RCBC v CA

FACTS:
RCBC Binondo Branch initially granted a credit facility of P30M to Goyu & Sons, Inc.
GOYUs applied again and through Binondo Branch key officer's Uys and Laos
recommendation, RCBCs executive committee increased its credit facility to P50M to
P90M and finally to P117M.
As security, GOYU executed 2 real estate mortgages and 2 chattel mortgages in favor of
RCBC.
GOYU obtained in its name 10 insurance policy on the mortgaged properties
from Malayan Insurance Company, Inc. (MICO). In February 1992, he was issued 8
insurance policies in favor of RCBC.
April 27, 1992: One of GOYUs factory buildings was burned so he claimed against
MICO for the loss who denied contending that the insurance policies were either attached
pursuant to writs of attachments/garnishments or that creditors are claiming to have a
better right
GOYU filed a complaint for specific performance and damages at the RTC
RCBC, one of GOYUs creditors, also filed with MICO its formal claim over the
proceeds of the insurance policies, but said claims were also denied for the same reasons
that MICO denied GOYUs claims
RTC: Confirmed GOYUs other creditors (Urban Bank, Alfredo Sebastian, and Philippine
Trust Company) obtained their writs of attachment covering an aggregate amount
of P14,938,080.23 and ordered that 10 insurance policies be deposited with the court
minus the said amount so MICO deposited P50,505,594.60.
Another Garnishment of P8,696,838.75 was handed down
RTC: favored GOYU against MICO for the claim, RCBC for damages and to pay RCBC
its loan
CA: Modified by increasing the damages in favor of GOYU
In G.R. No. 128834, RCBC seeks right to intervene in the action between Alfredo C.
Sebastian (the creditor) and GOYU (the debtor), where the subject insurance policies
were attached in favor of Sebastian
RTC and CA: endorsements do not bear the signature of any officer of GOYU concluded
that the endorsements favoring RCBC as defective.
=

ISSUE: W/N RCBC as mortgagee, has any right over the insurance policies taken by
GOYU, the mortgagor, in case of the occurrence of loss
HELD: YES.
=
Mortgagor and a mortgagee have separate and distinct insurable interests in the same
mortgaged property, such that each one of them may insure the same property for his own
sole benefit
Although it appears that GOYU obtained the subject insurance policies naming itself as
the sole payee, the intentions of the parties as shown by their contemporaneous acts, must
be given due consideration in order to better serve the interest of justice and equity
8 endorsement documents were prepared by Alchester in favor of RCBC
MICO, a sister company of RCBC
GOYU continued to enjoy the benefits of the credit facilities extended to it by RCBC.
GOYU is at the very least estopped from assailing their operative effects.
The two courts below erred in failing to see that the promissory notes which they ruled
should be excluded for bearing dates which are after that of the fire, are mere renewals of
previous ones
RCBC has the right to claim the insurance proceeds, in substitution of the property lost in
the fire. Having assigned its rights, GOYU lost its standing as the beneficiary of the said
insurance policies
Insurance company to be held liable for unreasonably delaying and withholding payment
of insurance proceeds, the delay must be wanton, oppressive, or malevolent - not shown
Sebastians right as attaching creditor must yield to the preferential rights of RCBC over
the Malayan insurance policies as first mortgagee.

Coquia v Fieldmens Insurance Co., Inc

FACTS:
December 1, 1961: Fieldmen's Insurance Company, Inc. issued in favor of the Manila
Yellow Taxicab Co., Inc. (Manila) from December 1, 1961 to December 1, 1962
February 10, 1962: A taxicab of Manila driven by Carlito Coquia, met a vehicular
accident at Mangaldan, Pangasinana and died
The insured filed a claim for P5,000 in which Fieldmen's replied with an offer to pay
P2,000 by way of compromise
The insured rejected it and countered with P4,000
September 18, 1962: Carlito's parents filed a complaint against the Company for
collection
The company pleaded lack of cause of action
RTC: ordered to pay the parents
ISSUE: W/N there is a stipulation pour autrui that exempts the general rule that the
parents are not a party to the contract
HELD: YES. RTC affirmed.
There is a stipulation that the Company "will indemnify any authorized Driver who is
driving the Motor Vehicle" of the Insured and, in the event of death of said driver, the
Company shall, likewise, "indemnify his personal representatives."
Typical of contracts pour autrui, this character being made more manifest by the fact that
the deceased driver paid 50% of the corresponding premiums, which were deducted from
his weekly commissions
Expressly stipulated and declared that it shall be a condition precedent to any right of
action or suit upon this Policy that the award by such arbitrator, arbitrators or umpire of
the amount of the Company's liability hereunder if disputed shall be first obtained
Both parties from the inception of their dispute proceeded in entire disregard of the
provisions of the contract relating to arbitration
Conduct was as effective a rejection of the right to arbitrate

Eternal Gardens Memorial Park Corp v Philippine American Life

Insurance Company
FACTS:
December 10, 1980: Philippine American Life Insurance Company (Philamlife) entered
into an agreement denominated as Creditor Group Life Policy No. P-19202 with Eternal
Gardens Memorial Park Corporation (Eternal)
Under the policy (renewable annually), the clients of Eternal who purchased burial lots
from it on installment basis would be insured by Philamlife
Amount of insurance coverage depended upon the existing balance
Eternal complied by submitting a letter dated December 29, 1982, a list of insurable
balances of its lot buyers for October 1982 which includes John Chuang which was
stamped as received by Philam Life
August 2, 1984, Chuang died with a balance of 100,000 php
April 25, 1986: Philamlife had not furnished Eternal with any reply on its insurance claim
so its demanded its claim
According to Philam Life, since the application was submitted only on November 15,
1984, after his death, Mr. John Uy Chuang was not covered under the Policy since his
application was not approved. Moreover, the acceptance of the premiums is only in trust
for and not a sign of approval.
RTC: favored Eternal
CA: Reversed RTC
ISSUE: W/N Philam's inaction or non-approval meant the perfection of the insurance
contract.
HELD: YES. CA reversed
Construed in favor of the insured and in favor of the effectivity of the insurance contract
Upon a partys purchase of a memorial lot on installment from Eternal, an insurance
contract covering the lot purchaser is created and the same is effective, valid, and binding
until terminated by Philamlife by disapproving the insurance application
Moreover, the mere inaction of the insurer on the insurance application must not work to
prejudice the insured
The termination of the insurance contract by the insurer must be explicit and
unambiguous

Philhealth Care v Commissioner of Internal Revenue

FACTS:
Philippine Health Care Providers, Inc. is a domestic corporation whose primary purpose
is "[t]o establish, maintain, conduct and operate a prepaid group practice health care
delivery system or a health maintenance organization to take care of the sick and disabled
persons enrolled in the health care plan and to provide for the administrative, legal, and
financial responsibilities of the organization." Individuals enrolled in its health care
programs pay an annual membership fee and are entitled to various preventive, diagnostic
and curative medical services provided by its duly licensed physicians, specialists and
other professional technical staff participating in the group practice health delivery
system at a hospital or clinic owned, operated or accredited by it.
January 27, 2000: Commissioner of Internal Revenue (CIR) sent petitioner a formal
demand letter and the corresponding assessment notices demanding the payment of
deficiency taxes, including surcharges and interest, for the taxable years 1996 and 1997 in
the total amount of P224,702,641.18
Petitioner protested the assessment in a letter dated February 23, 2000.
CIR did not act on the protest; petitioner filed a petition for review in the Court of Tax
Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments.
CTA: PARTIALLY GRANTED to pay VAT
DST assessment CANCELLED AND SET ASIDE
CIR: health care agreement was a contract of insurance subject to DST under Section 185
of the 1997 Tax Code
CA: health care agreement was in the nature of a non-life insurance contract subject to
DST
Court Affirmed CA
ISSUE:
W/N the Philippine Health Care Providers, Inc (HMO) was engaged in the business of
insurance during the pertinent taxable years - NO
W/N the Philippine Health Care Providers, Inc enters into an insurance contract - NO
HELD: motion for reconsideration is GRANTED
1. NO

P.D. 612 Insurance Code

Sec. 2 (2)
(2) The term "doing an insurance business" or "transacting an insurance business",
within the meaning of this Code, shall include:
(a) making or proposing to make, as insurer, any insurance contract;
(b) making or proposing to make, as surety, any contract of suretyship as a vocation
and not as merely incidental to any other legitimate business or activity of the
surety;
(c) doing any kind of business, including a reinsurance business, specifically
recognized as constituting the doing of an insurance business within the meaning of
this Code;
(d) doing or proposing to do any business in substance equivalent to any of the
foregoing in a manner designed to evade the provisions of this Code.
In the application of the provisions of this Code the fact that no profit is derived
from the making of insurance contracts, agreements or transactions or that no
separate or direct consideration is received therefor, shall not be deemed conclusive
to show that the making thereof does not constitute the doing or transacting of an
insurance business.
No profit is derived from the making of insurance contracts, agreements or transactions
or that no separate or direct consideration is received therefore, shall not be deemed
conclusive to show that the making thereof does not constitute the doing or transacting of
an insurance business
2. NO
Basic distinction between medical service corporations and ordinary health and accident
insurers is that the former undertake to provide prepaid medical services through
participating physicians, thus relieving subscribers of any further financial burden, while
the latter only undertake to indemnify an insured for medical expenses up to, but not
beyond, the schedule of rates contained in the policy
A participating provider of health care services is one who agrees in writing to render
health care services to or for persons covered by a contract issued by health service
corporation in return for which the health service corporation agrees to make payment
directly to the participating provider
Any indemnification resulting from the payment for services rendered in case of
emergency by non-participating health providers would still be incidental to petitioners
purpose of providing and arranging for health care services and does not transform it into
an insurer.

As an HMO, it is its obligation to maintain the good health of its members

Its undertaking under its agreements is not to indemnify its members against any loss or
damage arising from a medical condition but, on the contrary, to provide the health and
medical services needed to prevent such loss or damage
Overall, petitioner appears to provide insurance-type benefits to its members (with
respect to its curative medical services), but these are incidental to the principal activity
of providing them medical care. The "insurance-like" aspect of petitioners business is
miniscule compared to its noninsurance activities. Therefore, since it substantially
provides health care services rather than insurance services, it cannot be considered as
being in the insurance business.
Principal Purpose Test
-purpose of determining what "doing an insurance business" means, we have to scrutinize
the operations of the business as a whole and not its mere components
Letter dated September 3, 2000, the Insurance Commissioner confirmed that petitioner is
not engaged in the insurance business. This determination of the commissioner must be
accorded great weight
Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement
whereby one undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event. An insurance contract exists where
the following elements concur: - NOT present1. The insured has an insurable interest;2.
The insured is subject to a risk of loss by the happening of the designed peril;3. The
insurer assumes the risk;4. Such assumption of risk is part of a general scheme to
distribute actual losses among a large group of persons bearing a similar risk and5. In
consideration of the insurers promise, the insured pays a premium.
No indemnity
Member can take advantage of the bulk of the benefits anytime even in the absence of
any peril, loss or damage on his or her part.
Assumption of the expense by petitioner is not confined to the happening of a
contingency but includes incidents even in the absence of illness or injury
Since indemnity of the insured was not the focal point of the agreement but the extension
of medical services to the member at an affordable cost, it did not partake of the nature of
a contract of insurance
HMO undertakes a business risk when it offers to provide health services. But it is not the
risk of the type peculiar only to insurance companies. Insurance risk, also known as
actuarial risk, is the risk that the cost of insurance claims might be higher than the
premiums paid. The amount of premium is calculated on the basis of assumptions made

relative to the insured.

In our jurisdiction, a commentator of our insurance laws has pointed out that, even if a
contract contains all the elements of an insurance contract, if its primary purpose is the
rendering of service, it is not a contract of insurance. The primary purpose of the parties
in making the contract may negate the existence of an insurance contract.
Health care agreements are clearly not within the ambit of Section 185 of the NIRC and
there was never any legislative intent to impose the same on HMOs

Del Rosario v Equitable Insurance & Casualty Co

FACTS:
April 13, 1957: Simeon del Rosario, father of the insured who died from drowning filed a
claim for payment with Equitable Ins. and Casualty Co., Inc. but it refused to pay more
than P1,000 php so a case was filed with the RTC for the P2,000 balance stating that
under the policy they are entitled to P1,000 to P3,000 as indemnity
RTC: entitled to recover P3,000 - policy does not positively state any definite amount,
there is an ambiguity in this respect in the policy, which ambiguity must be interpreted in
favor of the insured and strictly against the insurer so as to allow greater indemnity
ISSUE: W/N Simeon is entitled to recover P3,000
HELD: YES.
Terms in an insurance policy, which are ambiguous, equivocal or uncertain, are to be
construed strictly against, the insurer, and liberally in favor of the insured so as to effect
the dominant purpose of indemnity or payment to the insured, especially where a
forfeiture is involved
Reason for this rule is that the "insured usually has no voice in the selection or
arrangement of the words employed and that the language of the contract is selected with
great care and deliberation by expert and legal advisers employed by, and acting
exclusively in the interest of, the insurance company

Pacific Timber Export Corp v CA

FACTS:
March 19, l963: Pacific Timber secured temporary insurance from Workmen's Insurance
Company, Inc. for its exportation of 1,250,000 board feet of Philippine Lauan and
Apitong logs to be shipped from the Diapitan Bay, Quezon Province to Tokyo, Japan.
Workmen's issued Cover Note insuring the cargo "Subject to the Terms and Conditions
of the Workmen's Insurance Company, Inc."
=
April 2, 1963: regular marine cargo policies were issued for a total of 1,195.498 bd. ft.
Due to the bad weather some of the logs were lost during loading operations. 45 pieces
of logs were salvaged, but 30 pieces were lost. Pacific informed Workmen's who refused
stating that the logs covered in the 2 marine policies were received in good order at the
point of destination and that the cover note was null and void upon the issuance of the
Marine Policies
CFI: cover note is valid
CA: reversed
ISSUE: W/N the cover note is valid despite the absence of premium payment upon it
HELD: YES. CA set aside. CFI reinstated
It was not necessary to ask for payment of the premium on the Cover Note, for the loss
insured against having already occurred, the more practical procedure is simply to deduct
the premium from the amount due on the Cover Note
Had all the logs been lost during the loading operations, but after the issuance of the
Cover Note, liability on the note would have already arisen even before payment of
premium
Cover note as a "binder"
Supported by the doctrine that where a policy is delivered without requiring payment of
the premium, the presumption is that a credit was intended and policy is valid
It sent its adjuster to investigate and assess the loss to determine if petitioner was guilty
of delay in communicating the loss but there was none
Section 84
Delay in the presentation to an insurer of notice or proof of loss is waived if caused by
any act of his or if he omits to take objection promptly and specifically upon that ground