suretyship insurance cases

8/12/2019 SURETYSHIP Insurance Cases

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SURETYSHIPPrudential Guarantee Assurance Inc. vs. Equinox Land Corporation !"#!$#%

&e'ore us 'or resolution is t(e instant Petition 'or Revie) on Certiorariassailin* t(e +ecision o' t(e Court o' Appeals ,T(ird +ivision- datedove/0er "12 "## in CA$G.R. SP o. !%34 and CA$G.R. SP o. !511!.

T(e undisputed 'acts o' t(e case2 as esta0lis(ed 06 t(e Construction Industr6Ar0itration Co//ission ,CIAC- and a''ir/ed 06 t(e Court o' Appeals2 are7

So/eti/e in 44%2 Equinox Land Corporation ,Equinox-2 respondent2decided to construct 'ive ,!- additional 'loors to its existin* 0uildin*2 t(eEast*ate Centre2 located at %4 E+SA2 8andalu6on* Cit6. It t(en sentinvitations to 0id to various 0uildin* contractors. 9our ,3- 0uildin*

contractors2 includin* :;8arc Construction < +evelop/ent Corporation,:;8arc-2 responded.

9indin* t(e 0id o' :;8arc to 0e t(e /ost advanta*eous2 Equinox o''ered t(econstruction pro=ect to it. >n 9e0ruar6 ""2 4452 :;8arc accepted t(e o''er.T)o da6s later2 Equinox 'or/all6 a)arded to :;8arc t(e contract to 0uildt(e extension 'or a consideration o' P152###2###.##.

>n 9e0ruar6 "32 4452 :;8arc su0/itted to Equinox t)o ,"- 0onds2 na/el67,- a suret6 0ond issued 06 Prudential Guarantee and Assurance2 Inc.,Prudential-2 (erein petitioner2 in t(e a/ount o' P42"!#2###.## to *uaranteet(e unliquidated portion o' t(e advance pa6/ent pa6a0le to :;8arc? and ,"-

a per'or/ance 0ond li@e)ise issued 06 Prudential in t(e a/ount o'P523##2###.## to *uarantee :;8arc;s 'ait('ul per'or/ance o' its o0li*ationsunder t(e construction a*ree/ent.

>n 8arc( 52 4452 Equinox and :;8arc si*ned t(e contract and relateddocu/ents. Under t(e ter/s o' t(e contract2 :;8arc )ould suppl6 all t(ela0or2 /aterials2 tools2 equip/ent2 and supervision required to co/plete t(epro=ect.

In accordance )it( t(e ter/s o' t(e contract2 Equinox paid :;8arc ado)npa6/ent o' P42"!#2###.## equivalent to "! o' t(e contract price.

:;8arc did not ad(ere to t(e ter/s o' t(e contract. It 'ailed to su0/it t(erequired /ont(l6 pro*ress 0illin*s 'or t(e /ont(s o' 8arc( and April 445.Its )or@ers ne*lected to cover t(e drainpipes2 (ence2 t(e6 )ere clo**ed 06)et ce/ent. T(is dela6ed t(e )or@ on t(e pro=ect.

>n 8a6 "12 4452 :;8arc requested an unsc(eduled cas( advance o'P1##2###.## 'ro/ Equinox2 explainin* it (ad encountered cas( pro0le/s.Equinox *ranted :;8arc;s request to prevent dela6.

>n 8a6 12 4452 :;8arc su0/itted its 'irst pro*ress 0illin* s(o)in* t(at it(ad acco/plis(ed onl6 5.1B"! o' t(e construction )or@ esti/ated atP"2512!1!.##. A'ter deductin* t(e advanced pa6/ents2 t(e net a/ount

pa6a0le to :;8arc )as onl6 P2"B!24!4.". >' t(is a/ount2 Equinox paid:;8arc onl6 P

%452##!." 0ecause t(e 'or/er paid EA P!BB24!3.## 'orconcrete /ix.

S(ortl6 a'ter Equinox paid :;8arc 0ased on its 'irst pro*ress 0illin*2 t(elatter a*ain requested an advanced pa6/ent o' P!#2###.##. A*ain Equinoxpaid :;8arc t(is a/ount. Eventuall62 Equinox 'ound t(at t(e a/ount o)in*to :;8arc;s la0orers )as onl6 P"2###.##2 not P!#2###.##.

In :une 4452 EA re'used to deliver concrete /ix to t(e pro=ect site dueto :;8arc;s recurrin* 'ailure to pa6 on ti/e. 9aced )it( a loo/in* dela6 int(e pro=ect sc(edule2 Equinox acceded to EA;s request t(at pa6/ents 'or

t(e concrete /ix s(ould 0e re/itted to it directl6.

>n :une 1#2 4452 :;8arc su0/itted its second pro*ress 0illin* s(o)in*t(at it acco/plis(ed onl6 %.#31! o' t(e pro=ect a'ter 3 /ont(s o'construction )or@. &ased on t(e contract and its o)n sc(edule2 :;8arcs(ould (ave acco/plis(ed at least 15.5#.

9aced )it( t(e pro0le/ o' dela62 Equinox 'or/all6 *ave :;8arc one 'inal


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c(ance to ta@e re/edial steps in order to 'inis( t(e pro=ect on ti/e.Ho)ever2 :;8arc 'ailed to underta@e an6 corrective /easure. Consequentl62on :ul6 #2 4452 Equinox ter/inated its contract )it( :;8arc and too@ overt(e pro=ect. >n t(e sa/e date2 Equinox sent Prudential a letter clai/in*

relie' 'ro/ :;8arc;s violations o' t(e contract.

>n :ul6 2 4452 t(e )or@ on t(e pro=ect stopped. T(e personnel o' 0ot(Equinox and :;8arc =ointl6 conducted an inventor6 o' all /aterials2 tools2equip/ent2 and supplies at t(e construction site. T(e6 also /easured andrecorded t(e a/ount o' )or@ actuall6 acco/plis(ed. As o' :ul6 2 4452:;8arc acco/plis(ed onl6 4.#!51 o' t(e )or@ or a s(orta*e o' ".!%!in violation o' t(e contract.

T(e cost o' :;8arc;s acco/plis(/ent )as onl6 P52#!2"#.##. In ot(er)ords2 Equinox overpaid :;8arc in t(e su/ o' P1245321##."! inclusive o'

t(e # retention on t(e 'irst pro*ress 0illin* a/ountin* to P"512!".!#. Inaddition2 Equinox also paid t(e )a*es o' :;8arc;s la0orers2 t(e 0illin*s 'orunpaid supplies2 and t(e a/ounts o)in* to su0contractors o' :;8arc in t(etotal su/ o' P

%%3244B.#4.

>n Au*ust "!2 4452 Equinox 'iled )it( t(e Re*ional Trial Court ,RTC-2&ranc( "32 8andalu6on* Cit6 a co/plaint 'or su/ o' /one6 and da/a*esa*ainst :;8arc and Prudential. Equinox pra6ed t(at :;8arc 0e ordered torei/0urse t(e a/ounts correspondin* to its ,Equinox- advanced pa6/entsand unliquidated portion o' its do)npa6/ent? and to pa6 da/a*es. Equinoxalso pra6ed t(at Prudential 0e ordered to pa6 its lia0ilit6 under t(e 0onds.

In its ans)er2 :;8arc alle*ed t(at Equinox (as no valid *round 'orter/inatin* t(eir contract. 9or its part2 Prudential denied Equinox;s clai/sand instituted a cross$clai/ a*ainst :;8arc 'or an6 =ud*/ent t(at /i*(t 0erendered a*ainst its 0onds.

+urin* t(e (earin*2 Prudential 'iled a /otion to dis/iss t(e co/plaint ont(e *round t(at pursuant to Executive >rder o. ##B2 it is t(e CIAC )(ic((as =urisdiction over it.

>n 9e0ruar6 "2 4442 t(e trial court *ranted Prudential;s /otion anddis/issed t(e case.

>n 8a6 42 4442 Equinox 'iled )it( t(e CIAC a request 'or ar0itration2doc@eted as CIAC Case o. 5$44. Prudential su0/itted a position papercontendin* t(at t(e CIAC (as no =urisdiction over it since it is not a priv6 tot(e construction contract 0et)een Equinox and :;8arc? and t(at its suret6and per'or/ance 0onds are not construction a*ree/ents2 t(us2 an6 actiont(ereon lies exclusivel6 )it( t(e proper court.

>n +ece/0er "2 4442 t(e CIAC rendered its +ecision in 'avor o' Equinoxand a*ainst :;8arc and Prudential2 t(us7

ADAR+

A'ter considerin* t(e evidence and t(e ar*u/ents o' t(e parties2 )e 'indt(at7

. :;8arc (as 0een dul6 noti'ied o' t(e 'ilin* and pendenc6 o' t(ear0itration proceedin* co//enced 06 Equinox a*ainst :;8arc and t(atCIAC (as acquired =urisdiction over :;8arc?

". T(e construction Contract )as validl6 ter/inated 06 Equinox due to:;8arc;s 'ailure to provide a ti/el6 suppl6 o' adequate la0or2 /aterials2tools2 equip/ent2 and tec(nical services and to re/ed6 its ina0ilit6 toco/pl6 )it( t(e construction sc(edule?

1. Equinox is not entitled to clai/ liquidated da/a*es2 alt(ou*( under t(ecircu/stances2 in t(e a0sence o' adequate proo' o' actual and co/pensator6da/a*es2 )e a)ard to Equinox no/inal or te/perate da/a*es in t(ea/ount o' P!##2###.##?

3. T(e percenta*e o' acco/plis(/ent o' :;8arc at t(e ti/e o' t(eter/ination o' t(e Contract )as 4.#!51 o' t(e )or@ valued atP52#!2"#.##. T(is a/ount s(ould 0e credited to :;8arc. >n t(e ot(er


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(and2 Equinox iF (ad paid :;8arc "! o' t(e contract price as do)n oradvance pa6/ent2 iiF (ad paid :;8arc its 'irst pro*ress 0illin*2 iiiF (ad/ade advances 'or pa6roll o' t(e )or@ers2 and 'or unpaid supplies and t(e)or@s o' :;8arc;s su0contractors2 all in t(e total su/ o' P2%4#23B1.13.

+eductin* t(e value o' :;8arc;s acco/plis(/ent 'ro/ t(ese advances andpa6/ent2 t(ere is due 'ro/ :;8arc to Equinox t(e a/ount o' P

32%142"B!.13.De (old :;8arc lia0le to pa6 Equinox t(is a/ount o' P

32%142"B!.13.

!. I' :;8arc (ad 0illed Equinox 'or its acco/plis(/ent as o' :ul6 2 4452"! o' t(e P52#!2"#.## )ould (ave 0een recouped as partial pa6/ent o't(e advanced or do)n pa6/ent. T(is )ould (ave resulted in reducin*Prudential;s lia0ilit6 on t(e Suret6 &ond 'ro/ P

B2"!#2###.## toP523B5244.B#. De2 t(ere'ore2 'ind t(at Prudential is lia0le to Equinox on itsSuret6 &ond t(e a/ount o' P523B5244.B#?

%. Prudential is 'urt(er/ore lia0le on its Per'or/ance &ond 'or t(e'ollo)in* a/ounts7 t(e advances /ade 06 Equinox on 0e(al' o' :;8arc tot(e )or@ers2 suppliers2 and su0contractors a/ountin* to P

%%324B!.#42 t(eno/inal da/a*es o' P!##2###.## and attorne6;s 'ees o' P##2###.## or atotal a/ount o' P2"%324B!.##?

5. All ot(er clai/s and counterclai/s are denied?

B. :;8arc s(all pa6 t(e cost o' ar0itration and s(all inde/ni'6 Equinox t(etotal a/ount paid 06 Equinox as expenses o' ar0itration?

4. T(e total lia0ilit6 o' :;8arc to Equinox is deter/ined to 0e

P!2142"B!.13 plus attorne6;s 'ees o' P##2###.##. T(e suret6;s lia0ilit6cannot exceed t(at o' t(e principal de0tor Art. "#!32 Civil Code. De (old

t(at2 not)it(standin* our 'indin* in os. ! and % o' t(is A)ard2 Prudentialis lia0le to Equinox on t(e Suret6 &ond and Per'or/ance &ond an a/ountnot to exceed P!2"142"B!.13. T(e cost o' ar0itration s(all 0e paid 06 :;8arcalone.

T(e a/ount o' P!2"142"B!.13 s(all 0e paid 06 respondent :;8arc andrespondent Prudential2 =ointl6 and severall62 )it( interest at six percent

%F per annu/ 'ro/ pro/ul*ation o' t(is a)ard. T(is a/ount2 includin*accrued interest2 s(all earn interest at t(e rate o' " per annu/ 'ro/ t(eti/e t(is decision 0eco/es 'inal and executor6 until t(e entire a/ount is'ull6 paid or =ud*/ent 'ull6 satis'ied. T(e expenses o' ar0itration2 )(ic(

s(all 0e paid 06 :;8arc alone2 s(all li@e)ise earn interest at % per annu/'ro/ t(e date o' pro/ul*ation o' t(e a)ard2 and " 'ro/ t(e date t(ea)ard 0eco/es 'inal until t(is a/ount includin* accrued interest is 'ull6paid.

S> >R+ERE+.

T(ereupon2 Prudential 'iled )it( t(e Court o' Appeals a petition 'or revie)2doc@eted as CA$G.R. SP o. !%34. Prudential alle*ed t(at t(e CIAC erredin rulin* t(at it is 0ound 06 t(e ter/s o' t(e construction contract 0et)eenEquinox and :;8arc and t(at it is solidaril6 lia0le )it( :;8arc under its

0onds.

Equinox 'iled a /otion 'or reconsideration on t(e *round t(at t(ere is anerror in t(e co/putation o' its clai/ 'or unliquidated da/a*es? and t(at it isentitled to an a)ard o' liquidated da/a*es.

>n 9e0ruar6 "2 "###2 t(e CIAC a/ended its A)ard 06 reducin* t(e totallia0ilit6 o' :;8arc to Equinox to P

32#%#25B#."2 plus attorne6;s 'ees o'P##2### or P

32%#25B#."2 and (oldin* t(at Prudential;s lia0ilit6 toEquinox on t(e suret6 and per'or/ance 0onds s(ould not exceed t(e saida/ount o' P

32%#25B#."2 pa6a0le 06 :;8arc and Prudential =ointl6 andseverall6.

+issatis'ied2 Equinox 'iled )it( t(e Court o' Appeals a petition 'or revie)2

doc@eted as CA$G.R. SP o. !511!. T(is case )as consolidated )it( CA$G.R. SP o. !%34 'iled 06 Prudential.

>n ove/0er "12 "##2 t(e Court o' Appeals rendered its +ecision in CA$G.R. SP o. !511! and CA$G.R. SP o. !%342 t(e dispositive portion o')(ic( reads7


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DHERE9>RE2 t(e A/ended +ecision dated 9e0ruar6 "2 "### isA99IR8E+ )it( 8>+I9ICATI> in para*rap( 3 in t(e A)ard 06(oldin* :;8arc lia0le 'or unliquidated da/a*es to Equinox in t(e a/ount o'P!21!B2%5.#4 and in para*rap( 4 t(ereo' 06 increasin* t(e total lia0ilit6 o'

:;8arc to Equinox to P!24!B2%5.#4 ,in vie) o' t(e additional a)ard o'P!##2###.## as no/inal and te/perate da/a*es and P##2###.## inattorne6;s 'ees-2 and A99IR8E+ in all ot(er respects.

S> >R+ERE+.

Prudential seasona0l6 'iled a /otion 'or reconsideration 0ut it )as denied06 t(e Court o' Appeals.

T(e issue raised 0e'ore us is )(et(er t(e Court o' Appeals erred in ,-up(oldin* t(e =urisdiction o' t(e CIAC over t(e case? and ,"- 'indin*

Prudential solidaril6 lia0le )it( :;8arc 'or da/a*es.

>n t(e first issue2 0asic is t(e rule t(at ad/inistrative a*encies are tri0unalso' li/ited =urisdiction and as suc(2 can onl6 )ield suc( po)ers as arespeci'icall6 *ranted to t(e/ 06 t(eir ena0lin* statutes."

Section 3 o' Executive >rder o. ##B21provides7

SEC. 3. Jurisdiction. T(e CIAC s(all (ave ori*inal and exclusive=urisdiction over disputes arisin* 'ro/2 or connected )it( contracts enteredinto 06 parties involved in construction in t(e P(ilippines2 )(et(er t(edispute arises 0e'ore or a'ter t(e co/pletion o' t(e contract2 or a'ter t(ea0andon/ent or 0reac( t(ereo'. T(ese disputes /a6 involve *overn/ent orprivate contracts. 9or t(e &oard to acquire =urisdiction2 t(e parties to adispute /ust a*ree to su0/it t(e sa/e to voluntar6 ar0itration.

T(e =urisdiction o' t(e CIAC /a6 include 0ut is not li/ited to violation o'speci'ications 'or /aterials and )or@/ans(ip2 violation o' t(e ter/s o'

a*ree/ent2 interpretation andor application o' contractual ti/e and dela6s2/aintenance and de'ects2 pa6/ent2 de'ault o' e/plo6er or contractor and

c(an*es in contract cost.

Excluded 'ro/ t(e covera*e o' t(e la) are disputes arisin* 'ro/ e/plo6er$e/plo6ee relations(ips )(ic( continue to 0e covered 06 t(e La0or Code o't(e P(ilippines.

In David v. Construction Industry and Arbitration Commission23)e ruledt(at Section 3 vests upon t(e CIAC ori*inal and exclusive =urisdiction over

disputes arisin* 'ro/ or connected )it( construction contracts entered into06 parties )(o (ave a*reed to su0/it t(eir case 'or voluntar6 ar0itration.

As earlier /entioned2 )(en Equinox lod*ed )it( t(e RTC its co/plaint 'ora su/ o' /one6 a*ainst :;8arc and Prudential2 t(e latter 'iled a /otion todis/iss on t(e *round o' lac@ o' =urisdiction2 contendin* t(at since t(e caseinvolves a construction dispute2 =urisdiction lies )it( CIAC. Prudential;s

/otion )as *ranted. Ho)ever2 a'ter t(e CIAC assu/ed =urisdiction over t(ecase2 Prudential a*ain /oved 'or its dis/issal2 alle*in* t(at it is not a part6to t(e construction contract 0et)een Equinox and :;8arc? and t(at t(esuret6 and per'or/ance 0onds it issued are not construction a*ree/ents.

A'ter (avin* voluntarilyinvo@ed 0e'ore t(e RTC t(e =urisdiction o' CIAC2Prudential is estopped to question its jurisdiction. As )e (eld inLapanday Agricultural & Development Corporation v. Estita2! t(e activeparticipation o' a part6 in a case pendin* a*ainst (i/ 0e'ore a court or aquasi$=udicial 0od6 is tanta/ount to a reco*nition o' t(at court;s or quasi$=udicial 0od6;s =urisdiction and a )illin*ness to a0ide 06 t(e resolution o't(e case and )ill 0ar said part6 'ro/ later on i/pu*nin* t(e court;s or

quasi$=udicial 0od6;s =urisdiction.

8oreover2 in its Repl6 to Equinox;s >pposition to t(e 8otion to +is/iss0e'ore t(e RTC2 Prudential2 citin*Philippine ational !an" v. Pineda%and#inman $eneral Assurance Corporation v. %ali"25ar*ued t(at as a suret62 itis considered under t(e la) to 0e t(e sa/e part6 as t(e o0li*or in relation to)(atever is ad=ud*ed re*ardin* t(e latter;s o0li*ation. T(ere'ore2 it is t(eCIAC )(ic( (as =urisdiction over t(e case involvin* a construction contract0et)een Equinox and :;8arc. Suc( an ad/ission 06 Prudential 0inds it and


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it cannot no) clai/ ot(er)ise.

Anent t(e second issue2 it is not disputed t(at Prudential entered into asuret6s(ip contract )it( :;8arc. Section 5! o' t(e Insurance Code de'inesa suret6s(ip as Ja contract or a*ree/ent )(ere06 a part62 called t(esuret6s(ip2 *uarantees t(e per'or/ance 06 anot(er part62 called t(eprincipal or o0li*or2 o' an o0li*ation or underta@in* in 'avor o' a t(ird part62called t(e o0li*ee. It includes o''icial reco*niKances2 stipulations2 0onds2 orunderta@in*s issued under Act !1%B2 as a/ended.J Corollaril62 Article "#35o' t(e Civil Code provides t(at suret6s(ip arises upon t(e solidary 0indin*o' a person dee/ed t(e suret6 )it( t(e principal de0tor 'or t(e purpose o''ul'illin* an o0li*ation.

In Castellvi de iggins andiggins v. %eliner24)e (eld t(at )(ile a suret6and a *uarantor are ali@e in t(at eac( pro/ises to ans)er 'or t(e de0t or

de'ault o' anot(er2 the surety assumes liability as a regular party to theundertaking and hence its obligation is primary.

In %ecurity Pacific Assurance Corporation v. 'ria(Infante2#)e reiteratedt(e rule t(at )(ile a contract o' suret6 is secondar6 onl6 to a valid principalo0li*ation2 t(e suret6;s lia0ilit6 to t(e creditor is said to 0e direct2 pri/ar62and a0solute. In ot(er )ords2 t(e suret6 is directl6 and equall6 0ound )it(t(e principal. T(us2 Prudential is 0arred 'ro/ disclai/in* t(at its lia0ilit6)it( :;8arc is solidar6.

WHEREFORE,)e E!"t(e petition. T(e assailed +ecision o' t(e Courto' Appeals ,T(ird +ivision- dated ove/0er "12 "## in CA$G.R. SP o.

!%34 and CA$G.R. SP o. !51!! is #FF$R%E in toto&Costs a*ainstpetitioner.

+&P Pool o' Accredited Insurance Co. vs. Radio 8indanao et)or@ Inc.35#14

T(is re'ers to t(e petition 'or certiorari under Rule 3! o' t(e Rules o' Courtsee@in* t(e revie) o' t(e +ecisiondated ove/0er %2 "### o' t(e Courto' Appeals ,CA- in CA$G.R. C o. !%1!2 t(e dispositive portion o')(ic( reads7

D(ere'ore2 pre/ises considered2 t(e appealed +ecision o' t(e Re*ionalTrial Court o' 8a@ati Cit62 &ranc( 1B in Civil Case o. 4#$%#" is (ere06A99IR8E+ )it( 8>+I9ICATI> in t(at t(e interest rate is (ere06reduced to % per annu/.

Costs a*ainst t(e de'endants$appellants.

S> >R+ERE+."

T(e assailed decision ori*inated 'ro/ Civil Case o. 4#$%#" 'iled 06 Radio

8indanao et)or@2 Inc. ,respondent- a*ainst +&P Pool o' AccreditedInsurance Co/panies ,petitioner- and Provident Insurance Corporation,Provident- 'or recover6 o' insurance 0ene'its. Respondent o)ns several0roadcastin* stations all over t(e countr6. Provident covered respondent;strans/itter equip/ent and *eneratin* set 'or t(e a/ount o' P12!!#2###.##under 9ire Insurance Polic6 o. 1#1!32 )(ile petitioner coveredrespondent;s trans/itter2 'urniture2 'ixture and ot(er trans/itter 'acilities 'ort(e a/ount o' P!2BB12%!#.## under 9ire Insurance Polic6 o. 9$%%B%#.

In t(e evenin* o' :ul6 "52 4BB2 respondent;s radio station located in SSS&uildin*2 &acolod Cit62 )as raKed 06 'ire causin* da/a*e in t(e a/ount o'P2#332#3#.##. Respondent sou*(t recover6 under t(e t)o insurance

policies 0ut t(e clai/s )ere denied on t(e *round t(at t(e cause o' loss )asan excepted ris@ excluded under condition no. % ,c- and ,d-2 to )it7

%. T(is insurance does not cover an6 loss or da/a*e occasioned 06 ort(rou*( or in consequence2 directl6 or indirectl62 o' an6 o' t(e 'ollo)in*consequences2 na/el67

,c- Dar2 invasion2 act o' 'orei*n ene/62 (ostilities2 or )arli@e operations


6/27

,)(et(er )ar 0e declared or not-2 civil )ar.

,d- 8utin62 riot2 /ilitar6 or popular risin*2 insurrection2 re0ellion2revolution2 /ilitar6 or usurped po)er.1

T(e insurance co/panies /aintained t(at t(e evidence s(o)ed t(at t(e 'ire)as caused 06 /e/0ers o' t(e Co//unist Part6 o' t(e P(ilippinese)People;s Ar/6 ,CPPPA-? and consequentl62 denied t(e clai/s. Hence2

respondent )as constrained to 'ile Civil Case o. 4#$%#" a*ainst petitionerand Provident.

A'ter trial on t(e /erits2 t(e Re*ional Trial Court o' 8a@ati2 &ranc( 1B2rendered a decision in 'avor o' respondent. T(e dispositive portion o' t(edecision reads7

I IED THERE>92 =ud*/ent is rendered in 'avor o' plainti''. +e'endantProvident Insurance Corporation is directed to pa6 plainti'' t(e a/ount o'P

3!#2###.## representin* t(e value o' t(e destro6ed propert6 insured underits 9ire Insurance Polic6 plus " le*al interest 'ro/ 8arc( "2 44# t(edate o' t(e 'ilin* o' t(e Co/plaint. +e'endant +&P Pool AccreditedInsurance Co/panies is li@e)ise ordered to pa6 plainti'' t(e su/ o'P

%#"2%##.## representin* t(e value o' t(e destro6ed propert6 under its 9ireInsurance Polic6 plus " le*al interest 'ro/ 8arc( "2 44#.

S> >R+ERE+.3

&ot( insurance co/panies appealed 'ro/ t(e trial court;s decision 0ut t(eCA a''ir/ed t(e decision2 )it( t(e /odi'ication t(at t(e applica0le interestrate )as reduced to % per annu/. A /otion 'or reconsideration )as 'iled06 petitioner +&P )(ic( )as denied 06 t(e CA per its Resolution dated:anuar6 1#2 "##.!

Hence2 (erein petition 06 +&P Pool o' Accredited Insurance Co/panies2%

)it( t(e 'ollo)in* assi*n/ent o' errors7

Assi*n/ent o' Errors

THE H>>RA&LE C>URT >9 APPEALS ERRE+ DHE IT HEL+THAT THERE DERE > SU99ICIET EI+ECE SH>DIG THATTHE APPR>I8ATELY TETY sicF ,"#- AR8E+ 8E DH> CUSE+sicF THE 9IRE AT RESP>+ET;S R8 PR>PERTY AT &AC>L>+CITY DERE 8E8&ERS >9 THE CPP$PA.

THE H>>RA&LE C>URT >9 APPEALS ERRE+ DHE ITA+:U+GE+ THAT RESP>+ET R8 CA>T &EHEL+ sicF 9>R+A8AGES A+ ATT>REY;S 9EES 9>R ISTITUTIG THEPRESET ACTI> AGAIST THE PETITI>ER U+ER ARTICLES"2 ""#B2 """4 A+ ""1" >9 THE CIIL C>+E >9 THEPHILIPPIES.5

Petitioner assails t(e 'actual 'indin* o' 0ot( t(e trial court and t(e CA t(atits evidence 'ailed to support its alle*ation t(at t(e loss )as caused 06 anexcepted ris@2 i.e.2 /e/0ers o' t(e CPPPA caused t(e 'ire. In up(oldin*respondent;s clai/ 'or inde/nit62 t(e trial court 'ound t(at7

T(e onl6 evidence )(ic( t(e Court can consider to deter/ine i' t(e 'ire )asdue to t(e intentional act co//itted 06 t(e /e/0ers o' t(e e) People;sAr/6 ,PA-2 are t(e testi/on6 sicF o' )itnesses Lt. Col. icolas Torresand SP>1 Leonardo Roc(ar )(o )ere ad/ittedl6 not present )(en t(e 'ireoccurred. T(eir testi/on6 sicF )as sicF li/ited to t(e 'act t(at aninvesti*ation )as conducted and in t(e course o' t(e investi*ation t(e6 )erein'or/ed 06 06standers t(at J(eavil6 ar/ed /en entered t(e trans/itter

(ouse2 poured *asoline in ,sic- it and t(en li*(ted it. A'ter t(at2 t(e6 )entout s(outin* J8a0u(a6 an* PAJ ,TS2 p. ".2 Au*ust "2 44!-. T(epersons )(o/ t(e6 investi*ated and actuall6 sa) t(e 0urnin* o' t(e station)ere not presented as )itnesses. T(e docu/entar6 evidence particularl6Ex(i0its J!J and J!$CJ do not satis'actoril6 prove t(at t(e aut(or o' t(e0urnin* )ere /e/0ers o' t(e PA. Ex(i0it J!$&J )(ic( is a letter released06 t(e PA /erel6 /entions so/e dissatis'action )it( t(e activities o'so/e people in t(e /edia in &acolod. T(ere )as no /ention t(ere o' an6t(reat on /edia 'acilities.B


7/27

T(e CA )ent over t(e evidence on record and sustained t(e 'indin*s o' t(etrial court2 to )it7

To recapitulate2 de'endants$appellants presented t(e 'ollo)in* to support itsclai/2 to )it7 police 0lotter o' t(e 0urnin* o' +YH&2 certi'ication o' t(ee*ros >ccidental Inte*rated ational Police2 &acolod Cit6 re*ardin* t(eincident2 letter o' alle*ed PA /e/0ers Celso 8a*silan* clai/in*responsi0ilit6 'or t(e 0urnin* o' +YH&2 'ire investi*ation report dated :ul6"42 4BB2 and t(e testi/onies o' Lt. Col. icolas Torres and S9> IIILeonardo Roc(as. De exa/ined care'ull6 t(e report on t(e police 0lotter o't(e 0urnin* o' +YH&2 t(e certi'ication issued 06 t(e Inte*rated ationalPolice o' &acolod Cit6 and t(e 'ire investi*ation report prepared 06 S9> IIIRoc(as and t(ere De 'ound t(at none o' t(e/ cate*oricall6 stated t(at t(et)ent6 ,"#- ar/ed /en )(ic( 0urned +YH& )ere /e/0ers o' t(eCPPPA. T(e said docu/ents si/pl6 stated t(at t(e said ar/ed /en )ereM0elieved; to 0e or Msuspected; o' 0ein* /e/0ers o' t(e said *roup. EvenS9> III Roc(as ad/itted t(at (e )as not sure t(at t(e said ar/ed /en )ere/e/0ers o' t(e CPP$PA2 t(us7

N

In 'act t(e onl6 person )(o see/s to 0e so sure t(at t(at t(e CPP$PA (ada (and in t(e 0urnin* o' +YH& )as Lt. Col. icolas Torres. Ho)ever2t(ou*( De 'ound (i/ to 0e persuasive in (is testi/on6 re*ardin* (o) (eca/e to arrive at (is opinion2 De cannot nevert(eless ad/it (is testi/on6as conclusive proo' t(at t(e CPP$PA )as reall6 involved in t(e incidentconsiderin* t(at (e ad/itted t(at (e did not personall6 see t(e ar/ed /en

even as (e tried to pursue t(e/. ote t(at )(en Lt. Col. Torres )aspresented as )itness2 (e )as presented as an ordinar6 )itness onl6 and notan expert )itness. Hence2 (is opinion on t(e identit6 or /e/0ers(ip o' t(ear/ed /en )it( t(e CPP$PA is not ad/issi0le in evidence.

Anent t(e letter o' a certain Celso 8a*silan*2 )(o clai/s to 0e a /e/0er o'PA$IR>C2 0ein* an ad/ission o' person )(ic( is not a part6 to t(epresent action2 is li@e)ise inad/issi0le in evidence under Section ""2 Rule1# o' t(e Rules o' Court. T(e reason 0ein* t(at an ad/ission is co/petent

onl6 )(en t(e declarant2 or so/eone identi'ied in le*al interest )it( (i/2 isa part6 to t(e action.4

T(e Court )ill not distur0 t(ese 'actual 'indin*s a0sent co/pellin* orexceptional reasons. It s(ould 0e stressed t(at a revie) 06 certiorari underRule 3! is a /atter o' discretion. Under t(is /ode o' revie)2 t(e =urisdictiono' t(e Court is li/ited to revie)in* onl6 errors o' la)2 not o' 'act.#

8oreover2 )(en supported 06 su0stantial evidence2 'indin*s o' 'act o' t(etrial court as a''ir/ed 06 t(e CA are conclusive and 0indin* on t(e parties2

)(ic( t(is Court )ill not revie) unless t(ere are exceptional circu/stances.T(ere are no exceptional circu/stances in t(is case t(at )ould (avei/pelled t(e Court to depart 'ro/ t(e 'actual 'indin*s o' 0ot( t(e trial courtand t(e CA.

&ot( t(e trial court and t(e CA )ere correct in rulin* t(at petitioner 'ailedto prove t(at t(e loss )as caused 06 an excepted ris@.

Petitioner ar*ues t(at private respondent is responsi0le 'or provin* t(at t(ecause o' t(e da/a*eloss is covered 06 t(e insurance polic62 as stipulated int(e insurance polic62 to )it7

N

An6 loss or da/a*e (appenin* durin* t(e existence o' a0nor/al conditions,)(et(er p(6sical or ot(er)ise- )(ic( are occasioned 06 or t(rou*( inconsequence directl6 or indirectl62 o' an6 o' t(e said occurrences s(all 0edee/ed to 0e loss or da/a*e )(ic( is not covered 06 t(e insurance2 exceptto t(e extent t(at t(e Insured s(all prove t(at suc( loss or da/a*e (appenedindependentl6 o' t(e existence o' suc( a0nor/al conditions.

In an6 action2 suit or ot(er proceedin* )(ere t(e Co/panies alle*e t(at 06reason o' t(e provisions o' t(is condition an6 loss or da/a*e is not covered

06 t(is insurance2 t(e 0urden o' provin* t(at suc( loss or da/a*e is covereds(all 0e upon t(e Insured."


8/27

An insurance contract2 0ein* a contract o' ad(esion2 s(ould 0e sointerpreted as to carr6 out t(e purpose 'or )(ic( t(e parties entered into t(econtract )(ic( is to insure a*ainst ris@s o' loss or da/a*e to t(e *oods.Li/itations o' lia0ilit6 s(ould 0e re*arded )it( extre/e =ealous6 and /ust

0e construed in suc( a )a6 as to preclude t(e insurer 'ro/ nonco/pliance)it( its o0li*ations.1

T(e J0urden o' proo'J conte/plated 06 t(e a'oresaid provision actuall6re'ers to t(e J0urden o' evidenceJ ,0urden o' *oin* 'or)ard-.3As appliedin t(is case2 it re'ers to t(e dut6 o' t(e insured to s(o) t(at t(e loss orda/a*e is covered 06 t(e polic6. T(e 'ore*oin* clause not)it(standin*2 t(e0urden o' proo' still rests upon petitioner to prove t(at t(e da/a*e or loss)as caused 06 an excepted ris@ in order to escape an6 lia0ilit6 under t(econtract.

&urden o' proo' is t(e dut6 o' an6 part6 to present evidence to esta0lis( (isclai/ or de'ense 06 t(e a/ount o' evidence required 06 la)2 )(ic( ispreponderance o' evidence in civil cases. T(e part62 )(et(er plainti'' orde'endant2 )(o asserts t(e a''ir/ative o' t(e issue (as t(e 0urden o' proo'to o0tain a 'avora0le =ud*/ent. 9or t(e plainti''2 t(e 0urden o' proo' neverparts.!9or t(e de'endant2 an a''ir/ative de'ense is one )(ic( is not adenial o' an essential in*redient in t(e plainti'';s cause o' action2 0ut one)(ic(2 i' esta0lis(ed2 )ill 0e a *ood de'ense i.e. an JavoidanceJ o' t(eclai/.%

Particularl62 in insurance cases2 )(ere a ris@ is excepted 06 t(e ter/s o' apolic6 )(ic( insures a*ainst ot(er perils or (aKards2 loss 'ro/ suc( a ris@

constitutes a de'ense )(ic( t(e insurer /a6 ur*e2 since it (as not assu/edt(at ris@2 and 'ro/ t(is it 'ollo)s t(at an insurer seeking to de'eat a claimbecause o' an e(ception or limitation in the policy has the burden o'proving that the loss comes )ithin the purvie) o' the e(ception orlimitation set up. I' a proo' is /ade o' a loss apparentl6 )it(in a contracto' insurance2 t(e 0urden is upon t(e insurer to prove t(at t(e loss arose 'ro/a cause o' loss )(ic( is excepted or 'or )(ic( it is not lia0le2 or 'ro/ acause )(ic( li/its its lia0ilit6.5

Consequentl62 it is su''icient 'or private respondent to prove t(e 'act o'da/a*e or loss. >nce respondent /a@es out a pri/a 'acie case in its 'avor2t(e dut6 or t(e 0urden o' evidence s(i'ts to petitioner to controvertrespondent;s pri/a 'acie case.BIn t(is case2 since petitioner alle*ed an

excepted ris@2 t(en t(e 0urden o' evidence s(i'ted to petitioner to provesuc( exception. It is onl6 )(en petitioner (as su''icientl6 proven t(at t(eda/a*e or loss )as caused 06 an excepted ris@ does t(e 0urden o' evidences(i't 0ac@ to respondent )(o is t(en under a dut6 o' producin* evidence tos(o) )(6 suc( excepted ris@ does not release petitioner 'ro/ an6 lia0ilit6.Un'ortunatel6 'or petitioner2 it 'ailed to disc(ar*e its pri/ordial 0urden o'provin* t(at t(e da/a*e or loss )as caused 06 an excepted ris@.

Petitioner (o)ever2 insists t(at t(e evidence on record esta0lis(ed t(eidentit6 o' t(e aut(or o' t(e da/a*e. It ar*ues t(at t(e trial court and t(e CAerred in not appreciatin* t(e reports o' )itnesses Lt. Col Torres and S9> IIRoc(ar t(at t(e 06standers t(e6 intervie)ed clai/ed t(at t(e perpetrators)ere /e/0ers o' t(e CPPPA as an exception to t(e (earsa6 rule as parto' res *estae.

A )itness can testi'6 onl6 to t(ose 'acts )(ic( (e @no)s o' (is personal@no)led*e2 )(ic( /eans t(ose 'acts )(ic( are derived 'ro/ (isperception.4A )itness /a6 not testi'6 as to )(at (e /erel6 learned 'ro/ot(ers eit(er 0ecause (e )as told or read or (eard t(e sa/e. Suc( testi/on6is considered (earsa6 and /a6 not 0e received as proo' o' t(e trut( o' )(at(e (as learned. T(e (earsa6 rule is 0ased upon serious concerns a0out t(etrust)ort(iness and relia0ilit6 o' (earsa6 evidence inas/uc( as suc(evidence are not *iven under oat( or sole/n a''ir/ation and2 /ore

i/portantl62 (ave not 0een su0=ected to cross$exa/ination 06 opposin*counsel to test t(e perception2 /e/or62 veracit6 and articulateness o' t(eout$o'$court declarant or actor upon )(ose relia0ilit6 on )(ic( t(e )ort( o't(e out$o'$court state/ent depends."#

Res *estae2 as an exception to t(e (earsa6 rule2 re'ers to t(ose excla/ationsand state/ents /ade 06 eit(er t(e participants2 victi/s2 or spectators to acri/e i//ediatel6 0e'ore2 durin*2 or a'ter t(e co//ission o' t(e cri/e2)(en t(e circu/stances are suc( t(at t(e state/ents )ere /ade as a


9/27

spontaneous reaction or utterance inspired 06 t(e excite/ent o' t(e occasionand t(ere )as no opportunit6 'or t(e declarant to deli0erate and to 'a0ricatea 'alse state/ent. T(e rule in res *estae applies )(en t(e declarant (i/sel'did not testi'6 and provided t(at t(e testi/on6 o' t(e )itness )(o (eard t(e

declarant co/plies )it( t(e 'ollo)in* requisites7 ,- t(at t(e principal act2t(e res *estae2 0e a startlin* occurrence? ,"- t(e state/ents )ere /ade0e'ore t(e declarant (ad t(e ti/e to contrive or devise a 'alse(ood? and ,1-t(at t(e state/ents /ust concern t(e occurrence in question and itsi//ediate attendin* circu/stances."

T(e Court is not convinced to accept t(e declarations as part o' res *estae.D(ile it /a6 concede t(at t(ese state/ents )ere /ade 06 t(e 06standersdurin* a startlin* occurrence2 it cannot 0e said (o)ever2 t(at t(eseutterances )ere /ade spontaneously 06 t(e 06standers and be'ore theyhad the time to contrive or devise a 'alsehood . &ot( S9> III Roc(ar andLt. Col. Torres received t(e 06standers; state/ents )(ile t(e6 )ere /a@in*t(eir investi*ations durin* and a'ter t(e 'ire. It is reasona0le to assu/e t(at)(en t(ese state/ents )ere noted do)n2 t(e 06standers alread6 (ad enou*(ti/e and opportunit6 to /ill around2 tal@ to one anot(er and exc(an*ein'or/ation2 not to /ention t(eories and speculations2 as is t(e usualexperience in disquietin* situations )(ere (6steria is li@el6 to ta@e place. Itcannot t(ere'ore 0e ascertained )(et(er t(ese utterances )ere t(e productso' trut(. T(at t(e utterances /a6 0e /ere idle tal@ is not re/ote.

At 0est2 t(e testi/onies o' S9> III Roc(ar and Lt. Col. Torres t(at t(esestate/ents )ere /ade /a6 0e considered as independentl6 relevantstate/ents *at(ered in t(e course o' t(eir investi*ation2 and are ad/issi0lenot as to t(e veracit6 t(ereo' 0ut to t(e 'act t(at t(e6 (ad 0een t(us uttered.""

9urt(er/ore2 ad/issi0ilit6 o' evidence s(ould not 0e equated )it( its)ei*(t and su''icienc6."1Ad/issi0ilit6 o' evidence depends on its relevanceand co/petence2 )(ile t(e )ei*(t o' evidence pertains to evidence alread6ad/itted and its tendenc6 to convince and persuade."3Even assu/in* t(att(e declaration o' t(e 06standers t(at it )as t(e /e/0ers o' t(e CPPPA)(o caused t(e 'ire /a6 0e ad/itted as evidence2 it does not 'ollo) t(atsuc( declarations are su''icient proo'. T(ese declarations s(ould 0e

cali0rated vis$O$vis t(e ot(er evidence on record. And t(e trial court aptl6noted t(at t(ere is a need 'or additional convincin* proo'2 viK.7

T(e Court 'inds t(e 'ore*oin* to 0e insu''icient to esta0lis( t(at t(e cause o't(e 'ire )as t(e intentional 0urnin* o' t(e radio 'acilities 06 t(e re0els or anact o' insurrection2 re0ellion or usurped po)er. Evidence t(at persons )(o0urned t(e radio 'acilities s(outed J8a0u(a6 an* PAJ does not 'urnis(lo*ical conclusion t(at t(e6 are /e/0er sicF o' t(e PA or t(at t(eir act)as an act o' re0ellion or insurrection. Additional convincin* proo' need 0esu0/itted. +e'endants 'ailed to disc(ar*e t(eir responsi0ilit6 to presentadequate proo' t(at t(e loss )as due to a ris@ excluded."!

D(ile t(e docu/entar6 evidence presented 06 petitioner2 i.e.2 ,- t(e police0lotter? ,"- t(e certi'ication 'ro/ t(e &acolod Police Station? and ,1- t(e9ire Investi*ation Report /a6 0e considered exceptions to t(e (earsa6 rule2

0ein* entries in o''icial records2 nevert(eless2 as noted 06 t(e CA2 none o't(ese docu/ents cate*oricall6 stated t(at t(e perpetrators )ere /e/0ers o't(e CPPPA."%Rat(er2 it )as stated in t(e police 0lotter t(at7 Ja *roup o'persons acco/panied 06 one ,- )o/an all believedto 0e CPPPA N/ore or less "# persons suspected to 0e CPPPA2J"5)(ile t(e certi'ication'ro/ t(e &acolod Police station stated t(at JN so/e "# or /ore ar/ed /enbelieved to 0e /e/0ers o' t(e e) People;s Ar/6 PA2J "Band t(e 'ireinvesti*ation report concluded t(at J,I-t is t(ere'ore believed 06 t(isInvesti*atin* Tea/ t(at t(e cause o' t(e 'ire is intentional2 and t(e ar/ed/en suspected to 0e /e/0ers o' t(e CPPPA )(ere ,sic- t(e onesresponsi0le NJ"4 All t(ese docu/ents s(o) t(at indeed2 t(e JsuspectedJexecutor o' t(e 'ire )ere 0elieved to 0e /e/0ers o' t(e CPPPA. &utsuspicion alone is not su''icient2 preponderance o' evidence 0ein* t(equantu/ o' proo'.

All told2 t(e Court 'inds no reason to *rant t(e present petition.

WHEREFORE2 t(e petition is $*%$**E. T(e Court o' Appeals+ecision dated ove/0er %2 "### and Resolution dated :anuar6 1#2 "##rendered in CA$G.R. C o. !%1! are #FF$R%E in toto.


10/27

P(ilippine Pr6ce Assurance Co. vs CA #5#%"

PH$+$PP$!E PR"E #**-R#!E ORPOR#.$O! vs& .HEO-R. OF #PPE#+* /01.H$2$*$O!3 and 4E4ROO, $!&

4R !O& 056578& FE9R-#R" 80, 0::1!OO!

9ACTS7 Inter)orld Assurance Corporation ,no) P(ilippine Pr6ceAssurance Corporation- )as t(e 0utt o' t(e co/plaint 'or collection o' su/o' /one6 'iled on 8a6 12 4BB 06 Ge*roco2 Inc. 0e'ore 8a@ati RTC&ranc( 1B alle*in* t(at Pr6ce issued " suret6 0onds ,o. ##"4 dated :ul6"32 4B52 and o. ##15 dated >cto0er 52 4B5- in 0e(al' o' its principalSa*u/ General 8erc(andise 'or P!##2### and P2###2###2 respectivel6.

In its ans)er2 dated :ul6 "42 4BB 0ut 'iled on Au*ust 32 4BB2 Pr6cead/itted (avin* executed t(e said 0onds 0ut denied lia0ilit6 0ecausealle*edl67. T(e c(ec@s )(ic( )ere to pa6 'or t(e pre/iu/s 0ounced and )ere

dis(onored (ence t(ere is no contract to spea@ o' 0et)een Pr6ce and itssupposed principal? and

". T(e 0onds )ere /erel6 to *uarantee pa6/ent o' its principal;so0li*ation2 t(us2 excussion is necessar6.

&ecause Pr6ce )as declared in de'ault due to its continued 'ailure to appear'or pre$trial2 RTC2 on 8arc( %2 4B42 ordered Pr6ce to pa6 P2!##2###representin* t(e principal o' t(e a/ount due plus le*al interest 'ro/ April 52

4BB until date o' pa6/ent plus P"#2### 'or attorne6;s 'ees. Pr6ce;s 8otion'or Reconsideration and e) Trial )as denied. CA a''ir/ed t(e decision o't(e trial court and denied Pr6ce;s 8R. Hence2 t(is petition.

ISSUES7 D(et(er t(ere is no contract to spea@ o' since ,- t(e c(ec@sissued 06 t(e principal )(ic( )ere supposed to pa6 'or t(e pre/iu/s0ounced? and ,"- as earl6 as 4B% and coverin* t(e ti/e o' t(e suret6 0ond2Inter)orld ,Pr6ce- )as not 6et aut(oriKed 06 t(e Insurance Co//ission toissue suc( 0onds.

HEL+7 >. T(e Insurance Code states t(at7

Sec. 55. T(e suret6 is entitled to pa6/ent o' t(e pre/iu/ as soon as t(e

contract o' suret6s(ip or 0ond is per'ected and delivered to t(e o0li*or. ocontract o' suret6s(ip or 0ondin* s(all 0e valid and 0indin* unless and untilt(e pre/iu/ t(ere'or (as 0een paid2 except )(ere t(e o0li*ee (as acceptedt(e 0ond2 in )(ic( case t(e 0ond 0eco/es valid and en'orcea0leirrespective of )hether or not the premium has been paid 06 t(e o0li*or tot(e suret6N

Sec. 55 o' t(e Insurance Code ne*ates Pr6ce;s 'irst de'ense. In a desperateatte/pt to escape lia0ilit62 Pr6ce 'urt(er asserts t(at t(e a0ove provision isnot applica0le 0ecause Ge*roco alle*edl6 (ad not accepted t(e suret6 0ond2(ence2 could not (ave delivered t(e *ood to Sa*u/.

H>DEER2 RTC 'ound t(at7

In t(e 'irst place2 petitioner2 in its ans)er2 admitted to (ave issued t(e 0ondssu0=ect /atter o' t(e ori*inal action.

Secondl62 t(e testi/on6 o' 8r. Leonardo T. GuK/an2 )itness 'or Ge*roco2reveals t(e 'ollo)in*7

*. +hat are the conditions and terms of sales you e,tended to %agum$eneral -erchandise

A. #irst/ )e re0uired him to submit to us %urety !ond to guaranty payment

of the spare parts to be purchased. 'hen )e sell to them on 12 days credit.Also/ )e re0uired them to issue post(dated chec"s.

*. Did %agum $eneral merchandise comply )ith your surety bondre0uirement

A. 3es. 'hey submitted to us and )hich )e have accepted t)o surety bonds.

* +ill you please present to us the aforesaid surety bonds


11/27

A. Inter)orld Assurance Corp. %urety !ond o. 2241 for P522/222 datedJuly 46/ 7189 and Inter)orld Assurance Corp. %urety !ond o. 22:9 forP7/222.222 dated ;ctober 9/ 7189.

Li@e)ise attac(ed to t(e record are ex(i0its C to C$B consistin* o' deliver6invoices addressed to Sa*u/ General 8erc(andise provin* t(at parts )erepurc(ased2 delivered and received.

>n t(e ot(er (and2 petitioners de'ense t(at it did not (ave aut(orit6 to issuea Suret6 &ond )(en it did is an ad/ission o' 'raud co//itted a*ainstrespondent. o person can clai/ 0ene'it 'ro/ t(e )ron* (e (i/sel'co//itted. A representation /ade is rendered conclusive upon t(e person/a@in* it and cannot 0e denied or disproved as a*ainst t(e person rel6in*t(ereon.

DHERE9>RE2 in vie) o' t(e 'ore*oin*2 t(e decision o' t(e Court o'Appeals dis/issin* t(e petition 0e'ore t(e/ and a''ir/in* t(e decision o't(e trial court and its order den6in* petitioners 8otion 'or Reconsiderationare (ere06 A99IR8E+. T(e present petition is +IS8ISSE+ 'or lac@ o'/erit.

LI9E ISURACE

Repu0lic vs. Sun Li'e Assurance Co/pan6 o' Canada !B#B!

.he Facts

T(e antecedents2 as narrated 06 t(e CA2 are as 'ollo)s7

QSun Li'e is a /utual li'e insuranceco/pan6 or*aniKed and existin* under t(e la)s o'

Canada. It is re*istered and aut(oriKed 06 t(eSecurities and Exc(an*e Co//ission and t(eInsurance Co//ission to en*a*e in 0usiness in t(eP(ilippines as a /utual li'e insurance co/pan6 )it(

principal o''ice at Paseo de Roxas2 Le*aspi illa*e28a@ati Cit6.

Q>n >cto0er "#2 4452 Sun Li'e 'iled )it(

t(e Co//issioner o' Internal RevenueF ,CIR- itsinsurance pre/iu/ tax return 'or t(e t(ird quarter o'445 and paid t(e pre/iu/ tax in t(e a/ount o'P123B!2B13.!. 9or t(e period coverin* Au*ust "to +ece/0er B2 4452 petitioner 'iled )it( t(e CIRits docu/entar6 sta/p tax ,+ST-F declarationreturns and paid t(e total a/ount o' P1#2###2###.##.

Q>n +ece/0er "42 4452 t(e Court o'Tax AppealsF ,CTA- rendered its decision in InsularLife Assurance Co. Ltd. v. 2 )(ic( (eld t(at/utual li'e insurance co/panies are purel6cooperative co/panies and are exe/pt 'ro/ t(epa6/ent o' pre/iu/ tax and +ST. T(ispronounce/ent )as later a''ir/ed 06 t(is court in v. Insular Life Assurance Company/ Ltd. SunLi'e sur/ised t(at2F 0ein* a /utual li'e insuranceco/pan62 it )as li@e)ise exe/pt 'ro/ t(e pa6/ento' pre/iu/ tax and +ST. Hence2 on Au*ust "#24442 Sun Li'e 'iled )it( t(e CIR an ad/inistrative

clai/ 'or tax credit o' its alle*ed erroneousl6 paidpre/iu/ tax and +ST 'or t(e a'orestated tax periods.

Q9or 'ailure o' t(e CIR to act upon t(e

ad/inistrative clai/ 'or tax credit and )it( t(e "$6earperiod to 'ile a clai/ 'or tax credit or re'undd)indlin* a)a6 and a0out to expire2 Sun Li'e 'iled)it( t(e CTA a petition 'or revie) on Au*ust "12444. In its petition2 it pra6ed 'or t(e issuance o' a


12/27

tax credit certi'icate in t(e a/ount o' P%23B!2B13.!representin* P123B!2B13.! o' erroneousl6 paidpre/iu/ tax 'or t(e t(ird quarter o' 445 andP1#2###2###F.## o' +ST on policies o' insurance

'ro/ Au*ust " to +ece/0er B2 445. Sun Li'estood 'ir/ on its contention t(at it is a /utual li'einsurance co/pan6 vested )it( all t(e c(aracteristic'eatures and ele/ents o' a cooperative co/pan6 orassociation as de'ined in SFection " o' t(e TaxCode. Pri/aril62 t(e /ana*e/ent and a''airs o' SunLi'e )ere conducted 06 its /e/0ers? secondl62 it isoperated )it( /one6 collected 'ro/ its /e/0ers?and2 lastl62 it (as 'or its purpose t(e /utual protectiono' its /e/0ers and not 'or pro'it or *ain.

QIn its ans)er2 t(e CIR2 t(en respondent2

raised as special and a''ir/ative de'enses t(e'ollo)in*7

M5. Petitioner;s

,Sun Li'e;s- alle*ed clai/'or re'und is su0=ect toad/inistrative routinar6investi*ationexa/ination06 respondent;s ,CIR;s-&ureau.

MB. Petitioner

/ust prove t(at it 'allsunder t(e exceptionprovided 'or under Section" ,no) "1- o' t(e TaxCode to 0e exe/pted 'ro/pre/iu/ tax and 0e entitledto t(e re'und sou*(t.

M4. Clai/s 'or

tax re'undcredit areconstrued strictl6 a*ainstt(e clai/ants t(ereo' ast(e6 are in t(e nature o'

exe/ption 'ro/ pa6/ent o'tax.

M#. In an

action 'or tax creditre'und2t(e 0urden is upon t(etaxpa6er to esta0lis( itsri*(t t(ereto2 and 'ailure tosustain t(is 0urden is 'atalto said clai/ x x x.

M. It is

incu/0ent upon petitionerto s(o) t(at it (as co/plied)it( t(e provisions o'Section "#32F in relation toSection ""42 0ot( in t(e445 Tax Code.;

Q>n ove/0er "2 "##"2 t(e CTA

'ound in 'avor o' Sun Li'e. uotin* lar*el6 'ro/its earlier 'indin*s in Insular Life AssuranceCompany/ Ltd. v. 2 )(ic( it 'ound to 0e on all'ours )it( t(e present action2 t(e CTA ruled7

MT(e CAF (as

alread6 spo@en. It ruledt(at a /utual li'e insuranceco/pan6 is a purel6cooperative co/pan6?Ft(us2 exe/pted 'ro/ t(epa6/ent o' pre/iu/ anddocu/entar6 sta/p taxes.


13/27

Petitioner Sun Li'e is)it(out dou0t a /utual li'einsurance co/pan6. x x x.

M xx x x xx x x x

M&ein* si/ilarl6

situated )it( Insular2Petitioner at 0ar is entitledto t(e sa/e interpretation*iven 06 t(is Court in t(eearlier cases o' T(e InsularLi'e Assurance Co/pan62Ltd. vs. CIRF ,CTA Case

os. !11% and !%#- and 06t(e CAF in t(e case entitledCIRF vs. T(e Insular Li'eAssurance Co/pan62 Ltd.2C.A. G.R. SP o. 3%!%2Septe/0er "42 44B.Petitioner Sun Li'e as a/utual li'e insuranceco/pan6 is2F t(ere'ore2F acooperative co/pan6 orassociation and is exe/pted'ro/ t(e pa6/ent o'

pre/iu/ tax and +STF onpolicies o' insurancepursuant to Section ",no) Section "1- andSection 44F- ,no)Section 44aF- o' t(e TaxCode.;

QSee@in* reconsideration o' t(e

decision o' t(e CTA2 t(e CIR ar*ued t(at Sun Li'eou*(t to (ave re*istered2 'ore/ost2 )it( t(eCooperative +evelop/ent Aut(orit6 0e'ore itcould en=o6 t(e exe/ptions 'ro/ pre/iu/ tax and

+ST extended to purel6 cooperative co/panies orassociations under SFections " and 44 o' t(eTax Code. 9or its 'ailure to re*ister2 it could notavail o' t(e exe/ptions pra6ed 'or. 8oreover2 t(eCIR alle*ed t(at Sun Li'e 'ailed to prove t(ato)ners(ip o' t(e co/pan6 )as vested in its/e/0ers )(o are entitled to vote and elect t(e&oard o' Trustees a/on* t(e/F. T(e CIR 'urt(erclai/ed t(at c(an*e in t(e 445 Tax Codesu0=ectin* /utual li'e insurance co/panies to t(ere*ular corporate inco/e tax rate re'lected t(ele*islature;s reco*nition t(at t(ese co/panies /ust

0e earnin* pro'its.Qot)it(standin* t(ese ar*u/ents2 t(e

CTA denied t(e CIR;s /otion 'or reconsideration.QT()arted ane) 0ut nonet(eless

undaunted2 t(e CIR co/es to t(is court via t(ispetition on t(e sole *round t(at7

MT(e Tax Court erred in*rantin* t(e re'und2F0ecause respondent does not

'all under t(e exceptionprovided 'or under Section" ,no) "1- o' t(e TaxCode to 0e exe/pted 'ro/pre/iu/ tax and +ST and0e entitled to t(e re'und.;

QT(e CIR repleads t(e ar*u/ents it raised

)it( t(e CTA and proposes 'urt(er t(at t(e CAF


14/27

decision in v. Insular Life Assurance Company/Ltd. is not controllin* and cannot constitute res ?udicatain t(e present action. At 0est2 t(e pronounce/ents are/erel6 persuasive as t(e decisions o' t(e Supre/e

Court alone (ave a universal and /andator6 e''ect.!F

Ruling o' the ourt o' #ppeals

In up(oldin* t(e CTA2 t(e CA reasoned t(at respondent )as a purel6cooperative corporation dul6 licensed to en*a*e in /utual li'e insurance0usiness in t(e P(ilippines. T(us2 respondent )as dee/ed exe/pt 'ro/pre/iu/ and docu/entar6 sta/p taxes2 0ecause its a''airs are /ana*ed andconducted 06 its /e/0ers )it( /one6 collected 'ro/ a/on* t(e/selves2solel6 'or t(eir o)n protection2 and not 'or pro'it. Its /e/0ers or

polic6(olders constituted 0ot( insurer and insured )(o contri0ute2 06 as6ste/ o' pre/iu/s or assess/ents2 to t(e creation o' a 'und 'ro/ )(ic( alllosses and lia0ilities )ere paid. T(e dividends it distri0uted to t(e/ )erenot pro'its2 0ut returns o' a/ounts t(at (ad 0een overc(ar*ed t(e/ 'orinsurance.

9or (avin* satis'actoril6 s(o)n )it( su0stantial evidence t(at it (aderroneousl6 paid and seasona0l6 'iled its clai/ 'or pre/iu/ anddocu/entar6 sta/p taxes2 respondent )as entitled to a re'und2 t(e CA ruled.

.he $ssues

QI.

QD(et(er or not respondent is a purel6 cooperativeco/pan6 or association under Section " o' t(eational Internal Revenue Code and a 'raternal or

0ene'iciar6 societ62 order or cooperative co/pan6on t(e lod*e s6ste/ or local cooperation plan andor*aniKed and conducted solel6 06 t(e /e/0erst(ereo' 'or t(e exclusive 0ene'it o' eac( /e/0er

and not 'or pro'it under Section 44 o' t(e ationalInternal Revenue Code.

QD(et(er or not re*istration )it( t(e Cooperative+evelop/ent Aut(orit6 is a sine 0ua nonrequire/ent to 0e entitled to tax exe/ption.QD(et(er or not respondent is exe/pted 'ro/pa6/ent o' tax on li'e insurance pre/iu/s anddocu/entar6 sta/p tax.5F

De s(all tac@le t(e issues seriatim.

.he ourt;s Ruling

T(e Petition (as no /erit.

First $ssuen t(e 0asis o'

its 06la)s2 its o)ners(ip (as 0een vested in its /e/0er$polic6(olders )(oare eac( entitled to one vote?1F and )(o2 in turn2 elect 'ro/ a/on*t(e/selves t(e /e/0ers o' its 0oard o' trustees.3F &ein* t(e *overnin*0od6 o' a nonstoc@ corporation2 t(e 0oard exercises corporate po)ers2 la6sdo)n all corporate 0usiness policies2 and assu/es responsi0ilit6 'or t(ee''icienc6 o' /ana*e/ent.!F

%econd2 it is operated )it( /one6 collected 'ro/ its /e/0ers. Sincerespondent is co/posed entirel6 o' /e/0ers )(o are also its polic6(olders2all pre/iu/s collected o0viousl6 co/e onl6 'ro/ t(e/.%F

T(e /e/0er$polic6(olders constitute Q0ot( insurer and insured5F

)(o Qcontri0ute2 06 a s6ste/ o' pre/iu/s or assess/ents2 to t(e creation o'a 'und 'ro/ )(ic( all losses and lia0ilities are paid.BF T(epre/iu/s4F pooled into t(is 'und are ear/ar@ed 'or t(e pa6/ent o' t(eirinde/nit6 and 0ene'it clai/s.

'hird2 it is licensed 'or t(e /utual protection o' its /e/0ers2 not 'ort(e pro'it o' an6one.

As earl6 as >cto0er 1#2 4352 t(e director o' co//erce (ad alread6issued a license to respondent $$ a corporation or*aniKed and existin* undert(e la)s o' Canada $$ to en*a*e in 0usiness in t(e P(ilippines."#F Pursuantto Section ""! o' Canada;s Insurance Co/panies Act2 t(e Canadian /inister

o' state ,'or 'inance and privatiKation- also declared in its A/endin* LettersPatent t(at respondent )ould 0e a /utual co/pan6 e''ective :une 2 44"."F In t(e P(ilippines2 t(e insurance co//issioner also *ranted it annualCerti'icates o' Aut(orit6 to transact li'e insurance 0usiness2 t(e /ostrelevant o' )(ic( )ere dated :ul6 2 445 and :ul6 2 44B.""F

A /utual li'e insurance co/pan6 is conducted 'or t(e 0ene'it o' its/e/0er$polic6(olders2"1F )(o pa6 into its capital 06 )a6 o' pre/iu/s.To t(at extent2 t(e6 are responsi0le 'or t(e pa6/ent o' all its losses."3F

QT(e cas( paid in 'or pre/iu/s and t(e pre/iu/ notes constitute t(eirassets x x x."!F In t(e event t(at t(e co/pan6 itsel' 'ails 0e'ore t(e ter/so' t(e policies expire2 t(e /e/0er$polic6(olders do not acquire t(e status o'creditors."%F Rat(er2 t(e6 si/pl6 0eco/e de0tors 'or )(atever pre/iu/s

t(at t(e6 (ave ori*inall6 a*reed to pa6 t(e co/pan62 i' t(e6 (ave not 6etpaid t(ose a/ounts in 'ull2 'or Q/Futual co/panies x x x depend solel6upon x x x pre/iu/s."5F >nl6 )(en t(e pre/iu/s )ill (aveaccu/ulated to a su/ lar*er t(an t(at required to pa6 'or co/pan6 losses)ill t(e /e/0er$polic6(olders 0e entitled to a Qpro ratadivision t(ereo' aspro'its."BF

Contri0utin* to its capital2 t(e /e/0er$polic6(olders o' a /utualco/pan6 are o0viousl6 also its o)ners."4F Sustainin* a dual relations(ipinter se2 t(e6 not onl6 contri0ute to t(e pa6/ent o' its losses2 0ut are alsoentitled to a proportionate s(are1#F and participate ali@e1F in its pro'itsand surplus.

D(ere t(e insurance is ta@en at cost2 it is i/portant t(at t(e rates o'

pre/iu/ c(ar*ed 06 a /utual co/pan6 0e lar*er t(an /i*(t reasona0l6 0eexpected to carr6 t(e insurance2 in order to constitute a /ar*in o' sa'et6.T(e ta0le o' /ortalit6 used )ill s(o) an ad/ittedl6 (i*(er deat( rate t(an)ill pro0a0l6 prevail? t(e assu/ed interest rate on t(e invest/ents o' t(eco/pan6 is /ade lo)er t(an is expected to 0e realiKed? and t(e provision'or contin*encies and expenses2 /ade *reater t(an )ould ordinaril6 0enecessar6.1"F T(is course o' action is ta@en2 0ecause a /utual co/pan6(as no capital stoc@ and relies solel6 upon its pre/iu/s to /eet unexpectedlosses2 contin*encies and expenses.

Certainl62 /an6 'actors are considered in calculatin* t(e insurancepre/iu/. Since t(e6 var6 )it( t(e @ind o' insurance ta@en and )it( t(e*roup o' polic6(olders insured2 an6 excess in t(e a/ount anticipated 06 a/utual co/pan6 to cover t(e cost o' providin* 'or t(e insurance over itsactual realiKed cost )ill also var6. I' a /e/0er$polic6(older receives anexcess pa6/ent2 t(en t(e apportion/ent /ust (ave 0een 0ased upon acalculation o' t(e actual cost o' insurance t(at t(e co/pan6 (as provided 'ort(at particular /e/0er$polic6(older. Accordin*l62 in apportionin* divisi0lesurpluses2 an6 /utual co/pan6 uses a contri0ution /et(od t(at ai/s to


16/27

distri0ute t(ose surpluses a/on* its /e/0er$polic6(olders2 in t(e sa/eproportion as t(e6 (ave contri0uted to t(e surpluses 06 t(eir pa6/ents.11F

S(arin* in t(e co//on 'und2 an6 /e/0er$polic6(older /a6 c(oose

to )it(dra) dividends in cas( or to appl6 t(e/ in order to reduce asu0sequent pre/iu/2 purc(ase additional insurance2 or accelerate t(epa6/ent period. Alt(ou*( t(e pre/iu/ /ade at t(e 0e*innin* o' a 6ear is/ore t(an necessar6 to provide 'or t(e cost o' carr6in* t(e insurance2 t(e/e/0er$polic6(older )ill nevert(eless receive t(e 0ene'it o' t(e overc(ar*e06 )a6 o' dividends2 at t(e end o' t(e 6ear )(en t(e cost is actuall6ascertained. QT(e declaration o' a dividend upon a polic6 reducespro tantot(e cost o' insurance to t(e (older o' t(e polic6. T(at is its purpose ande''ect.13F

A stipulated insurance pre/iu/ Qcannot 0e increased2 0ut /a6 0elessened annuall6 06 so /uc( as t(e experience o' t(e precedin* 6ear (as

deter/ined it to (ave 0een *reater t(an t(e cost o' carr6in* t(e insurance xx x.1!F T(e di''erence 0et)een t(at pre/iu/ and t(e cost o' carr6in* t(eris@ o' loss constitutes t(e so$called Qdividend )(ic(2 (o)ever2 Qis not inan6 real sense a dividend.1%F It is a tec(nical ter/ t(at is )ell understoodin t(e insurance 0usiness to 0e )idel6 di''erent 'ro/ t(at to )(ic( it isordinaril6 attac(ed.

T(e so$called Qdividend t(at is received 06 /e/0er$polic6(olders isnot a portion o' pro'its set aside 'or distri0ution to t(e stoc@(olders inproportion to t(eir su0scription to t(e capital stoc@ o' a corporation.15F;ne2 a /utual co/pan6 (as no capital stoc@ to )(ic( su0scription isnecessar6? t(ere are no stoc@(olders to spea@ o'2 0ut onl6 /e/0ers. And/

t)o2 t(e a/ount t(e6 receive does not parta@e o' t(e nature o' a pro'it orinco/e. T(e quasi$appearance o' pro'it )ill not c(an*e its c(aracter. Itre/ains an overpayment2 a 0ene'it to )(ic( t(e /e/0er$polic6(older isequita0l6 entitled.1BF

eril62 a /utual li'e insurance corporation is a cooperative t(atpro/otes t(e )el'are o' its o)n /e/0ers. It does not operate 'or pro'it2 0ut'or t(e /utual 0ene'it o' its /e/0er$polic6(olders. T(e6 receive t(eirinsurance at cost2 )(ile reasona0l6 and properl6 *uardin* and /aintainin*

t(e sta0ilit6 and solvenc6 o' t(e co/pan6.14F QT(e econo/ic 0ene'its'ilter to t(e cooperative /e/0ers. Eit(er equall6 or proportionall62 t(e6 aredistri0uted a/on* /e/0ers in correlation )it( t(e resources o' t(eassociation utiliKed.3#F

It does not 'ollo) t(at 0ecause respondent is re*istered as a nonstoc@

corporation and t(us exists 'or a purpose ot(er t(an pro'it2 t(e co/pan6 canno lon*er /a@e an6 pro'its.3F Earnin* pro'its is /erel6 its secondar62 notpri/ar62 purpose. In 'act2 it /a6 not la)'ull6 en*a*e in an6 0usinessactivit6 'or pro'it2 'or to do so )ould c(an*e or contradict its nature3"F as anon$pro'it entit6.31F It /a62 (o)ever2 invest its corporate 'unds in order toearn additional inco/e 'or pa6in* its operatin* expenses and /eetin*0ene'it clai/s. An6 excess pro'it it o0tains as an incident to its operationscan onl6 0e used2 )(enever necessar6 or proper2 'or t(e 'urt(erance o' t(epurpose 'or )(ic( it )as or*aniKed.33F

*econd $ssuen t(e ot(er (and2 Section 44 also exe/pts 'ro/ t(e+ST2 policies o' insurance or annuities /ade or *ranted 06 cooperativeco/panies. &ein* a cooperative2 respondent is t(us exe/pt 'ro/ 0ot( t6peso' taxes.

It is )ort(6 to note t(at )(ile RA B3"3 a/endin* t(e Tax Code (as

deleted t(e inco/e tax o' # percent i/posed upon t(e *ross invest/entinco/e o' /utual li'e insurance co/panies $$ do/estic%BF and 'orei*n%4F

$$ t(e provisions o' Section " and 44 re/ain unc(an*ed.5#F

Havin* 0een seasona0l6 'iled and a/pl6 su0stantiated2 t(e clai/ 'orexe/ption in t(e a/ount o' P%23B!2B13.!2 representin* percenta*e taxeson insurance pre/iu/s and docu/entar6 sta/p taxes on policies o'insurance or annuities t(at )ere paid 06 respondent in 4452 is in order.T(us2 t(e *rant o' a tax credit certi'icate to respondent as ordered 06 t(eappellate court )as correct.DHERE9>RE2 t(e Petition is (ere06DEIED2 and t(e assailed +ecisionand Resolution areA##I=-ED. o pronounce/ent as to costs.

anapi vs. Insular Li'e Assurance Co. !%"3

T(is is an action on a li'e insurance polic6.

>n Au*ust 2 B3B2 t(e de'endant insurance co/pan6 issued a polic6 on t(eli'e o' plainti''s (us0and2 Henr6 G. anapi2 )(ere06 de'endant undertoo@to pa6 to plainti'' as 0ene'iciar62 upon t(e deat( o' t(e insured2 t(e su/ o'P!2### i' t(e deat( 0e due to natural causes and an additional P!2### i' t(edeat( 0e due to accidental /eans2 pa6/ent o' t(is additional su/ 0ein*

provided 'or in t(e JAccidental +eat( &ene'it Polic6 ClauseJ appended toand 'or/in* part o' t(e polic6 0ut expressl6 /ade su0=ect to t(e exceptiont(at t(e clause )ould not appl6 )(ere deat( resulted 'ro/ in=ur6Jintentionall6 in'licted 06 a t(ird part6.J +urin* t(e li'e o' t(e polic62 t(einsured died 'ro/ a 0ullet )ound in'licted2 )it(out provocation2 06 oneConrado ue/osin*2 )(o2 as aut(or o' t(e @illin*2 )as 'ound *uilt6 o'/urder and sentenced to prison.


19/27

Upon receivin* proo' o' t(e insureds deat(2 de'endant paid plainti'' P!2###20ut re'used to pa6 t(e additional P!2### clai/ed upon t(e accidental deat(0ene'it clause on t(e *round t(at2 as t(e in=ured died 'ro/ an in=ur6intentionall6 in'licted 06 a t(ird part62 t(e clause did not appl6. T(e present

action is 'or t(e recover6 o' t(e additional su/.

Up(oldin* de'endants stand2 t(e lo)er court dis/issed t(e action2)(ereupon plainti'' appealed to t(is Court2 and t(e question 'or us todeter/ine is )(et(er plainti'' is entitled to t(e additional P!2### clai/edunder t(e accident 0ene'it clause o' t(e polic6.

T(is clause provide 'or t(e pa6/ent o' t(e su/ upon proof Jt(at t(e deat(o' t(e Insured resulted directl6 'ro/ 0odil6 in=ur6 a''ected t(rou*( externaland violent /eans sustained in an accident . . . and independentl6 o' allot(er clauses.J &ut 'ar 'ro/ provin* t(at t(e insured died 'ro/ 0odil6 in=ur6sustained in an accident2 t(e a*reed 'acts are to t(e e''ect t(at t(e insured)as /urdered2 t(us /a@in* it indisputa0le t(at (is deat( resulted 'ro/in=ur6 Jintentionall6 in'licted 06 a t(ird part6J? )(ic( is one o' t(eexceptions to t(e accident 0ene'it clause2 accordin* to )(ic( t(e 0ene'its(all not appl6 to deat( resultin* 'ro/ J,!- An6 in=ur6 received . . . ,e- t(at(as 0een in'licted intentionall6 06 a t(ird part62 eit(er )it( or )it(outprovocation on t(e part o' t(e Insured2 and )(et(er or not t(e attac@ or t(ede'ense 06 t(e t(ird part6 )as caused 06 a violation o' t(e la) 06 t(eInsured. . . .J T(ere is not(in* to t(e su**estion t(at t(e case co/es underexception ! ,d- or t(at portion o' it )(ic( excepts 'ro/ t(e 0ene'it an6in=ur6 received Jin an6 assault provo@ed 06 t(e InsuredJ2 it 0ein* ar*uedt(at 06 express /ention o' provo@ed assault an unprovo@ed one isin'erentiall6 excluded. T(e in'erence is not ad/issi0le 0ecause )(ere t(ein=ur6 is in'licted )it(out provocation t(e case co/es )it(in t(e ter/s o'exception ! ,e-2 )(ic(2 is2 t(ere'ore2 t(e one t(at s(ould 0e applied.

De 'ind t(e decision appealed 'ro/ to 0e in accordance )it( la) and t(e'acts. It is2 t(ere'ore2 a''ir/ed2 )it( costs.

&ia*tan vs. Insular Li'e Assurance Co "!!54

T(is is an appeal 'ro/ t(e decision o' t(e Court o' 9irst Instance o'Pan*asinan in its Civil Case o. +$5##.

T(e 'acts are stipulated. :uan S. &ia*tan )as insured )it( de'endantInsularLi'e Assurance Co/pan6 under Polic6 o. 14B#5! 'or t(e su/ o'P!2###.## and2 under a supple/entar6 contract deno/inated JAccidental+eat( &ene'it Clause2 'or an additional su/ o' P!2###.## i' Jt(e deat( o't(e Insured resulted directl6 'ro/ 0odil6 in=ur6 e''ected solel6 t(rou*(external and violent /eans sustained in an accident ... and independentl6 o'

all ot(er causes.J T(e clause2 (o)ever2expressl6 provided t(at it )ould notappl6 )(ere deat( resulted 'ro/ an in=ur6Jintentionall6 in'licted 06 anot(erpart6.J

>n t(e ni*(t o' 8a6 "#2 4%32 or durin* t(e 'irst (ours o' t(e 'ollo)in* da6a 0and o' ro00ers entered t(e (ouse o' t(e insured :uan S. &ia*tan. D(at(appened t(en is related in t(e decision o' t(e trial court as 'ollo)s7

...? t(at on t(e ni*(t o' 8a6 "#2 4%3 or t(e 'irst (ours o' 8a6 "2 4%32)(ile t(e said li'e polic6 and supple/entar6 contract )ere in 'ull 'orce ande''ect2 t(e (ouse o' insured :uan S. &ia*tan )as ro00ed 06 a 0and o'

ro00ers )(o )ere c(ar*ed in and convicted 06 t(e Court o' 9irst Instance o'Pan*asinan 'or ro00er6 )it( (o/icide? t(at in co//ittin* t(e ro00er62 t(ero00ers2 on reac(in* t(e staircase landin* on t(e second 'loor2 rus(edto)ards t(e door o' t(e second 'loor roo/2 )(ere t(e6 suddenl6 /et aperson near t(e door o' oneo' t(e roo/s )(o turned out to 0e t(e insured:uan S. &ia*tan )(o received t(rusts 'ro/ t(eir s(arp$pointed instru/ents2causin* )ounds on t(e 0od6 o' said :uan S. &ia*tan resultin* in (is deat( ata0out 5 a./. on t(e sa/e da62 8a6 "2 4%3?


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Plainti''s2 as 0ene'iciaries o' t(e insured2 'iled a clai/ under t(e polic6. T(einsurance co/pan6 paid t(e 0asic a/ount o' P!2###.## 0ut re'used to pa6t(e additional su/ o' P!2###.## under t(e accidental deat( 0ene'it clause2on t(e *round t(at t(e insureds deat( resulted 'ro/ in=uries intentionall6

in'licted 06 t(ird parties and t(ere'ore )as not covered. Plainti''s 'iled suitto recover2 and a'ter due (earin* t(e court a 0uorendered =ud*/ent in t(eir'avor. Hence t(e present appeal 06 t(e insurer.

T(e onl6 issue (ere is )(et(er under t(e 'acts are stipulated and 'ound 06t(e trial court t(e )ounds received 06 t(e insured at t(e (ands o' t(e ro00ers nine in all2 'ive o' t(e/ /ortal and 'our non$/ortal )ere in'lictedintentionall6. T(e court2 in rulin* ne*ativel6 on t(e issue2 stated t(at sincet(e parties presented no evidence and su0/itted t(e case upon stipulation2t(ere )as no Jproo' t(at t(e act o' receivin* t(rust ,sic- 'ro/ t(e s(arp$pointed instru/ent o' t(e ro00ers )as intended to in'lict in=uries upon t(eperson o' t(e insured or an6 ot(er person or /erel6 to scare a)a6 an6

person so as to )ard o'' an6 resistance or o0stacle t(at /i*(t 0e o''ered int(e pursuit o' t(eir /ain o0=ective )(ic( )as ro00er6.J

T(e trial court co//itted a plain error in dra)in* t(e conclusion it did 'ro/t(e ad/itted 'acts. ine )ounds )ere in'licted upon t(e deceased2 all 06/eans o' t(rusts )it( s(arp$pointed instru/ents )ielded 06 t(e ro00ers.T(is is a p(6sical 'act as to )(ic( t(ere is no dispute. So is t(e 'act t(at 'iveo' t(ose )ounds caused t(e deat( o' t(e insured. D(et(er t(e ro00ers (adt(e intent to @ill or /erel6 to scare t(e victi/ or to )ard o'' an6 de'ense (e/i*(t o''er2 it cannot 0e denied t(at t(e act itsel' o' in'lictin* t(e in=uries)as intentional. It s(ould 0e noted t(at t(e exception in t(e accidental0ene'it clause invo@ed 06 t(e appellant does not spea@ o' t(e purpose )(et(er (o/icidal or not o' a t(ird part6 in causin* t(e in=uries2 0ut onl6o' t(e 'act t(at suc( in=uries (ave 0een Jintentionall6J in'licted t(iso0viousl6 to distin*uis( t(e/ 'ro/ in=uries )(ic(2 alt(ou*( received at t(e(ands o' a t(ird part62 are purel6 accidental. T(is construction is t(e 0asicidea expressed in t(e covera*e o' t(e clause itsel'2 na/el62 t(at Jt(e deat( o't(e insured resulted directl6 'ro/ 0odil6 in=ur6 e''ected solel6 t(rou*(

external and violent /eans sustained in an accident... and independentl6 o'all ot(er causes.J A *un )(ic( disc(ar*es )(ile 0ein* cleaned and @ills a

06stander? a (unter )(o s(oots at (is pre6 and (its a person instead? anat(lete in a co/petitive *a/e involvin* p(6sical e''ort )(o collides )it( anopponent and 'atall6 in=ures (i/ as a result7 t(ese are instances )(ere t(ein'liction o' t(e in=ur6 is unintentional and t(ere'ore )ould 0e )it(in t(e

covera*e o' an accidental deat( 0ene'it clause suc( as t(atin question in t(iscase. &ut )(ere a *an* o' ro00ers enter a (ouse and co/in* 'ace to 'ace)it( t(e o)ner2 even i' unexpectedl62 sta0 (i/ repeatedl62 it is contrar6 toall reason and lo*ic to sa6 t(at (is in=uries are not intentionall6 in'licted2re*ardless o' )(et(er t(e6 prove 'atal or not. As it )as2 in t(e present caset(e6 did prove 'atal2 and t(e ro00ers (ave 0een accused and convicted o' t(ecri/e o' ro00er6 )it( (o/icide.

T(e case o' Calanoc vs. Court of Appeals2 4B P(il. 542 is relied upon 06 t(etrial court in support o' its decision. T(e 'acts in t(at case2 (o)ever2 aredi''erent 'ro/ t(ose o0tainin* (ere. T(e insured t(ere )as a )atc(/an in acertain co/pan62 )(o (appened to 0e invited 06 a police/an to co/e alon*

as t(e latter )as on (is )a6 to investi*ate a reported ro00er6 *oin* on in aprivate (ouse. As t(e t)o o' t(e/2 to*et(er )it( t(e o)ner o' t(e (ouse2approac(ed and stood in 'ront o' t(e /ain *ate2 a s(ot )as 'ired and itturned out a'ter)ards t(at t(e )atc(/an )as (it in t(e a0do/en2 t(e )oundcausin* (is deat(. Under t(ose circu/stances t(is Court (eld t(at it couldnot 0e said t(at t(e @illin* )as intentional 'or t(ere )as t(e possi0ilit6 t(att(e /ale'actor (ad 'ired t(e s(ot to scare people around 'or (is o)nprotection and not necessarrily to "ill or hit the victim. A si/ilar possi0ilit6is clearl6 ruled out 06 t(e 'acts in t(e case no) 0e'ore Us. 9or )(ile asin*le s(ot 'ired 'ro/ a distance2 and 06 a person )(o )as not even seenai/in* at t(e victi/2 could indeed (ave 0een 'ired )it(out intent to @ill orin=ure2 nine )ounds in'licted )it( 0laded )eapons at close ran*e cannot

conceiva0l6 0e considered as innocent inso'ar as suc( intent is concerned.T(e /anner o' execution o' t(e cri/e per/its no ot(er conclusion.

Court decisions in t(e A/erican =urisdiction2 )(ere si/ilar provisions inaccidental deat( 0ene'it clauses in insurance policies (ave 0een construed2/a6 s(ed li*(t on t(e issue 0e'ore Us. T(us2 it (as 0een (eld t(at

JintentionalJ as used in an accident polic6 exceptin* intentional in=uriesin'licted 06 t(e insured or an6 ot(er person2 etc.2 i/plies t(e exercise o' t(e


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reasonin* 'aculties2 consciousness and volition. 0 D(ere a provision o' t(epolic6 excludes intentional in=ur62 it is t(e intention o' t(e person in'lictin*t(e in=ur6 t(at is controllin*. 8I' t(e in=uries su''ered 06 t(e insured clearl6resulted 'ro/ t(e intentional act o' a t(ird person t(e insurer is relieved

'ro/ lia0ilit6 as stipulated.=

In t(e case o' utchcraft@s E,@r v. 'ravelers@ Ins. Co .2 B5 6. 1##2 B S.D.!5#2 " A/. St. Rep. 3B32 t(e insured )as )a6laid and assassinated 'or t(epurpose o' ro00er6. T)o ,"- de'enses )ere interposed to t(e action torecover inde/nit62 na/el67 ,- t(at t(e insured (avin* 0een @illed 06intentional /eans2 (is deat( )as not accidental2 and ,"- t(at t(e proviso int(e polic6 expressl6 exe/pted t(e insurer 'ro/ lia0ilit6 in case t(e insureddied 'ro/ in=uries intentionall6 in'licted 06 anot(er person. In renderin*=ud*/ent 'or t(e insurance co/pan6 t(e Court (eld t(at )(ile t(eassassination o' t(e insured )as as to (i/ an un'oreseen event and t(ere'oreaccidental2 Jt(e clause o' t(e proviso t(at excludes t(e ,insurers- lia0ilit62 in

case deat( or in=ur6 is intentionall6 in'licted 06 anot(er person2 applies tot(is case.J

In !utero v. 'ravelers@ Acc. Ins. Co.2 4% Dis. !1%2 %! A/. St. Rep. %2 5S.D. B2 t(e insured )as s(ot t(ree ti/es 06 a person un@no)n late on adar@ and stor/6 ni*(t2 )(ile )or@in* in t(e coal s(ed o' a railroadco/pan6. T(e polic6 did not cover deat( resultin* 'ro/ Jintentional in=uriesin'licted 06 t(e insured or an6 ot(er person.J T(e inquir6 )as as to t(equestion )(et(er t(e s(ootin* t(at caused t(e insureds deat( )as accidentalor intentional? and t(e Court 'ound t(at under t(e 'acts2 s(o)in* t(at t(e/urderer @ne) (is victi/ and t(at (e 'ired )it( intent to @ill2 t(ere could 0eno recover6 under t(e polic6 )(ic( excepted deat( 'ro/ intentional in=uriesin'licted 06 an6 person.

DHERE9>RE2 t(e decision appealed 'ro/ is reversed and t(e co/plaintdis/issed2 )it(out pronounce/ent as to costs.

Calanoc vs CA B!

T(is suit involves t(e collection o' P"2### representin* t(e value o' a

supple/ental polic6 coverin* accidental deat( )(ic( )as secured 06 one8elencio &asilio 'ro/ t(e P(ilippine A/erican Li'e Insurance Co/pan6.T(e case ori*inated in t(e 8unicipal Court o' 8anila and =ud*/ent 0ein*'avora0le to t(e plainti'' it )as appealed to t(e court o' 'irst instance. T(elatter court a''ir/ed t(e =ud*/ent 0ut on appeal to t(e Court o' Appeals t(e=ud*/ent )as reversed and t(e case is no) 0e'ore us on a petition 'orrevie).

8elencio &asilio )as a )atc(/an o' t(e 8anila Auto Suppl6 located at t(ecorner o' Avenida RiKal and Vur0aran. He secured a li'e insurance polic6'ro/ t(e P(ilippine A/erican Li'e Insurance Co/pan6 in t(e a/ount o'P"2### to )(ic( )as attac(ed a supple/entar6 contract coverin* deat( 06

accident. >n :anuar6 "!2 4!2 (e died o' a *uns(ot )ound on t(e occasiono' a ro00er6 co//itted in t(e (ouse o' Att6. >=eda at t(e corner o'>roquieta and Vur0aan streets. ir*inia Calanoc2 t(e )ido)2 )as paid t(esu/ o' P"2###2 'ace value o' t(e polic62 0ut )(en s(e de/anded t(epa6/ent o' t(e additional su/ o' P"2### representin* t(e value o' t(esupple/ental polic62 t(e co/pan6 re'used alle*in*2 as /ain de'ense2 t(att(e deceased died 0ecause (e )as /urdered 06 a person )(o too@ part int(e co//ission o' t(e ro00er6 and )(ile /a@in* an arrest as an o''icer o't(e la) )(ic( contin*encies )ere expressl6 excluded in t(e contract and(ave t(e e''ect o' exe/ptin* t(e co/pan6 'ro/ lia0ilit6.

T(e pertinent 'acts )(ic( need to 0e considered 'or t(e deter/ination o' t(equestions raised are t(ose reproduced in t(e decision o' t(e Court o'Appeals as 'ollo)s7

T(e circu/stances surroundin* t(e deat( o' 8elencio &asilio s(o) t(at)(en (e )as @illed at a0out seven ocloc@ in t(e ni*(t o' :anuar6 "!2 4!2(e )as on dut6 as )atc(/an o' t(e 8anila Auto Suppl6 at t(e corner o'Avenida RiKal and Vur0aran? t(at it turned out t(at Att6. Antonio >=eda)(o (ad (is residence at t(e corner o' Vur0aran and >roquieta2 a 0loc@


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a)a6 'ro/ &asilios station2 (ad co/e (o/e t(at ni*(t and 'ound t(at (is(ouse )as )ell$li*(ted2 0ut )it( t(e )indo)s closed? t(at *ettin*suspicious t(at t(ere )ere culprits in (is (ouse2 Att6. >=eda retreated to loo@'or a police/an and 'indin* &asilio in @(a@i uni'or/2 as@ed (i/ to

acco/pan6 (i/ to t(e (ouse )it( t(e latter re'usin* on t(e *round t(at (e)as not a police/an2 0ut su**estin* t(at Att6. >=eda s(ould as@ t(e tra''icpolice/an on dut6 at t(e corner o' RiKal Avenue and Vur0aran? t(at Att6.>=eda )ent to t(e tra''ic police/an at said corner and reported t(e /atter2as@in* t(e police/an to co/e alon* )it( (i/2 to )(ic( t(e police/ana*reed? t(at on t(e )a6 to t(e >=eda residence2 t(e police/an and Att6.>=eda passed 06 &asilio and so/e(o) or ot(er invited t(e latter to co/ealon*? t(at as t(e tree approac(ed t(e >=eda residence and stood in 'ront o't(e /ain *ate )(ic( )as covered )it( *alvaniKed iron2 t(e 'ence itsel'0ein* partl6 concrete and partl6 ado0e stone2 a s(ot )as 'ired? t(ati//ediatel6 a'ter t(e s(ot2 Att6. >=eda and t(e police/an sou*(t cover?t(at t(e police/an2 at t(e request o' Att6. >=eda2 le't t(e pre/ises to loo@

'or rein'orce/ent? t(at it turned out a'ter)ards t(at t(e special )atc(/an8elencio &asilio )as (it in t(e a0do/en2 t(e )ound causin* (isinstantaneous deat(? t(at t(e s(ot /ust (ave co/e 'ro/ inside t(e 6ard o'Att6. >=eda2 t(e 0ullet passin* t(rou*( a (ole )aist$(i*( in t(e *alvaniKediron *ate? t(at upon inquir6 Att6. >=eda 'ound out t(at t(e savin*s o' (isc(ildren in t(e a/ount o' P1# in coins @ept in (is aparador contained instoc@in*s )ere ta@en a)a62 t(e aparador (avin* 0een ransac@ed? t(at a/ont( t(erea'ter t(e correspondin* investi*ation conducted 06 t(e policeaut(orities led to t(e arrest and prosecution o' 'our persons in Cri/inal Caseo. !#3 o' t(e Court o' 9irst Instance o' 8anila 'or Ro00er6 in anIn(a0ited House and in &and )it( 8urder.

It is contended in 0e(al' o' t(e co/pan6 t(at &asilio )as @illed )(ic(J/a@in* an arrest as an o''icer o' t(e la)J or as a result o' an Jassault or/urderJ co//itted in t(e place and t(ere'ore (is deat( )as caused 06 oneo' t(e ris@s excluded 06 t(e supple/entar6 contract )(ic( exe/pts t(eco/pan6 'ro/ lia0ilit6. T(is contention )as up(eld 06 t(e Court o' Appealsand2 in reac(in* t(is conclusion2 /ade t(e 'ollo)in* co//ent7

9ro/ t(e 'ore*oin* testi/onies2 )e 'ind t(at t(e deceased )as a )atc(/an

o' t(e 8anila Auto Suppl62 and2 as suc(2 (e )as not 0oud to leave (is placeand *o )it( Att6. >=eda and Police/an 8a*sanoc to see t(e trou0le2 orro00er62 t(at occurred in t(e (ouse o' Att6. >=eda. In 'act2 accordin* to t(e'indin* o' t(e lo)er court2 Att6. >=eda 'indin* &asilio in uni'or/ as@ed (i/

to acco/pan6 (i/ to (is (ouse2 0ut t(e latter re'used on t(e *round t(at (e)as not a police/an and su**ested to Att6. >=eda to as@ (elp 'ro/ t(etra''ic police/an on dut6 at t(e corner o' RiKal Avenue and Vur0aran2 0uta'ter Att6. >=eda secured t(e (elp o' t(e tra''ic police/an2 t(e deceased)ent )it( >=eda and said tra''ic police/an to t(e residence o' >=eda2 and)(ile t(e deceased )as standin* in 'ront o' t(e /ain *ate o' said residence2(e )as s(ot and t(us died. T(e deat(2 t(ere'ore2 o' &asilio2 alt(ou*(unexpected2 )as not caused 06 an accident2 0ein* a voluntar6 andintentional act on t(e part o' t(e one )( ro00ed2 or one o' t(ose )(oro00ed2 t(e (ouse o' Att6. >=eda. Hence2 it is out considered opinion t(att(e deat( o' &asilio2 t(ou*( unexpected2 cannot 0e considered accidental2'or (is deat( occurred 0ecause (e le't (is post and =oined police/an

8a*sanoc and Att6. >=eda to repair to t(e latters residence to see )(at(appened t(ereat. Certainl62 )(en &asilio =oined Patrol/an 8a*sanoc andAtt6. >=eda2 (e s(ould (ave realiKed t(e dan*er to )(ic( (e )as exposin*(i/sel'2 6et2 instead o' re/ainin* in (is place2 (e )ent )it( Att6. >=eda andPatrol/an 8a*sanoc to see )(at )as t(e trou0le in Att6. >=edas (ouse andt(us (e )as 'atall6 s(ot.

De dissent 'ro/ t(e a0ove 'indin*s o' t(e Court o' Appeals. 9or one t(in*2&asilio )as a )atc(/an o' t(e 8anila Auto Suppl6 )(ic( )as a 0loc@a)a6 'ro/ t(e (ouse o' Att6. >=eda )(ere so/et(in* suspicious )as(appenin* )(ic( caused t(e latter to as@ 'or (elp. D(ile at 'irst (e decliedt(e invitation o' Att6. >=eda to *o )it( (i/ to (is residence to inquire into

)(at )as *oin* on 0ecause (e )as not a re*ular police/an2 (e later a*reedto co/e alon* )(en pro/pted 06 t(e tra''ic police/an2 and uponapproac(in* t(e *ate o' t(e residence (e )as s(ot and died. T(ecircu/stance t(at (e )as a /ere )atc(/an and (ad no dut6 to (eed t(e callo' Att6. >=eda s(ould not 0e ta@en as a capricious desire on (is part toexpose (is li'e to dan*er considerin* t(e 'act t(at t(e place (e )as in dut6$0ound to *uard )as onl6 a 0loc@ a)a6. In volunteerin* to extend (elp undert(e situation2 (e /i*(t (ave t(ou*(t2 ri*(tl6 or )ron*l62 t(at to @no) t(etrut( )as in t(e interest o' (is e/plo6er it 0ein* a /atter t(at a''ects t(e


23/27

securit6 o' t(e nei*(0or(ood. o dou0t t(ere )as so/e ris@ co/in* to (i/in pursuin* t(at errand2 0ut t(at ris@ al)a6s existed it 0ein* in(erent in t(eposition (e )as (oldin*. He cannot t(ere'ore 0e 0la/ed solel6 'or doin*)(at (e 0elieved )as in @eepin* )it( (is dut6 as a )atc(/an and as a

citiKen. And (e cannot 0e considered as /a@in* an arrest as an o''icer o' t(ela)2 as contended2 si/pl6 0ecause (e )ent )it( t(e tra''ic police/an2 'orcertainl6 (e did not *o t(ere 'or t(at purpose nor )as (e as@ed to do so 06t(e police/an.

8uc( less can it 0e pretended t(at &asilio died in t(e course o' an assault or/urder considerin* t(e ver6 nature o' t(ese cri/es. In t(e 'irst place2 t(ereis no proo' t(at t(e deat( o' &asilio is t(e result o' eit(er cri/e 'or t(erecord is 0arren o' an6 circu/stance s(o)in* (o) t(e 'atal s(ot )as 'ired.Per(aps t(is /a6 0e clari'ied in t(e cri/inal case no) pendin* in court asre*ards t(e incident 0ut 0e'ore t(at is done an6t(in* t(at /i*(t 0e said ont(e point )ould 0e a /ere con=ecture. or can it 0e said t(at t(e @illin* )as

intentional 'or t(ere is t(e possi0ilit6 t(at t(e /ale'actor (ad 'ired t(e s(ot/erel6 to scare a)a6 t(e people around 'or (is o)n protection and notnecessaril6 to @ill or (it t(e victi/. In an6 event2 )(ile t(e act /a6 notexce/pt t(e tri**er/an 'ro/ lia0ilit6 'or t(e da/a*e done2 t(e 'act re/ainst(at t(e (appenin* )as a pure accident on t(e part o' t(e victi/. T(e victi/could (ave 0een eit(er t(e police/an or Att6. >=eda 'or it cannot 0epretended t(at t(e /ale'actor ai/ed at t(e deceased precisel6 0ecause (e)anted to ta@e (is li'e.

De ta@e note t(at t(ese de'enses are included a/on* t(e ris@s exluded int(e supple/entar6 contract )(ic( enu/erates t(e cases )(ic( /a6 exe/ptt(e co/pan6 'ro/ lia0ilit6. D(ile as a *eneral rule Jt(e parties /a6 li/it

t(e covera*e o' t(e polic6 to certain particular accidents and ris@s or causeso' loss2 and /a6 expressl6 except ot(er ris@s or causes o' loss t(ere'ro/J,3! C. :. S. 5B$5B"-2 (o)ever2 it is to 0e desired t(at t(e ter/s andp(raseolo*6 o' t(e exception clause 0e clearl6 expressed so as to 0e )it(int(e eas6 *rasp and understandin* o' t(e insured2 'or i' t(e ter/s are dou0t'ulor o0scure t(e sa/e /ust o' necessit6 0e interpreted or resolved a*anst t(e

one )(o (as caused t(e o0scurit6. ,Article 1552 ne) Civil Code- And so it(as 0ene *enerall6 (eld t(at t(e Jter/s in an insurance polic62 )(ic( are

a/0i*uous2 equivacal2 or uncertain . . . are to be construed strictly and moststrongly against the insurer/ and liberally in favor of the insured so as toeffect the dominant purpose of indemnity or payment to the insured2especiall6 )(ere a 'or'eiture is involvedJ ,"4 A/. :ur.2 B-2 and t(e reason

'or t(is rule is t(at (e Jinsured usuall6 (as no voice in t(e selection orarran*e/ent o' t(e )ords e/plo6ed and t(at t(e lan*ua*e o' t(e contract isselected )it( *reat care and deli0eration 06 experts and le*al adviserse/plo6ed 062 and actin* exclusivel6 in t(e interest o'2 t(e insuranceco/pan6.J ,33 C. :. S.2 p. 53.-

Insurance is2 in its nature2 co/plex and di''icult 'or t(e la6/an tounderstand. Policies are prepared 06 experts )(o @no) and can anticipatet(e 0earin*s and possi0le co/plications o' ever6 contin*enc6. So lon* asinsurance co/panies insist upon t(e use o' a/0i*uous2 intricate andtec(nical provisions2 )(ic( conceal rat(er t(an 'ran@l6 disclose2 t(eir o)nintentions2 t(e courts /ust2 in 'airness to t(ose )(o purc(ase insurance2

construe ever6 a/0i*uit6 in 'avor o' t(e insured. ,Al*oe vs. Paci'ic 8ut. L.Ins. Co.2 4 Das(. 1"32 LRA 45A2 "15.-la)p(i.net

An insurer s(ould not 0e allo)ed2 06 t(e use o' o0scure p(rases andexceptions2 to de'eat t(e ver6 purpose 'or )(ic( t(e polic6 )as procured.,8oore vs. Aetna Li'e Insurance Co.2 LRA 4!+2 "%3.-

De are t(ere'ore persuaded to conclude t(at t(e circu/stances un'olded int(e present case do not )arrant t(e 'indin* t(at t(e deat( o' t(e un'ortunatevicti/ co/es )it(in t(e purvie) o' t(e exception clause o' t(esupple/entar6 polic6 and2 (ence2 do not exe/pt t(e co/pan6 'ro/ lia0ilit6.

D(ere'ore2 reversin* t(e decision appealed 'ro/2 )e (ere06 order t(eco/pan6 to pa6 petitioner$appellant t(e a/ount o' P"2###2 )it( le*alinterest 'ro/ :anuar6 "%2 4! until 'ull6 paid2 )it( costs.

+ela CruK vs. Capital Insurance < Suret6 Co. "!53


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T(is is an appeal 06 t(e Capital Insurance < Suret6 Co/pan62 Inc.2 'ro/t(e decision o' t(e Court o' 9irst Instance o' Pan*asinan ,in Civ Case o.U$"%!-2 orderin* it to inde/ni'6 t(erein plainti'' Si/on de la CruK 'or t(edeat( o' t(e latters son2 to pa6 t(e 0urial expenses2 and attorne6s 'ees.

Eduardo de la CruK2 e/plo6ed as a /uc@er in t(e Ito*on$Su6oc 8ines2 Inc.in &a*uio2 )as t(e (older o' an accident insurance polic6 ,o. IT>$&9E$5#- under)ritten 06 t(e Capital Insurance < Suret6 Co.2 Inc.2 'or t(eperiod 0e*innin* ove/0er 12 4!% to ove/0er "2 4!5. >n :anuar6 24!52 in connection )it( t(e cele0ration o' t(e e) Year2 t(e Ito*on$Su6oc8ines2 Inc. sponsored a 0oxin* contest 'or *eneral entertain/ent )(ereint(e insured Eduardo de la CruK2 a non$pro'essional 0oxer participated. Int(e course o' (is 0out )it( anot(er person2 li@e)ise a non$pro'essional2 o't(e sa/e (ei*(t2 )ei*(t2 and siKe2 Eduardo slipped and )as (it 06 (isopponent on t(e le't part o' t(e 0ac@ o' t(e (ead2 causin* Eduardo to 'all2)it( (is (ead (ittin* t(e rope o' t(e rin*. He )as 0rou*(t to t(e &a*uio

General Hospital t(e 'ollo)in* da6. T(e cause o' deat( )as reported as(e/orr(a*e2 intracranial2 le't.

Si/on de la CruK2 t(e 'at(er o' t(e insured and )(o )as na/ed 0ene'iciar6under t(e polic62 t(ereupon 'iled a clai/ )it( t(e insurance co/pan6 'orpa6/ent o' t(e inde/nit6 under t(e insurance polic6. As t(e clai/ )asdenied2 +e la CruK instituted t(e action in t(e Court o' 9irst Instance o'Pan*asinan 'or speci'ic per'or/ance. +e'endant insurer set up t(e de'enset(at t(e deat( o' t(e insured2 caused 06 (is participation in a 0oxin* contest2)as not accidental and2 t(ere'ore2 not covered 06 insurance. A'ter due(earin* t(e court rendered t(e decision in 'avor o' t(e plainti'' )(ic( is t(esu0=ect o' t(e present appeal.

It is not disputed t(at durin* t(e rin* 'i*(t )it( anot(er non$pro'essional0oxer2 Eduardo slipped2 )(ic( )as unintentional. At t(is opportunit62 (isopponent landed on Eduardos (ead a 0lo)2 )(ic( sent t(e latter to t(eropes. T(at /ust (ave caused t(e cranial in=ur6 t(at led to (is deat(.Eduardo )as insured Ja*ainst deat( or disa0ilit6 caused 06 accidental/eansJ. Appellant insurer no) contends t(at )(ile t(e deat( o' t(e insured)as due to (ead in=ur62 said in=ur6 )as sustained 0ecause o' (is voluntar6

participation in t(e contest. It is clai/ed t(at t(e participation in t(e 0oxin*contest )as t(e J/eansJ t(at produced t(e in=ur6 )(ic(2 in turn2 caused t(edeat( o' t(e insured. And2 since (is inclusion in t(e 0oxin* card )asvoluntar6 on t(e part o' t(e insured2 (e cannot 0e considered to (ave /et (is

deat( 06 Jaccidental /eansJ.7)phB7.t

T(e ter/s JaccidentJ and JaccidentalJ2 as used in insurance contracts2 (avenot acquired an6 tec(nical /eanin*2 and are construed 06 t(e courts in t(eirordinar6 and co//on acceptation. T(us2 t(e ter/s (ave 0een ta@en to /eant(at )(ic( (appen 06 c(ance or 'ortuitousl62 )it(out intention and desi*n2and )(ic( is unexpected2 unusual2 and un'oreseen. An accident is an eventt(at ta@es place )it(out ones 'oresi*(t or expectation an event t(atproceeds 'ro/ an un@no)n cause2 or is an unusual e''ect o' a @no)n causeand2 t(ere'ore2 not expected.

Appellant (o)ever2 )ould li@e to /a@e a distinction 0et)een Jaccident oraccidentalJ and Jaccidental /eansJ2 )(ic( is t(e ter/ used in t(e insurancepolic6 involved (ere. It is ar*ued t(at to 0e considered )it(in t(e protectiono' t(e polic62 )(at is required to 0e accidental is t(e meanst(at caused or0rou*(t t(e deat( and not t(e deat( itsel'. It /a6 0e /entioned in t(isconnection2 t(at t(e tendenc6 o' court decisions in t(e United States inrecent 6ears is to eli/inate t(e 'ine distinction 0et)een t(e ter/sJaccidentalJ and Jaccidental /eansJ and to consider t(e/ as le*all6s6non6/ous." &ut2 even i' )e ta@e appellants t(eor62 t(e deat( o' t(einsured in t(e case at 0ar )ould still 0e entitled to inde/ni'ication under t(epolic6. T(e *enerall6 accepted rule is t(at2 deat( or in=ur6 does not result'ro/ accident or accidental /eans )it(in t(e ter/s o' an accident$polic6 i'it is t(e natural result o' t(e insureds voluntar6 act2 unacco/panied 06

an6t(in* un'oreseen except t(e deat( or in=ur6.1T(ere is no accident )(en adeli0erate act is per'or/ed unless so/e additional2 unexpected2independent2 and un'oreseen (appenin* occurs )(ic( produces or 0rin*sa0out t(e result o' in=ur6 or deat(.3In ot(er )ords2 )(ere t(e deat( or in=ur6is not t(e natural or pro0a0le result o' t(e insureds voluntar6 act2 or i'so/et(in* un'oreseen occurs in t(e doin* o' t(e act )(ic( produces t(e

in=ur62 t(e resultin* deat( is )it(in t(e protection o' policies insurin*a*ainst deat( or in=ur6 'ro/ accident.


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In t(e present case2 )(ile t(e participation o' t(e insured in t(e 0oxin*contest is voluntar62 t(e in=ur6 )as sustained )(en (e slid2 *ivin* occasionto t(e in'liction 06 (is opponent o' t(e 0lo) t(at t(re) (i/ to t(e ropes o't(e rin*. Dit(out t(is un'ortunate incident2 t(at is2 t(e unintentional slippin*

o' t(e deceased2 per(aps (e could not (ave received t(at 0lo) in t(e (eadand )ould not (ave died. T(e 'act t(at 0oxin* is attended )it( so/e ris@s o'external in=uries does not /a@e an6 in=uries received in t(e course o' t(e*a/e not accidental. In 0oxin* as in ot(er equall6 p(6sicall6 ri*oroussports2 suc( as 0as@et0all or 0ase0all2 deat( is not ordinaril6 anticipated toresult. I'2 t(ere'ore2 it ever does2 t(e in=ur6 or deat( can onl6 0e accidentalor produced 06 so/e un'oreseen (appenin* or event as )(at occurred int(is case.

9urt(er/ore2 t(e polic6 involved (erein speci'icall6 excluded 'ro/ itscovera*e

,e- +eat( or disa0le/ent consequent upon t(e Insured en*a*in* in 'oot0all2(untin*2 pi*stic@in*2 steeplec(asin*2 polo$pla6in*2 racin* o' an6 @ind2/ountaineerin*2 or /otorc6clin*.

+eat( or disa0le/ent resultin* 'ro/ en*a*e/ent in 0oxin* contests )as notdeclared outside o' t(e protection o' t(e insurance contract. 9ailure o' t(ede'endant insurance co/pan6 to include deat( resultin* 'ro/ a 0oxin*/atc( or ot(er sports a/on* t(e pro(i0itive ris@s leads inevita0l6 to t(econclusion t(at it did not intend to li/it or exe/pt itsel' 'ro/ lia0ilit6 'orsuc( deat(.!

D(ere'ore2 in vie) o' t(e 'ore*oin* considerations2 t(e decision appealed'ro/ is (ere06 a''ir/ed2 )it( costs a*ainst appellant. so ordered.

9in/an General Assurance Corp. vs. CA ##45#

T(is is a petition 'or certiorari)it( a pra6er 'or t(e issuance o' a restrainin*

order and preli/inar6 /andator6 in=unction to annul and set aside t(edecision o' t(e Court o' Appeals dated :ul6 2 442 0 a''ir/in* t(edecision dated 8arc( "#2 44# o' t(e Insurance Co//ission 8in orderin*petitioner 9in/an General Assurance Corporation to pa6 private respondent

:ulia Surposa t(e proceeds o' t(e personal accident Insurance polic6 )it(interest.

It appears on record t(at on >cto0er ""2 4B%2 deceased2 Carlie Surposa )asinsured )it( petitioner 9in/an General Assurance Corporation under9in/an General Teac(ers Protection Plan 8aster Polic6 o. "##! andIndividual Polic6 o. #B4"3 )it( (is parents2 spouses :ulia and CarlosSurposa2 and 0rot(ers C(ristop(er2 C(arles2 C(ester and Cli'ton2 allsurna/ed2 Surposa2 as 0ene'iciaries. =

D(ile said insurance polic6 )as in 'ull 'orce and e''ect2 t(e insured2 CarlieSurposa2 died on >cto0er B2 4BB as a result o' a sta0 )ound in'licted 06one o' t(e t(ree ,1- unidenti'ied /en )it(out provocation and )arnin* ont(e part o' t(e 'or/er as (e and (is cousin2 Dinston Surposa2 )ere )aitin*'or a ride on t(eir )a6 (o/e alon* RiKal$Locsin Streets2 &acolod Cit6 a'terattendin* t(e cele0ration o' t(e J8as@arra Annual 9estival.J

T(erea'ter2 private respondent and t(e ot(er 0ene'iciaries o' said insurancepolic6 'iled a )ritten notice o' clai/ )it( t(e petitioner insurance co/pan6)(ic( denied said clai/ contendin* t(at /urder and assault are not )it(int(e scope o' t(e covera*e o' t(e insurance polic6.

>n 9e0ruar6 "32 4B42 private respondent 'iled a co/plaint )it( t(e

Insurance Co//ission )(ic( su0sequentl6 rendered a decision2 t(epertinent portion o' )(ic( reads7

In t(e li*(t o' t(e 'ore*oin*. )e 'ind respondent lia0le to pa6 co/plainantt(e su/ o' P!2###.## representin* t(e proceeds o' t(e polic6 )it( interest.As no

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