"INDEMNITY FOR TOTAL OR PARTIAL DISABILITY
G.R. No. L-21821-22 and L-21824-27             May 31, 1966
DIOSDADO C. TY,  and which shall not prove fatal but shall result, independently
vs.
FILIPINAS COMPAÑIA DE SEGUROS, et al
Facts:
Ty was an employee of Broadway Cotton Factory at Grace Park,
Caloocan City, working as mechanic operator. In the latter part of
1953, he took Personal Accident Policies from several insurance
companies, among which are herein defendants-appellees, on
different dates, effective for 12 months.
During the effectivity of these policies, or on December 24, 1953, a
fire broke out in the factory where Ty was working. As he was trying
to put out said fire with the help of a fire extinguisher, a heavy object
fell upon his left hand.
Ty received treatment at the National Orthopedic Hospital from
December 26, 1953 to February 8, 1954, which listed 6 injuries which
injuries, the attending surgeon certified, would cause temporary total
disability of appellant's left hand.
As the insurance companies refused to pay his claim for compensation
under the policies by reason of the said disability of his left hand, Ty
filed motions in the MTC, which rendered favorable decision.
On appeal to the Court of First Instance by the insurance companies,
the cases were dismissed on the ground that under the uniform terms
of the insurance policies, partial disability of the insured caused by
loss of either hand to be compensable, the loss must result in the
amputation of that hand. Hence, these appeals by the insured.
Ty is basing his claim for indemnity under the provision of the
insurance contract, uniform in all the cases, which reads:
If the Insured sustains any Bodily Injury which is effected
solely through violent, external, visible and accidental means,
of all other causes and within sixty (60) days from the
occurrence, thereof, in Total or Partial Disability of the
Insured, the Company shall pay, subject to the exceptions as
provided for hereinafter, the amount set opposite such injury.
PARTIAL DISABILITY
The loss of a hand shall mean the loss, by amputation through
the bones of the wrist.
Ty contends that to be entitled to indemnification under the foregoing
provision, it is enough that the insured is disabled to such an extent
that he cannot substantially perform all acts or duties of the kind
necessary in the prosecution of his business. It is argued that what is
compensable is the disability and not the amputation of the hand. The
definition of what constitutes loss of hand, placed in the contract,
according to appellant, consequently, makes the provision ambiguous
and calls for the interpretation thereof by this Court.
Issue:
Whether or not Ty should be indemnified under his accident policies?
Ruling:
NO. The Court said that while we sympathize with the plaintiff or his
employer, for whose benefit the policies were issued, we can not go
beyond the clear and express conditions of the insurance policies, all
of which definite partial disability as loss of either hand
by amputation through the bones of the wrist. There was no such
amputation in the case at bar. All that was found by the trial court,
which is not disputed on appeal, was that the physical injuries
"caused temporary total disability of plaintiff's left hand." Note that
the disability of plaintiff's hand was merely temporary, having been
caused by fractures of the index, the middle and the fourth fingers of
the left hand.

We might add that the agreement contained in the insurance policies

is the law between the parties. As the terms of the policies are clear,
express and specific that only amputation of the left hand should be
considered as a loss thereof, an interpretation that would include the
mere fracture or other temporary disability not covered by the policies
would certainly be unwarranted.

We find no reason to depart from the foregoing ruling on the matter.

Plaintiff-appellant cannot come to the courts and claim that he was
misled by the terms of the contract. The provision is clear enough to
inform the party entering into that contract that the loss to be
considered a disability entitled to indemnity, must be severance or
amputation of that affected member from the body of the insured.
 SAURA IMPORT & EXPORT CO., INC.,  On October 15, 1954, barely thirteen (13) days after the issuance
vs.
PHILIPPINE INTERNATIONAL SURETY CO., INC., and
PHILIPPINE NATIONAL BANK,
Facts:
Saura Import & Export Co Inc., mortgaged to the Phil. National
Bank, a parcel of land issued in its name, to secure the payment
of promissory note of P27,000.00. Later on, the mortgage was
amended to guarantee an increased amount, bringing the total
mortgaged debt to P37,000.00. The provisions of the mortgaged
contact, pertinent to the resolution of the present case, provide as
follows —
he shall insure the mortgaged property at all times against
fire and earthquake for an amount and with such company
satisfactory to the Mortgagee, indorsing to the latter the
corresponding policies; he shall keep the mortgaged
property in good condition, making repairs and protecting
walls that may be necessary; . . .
A building of strong materials which was also owned by Saura,
was erected on the parcel of land and the building  had always
been covered by insurance even before the execution of the
mortgage contract.
Pursuant to the requirement, Saura insured the building and its
contents with the Philippine International Surety, an insurance
firm acceptable to mortgagee Bank, for P29,000.00 against fire for
the period of one year from October 2, 1954.
As required therefor, the insurance policy was endorsed to the
mortgagee PNB, in a Memo which states —
Loss if any, payable to the Philippine National Bank as
their interest may appear, subject to the terms, conditions
and warranties of this policy.
The policy was delivered to the mortgagee Bank by Saura.
of the fire insurance policy (October 2, 1954), the insurer
cancelled the same, effective as of the date of issue. Notice of the
cancellation was given to appellee bank in writing, and was
received by the Bank on November 8, 1954.
On April 6, 1955, the building and its contents, worth P40,685.69
were burned. On April 11, 1955, Saura filed a claim with the
Insurer and mortgagee Bank.
Upon the presentation of notice of loss with the PNB, Saura
learned for the first time that the policy had previously been
cancelled on October 2, 1954, by the insurer, when Saura's folder
in the Bank's filed was opened and the notice of cancellation
(original and duplicate) sent by the Insurer to the Bank, was
found.
Upon refusal of the Insurer Philippine International Surety to pay
the amount of the insurance, Civil Case No. 26847 was filed with
the Manila CFI against the Insurer, and the PNB was later
included as party defendant, after it had refused to prosecute the
case jointly with Saura Import & Export Co., Inc.
At the trial, it was established that neither the Insurer nor the
mortgagee Bank informed the plaintiff Saura of the cancellation of
the policy.
Issue:
Whether or not there was a proper cancellation of the policy?
Ruling:
No. The policy in question, does not provide for the notice, its
form or period. The Insurance Law, Act No. 2427, does not
likewise provide for such notice. This being the case, it devolves
upon the Court to apply the generally accepted principles of
insurance, regarding cancellation of the insurance policy by the
insurer.

From what has been heretofore stated, actual notice of

cancellation in a clear and unequivocal manner, preferably in
writing, in view of the importance of an insurance contract, should
be given by the insurer to the insured, so that the latter might be
given an opportunity to obtain other insurance for his own
protection. The notice should be personal to the insured and not
to and/or through any unauthorized person by the policy.

In the case at bar, the defendant insurance company, must have

realized the paramount importance of sending a notice of
cancellation, when it sent the notice of cancellation of the policy
to the defendant bank (as mortgagee), but not to the insured with
which it (insurance company) had direct dealing. It was the
primary duty of the defendant-appellee insurance company to
notify the insured, but it did not. It should be stated that the
house and its contents were burned on April 6, 1955, at the time
when the policy was enforced (October 2, 1954 to October 2,
1955); and that under the facts, as found by the trial court, to
which We are bound, it is evident that both the insurance
company and the appellee bank failed, wittingly or unwittingly, to
notify the insured appellant Saura of the cancellation made.