REPUBLIC VS. SUNLIFE ASSURANCE COMPANY OF CANADA [GR NO.

15805; OCTOBER 14, 2005]

Facts: On December 29, 1997, the [Court of Tax Appeals] (CTA) rendered its
decision in Insular Life Assurance Co. Ltd. v. [CIR], which held that mutual life
insurance companies are purely cooperative companies and are exempt from the
payment of premium tax and DST. This pronouncement was later affirmed by this
court in [CIR] v. Insular Life Assurance Company, Ltd. Sun Life surmised that[,]
being a mutual life insurance company, it was likewise exempt from the payment of
premium tax and DST. Hence, on August 20, 1999, Sun Life filed with the CIR an
administrative claim for tax credit of its alleged erroneously paid premium tax and
DST for the aforestated tax periods.
For failure of the CIR to act upon the administrative claim for tax credit and with the
2-year period to file a claim for tax credit or refund dwindling away and about to
expire, Sun Life filed with the CTA a petition for review. The CTA found in favor of
Sun Life.
Seeking reconsideration of the decision of the CTA, the CIR argued that Sun Life
ought to have registered, foremost, with the Cooperative Development Authority
before it could enjoy the exemptions from premium tax and DST extended to
purely cooperative companies or associations under [S]ections 121 and 199 of the
Tax Code. For its failure to register, it could not avail of the exemptions prayed for.
The CTA denied the CIRs motion for reconsideration.
Issue: Whether or not respondent is exempted from payment of tax on life
insurance premiums and documentary stamp tax
Held: YES. The Tax Code defines a cooperative as an association conducted by
the members thereof with the money collected from among themselves and solely
for their own protection and not for profit. Without a doubt, respondent is a
cooperative engaged in a mutual life insurance business.
First, it is managed by its members. Both the CA and the CTA found that the
management and affairs of respondent were conducted by its memberpolicyholders. SUNLIFE has been mutualized or converted from a stock life
insurance company to a nonstock mutual life insurance corporation pursuant to
Section 266 of the Insurance Code of 1978. On the basis of its bylaws, its
ownership has been vested in its member-policyholders who are each entitled to
one vote; and who, in turn, elect from among themselves the members of its board
of trustees.
Second, it is operated with money collected from its members. Since respondent is
composed entirely of members who are also its policyholders, all premiums

collected obviously come only from them. The member-policyholders constitute

both insurer and insured who contribute, by a system of premiums or
assessments, to the creation of a fund from which all losses and liabilities are
paid.
Third, it is licensed for the mutual protection of its members, not for the profit of
anyone. A mutual life insurance company is conducted for the benefit of its
member-policyholders, who pay into its capital by way of premiums.
Under the Tax Code although respondent is a cooperative, registration with the
Cooperative Development Authority (CDA) is not necessary in order for it to be
exempt from the payment of both percentage taxes on insurance premiums, under
Section 121; and documentary stamp taxes on policies of insurance or annuities it
grants, under Section 199.

MAPALAD AISPORNA V CA (1982)

Facts
Mapalad Aisporna, the wife of one Rodolfo Aisporna, an insurance agent, solicited
the application of Eugenio Isidro in behalf of Perla Compana de Seguros without
the certificate of authority to act from the insurance commissioner. Isidro passed
away while his wife was issued Php 5000 from the insurance policy. After the
death, the fiscal instigated criminal action against Mapalad for violating sec 189 of
the Insurance code for feloniously acting as agent when she solicited the
application form.
In the trial court, she claimed that she helped Rodolfo as clerk and that she
solicited a renewal, not a new policy from Isidro through the phone. She did this
because her husband was absent when he called. She only left a note on top of
her husbands desk to inform him of what transpired. (She did not accept
compensation from Isidro for her services)
Aisporna was sentenced to pay Php 500 with subsidiary costs in case of
insolvency in 1971 in the Cabanatuan city court.
In the appellate court, she was found guilty of having violating par 1 of sec 189 of
the insurance code.
The OSG kept on repeating that she didnt violate sec 189 of the insurance code.
In seeking reversal of the judgment, Aisporna assigned errors of the appellate
court:

1. the receipt of compensation was not a necessary element of the crime in par 1
of sec 189 of the insurance code

The SC held that the definition of an insurance agent was made by CA to be

limited to paragraph 2 and not applicable to the 1st paragraph.

2. CA erred in giving due weight to exhibits F, F1, F17 inclusive sufficient to

establish petitioners guilt beyond reasonable doubt.

The appellate court said that a person was an insurance agent under par 2 if she
solicits insurance for compensation, but in the 1st paragraph, there was no
necessity that a person solicits an insurance compensation in order to be called an
agent.

3. The CA erred in not acquitting the petitioner

Issues: Won a person can be convicted of having violated the 1st par of the sec
189 of the IC without reference to the 2nd paragraph of the said section. Or
Is it necessary to determine WON the agent mentioned in the 1st paragraph of the
aforesaid section is governed by the definition of an insurance agent found on its
second paragraph
Decision: Aisporna acquitted
Ruling:
Sect 189 of the I.C., par 1 states that No insurance company doing business with
the Philippine Islands nor l any agent thereof shall pay any commission or other
compensation to any person for services in obtaining new insurance unless such
person shall have first procured from the Insurance Commissioner a certificate of
authority to act as an agent of such company as herein after provided.
No person shall act as agent, sub-agent, or broker in the solicitation of
procurement of applications for insurance without obtaining a certificate from the
Insurance Commissioner.
Par2 Any person who for COMPENSATION solicits or obtains insurance for any for
any insurance compna or offers or assumes to act in the negotiating of such
insurance shall be an insurance agent in the intent of this section and shall thereby
become liable to all liabilities to which an insurance agent is subject.
Par 3 500 pseo fine for person or company violating the provisions of the section.

The SC said that this was a reversible error.

The CA said that Aisporna didnt receive compensation.
The SC said that the definition of an insurance agent was found in the 2nd par of
Sec 189 (check the law) The definition in the 2nd paragraph qualified the definition
of an agent used in the 1st and third paragraphs.
DOCTRINE: The court held that legislative intent must be ascertained from the
consideration of the statute as a whole. The words shouldnt be studied in isolated
explanations but the whole and every part of the statute must be considered in
fixing the meaning of any of its parts in order to pronounce the harmonious whole.
Noscitur a sociis provides that where a particular word or phrase in a statement is
ambiguous in itself, the true meaning may be made clear in the company it is fixed
in. In applying this, the court held that the definition of an insurance agent in the
2nd paragraph was applicable in the 1st paragraph.
To receive compensation be the agent is an essential element for violation of the
1st paragraph.
The appellate court said that she didnt receive compensation by the receipt of
compensation wasnt an essential element for violation of the 1st paragraph.
The SC said that this view wasnt correct owing to the American insurance laws
which qualified compensation as a qualifying factor in penalizing unauthorized
persons who solicited insurance (Texas code and snyders law)

The court held that the 1st par prohibited a person to act as agent without
certificate of authority from the commissioner
In the 2nd par, the definition of an insurance agent is stipulated
The third paragraph provided the penalty for violating the 1st 2 rules
The appellate court said that the petitioner was penalized under the1st paragraph
and not the 1nd. The fact that she didnt receive compensation wasnt an excuse
for her acquittal because she was actually punished separately under sec 1
because she did not have a certificate of authority as under par 1.

G.R. No. L-67835 October 12, 1987

MALAYAN INSURANCE CO., INC. (MICO), petitioner, vs. GREGORIA CRUZ
ARNALDO, in her capacity as the INSURANCE COMMISSIONER, and
CORONACION PINCA, respondents.

FACTS:

On June 7, 1981, the petitioner (hereinafter called (MICO) issued to the private
respondent, Coronacion Pinca, Fire Insurance Policy No. F-001-17212 on her
property for the amount of P14,000.00 effective July 22, 1981, until July 22, 1982.
On October 15,1981, MICO allegedly cancelled the policy for non-payment, of the
premium and sent the corresponding notice to Pinca.
On December 24, 1981, payment of the premium for Pinca was received by
Domingo Adora, agent of MICO. On January 15, 1982, Adora remitted this
payment to MICO, together with other payments. On January 18, 1982, Pinca's
property was completely burned.

DECISION OF LOWER COURTS:

(1) Insurance Commission: granted claim for compensation for burned property.

(b) that upon written request of the insured, the insurer will furnish the facts on
which the cancellation is based.
MICO's claims it cancelled the policy in question on October 15, 1981, for nonpayment of premium. To support this assertion, it presented one of its employees,
who testified that "the original of the endorsement and credit memo" presumably
meaning the alleged cancellation "were sent the assured by mail through our
mailing section" However, there is no proof that the notice, assuming it complied
with the other requisites mentioned above, was actually mailed to and received by
Pinca.
We also look askance at the alleged cancellation, of which the insured and MICO's
agent himself had no knowledge, and the curious fact that although Pinca's
payment was remitted to MICO's by its agent on January 15, 1982, MICO sought
to return it to Adora only on February 5, 1982, after it presumably had learned of
the occurrence of the loss insured against on January 18, 1982. These
circumstances make the motives of the petitioner highly suspect, to say the least,
and cast serious doubts upon its candor and bona fides.

ISSUE:
Whether there was a valid insurance contract at the time of the loss.

MANUEL B. TAN, GREGG M. TECSON and ALEXANDER SALDAA, vs.

EDUARDO R. GULLAS and NORMA S. GULLAS

RULING:
Yes.
A valid cancellation must, therefore, require concurrence of the following
conditions:
(1) There must be prior notice of cancellation to the insured;
(2) The notice must be based on the occurrence, after the effective date of the
policy, of one or more of the grounds mentioned;
(3) The notice must be

G.R. No. 143978 December 3, 2002

Facts:
Respondents, were the registered owners of a parcel of land, they executed a
special power of attorney authorizing petitioners Tan, a licensed real estate broker,
and his associates Tecson and Saldaa, to negotiate for the sale of the land, at a
commission of 3% of the gross price. Tan contacted the Sisters of Mary of
Banneaux, Inc. (hereafter, Sisters of Mary), areligious organization interested in
acquiring a property. The Sisters, who had already seen and inspected the land,
found the same suitable for their purpose and expressed their desire to buy it.

(a) in writing,
(b) mailed, or delivered to the named insured,
(c) at the address shown in the policy;
(4) It must state
(a) which of the grounds mentioned in Section 64 is relied upon and

However, they requested that the selling price be reduced. Respondents agreed to
sell the property to the Sisters of Mary. Petitioners went to see respondents who
refused to pay the brokers fee and alleged that another group of agents was
responsible for the sale of land to the Sisters of Mary. Petitioners filed a complaint
against the defendants for recovery of their brokers fee. They alleged that they
were the efficient procuring cause in bringing about the sale of the, but that their

efforts in consummating the sale were frustrated by the respondents who, in

evident bad faith, malice and in order to evade payment of brokers fee, dealt
directly with the buyer whom petitioners introduced to them.

Estrada made proposals to the officers of Meralco regarding the Maxicare

plan but when Mercalco decided to subscribe, Maxicare directly negotiated with
Meralco, leaving Estrada out of the discussions. Mercalco eventually subscribed.

Issues:

(2) An agent distinguished from a broker.

Estrada demanded from Maxicare that she be paid commissions for the
Meralco account and 9 other accounts but Maxicare denied Estradas claim
because it was Maxicare that directly negotiated with Meralco and the 9 other
accounts.

Rulings:

(1) The records show that petitioner Tan is a licensed real estate broker, and other
petitioners his associates. "Broker" as "one who is engaged, for others, on a
commission, negotiating contracts relative to property with the custody of which he
has no concern; the negotiator between other parties, never acting in his own
name but in the name of those who employed him. x x x a broker is one whose
occupation is to bring the parties together, in matters of trade, commerce or
navigation." The petitioners were responsible for the introduction of the
representatives of the Sisters of Mary to respondent.

o
Both the RTC and the CA, upon appeal, found Maxicare liable for breach
of contract, holding that Estrada was the efficient procuring cause in the
execution of the service agreement.

(1) Whether or not the petitioners are entitled to the brokerage commission.

(2) There was no dispute as to the role that petitioners played in the transaction.
"An agent receives a commission upon the successful conclusion of a sale. On the
other hand, a broker earns his pay merely by bringing the buyer and the seller
together, even if no sale is eventually made." Clearly, therefore, petitioners, as
brokers, should be entitled to the commission whether or not the sale of the
property subject matter of the contract was concluded through their efforts.

PHILIPPINE HEALTH-CARE PROVIDERS, INC. V. CARMELA ESTRADA/CARA

HEALTH (2008)
FACTS

Philippine Health-Care Services, Inc. (Maxicare) engaged the services of

Carmela Estrada
o promote and sell their pre-paid group practice healthcare devlivery program
called the Maxicare Plan.
o
Estrada was appointed as Maxicares General Agent and was entitled to
commission on corporate accounts from all membership dues collected and
remitted by her to Maxicare under their letter-agreement.

Estrada filed a complaint against Maxicare and its officers.

ISSUE/HELD
[1] WoN Estrada was the procuring cause in the execution of the service
agreement between Maxicare and Meralco. YES
[2] WoN Estrada judicially admitted that her negotiations with Meralco failed in her
pleading. - NO
RATIO
[1] Estrada was the efficient procuring cause in the execution of the service
agreement, and is therefore entitled to commission.

It is readily apparent that Maxicare is attempting to evade payment of the

commission which rightfully belongs to Esrada as the broker who brought the
parties together.

Estrada was the one who penetrated the Meralco market, initially closed to
Maxicare, and laid down the groundwork for their business relationship.
o
Maxicares former Chairman testified that Maxicare had been trying to land
the Meralco account 2 years prior to engaging Estradas services.
o
Meralcos Assistant VP categorically stated in a letter that they received
the proposal of Maxicare from Estrada, who introduced Maxicare to them.

BROKER: one who is engaged, for others, on a commission, negotiating

contracts relative to property with the custody of which he has no concern; the
negotiator between the other parties, never acting in his own name but in the name
of those who employed him.

o
A broker is one whose occupation is to bring the parties together, in matter
of trade, commerce or navigation.

The letter was attached to the Complaint, and offered in evidence, to

demonstrate Maxicares bad faith and ill will towards Estrada.

PROCURING CAUSE: a cause originating a series of events which,

without break in their continuity, result in the accomplishment of the prime objective
of the employment of the broke.

SOUTH SEA V CA G.R. NO. 102253 JUNE 2, 1995

Estrada was evidently instumental in the sale of the Maxicare health plans
to Meralco and her efforts were the foundation on which the negotiations resulting
in the sale began.

Facts:

[2] Estrada did not admit that her negotiations

South Sea insured the logs for P2,000,000.00 in its marine policy. Valenzuela then
gave the check in payment of the premium on the insurance policy to Mr. Victorio
Chua.

Maxicare contends that Estrada herself admitted that her negotiations

with Meralco as shown in Annex F.
o
This Annex F is, in fact, Maxicares counsels letter. The letter contains a
unilateral declaration by Maxicare that the efforts initiated and negotiations
undertaken by Estrada failed.

Under Sec. 4 of Rule 129 of the Rules of Court, the general rule that a
judicial admission is conclusive upon the party making it and does not require
proof admits of 2 exceptions. (1) When it is shown that the admission was made
through palpable mistake, and (2) when it is shown that no such admission was
made.
o
The latter exception allows one to contradict an admission by denying that
he made such an admission.

For instance, if a party invokes an admission by an adverse party, but

cites the admission out of context, then the one making the admission may show
that he made no such admission, or that his admission was taken out of context.

In this case, the letter although part of Estradas Complaint, is not, ipso
facto, an admission of the statements contained therein, especially since the bone
of contention relates to Estradas entitlement to commissions.
o
It is more than obvious from the entirety of the records that Estrada has
unequivocally and consistently declared that her involvement as broker is the
proximate cause which consummated the sale between Meralco and Maxicare.
o
Moreover, Section 34, Rule 132 of the Rules of Court requires the purpose
for which the evidence is offered to be specified.

Valenzuela Hardwood entered into an agreement with the defendant Seven

Brothers whereby the latter undertook to load the former's 940 lauan logs for
shipment to Manila.

Seven Brothers ship sank resulting in the loss of the logs.

A check for P5,625.00 to cover payment of the premium tendered to the insurer but
was not accepted. Instead, the South Sea Surety and Insurance Co., Inc.
cancelled the insurance policy it issued as of the date of inception for non-payment
of the premium due in accordance with Section 77 of the Insurance Code.
Valenzuela demanded from South Sea the payment of the proceeds of the policy
but the latter denied liability under the policy. Plaintiff likewise filed a formal claim
with defendant Seven Brothers Shipping Corporation for the value of the lost logs
but the latter denied the claim.
Valenzuela filed a complaint a complaint for the recovery of the value of lost logs
and freight charges from Seven Brothers Shipping Corporation or from South Sea
Surety and Insurance Company, the insurer.
The trial court rendered judgment in favor of plaintiff Valenzuela. The Court of
Appeals affirmed the judgment only against the insurance corporation and
absolved the shipping entity from liability. The court held that there was a
stipulation in the charter party exempted the ship owner from liability in case of
loss.
In the SC petition, petitioner argues that it should have been freed from any liability
to Hardwood. It faults the appellate court (a) for having disregarded Section 77 of
the insurance Code and (b) for holding Victorio Chua to have been an authorized
representative of the insurer.
Issue:

W/N Mr. Chua acted as an agent of the surety company or of the insured when he
received the check for insurance premiums.
Held: Agent of the surety. Petition denied.
Ratio:
To determine if there was a valid contract of insurance, it must be determine if the
premium was validly paid to the company or its agents at the time of the loss.
The appellate and trial courts have found that Chua acted as an agent.
South Sea insisted that Chua has been an agent for less than ten years of the
Columbia Insurance Brokers, a different company. Appellant argued that Mr. Chua,
having received the premiums, acted as an agent under Section 301 of the
Insurance Code which provides:
Sec. 301. Any person who for any compensation, commission or other thing of
value, acts, or aids in soliciting, negotiating or procuring the making of any
insurance contract or in placing risk or taking out insurance, on behalf of an
insured other than himself, shall be an insurance broker within the intent of this
Code, and shall thereby become liable to all the duties requirements, liabilities and
penalties to which an insurance broker is subject.
Valenzuela claimed that the second paragraph of Section 306 of the Insurance
Code provided:
Sec. 306 Any insurance company which delivers to an insurance agent or
insurance broker a policy or contract of insurance shall be deemed to have
authorized such agent or broker to receive on its behalf payment of any premium
which is due on such policy of contract of insurance at the time of its issuance or
delivery or which becomes due thereon.
Mr. Chua testified that the marine cargo insurance policy logs was by South Sea to
be given to the wood company.
When South Sea delivered to Mr. Chua the marine cargo insurance policy for
Valenzuelas logs, he is deemed to have been authorized by former to receive the
premium which is due on its behalf.
When the logs were lost, the insured had already paid the premium to an agent of
the South Sea Surety and Insurance Co., Inc., which is consequently liable to pay
the insurance proceeds under the policy it issued to the insured.
The court followed the factual evidence of the lower courts and held that they didnt
try questions of fact.

G.R. No. L-64677

September 13, 1990

NORA LUMIBAO vs. IAC AND EUGENIO TRINIDAD

Assailed in this petition for review is a decision of the respondent appellate court
rendered in AC-G.R. CV No. 61200 which reversed the decision of the trial court,
thereby ordering petitioner to pay private respondent the sum of P46,590.00, with
interest thereon from the time of the filing of the complaint below until fully paid.
Both the trial and respondent appellate courts are in agreement as to the factual
antecedents of the case, thus:
Petitioner is a life insurance underwriter or agent and a member of a group of
insurance underwriters known as Bescon Insurance Agencies, Inc., representing
the Manila Bankers Life Insurance Corporation.
Sometime in January 1975, petitioner was able to convince private respondent
Eugenio Trinidad, the Vice-President and General Manager and principal
stockholder of Victory Liner Inc., to take out a life insurance policy with Manila
Bankers Life Insurance Corporation. As a result of a medical examination
conducted on private respondent showing that he was a diabetic, the insurance
company fixed the annual insurance premium at P93,180.00 for a life insurance
policy with a face value of Pl,000,000.00. In order to persuade private respondent
to take out the policy at the computed premium, petitioner offered to return to him
the amount corresponding to her commission out of the first premium payment,
which is equivalent to FIFTY percent (50%) thereof. Upon such inducement,
private respondent agreed to take the policy thus, on April 30, 1975, he issued two
checks in favor of the insurance company for P46,590.00 each or a total of
P93,180.00. Both checks were postdated May 30, 1975 so as to enable petitioner
to make arrangements for the return to private respondent of one check
corresponding to the amount of her commission.
On June 4, 1975, petitioner received the sum of P51,249.00 from Bescon
Insurance Agencies, Inc. as her commission out of the first annual premium paid
by private respondent. Yet, petitioner failed to comply with her commitment to pay
private respondent P46,590.00. Soon after, private respondent's attorney sent a
demand letter dated July 7, 1975. In reply thereto, petitioner, through her counsel,
denied that she had entered into such an arrangement with private respondent.
On August 6, 1975, private respondent instituted an action against petitioner for
specific performance and damages, docketed as Civil Case No. 3653. In her
answer with counterclaim filed on September 29, 1975, petitioner denied that she
had made a verbal promise to return to private respondent 50% of his premium.

The trial court, in a decision dated September 15, 1976, made a categorical finding
that petitioner had induced private respondent to take out a life insurance policy
with Manila Bankers Life Insurance Corporation by promising a rebate of 50% of
his first annual premium payment on said policy. However, despite such finding,
the trial court ordered the dismissal of private respondent's complaint, holding that
it could not grant private respondent any relief because the agreement entered into
between the parties was void for being contrary to the provisions of Pres. Decree
No. 612 [otherwise known as the Insurance Code] and public policy. The trial court
also dismissed petitioner's counterclaim.
Not satisfied with the decision, petitioner interposed an appeal with respondent
appellate court, docketed as AC-G.R. CV No. 61200.
On June 30, 1983, respondent appellate court affirmed the factual findings of the
trial court and sustained the dismissal of petitioner's counterclaim. But in a split
decision, * respondent appellate court reversed the trial court's judgment in so far
as it dismissed the complaint, and instead ordered petitioner to pay private
respondent the sum of P46,590.00, with interest thereon.
Hence, the present petition for review.
After the filing of the comment, reply, rejoinder, and the parties' respective briefs,
the Court considered the issues joined and the case submitted for decision.

Two issues are presented for resolution, to wit:

(1) Whether or not respondent appellate court erred in holding that petitioner
violated Section 361 of Pres. Decree No. 961;
(2) Whether or not respondent appellate court erred in ordering petitioner to pay
private respondent the sum of P46,590.00, with interest thereon.

As to the first issue, the Court holds that the respondent appellate court committed
no reversible error in holding that petitioner violated the provisions of Section 361
of the Insurance Code of the Philippines, or Pres. Decree No. 961.
A preponderance of evidence on record supports the findings of the trial and
appellate courts that petitioner had induced private respondent to take out a life
insurance policy from Manila Bankers Life Insurance Corporation by promising him
a rebate equivalent to 50% of the first annual premium payment. These factual
findings are, therefore, final and binding upon the Court.

Petitioner, however, argues that in view of the last paragraph of Article 1358 of the
New Civil Code, which provides that contracts where the amount involved exceeds
five hundred pesos must appear in writing, the courts below erred in giving weight
and credence to the testimonies of private respondent and his witnesses which
sought to prove that she had promised such rebate.
This contention is patently erroneous. Petitioner's reliance on Article 1358 is
misplaced for the apparent reason that this article does not lay down any
evidentiary rule which precludes oral testimony as a means of proving that parties
have entered into a contract or agreement involving an amount of more than five
hundred pesos.
Neither can it be gainsaid that petitioner, an insurance agent, is enjoined by law
from inducing prospective clients to take out insurance by offering rebates from the
premiums specified in the insurance policies.

Section 361 of Pres. Decree No. 612 states:

No insurance company doing business in the Philippines or any agent thereof, no
insurance broker, and no employee or other representative of any such insurance
company, agent, or broker, shall make, procure or negotiate any contract of
insurance or agreement as to policy contract, other than is plainly expressed in the
policy or other written contract issued or to be issued as evidence thereof, or shall
directly or shall indirectly, by giving or sharing a commission or in any manner
whatsoever, pay or allow or offer to pay or allow to the insured or to any employee
of such insured, either as an inducement to the making of such insurance or after
such insurance has been effected, any rebate from the premium which is specified
in the policy, or any special favor or advantage in the dividends or other benefits to
accrue thereon, or shall give or offer to give any valuable consideration or
inducement of any kind, directly or indirectly, which is not specified in such policy
or contract of insurance; nor shall any such company, or any agent thereof, as to
any policy or contract of insurance issued, make any discrimination against any
Filipino in the sense that he is given less advantageous rates, dividends or other
policy conditions or privileges than are accorded to other nationals because of his
race [Emphasis supplied.]
Furthermore, Section 363 of Pres. Decree No. 612 provides that violation of the
above section constitutes a ground for the immediate revocation of the license
issued to the erring insurance company, agent or broker and the imposition of a
fine not exceeding five hundred pesos.

It is evident that petitioner's promise to pay private respondent an amount

equivalent to 50% of the first premium payment, which would be taken out of her
commission on the insurance policy, is covered squarely by the express provisions
of Section 361.

By virtue of Article 1409 (7) of the New Civil Code, the rebate agreement between
the petitioner and private respondent is deemed a contract void ab initio, and,
consequently, does not give rise to enforceable rights and obligations as between
the parties thereto.

Having disposed of the first issue, the Court will now proceed to tackle the issue
pertaining to the enforceability of the rebate agreement between petitioner and
private respondent.

However, respondent appellate court opined that since the prohibition against
rebate agreements under Section 361 of Pres. Decree No. 612, and the penalty
imposed therefor under Section 363, refer only to insurance agents, brokers or
companies, Article 1412 (2) of the New Civil Code provides the legal basis for
allowing private respondent, the party who is not at fault, to recover the amount of
P46,590.00 from petitioner.

After deliberating on the arguments adduced in the pleadings, the Court finds that
respondent appellate court committed reversible error of law in ordering petitioner
to pay private respondent the promised rebate of P46,590.00.
Firstly, without legal justification, respondent appellate court contravened a basic
rule in appellate procedure.
It is well-settled in this jurisdiction that whenever an appeal is taken in a civil case,
an appellee who has not himself appealed may not obtain from the appellate court
any affirmative relief other than the ones granted in the decision of the court below.
The appellee can only advance any argument that he may deem necessary to
defeat the appellant's claim or to uphold the decision that is being disputed, and he
can assign errors in his brief if such is required to strengthen the views expressed
by the court a quo. These assigned errors in turn may be considered by the
appellate court solely to maintain the appealed decision on other grounds, but not
for the purpose of reversing or modifying the judgment in the appellee's favor and
giving him other affirmative reliefs [Bunge Corporation v. Elena Camenforte & Co.,
91 Phil. 861 (1952); Andaya v. Manansala, 107 Phil. 1151 (1960); Enecilla v.
Magsaysay, G.R. No. L-21568, May 19, 1966,17 SCRA 125].
In the case at bar, while petitioner interposed her appeal from the adverse decision
rendered by the trial court dismissing her counterclaim, private respondent
inexplicably failed to appeal from the same decision which dismissed his complaint
as well. It was, therefore, grave error on the part of respondent appellate court, in
reversing the trial court's decision, to grant private respondent affirmative relief
other than that found in the appealed judgment.
Secondly, prescinding from the earlier discussion declaring the collateral
agreement for rebate between the parties a prohibited transaction under Section
361 of Pres Decree No. 961, the Court must conclude that respondent appellate
court gravely erred in compelling petitioner to comply with her promised
undertaking.

This position is untenable.

There are indeed instances where the law recognizes the right of an innocent party
to recover what he has paid or delivered under the agreement [See Articles 14111417 of the New Civil Code], but contrary to the ruling of respondent appellate
court, the case at bar does not fall under any of the legal exceptions. Respondent
appellate court erred in citing Article 1412, par. (2) of the New Civil Code as legal
basis for compelling petitioner to comply with her promise to pay private
respondent the sum of P46,590.00.
Article 1412, par. (2), states that:
If the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:
xxx

xxx

xxx

(2) When only one of the contracting parties is at fault, he cannot recover what he
had given by reason of the contract, or ask for the fulfillment of what has been
promised him. The other, who is not at fault, may demand the return of what he
has given without any obligation to comply with his promise.
The article contemplates of a situation where the party who is not at fault, in the
performance of his undertaking with the party who is at fault, has paid or delivered
property to the latter. This is not the case between private respondent and
petitioner.
The agreement between the parties consists of an undertaking on the part of
private respondent to take out a life insurance policy with Manila Bankers Life
Insurance Corporation and, on the part of petitioner, to give private respondent a
rebate on the first premium payment. There is no indication on record that

petitioner, when she made the promise, had acted with the knowledge and under
the authority of the insurance company. But it is clear that the premium of
P93,180.00 was actually paid to the insurance company in consideration of the
policy taken out. Private respondent's checks were issued for the account of
Manila Bankers Life Insurance Corporation and so encashed by the insurance
company as the payee. Private respondent thus cannot "demand the return of
what he has given" from petitioner because he did not, strictly speaking, pay the
amount of P93,180.00 to petitioner.

Public policy considerations serve to underscore further the Court's foregoing

ruling that petitioner's promise of rebate, which is expressly prohibited by law, may
not be enforced for compliance by the courts.
Section 361 of Pres. Decree No. 612 is similar to the so-called "anti-discrimination"
statutes found in other jurisdictions which regulate the activities in the insurance
industry. The purpose of these statutes is the prevention of unfair discriminatory
practices by insurance companies, agents and brokers in order to ensure that
equal terms are fixed for policyholders of the same insurable class and equal
expectation of life. In aid and furtherance of this desirable policy, the statutes
prohibit such practices involving rebates or preferential treatment with respect to
the cost of the policy or the benefits allowed for the premium [See Laun v. Pacific
Mutual Life Ins. Co. of California, 111 NW 660 (1907); Bernblum v. Travelers Ins.

Co. of Hartford, Connecticut, 105 SW 2d 941 (1937); Chatz v. Bloom, 54 NE 2d

889 (1944); Mahone v. Hartford Life and Accident Insurance Company, 561 P 2d
142 (1976)]. It follows that to enforce contracts or agreements directly forbidden
under these statutes, thereby allowing recovery thereunder, would be subversive
of the very public policy which the law was designed and intended to uphold. True,
the statutes, like Sections 361 and 363 of Pres. Decree No. 961, in terms, are
addressed to the insurance companies, agents and brokers, and is enacted for the
protection of policyholders, but this is for the general body of policyholders who
would suffer by the enforcement of the prohibited agreements, and not for those
who have entered into such agreements and are seeking to profit by its terms [See
Smathers v. Bankers' Life Ins. Co., 65 SE 746 (1909); Richmond v. Conservative
Life Ins. Co., 165 NW 286 (1917); Sovereign Camp v. Waggoner, 173 So. 424
(1937)].
WHEREFORE, the assailed decision of respondent appellate court in AC-G.R. CV
No. 61200 is SET ASIDE, and the trial court's decision in Civil Case No. 3653 is
hereby REINSTATED. Let the Insurance Commissioner be furnished a copy of this
decision for appropriate administrative action against petitioner pursuant to Section
363 of Pres. Decree No. 961.