TIBAY VS. CA Sps. Antonio Tibay and Violeta Tibay et. al. v.

Court of Appeals

Posted on September 9, 2015

Tibay v CA G.R. No. 119655. May 24, 1996 J. Bellosillo:
G.R. No. 119655, 24 May 1996, 257 SCRA 126

Facts: Fortune Life issued a fire insurance Policy to Tibay on her two-storey residential building at Zobel Street, Makati City. The
insurance was for P600,000.00 covering the period from January 23, 1987 to January 23, 1988. On January 23 1987, Tibay only
paid P600.00 of 3,000 peso premium and left a balance. The insured building was completely destroyed by fire. Tibay then paid
the balance. On the same day, she filed a claim on the policy. Her claim was accordingly referred to the adjuster, Goodwill,
which immediately wrote Violeta requesting her tofurnish it with the necessary documents for the investigation and processing of
her claim. Petitioner complied, and she signed a non-waiver agreement. Fortune denied the claim for violation of the Insurance
Code. Tibay sued for damages in the amount of P600,000.00 representing the total coverage of the policy. The trial court ruled
for petitioners and made fortune liable for the total value of the insured building and personal properties. The Court of Appeals
reversed the court by removing liability from Fortune after returning the premium. Hence this petition for review. The petitioner
contended that Fortune remained liable under the subject fire insurance policy in spite of the failure of petitioners to pay their
premium in full.
Issue: May a fire insurance policy be valid, binding and enforceable upon mere partial payment of premium?
FACTS:
On 22 January 1987 private respondent Fortune Life and General Insurance Co., Inc. (FORTUNE) issued Fire Insurance Policy in
favor of Violeta R. Tibay and/or Nicolas Roraldo on their two-storey residential building located Makati City, together with all their
personal effects therein. The insurance was for P600,000.00 covering the period from 23 January 1987 to 23 January 1988. On
23 January 1987, of the total premium of P2,983.50, petitioner Violeta Tibay only paid P600.00 thus leaving a considerable balance
unpaid.
On 8 March 1987 the insured building was completely destroyed by fire. Two days later or on 10 March 1987 Violeta Tibay paid
the balance of the premium. On the same day, she filed with FORTUNE a claim on the fire insurance policy. In a letter dated 11
June 1987 FORTUNE denied the claim of Violeta for violation of Policy Condition No. 2 and of Sec. 77 of the Insurance Code.

On 3 March 1988 Violeta and the other petitioners sued FORTUNE for damages in the amount of P600,000.00 representing the
Held: No. Petition dismissed. total coverage of the fire insurance policy plus 12% interest per annum, P 100,000.00 moral damages, and attorney’s fees
equivalent to 20% of the total claim.

Ratio: The pertinent provisions read: 2. This policy including any renewal thereof and/or any endorsement thereon is not in force
until the premium has been fully paid to and duly receipted by the Company in the manner provided herein. This policy shall be On 19 July 1990 the trial court ruled for petitioners and adjudged FORTUNE liable for the total value of the insured building and
deemed effective, valid and binding upon the Company only when the premiums therefor have actually been paid in full and duly personal properties in the amount of P600,000.00 plus interest at the legal rate of 6% per annum from the filing of the compl aint
acknowledged in a receipt signed by any authorized official of the company Where the premium has only been partially paid and until full payment, and attorney’s fees equivalent to 20% of the total amount claimed plus costs of suit.
the balance paid only after the peril insured against has occurred, the insurance contract did not take effect and the insured
cannot collect at all on the policy. The Insurance Code which says that no policy or contract of insurance issued by an insurance
company is valid and binding unless and until the premium has been paid. What does “unless and until the premium thereof has On 24 March 1995 the Court of Appeals reversed the court a quo by declaring FORTUNE not to be liable to plaintiff-appellees
been paid” mean? Escosura v. San Miguel- the legislative practice was to interpret “with pay” in accordance to the intention of therein but ordering defendant-appellant to return to the former the premium of P2,983.50 plus 12% interest from 10 March 1987
distinguishbetween full and partial payment, where the modifying term is used. Petitioners used Philippine Phoenix v. until full payment.
Woodworks, where partial payment of the premium made the policy effective during the whole period of the policy. The SC didn’t Hence this petition for review with petitioners contending mainly that contrary to the conclusion of the appellate court, FORTUNE
consider the 1967 Phoenix case as persuasive due to the different factual scenario. In Makati Tuscany v CA, the parties mutually remains liable under the subject fire insurance policy inspite of the failure of petitioners to pay their premium in full.
agreed that the premiums could be paid in installments, hence, this Court refused to invalidate the insurance policy. Nothing in
Article 77 of the Code suggested that the parties may not agree to allow payment of the premiums in installment, or to consider
the contract as valid and binding upon payment of the first premium. Phoenix and Tuscany demonstrated the waiver of ISSUE:
prepayment in full by the insurer. In this case however, there was no waiver. There was a stipulation that the policy wasn’t in
force until the premium has been fully paid and receipted. There was no juridical tie of indemnification from the fractional
payment of premium. The insurance contract itself expressly provided that the policy would be effective only when the premium Whether a fire insurance policy is valid, binding and enforceable upon mere partial payment of premium?
was paid in full. Verily, it is elemental law that the payment of premium is requisite to keep the policy of insurance in force. If the
premium is not paid in the manner prescribed in the policy as intended by the parties the policy is ineffective. Partial payment
even when accepted as a partial payment will not keep the policy alive. South Sea v CA stipulated 2 exceptions to the RULING:
requirement of payment of the entire premium as a prerequisite to the validity of the insurance contract. These are when in case
the insurance coverage relates to life or insurance when a grace period applies, and when the insurer makes a written
acknowledgment of the receipt of premium to be conclusive evidence of payment. Hence, in the absence of clear waiver of
The Supreme Court finds no merit in the petition. Hence, it affirms the decision of the Court of Appeals.
prepayment in full by the insurer, the insured cannot collect on the proceeds of the policy. “The terms of the insurance policy
Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability ari sing
constitute the measure of the insurer’s liability. In the absence of statutory prohibition to the contrary, insurance companies have
from an unknown or contingent event.The consideration is the premium, which must be paid at the time and in the way and manner
the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not
specified in the policy, and if not so paid, the policy will lapse and be forfeited by its own terms.
inconsistent with public policy.” Dissent: J. Vitug “All the calculations of the company are based on the hypothesis of prompt
payments. They not only calculate on the receipt of the premiums when due, but on the compounding interest upon them. It is on
this basis that they are enabled to offer assurance at the favorable rates they do.” The failure of appellants to fully pay their
premium prevented the contract of insurance from becoming binding an Fortune. This series of acts is tainted with Clearly the Policy entered into between Sps. Antonio and Violeta Tibay and Fortune Life and General Insurance Co. provides for
misrepresentation and violates the uberrimae fidae principle of insurance contracts. Tibay had entered into a “Non-Waiver payment of premium in full. Accordingly, where the premium has only been partially paid and the balance paid only after the peril
Agreement” with the adjuster which permitted Fortune to claim non-payment of premium as a defense. The law neither requires, insured against has occurred, the insurance contract did not take effect and the insured cannot collect at all on the policy. This is
nor measures the strength of the vinculum juris by any specific amount of premium payment. Payment on the premium, partly or fully supported by Sec. 77 of the Insurance Code which provides:
in full, is made by the insured which the insurer accepts. In fine, it is either that a juridical tie exists (by such payment) or that it is
not extant at all (by an absence thereof). Once the juridical relation comes into being, the full efficacy follows. This is a partially
performed contract. The non-payment of the balance shouldn’t result in an automatic cancellation of the contract; otherwise, the SEC. 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against.
right to decide the effectivity of the contract would become potestative. Instead, the parties should be able to demand from each Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and
other the performance of whatever obligations they had assumed or, if desired, sue timely for the rescission of the contract. In binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the
the meanwhile, the contract endures, and an occurrence of the risk insured riggers the insurer’s liability. Also, legal grace period provision applies.
compensation arises where insurer’s liability to the insured would simply be reduced by the balance of the premium. It must here
be noted that the insured had made, and the insurer had accepted partial premium payment on the policy weeks before the risk
insured against took place. An insurance is an aleatory contract effective upon its perfection although the occurrence of a Thus, no vinculum juris whereby the insurer bound itself to indemnify the assured according to law ever resulted from the fractional
condition or event may later dictate the demandability of certain obligations. Fortune’s stipulation that insurance shall not “be . . . payment of premium. The insurance contract itself expressly provided that the policy would be effective only when the premium
in force until the premium has been fully paid,” and that it “shall be deemed effective, valid and binding upon the company only was paid in full. It would have been altogether different were it not so stipulated. Ergo, petitioners had absolute freedom of choice
when the premiums therefor have actually been paid in full and duly acknowledged,” override the efficaciousness of the whether or not to be insured by FORTUNE under the terms of its policy and they freely opted to adhere thereto.
insurance contract despite the payment and acceptance. Article 78 of the Insurance Code “An acknowledgment in a policy or
contract of insurance of the receipt of premium is conclusive evidence of its payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid“ Even if a portion was paid in Tibay, et. al v Court of Appeals
the premium, the insurance coverage becomes effective and binding, any stipulation in the policy to the contrary notwithstanding. GR No. 119655, 24 May 1996
Bellosillo, [J.]
 Facts:
1. In January 22 1987, the Petitioner Violeta Tibay (and Nicolas Roralso) obtained a fire insurance policy for their 2-storey from the Private Respondent Fortune
Life Insurance Co. The said policy covers the period from January 23, 1987 until January 23, 1988 or one year for P600, 000 and at the agreed premium of
P2, 983.50. On January 23 or the next day, petitioner made a partial payment of the premium with P600.
2. Unfortunately, on March 8 1987, the said building was burned to the ground. It was only two days after the fire that Petitioner Violeta advanced the full payment
of the policy premium which was accepted by the insurer. On this same day, petitioner likewise filed the claim that was then referred to the insurer's adjuster.
Investigation of the cause of fire commenced and the petitioner submitted the required proof of loss.
3. Despite that, the private respondent Fortune refused to pay the insurance claim saying it as not liable due to the non-payment by petitioner of the full amount
of the premium as stated in the policy.
4. The petitioner then brought the matter to the Insurance Commission but nothing good came out. Hence this case filed.
5. The trial court rule in favor of the petitioner. Upon appeal, the Court of Appeals reversed the lower court's decision and held that Fortune is not liable but
ordered it to return the premium paid with interest to the petitioner. Hence, this petition for review.
Issue: W/N the partial payment of the premium rendered the insurance policy ineffective?
YES.
1. Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent
event. The consideration is the premium, which must be paid at the time, way and manner as stated in the policy, and if not so paid as in this case, the policy
is therefore forfeited by its own terms. In this case, the policy taken out by the petitioner provides for payment of premium in full. Since the petitioner only
made partial payment with the remaining balance paid only after the fire or peril insured against has occurred, the insurance contract therefore did not take
effect barring the insured from claiming or collecting from the loss of her building.
2. Under Section 77 of the Insurance Code (Philippine), it provides therein that "An insurer is entitled to payment of the premium as soon as the thing insured is
exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is
valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period
provision applies." Herein case, the controversy is on the payment of the premium. It cannot be disputed that premium is the elixir vitae of the insurance
business because the insurer is required by law to maintain a reserve fund to meet its contingent obligations to the public. Due to this, it is imperative that
the premium is paid fully and promptly. To allow the possibility of paying the premium even after the peril has ensued will surely undermine the foundation
of the insurance business.
TIBAY v. CA (FORTUNE LIFE & GENERAL INSURANCE)
257 SCRA 126
BELLOSILLO; May 24, 1996
FACTS
- On 22 January 1987 Fortune Life and General Insurance Co., Inc. (FORTUNE) issued Fire Insurance Policy No. 136171 in favor of
Violeta R. Tibay and/or Nicolas Roraldo on their two-storey residential building located at 5855 Zobel Street, Makati City, together with
all their personal effects therein. The insurance was for P600,000 covering the period from 23 January 1987 to 23 January 1988. On 23
January 1987, of the total premium of P2,983.50, Violeta Tibay only paid P600 thus leaving a considerable balance unpaid.
- On 8 March 1987 the insured building was completely destroyed by fire. Two days later, Violeta Tibay paid the balance of the premium.
On the same day, she filed with FORTUNE a claim on the fire insurance policy. Her claim was accordingly referred to its adjuster, Goodwill
Adjustment Services, Inc. (GASI), which immediately wrote Violeta requesting her to furnish it with the necessary documents for the
investigation and processing of her claim. Petitioner forthwith complied. On 28 March 1987 she signed a nonwaiver agreement with GASI
to the effect that any action taken by the companies shall not be, or be claimed to be, an admission of liability.
- FORTUNE denied the claim of Violeta for violation of Policy Condition No. 2 ♪ and of Sec. 77 of the Insurance Code. Efforts to settle the
case before the Insurance Commission proved futile. On 3 March 1988 Violeta and the other petitioners sued FORTUNE for damages in
the amount of P600,000 representing the total coverage of the fire insurance policy plus 12% interest per annum, P100,000 moral
damages, and attorney's fees equivalent to 20% of the total claim. The trial court ruled for petitioners. CA reversed.
ISSUE
WON a fire insurance policy is valid, binding and enforceable upon mere partial payment of premium
HELD
NO
Ratio Where the insurer and the insured expressly stipulated that the policy is not in force until the premium has been fully paid the
payment of partial premium by the assured in this particular instance should not be considered the payment required by the law and the
stipulation of the parties. Rather, it must be taken in the concept of a deposit to be held in trust by the insurer until such time that the
full amount has been tendered and duly receipted for.
Reasoning
- As expressly agreed upon in the contract, full payment must be made before the risk occurs for the policy to be considered effective
and in force. Thus, no vinculum juris whereby the insurer bound itself to indemnify the assured according to law ever resulted from the
fractional payment of premium. The insurance contract itself expressly provided that the policy would be effective only when the premium
was paid in full. It would have been altogether different were it not so stipulated. Ergo, petitioners had absolute freedom of choice
whether or not to be insured by FORTUNE under the terms of its policy and they freely opted to adhere thereto.
- Indeed, and far more importantly, the cardinal polestar in the construction of an insurance contract is the intention of the parties as
expressed in the policy. Courts have no other function but to enforce the same. The rule that contracts of insurance will be construed in
favor of the insured and most strongly against the insurer should not be permitted to have the effect of making a plain agreement
ambiguous and then construe it in favor of the insured. Verily, it is elemental law that the payment of premium is requisite to keep the
policy of insurance in force. If the premium is not paid in the manner prescribed in the policy as intended by the parties the policy is
ineffective. Partial payment even when accepted as a partial payment will not keep the policy alive even for such fractional part of the
year as the part payment bears to the whole payment.
Disposition Petition is DENIED. Decision of the CA is AFFIRMED.
SEPARATE OPINION
VITUG [dissent]
♪This policy including any renewal thereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the
Company in the manner provided herein.
- The law neither requires, nor measures the strength of the vinculum juris by, any specific amount of premium payment. It should thus
be enough that payment on the premium, partly or in full, is made by the insured which the insurer accepts. In fine, it is either that a
juridical tie exists (by such payment) or that it is not extant at all (by an absence thereof). Once the juridical relation comes into being,
the full efficacy, not merely pro tanto, of the insurance contract naturally follows. Verily, not only is there an insurance perfected but
also a partially performed contract. In case of loss, recovery on the basis of the full contract value, less the unpaid premium can
accordingly be had; conversely, if no loss occurs, the insurer can demand the payment of the unpaid balance of the premium. The
insured, on the one hand, cannot avoid the obligation of paying the balance of the premium while the insurer, upon the other hand,
cannot treat the contract as valid only for the purpose of collecting premiums and as invalid for the purpose of indemnity.
MAKATI TUSCANY v. CA ( AMERICAN HOME ASSURANCE CO.)
215 SCRA 462
BELLOSILLO; November 6, 1992
NATURE
Appeal from decision of the CA
FACTS
- American Home Assurance Co. (AHAC), represented by American International Underwriters (Phils.), Inc., issued in favor of petitioner
Makati Tuscany Condominium Corporation an insurance policy on the latter's building and premises, for the period 1 March 1982 to1
March 1983. The premium was paid on installments all of which were accepted by AHAC.
- A second policy was issued to renew the first one, this time covering the period 1 March 1983 to 1 March 1984. This was also pain in
installment basis.
- A third policy was again issued for the period 1 March 1984 to 1 March 1985. For this, petitioner made two installment payments, both
accepted by AHAC. Thereafter, petitioner refused to pay the balance of the premium. AHAC filed an action to recover the unpaid balance
of P314,103.05.
- Petitioner explained that it discontinued the payment of premiums because the policy did not contain a credit clause in its favor and
the receipts for the installment payments covering the policy for 1984-85, as well as the two (2) previous policies, stated the following
reservations:
2. Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising
before such payments or after the expiration of the credit clause of the policy; and
3. Subject to no loss prior to premium payment. If there be any loss such is not covered.
- Petitioner further claimed that the policy was never binding and valid, and no risk attached to the policy. It then pleaded a counterclaim
for P152k for the premiums already paid for 1984-85, and in its answer with amended counterclaim, sought the refund of P924,206.10
representing the premium payments for 1982-85.
- Trial court dismissed the complaint and the counterclaim upon the following findings: (1) payment of the premiums of the three policies
were made during the term of said policies, hence, it could not be said, inspite of the reservations, that no risk attached under the
policies; (2) as regards the unpaid premiums, in view of the reservation in the receipts ordinarily issued by AHAC on premium payments
the only plausible conclusion is that AHAC has no right to demand their payment after the lapse of the term of said policy on March 1,
1985. Therefore, Tuscany was justified in refusing to pay the same.
- CA modified the decision by ordering Tuscany to pay the balance of the premiums due on the third policy plus legal interest until fully
paid, and affirming the denial of the counterclaim.
Petitioner’s Claims
Petitioner argues that where the premiums is not actually paid in full, the policy would only be effective if there is an acknowledgment
in the policy of the receipt of premium pursuant to Sec. 78 of the Insurance Code. The absence of an express acknowledgment in the
policies of such receipt of the corresponding premium payments, and petitioner's failure to pay said premiums on or before the effective
dates of said policies rendered them invalid. Petitioner thus concludes that there cannot be a perfected contract of insurance upon mere
partial payment of the premiums because under Sec. 77 of the Insurance Code, no contract of insurance is valid and binding unless the
premium thereof has been paid, notwithstanding any agreement to the contrary.
ISSUE
WON payment by installment of the premiums due on an insurance policy invalidates the contract of insurance
HELD
Ratio Where the risk is entire and the contract is indivisible, the insured is not entitled to a refund of the premiums paid if the insurer
was exposed to the risk insured for any period, however brief or momentary.
Reasoning
- The obligation to pay premiums when due is ordinarily as indivisible obligation to pay the entire premium. Here, the parties herein
agreed to make the premiums payable in installments, and there is no pretense that the parties never envisioned to make the insurance
contract binding between them. And the insured never informed the insurer that it was terminating the policy because the terms were
unacceptable.
- There is nothing in Section 77 which suggests that the parties may not agree to allow payment of the premiums in installment, or to
consider the contract as valid and binding upon payment of the first premium.
- The records clearly show that petitioner and private respondent intended subject insurance policies to be binding and effective
notwithstanding the staggered payment of the premiums. Acceptance of payments speaks loudly of the insurer's intention to honor the
policies it issued to petitioner.
- Section 78 of the Insurance Code in effect allows waiver by the insurer of the condition of prepayment by making an acknowledgment
in the insurance policy of receipt of premium as conclusive evidence of payment so far as to make the policy binding despite the fact
that premium is actually unpaid. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are
not paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not contrary to morals, good
customs, public order or public policy.
- At the very least, both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted.
Disposition Judgment affirmed. Costs against petitioner.
Philippine Phoenix and Insurance Company vs. Woodworks Inc.
 [G.R. No. L-25317 August 6, 1979]
Facts:
Philippine Phoenix and Insurance Company ( Phil. Phoenix for short) issued a fire insurance policy in favor of Woodworks, Inc. upon
application of the latter insuring Woodwork‘s building and equipments against loss by fire for a one year term from from July 21, 1960 to
July 21, 1961. After issuance of the policy, Woodworks did not pay the premium as stipulated. On April 19, 1961, Phil. Phoenix notified
Woodworks of the cancellation of the policy at the same time claiming earned premiums still unpaid by Woodworks from July 21, 1960 to
April 19, 1961 worth P7,483.11 for 271 days). In said letter, Phil. Phoenix credited the remaining balance ( or from April 19, 1961 to July 21,
1961 equivalent to 3,110.25 for 94 days) to Woodwork‘s account. Woodworks naturally refused to pay Phil. Phoenix ̳s alleged ―earned
premiums‖ averring that failure to pay the premium after the issuance of the policy rendered the insurance policy unenforceable thereby
prompting Phil. Phoenix legal action for recovery of premiums before the lower court ( CFI) of which Phoenix won. Now on appeal before
the SC on pure questions of law.
Issue:
1. WON non-payment or failure as the case may be of premiums after issuance of the fire insurance policy rendered such policy invalid or of
no effect
2. Even if the premium is unpaid after issuance of the policy by Phil. Phoenix, granting aguendo that indeed Phil. Phoenix gave Woodworks
credit extensions for purposes of giving effect of the policy, was there acceptance of such credit extended in this case?
Ruling:
1. Insurance policy became ineffective by non- payment of premiums after issuance of policy. Section 77 of the Insurance Code (Presidential
Decree No. 612, promulgated on December 18, 1974), provides that no contract of insurance issued by an insurance company is valid and
binding unless and until the premium thereof has been paid, notwithstanding any agreement to the contrary.
The insurance policy provides:
 THE COMPANY HEREBY AGREES with the Insured ... that if the Property above described, or any part
thereof, shall be destroyed or damaged by Fire or Lightning after payment of Premium, at any time between 4:00 o'clock in the afternoon of
the TWENTY FIRST day of JULY One Thousand Nine Hundred and SIXTY and 4:00 o'clock in the afternoon of the TWENTY FIRST day
of JULY One Thousand Nine Hundred and SIXTY ONE. ... (Emphasis supplied)
Insurance is "a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an
unknown or contingent event." The consideration is the "premium". "The premium must be paid at the time and in the way and manner
specified in the policy and, if not so paid, the policy will lapse and be forfeited by its own terms."
Since the premium had not been paid, the policy must be deemed to have lapsed.
The non-payment of premiums does not merely suspend but put, an end to an insurance contract, since the time of the payment is peculiarly
of the essence of the contract.
... the rule is that under policy provisions that upon the failure to make a payment of a premium or assessment at the time provided for, the
policy shall become void or forfeited, or the obligation of the insurer shall cease, or words to like effect, because the contract so prescribes
and because such a stipulation is a material and essential part of the contract. This is true, for instance, in
the case of life, health and accident, fire and hail insurance policies.
In fact, if the peril insured against had occurred, plaintiff, as insurer, would have had a valid defense against recovery under the Policy it had
issued. Explicit in the Policy itself is plaintiff's agreement to indemnify defendant for loss by fire only "after payment of premium," supra.
Compliance by the insured with the terms of the contract is a condition precedent to the right of recovery.
The burden is on an insured to keep a policy in force by the payment of premiums, rather than on the insurer to exert every effort to prevent
the insured from allowing a policy to elapse through a failure to make premium payments. The continuance of the insurer's obligation is
conditional upon the payment of premiums, so that no recovery can be had upon a lapsed policy, the contractual relation between the parties
having ceased.
Moreover, "an insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid for the purpose of indemnity."
2. No express acceptance of credit extensions, if any, by Woodworks. The Policy provides for pre-payment of premium. Accordingly; "when
the policy is tendered the insured must pay the premium unless credit is given or there is a waiver, or some agreement obviating the necessity
for prepayment." To constitute an extension of credit there must be a clear and express agreement therefor."
An acceptance of an offer to allow credit, if one was made, is as essential to make a valid agreement for credit, to change a conditional
delivery of an insurance policy to an unconditional delivery, as it is to make any other contract. Such an acceptance could not be merely a
mental act or state of mind, but would require a promise to pay made known in some manner to defendant.
PHILIPPINE PHOENIX SURETY & INSURANCE COMPANY, vs.
WOODWORKS, INC.
G.R. No. L-25317 August 6, 1979
FIRST DIVISION
MELENCIO-HERRERA, J.:
FACTS:
Upon WOODWORKS’s application, PHIL. PHOENIX issued in its favor a fire insurance policy whereby PHIL. PHOENIX insured
WOODWORKS’ building, machinery and equipment for a term of one year from against loss by fire. The premium and other
charges amounted to P10,593.36.
It is undisputed that WOODWORKS did not pay the premium stipulated in the Policy when it was issued nor at any time
thereafter.
Before the expiration of the one-year term, PHIL. PHOENIX notified WOODWORKS of the cancellation of the Policy allegedly
upon request of WOODWORKS. The latter has denied having made such a request. PHIL. PHOENIX credited WOODWORKS
with the amount of P3,110.25 for the unexpired period of 94 days, and claimed the balance of P7,483.11 representing , earned
premium. Thereafter, PHIL. PHOENIX demanded in writing for the payment of said amount.
WOODWORKS disclaimed any liability contending, in essence, that it need not pay premium “because the Insurer did not stand
liable for any indemnity during the period the premiums were not paid.”
For this reason, PHIL. PHOENIX commenced action in the CFI of Manila. Judgment was rendered in PHIL. PHOENIX’s favor .
From this adverse Decision, WOODWORKS appealed to the Court of Appeals which certified the case to SC on a question of
law.
ISSUE:
May the insurer collect the earned premiums?
HELD:
NO. The Courts findings are buttressed by Section 77 of the Insurance Code (Presidential Decree No. 612, promulgated on
December 18, 1974), which now provides that “no contract of insurance issued by an insurance company is valid and binding
unless and until the premium thereof has been paid, notwithstanding any agreement to the contrary.”
Since the premium had not been paid, the policy must be deemed to have lapsed.
The non-payment of premiums does not merely suspend but put, an end to an insurance contract, since the time of the payment
is peculiarly of the essence of the contract.
In fact, if the peril insured against had occurred, PHIL. PHOENIX, as insurer, would have had a valid defense against recovery
under the Policy it had issued. Explicit in the Policy itself is PHIL. PHOENIX’s agreement to indemnify WOODWORKS for loss by
fire only “after payment of premium,” Compliance by the insured with the terms of the contract is a condition precedent to the
right of recovery.
The burden is on an insured to keep a policy in force by the payment of premiums, rather than on the insurer to exert every effort
to prevent the insured from allowing a policy to elapse through a failure to make premium payments. The continuance of the
insurer’s obligation is conditional upon the payment of premiums, so that no recovery can be had upon a lapsed policy, the
contractual relation between the parties having ceased.
Moreover, “an insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid for the purpose of
indemnity.”
DISPOSITION:
The judgment appealed from was reversed, and PHIL. PHOENIX’s complaint dismissed.

Insurance Case Digest:
Philippine Phoenix Surety &
Insurance Co. V. Woodworks
Inc (1979)
G.R. No. L-25317 August 6, 1979
Lessons Applicable: Estoppel and credit extension (Insurance)
Laws Applicable: Section 77 of the Insurance Code
FACTS:
 July 21, 1960: Woodworks, Inc. was issued a fire policy for
its building machinery and equipment by Philippine Phoenix
Surety & Insurance Co. for P500K covering July 21, 1960 to
July 21, 1961. Woodworks did not pay the premium
totalling to P10,593.36.
 April 19, 1961: It was alleged that Woodworks notified
Philippine Phoenix the cancellation of the Policy so Philippine
Phoenix credited P3,110.25 for the unexpired period of 94
days and demanded in writing the payment of P7,483.11
 Woodworks refused stating that it need not pay premium
"because the Insurer did not stand liable for any indemnity
during the period the premiums were not paid."
 Philippine Phoenix filed with the CFI to recover its earned
premium of P7,483.11
 Woodworks: to pay the premium after the issuance of the
policy put an end to the insurance contract and rendered the
policy unenforceable
 CFI: favored Philippine Phoenix
ISSUE: W/N there was a valid insurance contract despite no
premium payment was paid
HELD: NO. Reversed
 Policy provides for pre-payment of premium. To constitute
an extension of credit there must be a clear and express
agreement therefor and there nust be acceptance of the
extension - none here
 Since the premium had not been paid, the policy must be
deemed to have lapsed.
 failure to make a payment of a premium or assessment at
the time provided for, the policy shall become void or
forfeited, or the obligation of the insurer shall cease, or
words to like effect, because the contract so prescribes and
because such a stipulation is a material and essential part of
the contract. This is true, for instance, in the case of life,
health and accident, fire and hail insurance policies
 Explicit in the Policy itself is plaintiff's agreement to
indemnify defendant for loss by fire only "after payment of
premium" Compliance by the insured with the terms of the
contract is a condition precedent to the right of recovery.
 The burden is on an insured to keep a policy in force by the
payment of premiums, rather than on the insurer to exert
every effort to prevent the insured from allowing a policy to
elapse through a failure to make premium payments.
36. Bonifacio Bros., Inc. v. Mora 20 SCRA 261 (1967)
FACTS: Enrique Mora, owner of Oldsmobile sedan model 1956, mortgaged it to H.S. Reyes, Inc.,
with the condition that they would be the beneficiary of its insurance. The sedan was insured
withState Bonding & Insurance Co., Inc. During the period of effectivity, the sedan met an accident
and it wasappraised byBayne Adjustment Co. and repaired it with Bonifacio Bros. and the parts
were supplied by Ayala Auto Parts Co. This was all done without the knowledge of H.S. Reyes.
Enrique was billed P2,102.73 through Bayne. The insurance company drew a check deducting P100
for franchise and entrusted it to Bayne payable to Enrique or H.S. Reyes.Still unpaid, the sedan was
delivered to Enrique without the Knowledge of H.S. Reyes. Bonifacio Bros and Ayala Auto filed in
the MTC on the theory that the insurance proceeds should be paid directly to them. CFI affirmed the
ruling of MTCthat H.S. Reyes, Inc. as having a better right.
ISSUE: Whether there is privity of contract between the Bonifacio Bros. Inc and the Ayala Auto
Parts Co. on the one hand and the insurance company on the other.
HELD: NO. Judgment affirmed. It is fundamental that contracts take effect only between the parties
thereto, except on some specific instances provided by law where the contract contains some
stipulation in favor of a third person (Art. 1311, Civil Code). Such stipulation is known as
stipulation pour autrui or a provision in favor of a third person not a party to the contract. Under this
doctrine, a third person is allowed to avail himself of a benefit granted to him by the terms of the
contract, provided that the contracting parties have clearly and deliberately conferred a favor upon
such person (Art. 1311, Civil Code; Uy Tam, Et. Al. v. Leonard, 30 Phil.. 471). Consequently, a
third person not a party to the contract has no action against the parties thereto, and cannot generally
demand the enforcement of the same
BONIFACIO BROS., INC. vs. MORA 20 SCRA 261
 [G.R. No. L-20853; May 29, 1967]
FACTS:
 Enrique Mora mortgaged his Oldsmobile sedan model 1956 to H.S. Reyes, Inc. Said vehicle
was thereafter ensured by Enrique with the State Bonding & Insurance Co., Inc. with H.S. Reyes as the
beneficiary. The motor car insurance policy that was issued to Enrique provides, among others, that the
insurance company will indemnify the Insured against loss of or damages to the Motor Vehicle and its
accessories and spare parts by accidental collision or overturning or collision or overturning consequent
upon mechanical breakdown or consequent upon wear and tear. At its own option, the Company may pay
in cash the amount of the loss or damage or may repair, reinstate, or replace the Motor Vehicle or any part
thereof or its accessories or spare parts, with its liability not to exceed the value of the parts, whichever is
less. Under paragraph 4 of said policy, the Insured may authorize the repair of the Motor Vehicle
necessitated by damage for which the Company may be liable under the Policy provided that the estimated
cost of repair does not exceed the Authorized Repair Limit and that a detailed estimate of the cost is
forwarded to the Company without delay, subject to the condition that "loss, if any is payable to H.S.
Reyes, Inc.," by virtue of the fact that said Oldsmobile sedan was mortgaged in its favor.
During the effectivity of the insurance contract, the car met with an accident. The insurance company then
assigned the accident to the Bayne Adjustment Co. for investigation and appraisal of the damage. Enrique
Mora, without the knowledge and consent of the H.S. Reyes, Inc., authorized the Bonifacio Bros. Inc. to
furnish the labor and materials, some of which were supplied by the Ayala Auto Parts Co. For the cost of
labor and materials, Enrique Mora was billed at P2,102.73 through the H.H. Bayne Adjustment Co. The
insurance company after claiming a franchise in the amount of P100, drew a check in the amount of
P2,002.73, as proceeds of the insurance policy, payable to the order of Enrique Mora or H.S. Reyes,. Inc.,
and entrusted the check to the H.H. Bayne Adjustment Co. for disposition and delivery to the proper party.
In the meantime, the car was delivered to Enrique Mora without the consent of H.S. Reyes, Inc., and
without payment to Bonifacio Bros. Inc. and the Ayala Auto Parts Co. of the cost of repairs and materials.
Upon the theory that the insurance proceeds should be paid directly to them, the Bonifacio Bros. Inc. and
the Ayala Auto Parts Co. filed a complaint with the Municipal Court of Manila against Enrique Mora and
the State Bonding & Insurance Co., Inc. for the collection of the sum of P2,002.73. The insurance
company filed its answer with
a counterclaim for interpleader, requiring the Bonifacio Bros. Inc. and the H.S. Reyes, Inc. to interplead in
order to determine who has better right to the insurance proceeds in question. Enrique Mora was declared
in default for failure to appear at the hearing, and evidence against him was received ex parte. However,
the counsel for the Bonifacio Bros. Inc., Ayala Auto Parts Co. and State Bonding & Insurance Co. Inc.
submitted a stipulation of facts, on the basis of which, the Municipal Court rendered a decision declaring
H.S. Reyes, Inc. as having a better right to the disputed amount and ordering State Bonding & Insurance
Co. Inc. to pay H. S. Reyes, Inc. the said sum of P2,002.73.
The Court of First Instance of Manila affirmed the decision of the Municipal Court. The Bonifacio Bros.
Inc. and the Ayala Auto Parts Co. moved for reconsideration of the decision, but the trial court denied the
motion. Hence, this appeal.
ISSUE:
 Whether or not there is privity of contract between the Bonifacio Bros. Inc. and the Ayala Auto
Parts Co. on the one hand and the insurance company on the other.
HELD:
 Contracts take effect only between the parties thereto, except in some specific instances
provided by law where the contract contains some stipulation in favor of a third person. Such stipulation is
known as stipulation pour autrui or a provision in favor of a third person not a pay to the contract. Under
this doctrine, a third person is allowed to avail himself of a benefit granted to him by the terms of the
contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such
person. Consequently, a third person not a party to the contract has no action against the parties thereto,
and cannot generally demand the enforcement of the same.
In the instant case, the insurance contract does not contain any words or clauses to disclose an intent to
give any benefit to any repairmen or materialmen in case of repair of the car in question. The parties to the
insurance contract omitted such stipulation, which is a circumstance that supports the said conclusion. On
the other hand, the "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to
H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.
Another cogent reason for not recognizing a right of action by the appellants against the insurance
company is that "a policy of insurance is a distinct and independent contract between the insured and
insurer, and third persons have no right either in a court of equity, or in a court of law, to the proceeds of
it, unless there be some contract of trust, expressed or implied between the insured and third person." In
this case, no contract of trust, expressed or implied exists.
This conclusion is deducible not only from the principle governing the operation and effect of insurance
contracts in general, but is clearly covered by the express provisions of Section 50 of the Insurance Act
which read: The insurance shall be applied exclusively to the proper interests of the person in whose name
it is made unless otherwise specified in the policy.
Loss in insurance, defined. — The injury or damage sustained by the insured in consequence of the
happening of one or more of the accidents or misfortune against which the insurer, in consideration of the
premium, has undertaken to indemnify the insured. (1 Bouv. Ins. No. 1215; Black's Law Dictionary;
Cyclopedic Law Dictionary, cited in Martin's Phil. Commercial Laws, Vol. 1, 1961 ed. p. 608).
Insurance Case Digest: Bonifacio Bros., Inc. V. Mora (1967)
G.R. No. L-20853 May 29, 1967
Lessons Applicable: stipulation pour autrui (Insurance)
FACTS:
 Enrique Mora, owner of Oldsmobile sedan model 1956, mortgaged it to H.S. Reyes, Inc.,
with the condition that they would be the beneficiary of its insurance
 June 23, 1959: The sedan was insured with State Bonding & Insurance Co., Inc
 During the period of effectivity, the sedan met an accident and it was appraised by Bayne
Adjustment Co. and repaired it with Bonifacio Bros. and the parts were supplied by Ayala
Auto Parts Co. This was all done without the knowledge of H.S. Reyes. Enrique was billed
P2,102.73 through Bayne. The insurance company drew a check deducting P100 for
franchise and entrusted it to Bayne payable to Enrique or H.S. Reyes.
 Still unpaid, the sedan was delivered to Enrique without the Knowledge of H.S. Reyes
 Bonifacio Bros and Ayala Auto filed in the MTC on the theory that the insurance proceeds
should be paid directly to them
 CFI affirmed MTC: H.S. Reyes, Inc. as having a better right
ISSUE: W/N there is privity between Bonifacio Bro and Ayala Auto against the insurance company
HELD: NO. Judgment affirmed
 GR: contracts take effect only between the parties thereto
 EX: some specific instances provided by law where the contract contains some stipulation in
favor of a third person - stipulation pour autrui
 provision in favor of a third person not a party to the contract
 third person is allowed to avail himself of a benefit granted to him by the terms of the contract, provided that the
contracting parties have clearly and deliberately conferred a favor upon such person
 stipulation pour autrui must be clearly expressed - none here
 "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S.
Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.
 stipulation merely establishes the procedure that the insured has to follow in order to be entitled to indemnity for
repair
 a policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have
no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract of trust,
expressed or implied between the insured and third person
 "loss" in insurance law embraces injury or damage
The injury or damage sustained by the insured in consequence of the happening of one or more of the accidents or
misfortune against which the insurer, in consideration of the premium, has
Bonifacio Bros. v. Mora
20 SCRA 262
Facts:
> Enrique Mora mortgaged his Odlsmobile sedan car to HS Reyes Inc. with the condition that Mora would insure
the car with HS Reyes as beneficiary.
> The car was then insured with State Insurance Company and the policy delivered to Mora.
> During the effectivity of the insurance contract, the car figured in an accident. The company then assigned
the accident to an insurance appraiser for investigation and appraisal of the damage.
> Mora without the knowledge and consent of HS Reyes, authorized Bonifacio Bros to fix the car, using
materials supplied by the Ayala Auto Parts Company.
> For the cost of Labor and materials, Mora was billed P2,102.73. The bill was sent to the insurer’s
appraiser. The insurance company drew a check in the amount of the insurance proceeds and entrusted the
check to its appraiser for delivery to the proper party.
> The car was delivered to Mora without the consent of HS Reyes, and without payment to Bonifacio Bros and
Ayala.
> Upon the theory that the insurance proceeds should be directly paid to them, Bonifacio and Ayala filed a
complaint against Mora and the insurer with the municipal court for the collection of P2,102.73.
> The insurance company filed its answer with a counterclaim for interpleader, requiring Bonifacio and HS
Reyes to interplead in order to determine who has a better right to the proceeds.
Issue:
Whether or not there is privity of contract between Bonficacio and Ayala on one hand and State Insurance on
the other.
Held:
NONE.
It is fundamental that contracts take effect only between the parties thereto, except in some specific instance
provided by law where the contract contains some stipulation in favor of a third person. Such stipulation is
known as a stipulation pour autrui; or a provision in favor of a third person not a party to the contract.
Under this doctrine, a third person is ed to avail himself of a benefit granted to him by the terms of the contract,
provided that the contracting parties have clearly and deliberately conferred a favor upon such
person. Consequently, a third person NOT a party to the contract has NO action against the aprties thereto,
and cannot generally demand the enforcement of the same.
The question of whether a third person has an enforceable interest in a contract must be settled by determining
whether the contracting parties intended to tender him such an interest by deliberately inserting terms in their
agreement with the avowed purpose of conferring favor upon such third person. IN this connection, this court
has laid down the rule that the fairest test to determine whether the interest of a 3 rd person in a contract is a
stipulation pour autrui or merely an incidental interest, is to rely upon the intention of the parties as disclosed by
their contract.
In the instant case the insurance contract does not contain any words or clauses to disclose an intent to give
any benefit to any repairmen or material men in case of repair of the car in question. The parties to the insurance
contract omitted such stipulation, which is a circumstance that supports the said conclusion. On the other hand,
the "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc."
indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.
A policy of insurance is a distinct and independent contract between the insured and insurer, and third persons
have no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract
of trust, expressed or implied, by the insured and third person. In this case, no contract of trust, express or
implied. In this case, no contract of trust, expressed or implied exists. We, therefore, agree with the trial court
that no cause of action exists in favor of the appellants in so far as the proceeds of insurance are concerned.
The appellant's claim, if at all, is merely equitable in nature and must be made effective through Enrique Mora
who entered into a contract with the Bonifacio Bros Inc. This conclusion is deducible not only from the principle
governing the operation and effect of insurance contracts in general, but is clearly covered by the express
provisions of section 50 of the Insurance Act (now Sec. 53).
The policy in question has been so framed that "Loss, if any, is payable to H. S. Reyes, Inc." which unmistakably
shows the intention of the parties.
 undertaken to indemnify the insured
 INSULAR LIFE ASSURANCE CO. v. EBRADO
 80 SCRA 181
 MARTIN; October 28, 1977
 person who cannot receive a donation cannot be named as beneficiary in the
 NATURE
 Appeal from judgment of RTC.
 since such relationship ultimately encroaches upon the nuptial and filial
 FACTS
 - Buenaventura Ebrado obtained a whole-life insurance policy from Insular,
for P5,882.00 with a rider for accidental death benefits for the same amount.
He designated Carponia Ebrado as the revocable beneficiary, referring to her
as the wife.
 - Afterwards, he died as a result of an accident when he was hit by a falling
branch of a tree. Carponia filed a claim for the proceeds as the designated
beneficiary in the policy, although she admits that she and Buenaventura
were merely living as husband and wife without the benefit of marriage. The
legal wife, Pascuala Vda De Ebrado, also filed her claim as the widow of the
deceased.
 - Insular then filed an interpleader in court (CFI Rizal) to determine to whom
the proceeds should be paid. CFI declared that Carponia was disqualified
from becoming beneficiary of the insured and directing the Insular to pay
the proceeds to the estate of Buenaventura.
 FACTS: Buenaventura Ebrado was issued by petitioner company an insurance policy wherein he
 ISSUE
 1. WON a common-law wife named as beneficiary in the insurance policy of
a legally married man claim the proceeds of the same
 deceased insured. She asserts that she is the one entitled to the insurance proceeds, not the common-
 HELD
 1. NO
 Ratio The prohibition that husband and wife cannot donate to each other
applies to common-law relationships. As the appointment of a beneficiary in
insurance may be considered a donation, one cannot name as beneficiary
his common-law wife.
 Reasoning
 - It is quite unfortunate that the Insurance Code does not contain any specific
provision grossly resolutory of the prime question at hand.
 - Rather, general rules of civil law should be applied to resolve the issue.
Art.2011, CC states: “The contract of insurance is governed by special laws.
Matters not expressly provided for in such special laws shall be regulated by
this Code.” Thus, when not otherwise specifically provided for by the
Insurance Law, the contract of life insurance is governed by the general rules
of the civil law regulating contracts.
 - Also, Art.2012 “any person who is forbidden from receiving any donation
under Article 739 cannot be named beneficiary of a life insurance policy by
the person who cannot make a donation to him.” Common-law spouses are,
definitely, barred from receiving donations from each other.
 - Art.739, CC: The following donations shall be void:
 1. Those made between persons who were guilty of adultery or concubinage
at the time of donation;
 - In essence, a life insurance policy is no different from a civil donation
insofar as the beneficiary is concerned. Both are founded upon the same
consideration: liberality. A beneficiary is like a donee, because from the
premiums of the policy which the insured pays out of liberality, the
beneficiary will receive the proceeds or profits of said insurance. As a
consequence, the proscription in Art.739 CC should equally operate in life
insurance contracts. The mandate of Art.2012 cannot be laid aside: any
life insurance policy of the person who cannot make the donation.
 - Policy considerations and dictates of morality rightly justify the institution
of a barrier between common-law spouses in regard to property relations
rights of the legitimate family. There is every reason to hold that the bar in
donations between legitimate spouses and those between illegitimate ones
should be enforced in life insurance policies since the same are based on
similar consideration.
 - So long as marriage remains the threshold of family laws, reason and
morality dictate that the impediments imposed upon married couple should
likewise be imposed upon extra-marital relationship. If legitimate
relationship is circumscribed by these legal disabilities, with more reason
should an illicit relationship be restricted by these disabilities.
 Disposition Decision AFFIRMED.
THE INSULAR LIFE ASSURANCE COMPANY, LTD. VS. CARPONIA T. EBRADO G.R. No. L-44059, 28
October 1977 80 SCRA 181
designated Carponia, his common-law wife, as his revocable beneficiary. When Buenaventura died,
Carponia filed with the insurer a claim for the proceeds of the policy in the total amount of P11,745.73.
Pascuala Vda. de Ebrado, Buenaventura’s legal wife, likewise filed her claim as the widow of the
law wife, Carponia.
ISSUE: Whether or not a common-law wife named as beneficiary in the life insurance policy of a legally
married man can claim the proceeds thereof in case of death of the latter
HELD: NO. When not otherwise specifically provided for by the Insurance Law, the contract of life
insurance is governed by the general rules of the civil law regulating contracts. And under Article 2012 of
the same Code, “any person who is forbidden from receiving any donation under Article 739 cannot be
named beneficiary of a life insurance policy by the person who cannot make a donation to him.
Commonlaw spouses are, definitely, barred from receiving donations from each other. In essence, a life
insurance policy is no different from a civil donation insofar as the beneficiary is concerned. Both are
founded upon the same consideration: liberality. A beneficiary is like a donee, because from the
premiums of the policy which the insured pays out of liberality, the beneficiary will receive the proceeds
or profits of said insurance. As a consequence, the proscription in Article 739 of the new Civil Code
should equally operate in life insurance contracts. The mandate of Article 2012 cannot be laid aside: any
person who cannot receive a donation cannot be named as beneficiary in the life insurance policy of the
person who cannot make the donation. Under American law, a policy of life insurance is considered as a
testament and in construing it, the courts will, so far as possible treat it as a will and determine the
effect of a clause designating the beneficiary by rules under which wins are interpreted.
ACCORDINGLY, the appealed judgment of the lower court is hereby affirmed. Carponia T. Ebrado is
hereby declared disqualified to be the beneficiary of the late Buenaventura C. Ebrado in his life
insurance policy. As a consequence, the proceeds of the policy are hereby held payable to the estate of
the deceased insured. Costs against Carponia T. Ebrado
INSULAR LIFE ASSURANCE COMPANY, LTD. vs. CARPONIA T. EBRADO
G.R. No. L-44059, October 28, 1977, FIRST DIVISION (MARTIN, J.)
FACTS:
On September 1, 1968, Buenaventura Cristor Ebrado was issued by The Life Assurance Co., Ltd., on a whole-life for
P5,882.00 with a rider for Accidental Death for the same amount. He designated Carponia T. Ebrado, his common-law
wife as the revocable beneficiary in his policy. He referred to her as his wife in the policy. On October 21, 1969, He
died as a result of an accident when he was hit by a failing branch of a tree. As the policy was in force, the insurance
company was liable to pay the coverage in the total amount of P11,745.73, representing the face value of the policy in
the amount of P5,882.00 plus the additional benefits for accidental death also in the amount of P5,882.00 and the
refund of P18.00 paid for the premium due November, 1969, minus the unpaid premiums and interest thereon due for
January and February, 1969, in the sum of P36.27. Carponia T. Ebrado filed a claim for the proceeds of the Policy as
the designated beneficiary therein, although she admits that she and the insured Buenaventura C. Ebrado were merely
living as husband and wife without the benefit of marriage. Pascual T. Ebrado, also filed a claim to the insurance
company, this time claiming to be the legal wife Buenaventura. She asserts that she has a better right over the
proceeds than Carponia who is a common-law wife. As the insurance company is at a loss as to whom to give the
proceeds, it commenced an action for interpleader in court. After the issues have been joined, a pre-trial conference
was held on July 8, 1972, that there is no possibility of amicable settlement. The Court proceeded to have the parties
submit their evidence for the purpose of the pre-trial and make admissions for the purpose of pretrial. On September
25, 1972, the trial court rendered judgment declaring among others, Carponia T. Ebrado disqualified from becoming
beneficiary of the insured Buenaventura Cristor Ebrado and directing the payment of the insurance proceeds to the
estate of the deceased insured. From this judgment, Carponia T. Ebrado appealed to the Court of Appeals, but on July
11, 1976, the Appellate Court certified the case to Us as involving only questions of law.
ISSUE:
Whether or not a common-law wife named as beneficiary in the life insurance policy of a legally married man claim the
proceeds thereof in case of death of the latter.
HELD:
The appealed judgment of the lower court is hereby affirmed.
Carponia T. Ebrado is hereby declared disqualified to be the beneficiary of the late Buenaventura C. Ebrado in his life
insurance policy. As a consequence, the proceeds of the policy are hereby held payable to the estate of the deceased
insured. Costs against Carponia T. Ebrado.
A common-law wife named as a beneficiary in the life insurance policy of a legally married man cannot claim the
proceeds thereof in case the death of the latter. The contract of insurance is govern by the provisions of the new civil
code on matters not specifically provided for in the insurance code. Rather, the general rules of civil law should be
applied to resolve this void in the Insurance Law. Article 2011 of the New Civil Code states: “The contract of insurance
is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this Code.”
When not otherwise specifically provided for by the Insurance Law, the contract of life insurance is governed by the
general rules of the civil law regulating contracts. And under Article 2012 of the same Code, “any person who is
forbidden from receiving any donation under Article 739 cannot be named beneficiary of a fife insurance policy by the
person who cannot make a donation to him. Common-law spouses are, definitely, barred from receiving donations
from each other. Also conviction for adultery or concubinage is not required as only preponderance of evidence is
necessary. “In essence, a life insurance policy is no different from a civil donation insofar as the beneficiary is
concerned. Both are founded upon the same consideration: liberality. A beneficiary is like a donee, because the
premiums of the policy which the insured pays out of liberality, the beneficiary will receive the proceeds or profits of
said insurance.”
Insurance Case Digest:The Insular Life Assurance Co. Ltd. V. Ebrado (1977)
G.R. No. L-44059 October 28, 1977
Lessons Applicable:
 Art. 2011 Civil Code (Insurance)
 Invalid Designation (Insurance)
FACTS:
 September 1, 1968: Buenaventura Cristor Ebrado was issued by The Insular Life Assurance Co., Ltd.,
Policy on a whole-life for P5,882.00 with a, rider for Accidental Death and designated Carponia T.
Ebrado as the revocable beneficiary in his policy
 October 21, 1969: Buenaventura was hit by a falling branch and died.
 Carponia filed a claim as the designated beneficiary, although she admits that they were merely
living as husband and wife without the benefit of marriage
 Pascuala Vda. de Ebrado also filed her claim as the widow of the deceased insured
 In doubt as to whom the insurance proceeds shall be paid, the insurer, The Insular Life Assurance
Co., Ltd. commenced an action for Interpleader bef. the CFI
 CFI: Carponia was disqualified because of adultery
 CA: affirmed CFI decision
ISSUE: W/N Carponia is disqualified for violating the Civil Code which supplements the silent Insurance
Code.
HELD: YES. CA affirmed.
Civil Code
Art. 2011
Art. 2011. The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall
be regulated by this Code.
Art. 2012
Art. 2012. Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life
insurance policy by the person who cannot make any donation to him, according to said article.
Art. 739
Art. 739. The following donations shall be void:
(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;
(2) Those made between persons found guilty of the same criminal offense, in consideration thereof;
(3) Those made to a public officer or his wife, descedants and ascendants, by reason of his office.
In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and
the guilt of the donor and donee may be proved by preponderance of evidence in the same action.
 Common-law spouses are, definitely, barred from receiving donations from each other
 In essence, a life insurance policy is no different from a civil donation insofar as the beneficiary is
concerned. Both are founded upon the same consideration: liberality. A beneficiary is like a
donee, because from the premiums of the policy which the insured pays out of liberality, the
beneficiary will receive the proceeds or profits of said insurance. As a consequence, the
proscription in Article 739 of the new Civil Code should equally operate in life insurance contracts.
 We do not think that a conviction for adultery or concubinage is exacted before the disabilities
mentioned in Article 739 may effectuate.
 requisite proof of common-law relationship between the insured and the beneficiary has been
conveniently supplied by the stipulations between the parties in the pre-trial conference of the
case
Insular v Ebrado G.R. No. L-44059 October 28, 1977
Facts:
J. Martin:
Cristor Ebrado was issued by The Life Assurance Co., Ltd., a policy for P5,882.00 with a rider for
Accidental Death. He designated Carponia T. Ebrado as the revocable beneficiary in his policy.
He referred to her as his wife.
Cristor was killed when he was hit by a failing branch of a tree. Insular Life was made liable to pay
the coverage in the total amount of P11,745.73, representing the face value of the policy in the
amount of P5,882.00 plus the additional benefits for accidental death.
Carponia T. Ebrado filed with the insurer a claim for the proceeds as the designated beneficiary
therein, although she admited that she and the insured were merely living as husband and wife
without the benefit of marriage.
Pascuala Vda. de Ebrado also filed her claim as the widow of the deceased insured. She asserts
that she is the one entitled to the insurance proceeds.
Insular commenced an action for Interpleader before the trial court as to who should be given the
proceeds. The court declared Carponia as disqualified.
Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally
married man can claim the proceeds in case of death of the latter?
Held: No. Petition
Ratio:
Section 50 of the Insurance Act which provides that "the insurance shall be applied exclusively to
the proper interest of the person in whose name it is made"
The word "interest" highly suggests that the provision refers only to the "insured" and not to the
beneficiary, since a contract of insurance is personal in character. Otherwise, the prohibitory laws
against illicit relationships especially on property and descent will be rendered nugatory, as the
same could easily be circumvented by modes of insurance.
When not otherwise specifically provided for by the Insurance Law, the contract of life insurance
is governed by the general rules of the civil law regulating contracts. And under Article 2012 of the
same Code, any person who is forbidden from receiving any donation under Article 739 cannot
be named beneficiary of a fife insurance policy by the person who cannot make a donation to him.
Common-law spouses are barred from receiving donations from each other.
Article 739 provides that void donations are those made between persons who were guilty of
adultery or concubinage at the time of donation.
There is every reason to hold that the bar in donations between legitimate spouses and those
between illegitimate ones should be enforced in life insurance policies since the same are based
on similar consideration. So long as marriage remains the threshold of family laws, reason and
morality dictate that the impediments imposed upon married couple should likewise be imposed
upon extra-marital relationship.
A conviction for adultery or concubinage isn’t required exacted before the disabilities mentioned
in Article 739 may effectuate. The article says that in the case referred to in No. 1, the action for
declaration of nullity may be brought by the spouse of the donor or donee; and the guilty of the
donee may be proved by preponderance of evidence in the same action.
The underscored clause neatly conveys that no criminal conviction for the offense is a condition
precedent. The law plainly states that the guilt of the party may be proved “in the same acting for
declaration of nullity of donation.” And, it would be sufficient if evidence preponderates.
The insured was married to Pascuala Ebrado with whom she has six legitimate children. He was
also living in with his common-law wife with whom he has two children.
Insular Life vs Ebrado Case Digest
Facts:
Buenaventura was married to Pascuala with whom he had six. Later on however, he started living
with Carponia although he was still legally married to Pascuala and had not legally separated from
her.
While living with Carponia, Buenaventura obtained an insurance policy from Insular Life
Assurance Co. with a rider for accidental death benefit and designated Carponia as the revocable
beneficiary, referring her therein as his wife. Barely more than a year after obtaining the
policy, Buenaventura died when he was hit by a falling branch of a tree.
Carponia filed a claim for the proceeds of the Policy as the designated beneficiary therein,
although she admits that she and the insured Buenaventura were merely living as husband and
wife without the benefit of marriage. Pascuala also filed her claim as the widow of the deceased
insured. She asserts that she is the one entitled to the insurance proceeds, not the common-law
wife, Carponia. In view of the conflicting claims, Insular Life brought the matter to court
interpleading both parties in the case. The trial court ruled in favor of Pascuala.
Issue:
Can a common-law wife named as beneficiary in the life insurance policy of a legally married man
claim the proceeds thereof in case of death of the latter?
Held:
Yes. In essence, a life insurance policy is no different from a civil donation insofar as the
beneficiary is concerned. Both are founded upon the same consideration: liberality. A beneficiary
is like a donee, because from the premiums of the policy which the insured pays out of liberality,
the beneficiary will receive the proceeds or profits of said insurance. As a consequence, the
proscription in Article 739 of the new Civil Code should equally operate in life insurance contracts.
The mandate of Article 2012 cannot be laid aside: any person who cannot receive
a donation cannot be named as beneficiary in the life insurance policy of the person who cannot
make the donation.
Policy considerations and dictates of morality rightly justify the institution of a barrier between
common law spouses in regard to property relations since such relationship ultimately encroaches
upon the nuptial and filial rights of the legitimate family.
A conviction for adultery or concubinage is not necessary. Article 739 itself provides that
the guilt of the donee may be proved by preponderance of evidence in the same action. In this
case, the common law relationship is already admitted by Carponia herself in the stipulation of
facts they submitted to the court. (Insular Life vs Ebrado, G.R. No. L-44059, October 28, 1977)
CONSUEGRA v. GSIS
37 SCRA 315
ZALDIVAR; January 30, 1971
NATURE
Appeal from the decision of the Court of First Instance of Surigao del Norte awarding the
8/16 part of the proceeds of the deceased Consuegra’s retirement benefits to Rosario Diaz.
FACTS
- The late Jose Consuegra, at the time of his death, was employed as a shop foreman of
the office of the District Engineer in the province of Surigao del Norte. In his lifetime,
Consuegra contracted two marriages, the first with herein respondent Rosario Diaz,
solemnized in the parish church of San Nicolas de Tolentino, Surigao, Surigao, on July 15,
1937, out of which marriage were born two children, namely, Jose Consuegra, Jr. and Pedro
Consuegra, but both predeceased their father; and the second, which was contracted in
good faith while the first marriage was subsisting, with herein petitioner Basilia Berdin, on
May 1, 1957 in the same parish and municipality, out of which marriage were born seven
children, namely, Juliana, Pacita, Maria Lourdes, Jose, Rodrigo, Lenida and Luz, all
surnamed Consuegra.
- Being a member of the Government Service Insurance System (GSIS, for short) when
Consuegra died on September 26, 1965, the proceeds of his life insurance under policy No.
601801 were paid by the GSIS to petitioner Basilia Berdin and her children who were the
beneficiaries named in the policy.
- However, Consuegra did not designate any beneficiary who would receive the retirement
insurance benefits due to him. Respondent Rosario Diaz, the widow by the first marriage,
filed a claim with the GSIS asking that the retirement insurance benefits be paid to her as
the only legal heir of Consuegra, considering that the deceased did not designate any
beneficiary with respect to his retirement insurance benefits. Petitioner Basilia Berdin and
her children, likewise, filed a similar claim with the GSIS, asserting that being the
beneficiaries named in the life insurance policy of Consuegra, they are the only ones entitled
to receive the retirement insurance benefits due the deceased Consuegra. Resolving the
conflicting claims, the GSIS ruled that the legal heirs of the late Jose Consuegra were
Rosario Diaz, his widow by his first marriage who is entitled to one-half, or 8/16, of the
retirement insurance benefits, on the one hand; and Basilia Berdin, his widow by the second
marriage and their seven children, on the other hand, who are entitled to the remaining
one-half, or 8/16, each of them to receive an equal share of 1/16.
- Dissatisfied with the foregoing ruling and apportionment made by the GSIS, Basilia Berdin
and her children filed on October 10, 1966 a petition for mandamus with preliminary
injunction in the Court of First Instance of Surigao.
- The CFI of Surigao ruled in favor of respondent Rosario Diaz and upheld the ruling of GSIS
in all aspect. Thus, Basilia Berdin and her children appealed said decision to the Supreme
Court.
ISSUE
WON GSIS was correct in awarding half of the retirement benefit of the deceased to Rosario
Diaz, the first wife, notwithstanding the fact that the petitioners were named as
beneficiaries of the life insurance
HELD
YES
- The GSIS offers two separate and distinct systems of benefits to its members, one is the
life insurance and the other is the retirement insurance. These two distinct systems of
benefits are paid out from two distinct and separate funds that are maintained by the GSIS.
Thus, it doesn’t necessarily mean that the beneficiaries in the life insurance are also the
beneficiaries in the retirement insurance.
- Consuegra started in the government service sometime during the early part of 1943, or
before 1943. In 1943 Com. Act 186 was not yet amended, and the only benefits then
provided for in said Com. Act 186 were those that proceed from a life insurance. Upon
entering the government service Consuegra became a compulsory member of the GSIS,
being automatically insured on his life, pursuant to the provisions of Com. Act 186 which
was in force at the time. During 1943 the operation of the Government Service Insurance
System was suspended because of the war, and the operation was resumed sometime in
1946. When Consuegra designated his beneficiaries in his life insurance he could not have
intended those beneficiaries of his life insurance as also the beneficiaries of his retirement
insurance because the provisions on retirement insurance under the GSIS came about only
when Com. Act 186 was amended by Rep. Act 660 on June 16, 1951. Hence, it cannot be
said that because herein appellants were designated beneficiaries in Consuegra's life
insurance they automatically became the beneficiaries also of his retirement insurance.
- The provisions of subsection (b) of Section 11 of Commonwealth Act 186, as amended by
Rep. Act 660, clearly indicate that there is need for the employee to file an application for
retirement insurance benefits when he becomes a member of the GSIS, and he should state
in his application the beneficiary of his retirement insurance. Hence, the beneficiary named
in the life insurance does not automatically become the beneficiary in the retirement
insurance unless the same beneficiary in the life insurance is so designated in the
application for retirement insurance.
- In the case of the proceeds of a life insurance, the same are paid to whoever is named
the beneficiary in the life insurance policy. As in the case of a life insurance provided for in
the Insurance Act, the beneficiary in a life insurance under the GSIS may not necessarily
be an heir of the insured. The insured in a life insurance may designate any person
as beneficiary unless disqualified to be so under the provisions of the Civil Code.
And in the absence of any beneficiary named in the life insurance policy, the proceeds of
the insurance will go to the estate of the insured.
- On the other hand, the beneficiary of the retirement insurance can only claim the proceeds
of the retirement insurance if the employee dies before retirement. If the employee failed
or overlooked to state the beneficiary of his retirement insurance, the retirement benefits
will accrue to his estate and will be given to his legal heirs in accordance with law, as in the
case of a life insurance if no beneficiary is named in the insurance policy.
Disposition Petition Denied. It is Our view, therefore, that the respondent GSIS had
correctly acted when it ruled that the proceeds of the retirement insurance of the late Jose
Consuegra should be divided equally between his first living wife Rosario Diaz, on the one
hand, and his second wife Basilia Berdin and his children by her.
estate of a deceased member, it is the Commission, not the probate or regular court that
determines the person or persons to whom it is payable.
- They are disbursed from a public special fund created by Congress.The sources of this
special fund are the covered employee's contribution (equal to 2-1/2 per cent of the
employee's monthly compensation) ; the employer's 'Contribution (equivalent to 3-1/2 per
cent of the monthly compensation of the covered employee) ;and the Government
contribution which consists in yearly appropriation of public funds to assure the
maintenance of an adequate working balance of the funds of the System. Additionally,
Section 21 of the Social Security Actprovides that the benefits prescribed in this Act shall
not be diminished and the Government of the Republic of the Philippines accepts general
responsibility for the solvency of the System.
- The benefits under the Social Security Act are not intended by the lawmaking body to
form part of the estate of the covered –members.
- Social Security Act is not a law of succession.
Disposition Resolution of the Social Security Commission appealed is affirmed
Consuegra v GSIS G.R. No. L-28093 January 30, 1971
J. Zaldivar
Facts:
Appeal on purely questions of law from the decision of the Court of First Instance of Surigao del Norte, dated
March 7, 1967, in its Special Proceeding No. 1720.
The late Jose Consuegra was employed as a shop foreman in the province of Surigao del Norte. He
contracted two marriages, the first with Rosario Diaz and the second, which was contracted in good faith while
the first marriage was subsisting, with Basilia Berdin.
Consuegra died, while the proceeds of his GSIS life insurance were paid to petitioner Basilia Berdin and her
children who were the beneficiaries named in the policy. They received Php 6,000.
Consuegra did not designate any beneficiary who would receive the retirement insurance benefits due to him. Facts:
Respondent Rosario Diaz, the widow by the first marriage, filed a claim with the GSIS asking that the
retirement insurance benefits be paid to her as the only legal heir of Consuegra, considering that the > Jose Consuegra was employed as a shop foreman of the Office of the District Engineer in Surigao Del
deceased did not designate any beneficiary with respect to his retirement insurance benefits. Norte.
Petitioner Berdin and her children, likewise, filed a similar claim with the GSIS, asserting that being
the beneficiaries named in the life insurance policy of Consuegra, they are the only ones entitled to receive the > When he was still alive, he contracted two marriages:
retirement insurance benefits due the deceased Consuegra.
The GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario Diaz, his widow by his first o First – Rosario Diaz; 2 children = Jose Consuegra Jr. and Pedro but both predeceased him
marriage who is entitled to one-half, or 8/16, of the retirement insurance benefits, on the one hand; and Basilia
Berdin, his widow by the second marriage and their seven children, on the other hand, who are entitled to the o 2nd – Basilia Berdin; 7 children. (this was contracted in GF while the first marriage subsisted)
remaining one-half, or 8/16.
> Being a GSIS member when he died, the proceeds of his life insurance were paid by the GSIS to Berdin
Basilia Berdin didn’t agree. She filed a petition declaring her and her children to be the legal heirs and
and her children who were the beneficiaries named in the policy.
exclusive beneficiariesof the retirement insurance.
The trial court affirmed stating that: "when two women innocently and in good faith are legally united in holy > Since he was in the gov’t service for 22.5028 years, he was entitled to retirement insurance benefits, for
matrimony to the same man, they and their children, born of said wedlock, will be regarded as legitimate which no beneficiary was designated.
children and each family be entitled to one half of the estate.”
Hence the present appeal by Basilia Berdin and her children. > Both families filed their claims with the GSIS, which ruled that the legal heirs were Diaz who is entitled to
one-half or 8/16 of the retirement benefits and Berdin and her children were entitled to the remaining half,
Issue: To whom should this retirement insurance benefits of Jose Consuegra be paid, because he did not each to receive an equal share of 1/16.
designate the beneficiary of his retirement insurance?
> Berdin went to CFI on appeal. CFI affirmed GSIS decision.
Held: No. Petition denied.

Ratio:
Berdin averred that because the deceased Jose Consuegra failed to designate the beneficiaries in his Issue:
retirement insurance, the appellants who were the beneficiaries named in the life insurance
should automatically be considered the beneficiaries to receive the retirement insurance benefits. To whom should the retirement insurance benefits be paid?
The GSIS offers two separate and distinct systems of benefits to its members — one is the life insurance and
the other is the retirement insurance. These two distinct systems of benefits are paid out from two distinct and
separate funds that are maintained by the GSIS.
In the case of the proceeds of a life insurance, the same are paid to whoever is named the beneficiary in the Held:
life insurance policy. As in the case of a life insurance provided for in the Insurance Act, the beneficiary in a
life insurance under the GSIS may not necessarily be a heir of the insured. The insured in a life insurance may Both families are entitled to half of the retirement benefits.
designate any person as beneficiary unless disqualified to be so under the provisions of the Civil Code. And in
the absence of any beneficiary named in the life insurance policy, the proceeds of the insurance will go to the The beneficiary named in the life insurance does NOT automatically become the beneficiary in the retirement
estate of the insured. insurance. When Consuegra, during the early part of 1943, or before 1943, designated his beneficiaries in his
Retirement insurance is primarily intended for the benefit of the employee, to provide for his old age, or life insurance, he could NOT have intended those beneficiaries of his life insurance as also the beneficiaries of
incapacity, after rendering service in the government for a required number of years. If the employee reaches his retirement insurance because the provisions on retirement insurance under the GSIS came about only
the age of retirement, he gets the retirement benefits even to the exclusion of the beneficiary when CA 186 was amended by RA 660 on June 18, 1951.
or beneficiaries named in his application for retirement insurance. The beneficiary of the retirement insurance
can only claim the proceeds of the retirement insurance if the employee dies before retirement. If the
employee failed or overlooked to state the beneficiary of his retirement insurance, the retirement benefits
will accrue to his estate and will be given to his legal heirs in accordance with law, as in the case of a life Sec. 11(b) clearly indicates that there is need for the employee to file an application for retirement insurance
insurance if no beneficiary is named in the insurance policy. benefits when he becomes a GSIS member and to state his beneficiary. The life insurance and the retirement
GSIS had correctly acted when it ruled that the proceeds should be divided equally between his first living wife insurance are two separate and distinct systems of benefits paid out from 2 separate and distinct funds.
and his second. The lower court has correctly applied the ruling of this Court in the case of Lao v Dee.
Gomez vs. Lipana- in construing the rights of two women who were married to the same man, held "that since
the defendant's first marriage has not been dissolved or declared void the conjugal partnership established by In case of failure to name a beneficiary in an insurance policy, the proceeds will accrue to the estate of the
that marriage has not ceased. Nor has the first wife lost or relinquished her status as putative heir of her insured. And when there exists two marriages, each family will be entitled to one-half of the estate.
husband under the new Civil Code, entitled to share in his estate upon his death should she survive him.
Consequently, whether as conjugal partner in a still subsisting marriage or as such putative heir she has an
interest in the husband's share in the property here in dispute....
With respect to the right of the second wife, although the second marriage can be presumed to be void ab
initio as it was celebrated while the first marriage was still subsisting, still there is need for judicial declaration Go vs. Redfern, GR 47705, 25 April 1941
of such nullity. And inasmuch as the conjugal partnership formed by the second marriage was dissolved
before judicial declaration of its nullity, "the only lust and equitable solution in this case would be to recognize
the right of the second wife to her share of one-half in the property acquired by her and her husband and Note: Original decision in Spanish [Rough translation]
consider the other half as pertaining to the conjugal partnership of the first marriage."

Vda. De Consuegra v. GSIS - Retirement Insurance Benefits

Facts:
37 SCRA 315
In October 1937, Edward K. Redfern obtained an insurance policy against accidents
from the International Assurance Co, Ltd. On 31 August 1938, Redfern died from an
accident. The mother of the deceased, presenting the necessary evidence of the
death of Redfern, sought to claim the proceeds of the insurance policy from the
insurance company. The company, however, denied such claim, on the ground that
the insurance policy was amended on 22 November 1937 to include another
beneficiary, Concordia Go. Hence, an action was filed to determine who has the right
to collect the insurance proceeds of the deceased Redfern. The mother claimed that
the addition of the co-beneficiary is illegal. Go, on her part, alleged the contrary. The
trial court ruled in favor of Angela Redfern, the mother. Go appealed.

Issue:

Whether the addition of Go’s name as co-beneficiary can be allowed for her share in
the insurance proceeds

Held:

When designated in a policy, the beneficiary acquires a right of which he cannot be

deprived of without his consent, unless the right has been reserved specifically to the
insured to modify the policy. The same doctrine was enunciated by the Court in the
cases of Gercio vs. Sun Life Assurance Co. of Canada (48 Phil. 55) and Insular Life
vs. Suva (34 Off. Gaz. 861). Thus, unless the insured has reserved specifically the
right to change or to modify the policy, with respect to the beneficiary, said policy
constitutes an acquired right of the beneficiary, which cannot be modified except with
the consent of the latter. Herein, it is admitted that Redfern did not reserve expressly
his right to change or modify the policy. Change implies the idea of an alteration. The
addition of Go's name as one of the beneficiaries of the policy constitutes change as
all addition is an alteration. The addition of Go's name changed the policy inasmuch
as there are two beneficiaries instead of one, and thus in effect the original
beneficiary cannot receive the full amount of the policy. The Supreme Court affirmed
the appealed judgment in all of its parts, with costs against Go.

COUNTRY BANKERS INSURANCE CORP v. LIANGA BAY

DE LEON; January 25, 2002

NATURE
Petition for review on certiorari

FACTS
- Lianga Bay is a duly registered cooperative judicially declared insolvent and is here represented
by, Cornelio Jamero. Country Bankers Insurance and Lianga Bay entered into a contract of fire
insurance. Country Bankers insured the respondent’s stocks-in-trade against fire loss, damage
or liability during the period starting from June 20, 1989 at 4:00 p.m. to June 20, 1990 at 4:00
p.m., for the sum of P200,000.00.
- On July 1, 1989, at or about 12:40 a.m., the respondent’s building at Barangay Diatagon, Lianga,
Surigao del Sur was gutted by fire, resulting in the total loss of the respondent’s stocks-in-trade,
pieces of furnitures and fixtures, equipments and records.
- Due to the loss, the respondent filed an insurance claim with the petitioner under its Fire
Insurance Policy, submitting: (a) the Spot Report of Pfc. Arturo V. Juarbal, INP Investigator, dated
July 1, 1989; (b) the Sworn Statement of Jose Lomocso; and (c) the Sworn Statement of Ernesto
Urbiztondo.
- The petitioner, however, denied the insurance claim on the ground that, based on the submitted
documents, the building was set on fire by 2 NPA rebels who wanted to obtain canned goods, rice
and medicines as provisions for their comrades in the forest, and that such loss was an excepted
risk under paragraph No. 6 of the policy conditions of Fire Insurance Policy No. F-1397, which
provides:
This insurance does not cover any loss or damage occasioned by or through or in consequence,
directly or indirectly, of any of the following occurrences, namely:
(d) Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or
usurped power.
Any loss or damage happening during the existence of abnormal conditions (whether physical
or otherwise) which are occasioned by or through or in consequence, directly or indirectly, of
any of said occurrences shall be deemed to be loss or damage which is not covered by this
insurance, except to the extent that the Insured shall prove that such loss or damage happened
independently of the existence of such abnormal conditions.
- Finding the denial of its claim unacceptable, Lianga Bay then instituted in the trial court the
complaint for recovery of "loss, damage or liability" against Country Bankers.
- RTC ruled in favor of the cooperative. CA affirmed.
ISSUE
WON the cause of the loss was an excepted risk under the terms of the fire insurance policy
HELD
- Where a risk is excepted by the terms of a policy which insures against other perils or hazards,
loss from such a risk constitutes a defense which the insurer may urge, since it has not assumed
that risk, 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. Stated else wise, since Country
bank here is defending on the ground of non-coverage and relying upon an exemption or exception
clause in the fire insurance policy it has the burden of proving the facts upon which such excepted
risk is based, by a preponderance of evidence. But petitioner failed to do so.
- The petitioner relies on the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo as well
as on the Spot Report of Pfc. Arturo V. Juarbal. A witness can testify only to those facts which he
knows of his personal knowledge, which means those facts which are derived from his perception.
Consequently, a witness may not testify as to what he merely learned from others either because
he was told or read or heard the same. Such testimony is considered hearsay and may not be
received as proof of the truth of what he has learned.
Disposition the appealed Decision is MODIFIED. The rate of interest on the adjudged principal
amount of Two Hundred Thousand Pesos (P200,000.00) shall be six percent (6%) per annum
computed from the date of filing of the Complaint in the trial court. The awards in the amounts of
Fifty Thousand Pesos (P50,000.00) as actual damages, Fifty Thousand Pesos (P50,000.00) as
exemplary damages, Five Thousand Pesos (P5,000.00) as litigation expenses, and Ten Thousand
Pesos (P10,000.00) as attorney?s fees are hereby DELETED.
Country Bankers Insurance Corp. v. Lianga Bay and Community Multi-Purpose Cooperative
G.R.No. 136914, 25 January 2002, 308 SCRA 559
FACTS:
1. Respondent, Llanga Bay and Community Multi-Purpose Cooperative, and petitioner entered into a contract
of fire insurance to protect respondent’s stocks-in-trade against fire loss, damage or liability for P200,000.00;
2. The respondent’s building was gutted in a fire resulting in the total loss of the respondent’s stocks-in-trade,
pieces of furniture and fixtures, equipment and records.
3. The petitioner denied the insurance claim on the ground that the building was set on fire by two (2) NPA
rebels who wanted to obtain canned goods, rice and medicines as provisions for their comrades in the forest,
and that such loss was an excepted risk under paragraph No. 6 of the policy conditions of Fire Insurance Policy.
4. Paragraph 6 provides that the insurance does not cover any loss or damage through or in consequence of
mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power.
5. RTC – Found for the respondent; CA – affirmed RTC’s decision
ISSUE:
Whether the stocks-in-trade were burned by NPA rebels and thus an excepted risk under the fire insurance
policy.
HELD:
NO.
A party is bound by his own affirmative allegations. This is a well-known postulate echoed in Section 1 of Rule
131 of the Revised Rules of Court. Each party must prove his own affirmative allegations by the amount of
evidence required by law which in civil cases, as in this case, is preponderance of evidence, to obtain a favorable
judgment. In the instant case, the petitioner does not dispute that the respondent’s stocks-in-trade were insured
against fire loss, damage or liability under Fire Insurance Policy No. F- 1397 and that the respondent lost its
stocks-in-trade in a fire that occurred on July 1, 1989, within the duration of said fire insurance. The petitioner,
however, posits the view that the cause of the loss was an excepted risk under the terms of the fire insurance
policy. Where a risk is excepted by the terms of a policy which insures against other perils or hazards, loss from
such a risk constitutes a defense which the insurer may urge, since it has not assumed that risk, 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. Stated
elsewise, since the petitioner in this case is defending on the ground of non-coverage and relying upon an
exemption or exception clause in the fire insurance policy, it has the burden of proving the facts upon which
such excepted risk is based, by a preponderance of evidence. But petitioner failed to do so. The Sworn
Statements of Jose Lomocso and Ernesto Urbiztondo are inadmissible in evidence, for being hearsay, inasmuch
as they did not take the witness stand and could not therefore be cross-examined. The petitioner’s evidence to
prove its defense is sadly wanting and thus, gives rise to its liability to the respondent under Fire Insurance
Policy No. F-1397.
ROQUE v. IAC (PIONEER INSURANCE AND SURETY CORP.)
139 SCRA 596
GUTIERREZ; November 11, 1985
NATURE
Petition for certiorari to review the decision of the IAC
FACTS
- February 19, 1972 – Common carrier Manila Bay Lighterage Corp. entered into a contract with Roque
Timber Enterprises and Chiong. The contract stated that Manila Bay would carry 422.18 cu. meters of
logs on its vessel Mable 10 from Malampaya Sound, Palawan to Manila North Harbor. Roque insured the
logs with Pioneer Insurance for P100,000.
- February 29, 1972 – 811 logs were loaded in Malampaya but en route to Manila, Mable 10 sank.
- March 8,1972 – Roque and Chiong wrote a letter to Manila Bay, demanding payment of P150,000.00
for the loss of the shipment plus P100,000.00 as unrealized profits but the latter ignored the demand.
- A letter was also sent to Pioneer, claiming the full amount of P100,000.00 under the insurance policy
but Pioneer refused to pay on the ground that its liability depended upon the "Total Loss by Total Loss of
Vessel only".
- After hearing, the trial court favored Roque. Pioneer and Manila Bay were ordered to pay Roque
P100,000. Pioneer appealed the decision.
- January 30, 1984 – Pioneer was absolved from liability after finding that there was a breach of implied
warranty of seaworthiness on the part of the petitioners and that the loss of the insured cargo was caused
by the "perils of the ship" and not by the "perils of the sea". It ruled that the loss is not covered by the
marine insurance policy.
- It was alleged that Mable 10 was not seaworthy and that it developed a leak
- The IAC found that one of the hatches was left open, causing water to enter the barge and because the
barge was not provided with the necessary cover or tarpaulin, the splash of sea waves brought more
water inside the barge.
- Petitioners contend that the implied warranty of seaworthiness provided for in the Insurance Code refers
only to the responsibility of the shipowner who must see to it that his ship is reasonably fit to make in
safety the contemplated voyage.
- The petitioners state that a mere shipper of cargo, having no control over the ship, has nothing to do
with its seaworthiness. They argue that a cargo owner has no control over the structure of the ship, its
cables, anchors, fuel and provisions, the manner of loading his cargo and the cargo of other shippers,
and the hiring of a sufficient number of competent officers and seamen.
ISSUE
WON the loss should have been covered by the marine insurance policy
HELD
NO
Ratio It is universally accepted that in every contract of insurance upon anything which is the subject of
marine insurance, a warranty is implied that the ship shall be seaworthy at the time of the inception of
the voyage. In marine insurance, the risks insured against are classified as 'perils of the sea,’ which
includes such losses that are of extraordinary nature, or arise from some overwhelming power, which
cannot be guarded against by the ordinary exertion of human skill and prudence.
Reasoning
- Based on Sec. 113 and Sec. 99 of the Insurance Code, the term "cargo" can be the subject of marine
insurance and that once it is so made, the implied warranty of seaworthiness immediately attaches to
whoever is insuring the cargo whether he be the shipowner or not.
- The fact that the un-seaworthiness of the ship was unknown to the insured is immaterial in ordinary
marine insurance and may not be used by him as a defense in order to recover on the marine insurance
policy.
- Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine
insurance, it becomes the obligation of a cargo owner to look for a reliable common carrier which keeps
its vessels in seaworthy condition. The shipper of cargo my have no control over the vessel but he has
full control in the choice of the common carrier that will transport his goods.
- In marine cases, the risks insured against are 'perils of the sea.’ The term extends only to losses caused
by sea damage, or by the violence of the elements, and does not embrace all losses happening at sea.
- It is quite unmistakable that the loss of the cargo was due to the perils of the ship rather than the perils
of the sea.
- Loss which, in the ordinary course of events, results from the natural and inevitable action of the sea,
from the ordinary wear and tear of the ship, or from the negligent failure of the ship's owner to provide
the vessel with proper equipment to convey the cargo under ordinary conditions, is not a ‘peril of the sea’
but is called ‘peril of the ship.’
Disposition Decision appealed from is affirmed.
Roque v IAC (Insurance)
G.R. No. L-66935 November 11, 1985
ISABELA ROQUE, doing business under the name and style of Isabela Roque Timber Enterprises and ONG
CHIONG, petitioners, vs. HON. INTERMEDIATE APPELATE COURT and PIONEER INSURANCE AND SURETY
CORPORATION, respondent.
FACTS:
On February 19, 1972, the Manila Bay Lighterage Corporation (Manila Bay), a common carrier, entered into a contract with
the petitioners whereby the former would load and carry on board its barge Mable 10 about 422.18 cubic meters of logs
from Malampaya Sound, Palawan to North Harbor, Manila. The petitioners insured the logs against loss for P100,000.00
with respondent Pioneer Insurance and Surety Corporation (Pioneer).
On February 29, 1972, the petitioners loaded on the barge, 811 pieces of logs at Malampaya Sound, Palawan for carriage
and delivery to North Harbor, Port of Manila, but the shipment never reached its destination because Mable 10 sank with
the 811 pieces of logs somewhere off Cabuli Point in Palawan on its way to Manila.
Hence, petitioners commenced Civil Case No. 86599 against Manila Bay and respondent Pioneer.
DECISION OF LOWER COURTS:
(1) Trial Court: found in favor of petitioners.
(2) Intermediate Appellate Court: absolved the respondent insurance company from liability on the grounds that the vessel
carrying the insured cargo was unseaworthy and the loss of said cargo was caused not by the perils of the sea but by the
perils of the ship
ISSUES:
I. THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT IN CASES OF MARINE CARGO INSURANCE, THERE
IS A WARRANTY OF SEAWORTHINESS BY THE CARGO OWNER.
II. THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE LOSS OF THE CARGO IN THIS CASE WAS
CAUSED BY "PERILS OF THE SHIP" AND NOT BY "PERILS OF THE SEA.”
RULING:
I. No. The IAC is correct.
The liability of the insurance company is governed by law. Section 113 of the Insurance Code provides:
In every marine insurance upon a ship or freight, or freightage, or upon any thing that is the subject of marine insurance, a
warranty is implied that the ship is seaworthy.
Section 99 of the same Code also provides in part. Marine insurance includes:
(1) Insurance against loss of or damage to:
(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, ...
From the above-quoted provisions, there can be no mistaking the fact that the term "cargo" can be the subject of marine
insurance and that once it is so made, the implied warranty of seaworthiness immediately attaches to whoever is insuring
the cargo whether he be the shipowner or not.
Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine insurance, it
becomes the obligation of a cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy
condition. The shipper of cargo may have no control over the vessel but he has full control in the choice of the common
carrier that will transport his goods. Or the cargo owner may enter into a contract of insurance which specifically provides
that the insurer answers not only for the perils of the sea but also provides for coverage of perils of the ship.
II. No, the IAC is correct.
In marine cases, the risks insured against are "perils of the sea"
A policy does not cover a loss or injury that must inevitably take place in the ordinary course of things. There is no doubt
that the term 'perils of the sea' extends only to losses caused by sea damage, or by the violence of the elements, and does
not embrace all losses happening at sea. They insure against losses from extraordinary occurrences only, such as stress of
weather, winds and waves, lightning, tempests, rocks and the like. These are understood to be the "perils of the sea"
referred in the policy, and not those ordinary perils which every vessel must encounter. "Perils of the sea" has been said to
include only such losses as are of extraordinarynature, encounter. "Perils of the sea" has been said to include only such
losses as are of extraordinary nature, or arise from some overwhelming power, which cannot be guarded against by the
ordinary exertion of human skill and prudence. Damage done to a vessel by perils of the sea includes every species of
damages done to a vessel at sea, as distinguished from the ordinary wear and tear of the voyage, and distinct from
injuriessuffered by the vessel in consequence of her not being seaworthy at the outset of her voyage (as in this case). It is
also the general rule that everything which happens thru the inherent vice of the thing, or by the act of the owners, master
or shipper, shall not be reputed a peril, if not otherwise borne in the policy.
It is quite unmistakable that the loss of the cargo was due to the perils of the ship rather than the perils of the sea. The facts
clearly negate the petitioners' claim under the insurance policy.
In the present case the entrance of the sea water into the ship's hold through the defective pipe already described was not
due to any accident which happened during the voyage, but to the failure of the ship's owner properly to repair a defect of
the existence of which he was apprised. The loss was therefore more analogous to that which directly results from simple
unseaworthiness than to that which result from the perils of the sea.
ORIENTAL ASSURANCE v. CA (PANAMA SAW MILL)
200 SCRA 459
MELENCIO-HERRERA; August 9, 1991
NATURE
Petition for review on certiorari
FACTS
- Sometime in January 1986, private respondent Panama Sawmill Co., Inc. (Panama) bought, in
Palawan, 1,208 pieces of apitong logs, with a total volume of 2,000 cubic meters. It hired
Transpacific Towage, Inc., to transport the logs by sea to Manila and insured it against loss for
P1-M with petitioner Oriental Assurance Corporation (Oriental Assurance).
- While the logs were being transported, rough seas and strong winds caused damage to one of
the two barges resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon.
- Panama demanded payment for the loss but Oriental Assurance refuse on the ground that its
contracted liability was for "TOTAL LOSS ONLY."
- Unable to convince Oriental Assurance to pay its claim, Panama filed a Complaint for Damages
against Oriental Assurance before the Regional Trial Court.
- RTC ordered Oriental Assurance to pay Panama with the view that the insurance contract should
be liberally construed in order to avoid a denial of substantial justice; and that the logs loaded in
the two barges should be treated separately such that the loss sustained by the shipment in one
of them may be considered as "constructive total loss" and correspondingly compensable. CA
affirmed in toto.
ISSUE
WON Oriental Assurance can be held liable under its marine insurance policy based on the theory
of a divisible contract of insurance and, consequently, a constructive total loss
HELD
NO
- The terms of the contract constitute the measure of the insurer liability and compliance therewith
is a condition precedent to the insured's right to recovery from the insurer. Whether a contract is
entire or severable is a question of intention to be determined by the language employed by the
parties. The policy in question shows that the subject matter insured was the entire shipment of
2,000 cubic meters of apitong logs. The fact that the logs were loaded on two different barges did
not make the contract several and divisible as to the items insured. The logs on the two barges
were not separately valued or separately insured. Only one premium was paid for the entire
shipment, making for only one cause or consideration. The insurance contract must, therefore,
be considered indivisible.
- More importantly, the insurer's liability was for "total loss only." A total loss may be either actual
or constructive (Sec. 129, Insurance Code). An actual total loss is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the purpose for which
he held it; or
(d) Any other event which effectively deprives the owner of the possession, at the port of
destination, of the thing insured. (Section 130, Insurance Code).
- A constructive total loss is one which gives to a person insured a right to abandon, under Section
139 of the Insurance Code. This provision reads:
SECTION 139. A person insured by a contract of marine insurance may abandon the thing
insured, or any particular portion thereof separately valued by the policy, or otherwise
separately insured, and recover for a total loss thereof, when the cause of the loss is a peril
injured against,
(a) If more than three-fourths thereof in value is actually lost, or would have to be expended
to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than three-fourths;
xxx xxx xxx
- The requirements for the application of Section 139 of the Insurance Code, quoted above, have
not been met. The logs involved, although placed in two barges, were not separately valued by
the policy, nor separately insured. Resultantly, the logs lost in the damaged barge in relation to
the total number of logs loaded on the same barge cannot be made the basis for determining
constructive total loss. The logs having been insured as one inseparable unit, the correct basis for
determining the existence of constructive total loss is the totality of the shipment of logs. Of the
entirety of 1,208, pieces of logs, only 497 pieces thereof were lost or 41.45% of the entire
shipment. Since the cost of those 497 pieces does not exceed 75% of the value of all 1,208 pieces
of logs, the shipment cannot be said to have sustained a constructive total loss under Section
139(a) of the Insurance Code.
Disposition judgment under review is SET ASIDE
Oriental v CA G.R. No. 94052 August 9, 1991
J. Melencio-Herrera
Facts:
Panama Sawmill shipped 1208 pieces of apitog logs to Manila and insured the logs with Oriental for the value
of Php 1 million. Two barges were loaded with 610 and 598 logs. At sea, typhoons ravaged one of the barges,
resulting in the loss of 497 of 598 of the logs.
The Insurance contract provided for indemnity under the following conditions:
Warranted that this Insurance is against TOTAL LOSS ONLY. Subject to the following clauses:
— Civil Code Article 1250 Waiver clause
— Typhoon warranty clause
— Omnibus clause.
Oriental didn’t give an indemnity because there wasn’t total loss of the shipment.
The sawmill filed a civil case against Oriental and the court ordered it to pay 410,000 as value for the missing
logs. The CA affirmed the lower court judgment but reduced the legal interest. Hence this appeal by Oriental.
Issue:
Whether or not Oriental Assurance can be held liable under its marine insurance policy based on the theory of
a divisiblecontract of insurance and, consequently, a constructive total loss.
Held: No. Petition granted.
Ratio:
Perla v CA- The terms of the contract constitute the measure of the insurer liability and compliance therewith
is a condition precedent to the insured's right to recovery from the insurer.
“Whether a contract is entire or severable is a question of intention to be determined by the
language employed by the parties. The policy in question shows that the subject matter insured was the entire
shipment of 2,000 cubic meters of apitong logs. The fact that the logs were loaded on two different barges did
not make the contract several and divisible as to the items insured. The logs on the two barges were not
separately valued or separately insured. Only one premium was paid for the entire shipment, making for only
one cause or consideration. The insurance contract must, therefore, be considered indivisible.”
Also, the insurer's liability was for "total loss only" as stipulated. A total loss may be either actual
or constructive. An actual total loss under Sec 130 of the Insurance Code is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it; or
(d) Any other event which effectively deprives the owner of the possession, at the port of destination, of the
thing insured.
A constructive total loss, gives to a person insured a right to abandon and it means:
SECTION 139. A person insured by a contract of marine insurance may abandon the thing insured, or any
particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a
total loss thereof, when the cause of the loss is a peril injured against,
(a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from
the peril;
(b) If it is injured to such an extent as to reduce its value more than three-fourths
The appellate court considered the cargo in one barge as separate from the other and ruled that 497 of 598
was more than ¾ of the amount lost, showing a constructive total loss.
The SC, however, said that although the logs were placed in two barges, they were not separately valued by
the policy, nor separately insured. Of the entirety of 1,208, pieces of logs, only 497 pieces thereof were lost or
41.45% of the entire shipment. Since the cost of those 497 pieces does not exceed 75% of the value of all
1,208 pieces of logs, the shipment can not be said to have sustained a constructive total loss under Section
139(a) of the Insurance Code.
FINMAN GENERAL ASSURANCE CORP v. INOCENCIO
179 SCRA 480
FELICIANO; November 15, 1989
FACTS
- Pan Pacific is a recruitment and employment agency. It posted surety bond
issued by Finman General Assurance and was granted license to operate by
POEA.
- Inocencio, Palero, Cardones, Hernandez filed with POEA complaints against Pan
Pacific for violation of Labor Code and for refund of placement fees. POEA
Administrator motu propio impleaded Finman as surety for Pan Pacific.
- Pan Pacific moved out and no notice of transfer was furnished to POEA as
required. POEA considered that constructive service of complaints had been
effected.
- Finman denied liability and said that
- POEA had no jurisdiction over surety bonds; jurisdiction is vested in Insurance
Commission
- Finman had not violated Labor Code
- Complainants have no cause of action against Finman
- Amounts claimed were paid as deposits and not as placement fees.
- POEA Administrator issued Order that respondents should pay. Finman
appealed to Secretary of Labor. Secretary upheld the POEA order.
ISSUE
WON Finman can be held liable for complainants’ claims against Pan Pacific
HELD
YES
- Under Insurance Code, liability of surety in a surety bond is joint and several
with the principal obligor.
- Conditions of a bond specified and required in the provisions of a statute
providing for submission of the bond, are incorporated into all bonds tendered
under that statute even though not set out in printer’s ink.
- POEA held and Secretary of Labor affirmed that Pan Pacific had violated Labor
Code, and at least one of the conditions for the grant and continued use of the
recruitment license. POEA and Secretary of Labor can require Pan Pacific to
refund the placement fees and to impose the fine.
- If Pan Pacific is liable, and if Finman is solidarily liable with Pan Pacific, then
Finman is liable both to private respondents and to POEA.
- Cash and surety bonds are required from recruitment companies as means of
ensuring prompt and effective recourse against such companies when held liable.
Public policy will be effectively negated if POEA and the DoLE were held powerless
to compel a surety company to make good on its solidary undertaking.
FINMAN GENERAL ASSURANCE CORPORATION v. CA (SURPOSA) 213 SCRA 493 NOCON;
September 2, 1992 NATURE Certiorari
FACTS - Oct. 22, 1986: Carlie Surposa was insured with Finman General Assurance Corporation
under Finman General Teachers Protection Plan Master Policy No. 2005 and Individual Policy No.
08924 with his parents, spouses Julia and Carlos Surposa, and brothers Christopher, Charles,
Chester and Clifton, all surnamed, Surposa, as beneficiaries. - While said insurance policy was in
full force and effect, the insured, Carlie Surposa, died on October 18, 1988 as a result of a stab
wound inflicted by one of the 3 unidentified men without provocation and warning on the part of
the former as he and his cousin, Winston Surposa, were waiting for a ride on their way home after
attending the celebration of the "Maskarra Annual Festival." - Thereafter, Julia Surposa and the
other beneficiaries of said insurance policy filed a written notice of claim with the FINMAN Corp
which denied said claim contending that murder and assault are not within the scope of the
coverage of the insurance policy. - Feb. 24, 1989: Surposa filed a complaint with the Insurance
Commission which subsequently ordered FINMAN to pay Surposa the proceeds of the policy with
interest. - CA affirmed said decision.
ISSUE WON CA committed GAD in applying the principle of "expresso unius exclusio alterius" in a
personal accident insurance policy (since death resulting from murder and/or assault are impliedly
excluded in said insurance policy considering that the cause of death of the insured was not
accidental but rather a deliberate and intentional act of the assailant in killing the former as
indicated by the location of the lone stab wound on the insured) [TF they cannot be made to
indemnify the Surposa heirs]
HELD NO - The record is barren of any circumstance showing how the stab wound was inflicted.
While the act may not exempt the unknown perpetrator from criminal liability, the fact remains
that the happening was a pure accident on the part of the victim. The insured died from an event
that took place without his foresight or expectation, an event that proceeded from an unusual
effect of a known cause and, therefore, not expected. Reasoning - De la Cruz vs. Capital Insurance
& Surety Co., Inc (1966)~ The terms "accident" and "accidental" as used in insurance contracts
have not acquired any technical meaning, and are construed by the courts in their ordinary and
common acceptation. Thus, the terms have been taken to mean that which happen by chance or
fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An
accident is an event that takes place without one's foresight or expectation an event that
proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not
expected. Ratio The generally accepted rule is that, death or injury does not result from accident
or accidental means within the terms of an accident-policy if it is the natural result of the insured's
voluntary act, unaccompanied by anything unforeseen except the death or injury. There is no
accident when a deliberate act is performed unless some additional, unexpected, independent,
and unforeseen happening occurs which produces or brings about the result of injury or death. In
other words, where the death or injury is not the natural or probable result of the insured's
voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury,
the resulting death is within the protection of the policies insuring against death or injury from
accident. - The personal accident insurance policy involved herein specifically enumerated only 10
circumstances wherein no liability attaches to FINMAN for any injury, disability or loss suffered by
the insured as a result of any of the stimulated causes. -The principle of " expresso unius exclusio
alterius" the mention of one thing implies the exclusion of another thing is therefore applicable in
the instant case since murder and assault, not having been expressly included in the enumeration
of the circumstances that would negate liability in said insurance policy: the failure of the FINMAN
to include death resulting from murder or assault among the prohibited risks leads inevitably to
the conclusion that it did not intend to limit or exempt itself from liability for such death. - A1377
NCC: The interpretation of obscure words or stipulations in a contract shall not favor the party
who caused the obscurity. - NPC vs. CA [1986]~ It is well settled that contracts of insurance are to
be construed liberally in favor of the insured and strictly against the insurer. Thus ambiguity in the
words of an insurance contract should be interpreted in favor of its beneficiary. Disposition
DENIED for lack of merit.
FINMAN GENERAL ASSURANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and JULIA SURPOSA, respondents.
Aquino and Associates for petitioner.
Public Attorney’s Office for private respondent.
Ponente: NOCON
FACTS:
[P]etitioner filed this petition alleging grove abuse of discretion on the part of the appellate court in applying the Whether the petitioner is correct that results from assult or murder are not deemed included in the term
principle of “expresso unius exclusio alterius” in a personal accident insurance policy since death resulting from “accident” and “accidental”
murder and/or assault are impliedly excluded in said insurance policy considering that the cause of death of the
insured was not accidental but rather a deliberate and intentional act of the assailant in killing the former as
indicated by the location of the lone stab wound on the insured. Therefore, said death was committed with RULING:
deliberate intent which, by the very nature of a personal accident insurance policy, cannot be indemnified.
The terms “accident” and “accidental” as used in insurance contracts have not acquired any technical
ISSUE:
meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms
have been taken to mean that which happen by chance or fortuitously, without intention and design, and
Whether or not death petitioner is correct that results from assault or murder deemed are not included in the terms
which is unexpected, unusual, and unforeseen. An accident is an event that takes place without one’s
“accident” and “accidental”.
foresight or expectation — an event that proceeds from an unknown cause, or is an unusual effect of a
known cause and, therefore, not expected.
HELD:
. . . The generally accepted rule is that, death or injury does not result from accident or accidental means
within the terms of an accident-policy if it is the natural result of the insured’s voluntary act,
NO. Petition for certiorari with restraining order and preliminary injunction was denied for lack of merit.
unaccompanied by anything unforeseen except the death or injury. There is no accident when a
deliberate act is performed unless some additional, unexpected, independent, and unforeseen
RATIO:
happening occurs which produces or brings about the result of injury or death. In other words, where the
death or injury is not the natural or probable result of the insured’s voluntary act, or if something
The terms “accident” and “accidental” as used in insurance contracts have not acquired any technical meaning,
unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the
and are construed by the courts in their ordinary and common acceptation. Thus, the terms have been taken to
protection of the policies insuring against death or injury from accident. 5
mean that which happen by chance or fortuitously, without intention and design, and which is unexpected,
In the case at bar, it cannot be pretended that Carlie Surposa died in the course of an assault or murder
unusual, and unforeseen. An accident is an event that takes place without one’s foresight or expectation — an
as a result of his voluntary act considering the very nature of these crimes. In the first place, the insured
event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not
and his companion were on their way home from attending a festival. They were confronted by
expected.
unidentified persons. The record is barren of any circumstance showing how the stab wound was
inflicted. Nor can it be pretended that the malefactor aimed at the insured precisely because the killer
[I]t is well settled that contracts of insurance are to be construed liberally in favor of the insured and strictly
wanted to take his life. In any event, while the act may not exempt the unknown perpetrator from criminal
against the insurer. Thus ambiguity in the words of an insurance contract should be interpreted in favor of its
liability, the fact remains that the happening was a pure accident on the part of the victim. The insured
beneficiary.
died from an event that took place without his foresight or expectation, an event that proceeded from an
unusual effect of a known cause and, therefore, not expected. Neither can it be said that where was a
Finman Gen. Insurance Corp. v. Court of Appeals
capricious desire on the part of the accused to expose his life to danger considering that he was just
going home after attending a festival.
Furthermore, the personal accident insurance policy involved herein specifically enumerated only ten
G.R. No. 100970, 2 September 1992, 213 SCRA 493 (10) circumstances wherein no liability attaches to petitioner insurance company for any injury, disability
or loss suffered by the insured as a result of any of the stimulated causes. The principle of “expresso
unius exclusio alterius” — the mention of one thing implies the exclusion of another thing — is therefore
FACTS: applicable in the instant case since murder and assault, not having been expressly included in the
enumeration of the circumstances that would negate liability in said insurance policy cannot be
On October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman General Assurance considered by implication to discharge the petitioner insurance company from liability for, any injury,
disability or loss suffered by the insured. Thus, the failure of the petitioner insurance company to include
Corporation under Finman General Teachers Protection Plan Master Policy No. 2005 and Individual
death resulting from murder or assault among the prohibited risks leads inevitably to the conclusion that
Policy No. 08924 with his parents, spouses Julia and Carlos Surposa, and brothers Christopher, Charles,
Chester and Clifton, all surnamed, Surposa, as beneficiaries. it did not intend to limit or exempt itself from liability for such death.
While said insurance policy was in full force and effect, the insured, Carlie Surposa, died on October 18,
1988 as a result of a stab wound inflicted by one of the three (3) unidentified men without provocation
and warning on the part of the former as he and his cousin, Winston Surposa, were waiting for a ride on
their way home along Rizal-Locsin Streets, Bacolod City after attending the celebration of the “Maskarra
Annual Festival.”
Thereafter, private respondent and the other beneficiaries of said insurance policy filed a written notice
of claim with the petitioner insurance company which denied said claim contending that murder and
assault are not within the scope of the coverage of the insurance policy.
Hence, petitioner filed this petition alleging grove abuse of discretion on the part of the appellate court in
applying the principle of “expresso unius exclusio alterius” in a personal accident insurance policy since
death resulting from murder and/or assault are impliedly excluded in said insurance policy considering FINMAN GENERAL ASSURANCE CORPORATION vs. THE HONORABLE COURT OF
that the cause of death of the insured was not accidental but rather a deliberate and intentional act of APPEALS 213 SCRA 493, September 2, 1992 NOCON, J.
the assailant in killing the former as indicated by the location of the lone stab wound on the insured.
Therefore, said death was committed with deliberate intent which, by the very nature of a personal FACTS:
accident insurance policy, cannot be indemnified.

On October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman General
ISSUE: Assurance Corporation with his parents, spouses Julia and Carlos Surposa, and brothers
Christopher, Charles, Chester and Clifton, all surnamed, Surposa, as beneficiaries. While said
insurance policy was in full force and effect, the insured, Carlie Surposa, died on October 18, 1988
as a result of a stab wound inflicted by one of the three (3) unidentified men. Private respondent the natural or probable result of the insured’s voluntary act, the resulting death is within the
and the other beneficiaries of said insurance policy filed a written notice of claim with the petitioner protection of the policies insuring against death or injury from accident.
insurance company which denied said claim contending that murder and assault are not within
the scope of the coverage of the insurance policy. Private respondent filed a complaint with the
Insurance Commission which rendered a favorable response for the respondent. The appellate
court ruled likewise. Petitioner filed this petition alleging grave abuse of discretion on the part of
the appellate court in applying the principle of "expresso unius exclusio alterius" in a personal
accident insurance policy, since death resulting from murder and/or assault are impliedly excluded
in said insurance policy considering that the cause of death of the insured was not accidental but
rather a deliberate and intentional act of the assailant. Therefore, said death was committed with
deliberate intent which, by the very nature of a personal accident insurance policy, cannot be
indemnified.

ISSUE: Whether or not the insurer is liable for the payment of the insurance premiums

HELD:

Yes, the insurer is still liable. Contracts of insurance are to be construed liberally in favor of the
insured and strictly against the insurer. Thus ambiguity in the words of an insurance contract
should be interpreted in favor of its beneficiary. The terms "accident" and "accidental" as used in
insurance contracts have not acquired any technical meaning, and are construed by the courts in
their ordinary and common acceptation. Thus, the terms have been taken to mean that which
happen by chance or fortuitously, without intention and design, and which is unexpected, unusual,
and unforeseen. Where the death or injury is not the natural or probable result of the insured's
voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury,
the resulting death is within the protection of the policies insuring against death or injury from
accident. In the case at bar, it cannot be pretended that Carlie Surposa died in the course of an
assault or murder as a result of his voluntary act considering the very nature of these crimes.
Neither can it be said that where was a capricious desire on the part of the accused to expose his
life to danger considering that he was just going home after attending a festival. Furthermore, the
personal accident insurance policy involved herein specifically enumerated only ten (10)
circumstances wherein no liability attaches to petitioner insurance company for any injury,
disability or loss suffered by the insured as a result of any of the stimulated causes. The principle
of " expresso unius exclusio alterius" — the mention of one thing implies the exclusion of another
thing — is therefore applicable in the instant case since murder and assault, not having been
expressly included in the enumeration of the circumstances that would negate liability in said
insurance policy cannot be considered by implication to discharge the petitioner insurance
company from liability for, any injury, disability or loss suffered by the insured. Thus, the failure of
the petitioner insurance company to include death resulting from murder or assault among the
prohibited risks leads inevitably to the conclusion that it did not intend to limit or exempt itself from
liability for such death.

3) Finman General Assurance Corp. vs. Court of Appeals, 213 SCRA 493
Define accident and accidental.

The words "accident" and "accidental" have never acquired any technical
The terms “accident” and “accidental” are construed by the courts in their ordinary and common signification in law, and when used in an insurance contract are to be
acceptation. The terms have been taken to mean that which happen by chance, without intention construed and considered according to the ordinary understanding and
and design, and which is unexpected, unusual and unforeseen. Where the death or injury is not common usage and speech of people generally. In-substance, the courts are
practically agreed that the words "accident" and "accidental" mean that which
happens by chance or fortuitously, without intention or design, and which is
unexpected, unusual, and unforeseen. The definition that has usually been
adopted by the courts is that an accident is an event that takes place without
one's foresight or expectation — an event that proceeds from an unknown
cause, or is an unusual effect of a known case, and therefore not expected. (43
Am. Jur. 2d 627)

An accident is an event which happens without any human agency or, if

happening through human agency, an event which, under the circumstances, is
unusual to and not expected by the person to whom it happens. It has also
been defined as an injury which happens by reason of some violence or
casualty to the injured without his design, consent, or voluntary co-
operation. (43 Am. Jur. 2d 628)

S Insurance Co issued a personal accident policy to Bob Tan with a face value of
P500th. In the evening of Sep 5, 1992, after his birthday party, Tan was in a happy
mood but not drunk. He was playing with his hand gun, from which he previously
removed the magazine. As his secretary was watching television, he stood in front
of her and pointed the gun at her. She pushed it aside and said that it may be loaded.
He assured her that it was not and then pointed it at his temple. The next
moment, there was an explosion and Tan slumped to the floor lifeless. The wife of
the deceased sought payment on the policy but her claim was rejected. The
insurance company agreed that there was no suicide. However, it was the submission
of the insurance company that there was no accident. In support thereof, it contended
a) that there was no accident when a deliberate act was performed unless some
additional, unexpected, independent and unforeseen happening occur which
produces or brings about the injury or death; and b) that the insured willfullyexposed
himself to needless peril and thus removed himself from the coverage of the
insurance policy. Are the two contentions of the insurance company tenable? Explain.
(1993 Bar Exams)

No. The two contentions of the insurer are not tenable. Tan had removed the
magazine from the gun and believed it was no longer dangerous. He expressly
assured her that the gun was not loaded. It is submitted that Tan did not
willfully expose himself to needless peril when he pointed the gun to his temple
because the fact isthat he thought it was not unsafe to do so. At most, the
insured is only guilty of negligence. (See Sun Insurance Office, Ltd vs Court of
Appeals, 211 SCRA 554 [July 17, 1992])

BIAGTAN v. THE INSULAR LIFE ASSURANCE COMPANY, LTD.

44 SCRA 58
MAKALINTAL; March 29, 1972

NATURE
Appeal from decision of CFI Pangasinan.

FACTS
- Juan Biagtan was insured with Insular for P5k and a supplementary contract “Accidental Death Benefit”
clause for another P5k if "the death of the Insured resulted directly from bodily injury effected solely
through external and violent means sustained in an accident . . . and independently of all other causes."
The clause, however, expressly provided that it would not apply where death resulted from an injury
"intentionally inflicted by a third party."
- One night, a band of robbers entered their house. Juan went out of his room and he was met with 9 Biagtan v. Insular Life Assurance Co., Ltd.
knife stabs. He died. The robbers were convicted of robbery with homicide.
- The family was claiming the additional P5k from Insular, under the Accidental Death Benefit clause.
Insular refused on the ground that the death resulted from injuries intentionally inflicted by 3 rd parties
G.R. No. L-25579, 29 March 1972, 44 SCRA 58
and was therefore not covered. Biagtans filed against Insular. CFI ruled in favor of Biagtans.

ISSUE FACTS:
WON the injuries were intentionally inflicted

HELD
YES
- Whether the robbers had the intent to kill or merely to scare the victim or to ward off any defense he
might offer, it cannot be denied that the act itself of inflicting the injuries was intentional.
- The exception in the accidental benefit clause invoked by the appellant does not speak of the purpose
— whether homicidal or not — of a third party in causing the injuries, but only of the fact that such
injuries have been "intentionally" inflicted — this obviously to distinguish them from injuries which,
although received at the hands of a third party, are purely accidental.
- Examples of unintentional:
>> A gun which discharges while being cleaned and kills a bystander;
>> a hunter who shoots at his prey and hits a person instead;
>> an athlete in a competitive game involving physical effort who collides with an opponent and fatally
injures him as a result.
- In Calanoc vs. CA: Where a shot was fired and it turned out afterwards that the watchman was hit in
the abdomen, the wound causing his death, the Court held that it could not be said that the killing was
intentional for there was the possibility that the malefactor had fired the shot to scare the people around
for his own protection and not necessarily to kill or hit the victim. A similar possibility is clearly ruled out
by the facts in this case. For while a single shot fired from a distance, and by a person who was not even
seen aiming at the victim, could indeed have been fired without intent to kill or injure, nine wounds
inflicted with bladed weapons at close range cannot conceivably be considered as innocent insofar as
such intent is concerned.
- In Hucthcraft's Ex'r vs. Travelers' Ins. Co. (US case): where the insured was waylaid and assassinated
for the purpose of robbery, the court rendered judgment for the insurance company and held that while
the assassination of the insured was as to him an unforeseen event and therefore accidental, "the clause
of the proviso that excludes the (insurer's) liability, in case death or injury is intentionally inflicted by any
other person, applies to this case."
Disposition CFI decision reversed.
Juan S. Biagtan was insured with defendant InsularLife Assurance Company under Policy No. 398075 for the sum of
P5,000.00 and, under a supplementary contract denominated “Accidental Death Benefit Clause, for an additional sum
of P5,000.00 if “the death of the Insured resulted directly from bodily injury effected solely through external and violent
means sustained in an accident … and independently of all other causes.” The clause, however,expressly provided that
it would not apply where death resulted from an injury”intentionally inflicted by another party.”
On the night of May 20, 1964, or during the first hours of the following day a band of robbers entered the house of the
insured Juan S. Biagtan. On the night of May 20, 1964 or the first hours of May 21, 1964, while the said life policy and
supplementary contract were in full force and effect, the house of insured Juan S. Biagtan was robbed by a band of
robbers who were charged in and convicted by the Court of First Instance of Pangasinan for robbery with homicide; that
in committing the robbery, the robbers, on reaching the staircase landing on the second floor, rushed towards the door
of the second floor room, where they suddenly met a person near the door of oneof the rooms who turned out to be the
insured Juan S. Biagtan who received thrusts from their sharp-pointed instruments, causing wounds on the body of said
Juan S. Biagtan resulting in his death.
Plaintiffs, as beneficiaries of the insured, filed a claim under the policy. The insurance company paid the basic amount
of P5,000.00 but refused to pay the additional sum of P5,000.00 under the accidental death benefit clause, on the ground
that the insured’s death resulted from injuries intentionally inflicted by third parties and therefore was not covered.
Plaintiffs filed suit to recover, and after due hearing the court a quo rendered judgment in their favor. Hence the present
appeal by the insurer.
ISSUE:
Whether under the facts are stipulated and found by the trial court the wounds received by the insured at the hands of
the robbers were inflicted intentionally.
RULING:

SEPARATE OPINION
Yes. It should be noted that the exception in the accidental benefit clause invoked by the appellant does not speak of
the purpose — whether homicidal or not — of a third party in causing the injuries, but only of the fact that such injuries
TEEHANKEE [dissent]
have been “intentionally” inflicted — this obviously to distinguish them from injuries which, although received at the hands
- Calanoc v. CA is controlling in this case because the insurance company wasn’t able to prove that the
of a third party, are purely accidental. This construction is the basic idea expressed in the coverage of the clause itself,
killing was intentional. (Burden of proof is with the insurance company)
namely, that “the death of the insured resulted directly from bodily injury effected solely through external and violent
- Insurance, being contracts of adhesion, must be construed strictly against insurance company in cases means sustained in an accident … and independently of all other causes.”
of ambiguity. But where a gang of robbers enter a house and coming face to face with the owner, even if unexpectedly, stab him
- The supplementary contract enumerated exceptions. The only exception which is not susceptible of repeatedly, it is contrary to all reason and logic to say that his injuries are not intentionally inflicted, regardless of whether
classification is that provided in paragraph 5(e), the very exception herein involved, which would also they prove fatal or not. As it was, in the present case they did prove fatal, and the robbers have been accused and
except injuries "inflicted intentionally by a third party, either with or without provocation on the part of convicted of the crime of robbery with homicide.
the insured, and whether or not the attack or the defense by the third party was caused by a violation of
the law by the insured."
- This ambiguous clause conflicts with all the other four exceptions in the same paragraph 5 particularly
that immediately preceding it in item (d) which excepts injuries received where the insured has violated
the law or provoked the injury, while this clause, construed as the insurance company now claims, would
seemingly except also all other injuries, intentionally inflicted by a third party, regardless of any violation
of law or provocation by the insured, and defeat the very purpose of the policy of giving the insured
double indemnity in case of accidental death by "external and violent means" — in the very language of
the policy.' EMILIA T. BIAGTAN vs THE INSULAR LIFE ASSURANCE COMPANY
- It is obvious from the very classification of the exceptions and applying the rule of noscitus a sociis,
that the double-indemnity policy covers the insured against accidental death, whether caused by fault,
negligence or intent of a third party which is unforeseen and unexpected by the insured. All the associated G.R. No. L-25579 March 29, 1972
words and concepts in the policy plainly exclude the accidental death from the coverage of the policy only
where the injuries are self-inflicted or attended by some proscribed act of the insured or are incurred in
some expressly excluded calamity such as riot, war or atomic explosion. FACTS: Juan S. Biagtan was insured with defendant InsularLife Assurance
- The untenability of insurer's claim that the insured's death fell within the exception is further heightened
by the stipulated fact that two other insurance companies which likewise covered the insured for much
Company for the sum of P5,000.00 and, under a supplementary contract
larger sums under similar accidental death benefit clauses promptly paid the benefits thereof to plaintiffs denominated "Accidental Death Benefit Clause, for an additional sum of
beneficiaries.
P5,000.00 if "the death of the Insured resulted directly from bodily injury
effected solely through external and violent means sustained in an accident ...
and independently of all other causes. The clause, however, expressly
provided that it would not apply where death resulted from an injury
"intentionally inflicted by another party. On the night of May 20, 1964 a band
of robbers entered the house of the insured Juan S. Biagtan. That in
committing the robbery, the robbers, on reaching the staircase landing on the
second floor, rushed towards the door of the second floor room, where they
suddenly met a person near the door of oneof the rooms who turned out to be
the insured Juan S. Biagtan who received thrusts from their sharp-pointed
instruments, causing wounds on the body of said Juan S. Biagtan resulting in
his death. Plaintiffs, as beneficiaries of the insured, filed a claim under the
policy. The insurance company paid the basic amount of P5,000.00 but
refused to pay the additional sum of P5,000.00 under the accidental death
benefit clause, on the ground that the insured's death resulted from injuries
intentionally inflicted by third parties and therefore was not covered.

ISSUE: Whether the wounds received by the insured at the hands of the
robbers — nine in all, five of them mortal and four non-mortal — were inflicted
intentionally.

HELD: Yes. It cannot be denied that the act itself of inflicting the injuries was
intentional. Where a gang of robbers enter a house and coming face to face
with the owner, even if unexpectedly, stab him repeatedly, it is contrary to all
reason and logic to say that his injuries are not intentionally inflicted,
regardless of whether they prove fatal or not. Nine wounds inflicted with bladed
weapons at close range cannot conceivably be considered as innocent insofar
as such intent is concerned. Thus, it has been held that "intentional" as used
in an accident policy excepting intentional injuries inflicted by the insured or
any other person, etc., implies the exercise of the reasoning faculties,
consciousness and volition. Where a provision of the policy excludes
intentional injury, it is the intention of the person inflicting the injury that is
controlling.