NOTICE AND PROOF OF LOSS DBP POOL OF ACCREDITED INSURANCE v.

RADIO MINDANAO NETWORK 480 SCRA 314MARTINEZ; January 27, 2006 NATURE Petiti n ! r "erti rari FACTS # In t$e e%enin& ! Ju'y 27, 1(88, t$e ra)i *tati n ! Ra)i Min)ana Net+ r, ' "ate) at t$e SSS -ui')in& in -a" ' ) City +a* .urne) ) +n "au*in& )a/a&e in t$e a/ unt ! %er ne /i''i n 0e* *1 Re*0 n)ent * u&$t t re" %er un)er t+ in*uran"e 0 'i"ie* .ut t$e "'ai/* +ere )enie) n t$e .a*i* t$at t$e "a*e ! t$e ' ** +a* an e2"e0te) ri*, un)er " n)iti n n 1 6 3"4 an) 3)4, t +it561 T$i* in*uran"e ) e* n t " %er any ' ** r )a/a&e ""a*i ne) .y r t$r u&$ r in " n*e6uen"e, )ire"t'y r in)ire"t'y, ! any ! t$e ! '' +in& " n*e6uen"e*, na/e'y53"4 7ar, in%a*i n, a"t ! ! rei&n ene/ie*, $ *ti'itie*, r +ar'i,e 0erati n* 3+$et$er +ar .e )e"'are) r n t4, "i%i" +ar13)4 Mutiny, ri t, /i'itary r 0 0u'ar u0ri*in&, in*urre"ti n, re.e''i n, re% 'uti n, /i'itary r u*ur0e) 0 +er1# T$e in*urer* /aintaine) t$at .a*e) n +itne**e* an) e%i)en"e &at$ere) at t$e *ite, t$e !ire +a* "au*e) .y t$e /e/.er* ! t$e C //uni*t Party ! t$e P$i'i00ine*8Ne+ Pe 0'e9* Ar/y1 :en"e t$e re!u*a' t $ n r t$eir .'i&ati n*1 # T$e tria' " urt an) t$e CA ! un) in !a% r ! t$e re*0 n)ent1 In it* !in)in&*, . t$ " urt* /enti ne) t$e !a"t t$at t$ere +a* n "re)i.'e e%i)en"e 0re*ente) t$at t$e CCP8NPA )i) in !a"t "au*e t$e !ire t$at &utte) t$e ra)i *tati n in -a" ' )1 ISSUE 7;N t$e in*uran"e " /0anie* are 'ia.'e t 0ay Ra)i Min)ana Net+ r, un)er t$e in*uran"e 0 'i"ie* HELD <ES Any loss or damage happening during the existence of abnormal conditions (whether physical or otherwise) which are occasioned by or through in consequence directly or indirectly, of any of the said occurrences shall be deemed to be loss or damage which is not covered by the insurance, except to the extent that the Insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions. In any action, suit or other proceeding where the Companies allege that by reason of the provisions of this condition any loss or damage is not covered by this insurance, the burden of proving that such loss or damage is covered shall be upon the Insured.

he !burden of proof! contemplated by the aforesaid provision actually refers to the !burden of evidence! (burden of going forward). As applied in this case, it refers to the duty of the insured to show that the loss or damage is covered by the policy. he foregoing clause notwithstanding, the burden of proof still rests upon petitioner to prove that the damage or loss was caused by an excepted ris" in order to escape any liability under the contract.

#articularly, in insurance cases, where a ris" is excepted by the terms of a policy which insures against other perils or ha$ards, loss from such a ris" constitutes a defense which the insurer may urge, since it has not assumed that ris", and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation set up. If a proof is made of a loss apparently within a contract of insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a cause which limits its liability. Consequently, it is sufficient for private respondent to prove the fact of damage or loss. %nce respondent ma"es out a prima facie case in its favor, the duty or the burden of evidence shifts to petitioner to controvert respondent&s prima facie case. In this case, since petitioner alleged an excepted ris", then the burden of evidence shifted to petitioner to prove such exception. It is only when petitioner has sufficiently proven that the damage or loss was caused by an excepted ris" does the burden of evidence shift bac" to respondent who is then under a duty of producing evidence to show why such excepted ris" does not release petitioner from any liability. 'nfortunately for petitioner, it failed to discharge its primordial burden of proving that the damage or loss was caused by an excepted ris".

UNITED MERCHANTS CORP v. COUNTRY BANKERS FACTS: Petitioner United Merchants Corporation (UMC) is engaged in the business of buying, selling, and manufacturing Christmas lights. UMC leased a warehouse at 19 ! "agot #treet, #an $ose #ubdi%ision, !arrio Manresa, &ue'on City, where UMC assembled and stored its products. (n ) #eptember 199*, UMC+s ,eneral Manager -lfredo .an insured UMC+s stoc/s in trade of Christmas lights against fire with defendant Country !an/ers 0nsurance Corporation (C!0C) for P1*,111,111.11. (n 2 May 199), UMC and C!0C e3ecuted 4ndorsement 569) 1*7 and 5ire 0n%oice 8o. 1)*9:to form part of the 0nsurance Policy. 4ndorsement 569) 1*7 pro%ides that UMC+s stoc/s in trade were insured against additional perils, to wit; <typhoon, flood, e3t. co%er, and full earth=ua/e.>

.he sum insured was also increased to P*1,111,111.11 effecti%e 2 May 199) to 11 $anuary 1992. (n 9 May 199), C!0C issued 4ndorsement 569) 1*2 where the name of the assured was changed from -lfredo .an to UMC. (n : $uly 199), a fire gutted the warehouse rented by UMC. C!0C designated C?M -d@ustment Corporation (C?M) to in%estigate and e%aluate UMC+s loss by reason of the fire. C!0C+s reinsurer, Central #urety, li/ewise re=uested the 8ational !ureau of 0n%estigation (8!0) to conduct a parallel in%estigation. (n ) $uly 199), UMC, through C?M, submitted to C!0C its #worn #tatement of 5ormal Claim, with proofs of its loss. (n A1 8o%ember 199), UMC demanded for at least fifty percent (*1B) payment of its claim from C!0C. (n A* 5ebruary 1992, UMC recei%ed C!0C+s letter, dated 11 $anuary 1992, re@ecting UMC+s claim due to breach of Condition 8o. 1* of the 0nsurance Policy. Condition 8o. 1* states; 0f the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or de%ices are used by the 0nsured or anyone acting in his behalf to obtain any benefit under this PolicyC or if the loss or damage be occasioned by the willful act, or with the conni%ance of the 0nsured, all the benefits under this Policy shall be forfeited.D)E

HELD: UMC contends that because it had already established a prima facie case against C!0C which failed to pro%e its defense, UMC is entitled to claim the full co%erage under the 0nsurance Policy. (n the other hand, C!0C contends that because arson and fraud attended the claim, UMC is not entitled to reco%er under Condition 8o. 1* of the 0nsurance Policy. !urden of proof is the duty of any party to present e%idence to establish his claim or defense by the amount of e%idence re=uired by law, D19E which is preponderance of e%idence in ci%il cases.DA1E .he party, whether plaintiff or defendant, who asserts the affirmati%e of the issue has the burden of proof to obtain a fa%orable @udgment. DA1E Particularly, in insurance cases, once an insured ma/es out a prima facie case in its fa%or, the burden of e%idence shifts to the insurer to contro%ert the insured+s prima facie case.DAAE 0n the present case, UMC established a prima facie case against C!0C. C!0C does not dispute that UMC+s stoc/s in trade were insured against fire under the 0nsurance Policy and that the warehouse, where UMC+s stoc/s in trade were stored, was gutted by fire on : $uly 199), within the duration of the fire insurance. Fowe%er, since C!0C alleged an e3cepted ris/, then the burden of e%idence shifted to C!0C to pro%e such e3ception. -n insurer who see/s to defeat a claim because of an e3ception or limitation in the policy has the burden of establishing that the loss comes within the pur%iew of the e3ception or limitation.DA:E 0f loss is pro%ed apparently within a contract of insurance, the burden is upon the insurer to establish that the loss arose from a cause of loss which is e3cepted or for which it is not liable, or from a cause which limits its liability. DA7E 0n the present case, C!0C failed to

discharge its primordial burden of establishing that the damage or loss was caused by arson, a limitation in the policy. 0n prosecutions for arson, proof of the crime charged is complete where the e%idence establishes; (1) the corpus delicti, that is, a fire caused by a criminal actC and (A) the identity of the defendants as the one responsible for the crime. DA*E Corpus delicti means the substance of the crime, the fact that a crime has actually been committed. DA)E .his is satisfied by proof of the bare occurrence of the fire and of its ha%ing been intentionally caused.DA2E 0n the present case, C!0C+s e%idence did not pro%e that the fire was intentionally caused by the insured. First, the findings of C!0C+s witnesses, Cabrera and Ga'aro, were based on an in%estigation conducted more than four months after the fire. .he testimonies of Cabrera and Ga'aro, as to the bo3es doused with /erosene as told to them by barangay officials, are hearsay because the barangay officials were not presented in court. Cabrera and Ga'aro e%en admitted that they did not conduct a forensic in%estigation of the warehouse nor did they file a case for arson.DA9E Second, the #worn #tatement of 5ormal Claim submitted by UMC, through C?M, states that the cause of the fire was faulty electrical wiring/accidental in nature. C!0C is bound by this e%idence because in its -nswer, it admitted that it designated C?M to e%aluate UMC+s loss. Third, the Certification by the !ureau of 5ire Protection states that the fire was accidental in origin. .his Certification en@oys the presumption of regularity, which C!0C failed to rebut. Contrary to UMCs a !"at#on$ CBICs %a# &r! to 'rov! arson (o!s not )!an t*at #t a so %a# !( to 'rov! %ra&(. 0n the present case, arson and fraud are two separate grounds based on two different sets of e%idence, either of which can %oid the insurance claim of UMC. .he absence of one does not necessarily result in the absence of the other. 0n the present case, as proof of its loss of stoc/s in trade amounting to P*1,111,111.11, UMC submitted its #worn #tatement of 5ormal Claim together with the following documents; (1) letters of credit and in%oices for raw materials, Christmas lights and cartons purchasedC (A) charges for assembling the Christmas lightsC and (:) deli%ery receipts of the raw materials. Fowe%er, the charges for assembling the Christmas lights and deli%ery receipts could not support its insurance claim. .he 0nsurance Policy pro%ides that C!0C agreed to insure UMC+s stoc/s in trade. UMC defined stoc/ in trade as tangible personal property kept for sale or traffic. D::E -pplying UMC+s definition, only the letters of credit and in%oices for raw materials, Christmas lights and cartons may be considered. .he in%oices, howe%er, cannot be ta/en as genuine. .he in%oices re%eal that the stoc/s in trade purchased for 199) amounts to PA1,111,111.11 which were purchased in one month. .hus, UMC needs to pro%e purchases amounting to P:1,111,111.11 worth of stoc/s in trade for 199* and prior years. Fowe%er, in the #tatement of 0n%entory it submitted to the !0?, which is considered an entry in official records,D:7E UMC stated that it had no stoc/s in trade as of :1 "ecember 199*. 0n its defense, UMC alleged that it did not include as stoc/s in trade the raw materials to be assembled as Christmas lights, which it had on :1 "ecember 199*. Fowe%er, as proof of its loss,

UMC submitted in%oices for raw materials, /nowing that the insurance co%ers only stoc/s in trade. 5urthermore, UMC+s 0ncome #tatement indicated that the purchases or costs of sales are P9A2,)21.11 for 199* and P1,119,191.11 for 199) or a total ofP1,9:),9)1.11.D:9E .o corroborate this fact, 4bora testified that; &; !ased on your 199* purchases, how much were the purchases made in 199*H -; The purchases made by United Merchants Corporation for the last year 1995 is P827, 7!"#!!$ sir &; -nd how about in 1997H -; 0n 1997, it+s P)19,99).11 sir. &; .hese purchases were made for the entire year of 199* and 1997 respecti%ely, am 0 correctH -; Ies sir, for the year 1997 and 199*.D71E (4mphasis supplied) 0n its 199) 5inancial ?eport, which UMC admitted as e3isting, authentic and duly e3ecuted during the 7 "ecember A11A hearing, it had P1,1*1,9)A.21 as total assets and P1)2,1*9.72 as total liabilities.D71E .hus, either amount in UMC+s 0ncome #tatement or 5inancial ?eports is twenty fi!e times the claim UMC see/s to enforce. .he ?.C itself recogni'ed that UMC padded its claim when it only allowed P7:,9:1,A:1.11 as insurance claim. UMC supported its claim of P*1,111,111.11 with the Certification from the !ureau of 5ire Protection stating that <3 3 3 a fire bro/e out at United Merchants Corporation located at 19 ! "agDoEt #treet, !rgy. Manresa, &ue'on City incurring an estimated damage of 5ifty 5i%e Million Pesos (P**,111,111.11) to the building and contents 3 3 3.> Fowe%er, this Certification only pro%ed that the estimated damage ofP**,111,111.11 is shared by both the building and the stoc/s in trade. 0t has long been settled that a false and material statement made with an intent to decei%e or defraud %oids an insurance policy. (n UMC+s allegation that it did not breach any warranty, it may be argued that the discrepancies do not, by themsel%es, amount to a breach of warranty. Fowe%er, the 0nsurance Code pro%ides that <a policy may declare that a %iolation of specified pro%isions thereof shall a%oid it.> D79E .hus, in fire insurance policies, which contain pro%isions such as Condition 8o. 1* of the 0nsurance Policy, a fraudulent discrepancy between the actual loss and that claimed in the proof of loss %oids the insurance policy. Mere filing of such a claim will e3onerate the insurer.D*1E Considering that all the circumstances point to the ine%itable conclusion that UMC padded its claim and was guilty of fraud, UMC %iolated Condition 8o. 1* of the 0nsurance Policy. .hus, UMC forfeited whate%er benefits it may be entitled under the 0nsurance Policy, including its insurance claim.

DOUBLE INSURANCE MALAYAN INSURANCE v. PHILIPPINES FIRST INSURANCE FACTS: (ince )*+*, ,yeth #hilippines, Inc. (,yeth) and respondent -eputable .orwarder (ervices, Inc. (-eputable) had been annually executing a contract of carriage, whereby the latter undertoo" to transport and deliver the former&s products to its customers, dealers or salesmen. %n /ovember )+, )**0, ,yeth procured 1arine #olicy /o. 1A- )02*2 (1arine #olicy) from respondent #hilippines .irst Insurance Co., Inc. (#hilippines .irst) to secure its interest over its own products. #hilippines .irst thereby insured ,yeth&s nutritional, pharmaceutical and other products usual or incidental to the insured&s business while the same were being transported or shipped in the #hilippines. he policy covers all ris"s of direct physical loss or damage from any external cause, if by land, and provides a limit of #3,444,444.44 per any one land vehicle. %n 5ecember ), )**0, ,yeth executed its annual contract of carriage with -eputable. It turned out, however, that the contract was not signed by ,yeth&s representative6s. /evertheless, it was admittedly signed by -eputable&s representatives, the terms thereof faithfully observed by the parties and, as previously stated, the same contract of carriage had been annually executed by the parties every year since )*+*. 'nder the contract, -eputable undertoo" to answer for !all ris"s with respect to the goods and shall be liable to the C%1#A/7 (,yeth), for the loss, destruction, or damage of the goods6products due to any and all causes whatsoever, including theft, robbery, flood, storm, earthqua"es, lightning, and other force ma8eure while the goods6products are in transit and until actual delivery to the customers, salesmen, and dealers of the C%1#A/7!. he contract also required -eputable to secure an insurance policy on ,yeth&s goods. hus, on .ebruary )), )**9, -eputable signed a (pecial -is" Insurance #olicy ((#olicy) with petitioner 1alayan for the amount of #),444,444.44. %n %ctober 3, )**9, during the effectivity of the 1arine #olicy and (- #olicy, -eputable received from ,yeth ),444 boxes of #romil infant formula worth #:,0;2,;+:.24 to be delivered by -eputable to 1ercury 5rug Corporation in <ibis, =ue$on City. 'nfortunately, on the same date, the truc" carrying ,yeth&s products was hi8ac"ed by about )4 armed men. hey threatened to "ill the truc" driver and two of his helpers should they refuse to turn over the truc" and its contents to the said highway robbers. he hi8ac"ed truc" was recovered two wee"s later without its cargo.

%n 1arch +, )**;, #hilippines .irst, after due investigation and ad8ustment, and pursuant to the 1arine #olicy, paid ,yeth #:,)00,:;2.44 as indemnity. #hilippines .irst then demanded reimbursement from -eputable, having been subrogated to the rights of ,yeth by virtue of the payment. he latter, however, ignored the demand. Consequently, #hilippines .irst instituted an action for sum of money against -eputable on August ):, )**3. In its complaint, #hilippines .irst stated that -eputable is a !private corporation engaged in the business of a common carrier.! In its answer, -eputable claimed that it is a private carrier. It also claimed that it cannot be made liable under the contract of carriage with ,yeth since the contract was not signed by ,yeth&s representative and that the cause of the loss was force ma8eure, i.e., the hi8ac"ing incident. (ubsequently, -eputable impleaded 1alayan as third>party defendant in an effort to collect the amount covered in the (- #olicy. According to -eputable, !it was validly insured with 1alayan for #),444,444.44 with respect to the lost products under the latter&s Insurance #olicy /o. (->444)>4:;22 effective .ebruary ), )**9 to .ebruary ), )**;! and that the (- #olicy covered the ris" of robbery or hi8ac"ing. 5isclaiming any liability, 1alayan argued, among others, that under (ection ; of the (#olicy, the insurance does not cover any loss or damage to property which at the time of the happening of such loss or damage is insured by any marine policy and that the (- #olicy expressly excluded third>party liability.

HELD: 1alayan refers to (ection ; of its (- #olicy as an !over insurance clause! and to (ection ): as a !modified ?other insurance& clause!. In rendering inapplicable said provisions in the (- #olicy, the CA ruled in this wise@ (ince (ec. ; calls for 1alayan&s complete absolution in case the other insurance would be sufficient to cover the entire amount of the loss, it is in direct conflict with (ec. ): which provides only for a pro>rated contribution between the two insurers. Aeing the later provision, and pursuant to the rules on interpretation of contracts, (ec. ): should therefore prevail. xxxx x x x he intention of both -eputable and 1alayan should be given effect as against the wordings of (ec. ): of their contract, as it was intended by the parties to operate only in case of double insurance, or where the benefits of the policies of both plaintiff>appellee and 1alayan should pertain to -eputable alone. Aut since the court a quo correctly ruled that there is no double insurance in this case inasmuch as -eputable was not

privy thereto, and therefore did not stand to benefit from the policy issued by plaintiff> appellee in favor of ,yeth, then 1alayan&s stand should be re8ected. o rule that (ec. ): operates even in the absence of double insurance would wor" in8ustice to -eputable which, despite paying premiums for a #),444,444.44 insurance coverage, would not be entitled to recover said amount for the simple reason that the same property is covered by another insurance policy, a policy to which it was not a party to and much less, from which it did not stand to benefit. #lainly, this unfair situation could not have been the intention of both -eputable and 1alayan in signing the insurance contract in question. In questioning said ruling, 1alayan posits that (ections ; and ): are separate provisions applicable under distinct circumstances. 1alayan argues that !it will not be completely absolved under (ection ; of its policy if it were the assured itself who obtained additional insurance coverage on the same property and the loss incurred by ,yeth&s cargo was more than that insured by #hilippines .irst&s marine policy. %n the other hand, (ection ): will not completely absolve 1alayan if additional insurance coverage on the same cargo were obtained by someone besides -eputable, in which case 1alayan&s (- policy will contribute or share ratable proportion of a covered cargo loss.! 1alayan&s position cannot be countenanced. (ection ; is actually the other insurance clause (also called !additional insurance! and !double insurance!), one a"in to Condition /o. 0 in issue in Beagonia v. CA, which validity was upheld by the Court as a warranty that no other insurance exists. he Court ruled that Condition /o. 0 is a condition which is not proscribed by law as its incorporation in the policy is allowed by (ection 2; of the Insurance Code. It was also the Court&s finding that unli"e the other insurance clauses, Condition /o. 0 does not absolutely declare void any violation thereof but expressly provides that the condition !shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than #:44,444.44.! In this case, similar to Condition /o. 0 in Beagonia, (ection ; does not provide for the nullity of the (- #olicy but simply limits the liability of 1alayan only up to the excess of the amount that was not covered by the other insurance policy. In interpreting the !other insurance clause! in Beagonia, the Court ruled that the prohibition applies only in case of double insurance. he Court ruled that in order to constitute a violation of the clause, the other insurance must be upon same sub8ect matter, the same interest therein, and the same ris". hus, even though the multiple insurance policies involved were all issued in the name of the same assured, over the same sub8ect matter and covering the same ris", it was ruled that there was no violation of the !other insurance clause! since there was no double insurance. (ection ): of the (- #olicy, on the other hand, is the over insurance clause. 1ore particularly, it covers the situation where there is over insurance due to double

insurance. In such case, (ection ); provides that 1alayan shall !not be liable to pay or contribute more than its ratable proportion of such loss or damage.! his is in accord with the principle of contribution provided under (ection *9(e) of the Insurance Code, which states that !where the insured is over insured by double insurance, each insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract.! Clearly, both (ections ; and ): presuppose the existence of a double insurance. he pivotal question that now arises is whether there is double insurance in this case such that either (ection ; or (ection ): of the (- #olicy may be applied. Ay the express provision of (ection *0 of the Insurance Code, double insurance exists where the same person is insured by several insurers separately in respect to the same sub8ect and interest. he requisites in order for double insurance to arise are as follows@ ). he person insured is the sameC :. wo or more insurers insuring separatelyC 0. here is identity of sub8ect matterC 9. here is identity of interest insuredC and ;. here is identity of the ris" or peril insured against. In the present case, while it is true that the 1arine #olicy and the (- #olicy were both issued over the same sub8ect matter, i.e. goods belonging to ,yeth, and both covered the same peril insured against, it is, however, beyond cavil that the said policies were issued to two different persons or entities. It is undisputed that ,yeth is the recogni$ed insured of #hilippines .irst under its 1arine #olicy, while -eputable is the recogni$ed insured of 1alayan under the (- #olicy. he fact that -eputable procured 1alayan&s (- #olicy over the goods of ,yeth pursuant merely to the stipulated requirement under its contract of carriage with the latter does not ma"e -eputable a mere agent of ,yeth in obtaining the said (- #olicy. he interest of ,yeth over the property sub8ect matter of both insurance contracts is also different and distinct from that of -eputable&s. he policy issued by #hilippines .irst was in consideration of the legal and6or equitable interest of ,yeth over its own goods. %n the other hand, what was issued by 1alayan to -eputable was over the latter&s insurable interest over the safety of the goods, which may become the basis of the latter&s liability in case of loss or damage to the property and falls within the contemplation of (ection ); of the Insurance Code. herefore, even though the two concerned insurance policies were issued over the same goods and cover the same ris", there arises no double insurance since they were issued to two different persons6entities having distinct insurable interests. /ecessarily,

over insurance by double insurance cannot li"ewise exist. Dence, as correctly ruled by the - C and CA, neither (ection ; nor (ection ): of the (- #olicy can be applied. Apart from the foregoing, the Court is also wont to strictly construe the controversial provisions of the (- #olicy against 1alayan. 1wphi1 his is in "eeping with the rule that@ !Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured, where the contract or policy is prepared by the insurer. A contract of insurance, being a contract of adhesion, par excellence, any ambiguity therein should be resolved against the insurerC in other words, it should be construed liberally in favor of the insured and strictly against the insurer. <imitations of liability should be regarded with extreme 8ealousy and must be construed in such a way as to preclude the insurer from noncompliance with its obligations.! 1oreover, the CA correctly ruled that@ o rule that (ec. ): operates even in the absence of double insurance would wor" in8ustice to -eputable which, despite paying premiums for a #),444,444.44 insurance coverage, would not be entitled to recover said amount for the simple reason that the same property is covered by another insurance policy, a policy to which it was not a party to and much less, from which it did not stand to benefit. x x x %n the fourth issue E -eputable is not solidarily liable with 1alayan. here is solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires. In Deirs of Beorge 7. #oe v. 1alayan lnsurance Company., lnc., the Court ruled that@ ,here the insurance contract provides for indemnity against liability to third persons, the liability of the insurer is direct and such third persons can directly sue the insurer. he direct liability of the insurer under indemnity contracts against third partyF> Gliability does not mean, however, that the insurer can be held solidarily liable with the insured and6or the other parties found at fault, since they are being held liable under different obligations. he liability of the insured carrier or vehicle owner is based on tort, in accordance with the provisions of the Civil CodeC while that of the insurer arises from contract, particularly, the insurance policy@ (Citation omitted and emphasis supplied) (uffice it to say that 1alayanHs and -eputableHs respective liabilities arose from different obligations> 1alayanHs is based on the (- #olicy while -eputableHs is based on the contract of carriage. All told, the Court finds no reversible error in the 8udgment sought to be reviewed.

CATHAY INSURANCE CO. v. CA (REMINGTON INDUSTRIAL SALES CORP.) 1=1 SCRA 710PARAS; June 30 1(87 FACTS # Re/in&t n In)u*tria' Sa'e* C r0 in*ure) it* *$i0/ent ! *ea/'e** *tee' 0i0e*1 It in"urre) ' **e* an) )a/a&e* 3I &at$er t$e *tee' 0i0e* ru*te) )urin& t$e % ya&e !r / Ja0an t t$e P$i'*1 n . ar) %e**e' SS >Ea*tern Mariner?4 an) !i'e) " /0'aint a&ain*t Cat$ay In*uran"e C *ee,in& " ''e"ti n ! t$e *u/ ! P868,33(11=# TC )e"i)e) ! r Re/in&t n1 Cat$ay !i'e) MR, +$i"$ +a* )enie)1 CA a!!ir/e)1# CA *ai) 3a/ n& t$er t$in&*45 11 C %era&e ! 0ri%ate re*0 n)ent@* ' ** un)er t$e in*uran"e 0 'i"y i**ue) .y 0etiti ner i* un/i*ta,a.'e;21 A''e&e) " ntra"tua' 'i/itati n* " ntaine) in in*uran"e 0 'i"ie* are re&ar)e) +it$ e2tre/e "auti n .y " urt* an) are t .e *tri"t'y " n*true) a&ain*t t$e in*urer; .*"ure 0$ra*e* an) e2"e0ti n* *$ u') n t .e a'' +e) t )e!eat t$e %ery 0ur0 *e ! r +$i"$ t$e 0 'i"y +a* 0r "ure);31 Ru*t i* n t an in$erent %i"e ! t$e *ea/'e** *tee' 0i0e* +it$ ut inter!eren"e ! e2terna' !a"t r*# Cathay " nten) 3a/ n& t$er t$in&*45 11 0ri%ate re*0 n)ent $a* a)/itte) t$at t$e 6ue*ti ne) *$i0/ent i* n t " %ere) .y a >*6uare 0r %i*i n ! t$e " ntra"t,> .ut0ri%ate re*0 n)ent "'ai/* i/0'ie) " %era&e !r / t$e 0$ra*e >0eri'* ! t$e *ea> /enti ne) in t$e 0enin& *enten"e ! t$e 0 'i"y; 21 T$e in*i*ten"e ! 0ri%atere*0 n)ent t$at ru*tin& i* a 0eri' ! t$e *ea i* err ne u*; 31 Ru*tin& i* n t a ri*, in*ure) a&ain*t, *in"e a ri*, t .e in*ure) a&ain*t *$ u') .e a "a*ua'ty r * /e"a*ua'ty, * /et$in& +$i"$ " u') n t .e ! re*een a* ne ! t$e ne"e**ary in"i)ent* ! a)%enture; 41 A !a"t "a0a.'e ! un6ue*ti na.'e )e/ n*trati n r ! 0u.'i",n +'e)&e nee)* n e%i)en"e1 T$i* !a"t ! un6ue*ti na.'e )e/ n*trati n r ! 0u.'i" ,n +'e)&e i* t$at $ea%y ru*tin& ! *tee' r ir n 0i0e* "ann t ""ur +it$in a0eri ) ! a *e%en 374 )ay % ya&e1 -e*i)e*, 0etiti ner $a) intr )u"e) t$e "'ear "ar& re"ei0t* r ta''y *$eet* in)i"atin& t$at t$ere +a* n )a/a&e n t$e *tee' 0i0e*)urin& t$e % ya&e1 ISSUE 7;N ru*tin& i* a A0eri' ! t$e *ea? HELD <ES# T$ere i* n 6ue*ti n t$at t$e ru*tin& ! *tee' 0i0e* in t$e " ur*e ! a % ya&e i* a >0eri' ! t$e *ea> in %ie+ ! t$e t '' n t$e "ar& ! +in), +ater, an) *a't " n)iti n*1At any rate i! t$e in*urer "ann t .e $e') a"" unta.'e t$ere! r, 7e + u') !ai' t .*er%e a "ar)ina' ru'e in

t$e inter0retati n ! " ntra"t*, na/e'y, t$at any a/.i&uityt$erein *$ u') .e " n*true) a&ain*t t$e /a,er8i**uer8)ra!ter t$ere !, na/e'y, t$e in*urer1 -e*i)e* t$e 0re"i*e 0ur0 *e ! in*urin& "ar& )urin& a % ya&e + u') .eren)ere) !ruit'e**1 Di !" iti"# 7:EREB;RE, t$i* 0etiti n i* $ere.y CENIEC, an) t$e a**ai'e) )e"i*i n ! t$e C urt ! A00ea'* i* $ere.y ABBIRMEC RO$UE v. IAC (PIONEER INSURANCE AND SURETY CORP.) NATURE Petiti n ! r "erti rari t re%ie+ t$e )e"i*i n ! t$e IAC FACTS # Be.ruary 1(, 1(72 C // n "arrier Mani'a -ay Di&$tera&e C r01 entere) int a " ntra"t +it$ R 6ue Ti/.er Enter0ri*e* an) C$i n&1 T$e " ntra"t *tate) t$at Mani'a -ay + u') "arry 422118 "u1 /eter* ! ' &* n it* %e**e' Ma.'e 10 !r / Ma'a/0aya S un), Pa'a+an t Mani'a N rt$ :ar. r1 R 6ue in*ure) t$e ' &* +it$ Pi neer In*uran"e ! r P100,0001# Be.ruary 2(, 1(72 811 ' &* +ere ' a)e) in Ma'a/0aya .ut en r ute t Mani'a, Ma.'e 10 *an,1# Mar"$ 8,1(72 R 6ue an) C$i n& +r te a 'etter t Mani'a -ay, )e/an)in& 0ay/ent ! P1=0,000100 ! r t$e ' ** ! t$e *$i0/ent 0'u* P100,000100 a* unrea'iEe) 0r !it* .ut t$e 'atter i&n re) t$e )e/an)1# A 'etter +a* a'* *ent t Pi neer, "'ai/in& t$e !u'' a/ unt ! P100,000100 un)er t$e in*uran"e 0 'i"y .ut Pi neer re!u*e) t 0ay n t$e &r un) t$at it* 'ia.i'ity )e0en)e) u0 n t$e >T ta' D ** .y T ta' D ** ! Fe**e' n'y>1# A!ter $earin&, t$e tria' " urt !a% re) R 6ue1 Pi neer an) Mani'a -ay +ere r)ere) t 0ay R 6ue P100,0001 Pi neer a00ea'e) t$e )e"i*i n1# January 30, 1(84 Pi neer +a* a.* '%e) !r / 'ia.i'ity a!ter !in)in& t$at t$ere +a* a .rea"$ ! i/0'ie) +arranty ! *ea+ rt$ine** n t$e 0art ! t$e 0etiti ner* an) t$at t$e ' ** ! t$e in*ure) "ar& +a* "au*e) .y t$e >0eri'* ! t$e *$i0> an) n t .y t$e >0eri'* ! t$e *ea>1 It ru'e) t$at t$e ' ** i* n t " %ere) .y t$e /arine in*uran"e 0 'i"y1# It +a* a''e&e) t$at Ma.'e 10 +a* n t *ea+ rt$y an) t$at it )e%e' 0e) a 'ea,# T$e IAC ! un) t$at ne ! t$e $at"$e* +a* 'e!t 0en, "au*in& +ater t enter t$e .ar&e an) .e"au*e t$e .ar&e +a* n t 0r %i)e) +it$ t$e ne"e**ary " %er r tar0au'in, t$e *0'a*$ ! *ea +a%e* .r u&$t / re +ater in*i)e t$e .ar&e1# Petiti ner* " nten) t$at t$e i/0'ie) +arranty ! *ea+ rt$ine** 0r %i)e) ! r in t$e In*uran"e C )e re!er* n'y t t$e re*0 n*i.i'ity ! t$e *$i0 +ner +$ /u*t *ee t it t$at $i* *$i0 i* rea* na.'y !it t /a,e in *a!ety t$e " nte/0'ate) % ya&e1# T$e 0etiti ner* *tate t$at a /ere

*$i00er ! "ar& , $a%in& n " ntr ' %er t$e *$i0, $a* n t$in& t ) +it$ it* *ea+ rt$ine**1 T$ey ar&ue t$at a "ar& +ner $a* n " ntr ' %er t$e *tru"ture ! t$e *$i0, it* "a.'e*, an"$ r*, !ue' an) 0r %i*i n*, t$e /anner ! ' a)in& $i* "ar& an) t$e "ar& ! t$er *$i00er*, an) t$e $irin& ! a *u!!i"ient nu/.er ! " /0etent !!i"er* an) *ea/en1 ISSUE 7;N t$e ' ** *$ u') $a%e .een " %ere) .y t$e /arine in*uran"e 0 'i"y HELD N; Rati" It i* uni%er*a''y a""e0te) t$at in e%ery " ntra"t ! in*uran"e u0 n anyt$in& +$i"$ i* t$e *u.Ge"t ! /arine in*uran"e, a +arranty i* i/0'ie) t$at t$e *$i0 *$a'' .e *ea+ rt$y at t$e ti/e ! t$e in"e0ti n ! t$e % ya&e1 In /arine in*uran"e, t$e ri*,* in*ure) a&ain*t are "'a**i!ie) a* @0eri'* ! t$e *ea,9 +$i"$ in"'u)e* *u"$ ' **e* t$at are ! e2tra r)inary nature, r ari*e !r / * /e %er+$e'/in& 0 +er, +$i"$ "ann t .e &uar)e) a&ain*t .y t$e r)inary e2erti n ! $u/an *,i'' an) 0ru)en"e1 R%a "#i#& # -a*e) n Se"1 113 an) Se"1 (( ! t$e In*uran"e C )e, t$e ter/ >"ar& > "an .e t$e *u.Ge"t ! /arine in*uran"e an) t$at n"e it i* * /a)e, t$e i/0'ie) +arranty ! *ea+ rt$ine** i//e)iate'y atta"$e* t +$ e%er i* in*urin& t$e "ar& +$et$er $e .e t$e *$i0 +ner r n t1# T$e !a"t t$at t$e un#*ea+ rt$ine** ! t$e *$i0 +a* un,n +n t t$e in*ure) i* i//ateria' in r)inary /arine in*uran"e an) /ay n t .e u*e) .y $i/ a* a )e!en*e in r)er t re" %er n t$e /arine in*uran"e 0 'i"y1# Sin"e t$e 'a+ 0r %i)e* ! r an i/0'ie) +arranty ! *ea+ rt$ine** in e%ery " ntra"t ! r)inary /arine in*uran"e, it .e" /e* t$e .'i&ati n ! a "ar& +ner t ' , ! r a re'ia.'e " // n "arrier +$i"$ ,ee0* it* %e**e'* in *ea+ rt$y " n)iti n1 T$e *$i00er ! "ar& /y $a%e n " ntr ' %er t$e %e**e' .ut $e $a* !u'' " ntr ' in t$e "$ i"e ! t$e " // n "arrier t$at +i'' tran*0 rt $i* & )*1# In /arine "a*e*, t$e ri*,* in*ure) a&ain*t are @0eri'* ! t$e *ea19 T$e ter/ e2ten)* n'y t ' **e* "au*e) .y *ea )a/a&e, r .y t$e %i 'en"e ! t$e e'e/ent*, an) ) e* n t e/.ra"e a'' ' **e* $a00enin& at *ea1# It i* 6uite un/i*ta,a.'e t$at t$e ' ** ! t$e "ar& +a* )ue t t$e 0eri'* ! t$e *$i0 rat$er t$an t$e 0eri'* ! t$e *ea1# D ** +$i"$, in t$e r)inary " ur*e ! e%ent*, re*u't* !r / t$e natura' an) ine%ita.'e a"ti n ! t$e *ea, !r / t$e r)inary +ear an) tear ! t$e *$i0, r !r / t$e ne&'i&ent !ai'ure ! t$e *$i0@* +ner t 0r %i)e t$e %e**e' +it$ 0r 0er e6ui0/ent t " n%ey t$e "ar& un)er r)inary " n)iti n*, i* n t a H0eri' ! t$e *ea9 .ut i* "a''e) H0eri' ! t$e *$i019 Di !" iti"#

Ce"i*i n a00ea'e) !r / i* a!!ir/e)1 Oriental Assurance Corporation vs. CA [G.R. No. 94052 August 9, 1991, 200 SCRA 459 Fa't ( Pana/a . u&$t, in Pa'a+an, 1,208 0ie"e* ! a0it n& ' &*, +it$ a t ta' % 'u/e ! 2,000 "u.i" /eter*1 It $ire) Tran*0a"i!i" T +a&e, In"1, t tran*0 rt *ai) ' &* .y *ea t Mani'a an) in*ure) it a&ain*t ' ** ! r P1#M +it$ ;rienta' A**uran"e1 T$e 0 'i"y +a* i**ue)1 It i* *ti0u'ate) t$ere, a/ n& t$er*, t$at t$e *u.Ge"t /atter in*ure) i* 2,000 "u.i" /eter* ! a0it n& ' &* an) t$at t$e %e**e'* t .e uti'iEe) are t$e ! '' +in&5 MT1 @Se/in 'e@, -ar&ePCT#7000 ! r t$e 1,000 "u.i" /eter ! a0it n& ' &* an) -ar&eTran*0a"#1000 ! r t$e t$er 1,000 "u.i" /eter ! a0it n& ' &*1 It i* a'* *ti0u'ate) in t$e 0 'i"y t$at t$e in*uran"e i* a&ain*t T;TAD D;SS n'y, an) it i* *u.Ge"t t t$e ! '' +in& "'au*e*, t +it5 Ci%i' C )e Arti"'e 12=0 7ai%er "'au*e, Ty0$ n +arranty "'au*e, an) ;/ni.u* "'au*e1 T$e ' &* +ere ' a)e) n t$e 2 .ar&e*5314 n .ar&e PCT#7000, 610 0ie"e* ! ' &* +it$ a % 'u/e ! 1,000 "u.i" /eter*; an) 324 n -ar&eTPAC#1000, =(8 0ie"e* ! ' &*, a'* +it$ a % 'u/e ! 1,000 "u.i" /eter*1 ;n 28 January 1(86, t$e 2 .ar&e* +ere t +e) .y MT @Se/in 'e@3tu&. at4, )urin& t$e % ya&e, r u&$ *ea* an) *tr n& +in)* "au*e) )a/a&e t -ar&e TPAC#1000 re*u'tin& in t$e ' ** ! 4(7 0ie"e* ! ' &* ut ! t$e =(8 0ie"e* ' a)e) t$ere n1 Pana/a )e/an)e) 0ay/ent ! r t$e ' ** .ut ;rienta' A**uran"e re!u*e) n t$e &r un) t$at it* " ntra"te) 'ia.i'ity +a* ! r >T;TAD D;SS ;ND<1> C n*e6uent'y, Pana/a !i'e) a C /0'aint ! r Ca/a&e* a&ain*t E%er In*uran"e A&en"y 3a''e&e)'y, a'* 'ia.'e4, -enit Sy Dee < n& an) ;rienta' A**uran"e, .e! re t$e RTC#Ia' ,an1 RTC ren)ere) a )e"i*i n r)erin& ;rienta' A**uran"e t 0ay Pana/a P41=,000100 a* in*uran"e in)e/nity1 - t$ 0artie* a00ea'e)1 T$e a00e''ate " urt a!!ir/e) t$e RTC )e"i*i n1 - t$ RTC an) CA *$are) t$e %ie+ t$at t$e in*uran"e " ntra"t *$ u') .e 'i.era''y " n*true) in r)er t a% i) a )enia' ! *u.*tantia' Gu*ti"e; t$at t$e ' &* ' a)e) in t$e t+ .ar&e* *$ u') .e treate) *e0arate'y *u"$ t$at t$e ' ** *u*taine) .yt$e *$i0/ent in ne ! t$e/ /ay .e " n*i)ere) a* >" n*tru"ti%e t ta' ' **> an) " rre*0 n)in&'y " /0en*a.'e1 ;rienta' A**uran"e !i'e) a 0etiti n ! r re%ie+ n "erti rari "$a''en&in& t$e a! re*ai) )i*0 *iti n*1 I )%( I* ;rienta' A**uran"e 'ia.'eJ H%*+( N 1 T$e SC $e') t$at t$e ter/* ! t$e " ntra"t " n*titute t$e /ea*ure ! t$e in*urer9* 'ia.i'ity an) " /0'ian"e t$ere+it$ i* a " n)iti n 0re"e)ent t t$e in*ure)@* ri&$t t re" %ery !r / t$e

in*urer1 T$at +$et$er a " ntra"t i* entire r *e%era.'e i* a 6ue*ti n ! intenti n t .e )eter/ine) .y t$e 'an&ua&e e/0' ye) .y t$e 0artie*1 T$e 0 'i"y in 6ue*ti n *$ +* t$at t$e *u.Ge"t /atter in*ure) +a* t$e entire *$i0/ent ! 2,000 "u.i" /eter* ! a0it n& ' &*1 T$e !a"t t$at t$e ' &* +ere ' a)e) n t+ )i!!erent .ar&e* )i) n t /a,e t$e " ntra"t *e%era' an) )i%i*i.'e a* t t$e ite/* in*ure)1 T$e ' &* n t$e t+ .ar&e* +ere n t *e0arate'y %a'ue) r *e0arate'y in*ure)1 ;n'y ne 0re/iu/ +a* 0ai) ! r t$e entire *$i0/ent, /a,in& ! r n'y ne "au*e r " n*i)erati n1 T$e in*uran"e " ntra"t /u*t, t$ere! re, .e " n*i)ere) in)i%i*i.'e1 T$e 'a+ 0r %i)e* t$at a A" n*tru"ti%e t ta' ' **?, i* ne +$i"$ &i%e* t a 0er* n in*ure) .y a " ntra"t ! /arine in*uran"e a ri&$t t a.an) n t$in& in*ure), r any 0arti"u'ar 0 rti n t$ere ! *e0arate'y %a'ue) .y t$e 0 'i"y, r t$er+i*e *e0arate'y in*ure), an) re" %er ! r a t ta' ' ** t$ere !, +$en t$e "au*e ! t$e ' ** i* a 0eri' inGure) a&ain*t5 3a4 I! / re t$an t$ree#! urt$* t$ere ! in %a'ue i* a"tua''y ' *t, r + u') $a%e t .e e20en)e) t re" %er it !r / t$e 0eri'; 3.4 I! it i* inGure) t *u"$ an e2tent a* t re)u"e it* %a'ue / re t$an t$ree# ! urt$*1 T$e ' &* in% '%e), a't$ u&$ 0'a"e) in t+ .ar&e*, +ere n t *e0arate'y %a'ue) .y t$e 0 'i"y, n r *e0arate'y in*ure)1 Re*u'tant'y, t$e ' &* ' *t in .ar&e TPAC#1000 in re'ati n t t$e t ta' nu/.er ! ' &* ' a)e) n t$e *a/e .ar&e "ann t .e /a)e t$e .a*i* ! r )eter/inin& " n*tru"ti%e t ta' ' **1 T$e ' &* $a%in& .een in*ure) a* ne in*e0ara.'e unit, t$e " rre"t .a*i* ! r )eter/inin& t$e e2i*ten"e ! " n*tru"ti%e t ta' ' ** i* t$e t ta'ity ! t$e *$i0/ent ! ' &*1 ;! t$e entirety ! 1,208, 0ie"e* ! ' &*, n'y 4(7 0ie"e* t$ere ! +ere ' *t r 4114=K ! t$e entire *$i0/ent1 Sin"e t$e " *t ! t$ *e4(7 0ie"e* ) e* n t e2"ee) 7=K ! t$e %a'ue ! a'' 1,208 0ie"e* ! ' &*, t$e *$i0/ent "ann t .e *ai) t $a%e *u*taine) a " n*tru"ti%e t ta' ' **1 :en"e, n re" %ery "an .e $a) a&ain*t ;rienta' A**uran"e1 T$e 'atter $a* n 'ia.i'ity un)er t$e 0 'i"y1 Pa*%,-" v Py,a-i+ G.R.L../01234May /5456227

T$i* re!er* t t$e re6uire/ent ! 'i"en*e +$en /a,in& a %a'i) in*uran"e "'ai/1 -a*e) n t$i* "a*e, t$e re6uire/ent ! 'i"en*e ! r 0ur0 *e* ! "'ai/in& ! r in*uran"e i* a00'i"a.'e n'y +$en t$e ne )ri%in& i* * /e ne un)er t$e 0er/i**i n ! t$e in*ure) t )ri%e1 C n%er*e'y, t$e )e"i*i n in t$i* "a*e *tate) t$at in t$e e%ent t$at it i* t$e in*ure) $i/*e'! +$ i* )ri%in& t$e in*ure) %e$i"'e, t$e re6uire/ent ! a %a'i) 'i"en*e i* n t a re6uire/ent in /a,in& a %a'i) in*uran"e "'ai/1 T$ere! re, t$e in*ure) "an %a'i)'y "'ai/ ! r .ene!it* un)er t$e 0 'i"y e%en i! it i* 0r %en t$at t$e 'i"en*e ! t$e in*ure) i* e20ire) at t$e ti/e ! a""i)ent1 /6. G.R. N". L./0123 May /54 5622

ANDREW PALERMO4 0'ainti!!#a00e''ee, %*1 PYRAMID INSURANCE CO.4 INC.4 )e!en)ant# a00e''ant1 GRI8O.A$UINO4 9( PALERMO v . PYRAMID BACTS5 Pa'er/ in*ure) $i* "ar +it$ Pyra/i) a&ain*t ' ** r )a/a&e an) t$ir) 0arty 'ia.i'ity1 7$i'e Pa'er/ +a* )ri%in& $i* "ar, a !ire tru", .u/0e) *ai) "ar $ea) n "au*in& inGurie* t Pa'er/ , t$e )eat$ ! $i* !at$er +$ +a* t$en a 0a**en&er, an) a t ta' )a/a&e t t$e "ar in*ure)1 At t$e ti/e ! t$e a""i)ent, t$e 'i"en*e ! Pa'er/ +a* e20ire)1 T$e in*urer re!u*e) t / 0ay t$e 0r "ee)* ! t$e in*uran"e n t$e &r un) t$at t$e in*ure) +a* n t an aut$ riEe) )ri%er *in"e $i* 'i"en*e $a) e20ire) at t$e ti/e ! t$e a""i)ent1 ISSLE5 I* t$e in*urer9* re!u*a' t 0ay /erit ri u*J :EDC5 T$ere i* n /erit in t$e in*urer9* a''e&ati n t$at t$e in*ure) +a* n t aut$ riEe) t )ri%e t$e in*ure) / t r %e$i"'e .e"au*e $i* )ri%er9* 'i"en*e $a) e20ire)1 Th% +,iv%, ": th% i# ),%+ v%hi'*% at th% ti-% ": th% a''i+%#t ;a th% i# ),%+ hi- %*:4 h%#'% a# a)th",i<%+ +,iv%, )#+%, th% !"*i'y. Th% ,%=)i,%-%#t i# th% !"*i'y that th% +,iv%, -) t >% *i'%# %+ t" +,iv% )#+%, th% *a; +"% #"t a!!*y ;h%# th% !%, "# +,ivi#& i th% i# ),%+ hi- %*:. I: th% i# ),%+ hi- %*: i th% +,iv%, ": th% v%hi'*% i# ),%+4 h% ha th% ,i&ht t" ,%'"v%, th% +a-a&% th%,%t" %v%# i: h% ha #" +,iv%,? *i'%# % ", th% a-% ha+ %@!i,%+ at th% ti-% ": th% a''i+%#t. JE7ED FIDDAC;RTA %*1 T:E INSLRANCE C;MMISSI;NM1R1 N 1 D#=4171, 28 ;"t .er 1(80 100 SCRA 467 BACTS5 Fi''a" rta $a) $er C 't Dan"er "ar in*ure) +it$ E/0ire In*uran"e C /0any a&ain*t +n )a/a&e, t$e!t an) 3r) 0arty 'ia.i'ity1 7$i'e t$e "ar +a* in t$e re0air *$ 0, ne ! t$e

e/0' yee* ! t$e *ai) re0air *$ 0 t , it ut ! r a G yri)e a!ter +$i"$ it !i&ure) in a %e$i"u'ar a""i)ent1 T$i* re*u'te) t t$e )eat$ ! t$e )ri%er an) * /e ! t$e 0a**en&er* a* +e'' a* t e2ten*i%e )a/a&e t t$e "ar1 Fi''a" rta !i'e) a "'ai/ ! r t ta' ' ** +it$ t$e *ai) in*uran"e " /0any1 : +e%er, it )enie) t$e "'ai/ n t$e &r un) t$at t$e a""i)ent )i) n t !a'' +it$in t$e 0r %i*i n* ! t$e 0 'i"y eit$er ! r t$e ;+n Ca/a&e r T$e!t " %era&e, in% ,in& t$e 0 'i"y 0r %i*i n n AAut$ riEe) Cri%er C'au*e?1 T$i* +a* u0$e') .y t$e In*uran"e C //i**i n !urt$er *tatin& t$at t$e "ar +a* n t *t 'en an) t$ere! re n t " %ere) .y t$e T$e!t C'au*e .e"au*e it i* n t e%i)ent t$at t$e 0er* n +$ t , t$e "ar ! r a G yri)e inten)* t 0er/anent'y )e0ri%e t$e in*ure) ! $i*8 $er "ar1 ISSLE5 7$et$er r n t t$e in*urer " /0any *$ u') 0ay t$e *ai) "'ai/ :EDC5 <e*1 7$ere t$e in*ure)9* "ar i* +r n&!u''y ta,en +it$ ut t$e in*ure)9* " n*ent !r / t$e "ar *er%i"e an) re0air *$ 0 t +$ / it $a) .een entru*te) ! r "$e",#u0 an) re0air* 3a**u/in& t$at *u"$ ta,in& +a* ! r a G y ri)e, in t$e " ur*e ! +$i"$ it +a* t ta''y */a*$e) in an a""i)ent4, re*0 n)ent in*urer i* 'ia.'e an) /u*t 0ay in*ure) ! r t$e t ta' ' ** ! t$e in*ure) %e$i"'e un)er t$e T$e!t C'au*e ! t$e 0 'i"y1 A**u/in&, )e*0ite t$e t ta''y ina)e6uate e%i)en"e, t$at t$e ta,in& +a* Ate/0 rary? an) ! r a AG y ri)e?, t$e C urt *u*tain* a* t$e .etter %ie+ t$at +$i"$ $ ')* t$at +$en a 0er* n, eit$er +it$ t$e .Ge"t ! & in& t a "ertain 0'a"e, r 'earnin& $ + t )ri%e, r enG yin& a !ree ri)e, ta,e* 0 **e**i n ! a %e$i"'e .e' n&in& t an t$er, +it$ ut t$e " n*ent ! it* +ner, $e i* &ui'ty ! t$e!t .e"au*e .y ta,in& 0 **e**i n ! t$e 0er* na' 0r 0erty .e' n&in& t an t$er an) u*in& it, $i* intent t &ain i* e%i)ent *in"e $e )eri%e* t$ere!r / uti'ity, *ati*!a"ti n, enG y/ent an) 0'ea*ure1 ACC;RCINMD<, t$e a00ea'e) )e"i*i n i* *et a*i)e an) Gu)&/ent i* $ere.y ren)ere) *enten"in& 0ri%ate re*0 n)ent t 0ay 0etiti ner t$e *u/ ! P3=,000100 +it$ 'e&a'intere*t !r / t$e !i'in& ! t$e " /0'aint unti' !u'' 0ay/ent i* /a)e an) t 0ay t$e " *t* ! *uit1 :EDC5 T$e /ain 0ur0 *e ! t$e >aut$ riEe) )ri%er> "'au*e, a* /ay .e *een !r / it* te2t, *u0ra, i* t$at a 0er* n t$er t$an t$e in*ure) +ner, +$ )ri%e* t$e "ar nt $e in*ure)@* r)er, *u"$ a* $i* re&u'ar )ri%er, r +it$ $i* 0er/i**i n, *u"$ a* a !rien) r /e/.er ! t$e !a/i'y r t$e e/0' yee* ! a "ar *er%i"e r re0air *$ 0 /u*t .e )u'y 'i"en*e) )ri%er* an) $a%e n )i*6ua'i!i"ati n t )ri%e a / t r %e$i"'e1 A "ar +ner +$ entru*t* $i* "ar t an e*ta.'i*$e)

"ar *er%i"e an) re0air *$ 0 ne"e**ari'y entru*t* $i* "ar ,ey t t$e *$ 0 +ner an) e/0' yee* +$ are 0re*u/e) t $a%e t$e in*ure)@* 0er/i**i n t )ri%e t$e "ar ! r 'e&iti/ate 0ur0 *e* ! "$e",in& r r a)#te*tin& t$e "ar1 T$e /ere $a00en*tan"e t$at t$e e/0' yee3*4 ! t$e *$ 0 +ner )i%ert* t$e u*e ! t$e "ar t $i* +n i''i"it r unaut$ riEe) 0ur0 *e in %i 'ati n ! t$e tru*t re0 *e) in t$e *$ 0 .y t$e in*ure) "ar +ner ) e* n t /ean t$at t$e >aut$ riEe) )ri%er> "'au*e $a* .een %i 'ate) *u"$ a* t .ar re" %ery, 0r %i)e) t$at *u"$ e/0' yee i* )u'y 6ua'i!ie) t )ri%e un)er a %a'i) )ri%er@* 'i"en*e1 T$e *ituati n i* n )i!!erent !r / t$e re&u'ar r !a/i'y )ri%er, +$ in*tea) ! "arryin& ut t$e +ner@* r)er t !et"$ t$e "$i')ren !r / *"$ ' ta,e* ut $i* &ir' !rien) in*tea) ! r a G y ri)e an) in*tea) +re",* t$e "ar1 T$ere i* n 6ue*ti n ! $i* .ein& an >aut$ riEe) )ri%er> +$i"$ a'' +* re" %ery ! t$e ' ** a't$ u&$ $i* tri0 +a* ! r a 0er* na' r i''i"it 0ur0 *e +it$ ut t$e +ner@* aut$ riEati n1

15. PRUDENTIAL GUARANTEE a#+ ASSURANCE4 INC. v . E$UINOA LAND CORPORATION BACTS5 S /eti/e in 1((6, E6uin 2 Dan) C r0 rati n 3E6uin 24, re*0 n)ent, )e"i)e) t " n*tru"t !i%e 3=4 a))iti na' !' r* t it* e2i*tin& .ui')in&, t$e Ea*t&ate Centre, ' "ate) at 16( ECSA, Man)a'uy n& City1 It t$en *ent in%itati n* t .i) t %ari u* .ui')in& " ntra"t r*1 B ur 344 .ui')in& " ntra"t r*, in"'u)in& J Mar" C n*tru"ti n NCe%e' 0/ent C r0 rati n 3J Mar"4, re*0 n)e)1 Bin)in& t$e .i) ! J Mar" t .e t$e / *t a)%anta&e u*, E6uin 2 !!ere) t$e " n*tru"ti n 0r Ge"t t it1 ;n Be.ruary 22, 1((7, J Mar" a""e0te) t$e !!er1 T+ )ay* 'ater, E6uin 2 ! r/a''y a+ar)e) t J Mar" t$e " ntra"t t .ui') t$e e2ten*i n ! r a " n*i)erati n ! P37,000,0001001;n Be.ruary 24, 1((7, J Mar" *u./itte) t E6uin 2 t+ 324 . n)*, na/e'y5 314 a *urety . n) i**ue) .y Pru)entia' Muarantee an) A**uran"e, In"1 3Pru)entia'4,$erein 0etiti ner, in t$e a/ unt ! P(,2=0,000100 t &uarantee t$e un'i6ui)ate) 0 rti n ! t$e a)%an"e 0ay/ent 0aya.'e t J Mar"; an) 324 a 0er! r/an"e . n) 'i,e+i*e i**ue) .y Pru)entia' in t$e a/ unt ! P7,400,000100 t &uarantee J Mar"* !ait$!u' 0er! r/an"e ! it* .'i&ati n* un)er t$e " n*tru"ti n a&ree/ent1 ;n Mar"$ 17, 1((7, E6uin 2 an) J Mar" *i&ne) t$e " ntra"t an) re'ate) ) "u/ent*1 Ln)er t$e ter/* ! t$e " ntra"t, J Mar" + u') *u00'y a'' t$e 'a. r, /ateria'*, t '*, e6ui0/ent, an) *u0er%i*i n re6uire) t " /0'ete t$e 0r Ge"t1 J

Mar" )i) n t a)$ere t t$e ter/* ! t$e " ntra"t1 It !ai'e) t *u./it t$e re6uire) / nt$'y 0r &re** .i''in&* ! r t$e / nt$* ! Mar"$ an) A0ri' 1((71 It* + r,er* ne&'e"te) t " %er t$e )rain0i0e*, $en"e, t$ey +ere "' &&e) .y +et "e/ent1 T$i* )e'aye) t$e + r, n t$e 0r Ge"t1 Ba"e) +it$ t$e 0r .'e/ ! )e'ay, E6uin 2 ! r/a''y &a%e J Mar" ne !ina' "$an"e t ta,e re/e)ia' *te0* in r)er t !ini*$ t$e 0r Ge"t n ti/e1 : +e%er, J Mar" !ai'e) t un)erta,e any " rre"ti%e /ea*ure1 C n*e6uent'y, n Ju'y 10, 1((7, E6uin 2 ter/inate) it* " ntra"t +it$ J Mar" an) t , %er t$e 0r Ge"t1 ;n t$e *a/e )ate, E6uin 2 *ent Pru)entia' a 'etter "'ai/in& re'ie! !r / J Mar"* %i 'ati n* ! t$e " ntra"t1 ;n Au&u*t 2=, 1((7, E6uin 2 !i'e) +it$ t$e Re&i na' Tria' C urt 3RTC4, -ran"$ 214, Man)a'uy n& City a " /0'aint ! r *u/ ! / ney an) )a/a&e* a&ain*t J Mar" an) Pru)entia'1 E6uin 2 0raye) t$at J Mar" .e r)ere) t rei/.ur*e t$e a/ unt* " rre*0 n)in& t it* 3E6uin 24 a)%an"e) 0ay/ent* an) un'i6ui)ate) 0 rti n ! it* ) +n0ay/ent; an) t 0ay )a/a&e*1 E6uin 2 a'* 0raye) t$at Pru)entia' .e r)ere) t 0ay it* 'ia.i'ity un)er t$e . n)*1 ;n May 1(, 1(((, E6uin 2 !i'e) +it$ t$e CIAC a re6ue*t ! r ar.itrati n, ) ",ete) a* CIAC Ca*e N 1 17#((1 Pru)entia' *u./itte) a 0 *iti n 0a0er " nten)in& t$at t$e CIAC $a* n Guri*)i"ti n %er it *in"e it i* n t a 0ri%y t t$e " n*tru"ti n " ntra"t .et+een E6uin 2 an) J Mar"; an) t$at it* *urety an) 0er! r/an"e . n)* are n t " n*tru"ti n a&ree/ent*, t$u*, any a"ti n t$ere n 'ie* e2"'u*i%e'y +it$ t$e 0r 0er " urt1 ;n Ce"e/.er 21, 1(((, t$e CIAC ren)ere) it* Ce"i*i n in !a% r ! E6uin 2 an) a&ain*t J Mar" an) Pru)entia', T$ereu0 n, Pru)entia' !i'e) +it$ t$e C urt ! A00ea'* a 0etiti n ! r re%ie+, ) ",ete) a* CA#M1R1 SP N 1 =64(11 Pru)entia' a''e&e) t$at t$e CIAC erre) in ru'in& t$at it i* . un) .y t$e ter/* ! t$e " n*tru"ti n " ntra"t .et+een E6uin 2 an) J Mar" an) t$at it i* * 'i)ari'y 'ia.'e +it$ J Mar" un)er it* . n)*1 :EDC5 Anent t$e *e" n) i**ue , it i* n t )i*0ute) t$at Pru)entia' entere) int a *urety*$i0 " ntra"t +it$ J Mar"1 Se"ti n 17= ! t$e In*uran"e C )e )e!ine* a *urety*$i0 a* >a " ntra"t r a&ree/ent +$ere.y a 0arty, "a''e) t$e *urety*$i0, &uarantee* t$e 0er! r/an"e .y an t$er 0arty, "a''e) t$e 0rin"i0a' r .'i& r, ! an .'i&ati n r un)erta,in& in !a% r ! a t$ir) 0arty, "a''e) t$e .'i&ee1 It in"'u)e* !!i"ia' re" &niEan"e*, *ti0u'ati n*, . n)*, r un)erta,in&* i**ue) un)er A"t =3),a* a/en)e)1> C r ''ari'y, Arti"'e 2047 ! t$e Ci%i' C )e 0r %i)e* t$at *urety*$i0 ari*e* u0 n t$e "*i+a,y .in)in& ! a 0er* n )ee/e) t$e *urety +it$ t$e 0rin"i0a' )e.t r! r t$e 0ur0 *e ! !u'!i''in& an .'i&ati n1 In Ca*te''%i )e :i&&in* an) :i&&in* %1 Se'iner +e $e') t$at +$i'e a *urety an) a &uarant r are a'i,e in t$at ea"$ 0r /i*e* t an*+er ! r t$e )e.t r )e!au't ! an t$er, th% ),%ty a )-% *ia>i*ity a a ,%&)*a, !a,ty t" th% )#+%,taBi#& a#+ h%#'% it ">*i&ati"# i !,i-a,y

1In Se"urity Pa"i!i" A**uran"e C r0 rati n %1 Tria#In!ante +e reiterate) t$e ru'e t$at +$i'e a " ntra"t ! *urety i* *e" n)ary n'y t a %a'i) 0rin"i0a' .'i&ati n, t$e *urety* 'ia.i'ity t t$e "re)it r i* *ai) t .e )ire"t, 0ri/ary, an) a.* 'ute1 In t$er + r)*, t$e *urety i* )ire"t'y an) e6ua''y . un) +it$ t$e 0rin"i0a'1 T$u* ,Pru)entia' i* .arre) !r / )i*"'ai/in& t$at it* 'ia.i'ity +it$ J Mar" i* * 'i)ary1