Topic: The Policy Terms of policy constitute the measure of the insurers liability 67.

. Pacific Banking vs Court of Appeals Facts: An open Fire Policy issued to Paramount Shirt Manufacturing for Php61,000 on the following: stocks, materils, supplies, furniture, fixture, machinery, equipment contained on the 1st to 3rd floors. Insurance is for a year starting 21 OCTOBER 1964. Paramount Shirt is debtor of Pacific Banking amounting to Php800,000. Goods in policy were held in trust by Paramount for Pacific under thrust receipts. Fire broke out on 4 January 1964. Pacific sent letter of demand to Oriental. Insurance Adjuster ofOriental notified Pacific to submit proof of loss pursuant to Policy Condition 11. Pacific did not accede but asked Insurance Adjuster to verify records form Bureau of Customs. Pacific filed for sum of money against Oriental. Oriental alleged that Pacific prematurely filed a suit, for neither filing a formal claim over loss pursuant to policy nor submitting any proof of loss. Trial court decided in favor of Pacific. Decision based on technicality. The defense of lack of proof of loss and defects were raised for the 1st time. (On presentation of evidences by Pacific, it was revealed there was violation of Condition No.3, there were undeclared co-insurances under same property Wellington, Empire, Asian. The only declared co-insurances were Malayan, South Sea, and Victory) CA reversed decision. Concealment of other co-insurances is a misrepresentation and can easily be fraud.

68. Oriental Assurance v. Court of Appeals Facts: Panama bought, in Palawan, 1,208 pieces of apitong logs, with a total volume of 2,000 cubic meters. It hired Transpacific Towage, Inc., to transport said logs by sea to Manila and insured it against loss for P1-M with Oriental Assurance. The policy was issued. It is stipulated there, among others, that the subject matter insured is 2,000 cubic meters of apitong logs and that the vessels to be utilized are the following: MT. 'Seminole', Barge PCT-7000 for the 1,000 cubic meter of apitong logs and Barge Transpac-1000 for the other 1,000 cubic meter of apitong logs. It is also stipulated in the policy that the insurance is against TOTAL LOSS only, and it is subject to the following clauses, to wit: Civil Code Article 1250 Waiver clause, Typhoon warranty clause, and Omnibus clause. The logs were loaded on the 2 barges: (1) on barge PCT-7000, 610 pieces of logs with a volume of 1,000 cubicmeters; and (2) on Barge TPAC-1000, 598 pieces of logs, also with a volume of 1,000 cubic meters. On 28 January 1986, the 2 barges were towed by MT 'Seminole'(tugboat), during the voyage, rough seas and strong winds caused damage to Barge TPAC-1000 resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon. Panama demanded payment for the loss but Oriental Assurance refused on the ground that its contracted liability was for "TOTAL LOSS ONLY." Consequently, Panama filed a Complaint for Damages against Ever Insurance Agency (allegedly, also liable), Benito Sy Lee Yong and Oriental Assurance, before the RTC-Kalookan. RTC rendered a decision ordering Oriental Assurance to pay Panama P415,000.00 as insurance indemnity. Both parties appealed. The appellate court affirmed the RTC decision. Both RTC and CA shared the view that the insurance contract should be liberally construed in order to avoid a denial of substantial justice; that the logs loaded in the two barges should be treated separately such that the loss sustained by the shipment in one of them may be considered as "constructive total loss" and correspondingly compensable. Hence, this petition.

Issue/Held: Whether the insured can recover having violated or failed to perform the conditions under No.3 and 11 of the contract, and such has not been waived by the insurer NO

Ratio: Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. The parties have a right to impose such reasonable conditions at the time of the making of the contract as they may deem wise and necessary. The agreement has the force of law between the parties. The terms of the policy constitute the measure of the insurers liability and in order to recover, the insured must show himself within those terms. The compliance of the insured with the term of the policy is a condition precedent to the right of recovery.

Issue/Ratio: Ratio: The SC held that the terms of the contract constitute the measure of the insurers liability and compliance therewith is a condition precedent to the insured's right to recovery from the insurer. That whether a contract is entire or severable is a question of intention to be determined by the language employed by the parties. The policy in question shows that the subject matter insured was the entire Is Oriental Assurance liable - NO

shipment of 2,000 cubic meters of apitong logs. The fact that the logs were loaded on two different barges did not make the contract several and divisible as to the items insured. The logs on the two barges were not separately valued or separately insured. Only one premium was paid for the entire shipment, making for only one cause or consideration. The insurance contract must, therefore, be considered indivisible. The law provides that a constructive total loss, is one which gives to a person insured by a contract of marine insurance a right to abandon thing insured, or any particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril injured against: (a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from the peril; (b) If it is injured to such an extent as to reduce its value more than three-fourths. The logs involved, although placed in two barges, were not separately valued by the policy, nor separately insured. Resultantly, the logs lost in barge TPAC-1000 in relation to the total number of logs loaded on the same barge cannot be made the basis for determining constructive total loss. The logs having been insured as one inseparable unit, the correct basis for determining the existence of constructive total loss is the totality of the shipment of logs. Of the entirety of 1,208, pieces of logs, only 497 pieces thereof were lost or 41.45% of the entire shipment. Since the cost of those 497 pieces does not exceed 75% of the value of all 1,208 pieces of logs, the shipment cannot be said to have sustained a constructive total loss. Hence, no recovery can be had against Oriental Assurance. The latter has no liability under the policy.

After an investigation conducted by the Pasay police authorities, the driver Magalong and guard Atiga were charged, together with Edelmer Bantigue Y Eulalio, Reynaldo Aquino and John Doe, with violation of PD 532 (Anti-Highway Robbery Law) before the Fiscal of Pasay City. The Fiscal of Pasay City then filed an information charging the aforesaid persons with the said crime before Branch 112 of the Regional Trial Court of Pasay City. The case is still being tried as of the date of filing of the present case. Demands were made by Producers upon Fortune to pay the amount of the loss of P725,000.00, but the latter refused to pay as the loss is excluded from the coverage of the insurance policy, specifically under page 1 thereof, "General Exceptions" Section (b), and which reads as follows: "GENERAL EXCEPTIONS The company shall not be liable under this policy in respect of xxx (b)any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others..." Producers opposed the contention of Fortune and contended that Atiga and Magalong are not its "officer, employee, trustee or authorized representative at the time of the robbery. On 26 April 1990, the trial court rendered its decision in favor of Producers. It ordered Fortune to pay Producers the net amount ofP540,000.00 as liability under Policy 0207 (as mitigated by the P40,000.00 special clause deduction and by the recovered sum of P145,000.00), with interest thereon at the legal rate, until fully paid; the sum ofP30,000.00 as and for attorney's fees; and to pay the costs of suit. Fortune appealed this decision to the Court of Appeals (CAGR CV 32946). In its decision promulgated on 3 May 1994, it affirmed in toto the appealed decision. On 20 June 1994, Fortune filed the petition for review on certiorari.

Issue: 69. Fortune Assurance vs Court of Appeals supra Facts: Producers Bank of the Philippines was insured by the Fortune Insurance and Surety Co. Inc. and an insurance policy was issued. An armored car of Producers, while in the process of transferring cash in the sum of P725,000.00 under the custody of its teller, Maribeth Alampay, from its Pasay Branch to its Head Office at 8737 Paseo de Roxas, Makati, Metro Manila on 29 June 1987, was robbed of the said cash. The robbery took place while the armored car was traveling along Taft Avenue in Pasay City. The said armored car was driven by Benjamin Magalong y de Vera, escorted by Security Guard Saturnino Atiga y Rosete. Driver Magalongwas assigned by PRC Management Systems with Producers by virtue of an Agreement executed on 7 August1983. The Security Guard Atiga was assigned by Unicorn Security Services, Inc. with Producers by virtue of a contract of Security Service executed on 25 October 1982. WON Fortune is liable under the Money, Security, and Payroll Robbery policy it issued to the issued to Producers or whether recovery thereunder is precluded under the general exceptions clause thereof?

Held/Ratio: It should be noted that the insurance policy entered into by the parties is a theft or robbery insurance policy which is a form of casualty insurance. Section 174 of the Insurance Code provides that "Casualty insurance is insurance covering loss or liability arising from accident or mishap, excluding certain types of loss which by law or custom are considered as falling exclusively within the scope of insurance such as fire or marine. It includes, but is not limited to, employer's liability insurance, public liability insurance, motor vehicle liability insurance, plate glass insurance, burglary and theft insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of

insurance."Except with respect to compulsory motor vehicle liability insurance, the Insurance Code contains no other provisions applicable to casualty insurance or to robbery insurance in particular. These contracts are, therefore, governed by the general provisions applicable to all types of insurance. Outside of these, the rights and obligations of the parties must be determined by the terms of their contract, taking into consideration its purpose and always in accordance with the general principles of insurance law. It has been aptly observed that in burglary, robbery, and theft insurance, "the opportunity to defraud the insurer the moral hazard is so great that insurers have found it necessary to fill up their policies with countless restrictions, many designed to reduce this hazard. Seldom does the insurer assume the risk of all losses due to the hazards insured against. Persons frequently excluded under such provisions are those in the insured's service and employment. The purpose of the exception is to guard against liability should the theft be committed by one having unrestricted access to the property." In such cases, the terms specifying the excluded classes are to be given their meaning as understood in common speech. The terms "service" and "employment" are generally associated with the idea of selection, control, and compensation. A contract of insurance is a contract of adhesion, thus any ambiguity therein should be resolved against the insurer, or it should be construed liberally in favor of the insured and strictly against the insurer. Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to preclude the insurer from non-compliance with its obligation. It goes without saying then that if the terms of the contract are clear and unambiguous, there is no room construction and such terms cannot be enlarged or diminished by judicial construction. An insurance contract is a contract of indemnity upon the terms and conditions specified therein. It is settled that the terms of the policy constitute the measure of the insurer's liability. In the absence of statutory prohibition to the contrary, insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent with public policy. Insofar as Fortune is concerned, it was its intention to exclude and exempt from protection and coverage losses arising from dishonest, fraudulent, or criminal acts of persons granted or having unrestricted access to Producers' money or payroll. When it used then the term "employee," it must have had in mind any person who qualifies as such as generally and universally understood, or jurisprudentially established in the light of the four standards in the determination of the employeremployee relationship, or as statutorily declared even in a limited sense as in the case of Article 106 of the Labor Code which considers the employees under a "labor-only" contract as employees of the party employing them and not of the party who supplied them to the employer. Still, howsoever viewed, Producers

entrusted the three with the specific duty to safely transfer the money to its head office, with Alampay to be responsible for its custody in transit; Magalong to drive the armored vehicle which would carry the money; and Atiga to provide the needed security for the money, the vehicle, and his two other companions. In short, for these particular tasks, the three acted as agents of Producers. A "representative" is defined as one who represents or stands in the place of another; one who represents others or another in a special capacity, as an agent, and is interchangeable with "agent." In view of the foregoing, Fortune is exempt from liability under the general exceptions clause of the insurance policy.

Topic: preliminary contracts of insurance (section 52) 70. GREAT PACIFIC LIFE v. CA (NGO HING) Facts: On March 14, 1957, private respondent Ngo Hing filed an application with the Great Pacific Life Assurance Co. (Pacific Life) for a 20 year endowment policy of P50k on the life of his 1 year old daughter, Helen. Ngo Hing supplied the essetntial data which petitioner Mondragon, branch manager of the Pacific Life in Cebu, wrote on the corresponding form in his own handwriting, later typing the data on an application form signed by Ngo Hing. The latter paid the P1077.75 annual premium but retained P1,317 as commission as he was also a duly authorized agent of Pacific Life. The binding deposit receipt was then issued to Ngo Hing; Mondragon handwrote his strong recommendation for the approval of the application on the back of the form. On April 30, Mondragon received a letter from Pacific Life which stated that the 20 year endowment plan was not available for minors below 7, but that Pacific Life could consider the same under the Juvenile Triple Action Plan, advising that if the offer was acceptable, the Juvenile Non-Medical Declaration be sent to the company. Mondragon allegedly failed to inform Ngo Hing of the non-acceptance of the insurance plan, instead writing Pacific Life again, recommending the approval of the endowment plan to children since customers had been asking for such coverage since 1954. On May 28, 1957, Helen died of influenza. Ngo Hing sought the payment of the proceeds of the insurance, but having failed to do so, filed an action for recovery with the CFI of Cebu. The Court ordered Pacific Life to pay P50k with 6% interest, hence this petition.

Issue/Held: WON the binding deposit receipt constituted a temporary contract of the life insurance in question NO

Ratio: The binding deposit receipt is merely a provisional contract and only upon compliance with the ff conditions: (1) that the company be satisfied that the applicant was insurable on standard rates (2) that if the company does not accept the application and offers a different policy, the insurance contract shall not be binding until the applicant accepts the new policy (3) that if the applicant is not found to be insurable on standard rates and the application is disapproved, the insurance shall not be in force at any time and the premium be returned to the applicant. This implies the receipt is merely an acknowledgement, on behalf of the company, that the Cebu branch of Pacific Life had received the premium and had accepted the application subject to processing by the insurance company, which will approve or reject it depending on whether the applicant is insurable on standard rates. As such, the receipt was never in force-it does not insure outright. No liability attaches until the principal approves the risk and a receipt is given by the agent; because private respondent failed to accept Pacific Life's offer for the Juvenile Triple Action plan, there was no meeting of the minds and thus no contract. Also, being an authorized agent of Pacific Life, Ngo Hing must have known the company did not offer the insurance applied for and merely took a chance on Mondragon's recommendation. Disposition the decision appealed from is set aside, absolving Pacific Life from their civil liabilities

Mora without the knowledge and consent of HS Reyes, authorized Bonifacio Bros to fix the car, using materials supplied by the Ayala Auto Parts Company. For the cost of Labor and materials, Mora was billed P2,102.73. The bill was sent to the insurers appraiser. The insurance company drew a check in the amount of the insurance proceeds and entrusted the check to its appraiser for delivery to the proper party. The car was delivered to Mora without the consent of HS Reyes, and without payment to Bonifacio Bros and Ayala. Upon the theory that the insurance proceeds should be directly paid to them, Bonifacio and Ayala filed a complaint against Mora and the insurer with the municipal court for the collection of P2,102.73. The insurance company filed its answer with a counterclaim for interpleader, requiring Bonifacio and HS Reyes to interplead in order to determine who has a better right to the proceeds.

Issue/Held: Whether or not there is privity of contract between Bonficacio and Ayala on one hand and State Insurance on the other NONE

Ratio: It is fundamental that contracts take effect only between the parties thereto, except in some specific instance provided by law where the contract contains some stipulation in favor of a third person. Such stipulation is known as a stipulation pour autrui; or a provision in favor of a third person not a party to the contract. Under this doctrine, a third person is entitled to avail himself of a benefit granted to him by the terms of the contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such person. Consequently, a third person NOT a party to the contract has NO action against the aprties thereto, and cannot generally demand the enforcement of the same. The question of whether a third person has an enforceable interest in a contract must be settled by determining whether the contracting parties intended to tender him such an interest by deliberately inserting terms in their agreement with the avowed purpose of conferring favor upon such third person. IN this connection, this court has laid down the rule that the fairest test to determine whether the interest of a 3rd person in a contract is a stipulation pour autrui or merely an incidental interest, is to rely upon the intention of the parties as disclosed by their contract. In the instant case the insurance contract does not contain any words or clauses to disclose an intent to give any benefit to any repairmen or material men in case of repair of the car in question. The parties to the insurance contract omitted such

Topic: Persons entitled to recover on policy (section 53) 71. Bonifacio Brothers vs Mora Facts: Enrique Mora mortgaged his Odlsmobile sedan car to HS Reyes Inc. with the condition that Mora would insure the car with HS Reyes as beneficiary. The car was then insured with State Insurance Company and the policy delivered to Mora. During the effectivity of the insurance contract, the car figured in an accident. The company then assigned the accident to an insurance appraiser for investigation and appraisal of the damage.

stipulation, which is a circumstance that supports the said conclusion. On the other hand, the "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit. A policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract of trust, expressed or implied, by the insured and third person. In this case, no contract of trust, express or implied. In this case, no contract of trust, expressed or implied exists. We, therefore, agree with the trial court that no cause of action exists in favor of the appellants in so far as the proceeds of insurance are concerned. The appellant's claim, if at all, is merely equitable in nature and must be made effective through Enrique Mora who entered into a contract with the Bonifacio Bros Inc. This conclusion is deducible not only from the principle governing the operation and effect of insurance contracts in general, but is clearly covered by the express provisions of section 50 of the Insurance Act (now Sec. 53). The policy in question has been so framed that "Loss, if any, is payable to H. S. Reyes, Inc." which unmistakably shows the intention of the parties.

72. Heirs of Maramag vs Maramag Facts: PETITIONERS were legitimate wife and children of Loreto Maramag. PETITIONERS' CONTENTION: (a) RESPONDENTS were Loreto''s illegitimate family; (b)Eva Maramag was concubine of Loreto and a suspect in the killing of Loreto. Thus, she is disqualified to receive any proceeds from his insurance policies from Insular Life Assurance (INSULAR) and Great Pacific Life Assurance (GREPALIFE); (c) The illegitimate children were entitled only to 1/2 of the legitime of the legitimate children, thus the proceeds released to the illegitimate children were inofficious and should be reduced; and (d) x x x TRO and writ of preliminary injunction were filed by the petitioner because, some part of the insurance proceeds had already been released in favor of one of the illegitimate and the rest are to be releases in favor of the other illegitimate. Insular admitted that Loreto misrepresented Eva as his legitimate wife and Odessa, Karl Brian, and Trisha Angelie as his legitimate children, and that they filed their claims for the insurance proceeds of the insurance policies. INSULAR ALLEGATION: THE COMPLAINT OR PETITION FAILED TO STATE A CAUSE OF ACTION AS TO DECLARE AS VOID THE DESIGNATION OF EVA AS BENEFICIARY for Loreto revoked her designation and already disqualified her.

GREPALIFR CONTENTION: Eva was not designated as an insurance policy beneficiary, that r claims of the illegitimate children were denied because Loreto was ineligible for the insurance due to the misrepresentation in his application form that he was not more than 65 years old. Both Insular and Grepalife countered that the insurance proceeds belong exclusively to the designated beneficiaries in the policies, not to the estate or to the heirs of the insured. Grepalife also reiterated that it had disqualified Eva as a beneficiary when it ascertained that Loreto was legally married to Vicenta Pangilinan Maramag. RTC: In favor of the respondents. Neither could the plaintiffs invoked the law on donations or the rules on testamentary succession in order to defeat the right of herein defendants to collect the insurance indemnity. The beneficiary in a contract of insuranceis not the donee spoken in the law of donation. The rules on testamentary succession cannot apply here, for the insurance indemnity does not partake of a donation. THE PROCEEDS BELONG EXCLUSIVELY THE BENEFICIARY AND NOT TO THE ESTATE OF THE PERSON. NO SUFFICIENT CAUSE OF ACTION AGAINST THE ILLEGITIMATE FLR THE REDUCTION AND/OR DECLARATION OF INOFFICIOUS OF DONATION AS PRIMARY BENEFICIARY. EVA AS THE CONCUBINE CANNOT BE A BENEFICIARY CA: Affirmed the decision of the RTC. The distribution of the insurance proceeds is governed primarily by the Insurance Code, and the provisions of the Civil Code are irrelevant and inapplicable.

Issue/Held: Whether or not the legitimate children of the insured decease shall receive the proceeds of the insurance that originally designated to Eva No. Even assuming Insular disqualified Eva as a beneficiary, her share should not have been distributed to the legitimate heirs of the insured deceased.

Ratio: It is evident from the face of the complaint that petitioners are not entitled to a favorable judgment in light of Article 2011 of the Civil Code which expressly provides that insurance contracts shall be governed by special laws, i.e., the Insurance Code. Section 53 of the Insurance Code states SECTION 53. The insurance proceeds shall be applied exclusively to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy. Pursuant thereto, it is obvious that the only persons entitled to claim the insurance proceeds are either the insured, if still alive; or the beneficiary, if the insured is already deceased, upon the maturation of the policy. The exception to this rule is a situation where the insurance contract was intended to benefit third

persons who are not parties to the same in the form of favorable stipulations or indemnity. In such a case, third parties may directly sue and claim from the insurer. Petitioners are third parties to the insurance contracts with Insular and Grepalife and, thus, are not entitled to the proceeds thereof. Accordingly, respondents Insular and Grepalife have no legal obligation to turn over the insurance proceeds to petitioners. The revocation of Eva as a beneficiary in one policy and her disqualification as such in another are of no moment considering that the designation of the illegitimate children as beneficiaries in Loretos insurance policies remains valid. Because no legal proscription exists in naming as beneficiaries the children of illicit relationships by the insured, the shares of Eva in the insurance proceeds, whether forfeited by the court in view of the prohibition on donations under Article 739 of the Civil Code or by the insurers themselves for reasons based on the insurance contracts, must be awarded to the said illegitimate children, the designated beneficiaries.

73. Coquia vs. Fieldmen's Insurance Co., Inc. Facts: On December 1, 1961, Fieldmens Insurance Co., Inc. issued in favor of the Manila Yellow Taxicab a common carrier insurance policy with a stipulation that the Company shall indemnify the insured of the sum which the latter may be held liable for with respect to death or bodily injury to any fare-paying passenger including the driver and conductor. The policy also stated that in the event of the death of the driver, the Company shall indemnify his personal representatives and at the Companys option may make indemnity payable directly to the claimants or heirs of the claimants. During the policys lifetime, a taxicab of the insured driven by Coquia met an accident and Coquia died. When the Company refused to pay the only heirs of Coquia, his parents, they institued this complaint. The company contended that plaintiffs had no cause of action since the Coquia's have no contractual relationship with the Company.

"If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person." This is but the restatement of a well-known principle concerning contracts "pour autrui", the enforcement of which may be demanded by a third party for whose benefit it was made, although not a party to the contract, before the stipulation in his favor has been revoked by the contracting parties In the case at bar, the policy under consideration is typical of contracts "pour autrui" this character being made more manifest by the fact that the deceased driver paid fifty percent (50%) of the corresponding premiums, which were deducted from his weekly commissions. Under these conditions, it is clear that the Coquia's - who, admittedly, were the sole heirs of the deceased, have a direct cause of action against the Company, and, since they could have maintained this action by themselves, without the assistance of the insured it goes without saying that they could and did properly join the latter in filing the complaint herein.

Topic: Insurance by agent or trustee (section 54) 74 LOPEZ V. DEL ROSARIO Facts: Benita Quiogue de V. del Rosario (Mrs. del Rosario), owner of a bonded warehouse where Froilan Lopez, holder or 14 waehouse receipts and Elias Zamora had their copra deposited. The warehouse recipts states an insurance of 1% their declared value which can be increase or decrease by giving 1 month's notice in writing. Lopez paid the insurance to May 18, 1920, but not thereafter. June 6, 1920: the warehouse was destroyed by fire. Only copra worth P49,985 was salvaged. At that time Lopez was still liable for the storage and insurance of P315.90. Mrs. Del Rosario submitted the insurance with the arbitrators and seems to have satisfied all of the persons who had copra stored in her warehouse, including the stockholders in the Compaia Coprera de Tayabas (whose stock she took over), with the exception of Froilan Lopez. Ineffectual attempts by Mrs. Del Rosario to effect a compromise with Lopez first for P71,994, later raised to P72,724, and finally reduced to P17,000, were made. But Lopez stubbornly contended, or, at least, his attorney contended for him, that

Issue/Held: Ratio: Although, in general, only parties to a contract may bring an action based thereon, this rule is subject to exceptions, one of which is found in the second paragraph of Article 1311 of the Civil Code of the Philippines, which reads: Whether or not plaintiffs have the right to collect on the policy - YES

he should receive not a centavo less than P88,595.43 (from originally P107,990.40). Issue: Whether Del Rosario acted as the agent of Lopez in taking out the insurance on the contents of the warehouse or whether she acted as the reinsurer of the copra YES

Ratio: The petitioner's claim that the insurance covered only the building and not the elevators is absurd. The circumstance that the building insured is seven stories high and so had to be provided with elevators-a legal requirement known to the petitioner as insurance company-makes its contention all the more ridiculous. There is no evidence on record that the building was worth P5,800,000.00 at the time of the loss; only the petitioner says so and it does not back up its self-serving estimate with any independent corroboration. On the contrary, the building was insured at P2,500,000.00, and this must be considered, by agreement of the insurer and the insured, the actual value of the property insured on the day the fire occurred. This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed. The Court notes that Policy RY/F-082 is an open policy and is subject to the express condition that: Open Policy: This is an open policy as defined in Section 57 of the Insurance Act. In the event of loss, whether total or partial, it is understood that the amount of the loss shall be subject to appraisal and the liability of the company, if established, shall be limited to the actual loss, subject to the applicable terms, conditions, warranties and clauses of this Policy, and in no case shall exceed the amount of the policy. As defined in the aforestated provision, which is now Section 60 of the Insurance Code, "an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss. " This means that the actual loss, as determined, will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not exceed the face value of the policy. The actual loss has been ascertained in this case and, to repeat, this Court will respect such factual determination in the absence of proof that it was arrived at arbitrarily. There is no such showing. Hence, applying the open policy clause as expressly agreed upon by the parties in their contract, we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of P508,867.00.

Ratio: The agency can be deduced from the warehouse receipts, the insurance policies and the circumstances surrounding the transaction. Under any aspect, Del Rosario is liable. The law is that a policy effected by a bailee and covering by its terms in his own property and property held in trust, inures, in the event of loss, equally and proportionately to the benefit of all owners of the property insured. Even if one secured insurance covering his own goods and goods stored with him, and even if the owner of the stored goods did not request or know the insurance, and did not ratify it before the payment of the loss, it has been held by a reputable court that the warehouseman is liable to the owner of such stored goods for his share. In a case of contributing policies, adjustments of loss made by an expert or by a board of arbitrators may be submitted to the court NOT as evidence of the facts stated therein, or as obligatory, but for the purpose of assisting the court in calculating the amount of liability.

Topic: Open Valued and Running Policies (section 59-62) 75. Development Bank vs IAC Facts: A fire broke out in the building of the private respondent and it sued for recovery of damages from the petitioner on the basis of an insurance contract between them. The private respondent's building was insured by petitioner against fire for P2,500,000.00 under an open policy, Policy No. RY/F-082. Petitioner refused to pay advancing the argument that only the building and not the elevators were insured.

Topic: Commencement of Action (section 63) 76. Teal Motor v. Orient Insurance Facts: Seven consolidated cases related to insurance policies covering the goods, wares, and merchandise contained in the building in the Port Area in the City of Manila

Issue/Held: Whether the respondent is entitled to indemnity, if so, how much YES, in the amount of P508,867.00

which was damaged by a fire of unknown origin the afternoon of Sunday, January 6, 1929. At the request of the insured, the companies gave additional time for the filing of the claims of loss. These claims were definitely rejected in writing by the insurance companies through their agents on April 15, 1929. Among the special defenses of the insurance companies is one based upon a clause in the policies which, with the exception of those of the Atlas Assurance Company, Ltd., among other things provides: .. . if the claim be made and rejected, and action or suit be not commenced within three months after such rejection, ... all benefit under this Policy shall be forfeited. While those cases were under advisement here, we noticed that the provision relating to the Atlas policy reads: . . . if the claim be made and rejected and arbitration proceedings be not commenced in pursuance of the 18th Condition of this Policy within three months after such rejection; all benefit under this Policy shall be forfeited. No such arbitration proceedings were instituted within the three months period. The seven suits were filed between the 3rd and the 15th day of August, 1929, or more than three months after the rejection by the defendant companies of plaintiff's claim. Bachrach, the president of the Teal Motor Company, and Teal had informal conversations principally with Elser, the general agent of a number of the insurance companies, looking to an extrajudicial settlement. Elser was receptive but stated that the Royal Insurance Company, Ltd., represented her by Selkirk, having the largest policies, would have to take the lead in any such negotiations. Selkirk took the position that as the claims had been rejected by the adjusters and that as the matter was in the hands of the attorneys, conversations were of no moment and he would consider nothing but a formal statement. It is presumed that he meant by "formal statement" a definite, concrete proposition in writing. Elser doesnt want to continue with the extrajudicial settlement and just pursued to fill a suit against the Teal Motor Company for a fact that the president of the said company asked for him not to sue. The RTC the negotiations for compromise that took place some time after the 15th of April and terminated on the 31st of May could be considered and also held st th that there was ample time from the 1 of June to the 15 of July for plaintiff to formulate and file in the Court of First Instance of Manila its complaints.

Ratio: Under the contract of insurance, the insured had three months after rejection in which to bring suit. The issues were virtually joined on the presentation of the claims and their rejection by the companies in writing, and three months thereafter is not an unreasonably short time to draft and file in court an appropriate complaint on a contract of fire insurance. The SC concurred with the view of the trial court that these cases were not brought within time, it is unnecessary to discuss and pass upon the question whether or not there were overinsurance and false claims of loss in these cases.

77. PAULO ANG AND SALLY ANG v. FULTON FIRE INSURANCE, ET AL. Facts: Sept. 1953: Fulton Fire (Fulton) issued a policy in favor of P. and S. Department Store over stocks of merchandise contained in abuilding occupied by the Angs (annual premium of P 500.00). The store was destroyed by fire. On Dec. 30, 1954, the Angs demanded the payment of the proceeds after the Manila Adjustment determined the amount, but Fulton denied the claim on April 6, 1956. Meanwhile, Paulo was charged but later acquitted of the crime of arson. May 5, 1958 (a material date): Angs instituted an action to recover the proceeds. May 26, 1958: Fulton, in an answer, claimed that since the action was instituted only on May 5, 1958, more than 12 months had passed from the rejection of the claim which was on April 1956. Hence, the policy, according to Fulton, is forfeited. Fulton cites Par. 13 of the policy which provides that if the loss or damage is occasioned by the willful act of the insured, or if the claim is made and rejected but no action is commenced within 12 months, all benefits under the policy are forfeited. Angs, in their reply, argued that the action was still within the 12-month period (because only 9 months have passed since the filing) because the period between the filing by Ang on May 11, 1956 against Fultons agent Paramount before the CFI and its subsequent dismissal on Sept. 1957 should be deducted from the period leading to the 12-month deadline, because the action before the CFI INTERRUPTED the running of the 12-month period. CFI: in favor of Angs. The lower court claimed that Par. 13 is merely a procedural requirment.

Issue: Held: No, Plaintiff was given such time as it deemed necessary to formulate and present its claim of loss. WON the commencement of the claims of the plaintiff was brought in time?

Issue/Held:

Whether or not the running of the 12-month period startingt from Fultons rejection of the claims was interrupted by Angs case against Paramount before the CFI No

1.

Ratio: Par. 13 is important because it will make sure there is a prompt settlement of claims against the insurer, because insurance suits must be commenced while the evidence as to the cause of destruction have not yet disappeared. It is a resolutely condition, which extinguishes liability if the suit is not filed within the agreed time. It must be stressed that the contractual limitation prevails over statutory limitation (based on the rule that the contract is the law between the parties, generally). Hence, Par. 13 should govern, and not the general rules on prescription of actions (under Article 1114 of the Civil Code, action upon a written contract must be commenced within 10 years). DISPOSITIVE: Dismissed.

2.

78. SUN INSURANCE OFFICE LTD. V CA (TAN) FACTS Private respondent Emilio Tan took from the petitioner a Peso 300,000 property insurance policy to cover his interest in the electrical insurance store of his brother housed in a building in Iloilo City on August 15, 1983. Four days after the issuance of the policy, the building including the insured store burned. On August 20, 1983, Tan filed his claim for fire loss. Sun Insurance, on February 29, 1984, wrote the private respondent denying the claim. On April 3, 1984, private respondent wrote another letter to the insurance company requesting reconsideration of the denial. Tan's lawyer wrote another letter to the insurance company inquiring about the April 3 letter which sought for a reconsideration of the denial. In its reply to the lawyer's letter, Sun Insurance reiterated its denial of the claim and enclosed therein copies of the two previous denials dated February 29, 1984 and May 17, 1985. On November 20, 1985, Tan filed a civil case with the RTC. Petition filed a motion to dismiss on the alleged ground that the action has already prescribed based on Condition 27 of the Insurance Policy which stated that the window to file the appropriate action with either the Insurance Commission or in any court of competent jurisdiction is twelve months from the rejection of the claim. RTC denied the motion and the subsequent motion for reconsideration. The CA likewise denied the petition of Sun Insurance.

WON the court the filing of a motion for reconsideration interrupts the 12 months prescription period to contest the denial of the insurance claim NO The SC held that Condition 27 of the Insurance policy is very clear and free from any doubt or ambiguity. It has to be taken in its plain, ordinary, and popular sense. The rejection letter of February 29, 1984 was clear and plain. The Court noted that the one year period is likewise in accord with Section 23 of the Insurance Code which states that any condition which limits the time for commencing an action to a period of less than one year when the cause of action accrues is void. The right of action, according to the SC, accrues at the time that the claim is rejected at the first instance. A request for reconsideration of the denial cannot suspend the running of the prescriptive period. The Court noted that the rationale for the one year period is to ensure that the evidence as to the origin and cause of the destruction have not yet disappeared. WON the rejection of the claim shall be deemed final only if it contains words to the effect that the denial is final NO The Court clarified its ruling in Eagle Star Insurance Co. vs Chia Yu where it ruled that "the cause of action in an insurance contract does not accrue until the Insured's claim is finally rejected by the Insurer" by stating the use of the word "finally" cannot be construed to mean the rejection of a petition for reconsideration. What the court referred to in effect is the rejection in the first instance as claimed by Sun Insurance

Disposition: The decision of the CA is reversed and set aside. The case is dismissed

79. Pacific Banking v CA Facts: An open fire insurance policy, was issued to Paramount Shirt Manufacturing by Oriental Assurance Corporation to indemnify P61,000.00, caused by fire to the factorys stocks, materials and supplies. The insured was a debtor of Pacific Banking in the amount of (P800,000.00) and the goods described in the policy were held in trust by the insured for Pacific Banking under trust receipts. The policy was endorsed to Pacific Banking as mortgagee/ trustor of the properties insured, with the knowledge and consent of private respondent to the effect that "loss if any under this policy is payable to the Pacific Banking Corporation". A fire broke out on the premises destroying the goods contained in the building. The bank sent a letter of demand to Oriental for indemnity. The company wasnt ready to give since it was awaiting the adjusters report.

Issue/Held/Ratio

The company then made an excuse that the insured had not filed any claim with it, nor submitted proof of loss which is a clear violation of Policy Condition No.11, as a result, determination of the liability of private respondent could not be made. Pacific Banking filed in the trial court an action for a sum of money for P61,000.00 against Oriental Assurance. At the trial, petitioner presented communications of the insurance adjuster to Asian Surety revealing undeclared coinsurances with the following: P30,000 with Wellington Insurance; P25,000 with Empire Surety and P250,000 with Asian Surety undertaken by insured Paramount on the same property covered by its policy with Oriental whereas the only co-insurances declared in the subject policy are those of P30,000.00 with Malayan P50,000.00 with South Sea and P25.000.00 with Victory. The defense of fraud, in the form of non-declaration of co-insurances which was not pleaded in the answer, was also not pleaded in the Motion to Dismiss. The trial court denied the respondents motion. Oriental filed another motion to include additional evidence of the coinsurance which could amount to fraud. The trial court still made Oriental liable for P 61,000. The CA reversed the trial court decision. Pacific Banking filed a motion for reconsideration of the said decision of the respondent Court of Appeals, but this was denied for lack of merit.

Issues/Held/Ratio: 1. WON unrevealed co-insurances Violated policy conditions No. 3 YES Policy Condition No. 3 explicitly provides: 3. The Insured shall give notice to the Company of any insurance already effected, or which may subsequently be effected, covering any of the property hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefit under this policy shall be forfeited. The insured failed to reveal before the loss three other insurances. Had the insurer known that there were many co-insurances, it could have hesitated or plainly desisted from entering into such contract. Hence, the insured was guilty of clear fraud. Concrete evidence of fraud or false declaration by the insured was furnished by the petitioner itself when the facts alleged in the policy under clauses "Co-Insurances Declared" and "Other Insurance Clause" are materially different from the actual number of co-insurances taken over the subject property. As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property, the total absence of such notice nullifies the policy.

Petitioner points out that Condition No. 3 in the policy in relation to the "other insurance clause" supposedly to have been violated, cannot certainly defeat the right of the petitioner to recover the insurance as mortgagee/assignee. Hence, they claimed that the purpose for which the endorsement or assignment was made was to protect the mortgagee/assignee against any untoward act or omission of the insured. It would be absurd to hold that petitioner is barred from recovering the insurance on account of the alleged violation committed by the insured. It is obvious that petitioner has missed all together the import of subject mortgage clause which specifically provides: Loss, if any, under this policy, shall be payable to the PACIFIC BANKING CORPORATION Manila mortgagee/trustor as its interest may appear, it being hereby understood and agreed that this insurance as to the interest of the mortgagee/trustor only herein, shall not be invalidated by any act or neglectexcept fraud or misrepresentation, or arsonof the mortgagor or owner/trustee of the property insured; provided, that in case the mortgagor or owner/trustee neglects or refuses to pay any premium, the mortgagee/ trustor shall, on demand pay the same. The paragraph clearly states the exceptions to the general rule that insurance as to the interest of the mortgagee, cannot be invalidated; namely: fraud, or misrepresentation or arson. Concealment of the aforecited co-insurances can easily be fraud, or in the very least, misrepresentation. Undoubtedly, it is but fair and just that where the insured who is primarily entitled to receive the proceeds of the policy has by its fraud and/or misrepresentation, forfeited said right. Petitioner further stressed that fraud which was not pleaded as a defense in private respondent's answer or motion to dismiss, should be deemed to have been waived. It will be noted that the fact of fraud was tried by express or at least implied consent of the parties. Petitioner did not only object to the introduction of evidence but on the contrary, presented the very evidence that proved its existence.

2.

WON the insured failed to file the required proof of loss prior to court action YES Generally, the cause of action on the policy accrues when the loss occurs, But when the policy provides that no action shall be brought unless the claim is first presented extrajudicially in the manner provided in the policy, the cause of action will accrue from the time the insurer finally rejects the claim for payment In the case at bar, policy condition No. 11 specifically provides that the insured shall on the happening of any loss or damage give notice to the company and shall within fifteen

(15) days after such loss or damage deliver to the private respondent (a) a claim in writing giving particular account as to the articles or goods destroyed and the amount of the loss or damage and (b) particulars of all other insurances, if any. Twenty-four days after the fire did petitioner merely wrote letters to private respondent to serve as a notice of loss. It didnt even furnish other documents. Instead, petitioner shifted upon private respondent the burden of fishing out the necessary information to ascertain the particular account of the articles destroyed by fire as well as the amount of loss. Since the required claim by insured, together with the preliminary submittal of relevant documents had not been complied with, it follows that private respondent could not be deemed to have finally rejected petitioner's claim and therefore there was no cause of action. It appearing that insured has violated or failed to perform the conditions under No. 3 and 11 of the contract, and such violation or want of performance has not been waived by the insurer, the insured cannot recover, much less the herein petitioner.

pointing to that Lady Love Taxi with Plate No. 438, obviously the vehicle involved herein. Abellon rectified that the taxi was driven by one Rodrigo Dumlao.Dumlao absconded in that criminal case, specially at the time of the promulgation of the judgment therein so much so that he is now a fugitive from justice. Private respondent filed a complaint for damages against Armando Abellon as the ownerof the Lady Love Taxi and Rodrigo Dumlao as the driver of the Lady Love taxicab that bumped private respondents mother.RESPONDENT AMENDED HIS COMPLAINT TO INCLUDE THE PETITIONER AS THE COMPULSORY INSURER OF THE SAID TAXICAB. RTC: ruled in favor of the of the respondent. Petitioners ordered to pay the respondents. CA: Affirmed the decision of the RTC. PETITIONER CONTENTION: It did not issue an insurance policy as compulsory insurer of the Lady Love Taxi and that, assuming arguendo that it had indeed covered said taxicab for third-party liability insurance, private respondent failed to file a written notice of claim with petitioner as required by Section 384 of P.D. No. 612, otherwise known as the Insurance Code. FAILED TO ATTACH THE COPYOF THE INSURANCE CONTRACT.

Decision: Petition dismissed.

Issue/Held Whether or not the defendant has the right to sue or has a cause of action to sue the insurer NO. The defendant has no cause of action to sue the petitioner.

80. TRAVELLERS INSURANCE & SURETY vs. COURT OF APPEALS Facts: A 78 year old woman by the name of Feliza Vineza De Mendoza was on her way to hear mass. While walking along Tayuman, she was bumped by a taxi that was running fast. The good Samaritan that he was, Marvilla ran towards the old woman and held her on his lap to inquire from her what had happened, but obviously she was already in shock and could not talk. A private jeep stopped and the driver helped the two persons of Feliza board the old woman on the jeep. The driver also witnessed the incident. Caused of death was by TRAUMATIC SHOCK. RTC: found out that the accused was driving the subject taxicab in a careless, reckless and imprudent manner and at a speed greater than what was reasonable and proper without taking the necessary precaution to avoid accident and the driver fled away without assisting the victim. Three (3) witnesses who were at the scene at the time identified the taxi involved, though not necessarily the driver thereof. He eyewitnesses were unanimous in Ratio:

The right of the person injured to sue the insurer of the party at fault (insured), depends on whether the contract of insurance is intended to benefit third persons also or on the insured. And the test applied has been this: Where the contract provides for indemnity against liability to third persons, then third persons to whom the insured is liable can sue the insurer. Since private respondent failed to attach a copy of the insurance contract to his complaint, the trial court could not have been able to apprise itself of the real nature and pecuniary limits of petitioners liability. More importantly, the trial court could not have possibly ascertained the right of private respondent as third person to sue petitioner as insurer of the Lady Love taxicab because the trial court never saw nor read the insurance contract and learned of its terms and conditions. IN THIS CASE, the trial court did not distinguish between the private respondents cause of action against the owner (based on torts) and the driver of the Lady Love taxicab and his cause of action against petitioner (based on contracts). The trial court brushed aside its ignorance of the terms and conditions of the insurance contract and forthwith found all three (the driver of the taxicab, the

owner of the taxicab, and the alleged insurer of the taxicab) jointly and severally liable for actual, moral and exemplary damages as well as attorneys fees and litigation expenses. (IMPORTANT)MOREOVER, PRIVATE RESPONDENT'S CAUSE OF ACTION against petitioner did not successfully accrue because he failed to file with petitioner a written notice of claim within six (6) months from the date of the accident as required by Section 384 of the Insurance Code. We have certainly ruled with consistency that the prescriptive period to bring suit in court under an insurance policy, begins to run from the date of t he insurers rejection of the claim filed by the insured, the beneficiary or any person claiming under an insurance contract. This ruling is premised upon the compliance by the persons suing under an insurance contract, with the indispensable requirement of having filed the written claim mandated by Section 384 of the Insurance Code before and after its amendment. ABSENT OF SUCH CLAIM FILED BY THE PERSON SUING UNDER AN INSURANCE CONTRACT, NO CAUSE OF ACTION ACCRUES UNDER SUCH INSURANCE CONTRACT considering that it is the rejection of that claim that triggers the running of the one-year prescriptive period to bring suit in court, and there can be no opportunity for the insurer to even reject a claim if none has been filed in the first place, as in the instant case. PETITION GRANTED. NOTE: But, Where the contract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged by him thru payment to third persons, said third persons recourse being thus limited to the insured alone.

81. Lopez vs. Filipinas Compaa De Seguros Facts: This was an appeal by Lopez, from an order of the Court of First Instance of Manila, dismissing his complaint against Filipinas Compaia de Seguros. Lopez applied with the company for the insurance of his property consisting of a Biederman truck tractor and a Winter Weils trailer from loss or damage in the amount of P26,000.00 and P10,000.00, respectively. In connection with the above application, the defendant company inquired of the plaintiff the following: 5. Has any company in respect of the insurance of any car or vehicle declined, cancelled or refused to renew your insurance? increased your premium on renewal? To both questions, the plaintiff answered: None though the truth was at that time, the American International Underwriters of the Philippines (AIU) had already

declined a similar application for insurance by the plaintiff in respect of the abovedescribed vehicles. Filipinas issued to Lopez two "Commercial Vehicle Comprehensive Policies" covering the above properties. While the said policies were in force, the vehicles figured in an accident at Bagabag, Nueva Vizcaya, resulting in the total loss of the tractor and partial damage to the trailer. Lopez gave notice of the same to the company and made demand for the payment of P27,962.00, the total amount of damages resulting from the accident. The company rejected the claim by reason of: The claimants alleged concealment of a material fact", that the insured property was previously declined insurance by another company. Lopez filed with the Office of the Insurance Commissioner a complaint against the company. The Assistant Insurance Commissioner requested the defendant company to give its side of the complaint. Lopez informed through a letter to the Office of the Insurance Commissioner that he was willing to submit his claim to arbitration but Filipinas on the other hand, informed the Insurance Commissioner that it could not consent to the above proposal because the claim of the plaintiff cannot be resolved by arbitration, as recourse to arbitration referred to in the policy contract, envisioned only differences or disputes, with respect to the amount of the companys liability, and not to cases where the company does not admit its liability to the insured. With this rejection, Lopez filed a complaint with the Court of First Instance of Manila. Filipinas filed a "motion to dismiss" on the ground of prescription. The latter argued that the plaintiffs claim had already prescribed since it was not filed within twelve months from its rejection by the insurance company as stipulated under paragraph 9 of the General Conditions of Commercial Vehicle Comprehensive Policy Nos. 5598 and 5599, to wit: If a claim be made and rejected and an action or suit be not commenced within twelve months after such rejection or (in case of an arbitration taking place as provided herein) within twelve months after the arbitrator, arbitrators, or umpire shall have made their award then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recovered hereunder. On January 25, 1962, the court a quo sustained the above motion and dismissed the complaint. Thus, the instant appeal.

Issue/Held: Whether or not the complaint filed by Lopez with the Office of the Insurance Commissioner was a commencement of an action or suit within the meaning and intent of the "general condition" quoted above NO

Ratio: The following jurisprudence is expressed: Action is the act by which one sues another in a court of justice for the enforcement or protection of a right, or the prevention or redress of a wrong." Special proceeding is the act by which one seeks to establish the status or right of a party, or a particular fact." Hence, an action is distinguished from special proceeding in that the former is a formal demand of a right by one against another, while the latter is but a petition or a declaration of a status, right or fact." The above distinction was laid down in connection with the definition of action in Rule 2, Section 1 of the Rules of Court that: Section 1. Action defined.-Action means an ordinary suit in a Court of Justice by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong. Also, in 1 Am. Jur. 407, as cited in Francisco, Civil Procedure, p. 91, a suit is defined as: Suit is the prosecution or pursuit of some claim or demand in a court of justice or any proceeding in a court of justice in which a plaintiff pursues his remedy to recover a right or claim. Upon the authorities, therefore, it is settled that the terms action and suit are synonymous. Moreover, it is clear that the determinative or operative fact which converts a claim into an action or suit is the filing of the same with a court or justice. Filed elsewhere, as with some other body or office not a court of justice, the claim may not properly be categorized under either term. Apart from the foregoing, however, there is yet one other reason why the appellants recourse to the Office of the Insurance Commissioner could not have been an action or suit which could have halted the running of the prescript ive period stipulated in the insurance policies involved. An action or suit is essentially for the enforcement or protection of a right, or the prevention or redress of a wrong. (Rule 2, Sec. 1, Rules of Court). There is nothing in the Insurance Law, Act No. 2427, as amended, nor in any of its allied Legislations, which empowers the Insurance Commissioner to adjudicate on disputes relating to an insurance companys liability to an insured under a policy issued by the former to the latter. The validity of an insureds claim under a specific policy, its amount, and all such other matters as might involve the interpretation and construction of the insurance policy, are issues which only a regular court of justice may resolve and settle. Consequently, the complaint filed by the appellant herein with the Office of the Insurance Commission could not have been an action or suit.

To guarantee the Asingan Farmers' Cooperative Marketing Association, Inc. (FACOMA) against loss on account of personal dishonesty, amounting to larceny/estafa of its Secretary-Treasurer, Ladines, appellee Alpha Insurance & Surety Company had issued, on 14 February 1958, its bond with Ladines as principal and the appellee as solidary surety. On the same date, the Asingan FACOMA assigned its rights to the appellant, Agricultural Credit Cooperative and Financing Administration (ACCFA) with approval of the principal and the surety. During the effectivity of the bond, Ladines converted and misappropriated, to his personal benefit, some of the FACOMA funds, of which a part belonged to the ACCFA. Upon discovery of the loss, ACCFA immediately notified in writing the survey company on 10 October 1958, and presented the proof of loss within the period fixed in the bond; but despite repeated demands the surety company refused and failed to pay. ACCFA filed suit against appellee on 30 May 1960. Defendant Alpha Insurance & Surety Co., Inc., (now appellee) moved to dismiss the complaint as it was filed more than one year after plaintiff made claim for loss, contrary to the eighth condition of the bond At first, the Court of First Instance denied dismissal; but, upon reconsideration, the court reversed its original stand, and dismissed the complaint on the ground that the action was filed beyond the contractual limitation period. Hence, this appeal.

Issue/Held: WON the provision of a fidelity bond that no action shall be had or maintained thereon unless commenced within one year from the making of a claim for the loss upon which the action is based, is valid, in view of Section 61-A of the Insurance Act invalidating stipulations limiting the time for commencing an action thereon to less than one year from the time the cause of action accrues NO

Ratio: A fidelity bond is, in the nature of a contract of insurance against loss from misconduct, and is governed by the same principles of interpretation. Consequently, the condition of the bond in question, limiting the period for bringing action is subject to the provisions of Section 61-A of the Insurance Act (No. 2427), as amended by Act 4101 of the pre-Commonwealth Philippine Legislature, prescribing that: SEC. 61-A: A condition, stipulation or agreement in any policy of insurance, limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues is void.

82. ACCFA v. Alpha Insurance Facts: Topic: Cancellation of non-life policy (section 62)

83. Saura Import & Export vs Phil. Intl Surety supra Facts: Saura Import & Export Co Inc., mortgaged to the Phil. National Bank Davao, a parcel of land to secure the payment of promissory note of P27,000.00 with a condition from PNB that Saura shall insure the mortgaged property at all times against fire and earthquake for an amount satisfactory to PNB, indorsing to the latter policies of such insurance. Pursuant to the requirement, Saura insured the building together with its contents with the Philippine International Surety, an insurance firm acceptable to PNB for P29,000.00, against fire for the period of 1 year from October 2, 1954 and as further required the insurance policy was endorsed to PNB. 13 days after the issuance of the fire insurance policy, insurer cancelled it, effective as of the date of issue. Notice of cancellation was given to PNB in writing, sent via Registered Mail, personally addressed to Fortunato Domingo, PNB Branch Manager. The latter received it on Nov. 8, 1954. On April 6, 1955, the building and its contents worth P40,685.69 were burned. Saura filed a claim and upon presentation of notice of loss with PNB, Saura learned for the 1st time that the policy had previously been cancelled. Insurer refused to pay Saura.

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. Actual personal notice to the insured is essential to a cancellation under a provision for cancellation by notice. The actual receipt by the insured of a notice of cancellation is universally recognized as a condition precedent to a cancellation of the policy by the insurer, and consequently a letter containing notice of cancellation which is mailed by the insurer but not received by the insured, is ineffective as cancellation. The purpose of provisions or stipulations for notice to the insured, is to prevent the cancellation of the policy, without allowing the insured ample opportunity to negotiate for other insurance in its stead.

84. Malayan Insurance v. Cruz-Arnaldo FACTS: June 7, 1981: Malayan insurance co., inc. (MICO) issued to Coronacion Pinca, Fire Insurance Policy for her property effective for one (1) year (July 22, 1981, until July 22, 1982). October 15,1981: MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca December 24, 1981: payment of the premium for Pinca was received by Domingo Adora, agent of MICO January 15, 1982: Adora remitted this payment to MICO, together with other payments January 18, 1982: Pinca's property was completely burned February 5, 1982: Pinca's payment was returned by MICO to Adora on the ground that her policy had been cancelled earlier but Adora refused to accept it and instead demanded for payment Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein petition

Issue/Held: Whether or not the notice of cancellation of the policy to the mortgagee (PNB) was already a substantial compliance of the insurers duty to notify the insured of the policy cancellation NO

Ratio: The policy in question (Exh. A), 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

was filed on July 2, 1981, or nineteen days later, there is no question that it is tardy by four days. Insurance Commission: favored Pinca and MICO appealed

Issue/Held WON MICO should be liable because its agent Adora was authorized to receive it YES, petition is DENIED SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies. SEC. 306. xxx xxx xxx

Ratio: Any insurance company which delivers to an insurance agent or insurance broker a policy or contract of insurance shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon. Payment to an agent having authority to receive or collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal. SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following: (a) non-payment of premium; (b) conviction of a crime arising out of acts increasing the hazard insured against; (c) discovery of fraud or material misrepresentation; (d) discovery of willful, or reckless acts or commissions increasing the hazard insured against; (e) physical changes in the property insured which result in the property becoming uninsurable; or (f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code. As for the method of cancellation, Section 65 provides as follows: SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixtyfour is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based.

A valid cancellation must, therefore, require concurrence of the following conditions: (1) There must be prior notice of cancellation to the insured; (2) The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned; (3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy; (4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based. All MICO's offers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section." without more. It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981. Instead, she would have asked for a new insurance, effective on that date and until one year later, and so taken advantage of the extended period. Incidentally, Adora had not been informed of the cancellation either and saw no reason not to accept the said payment. Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO sought to return it to Adora only on February 5, 1982, after it presumably had learned of the occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly suspicious.