G.R. No. 82036.

May 22, 1997

Travellers Insurance & Surety Corporation vs. Hon. Court of Appeals & Vicente Mendoza

FACTS:

At about 5:30 oclock in the morning of July 20, 1980, a 78-year old woman by the name of
Feliza Vineza de Mendoza was on her way to hear mass at the Tayuman Cathedral. While
walking along Tayuman corner Gregorio Perfecto Streets, she was bumped by a taxi that was
running fast. Several persons witnessed the accident, among whom were Rolando Marvilla,
Ernesto Lopez and Eulogio Tabalno.

After the bumping, the old woman was seen sprawled on the pavement. Right away, the good
Samaritan that he was, Marvilla ran towards the old woman and held her on his lap to inquire
from her what had happened, but obviously she was already in shock and could not talk. At this
moment, a private jeep stopped. With the driver of that vehicle, the two helped board the old
woman on the jeep and brought her to the Mary Johnston Hospital in Tondo. The victim was
brought to the U.S.T. Hospital where she expired at 9:00 o’clock that same morning.

Death was caused by traumatic shock as a result of the severe injuries she sustained. The
evidence shows that at the moment the victim was bumped by the vehicle, the latter was
running fast, so much so that because of the strong impact the old woman was thrown away
and she fell on the pavement. The trial court in its decision held Travellers Insurance to be
solidarily liable against private respondent with the taxicab driver and operator.

ISSUE: WHETHER OR NOT THE PETITIONER IS LIABLE.

HELD:

No. The right of the person injured to sue the insurer of the party at fault (insured), depends on
whether the contract of insurance is intended to benefit third persons also or on the insured.
Where the contract is for indemnity against actual loss or payment, then third persons cannot
proceed against the insurer, the contract being solely to reimburse the insured for liability
actually discharged by him thru payment to third persons, said third persons’ recourse being
thus limited to the insured alone.

The trial court did not distinguish between the private respondent’s cause of action against the
owner and the driver of the Lady Love taxicab and his cause of action against petitioner. The
former is based on torts and quasi-delicts while the latter is based on contract. The direct
liability of the insurer under indemnity contracts against third-party liability does not mean that
the insurer can be held solidarily liable with the insured and/or the other parties found at fault.
The liability of the insurer is based on contract; that of the insured is based on tort.
 G.R.No. 113899, 13 October 1999, 316 SCRA 677

Great Pacific Life Insurance Corp. v. Court of Appeals

FACTS:

There was an existing group life insurance executed between Great Pacific Life Assurance
(Grepalife) and the Development Bank of the Philippines (DBP). Grepalife agreed to insure the
lives of eligible housing loan mortgagors of DBP. In November 1983, Wilfredo Leuterio,
mortgagor of DBP applied to be a member of the group life insurance. He filled out a form
where he indicated he never consulted any physician regarding any illness (heart condition etc)
and that he is in good health. He was eventually included in the group life insurance and he was
covered for the amount of his indebtedness (P86,200.00).

In August 1984, Wilfredo died. DBP submitted a death claim but it was denied by Grepalife as it
insisted that Wilfredo actually concealed that he was suffering from hypertension at the time of
his insurance application. Grepalife relied on the statement made by the doctor who issued
Wilfredo’s death certificate wherein it was stated that Wilfredo’s immediate cause of death was
massive cerebral hemorrhage secondary to hypertension or hypertension as a “possible cause
of death”.

Since Grepalife refused to pay the insurance claim filed by DBP, Medarda Leuterio (widow) sued
Grepalife. Grepalife assailed the suit and insisted that Medarda is not a proper party in interest.
The lower court ruled in favor of Medarda and the court ordered Grepalife to pay the amount
of the insurance to DBP. The Court of Appeals affirmed this decision in 1993. Grepalife appealed
to the Supreme Court. In 1995, pending resolution of the case in the SC, DBP foreclosed the
property of Medarda.

ISSUE: WHETHER OR NOT DBP HAS INSURABLE INTEREST AS CREDITOR.

HELD: Yes. In this type of policy insurance, the mortgagee is simply an appointee of the
insurance fund; such loss-payable clause does not make the mortgagee a party to the contract.
Section 8 of the Insurance Code provides: “Unless the policy provides, where a mortgagor of
property effects insurance in his own name providing that the loss shall be payable to the
mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon
the interest of the mortgagor, who does not cease to be a party to the original contract, and
any act of his, prior to the loss, which would otherwise avoid the insurance, will have the same
effect, although the property is in the hands of the mortgagee, but any act which, under the
contract of insurance, is to be performed by the mortgagor, may be performed by the
mortgagee therein named, with the same effect as if it had been performed by the mortgagor.”
The insured Dr. Wilfredo Leuterio did not cede to the mortgagee all his rights or interests in the
insurance. When Grepalife denied payment, DBP collected the debt from the mortgagor and
took the necessary action of foreclosure on the residential lot of Dr. Wilfredo Leuterio.

Insured may be regarded as the real party in interest, although he has assigned the policy for
the purpose of collection, or has assigned as collateral security any judgment he may obtain.
 GR 128833, 20 April 1998; 289 SCRA 292 (1998)

Rizal Commercial Banking Corporation (RCBC) vs. Court of Appeals

FACTS: Goyu & Sons, Inc. (Goyu) applied for credit facilities and accommodations with Rizal
Commercial Banking Corporation (RCBC) at its Binondo Branch. After due evaluation, RCBC
Binondo Branch, through its key officers, petitioners Uy Chun Bing and Eli D. Lao, recommended
Goyu's application for approval by RCBC's executive committee. A credit facility in the amount
of P30 million was initially granted. Upon Goyu's application and Uy's and Lao's
recommendation, RCBC's executive committee increased Goyu's credit facility to P50 million,
then to P90 million, and finally to P117 million.

As security for its credit facilities with RCBC, Goyu executed two real estate mortgages and two
chattel mortgages in favor of RCBC, which were registered with the Registry of Deeds at
Valenzuela, Metro Manila. Under each of these four mortgage contracts, Goyu committed itself
to insure the mortgaged property with an insurance company approved by RCBC, and
subsequently, to endorse and deliver the insurance policies to RCBC. Goyu obtained in its name
a total of 10 insurance policies from MICO.

In February 1992, Alchester Insurance Agency, Inc., the insurance agent where Goyu obtained
the Malayan insurance policies, issued 9 endorsements in favor of RCBC seemingly upon
instructions of Goyu. On 27 April 1992, one of Goyu's factory buildings in Valenzuela was gutted
by fire. Consequently, Goyu submitted its claim for indemnity on account of the loss insured
against. MICO denied the claim on the ground that the insurance policies were either attached
pursuant to writs of attachments/garnishments issued by various courts or that the insurance
proceeds were also claimed by other creditors of Goyu alleging better rights to the proceeds
than the insured.

Goyu filed a complaint for specific performance and damages which was docketed at the
Regional Trial Court of the National Capital Judicial Region (Manila, Branch 3) as Civil Case 93-
65442. RCBC, one of Goyu's 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 AGCO denied
Goyu's claims. In an interlocutory order dated 12 October 1993, the Regional Trial Court of
Manila (Branch 3), confirmed that Goyu's other creditors, namely, Urban Bank, Alfredo
Sebastian, and Philippine Trust Company obtained their respective writs of attachments from
various courts, covering an aggregate amount of P14,938,080.23, and ordered that the
proceeds of the 10 insurance policies be deposited with the said court minus the
aforementioned P14,938,080.23. Accordingly, on 7 January 1994, MICO deposited the amount
of P50,505,594.60 with Branch 3 of the Manila RTC.
In the meantime, another notice of garnishment was handed down by another Manila RTC sala
(Branch 28) for the amount of P8,696,838.75. After trial, Branch 3 of the Manila RTC rendered
judgment in a favor of Goyu, ordering Malayan to pay Goyu its fire loss claims in the total
amount of P74,040,518.58 less the amount of P50,000,000.00 which is deposited with the
Court; damages by way of interest for the duration of the delay since 27 July 1992 (90 days
after Malayan's receipt of the required proof of loss and notice of loss) at the rate of twice the
ceiling prescribed by the Monetary Board, on the amounts of (1) P50,000,000.00 from 27 July
1992 up to the time said amount was deposited with the Court on 7 January 1994; and (2)
P24,040,518.58 — from 17 July 1992 up to the time when the writs of attachments were
received by Malayan. The court also ordered RCBC to pay Goyu actual and compensatory
damages in the amount of P2,000,000.00, and both Malayan and RCBC to solidarily pay Goyu
(1) P1,000,000.00 as exemplary damages; (2) P1,000,000.00 as, and for, attorneys fees; and (3)
Costs of suit. The Court, on the Counterclaim of RCBC, ordered Goyu to pay its loan obligations
with RCBC in the amount of P68,785,069.04, as of 27 April 1992, with interest thereon at the
rate stipulated in the respective promissory notes (without surcharges and penalties).

From this judgment, all parties interposed their respective appeals.

ISSUE: WHETHER OR NOT RCBC, AS MORTGAGEE, HAS ANY RIGHT OVER THE INSURANCE
POLICIES TAKEN BY GOYU, THE MORTGAGOR, IN CASE OF THE OCCURRENCE OF LOSS.

HELD: Yes. It is settled that a 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. There is no question that Goyu could insure the mortgaged
property for its own exclusive benefit. Herein, 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. It is to be noted that nine endorsement documents were
prepared by Alchester in favor of RCBC. The Court is in a quandary how Alchester could arrive at
the idea of endorsing any specific insurance policy in favor of any particular beneficiary or
payee other than the insured had not such named payee or beneficiary been specifically
disclosed by the insured itself.

It is also significant that Goyu voluntarily and purposely took the insurance policies from MICO,
a sister company of RCBC, and not just from any other insurance company. Alchester would not
have found out that the subject pieces of property were mortgaged to RCBC had not such
information been voluntarily disclosed by Goyu itself. Had it not been for Goyu, Alchester
would not have known of Goyu's intention of obtaining insurance coverage in compliance with
its undertaking in the mortgage contracts with RCBC, and verify, Alchester would not have
endorsed the policies to RCBC had it not been so directed by Goyu. On equitable principles,
particularly on the ground of estoppel, the Court is constrained to rule in favor of mortgagor
RCBC.

RCBC, in good faith, relied upon the endorsement documents sent to it as this was only
pursuant to the stipulation in the mortgage contracts. Such reliance is justified under the
circumstances of the case. Goyu failed to seasonably repudiate the authority of the person or
persons who prepared such endorsements. Over and above this, Goyu continued, in the
meantime, to enjoy the benefits of the credit facilities extended to it by RCBC. After the
occurrence of the loss insured against, it was too late for Goyu to disown the endorsements for
any imagined or contrived lack of authority of Alchester to prepare and issue said
endorsements. If there had not been actually an implied ratification of said endorsements by
virtue of Goyu's inaction in this case, Goyu is at the very least estopped from assailing their
operative effects.

To permit Goyu to capitalize on its non- confirmation of these endorsements while it continued
to enjoy the benefits of the credit facilities of RCBC which believed in good faith that there was
due endorsement pursuant to their mortgage contracts, is to countenance grave contravention
of public policy, fair dealing, good faith, and justice. Such an unjust situation, the Court cannot
sanction. Under the peculiar circumstances, the Court is bound to recognize RCBC's right to the
proceeds of the insurance policies if not for the actual endorsement of the policies, at least on
the basis of the equitable principle of estoppel.