SECOND DIVISION

[ G.R. No. 156167, May 16, 2005 ]

GULF RESORTS, INC., PETITIONER, VS. PHILIPPINE CHARTER INSURANCE

CORPORATION, RESPONDENT.
Facts:
Gulf Resorts is the owner of the Plaza Resort and had its properties in said resort
insured originally with the AHAC-AIU. In the first four insurance policies issued by
AHACAIU the risk of loss from earthquake shock was extended to only the plaintiff’s two
swimming pools. Subsequently, AHAC-AIU issued in the plaintiff’s favor a policy, the
earthquake endorsement clause was deleted.
Gulf Resorts agreed to insure with Philippine Charter Insurance Corporation the
properties covered by AHACAIU provided that the policy wording and rates in the said
policy be copied in the policy to be issued by defendant. The defendant then issued a
policy, which provides that:
“In consideration of the payment by the insured to the company of the sum included
additional premium the Company agrees, notwithstanding what is stated in the printed
conditions of this policy due to the contrary, that this insurance covers loss or damage
to shock to any of the property insured by this Policy occasioned by or through or in
consequence of earthquake.”
In the said policy, the word “included” was deleted. An earthquake struck Central Luzon
and Northern Luzon and the plaintiff’s properties including the two swimming pools in its
Resort were damaged. After the earthquake, petitioner advised respondent that it would
be making a claim for damages on its properties. Respondent instructed petitioner to file
a formal claim, then assigned the investigation of the claim to an independent claims
adjuster. The respondent through its adjuster, requested petitioner to submit various
documents in support of its claim. Subsequently, the adjuster rendered a decision
saying “except for the swimming pools, all affected items have no coverage for
earthquake shocks.” Petitioner then filed its formal demand for settlement for the
damage to all its properties in the Agoo Playa Resort.
The regional trial court ruled in favor of respondent stating that only the 2
swimming pools had earthquake shock coverage. Upon appeal, the appellate court
affirmed the decision of the trial court.
ISSUE:
Whether or not the other properties in the Agoo Playa Resort are included in the
earthquake shock coverage of the said insurance policy.
HELD:
A careful examination of the premium recapitulation will show that it is the
clear intent of the parties to extend earthquake coverage shock only to the 2 swimming
pools. 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. Thus, 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 similar risk
5. in consideration of the insurer’s promise, the insured pays a premium
an insurance premium is the consideration paid an insurer for undertaking to
indemnify the insured against a specified peril.
In the subject policy, no premium payments were made with regard to earthquake shock
coverage, except on the 2 swimming pools. There is no mention of any premium
payable for the other resort properties with regard to earthquake shock. This is
consistent with the history of petitioner’s previous insurance policies from
AHAC-AIU. Hence, the judgment of the Court of Appeals is affirmed.