioner reimbursement of the sum of 4,500
paid by San Miguel Corporation. Petitioner refused; hence the instance case.
Issue:
Whether the respondent insurance company is subrogated to the rights of the petitioner against San
Miguel Corporation.
Ruling:
Yes. The Supreme Court held that if a property is insured and the owner and the owner receives
indemnity from the insurer, it is provided in article 2207 of the New Civil Code that the insurer is deemed
subrogated to the rights of the insured against the wrongdoer and if the amount paid by the insurer does not
fully cover the loss, then the aggrieved party is the one entitled to recover the deficiency. Under this legal
provision, the real party in interest with regard to the portion of the indemnity paid is the insurer and not the
insured.
Hence the petitioner is entitled to keep the sum of 4,500 pesos paid by San Miguel Corporation
under its clear right to file a deficiency claim for the damages incurred, against the wrongdoer, should the
insurance company not fully pay for the injury caused. However, when the petitioner released San Miguel
Corporation from any liability, petitioner’s right to retain the sum of 5,000 pesos no longer exist thereby
entitling private respondent to recover the same.
The right of subrogation can only exist after the insurer has paid the insured otherwise the insured
will be deprived of his right to indemnity. If the insurance proceeds are not sufficient to cover the damages
suffered by the insured, then he may sue the party responsible for the damage for the remainder. To the
extent of the amount already received from, the insurer enjoys the right of subrogation.
Since the insurer can be subrogated to only such right as the insured may have, should the insured,
after receiving payment from the insurer, release the wrongdoer who caused the loss, the insurer loses his
rights against the latter. But in such a case, the insurer will be entitled to recover from the insured whatever it
has paid to the latter, unless the release was made with the consent of the insurer.
FF Cruz and co vs CA
Facts:
A fire broke up from the furniture shop of the petitioner in Caloocan city early September 6, 1974. Prior to
that, neighbor of the said shop requested that the petitioner should build a firewall but failed to do so. The
cause of the fire was never discovered. Private respondent got P35k from the insurance on their house and
contents thereof.
Issue:
Whether or not the 35k be deducted from the damages thereof
Ruling
Since P35k had already been claimed by the respondents, the court held that such amount should be deducted
from the award of damages in accordance with Art 2207 NCC
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrongdoer or the person who has
violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.
Having been indemnified by their insurer, private respondents are entitled only to recover the deficiency from
the petitioner.
Whether or not the insurer should exercise the rights of the insured to which it had been subrogated lies solely
within the former's sound discretion. Since the insurer is not a party to the case, its identity is not of record
and no claim is made on its behalf, the private respondent's insurer has to claim his right to reimbursement of
the P35,000.00 paid to the insured.
Cathay Insurance Co. vs. Court of Appeals [GR 76145, 30 June 1987]
Second Division, Paras (J): 3 concur, 2 took no part
Facts: A complaint was filed by Remington Industrial Sales Corporation against Cathay Insurance Co. seeking
collection of the sum of P868,339.15 representing Remington's losses and damages incurred in a shipment of
seamless steel pipes under an insurance contract in favor of Remington as the insured, consignee or importer
of aforesaid merchandise while in transit from Japan to the Philippines on board vessel SS "Eastern Mariner."
The total value of the shipment was P2,894,463.83 at the prevailing rate of P7.95 to a dollar in June and July
1984, when the shipment was made. The trial court decided in favor of Remington by ordering Cathay
Insurance to pay it the sum of P866,339.15 as its recoverable insured loss equivalent to 30% of the value of the
seamless steel pipes; ordering Cathay Insurance to pay Remington interest on the aforecited amount at the
rate of 34% or double the ceiling prescribed by the Monetary Board per annum from 3 February 1982 or 90
days from Remington's submission of proof of loss to Cathay Insurance until paid as provided in the settlement
of claim provision of the policy; and ordering Cathay Insurance to pay Remington certain amounts for marine
surveyor's fee, attorney's fees and costs of the suit. On appeal, the Court of Appeals affirmed the decision of the
Regional Trial Court National Capital Region (NCR) Manila, Branch 38. Cathay Insurance moved for
reconsideration, but was denied. It thus filed the petition for review. Remington, in its comment on the
petition, contends that
(1) Coverage of Remington's loss under the insurance policy issued by Cathay Insurance is unmistakable; (2)
Alleged contractual limitations contained in insurance policies are regarded with extreme caution by courts
and are to be strictly construed against the insurer; obscure phrases and exceptions should not be allowed to
defeat the very purpose for which the policy was procured; (3) Rust is not an inherent vice of the seamless
steel pipes without interference of external factors; (4) No matter how Cathay Insurance might want it
otherwise, the 15-day clause of the policy had been foreclosed in the pre-trial order and it was not even raised
in Cathay Insurance's answer to Remington's complaint; (5) The decision was correct in not holding that the
heavy rusting of the seamless steel pipes did not occur during the voyage of 7 days from July 1 to July 7, 1981;
(6) The alleged lack of supposed bad order survey from the arrastre capitalized on by Cathay Insurance was
more than clarified by no less than 2 witnesses; (7) The placing of notation "rusty" in the way bills is not only
Remington's right but a natural and spontaneous reaction of whoever received the seamless steel pipes in a
rusty condition at Remington's bodega; (8) The Court of Appeals did not engage in any guesswork or
speculation in concluding a loss allowance of 30% in the amount of P868,339.15; and (9) The rate of 34% per
annum double the ceiling prescribed by the Monetary Board is the rate of interest fixed by the Insurance Policy
itself and the Insurance Code.
Cathay Insurance however maintains that (1) Remington does not dispute the fact that, contrary to the finding
of the respondent Court (that Cathay Insurance has failed "to present any evidence of any viable exception to
the application of the policy") there is in fact an express exception to the application of the policy; (2) As
adverted to in the Petition for Review, Remington has admitted that the questioned shipment is not covered by
a "square provision of the contract," but Remington claims implied coverage from the phrase "perils of the sea"
mentioned in the opening sentence of the policy; (3) The insistence of Remington that rusting is a peril of the
sea is erroneous; (4) Remington inaccurately invokes the rule of strict construction against insurer under the
guise of construction in order to impart a non-existing ambiguity or doubt into the policy so as to resolve it
against the insurer; (5) Remington while impliedly admitting that a loss occasioned by an inherent defect or
vice in the insured article is not within the terms of the policy, erroneously insists that rusting is not an
inherent vice or in the nature of steel pipes; (6) Rusting is not a risk insured against, since a risk to be insured
against should be a casualty or some casualty, something which could not be foreseen as one of the necessary
incidents of adventure; (7) A fact capable of unquestionable demonstration or of public knowledge needs no
evidence. This fact of unquestionable demonstration or of public knowledge is that heavy rusting of steel or
iron pipes cannot occur within a period of a 7 day voyage. Besides, Cathay Insurance had introduced the clear
cargo receipts or tally sheets indicating that there was no damage on the steel pipes during the voyage; and (8)
The evidence of Remington betrays the fact that the account of P868,339.15 awarded by the respondent Court
is founded on speculation, surmises or conjectures and the amount of less has not been proven by competent,
satisfactory and clear evidence.
Issue: Whether the rusting of steel pipes in the course of a voyage is a "peril of the sea," and whether rusting is
a risk insured against.
Held: YES. There is no question that the rusting of steel pipes in the course of a voyage is a "peril of the sea" in
view of the toll on the cargo of wind, water, and salt conditions. At any rate if the insurer cannot be held
accountable therefor, the Court would fail to observe a cardinal rule in the interpretation of contracts, namely,
that any ambiguity therein should be construed against the maker/issuer/drafter thereof, namely, the insurer.
Besides the precise purpose of insuring cargo during a voyage would be rendered fruitless.
Tio Khe Chio vs. Court of Appeals
[GR 76101-02, 30 September 1991] Third Division,
Fernan (J): 4 concur
Facts: On 18 December 1978, Tio Khe Chio imported 1,000 bags of fishmeal valued at $36,000.30 from Agro
Impex, S.A. Dallas, Texas, U.S.A. The goods were insured with Eastern Assurance and Surety Corporation
(EASCO) and shipped on board the M/V Peskov, a vessel owned by Far Eastern Shipping Company. When the
goods reached Manila on 28 January 1979, they were found to have been damaged by sea water which
rendered the fishmeal useless. Tio filed a claim with EASCO and Far Eastern Shipping. Both refused to pay.
Whereupon, Tio sued them before the then Court of First Instance of Cebu, Branch II for damages. EASCO, as
the insurer, filed a counterclaim against the Tio for the recovery of P18,387.86 representing the unpaid
insurance premiums. On 30 June 1982, the trial court rendered judgment ordering EASCO and Far Eastern
Shipping to pay Tio solidarily the sum of P105,986.68 less the amount of P18,387.86 for unpaid premiums
with interest at the legal rate from the filing of the complaint, the sum of P15,000.00 as attorney's fees and the
costs. The judgment became final as to EASCO but the shipping company appealed to the Court of Appeals and
was absolved from liability by the said court in AC-GR 00161, entitled "Tio Khe Chio vs. Eastern Assurance and
Surety Corporation." The trial court, upon motion by Tio, issued a writ of execution against EASCO. The sheriff
enforcing the writ reportedly fixed the legal rate of interest at 12%. EASCO moved to quash the writ alleging
that the legal interest to be computed should be 6% per annum in accordance with Article 2209 of the Civil
Code and not 12% as insisted upon by Tio's counsel. In its order of 30 July 1986, the trial court denied EASCO's
motion. EASCO then filed a petition for certiorari and prohibition before the Court of Appeals. On 30 July 1986,
the Appellate Court rendered judgment, setting aside the order dated 30 July 1986 in so far as it fixes the
interest at 12% on the principal amount of P87,598.82 from the date of filing of the complaint until the full
payment of the amount, and the interest that Tio was entitled to collect from EASCO was reduced to 6% per
annum; without pronouncement as to costs. Tio filed the petition for certiorari and prohibition.
Issue [1]: Whether Sections 243 and 244, as to interest, apply in the present case.
Held [1]: NO. Section 243 of the Insurance Code provides that "the amount of any loss or damage for which an
insurer may be liable, under any policy other than life insurance policy, shall be paid within thirty days after
proof of loss is received by the insurer and ascertainment of the loss or damage is made either by agreement
between the insured and the insurer or by arbitration; but if such ascertainment is not had or made within
sixty days after such receipt by the insurer of the proof of loss, then the loss or damage shell be paid within
ninety days after such receipt. Refusal or failure to pay the loss or damage within the time prescribed herein
will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate
of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the
ground that the claim is fraudulent." Section 244 of the aforementioned Code also provides that "In case of any
litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the Commissioner or
the Court, as the case may be, to make a finding as to whether the payment of the claim of the insured has been
unreasonably denied or withheld; and in the affirmative case, the insurance company shall be adjudged to pay
damages which shall consist of attorney's fees and other expenses incurred by the insured person by reason of
such undeniable denial or withholding of payment plus interest of twice the ceiling prescribed by the
Monetary Board of the amount of the claim due the insured, from the date following the time prescribed in
section two hundred forty-two or in section two hundred forty-three, as the case may be, until the claim is fully
satisfied; Provided, That the failure to pay any such claim within the time prescribed in said sections shall be
considered prima facie evidence of unreasonable delay in payment." Herein, there was no unjustified refusal or
withholding of payment on Tio's claim. The aforecited sections of the Insurance Code are not pertinent to the
case, as they apply only when the court finds an unreasonable delay or refusal in the payment of the claims.
Issue [2]: Whether the interest to be imposed on claims based on an insurance contract is 6% or 12%.
Held [2]: 6%. The legal rate of interest is 6% per annum. Circular 416 of the Central Bank which took effect on
29 July 1974 pursuant to Presidential Decree 116 (Usury Law) which raised the legal rate of interest from 6%
to 12% cannot apply as the adjusted rate mentioned in the circular refers only to loans or forbearances of
money, goods or credits and court judgments thereon but not to court judgments for damages arising from
injury to persons and loss of property which does not involve a loan. On the other hand, in the case of
Philippine Rabbit Bus Lines, Inc. vs. Cruz, G.R. No. 71017, July 28, 1986, 143 SCRA 158, the Court declared that
the legal rate of interest is 6% per annum, and not 12%, where a judgment award is based on an action for
damages for personal injury, not use or forbearance of money, goods or credit. In the same vein, the Court held
in GSIS vs. Court of Appeals, GR 52478, 30 October 1986, 145 SCRA 311, that the rates under the Usury Law
(amended by PD 116) are applicable only to interest by way of compensation for the use or forbearance of
money, interest by way of damages is governed by Article 2209 of the Civil Code. Clearly, the applicable law is
Article 2209 of the Civil Code which reads "If the obligation consists in the payment of a sum of money and the
debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the
payment of interest agreed upon, and in the absence of stipulation, the legal interest which is six per cent per
annum." And in the light of the fact that the contending parties did not allege the rate of interest stipulated in
the insurance contract, the legal interest was properly pegged at 6%.
Coastwise Lighterage Corporation v. CA
Facts:
Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila with
Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were
towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay,
one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was
damaged, and water gushed in through a hole "two inches wide and twenty-two inches long". As a
consequence, the molasses at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine
General Insurance Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost.
Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to the
claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals ruled
against Coastwise.
Issues:
(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with
Pag-asa, and whether it exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the carrier
Held:
(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to
another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise
Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier,
but remained a common carrier and was still liable as such. The law and jurisprudence on common carriers
both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the
same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows
then that the presumption of negligence that attaches to common carriers, once the goods it is sports are lost,
destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the
exercise of extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the
vessel "Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have
exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm
of the vessel which eventually met the fateful accident. It may also logically, follow that a person without
license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe
routes taken by seasoned and legally authorized ones. Had the patron been licensed he could be presumed to
have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship
that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage,
having failed to overcome the presumption of negligence with the loss and destruction of goods it transported,
by proof of its exercise of extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured
property is destroyed or damaged through the fault or negligence of a party other than the assured, then the
insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from the
wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured
operated as an equitable assignment to the former of all remedies which the latter may have against the third
party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor
does it grow out of, any private of contract or upon written assignment of, claim. It accrues simply upon
payment of the insurance claim by the insurer.
Philam v CA
G.R. No. 125678 March 18, 2002
Lessons Applicable:
Elements (Insurance)
Blood Relationship (Insurance)
FACTS:
Ernani Trinos, deceased husband of Julita Trinos, applied for a health care coverage with Philamcare Health
Systems, Inc.
He answered the standard application form: Have you or any of your family members ever consulted or been
treated for high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes,
give details). - NO
the application was approved for a period of one year from March 1, 1988 to March 1, 1989. Accordingly, he
was issued Health Care Agreement No. P010194
Under the agreement, respondent’s husband was entitled to avail of hospitalization benefits, whether ordinary
or emergency, listed therein. He was also entitled to avail of "out-patient benefits" such as annual physical
examinations, preventive health care and other out-patient services.
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. The amount of coverage was increased to a maximum sum of
P75,000.00 per disability.
During the period of his coverage, Ernani suffered a heart attack and was confined at the Manila Medical
Center (MMC) for 1 month beginning March 9, 1990.
While her husband was in the hospital, Julina Trinos tried to claim the benefits under the health care
agreement.
Philamcare denied her claim saying that the Health Care Agreement was void for concealing Ernani’s medical
history so she paid the hospitalization expenses of P76,000.00 herself.
Doctors at the MMC allegedly discovered at the time of Ernani’s confinement that he was hypertensive,
diabetic and asthmatic, contrary to his answer in the application form.
After being discharged from the MMC, he was attended by a physical therapist at home.
Later, he was admitted at the Chinese General Hospital.
Due to financial difficulties, however, he was brought home again.
April 13, 1990 morning: Ernani had fever and was feeling very weak
He was brought to Chinese General Hospital where he died
July 24, 1990: She brought action for damages against Philamcare Health Systems Inc. and its president, Dr.
Benito Reverente
RTC: Philamcare and Dr. Benito Reverent to pay and reimburse P76k plus interest, moral damages, exemplary
damages, attorney's fees and cost of suit
CA: affirmed the decision of RTC but deleted all awards for damages and absolved Philamcare
Philamcare brought an instant petition for review arguing that:
health care agreement is not an insurance contract; hence the "incontestability clause" under the Insurance
Code does not apply.
grants "living benefits," such as medical check-ups and hospitalization which a member may immediately
enjoy so long as he is alive upon effectivity of the agreement until its expiration one-year thereafter
only medical and hospitalization benefits are given under the agreement without any indemnification, unlike
in an insurance contract where the insured is indemnified for his loss
since Health Care Agreements are only for a period of one year, as compared to insurance contracts which last
longer; incontestability clause does not apply, as the same requires an effectivity period of at least two years
insurance company is governed by the Insurance Commission, but a Health Maintenance Organization under
the authority of the Department of Health
ISSUE:
W/N the health care agreement is a contract of insurance. - YES
W/N the spouse being "not" legal wife can claim - YES
HELD: Petition is DENIED. CA AFFIRMED.
1. YES.
P.D. 612 Insurance Code
Sec. 2 (1)
(1) 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.
Sec. 3
Sec. 3. Any contingent or unknown event, whether past or future, which may damnify a person having an
insurable interest, or create a liability against him, may be insured against, subject to the provisions of this
chapter.
The consent of the husband is not necessary for the validity of an insurance policy taken out by a married
woman on her life or that of her children.
Any minor of the age of eighteen years or more, may, notwithstanding such minority, contract for life, health
and accident insurance, with any insurance company duly authorized to do business in the Philippines,
provided the insurance is taken on his own life and the beneficiary appointed is the minor's estate or the
minor's father, mother, husband, wife, child, brother or sister.
The married woman or the minor herein allowed to take out an insurance policy may exercise all the rights
and privileges of an owner under a policy.
All rights, title and interest in the policy of insurance taken out by an original owner on the life or health of a
minor shall automatically vest in the minor upon the death of the original owner, unless otherwise provided
for in the policy.
In the case at bar, the insurable interest of respondent's husband in obtaining the health care agreement was
his own health.
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.
The answer in response to the question relating to the medical history of the applicant largely depends on
opinion rather than fact, especially coming from respondent's husband who was not a medical doctor.
Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive
will not avoid a policy even though they are untrue.
The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance
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.
P.D. 612 Insurance Code
Sec. 27
Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of
insurance.
cancellation of health care agreements as in insurance policies require the concurrence of the following
conditions: - none of these was made
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds
mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in the policy;
4. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of
insured, to furnish facts on which cancellation is based.
When the terms of insurance contract contain limitations on liability, courts should construe them in such a
way as to preclude the insurer from non-compliance with his obligation.
Being a contract of adhesion, the terms of an insurance contract are to be construed strictly against the party
which prepared the contract - the insurer.
(U)nder the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve
months from the date of issuance of the Agreement within which to contest the membership of the patient if he
had previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick of
diabetes or hypertension. The periods having expired, the defense of concealment or misrepresentation no
longer lie.
2. YES.
P.D. 612 Insurance Code
Sec. 10
Sec. 10. Every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for education or support, or in whom he has a
pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money, respecting property or service, of
which death or illness might delay or prevent the performance; and
(4) of any person upon whose life any estate or interest vested in him depends.
not the legal wife (deceased was previously married to another woman who was still alive)
health care agreement is in the nature of a contract of indemnity.
payment should be made to the party who incurred the expenses
Finman General Assurance Corporation vs. Court of Appeals [GR 138737, 12 July 2001] First Division,
Kapunan (J): 4 concur
Facts: On 15 September 1981, Usiphil Incorporated obtained a fire insurance policy from Finman General
Assurance Corporation (then doing business under the name Summa Insurance Corporation) covering certain
properties, e.g., office, furniture, fixtures, shop machinery and other trade equipment. Under Policy F3100
issued to Usiphil, Finman undertook to indemnify Usiphil for any damage to or loss of said properties arising
from fire. Sometime in 1982, Usiphil filed with Finman an insurance claim amounting to P987,126.11 for the
loss of the insured properties due to fire. Acting thereon, Finman appointed Adjuster H.H. Bayne to undertake
the valuation and adjustment of the loss. H.H. Bayne then required Usiphil to file a formal claim and submit
proof of loss. In compliance therewith, Usiphil submitted its Sworn Statement of Loss and Formal Claim, dated
22 July 1982, signed by Reynaldo Cayetano, Usiphil's Manager. Usiphil likewise submitted Proof of Loss signed
by its Accounting Manager Pedro Palallos and countersigned by H.H. Bayne's Adjuster F.C. Medina. Palallos
personally followed-up Usiphil's claim with Finman's President Joaquin Ortega. During their meeting, Ortega
instructed their Finance Manager, Rosauro Maghirang, to reconcile the records. Thereafter, Maghirang and
Palallos signed a Statement/Agreement, dated 28 February 1985, which indicated that the amount due Usiphil
was P842,683.40. Despite repeated demands by Usiphil, Finman refused to pay the insurance claim. Thus,
Usiphil was constrained to file a complaint against Finman for the unpaid insurance claim. In its Answer,
Finman maintained that the claim of Usiphil could not be allowed because it failed to comply with Policy
Condition 13 regarding the submission of certain documents to prove the loss. Trial ensued. On 6 July 1994,
the trial court rendered judgment in favor of Usiphil. It ordered Finman to pay Usiphil the sum of P842,683.40
and to pay 24% interest per annum from 28 February 1985 until fully paid; the sum equivalent to 10% of the
principal obligation as and for attorney's fees, plus P1,500.00 per court appearance of counsel; the amount of
P30,000.00 as exemplary damages in addition to the actual and compensatory damages awarded. The court
also dismissed the claim of P30,000.00 for actual damages under par. 4 of the prayer, since the actual damages.
has been awarded under par. 1 of the decision's dispositive portion; dismissed the claim of interest under par.
2 of the prayer, there being no agreement to such effect; dismissed the counter-claim for lack of merit; and
ordered Finman to pay the cost of suit. On appeal, the CA substantially affirmed the decision of the trial court.
The appellate court modified the decision by ordering Finman to pay Usiphil the sum of P842,683.40 and to
pay 24% interest per annum from 3 May 1985 until fully paid. Finman filed the petition for review on
certiorari.
Issue [1]: Whether Usiphil has complied with Policy Condition 13 in notifying Finman of the loss.
Held [1]: YES. Usiphil had substantially complied with Policy Condition 13 which reads "The insured shall give
immediate written notice to the Company of any loss, protect the property from further damage, forthwith
separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete
inventory of the destroyed, damaged, and undamaged property, showing in detail quantities, costs, actual cash
value and the amount of loss claimed; AND WITHIN SIXTY DAYS AFTER THE LOSS, UNLESS SUCH TIME IS
EXTENDED IN WRITING BY THE COMPANY, THE INSURED SHALL RENDER TO THE COMPANY A PROOF OF
LOSS, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following:
the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value
of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance,
whether valid or not, covering any of said property, any changes in the title, use, occupation, location,
possession or exposures of said property since the issuing of this policy by whom and for what purpose any
buildings herein described and the several parts thereof were occupied at the time of loss and whether or not
it then stood on leased ground, and shall furnish a copy of all the descriptions and schedules in all policies, and
if required verified plans and specifications of any building, fixtures, or machinery destroyed or damaged. The
insured, as often as may be reasonably required, shall exhibit to any person designated by the company all that
remains of any property herein described, and submit to examination under oath by any person named by the
Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination
all books of account, bills, invoices, and other vouchers or certified copies thereof if originals be lost, at such
reasonable time and place as may be designated by the Company or its representative and shall permit
extracts and copies thereof to be made. No claim under this policy shall be payable unless the terms of this
condition have been complied with." A perusal of the records shows that Usiphil, after the occurrence of the
fire, immediately notified Finman thereof. Thereafter, Usiphil submitted the following documents: (1) Sworn
Statement of Loss and Formal Claim and; (2) Proof of Loss. The submission of these documents constitutes
substantial compliance with the above provision. Indeed, as regards the submission of documents to prove
loss, substantial, not strict as urged by Finman, compliance with the requirements will always be deemed
sufficient. In any case, Finman itself acknowledged its liability when through its Finance Manager, Rosauro
Maghirang, it signed the document indicating that the amount due Usiphil is P842,683.40. Issue [2]: Whether
the payment of 24% interest per annum is authorized by Sections 243 and 244 of the Insurance Code. Held [2]:
YES. Anent the payment of 24% interest per annum computed from 3 May 1985 until fully paid, the same is
authorized by Sections 243 and 244 of the Insurance Code. Notably, under Section 244, a prima facie evidence
of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within
the time fixed in both Sections 243 and 244. Further, Section 29 of the policy itself provides for the payment of
such interest: "Settlement of claim clause. The amount of any .loss or damage for which the company may be
liable, under this policy shall be paid within thirty days after proof of loss is received by the company and
ascertainment of the loss or damage is made either in an agreement between the insured and the company or
by arbitration; but if such ascertainment is not had or made within sixty days after such receipt by the
company of the proof of loss, then the loss or damage shall be paid within ninety days after such receipt.
Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect
interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by
the Monetary Board. unless such failure or refusal to pay is based on the grounds (sic) that the claim is
fraudulent." The policy itself obliges Finman to pay the insurance claim within 30 days after proof of loss and
ascertainment of the loss made in an agreement between Usiphil and Finman. Finman and Usiphil signed the
agreement indicating that the amount due Usiphil was P842,683.40 on 2 April 1985. Finman thus had until 2
May 1985 to pay Usiphil's insurance. For its failure to do so, the Court of Appeals and the trial court rightfully
directed Finman to pay, inter alia, 24% interest per annum in accordance with the above quoted provisions.
DELSAN TRANSPORT LINES, INC. VS. CA ET.AL.
G.R. No.127897, November 15, 2001
Facts: Caltex Phil. entered into a contract of affreightment with the petitioner, Delsan Transport Lines, Inc. for
a period of one year whereby the petitioner agreed to transport Caltex industrial fuel oil from Batangas
refinery to different parts of the country. On August 14, 1986, MT Maysun set sail for Zamboanga City but
unfortunately the vessel in the early morning of August 16, 1986 near Panay Gulf. The shipment was insured
with the private respondent, American Home Assurance Corporation. Subsequently, private respondent paid
Caltex the sum of Php.5,096,635.57. Exercising its right of subrogation under Art. 2207, NCC, the private
respondent demanded from the petitioner the same amount paid to Caltex. Due to its failure to collect from the
petitioner, private respondent filed a complaint with the RTC of Makati City but the trial court dismissed the
complaint, finding the vessel to be seaworthy and that the incident was due to a force majeure, thus exempting
the petitioner from liability. However, the decision of the trial court was reversed by the CA, giving credence to
the report of PAGASA that the weather was normal and that it was impossible for the vessel to sink.
Issue: Whether or not the payment made by private respondent for the insured value of the lost cargo
amounted to an admission that the vessel was seaworthy, thus precluding any action for recovery against the
petitioner.
Held: The payment by the private respondent for the insured value of the lost cargo operates as waiver of its
right to enforce the term of the implied warranty against Caltex under the marine insurance policy. However,
the same cannot be validly interpreted as an automatic admission of the vessel’s seaworthiness by the private
respondent as to foreclose recourse against the petitioner for any liability under its contractual obligation as
common carrier. The fact of payment grants the private respondent subrogatory right which enables it to
exercise legal remedies that otherwise be available to Caltex as owner of the lost cargo against the petitioner
common carrier.
PRUDENTIAL GUARANTEE and ASSURANCE INC., vs. TRANS-ASIA SHIPPING LINES, INCG.R. No. 151890
June 20, 2006
a warranty is a statement or promise set forth in the policy, or b y r e f e r e n c e incorporated therein, the
untruth or non-fulfillment of which in any respect, and without reference to whetherthe insurer was in fact
prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer.However it must be
first duly proven by the one who alleges that there was a breach of warranty.
Facts:
TRANS-ASIA is the owner of the vessel M/V Asia Korea. In consideration of payment of premiums,
PRUDENTIAL insuredM/V Asia Korea for loss/damage of the hull and machinery arising from perils, inter alia,
of fire and explosion for thesum of P40 Million, beginning from the period of July 1, 1993 up to July 1, 1994.On
October 25, 1993, while the policy was in force, a fire broke out while [M/V Asia Korea was] undergoing
repairs atthe port of Cebu. On October 26, 1993 TRANS- ASIA filed its notice of claim for damage sustained by
the vessel evidenced by a letter/formal claim. TRANS-ASIA reserved its right to subsequently notify
PRUDENTIAL as to the fullamount of the claim upon final survey and determination by average adjuster
Richard Hogg International (Phil.) of thedamage sustained by reason of fire. TRANS-ASIA executed a document
denominated "Loan and Trust receipt", a portion of which states that “Receivedfrom Prudential Guarantee and
Assurance, Inc., the sum of PESOS THREE MILLION ONLY (P3,000,000.00) as a loanwithout interest under
Policy No. MH 93/1353 [sic], repayable only in the event and to the extent that any net recoveryis made by
TransAsia Shipping Corporation, from any person or persons, corporation or corporations, or other parties,on
account of loss by any casualty for which they may be liable occasioned by the 25 October 1993: Fire on
Board."PRUDENTIAL later on denied Trans-Asia’s claim in stated in a letter that "After a careful review and
evaluation of yourclaim arising from the abovecaptioned incident, it has been ascertained that you are in
breach of policy conditions,among them "WARRANTED VESSEL CLASSED AND CLASS MAINTAINED".
Accordingly, we regret to advise that yourclaim is not compensable and hereby DENIED." and asked for the
return of the 3,000,000. TRANS-ASIA filed a Complaint for Sum of Money against PRUDENTIAL with the RTC of
Cebu City, wherein TRANS-ASIAsought the amount of P8,395,072.26 from PRUDENTIAL, alleging that the same
represents the balance of the indemnity due upon the insurance policy in the total amount of P11,395,072.26.
TRANS-ASIA similarly sought interestat 42% per annum citing Section 243 of Presidential Decreee No. 1460,
otherwise known as the "Insurance Code," asamended.PRUDENTIAL denied the material allegations of the
Complaint and interposed the defense that TRANS-ASIA breachedinsurance policy conditions, in particular:
PRUDENTIAL posits that TRANS- ASIA violated an express and material warranty in the subject insurance
contract, i.e., Marine Insurance Policy No. MH93/1363, specifically Warranty ClauseNo. 5 thereof, which stipul
ates that the insured vessel, "M/V ASIA KOREA" is required to be CLASSED AND CLASS MAINTAINED.
According to PRUDENTIAL, on 25 October 1993, or at the time of the occurrence of the fire, "M/V ASIAKOREA"
was in violation of the warranty as it was not CLASSED AND CLASS MAINTAINED. PRUDENTIAL submits that
Warranty Clause No. 5 was a condition precedent to the recovery of TRANS-ASIA under the policy, the
violation of which entitled PRUDENTIAL to rescind the contract under Sec. 74 of the Insurance Code. By way of
a counterclaim,PRUDENTIAL sought a refund of P3,000,000.00, which it allegedly advanced to TRANS-ASIA by
way of a loan withoutinterest and without prejudice to the final evaluation of the claim, including the amounts
of P500,000.00, for surveyfees and P200,000.00, representing attorney’s fees. Trial court ruled in favor of
Prudential. It ruled that a determination of the parties’ liabilities hinged on whether TRANS-ASIA violated and
breached the policy conditi ons on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED. Itinterpreted
the provision to mean that TRANS-ASIA is required to maintain the vessel at a certain class at all
timespertinent during the life of the policy. According to the court a quo, TRANS- ASIA failed to prove
compliance of the terms of the warranty, the violation thereof entitled PRUDENTIAL to rescind the contract.
The court of appeals reversed the decision. It ruled that PRUDENTIAL, as the party asserting the non-
compensability of the loss had the burden of proof to show that TRANS-ASIA breached the warranty, which
burden it failed to discharge.P R U D E N T I A L cannot rely on the lack of certification to the effect that TRANS-
ASIA w a s C L A S S E D A N D C L A S S MAINTAINED as its sole basis for reaching the conclusion that the
warranty was breached. It opined that the lack of acertification does not necessarily mean that the warranty
was breached by TRANS- ASIA. Instead, it consi deredPRUDENTIAL’s admission that at the time the insurance
contract was entered into between the parties, the vessel wasproperly classed by Bureau Veritas, a
classification society recognized by the industry. It similarly gave weight to thef a c t t h a t i t w a s t h e
responsibility of Richards Hogg International (Phils.) Inc., the a v e r a g e a d j u s t e r h i r e d b y
PRUDENTIAL, to secure a copy of such certification to support its conclusion that mere absence of a
certification doesnot warrant denial of TRANSASIA’s claim under the insurance policy. Issue: WON Trans-Asia
breached the warranty stated in the insurance policy, thus absolving Prudential from paying Trans-Asia.
Ruling: No.Rationale:A s f o u n d b y t h e C o u r t o f A p p e a l s a n d a s s u p p o r t e d b y the records,
Bureau Veritas is a classification society recognized in the marine industry. As it is undisputed that TRANS-
ASIA was properly classed at the time the contract of insurance was entered into, thus , it becomes incumbent
upon PRUDENTIAL to show evidence that the statusof TRANSASIA as being properly CLASSED by Bureau
Veritas had shifted in violation of the warranty.
Unfortunately, PRUDENTIAL failed to support the allegation. The lack of a certification in PRUDENTIAL’s
records to the effect that TRANS-ASIA’s "M/V Asia Korea" was CLASSED ANDCLASS MAINTAINED at the time
of the occurrence of the fire cannot be tantamount to the conclusion that TRANS-ASIAin fact breached the
warranty contained in the policy.It was likewise the responsibility of the average adjuster, Richards Hogg
International (Phils.), Inc., to secure a copy of such certification, and the alleged breach of TRANS- ASIA cannot
be gleaned from the average adjuster’s survey report , or adjustment of particular average per "M/V Asia
Korea" of the 25 October 1993 fire on board. The Supreme Court is not unmindful of the clear language of Sec.
74 of the Insurance Code which provides that ,"the violation of a material warranty, or other material
provision of a policy on the part of either party thereto, entitles the other to rescind." It is generally accepted
that "a warranty is a statement or promiseset forth in the policy, or by reference incorporated therein, the
untruth or non- fulfillment of which inany respect, and without reference to whether the insurer was in fact
prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer." However, it is
similarly indubitable that for the breach of a warranty to avoid a policy, the same must be dulys h o w n b y t h
e party alleging the same. We cannot sustai n an allegation that is unfounded. Consequently, PRUDENTIAL, not
having shown that TRANS-ASIA breached the warranty condition, CLASSED AND CLASSMAINTAINED, it
remains that TRANS-ASIA must be allowed to recover its rightful claims on the policy. Assuming arguendo that
TRANS- ASIA violated the policy condi tion on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED,
PRUDENTIAL made a valid waiver of the same.PRUDENTIAL can be deemed to have made a valid waiver of
TRANSASIA’s breach of warranty as alleged. Becauseafter the loss, Prudential renewed the insurance policy of
Trans-Asia for two (2) consecutive years, from noon of 01 July1994 to noon of 01 July 1995, and then again
until noon of 01 July 1996. This renewal is deemed a waiver of anybreach of warranty.PRUDENTIAL, in
renewing TRANS-ASIA’s insurance policy for two consecutive years after the loss covered by Policy
No.MH93/1363, was considered to have waived TRANS-ASIA’s breach of the subject warranty, if any. Breach
of a warrantyor of a condi tion renders the contract defeasible at the option of the insurer; but if he so elects,
he may waive his privilege and power to rescind by the mere expression of an intention so to do. In that event
his liability under thepolicy continues as before. There can be no clearer intention of the waiver of the alleged
breach than the renewal of the policy insurance granted by PRUDENTIAL to TRANS-ASIA in MH94/1595 and
MH95/1788, issued in the years 1994and 1995, respectively.
PRUDENTIAL GUARANTEE and ASSURANCE INC., vs. TRANS-ASIA SHIPPING LINES, INC
[G.R. No. 151890; June 20, 2006]
Principle found in the case: Section 343 and 344 applies when there is unreasonable delay or refusal in the
payment of the insurance claims which could force the insured to file a case thus entitling him of attorney’s
fees.
Facts:
TRANS-ASIA is the owner of the vessel M/V Asia Korea. In consideration of payment of premiums,
PRUDENTIAL insured M/V Asia Korea for loss/damage of the hull and machinery arising from perils, inter alia,
of fire and explosion for the sum of P40 Million, beginning from the period of July 1, 1993 up to July 1, 1994.On
October 25, 1993, while the policy was in force, a fire broke out while [M/V Asia Korea was] undergoing
repairs at the port of Cebu. On October 26, 1993 TRANS-ASIA filed its notice of claim for damage sustained by
the vessel evidenced by a letter/formal claim. TRANS-ASIA reserved its right to subsequently notify
PRUDENTIAL as to the full amount of the claim upon final survey and determination by average adjuster
Richard Hogg International (Phil.) of the damage sustained by reason of fire. TRANS-ASIA executed a
document denominated “Loan and Trust receipt”, a portion of which states that “Received from Prudential
Guarantee and Assurance, Inc., the sum of PESOS THREE MILLION ONLY (P3,000,000.00) as a loan without
interest under Policy No. MH 93/1353 [sic], repayable only in the event and to the extent that any net recovery
is made by Trans-Asia Shipping Corporation, from any person or persons, corporation or corporations,
or other parties, on account of loss by any casualty for which they may be liable occasioned by the 25 October
1993: Fire on Board. “PRUDENTIAL later on denied Trans-Asia’s claim in stated in a letter that “After a careful
review and evaluation of your claim arising from the above-captioned incident, it has been ascertained that
you are in breach of policy conditions, among them “WARRANTED VESSEL CLASSED AND CLASS
MAINTAINED”. Accordingly, we regret to advise that your claim is not compensable and hereby DENIED.” and
asked for the return of the 3,000,000. TRANS-ASIA filed a Complaint for Sum of Money against PRUDENTIAL
with the RTC of Cebu City, wherein TRANS-ASIA sought the amount of P8,395,072.26 from PRUDENTIAL,
alleging that the same represents the balance of the indemnity due upon the insurance policy in the total
amount of P11,395,072.26. TRANS-ASIA similarly sought interest at 42% per annum citing Section 243 of
Presidential Decree No. 1460, otherwise known as the “Insurance Code,” as amended. PRUDENTIAL denied the
material allegations of the Complaint and interposed the defense that TRANS-ASIA breached
insurance policy conditions, in particular: PRUDENTIAL posits that TRANS-
ASIA violated an express and material warranty in the subject insurance contract, i.e., Marine Insurance Policy
No. MH93/1363, specifically Warranty Clause No. 5 thereof, which stipulates that the insured vessel, “M/V
ASIA KOREA” is required to be CLASSED AND CLASS MAINTAINED. According to PRUDENTIAL, on 25 October
1993, or at the time of the occurrence of the fire, “M/V ASIA KOREA” was in violation of the warranty as it was
not CLASSED AND CLASS MAINTAINED. PRUDENTIAL submits that Warranty Clause No. 5 was a condition
precedent to the recovery of TRANS-ASIA under the policy, the violation of which entitled PRUDENTIAL to
rescind the contract under Sec. 74 of the Insurance Code. By way of a counterclaim, PRUDENTIAL sought a
refund of P3,000,000.00, which it allegedly advanced to TRANS-ASIA by way of a loan without interest and
without prejudice to the final evaluation of the claim, including the amounts of P500,000.00, for survey fees
and P200,000.00, representing attorney’s fees. Trial court ruled in favor of Prudential. It ruled that a
determination of the parties’ liabilities hinged on whether TRANS-ASIA violated and breached
the policy conditions on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED. It interpreted the
provision to mean that TRANS-ASIA is required to maintain the vessel at a certain class at all times pertinent
during the life of the policy. According to the court a quo, TRANS-ASIA failed to prove compliance of the terms
of the warranty, the violation thereof entitled PRUDENTIAL to rescind the contract. The court of appeals
reversed the decision. It ruled that PRUDENTIAL, as the party asserting the non-compensability of the loss
had the burden of proof to show that TRANS-ASIA breached the warranty, which burden it failed
to discharge.It considered PRUDENTIAL’s admission that at the time the insurance contract was entered into
between the parties, the vessel was properly classed by Bureau Veritas, a classification society recognized by
the industry. It similarly gave weight to the fact that it was the responsibility of Richards Hogg International
(Phils.) Inc., the average adjuster hired by PRUDENTIAL, to secure a copy of such certification to support its
conclusion that mere absence of a certification does not warrant denial of TRANS-ASIA’s claim under the
insurance policy.Also the C.A. ruled that TRANS-ASIA is entitled to the unpaid claims covered by Marine Policy,
or a total amount of P8,395,072.26 however even if there was unreasonable denial or withholding of
the payment of the claims due Trans-Asia is still not entitled to pay for attorney’s fees for it can only
be awarded in the cases enumerated in Article 2208 of the Civil Code. But Trans-Asia is entitled to double
interest on the policy for the duration of the delay of payment of the unpaid balance, citing Section 244 of the
Insurance Code.
Issue:
WON Prudential should pay Trans-Asia the unpaid claims covered by the marine policy including attorney’s
fees.
Ruling:
Yes
Rationale:
Sec. 244 of the Insurance Code grants damages consisting of attorney’s fees and other expenses incurred by
the insured after a finding by the Insurance Commissioner or the Court, as the case may be,of an unreasonable
denial or withholding of the payment of the claims due. Moreover, the law imposes an interest of twice the
ceiling prescribed by the Monetary Board on the amount of the claim due the insured from the date following
the time prescribed in Section 242 or in Section 243, as the case may be,until the claim is fully satisfied. Finally,
Section 244 considers the failure to pay the claims within the time prescribed in Sections 242 or 243, when
applicable, as prima facie evidence of unreasonable delay in payment.
To the mind of this Court, Section 244 does not require a showing of bad faith in order that attorney’s fees
be granted.As earlier stated, under Section 244, a prima facie evidence of unreasonable delay in payment of the
claim is created by failure of the insurer to pay the claim within the time fixed in both Sections 242 and 243
of the Insurance Code.
As established in Section 244, by reason of the delay and the consequent filing of the suit by the insured, the
insurers shall be adjudged to pay damages which shall consist of attorney’s fees and other expenses incurred
by the insured.
Section 244 reads:
“In case of any litigation for the enforcement of any policy or contract of insurance, it shall be the duty of the
Commissioner or the Court, as the case may be, to make a finding as to whether the payment of the claim of
theinsured has been unreasonably denied or withheld; and in the affirmative case, the insurance company
shall beadjudged to pay damages which shall consist of attorney’s fees and other expenses incurred by the
insured personby reason of such unreasonable denial or withholding of payment plus interest of twice the
ceiling prescribed by theMonetary Board of the amount of the claim due the insured, from the date following
the time prescribed in sectiontwo hundred forty-two or in section two hundred forty-three, as the case may be,
until the claim is fully satisfied;Provided, That the failure to pay any such claim within the time prescribed in
said sections shall be considered primafacie evidence of unreasonable delay in payment.”
Sections 243 and 244 of the Insurance Code apply when the court finds an unreasonable delay or refusal in the
payment of the insurance claims.
In the case at bar, the facts as found by the Court of Appeals, and confirmed by the records show that there was
an unreasonable delay by PRUDENTIAL in the payment of the unpaid balance of P8,395,072.26 to TRANS-
ASIA. On 26 October 1993, a day after the occurrence of the fire in “M/V Asia Korea”, TRANS-ASIA filed its
notice of claim. On 13 August 1996, the adjuster, Richards Hogg International (Phils.), Inc., completed its
survey report recommending the amount of P11,395,072.26 as the total indemnity due to TRANS-ASIA. On 21
April 1997, PRUDENTIAL, in a letter addressed to TRANS-ASIA denied the latter’s claim for the amount of
P8,395,072.26 representing the balance of thetotal indemnity. On 21 July 1997, PRUDENTIAL sent a second
letter to TRANS-ASIA seeking a return of the amount of P3,000,000.00. On 13 August 1997, TRANS-ASIA was
constrained to file a complaint for sum of money against PRUDENTIAL praying, inter alia, for the sum
of P8,395,072.26 representing the balance of the proceeds of the insurance claim.As can be gleaned from the
foregoing, there was an unreasonable delay on the part of PRUDENTIAL to pay TRANS-ASIA, as in fact, it
refuted the latter’s right to the insurance claims, from the time proof of loss was shown and the
ascertainment of the loss was made by the insurance adjuster. Evidently, PRUDENTIAL’s unreasonable delay in
satisfying TRANS-ASIA’s unpaid claims compelled the latter to file a suit for collection.Succinctly, an award
equivalent to ten percent (10%) of the unpaid proceeds of the policy as attorney’s fees to TRANS-ASIA is
reasonable under the circumstances, or otherwise stated, ten percent (10%) of P8,395,072.26. In the case
of Cathay Insurance, Co., Inc. v. Court of Appeals, where a finding of an unreasonable delay under Section 244
of the Insurance Code was made by this Court, we grant an award of attorney’s fees equivalent to ten percent
(10%) of the total proceeds. We find no reason to deviate from this judicial precedent in the case at bar.
Aboitiz Shipping Corp. V. Insurance Co. Of North America (2008)
G.R. No. 168402 August 6, 2008
Lessons Applicable: Insurer's right of subrogration (Insurance)
FACTS:
June 20, 1993: MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS)
procured an "all-risk" marine insurance policy from ICNA UK Limited of London for wooden work tools and
workbenches purchased by consignee Science Teaching Improvement Project (STIP), Ecotech Center, Sudlon
Lahug, Cebu City.
July 26, 1993: the cargo was received by Aboitiz Shipping Corporation (Aboitiz) through its duly authorized
booking representative, Aboitiz Transport System
August 1, 1993: container van was loaded on board MV Super Concarrier I
The vessel left Manila en route to Cebu City
August 3, 1993: shipment arrived in Cebu City
August 5, 1993: Stripping Report, checker noted that the crates were slightly broken or cracked at the bottom
August 11, 1993: cargo was withdrawn by the representative of the consignee, Science Teaching Improvement
Project (STIP) and delivered to Don Bosco Technical High School, Punta Princesa, Cebu City
August 13, 1993: Mayo B. Perez, Head of Aboiti received a call from the receiver Mr. Bernhard Willig that
the cargo sustained water damage so he checked the other cargo but they were dry
In a letter dated August 15, 1993, Willig informed Aboitiz that the damage was caused by water entering
through the broken bottom parts of the crate
Consignee filed a claim against ICNA
CAC reported to ICNA that the shipment was placed outside the warehouse when it was delivered on July 26,
1993 and it was only on July 31, 1993 when the shipment was stuffed inside another container van for
shipment to Cebu. Weather report shows that the heavy rains on July 28 and 29, 1993 caused the damages.
Aboitiz refused to settle the claim
ICNA paid the amount of P280,176.92 to consignee and a subrogation receipt was duly signed by Willig.
ICNA then advised Aboitiz of the receipt signed in its favor but received no reply so it filed for collection at the
RTC.
RTC: against ICNA - subrogation Form is self-serving and has no probative value since Wellig was not
presented to the witness stand
CA: reversed RTC ruling - right of subrogation accrues simply upon payment by the insurance company of the
insurance claim even assuming that it is an unlicensed foreign corporation
ISSUE: W/N ICNA can claim under the right of subrogation
HELD: YES. CA affirmed.
Only when that foreign corporation is "transacting" or "doing business" in the country will a license be
necessary before it can institute suits. It may, however, bring suits on isolated business transactions, which is
not prohibited under Philippine law
The policy benefits any subsequent assignee, or holder, including the consignee, who may file claims on behalf
of the assured.
Insurance Code
Sec. 57
Sec. 57. A policy may be so framed that it will inure to the benefit of whomsoever, during the continuance of
the risk, may become the owner of the interest insured.
Civil Code
Art. 2207
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrongdoer or the person who has
violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.
This right of subrogation, however, has its limitations.
First, both the insurer and the consignee are bound by the contractual stipulations under the bill of lading
Second, the insurer can be subrogated only to the rights as the insured may have against the wrongdoer. If by
its own acts after receiving payment from the insurer, the insured releases the wrongdoer who caused the loss
from liability, the insurer loses its claim against the latter.
Civil Code
Art. 366
Article 366. Within twenty four hours following the receipt of the merchandise, the claim against the carrier
for damages or average which may be found therein upon opening the packages, may be made, provided that
the indications of the damage or average which give rise to the claim cannot be ascertained from the outside
part of such packages, in which case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be
admitted against the carrier with regard to the condition in which the goods transported were delivered.
The call was made 2 from delivery, a reasonable period considering that the goods could not have corroded
instantly overnight such that it could only have sustained the damage during transit.
Civil Code
Art. 1735
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods
are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as required in Article 1733.
the shipment delivered to the consignee sustained water damage. We agree with the findings of the CA that
petitioner failed to overturn this presumption

UMC VS COUNTRY BANKERS (G.R. NO. 198588 JULY 11, 2012)
United Merchants Corporation vs Country Bankers Insurance Corporation
G.R. No. 198588 July 11, 2012
Facts: Petitioner United Merchants Corporation (UMC) is engaged in the business of buying, selling, and
manufacturing Christmas lights. UMC leased a warehouse at 19-B Dagot Street, San Jose Subdivision, Barrio
Manresa, Quezon City, where UMC assembled and stored its products. On 6 September 1995, UMCs General
Manager Alfredo Tan insured UMCs stocks in trade of Christmas lights against fire with defendant Country
Bankers Insurance Corporation (CBIC) for P 15,000,000.00. The Fire Insurance Policy No. F-HO/95-576
(Insurance Policy) and Fire Invoice No. 12959A, valid until 6 September 1996. On 7 May 1996, UMC and CBIC
executed Endorsement F/96-154 and Fire Invoice No. 16583A to form part of the Insurance Policy.
Endorsement F/96-154 provides that UMCs stocks in trade were insured against additional perils, to wit:
typhoon, flood, ext. cover, and full earthquake. The sum insured was also increased to P50,000,000.00 effective
7 May 1996 to 10 January 1997. On 9 May 1996, CBIC issued Endorsement F/96-157 where the name of the
assured was changed from Alfredo Tan to UMC. On 3 July 1996, a fire gutted the warehouse rented by UMC.
CBIC designated CRM Adjustment Corporation (CRM) to investigate and evaluate UMCs loss by reason of the
fire. CBICs reinsurer, Central Surety, likewise requested the National Bureau of Investigation (NBI) to conduct
a parallel investigation. On 6 July 1996, UMC, through CRM, submitted to CBIC its Sworn Statement of Formal
Claim, with proofs of its loss.
Issue: Whether or not UMC is entitled to claim from CBIC the full coverage of its fire insurance policy.
Held: No. Burden of proof is the duty of any party to present evidence to establish his claim or defense by the
amount of evidence required by law, which is preponderance of evidence in civil cases. The party, whether
plaintiff or defendant, who asserts the affirmative of the issue has the burden of proof to obtain a favorable
judgment. Particularly, in insurance cases, once an insured makes out a prima facie case in its favor, the burden
of evidence shifts to the insurer to controvert the insureds prima facie case. In the present case, UMC
established a prima facie case against CBIC. CBIC does not dispute that UMCs stocks in trade were insured
against fire under the Insurance Policy and that the warehouse, where UMCs stocks in trade were stored, was
gutted by fire on 3 July 1996, within the duration of the fire insurance. However, since CBIC alleged an
excepted risk, then the burden of evidence shifted to CBIC to prove such exception.
An insurer who seeks to defeat a claim because of an exception or limitation in the policy has the burden of
establishing that the loss comes within the purview of the exception or limitation. If loss is proved apparently
within a contract of insurance, the burden is upon the insurer to establish that the loss arose from a cause of
loss which is excepted or for which it is not liable, or from a cause which limits its liability.
In Uy Hu & Co. v. The Prudential Assurance Co., Ltd., the Court held that where a fire insurance policy provides
that if the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or
if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit
under this Policy, and the evidence is conclusive that the proof of claim which the insured submitted was false
and fraudulent both as to the kind, quality and amount of the goods and their value destroyed by the fire, such
a proof of claim is a bar against the insured from recovering on the policy even for the amount of his actual
loss.
In the present case, as proof of its loss of stocks in trade amounting to P 50,000,000.00, UMC submitted its
Sworn Statement of Formal Claim together with the following documents: (1) letters of credit and invoices for
raw materials, Christmas lights and cartons purchased; (2) charges for assembling the Christmas lights; and
(3) delivery receipts of the raw materials. However, the charges for assembling the Christmas lights and
delivery receipts could not support its insurance claim. The Insurance Policy provides that CBIC agreed to
insure UMCs stocks in trade. UMC defined stock in trade as tangible personal property kept for sale or traffic.
Applying UMCs definition, only the letters of credit and invoices for raw materials, Christmas lights and
cartons may be considered.
It has long been settled that a false and material statement made with an intent to deceive or defraud voids an
insurance policy.
The most liberal human judgment cannot attribute such difference to mere innocent error in estimating or
counting but to a deliberate intent to demand from insurance companies payment for indemnity of goods not
existing at the time of the fire. This constitutes the so-called fraudulent claim which, by express agreement
between the insurers and the insured, is a ground for the exemption of insurers from civil liability.
BPI & FGI Insurance Corp. vs. LaingoG.R. No. 205206 Mar. 16, 2016
FACTS:
Rheozel
, the son of Yolanda Laingo, opened a “Platinum 2
-in-1 Savings and Insurance
Account” with the Bank of the Philippine Islands, a savings account where depositors are
automatically covered by an insurance policy against disability or death issued by petitionerFGU Insurance
Corporation (FGU Insurance), now known as BPI/MS Insurance Corporation. ABPI Passbook as well as a
Personal Accident Insurance Coverage Certificate was issued toRheozel with Yolanda as the beneficiary. On
September 27, 2000, Rheozel died in a vehicularaccident.
To answer for Rheozel’s burial and funeral expenses, Yolanda instructed hersecretary to inquire from the BPI
about Rheozel’s death.
The BPI Branch Manager
accommodated Yolanda’s request and allowed her to withdraw P995,000.00
from theaccount.
An employee of the BPI also went to Rheozel’s wake to verify some information and
for Yolanda to sign some documents for the withdrawal of the amount. It was only after two
years, when Rheozel’s sister Rhealyn was rearranging Rheozel’ s personal things, that
Rheozel’s Personal Accident Insurance Coverage with FGU Insurance was discovered.
Shepromptly informed Yolanda, who filed a claim for insurance benefits under the policy. Thecompany denied
the claim, stating that Yolanda should have filed the claim within threecalendar months from the death of
Rheozel as required under Paragraph 15 of the PersonalAccident Certificate of Insurance.
ISSUE:
whether or not Laingo, as named beneficiary who had no knowledge of the existenceof the insurance contract,
is bound by the three calendar month deadline for filing a writtennotice of claim upon the death of the insured.
RULING:
No, Laingo is not bound by the 3-calendar rule in filing insurance claims since sheonly learned the existence of
the insurance coverage 2 years from the death of his son.

There is a rationale in the contract of agency, which flows from the "doctrine ofrepresentation," that notice to
the agent is notice to the principal. Here, BPI had beeninformed of Rheozel's death by the latter's family. Since
BPI is the agent of FGU Insurance,then such notice of death to BPI is considered as notice to FGU Insurance as
well. FGUInsurance cannot now justify the denial of a beneficiary's insurance claim for being filed outof time
when notice of death had been communicated to its agent within a few days after thedeath of the depositor-
insured. In short, there was timely notice of Rheozel's death given toFGU Insurance within three months from
Rheozel's death as required by the insurancecompany.Since an agency relationship between BPI (as an agent)
and FGI Insurance (as the principal)was duly established, BPI, as agent of FGU Insurance, had the primary
responsibility to ensurethat the 2-in-1 account be reasonably carried out with full disclosure to the parties
concerned,particularly the beneficiaries. Thus, it was incumbent upon BPI to give proper notice of theexistence
of the insurance coverage and the stipulation in the insurance contract for filing aclaim to Laingo, as Rheoz
el’s beneficiary, upon the latter’s death.
As a general rule, the acts of the agent on behalf of the principal within the scope of thedelegated authority
have the same legal effect and consequence as though the principal hadbeen the one so acting in the given
situation.It is the duty of the agent to act in good faith for the advancement of the interests of theprincipal. In
this case, BPI had the obligation to carry out the agency by informing thebeneficiary, who appeared before BPI
to withdraw funds o
f the insured who was BPI’s
depositor, not only of the existence of the insurance contract but also the accompanying termsand conditions
of the insurance policy in order for the beneficiary to be able to properly andtimely claim the benefit.Thus, BPI
acted as agent of FGU Insurance with respect to the insurance feature of its ownmarketed product.