1 made on the assumption that there was no the assured, will be subrogated to the rights

Subrogation Doctrines wrongdoer or no third party at fault. The of the assured to recover from the
PAN MALAYAN INSURANCE RTC issued an order dated June 16, 1986 wrongdoer to the extent that the insurer has
CORPORATION, vs. COURT OF dismissing PANMALAY's complaint for no been obligated to pay. Payment by the
APPEALS cause of action. On appeal taken by insurer to the assured operates as an
PANMALAY, these orders were upheld by equitable assignment to the former of all
the CA. Consequently, PANMALAY filed the
FACTS: PANMALAY filed a complaint for remedies which the latter may have against
present petition for review. PANMALAY
damages with the RTC of Makati against the third party whose negligence or wrongful
alleged in its complaint that, pursuant to a
private respondents Erlinda Fabie and her act caused the loss. The right of
motor vehicle insurance policy, it had
driver. PANMALAY averred that it insured a subrogation is not dependent upon, nor
indemnified CANLUBANG for the damage
Mitsubishi Colt Lancer car and registered in does it grow out of, any privity of
to the insured car resulting from a traffic
the name of Canlubang Automotive contract or upon written assignment of
accident allegedly caused by the negligence
Resources Corporation. that on May 26,
of the driver of private respondent, Erlinda claim. It accrues simply upon payment of
1985, due to the "carelessness,
Fabie. PANMALAY contended, therefore, the insurance claim by the insurer.
recklessness, and imprudence" of the
that its cause of action against private
unknown driver of a pick-up, the insured car There are a few recognized
respondents was anchored upon Article
was hit and suffered damages in the exceptions to this rule. For instance, where
2207 of the Civil Code, which reads:
amount of P42,052.00; that PANMALAY the insurer pays the assured for a loss
defrayed the cost of repair of the insured car
If the plaintiffs property has been insured, which is not a risk covered by the policy,
and, therefore, was subrogated to the rights
and he has received indemnity from the thereby effecting "voluntary payment", the
of CANLUBANG against the driver of the
pick-up and his employer, Erlinda Fabie; insurance company for the injury or loss former has no right of subrogation against
and that, despite repeated demands, arising out of the wrong or breach of the third party liable for the loss. None of the
defendants, failed and refused to pay the contract complained of, the insurance exceptions are availing in the present case.
claim of PANMALAY. Private respondents, company shall be subrogated to the rights the insurer PANMALAY as subrogee merely
thereafter, filed a Motion for Bill of of the insured against the wrongdoer or the prays that it be allowed to institute an action
Particulars and a supplemental motion person who has violated the contract. to recover from third parties who allegedly
thereto. In compliance therewith, caused damage to the insured vehicle, the
PANMALAY clarified, among others, that ISSUE:  W/N the insurer PANMALAY may
amount which it had paid its assured under
the damage caused to the insured car was institute an action to recover the amount it
the insurance policy. 
settled under the "own damage", coverage had paid its assured in settlement of an
of the insurance policy, and that the driver insurance claim against private respondents 2.Chua
of the insured car was, at the time of the as the parties allegedly responsible for the FEDERAL EXPRESS CORP VS
accident, an authorized driver duly licensed damage caused to the insured vehicle. AMEROCAM HOME ASS.CO
to drive the vehicle. On February 12, 1986, FACTS: SMITHKLINE Beecham
private respondents filed a Motion to RULING: Yes. Article 2207 of the Civil Code (SMITHKLINE for brevity) of Nebraska, USA
Dismiss alleging that PANMALAY had no is founded on the well-settled principle of delivered to Burlington Air Express
cause of action against them. They argued subrogation. If the insured property is (BURLINGTON), an agent of [Petitioner]
that payment under the "own damage" destroyed or damaged through the fault or Federal Express Corporation, a shipment of
clause of the insurance policy precluded negligence of a party other than the 109 cartons of veterinary biologicals for
subrogation under Article 2207 of the Civil assured, then the insurer, upon payment to delivery to consignee SMITHKLINE and
Code, since indemnification thereunder was French Overseas Company in Makati City,
Metro Manila. The shipment was covered by [respondents] filed an action for damages the insured makes the insurer an assignee
Burlington Airway Bill No. 11263825 with against the [petitioner] imputing negligence in equity.
the words, 'REFRIGERATE WHEN NOT IN on either or both of them in the handling of
TRANSIT' and 'PERISHABLE' stamp the cargo.
marked on its face. That same day, ISSUE: Whether Federal Express is liable
FACTS: Jamila/Veterans PH Scouts
Burlington insured the cargoes in the for damage to or loss of the insured goods
amount of $39,339.00 with American Home RULING: No, The requirement of giving Security Agency contracted to supply
Assurance Company (AHAC). notice of loss of or injury to the goods is security guards to Firestone. Jamila
a non-licensed custom's broker who not an empty formalism. The fundamental assumed responsibility for the acts of its
was assigned by GETC to facilitate the reasons for such a stipulation are (1) to security guards. First Quezon City
release of the subject cargoes, found out, inform the carrier that the cargo has been Insurance executed a bond for P20K to
while he was about to cause the release of damaged, and that it is being charged with guarantee Jamilas obligation under that
the said cargoes, that the same [were] liability therefor; and (2) to give it an contract. Later on Firestones properties
stored only in a room with two (2) air opportunity to examine the nature and valued at P11,925 were allegedly lost due to
conditioners running, to cool the place extent of the injury. "This protects the carrier the acts of its employees who connived with
instead of a refrigerator. When he asked an by affording it an opportunity to make an Jamilas security guard. Firemans Fund, as
employee of Cargohaus why the cargoes investigation of a claim while the matter is insurer paid to Firestone the amount of the
were stored in the 'cool room' only, the latter fresh and easily investigated so as to
loss and Firemans Fund was subrogated to
told him that the cartons where the vaccines safeguard itself from false and fraudulent
Firestones right to get reimbursement from
were contained specifically indicated therein claims."
that it should not be subjected to hot or cold In the present case, there is neither Jamila. Jamila and its surety (First Quezon
temperature. Thereafter, DIONEDA, upon an allegation nor a showing of respondents' Insurance) failed to pay the amount of the
instructions from GETC, did not proceed compliance with this requirement within the loss.
with the withdrawal of the vaccines and prescribed period. While respondents may
Fireman invoked Article 2207, as the insurer
instead, samples of the same were taken have had a cause of action then, they
Firemans Fund is entitled to go after the
and brought to the Bureau of Animal cannot now enforce it for their failure to
Industry of the Department of Agriculture in comply with the aforesaid condition person or entity that violated its contractual
the Philippines by SMITHKLINE for precedent. commitment to answer for the loss insured
examination wherein it was discovered that against. Jamila contends that it did not
the 'ELISA reading of vaccinates sera are 3 consent to the subrogation of Firemans
below the positive reference serum.' Fireman's Fund Insurance Company vs. Fund to Firestones right to get
"As a consequence of the foregoing Jamila and Company reimbursement from Jamila and its surety.
result of the veterinary biologics test, Subrogation Further arguing that legal subrogation under
SMITHKLINE abandoned the shipment and, DOCTRINE: When the insurance company Art 2207 of the Civil Code requires the
declaring 'total loss' for the unusable pays for the loss, such payment operates as debtors consent and that according to Art
shipment, filed a claim with AHAC through 1302, the instant case is not among the
an equitable assignment to the insurer of
its representative in the Philippines, the cases mentioned when legal subrogation
the property and all remedies which the
Philam Insurance Co., Inc. ('PHILAM') which
insured may have for the recovery thereof. can take place.
recompensed SMITHKLINE for the whole
insured amount of THIRTY NINE That right is not dependent upon, nor does it
THOUSAND THREE HUNDRED THIRTY grow out of, any privity of contract, or upon
NINE DOLLARS ($39,339.00). Thereafter, written assignment of claim, and payment to
ISSUE: WON Firemans Fund can subrogate SUBROGATION DOCTRINES Art. 2207. If the plaintiff's property has been
to the rights of Jamilia. insured, and he has received indemnity
FACTS: The furniture manufacturing shop from the insurance company for the injury or
of petitioner in Caloocan City was situated loss arising out of the wrong or breach of
adjacent to the residence of private contract complained of, the insurance
RULING: YES. Article 2207 is a restatement
respondents. Private respondent Gregorio company shall be subrogated to the rights
of a settled principle of American Mable first approached Eric Cruz, of the insured against the wrongdoer or the
jurisprudence. Subrogation has been petitioner's plant manager, to request that a person who has violated the contract. If the
referred to as the doctrine of substitution. It firewall be constructed between the shop amount paid by the insurance company
is an arm of equity that may guide or even and private respondents' residence. The does not fully cover the injury or loss, the
force one to pay a debt for which an request was repeated several times but they aggrieved party shall be entitled to recover
obligation was incurred but which was in fell on deaf ears. A fire broke out in the deficiency from the person causing the
whole or in part paid by another. petitioner's shop. Petitioner's employees, loss or injury.
Subrogation is founded on principles of who slept in the shop premises, tried to put
justice and equity, and its operation is out the fire, but their efforts proved futile. Having been indemnified by their insurer,
governed by principles of equity. It rests on The fire spread to private respondents' private respondents are entitled only to
the principle that substantial justice should house. Both the shop and the house were recover the deficiency from the petitioner.
razed to the ground. The cause of the Whether or not the insurer should exercise
be attained regardless of form, that is, its
conflagration was never discovered. The the rights of the insured to which it had been
basis is the doing of complete, essential,
NBI found specimens from the burned subrogated lies solely within the former's
and perfect justice between all the parties structures negative for the presence of sound discretion. Since the insurer is not a
without regard to form. inflammable substances. Subsequently, party to the case, its identity is not of record
Subrogation is a normal incident of private respondents collected P35, 000.00 and no claim is made on its behalf, the
on the insurance on their house and the private respondent's insurer has to claim his
indemnity insurance. Upon payment of the
contents thereof. Private respondents filed right to reimbursement of the P35, 000.00
loss, the insurer is entitled to be subrogated
an action for damages against petitioner, paid to the insured.
pro tanto to any right of action which the praying for a judgment in their favor 5
insured may have against the third person awarding P150, 000.00 as actual damages, Rizal Surety & Insurance Co. vs. Manila
whose negligence or wrongful act caused P50,000.00 as moral damages, P25,000.00 Railroad Company
the loss. When the insurance company pays as exemplary damages, P20,000.00 as 23 SCRA 205, No. L-24043 April 25, 1968
for the loss, such payment operates as an attorney's fees and costs.
equitable assignment to the insurer of the Doctrine: Insurer after paying the claim of
property and all remedies which the insured ISSUE: Whether or not the 35k is deducted the insured for damages under the
may have for the recovery thereof. That from the damages thereof insurance is subrogated merely to the rights
right is not dependent upon, nor does it of the insured and therefore can necessarily
grow out of, any privity of contract, or upon RULING: Yes. Since P35k had already recover only that to what was recoverable
written assignment of claim, and payment to been claimed by the respondents, the court by the insured.
held that such amount should be deducted
the insured makes the insurer an assignee
from the award of damages in accordance FACTS: The SS Flying Trader loaded on
in equity. with Art 2207 NCC board at Genoa, Italy for shipment to Manila
4. HALID among other cargoes, 6 cases OMH,
FF CRUZ AND CO VS CA Special Single Color Offset Press Machine,
consigned to Suter, Inc. The vessel arrived agreements, Lim also executed a chattel
at the port of Manila and subsequently The literal language of Article 2207 makes it mortgage on the aircrafts purchased in favor
discharged the shipment into the custody of clear that the insurance company that has of Pioneer as security. Lim eventually failed
Manila Port Service. At the back of the paid the indemnity for the injury or loss to pay. Pioneer paid on his behalf. Thus, the
Delivery permit appeared clause 15 of the sustained by the property insured “shall be mortgage was foreclosed. Pioneer also
management contract wherein it was stated subrogated to the rights of the insured applied for a writ of preliminary attachment
that the company’s liability was limited to against the wrong-doer or the person who
against Lim and the indemnitors. It appears,
P500 per package unless the value of the has violated the contract.” The insurer, after
however, that Pioneer had already collected
goods is otherwise specified. In the course paying the claim of the insured for damages
of handling the shipment, one of the six under the insurance, is subrogated merely the proceeds of the reinsurance on its bond
cases containing the OMH Special Single to the rights of the insured and therefore in favor of JDA. The indemnitors, on the
Color Offset Press, was dropped by the can necessarily recover only what was other hand, filed cross-claims against Lim,
while it was being lifted and loaded into the recoverable by the insured. alleging that they were not privies to the
consignee’s truck. Rizal Surety as insurer 6 contracts signed by Lim. They also sought
paid to Suter Inc (consignee) damages for Pioneer Insurance & Surety Corporation to recover the amounts advanced by them
the destruction caused to the press machine v. Court of Appeals for the purchase of the aircraft.
(P16,680). Rizal Surety and Insurance G.R. No. 84197, 28 July 1989
Company filed an action to recover the ISSUE: W/N Lim and the indemnitors liable
Subrogation Doctrines
amount paid to the consignee against to Pioneer Insurance & Surety Co.
Manila Railroad, citing Art. 2207 of the Civil
MP: An insurer who has already collected RULING: No. As regards the issue of
Code. They allege that they are entitled to
proceeds from its reinsurer can no longer be subrogation, the SC dismissed the case
the amount it paid in full. Lower court
ordered Manila Railroad to pay Rizal Surety subrogated to the rights of the insured. It is filed by Pioneer against Lim and the
P500 with legal interest. instead the reinsurer that may be indemnitors given that it was established
subrogated as such. that it had already collected the proceeds of
ISSUE: WON Rizal Surety is entitled to the the reinsurance on its bond in favor JDA. In
FACTS: Lim, as owner-operator of
amount paid by it in full by virtue of the this case, the Court held that the real-party-
insurance contract. Southern Airlines (SAL) bought aircrafts
in-interest is Pioneer’s reinsurer, having
from Japan Domestic Airlines (JDA). A
been subrogated to the latter’s rights upon
RULING: No. Rizal Surety cannot recover surety bond was executed by Pioneer
its payment to Pioneer; Pioneer, thus, had
from Manila Railroad an amount greater Insurance and Surety Corp. (Pioneer) in
no cause of action against the respondents.
than that to which the consignee could favor of JDA, in behalf of Lim. Indemnity
It is clear from the records that Pioneer
lawfully lay claim. This is because the agreements were also executed in favor of
sued in its own name and not as an
management contract clearly states that the Pioneer, whereby the indemnitors bound
amount is limited to P500. Having taken attorney-in-fact of the reinsurer.
themselves to jointly and severally
delivery of the shipment by virtue of a indemnify Pioneer against all damages,
delivery permit that incorporated the losses, etc. that it may incur as a surety.
aforementioned clause of the management These indemnitors also contributed funds 7. Oriental Assurance Corporation v.
contract, they became bound by said Ong
for the purchase of said aircrafts based on
provisions. They could’ve avoided the P500
the misrepresentation of Lim that they will G.R. No. 189524. October 11, 2017
limit by specifically stating the value of the
goods. form a new corporation to expand his Subrogation Doctrine
business. In addition to the indemnification
 RULING: YES. The provisions of a gate the insurance claim by the insurer (Article 
FACTS: The coils were discharged and pass or of an arrastre management contract 2207) As subrogee, petitioner merely
stored under the custody of are binding on an insurer-subrogee even if stepped into the shoes of the consignee and
the arrastre contractor, Asian Terminals. the latter is not a party to it. By availing may only exercise those rights that the
From the storage compound, the coils were himself of the services of consignee may have against the wrongdoer
loaded on the trucks of Ong and delivered the arrastre operator and taking delivery who caused the damage. It can recover only
to JEA Steel’s plant. 11 of these coils ‘were therefrom in pursuance of a permit and a the amount that is recoverable by the
found to be damaged. JEA Steel filed a pass issued by the latter, which were assured. And since the right of action of the
claim with Oriental for the value of the “subject to all the terms and conditions” of consignee is subject to a precedent
damaged coils, pursuant to Marine said management contract, including, inter condition stipulated in the Gate Pass, which
Insurance Policy. Oriental paid JEA Steel alia, the requirement thereof that “a claim is includes by reference the terms of the
and subsequently demanded indemnity filed with the Company within 15 days from Management Contract, necessarily a suit by
from Ong and Asian Terminals the date of arrival of the goods,” the the insurer is subject to the same precedent
(respondents), but they refused to pay. consignee — and, hence, the insurer, or condition.
Thus, Oriental filed a Complaint. Asian plaintiff herein, as successor to the rights of
Terminals argued that Oriental’s claim was 8 – LIM
the consignee — became bound by the
barred for the latter’s failure to file a notice United Doctor’s Medical Center vs.
provisions of said contract.
of claim within the 15-day period provided in Bernadas
the Gate Pass and Management Contract. The fact that Oriental is not a party to the G.R. No. 209468, December 13, 2017
Oriental contends that it was not aware of Gate Pass and the Management Contract Insurance Contracts Interpretation
the provisions of the Gate Pass or the does not mean that it cannot be bound by Doctrines
Management Contract, neither of which it their provisions. Oriental is subrogated to
was a party to. Consequently, it cannot be the rights of the consignee simply upon its MAIN POINT: Thus, the grant of insurance
bound by the stipulation limiting the liability payment of the insurance claim. If the proceeds will not necessarily bar the grant
of Asian Terminals. insured property is destroyed or damaged of retirement benefits. These are two (2)
through the fault or negligence of a party separate and distinct benefits that an
Asian Terminals counters that the other than the assured, then the insurer, employer may provide to its employees.
provisions of the Management Contract and upon payment to the assured, will be
the Gate Pass are binding on Oriental as subrogated to the rights of the assured to
insurer-subrogee and successor-in-interest recover from the wrongdoer to the extent FACTS: Cesario started working as an
of the consignee. RTC-Manila and CA that the insurer has been obligated to pay. orderly in United Doctors Medical Center's
dismissed the complaint on the ground that Payment by the insurer to the assured housekeeping department. He was
its claim had already prescribed. operates as an equitable assignment to the eventually promoted as a utility man. United
former of all remedies which the latter may Doctors Medical Center and its rank-and-file
ISSUE: W/N Oriental is bound by the
have against the third party whose employees had a CBA, under which rank-
stipulation of the Management Contract and
negligence or wrongful act caused the loss. and-file employees were entitled to optional
the Gate Pass as insurer-subrogee; thus is
The right of subrogation is not dependent retirement benefits. In addition to the
bound by the 15-day prescriptive period
upon, nor does it grow out of, any privity of retirement plan, employees are also
fixed in them to file a claim against
contract or upon written assignment of provided insurance, with United Doctors
the operator.
claim. It accrues simply upon payment of
Medical Center paying the premiums. The conditioned on age and length of service. "A driver.” The policy stated that the authorized
employees' family members would be the 'contract of insurance' is an agreement driver is the following: 1) the insured; 2)
beneficiaries of the insurance. whereby one undertakes for a consideration [a]ny person driving on the insured’s order
to indemnify another against loss, damage or with his permission, provided that the
On 2009, Cesario, 53, died from a "freak person driving is permitted in accordance
or liability arising from an unknown or
accident"9 while working in a doctor's with licensing laws or regulations to drive
contingent event."
residence. Leonila (widow) filed a Complaint the motor vehicle… According to the
for payment of retirement benefits, On the other hand, retirement plans, while insurer, as the driver does not know how to
damages, and attorney's fees with the initially humanitarian in nature, now read and write, he could not have been able
NLRC. Leonila and her son also claimed concomitantly serve to secure loyalty and to secure the driver’s license which requires
and were able to receive insurance efficiency on the part of employees, and to him to pass an examination therefor. The
proceeds of P180k under the CBA. increase continuity of service and decrease CFI ruled in favor of Robes. The CA
affirmed.
the labor turnover, by giving to the
LA ruled that Cesario should have applied
employees some assurance of security as ISSUE: W/N the CCC insurance corporation
for optional retirement benefits during his
they approach and reach the age at which should be held liable.
lifetime, the benefits being optional. Since
earning ability and earnings are materially
he did not apply for it, his beneficiaries were
impaired or at an end. RULING: YES. The Supreme Court held the
not entitled to claim his optional retirement
insurer liable. It ruled that a driver’s license,
benefits. NLRC reversed, CA affirmed 9
regular upon its face, is a public instrument
NLRC. Petitioner argues that respondent CCC Insurance Corp. v. CA
which is accorded the presumption of
Cesario's beneficiaries do not have legal 31 SCRA 264
genuineness. The burden of proof to show
capacity to apply for Cesario's optional Insurance Contracts Interpretation
otherwise lie with the party claiming its
retirement benefits since respondent himself Doctrines
invalidity, in this case, the insurer. However,
never applied for it in his lifetime. Petitioner the latter failed to dispense such burden
MP: The weight of authority is in favor of a
likewise argues that to grant respondent with the presentation of a mere certification
liberal interpretation of the insurance policy
Cesario's beneficiaries optional retirement by an agency of the Motor Vehicles Office
for the benefit of the party insured, and
benefits on top of the life insurance benefits that it did not issue the license in question.
strictly against the insurer.
that they have already received would be The latter may have been mistaken, or that
equal to "double compensation and unjust the license may have been issued by
FACTS: Carlos F. Robes insured with the
enrichment." another agency. The issuance of the license
CCC Insurance Corporation his Dodge
is proof that the Motor Vehicles Office
Kingsway car. CCC Insurance Corporation
official considered Reyes, the driver of the
ISSUE: W/N the widow and the son are refused to pay the claim for insurance
insured- appellee, qualified to operate motor
entitled to the retirement plan on top of the proceeds of Carlos Robes under his
vehicles, and the insured was entitled to rely
insurance claim as beneficiaries – YES accident policy with the former. The claim
upon such license. In this connection, it
arose as his car covered by the insurance
should be observed that the chauffeur,
became involved with a collision while being
Reyes, had been driving since 1957, and
RULING: YES. At the outset, retirement driven by his driver, Reyes. In denying the
without mishap, for all the record shows.
claim, the insurer claimed that there had
benefits must be differentiated from Considering that, as pointed out by the
been a violation of the insurance contract
insurance proceeds. One is in the concept Court of Appeals, the weight of authority is
because the one driving the car at the time
of an indemnity while the other is in favor of a liberal interpretation of the
of the incident was not an “authorized
insurance policy for the benefit of the party ISSUE: W/N the damage to the Chevrolet and fittings. From August to October 1983,
insured, and strictly against the insurer Carry-all be compensable under the Mayer shipped the pipes and fittings to
10 Fieldmen’s Private Car Comprehensive Hongkong as evidenced by the invoice.
Assoc. of Baptists for World Evangelism Policy Prior to shipping, Mayer insured the pipes
vs. Fieldmen's Insurance and fittings against all risks with South Sea
124 SCRA 618 RULING: YES. The Comprehensive Policy Surety and Insurance (South Sea) and
issued by the insurance company includes Charter Insurance (Charter). Mayer and
FACTS: Plaintiff is a religious corporation, loss of or damage to the motor vehicle by Hongkong jointly appointed Industrial
while defendant is a domestic corporation. "burglary or theft." It is settled that the act of Inspection as third-party inspector to
The plaintiff, having an insurable interest in Catiben in taking the vehicle for a joy ride to examine whether the pipes and fittings are
a Chevrolet Carry-all, 1955 Model, issued Toril, Davao City, constitutes theft within the manufactured in accordance with the
by the Davao Motor Vehicles Office Agency meaning of the insurance policy and that specifications in the contract. Industrial
and owned by Reverend Clinton Bonnel, recovery for damage to the car is not barred Inspection certified all the pipes and fittings
insured said vehicle with the defendant by the illegal use of the car by one of the to be in good order condition before they
under Fieldmen’s Insurance Co., Inc. station boys. were loaded in the vessel. Nonetheless,
Private Car Comprehensive Policy was when the goods reached Hongkong, it was
attached against loss or damage up to the Where a car is unlawfully and wrongfully discovered that a substantial portion thereof
amount of P5,000.00. taken by some people, be they employees was damaged.
of the car shop or not to whom it had been
Through plaintiff’s representative, Dr. entrusted, and taken on a long trip without Mayer and Hongkong filed a claim against
Antonio Lim, the Chevrolet Carry-all was the owner’s consent or knowledge, such South Sea and Charter for indemnity under
placed at the Jones Monument Mobilgas taking constitutes or partakes of the nature the insurance contract. Thus, Charter made
Service Station at Davao City, under the of theft. There need be no prior conviction a partial payment to Hongkong. Mayer and
care of said station’s operator, Rene Te so for the crime of theft to make an insurer Hongkong demanded payment of the
that said carry-all could be displayed as liable under the theft clause of the policy. balance representing the cost of repair of
being for sale, with the understanding that 11 the damaged pipes. However, South Sea
any of his station boys would receive a 2% Mayer Steel Corp. vs. CA and Charter refused to pay because the
commission should they sell said vehicle. 273 SCRA 432 (1997) insurance surveyor’s report allegedly
Insurance contract interpretation showed that the damage is a factory defect.
Sometime, Romeo Catiben, one of the boys doctrines
at the Jones Monument Service Station, Mayer and Hongkong filed an action against
took the chevrolet carry-all for a joy ride to DOCTRINE OF LAW: An “all risks” South Sea and Charter to recover the said
Toril, Davao City, without the prior insurance policy covers all kinds of loss sum. On the other hand, South Sea and
permission, authority or consent of either other than those due to willful and Charter averred that they have no obligation
the plaintiff or its representative Dr. Lim, or fraudulent act of the insured. It is settled to pay the amount claimed by petitioners
of Rene Te, and on its way back to Davao that the terms of the policy constitute the because the damage to the goods is due to
City, said vehicle, due to some mechanical measure of the insurer’s liability. factory defects which are not covered by the
defect accidentally bumped an electric post insurance policies.
causing actual damages valued at FACTS: Hongkong Government Supplies
P5,518.61. Department (Hongkong) contracted Mayer RTC – ruled in favor of Mayer and
Steel Pipe Corporation (Mayer) to Hongkong, finding that the damage to the
manufacture and supply various steel pipes goods is not due to manufacturing defects.
It also noted that the insurance contracts does not, however, affect the relationship AMERICAN HOME ASSURANCE
executed by Mayer with South Sea and between the shipper and the insurer. The COMPANY v TANTUCO ENTERPRISES,
Charter are “all risks” policies which insure latter case is governed by the Insurance INC.
against all causes of conceivable loss or Code. Insurance Contract Interpretation
damage. The only exceptions are those
excluded in the policy, or those sustained The Filipino Merchants case is different MP: In determining what the parties
due to fraud or intentional misconduct on from the case at bar. In Filipino Merchants, intended, the courts will read and construe
the part of the insured. it was the insurer which filed a claim against the policy as a whole and if possible,
the carrier for reimbursement of the amount give effect to all the parts of the
CA – dismissed complaint on the ground of it paid to the shipper. In the case at bar, it contract, keeping in mind always,
prescription. It held that the action is barred was the shipper which filed a claim against however, the prime rule that in the event of
under Section 3(6) of the Carriage of Goods the insurer. The basis of the shipper’s doubt, this doubt is to be resolved against
by Sea Act since it was filed more than two claim is the “all risks” insurance policies the insurer.
years from the time the goods were issued by private respondents to
unloaded from the vessel, when it should petitioner Mayer. Thus, when the court FACTS: Respondent Tantuco Enterprises,
have been brought within one year after said in Filipino Merchants that Section 3(6) Inc. is engaged in the coconut oil milling and
delivery of the goods. The CA held that this of the Carriage of Goods by Sea Act applies refining industry. It owns two oil mills which
provision applies not only to carriers, but to the insurer, it meant that the insurer, like were separately covered by fire insurance
also to the insurer, citing Filipino Merchants the shipper, may no longer file a claim policies issued by petitioner. The first oil mill
Insurance vs. Alejandro. against the carrier beyond the one-year was insured for 3 million under Policy 1 for
period provided in the law. But it does not the period March 1, 1991 to1992. The new
ISSUE: W/N the case should be dismissed. mean that the shipper may no longer file oil mill was insured for 6 million under
a claim against the insurer because the Policy No. 2 for the same term. A fire broke
RULING: NO. Section 3(6) of the Carriage basis of the insurer’s liability is the out in the early morning of September
of Goods by Sea Act states that the carrier insurance contract. 30,1991 and destroyed the new oil mill.
and the ship shall be discharged from all Respondent immediately notified the
liability for loss or damage to the goods if no An insurance contract is a contract whereby petitioner of the incident. However, insurer
suit is filed within one year after delivery of one party, for a consideration known as the rejected the claim for the insurance
the goods or the date when they should premium, agrees to indemnify another for proceeds on the ground that the burned oil
have been delivered. Under this provision, loss or damage which he may suffer from a mill is not covered by any insurance policy.
only the carrier’s liability is extinguished if specified peril. An “all risks” insurance policy According to it, the oil mill insured is
no suit is brought within one year, but the covers all kinds of loss other than those due specifically described, that this specific
liability of the insurer is not extinguished to willful and fraudulent act of the insured. boundary description clearly pertains, not to
because the insurer’s liability is based not Thus, when South Sea and Charter the burned oil mill, but to the old oil mill. In
on the contract of carriage but on the issued the “all risks” policies to Mayer, other words, the oil mill gutted by fire was
contract of insurance. A close reading of the they bound themselves to indemnify the not the one described by the specific
law reveals that the Carriage of Goods by latter in case of loss or damage to the boundaries in the contested policy.
Sea Act governs the relationship between goods insured. Such obligation
the carrier on the one hand and the shipper, prescribes in ten years, in accordance ISSUE: Whether or not the petitioner is
the consignee and/or the insurer on the with Article 1144 of the New Civil Code. correct in arguing that the oil mill gutted by
other hand. It defines the obligations of the 13 – Sabtaluh fire was not the one described by the
carrier under the contract of carriage. It specific boundaries in the contested policy.
 FACTS: Rizal Surety & Insurance Company with great care and deliberation by experts
RULING: No. In construing the words used And New India Assurance Company issued and legal advisers employed by, and acting
descriptive of a building insured, the Fire Insurance Policy in favor of Transworld exclusively in the interest of, the insurance
greatest liberality is shown by the courts Knitting Mills, Inc. Thereafter, a fire broke company. In the case at bar, Rizal Surety
in giving effect to the insurance. In view out in the compound of Transworld, razing should have specifically excluded the said
of the custom of insurance agents to the middle portion of its four-span building two-storey building from the coverage of the
examine buildings before writing policies and partly gutting the left and right sections fire insurance if minded to exclude the same
upon them, and since a mistake as to the thereof. A two-storey building (behind said but it did not, and instead, went on to
identity and character of the building is four-span building) where fun and provide that such fire insurance policy
extremely unlikely, the courts are inclined amusement machines and spare parts were covers the products, raw materials and
to consider that the policy of insurance stored, was also destroyed by the fire. supplies stored within the premises of
covers any building which the parties Transworld filed its insurance claims with respondent Transworld which was an
manifestly intended to insure, however Rizal Surety & Insurance Company and integral part of the four-span building
inaccurate the description may be. New India Assurance Company but to no occupied by Transworld which created a
Notwithstanding, therefore, the avail. Rizal alleged that the fire insurance doubt as to the coverage of the insurance
misdescription in the policy, it is beyond policy litigated upon protected only the policy.
dispute, to our mind, that what the parties contents of the main building (fourspan) and
manifestly intended to insure was the new did not include those stored in the two- (2) Yes, it was held that where a party’s
oil mill. If the parties really intended to storey annex building. Transworld alleged insurable interest in, and compensability for
protect the first oil mill, then there is no need that the so called “annex” was not an annex the loss of certain articles had been
to specify it as new. In determining what but was actually an integral part of the adjudicated, settled and sustained by the
the parties intended, the courts will read fourspan building and therefore, the goods Court of Appeals and by the Supreme
and construe the policy as a whole and if and items stored therein were covered by Court, the same can no longer be relitigated
possible, give effect to all the parts of the same fire insurance policy; to which the and passed upon in another case. In the
the contract, keeping in mind always, RTC and CA ruled in favor to. Hence, this case at bar, considering that private
however, the prime rule that in the event petition. respondent’s insurable interest in, and
of doubt, this doubt is to be resolved compensability for the loss of subject fun
against the insurer. In determining the ISSUE: (1) WN the doubt over the provision and amusement machines and spare parts,
intent of the parties to the contract, the of the insurance policy should be interpreted had been adjudicated, settled and sustained
courts will consider the purpose and object in favor of Transworld. (2) WN Transworld by the Court of Appeals the same can no
of the contract. (private respondent) has an insurable longer be relitigated and passed upon in the
interest. present case. Therefore, Rizal Surety
14. Rizal Surety vs. CA (336 SCRA 12) Insurance Company, is bound by the ruling
Insurance Contract Interpretation RULING: (1) YES. The SC held that the of the Court of Appeals and of this Court
Doctrines doubt should be resolved against the that the private respondent has an insurable
petitioner, Rizal Surety Insurance Company, interest in the aforesaid fun and amusement
DOCTRINE: Terms in an insurance policy, whose lawyer or managers drafted the fire machines and spare parts; and should be
which are ambiguous, equivocal or insurance policy contract under scrutiny. indemnified for the loss of the same.
uncertain are to be construed strictly and The reason for this is that the insured
most strongly against the insurer. usually has no voice in the selection or 15 – Tan
arrangement of the words employed and Perla Compania de Seguros, Inc. vs. CA
that the language of the contract is selected G.R. No. 78860, May 28, 1990
FACTS: Milagros Cayas was the registered according to the literal sense of their respondent rejected. After allegedly being
owner of a Mazda bus that was insured by stipulations, if their terms are clear and given a run around by Zenith for two (2)
herein petitioner. Subsequently, the bus leave no room for doubt as to the intention months, Fernandez filed a complaint with
figured in an accident injuring several of its of the contracting parties, for contracts are the Regional Trial Court for sum of money
passengers. 1 passenger sued for damages obligatory, no matter what form they may and damages resulting from the refusal of
while 3 passengers agreed to a settlement be, whenever the essential requisites for Zenith to pay the amount claimed. Aside
of P4,000 each with Cayas. At the pre-trial, their validity are present. from actual damages and interests,
Cayas failed to appear and thereafter, she Fernandez also prayed for moral damages
was ordered to pay a total of P27,000. The first and fundamental duty of the courts in the amount of P10,000.00, exemplary
When the decision was about to be is the application of the law according to its
damages of P5,000.00, attorney's fees of
executed, she filed a complaint with the express terms, interpretation being called
P3,000.00 and litigation expenses of
Office of the Insurance Commission against for only when such literal application is
P3,000.00.
petitioner claiming P40,000 because she impossible.
alleged that she could not have suffered 16 On June 4, 1986, a decision was rendered
financial setback had the counsel for Zenith Insurance Corporation v Court of by the trial court ordered the insurance
petitioner, who also represented her Appeals and Fernandez company to pay the insured the damage
appeared in the case. Her property was G.R. No. 85296 incurred plus interest at the rate of twice the
later levied for P38,200 to satisfy the Medialdea, J. prevailing interest rates,  moral damages
judgment. Insurance Contracts Interpretation and (20,000, that is twice the amount the
Petitioner contended that under their Doctrine insured prayed for),  exemplary damages,
agreement stated that: (1) liability of attorney's fees, litigation expenses and
petitioner is limited to P12,000/person and DOCTRINE OF LAW: In case of costs. The CA affiremed the decision of the
P50,000/accidence; and (2) no payment unreasonable delay in the payment of the trial court.
made by the insured without the written proceeds of an insurance policy, the
consent of the company. Petitioner merely damages that may be awarded are: 1) ISSUE: Whether or not the insurer is liable
informed them but did not get written attorney's fees; 2) other expenses incurred to the insured for moral and exemplary
authority. by the insured person by reason of such damages as ordered by the trial court
unreasonable denial or withholding of
ISSUE: W/N Cayas can be indemnified payment; 3) interest at twice the ceiling RULING: NO. The decision of the lower
beyond the stipulations of the insurance prescribed by the Monetary Board of the court is modified to which, the moral
contact. amount of the claim due the injured; and 4) damages is reduced to 10,000 and the
the amount of the claim. (Insurance Code award of exemplary damages is deleted 
RULING: NO. The fundamental principle Sec. 244)
that contracts are respected as the law
between the contracting parties finds In awarding moral damages in case of
FACTS: On January 25, 1983, private breach of contract, there must be a showing
application in the present case. Thus, it was
respondent Lawrence Fernandez insured that the breach was wanton and deliberately
error on the part of the trial and appellate
with the insurer his car for "own damage". injurious or the one responsible acted
courts to have disregarded the stipulations
The car figured in an accident and suffered fraudently or in bad faith.The act of
of the parties and to have substituted their
actual damages in the amount of P3,640.00. petitioner of delaying payment for two
own interpretation of the insurance policy.
The insurer offered to pay the claim of months cannot be considered as so wanton
Contracts which are the private laws of the
Fernandez pursuant to the terms and or malevolent to justify an award of
contracting parties should be fulfilled
conditions of the contract which, the private P20,000.00 as moral damages, taking into
consideration  the actual damage. The Vehicle Policy. The comprehensive motor thereby precluding the respondents from
reason for petitioner's failure to indemnify car insurance policy for Pl5,306.45 claiming the proceeds of the insurance
private respondent within the two-month undertook to indemnify the insured against policy.
period was that the parties could not come loss or damage to the car and death or
to an agreement as regards the amount of injury caused to third persons by reason of RULING: No, Contrary to the claim of the
the actual damage on the car.  accident. While the policy was in effect, the petitioner; it miserably failed to prove the
vehicle figured in an accident along National fact of intoxication during the trial. Aside
On the other hand, exemplary or corrective Highway in Brgy. Palihan, Hermosa, Bataan from the Medico Legal Certificate and the
damages are imposed by way of example or resulting in the death of 4 persons while Pagpapatunay, which were stripped of
correction for the public good (Art. 2229, seriously injuring 3 others. 2 vehicles were evidentiary value because of the dubious
NCC). In the case of Noda v. Cruz-Arnaldo, also heavily damaged as a result of the circumstances under which they were
G.R. No. 57322, June 22,1987; 151 SCRA accident.The claim was, however, denied by obtained, the petitioner did not adduce other
227, exemplary damages were not awarded the insurance company on the ground that
proof to justify the avoidance of the policy. It
as the insurance company had not acted in at the time the accident took place the driver
wanton, oppressive or malevolent manner. of the insured vehicle was heavily drunk as must be emphasized that the RTC doubted
The same is true in the case at bar shown in the Pagpapatunay issued by the authenticity of the Medico Legal
Bararigay Chairman Rafael Torres and the Certificate because of the attendant
Medico Legal Certificate which was signed alteration and tampering on the face of the
17 by a certain Dr. Ferdinand Bautista. document. Simply put, he who alleges the
Insurance Contract Interpretation affim1ative of the issue has the burden of
Doctrines The denial of the claim prompted proof, and upon the plaintiff in a civil case
Stronghold Insurance V. Interpacific respondents to initiate an action for the rested the burden of proof. Notably, in the
Contaner and Gloria dee Chong recovery of sum of money against course of trial in a civil case, once plaintiff
petitioner. They argued that there was no makes out a prima facie case in his favor,
MAINPOINT: This case involves a contract sufficient proof to support the claim of the the duty or the burden of evidence shifts to
of insurance, the authenticity and validity of petitioner that the driver was drunk at the defendant to controvert plaintiff's prima facie
which was uncontested. In exempting time of the incident underscoring the lack of case, otherwise, a verdict must be returned
insurers from liability under the contract, mention of such crucial fact in the police
in favor of plaintiff. Moreover, in civil cases,
proof thereof must be clear, credible and blotter report documenting the incident. In
refuting the allegations in the complaint, the party having the burden of proof must
convincing. Fundamental is the rule that the produce a preponderance of evidence
petitioner averred that the intoxication of the
contract is the law between the parties and, thereon, with plaintiff having to rely on the
driver of the insured vehicle legally avoided
that absent any showing that its provisions strength of his own evidence and not upon
the liability of the insurance company under
are wholly or in part contrary to law, morals, the policy. Petitioner further claimed that the the weakness of the defendant's.
good customs, public order, or public policy, insured violated Section 53 of Republic Act
it shall be enforced to the letter by the No. 4136 (Land Transportation and Traffic
courts Code) which prohibits driving of motor 18 Chua
vehicles under the influence of alcohol. WHITE GOLD MARINE SERVICES VS
FACTS: Respondent Gloria Dee Chong is PIONEER INSURANCE GR NO 154514
the owner of the Fuso truck. The vehicle ISSUE: whether or not it was proven during FACTS: White Gold Marine Services, Inc.
was insured by petitioner Stronghold the trial that the driver of the insured vehicle (White Gold) procured a protection and
Insurance Company under Commercial was intoxicated at the time of the accident indemnity coverage for its vessels from The
Steamship Mutual Underwriting Association which an insurance broker is subject.) in (2) YES, Pioneer is the resident agent of
(Bermuda) Limited (Steamship Mutual) relation to Sections 302 and 303, thereof. Steamship Mutual as evidenced by the
through Pioneer Insurance and Surety certificate of registration issued by the
Corporation (Pioneer). Subsequently, White ISSUE: (1) Whether Steamship Mutual, a P Insurance Commission. It has been licensed
Gold was issued a Certificate of Entry and & I Club, engaged in the insurance business to do or transact insurance business by
Acceptance. Pioneer also issued receipts in the Philippines? (2) Whether Pioneer virtue of the certificate of authority issued by
evidencing payments for the coverage. need a license as an insurance the same agency. However, a Certification
When White Gold failed to fully pay its agent/broker for Steamship Mutual from the Commission states that Pioneer
accounts, Steamship Mutual refused to RULING: (1) Yes,The test to determine if a does not have a separate license to be an
renew the coverage. contract is an insurance contract or not, agent/broker of Steamship Mutual.
Steamship Mutual thereafter filed a depends on the nature of the promise, the Although Pioneer is already licensed
case against White Gold for collection of act required to be performed, and the exact as an insurance company, it needs a
sum of money to recover the latter’s unpaid nature of the agreement in the light of the separate license to act as insurance agent
balance. White Gold on the other hand, filed occurrence, contingency, or circumstances for Steamship Mutual under Section 29 of
a complaint before the Insurance under which the performance becomes the Insurance Code.
Commission claiming that Steamship requisite. It is not by what it is called.
Mutual violated Sections 186 (capital and Basically, an insurance contract is a
assets required of an insurance corporation contract of indemnity. In it, one undertakes
doing the same kind of business in the for a consideration to indemnify another
Philippines.) and 187 (certificate of authority against loss, damage or liability arising from
requirement) of the Insurance Code, while an unknown or contingent event. In
Pioneer violated Sections 299(license particular, a marine insurance undertakes to
requirement as an insurance agent) , 300 indemnify the assured against marine
(Any person who for compensation solicits losses, such as the losses incident to a
or obtains insurance on behalf of any marine adventure. Section 99 of the
insurance company or transmits for a Insurance Code enumerates the coverage
person other than himself an application for of marine insurance.
a policy or contract of insurance to or from The records reveal Steamship
such company or offers or assumes to act Mutual is doing business in the country
in the negotiating of such insurance shall be albeit without the requisite certificate of
an insurance agent) and 301 (Any person authority mandated by Section 187 of the
who for any compensation, commission or Insurance Code. It maintains a resident
other thing of value acts or aids in any agent in the Philippines to solicit insurance
manner in soliciting, negotiating or and to collect payments in its behalf. We
procuring the making of any insurance note that Steamship Mutual even renewed
contract or in placing risk or taking out its P & I Club cover until it was cancelled
insurance, on behalf of an insured other due to non-payment of the calls. Thus, to
than himself, shall be an insurance broker continue doing business here, Steamship
within the intent of this Code, and shall Mutual or through its agent Pioneer, must
thereby become liable to all the duties, secure a license from the Insurance
requirements, liabilities and penalties to Commission.