B2022 REPORTS ANNOTATED G.R. No.

120724-25 May 21, 1998

IPAMS vs Country Bankers IPAMS vs Country Bankers

I. Recit-ready summary Petitioners still averred that the non-disclosure of the pre-existing condition
Industrial Personnel and Management Services, Inc. (IPAMS) began recruiting registered made a presumption in its favor. Respondents still maintained that the
nurses for work deployment in the United States of America (U.S.). It takes eighteen (18) to petitioner had the duty to prove its accusation.
twenty four (24) months for the entire immigration process to complete. As the process
requires huge amounts of money, such amounts are advanced [to] the nurse applicants IPAMS Petitioner never presented evidence to prove its presumption that the
agreed Doctor’s report would work against Neomi. They only perceived that the
to provide bonds for the said nurses. Under the agreement of IPAMS and Country Bankers, the invocation of the privilege made the report adverse to Neomi and such was
latter will provide surety bonds and the premiums therefor were paid by IPAMS on behalf of a disreputable presumption. They should have made an independent
the
nurse applicants. assessment of Neomi’s condition when it failed to obtain the report. They
shouldn’t have waited for the attending physician’s report to come out
A Memorandum of Agreement (MOA) was executed by the said parties on February 1, 2002 II. Facts of the case
which stipulated the various requirements for collecting claims from Country Bankers. Among
the requirements for collecting claims, the official receipts of the expenses incurred for the
1. In 2000, Industrial Personnel and Management Services, Inc. (IPAMS) began
application of nurses are not included. Country Bankers was not able to pay some of the claims
recruiting registered nurses for work deployment in the United States of America
of IPAMS. Country Bakers acknowledged its obligations, apologized for the delay in the
(U.S.). It takes eighteen (18) to twenty four (24) months for the entire immigration
payment of claims, and proposed to amortize the settlement of claims by paying a semi-
process to complete. As the process requires huge amounts of money, such
monthly amount of P850,000.00. In addition, Country Bankers promised to pay future claims
amounts are advanced [to] the nurse applicants.
within a ninety (90)-day period.
2. By reason of the advances the nurses were required to furnish a surety bond and
Country Bankers started to oppose the payment of claims and insisted on the production of
this was to:
official receipts of IPAMS on the expenses it incurred for the application of nurses. IPAMS
opposed this, saying that the Country Bankers' insistence on the production of official receipts
a. that they will comply with the entire immigration process
was contrary to, and not contemplated in, the MOA and was an impossible condition
b. that they will complete the documents required,
considering that the U.S. authorities did not issue official receipts. In lieu of official receipts,
c. pass all the qualifying examinations for the issuance of immigration
IPAMS submitted statements of accounts, as provided in the MOA.
visa.
Issue: Whether Country Bakers can refuse payment of the claims on the ground of non-
3. Country bankers agreed to provide the boonds for the nurses, and the premiums
presentation of official receipts. DEINS (No)
were paid by IPAMS

4. The bonds clearly state that the liability of country bankers shall be limited to
HELD: Under Section 92 of the Insurance Code all defects in the proof of actual damages arising from the breach of contract
loss, which the insured might remedy, are waived as grounds for objection
when the insurer omits to specify to him without unnecessary delay. It is the 5. A Memorandum of Agreement (MOA) was executed by the said parties on
February 1, 2002 [which stipulated the various requirements for collecting claims
duty of the insurer to indicate the defects on the proofs of loss given, so that from Country Bankers, namely:
the deficiencies may be supplied by the insured. When the insurer
recognizes his liability to pay the claim, there is waiver by the insurer of a. 1st demand letter requiring his/her to submit complete documents.
b. 2nd Demand letter 
any defect in the proof of loss. In the instant case, it must be emphasized
c. Affidavit stating reason of any violation to be executed by responsible
that Country Bankers readily acknowledged the obligations of Country officer of Recruitment Agency
Bankers under the surety agreement, apologized for the delay in the d. Satament of account
payment of claims, and proposed to amortize the settlement of claims by e. Transkittal claim letter
paying a semi-monthly amount of P850,000.00. In addition, Country 6. IPAMS submitted its claims under the surety bonds issued by Country Bankers.
Bankers promised to pay future claims within a 90- day period. For its part, Country Bankers, upon receipt of the documents enumerated under the
.” MOA, paid the claims to IPAMS

G.R. NO: 177056 PONENTE: Serreno, J

ARTICLE; TOPIC OF CASE: Insurance DIGEST MAKER: Romeo Luis R. Villonco
 B2022 REPORTS ANNOTATED G.R. No. 120724-25 May 21, 1998
IPAMS vs Country Bankers IPAMS vs Country Bankers

7. In 2004, Country Bankers was not able to pay six (6) claims of IPAMS. The In reversing and setting aside the rulings of the IC, DOF, and OP, the CA,
claims were not denied by Country Bankers, which instead asked for time within
in the main, found that as provisions of applicable law are deemed written
which to pay the claims, as it alleged to be cash strapped at that time. Thereafter,
the number of unpaid claims increased. By February 16, 2007, the total amount of into contracts, Article 2199 of the Civil Code[32] should be applied regarding
unpaid claims was P11,309,411.56 the MOA between petitioner IPAMS and respondent Country Bankers. The
CA reasoned that since "[c]ompetent proof x x x must be presented to
8. IPAMS took the issue up to the GM Ong who said sorry and acknowledged the
obligation to IPAMS proposed to amortize the settlement of claims by paying a
justify award for actual damages,"[33] respondent Country Bankers was
semi-monthly amount of P850,000.00. In addition, Country Bankers promised to correct in not paying the subject claims of petitioner IPAMS because the
pay future claims within a ninety (90)-day period. latter failed to present official receipts and other "competent" evidence
establishing the actual costs and expenses incurred by petitioner IPAMS.
9. Country Bankers, Atty. Marisol Caleja, started to oppose the payment of claims
and insisted on the production of official receipts of IPAMS on the expenses it
incurred for the application of nurses At the onset, it is important to note that according to the autonomy
characteristic of contracts, the contracting parties may establish such
10. IPAMS CONTENTION:  In lieu of official receipts, IPAMS submitted statements stipulations, clauses, terms and conditions as they may deem convenient,
of accounts, as provided in the MOA  Country Bankers' insistence on the
production of official receipts was contrary to, and not contemplated in, the MOA
provided they are not contrary to law, morals, good customs, public order,
and was an impossible condition considering that the U.S. authorities did not issue or public policy.
official receipts.
Petitioner IPAMS and respondent Country Bankers in essence made a
11. Due to the unwillingness of Country Bankers to settle the claims of IPAMS, the
latter sought the intervention of the IC, through a letter-complaint dated February
stipulation to the effect that mere demand letters, affidavits, and statements
9, 2007 of accounts are enough proof of actual damages as provided for in their
MOA
12. Country Bankers on the other hand alleged that until the third quarter of 2006, it
never received any complaint from IPAMS. Due to remarkable high loss ratio of
IPAMS, the latter's accounts were evaluated and audited by the Country Bankers. As to why the parties agreed on the sufficiency of the listed requirements
The IPAMS was informed of the same problem. Instead of complying with the under the MOA goes into the motives of the parties, which is not hard to
requirements for claim processes, IPAMS insisted that the supporting documents understand, considering that the covered transactions, i.e., the processing of
cannot be produced. applications of nurses in the U.S., are generally not subject to the issuance
13. IC RULED: no ground for the refusal of CBIC to pay the claims of IPAMS. Its of official receipts by the U.S. government and its agencies
failure to settle the claim after having entered into an Agreement with the
complainant, IPAMS, demonstrates respondent's bad faith in the fulfillment of pursuant to the autonomy characteristic of contracts, they can. In an
their obligation, to the prejudice of the complainant insurance contract, founded on the autonomy of contracts, the parties are
14. CA: n its assailed Decision, the CA granted the Rule 43 Petition filed by generally not prevented from imposing the terms and conditions that
respondent Country Bankers, reversing and setting aside the rulings of the IC, determine the contract's obligatory force
DOF, and OP,
Issue/s Thus, the view posited by the CA that the Requirements for Claim Clause is
III. whether the CA erred in issuing its assailed Decision which reversed contrary to law because it is incongruent with Article 2199 of the Civil
and set aside the rulings of the IC, DOF, and OP, which found that Code and, therefore, an exception to the rule on autonomy of contracts is
respondent Country Bankers has no ground to refuse the payment of erroneous. A more thorough examination of Article 2199 does not support
petitioner IPAMS' claims and shall accordingly be subjected to the CA's view. B/c 2199 states that “Except as provided by law or by
disciplinary action stipulation”
IV. Ratio/Legal Basis

G.R. NO: 177056 PONENTE: Serreno, J

ARTICLE; TOPIC OF CASE: Insurance DIGEST MAKER: Romeo Luis R. Villonco
 B2022 REPORTS ANNOTATED G.R. No. 120724-25 May 21, 1998
IPAMS vs Country Bankers IPAMS vs Country Bankers

The submission of official receipts and other pieces of evidence as a Respondent Country Bankers is therefore estopped from
prerequisite for the payment of claims is excused by stipulation of the claiming that the submission of official receipts and other
parties; and in lieu thereof, the presentation of statement of accounts with "competent proof” is a further requirement for the payment of
detailed expenses, demand letters, and affidavits is, by express stipulation, claims
sufficient evidence for the payment of claims.
Court finds that, by stipulation of petitioner IPAMS and respondent
In the instant case, it is not disputed by any party that in the MOA entered Country Bankers in their MOA, the parties waived the requirement of
into by the petitioner IPAMS and respondent Country Bankers, the parties actually proving the expenses incurred by petitioner IPAMS through the
expressly agreed upon a list of requirements to be fulfilled by the petitioner submission of official receipts and other documentary evidence. Thus,
in order to claim from respondent Country Bankers under the surety bond. respondent Country Bankers was not justified in denying the payment of
claims presented by petitioner IPAMS based on the lack of official receipts.
Evidently, the parties did not include as preconditions for the payment of
claims the submission of official receipts or any other more direct or Under the Insurance Code, all defects in the proof of loss, which the
concrete piece of evidence to substantiate the expenditures of petitioner insured might remedy, are waived as grounds for objection when the
IPAMS. If the parties truly had the intention of treating the submission of insurer omits to specify to him without unnecessary delay.
official receipts as a requirement for the payment of claims, they would
have included such requirement in the MOA. But they did not In this case, the surety, i.e., respondent Country Bankers, is admittedly an
insurance company engaged in the business of insurance. In fact, the CA
It is elementary that when the terms of an agreement have been reduced to itself in its assailed Decision mentioned that a contract of suretyship is
writing, it is considered as containing all the terms agreed upon and there defined and covered by the Insurance Code
can be no evidence on such terms other than the contents of the written
agreement. Section 92!!!! Of IC is V. important… “all defects in the proof of loss,
which the insured might remedy, are waived as grounds for objection when
In the case at hand, respondent Country Banker failed to present any the insurer omits to specify to him without unnecessary delay. It is the duty
compelling evidence that convinces the Court that the parties had the of the insurer to indicate the defects on the proofs of loss given, so that the
intention of adding requirements other than the five requirements for deficiencies may be supplied by the insured. When the insurer recognizes
payment of claims enumerated in the Requirements for Claim Clause. On his liability to pay the claim, there is waiver by the insurer of any defect in
the contrary, several circumstances show that the submission of official the proof of loss”.
receipts was really NOT intended by the parties to be a precondition for the
payment of claims. In fact, respondent Country Bankers had previously paid it must be emphasized that respondent Country Bankers, through its
similar claims made by petitioner IPAMS on the basis of the same set of General Manager, Mr. Ong, issued a letter dated November 14, 2005 which
documents, even without the submission of official receipts and other readily acknowledged the obligations of Country Bankers under the surety
pieces of evidence. agreement, apologized for the delay in the payment of claims, and proposed
to amortize the settlement of claims by paying a semi-monthly amount of
As the contemporaneous and subsequent acts of the contracting parties shall P850,000.00. In addition, Country Bankers promised to pay future claims
be principally considered in determining the intention of the parties,[43] within a 90-day period.
and that, by virtue of estoppel
- prior actuations of respondent Country Bankers clearly It bears stressing that respondent Country Bankers, after undergoing an
establish that it did not intend the submission of official evaluation of the total number of claims of petitioner IPAMS, undertook the
receipts to be a prerequisite for the payment of claims.

G.R. NO: 177056 PONENTE: Serreno, J

ARTICLE; TOPIC OF CASE: Insurance DIGEST MAKER: Romeo Luis R. Villonco
 B2022 REPORTS ANNOTATED G.R. No. 120724-25 May 21, 1998
IPAMS vs Country Bankers IPAMS vs Country Bankers

settlement of such claims even WITHOUT the submission of official required proof of loss, is therefore considered waived as ground for
receipts. objecting the claims of petitioner IPAMS.

In fact, respondent Country Bankers raised up the issue on the missing For the foregoing reasons, the ruling of the CA, which sets aside the rulings
official receipts and other evidence to prove the expenses incurred by of the IC, DOF, and OP, which found that respondent Country Bankers has
petitioner IPAMS only when the latter requested the intervention of the IC no ground to refuse the payment of petitioner IPAMS' claims and shall
in 2007. accordingly be subjected to disciplinary action pursuant to Sections 241
- If CB really thought that official receipts was critical then they (now Section 247) and 247 (now Section 254) of the Insurance Code if the
would have raised that contention at the earliest possible latter does not settle the subject claims of petitioner IPAMS, should be
opportunity reversed.

While not denying the existence of the said letter, respondent Country
Bankers attempts to downplay it by arguing that the claims covered by the WHEREFORE, the petition is hereby DENIED. The July 29, 2005
letter and the claims raised by petitioner IPAMS before the IC are different decision and September 21, 2005 resolution of the Court of Appeals in
and distinct from each other. Such argument deserves scant consideration. CA-G.R. SP No. 84163 are AFFIRMED.

While the claims in the said letter may be different from the specific claims Treble costs against petitioner.
presented before the IC, both sets of claims were similarly made under the
same suretyship agreement between the parties. SO ORDERED.

In fact, the records show that respondent Country Bankers does not deny
the fact that it accepted the reimbursements from the nurse applicants based
on the Statements of Accounts of petitioner IPAMS

Furthermore, the DOF likewise factually determined that respondent

Country Bankers, through its new General Manager, Ms. Valeriano, had
assured IPAMS that the obligations of Country Bankers would be paid
promptly, again, even without the submission of official receipts and other
pieces of evidence.

OP also factually found that respondent Country Bankers "knew as a matter

of IPAMS' regular course of business that these covered transactions are
generally not issued official receipts by US government and its agencies
and the US based professional organizations and institutions involved to
complete the requirements for the issuance of an immigrant visa.

Accordingly, under Section 92 of the Insurance Code, the failure to attach

official receipts and other documents evidencing the expenses incurred by
petitioner IPAMS, even assuming that it can be considered a defect on the

G.R. NO: 177056 PONENTE: Serreno, J

ARTICLE; TOPIC OF CASE: Insurance DIGEST MAKER: Romeo Luis R. Villonco