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WHITE GOLD MARINE SERVICES, INC., petitioner, vs.

PIONEER INSURANCE AND


SURETY CORPORATION AND THE STEAMSHIP MUTUAL UNDERWRITING
ASSOCIATION (BERMUDA) LTD., respondents.

FACTS:
White Gold Marine Services, Inc. (White Gold) procured a protection and indemnity coverage for its
vessels from The Steamship Mutual Underwriting Association (Bermuda) Limited (Steamship Mutual)
through Pioneer Insurance and Surety Corporation (Pioneer). Subsequently, White Gold was issued a
Certificate of Entry and Acceptance. Pioneer also issued receipts evidencing payments for the coverage.
When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage.
Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to
recover the latters unpaid balance. White Gold on the other hand, filed a complaint before the Insurance
Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code, while
Pioneer violated Sections 299, 300 and 301 in relation to Sections 302 and 303, thereof.
The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual
to secure a license because it was not engaged in the insurance business. It explained that Steamship
Mutual was a Protection and Indemnity Club (P & I Club). Likewise, Pioneer need not obtain another
license as insurance agent and/or a broker for Steamship Mutual because Steamship Mutual was not
engaged in the insurance business. Moreover, Pioneer was already licensed, hence, a separate license
solely as agent/broker of Steamship Mutual was already superfluous

ISSUE: WON Steamship Mutual is engaged in Insurance Business in the Philippines

HELD:

YES. Section 2(2) of the Insurance Code enumerates what constitutes doing an insurance
business or transacting an insurance business. These are:

(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.

The test to determine if a contract is an insurance contract or not, depends on the nature of the
promise, the act required to be performed, and the exact nature of the agreement in the light of the
occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by
what it is called. A P & I Club is a form of insurance against third party liability, where the third party is
anyone other than the P & I Club and the members. By definition then, Steamship Mutual as a P & I Club
is a mutual insurance association engaged in the marine insurance business. Thus, to continue doing
business here, Steamship Mutual or through its agent Pioneer, must secure a license from the Insurance
Commission. Since a contract of insurance involves public interest, regulation by the State is necessary.
No insurer or insurance company is allowed to engage in the insurance business without a license or a
certificate of authority from the Insurance Commission.
VERENDIA, vs. COURT OF APPEALS and FIDELITY & SURETY CO. OF THE PHILIPPINES

FACTS:

Verendia took a fire insurance policy from Fidelity and Surety Insurance Company of the
Philippines for his residential building located at Antipolo, Rizal. In 1980, the insured property was
completely destroyed by fire. Fidelity was accordingly informed of the loss and despite demands, refused
payment under its policy, thus prompting Verendia to file a complaint with the then Court of First
Instance of Quezon City. Answering the complaint, Fidelity, among other things, averred that the policy
was avoided by reason of over-insurance; that Verendia maliciously represented that the building at the
time of the fire was leased under a contract executed on June 25, 1980 to a certain Roberto Garcia, when
actually it was a Marcelo Garcia who was the lessee. Trial Court ruled in favour of fidelity. IAC reversed.

ISSUE: WON the contract of lease submitted by Verendia to support his claim on the fire insurance
policy constitutes a false declaration which would forfeit his benefits

HELD:

YES. Verendia failed to live by the terms of the policy, specifically Section 13 thereof which is
expressed in terms that are clear and unambiguous, that all benefits under the policy shall be forfeited "If
the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if
any fraudulent means or devises are used by the Insured or anyone acting in his behalf to obtain any
benefit under the policy". According to the investigation report prepared by the Antipolo police, the
building appeared to have "no occupant" and that Mr. Roberto Garcia was "renting on the otherside (sic)
portion of said compound" . Robert Garcia then executed an affidavit before the National Intelligence and
Security Authority (NISA) to the effect that he was not the lessee of Verendia's house and that his
signature on the contract of lease was a complete forgery. A contract of indemnity, an insurance contract
is the law between the parties. Verendia, having presented a false declaration to support his claim for
benefits in the form of a fraudulent lease contract, he forfeited all benefits therein by virtue of Section 13
of the policy in the absence of proof that Fidelity waived such provision. By presenting a false lease
contract, Verendia, reprehensibly disregarded the principle that insurance contracts are uberrimae
fidae and demand the most abundant good faith

RIZAL SURETY & INSURANCE COMPANY, petitioner, vs. COURT OF APPEALS and
TRANSWORLD KNITTING MILLS, INC., respondents.

FACTS:

Rizal Surety & Insurance Company issued Fire Insurance Policy in favor of Transworld Knitting
Mills, Inc. The same pieces of property insured with the petitioner were also insured with New India
Assurance Company, Ltd. In 1981, fire broke out in the compound of Transworld, razing the middle
portion of its four-span building and partly gutting the left and right sections thereof. A two-storey
building (behind said four-span building) where fun and amusement machines and spare parts were
stored, was also destroyed by the fire. Transworld filed its insurance claims with Rizal Surety &
Insurance Company and New India Assurance Company but to no avail. , private respondent brought
against the said insurance companies an action for collection of sum of money and damages. Petitioner
Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-
span building, which was partly burned, and not the damage caused by the fire on the two-storey annex
building.

ISSUE: WON Transworld is entitled to receive compensation for the destroyed two-storey building

HELD:

YES. Considering that the two-storey building aforementioned was already existing when subject
fire insurance policy contract was entered into, petitioner should have specifically excluded the said two-
storey building from the coverage of the fire insurance if minded to exclude the same but if did not, and
instead, went on to provide that such fire insurance policy covers the products, raw materials and supplies
stored within the premises of respondent Transworld which was an integral part of the four-span building
occupied by Transworld, knowing fully well the existence of such building adjoining and
intercommunicating with the right section of the four-span building.

The terms in an insurance policy, which are ambiguous, equivocal, or uncertain are to be
construed strictly and most strongly 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 forfeiture is involved, and
the reason for this 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 experts and
legal advisers employed by, and acting exclusively in the interest of, the insurance company

PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS and JULITA TRINOS

FACTS:

Ernani Trinos, deceased husband of respondent Julita Trinos, applied for a health care
coverage with petitioner Philamcare Health Systems, Inc. In the standard application form, he answered
no to the question whether he or any of his family members ever consulted or been treated for high blood
pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer. Under the agreement,
respondents husband was entitled to avail of hospitalization benefits, whether ordinary or emergency,
listed therein. He was also entitled to avail of out-patient benefits such as annual physical examinations,
preventive health care and other out-patient services.

During the period of his coverage, Ernani suffered a heart attack and was confined at the Manila
Medical Center (MMC). While her husband was in the hospital, respondent tried to claim the benefits
under the health care agreement. However, petitioner denied her claim saying that the Health Care
Agreement was void. According to petitioner, there was a concealment regarding Ernanis medical
history. Doctors at the MMC allegedly discovered at the time of Ernanis confinement that he was
hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Thus, respondent
paid the hospitalization expenses herself. After her husband was discharged from the MMC, he was
attended by a physical therapist at home. Later, he was admitted at the Chinese General Hospital. Due to
financial difficulties, however, respondent brought her husband home again. Ernani had fever again and
was feeling very weak. Respondent was constrained to bring him back to the Chinese General Hospital
where he died on the same day. respondent instituted with the Regional Trial Court of Manila, an action
for damages against petitioner and its president.
ISSUE: WON Trinos is entitled to reimbursement from Philamcare

HELD:

YES. 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:
1. The insured has an insurable interest;
2. The insured is subject to a risk of loss by the happening of the designated 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; and
5. In consideration of the insurers promise, the insured pays a premium.
Section 3 of the Insurance Code states that any contingent or unknown event, whether past or future,
which may damnify a person having an insurable interest against him, may be insured against. Every
person has an insurable interest in the life and health of himself. Section 10 provides:

Every person has an insurable interest in the life and health:

(1) of himself, of his spouse and of his children;


(2) of any person on whom he depends wholly or in part for education or support, or in whom
he has a pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money, respecting property
or service, of which death or illness might delay or prevent the performance; and
(4) of any person upon whose life any estate or interest vested in him depends.

In the case at bar, the insurable interest of respondents husband in obtaining the health care
agreement was his own health. The health care agreement was in the nature of non-life insurance, which
is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense
arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same
to the extent agreed upon under the contract.
The answer assailed by petitioner was in response to the question relating to the medical history of
the applicant. This largely depends on opinion rather than fact, especially coming from respondent’s
husband who was not a medical doctor. Where matters of opinion or judgment are called for, answers
made in good faith and without intent to deceive will not avoid a policy even though they are untrue.
Although false, a representation of the expectation, intention, belief, opinion, or judgment of the insured
will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance
at a lower rate of premium, and this is likewise the rule although the statement is material to the risk, if
the statement is obviously of the foregoing character, since in such case the insurer is not justified in
relying upon such statement, but is obligated to make further inquiry.
FORTUNE INSURANCE AND SURETY CO., INC. vs. COURT OF APPEALS and PRODUCERS
BANK OF THE PHILIPPINES

FACTS:

Producers was insured by Fortune and an insurance policy was issued. An armored car of the
Producers while in the process of transferring cash in the sum of P725,000.00 under the custody of its
teller, Alampay, from its Pasay Branch to its Head Office at Makati, was robbed of the said cash. The
said armored car was driven by Magalong, escorted by Security Guard Atiga. Driver Magalong was
assigned by PRC Management Systems with the plaintiff. The Security Guard Atiga was assigned by
Unicorn Security Services, Inc. with the plaintiff by virtue of a contract of Security Service. After an
investigation conducted by the Pasay police authorities, the driver Magalong and guard Atiga were
charged, together with other suspects, with violation of P.D. 532 (Anti-Highway Robbery Law) before the
Fiscal of Pasay City. Demands were made by the Producers upon Fortune to pay the amount of the loss,
but the latter refused to pay as the loss is excluded from the coverage of the insurance policy. Under the
General Provisions of the Insurance policy, it was stated that the company shall not be liable under this
policy in report of any loss caused by any dishonest, fraudulent or criminal act of the insured or any
officer, employee, partner, director, trustee or authorized representative of the Insured whether acting
alone or in conjunction with others. Producers opposes the contention of the defendant and contends that
Atiga and Magalong are not its officer, employee, trustee or authorized representative at the time of the
robbery.

ISSUE:

HELD:

FACTS:

ISSUE:

HELD:

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