INSURANCE CASE LAW for 2008 (July to December)

Aboitiz Shipping Corp v. Insurance Company of North America (GR 168402, August 6 2008)
FACTS:
Aboitiz Shipping is refusing a claim of respondent Insurance Company of North America (foreign
company) for the latters payment, as insurer, to Science Teaching Improvement Project. Science
Teaching is the consignee of a shipment of wooden work tools and workbenches from Germany
which the respondent insured. Said shipment was damaged in Manila while being transferred
from its original vessel to Aboitiz own vessel since Aboitiz was hired to ship it from Manila to
Cebu (its final destination). The damage was allegedly caused when Aboitiz left the shipment
outside its warehouse in Manila during a heavy downpour.
Aboitiz ground for refusal is respondents foreign company-status arguing that it has no legal
personality to sue here in the Philippines
ISSUE:
Whether a foreign company may sue in the Philippines as the subrogee in an insurance contract
RULING:
YES, A foreign corporation not licensed to do business in the Philippines is not absolutely
incapacitated from filing a suit in local courts. Only when that foreign corporation is
transacting or doing business in the country will a license be necessary before it can institute
suits. It may, however, bring suits on isolated business transactions, which is not prohibited under
Philippine law. Thus, this Court has held that a foreign insurance company may sue in the
Philippine courts upon the marine insurance policies issues by it abroad to cover international-
bound cargoes shipped by a Philippine carrier, even if it has no license to do business in this
country. It is the act of engaging in business without the prescribed license, and not the lack of
license per se, which bars a foreign corporation from access to our courts. Thus, the payment by
the insurer to the assured operates as an equitable assignment of all remedies the assured may
have against the third party who caused the damage. Subrogation is not dependent upon, nor does
it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon
payment of the insurance by the insurer.
NOTES ON SUBROGATION:
The right of subrogation has limitations, namely:
o Both the insurer and the consignee are bound by the contractual stipulations under the bill
of lading;
o The insurer can be subrogated only to the rights as the insured may have against the
wrongdoer.
INSURANCE CASE LAW for 2009
Heirs of Loreto Maramag represented by spouse Vicenta Maramag v. Eva Maramag, et al, Insular
Life, Great Pacific Life Insurance (Grepalife) (GR 181132, June 5 2009)
FACTS:
Loreto (deceased) has a standing insurance policy with Insular Life and Grepalife where he
named his concubine Eva and their illegitimate children Odessa, Karl, and Trisha as beneficiaries
o Petitioner Vicenta (the legitimate spouse) is contesting this designation alleging that Eva
is disqualified to be a beneficiary and a suspect to the killing of Loreto
o Furthermore, she argues that the illegitimate children should only receive of the shares
of the legitimate children

For their part, Insular argues that it already disqualified Eva thus there can be no cause of action;
meanwhile, Grepalife argues that it is bound to honor the designation of the illegitimate children
as beneficiaries
On trial, Eva & children, Insular and Grepalife won
o The trial court ruled that Insulars act of disqualifying Eva divested Vicenta of any cause
of action
o Further, the proceeds of an insurance policy is owned by the beneficiaries, not the estate
of the deceased thus it is incorrect to apply the 1/2 share per illegitimate child rule
On appeal, the CA dismissed petitioners appeal on the grounds of non-jurisdiction hence this
petition (it raised pure questions of law)

ISSUE:
Whether the share from an insurance policy of a disqualified concubine should pertain to the
illegitimate children or the legitimate family
RULING:
The forfeited share of the policy should pertain to the ILLEGITIMATE CHILDREN the
persons explicitly named in the policy
o Based on Art 2011 (NCC), insurance contracts shall be governed by special laws, i.e.
Insurance Code thus:
o The Insurance Code (Sec 53) provides that 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
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
o EXCEPTION: the insurance contract was intended to benefit third persons
It is only in cases where the insured has not designated any beneficiary, or when the designated
beneficiary is disqualified by law to receive the proceeds, that the insurance policy proceeds shall
redound to the benefit of the estate of the insured
Violeta Lalican vs. The Insular Life Assurance Company, Limited, (GR 183526 August 25 2009)
FACTS:
Insular Life, through Malaluan (its agent), issued a policy to Eulogio amounting to 1.5M wherein
Violeta was named as the primary beneficiary.
Under the terms of the policy, Eulogio was to pay the premiums on a quarterly basis until the end
of the 20-year period of the policy.
o If any premium was not paid on or before the due date, the policy would be in default,
and if the premium remained unpaid until the end of the grace period of 31 days, the
policy would automatically lapse and become void.
Eulogio defaulted in payment, thus, the policy lapsed and became void
Eulogio submitted an application for reinstatement which was denied because he left unpaid the
overdue interest
Later, Eulogio went to Malaluans house and submitted a second application for reinstatement
including the amount due (3 quarters) and overdue interest.
o As Malaluan was away on a business errand, her husband received such and issued a
receipt for the amount Eulogio deposited.
o Hours later, Eulogio died of cardio-respiratory arrest secondary to electrocution.
Without knowing of Eulogios death, Malaluan forwarded to the Insular Life Eulogios second
application for reinstatement as well as the deposit.

However, Insular Life no longer acted upon Eulogios second application, as the former was
informed that Eulogio had already passed away.
Violeta filed with Insular Life a claim for payment of the full proceeds of the policy
Insular Life informed Violeta that her claim could not be granted since the policy was not
reinstated.
o According to the application for reinstatement, the policy would only be considered
reinstated upon approval of the application by Insular Life during the applicants
"lifetime and good health," and whatever amount the applicant paid in connection thereto
was considered to be a deposit only until approval of said application.
Insular Life refunded Violeta the payments made by Eulogio on the policy
Violeta filed with the RTC a complaint for death claim benefit.
o Violeta argues that the provisions of the application for reinstatement must be construed
in favor of the insured and against the insurer

ISSUE:
Whether the policy is considered reinstated, thus making Violeta entitled to the policy as
beneficiary
RULING:
NO. The policy could only be considered reinstated after the application for reinstatement had
been processed and approved by Insular Life during Eulogios lifetime and good health.
o The conditions for reinstatement were written in clear and simple language, which could
not admit of any meaning or interpretation other than those that they so obviously
embody.
A construction in favor of the insured is not called for, as there is no ambiguity in the said
provisions in the first place.
Philippine Health Care Providers, Inc. vs. Commissioner of Internal Revenue, (G.R. 167330
September 18 2009)
FACTS:
Petitioner Philippine Health is domestic corporation whose primary purpose is to operate a
prepaid group practice health care delivery system
o Individuals enrolled in its health care programs pay an annual membership fee and are
entitled to various medical services provided by health care professionals at a
hospital/clinic, accredited by it
o Petitioner is bound to indemnify any member who incurs medical expenses arising from
sickness, injury or other stipulated contingency to the extent agreed upon under the
contract.
Later, Commissioner of Internal Revenue (CIR) sent petitioner assessment notices and demanded
the payment of deficiency taxes, which includes documentary stamp tax (DST)
o Basis of CIR is Section 185 of the 1997 Tax Code which provides for the collection of
stamp tax on all policies of insurance
Petitioner filed a petition for review in the Court of Tax Appeals (CTA) seeking the cancellation
of the deficiency VAT and DST assessments.
o Petitioner argues that its health care agreement is not a contract of insurance but a
contract for the provision on a prepaid basis of medical services that are not based on loss
or damage.
CTA cancelled only the DST assessments
ISSUE:

Is a health care agreement in the nature of an insurance contract and therefore subject to the
documentary stamp tax (DST) imposed under Section 185 of Republic Act 8424 (Tax Code of
1997)?
RULING:
YES. Petitioners health care agreement is primarily a contract of indemnity. A health care
agreement is in the nature of a non-life insurance policy.
o The insurable interest of every member of petitioners health care program in obtaining
the health care agreement is his own health.
o Petitioner does not bear the costs alone but distributes or spreads them out among a large
group of persons bearing a similar risk. This is insurance.
Moreover, the DST is imposed on the privilege of making or renewing any policy of insurance
(except life, marine, inland and fire insurance), bond or obligation in the nature of indemnity for
loss, damage, or liability.
Malayan Insurance Co v. Jardine Davies Transport Services, Asian Terminals Inc (GR 181300,
September 18 2009)
FACTS:
LMG Chemicals insured with Malayan Insurance its shipment of yellow crude sulphur which
later turned out to be short of 477 MT upon delivery. The shipment was handled by respondent
Jardine Davies Transport which now refuses liability to pay Malayan (as subrogated insurer) for
the amount paid by Malayan to LMG constituting the value of the lost cargoes. Jardines refusal
is hinged on its allegation that there was no valid subrogation because the shipment was merely
covered by a Marine Risk Note and that said note was issued after lapse of the Open Marine
Insurance Policy over the cargoes.
ISSUE:
Whether there was a valid subrogation
RULING:
NO, jurisprudence mandates the presentation in evidence of the marine insurance policy so that
its terms and conditions can be scrutinized and the extent of coverage can be
determined. Respondents were thus well within their rights to scrutinize the contents thereof for
the purpose of determining the terms of its validity or effectivity.
Given that it is respondents who stand to be prejudiced by any claims for restitution arising from
petitioners right of subrogation under the open policy, it is, at best specious to insist that they are
barred from invoking any contractual defect as a defense under the pretext that they were not
privy to the insurance contract.
The Marine Risk Note, however, is not the insurance policy. It merely constitutes an
acknowledgment or declaration of the shipper about the specific shipment covered by the marine
insurance policy, the evaluation of the cargo and the chargeable premium.
The marine open policy is the blanket insurance to be undertaken by the insurer on all goods to be
shipped by the consignee during the existence of the contract.

INSURANCE CASE LAW FOR 2010

-None found-

INSURANCE CASE LAW for 2011

Loadmasters Customs Services Inc v. Glodel Brokerage Corporation, R&B Insurance Corporation
(GR 179446, January 9 2011)
FACTS:
On Aug 28, 2001, R and B Insurance insured in favor of Columbia Wire and Cable Corp. a
shipment of 132 bundles of electric copper wire against all risks. The shipment was from Isabela,
Leyte to Manila. Columbia engaged the services of Glodel Brokerage Corp. for the release and
withdrawal of the cargoes from the pier. Glodel contracted Loadmasters Customs Services to
transport the cargoes from the pier to Columbias plants in Bulacan and Valenzuela. The goods
were loaded on 12 trucks, 6 of which were destined for Bulacan and 6 for Valenzuela. Of the
trucks destined for Bulacan, only 5 reached the destination. Later on, the truck was recovered, but
the copper wires were not there. Columbia then filed a claim for insurance indemnity with R&B
amounting to P1,896,789.62, which it promptly paid to Columbia. Consequently, R&B sought
reimbursement of the above amount from Glodel and Loadmasters before RTC Branch 14 of
Manila. R&B claimed it had been subrogated to the right of Columbia after it paid the latter the
insurance indemnity, so it was then legally empowered to recover from Glodel and Loadmasters
the amount paid. The RTC rendered a decision in favor of R&B, but ordered only Glodel (and not
Loadmasters) to pay the above amount to R&B. Upon appeal to the Court of Appeals, the RTC
decision was modified, with the CA declaring that Loadmasters was an agent of Glodel and thus
liable to Glodel for the amount of the insurance indemnity.
ISSUE:
Is Loadmasters liable for the reimbursement of the insurance indemnity paid by R&B to
Columbia?
RULING:
YES. As subrogee of the rights and interest of Columbia, R&B has the right to seek
reimbursement from either Glodel or Loadmasters. Subrogation is the substitution of one person
in the place of another with regard to a lawful right or claim, so that he who is substituted
succeeds to the rights of the other in relation to a debt or claim, including its remedies or
securities. R&B is subrogated to the rights of Columbia by virtue of Art. 2207 of the Civil Code,
which states:
o ART. 2207. If the plaintiffs property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrong-doer or the person who has violated the contract. If the
amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing the
loss or injury.
Loadmasters and Glodel are jointly and severally liable as common carriers servicing the needs of
Columbia; extraordinary diligence is required of common carriers, and both Loadmasters and
Glodel having failed this standard, they are both liable for the reimbursement of the insurance
indemnity paid by R&B to Columbia.
Commissioner of Internal Revenue v. Manila Bankers Life Insurance Corporation (GR 169103,
March 16 2011)
NOTE: This case is focused on Taxation matters and merely discussed in passing the concept of Group
Insurance
Group insurance provides life or health insurance coverage for the employees of one employer.

The coverage terms for group insurance are usually stated in a master agreement or
policy that is issued by the insurer to a representative of the group or to an administrator
of the insurance program, such as an employer. The employer acts as a functionary in the
collection and payment of premiums and in performing related duties.
Most policies, such as the one in this case, require an employee to pay a portion of the
premium, which the employer deducts from wages while the remainder is paid by the
employer. This is known as a contributory plan as compared to a non-contributory plan
where the premiums are solely paid by the employer.
Although the employer may be the titular or named insured, the insurance is actually
related to the life and health of the employee.

Asian Terminals Inc v. Malayan Insurance Co Inc (GR 171406, April 4 2011)
FACTS:
A shipment of 60,000 bags of soda ash dense from China to Manila consigned to Phil Banking
Corp and insured by respondent Malayan was delivered to the consignee with several bags
already in bad condition. Later, it was found out that the arrastre and stevedoring provider, herein
petitioner, caused the damage to the bags prompting the respondent (as subrogated insurer) to
claim damages from Asian Terminals. The claim was granted in the court a quo and on appeal
hence this certiorari petition where Asian refuses payment on the ground that Malayan failed to
present an insurance policy
ISSUE:
Whether the non-presentation of policy will avoid payment to a subrogated insurer
RULING:
NO, the right of subrogation accrues simply upon payment by the insurance company of the
insurance claim
Although Asian Terminal initially objected to the admission of a subrogation receipt submitted by
Malayan, it never assailed the validity of the insurance contract between Malayan and the insured
hence the insurance contracts validity must be upheld
RCJ Bus Lines Inc v. Standard Insurance Co Inc (GR 193629, Aug 17 2011)
NOTE: This case mainly delves into Transportation Law but made a short discussion on subrogation
FACTS:
Rodelene Valentino insured his Mitsubishi Lancer car with respondent Standard Insurance which
now seeks to collect from RCJ Bus Lines. It was one of RCJs buses that bumped the rear end of
Valentinos car.
DISCUSSION ON SUBROGATION:
In the present case, it cannot be denied that the Mitsubishi Lancer sustained damages. Moreover,
it cannot also be denied that Standard paid Rodelene Valentino P162,151.22 for the repair of the
Mitsubishi Lancer pursuant to a Release of Claim and Subrogation Receipt. Neither RCJ
nor Mangoba cross-examined Standards claims evaluator when he testified on his duties, the
insurance contract between Rodelene Valentino and Standard, Standards payment of insurance
proceeds, and RCJ and Mangobas refusal to pay despite demands. After being lackadaisical
during trial, RCJ cannot escape liability now. Standards right of subrogation accrues simply upon
its payment of the insurance claim
New World International Devt v. NYK-FilJapan Shipping Co, Lep Profit International, Advatech
Industries, Marina Port Services, Serbros Carrier, Seaboard-Eastern Insurance (GR 171468/
174241, Aug 24 2011)
FACTS:

Petitioner New World bought 3 emergency generator sets in US from DMT Corp (through its
agent, Advatech) in the amount of $721.5K
The generators were shipped in this manner: Wisconsin-Chicago-California(handled by Lep
Profit)-HK-Manila(handled by NYK thru SS California Luna & ACX Ruby)
o In Manila, Marina Port acted as cargo handler while Serbros acted as customs broker
During the HK-Manila trip, SS ACX Ruby encountered Typhoon Kadiang causing damage to its
cargo
o Among the cargoes damaged were the generators which were discovered to be irreparable
only after release by the Customs official in Manila
o As such, New World sought damages from all parties involved in the shipping including
the insurer Seaboard for its refusal to pay the insurance claim (Seaboard demanded an
itemized list of damages before it pays)
On trial, judgment was rendered against New World
o New World belatedly filed its complaint against NYK in contravention of a 1 year period
allowed for filing claims (under Carrier of Goods by Sea Act or COGSA)
o As for Seaboard, its refusal to pay was justified and the belated filing will only prejudice
Seaboard if it will be subrogated later on
On appeal, judgment was sustained except for Seaboards liability (it will not be prejudiced)

ISSUE:
Whether the belated filing will prejudice Seaboard later on when it subrogates New World
RULING:
NO, Seaboards unreasonable refusal to pay New World caused the delay in filing of claims
o 11 months before the prescription of claims, New World already demanded from
Seaboard for the insurance claim
o If only Seaboard immediately paid New World, it can claim subrogation and file a claim
against NYK within the 1 year period
The Insurance Code:
o (Art 241) mandates insurance companies not to refuse payment without just cause
o (Art 243) gives insurance companies 30 days to review the claim and 90 days to pay plus
interest for failure to review the claim within 60 days
o (Art 244) treats failure to pay within the time allowed by Art 243 as prima facie evidence
of unreasonable delay