1.) White Gold Marine Services vs.

Pioneer Insurance and Surety

Corporation and the Steamship Mutual Underwriting Association (G.R. No.
154514, July 28,2005)
FACTS: Herein petitioner White Gold Marine Services, through the Pioneer
Insurance and Surety Corporation, obtained from Steamship Mutual
Underwriting Association a protection and indemnity coverage for its vessels.
Petitioner then, at some time, failed to fully pay its accounts prompting
Steamship to deny renewal of the coverage. Steamship then sought to
recover the unpaid balances of White Gold but the latter led a case before
the Insurance Commission alleging that Steamship was engaging in the
Insurance business without a license and hence, had been violating Sections
186 and 187 of the Insurance Code. Accordingly, included therein is a
complaint against Pioneer Insurance for not having a license as an insurance
agent and/or broker for Steamship. The Insurance Commission dismissed the
complaint on the grounds that Steamship is not engaged in the insurance
business but rather only a Protection and Indemnity Club (P & I Club). Thus, it
only follows that Pioneer need not secure a license as an insurance agent for
Steamship was found to be not engaged in the insurance business. The Court
of Appeals (CA) upheld the Insurance Commissions ruling thus resulting to
this petition before the Supreme Court.
ISSUES: Whether or not (1) Steamship Mutual is engaged in the insurance
business and thus, (2) should Pioneer rst secure a license as an insurance
agent for the former.
HELD: YES, Steamship Mutual is engaged in the insurance business as the
basic test in determining if a contract is an insurance or not is not dependent
on what it is called but rather on the nature of the promise, act required to
be performed, and the exact nature of the agreement in light of the
occurence, contingency, or circumstances under which the performance
becomes a requisite. Steamship Mutual argues that they are only a P& I Club
and not an insurance company. The Court, in ruling in the afrmative,
explained that a P & I Club is a form of insurance against third party liability ,
where the third party is anyone but the members of such club. Hence,
Steamship Mutual as a P & I Club, is a mutual insurance association engaged
in the marine insurance business. It only follows then that Steamship Mutual
had been conducting insurance business here in the Philippines, through its
agent Pioneer, without the requisite certicate of authority from the
Insurance Commission. A contract of insurance is impressed with the public
interest and hence, must be regulated by the State in the exercise of its
police powers. On the other hand, although Pioneer already has a license as
an insurance company, it still has to rst secure another license to act as an
insurance agent for Steamship Mutual.
2.) Fe De Joya Landicho vs. Government Service Insurance System (G.R. No.
L-28866, March 17, 1972)
FACTS: Flaviano Landicho, husband of herein petitioner, obtained from the
Government Service Insurance System (GSIS), an optional additional life
insurance policy in the sum of 7,900. Unfortunately, Flaviano gured in a
plane crash accident. Thus, petitioner and her minor children led with the
GSIS a claim of 15,800PHP as double indemnity under the policy. However,
the GSIS denied the claim stating that the policy had never been in effect for
no payment of premium and been made. According to the GSIS, pursuant to
subdivision (e) of the application, it states that shall be.. effective on the
rst day of the month following the month the rst premium is paid. The
facts, however, disclose that a letter of authority from the application
provides that thru the GSIS to deduct from my salary the monthly
premium. and failure to deduct from my salary the monthly premiums shall
not make the policy lapse , however, the premium account shall be
considered indebtedness which I, the insured, bind myself to pay the
System. The GSIS continuously maintained that these provisions are
inoperative until and unless the contract is effective, that is, on the payment
of the rst premium which indeed had never took place.
ISSUE: Whether or not GSIS shall be made liable despite the conicting
provisions in the insurance contract.
HELD: YES since the ambiguity must be strongly resolved against the party
responsible thereof or the insured, who prepared and furnished the
application form. Accordingly, no such deduction from the salary was made
because the Collecting Ofcer of the GSIS was not advised by the latter to
make the deduction. Also, the GSIS continued to pay dividends to the insured
thus impliedly inducing the latter that the policy is indeed in effect.
3.) Rizal Surety and Insurance Company vs. Court of Appeals and Transworld
Knitting Mills. Inc. (G.R. 112360, July 18, 2000)
FACTS: Herein petitioner Rizal Surety and Insurance Company granted a Fire
Insurance Policy in favor of private respondent Transworld Knitting Mills
initially for 1,000,000 PHP but later on increased to 1,500,000 PHP. The policy
covers a four-span lofty one storey building, the middle portion of which was
later on damaged by a re. The same property was insured under New India
Assurance Company Ltd. The re gutted the middle portion of the 4-span
building but the left and right were not affected. However, a two-storey
building behind the 4-span building, containing fun and amusement machine
and spare parts were stored, was also destroyed by the re. Private
respondent then sought the insurance against the two companies but to no
avail prompting the former to le a legal case with damages against the two.
Petitioner Rizal Insurance argued that the insurance policy covers only the
main 4-span building and not the 2-storey annex building behind it. The trial
court however still ruled in favour of Transworld and this decision was later
on upheld by the Court of Appeals (CA). Aggrieved, petitioner now comes
before the Supreme Court (SC) through this petition.
ISSUE: Whether or not the 2-storey annex building is covered by the
insurance policy so as to make Rizal Surety liable.
HELD: Yes because the factual ndings of the trial court and the CA prove
that the annex building is not really an annex but rather an integral and
inseparable part of the 4-span building. Thus, it only follows that the fun and
amusement machine and spare parts destroyed in the 2-storey building are
covered by the insurance policy. The two-storey building has a permanent
structure which adjoins and intercommunicates with the rst span of the 4-
storey building. Verily, the 2storey building was already existing when the
re insurance policy had been granted. Had petitioners intended to exclude
the 2-storey building and only include the main 4-span building in the
insurance policy, they must have put it into unequivocal and clear terms
since the are fully aware of the existence of such building adjoining and inter
communicating with the right section of the 4-span building. Accordingly, the
SC went on to remind that doubts in insurance contracts must be resolved
against the insurer and liberally in favour of the insured to give effect of the
dominant purpose of indemnity and payment to the insured. Moreover, the
issue as to the existence of insurable interest in the fun and amusement
machines had already been settled with nality in its case against New India.

4.) Great Pacic Life Assurance Corp. vs. Court of Appeals and Medarda V.
Leuterio (G.R No. 113899, October 13, 1999)
FACTS: Great Pacic Life Assurance Corp. (GrePa Life), together with the
Development Bank of the Philippines (DBP), executed a contract of group life
insurance to insure the lives of eligible housing loan mortgagors of DBP. One
Dr. Wilfredo Leuterio who is a physician and a housing debtor of DBP applied
for membership in the group life assurance plan. Dr. Leuterio answered in the
application that he is of good health and thus, had not consulted any
physician regarding any sickness and physical disorder. Unfortunately, Dr.
Leuterio met his death and died due to massive cerebral haemorrhage on
October 20, 1986. Hence, DBP submitted a death claim to GrePa life but the
latter denied the same saying that Dr. Leuterio was not in good physical
condition at the time he applied for the the policy and that he committed
concealment for non-disclosure that he had been suffering from
hypertension. Hence, GrePa life asserts that they are justied in denying the
claim. This prompted the widow of the late doctor to le a case against GrePa
life. Dr. Hernando Mejia, witness for petitioner, was called to testify his
ndings but the trial court ruled that the inference was not conclusive
because Dr. Leuterio was never autopsied thus opening the gate for other
causes of death.
ISSUE: Whether or not Dr. Letuerio indeed concealed that he had
hypertension in the application and thus GrePa life may deny payment.
HELD: No because GrePa life failed to sufciently prove that Dr. Letuterio
fraudulently concealed the fact of hypertension. Concealment, in the words
of the Supreme Court (SC), exists where the assured had knowledge of a
fact material to the risk, and honesty, good faith, and fair dealing requires
that he should communicate to the assured, but he designedly and
intentionally and intentionally withholds the same. Petitioner merely
predicated its case on Dr. Mejias ndings who never autopsied the body of
Dr. Leuterio, but only provided some medical ndings therein coupled with
Dr. Leturios widows statement that her husband may have had possible
hypertension several years ago. The SC ruled that these statements are
mere hearsay, as correctly ruled by the trial court and the CA. Succinctly,
petitioner failed to prove fraud on the part of the deceased in failure to
disclose the possible hypertension, if indeed there was, at the time of the
application. Petitioner raises misrepresentation on the part of the the
deceased and this is an afrmative defense. Hence, the obligation to provide
satisfactory and convincing evidence rests upon the insurer.

5.) Philamcare Health Systems, Inc. vs. Court of Appeals and Julita Trinos
(G.R. No. 125678, March 18, 2002)
FACTS: Ernani Trinos applied for a health care coverage with petitioner
Philamcare Health Systems to which such application was later on approved
entitling the former to avail of hospitalisation benets, out-patient benets,
preventive health care, and other out-patient services. Ernani Trinos however
suffered from a heart attack which later on took his life. Herein private
respondent Julita Trinos, while her husband was still alive, sought from the
petitioner an amount totalling to 75,000 for the hospitalisation expenses but
the latter denied the same. Thus, Julita paid the hospitalisation expenses.
Due to nancial constraints, Ernani had not been given proper medical
attention. He later on died. Private respondent then instituted a complaint
against herein petitioner seeking reimbursement of her expenses and moral
damages suffered from the denial of her claim from petitioner. The trial court
ruled in favour of Julita and on appeal, the Court of Appeals upheld the
former courts ruling. Petitioner avers that the Health Care Agreement is not
an insurance contract for it only covers medical and hospitalisation benets
and are given without any indemnication. Unlike in an insurance contract,
as petitioner aruges, the insured is indemnied for the loss. Petitioner further
attempted to bolster its claim saying that the agreement was for a period of
1 year only as compared to insurance contracts which last longer.
Accordingly, petitioner argues that the husband of private respondent
concealed a material fact in the application.
ISSUE: Whether or not (1) the health care agreement is an insurance contract
and (2) if there was indeed material concealment so as to free petitioner
from liability.
HELD: As to the rst issue, the health care agreement is indeed a contract of
insurance. The Supreme Court (SC) ruled, by citing Sections 2 and 3 of the
Insurance Code, that the insurable interest of respondents husband in
obtaining the health care agreement was his health. Verily, the health care
agreement is in the nature of non-life insurance which is primarily a contract
of indemnity. Thus, when a member incurs a hospital, medical, or other
expenses arising from sickness or other stipulated contingent, the health
care provider must pay to the member to the extent agreed upon the policy.
Tackling the next issue, petitioner cannot escape liability by raising the
defence of misrepresentation. The application form entered by respondents
husband shows that he was required to sign an express authorization for any
person or entity that has record or knowledge of his health to furnish all
necessary information thereof. The records show that Ernani checked no in
a question where he was asked if he or his family members had been
consulted or treated for a certain list of sicknesses. The SC ruled that this is a
question relating to the medical history of the applicant which largely
depends on opinion rather than fact. Hence, answers made in good faith and
without fraudulent intent, although erroneous, will not avoid the policy.
Indeed, fraudulent intent on the part of the insured must be proven to
warrant rescission of the contract. Concealment as a defence for the
petitioner is an afrmative defence which must be proven by satisfactory
evidence by the insurer. Moreover, the Insurance Code requires that the
exercise of the right to rescind must precede any commencement of action
on the basis of the contract. The case at bar shows that no rescission was
made before the commencement of this action by private respondent.
6.) Malayan Insurance Co., Inc., vs. Court of Appeals, Martin Vallejos, Sio
Choy, San Leon Rice Mill Inc., and Pangasinan Transporation Co., Inc., (G.R.
No. L-36413, September 26, 1988)
FACTS: Petitioner Malayan Insurance Co. issued in favour of Sio Choy a
Private Comprehensive Car Policy covering a Willys Jeepney. The coverage
was for own damage not to exceed 600.00PHP and third-party liability in
the amount of 20,000.00PHP. The insured jeep, while being driven by one
Juan P. Campollo who is an employee of respondent San Leon Rice Mill,
gured in an accident with a bus belonging to Pangasinan Transportation Co
(Pantranco). This caused the instantaneous death of the driver while injuries
were suffered by respondent Martin Vallejos who was riding in the jeep.
Martin Vallejos led a claim against Sio Choy, Pantranco, and petitioner. Sio
Choy avers that the comprehensive car policy obligated petitioner to
indemnify him for the 5,000.00 PHP he had paid Vallejos for the
hospitalization. Petitioner then led a complaint against San Leon Rice Mill
for it is the employee of the driver of the jeepney owned by Sio Choy and
hence, should be liable for the acts of its employees. The trial court held that
Sio Choy, San Leon Rice Mill and petitioner are liable solidarity for Vallejos.
This was upheld by the Court of Appeals (CA).
ISSUE: Whether the trial court, as upheld by the Court of Appeals, was
correct in holding petitioner and respondents Sio Choy and San Leon Rice
Mill, Inc. "solidarily liable" to respondent Vallejos.
HELD: NO. Only Sio Choy and San Leon Rice Mill are solidarily liable for the
damages. Petitioner insurance company, in being held liable for
20,000.00PHP, is obligated to pay not more than such amount arising from
the comprehensive car policy with Sio Choy. Alternatively, petitioner Malayan
is liable to Vallejos simply because it is the insurer of Sio Choy but this does
not follow that it may be held solidarity liable with the principal tortfeasors.
The third party liability in the policy of petitioner and Sio Choy is indemnity
for 20,000.00PHP. Hence, in accordance with justice and wellsettled
principles in insurance contracts, petitioner must be held liable for such
amount only. Interestingly, the Supreme Court (SC) further ruled that third
persons may directly sue the insurer in indemnity against liability to third
persons.

7.) American Home Assurance Company vs. Tantuco Enterprises Inc. (G.R.
No. 138941, October 8, 2001)
FACTS: Engaged in the coconut oil milling and rening industry, respondent
Tantuco Enterprises Inc. has two oil mills. One which had already existed
when it started its business operations and a new one in 1988, commonly
referred to as the new oil mill. These two oil mills were separately covered by
re insurance policies issued by petitioner American Home Assurance
Company. The rst oil mill was insured for 3,000,000 PHP while the new oil
mill for 6,000,000 PHP for the same term. A re broke out and consumed the
new oil mill. Respondent immediately informed petitioner of the unfortunate
event but the latter rejected respondents claim alleging that no policy was
issued for the new oil mill since the stated description in the policy pertains
to the description of the old oil mill. They allege that the building covered
was Building No. 5 while the burnt and affected one is Building No. 14.
Hence, a complaint for specic performance and damages was instituted by
respondent against petitioner that later on resulted to judgment in favour of
the former. Such decision was later on upheld by the Court of Appeals (CA).
Petitioner counters that the description
of the specic boundaries issued in the policy pertains in the old oil mill and
not the burned or new one.
ISSUE: Whether or not petitioner must pay to private respondent damage for
loss by re on the new oil mill.
HELD: YES. The Supreme Court (SC) ruled that it is highly inconceivable that
private respondent would insure the old oil mill twice while leaving the new
oil mill uninsured. Furthermore, since examination of building descriptions by
agents are highly susceptible to inaccuracy of description, courts are inclined
to delve into the intention of the insured as to which property is covered. The
policy already contains a categorical statement stating that the new oil mill
is to be insured although the descriptions stated therein are that of the old
oil mill. Accordingly, evidence shows that Mr. Borja of American Home
Assurance assured to Mr. Tantuco that even if there are impreciseness in the
description, what is important is the inclusion of the word new oil mill. The
SC went on to further remind the public that these doubts and ambiguities in
the contracts of insurance must be resolved strongly against the insurer and
liberally in favor of the insured