insurance 2nd cases

7/25/2019 Insurance 2nd Cases

http://slidepdf.com/reader/full/insurance-2nd-cases 1/144

THIRD DIVISION

[G.R. No. 112360. July 18, 2000]

RIZAL SURETY & INSURANCE CO!ANY, petitioner, vs. COURT O"

A!!EALS #$% TRANSORL' (NITTING ILLS, INC., respondents.

' E C I S I O N

!URISIA, J .)

At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seein! to

annul and set aside the "ul# $5% $&&' De(ision )$* and O(tober ++% $&&' Resolution)+* of the

Court of A,,eals)'* in CA-./R/ CV NO/ +011&% whi(h 2odified the Rulin! )4* of the Re!ional

Trial Court of Pasi!% 3ran(h $$% in Civil Case No/ 4$/

The ante(edent fa(ts that 2atter are as follows6

On 7ar(h $'% $&0% Ri8al Suret# 9 Insuran(e Co2,an# :Ri8al Insuran(e; issued <ire

Insuran(e Poli(# No/ 451+1 in favor of Transworld =nittin! 7ills% In(/ :Transworld;% initiall# for

One 7illion :P$%%/; Pesos and eventuall# in(reased to One 7illion <ive Hundred

Thousand :P$%5%/; Pesos% (overin! the ,eriod fro2 Au!ust $4% $&0 to 7ar(h $'%

$&0$/

Pertinent ,ortions of sub>e(t ,oli(# on the buildin!s insured% and lo(ation thereof% read6

?On sto(s of finished and@or unfinished ,rodu(ts% raw 2aterials and su,,lies of

ever# ind and des(ri,tion% the ,ro,erties of the Insureds and@or held b# the2 intrust% on (o22ission or on >oint a((ount with others and@or for whi(h the# :si(;

res,onsible in (ase of loss whilst (ontained and@or stored durin! the (urren(# of

this Poli(# in the ,re2ises o((u,ied b# the2 for2in! ,art of the buildin!s situate

:si(; within own Co2,ound at 7A.DAO STRBBT% 3ARRIO .ON.% PASI.%

7BTRO 7ANIA% PHIIPPINBS% 3OC= NO/ $/

//////////////////////////////

Said buildin! of four-s,an loft# one store# in hei!ht with 2e88anine ,ortions is

(onstru(ted of reinfor(ed (on(rete and hollow blo(s and@or (on(rete under

!alvani8ed iron roof and o((u,ied as hosier# 2ills% !ar2ent and lin!erie fa(tor#%

transistor-stereo asse2bl# ,lant% offi(es% warehouse and (aretaerEs Fuarters/

'Bounds in front partly by one-storey concrete building under galvanized iron

roof occupied as canteen and guardhouse, partly by building of two and partly

one storey constructed of concrete below, timber above undergalvanized iron

roof occupied as garage and quarters and partly by open space and/or tracking/

packing, beyond which is the aforementioned agdalo !treet" on its right and

http://sc.judiciary.gov.ph/jurisprudence/2000/july2000/112360.htm#_ftn1










left by driveway, thence open spaces, and at the rear by open spaces#'$ )5*

The sa2e ,ie(es of ,ro,ert# insured with the ,etitioner were also insured with New India

Assuran(e Co2,an#% td/% :New India;/

On "anuar# $+% $&0$% fire broe out in the (o2,ound of Transworld% ra8in! the 2iddle ,ortion

of its four-s,an buildin! and ,artl# !uttin! the left and ri!ht se(tions thereof/ A two-store#

buildin! :behind said four-s,an buildin!; where fun and a2use2ent 2a(hines and s,are

,arts were stored% was also destro#ed b# the fire/

Transworld filed its insuran(e (lai2s with Ri8al Suret# 9 Insuran(e Co2,an# and New India

Assuran(e Co2,an# but to no avail/

On 7a# +% $&0+% ,rivate res,ondent brou!ht a!ainst the said insuran(e (o2,anies an a(tion

for (olle(tion of su2 of 2one# and da2a!es% do(eted as Civil Case No/ 4$ before

3ran(h $$ of the then Court of <irst Instan(e of Ri8alG ,ra#in! for >ud!2ent orderin! Ri8al

Insuran(e and New India to ,a# the a2ount of P+%141% 01/ ,lus le!al interest%

P4%/ as attorne#Es fees% ee2,lar# da2a!es% e,enses of liti!ation of P5%/and (osts of suit/)*

Petitioner Ri8al Insuran(e (ountered that its fire insuran(e ,oli(# sued u,on (overed onl# the

(ontents of the four-s,an buildin!% whi(h was ,artl# burned% and not the da2a!e (aused b#

the fire on the two-store# anne buildin!/)1*

On "anuar# 4% $&&% the trial (ourt rendered its de(isionG dis,osin! as follows6

?ACCORDIN.% >ud!2ent is hereb# rendered as follows6

:$;Dis2issin! the (ase as a!ainst The New India Assuran(e Co/% td/G

:+; Orderin! defendant Ri8al Suret# And Insuran(e Co2,an# to ,a# Transwrold

:si(; =nittin! 7ills% In(/ the a2ount of P0+% 5/ re,resentin! the a(tual

value of the losses suffered b# itG and

:'; Cost a!ainst defendant Ri8al Suret# and Insuran(e Co2,an#/

!% %&(&(#$ )0*

3oth the ,etitioner% Ri8al Insuran(e Co2,an#% and ,rivate res,ondent% Transworld =nittin!

7ills% In(/% went to the Court of A,,eals% whi(h (a2e out with its de(ision of "ul# $5% $&&'

under atta(% the de(retal ,ortion of whi(h reads6

?HBRB<ORB% and u,on all the fore!oin!% the de(ision of the (ourt below is

7ODI<IBD in that defendant New India Assuran(e Co2,an# has and is hereb#

reFuired to ,a# ,laintiff-a,,ellant the a2ount of P$%0$0%4/$& while the other

Ri8al Suret# has to ,a# the ,laintiff-a,,ellant P41%'+0/1% based on the a(tual

losses sustained b# ,laintiff Transworld in the fire% totallin! P+%1&%'1/ as

a!ainst the a2ounts of fire insuran(e (overa!es res,e(tivel# etended b# New











India in the a2ount of P5%0%/ and Ri8al Suret# and Insuran(e Co2,an#

in the a2ount of P$%5%//

No (osts/

!% %&(&(#$ )&*

On Au!ust +% $&&'% fro2 the aforesaid >ud!2ent of the Court of A,,eals New India a,,ealedto this Court theori8in! inter alia that the ,rivate res,ondent (ould not be (o2,ensated for the

loss of the fun and a2use2ent 2a(hines and s,are ,arts stored at the two-store# buildin!

be(ause it :Transworld; had no insurable interest in said !oods or ite2s/

On <ebruar# +% $&&4% the Court denied the a,,eal with finalit# in ./R/ No/ -$$$$$0 : )ew

*ndia +ssurance Company td# vs# Court of +ppeals;/

Petitioner Ri8al Insuran(e and ,rivate res,ondent Transworld% inter,osed a 7otion for

Re(onsideration before the Court of A,,eals% and on O(tober ++% $&&'% the Court of A,,eals

re(onsidered its de(ision of "ul# $5% $&&'% as re!ards the i2,osition of interest% rulin! thus6

?HBRB<ORB% the De(ision of "ul# $5% $&&' is a2ended but onl# insofar as

the i2,osition of le!al interest is (on(erned% that% on the assess2ent a!ainst

New India Assuran(e Co2,an# on the a2ount of P$%0$0%4/$& and that

a!ainst Ri8al Suret# 9 Insuran(e Co2,an# on the a2ount of P41%'+0/1% fro2

7a# +% $&0+ when the (o2,laint was filed until ,a#2ent is 2ade/ The rest of

the said de(ision is retained in all other res,e(ts/

!% %&(&(#$ )$*

ndaunted% ,etitioner Ri8al Suret# 9 Insuran(e Co2,an# found its wa# to this Court via the

,resent Petition% (ontendin! that6

I/////SAID DBCISION :ANNBJ A; BRRBD IN ASS7IN. THAT THB ANNBJ

3IDIN. HBRB THB 3= O< THB 3RNBD PROPBRTIBS BRB

STORBD% AS INCDBD IN THB COVBRA.B O< THB INSRANCB

POIC ISSBD 3 RIKA SRBT TO TRANSORD/

II/////SAID DBCISION AND RBSOTION :ANNBJBS A AND 3; BRRBD IN

NOT CONSIDBRIN. THB PICTRBS :BJHS/ ' TO 1-C-RIKA SRBT;%

TA=BN I77BDIATB A<TBR THB <IRB% HICH CBAR SHO THAT

THB PRB7ISBS OCCPIBD 3 TRANSORD% HBRB THB INSRBD

PROPBRTIBS BRB OCATBD% SSTAINBD PARTIA DA7A.B ON/

III/ SAID DBCISION :ANNBJ A; BRRBD IN NOT HODIN. THAT

TRANSORD HAD ACTBD IN PAPA3B 3AD <AITH AND ITH 7AICB IN

<IIN. ITS CBAR N<ONDBD CIVI ACTION% AND IN NOT ORDBRIN.

TRANSORD TO PA TO RIKA SRBT 7ORA AND PNITIVB

DA7A.BS :ART/ ++5% CIVI CODB;% PS ATTORNBES <BBS AND







BJPBNSBS O< ITI.ATION :ART/ ++0 PARS/ 4 and $$% CIVI CODB;/ )$$*

The Petition is not i2,ressed with 2erit/

It is ,etitionerEs sub2ission that the fire insuran(e ,oli(# liti!ated u,on ,rote(ted onl# the

(ontents of the 2ain buildin! :four-s,an;% )$+* and did not in(lude those stored in the two-store#

anne buildin!/ On the other hand% the ,rivate res,ondent theori8ed that the so (alled ?anne?

was not an anne but was a(tuall# an inte!ral ,art of the four-s,an buildin! )$'* and therefore%

the !oods and ite2s stored therein were (overed b# the sa2e fire insuran(e ,oli(#/

Resolution of the issues ,osited here hin!es on the ,ro,er inter,retation of the sti,ulation in

sub>e(t fire insuran(e ,oli(# re!ardin! its (overa!e% whi(h reads6

? (ontained and@or stored durin! the (urren(# of this Poli(# in the ,re2ises

o((u,ied b# the2 for2in! ,art of the buildin!s situate :si(; within own

Co2,ound ?

Therefro2% it (an be !leaned unerrin!l# that the fire insuran(e ,oli(# in Fuestion did not li2it

its (overa!e to what were stored in the four-s,an buildin!/ As o,ined b# the trial (ourt of

ori!in% two reFuire2ents 2ust (on(ur in order that the said fun and a2use2ent 2a(hines and

s,are ,arts would be dee2ed ,rote(ted b# the fire insuran(e ,oli(# under s(rutin#% to wit6

?<irst% said ,ro,erties 2ust be (ontained and@or stored in the areas o((u,ied b#

Transworld and se(ond% said areas 2ust for2 ,art of the buildin! des(ribed in

the ,oli(# ?)$4*

ESaid buildin! of four-s,an loft# one store# in hei!ht with

2e88anine ,ortions is (onstru(ted of reinfor(ed (on(rete and

hollow blo(s and@or (on(rete under !alvani8ed iron roof ando((u,ied as hosier# 2ills% !ar2ent and lin!erie fa(tor#% transistor-

stereo asse2bl# ,lant% offi(es% ware house and (aretaerEs

Fuarter/E

The Court is 2indful of the well-entren(hed do(trine that fa(tual findin!s b# the Court of

A,,eals are (on(lusive on the ,arties and not reviewable b# this Court% and the sa2e (arr#

even 2ore wei!ht when the Court of A,,eals has affir2ed the findin!s of fa(t arrived at b# the

lower (ourt/)$5*

In the (ase under (onsideration% both the trial (ourt and the Court of A,,eals found that the so(alled ?anne ? was not an anne buildin! but an inte!ral and inse,arable ,art of the four-

s,an buildin! des(ribed in the ,oli(# and (onseFuentl#% the 2a(hines and s,are ,arts stored

therein were (overed b# the fire insuran(e in dis,ute/ The letter-re,ort of the 7anila Ad>usters

and Surve#orEs Co2,an#% whi(h ,etitioner itself (ited and invoed% des(ribes the ?anne?

buildin! as follows6

?Two-store# buildin! (onstru(ted of ,artl# ti2ber and ,artl# (on(rete hollow














blo(s under !/i/ roof whi(h is ad>oinin! and inter(o22uni(atin! with the re,air

of the first ri!ht s,an of the loft# store# buildin! and then(e b# ,ro,ert# fen(e

wall/?)$*

Veril#% the two-store# buildin! involved% a ,er2anent stru(ture whi(h ad>oins and

inter(o22uni(ates with the ?first ri!ht s,an of the loft# store# buildin!?% )$1* for2ed ,art thereof%

and 2eets the reFuisites for (o2,ensabilit# under the fire insuran(e ,oli(# sued u,on/

So also% (onsiderin! that the two-store# buildin! afore2entioned was alread# eistin! when

sub>e(t fire insuran(e ,oli(# (ontra(t was entered into on "anuar# $+% $&0$% havin! been

(onstru(ted so2eti2e in $&10%)$0* ,etitioner should have s,e(ifi(all# e(luded the said two-

store# buildin! fro2 the (overa!e of the fire insuran(e if 2inded to e(lude the sa2e but if did

not% and instead% went on to ,rovide that su(h fire insuran(e ,oli(# (overs the ,rodu(ts% raw

2aterials and su,,lies stored within the ,re2ises of res,ondent Transworld whi(h was an

inte!ral ,art of the four-s,an buildin! o((u,ied b# Transworld% nowin! full# well the eisten(e

of su(h buildin! ad>oinin! and inter(o22uni(atin! with the ri!ht se(tion of the four-s,an

buildin!/

After a (areful stud#% the Court does not find an# basis for disturbin! what the lower (ourts

found and arrived at/

Indeed% the sti,ulation as to the (overa!e of the fire insuran(e ,oli(# under (ontrovers# has

(reated a doubt re!ardin! the ,ortions of the buildin! insured thereb#/ Arti(le $'11 of the New

Civil Code ,rovides6

?Art/$'11/ The inter,retation of obs(ure words or sti,ulations in a (ontra(t shall

not favor the ,art# who (aused the obs(urit#?

Confor2abl#% it stands to reason that the doubt should be resolved a!ainst the ,etitioner%

Ri8al Suret# Insuran(e Co2,an#% whose law#er or 2ana!ers drafted the fire insuran(e ,oli(#

(ontra(t under s(rutin#/ Citin! the afore(ited ,rovision of law in ,oint% the Court in andicho

vs# overnment !ervice *nsurance !ystem%)$&* ruled6

$.his is particularly true as regards insurance policies, in respect of which it is

settled that the 'terms in an insurance policy, which are ambiguous, equivocal,

or uncertain are to be construed strictly and most strongly against the

insurer, and liberally in favor of the insured so as to effect the dominant purpose

of indemnity or payment to the insured, especially where forfeiture is involved'012 +m# 3ur#, 4546, and the reason for this is that the 'insured usually has no

voice in the selection or arrangement of the words employed and that the

language of the contract is selected with great care and deliberation by eperts

and legal advisers employed by, and acting eclusively in the interest of, the

insurance company#' 077 C#3#!#, p# 44876#$$ )+*

BFuall# relevant is the followin! disFuisition of the Court in 9ieldmen's *nsurance Company,













*nc# vs# :da# e !ongco,)+$* to wit6

$'.his rigid application of the rule on ambiguities has become necessary in view

of current business practices# .he courts cannot ignore that nowadays

monopolies, cartels and concentration of capital, endowed with overwhelming

economic power, manage to impose upon parties dealing with them cunningly

prepared 'agreements' that the weaker party may not change one whit, his participation in the 'agreement' being reduced to the alternative to 'take it or

leave it' labelled since &aymond !aleilles 'contracts by adherence' 0contrats

;sic< d'adhesion6, in contrast to these entered into by parties bargaining on an

equal footing, such contracts 0of which policies of insurance and international

bills of lading are prime eample6 obviously call for greater strictness and

vigilance on the part of courts of =ustice with a view to protecting the weaker

party from abuses and imposition, and prevent their becoming traps for the

unwary 0)ew Civil Code, +rticle 17" !ent# of !upreme Court of !pain, 4> ec#

42>7, 18 9ebruary 4271#6'$ )++*

The issue of whether or not Transworld has an insurable interest in the fun and a2use2ent

2a(hines and s,are ,arts% whi(h entitles it to be inde2nified for the loss thereof% had been

settled in ./R/ No/ -$$$$$0% entitled )ew *ndia +ssurance Company, td#, vs# Court of

+ppeals% where the a,,eal of New India fro2 the de(ision of the Court of A,,eals under

review% was denied with finalit# b# this Court on <ebruar# +% $&&4/

The rule on (on(lusiveness of >ud!2ent% whi(h obtains under the ,re2ises% ,re(ludes the

reliti!ation of a ,arti(ular fa(t or issue in another a(tion between the sa2e ,arties based on a

different (lai2 or (ause of a(tion/ ? the >ud!2ent in the ,rior a(tion o,erates as esto,,el

onl# as to those 2atters in issue or ,oints (ontroverted% u,on the deter2ination of whi(h the

findin! or >ud!2ent was rendered/ In fine% the ,revious >ud!2ent is (on(lusive in the se(ond

(ase% onl# as those 2atters a(tuall# and dire(tl# (ontroverted and deter2ined and not as to

2atters 2erel# involved therein/?)+'*

A,,l#in! the above(ited ,ronoun(e2ent% the Court% in !mith Bell and Company 0?hils#6, *nc#

vs# Court of +ppeals,)+4* held that the issue of ne!li!en(e of the shi,,in! line% whi(h issue had

alread# been ,assed u,on in a (ase filed b# one of the insurers% is (on(lusive and (an no

lon!er be reliti!ated in a si2ilar (ase filed b# another insurer a!ainst the sa2e shi,,in! line

on the basis of the sa2e fa(tual (ir(u2stan(es/ Ratio(inatin! further% the Court o,ined6$*n the case at bar, the issue of which vessel 0'on Carlos' or '@otai aru'6 had

been negligent, or so negligent as to have proimately caused the collision

between them, was an issue that was actually, directly and epressly raised,

controverted and litigated in C#+#-#&# )o# A4>1-&# &eyes, #B#, 3#, resolved

that issue in his ecision and held the 'on Carlos' to have been negligent

rather than the '@otai aru' and, as already noted, that ecision was affirmed

by this Court in #&# )o# -755>2 in a &esolution dated A ecember 4258# .he











&eyes ecision thus became final and eecutory approimately two 016 years

before the !ison ecision, which is assailed in the case at bar, was

promulgated# +pplying the rule of conclusiveness of =udgment, the question of

which vessel had been negligent in the collision between the two 016 vessels,

had long been settled by this Court and could no longer be relitigated in C#+#-

#&# )o# A41A-&# ?rivate respondent o .hong was certainly bound by theruling or =udgment of &eyes, #B#, 3# and that of this Court# .he Court of +ppeals

fell into clear and reversible error when it disregarded the ecision of this Court

affirming the &eyes ecision#$ )+5*

The (ontrovers# at bar is on all fours with the afore(ited (ase/ Considerin! that ,rivate

res,ondentEs insurable interest in% and (o2,ensabilit# for the loss of sub>e(t fun and

a2use2ent 2a(hines and s,are ,arts% had been ad>udi(ated% settled and sustained b# the

Court of A,,eals in CA-./R/ CV NO/ +011&% and b# this Court in ./R/ No/ -$$$$$0% in a

Resolution% dated <ebruar# +% $&&4% the sa2e (an no lon!er be reliti!ated and ,assed u,on

in the ,resent (ase/ Inelu(tabl#% the ,etitioner% Ri8al Suret# Insuran(e Co2,an#% is bound b#the rulin! of the Court of A,,eals and of this Court that the ,rivate res,ondent has an

insurable interest in the aforesaid fun and a2use2ent 2a(hines and s,are ,artsG and should

be inde2nified for the loss of the sa2e/

So also% the Court of A,,eals (orre(tl# ad>ud!ed ,etitioner liable for the a2ount of

P41%'+0/1% it bein! the total loss and da2a!e suffered b# Transworld for whi(h ,etitioner

Ri8al Insuran(e is liable/)+*

All thin!s studiedl# (onsidered and viewed in ,ro,er ,ers,e(tive% the Court is of the

irresistible (on(lusion% and so finds% that the Court of A,,eals erred not in holdin! the

,etitioner% Ri8al Suret# Insuran(e Co2,an#% liable for the destru(tion and loss of the insured

buildin!s and arti(les of the ,rivate res,ondent/

*ERE"ORE% the De(ision% dated "ul# $5% $&&'% and the Resolution% dated O(tober ++%

$&&'% of the Court of A,,eals in CA-./R/ CV NO/ +011& are A<<IR7BD in toto/ No

,ronoun(e2ent as to (osts/

SO OR'ERE'.

elo, 0Chairman6, :itug, ?anganiban, and onzaga-&eyes, 33#, (on(ur/

[1] Annex "A"; Rollo, pp. 27-49.

[2] Annex "B"; Rollo, pp. 51- 52.

[3] Special Tenth Divii!n; c!p!e# !$ A!ciate %&tice' (e)a* D. +*ancic! !nente, /l!*ia (.

a*a (hai*an, an# 0ica*#! . /alve) ee*



http://sc.judiciary.gov.ph/jurisprudence/2000/july2000/112360.htm#_ftnref1










[4] enne# %&#e $*en D. 6illan&eva.

[5] Decii!n, Annex "A"; Rollo, pp. 2-29.

[8] Rollo, p. 59.

[7] Rollo, p. 82.

[] Decii!n, Rollo, pp. 7-79.

[9] Decii!n, Rollo, p. 49.

[1] 0e!l&ti!n, Rollo, p. 52.

[11] etiti!n, Rollo, pp. 12-13.

[12] An:e*, Rollo, p. 82.

[13] Rollo, p. 78.

[14]

Rollo, p. 77.[15] B!**!e! v. (!&*t !$ Appeal, /.0. !. 759, <ct!e* 22, 1999; citin : enee vs. (!&*t !$

Appeal, 248 S(0A 182, p.171; (!ca (!la B!ttle* hil., =nc vs. (!&*t !$ Appeal, 229 S(0A 533;

an# Binala vs. anal!, 195 S(0A 374.

[18] etiti!ne*, Rollo, p. 17.

[17] Rollo, p. 17.

[1] Decii!n, Rollo, p. 89.

[19] 44 S(0A 7.

[2] Ibid., pp. 12-13, citin' (alan!c vs. (!&*t !$ Appeal, 9 hil. 79, 4. See, al!, >.. >eac!c? (!.

vs. ac!n#*a, 42, hil. 25; 0ive*! vs. 0!e, 54 hil. 92; At&*ia S&a* (ent*al vs. The &*e (ane

!lae (!., 57 hil. 519; /!n)ale v. @a *evi!*a +ilipina , 74 hil. 185; Del 0!a*i! vs. The

&itale =n&*ance, 82 <./. 54, 543-4.

[21] 25 S(0A 7.

[22] Ibid., p. 75.

[23] Sith Bell an# (!pan hil., =nc. vs. (!&*t !$ Appeal, 197 S(0A 21, p. 29; citin' Tin!n

v. (!&*t !$ Appeal, 49 S(0A 429.

[24] Sith Bell an# (!pan hil., =nc. vs. (!&*t !$ Appeal, supra.

[25] Ibid., pp. 21-211.

[28] Rollo, p. 43.

















































FIRST DIVISION

BLUE CROSS HEALTH CARE, /.0. !. 189737

INC.,

Petitioner, *eent'

<, C.J., Chairperson,

SAD<6A@-/T=00C,

- v e r s u s - (<0<A,

AC(A an#

@<A0D<-D (AST0<, JJ.

NEOMI* and DANILO OLIVARES,

Respondents. *!&late#'

+e*&a* 12, 2

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CORONA , J .:

Thi i a petiti!n $!* *evie: !n ce*ti!*a*i[1] !$ a #ecii!n[2] an# *e!l&ti!n[3] !$ the

(!&*t !$ Appeal (A #ate# %&l 29, 25 an# Septee* 21, 25, *epectivel, in

(A-/.0. S !. 4183 :hich a$$i*e# the #ecii!n !$ the 0ei!nal T*ial (!&*t 0T(,

a?ati (it, B*anch 81 #ate# +e*&a* 2, 24 in (ivil (ae !. 3-1153, [4] :hich in

t&*n *eve*e# the #ecii!n !$ the et*!p!litan T*ial (!&*t eT(, a?ati (it, B*anch

88 #ate# A&&t 5, 23 in (ivil (ae !. 87.[5]

0ep!n#ent e!i T. <liva*e applie# $!* a health ca*e p*!*a :ith petiti!ne* Bl&e

(*! >ealth (a*e, =nc., a health aintenance $i*. +!* the pe*i!# <ct!e* 18, 22 t!

<ct!e* 15, 23,[8] he pai# the a!&nt !$ 11,117. +!* the ae pe*i!#, he al!

http://sc.judiciary.gov.ph/jurisprudence/2008/feb2008/169737.htm#_ftn1
















availe# !$ the a##iti!nal e*vice !$ liitle c!n&ltati!n $!* an a##iti!nal a!&nt !$

1,. She pai# thee a!&nt in $&ll !n <ct!e* 17, 22. The applicati!n :a

app*!ve# !n <ct!e* 22, 22. =n the health ca*e a*eeent, ailent #&e t! p*e-

exitin c!n#iti!n :e*e excl&#e# $*! the c!ve*ae.[7]

<n !vee* 3, 22, !* a*el 3 #a $*! the e$$ectivit !$ he* health in&*ance,

*ep!n#ent e!i &$$e*e# a t*!?e an# :a a#itte# at the e#ical (it :hich :a

!ne !$ the h!pital acc*e#ite# petiti!ne*. D&*in he* c!n$ineent, he &n#e*:ent

eve*al la!*at!* tet. <n Decee* 2, 22, he* atten#in phician, D*. #&n#!

Saniel,[] in$!*e# he* that he c!&l# e #icha*e# $*! the h!pital. She inc&**e#

h!pital expene a!&ntin t! 34,217.2. (!ne&entl, he *e&ete# $*! the

*ep*eentative !$ petiti!ne* at e#ical (it a lette* !$ a&th!*i)ati!n in !*#e* t! ettle he*

e#ical ill. B&t petiti!ne* *e$&e# t! i&e the lette* an# &pen#e# paent pen#in

the &ii!n !$ a ce*ti$icati!n $*! he* atten#in phician that the t*!?e he &$$e*e#

:a n!t ca&e# a p*e-exitin c!n#iti!n.[9]

She :a #icha*e# $*! the h!pital !n Decee* 3, 22. <n Decee* 5, 22, he

#ean#e# that petiti!ne* pa he* e#ical ill. hen petiti!ne* till *e$&e#, he an# he*

h&an#, *ep!n#ent Danil! <liva*e, :e*e c!nt*aine# t! ettle the ill.[1] The

the*ea$te* $ile# a c!plaint $!* c!llecti!n !$ & !$ !ne aaint petiti!ne* in the

eT( !n %an&a* , 23.[11] =n it an:e* #ate# %an&a* 24, 23, petiti!ne*

aintaine# that it ha# n!t et #enie# *ep!n#entE clai a it :a till a:aitin D*.

SanielE *ep!*t.













=n a lette* t! petiti!ne* #ate# +e*&a* 14, 23, D*. Saniel tate# that'

Thi i in *ep!ne t! !&* lette* #ate# +e*&a* 13, 23. [0ep!n#ent] e!i T. <liva*e calle#

ph!ne !n %an&a* 29, 23. She tate# that he i inv!?in patient-phician c!n$i#entialit. That he

n! l!ne* ha an *elati!nhip :ith [petiti!ne*]. An# that = h!&l# n!t *eleae an e#ical in$!*ati!n

c!nce*nin he* ne&*!l!ic tat& t! an!ne :ith!&t he* app*!val. >ence, the ae #a = int*&cte# ec*eta* t! in$!* !&* !$$ice th*& . Be*nie *ea*#in [*ep!n#entE] :ihe.

xxx xxx xxx[12]

=n a #ecii!n #ate# A&&t 5, 23, the eT( #iie# the c!plaint $!* lac? !$ ca&e

!$ acti!n. =t hel#'

xxx the et pe*!n t! #ete*ine :hethe* !* n!t the t*!?e he &$$e*e# :a n!t ca&e# p*e-

exitin c!n#iti!n i he* atten#in phician D*. Saniel :h! t*eate# he* an# c!n#&cte# the tet#&*in he* c!n$ineent. xxx B&t ince the evi#ence !n *ec!*# *eveal that it :a n! le than

[*ep!n#ent e!i] he*el$ :h! p*evente# he* atten#in phician $*! i&in the *e&i*e#

ce*ti$icati!n, petiti!ne* cann!t e $a&lte# $*! &pen#in paent !$ he* clai, $!* &ntil an#

&nle it can e h!:n $*! the $in#in a#e he* atten#in phician that the t*!?e he

&$$e*e# :a n!t #&e t! p*e-exitin c!n#iti!n c!&l# he #ean# entitleent t! the ene$it !$

he* p!lic.[13]

<n appeal, the 0T(, in a #ecii!n #ate# +e*&a* 2, 24, *eve*e# the *&lin !$ the

eT( an# !*#e*e# petiti!ne* t! pa *ep!n#ent the $!ll!:in a!&nt' 1 34,217.2

*ep*eentin the e#ical ill in e#ical (it an# 1, a *ei&*eent $!*

c!n&ltati!n $ee, :ith leal inte*et $*! the $ilin !$ the c!plaint &ntil $&ll pai#; 2

2, a !*al #aae; 3 2, a exepla* #aae; 4 2, a

att!*neE $ee an# 5 c!t !$ &it.[14] The 0T( hel# that it :a the &*#en !$

petiti!ne* t! p*!ve that the t*!?e !$ *ep!n#ent e!i :a excl&#e# $*! the c!ve*ae

!$ the health ca*e p*!*a $!* ein ca&e# a p*e-exitin c!n#iti!n. =t :a n!t ale

t! #icha*e that &*#en.[15]

A*ieve#, petiti!ne* $ile# a petiti!n $!* *evie: &n#e* 0&le 42 !$ the 0&le !$ (!&*t in











the (A. =n a #ecii!n p*!&late# !n %&l 29, 25, the (A a$$i*e# the #ecii!n !$ the

0T(. =t #enie# *ec!ni#e*ati!n in a *e!l&ti!n p*!&late# !n Septee* 21, 25.

>ence thi petiti!n :hich *aie the $!ll!:in i&e' 1 :hethe* petiti!ne* :a ale t!

p*!ve that *ep!n#ent e!iE t*!?e :a ca&e# a p*e-exitin c!n#iti!n an#

the*e$!*e :a excl&#e# $*! the c!ve*ae !$ the health ca*e a*eeent an# 2 :hethe*

it :a liale $!* !*al an# exepla* #aae an# att!*neE $ee.

The health ca*e a*eeent #e$ine# a p*e-exitin c!n#iti!n a'

x x x a #iailit :hich exite# e$!*e the c!enceent #ate !$ ee*hip :h!e

nat&*al hit!* can e clinicall #ete*ine#, :hethe* !* n!t the ee* :a a:a*e !$

&ch illne !* c!n#iti!n. S&ch c!n#iti!n al! incl&#e #iailitie exitin p*i!* t!

*eintateent #ate in the cae !$ lape !$ an A*eeent. !t:ithtan#in, the $!ll!:in

#iailitie &t n!t t! the excl&i!n !$ !the* a*e c!ni#e*e# p*e-exitin c!n#iti!n

incl&#in thei* c!plicati!n :hen !cc&**in #&*in the $i*t ea* !$ a ee*

c!ve*ae'

=. T&!* !$ =nte*nal <*an

==. >e!**h!i#FAnal +it&la

===. Dieae# t!nil an# in& c!n#iti!n *e&i*in &*e*

=6. (ata*actF/la&c!a

6. ath!l!ical An!*alitie !$ naal ept& !* t&*inate

6=. /!ite* an# !the* th*!i# #i!*#e*

6==. >e*niaFBenin p*!tatic hpe*t*!ph

6===. n#!et*i!i

=G. AthaF(h*!nic <t*&ctive @&n #ieae

G. pilep

G=. Sch!li!iF>e*niate# #ic an# !the* Spinal c!l&n

an!*alitie

G==. T&e*c&l!iG===. (h!leciti

G=6. /at*ic !* D&!#enal &lce*

G6. >all&x val&

G6=. >pe*teni!n an# !the* (a*#i!vac&la* #ieae

G6==. (alc&li

G6===. T&!* !$ ?in, &c&la* ti&e, !ne !* an $!* !$ l!!#

#c*acia



G=G. Diaete ellit&

GG. (!llaenFA&t!-=&ne #ieae

A$te* the ee* ha een c!ntin&!&l c!ve*e# $!* 12 !nth, thi p*e-exitin

p*!vii!n hall n! l!ne* e applicale except $!* illnee peci$icall excl&#e# an

en#!*eent an# a#e pa*t !$ thi A*eeent.[18]

n#e* thi p*!vii!n, #iailitie :hich exite# e$!*e the c!enceent !$ the

a*eeent a*e excl&#e# $*! it c!ve*ae i$ the ec!e ani$et :ithin !ne ea* $*!

it e$$ectivit. State# !the*:ie, petiti!ne* i n!t liale $!* p*e-exitin c!n#iti!n i$ the

!cc&* :ithin !ne ea* $*! the tie the a*eeent ta?e e$$ect.

etiti!ne* a*&e that *ep!n#ent p*evente# D*. Saniel $*! &ittin hi *ep!*t

*ea*#in the e#ical c!n#iti!n !$ e!i. >ence, it c!nten# that the p*e&pti!n that

evi#ence :ill$&ll &pp*ee# :!&l# e a#ve*e i$ p*!#&ce# h!&l# appl in it $av!*.

[17]

0ep!n#ent c!&nte* that the &*#en :a !n petiti!ne* t! p*!ve that e!iE t*!?e :a

excl&#e# $*! the c!ve*ae !$ thei* a*eeent eca&e it :a #&e t! a p*e-exitin

c!n#iti!n. =t $aile# t! p*!ve thi.[1]

e a*ee :ith *ep!n#ent.

=n Philamcare Health Systems, Inc. v. CA,[19] :e *&le# that a health ca*e a*eeent i in

the nat&*e !$ a n!n-li$e in&*ance.[2] =t i an etalihe# *&le in in&*ance c!nt*act that

:hen thei* te* c!ntain liitati!n !n liailit, the h!&l# e c!nt*&e# t*ictl aaint

the in&*e*. Thee a*e c!nt*act !$ a#hei!n the te* !$ :hich &t e inte*p*ete# an#

en$!*ce# t*inentl aaint the in&*e* :hich p*epa*e# the c!nt*act. Thi #!ct*ine i

e&all applicale t! health ca*e a*eeent.[21]

etiti!ne* neve* p*eente# an evi#ence t! p*!ve that *ep!n#ent e!iE t*!?e :a















#&e t! a p*e-exitin c!n#iti!n. =t e*el pec&late# that D*. SanielE *ep!*t :!&l# e

a#ve*e t! e!i, ae# !n he* inv!cati!n !$ the #!ct!*-patient p*ivilee. Thi :a a

#ip&tale p*e&pti!n at et.

Secti!n 3 e, 0&le 131 !$ the 0&le !$ (!&*t tate'

Sec. 3. Dip&tale p*e&pti!n. H The $!ll!:in p*e&pti!n a*e ati$act!* i$

&nc!nt*a#icte#, &t a e c!nt*a#icte# an# !ve*c!e !the* evi#ence'

xxx xxx xxx

e That evi#ence :ill$&ll &pp*ee# :!&l# e a#ve*e i$ p*!#&ce#.

S&$$ice it t! a that thi p*e&pti!n #!e n!t appl i$ a the evi#ence i at the #ip!al

!$ !th pa*tie; the &pp*ei!n :a n!t :ill$&l; c it i e*el c!**!!*ative !*

c&&lative an# # the suppression is n exer!ise o" privi#e$e.[22] >e*e, *ep!n#entE

*e$&al t! p*eent !* all!: the p*eentati!n !$ D*. SanielE *ep!*t :a I&ti$ie#. =t :a

p*ivilee# c!&nicati!n et:een phician an# patient.

+&*the*!*e, a al*ea# tate#, liitati!n !$ liailit !n the pa*t !$ the in&*e* !* health

ca*e p*!vi#e* &t e c!nt*&e# in &ch a :a a t! p*ecl&#e it $*! eva#in it

!liati!n. Acc!*#inl, the h!&l# e c*&tini)e# the c!&*t :ith extre%e

&e#ous'[23] an# !re an# :ith a &undi!ed e'e.[24] Since petiti!ne* ha# the &*#en !$

p*!vin excepti!n t! liailit, it h!&l# have a#e it !:n aeent !$ :hethe*

*ep!n#ent e!i ha# a p*e-exitin c!n#iti!n :hen it $aile# t! !tain the atten#in

phicianE *ep!*t. =t c!&l# n!t I&t paivel :ait $!* D*. SanielE *ep!*t t! ail it !&t.

The e*e *eliance !n a #ip&tale p*e&pti!n #!e n!t eet the t*ict tan#a*# *e&i*e#

&n#e* !&* I&*ip*&#ence.

ext, petiti!ne* a*&e that it h!&l# n!t e hel# liale $!* !*al an# exepla*









#aae, an# att!*neE $ee ince it #i# n!t act in a# $aith in #enin *ep!n#ent

e!iE clai. =t init that it :aite# in !!# $aith $!* D*. SanielE *ep!*t an# that, ae#

!n ene*al e#ical $in#in, it ha# *ea!nale *!&n# t! elieve that he* t*!?e :a #&e

t! a p*e-exitin c!n#iti!n, c!ni#e*in it !cc&**e# !nl 3 #a a$te* the c!ve*ae t!!?

e$$ect.[25]

e #ia*ee.

The 0T( an# (A $!&n# that the*e :a a $act&al ai $!* the #aae a#I&#e# aaint

petiti!ne*. The $!&n# that it :a &ilt !$ a# $aith in #enin a clai ae# e*el !n

it !:n pe*cepti!n that the*e :a a p*e-exitin c!n#iti!n'

[0ep!n#ent] have &$$icientl h!:n that [the] :e*e $!*ce# t! enae in a #ip&te :ith

[petiti!ne*] !ve* a leitiate clai :hile [*ep!n#ent e!i :a] till expe*iencin the e$$ect

!$ a t*!?e an# $!*ce# t! pa $!* he* e#ical ill #&*in an# a$te* he* h!pitali)ati!n #epite

ein c!ve*e# [petiti!ne*] health ca*e p*!*a, the*e &$$e*in in the p*!ce ext*ee

ental an&ih, h!c?, e*i!& anxiet an# *eat t*e. [The] have h!:n that eca&e !$ the

*e$&al !$ [petiti!ne*] t! i&e a lette* !$ a&th!*i)ati!n an# t! pa [*ep!n#ent e!iE] h!pital

ill, [the ha#] t! enae the e*vice !$ c!&nel $!* a $ee !$ 2,.. +inall, t(e re"us#o" petitioner to p' respondent Neo%i)s *i##s s%!+s o" *d "it(, a it *e$&al [:a] e*el

ae# !n it !:n pe*cepti!n that a t*!?e i a p*e-exitin c!n#iti!n. ephai &pplie#

Thi i a $act&al atte* in#in an# c!ncl&ive !n thi (!&*t.[28] e ee n!

*ea!n t! #it&* thee $in#in.

HEREORE, the petiti!n i he*e ENIE. The %&l 29, 25 #ecii!n an#

Septee* 21, 25 *e!l&ti!n !$ the (!&*t !$ Appeal in (A-/.0. S !. 4183 a*e

AIR/E.

T*ele c!t aaint petiti!ne*.

SO ORERE.







RENATO C. CORONA

A!ciate %&tice

(<(0'

REYNATO S. PUNO

(hie$ %&tice

(hai*pe*!n

ANGELINA SANDOVAL-GUTIERREZ

Associate Justice

ADOLFO S. AZCUNA

Associate Justice

TERESITA 0. LEONARO-E CASTRO

A!ciate %&tice

C E R T I F I C A T I O N

&*&ant t! Secti!n 13, A*ticle 6=== !$ the (!ntit&ti!n, = ce*ti$ that the c!ncl&i!n inthe a!ve #ecii!n ha# een *eache# in c!n&ltati!n e$!*e the cae :a aine# t! the

:*ite* !$ the !pini!n !$ the (!&*t Divii!n.

RE1NATO S. PUNO

Chief Justice

J The petiti!n pelle# the nae !$ *ep!n#ent a !ei <liva*e &t in the #ecii!n !$ the (!&*t !$

Appeal, e!i :a &e# ince he ine# a &ch in the ve*i$icati!n an# ce*ti$icate !$ n!n-$!*&

h!ppin attache# t! he* c!plaint.

[1] n#e* 0&le 45 !$ the 0&le !$ (!&*t.

[2] enne# A!ciate %&tice %apa* B. Diaapa! an# c!nc&**e# in A!ciate %&tice a*tin S.

6illa*aa, %*. an# #a*#! +. S&n#ia !$ the +!*e* +i$teenth Divii!n !$ the (!&*t !$ Appeal; rollo,

pp. 17-25.

[3] =#., pp. 27-2.

[4] enne# %&#e 0!e! +. Ba*)a; i#., pp. 3-43.

[5] enne# %&#e e*pet&a Atal-a!; i#., pp. 44-47.

[8] =#., p. 17.

[7] =#., p. 39.

[] =#., p. 1.

[9] =#., p. 39.

http://sc.judiciary.gov.ph/jurisprudence/2008/feb2008/169737.htm#_ftnref1






















[1] =#., p. 19.

[11] =#., p. 3.

[12] =#., p. 29.

[13] =#., p. 47.

[14] =#., p. 43.

[15] =#., p. 42.

[18] =#., p. 114.

[17] =#., p. 195.

[1] =#., p. 214.

[19] 429 hil. 2 22.

[2] =#., p. 9.

[21] =#., pp. 93-94, citati!n !itte#.

[22] People v. Andal, 344 hil. 9, 912 1997, citin People v. Ducay, /.0. !. 8939, 2 A&&t

1993, 225 S(0A 1 an# People v. ava!a, /.0. !. 1444, 3 a*ch 1993, 22 S(0A 824, 833.

[23] D"P Pool o# Accredited Insurance Companies v. Radio $indanao et%or&, Inc., /.0. !. 14739,

27 %an&a* 28, 4 S(0A 314, 322, citin $alayan Insurance Corporation v. Court o# Appeals, 338

hil. 977, 99 1997.

[24] 'estern (uaranty Corporation v. Court o# Appeals, /.0. !. 91888, 2 %&l 199, 17 S(0A 852,

859-88, citin )aurus )a*i Co., Inc. v. )he Capital Ins. + Surety Co., Inc. , /.0. !. @-23491, 31 %&l198, 24 S(0A 454 an# a-le Star Insurance, td. v. Chia /u, 98 hil. 898 1955.

[25] Rollo, pp. 198-19.

[28] PA, Inc. v. CA, 328 hil. 24, 35 1998, citati!n !itte#.

0ep&lic !$ the hilippine

SUPRE/E COURT

anila

+=0ST D=6=S=<

2.R. No. 334567 /' 58, 3994

ORTUNE INSURANCE AN SURET1 CO., INC., petiti!ne*,

v.





































COURT O APPEALS nd PROUCERS BAN O THE PHILIPPINES, *ep!n#ent.

A;IE, 0R., J.:

The $&n#aental leal i&e *aie# in thi petiti!n $!* *evie: !n certiorari i :hethe* the petiti!ne* i

liale &n#e* the !ne, Sec&*it, an# a*!ll 0!e* p!lic it i&e# t! the p*ivate *ep!n#ent !*:hethe* *ec!ve* the*e&n#e* i p*ecl&#e# &n#e* the ene*al excepti!n cla&e the*e!$. B!th the t*ial

c!&*t an# the (!&*t !$ Appeal hel# that the*e h!&l# e *ec!ve*. The petiti!ne* c!nten# !the*:ie.

Thi cae ean :ith the $ilin :ith the 0ei!nal T*ial (!&*t 0T( !$ a?ati, et*! anila,

p*ivate *ep!n#ent *!#&ce* Ban? !$ the hilippine he*eina$te* *!#&ce* aaint petiti!ne* +!*t&ne

=n&*ance an# S&*et (!., =nc. he*eina$te* +!*t&ne !$ a c!plaint $!* *ec!ve* !$ the & !$

725,. &n#e* the p!lic i&e# +!*t&ne. The & :a allee#l l!t #&*in a *!e* !$

*!#&ce*E a*!*e# vehicle :hile it :a in t*anit t! t*an$e* the !ne $*! it aa (it B*anch t!

it hea# !$$ice in a?ati. The cae :a #!c?ete# a (ivil (ae !. 117 an# aine# t! B*anch 148

the*e!$.

A$te* I!in#e* !$ i&e, the pa*tie a?e# the t*ial c!&*t t! *en#e* I&#ent ae# !n the $!ll!:in

tip&lati!n !$ $act'

1. The plainti$$ :a in&*e# the #e$en#ant an# an in&*ance p!lic

:a i&e#, the #&plicate !*iinal !$ :hich i he*et! attache# a xhiit

"A";

2. An a*!*e# ca* !$ the plainti$$, :hile in the p*!ce !$ t*an$e**in cah

in the & !$ 725,. &n#e* the c&t!# !$ it telle*, a*ieth

Alapa, $*! it aa B*anch t! it >ea# <$$ice at 737 ae! #e0!xa, a?ati, et*! anila !n %&ne 29, 197, :a *!e# !$ the ai#

cah. The *!e* t!!? place :hile the a*!*e# ca* :a t*avelin al!n

Ta$t Aven&e in aa (it;

3. The ai# a*!*e# ca* :a #*iven BenIain aal!n K #e 6e*a,

ec!*te# Sec&*it /&a*# Sat&*nin! Atia K 0!ete. D*ive* aal!n

:a aine# 0( anaeent Ste :ith the plainti$$ vi*t&e !$

an A*eeent exec&te# !n A&&t 7, 193, a #&plicate !*iinal c!p !$

:hich i he*et! attache# a xhiit "B";

4. The Sec&*it /&a*# Atia :a aine# nic!*n Sec&*it Se*vice,

=nc. :ith the plainti$$ vi*t&e !$ a c!nt*act !$ Sec&*it Se*vice exec&te#

!n <ct!e* 25, 192, a #&plicate !*iinal c!p !$ :hich i he*et! attache#

a xhiit "(";

5. A$te* an invetiati!n c!n#&cte# the aa p!lice a&th!*itie, the

#*ive* aal!n an# &a*# Atia :e*e cha*e#, t!ethe* :ith #ele*



Banti&e K &lali!, 0enal#! A&in! an# %!hn D!e, :ith vi!lati!n !$

.D. 532 Anti->ih:a 0!e* @a: e$!*e the +ical !$ aa (it. A

c!p !$ the c!plaint i he*et! attache# a xhiit "D";

8. The +ical !$ aa (it then $ile# an in$!*ati!n cha*in the

a$!*eai# pe*!n :ith the ai# c*ie e$!*e B*anch 112 !$ the 0ei!nal

T*ial (!&*t !$ aa (it. A c!p !$ the ai# in$!*ati!n i he*et!attache# a xhiit "." The cae i till ein t*ie# a !$ thi #ate;

7. Dean# :e*e a#e the plainti$$ &p!n the #e$en#ant t! pa the

a!&nt !$ the l! !$ 725,., &t the latte* *e$&e# t! pa a the l!

i excl&#e# $*! the c!ve*ae !$ the in&*ance p!lic, attache# he*et! a

xhiit "A," peci$icall &n#e* pae 1 the*e!$, "/ene*al xcepti!n"

Secti!n , :hich i a*?e# a xhiit "A-1," an# :hich *ea# a

$!ll!:'

/0A@ G(T=<SThe c!pan hall n!t e liale &n#e* thi p!lic in *ep!*t !$

xxx xxx xxx

an l! ca&e# an #ih!net, $*a&#&lent !*

c*iinal act !$ the in&*e# !* an !$$ice*, employee,

pa*tne*, #i*ect!*, trustee or authori0ed representative !$ the

=n&*e# :hethe* actin al!ne !* in c!nI&ncti!n :ith !the*.

. . .

. The plainti$$ !pp!e the c!ntenti!n !$ the #e$en#ant an# c!nten# that

Atia an# aal!n a*e n!t it "!$$ice*, epl!ee, . . . t*&tee !*

a&th!*i)e# *ep*eentative . . . at the tie !$ the *!e*. 1

<n 28 Ap*il 199, the t*ial c!&*t *en#e*e# it #ecii!n in $av!* !$ *!#&ce*. The #ip!itive p!*ti!n

the*e!$ *ea# a $!ll!:'

>0+<0, p*eie c!ni#e*e#, the (!&*t $in# $!* plainti$$ an# aaint #e$en#ant,

an#

a !*#e* #e$en#ant t! pa plainti$$ the net a!&nt !$

54,. a liailit &n#e* !lic !. 27 a

itiate# the 4,. pecial cla&e #e#&cti!n an#

the *ec!ve*e# & !$ 145,., :ith inte*et

the*e!n at the leal *ate, &ntil $&ll pai#;

!*#e* #e$en#ant t! pa plainti$$ the & !$ 3,.

a an# $!* att!*neE $ee; an#



c !*#e* #e$en#ant t! pa c!t !$ &it.

All !the* clai an# c!&nte*clai a*e acc!*#inl #iie# $!*th:ith.

S< <0D0D. 2

The t*ial c!&*t *&le# that aal!n an# Atia :e*e n!t epl!ee !* *ep*eentative !$ *!#&ce*. =t

Sai#'

The (!&*t i ati$ie# that plainti$$ a n!t e ai# t! have electe# an# enae#

aal!n an# Atia, thei* e*vice a a*!*e# ca* #*ive* an# a ec&*it &a*# havin

een e*el !$$e*e# 0( anaeent an# nic!*n Sec&*it an# :hich latte*

$i* aine# the t! plainti$$. The :ae an# ala*ie !$ !th aal!n an# Atia a*e

p*e&al pai# thei* *epective $i*, :hich al!ne :iel# the p!:e* t! #ii

the. aal!n an# Atia a*e aine# t! plainti$$ in $&l$illent !$ a*eeent t!

p*!vi#e #*ivin e*vice an# p*!pe*t p*!tecti!n a &ch L in a c!ntext :hich #!e n!t

ip*e the (!&*t a t*anlatin int! plainti$$E p!:e* t! c!nt*!l the c!n#&ct !$ an

aine# #*ive* !* ec&*it &a*#, e!n# pe*hap entitlin plainti$$ t! *e&et a*e

*eplaceent $!* &ch #*ive* &a*#. The $in#in i acc!*#inl c!pelle# that neithe*

aal!n n!* Atia :e*e plainti$$E "epl!ee" in av!i#ance !$ #e$en#antE liailit

&n#e* the p!lic, pa*tic&la*l the ene*al excepti!n the*ein e!#ie#.

eithe* i the (!&*t p*epa*e# t! accept the p*!p!iti!n that #*ive* aal!n an# &a*#

Atia :e*e the "a&th!*i)e# *ep*eentative" !$ plainti$$. The :e*e e*el an aine#

a*!*e# ca* #*ive* an# ec&*it &a*#, *epectivel, $!* the %&ne 29, 197 !ne t*an$e*

$*! plainti$$E aa B*anch t! it a?ati >ea# <$$ice. M&ite plainl L it :a telle*a*ieth Alapa :h! ha# "c&t!#" !$ the 725,. cah ein t*an$e**e# al!n a

peci$ie# !ne *!&te, an# hence plainti$$E then #einate# "eene*" a#ve*te# t! in

the p!lic. 3

+!*t&ne appeale# thi #ecii!n t! the (!&*t !$ Appeal :hich #!c?ete# the cae a (A-/.0. (6 !.

32948. =n it #ecii!n + ,ro2ul!ated on ' 7a# $&&4% it affir2ed in toto the a,,ealed de(ision/

The (!&*t !$ Appeal a*ee# :ith the c!ncl&i!n !$ the t*ial c!&*t that aal!n an# Atia :e*e

neithe* epl!ee n!* a&th!*i)e# *ep*eentative !$ *!#&ce* an# *ati!cinate# a $!ll!:'

A p!lic !* c!nt*act !$ in&*ance i t! e c!nt*&e# lie*all in $av!* !$ the in&*e# an#

t*ictl aaint the in&*ance c!pan e: @i$e nte*p*ie v. (!&*t !$ Appeal, 27

S(0A 889; S&n =n&*ance <$$ice, @t#. v. (!&*t !$ Appeal, 211 S(0A 554. (!nt*act

!$ in&*ance, li?e !the* c!nt*act, a*e t! e c!nt*&e# acc!*#in t! the ene an# eanin

!$ the te* :hich the pa*tie theelve have &e#. =$ &ch te* a*e clea* an#

&nai&!&, the &t e ta?en an# &n#e*t!!# in thei* plain, !*#ina* an# p!p&la*



ene e: @i$e nte*p*ie (ae, supra, p. 878; S&n =n&*ance <$$ice, @t#. v. (!&*t !$

Appeal, 195 S(0A 193.

The lan&ae &e# #e$en#ant-appellant in the a!ve &!te# tip&lati!n i plain,

!*#ina* an# iple. ! !the* inte*p*etati!n i necea*. The :!*# "epl!ee" &t e

ta?en t! ean in the !*#ina* ene.

The @a!* (!#e i a pecial la: peci$icall #ealin :ithFan# peci$icall #eine# t!

p*!tect la!* an# the*e$!*e it #e$initi!n a t! epl!e*-epl!ee *elati!nhip in!$a*

a the applicati!nFen$!*ceent !$ ai# (!#e i c!nce*ne# &t necea*il e

inapplicale t! an in&*ance c!nt*act :hich #e$en#ant-appellant itel$ ha# $!*&late#.

>a# it inten#e# t! appl the @a!* (!#e in #e$inin :hat the :!*# "epl!ee" *e$e* t!,

it &tFh!&l# have ! tate# exp*el in the in&*ance p!lic.

Sai# #*ive* an# ec&*it &a*# cann!t e c!ni#e*e# a epl!ee !$ plainti$$-appellee

an? eca&e it ha n! p!:e* t! hi*e !* t! #ii ai# #*ive* an# ec&*it &a*# &n#e*

the c!nt*act xh. an# ( except !nl t! a? $!* thei* *eplaceent $*! the

c!nt*act!*.

<n 2 %&ne 1994, +!*t&ne $ile# thi petiti!n $!* *evie: !n certiorari. =t allee that the t*ial c!&*t an#

the (!&*t !$ Appeal e**e# in h!l#in it liale &n#e* the in&*ance p!lic eca&e the l! $all :ithin

the ene*al excepti!n cla&e c!ni#e*in that #*ive* aal!n an# ec&*it &a*# Atia :e*e

*!#&ce*E a&th!*i)e# *ep*eentative !* epl!ee in the t*an$e* !$ the !ne an# pa*!ll $*! it

*anch !$$ice in aa (it t! it hea# !$$ice in a?ati.

Acc!*#in t! +!*t&ne, :hen *!#&ce* c!ii!ne# a &a*# an# a #*ive* t! t*an$e* it $&n# $*!!ne *anch t! an!the*, the e$$ectivel an# necea*il ecae it a&th!*i)e# *ep*eentative in the ca*e

an# c&t!# !$ the !ne. A&in that the c!&l# n!t e c!ni#e*e# a&th!*i)e# *ep*eentative, the

:e*e, neve*thele, epl!ee !$ *!#&ce*. =t ae*t that the exitence !$ an epl!e*-epl!ee

*elati!nhip "i #ete*ine# la: an# ein &ch, it cann!t e the &Iect !$ a*eeent." Th&, i$ the*e

:a in *ealit an epl!e*-epl!ee *elati!nhip et:een *!#&ce*, !n the !ne han#, an# aal!n

an# Atia, !n the !the*, the p*!vii!n in the c!nt*act !$ *!#&ce* :ith 0( anaeent Ste $!*

aal!n an# :ith nic!*n Sec&*it Se*vice $!* Atia :hich tate that *!#&ce* i n!t thei*

epl!e* an# that it i a!lve# $*! an liailit a an epl!e*, :!&l# n!t !lite*ate the *elati!nhip.

+!*t&ne p!int !&t that an epl!e*-epl!ee *elati!nhip #epen# &p!n $!&* tan#a*#' 1 theanne* !$ electi!n an# enaeent !$ the p&tative epl!ee; 2 the !#e !$ paent !$ :ae; 3

the p*eence !* aence !$ a p!:e* t! #ii; an# 4 the p*eence an# aence !$ a p!:e* t! c!nt*!l

the p&tative epl!eeE c!n#&ct. <$ the $!&*, the *iht-!$-c!nt*!l tet ha een hel# t! e the #eciive

$act!*. 6 It asserts that the ,ower of (ontrol over 7a!alon! and Ati!a was vested in and eer(ised b# Produ(ers/

<ortune further insists that PRC 7ana!e2ent S#ste2 and ni(orn Se(urit# Servi(es are but ?labor-onl#?

(ontra(tors under Arti(le $ of the abor Code whi(h ,rovides6

A*t. 18. Contractor or subcontractor. L The*e i "la!*-!nl" c!nt*actin :he*e the



pe*!n &pplin :!*?e* t! an epl!e* #!e n!t have &tantial capital !* invetent

in the $!* !$ t!!l, e&ipent, achine*ie, :!*? p*eie, a!n !the*, an# the

:!*?e* *ec*&ite# an# place# &ch pe*!n a*e pe*$!*in activitie :hich a*e

#i*ectl *elate# t! the p*incipal &ine !$ &ch epl!e*. =n &ch cae, the pe*!n !*

inte*e#ia* hall e c!ni#e*e# e*el a an aent !$ the epl!e* :h! hall e

*ep!nile t! the :!*?e* in the ae anne* an# extent a i$ the latte* :e*e #i*ectlepl!e# hi.

+!*t&ne th& c!nten# that aal!n an# Atia :e*e epl!ee !$ *!#&ce*, $!ll!:in the *&lin in

International )imber Corp. vs. RC - that a findin! that a (ontra(tor is a ?labor-onl#? (ontra(tor is

eFuivalent to a findin! that there is an e2,lo#er-e2,lo#ee relationshi, between the owner of the ,ro>e(t and the

e2,lo#ees of the ?labor-onl#? (ontra(tor/

<n the !the* han#, *!#&ce* c!nten# that aal!n an# Atia :e*e n!t it epl!ee ince it ha#

n!thin t! #! :ith thei* electi!n an# enaeent, the paent !$ thei* :ae, thei* #iial, an# the

c!nt*!l !$ thei* c!n#&ct. *!#&ce* a*&e# that the *&le in International )imber Corp. i n!t applicale

t! all cae &t !nl :hen it ec!e necea* t! p*event an vi!lati!n !* ci*c&venti!n !$ the @a!*(!#e, a !cial leilati!n :h!e p*!vii!n a et ai#e c!nt*act ente*e# int! pa*tie in !*#e* t!

ive p*!tecti!n t! the :!*?in an.

*!#&ce* $&*the* aeve*ate that :hat h!&l# e applie# i the *&le in American President ines vs.

Clave, 8 to wit6

=n #ete*inin the exitence !$ epl!e*-epl!ee *elati!nhip, the $!ll!:in eleent

a*e ene*all c!ni#e*e#, nael' 1 the electi!n an# enaeent !$ the epl!ee; 2

the paent !$ :ae; 3 the p!:e* !$ #iial; an# 4 the p!:e* t! c!nt*!l the

epl!eeE c!n#&ct.

Since &n#e* *!#&ce*E c!nt*act :ith 0( anaeent Ste it i the latte* :hich aine#

aal!n a the #*ive* !$ *!#&ce*E a*!*e# ca* an# :a *ep!nile $!* hi $aith$&l #icha*e !$ hi

#&tie an# *ep!niilitie, an# ince *!#&ce* pai# the !nthl c!penati!n !$ 1,4. pe* #*ive*

t! 0( anaeent Ste an# n!t t! aal!n, it i clea* that aal!n :a n!t *!#&ce*E

epl!ee. A t! Atia, *!#&ce* *elie !n the p*!vii!n !$ it c!nt*act :ith nic!*n Sec&*it Se*vice

:hich p*!vi#e that the &a*# !$ the latte* "a*e in n! ene epl!ee !$ the (@=T."

The*e i e*it in thi petiti!n.

=t h!&l# e n!te# that the in&*ance p!lic ente*e# int! the pa*tie i a the$t !* *!e* in&*ancep!lic :hich i a $!* !$ ca&alt in&*ance. Secti!n 174 !$ the =n&*ance (!#e p*!vi#e'

Sec. 174. (a&alt in&*ance i in&*ance c!ve*in l! !* liailit a*iin $*! acci#ent

!* ihap, excl&#in ce*tain tpe !$ l! :hich la: !* c&t! a*e c!ni#e*e# a

$allin excl&ivel :ithin the c!pe !$ in&*ance &ch a $i*e !* a*ine. =t incl&#e, &t

i n!t liite# t!, epl!e*E liailit in&*ance, p&lic liailit in&*ance, !t!* vehicle

liailit in&*ance, plate la in&*ance, bur-lary and the#t insurance, pe*!nal acci#ent



an# health in&*ance a :*itten n!n-li$e in&*ance c!panie, and other substantially

similar &inds o# insurance. ephae &pplie#

xcept :ith *epect t! c!p&l!* !t!* vehicle liailit in&*ance, the =n&*ance (!#e c!ntain n!

!the* p*!vii!n applicale t! ca&alt in&*ance !* t! *!e* in&*ance in pa*tic&la*. Thee c!nt*act

a*e, the*e$!*e, !ve*ne# the ene*al p*!vii!n applicale t! all tpe !$ in&*ance. <&ti#e !$ thee,the *iht an# !liati!n !$ the pa*tie &t e #ete*ine# the te* !$ thei* c!nt*act, ta?in int!

c!ni#e*ati!n it p&*p!e an# al:a in acc!*#ance :ith the ene*al p*inciple !$ in&*ance la:.

=t ha een aptl !e*ve# that in &*la*, *!e*, an# the$t in&*ance, "the !pp!*t&nit t! #e$*a&# the

in&*e* L the !*al ha)a*# L i ! *eat that in&*e* have $!&n# it necea* t! $ill &p thei* p!licie

:ith c!&ntle *et*icti!n, an #eine# t! *e#&ce thi ha)a*#. Sel#! #!e the in&*e* a&e the

*i? !$ all l!e #&e t! the ha)a*# in&*e# aaint." 10 Persons freFuentl# e(luded under su(h ,rovisions

are those in the insuredEs servi(e and e2,lo#2ent/ 11 The ,ur,ose of the e(e,tion is to !uard a!ainst liabilit#

should the theft be (o22itted b# one havin! unrestri(ted a((ess to the ,ro,ert#/ 12 In su(h (ases% the ter2s

s,e(if#in! the e(luded (lasses are to be !iven their 2eanin! as understood in (o22on s,ee(h/ 13 The ter2s

?servi(e? and ?e2,lo#2ent? are !enerall# asso(iated with the idea of sele(tion% (ontrol% and (o2,ensation/ 1+

A c!nt*act !$ in&*ance i a c!nt*act !$ a#hei!n, th& an ai&it the*ein h!&l# e *e!lve# aaint

the in&*e*, 1 or it should be (onstrued liberall# in favor of the insured and stri(tl# a!ainst the insurer/ 16

i2itations of liabilit# should be re!arded with etre2e >ealous# and 2ust be (onstrued

in su(h a wa#% as to ,re(lude the insurer fro2 non-(o2,lian(e with its obli!ation/

1-

It !oes without sa#in! thenthat if the ter2s of the (ontra(t are (lear and una2bi!uous% there is no roo2 for (onstru(tion and su(h ter2s

(annot be enlar!ed or di2inished b# >udi(ial (onstru(tion/ 18

An in&*ance c!nt*act i a c!nt*act !$ in#enit &p!n the te* an# c!n#iti!n peci$ie# the*ein. 1 It is

settled that the ter2s of the ,oli(# (onstitute the 2easure of the insurerEs liabilit#/ 20 In the absen(e of statutor#

,rohibition to the (ontrar#% insuran(e (o2,anies have the sa2e ri!hts as individuals to li2it their liabilit# and to

i2,ose whatever (onditions the# dee2 best u,on their obli!ations not in(onsistent with ,ubli( ,oli(#/

ith the $!*e!in p*inciple in in#, it a n!: e a?e# :hethe* aal!n an# Atia &ali$ a

epl!ee !* a&th!*i)e# *ep*eentative !$ *!#&ce* &n#e* pa*a*aph !$ the ene*al excepti!n

cla&e !$ the p!lic :hich, $!* ea *e$e*ence, i aain &!te#'

/0A@ G(T=<S

The c!pan hall n!t e liale &n#e* thi p!lic in *epect !$

xxx xxx xxx

an l! ca&e# an #ih!net, $*a&#&lent !* c*iinal act !$ the

in&*e# !* an !$$ice*, employee, pa*tne*, #i*ect!*, trustee or authori0ed



representative !$ the =n&*e# :hethe* actin al!ne !* in c!nI&ncti!n :ith

!the*. . . . ephae &pplie#

The*e i a*?e# #ia*eeent et:een the pa*tie !n the c!**ect eanin !$ the te* "epl!ee" an#

"a&th!*i)e# *ep*eentative."

=t i clea* t! & that in!$a* a +!*t&ne i c!nce*ne#, it :a it intenti!n t! excl&#e an# exept $*!

p*!tecti!n an# c!ve*ae l!e a*iin $*! #ih!net, $*a&#&lent, !* c*iinal act !$ pe*!n *ante# !*

havin &n*et*icte# acce t! *!#&ce*E !ne !* pa*!ll. hen it &e# then the te* "epl!ee," it

&t have ha# in in# an pe*!n :h! &ali$ie a &ch a ene*all an# &nive*all &n#e*t!!#, !*

I&*ip*&#entiall etalihe# in the liht !$ the $!&* tan#a*# in the #ete*inati!n !$ the epl!e*-

epl!ee *elati!nhip, 21 or as statutoril# de(lared even in a li2ited sense as in the (ase of Arti(le $ of the

abor Code whi(h (onsiders the e2,lo#ees under a ?labor-onl#? (ontra(t as e2,lo#ees of the ,art# e2,lo#in!

the2 and not of the ,art# who su,,lied the2 to the e2,lo#er/ 22

+!*t&ne clai that *!#&ce*E c!nt*act :ith 0( anaeent Ste an# nic!*n Sec&*it

Se*vice a*e "la!*-!nl" c!nt*act.

*!#&ce*, h!:eve*, init that the exp*e te* the*e!$, it i n!t the epl!e* !$

aal!n. !t:ithtan#in &ch exp*e a&pti!n !$ 0( anaeent Ste an#

nic!*n Sec&*it Se*vice that the #*ive* an# the ec&*it &a*# each hall &ppl t!

*!#&ce* a*e n!t the latte*E epl!ee, it a, in $act, e that it i eca&e the c!nt*act a*e,

in#ee#, "la!*-!nl" c!nt*act. hethe* the a*e i, in the liht !$ the c*ite*ia p*!vi#e# $!* in

A*ticle 18 !$ the @a!* (!#e, a &eti!n !$ $act. Since the pa*tie !pte# t! &it the cae $!*

I&#ent !n the ai !$ thei* tip&lati!n !$ $act :hich a*e t*ictl liite# t! the in&*ancep!lic, the c!nt*act :ith 0( anaeent Ste an# nic!*n Sec&*it Se*vice, the

c!plaint $!* vi!lati!n !$ .D. !. 532, an# the in$!*ati!n the*e$!* $ile# the (it +ical !$

aa (it, the*e i a pa&cit !$ evi#ence a t! :hethe* the c!nt*act et:een *!#&ce* an#

0( anaeent Ste an# nic!*n Sec&*it Se*vice a*e "la!*-!nl" c!nt*act.

B&t even *antin $!* the a?e !$ a*&ent that thee c!nt*act :e*e n!t "la!*-!nl" c!nt*act, an#

0( anaeent Ste an# nic!*n Sec&*it Se*vice :e*e t*&l in#epen#ent c!nt*act!*, :e a*e

ati$ie# that aal!n an# Atia :e*e, in *epect !$ the t*an$e* !$ *!#&ce*E !ne $*! it aa

(it *anch t! it hea# !$$ice in a?ati, it "a&th!*i)e# *ep*eentative" :h! e*ve# a &ch :ith it

telle* a*ieth Alapa. >!:!eve* vie:e#, *!#&ce* ent*&te# the th*ee :ith the peci$ic #&t t!

a$el t*an$e* the !ne t! it hea# !$$ice, :ith Alapa t! e *ep!nile $!* it c&t!# in t*anit;

aal!n t! #*ive the a*!*e# vehicle :hich :!&l# ca** the !ne; an# Atia t! p*!vi#e the nee#e#

ec&*it $!* the !ne, the vehicle, an# hi t:! !the* c!pani!n. =n h!*t, $!* thee pa*tic&la* ta?,



the th*ee acte# a aent !$ *!#&ce*. A "*ep*eentative" i #e$ine# a !ne :h! *ep*eent !* tan# in

the place !$ an!the*; !ne :h! *ep*eent !the* !* an!the* in a pecial capacit, a an aent, an# i

inte*chaneale :ith "aent." 23

=n vie: !$ the $!*e!in, +!*t&ne i exept $*! liailit &n#e* the ene*al excepti!n cla&e !$ the

in&*ance p!lic.

>0+<0 , the intant petiti!n i he*e /0ATD. The #ecii!n !$ the (!&*t !$ Appeal in (A-

/.0. (6 !. 32948 #ate# 3 a 1994 a :ell a that !$ B*anch 148 !$ the 0ei!nal T*ial (!&*t !$

a?ati in (ivil (ae !. 117 a*e 060SD an# ST AS=D. The c!plaint in (ivil (ae !.

117 i D=S=SSD.

! p*!n!&nceent a t! c!t.

S< <0D0D.

"ellosillo and 1apunan, JJ., concur.

Padilla, J., too& no part.

2uiason, J., is on leave.

"oo/$o/

1 Rollo, 48-47 ephae &pplie#.

2 Id., .

3 Rollo, 1-11.

4 Annex "A" !$ etiti!n; Id., 45-53. e* A&t*ia-a*tine), A., %., :ith a*i!en, A.

an# 0ee, 0., %%., c!nc&**in.

5 Rollo, 51-52.

8 (itin in the etiti!n, B*!a#:a !t!*, =nc. v. @0(, 158 S(0A 522 [197], an# in

the e!*an#&, 6all& Sec&*it Se*vice v. @0(, 224 S(0A 71 [1993].

7 189 S(0A 341 [199].

114 S(0A 32 [192].

9 A0=A (@A0A . (A<S, Insurance, 193 e#., 199.

1 =@@=A B. 6A(, Handboo& on the a% o# Insurance, 3*# e#. B&it .

An#e*en [1951], 114.

11 B!:lin v. >alen (!&nt !t!* (!., 88 S.. 2# 229, 18 Tenn. App. 52.

12 Ba**et v. (!e*cial Stan#a*# =n. (!., Tex. (iv. App., 145 S.. 2# 315.



13 @e#vin?a v. >!e =n. (!. !$ e: K!*?, 115 A. 598, 139 #. 434, 19 [email protected]. 187.

14 Id.; /&l$ +inance N Sec&*itie (!. v. ati!nal +i*e =n. (!., 7 @a. App. .

15 (A<S, op. cit ., 22.

18 6e*en#ia v. (!&*t !$ Appeal, 217 S(0A 417 [1993].

17 (A<S, op. cit ., 13.

1 43 A %&* 2# =n&*ance O 271 [192].

19 St!?e v. alaan =n&*ance, 127 S(0A 788 [194].

2 a*a!&nt =n&*ance (!*p. v. %ap)!n, 211 S(0A 79 [1992].

21 See B*!a#:a !t!*, =nc. v. @0(, supra n!te 8; (anl&an Sec&*it Aenc

(!*p. v. @0(, 218 S(0A 2 [1992]; 6all& Sec&*it Se*vice v. @0(, supra

n!te 8; an# 6ill&a v. @0(, 225 S(0A 537 [1993].

22 See =nte*nati!nal Tie* (!*p. v. @0(, supra n!te 7; Ba&i! v. @0(, 22

S(0A 485 [1985].

23 Blac?E @a: Dicti!na*, +i$th e#., 117.

S(<D D=6=S=<

[/.0. !. 158187. a 18, 25]

/@+ 0S<0TS, =(., petitioner, vs. >=@== (>A0T0 =S0A( (<0<0AT=<,

respondent .

D ( = S = <

<, J .'

Be$!*e the (!&*t i the petiti!n $!* certiorari &n#e* 0&le 45 !$ the 0evie# 0&le !$ (!&*t petiti!ne*

/@+ 0S<0TS, =(., aaint *ep!n#ent >=@== (>A0T0 =S0A( (<0<0AT=<.

etiti!ne* aail the appellate c!&*t #ecii!n[1] :hich #iie# it t:! appeal an# a$$i*e# the

I&#ent !$ the t*ial c!&*t.

+!* *evie: a*e the :a**in inte*p*etati!n !$ petiti!ne* an# *ep!n#ent !n the c!pe !$ the in&*ancec!pan liailit $!* ea*th&a?e #aae t! petiti!ne* p*!pe*tie. etiti!ne* ave* that, p&*&ant t! it

ea*th&a?e h!c? en#!*eent *i#e*, =n&*ance !lic !. 31944 c!ve* all #aae t! the p*!pe*tie

:ithin it *e!*t ca&e# ea*th&a?e. 0ep!n#ent c!nten# that the *i#e* liit it liailit $!* l! t!

the t:! :iin p!!l !$ petiti!ne*.

The $act a etalihe# the c!&*t a 3uo, an# a$$i*e# the appellate c!&*t a*e a $!ll!:'

[]lainti$$ i the !:ne* !$ the la)a 0e!*t it&ate# at A!!, @a ni!n an# ha# it p*!pe*tie in ai#

http://sc.judiciary.gov.ph/jurisprudence/2005/may2005/156167.htm#_ftn1




*e!*t in&*e# !*iinall :ith the Ae*ican >!e A&*ance (!pan A>A(-A=. =n the $i*t $!&*

in&*ance p!licie i&e# A>A(-A= $*! 194-5; 195-8; 198-197; an# 197- xh. (,

D, an# +; al! xh. 1, 2, 3 an# 4 *epectivel, the *i? !$ l! $*! ea*th&a?e h!c? :a exten#e#

!nl t! plainti$$ t:! :iin p!!l, th&, ea*th&a?e h!c? en#t. =te 5 !nl xh. (-1; D-1, an#

an# t:! 2 :iin p!!l !nl xh. (-1; D-1, an# +-1. =te 5 in th!e p!licie *e$e**e# t!

the t:! 2 :iin p!!l !nl xh. 1-B, 2-B, 3-B an# +-2; that &e&entl A>A(A= i&e#in plainti$$ $av!* !lic !. 28-41233- c!ve*in the pe*i!# a*ch 14, 19 t! a*ch 14, 199

xh. / al! /-1 an# in ai# p!lic the ea*th&a?e en#!*eent cla&e a in#icate# in xhiit (-1,

D-1, xhiit an# +-1 :a #elete# an# the ent* &n#e* n#!*eentFa**antie at the tie !$ i&e

*ea# that plainti$$ *ene:e# it p!lic :ith A>A( A= $!* the pe*i!# !$ a*ch 14, 199 t! a*ch 14,

199 &n#e* !lic !. 28-45881-9 xh. > :hich ca**ie# the ent* &n#e* n#!*eentFa**antie

at Tie !$ =&e, :hich *ea# n#!*eent t! =ncl&#e a*th&a?e Sh!c? xh. 8-B-1 in the a!&nt !$

1,7. an# pai# 42,85.14 xh. 8-A an# 8-B a p*ei& the*e!$, c!p&te# a $!ll!:'

=te -7,891,. - !n the (l&h!&e !nl

P .392Q;

1,5,. - !n the $&*nit&*e, etc.

c!ntaine# in the &il#in

a!ve-enti!ne#P .49Q;

393,.- !n the t:! :iin

p!!l, !nl aaint the

pe*il !$ ea*th&a?e

h!c? !nl P .1Q

118,8.- !the* &il#in incl&#e

a $!ll!:'

a Tilte* >!&e- 19,.- .551Q

!:e* >!&e- 41,.- .551Q

c >!&e She#- 55,. -.54Q

1,. $!* $&*nit&*e, $ixt&*e,

line ai*-c!n an#

!pe*atin e&ipent

that plainti$$ a*ee# t! in&*e :ith #e$en#ant the p*!pe*tie c!ve*e# A>A( A= !lic !. 28-

45881-9 xh. > p*!vi#e# that the p!lic :!*#in an# *ate in ai# p!lic e c!pie# in the p!lic t!

e i&e# #e$en#ant; that #e$en#ant i&e# !lic !. 31944 t! plainti$$ c!ve*in the pe*i!# !$

a*ch 14, 199 t! a*ch 14, 1991 $!* 1,7,8. $!* a t!tal p*ei& !$ 45,159.92 xh. =; that



in the c!p&tati!n !$ the p*ei&, #e$en#ant !lic !. 31944 xh. =, :hich i the p!lic in

&eti!n, c!ntaine# !n the *iht-han# &ppe* p!*ti!n !$ pae 7 the*e!$, the $!ll!:in'

0ate-6a*i!&

*ei& - 37,42.8 +F@

2,81.52 Tph!!n

1,3.78 (

393. S

D!c. Stap 3,8.1

+.S.T. 778.9

*e. Tax 49.5

T<TA@ 45,159.92;

that the a!ve *ea?-#!:n !$ p*ei& h!: that plainti$$ pai# !nl 393. a p*ei& aaint

ea*th&a?e h!c? S; that in all the ix in&*ance p!licie xh. (, D, , +, / an# >, the p*ei&

aaint the pe*il !$ ea*th&a?e h!c? i the ae, that i 393. xh. ( an# 1-B; 2-B an# 3-B-1 an#

3-B-2; +-2 an# 4-A-1; /-2 an# 5-(-1; 8-(-1; i&e# A>A( xh. (, D, , +, / an# > an# in

!lic !. 31944 i&e# #e$en#ant, the h!c? en#!*eent p*!vi#esic4'

=n c!ni#e*ati!n !$ the paent the in&*e# t! the c!pan !$ the & incl&#e# a##iti!nal p*ei&

the (!pan a*ee, n!t:ithtan#in :hat i tate# in the p*inte# c!n#iti!n !$ thi p!lic #&e t! the

c!nt*a*, that thi in&*ance c!ve* l! !* #aae t! h!c? t! an !$ the p*!pe*t in&*e# thi

!lic !ccai!ne# !* th*!&h !* in c!ne&ence !$ ea*th&a?e xh. 1-D, 2-D, 3-A, 4-B, 5-A, 8-D

an# 7-(;

that in xhiit 7-( the :!*# incl&#e# a!ve the &n#e*line# p!*ti!n :a #elete#; that !n %&l 18, 199

an ea*th&a?e t*&c? (ent*al @&)!n an# !*the*n @&)!n an# plainti$$ p*!pe*tie c!ve*e# !lic

!. 31944 i&e# #e$en#ant, incl&#in the t:! :iin p!!l in it A!! laa 0e!*t :e*e

#aae#.[2]

A$te* the ea*th&a?e, petiti!ne* a#vie# *ep!n#ent that it :!&l# e a?in a clai &n#e* it =n&*ance

!lic !. 31944 $!* #aae !n it p*!pe*tie. 0ep!n#ent int*&cte# petiti!ne* t! $ile a $!*al clai,

then aine# the invetiati!n !$ the clai t! an in#epen#ent clai a#I&te*, Bane A#I&te* an#

S&*ve!*, =nc.[3] <n %&l 3, 199, *ep!n#ent, th*!&h it a#I&te*, *e&ete# petiti!ne* t! &itva*i!& #!c&ent in &pp!*t !$ it clai. <n A&&t 7, 199, Bane A#I&te* an# S&*ve!*, =nc.,

th*!&h it 6ice-*ei#ent A.0. #e @e!n,[4] *en#e*e# a p*eliina* *ep!*t[5] $in#in extenive #aae

ca&e# the ea*th&a?e t! the cl&h!&e an# t! the t:! :iin p!!l. *. #e @e!n tate# that

except $!* the :iin p!!l, all a$$ecte# ite have n! c!ve*ae $!* ea*th&a?e h!c?.[8] <n

A&&t 11, 199, petiti!ne* $ile# it $!*al #ean#[7] $!* ettleent !$ the #aae t! all it p*!pe*tie

in the A!! laa 0e!*t. <n A&&t 23, 199, *ep!n#ent #enie# petiti!ne* clai !n the *!&n# that

it in&*ance p!lic !nl a$$!*#e# ea*th&a?e h!c? c!ve*ae t! the t:! :iin p!!l !$ the *e!*t.
















[] etiti!ne* an# *ep!n#ent $aile# t! a**ive at a ettleent.[9] Th&, !n %an&a* 24, 1991, petiti!ne*

$ile# a c!plaint[1] :ith the *ei!nal t*ial c!&*t !$ ai p*ain $!* the paent !$ the $!ll!:in'

1. The & !$ 5,427,779., *ep*eentin l!e &taine# the in&*e# p*!pe*tie, :ith

inte*et the*e!n, a c!p&te# &n#e* pa*. 29 !$ the p!lic Annex B &ntil $&ll pai#;

2. The & !$ 42,42. pe* !nth, *ep*eentin c!ntin&in l!e &taine# plainti$$

!n acc!&nt !$ #e$en#ant *e$&al t! pa the clai;

3. The & !$ 5,., :a !$ exepla* #aae;

4. The & !$ 5,. :a !$ att!*ne $ee an# expene !$ litiati!n;

5. (!t.[11]

0ep!n#ent $ile# it An:e* :ith Special an# A$$i*ative De$ene :ith (!p&l!* (!&nte*clai.[12]

<n +e*&a* 21, 1994, the l!:e* c!&*t a$te* t*ial *&le# in $av!* !$ the *ep!n#ent, vi0'

The a!ve che#&le clea*l h!: that plainti$$ pai# !nl a p*ei& !$ 393. aaint the pe*il !$

ea*th&a?e h!c?, the ae p*ei& it pai# aaint ea*th&a?e h!c? !nl !n the t:! :iin p!!l

in all the p!licie i&e# A>A(A= xhiit (, D, , + an# /. +*! thi $act the (!&*t &t

c!ne&entl a*ee :ith the p!iti!n !$ #e$en#ant that the en#!*eent *i#e* xhiit 7-( ean that

!nl the t:! :iin p!!l :e*e in&*e# aaint ea*th&a?e h!c?.

lainti$$ c!**ectl p!int !&t that a p!lic !$ in&*ance i a c!nt*act !$ a#hei!n hence, :he*e the

lan&ae &e# in an in&*ance c!nt*act !* applicati!n i &ch a t! c*eate ai&it the ae h!&l# e

*e!lve# aaint the pa*t *ep!nile the*e$!*, i.e., the in&*ance c!pan :hich p*epa*e# the c!nt*act.

T! the in# !$ [the] (!&*t, the lan&ae &e# in the p!lic in litiati!n i clea* an# &nai&!& hence

the*e i n! nee# $!* inte*p*etati!n !* c!nt*&cti!n &t !nl applicati!n !$ the p*!vii!n the*ein.

+*! the a!ve !e*vati!n the (!&*t $in# that !nl the t:! 2 :iin p!!l ha# ea*th&a?e

h!c? c!ve*ae an# :e*e heavil #aae# the ea*th&a?e :hich t*&c? !n %&l 18, 199. De$en#ant

havin a#itte# that the #aae t! the :iin p!!l :a app*aie# #e$en#ant a#I&te* at

38,., #e$en#ant &t, vi*t&e !$ the c!nt*act !$ in&*ance, pa plainti$$ ai# a!&nt.

Beca&e it i the $in#in !$ the (!&*t a tate# in the ie#iatel p*ece#in pa*a*aph that #e$en#ant i

liale !nl $!* the #aae ca&e# t! the t:! 2 :iin p!!l an# that #e$en#ant ha a#e ?n!:n

t! plainti$$ it :illinne an# *ea#ine t! ettle ai# liailit, the*e i n! ai $!* the *ant !$ the !the*

#aae p*ae# $!* plainti$$. A t! the c!&nte*clai !$ #e$en#ant, the (!&*t #!e n!t a*ee that the

acti!n $ile# plainti$$ i aele an# hihl pec&lative ince &ch acti!n i a la:$&l exe*cie !$ the

plainti$$ *iht t! c!e t! (!&*t in the h!net elie$ that thei* (!plaint i e*it!*i!&. The p*ae*,

the*e$!*e, !$ #e$en#ant $!* #aae i li?e:ie #enie#.

>0+<0, p*eie c!ni#e*e#, #e$en#ant i !*#e*e# t! pa plainti$$ the & !$ T>0

>D0D =/>TK S=G T><SAD S<S 38,. *ep*eentin #aae t! the t:! 2

:iin p!!l, :ith inte*et at 8Q pe* ann& $*! the #ate !$ the $ilin !$ the (!plaint &ntil















#e$en#ant !liati!n t! plainti$$ i $&ll pai#.

! p*!n!&nceent a t! c!t.[13]

etiti!ne* !ti!n $!* 0ec!ni#e*ati!n :a #enie#. Th&, petiti!ne* $ile# an appeal :ith the (!&*t !$

Appeal ae# !n the $!ll!:in aine# e**!*'[14]

A. T> T0=A@ (<0T 00D = +=D=/ T>AT @A=T=++-A@@AT (A <@K0(<60 +<0 T> DAA/ T< =TS T< S==/ <<@S D0 =TS +=0 <@=(K

<. 31944, (<S=D0=/ =TS 0<6=S=<S, T> (=0(STA(S S00<D=/ T>

=SSA( <+ SA=D <@=(K AD T> A(TAT=<S <+ T> A0T=S SBSMT T<

T> A0T>MAR <+ %@K 18, 199.

B. T> T0=A@ (<0T 00D = DT0==/ @A=T=++-A@@ATS 0=/>T T<

0(<60 D0 D+DAT-A@@S <@=(K <. 31944; G> = BK @==T=/

=TS@+ T< A (<S=D0AT=< <+ T> SA=D <@=(K =S<@ATD +0< T>

(=0(STA(S S00<D=/ =TS =SSA( AD T> A(TAT=<S <+ T>

A0T=S A+T0 T> A0T>MAR <+ %@K 18, 199.

(. T> T0=A@ (<0T 00D = <T ><@D=/ T>AT @A=T=++-A@@AT =S

T=T@D T< T> DAA/S (@A=D, =T> =T0ST (<TD AT 24Q 0

A < (@A=S < 0<(DS <+ <@=(K.

<n the !the* han#, *ep!n#ent $ile# a pa*tial appeal, aailin the l!:e* c!&*t $ail&*e t! a:a*# it

att!*ne $ee an# #aae !n it c!p&l!* c!&nte*clai.

A$te* *evie:, the appellate c!&*t a$$i*e# the #ecii!n !$ the t*ial c!&*t an# *&le#, th&'

>!:eve*, a$te* ca*e$&ll pe*&in the #!c&enta* evi#ence !$ !th pa*tie, e a*e n!t c!nvince# that

the lat t:! 2 in&*ance c!nt*act xh. / an# >, :hich the plainti$$-appellant ha# :ith A>A(

A= an# &p!n :hich the &Iect in&*ance c!nt*act :ith hilippine (ha*te* =n&*ance (!*p!*ati!n i

ai# t! have een ae# an# c!pie# xh. =, c!ve*e# an exten#e# ea*th&a?e h!c? in&*ance !n all the

in&*e# p*!pe*tie.

x x x

e al! $in# that the (!&*t a &! :a c!**ect in n!t *antin the plainti$$-appellant p*ae* $!* the

ip!iti!n !$ inte*et 24Q !n the in&*ance clai an# 8Q !n l! !$ inc!e allee#l a!&ntin t!

4,2,.. Since the #e$en#ant-appellant ha exp*ee# it :illinne t! pa the #aae ca&e#

!n the t:! 2 :iin p!!l, a the (!&*t a &! an# thi (!&*t c!**ectl $!&n# it t! e liale !nl, it

then cann!t e ai# that it :a in #e$a&lt an# the*e$!*e liale $!* inte*et.

(!in t! the #e$en#ant-appellant p*ae* $!* an att!*ne $ee, l!n-tan#in i the *&le that the

a:a*# the*e!$ i &Iect t! the !&n# #ic*eti!n !$ the c!&*t. Th&, i$ &ch #ic*eti!n i :ell-exe*cie#,

it :ill n!t e #it&*e# !n appeal (at*! et al. v. (A, et al., /.0. !. 1153, %&l 1, 22.

!*e!ve*, ein the a:a*# the*e!$ an excepti!n *athe* than a *&le, it i necea* $!* the c!&*t t! a?e

$in#in !$ $act an# la: that :!&l# *in the cae :ithin the excepti!n an# I&ti$ the *ant !$ &ch







a:a*# (!&nt* Ban?e* =n&*ance (!*p. v. @iana Ba an# (!&nit &lti-&*p!e (!!p., =nc.,

/.0. !. 138914, %an&a* 25, 22. The*e$!*e, h!l#in that the plainti$$-appellant acti!n i n!t

aele an# hihl pec&lative, e $in# that the (!&*t a &! #i# n!t e** in *antin the ae.

>0+<0, in vie: !$ all the $!*e!in, !th appeal a*e he*e D=S=SSD an# I&#ent !$ the

T*ial (!&*t he*e A++=0D in toto. ! c!t.[15]

etiti!ne* $ile# the p*eent petiti!n *aiin the $!ll!:in i&e' [18]

A. >T>0 T> (<0T <+ AA@S (<00(T@K >@D T>AT D0

0S<DTS =S0A( <@=(K <. 31944, <@K T> T< 2 S==/

<<@S, 0AT>0 T>A A@@ T> 0<0T=S (<60D T>0D0, A0

=S0D A/A=ST T> 0=SR <+ A0T>MAR S><(R.

B. >T>0 T> (<0T <+ AA@S (<00(T@K D=D T=T=<0S 0AK0

+<0 DAA/S =T> =T0ST T>0< AT T> 0AT (@A=D, ATT<0KS

+S AD GSS <+ @=T=/AT=<.

etiti!ne* c!nten#'

irst, that the p!lic ea*th&a?e h!c? en#!*eent clea*l c!ve* all !$ the p*!pe*tie in&*e# an# n!t

!nl the :iin p!!l. =t &e# the :!*# an p*!pe*t in&*e# thi p!lic, an# it h!&l# e

inte*p*ete# a all incl&ive.

Se!ond, the &n&ali$ie# an# &n*et*icte# nat&*e !$ the ea*th&a?e h!c? en#!*eent i c!n$i*e# in

the !# !$ the in&*ance p!lic itel$, :hich tate that it i []&Iect t!' <the* =n&*ance (la&e,

Tph!!n n#!*eent, Ert(<u+e S(o!+ Endt., xten#e# (!ve*ae n#t., +A a**ant N Ann&al

aent A*eeent <n @!n Te* !licie.[17]

T(ird, that the &ali$icati!n *e$e**in t! the t:! :iin p!!l ha# al*ea# een #elete# in the

ea*th&a?e h!c? en#!*eent.

ourt(, it i &nelievale $!* *ep!n#ent t! clai that it !nl a#e an ina#ve*tent !ii!n :hen it

#elete# the ai# &ali$icati!n.

i"t(, that the ea*th&a?e h!c? en#!*eent *i#e* h!&l# e iven p*ece#ence !ve* the :!*#in !$ the

in&*ance p!lic, eca&e the *i#e* i the !*e #elie*ate exp*ei!n !$ the a*eeent !$ the c!nt*actin

pa*tie.

Sixt(, that in thei* p*evi!& in&*ance p!licie, liit :e*e place# !n the en#!*eentF:a**antie

en&e*ate# at the tie !$ i&e.

Sevent(, an ai&it in the ea*th&a?e h!c? en#!*eent h!&l# e *e!lve# in $av!* !$ petiti!ne*

an# aaint *ep!n#ent. =t :a *ep!n#ent :hich ca&e# the ai&it :hen it a#e the p!lic in i&e.

Ei$(t(, the &ali$icati!n !$ the en#!*eent liitin the ea*th&a?e h!c? en#!*eent h!&l# e

inte*p*ete# a a caveat !n the tan#a*# $i*e in&*ance p!lic, &ch a t! *e!ve the t:! :iin p!!l

$*! the c!ve*ae $!* the *i? !$ $i*e. =t h!&l# n!t e &e# t! liit the *ep!n#ent liailit $!*









ea*th&a?e h!c? t! the t:! :iin p!!l !nl.

Nint(, the*e i n! ai $!* the appellate c!&*t t! h!l# that the a##iti!nal p*ei& :a n!t pai# &n#e*

the exten#e# c!ve*ae. The p*ei& $!* the ea*th&a?e h!c? c!ve*ae :a al*ea# incl&#e# in the

p*ei& pai# $!* the p!lic.

Tent(, the pa*tie c!ntep!*ane!& an# &e&ent act h!: that the inten#e# t! exten# ea*th&a?e

h!c? c!ve*ae t! all in&*e# p*!pe*tie. hen it ec&*e# an in&*ance p!lic $*! *ep!n#ent,

petiti!ne* t!l# *ep!n#ent that it :ante# an exact *eplica !$ it latet in&*ance p!lic $*! Ae*ican

>!e A&*ance (!pan A>A(-A=, :hich c!ve*e# all the *e!*t p*!pe*tie $!* ea*th&a?e

h!c? #aae an# *ep!n#ent a*ee#. A$te* the %&l 18, 199 ea*th&a?e, *ep!n#ent a&*e# petiti!ne*

that it :a c!ve*e# $!* ea*th&a?e h!c?. 0ep!n#ent in&*ance a#I&te*, Bane A#I&te* an#

S&*ve!*, =nc., li?e:ie *e&ete# petiti!ne* t! &it the necea* #!c&ent $!* it &il#in clai

an# !the* *epai* c!t. Th&, &n#e* the #!ct*ine !$ e&itale et!ppel, it cann!t #en that the in&*ance

p!lic it i&e# t! petiti!ne* c!ve*e# all !$ the p*!pe*tie :ithin the *e!*t.

E#event(, that it i p*!pe* $!* it t! avail !$ a petiti!n $!* *evie: certiorari &n#e* 0&le 45 !$ the0evie# 0&le !$ (!&*t a it *ee#, an# the*e i n! nee# $!* cali*ati!n !$ the evi#ence in !*#e* t!

etalih the $act &p!n :hich thi petiti!n i ae#.

<n the !the* han#, *ep!n#ent a#e the $!ll!:in c!&nte* a*&ent'[1]

irst, n!ne !$ the p*evi!& p!licie i&e# A>A(-A= $*! 193 t! 199 explicitl exten#e#

c!ve*ae aaint ea*th&a?e h!c? t! petiti!ne* in&*e# p*!pe*tie !the* than !n the t:! :iin

p!!l. etiti!ne* a#itte# that $*! 194 t! 19, !nl the t:! :iin p!!l :e*e in&*e# aaint

ea*th&a?e h!c?. +*! 19 &ntil 199, the p*!vii!n in it p!lic :e*e p*acticall i#entical t! it

ea*lie* p!licie, an# the*e :a n! inc*eae in the p*ei& pai#. A>A(-A=, in a lette* [19] it

*ep*eentative an&el (. M&iIan!, cate!*icall tate# that it p*evi!& p!lic, $*! :hich *ep!n#ent

p!lic :a c!pie#, c!ve*e# !nl ea*th&a?e h!c? $!* the t:! :iin p!!l.

Se!ond, petiti!ne* paent !$ a##iti!nal p*ei& in the a!&nt !$ 393. h!: that the p!lic

!nl c!ve*e# ea*th&a?e h!c? #aae !n the t:! :iin p!!l. The a!&nt :a the ae a!&nt

pai# petiti!ne* $!* ea*th&a?e h!c? c!ve*ae !n the t:! :iin p!!l $*! 199-1991. !

a##iti!nal p*ei& :a pai# t! :a**ant c!ve*ae !$ the !the* p*!pe*tie in the *e!*t.

T(ird, the #eleti!n !$ the ph*ae pe*tainin t! the liitati!n !$ the ea*th&a?e h!c? en#!*eent t!

the t:! :iin p!!l in the p!lic che#&le #i# n!t expan# the ea*th&a?e h!c? c!ve*ae t! all !$

petiti!ne* p*!pe*tie. A pe* it a*eeent :ith petiti!ne*, *ep!n#ent c!pie# it p!lic $*! theA>A(-A= p!lic p*!vi#e# petiti!ne*. Alth!&h the $i*t $ive p!licie c!ntaine# the ai#

&ali$icati!n in thei* *i#e* title, in the lat t:! p!licie, thi &ali$icati!n in the title :a #elete#.

A>A(-A=, th*!&h *. %. Ba*an#a ===, tate# that &ch #eleti!n :a a e*e ina#ve*tence. Thi

ina#ve*tence #i# n!t a?e the p!lic inc!plete, n!* #i# it *!a#en the c!pe !$ the en#!*eent

:h!e #ec*iptive title :a e*el en&e*ate#. An ai&it in the p!lic can e eail *e!lve#

l!!?in at the !the* p*!vii!n, peciall the en&e*ati!n !$ the ite in&*e#, :he*e !nl the t:!

:iin p!!l :e*e n!te# a c!ve*e# $!* ea*th&a?e h!c? #aae.








ourt(, in it (!plaint, petiti!ne* allee# that in it p!licie $*! 194 th*!&h 19, the ph*ae =te

5 393,. !n the t:! :iin p!!l !nl aaint the pe*il !$ ea*th&a?e h!c? !nl eant that

!nl the :iin p!!l :e*e in&*e# $!* ea*th&a?e #aae. The ae ph*ae i &e# in toto in the

p!licie $*! 199 t! 199, the !nl #i$$e*ence ein the #einati!n !$ the t:! :iin p!!l a

=te 3.

i"t(, in !*#e* $!* the ea*th&a?e h!c? en#!*eent t! e e$$ective, p*ei& &t e pai# $!* all thep*!pe*tie c!ve*e#. =n all !$ it even in&*ance p!licie, petiti!ne* !nl pai# 393. a p*ei& $!*

c!ve*ae !$ the :iin p!!l aaint ea*th&a?e h!c?. ! !the* p*ei& :a pai# $!* ea*th&a?e

h!c? c!ve*ae !n the !the* p*!pe*tie. =n a##iti!n, the &e !$ the &ali$ie* AK intea# !$ A@@ t!

#ec*ie the p*!pe*t c!ve*e# :a #!ne #elie*atel t! enale the pa*tie t! peci$ the p*!pe*tie

incl&#e# $!* ea*th&a?e c!ve*ae.

Sixt(, petiti!ne* #i# n!t in$!* *ep!n#ent !$ it *e&i*eent that all !$ it p*!pe*tie &t e incl&#e#

in the ea*th&a?e h!c? c!ve*ae. etiti!ne* !:n evi#ence h!: that it !nl *e&i*e# *ep!n#ent t!

$!ll!: the exact p*!vii!n !$ it p*evi!& p!lic $*! A>A(-A=. 0ep!n#ent c!plie# :ith thi

*e&i*eent. 0ep!n#ent !nl #eviati!n $*! the a*eeent :a :hen it !#i$ie# the p*!vii!n

*ea*#in the *eplaceent c!t en#!*eent. ith *ea*# t! the i&e &n#e* litiati!n, the *i#e* !$ the

!l# p!lic an# the p!lic in i&e a*e i#entical.

Sevent(, *ep!n#ent #i# n!t #! an act !* ive an a&*ance t! petiti!ne* a :!&l# et!p it $*!

aintainin that !nl the t:! :iin p!!l :e*e c!ve*e# $!* ea*th&a?e h!c?. The a#I&te* lette*

n!ti$in petiti!ne* t! p*eent ce*tain #!c&ent $!* it &il#in clai an# *epai* c!t :a iven t!

petiti!ne* e$!*e the a#I&te* ?ne: the $&ll c!ve*ae !$ it p!lic.

etiti!ne* anch!* it clai !n A>A(-A= ina#ve*tent #eleti!n !$ the ph*ae =te 5 <nl a$te* the

#ec*iptive nae !* title !$ the a*th&a?e Sh!c? n#!*eent. >!:eve*, the :!*# !$ the p!lic*e$lect the pa*tie clea* intenti!n t! liit ea*th&a?e h!c? c!ve*ae t! the t:! :iin p!!l.

Be$!*e petiti!ne* accepte# the p!lic, it ha# the !pp!*t&nit t! *ea# it c!n#iti!n. =t #i# n!t !Iect t!

an #e$icienc n!* #i# it intit&te an acti!n t! *e$!* the p!lic. The p!lic in# the petiti!ne*.

Ei$(t(, the*e i n! ai $!* petiti!ne* t! clai #aae, att!*ne $ee an# litiati!n expene. Since

*ep!n#ent :a :illin an# ale t! pa $!* the #aae ca&e# !n the t:! :iin p!!l, it cann!t e

c!ni#e*e# t! e in #e$a&lt, an# the*e$!*e, it i n!t liale $!* inte*et.

e h!l# that the petiti!n i #ev!i# !$ e*it.

=n =n&*ance !lic !. 31944, $!&* ?e ite a*e ip!*tant in the *e!l&ti!n !$ the cae at a*.

irst, in the #einati!n !$ l!cati!n !$ *i?, !nl the t:! :iin p!!l :e*e peci$ie# a incl&#e#,

vi0'

=T 3 393,. <n the t:! 2 :iin p!!l !nl aaint the pe*il !$ ea*th&a?e h!c? !nl[2]

Se!ond, &n#e* the *ea?#!:n $!* p*ei& paent,[21] it :a tate# that'







0= 0(A=T@AT=<

=T <S. A<T 0ATS 0=

x x x

3 393,. .1Q-FS 393.[22]

T(ird, !lic (!n#iti!n !. 8 tate#'

8. Thi in&*ance #!e n!t c!ve* an l! !* #aae !ccai!ne# !* th*!&h !* in c!ne&ence,

#i*ectl !* in#i*ectl !$ an !$ the $!ll!:in !cc&**ence, nael'--

a a*th&a?e, v!lcanic e*&pti!n !* !the* c!nv&li!n !$ nat&*e. [23]

ourt(, the *i#e* attache# t! the p!lic, title# xten#e# (!ve*ae n#!*eent T! =ncl&#e the e*il

!$ xpl!i!n, Ai*c*a$t, 6ehicle an# S!?e, tate#, vi0'

AA@ AKT A/0T <

@</ T0 <@=(=S

T> =S0D D0 T>=S <@=(K >A6=/ STAB@=S>D A//0/AT SS =S0D

= G(SS <+ +=6 =@@=< S<S, = (<S=D0AT=< <+ A D=S(<T <+ 5Q <0 7 Q

<+ T> T 0= x x x <@=(K >0BK D0TARS T< (<T= T>

=S0A( D0 T> AB<6 AD x x x AD T< AK T> 0=.

a*th&a?e n#!*eent

=n c!ni#e*ati!n !$ the paent the =n&*e# t! the (!pan !$ the & !$ . . . . . . . . . . . . . . . . .

a##iti!nal p*ei& the (!pan a*ee, n!t:ithtan#in :hat i tate# in the p*inte# c!n#iti!n !$

thi !lic t! the c!nt*a*, that thi in&*ance c!ve* l! !* #aae incl&#in l! !* #aae $i*et! an !$ the p*!pe*t in&*e# thi !lic !ccai!ne# !* th*!&h !* in c!ne&ence !$

a*th&a?e.

*!vi#e# al:a that all the c!n#iti!n !$ thi !lic hall appl except in ! $a* a the a e

he*e exp*el va*ie# an# that an *e$e*ence the*ein t! l! !* #aae $i*e h!&l# e #eee# t!

appl al! t! l! !* #aae !ccai!ne# !* th*!&h !* in c!ne&ence !$ a*th&a?e. [24]

etiti!ne* c!nten# that p&*&ant t! thi *i#e*, n! &ali$icati!n :e*e place# !n the c!pe !$ the

ea*th&a?e h!c? c!ve*ae. Th&, the p!lic exten#e# ea*th&a?e h!c? c!ve*ae t! all !$ the in&*e#

p*!pe*tie.

=t i aic that all the p*!vii!n !$ the in&*ance p!lic h!&l# e exaine# an# inte*p*ete# in

c!n!nance :ith each !the*.[25] All it pa*t a*e *e$lective !$ the t*&e intent !$ the pa*tie. The p!lic

cann!t e c!nt*&e# pieceeal. (e*tain tip&lati!n cann!t e e*eate# an# then a#e t! c!nt*!l;

neithe* #! pa*tic&la* :!*# !* ph*ae necea*il #ete*ine it cha*acte*. etiti!ne* cann!t $!c& !n

the ea*th&a?e h!c? en#!*eent t! the excl&i!n !$ the !the* p*!vii!n. All the p*!vii!n an#

*i#e*, ta?en an# inte*p*ete# t!ethe*, in#&ital h!: the intenti!n !$ the pa*tie t! exten# ea*th&a?e

h!c? c!ve*ae t! the t:! :iin p!!l !nl.













A ca*e$&l exainati!n !$ the p*ei& *ecapit&lati!n :ill h!: that it i the clea* intent !$ the pa*tie t!

exten# ea*th&a?e h!c? c!ve*ae !nl t! the t:! :iin p!!l. Secti!n 21 !$ the =n&*ance (!#e

#e$ine a c!nt*act !$ in&*ance a an a*eeent :he*e !ne &n#e*ta?e $!* a c!ni#e*ati!n t!

in#eni$ an!the* aaint l!, #aae !* liailit a*iin $*! an &n?n!:n !* c!ntinent event. Th&,

an in&*ance c!nt*act exit :he*e the $!ll!:in eleent c!nc&*'

1. The in&*e# ha an in&*ale inte*et;

2. The in&*e# i &Iect t! a *i? !$ l! the happenin !$ the #einate# pe*il;

3. The in&*e* a&e the *i?;

4. S&ch a&pti!n !$ *i? i pa*t !$ a ene*al chee t! #it*i&te act&al l!e a!n a la*e

*!&p !$ pe*!n ea*in a iila* *i?; an#

5. In !onsidertion o" t(e insurer)s pro%ise, t(e insured p's pre%iu%.[28] mphasis

ours

An in&*ance p*ei& i the c!ni#e*ati!n pai# an in&*e* $!* &n#e*ta?in t! in#eni$ the in&*e#aaint a peci$ie# pe*il.[27] =n $i*e, ca&alt, an# a*ine in&*ance, the p*ei& paale ec!e a

#et a !!n a the *i? attache.[2] =n the &Iect p!lic, n! p*ei& paent :e*e a#e :ith *ea*#

t! ea*th&a?e h!c? c!ve*ae, except !n the t:! :iin p!!l. The*e i n! enti!n !$ an p*ei&

paale $!* the !the* *e!*t p*!pe*tie :ith *ea*# t! ea*th&a?e h!c?. Thi i c!nitent :ith the

hit!* !$ petiti!ne* p*evi!& in&*ance p!licie $*! A>A(-A=. A !*ne !&t petiti!ne*

:itnee'

(0<SS GA=AT=< <+ @<<@D< AT<>A( TS, !vee* 25, 1991

pp. 12-13

M. !: *. ant!hac, :ill it e c!**ect t! tate al! that in!$a* a !&* in&*ance p!lic #&*in the

pe*i!# $*! a*ch 4, 194 t! a*ch 4, 195 the c!ve*ae !n ea*th&a?e h!c? :a liite# t! the t:!

:iin p!!l !nl

A. Ke, i*. =t i liite# t! the t:! :iin p!!l, peci$icall h!:n in the :a**ant, the*e i a

p*!vii!n he*e that it :a !nl $!* ite 5.

M. !*e peci$icall =te 5 tate the a!&nt !$ 393,. c!**ep!n#in t! the t:! :iin

p!!l !nl

A. Ke, i*.

(0<SS GA=AT=< <+ @<<@D< AT<>A( TS, !vee* 25, 1991

pp. 23-28

M. +!* the pe*i!# $*! a*ch 14, 19 &p t! a*ch 14, 199, #i# !& pe*!nall a**ane $!* the

p*!c&*eent !$ thi p!lic

A. Ke, i*.









M. Di# !& al! #! thi th*!&h !&* in&*ance aenc

A. =$ !& a*e *e$e**in t! +!*te =n&*ance Aenc, e.

M. = +!*te =n&*ance Aenc a #epa*tent !* #ivii!n !$ !&* c!pan

A. !, i*. The a*e !&* in&*ance aenc.

M. An# the a*e in#epen#ent !$ !&* c!pan in!$a* a !pe*ati!n a*e c!nce*ne#

A. Ke, i*, the a*e epa*ate entit.

M. B&t in!$a* a the p*!c&*eent !$ the in&*ance p!lic i c!nce*ne# the a*e !$ c!&*e &Iect t!

!&* int*&cti!n, i that n!t c!**ect

A. Ke, i*. The $inal acti!n i till :ith & alth!&h the can *ec!en# :hat in&*ance t! ta?e.

M. =n the p*!c&*eent !$ the in&*ance p!lice sic $*! a*ch 14, 19 t! a*ch 14, 199, #i# !&

ive :*itten int*&cti!n t! +!*te =n&*ance Aenc a#viin it that the ea*th&a?e h!c? c!ve*ae &t

exten# t! all p*!pe*tie !$ A!! laa 0e!*t in @a ni!n

A. !, i*. e #i# n!t a?e an :*itten int*&cti!n, alth!&h :e a#e an !*al int*&cti!n t! that e$$ect

!$ exten#in the c!ve*ae !n sic the !the* p*!pe*tie !$ the c!pan.

M. An# that int*&cti!n, acc!*#in t! !&, :a ve* ip!*tant eca&e in Ap*il 197 the*e :a an

ea*th&a?e t*e!* in @a ni!n

A. Ke, i*.

M. An# !& :ante# t! p*!tect all !&* p*!pe*tie aaint iila* t*e!* in the [$&t&*e], i that c!**ect

A. Ke, i*.M. !:, a$te* thi p!lic :a #elive*e# t! !& #i# !& !the* t! chec? the p*!vii!n :ith *epect t!

!&* int*&cti!n that all p*!pe*tie &t e c!ve*e# aain ea*th&a?e h!c? en#!*eent

A. A*e !& *e$e**in t! the in&*ance p!lic i&e# Ae*ican >!e A&*ance (!pan a*?e#

xhiit /

Att. eIia' Ke.

itne'

A. = exaine# the p!lic an# eein that the :a**ant !n the ea*th&a?e h!c? en#!*eent ha n!

!*e liitati!n *e$e**in t! the t:! :iin p!!l !nl, = :a c!ntente# al*ea# that the p*evi!&

liitati!n pe*tainin t! the t:! :iin p!!l :a al*ea# *e!ve#.

etiti!ne* al! cite# an# *elie !n the attachent !$ the ph*ae Su*&e!t to: Ot(er Insurn!e C#use,

T'p(oon Endorse%ent, Ert(<u+e S(o!+ Endorse%ent, Extended Cover$e Endorse%ent, EA

rrnt' = Annu# P'%ent A$ree%ent on Lon$ Ter% Po#i!ies[29] t! the in&*ance p!lic a p*!!$

!$ the intent !$ the pa*tie t! exten# the c!ve*ae $!* ea*th&a?e h!c?. >!:eve*, thi ph*ae i e*el

an en&e*ati!n !$ the #ec*iptive title !$ the *i#e*, cla&e, :a**antie !* en#!*eent t! :hich the





p!lic i &Iect, a *e&i*e# &n#e* Secti!n 5, pa*a*aph 2 !$ the =n&*ance (!#e.

e al! h!l# that n! ini$icance can e place# !n the #eleti!n !$ the &ali$icati!n liitin the

c!ve*ae t! the t:! :iin p!!l. The ea*th&a?e h!c? en#!*eent cann!t tan# al!ne. A

explaine# the teti!n !$ %&an Ba*an#a ===, &n#e*:*ite* $!* A>A(-A='

D=0(T GA=AT=< <+ %A BA0ADA ===[3]

TS, A&&t 11, 1992

pp. 9-12

Att. eIia'

e *epect$&ll ani$et that the ae exhiit ( t! > incl&ive have een p*evi!&l a*?e#

c!&nel $!* #e$en#ant a xhiit[] 1-8 incl&ive. Di# !& have !ccai!n t! *evie: !$ sic thee ix 8

p!licie i&e# !&* c!pan [in $av!*] !$ A!! laa 0e!*t

=TSS'

Ke[,] = *eee* havin !ne !ve* thee p!licie at !ne p!int !$ tie, i*.

M. !:, :ach sic !$ thee ix 8 p!licie a*?e# in evi#ence a xhiit ( t! > *epectivel ca**ie

an ea*th&a?e h!c? en#!*eent[] &eti!n t! !& i, !n the ai !n sic the :!*#in in#icate#

in xhiit ( t! > *epectivel :hat :a the extent !$ the c!ve*ae [aaint] the pe*il !$ ea*th&a?e

h!c? a p*!vi#e# $!* in each !$ the ix 8 p!licie

x x x

=TSS'

The extent !$ the c!ve*ae i !nl &p t! the t:! 2 :iin p!!l, i*.

M. = that $!* each !$ the ix 8 p!licie nael' xhiit (, D, , +, / an# >

A. Ke, i*.

ATTK. %=A'

hat i !&* ai $!* tatin that the c!ve*ae aaint ea*th&a?e h!c? a p*!vi#e# $!* in each !$ the

ix 8 p!licie exten# t! the t:! 2 :iin p!!l !nl

=TSS'

Beca&e it a he*e in the p!licie, in the en&e*ati!n a*th&a?e Sh!c? n#!*eent, in the (la&ean# a**antie' =te 5 !nl a*th&a?e Sh!c? n#!*eent, i*.

ATTK. %=A'

itne *e$e**in t! xhiit (-1, !&* >!n!*.

=TSS'

e #! n!t n!*all c!ve* ea*th&a?e h!c? en#!*eent !n tan# al!ne ai. +!* :iin p!!l :e





#! c!ve* ea*th&a?e h!c?. +!* &il#in :e c!ve*e# it $!* $&ll ea*th&a?e c!ve*ae :hich incl&#e

ea*th&a?e h!c?

(<0T'

A $a* a ea*th&a?e h!c? en#!*eent !& #! n!t have a peci$ic c!ve*ae $!* !the* thin !the* than

:iin p!!l K!& a*e c!ve*in &il#in The a*e c!ve*e# a ene*al in&*ance

=TSS'

a*th&a?e h!c? c!ve*ae c!&l# n!t tan# al!ne. =$ :e a*e c!ve*in &il#in !* an!the* :e can i&e

ea*th&a?e h!c? !lel &t that the !ent = ee thi, the thin that c!e t! in# i eithe*

in&*in a :iin p!!l, $!&n#ati!n, the a*e n!*all a$$ecte# ea*th&a?e &t n!t $i*e, i*.

D=0(T GA=AT=< <+ %A BA0ADA ===

TS, A&&t 11, 1992

pp. 23-25

M. lainti$$ :itne, *. ant!hac teti$ie# an# he allee# that !nl xhiit (, D, an# + incl&ive

[*eaine#] it c!ve*ae aaint ea*th&a?e h!c? t! t:! 2 :iin p!!l !nl &t that xhiit /

an# > *epectivel enten# the c!ve*ae aaint ea*th&a?e h!c? t! all the p*!pe*tie in#icate# in the

*epective che#&le attache# t! ai# p!licie, :hat can !& a a!&t that teti!n !$ plainti$$

:itne

=TSS'

A = have enti!ne# ea*lie*, ea*th&a?e h!c? cann!t tan# al!ne :ith!&t the !the* hal$ !$ it. = a&*e

!& that thi !ne c!ve* the t:! :iin p!!l :ith *epect t! ea*th&a?e h!c? en#!*eent. Bae#

!n it, i$ :e a*e !in t! l!!? at the p*ei& the*e ha een n! chane :ith *epect t! the *ate.ve*tie sic the*e i a *ene:al i$ the intenti!n !$ the in&*e* :a t! incl&#e the ea*th&a?e h!c?, =

thin? the*e i a &tantial inc*eae in the p*ei&. e a*e n!t !nl !in t! c!ni#e* the t:! 2

:iin p!!l !$ the !the* a tate# in the p!lic. A = ee, the*e i n! inc*eae in the a!&nt !$ the

p*ei&. = &t a that the c!ve*ae :a n!t *!a#en sic t! incl&#e the !the* ite.

(<0T'

The a*e the ae, the p*ei& *ate

=TSS'

The a*e the ae in the ence sic, in the a!&nt !$ the c!ve*ae. =$ !& a*e !in t! #! !e

c!p&tati!n ae# !n the *ate !& :ill a**ive at the ae p*ei&, !&* >!n!*.

(0<SS-GA=AT=< <+ %A BA0ADA ===

TS, Septee* 7, 1992

pp. 4-8



ATTK. AD0S'

!&l# !& a a atte* !$ p*actice [in&*e] :iin p!!l $!* $i*e in&*ance

=TSS'

!, :e #!nt, i*.

M. That i :h the ph*ae ea*th&a?e h!c? t! the t:! 2 :iin p!!l !nl :a place#, i it n!t

A. Ke, i*.

ATTK. AD0S'

ill !& n!t al! a*ee :ith e that thee exhiit, xhiit / an# > :hich !& have p!inte# t! #&*in

!&* #i*ect-exainati!n, the ph*ae =te n!. 5 !nl eanin t! sic the t:! 2 :iin p!!l :a

#elete# $*! the p!licie i&e# A=, i it n!t

x x x

ATTK. AD0S'

A an in&*ance exec&tive :ill !& n!t attach an ini$icance t! the #eleti!n !$ the &ali$in ph*ae

$!* the p!licie

=TSS'

an:e* t! that :!&l# e, the #eleti!n !$ that pa*tic&la* ph*ae i ina#ve*tent. Bein a c!pan

&n#e*:*ite*, :e #! n!t c!ve*. . it :a ina#ve*tent eca&e !$ the p*evi!& p!licie that :e have i&e#

:ith n! peci$ic attachent, p*ei& *ate an# ! !n. =t :a ina#ve*tent, i*.

The (!&*t al! *eIect petiti!ne* c!ntenti!n that *ep!n#ent c!ntep!*ane!& an# &e&ent act t!the i&ance !$ the in&*ance p!lic $alel ave the petiti!ne* a&*ance that the c!ve*ae !$ the

ea*th&a?e h!c? en#!*eent incl&#e# all it p*!pe*tie in the *e!*t. 0ep!n#ent !nl in&*e# the

p*!pe*tie a inten#e# the petiti!ne*. etiti!ne* !:n :itne teti$ie# t! thi a*eeent, vi0'

(0<SS GA=AT=< <+ @<<@D< AT<>A(

TS, %an&a* 14, 1992

pp. 4-5

M. %&t t! e clea* a!&t thi pa*tic&la* an:e* !$ !&* *. itne, :hat exactl #i# !& tell Att.

<la ic t! c!p $*! xhiit > $!* p&*p!e !$ p*!c&*in the p!lic $*! hilippine (ha*te*=n&*ance (!*p!*ati!n

A. = t!l# hi that the in&*ance that the :ill have t! et :ill have the ae p*!vii!n a thi

Ae*ican >!e =n&*ance !lic !. 28-45881-9.

M. K!& a*e *e$e**in t! xhiit > !$ c!&*e

A. Ke, i*, t! xhiit >.



M. S!, all the p*!vii!n he*e :ill e the ae except that !$ the p*ei& *ate

A. Ke, i*. >e a&*e# e that :ith *ea*# t! the in&*ance p*ei& *ate that the :ill e cha*in

:ill e liite# t! thi !ne. = sic can even e lee*.

(0<SS GA=AT=< <+ @<<@D< AT<>A(

TS, %an&a* 14, 1992

pp. 12-14

Att. eIia'

M. ill it e c!**ect t! tate[,] *. itne, that !& a#e a c!pa*i!n !$ the p*!vii!n an# c!pe !$

c!ve*ae !$ xhiit = an# > !etie in the thi*# :ee? !$ a*ch, 199 !* the*ea!&t

A. Ke, i*, a!&t that tie.

M. An# at that tie #i# !& n!tice an #ic*epanc !* #i$$e*ence et:een the p!lic :!*#in a :ell

a c!pe !$ c!ve*ae !$ xhiit = an# > *epectivel

A. !, i*, = #i# n!t #ic!ve* an #i$$e*ence ina&ch sic a = :a a&*e# al*ea# that the p!lic

:!*#in an# *ate :e*e c!pie# $*! the in&*ance p!lic = ent the &t it :a !nl :hen thi cae

e*&pte# that :e #ic!ve*e# !e #ic*epancie.

M. ith *epect t! the ite #ecla*e# $!* in&*ance c!ve*ae #i# !& n!tice an #ic*epanc at an tie

et:een th!e in#icate# in xhiit = an# th!e in#icate# in xhiit > *epectivel

A. ith *ea*# t! the :!*#in = #i# n!t n!tice an #i$$e*ence eca&e it :a exactl the ae

393,. !n the t:! 2 :iin p!!l !nl aaint the pe*il !$ ea*th&a?e h!c? :hich =

&n#e*t!!# e$!*e that thi p*!vii!n :ill have t! e place# he*e eca&e thi pa*tic&la* p*!vii!n &n#e*

the pe*il !$ ea*th&a?e h!c? !nl i *e&ete# eca&e thi i an in&*ance p!lic an# the*e$!*e cann!t

e in&*e# aaint $i*e, ! thi ha t! e place#.

The ve*al a&*ance allee#l iven *ep!n#ent *ep*eentative Att. la :e*e n!t p*!ve#. Att.

la cate!*icall #enie# havin iven &ch a&*ance.

+inall, petiti!ne* p&t &ch t*e !n the lette* !$ *ep!n#ent in#epen#ent clai a#I&te*, Bane

A#I&te* an# S&*ve!*, =nc. B&t a teti$ie# t! the *ep*eentative !$ Bane A#I&te* an#

S&*ve!*, =nc., *ep!n#ent neve* eant t! lea# petiti!ne* t! elieve that the en#!*eent $!*

ea*th&a?e h!c? c!ve*e# p*!pe*tie !the* than the t:! :iin p!!l, vi0'

D=0(T GA=AT=< <+ A@B0T< D @< Bane

A#I&te* an# S&*ve!*, =nc.

TS, %an&a* 28, 1993

pp. 22-28

M. D! !& *ecall the ci*c&tance that le# t! !&* #ic&i!n *ea*#in the extent !$ c!ve*ae !$ the

p!lic i&e# hilippine (ha*te* =n&*ance (!*p!*ati!n



A. = *eee* that :hen = *et&*ne# t! the !$$ice a$te* the inpecti!n, = !t a ph!t!c!p !$ the in&*ance

c!ve*ae p!lic an# it :a in#icate# &n#e* =te 3 peci$icall that the c!ve*ae i !nl $!* ea*th&a?e

h!c?. Then, = *eee* = ha# a tal? :ith Att. la sic, an# = *elae# t! hi :hat = ha# $!&n# !&t

in the p!lic an# he c!n$i*e# t! e in#ee# !nl =te 3 :hich :e*e the t:! :iin p!!l have

c!ve*ae $!* ea*th&a?e h!c?.

x x x

M. !:, a :e ?n!: $*! !& n*. #e @e!n !&* ai, i$ an, $!* tatin that except $!* the

:iin p!!l all a$$ecte# ite have n! c!ve*ae $!* ea*th&a?e h!c?

x x x

A. = ae# tateent !n $in#in, eca&e &p!n exainati!n !$ the p!lic = $!&n# !&t that

&n#e* =te 3 it :a peci$ic !n the :!*#in that !n the t:! :iin p!!l !nl, then encl!e# in

pa*enthei aaint the pe*il[] !$ ea*th&a?e h!c? !nl, an# ec!n#l, :hen = exaine# the

&a* !$ p*ei& paent !nl =te 3 :hich *e$e* t! the :iin p!!l have a c!p&tati!n $!*

p*ei& paent $!* ea*th&a?e h!c? an# all the !the* ite have n! c!p&tati!n $!* paent !$p*ei&.

=n &, the*e i n! ai&it in the te* !$ the c!nt*act an# it *i#e*. etiti!ne* cann!t *el !n the

ene*al *&le that in&*ance c!nt*act a*e c!nt*act !$ a#hei!n :hich h!&l# e lie*all c!nt*&e# in

$av!* !$ the in&*e# an# t*ictl aaint the in&*e* c!pan :hich &&all p*epa*e it.[31] A c!nt*act !$

a#hei!n i !ne :he*ein a pa*t, &&all a c!*p!*ati!n, p*epa*e the tip&lati!n in the c!nt*act, :hile

the !the* pa*t e*el a$$ixe hi inat&*e !* hi "a#hei!n" the*et!. Th*!&h the ea*, the c!&*t

have hel# that in thee tpe !$ c!nt*act, the pa*tie #! n!t a*ain !n e&al $!!tin, the :ea?e* pa*tE

pa*ticipati!n ein *e#&ce# t! the alte*native t! ta?e it !* leave it. Th&, thee c!nt*act a*e vie:e# a

t*ap $!* the :ea?e* pa*t :h! the c!&*t !$ I&tice &t p*!tect. [32] (!ne&entl, an ai&it

the*ein i *e!lve# aaint the in&*e*, !* c!nt*&e# lie*all in $av!* !$ the in&*e#. [33]

The cae la: :ill h!: that thi (!&*t :ill !nl *&le !&t lin# a#he*ence t! te* :he*e $act an#

ci*c&tance :ill h!: that the a*e aicall !ne-i#e#.[34] Th&, :e have calle# !n l!:e* c!&*t t!

*eain ca*e$&l in c*&tini)in the $act&al ci*c&tance ehin# each cae t! #ete*ine the e$$icac !$

the clai !$ c!nten#in pa*tie. =n eve#op%ent Bn+ o" t(e P(i#ippines v. Ntion#

/er!(ndisin$ Corportion, et #.,[35] the pa*tie, :h! :e*e ac&te &ineen !$ expe*ience, :e*e

p*e&e# t! have aente# t! the aaile# #!c&ent :ith $&ll ?n!:le#e.

e cann!t appl the ene*al *&le !n c!nt*act !$ a#hei!n t! the cae at a*. etiti!ne* cann!t clai it#i# n!t ?n!: the p*!vii!n !$ the p!lic. +*! the incepti!n !$ the p!lic, petiti!ne* ha# *e&i*e# the

*ep!n#ent t! c!p verbatim the p*!vii!n an# te* !$ it latet in&*ance p!lic $*! A>A(-A=.

The teti!n !$ *. @e!p!l#! ant!hac, a #i*ect pa*ticipant in ec&*in the in&*ance p!lic !$

petiti!ne*, i *e$lective !$ petiti!ne* ?n!:le#e, vi0'

D=0(T GA=AT=< <+ @<<@D< AT<>A([38]

TS, Septee* 23, 1991


















pp. 2-21

M. Di# !& in#icate t! Att. <la sic :hat ?in# !$ p!lic !& :!&l# :ant $!* th!e $acilitie in

A!! laa

A. Ke, i*. = t!l# hi that = :ill a*ee t! that *ene:al !$ thi p!lic &n#e* hilippine (ha*te* =n&*ance

(!*p!*ati!n a l!n a it :ill $!ll!: the ae !* exact p*!vii!n !$ the p*evi!& in&*ance p!lic :e

ha# :ith Ae*ican >!e A&*ance (!*p!*ati!n.

M. Di# !& ta?e an tep *. itne t! en&*e that the p*!vii!n :hich !& :ante# in the Ae*ican

>!e =n&*ance p!lic a*e t! e inc!*p!*ate# in the (=( p!lic

A. Ke, i*.

M. hat tep #i# !& ta?e

A. hen = exaine# the p!lic !$ the hilippine (ha*te* =n&*ance (!*p!*ati!n = peci$icall t!l# hi

that the p!lic an# :!*#in hall e c!pie# $*! the A= !lic !. 28-45881-9.

0ep!n#ent, in c!pliance :ith the c!n#iti!n et the petiti!ne*, c!pie# A= !lic !. 28-

45881-9 in #*a$tin it =n&*ance !lic !. 31944. =t i t*&e that the*e :a va*iance in !e te*,

peci$icall in the *eplaceent c!t en#!*eent, &t the p*incipal p*!vii!n !$ the p!lic *eaine#

eentiall iila* t! A>A(-A= p!lic. (!ne&entl, :e cann!t appl the "$ine p*int" !* "c!nt*act

!$ a#hei!n" *&le in thi cae a the pa*tie intent t! liit the c!ve*ae !$ the p!lic t! the t:!

:iin p!!l !nl i n!t ai&!&.[37]

IN ;IE HEREO, the I&#ent !$ the (!&*t !$ Appeal i a$$i*e#. The petiti!n $!* certiorari i

#iie#. ! c!t.

S< <0D0D.

A&t*ia-a*tine), (alleI!, S*., Tina, an# (hic!-a)a*i!, %%., c!nc&*.

[1] The #ecii!n :a penne# %&tice %!e @. Sai!, %*., !$ the 1th Divii!n !$ the (!&*t !$ Appeal.

[2] 0!ll!, pp. 1-12.

[3] <*iinal 0ec!*#, p. 5.

[4] 6ice-*ei#ent $!* the +i*e, ninee*in an# Allie# (lai Divii!n.

[5] <*iinal 0ec!*#, pp. 44-4.

[8] <*iinal 0ec!*#, p. 47.

[7] Id., p. 49.

[] Id., p. 5.


http://sc.judiciary.gov.ph/jurisprudence/2005/may2005/156167.htm#_ftnref1



















[9] Id., pp. 5-54.

[1] Id., pp. 1-7.

[11] Id., pp. 8-7.

[12] <*iinal 0ec!*#, pp. 2-42.

[13] <*iinal 0ec!*#, pp. 4-41.

[14] (A 0!ll!, p. 42.

[15] (A 0!ll!, pp. 14-18.

[18] 0!ll!, p. 42.

[17] 0!ll!, pp. 4-49.

[1] 0!ll!, pp. 34-395.

[19]

xhiit 9.[2] <*iinal 0ec!*#, p. 17.

[21] <*iinal 0ec!*#, p. 17.

[22] <*iinal 0ec!*#, p. 8.

[23] 0!ll!, p. 7.

[24] <*iinal 0ec!*#, p. 71.

[25] 0&i) v. She*i$$ !$ anila, 34 S(0A 3 197; ati!nal ni!n +i*e =n&*ance (!pan !$

itt&* v. St!lt-ielen hilippine, =nc., 14 S(0A 82 199.

[28] See 6ance, pp. 1-2, cite# in Aaani, (!e*cial @a: !$ the hilippine, v!l. 2, 198, p. 8;

hilaca*e >ealth Ste, =nc. v. (!&*t !$ Appeal, 379 S(0A 358 22.

[27] 43 A. %&*. 2# 7.

[2] De @e!n, >ect!* S., The =n&*ance (!#e !$ the hilippine 1992, p. 194.

[29] xhiit = an# =-2.

[3] The &n#e*:*ite* $!* hil-Ae*ican =n&*ance (!*p!*ati!n $!*e*l A= :h! *evie:e# the A!!

laa 0e!*t in&*ance p!licie.

[31] ete*n /&a*ant (!*p!*ati!n v. (!&*t !$ Appeal, 17 S(0A 852 199; 6e*en#ia v. (!&*t !$

Appeal, 217 S(0A 417 1993.

[32] hilippine ati!nal Ban? v. (!&*t !$ Appeal, 198 S(0A 538 1991.

[33] 6e*en#ia v. (!&*t !$ Appeal, 217 S(0A 417 1993; e: @i$e nte*p*ie v. (!&*t !$ Appeal, 27

S(0A 889 1992; S&n =n&*ance <$$ice, @t#. v. (!&*t !$ Appeal, 211 S(0A 554 1992.



















http://sc.judiciary.gov.ph/jurisprudence/2002/mar2002/125678.htm





































[34] an Ae*ican !*l# Ai*:a, =nc. v. 0apa#a, 29 S(0A 87 1992; B= (*e#it (!*p!*ati!n v.

(!&*t !$ Appeal, 24 S(0A 81 1991; Se**a v. (!&*t !$ Appeal, 229 S(0A 8 1994.

[35] 4 S(0A 824 1971.

[38] Teti!n !$ the vice p*ei#ent $!* c!*p!*ate a$$ai* an# c!*p!*ate ec*eta* !$ petiti!ne*, TS,

Septee* 23, 1991.

[37] S:eet @ine, =nc. v. Teve, 3 S(0A 381 197; Tan v. (!&*t !$ Appeal, 174 S(0A 43 199.


SUPRE/E COURT

Ba&i! (it

SECON I;ISION

2.R. No. 3>>5?4 Apri# 9, 5@@7

ETERNAL 2ARENS /E/ORIAL PAR CORPORATION, petiti!ne*,

v.

THE PHILIPPINE A/ERICAN LIE INSURANCE CO/PAN1, *ep!n#ent.

E C I S I O N

;ELASCO, 0R., J.:

T(e Cse

(ent*al t! thi etiti!n $!* 0evie: !n (e*ti!*a*i &n#e* 0&le 45 :hich ee? t! *eve*e an# et ai#e the

!vee* 28, 24 Decii!n1 !$ the (!&*t !$ Appeal (A in (A-/.0. (6 !. 571 i the &e*'

a the inacti!n !$ the in&*e* !n the in&*ance applicati!n e c!ni#e*e# a app*!val !$ the

applicati!n

T(e !ts

<n Decee* 1, 19, *ep!n#ent hilippine Ae*ican @i$e =n&*ance (!pan hilali$e ente*e#

int! an a*eeent #en!inate# a (*e#it!* /*!&p @i$e !lic !. -1922 :ith petiti!ne* te*nal

/a*#en e!*ial a*? (!*p!*ati!n te*nal. n#e* the p!lic, the client !$ te*nal :h! p&*chae#

&*ial l!t $*! it !n intallent ai :!&l# e in&*e# hilali$e. The a!&nt !$ in&*ance

c!ve*ae #epen#e# &p!n the exitin alance !$ the p&*chae# &*ial l!t. The p!lic :a t! e

e$$ective $!* a pe*i!# !$ !ne ea*, *ene:ale !n a ea*l ai.

The *elevant p*!vii!n !$ the p!lic a*e'

@=/=B=@=TK.

An @!t &*chae* !$ the A&*e# :h! i at leat 1 &t n!t !*e than 85 ea* !$ ae, i





http://www.lawphil.net/judjuris/juri2008/apr2008/gr_166245_2008.html#fnt1










in#ete# t! the A&*e# $!* the &npai# alance !$ hi l!an :ith the A&*e#, an# i accepte# $!*

@i$e =n&*ance c!ve*ae the (!pan !n it e$$ective #ate i eliile $!* in&*ance &n#e* the

!lic.

6=D( <+ =S0AB=@=TK.

! e#ical exainati!n hall e *e&i*e# $!* a!&nt !$ in&*ance &p t! 5,.. >!:eve*,

a #ecla*ati!n !$ !!# health hall e *e&i*e# $!* all @!t &*chae* a pa*t !$ the applicati!n.

The (!pan *ee*ve the *iht t! *e&i*e $&*the* evi#ence !$ in&*ailit ati$act!* t! the

(!pan in *epect !$ the $!ll!:in'

1. An a!&nt !$ in&*ance in exce !$ 5,..

2. An l!t p&*chae* :h! i !*e than 55 ea* !$ ae.

@=+ =S0A( B+=T.

The @i$e =n&*ance c!ve*ae !$ an @!t &*chae* at an tie hall e the a!&nt !$ the &npai#

alance !$ hi l!an incl&#in a**ea* &p t! &t n!t excee#in 2 !nth a *ep!*te# theA&*e# t! the (!pan !* the & !$ 1,., :hicheve* i alle*. S&ch ene$it hall e

pai# t! the A&*e# i$ the @!t &*chae* #ie :hile in&*e# &n#e* the !lic.

++(T=6 DAT <+ B+=T.

The in&*ance !$ an eliile @!t &*chae* hall e e$$ective !n the #ate he c!nt*act a l!an

:ith the A&*e#. >!:eve*, the*e hall e n! in&*ance i$ the applicati!n !$ the @!t &*chae* i

n!t app*!ve# the (!pan.3

te*nal :a *e&i*e# &n#e* the p!lic t! &it t! hilali$e a lit !$ all ne: l!t p&*chae*, t!ethe*

:ith a c!p !$ the applicati!n !$ each p&*chae*, an# the a!&nt !$ the *epective &npai# alance !$

all in&*e# l!t p&*chae*. =n *elati!n t! the intant petiti!n, te*nal c!plie# &ittin a lette*

#ate# Decee* 29, 192,4 c!ntainin a lit !$ in&*ale alance !$ it l!t &e* $!* <ct!e* 192.

<ne !$ th!e incl&#e# in the lit a "ne: &ine" :a a ce*tain %!hn (h&an. >i alance !$

paent :a h 1,. <n A&&t 2, 194, (h&an #ie#.

te*nal ent a lette* #ate# A&&t 2, 1945 t! hilali$e, :hich e*ve# a an in&*ance clai $!*

(h&an #eath. Attache# t! the clai :e*e the $!ll!:in #!c&ent' 1 (h&an (e*ti$icate !$

Death; 2 =#enti$icati!n (e*ti$icate tatin that (h&an i a nat&*ali)e# +ilipin! (iti)en; 3 (e*ti$icate!$ (laiant; 4 (e*ti$icate !$ Atten#in hician; an# 5 A&*e# (e*ti$icate.

=n *epl, hilali$e :*!te te*nal a lette* !n !vee* 12, 194,8 *e&i*in te*nal t! &it the

$!ll!:in #!c&ent *elative t! it in&*ance clai $!* (h&an #eath' 1 (e*ti$icate !$ (laiant

:ith $!* attache#; 2 A&*e# (e*ti$icate :ith $!* attache#; 3 Applicati!n $!* =n&*ance

acc!plihe# an# ine# the in&*e#, (h&an, :hile till livin; an# 4 Stateent !$ Acc!&nt

h!:in the &npai# alance !$ (h&an e$!*e hi #eath.












te*nal t*anitte# the *e&i*e# #!c&ent th*!&h a lette* #ate# !vee* 14, 194,7 :hich :a

*eceive# hilali$e !n !vee* 15, 194.

A$te* !*e than a ea*, hilali$e ha# n!t $&*nihe# te*nal :ith an *epl t! the latte* in&*ance

clai. Thi p*!pte# te*nal t! #ean# $*! hilali$e the paent !$ the clai $!* h 1, !n

Ap*il 25, 198.

=n *ep!ne t! te*nal #ean#, hilali$e #enie# te*nal in&*ance clai in a lette* #ate# a 2,

198,9 a p!*ti!n !$ :hich *ea#'

The #eceae# :a 59 ea* !l# :hen he ente*e# int! (!nt*act U955 an# 9529 :ith te*nal

/a*#en e!*ial a*? in <ct!e* 192 $!* the t!tal axi& in&*ale a!&nt !$

1,. each. ! applicati!n $!* /*!&p =n&*ance :a &itte# in !&* !$$ice p*i!* t! hi

#eath !n A&&t 2, 194.

=n acc!*#ance :ith !&* (*e#it!* /*!&p @i$e !lic !. -192, &n#e* vi#ence !$ =n&*ailitp*!vii!n, "a #ecla*ati!n !$ !!# health hall e *e&i*e# $!* all @!t &*chae* a pa*t !$ the

applicati!n." e cite $&*the* the p*!vii!n !n $$ective Date !$ (!ve*ae &n#e* the p!lic

:hich tate that "the*e hall e n! in&*ance i$ the applicati!n i n!t app*!ve# the

(!pan." Since n! applicati!n ha# een &itte# the =n&*e#FA&*e#, p*i!* t! hi #eath,

$!* !&* app*!val &t :a &itte# intea# !n !vee* 15, 194, a$te* hi #eath, *. %!hn

(h&an :a n!t c!ve*e# &n#e* the !lic. e :ih t! p!int !&t that te*nal /a*#en ein the

A&*e# :a a pa*t t! the (!nt*act an# :a the*e$!*e a:a*e !$ thee pe*tinent p*!vii!n.

ith *ea*# t! !&* acceptance !$ p*ei&, thee #! n!t c!nn!te !&* app*!val pe* e !$ the

in&*ance c!ve*ae &t a*e hel# & in t*&t $!* the pa!* &ntil the p*e*e&iite $!* in&*ancec!ve*ae hall have een et. e :ill h!:eve*, *et&*n all the p*ei& :hich have een pai#

in ehal$ !$ %!hn (h&an.

(!ne&entl, te*nal $ile# a cae e$!*e the a?ati (it 0ei!nal T*ial (!&*t 0T( $!* a & !$

!ne aaint hilali$e, #!c?ete# a (ivil (ae !. 14738. The t*ial c!&*t #eci#e# in $av!* !$

te*nal, the #ip!itive p!*ti!n !$ :hich *ea#'

>0+<0, p*eie c!ni#e*e#, I&#ent i he*e *en#e*e# in $av!* !$ lainti$$

T0A@, aaint De$en#ant >=@A@=+, !*#e*in the De$en#ant >=@A@=+, t! pa

the & !$ 1,., *ep*eentin the p*!cee# !$ the !lic !$ %!hn (h&an, pl& leal

*ate !$ inte*et, &ntil $&ll pai#; an#, t! pa the & !$ 1,. a att!*ne $ee.

S< <0D0D.

The 0T( $!&n# that te*nal &itte# (h&an applicati!n $!* in&*ance :hich he acc!plihe#

e$!*e hi #eath, a teti$ie# t! te*nal :itne an# evi#ence# the lette* #ate# Decee* 29,

192, tatin, a!n !the*' "ncl' hil-A @i$e =n&*ance Applicati!n +!* N (e*t." 1 =t $&*the*

*&le# that #&e t! hilali$e inacti!n $*! the &ii!n !$ the *e&i*eent !$ the *!&p in&*ance












!n Decee* 29, 192 t! (h&an #eath !n A&&t 2, 194, a :ell a hilali$e acceptance !$ the

p*ei& #&*in the ae pe*i!#, hilali$e :a #eee# t! have app*!ve# (h&an applicati!n. The

0T( ai# that ince the c!nt*act i a *!&p li$e in&*ance, !nce p*!!$ !$ #eath i &itte#, paent

&t $!ll!:.

hilali$e appeale# t! the (A, :hich *&le#, th&'

HEREORE, the #ecii!n !$ the 0ei!nal T*ial (!&*t !$ a?ati in (ivil (ae !. 571 i

RE;ERSE nd SET ASIE, an# the c!plaint i IS/ISSE. ! c!t.

S< <0D0D.11

The (A ae# it Decii!n !n the $act&al $in#in that (h&an applicati!n :a n!t encl!e# in

te*nal lette* #ate# Decee* 29, 192. =t $&*the* *&le# that the n!n-acc!plihent !$ the &itte#

applicati!n $!* vi!late# Secti!n 28 !$ the =n&*ance (!#e. Th&, the (A c!ncl&#e#, the*e ein n!

applicati!n $!*, (h&an :a n!t c!ve*e# hilali$e in&*ance.

>ence, :e have thi petiti!n :ith the $!ll!:in *!&n#'

The >!n!*ale (!&*t !$ Appeal ha #eci#e# a &eti!n !$ &tance, n!t the*e$!*e #ete*ine#

thi >!n!*ale (!&*t, !* ha #eci#e# it in a :a n!t in acc!*# :ith la: !* :ith the applicale

I&*ip*&#ence, in h!l#in that'

=. The applicati!n $!* in&*ance :a n!t #&l &itte# t! *ep!n#ent hila@i$e e$!*e

the #eath !$ %!hn (h&an;

==. The*e :a n! vali# in&*ance c!ve*ae; an#

===. 0eve*in an# ettin ai#e the Decii!n !$ the 0ei!nal T*ial (!&*t #ate# a 29,

1998.

T(e Courts Ru#in$

A a ene*al *&le, thi (!&*t i n!t a t*ie* !$ $act an# :ill n!t *e-exaine $act&al i&e *aie# e$!*e

the (A an# $i*t level c!&*t, c!ni#e*in thei* $in#in !$ $act a*e c!ncl&ive an# in#in !n thi

(!&*t. >!:eve*, &ch *&le i &Iect t! excepti!n, a en&nciate# in Sampayan v. Court o# Appeals'

1 :hen the $in#in a*e *!&n#e# enti*el !n pec&lati!n, &*ie !* c!nIect&*e; 2 :hen

the in$e*ence a#e i ani$etl ita?en, a&*# !* ip!ile; 3 :hen the*e i *ave a&e

!$ #ic*eti!n; 4 :hen the I&#ent i ae# !n a iapp*eheni!n !$ $act; 5 :hen the

$in#in !$ $act a*e c!n$lictin; 8 :hen in a?in it $in#in the [(A] :ent e!n# the

i&e !$ the cae, !* it $in#in a*e c!nt*a* t! the a#ii!n !$ !th the appellant an# the

appellee; 7 (en t(e "indin$s o" t(e CAD re !ontrr' to t(e tri# !ourt ; :hen the

$in#in a*e c!ncl&i!n :ith!&t citati!n !$ peci$ic evi#ence !n :hich the a*e ae#; 9 :hen

the $act et $!*th in the petiti!n a :ell a in the petiti!ne* ain an# *epl *ie$ a*e n!t

#ip&te# the *ep!n#ent; 1 :hen the $in#in !$ $act a*e p*eie# !n the &pp!e#

aence !$ evi#ence an# c!nt*a#icte# the evi#ence !n *ec!*#; an# 11 :hen the (!&*t !$





Appeal ani$etl !ve*l!!?e# ce*tain *elevant $act n!t #ip&te# the pa*tie, :hich, i$

p*!pe*l c!ni#e*e#, :!&l# I&ti$ a #i$$e*ent c!ncl&i!n.12 phai &pplie#.

=n the intant cae, the $act&al $in#in !$ the 0T( :e*e *eve*e# the (A; th&, thi (!&*t a

*evie: the.

te*nal clai that the evi#ence that it p*eente# e$!*e the t*ial c!&*t &pp!*t it c!ntenti!n that it&itte# a c!p !$ the in&*ance applicati!n !$ (h&an e$!*e hi #eath. =n te*nal lette* #ate#

Decee* 29, 192, a lit !$ in&*ale inte*et !$ &e* $!* <ct!e* 192 :a attache#, incl&#in

(h&an in the lit !$ ne: &inee. te*nal a##e# it :a n!te# at the !tt! !$ ai# lette* that the

c!**ep!n#in "hil-A @i$e =n&*ance Applicati!n +!* N (e*t." :e*e encl!e# in the lette* that

:a appa*entl *eceive# hilali$e !n %an&a* 15, 193. +inall, te*nal allee# that it p*!vi#e# a

c!p !$ the in&*ance applicati!n :hich :a ine# (h&an hiel$ an# exec&te# e$!*e hi #eath.

<n the !the* han#, hilali$e clai that the evi#ence p*eente# te*nal i in&$$icient, a*&in that

te*nal &t p*eent evi#ence h!:in that hilali$e *eceive# a c!p !$ (h&an in&*ance

applicati!n.

The evi#ence !n *ec!*# &pp!*t te*nal p!iti!n.

The $act !$ the atte* i, the lette* #ate# Decee* 29, 192, :hich hilali$e tape# a *eceive#,

tate that the in&*ance $!* $!* the attache# lit !$ &*ial l!t &e* :e*e attache# t! the lette*. S&ch

tap !$ *eceipt ha the e$$ect !$ ac?n!:le#in *eceipt !$ the lette* t!ethe* :ith the attachent.

S&ch *eceipt i an a#ii!n hilali$e aaint it !:n inte*et.13 The &*#en !$ evi#ence ha

hi$te# t! hilali$e, :hich &t p*!ve that the lette* #i# n!t c!ntain (h&an in&*ance applicati!n.

>!:eve*, hilali$e $aile# t! #! !; th&, hilali$e i #eee# t! have *eceive# (h&an in&*ance

applicati!n.T! *eite*ate, it :a hilali$e !&n#en #&t t! a?e &*e that e$!*e a t*anittal lette* i tape# a

*eceive#, the c!ntent !$ the lette* a*e c!**ect an# acc!&nte# $!*.

hilali$e alleati!n that te*nal :itnee *an !&t !$ c*e#iilit an# *eliailit #&e t!

inc!nitencie i *!&n#le. The t*ial c!&*t i in the et p!iti!n t! #ete*ine the *eliailit an#

c*e#iilit !$ the :itnee, eca&e it ha the !pp!*t&nit t! !e*ve $i*than# the :itnee

#eean!*, c!n#&ct, an# attit&#e. +in#in !$ the t*ial c!&*t !n &ch atte* a*e in#in an# c!ncl&ive

!n the appellate c!&*t, &nle !e $act !* ci*c&tance !$ :eiht an# &tance have een

!ve*l!!?e#, iapp*ehen#e#, !* iinte*p*ete#,14 that, i$ c!ni#e*e#, iht a$$ect the *e&lt !$ the

cae.15

An exainati!n !$ the teti!nie !$ the :itnee enti!ne# hilali$e, h!:eve*, *eveal n!

!ve*l!!?e# $act !$ &tance an# val&e.

hilali$e p*ia*il clai that te*nal #i# n!t even ?n!: :he*e the !*iinal in&*ance applicati!n !$












(h&an :a, a h!:n the teti!n !$ #ile*t! en#!)a'

Att. A*eval!'

M he*e i the !*iinal !$ the applicati!n $!* :hich i *e&i*e# in cae !$ ne: c!ve*ae

[en#!)a']

A =t i [a] tan#a*# !pe*atin p*!ce#&*e $!* the ne: client t! $ill &p t:! c!pie !$ thi $!* an#

the !*iinal !$ thi i &itte# t! hilali$e t!ethe* :ith the !nthl *eittance an# the

ec!n# c!p i *eaine# !* *etaine# :ith the a*?etin #epa*tent !$ te*nal /a*#en.

Att. i*an#a'

e !ve t! t*i?e !&t the an:e* a it i n!t *ep!nive a c!&nel i e*el a?in $!* the

l!cati!n an# #!e n!t [a?] $!* the n&e* !$ c!p.

Att. A*eval!'

M he*e i the !*iinal

[en#!)a']

A A $a* a = *eee* = #! n!t ?n!: :he*e the !*iinal &t :hen = &itte# :ith that

paent t!ethe* :ith the ne: client all the !*iinal = ee t! it e$!*e = in the t*anittal

lette* the !*iinal a*e attache# the*ein.18

=n !the* :!*#, the :itne a#itte# n!t ?n!:in :he*e the !*iinal in&*ance applicati!n :a, &t

elieve# that the applicati!n :a t*anitte# t! hilali$e a an attachent t! a t*anittal lette*.

A t! the eein inc!nitencie et:een the teti!n !$ an&el (!*te) !n :hethe* !ne !* t:!

in&*ance applicati!n $!* :e*e acc!plihe# an# the teti!n !$ en#!)a !n :h! act&all $ille#

!&t the applicati!n $!*, thee a*e in!* inc!nitencie that #! n!t a$$ect the c*e#iilit !$ the

:itnee. Th&, :e *&le# in e!ple v. a*e#e that in!* inc!nitencie a*e t!! t*ivial t! a$$ect the

c*e#iilit !$ :itnee, an# thee a even e*ve t! t*enthen thei* c*e#iilit a thee neate an

&pici!n that the teti!nie have een *ehea*e#.17

e *eite*ate# the a!ve *&lin in $erencillo v. People'

in!* #ic*epancie !* inc!nitencie #! n!t ipai* the eential inte*it !$ the p*!ec&ti!n

evi#ence a a :h!le !* *e$lect !n the :itnee h!net. The tet i :hethe* the teti!nie

a*ee !n eential $act an# :hethe* the *epective ve*i!n c!**!!*ate an# &tantiall

c!inci#e :ith each !the* ! a t! a?e a c!nitent an# c!he*ent :h!le.1










=n the p*eent cae, the n&e* !$ c!pie !$ the in&*ance applicati!n that (h&an exec&te# i n!t at

i&e, neithe* i :hethe* the in&*ance applicati!n p*eente# te*nal ha een $ali$ie#. Th&, the

inc!nitencie p!inte# !&t hilali$e a*e in!* an# #! n!t a$$ect the c*e#iilit !$ te*nal

:itnee.

>!:eve*, the &eti!n a*ie a t! :hethe* hilali$e a&e# the *i? !$ l! :ith!&t app*!vin the

applicati!n.

Thi &eti!n &t e an:e*e# in the a$$i*ative.

A ea*lie* tate#, hilali$e an# te*nal ente*e# int! an a*eeent #en!inate# a (*e#it!* /*!&p @i$e

!lic !. -192 #ate# Decee* 1, 19. =n the p!lic, it i p*!vi#e# that'

++(T=6 DAT <+ B+=T.

The in&*ance !$ an eliile @!t &*chae* hall e e$$ective !n the #ate he c!nt*act a l!an

:ith the A&*e#. >!:eve*, the*e hall e n! in&*ance i$ the applicati!n !$ the @!t &*chae* i

n!t app*!ve# the (!pan.

An exainati!n !$ the a!ve p*!vii!n :!&l# h!: ai&it et:een it t:! entence. The $i*t

entence appea* t! tate that the in&*ance c!ve*ae !$ the client !$ te*nal al*ea# ecae e$$ective

&p!n c!nt*actin a l!an :ith te*nal :hile the ec!n# entence appea* t! *e&i*e hilali$e t!

app*!ve the in&*ance c!nt*act e$!*e the ae can ec!e e$$ective.

=t &t e *eee*e# that an in&*ance c!nt*act i a c!nt*act !$ a#hei!n :hich &t e c!nt*&e#

lie*all in $av!* !$ the in&*e# an# t*ictl aaint the in&*e* in !*#e* t! a$e&a*# the latte* inte*et.

Th&, in $alayan Insurance Corporation v. Court o# Appeals, thi (!&*t hel# that'

=n#enit an# liailit in&*ance p!licie a*e c!nt*&e# in acc!*#ance :ith the ene*al *&le !$

*e!lvin an ai&it the*ein in $av!* !$ the in&*e#, :he*e the c!nt*act !* p!lic i p*epa*e#

the in&*e*. A !ontr!t o" insurn!e, *ein$ !ontr!t o" d(esion, pr ex!e##en!e, n'

%*i$uit' t(erein s(ou#d *e reso#ved $inst t(e insurer; in !the* :!*#, it h!&l# e

c!nt*&e# lie*all in $av!* !$ the in&*e# an# t*ictl aaint the in&*e*. @iitati!n !$ liailit

h!&l# e *ea*#e# :ith ext*ee Ieal!& an# &t e c!nt*&e# in &ch a :a a t! p*ecl&#e

the in&*e* $*! n!nc!pliance :ith it !liati!n.19 phai &pplie#.

=n the !*e *ecent cae !$ Philamcare Health Systems, Inc. v. Court o# Appeals, :e *eite*ate# the a!ve

*&lin, tatin that'

hen the te* !$ in&*ance c!nt*act c!ntain liitati!n !n liailit, c!&*t h!&l# c!nt*&e

the in &ch a :a a t! p*ecl&#e the in&*e* $*! n!n-c!pliance :ith hi !liati!n. Bein a

c!nt*act !$ a#hei!n, the te* !$ an in&*ance c!nt*act a*e t! e c!nt*&e# t*ictl aaint the

pa*t :hich p*epa*e# the c!nt*act, the in&*e*. B *ea!n !$ the excl&ive c!nt*!l !$ the

in&*ance c!pan !ve* the te* an# ph*ae!l! !$ the in&*ance c!nt*act, ai&it &t e






t*ictl inte*p*ete# aaint the in&*e* an# lie*all in $av!* !$ the in&*e#, epeciall t! av!i#

$!*$eit&*e.2

(lea*l, the va&e c!nt*act&al p*!vii!n, in (*e#it!* /*!&p @i$e !lic !. -192 #ate# Decee* 1,

19, &t e c!nt*&e# in $av!* !$ the in&*e# an# in $av!* !$ the e$$ectivit !$ the in&*ance c!nt*act.

<n the !the* han#, the eeinl c!n$lictin p*!vii!n &t e ha*!ni)e# t! ean that &p!n a

pa*t p&*chae !$ a e!*ial l!t !n intallent $*! te*nal, an in&*ance c!nt*act c!ve*in the l!t

p&*chae* i c*eate# an# the ae i e$$ective, vali#, an# in#in &ntil te*inate# hilali$e

#iapp*!vin the in&*ance applicati!n. The ec!n# entence !$ (*e#it!* /*!&p @i$e !lic !. -192

!n the $$ective Date !$ Bene$it i in the nat&*e !$ a *e!l&t!* c!n#iti!n :hich :!&l# lea# t! the

ceati!n !$ the in&*ance c!nt*act. !*e!ve*, the e*e inacti!n !$ the in&*e* !n the in&*ance

applicati!n &t n!t :!*? t! p*eI&#ice the in&*e#; it cann!t e inte*p*ete# a a te*inati!n !$ the

in&*ance c!nt*act. The te*inati!n !$ the in&*ance c!nt*act the in&*e* &t e explicit an#

&nai&!&.

A a $inal n!te, t! cha*acte*i)e the in&*e* an# the in&*e# a c!nt*actin pa*tie !n e&al $!!tin i

inacc&*ate at et. =n&*ance c!nt*act a*e :h!ll p*epa*e# the in&*e* :ith vat a!&nt !$

expe*ience in the in#&t* p&*p!e$&ll &e# t! it a#vantae. !*e !$ten than n!t, in&*ance c!nt*act

a*e c!nt*act !$ a#hei!n c!ntainin technical te* an# c!n#iti!n !$ the in#&t*, c!n$&in i$ at all

&n#e*tan#ale t! lape*!n, that a*e ip!e# !n th!e :h! :ih t! avail !$ in&*ance. A &ch,

in&*ance c!nt*act a*e i&e# :ith p&lic inte*et that &t e c!ni#e*e# :heneve* the *iht an#

!liati!n !$ the in&*e* an# the in&*e# a*e t! e #elineate#. >ence, in !*#e* t! p*!tect the inte*et !$

in&*ance applicant, in&*ance c!panie &t e !liate# t! act :ith hate &p!n in&*ance

applicati!n, t! eithe* #en !* app*!ve the ae, !* !the*:ie e !&n# t! h!n!* the applicati!n a a

vali#, in#in, an# e$$ective in&*ance c!nt*act.21

HEREORE, :e 2RANT the petiti!n. The !vee* 28, 24 (A Decii!n in (A-/.0. (6 !.

571 i RE;ERSE an# SET ASIE. The a 29, 1998 Decii!n !$ the a?ati (it 0T(, B*anch

13 i /OIIE. hilali$e i he*e ORERE'

1 T! pa te*nal the a!&nt !$ h 1, *ep*eentin the p*!cee# !$ the @i$e =n&*ance!lic !$ (h&an;

2 T! pa te*nal leal inte*et at the *ate !$ ix pe*cent 8Q pe* ann& !$ h 1, $*!

the tie !$ ext*a-I&#icial #ean# te*nal &ntil hilali$e *eceipt !$ the a 29, 1998 0T(

Decii!n !n %&ne 17, 1998;

3 T! pa te*nal leal inte*et at the *ate !$ t:elve pe*cent 12Q pe* ann& !$ h 1,

$*! %&ne 17, 1998 &ntil $&ll paent !$ thi a:a*#; an#







4 T! pa te*nal att!*ne $ee in the a!&nt !$ h 1,.

! c!t.

SO ORERE.

Carpio5$orales, Actin- Chairperson, )in-a, "rion, Chico5a0arioJ, JJ., c!nc&*.

ootnotes

J A##iti!nal ee* a pe* +e*&a* 8, 2 *a$$le.

1 Rollo, pp. 45-54. enne# A!ciate %&tice Santia! %avie* 0ana#a an# c!nc&**e# in

A!ciate %&tice a*ina @. B&)!n (hai*pe*!n an# a*i! @. /&a*iVa ===.

2 0ec!*#, pp. 57-82.

3 =#. at 5.

4 =#. at 139.

5 =#. at 18.

8 =#. at 182.

7 =#. at 183.

=#. at 184.

9 =#. at 185.

1 0!ll!, p. 44.

11 =#. at 54.

12 /.0. !. 15838, %an&a* 14, 25, 44 S(0A 22, 22-229.

13 0&le !$ (!&*t, 0&le 13, Sec. 28.

14 e!ple v. %ae*t!, /.0. !. 12147, a 12, 1999, 37 S(0A 93, 12.

15 e!ple v. <li&in!, /.0. !. 171314, a*ch 8, 27, 517 S(0A 579, 5.

18 TS, Septee* 13, 199, p. .

17 /.0. !. 13815, <ct!e* 23, 21, 38 S(0A 12, 1.

1 /.0. !. 142389-7, Ap*il 13, 27, 521 S(0A 31, 43.

19 /.0. !. 119599, a*ch 2, 1997, 27 S(0A 242, 254.

http://www.lawphil.net/judjuris/juri2008/apr2008/gr_166245_2008.html#fnt*


http://www.lawphil.net/judjuris/juri2008/apr2008/gr_166245_2008.html#rnt*

http://www.lawphil.net/judjuris/juri2008/apr2008/gr_166245_2008.html#rnt1













http://www.lawphil.net/judjuris/juri2005/jan2005/gr_156360_2005.html




http://www.lawphil.net/judjuris/juri1999/may1999/gr_128147_1999.html



http://www.lawphil.net/judjuris/juri2007/mar2007/gr_171314_2007.html




http://www.lawphil.net/judjuris/juri2001/oct2001/gr_136105_2001.html



http://www.lawphil.net/judjuris/juri2007/apr2007/gr_142369_2007.html






http://www.lawphil.net/judjuris/juri2008/apr2008/gr_166245_2008.html#rnt*




























2 /.0. !. 12587, a*ch 1, 22, 379 S(0A 358, 388.

21 0. . Reet!n N A. =. i#i, =n&*ance @a: W A /&i#e t! +&n#aental *inciple, @eal

D!ct*ine an# (!e*cial *actice 77-7.


SUPRE/E COURT

anila

S(<D D=6=S=<

2.R. No. 364>>> 0u#' 59, 5@38

/ANILA BANERS LIE INSURANCE CORPORATION, etiti!ne*.

v.CRESENCIA P. ABAN, 0ep!n#ent.

D ( = S = <

EL CASTILLO, J.:

The &ltiate ai !$ Secti!n 4 !$ the =n&*ance (!#e i t! c!pel in&*e* t! !licit &ine $*! !*

p*!vi#e in&*ance c!ve*ae !nl t! leitiate an# !na $i#e client, *e&i*in the t! th!*!&hl

invetiate th!e the in&*e :ithin t:! ea* $*! e$$ectivit !$ the p!lic an# :hile the in&*e# i

till alive. =$ the #! n!t, the :ill e !liate# t! h!n!* clai !n the p!licie the i&e, *ea*#le !$

$*a&#, c!ncealent !* i*ep*eentati!n. The la: a&e that the :ill #! I&t that an# n!t it !n thei*

la&*el, in#ic*iinatel !licitin an# acceptin in&*ance &ine $*! an T!, Dic? an# >a**.

Aaile# in thi etiti!n $!* 0evie: !n (e*ti!*a*i1 a*e the Septee* 2, 25 Decii!n2 !$ the (!&*t

!$ AppealE (A in (A-/.0. (6 !. 8228 an# it !vee* 9, 28 0e!l&ti!n 3 #enin the

petiti!ne* !ti!n $!* 0ec!ni#e*ati!n.4

+act&al Antece#ent

<n %&l 3, 1993, Delia S!te*! S!te*! t!!? !&t a li$e in&*ance p!lic $*! anila Ban?e* @i$e

=n&*ance (!*p!*ati!n Ban?e* @i$e, #einatin *ep!n#ent (*eencia . Aan Aan, he* niece,5 ahe* ene$icia*.

etiti!ne* i&e# =n&*ance !lic !. 747411 the p!lic, :ith a $ace val&e !$1,., in

S!te*! $av!* !n A&&t 3, 1993, a$te* the *e&iite e#ical exainati!n an# paent !$ the

in&*ance p*ei&.8

<n Ap*il 1, 1998,7 :hen the in&*ance p!lic ha# een in $!*ce $!* !*e than t:! ea* an# even





http://www.lawphil.net/judjuris/juri2013/jul2013/gr_175666_2013.html#fnt1





















!nth, S!te*! #ie#. 0ep!n#ent $ile# a clai $!* the in&*ance p*!cee# !n %&l 9, 1998. etiti!ne*

c!n#&cte# an invetiati!n int! the clai, an# cae !&t :ith the $!ll!:in $in#in'

1. S!te*! #i# n!t pe*!nall appl $!* in&*ance c!ve*ae, a he :a illite*ate;

2. S!te*! :a ic?l ince 199;

3. S!te*! #i# n!t have the $inancial capailit t! pa the in&*ance p*ei& !n =n&*ance!lic !. 747411;

4. S!te*! #i# n!t in the %&l 3, 1993 applicati!n $!* in&*ance;9 an#

5. 0ep!n#ent :a the !ne :h! $ile# the in&*ance applicati!n, an# x x x #einate# he*el$ a

the ene$icia*.1

+!* the a!ve *ea!n, petiti!ne* #enie# *ep!n#ent clai !n Ap*il 18, 1997 an# *e$&n#e# the

p*ei& pai# !n the p!lic.11

<n Ap*il 24, 1997, petiti!ne* $ile# a civil cae $!* *ecii!n an#F!* ann&lent !$ the p!lic, :hich :a

#!c?ete# a (ivil (ae !. 97-87 an# aine# t! B*anch 134 !$ the a?ati 0ei!nal T*ial (!&*t. The

ain thei !$ the (!plaint :a that the p!lic :a !taine# $*a&#, c!ncealent an#F!*

i*ep*eentati!n &n#e* the =n&*ance (!#e,12 :hich th& *en#e* it v!i#ale &n#e* A*ticle 13913 !$

the (ivil (!#e.

0ep!n#ent $ile# a !ti!n t! Dii14 claiin that petiti!ne* ca&e !$ acti!n :a a**e#

p*ec*ipti!n p&*&ant t! Secti!n 4 !$ the =n&*ance (!#e, :hich p*!vi#e a $!ll!:'

heneve* a *iht t! *ecin# a c!nt*act !$ in&*ance i iven t! the in&*e* an p*!vii!n !$ thi

chapte*, &ch *iht &t e exe*cie# p*evi!& t! the c!enceent !$ an acti!n !n the c!nt*act.

A$te* a p!lic !$ li$e in&*ance a#e paale !n the #eath !$ the in&*e# hall have een in $!*ce

#&*in the li$etie !$ the in&*e# $!* a pe*i!# !$ t:! ea* $*! the #ate !$ it i&e !* !$ it lat

*eintateent, the in&*e* cann!t p*!ve that the p!lic i v!i# a initi! !* i *ecin#ile *ea!n !$ the

$*a&#&lent c!ncealent !* i*ep*eentati!n !$ the in&*e# !* hi aent.

D&*in the p*!cee#in !n the !ti!n t! Dii, petiti!ne* invetiat!* teti$ie# in c!&*t, tatin

a!n !the* that the in&*ance &n#e*:*ite* :h! !licite# the in&*ance i a c!&in !$ *ep!n#ent

h&an#, Din#! Aan,15 an# that it :a the *ep!n#ent :h! pai# the ann&al p*ei& !n the p!lic.18

0&lin !$ the 0ei!nal T*ial (!&*t

<n Decee* 9, 1997, the t*ial c!&*t i&e# an <*#e*17 *antin *ep!n#ent !ti!n t! Dii, th&'

>0+<0, #e$en#ant (0S(=A . ABA !ti!n t! Dii i he*e *ante#. (ivil (ae

!. 97-87 i he*e #iie#.
























S< <0D0D.1

=n #iiin the cae, the t*ial c!&*t $!&n# that S!te*!, an# n!t *ep!n#ent, :a the !ne :h! p*!c&*e#

the in&*ance; th&, S!te*! c!&l# leall ta?e !&t in&*ance !n he* !:n li$e an# vali#l #einate W a

he #i# W *ep!n#ent a the ene$icia*. =t hel# $&*the* that &n#e* Secti!n 4, petiti!ne* ha# !nl t:!

ea* $*! the e$$ectivit !$ the p!lic t! &eti!n the ae; ince the p!lic ha# een in $!*ce $!* !*e

than t:! ea*, petiti!ne* i n!: a**e# $*! c!ntetin the ae !* ee?in a *ecii!n !* ann&lent

the*e!$.

etiti!ne* !ve# $!* *ec!ni#e*ati!n, &t in an!the* <*#e*19 #ate# <ct!e* 2, 199, the t*ial c!&*t

t!!# it *!&n#.

etiti!ne* inte*p!e# an appeal :ith the (A, #!c?ete# a (A-/.0. (6 !. 8228. etiti!ne*

&eti!ne# the #iial !$ (ivil (ae !. 97-87, a*&in that the t*ial c!&*t e**e# in applin Secti!n

4 an# #ecla*in that p*ec*ipti!n ha et in. =t c!nten#e# that ince it :a *ep!n#ent W an# n!t S!te*!

W :h! !taine# the in&*ance, the p!lic i&e# :a *en#e*e# v!i# a initi! $!* :ant !$ in&*ale

inte*et.

0&lin !$ the (!&*t !$ Appeal

<n Septee* 2, 25, the (A i&e# the aaile# Decii!n, :hich c!ntaine# the $!ll!:in #ec*etal

p!*ti!n'

>0+<0, in the liht !$ all the $!*e!in, the intant appeal i D=S=SSD $!* lac? !$ e*it.

S< <0D0D.2

The (A th& &taine# the t*ial c!&*t. Applin Secti!n 4 t! petiti!ne* cae, the (A hel# that

petiti!ne* a n! l!ne* p*!ve that the &Iect p!lic :a v!i# a initi! !* *ecin#ile *ea!n !$

$*a&#&lent c!ncealent !* i*ep*eentati!n a$te* the lape !$ !*e than t:! ea* $*! it i&ance. =t

*ati!cinate# that petiti!ne* :a e&ippe# :ith aple ean t! #ete*ine, :ithin the $i*t t:! ea* !$

the p!lic, :hethe* $*a&#, c!ncealent !* i*ep*eentati!n :a p*eent :hen the in&*ance c!ve*ae

:a !taine#. =$ it $aile# t! #! ! :ithin the tat&t!* t:!-ea* pe*i!#, then the in&*e# &t e

p*!tecte# an# all!:e# t! clai &p!n the p!lic.

etiti!ne* !ve# $!* *ec!ni#e*ati!n,21 &t the (A #enie# the ae in it !vee* 9, 28

0e!l&ti!n.22 >ence, the p*eent etiti!n.

=&e

etiti!ne* *aie the $!ll!:in i&e $!* *e!l&ti!n'

=

>T>0 T> (<0T <+ AA@S 00D = SSTA==/ T> <0D0 <+T> T0=A@ (<0T D=S=SS=/ T> (<@A=T < T> /0<D <+0S(0=T=< = (<T0A6T=< <+ 0T=T @AS AD A@=(AB@















%0=S0D(.

==

>T>0 T> (<0T <+ AA@S 00D = SSTA==/ T> A@=(AT=<<+ T> =(<TSTAB=@=TK 0<6=S=< = T> =S0A( (<D BK T>

T0=A@ (<0T.

===

>T>0 T> (<0T <+ AA@S 00D = DK=/ T=T=<0S

<T=< +<0 0(<S=D0AT=<.23

etiti!ne* A*&ent

=n p*ain that the (A Decii!n e *eve*e# an# that the cae e *ean#e# t! the t*ial c!&*t $!* the

c!n#&ct !$ $&*the* p*!cee#in, petiti!ne* a*&e in it etiti!n an# 0epl

24

that Secti!n 4 cann!tappl t! a cae :he*e the ene$icia* &n#e* the in&*ance c!nt*act p!e# a the in&*e# an# !taine#

the p!lic &n#e* $*a&#&lent ci*c&tance. =t a## that *ep!n#ent, :h! :a e*el S!te*! niece, ha#

n! in&*ale inte*et in the li$e !$ he* a&nt.

0elin !n the *e&lt !$ the invetiati!n that it c!n#&cte# a$te* the clai $!* the in&*ance p*!cee#

:a $ile#, petiti!ne* init that *ep!n#ent clai :a p&*i!&, a it appea*e# that S!te*! #i# n!t

act&all appl $!* in&*ance c!ve*ae, :a &nlette*e#, ic?l, an# ha# n! viile !&*ce !$ inc!e t!

pa $!* the in&*ance p*ei&; an# that *ep!n#ent :a an ip!t!*, p!in a S!te*! an#

$*a&#&lentl !tainin in&*ance in the latte* nae :ith!&t he* ?n!:le#e an# c!nent.

etiti!ne* a## that =n&*ance !lic !. 747411 :a v!i# a initi! an# c!&l# n!t have iven *ie t!

*iht an# !liati!n; a &ch, the acti!n $!* the #ecla*ati!n !$ it n&llit !* inexitence #!e n!t

p*ec*ie.25

0ep!n#ent A*&ent

0ep!n#ent, !n the !the* han#, eentiall a*&e in he* (!ent28 that the (A i c!**ect in applin

Secti!n 4. She a## that petiti!ne* ne: alleati!n in it etiti!n that the p!lic i v!i# a initi!

e*it n! attenti!n, havin $aile# t! *aie the ae el!:, a it ha# claie# !*iinall that the p!lic

:a e*el v!i#ale.

<n the i&e !$ in&*ale inte*et, *ep!n#ent ech!e the (A p*!n!&nceent that ince it :a S!te*!

:h! !taine# the in&*ance, in&*ale inte*et :a p*eent. n#e* Secti!n 1 !$ the =n&*ance (!#e,

S!te*! ha# in&*ale inte*et in he* !:n li$e, an# c!&l# vali#l #einate an!ne a he* ene$icia*.

0ep!n#ent &it that the (A $in#in !$ $act lea#in t! &ch c!ncl&i!n h!&l# e *epecte#.

<&* 0&lin












The (!&*t #enie the etiti!n.

The (!&*t :ill n!t #epa*t $*! the t*ial an# appellate c!&*t $in#in that it :a S!te*! :h! !taine#

the in&*ance $!* he*el$, #einatin *ep!n#ent a he* ene$icia*. B!th c!&*t a*e in acc!*# in thi

*epect, an# the (!&*t i l!ath t! #it&* thi. hile petiti!ne* init that it in#epen#ent invetiati!n

!n the clai *eveal that it :a *ep!n#ent, p!in a S!te*!, :h! !taine# the in&*ance, thi clai i

n! l!ne* $eaile in the :a?e !$ the c!&*t $in#in that it :a S!te*! :h! !taine# the in&*ance $!*he*el$. Thi $in#in !$ $act in# the (!&*t.

ith the a!ve c*&cial $in#in !$ $act W that it :a S!te*! :h! !taine# the in&*ance $!* he*el$ W

petiti!ne* cae i eve*el :ea?ene#, i$ n!t t!tall #ip*!ve#. Alleati!n !$ $*a&#, :hich a*e

p*e#icate# !n *ep!n#ent allee# p!in a S!te*! an# $!*e* !$ he* inat&*e in the in&*ance

applicati!n, a*e at !nce elie# the t*ial an# appellate c!&*t $in#in that S!te*! he*el$ t!!? !&t the

in&*ance $!* he*el$. "+*a&#&lent intent !n the pa*t !$ the in&*e# &t e etalihe# t! entitle the

in&*e* t! *ecin# the c!nt*act."27 =n the aence !$ p*!!$ !$ &ch $*a&#&lent intent, n! *iht t! *ecin#

a*ie.

!*e!ve*, the *e&lt an# c!ncl&i!n a**ive# at #&*in the invetiati!n c!n#&cte# &nilate*all

petiti!ne* a$te* the clai :a $ile# a ipl e #iie# a el$-e*vin an# a n!t $!* the ai

!$ a ca&e !$ acti!n iven the exitence an# applicati!n !$ Secti!n 4, a :ill e #ic&e# at lenth

el!:.

Secti!n 4 e*ve a n!le p&*p!e, a it *e&late the acti!n !$ !th the in&*e* an# the in&*e#. n#e*

the p*!vii!n, an in&*e* i iven t:! ea* W $*! the e$$ectivit !$ a li$e in&*ance c!nt*act an# :hile

the in&*e# i alive W t! #ic!ve* !* p*!ve that the p!lic i v!i# a initi! !* i *ecin#ile *ea!n !$

the $*a&#&lent c!ncealent !* i*ep*eentati!n !$ the in&*e# !* hi aent. A$te* the t:!-ea* pe*i!#

lape, !* :hen the in&*e# #ie :ithin the pe*i!#, the in&*e* &t a?e !!# !n the p!lic, eventh!&h the p!lic :a !taine# $*a&#, c!ncealent, !* i*ep*eentati!n. Thi i n!t t! a that

in&*ance $*a&# &t e *e:a*#e#, &t that in&*e* :h! *ec?lel an# in#ic*iinatel !licit an#

!tain &ine &t e penali)e#, $!* &ch *ec?lene an# lac? !$ #ic*iinati!n &ltiatel :!*? t!

the #et*ient !$ !na $i#e ta?e* !$ in&*ance an# the p&lic in ene*al.

Secti!n 4 *e&late !th the acti!n !$ the in&*e* an# p*!pective ta?e* !$ li$e in&*ance. =t ive

in&*e* en!&h tie t! in&i*e :hethe* the p!lic :a !taine# $*a&#, c!ncealent, !*

i*ep*eentati!n; !n the !the* han#, it $!*e:a*n chein in#ivi#&al that thei* attept at in&*ance

$*a&# :!&l# e tiel &nc!ve*e# W th& #ete**in the $*! vent&*in int! &ch ne$a*i!& ente*p*ie.

At the ae tie, leitiate p!lic h!l#e* a*e a!l&tel p*!tecte# $*! &n:a**ante# #enial !$ thei*

clai !* #ela in the c!llecti!n !$ in&*ance p*!cee# !ccai!ne# alleati!n !$ $*a&#, c!ncealent,

!* i*ep*eentati!n in&*e*, clai :hich a n! l!ne* e et &p a$te* the t:!-ea* pe*i!#

expi*e a !*#aine# &n#e* the la:.

Th&, the el$-*e&latin $eat&*e !$ Secti!n 4 lie in the $act that !th the in&*e* an# the in&*e# a*e

iven the a&*ance that an #ih!net chee t! !tain li$e in&*ance :!&l# e exp!e#, an# attept

at &n#&l #enin a clai :!&l# e t*&c? #!:n. @i$e in&*ance p!licie that pa the tat&t!* t:!-






ea* pe*i!# a*e eentiall t*eate# a leitiate an# e!n# &eti!n, an# the in#ivi#&al :h! :iel#

the a*e a#e ec&*e the th!&ht that the :ill e pai# p*!ptl &p!n clai. =n thi anne*,

Secti!n 4 c!nt*i&te t! the tailit !$ the in&*ance in#&t*.

Secti!n 4 p*event a it&ati!n :he*e the in&*e* ?n!:inl c!ntin&e t! accept ann&al p*ei&

paent !n li$e in&*ance, !nl t! late* !n #en a clai !n the p!lic !n peci!& clai !$ $*a&#&lent

c!ncealent an# i*ep*eentati!n, &ch a :hat !tain in the intant cae. Th&, intea# !$c!n#&ctin at the $i*t intance an invetiati!n int! the ci*c&tance &**!&n#in the i&ance !$

=n&*ance !lic !. 747411 :hich :!&l# have tiel exp!e# the &pp!e# $la: an# i**e&la*itie

atten#in it a it n!: p*!$ee, petiti!ne* appea* t! have t&*ne# a lin# ee an# !pte# intea# t!

c!ntin&e c!llectin the p*ei& !n the p!lic. +!* nea*l th*ee ea*, petiti!ne* c!llecte# the

p*ei& an# #ev!te# the ae t! it !:n p*!$it. =t cann!t n!: #en the clai :hen it i calle# t!

acc!&nt. Secti!n 4 &t e applie# t! it :ith $&ll $!*ce an# e$$ect.

The (!&*t the*e$!*e a*ee $&ll :ith the appellate c!&*t p*!n!&nceent that W

the "inc!ntetailit cla&e" i a p*!vii!n in la: that a$te* a p!lic !$ li$e in&*ance a#e paale !nthe #eath !$ the in&*e# hall have een in $!*ce #&*in the li$etie !$ the in&*e# $!* a pe*i!# !$ t:!

2 ea* $*! the #ate !$ it i&e !* !$ it lat *eintateent, the in&*e* cann!t p*!ve that the p!lic i

v!i# a initi! !* i *ecin#ile *ea!n !$ $*a&#&lent c!ncealent !* i*ep*eentati!n !$ the in&*e#

!* hi aent.

The p&*p!e !$ the la: i t! ive p*!tecti!n t! the in&*e# !* hi ene$icia* liitin the *ecin#in

!$ the c!nt*act !$ in&*ance !n the *!&n# !$ $*a&#&lent c!ncealent !* i*ep*eentati!n t! a pe*i!# !$

!nl t:! 2 ea* $*! the i&ance !$ the p!lic !* it lat *eintateent.

The in&*e* i #eee# t! have the necea* $acilitie t! #ic!ve* &ch $*a&#&lent c!ncealent !*

i*ep*eentati!n :ithin a pe*i!# !$ t:! 2 ea*. =t i n!t $ai* $!* the in&*e* t! c!llect the p*ei&

a l!n a the in&*e# i till alive, !nl t! *aie the i&e !$ $*a&#&lent c!ncealent !*

i*ep*eentati!n :hen the in&*e# #ie in !*#e* t! #e$eat the *iht !$ the ene$icia* t! *ec!ve* &n#e*

the p!lic.

At leat t:! 2 ea* $*! the i&ance !$ the p!lic !* it lat *eintateent, the ene$icia* i iven

the tailit t! *ec!ve* &n#e* the p!lic :hen the in&*e# #ie. The p*!vii!n al! a?e clea* :hen the

t:!-ea* pe*i!# h!&l# c!ence in cae the p!lic h!&l# lape an# i *eintate#, that i, $*! the

#ate !$ the lat *eintateent.

A$te* t:! ea*, the #e$ene !$ c!ncealent !* i*ep*eentati!n, n! atte* h!: patent !* :ell-$!&n#e#, :ill n! l!ne* lie.

(!n*e $elt thi :a a &$$icient an:e* t! the va*i!& tactic epl!e# in&*ance c!panie t!

av!i# liailit.

The !-calle# "inc!ntetailit cla&e" p*ecl&#e the in&*e* $*! *aiin the #e$ene !$ $ale

*ep*eentati!n !* c!ncealent !$ ate*ial $act in!$a* a health an# p*evi!& #ieae a*e c!nce*ne#

i$ the in&*ance ha een in $!*ce $!* at leat t:! ea* #&*in the in&*e# li$etie. The ph*ae "#&*in



the li$etie" $!&n# in Secti!n 4 ipl ean that the p!lic i n! l!ne* c!ni#e*e# in $!*ce a$te* the

in&*e# ha #ie#. The ?e ph*ae in the ec!n# pa*a*aph !$ Secti!n 4 i "$!* a pe*i!# !$ t:! ea*."

A !*ne the *ec!*#, the p!lic :a i&e# !n A&&t 3, 1993, the in&*e# #ie# !n Ap*il 1, 1998,

an# the clai :a #enie# !n Ap*il 18, 1997. The in&*ance p!lic :a th& in $!*ce $!* a pe*i!# !$ 3

ea*, 7 !nth, an# 24 #a. (!ni#e*in that the in&*e# #ie# a$te* the t:!-ea* pe*i!#, the plainti$$-

appellant i, the*e$!*e, a**e# $*! p*!vin that the p!lic i v!i# a initi! *ea!n !$ the in&*e#$*a&#&lent c!ncealent !* i*ep*eentati!n !* :ant !$ in&*ale inte*et !n the pa*t !$ the ene$icia*,

he*ein #e$en#ant-appellee.

ell-ettle# i the *&le that it i the plainti$$-appellant &*#en t! h!: that the $act&al $in#in !$ the

t*ial c!&*t a*e n!t ae# !n &tantial evi#ence !* that it c!ncl&i!n a*e c!nt*a* t! applicale la:

an# I&*ip*&#ence. The plainti$$-appellant $aile# t! #icha*e that &*#en.2

etiti!ne* clai that it in&*ance aent, :h! !licite# the S!te*! acc!&nt, happen t! e the c!&in !$

*ep!n#ent h&an#, an# th& inin&ate that !th c!nnive# t! c!it in&*ance $*a&#. =$ thi :e*et*&l the cae, then petiti!ne* :!&l# have #ic!ve*e# the chee ea*lie* i$ it ha# in ea*net c!n#&cte#

an invetiati!n int! the ci*c&tance &**!&n#in the S!te*! p!lic. B&t eca&e it #i# n!t an# it

invetiate# the S!te*! acc!&nt !nl a$te* a clai :a $ile# the*e!n !*e than t:! ea* late*, nat&*all

it :a &nale t! #etect the chee. +!* it nelience an# inacti!n, the (!&*t cann!t pathi)e :ith

it pliht. =ntea#, it cae p*eciel p*!vi#e the t*!n a*&ent $!* *e&i*in in&*e* t! #ilientl

c!n#&ct invetiati!n !n each p!lic the i&e :ithin the t:!-ea* pe*i!# an#ate# &n#e* Secti!n

4, an# n!t a$te* clai $!* in&*ance p*!cee# a*e $ile# :ith the.

Bei#e, i$ in&*e* cann!t v!&ch $!* the inte*it an# h!net !$ thei* in&*ance aentFaleen an#

the in&*ance p!licie the i&e, then the h!&l# ceae #!in &ine. =$ the c!&l# n!t p*!pe*lc*een thei* aent !* aleen e$!*e ta?in the in t! a*?et thei* p*!#&ct, !* i$ the #! n!t

th!*!&hl invetiate the in&*ance c!nt*act the ente* int! :ith thei* client, then the have !nl

theelve t! lae. <the*:ie ai#, in&*e* cann!t e all!:e# t! c!llect p*ei& !n in&*ance

p!licie, &e thee a!&nt c!llecte# an# invet the ae th*!&h the ea*, ene*atin p*!$it an#

*et&*n the*e$*! $!* thei* !:n ene$it, an# the*ea$te* c!nvenientl #en in&*ance clai

&eti!nin the a&th!*it !* inte*it !$ thei* !:n aent !* the in&*ance p!licie the i&e# t! thei*

p*ei&-pain client. Thi i exactl !ne !$ the chee :hich Secti!n 4 ai t! p*event.

=n&*e* a n!t e all!:e# t! #ela the paent !$ clai $ilin $*iv!l!& cae in c!&*t, h!pin

that the inevitale a e p&t !$$ $!* ea* W !* even #eca#e W the pen#enc !$ thee &nnecea*

c!&*t cae. =n the eantie, the ene$it $*! c!llectin the inte*et an#F!* *et&*n !n !th the

p*ei& p*evi!&l pai# the in&*e# an# the in&*ance p*!cee# :hich h!&l# !the*:ie ! t! thei*

ene$icia*ie. The &ine !$ in&*ance i a hihl *e&late# c!e*cial activit in the c!&nt*, 29 an#

i i&e# :ith p&lic inte*et.3 "An in&*ance c!nt*act i a c!nt*act !$ a#hei!n :hich &t e









c!nt*&e# lie*all in $av!* !$ the in&*e# an# t*ictl aaint the in&*e* in !*#e* t! a$e&a*# the

$!*e* inte*et."31

>0+<0, the etiti!n i D=D. The aaile# Septee* 2, 25 Decii!n an# the !vee*

9, 28 0e!l&ti!n !$ the (!&*t !$ Appeal in (A-/.0. (6 !. 8228 a*e A++=0D.

S< <0D0D./ARIANO C. EL CASTILLO

A!ciate %&tice

(<(0'

ANTONIO T. CARPIO

A!ciate %&tice

(hai*pe*!n

ARTURO . BRION

A!ciate %&tice

0OSE PORTU2AL PERE

A!ciate %&ticeESTELA /. PERLAS-BERNABE

A!ciate %&tice

A T T S T A T = <

= attet that the c!ncl&i!n in the a!ve Decii!n ha# een *eache# in c!n&ltati!n e$!*e the cae :a

aine# t! the :*ite* !$ the !pini!n !$ the (!&*tE Divii!n.

ANTONIO T. CARPIO

A!ciate %&tice

(hai*pe*!n

( 0 T = + = ( A T = <

&*&ant t! Secti!n 13, A*ticle 6=== !$ the (!ntit&ti!n an# the Divii!n (hai*pe*!nE Attetati!n, =

ce*ti$ that the c!ncl&i!n in the a!ve Decii!n ha# een *eache# in c!n&ltati!n e$!*e the cae :a

aine# t! the :*ite* !$ the !pini!n !$ the (!&*tE Divii!n.

/ARIA LOURES P. A. SERENO

(hie$ %&tice

ootnotes

1 0!ll!, pp. 3-14.

2 (A *!ll!, pp. 3-47; penne# A!ciate %&tice Aelita /. T!lentin! an# c!nc&**e# in

A!ciate %&tice Danil! B. ine an# 6icente S.. 6el!!.

3 =#. at 59-8; penne# A!ciate %&tice Aelita /. T!lentin! an# c!nc&**e# in A!ciate


http://www.lawphil.net/judjuris/juri2013/jul2013/gr_175666_2013.html#rnt1









%&tice 0eala#! . aa!n an# 6icente S.. 6el!!.

4 =#. at 4-58.

5 0!ll!, p. 8.

8 =#. at 8-7, 71.

7 0ec!*#, p. 23.

0!ll!, p. 7.

9 =#. at 7, 18.

1 0ec!*#, p. 2.

11 =#.

12

*ei#ential Dec*ee !. 812.13 A*t. 139. The $!ll!:in c!nt*act a*e v!i#ale !* ann&llale, even th!&h the*e a have

een n! #aae t! the c!nt*actin pa*tie'

1 Th!e :he*e !ne !$ the pa*tie i incapale !$ ivin c!nent t! a c!nt*act;

2 Th!e :he*e the c!nent i vitiate# ita?e, vi!lence, intii#ati!n, &n#&e

in$l&ence !* $*a&#.

Thee c!nt*act a*e in#in, &nle the a*e ann&lle# a p*!pe* acti!n in c!&*t. The

a*e &ceptile !$ *ati$icati!n.

14 0ec!*#, pp. 19-22.

15 TS, a 5, 199, pp. 12-13; *ec!*#, pp. 95-98.

18 =#. at 15; i#. at 9.

17 0ec!*#, pp. 55-58; penne# %&#e =naci! . (ap&l!n.

1 =#. at 58.

19 =#. at 118-119.

2 (A *!ll!, p. 48.

21 =#. at 4-58.

22 =#. at 59-8.

23 0!ll!, p. 9.












































24 =#. at 89-75.

25 (itin A*ticle 141 !$ the (ivil (!#e'

A*t. 141. The acti!n !* #e$ene $!* the #ecla*ati!n !$ the inexitence !$ a c!nt*act #!e

n!t p*ec*ie.

28 0!ll!, pp. 57-87.

27 /*eat aci$ic @i$e A&*ance (!*p!*ati!n v. (!&*t !$ Appeal, 375 hil. 142, 152 1999.

2 (A *!ll!, pp. 44-48.

29 T!n?! v. The an&$act&*e* @i$e =n&*ance (!pan hil., =nc., /.0. !. 187822, %&ne

29, 21, 822 S(0A 5, 75.

3 0ep&lic v. Del !nte !t!*, =nc., 535 hil. 53, 8 28; hite /!l# a*ine Se*vice,

=nc. v. i!nee* =n&*ance N S&*et (!*p!*ati!n, 52 hil. 892, 7 25.

31 te*nal /a*#en e!*ial a*? (!*p!*ati!n v. hilippine Ae*ican @i$e =n&*ance

(!pan, /.0. !. 188245, Ap*il 9, 2, 551 S(0A 1, 13.


SUPRE/E COURT

anila

T>=0D D=6=S=<

2.R. No. 64>@4 0nur' 55, 3998

RAAEL FREG ;ERENIA, petiti!ne*,

v.

COURT O APPEALS nd IELIT1 = SURET1 CO. O THE PHILIPPINES, *ep!n#ent.

2.R. No. 6>899 0nur' 55, 3998

IELIT1 = SURET1 CO. O THE PHILIPPINES, INC., petitioner,vs.

RAAEL ;ERENIA nd THE COURT O APPEALS, respondents.

B.L. Padilla for petitioner.

Sabino Padilla, Jr. for Fidelity & Surety, Co.



















/ELO, J.:

T(e to !onso#idted !ses invo#ved (erein ste%%ed "ro% t(e issun!e *' ide#it' nd Suret'

Insurn!e Co%pn' o" t(e P(i#ippines Fide#it' "or s(ort o" its ire Insurn!e Po#i!' No. -

3776> e""e!tive *eteen 0une 58, 397@ nd 0une 58, 3973 !overin$ R"e# FRex ;erendi)s

residenti# *ui#din$ #o!ted t Tu#ip rive, Bever#' Hi##s, Antipo#o, Ri# in t(e %ount o"

P874,@@@.@@. esi$nted s *ene"i!ir' s t(e /onte de Piedd = Svin$s Bn+. ;erendi #soinsured t(e s%e *ui#din$ it( to ot(er !o%pnies, n%e#', T(e Countr' Bn+ers Insurn!e

"or P4>,@@@.@@ under Po#i!' No. PB-7@-3938 expirin$ on /' 35, 3973, nd T(e eve#op%ent

Insurn!e "or P?@@,@@@.@@ under Po#i!' No. -?77>6 expirin$ on 0une 8@, 397#.

(i#e t(e t(ree "ire insurn!e po#i!ies ere in "or!e, t(e insured propert' s !o%p#ete#'

destro'ed *' "ire on t(e er#' %ornin$ o" e!e%*er 57, 397@. ide#it' s !!ordin$#' in"or%ed

o" t(e #oss nd despite de%nds, re"used p'%ent under its po#i!', t(us pro%ptin$ ;erendi to

"i#e !o%p#int it( t(e t(en Court o" irst Instn!e o" Jueon Cit', pr'in$ "or p'%ent o"

P874,@@@.@@, #e$# interest t(ereon, p#us ttorne')s "ees nd #iti$tion expenses. T(e !o%p#int

s #ter %ended to in!#ude /onte de Piedd s n Kuni##in$ de"endntK FP. 3>, Re!ord.

Anserin$ t(e !o%p#int, ide#it', %on$ ot(er t(in$s, verred t(t t(e po#i!' s voided *'

reson o" over-insurn!e t(t ;erendi %#i!ious#' represented t(t t(e *ui#din$ t t(e ti%e o"

t(e "ire s #esed under !ontr!t exe!uted on 0une 54, 397@ to !ertin Ro*erto 2r!i, (en

!tu##' it s /r!e#o 2r!i (o s t(e #essee.

On /' 5?, 3978, t(e tri# !ourt rendered de!ision, per 0ud$e Rodo#"o A. Orti, ru#in$ in "vor

o" ide#it'. In sustinin$ t(e de"enses set up *' ide#it', t(e tri# !ourt ru#ed t(t Pr$rp( 8 o"

t(e po#i!' s #so vio#ted *' ;erendi in t(t t(e insured "i#ed to in"or% ide#it' o" (is ot(er

insurn!e !over$es it( Countr' Bn+ers Insurn!e nd eve#op%ent Insurn!e.

;erendi ppe#ed to t(e t(en Inter%edite Appe##te Court nd in de!ision pro%u#$ted on

/r!( 83, 397>, FCA-2.R. No. C; No. @5794, Co<ui, os, Brto#o%e, nd E&er!ito FP, 00., t(e

ppe##te !ourt reversed "or t(e "o##oin$ resons: F t(ere s no %isrepresenttion !on!ernin$

t(e #ese "or t(e !ontr!t s si$ned *' /r!e#o 2r!i in t(e n%e o" Ro*erto 2r!i nd F*

Pr$rp( 8 o" t(e po#i!' !ontr!t re<uirin$ ;erendi to $ive noti!e to ide#it' o" ot(er !ontr!ts

o" insurn!e s ived *' ide#it' s s(on *' its !ondu!t in tte%ptin$ to sett#e t(e !#i% o"

;erendi Fpp. 85-88, Rollo o" 2.R. No. 6>899.

ide#it' re!eived !op' o" t(e ppe##te !ourt)s de!ision on Apri# ?, 397>, *ut insted o" dire!t#'

"i#in$ %otion "or re!onsidertion it(in 34 d's t(ere"ro%, ide#it' "i#ed on Apri# 53, 397>,

%otion "or extension o" 8 d's it(in (i!( to "i#e %otion "or re!onsidertion. T(e %otion "or

extension s not "i#ed on Apri# 39, 397> (i!( s t(e 34t( d' "ter re!eipt o" t(e de!ision

*e!use sid 34t( d' s Sturd' nd o" !ourse, t(e "o##oin$ d' s Sund' Fp. 3?.,

Rollo o" 2.R. No. 64>@4. T(e %otion "or extension s $rnted *' t(e ppe##te !ourt on Apri#

8@, 397> Fp. 34. ibid ., *ut ide#it' (d in t(e %enti%e "i#ed its %otion "or re!onsidertion on

Apri# 5?, 397> Fp. 3>, ibid ..



;erendi "i#ed %otion to expun$e "ro% t(e re!ord ide#it')s %otion "or re!onsidertion on t(e

$round t(t t(e %otion "or extension s "i#ed out o" ti%e *e!use t(e 34t( d' "ro% re!eipt o"

t(e de!ision (i!( "e## on Sturd' s i$nored *' ide#it', "or indeed, so ;erendi !ontended,

t(e Inter%edite Appe##te Court (s personne# re!eivin$ p#edin$s even on Sturd's.

T(e %otion to expun$e s denied on 0une 36, 397> Fp. 56, ibid . nd "ter %otion "or

re!onsidertion s si%i#r#' *rus(ed side on 0u#' 55, 397> Fp. 8@, ibid ., t(e petition (ereindo!+eted s 2.R. No. 64>@4 s initited. Su*se<uent#', or %ore spe!i"i!##' on O!to*er 53, 397>,

t(e ppe##te !ourt denied ide#it')s %otion "or re!onsidertion nd !!ount t(ereo". ide#it'

"i#ed on /r!( 83, 397>, t(e petition "or revie on certiorari no do!+eted s 2.R. No. 6>899.

T(e to petitions, inter-re#ted s t(e' re, ere !onso#idted

Fp. 4?, Rollo o" 2.R. No. 6>899 nd t(ere"ter $iven due !ourse.

Be"ore e !n even *e$in to #oo+ into t(e %erits o" t(e %in !se (i!( is t(e petition "or revie

on certiorari, e %ust "irst deter%ine (et(er t(e de!ision o" t(e ppe##te !ourt %' sti## *e

revieed, or (et(er t(e s%e is *e'ond "urt(er &udi!i# s!rutin'. Stted ot(erise, *e"ore

n't(in$ e#se, in<uir' %ust *e %de into t(e issue o" (et(er ide#it' !ou#d (ve #e$##' s+ed

"or n extension o" t(e 34-d' re$#e%entr' period "or ppe#in$ or "or %ovin$ "or

re!onsidertion.

As er#' s 39??, t(is Court t(rou$( 0usti!e Oet #red' pronoun!ed t(e do!trine t(t t(e

penden!' o" %otion "or extension o" ti%e to per"e!t n ppe# does not suspend t(e runnin$ o"

t(e period sou$(t to *e extended F2r!i vs. Buenventur 6? P(i#. >33 39??D. To t(e s%e

e""e!t ere t(e ru#in$s in Gibbs vs. CF of !anila F7@ P(i#. 3>@ 39?7D Bello vs. Fernando F?

SCRA 387 39>5D, nd Joe vs. "in# F5@ SCRA 335@ 39>6D.

T(e *ove !ses notit(stndin$ nd *e!use t(e Ru#es o" Court do not express#' pro(i*it t(e"i#in$ o" %otion "or extension o" ti%e to "i#e %otion "or re!onsidertion in re$rd to "in#

order or &ud$%ent, %$istrtes, in!#udin$ t(ose in t(e Court o" Appe#s, (e#d s(rp#' divided

opinions on (et(er t(e period "or ppe#in$ (i!( #so in!#udes t(e period "or %ovin$ to

re!onsider %' *e extended. T(e %tter s not de"inite#' sett#ed unti# t(is Court issued its

Reso#ution in $abaluyas %nterprises, nc. vs. Japson F3?5 SCRA 397>D, de!#rin$ t(t *e$innin$

one %ont( "ro% t(e pro%u#$tion o" t(e reso#ution on /' 8@, 397> M

. . . t(e ru#e s(## *e stri!t#' en"or!ed t(t no otion for e'tension of tie to file a

otion for ne( trial or reconsideration s(## *e "i#ed . . . Ft p. 535.

In t(e instnt !se, t(e %otion "or extension s "i#ed nd $rnted *e"ore 0une 8@, 397>,

#t(ou$(, o" !ourse, ;erendi)s %otion to expun$e t(e %otion "or re!onsidertion s not "in##'

disposed unti# 0u#' 55, 397>, or "ter t(e di!tu% in $abaluyas (d t+en e""e!t. See%in$#',

t(ere"ore, t(e "i#in$ o" t(e %otion "or extension !%e *e"ore its "or%# pros!ription under

$abaluyas, "or (i!( reson e no turn our ttention to 2.R. No. 6>899.

Redu!ed to *re essenti#s, t(e issues ide#it' rises t(erein re: F (et(er or not t(e !ontr!t



o" #ese su*%itted *' ;erendi to support (is !#i% on t(e "ire insurn!e po#i!' !onstitutes "#se

de!#rtion (i!( ou#d "or"eit (is *ene"its under Se!tion 38 o" t(e po#i!' nd F* (et(er or not,

in su*%ittin$ t(e su*ro$tion re!eipt in eviden!e, ide#it' (d in e""e!t $reed to sett#e ;erendi)s

!#i% in t(e %ount stted in sid re!eipt. 1

;er$in$ on t(e "!tu#, t(e issue o" t(e ver!it' or "#sit' o" t(e #ese !ontr!t !ou#d (ve *een

*etter reso#ved *' t(e ppe##te !ourt "or, in petition "or revie on certiorari under Ru#e ?4, t(e

&urisdi!tion o" t(is Court is #i%ited to t(e revie o" errors o" #. T(e ppe##te !ourt)s "indin$s

o" "!t re, t(ere"ore, !on!#usive upon t(is Court ex!ept in t(e "o##oin$ !ses: F3 (en t(e

!on!#usion is "indin$ $rounded entire#' on spe!u#tion, sur%ises, or !on&e!tures F5 (en t(e

in"eren!e %de is %ni"est#' *surd, %ist+en, or i%possi*#e F8 (en t(ere is $rve *use o"

dis!retion in t(e ppre!ition o" "!ts F? (en t(e &ud$%ent is pre%ised on %isppre(ension

o" "!ts F4 (en t(e "indin$s o" "!t re !on"#i!tin$ nd F> (en t(e Court o" Appe#s in

%+in$ its "indin$s ent *e'ond t(e issues o" t(e !se nd t(e s%e re !ontrr' to t(e

d%issions o" *ot( ppe##nt nd ppe##ee FRon<ui##o v. Court o" Appe#s, 394 SCRA ?88 3993D.

In vie o" t(e !on"#i!tin$ "indin$s o" t(e tri# !ourt nd t(e ppe##te !ourt on i%portnt issues in

t(ese !onso#idted !ses nd it pperin$ t(t t(e ppe##te !ourt &ud$%ent is *sed on

%isppre(ension o" "!ts, t(is Court s(## revie t(e eviden!e on re!ord.

T(e !ontr!t o" #ese upon (i!( ;erendi re#ies to support (is !#i% "or insurn!e *ene"its, s

entered into *eteen (i% nd one Ro*ert 2r!i, %rried to He#en Cinin, on 0une 54, 397@

FEx(. K3K, !oup#e o" d's "ter t(e e""e!tivit' o" t(e insurn!e po#i!'. (en t(e rented

residenti# *ui#din$ s red to t(e $round on e!e%*er 57, 397@, it ppers t(t Ro*ert

2r!i For Ro*erto 2r!i s sti## it(in t(e pre%ises. Hoever, !!ordin$ to t(e investi$tion

report prepred *' Pt. E#euterio /. Buenvi&e o" t(e Antipo#o po#i!e, t(e *ui#din$ ppered to

(ve Kno o!!upntK nd t(t /r. Ro*erto 2r!i s K rentin# on t)e ot)erside *sic+ portion of

said copound

FEx(. KEK. T(ese pie!es o" eviden!e *e#ie ;erendi)s un!orro*orted testi%on' t(t /r!e#o

2r!i, (o% (e !onsidered s t(e re# #essee, s o!!up'in$ t(e *ui#din$ (en it s *urned

FTSN, 0u#' 56, 3975, p.3@.

Ro*ert 2r!i disppered "ter t(e "ire. It s on#' on O!to*er 9, 3973 t(t n d&uster s

*#e to #o!te (i%. Ro*ert 2r!i t(en exe!uted n ""idvit *e"ore t(e Ntion# Inte##i$en!e nd

Se!urit' Aut(orit' FNISA to t(e e""e!t t(t (e s not t(e #essee o" ;erendi)s (ouse nd t(t (is

si$nture on t(e !ontr!t o" #ese s !o%p#ete "or$er'. T(us, on t(e stren$t( o" t(ese "!ts, t(e

d&uster su*%itted report dted e!e%*er ?, 3973 re!o%%endin$ t(e deni# o" ;erendi)s

!#i% FEx(. K5K.

Ironi!##', durin$ t(e tri#, ;erendi d%itted t(t it s not Ro*ert 2r!i (o si$ned t(e #ese

!ontr!t. A!!ordin$ to ;erendi, it s si$ned *' /r!e#o 2r!i, !ousin o" Ro*ert, (o (d

*een p'in$ t(e rent#s ## t(e (i#e. ;erendi, (oever, "i#ed to exp#in (' /r!e#o (d to

si$n (is !ousin)s n%e (en (e in "!t s p'in$ "or t(e rent nd (' (e F;erendi (i%se#", t(e



#essor, ##oed su!( ruse. ide#it')s !on!#usions on t(ese proven "!ts pper, t(ere"ore, to (ve

su""i!ient *ses ;erendi !on!o!ted t(e #ese !ontr!t to de"#e!t responsi*i#it' "or t(e "ire

tords n ##e$ed K#esseeK, in"#ted t(e v#ue o" t(e propert' *' t(e ##e$ed %ont(#' rent# o"

P>,4@@ (en in "!t, t(e Provin!i# Assessor o" Ri# (d ssessed t(e propert')s "ir %r+et

v#ue to *e on#' P?@,8@@.@@, insured t(e s%e propert' it( to ot(er insurn!e !o%pnies "or

tot# !over$e o" round P9@@,@@@, nd !reted ded-end "or t(e d&uster *' t(e disppern!eo" Ro*ert 2r!i.

Bsi!##' !ontr!t o" inde%nit', n insurn!e !ontr!t is t(e # *eteen t(e prties FP!i"i!

Bn+in$ Corportion vs. Court o" Appe#s 3>7 SCRA 3 3977D. Its ter%s nd !onditions

!onstitute t(e %esure o" t(e insurer)s #i*i#it' nd !o%p#in!e t(ereit( is !ondition pre!edent

to t(e insured)s ri$(t to re!over' "ro% t(e insurer FOrient# Assurn!e Corportion vs. Court o"

Appe#s, 5@@ SCRA ?49 3993D, !itin$ Perla Copania de Se#uros, nc. vs. Court of -ppeals, 374

SCRA 6?3 3993D. As it is #so !ontr!t o" d(esion, n insurn!e !ontr!t s(ou#d *e #i*er##'

!onstrued in "vor o" t(e insured nd stri!t#' $inst t(e insurer !o%pn' (i!( usu##' prepres

it Festern 2urnt' Corportion vs. Court o" Appe#s, 376 SCRA >45 397@D.

Considerin$, (oever, t(e "ore$oin$ dis!ussion pointin$ to t(e "!t t(t ;erendi used "#se

#ese !ontr!t to support (is !#i% under ire Insurn!e Po#i!' No. -3776>, t(e ter%s o" t(e

po#i!' s(ou#d *e stri!t#' !onstrued $inst t(e insured. ;erendi "i#ed to #ive *' t(e ter%s o" t(e

po#i!', spe!i"i!##' Se!tion 38 t(ereo" (i!( is expressed in ter%s t(t re !#er nd

un%*i$uous, t(t ## *ene"its under t(e po#i!' s(## *e "or"eited KI" t(e !#i% *e in n' respe!t

"rudu#ent, or i" n' "#se de!#rtion *e %de or used in support t(ereo", or i" n' "rudu#ent

%ens or devises re used *' t(e Insured or n'one !tin$ in (is *e(#" to o*tin n' *ene"it

under t(e po#i!'K. ;erendi, (vin$ presented "#se de!#rtion to support (is !#i% "or *ene"its

in t(e "or% o" "rudu#ent #ese !ontr!t, (e "or"eited ## *ene"its t(erein *' virtue o" Se!tion 38o" t(e po#i!' in t(e *sen!e o" proo" t(t ide#it' ived su!( provision FP!i"i! Bn+in$

Corportion vs. Court o" Appe#s , supra. orse 'et, *' presentin$ "#se #ese !ontr!t,

;erendi, repre(ensi*#' disre$rded t(e prin!ip#e t(t insurn!e !ontr!ts re uberriae fidae

nd de%nd t(e %ost *undnt $ood "it( F;e#s!o vs. Aposto#, 368 SCRA 557 3979D.

T(ere is #so no reson to !on!#ude t(t *' su*%ittin$ t(e su*ro$tion re!eipt s eviden!e in

!ourt, ide#it' *ound itse#" to K%utu# $ree%entK to sett#e ;erendi)s !#i%s in !onsidertion

o" t(e %ount o" P3?5,>74.66. (i#e t(e sid re!eipt ppers to (ve *een "i##ed-up "or% o"

ide#it', no representtive o" ide#it' (d si$ned it. It is even in!o%p#ete s t(e *#n+ sp!es "or

itness nd (is ddress re not "i##ed up. /ore si$ni"i!nt#', t(e s%e re!eipt sttes t(t ;erendi

(d re!eived t(e "oresid %ount. Hoever, t(t ;erendi (d not re!eived t(e %ount stted

t(erein, is proven *' t(e "!t t(t ;erendi (i%se#" "i#ed t(e !o%p#int "or t(e "u## %ount o"

P874,@@@.@@ stted in t(e po#i!'. It %i$(t *e t(t t(ere (d *een e""orts to sett#e ;erendi)s

!#i%s, *ut sure#', t(e su*ro$tion re!eipt *' itse#" does not prove t(t sett#e%ent (d *een

rrived t nd en"or!ed. T(us, to interpret ide#it')s presenttion o" t(e su*ro$tion re!eipt in

eviden!e s indi!tive o" its !!ession to its Kter%sK is not on#' ntin$ in rtion# *sis *ut



ou#d *e su*stitutin$ t(e i## o" t(e Court "or t(t o" t(e prties.

HEREORE, t(e petition in 2.R. No. 64>@4 is IS/ISSE. T(e petition in 2.R. No. 6>899 is

2RANTE nd t(e de!ision o" t(e t(en Inter%edite Appe##te Court under revie is

RE;ERSE nd SET ASIE nd t(t o" t(e tri# !ourt is (ere*' REINSTATE nd UPHEL.

SO ORERE.

Gutierre, Jr., Bidin, /avide, Jr. and Roero, JJ., concur .

"oo/$o/

3 ide#it' ppers to (ve $reed it( t(e ppe##te !ourt t(t it (d ived

;erendi)s "i#ure to *ide *' po#i!' !ondition No. 8 on dis!#osure o" ot(er

insurn!e po#i!ies *' its "i#ure to ssi$n it s n error in t(e petition in 2.R. No.

6>899. It %ust (ve #i+eise re#ied t(e "uti#it' o" ssi$nin$ it s n error *e!use

on t(e "irst p$e o" t(e po#i!' t(e "o##oin$ is t'peritten: KOt(er insurn!es##oed, t(e %ounts to *e de!#red in t(e event o" #oss or (en re<uired.K

+=0ST D=6=S=<

[/.0. !. 12587. a*ch 1, 22]

>=@A(A0 >A@T> SKSTS, =(., petitioner, vs. (<0T <+ AA@S an# %@=TA

T0=<S, respondents.

D ( = S = <

KA0S-SAT=A/<, J.'

*nani T*in!, #eceae# h&an# !$ *ep!n#ent %&lita T*in!, applie# $!* a health ca*e c!ve*ae :ith

petiti!ne* hilaca*e >ealth Ste, =nc. =n the tan#a*# applicati!n $!*, he an:e*e# n! t! the

$!ll!:in &eti!n'

>ave !& !* an !$ !&* $ail ee* eve* c!n&lte# !* een t*eate# $!* hih l!!# p*e&*e, hea*t

t*!&le, #iaete, cance*, live* #ieae, atha !* peptic &lce* =$ Ke, ive #etail.[1]

The applicati!n :a app*!ve# $!* a pe*i!# !$ !ne ea* $*! a*ch 1, 19 t! a*ch 1, 199.

Acc!*#inl, he :a i&e# >ealth (a*e A*eeent !. 1194. n#e* the a*eeent, *ep!n#ent

h&an# :a entitle# t! avail !$ h!pitali)ati!n ene$it, :hethe* !*#ina* !* ee*enc, lite# the*ein.

>e :a al! entitle# t! avail !$ !&t-patient ene$it &ch a ann&al phical exainati!n, p*eventive

health ca*e an# !the* !&t-patient e*vice.

p!n the te*inati!n !$ the a*eeent, the ae :a exten#e# $!* an!the* ea* $*! a*ch 1, 199 t!

http://sc.judiciary.gov.ph/jurisprudence/2002/mar2002/125678.htm#_edn1




a*ch 1, 199, then $*! a*ch 1, 199 t! %&ne 1, 199. The a!&nt !$ c!ve*ae :a inc*eae# t! a

axi& & !$ 75,. pe* #iailit.[2]

D&*in the pe*i!# !$ hi c!ve*ae, *nani &$$e*e# a hea*t attac? an# :a c!n$ine# at the anila

e#ical (ente* ( $!* !ne !nth einnin a*ch 9, 199. hile he* h&an# :a in the

h!pital, *ep!n#ent t*ie# t! clai the ene$it &n#e* the health ca*e a*eeent. >!:eve*, petiti!ne*

#enie# he* clai ain that the >ealth (a*e A*eeent :a v!i#. Acc!*#in t! petiti!ne*, the*e :a ac!ncealent *ea*#in *nani e#ical hit!*. D!ct!* at the ( allee#l #ic!ve*e# at the tie

!$ *nani c!n$ineent that he :a hpe*tenive, #iaetic an# athatic, c!nt*a* t! hi an:e* in the

applicati!n $!*. Th&, *ep!n#ent pai# the h!pitali)ati!n expene he*el$, a!&ntin t! a!&t

78,..

A$te* he* h&an# :a #icha*e# $*! the (, he :a atten#e# a phical the*apit at h!e.

@ate*, he :a a#itte# at the (hinee /ene*al >!pital. D&e t! $inancial #i$$ic&ltie, h!:eve*,

*ep!n#ent *!&ht he* h&an# h!e aain. =n the !*nin !$ Ap*il 13, 199, *nani ha# $eve* an#

:a $eelin ve* :ea?. 0ep!n#ent :a c!nt*aine# t! *in hi ac? t! the (hinee /ene*al >!pital

:he*e he #ie# !n the ae #a.

<n %&l 24, 199, *ep!n#ent intit&te# :ith the 0ei!nal T*ial (!&*t !$ anila, B*anch 44, an acti!n

$!* #aae aaint petiti!ne* an# it p*ei#ent, D*. Benit! 0eve*ente, :hich :a #!c?ete# a (ivil

(ae !. 9-53795. She a?e# $!* *ei&*eent !$ he* expene pl& !*al #aae an# att!*ne

$ee. A$te* t*ial, the l!:e* c!&*t *&le# aaint petiti!ne*, vi0:

>0+<0, in vie: !$ the $!*!in, the (!&*t *en#e* I&#ent in $av!* !$ the plainti$$ %&lita

T*in!, !*#e*in'

1. De$en#ant t! pa an# *ei&*e the e#ical an# h!pital c!ve*ae !$ the late *nani T*in! in the

a!&nt !$ 78,. pl& inte*et, &ntil the a!&nt i $&ll pai# t! plainti$$ :h! pai# the ae;

2. De$en#ant t! pa the *e#&ce# a!&nt !$ !*al #aae !$ 1,. t! plainti$$;

3. De$en#ant t! pa the *e#&ce# a!&nt !$ 1,. a exepla* #aae t! plainti$$;

4. De$en#ant t! pa att!*ne $ee !$ 2,., pl& c!t !$ &it.

S< <0D0D.[3]

<n appeal, the (!&*t !$ Appeal a$$i*e# the #ecii!n !$ the t*ial c!&*t &t #elete# all a:a*# $!*

#aae an# a!lve# petiti!ne* 0eve*ente.[4] etiti!ne* !ti!n $!* *ec!ni#e*ati!n :a #enie#.[5]

>ence, petiti!ne* *!&ht the intant petiti!n $!* *evie:, *aiin the p*ia* a*&ent that a health ca*e

a*eeent i n!t an in&*ance c!nt*act; hence the inc!ntetailit cla&e &n#e* the =n&*ance (!#e[8]

#!e n!t appl.

etiti!ne* a*&e that the a*eeent *ant livin ene$it, &ch a e#ical chec?-&p an#

h!pitali)ati!n :hich a ee* a ie#iatel enI! ! l!n a he i alive &p!n e$$ectivit !$ the

a*eeent &ntil it expi*ati!n !ne-ea* the*ea$te*. etiti!ne* al! p!int !&t that !nl e#ical an#

h!pitali)ati!n ene$it a*e iven &n#e* the a*eeent :ith!&t an in#eni$icati!n, &nli?e in an













in&*ance c!nt*act :he*e the in&*e# i in#eni$ie# $!* hi l!. !*e!ve*, ince >ealth (a*e

A*eeent a*e !nl $!* a pe*i!# !$ !ne ea*, a c!pa*e# t! in&*ance c!nt*act :hich lat l!ne*, [7]

petiti!ne* a*&e that the inc!ntetailit cla&e #!e n!t appl, a the ae *e&i*e an e$$ectivit

pe*i!# !$ at leat t:! ea*. etiti!ne* $&*the* a*&e that it i n!t an in&*ance c!pan, :hich i

!ve*ne# the =n&*ance (!ii!n, &t a >ealth aintenance <*ani)ati!n &n#e* the a&th!*it !$

the Depa*tent !$ >ealth.Secti!n 2 1 !$ the =n&*ance (!#e #e$ine a c!nt*act !$ in&*ance a an a*eeent :he*e !ne

&n#e*ta?e $!* a c!ni#e*ati!n t! in#eni$ an!the* aaint l!, #aae !* liailit a*iin $*! an

&n?n!:n !* c!ntinent event. An in&*ance c!nt*act exit :he*e the $!ll!:in eleent c!nc&*'

1. The in&*e# ha an in&*ale inte*et;

2. The in&*e# i &Iect t! a *i? !$ l! the happenin !$ the #einate# pe*il;

3. The in&*e* a&e the *i?;

4. S&ch a&pti!n !$ *i? i pa*t !$ a ene*al chee t! #it*i&te act&al l!e a!n a la*e *!&p !$

pe*!n ea*in a iila* *i?; an#

5. =n c!ni#e*ati!n !$ the in&*e* p*!ie, the in&*e# pa a p*ei&.[]

Secti!n 3 !$ the =n&*ance (!#e tate that an c!ntinent !* &n?n!:n event, :hethe* pat !* $&t&*e,

:hich a #ani$ a pe*!n havin an in&*ale inte*et aaint hi, a e in&*e# aaint. ve*

pe*!n ha an in&*ale inte*et in the li$e an# health !$ hiel$. Secti!n 1 p*!vi#e'

ve* pe*!n ha an in&*ale inte*et in the li$e an# health'

1 !$ hiel$, !$ hi p!&e an# !$ hi chil#*en;

2 !$ an pe*!n !n :h! he #epen# :h!ll !* in pa*t $!* e#&cati!n !* &pp!*t, !* in

:h! he ha a pec&nia* inte*et;

3 !$ an pe*!n &n#e* a leal !liati!n t! hi $!* the paent !$ !ne, *epectin

p*!pe*t !* e*vice, !$ :hich #eath !* illne iht #ela !* p*event the pe*$!*ance;

an#

4 !$ an pe*!n &p!n :h!e li$e an etate !* inte*et vete# in hi #epen#.

=n the cae at a*, the in&*ale inte*et !$ *ep!n#ent h&an# in !tainin the health ca*e a*eeent

:a hi !:n health. The health ca*e a*eeent :a in the nat&*e !$ n!n-li$e in&*ance, :hich i

p*ia*il a c!nt*act !$ in#enit.[9] <nce the ee* inc&* h!pital, e#ical !* an !the* expene

a*iin $*! ic?ne, inI&* !* !the* tip&late# c!ntinent, the health ca*e p*!vi#e* &t pa $!* the

ae t! the extent a*ee# &p!n &n#e* the c!nt*act.

etiti!ne* a*&e that *ep!n#ent h&an# c!nceale# a ate*ial $act in hi applicati!n. =t appea* that

in the applicati!n $!* health c!ve*ae, petiti!ne* *e&i*e# *ep!n#ent h&an# t! in an exp*e

a&th!*i)ati!n $!* an pe*!n, !*ani)ati!n !* entit that ha an *ec!*# !* ?n!:le#e !$ hi health t!

$&*nih an an# all in$!*ati!n *elative t! an h!pitali)ati!n, c!n&ltati!n, t*eatent !* an !the*









e#ical a#vice !* exainati!n.[1] Speci$icall, the >ealth (a*e A*eeent ine# *ep!n#ent

h&an# tate'

e he*e #ecla*e an# a*ee that all tateent an# an:e* c!ntaine# he*ein an# in an a##en#&

annexe# t! thi applicati!n a*e $&ll, c!plete an# t*&e an# in# all pa*tie in inte*et &n#e* the

A*eeent he*ein applie# $!*, that the*e hall e n! c!nt*act !$ health ca*e c!ve*ae &nle an# &ntil an

A*eeent i i&e# !n thi applicati!n an# the $&ll ee*hip +ee acc!*#in t! the !#e !$ paentapplie# $!* i act&all pai# #&*in the li$etie an# !!# health !$ p*!p!e# ee*; that n!

in$!*ati!n ac&i*e# an 0ep*eentative !$ hila(a*e hall e in#in &p!n hila(a*e &nle

et !&t in :*itin in the applicati!n; that an phician i, thee p*eent, exp*el a&th!*i)e# t!

#icl!e !* ive teti!n at antie *elative t! an in$!*ati!n ac&i*e# hi in hi p*!$ei!nal

capacit &p!n an &eti!n a$$ectin the eliiilit $!* health ca*e c!ve*ae !$ the *!p!e# ee*

an# that the acceptance !$ an A*eeent i&e# !n thi applicati!n hall e a *ati$icati!n !$ an

c!**ecti!n in !* a##iti!n t! thi applicati!n a tate# in the pace $!* >!e <$$ice n#!*eent. [11]

n#e*c!*in !&*

=n a##iti!n t! the a!ve c!n#iti!n, petiti!ne* a##iti!nall *e&i*e# the applicant $!* a&th!*i)ati!n t!

in&i*e a!&t the applicant e#ical hit!*, th&'

= he*e a&th!*i)e an pe*!n, !*ani)ati!n, !* entit that ha an *ec!*# !* ?n!:le#e !$ health

an#F!* that !$ XXXXXXXXXX t! ive t! the hila(a*e >ealth Ste, =nc. an an# all in$!*ati!n

*elative t! an h!pitali)ati!n, c!n&ltati!n, t*eatent !* an !the* e#ical a#vice !* exainati!n. Thi

a&th!*i)ati!n i in c!nnecti!n :ith the applicati!n $!* health ca*e c!ve*ae !nl. A ph!t!*aphic c!p

!$ thi a&th!*i)ati!n hall e a vali# a the !*iinal. [12] n#e*c!*in !&*

etiti!ne* cann!t *el !n the tip&lati!n *ea*#in =nvali#ati!n !$ a*eeent :hich *ea#'

+ail&*e t! #icl!e !* i*ep*eentati!n !$ an ate*ial in$!*ati!n the ee* in the applicati!n

!* e#ical exainati!n, :hethe* intenti!nal !* &nintenti!nal, hall a&t!aticall invali#ate the

A*eeent $*! the ve* einnin an# liailit !$ hilaca*e hall e liite# t! *et&*n !$ all

ee*hip +ee pai#. An &n#icl!e# !* i*ep*eente# in$!*ati!n i #eee# ate*ial i$ it

*evelati!n :!&l# have *e&lte# in the #eclinati!n !$ the applicant hilaca*e !* the aeent !$ a

hihe* ee*hip +ee $!* the ene$it !* ene$it applie# $!*.[13]

The an:e* aaile# petiti!ne* :a in *ep!ne t! the &eti!n *elatin t! the e#ical hit!* !$ the

applicant. Thi la*el #epen# !n !pini!n *athe* than $act, epeciall c!in $*! *ep!n#ent

h&an# :h! :a n!t a e#ical #!ct!*. he*e atte* !$ !pini!n !* I&#ent a*e calle# $!*, an:e*

a#e in !!# $aith an# :ith!&t intent t! #eceive :ill n!t av!i# a p!lic even th!&h the a*e &nt*&e.

[14] Th&,

Alth!&h $ale, a *ep*eentati!n !$ the expectati!n, intenti!n, elie$, !pini!n, !* I&#ent !$ the

in&*e# :ill n!t av!i# the p!lic i$ the*e i n! act&al $*a&# in in#&cin the acceptance !$ the *i?, !* it

acceptance at a l!:e* *ate !$ p*ei&, an# thi i li?e:ie the *&le alth!&h the tateent i ate*ial t!

the *i?, i$ the tateent i !vi!&l !$ the $!*e!in cha*acte*, ince in &ch cae the in&*e* i n!t

I&ti$ie# in *elin &p!n &ch tateent, &t i !liate# t! a?e $&*the* in&i*. The*e i a clea*













#itincti!n et:een &ch a cae an# !ne in :hich the in&*e# i $*a&#&lentl an# intenti!nall tate t!

e t*&e, a a atte* !$ expectati!n !* elie$, that :hich he then ?n!:, t! e act&all &nt*&e, !* the

ip!iilit !$ :hich i h!:n the $act :ithin hi ?n!:le#e, ince in &ch cae the intent t!

#eceive the in&*e* i !vi!& an# a!&nt t! act&al $*a&#.[15] n#e*c!*in !&*

The $*a&#&lent intent !n the pa*t !$ the in&*e# &t e etalihe# t! :a**ant *ecii!n !$ the

in&*ance c!nt*act.[18] (!ncealent a a #e$ene $!* the health ca*e p*!vi#e* !* in&*e* t! av!i#liailit i an a$$i*ative #e$ene an# the #&t t! etalih &ch #e$ene ati$act!* an# c!nvincin

evi#ence *et &p!n the p*!vi#e* !* in&*e*. =n an cae, :ith !* :ith!&t the a&th!*it t! invetiate,

petiti!ne* i liale $!* clai a#e &n#e* the c!nt*act. >avin a&e# a *ep!niilit &n#e* the

a*eeent, petiti!ne* i !&n# t! an:e* the ae t! the extent a*ee# &p!n. =n the en#, the liailit !$

the health ca*e p*!vi#e* attache !nce the ee* i h!pitali)e# $!* the #ieae !* inI&* c!ve*e#

the a*eeent !* :heneve* he avail !$ the c!ve*e# ene$it :hich he ha p*epai#.

n#e* Secti!n 27 !$ the =n&*ance (!#e, a c!ncealent entitle the inI&*e# pa*t t! *ecin# a c!nt*act

!$ in&*ance. The *iht t! *ecin# h!&l# e exe*cie# p*evi!& t! the c!enceent !$ an acti!n !n

the c!nt*act.[17] =n thi cae, n! *ecii!n :a a#e. Bei#e, the cancellati!n !$ health ca*e

a*eeent a in in&*ance p!licie *e&i*e the c!nc&**ence !$ the $!ll!:in c!n#iti!n'

1. *i!* n!tice !$ cancellati!n t! in&*e#;

2. !tice &t e ae# !n the !cc&**ence a$te* e$$ective #ate !$ the p!lic !$ !ne !* !*e !$ the

*!&n# enti!ne#;

3. &t e in :*itin, aile# !* #elive*e# t! the in&*e# at the a##*e h!:n in the p!lic;

4. &t tate the *!&n# *elie# &p!n p*!vi#e# in Secti!n 84 !$ the =n&*ance (!#e an# &p!n *e&et !$

in&*e#, t! $&*nih $act !n :hich cancellati!n i ae#.[1]

!ne !$ the a!ve p*e-c!n#iti!n :a $&l$ille# in thi cae. hen the te* !$ in&*ance c!nt*act

c!ntain liitati!n !n liailit, c!&*t h!&l# c!nt*&e the in &ch a :a a t! p*ecl&#e the in&*e*

$*! n!n-c!pliance :ith hi !liati!n.[19] Bein a c!nt*act !$ a#hei!n, the te* !$ an in&*ance

c!nt*act a*e t! e c!nt*&e# t*ictl aaint the pa*t :hich p*epa*e# the c!nt*act the in&*e*. [2] B

*ea!n !$ the excl&ive c!nt*!l !$ the in&*ance c!pan !ve* the te* an# ph*ae!l! !$ the

in&*ance c!nt*act, ai&it &t e t*ictl inte*p*ete# aaint the in&*e* an# lie*all in $av!* !$

the in&*e#, epeciall t! av!i# $!*$eit&*e.[21] Thi i e&all applicale t! >ealth (a*e A*eeent.

The ph*ae!l! &e# in e#ical !* h!pital e*vice c!nt*act, &ch a the !ne at a*, &t e lie*all

c!nt*&e# in $av!* !$ the &c*ie*, an# i$ #!&t$&l !* *ea!nal &ceptile !$ t:! inte*p*etati!n thec!nt*&cti!n c!n$e**in c!ve*ae i t! e a#!pte#, an# excl&i!na* cla&e !$ #!&t$&l ip!*t h!&l#

e t*ictl c!nt*&e# aaint the p*!vi#e*.[22]

Anent the inc!ntetailit !$ the ee*hip !$ *ep!n#ent h&an#, :e &!te :ith app*!val the

$!ll!:in $in#in !$ the t*ial c!&*t'

n#e* the title (lai p*!ce#&*e !$ expene, the #e$en#ant hilaca*e >ealth Ste =nc. ha#

t:elve !nth $*! the #ate !$ i&ance !$ the A*eeent :ithin :hich t! c!ntet the ee*hip !$






















the patient i$ he ha# p*evi!& ailent !$ atha, an# ix !nth $*! the i&ance !$ the a*eeent i$

the patient :a ic? !$ #iaete !* hpe*teni!n. The pe*i!# havin expi*e#, the #e$ene !$

c!ncealent !* i*ep*eentati!n n! l!ne* lie.[23]

+inall, petiti!ne* allee that *ep!n#ent :a n!t the leal :i$e !$ the #eceae# ee* c!ni#e*in

that at the tie !$ thei* a**iae, the #eceae# :a p*evi!&l a**ie# t! an!the* :!an :h! :a till

alive. The health ca*e a*eeent i in the nat&*e !$ a c!nt*act !$ in#enit. >ence, paent h!&l# ea#e t! the pa*t :h! inc&**e# the expene. =t i n!t c!nt*!ve*te# that *ep!n#ent pai# all the h!pital

an# e#ical expene. She i the*e$!*e entitle# t! *ei&*eent. The *ec!*# a#e&atel p*!ve the

expene inc&**e# *ep!n#ent $!* the #eceae# h!pitali)ati!n, e#icati!n an# the p*!$ei!nal $ee

!$ the atten#in phician.[24]

HEREORE, in vie: !$ the $!*e!in, the petiti!n i D=D. The aaile# #ecii!n !$ the (!&*t

!$ Appeal #ate# Decee* 14, 1995 i A++=0D.

S< <0D0D.

Davi#e, %*., (.%., (hai*an, &n!, an# Rap&nan, %%., c!nc&*.

[1] 0ec!*#, p. 2.

[2] xhiit 4, 0ec!*#, p. 158.

[3] Date# !vee* 18, 1993; penne# %&#e @!lita /al-lan; Rollo, pp. 134-135.

[4] Date# Decee* 14, 1995, penne# A!ciate %&tice +i#el . &*iia, c!nc&**e# in A!ciate

%&tice +e*in A. a*tin, %*. an# (!nchita (a*pi! !*ale; Rollo, p. 45.

[5] 0e!l&ti!n #ate# %&l 23, 1998; Rollo, p. 4.

[8] Secti!n 4 !$ .D. !. 148 !the*:ie ?n!:n a the =n&*ance (!#e.

[7] etiti!n, pp. 13-14; Rollo, pp. 22-23.

[] See 6ance pp. 1-2 cite# in Aaani, (!e*cial @a: !$ the hilippine, v!l. 2, 198 e#. p. 8.

[9] (ha v. (!&*t !$ Appeal, 27 S(0A 89, 894 1997.

[1] 0ec!*#, p. 2.

[11] Ibid.

[12] Ibid.

[13] Ibid., p. 13.

[14] B*ant v. !#e*n !!#en !$ Ae*ica, 8 e 372, 125 821.

[15] >e**ic? v. ni!n &t. +i*e =n. (!., 4 e 55; B*ant v. !#e*n !!#en !$ Ae*ica, supra;



http://sc.judiciary.gov.ph/jurisprudence/2002/mar2002/125678.htm#_ednref1



































B!&telle v. etchete* +i*e =n. (!., 51 6t 4 cite# in 43 A %&* 2# 118.

[18] /*eat aci$ic @i$e v. (!&*t !$ Appeal, 318 S(0A 877 [1999], citin /an Cee v. Aian

(*&a#e* @i$e A&*ance (!*p., 122 S(0A 481 [193].

[17] Secti!n 4, =n&*ance (!#e.

[1] alaan =n&*ance v. (*&) A*nal#!, 154 S(0A 872 [197].

[19] >ei* !$ =l#e$!n! (!c&ll&ela, S*. v. 0ic! /ene*al =n&*ance (!*p!*ati!n, 179 S(0A 511 [199].

[2] @an#ich! v. /S=S, 44 S(0A 7 [1972]; ete*n /&a*ant (!pan v. (!&*t !$ Appeal, 17

S(0A 852 [199].

[21] 44 (.%.S. pp. 1188-1175; 29 A. %&*. 1. See al! Aetna =n&*ance (!. v. 0h!#e, 17 +2# 111;

=n&*ance (!. v. !*t!n, 98 .S. 234, 24 @ e# 89; $ei$$e* v. i!&*i State @i$e =n. (!., 174 A*?

73, 297 S 47.

[22] See e* v. Ritap hician Se*vice, 7 ah 2# 28, 474 2# 19, 88 A@03# 1198; >&nt v.

>!pital Se*vice lan, 1 A@0 2# 919 cite# in 43 A %&* 2# 29.

[23] 0ec!*#, p. 257.

[24] xhiit B, xhiit D t! D-7; 0ec!*#, pp. -97.


SUPRE/E COURT

anila

S(<D D=6=S=<

2.R. No. L-4564> O!to*er 35, 3976

/ANILA /AHO2AN1 /ANUACTURIN2 CORPORATION, petiti!ne*,

v.

COURT O APPEALS AN ENITH INSURANCE CORPORATION, *ep!n#ent.

PAILLA, J:

etiti!n t! *evie: the #ecii!n of the Court of A,,eals% in CA-./R/ No/ SP-04+% dated +$ 7ar(h $&1&% orderin! ,etitioner 7anila 7aho!an#

7anufa(turin! Cor,oration to ,a# ,rivate res,ondent Kenith Insuran(e Cor,oration the su2 of <ive Thousand Pesos :P5%/; with L annual interest fro2

$0 "anuar# $&1'% attorne#Es fees in the su2 of five hundred ,esos :P5/;% and (osts of suit% and the resolution of the sa2e Court% dated 0 <ebruar# $&0%

den#in! ,etitionerEs 2otion for re(onsideration of itEs de(ision/

+*! 8 a*ch 197 t! 8 a*ch 1971, petiti!ne* in&*e# it e*ce#e Ben) 4-#!!* e#an :ith

*ep!n#ent in&*ance c!pan. <n 4 a 197 the in&*e# vehicle :a &pe# an# #aae# a

t*&c? !:ne# San i&el (!*p!*ati!n. +!* the #aae ca&e#, *ep!n#ent c!pan pai# petiti!ne*

$ive th!&an# pe! 5,. in aicale ettleent. etiti!ne*E ene*al anae* exec&te# a





















0eleae !$ (lai, &*!atin *ep!n#ent c!pan t! all it *iht t! acti!n aaint San i&el

(!*p!*ati!n.

<n 11 Decee* 1972, *ep!n#ent c!pan :*!te =n&*ance A#I&te*, =nc. t! #ean# *ei&*eent

$*! San i&el (!*p!*ati!n !$ the a!&nt it ha# pai# petiti!ne*. =n&*ance A#I&te*, =nc. *e$&e#

*ei&*eent, allein that San i&el (!*p!*ati!n ha# al*ea# pai# petiti!ne* 4,5. $!* the

#aae t! petiti!ne*E !t!* vehicle, a evi#ence# a cah v!&che* an# a 0eleae !$ (lai exec&te# the /ene*al anae* !$ petiti!ne* #icha*in San i&el (!*p!*ati!n $*! "all acti!n, clai,

#ean# the *iht !$ acti!n that n!: exit !* he*ea$te* [ic] #evel!p a*iin !&t !$ !* a a c!ne&ence

!$ the acci#ent."

0ep!n#ent in&*ance c!pan th& #ean#e# $*! petiti!ne* *ei&*eent !$ the & !$ 4,5.

pai# San i&el (!*p!*ati!n. etiti!ne* *e$&e#; hence, *ep!n#ent c!pan $ile# &it in the (it

(!&*t !$ anila $!* the *ec!ve* !$ 4,5.. The (it (!&*t !*#e*e# petiti!ne* t! pa *ep!n#ent

4,5.. <n appeal the (!&*t !$ +i*t =ntance !$ anila a$$i*e# the (it (!&*tE #ecii!n in toto,

:hich (+= #ecii!n :a a$$i*e# the (!&*t !$ Appeal, :ith the !#i$icati!n that petiti!ne* :a t!

pa *ep!n#ent the t!tal a!&nt !$ 5,. that it ha# ea*lie* *eceive# $*! the *ep!n#ent in&*ance

c!pan.

etiti!ne* n!: c!nten# it i n!t !&n# t! pa 4,5., an# &ch !*e, 5,. t! *ep!n#ent

c!pan a the &*!ati!n in the 0eleae !$ (lai it exec&te# in $av!* !$ *ep!n#ent :a c!n#iti!ne#

!n *ec!ve* !$ the t!tal a!&nt !$ #aae petiti!ne* ha# &taine#. Since t!tal #aae :e*e val&e#

petiti!ne* at 9,48.43 an# !nl 5,. :a *eceive# petiti!ne* $*! *ep!n#ent, petiti!ne*

a*&e that it :a entitle# t! ! a$te* San i&el (!*p!*ati!n t! clai the a##iti!nal 4,5.

event&all pai# t! it the latte*, :ith!&t havin t! t&*n !ve* ai# a!&nt t! *ep!n#ent. 0ep!n#ent !$

c!&*e #ip&te thi alleati!n an# tate that the*e :a n! &ali$icati!n t! it *iht !$ &*!ati!n &n#e*

the 0eleae !$ (lai exec&te# petiti!ne*, the c!ntent !$ ai# #ee# havin exp*ee# all the intent

an# p&*p!e !$ the pa*tie.

T! &pp!*t it allee# *iht n!t t! *et&*n the 4,5. pai# San i&el (!*p!*ati!n, petiti!ne* cite

A*t. 227 !$ the (ivil (!#e, :hich tate'

=$ the plainti$$E p*!pe*t ha een in&*e#, an# he ha *eceive# in#enit $*! the

in&*ance c!pan $!* the inI&* !* l! a*iin !&t !$ the :*!n !* *each !$ c!nt*act

c!plaine# !$ the in&*ance c!pan hall e &*!ate# t! the *iht !$ the in&*e#

aaint the :*!n#!e* !* the pe*!n :h! ha vi!late# the c!nt*act. =$ the a!&nt pai#

the in&*ance c!pan #!e n!t $&ll c!ve* the inI&* !* l! the a*ieve# pa*t halle entitle# t! *ec!ve* the #e$icienc $*! the pe*!n ca&in the l! !* inI&*.

etiti!ne* al! inv!?e A*t. 134 !$ the (ivil (!#e, tatin.

A c*e#it!*, t! :h! pa*tial paent ha een a#e, a exe*cie hi *iht $!* the

*eain#e*, an# he hall e p*e$e**e# t! the pe*!n :h! ha een &*!ate# in hi place

in vi*t&e !$ the pa*tial paent !$ the ae c*e#it.



e $in# petiti!ne* a*&ent t! e &ntenale an# :ith!&t e*it. =n the aence !$ an !the* evi#ence

t! &pp!*t it alleati!n that a entleenE a*eeent exite# et:een it an# *ep!n#ent, n!t e!#ie#

in the 0eleae !$ (lai, &ch eae !$ (lai &t e ta?en a the et evi#ence !$ the intent an#

p&*p!e !$ the pa*tie. Th&, the (!&*t !$ Appeal *ihtl tate#'

etiti!ne* a*&e that the *eleae clai it exec&te# &*!atin *ivate *ep!n#ent t! an

*iht !$ acti!n it ha# aaint San i&el (!*p!*ati!n #i# n!t p*ecl&#e anila ah!an$*! $ilin a #e$icienc clai aaint the :*!n#!e*. (itin A*ticle 227, e: (ivil

(!#e, t! the e$$ect that i$ the a!&nt pai# an in&*ance c!pan #!e n!t $&ll c!ve*

the l!, the a*ieve# pa*t hall e entitle# t! *ec!ve* the #e$icienc $*! the pe*!n

ca&in the l!, petiti!ne* clai a p*e$e**e# *iht t! *etain the a!&nt c!in $*!

San i&el (!*p!*ati!n, #epite the &*!ati!n in $av!* !$ *ivate *ep!n#ent.

Alth!&h petiti!ne* *iht t! $ile a #e$icienc clai aaint San i&el (!*p!*ati!n i

:ith leal ai, :ith!&t p*eI&#ice t! the in&*e*E *iht !$ &*!ati!n, neve*thele

:hen anila ah!an exec&te# an!the* *eleae clai xhiit R #icha*in San

i&el (!*p!*ati!n $*! "all acti!n, clai, #ean# an# *iht !$ acti!n that n!:

exit !* he*ea$te* a*iin !&t !$ !* a a c!ne&ence !$ the acci#ent" a$te* the in&*e* ha#

pai# the p*!cee# !$ the p!lic- the c!p*!ie a*eeent !$ 5,. ein ae# !n

the in&*ance p!lic-the in&*e* i entitle# t! *ec!ve* $*! the in&*e# the a!&nt !$

in&*ance !ne pai# et*!p!litan (a&alt =n&*ance (!pan !$ e: K!*? v.

Ba#le*, 229 .K.S. 81, 132 ic. 132 cite# in =n&*ance (!#e an# =n!lvenc @a: :ith

c!ent an# ann!tati!n, >.B. e*e) 1978, p. 151. Since petiti!ne* it !:n act

*eleae# San i&el (!*p!*ati!n, the*e #e$eatin p*ivate *ep!n#ent, the *iht !$

&*!ati!n, the *iht !$ acti!n !$ petiti!ne* aaint the in&*e* :a al! n&lli$ie#. S

Ren N (!. v. M&eenlan# =n&*ance (!., @t#., 54 <./. 391 <the*:ie tate#' p*ivate*ep!n#ent a *ec!ve* the & !$ 5,. it ha# ea*lie* pai# t! petiti!ne*. 1

A hel# in Phil. Air ines v. Heald umber Co., 2

=$ a p*!pe*t i in&*e# an# the !:ne* *eceive the in#enit $*! the in&*e*, it i

p*!vi#e# in [A*ticle 227 !$ the e: (ivil (!#e] that the in&*e* i deemed subro-ated

t! the *iht !$ the in&*e# aaint the :*!n#!e* an# i$ the a!&nt pai# the in&*e*

#!e n!t $&ll c!ve* the l!, then the a*ieve# pa*t i the !ne entitle# t! *ec!ve* the

#e$icienc. ... n#e* thi leal p*!vii!n, the real party in interest %ith re-ard to the

portion o# the indemnity paid is the insurer and not the insured 3 :B2,hasis su,,lied;

The #ecii!n !$ the *ep!n#ent c!&*t !*#e*in petiti!ne* t! pa *ep!n#ent c!pan, n!t the 4,5.

a !*iinall a?e# $!*, &t 5,., the a!&nt *ep!n#ent c!pan pai# petiti!ne* a in&*ance, i

al! in acc!*# :ith la: an# I&*ip*&#ence. =n #ip!in !$ thi i&e, the (!&*t !$ Appeal hel#'

... petiti!ne* i entitle# t! ?eep the & !$ 4,5. pai# San i&el (!*p!*ati!n

&n#e* it clea* *iht t! $ile a #e$icienc clai $!* #aae inc&**e#, aaint the

:*!n#!e*, h!&l# the in&*ance c!pan n!t $&ll pa $!* the inI&* ca&e# A*ticle



227, e: (ivil (!#e. Ho%ever, %hen petitioner released San $i-uel Corporation

#rom any liability, petitioner6s ri-ht to retain the sum o# P7,888.88 no lon-er e*isted,

thereby entitlin- private respondent to recover the same. phai &pplie#

A ha een !e*ve#'

... The *iht !$ &*!ati!n can !nl exit a$te* the in&*e* ha pai# the !the*:ie the

in&*e# :ill e #ep*ive# !$ hi *iht t! $&ll in#enit. =$ the in&*ance p*!cee# a*e n!t

&$$icient t! c!ve* the #aae &$$e*e# the in&*e#, then he a &e the pa*t

*ep!nile $!* the #aae $!* the the [ic] *eain#e*. T! the extent !$ the a!&nt he

ha al*ea# *eceive# $*! the in&*e* enI!E [ic] the *iht !$ &*!ati!n.

Since the in&*e* can e &*!ate# t! !nl &ch *iht a the in&*e# a have, should

the insured, a#ter receivin- payment #rom the insurer, release the %ron-doer %ho caused

the loss, the insurer loses his ri-hts a-ainst the latter. "ut in such a case, the insurer %ill

be entitled to recover #rom the insured %hatever it has paid to the latter, unless the

release %as made %ith the consent o# the insurer.+ :B2,hasis su,,lied/;

An# even i$ the peci$ic a!&nt a?e# $!* in the c!plaint i 4,5. !nl an# n!t 5,., till,

the *ep!n#ent (!&*t acte# :ell :ithin it #ic*eti!n in a:a*#in 5,., the t!tal a!&nt pai#

the in&*e*. The (!&*t !$ Appeal *ihtl *ea!ne# a $!ll!:'

=t i t! e n!te# that p*ivate *ep!n#ent, in it c!panie, p*a $!* the *ec!ve*, n!t !$

5,. it ha# pai# &n#e* the in&*ance p!lic &t 4,5. San i&el (!*p!*ati!n

ha# pai# t! petiti!ne*. <n thi c!*e, e elieve the (it (!&*t an# (!&*t !$ +i*t

=ntance e**e# in n!t a:a*#in the p*!pe* *elie$. Alth!&h p*ivate *ep!n#ent p*a $!*

the *ei&*eent !$ 4,5. pai# San i&el (!*p!*ati!n, intea# !$ 5,.

pai# &n#e* the in&*ance p!lic, the t*ial c!&*t h!&l# have a:a*#e# the latte*, alth!&h

n!t p*ae# $!*, &n#e* the ene*al p*ae* in the c!plaint "$!* &ch $&*the* !* !the* *elie$

a a e #eee# I&t !* e&itale, 0&le 8, Sec. 3, 0evie# 0&le !$ (!&*t; 0!ale v.

0ee <*#!ve)a, 25 hil. 495 ; (aia! v. @i, 5 hil. 44; Ba&i*! v. Ba**i!

T&pa, 77 hil 12.

>0+<0, p*eie c!ni#e*e#, the petiti!n i D=D. The I&#ent appeale# $*! i he*e

A++=0D :ith c!t aaint petiti!ne*.

S< <0D0D.

/ap 9Chairman4, $elencio5Herrera, Paras and Sarmiento, JJ., concur.

"oo/$o/

J enne# %&tice Sie!n . /!penc!, :ith the c!nc&**ence !$ %&tice aa D.

B&*an an# =i#*! (. B!**!e!.

1 0!ll! at 45-48.



2 11 hil. 131 1957.

3 Id. at 135.

4 (ap! an# (ap!, <TS AD S@(TD (ASS < =S0A( @A

492 198

T>=0D D=6=S=<

[/.0. !. 1594. A&&t 1, 24]

+D0A@ G0SS (<0<0AT=<, petitioner, vs. A0=(A >< ASS0A(

(<AK an# >=@A =S0A( (<AK, =(., respondents.

D ( = S = <

A/A=BA, J.:

Baic i the *e&i*eent that e$!*e &in t! *ec!ve* l! !$ !* #aae t! t*anp!*te# !!#, the

plainti$$ &t ive the ca**ie* n!tice !$ the l! !* #aae, :ithin the pe*i!# p*ec*ie# the a*a:

(!nventi!n an#F!* the ai*:a ill.

The (ae

Be$!*e & i a etiti!n $!* 0evie:[1] &n#e* 0&le 45 !$ the 0&le !$ (!&*t, challenin the %&ne 4, 21

Decii!n[2] an# the Septee* 21, 21 0e!l&ti!n[3] !$ the (!&*t !$ Appeal (A in (A-/0 (6 !.

52. The aaile# Decii!n #ip!e# a $!ll!:'

>0+<0, p*eie c!ni#e*e#, the p*eent appeal i he*e D=S=SSD $!* lac? !$ e*it. The

appeale# Decii!n !$ B*anch 149 !$ the 0ei!nal T*ial (!&*t !$ a?ati (it in Civil Case o. 75

;<;, entitle# American Home Assurance Co. and PHIA$ Insurance Co., Inc. v. =DRA

>PRSS C?RP?RA)I? and@or CAR(?HAS, IC. 9#ormerly 5'ARH?S, IC.4, i he*e

AIR/E an# REITERATE.

(!t aaint the [petiti!ne* an# (a*!ha&, =nc.].[4]

The aaile# 0e!l&ti!n #enie# petiti!ne* !ti!n $!* 0ec!ni#e*ati!n.

The +act

The antece#ent $act a*e &a*i)e# the appellate c!&*t a $!ll!:'

<n %an&a* 28, 1994, S=T>R@= Beecha S=T>R@= $!* *evit !$ e*a?a, SA

#elive*e# t! B&*lint!n Ai* xp*e B0@=/T<, an aent !$ [etiti!ne*] +e#e*al xp*e

(!*p!*ati!n, a hipent !$ 19 ca*t!n !$ vete*ina* i!l!ical $!* #elive* t! c!ninee

S=T>R@= an# +*ench <ve*ea (!pan in a?ati (it, et*! anila. The hipent :a

c!ve*e# B&*lint!n Ai*:a Bill !. 1128325 :ith the :!*#, 0+0=/0AT > <T =

http://sc.judiciary.gov.ph/jurisprudence/2004/aug2004/150094.htm#_ftn1










T0AS=T an# 0=S>AB@ tap a*?e# !n it $ace. That ae #a, B&*lint!n in&*e# the ca*!e

in the a!&nt !$ Y39,339. :ith Ae*ican >!e A&*ance (!pan A>A(. The $!ll!:in #a,

B&*lint!n t&*ne# !ve* the c&t!# !$ ai# ca*!e t! +e#e*al xp*e :hich t*anp!*te# the ae t!

anila. The $i*t hipent, c!nitin !$ 92 ca*t!n a**ive# in anila !n %an&a* 29, 1994 in +liht

!. 71-20T an# :a ie#iatel t!*e# at [(a*!ha& =nc.] :a*eh!&e. hile the ec!n#,

c!nitin !$ 17 ca*t!n, cae in t:! 2 #a late*, !* !n %an&a* 31, 1994, in +liht !. 71-30T:hich :a li?e:ie ie#iatel t!*e# at (a*!ha& :a*eh!&e. *i!* t! the a**ival !$ the ca*!e,

+e#e*al xp*e in$!*e# /T( (a*! =nte*nati!nal (!*p!*ati!n, the c&t! *!?e* hi*e# the

c!ninee t! $acilitate the *eleae !$ it ca*!e $*! the B&*ea& !$ (&t!, !$ the ipen#in a**ival

!$ it client ca*!e.

<n +e*&a* 1, 1994, DA0=< (. D=<DA D=<DA, t:elve 12 #a a$te* the ca*!e a**ive#

in anila, a n!n-licene# c&t! *!?e* :h! :a aine# /T( t! $acilitate the *eleae !$ the

&Iect ca*!e, $!&n# !&t, :hile he :a a!&t t! ca&e the *eleae !$ the ai# ca*!e, that the ae

[:e*e] t!*e# !nl in a *!! :ith t:! 2 ai* c!n#iti!ne* *&nnin, t! c!!l the place intea# !$ a

*e$*ie*at!*. hen he a?e# an epl!ee !$ (a*!ha& :h the ca*!e :e*e t!*e# in the c!!l *!!!nl, the latte* t!l# hi that the ca*t!n :he*e the vaccine :e*e c!ntaine# peci$icall in#icate#

the*ein that it h!&l# n!t e &Iecte# t! h!t !* c!l# tepe*at&*e. The*ea$te*, D=<DA, &p!n

int*&cti!n $*! /T(, #i# n!t p*!cee# :ith the :ith#*a:al !$ the vaccine an# intea#, aple !$

the ae :e*e ta?en an# *!&ht t! the B&*ea& !$ Anial =n#&t* !$ the Depa*tent !$ A*ic&lt&*e in

the hilippine S=T>R@= $!* exainati!n :he*ein it :a #ic!ve*e# that the @=SA *ea#in !$

vaccinate e*a a*e el!: the p!itive *e$e*ence e*&.

A a c!ne&ence !$ the $!*e!in *e&lt !$ the vete*ina* i!l!ic tet, S=T>R@= aan#!ne# the

hipent an#, #ecla*in t!tal l! $!* the &n&ale hipent, $ile# a clai :ith A>A( th*!&h it

*ep*eentative in the hilippine, the hila =n&*ance (!., =nc. >=@A :hich *ec!pene#S=T>R@= $!* the :h!le in&*e# a!&nt !$ T>=0TK = T><SAD T>0 >D0D

T>=0TK = D<@@A0S Y39,339.. The*ea$te*, [*ep!n#ent] $ile# an acti!n $!* #aae aaint

the [petiti!ne*] ip&tin nelience !n eithe* !* !th !$ the in the han#lin !$ the ca*!.

T*ial en&e# an# &ltiatel c!ncl&#e# !n a*ch 1, 1997 :ith the [petiti!ne*] ein hel# !li#a*il

liale $!* the l! a $!ll!:'

>0+<0, I&#ent i he*e *en#e*e# in $av!* !$ [*ep!n#ent] an# [petiti!ne* an# it (!-

De$en#ant (a*!ha&] a*e #i*ecte# t! pa [*ep!n#ent], I!intl an# eve*all, the $!ll!:in'

1. Act&al #aae in the a!&nt !$ the pe! e&ivalent !$ SY39,339. :ith inte*et $*! the tie !$the $ilin !$ the c!plaint t! the tie the ae i $&ll pai#.

2. Att!*ne $ee in the a!&nt !$ 5,. an#

3. (!t !$ &it.

S< <0D0D.

A*ieve#, [petiti!ne*] appeale# t! [the (A].[5]





0&lin !$ the (!&*t !$ Appeal

The Tet 0ep!*t i&e# the nite# State Depa*tent !$ A*ic&lt&*e Anial an# lant >ealth

=npecti!n Se*vice :a $!&n# the (A t! e ina#iile in evi#ence. Depite thi *&lin, the

appellate c!&*t hel# that the hippin 0eceipt :e*e a p*ia $acie p*!!$ that the !!# ha# in#ee# een

#elive*e# t! the ca**ie* in !!# c!n#iti!n. e &!te $*! the *&lin a $!ll!:'

he*e the plainti$$ int*!#&ce evi#ence :hich h!: prima #acie that the !!# :e*e #elive*e# t! the

ca**ie* in !!# c!n#iti!n [i.e., the hippin *eceipt], an# that the ca**ie* #elive*e# the !!# in a

#aae# c!n#iti!n, a p*e&pti!n i *aie# that the #aae !cc&**e# th*!&h the $a&lt !* nelience !$

the ca**ie*, an# thi cat &p!n the ca**ie* the &*#en !$ h!:in that the !!# :e*e n!t in !!#

c!n#iti!n :hen #elive*e# t! the ca**ie*, !* that the #aae :a !ccai!ne# !e ca&e exceptin

the ca**ie* $*! a!l&te liailit. Thi the [petiti!ne*] $aile# t! #icha*e. x x x. [8]

+!&n# #ev!i# !$ e*it :a petiti!ne* clai that *ep!n#ent ha# n! pe*!nalit t! &e. Thi a*&ent

:a &pp!e#l n!t *aie# in the An:e* !* #&*in t*ial.

>ence, thi etiti!n.[7]

The =&e

=n it e!*an#&, petiti!ne* *aie the $!ll!:in i&e $!* !&* c!ni#e*ati!n'

=.

A*e the #ecii!n an# *e!l&ti!n !$ the >!n!*ale (!&*t !$ Appeal p*!pe* &Iect $!* *evie: the

>!n!*ale (!&*t &n#e* 0&le 45 !$ the 1997 0&le !$ (ivil *!ce#&*e

==.

= the c!ncl&i!n !$ the >!n!*ale (!&*t !$ Appeal petiti!ne* clai that *ep!n#ent have n!

pe*!nalit t! &e eca&e the paent :a a#e the *ep!n#ent t! Sith?line :hen the in&*e#

&n#e* the p!lic i B&*lint!n Ai* xp*e i #ev!i# !$ e*it c!**ect !* n!t

===.

= the c!ncl&i!n !$ the >!n!*ale (!&*t !$ Appeal that the !!# :e*e *eceive# in !!# c!n#iti!n,

c!**ect !* n!t

=6.

A*e xhiit + an# / hea*a evi#ence, an# the*e$!*e, n!t a#iile

6.

= the >!n!*ale (!&*t !$ Appeal c!**ect in in!*in an# #i*ea*#in *ep!n#ent !:n a#ii!n that

petiti!ne* i n!t liale an#

6=.

= the >!n!*ale (!&*t !$ Appeal c!**ect in in!*in the a*a: (!nventi!n []









Sipl tate#, the i&e a*e a $!ll!:' 1 = the etiti!n p*!pe* $!* *evie: the S&p*ee (!&*t 2

= +e#e*al xp*e liale $!* #aae t! !* l! !$ the in&*e# !!#

Thi (!&*t 0&lin

The etiti!n ha e*it.

*eliina* =&e' Propriety o# Revie%

The c!**ectne !$ leal c!ncl&i!n #*a:n the (!&*t !$ Appeal $*! &n#ip&te# $act i a &eti!n

!$ la: c!ni)ale the S&p*ee (!&*t.[9]

=n the p*eent cae, the $act a*e &n#ip&te#. A :ill e h!:n h!*tl, petiti!ne* i &eti!nin the

c!ncl&i!n #*a:n $*! &ch $act. >ence, thi cae i a p*!pe* &Iect $!* *evie: thi (!&*t.

ain =&e'

iability #or Dama-es

etiti!ne* c!nten# that *ep!n#ent have n! pe*!nalit t! &e -- th&, n! ca&e !$ acti!n aaint it --

eca&e the paent a#e t! Sith?line :a e**!ne!&.

e*tinent t! thi i&e i the (e*ti$icate !$ =n&*ance[1] (e*ti$icate that !th !pp!in pa*tie cite in

&pp!*t !$ thei* *epective p!iti!n. The #i$$e* !nl in thei* inte*p*etati!n !$ :hat thei* *iht a*e

&n#e* it te*. The #ete*inati!n !$ th!e *iht inv!lve a &eti!n !$ la:, n!t a &eti!n !$ $act. A

#itin&ihe# $*! a &eti!n !$ la: :hich exit :hen the #!&t !* #i$$e*ence a*ie a t! :hat the

la: i !n a ce*tain tate !$ $act -- the*e i a &eti!n !$ $act :hen the #!&t !* #i$$e*ence a*ie a t!

the t*&th !* the $aleh!!# !$ allee# $act; !* :hen the &e* necea*il invite cali*ati!n !$ the

:h!le evi#ence c!ni#e*in ainl the c*e#iilit !$ :itnee, exitence an# *elevanc !$ peci$ic

&**!&n#in ci*c&tance, thei* *elati!n t! each !the* an# t! the :h!le an# the p*!ailitie !$ the

it&ati!n.[11]

Proper Payee

The (e*ti$icate peci$ie that l! !$ !* #aae t! the in&*e# ca*! i paale t! !*#e* x x x &p!n

&**en#e* !$ thi (e*ti$icate. S&ch :!*#in c!nve the *iht !$ c!llectin !n an &ch #aae !* l!,

a $&ll a i$ the p*!pe*t :e*e c!ve*e# a pecial p!lic in the nae !$ the h!l#e* itel$. At the ac?

!$ the (e*ti$icate appea* the inat&*e !$ the *ep*eentative !$ B&*lint!n. Thi #!c&ent ha th&

een #&l in#!*e# in lan? an# i #eee# a ea*e* int*&ent.

Since the (e*ti$icate :a in the p!ei!n !$ Sith?line, the latte* ha# the *iht !$ c!llectin !* !$

ein in#eni$ie# $!* l! !$ !* #aae t! the in&*e# hipent, a $&ll a i$ the p*!pe*t :e*e

c!ve*e# a pecial p!lic in the nae !$ the h!l#e*. >ence, ein the h!l#e* !$ the (e*ti$icate an#

havin an in&*ale inte*et in the !!#, Sith?line :a the p*!pe* paee !$ the in&*ance p*!cee#.

Subro-ation

p!n *eceipt !$ the in&*ance p*!cee#, the c!ninee Sith?line exec&te# a &*!ati!n 0eceipt[12]












in $av!* !$ *ep!n#ent. The latte* :e*e th& a&th!*i)e# t! $ile clai an# ein &it aaint an &ch

ca**ie*, veel, pe*!n, c!*p!*ati!n !* !ve*nent. n#enial, the c!ninee ha# a leal *iht t!

*eceive the !!# in the ae c!n#iti!n it :a #elive*e# $!* t*anp!*t t! petiti!ne*. =$ that *iht :a

vi!late#, the c!ninee :!&l# have a ca&e !$ acti!n aaint the pe*!n *ep!nile the*e$!*.

p!n paent t! the c!ninee !$ an in#enit $!* the l! !$ !* #aae t! the in&*e# !!#, the

in&*e* entitleent t! &*!ati!n pro tanto -- ein !$ the hihet e&it -- e&ip it :ith a ca&e !$acti!n in cae !$ a c!nt*act&al *each !* nelience.[13] +&*the*, the in&*e* &*!at!* *iht t! &e $!*

*ec!ve* &n#e* the ill !$ la#in in cae !$ l! !$ !* #aae t! the ca*! i I&*ip*&#entiall &phel#. [14]

=n the exe*cie !$ it &*!at!* *iht, an in&*e* a p*!cee# aaint an e**in ca**ie*. T! all intent

an# p&*p!e, it tan# in the place an# in &tit&ti!n !$ the c!ninee. A #ortiori, !th the in&*e* an#

the c!ninee a*e !&n# the c!nt*act&al tip&lati!n &n#e* the ill !$ la#in. [15]

Prescription o# Claim

+*! the initial p*!cee#in in the t*ial c!&*t &p t! the p*eent, petiti!ne* ha ti*elel p!inte# !&t that

*ep!n#ent clai an# *iht !$ acti!n a*e al*ea# a**e#. The latte*, an# even the c!ninee, neve* $ile#:ith the ca**ie* an :*itten n!tice !* c!plaint *ea*#in it clai $!* #aae !$ !* l! t! the &Iect

ca*! :ithin the pe*i!# *e&i*e# the a*a: (!nventi!n an#F!* in the ai*:a ill. =n#ee#, thi $act

ha neve* een #enie# *ep!n#ent an# i plainl evi#ent $*! the *ec!*#.

Ai*:a Bill !. 1128325, i&e# B&*lint!n a aent !$ petiti!ne*, tate'

8. ! acti!n hall e aintaine# in the cae !$ #aae t! !* pa*tial l! !$ the hipent &nle a

:*itten n!tice, &$$icientl #ec*iin the !!# c!nce*ne#, the app*!xiate #ate !$ the #aae !* l!,

an# the #etail !$ the clai, i p*eente# hippe* !* c!ninee t! an !$$ice !$ B&*lint!n :ithin 14

#a $*! the #ate the !!# a*e place# at the #ip!al !$ the pe*!n entitle# t! #elive*, !* in the cae!$ t!tal l! incl&#in n!n-#elive* &nle p*eente# :ithin 12 #a $*! the #ate !$ i&e !$ the

[Ai*:a Bill].[18]

0elevantl, petiti!ne* ai*:a ill tate'

12.F12.1 The pe*!n entitle# t! #elive* &t a?e a c!plaint t! the ca**ie* in :*itin in the cae'

12.1.1 !$ viile #aae t! the !!#, ie#iatel a$te* #ic!ve* !$ the #aae an# at the latet

:ithin $!&*teen 14 #a $*! *eceipt !$ the !!#;

12.1.2 !$ !the* #aae t! the !!#, :ithin $!&*teen 14 #a $*! the #ate !$ *eceipt !$ the !!#;

12.1.3 #ela, :ithin t:ent-!ne 21 #a !$ the #ate the !!# a*e place# at hi #ip!al; an#

12.1.4 !$ n!n-#elive* !$ the !!#, :ithin !ne h&n#*e# an# t:ent 12 #a $*! the #ate !$ the

i&e !$ the ai* :aill.

12.2 +!* the p&*p!e !$ 12.1 c!plaint in :*itin a e a#e t! the ca**ie* :h!e ai* :aill :a

&e#, !* t! the $i*t ca**ie* !* t! the lat ca**ie* !* t! the ca**ie* :h! pe*$!*e# the t*anp!*tati!n #&*in

:hich the l!, #aae !* #ela t!!? place. [17]














A*ticle 28 !$ the a*a: (!nventi!n, !n the !the* han#, p*!vi#e'

A0T. 28. 1 0eceipt the pe*!n entitle# t! the #elive* !$ aae !* !!# :ith!&t c!plaint hall

e p*ia $acie evi#ence that the ae have een #elive*e# in !!# c!n#iti!n an# in acc!*#ance :ith

the #!c&ent !$ t*anp!*tati!n.

2 =n cae !$ #aae, the pe*!n entitle# t! #elive* &t c!plain t! the ca**ie* $!*th:ith a$te* the

#ic!ve* !$ the #aae, an#, at the latet, :ithin 3 #a $*! the #ate !$ *eceipt in the cae !$ aae

an# 7 #a $*! the #ate !$ *eceipt in the cae !$ !!#. =n cae !$ #ela the c!plaint &t e a#e at

the latet :ithin 14 #a $*! the #ate !n :hich the aae !* !!# have een place# at hi #ip!al.

3 ve* c!plaint &t e a#e in :*itin &p!n the #!c&ent !$ t*anp!*tati!n !* epa*ate n!tice

in :*itin #ipatche# :ithin the tie a$!*eai#.

4 +ailin c!plaint :ithin the tie a$!*eai#, n! acti!n hall lie aaint the ca**ie*, ave in the cae

!$ $*a&# !n hi pa*t.[1]

Condition Precedent

=n thi I&*i#icti!n, the $ilin !$ a clai :ith the ca**ie* :ithin the tie liitati!n the*e$!* act&all

c!ntit&te a c!n#iti!n p*ece#ent t! the acc*&al !$ a *iht !$ acti!n aaint a ca**ie* $!* l! !$ !*

#aae t! the !!#.[19] The hippe* !* c!ninee &t allee an# p*!ve the $&l$illent !$ the

c!n#iti!n. =$ it $ail t! #! !, n! *iht !$ acti!n aaint the ca**ie* can acc*&e in $av!* !$ the $!*e*. The

a$!*eenti!ne# *e&i*eent i a *ea!nale c!n#iti!n p*ece#ent; it #!e n!t c!ntit&te a liitati!n !$

acti!n.[2]

The *e&i*eent !$ ivin n!tice !$ l! !$ !* inI&* t! the !!# i n!t an ept $!*ali. The

$&n#aental *ea!n $!* &ch a tip&lati!n a*e 1 t! in$!* the ca**ie* that the ca*! ha een

#aae#, an# that it i ein cha*e# :ith liailit the*e$!*; an# 2 t! ive it an !pp!*t&nit t!exaine the nat&*e an# extent !$ the inI&*. Thi p*!tect the ca**ie* a$$!*#in it an !pp!*t&nit t!

a?e an invetiati!n !$ a clai :hile the atte* i $*eh an# eail invetiate# ! a t! a$e&a*#

itel$ $*! $ale an# $*a&#&lent clai.[21]

hen an ai*:a ill -- !* an c!nt*act !$ ca**iae $!* that atte* -- ha a tip&lati!n that *e&i*e a

n!tice !$ clai $!* l! !$ !* #aae t! !!# hippe# an# the tip&lati!n i n!t c!plie# :ith, it

en$!*ceent can e p*evente# an# the liailit cann!t e ip!e# !n the ca**ie*. T! t*e, n!tice i a

c!n#iti!n p*ece#ent, an# the ca**ie* i n!t liale i$ n!tice i n!t iven in acc!*#ance :ith the

tip&lati!n.[22] +ail&*e t! c!pl :ith &ch a tip&lati!n a* *ec!ve* $!* the l! !* #aae &$$e*e#.[23]

Bein a c!n#iti!n p*ece#ent, the n!tice &t p*ece#e a &it $!* en$!*ceent.[24] =n the p*eent cae,

the*e i neithe* an alleati!n n!* a h!:in !$ *ep!n#ent c!pliance :ith thi *e&i*eent :ithin the

p*ec*ie# pe*i!#. hile *ep!n#ent a have ha# a ca&e !$ acti!n then, the cann!t n!: en$!*ce it

$!* thei* $ail&*e t! c!pl :ith the a$!*eai# c!n#iti!n p*ece#ent.

=n vie: !$ the $!*e!in, :e $in# n! !*e neceit t! pa &p!n the !the* i&e *aie# petiti!ne*.


















e n!te that *ep!n#ent a*e n!t :ith!&t *ec!&*e. (a*!ha&, =nc. -- petiti!ne* c!-#e$en#ant in

*ep!n#ent (!plaint el!: -- ha een a#I&#e# the t*ial c!&*t a liale $!*, inter alia, act&al

#aae in the a!&nt !$ the pe! e&ivalent !$ S Y39,339. [25] Thi I&#ent :a a$$i*e# the

(!&*t !$ Appeal an# i al*ea# $inal an# exec&t!*.[28]

HEREORE, the etiti!n i (RA)D, an# the aaile# Decii!n RBRSD in!$a* a it pe*tain

t! etiti!ne* +e#e*al xp*e (!*p!*ati!n. ! p*!n!&nceent a t! c!t.

S< <0D0D.

(!*!na, an# (a*pi!-!*ale, %%., c!nc&*.

San#!val-/&tie**e), %., !n leave.

[1] Rollo, pp. 14-33.

[2] Id., pp. 35-43. T:el$th Divii!n. enne# %&tice a*tin S. 6illa*aa %*., :ith the c!nc&**ence !$

%&tice (!n*a#! . 6a&e) %*. Divii!n chai* an# Alicia @. Sant! ee*.

[3] Id., pp. 45-47.

[4] Aaile# (A Decii!n, p. 9; rollo, p. 43.

[5] Id., pp. 1-3 N 35-37.

[8] Id., pp. N 42.

[7] The cae :a #eee# &itte# $!* #ecii!n !n Septee* 2, 22, &p!n thi (!&*t *eceipt !$

*ep!n#ent e!*an#&, ine# Att. a* %!ce . Saan. etiti!ne* e!*an#&, ine# Att. ilian! S. Sa!n, :a *eceive# thi (!&*t !n A&&t 2, 22.

[] etiti!ne* e!*an#&, p. 1; *!ll!, p. 118. (itati!n !itte#.

[9] Pilar Development Corp. v. IAC , 148 S(0A 215, Decee* 12, 198.

[1] xhiit D; *ec!*#, p. 142.

[11] "ernardo v. CA, 218 S(0A 224, Decee* 7, 1992, pe* (ap! %*., J .

[12] xhiit ; *ec!*#, p 159.

[13] Philippine American (eneral Insurance Co., Inc. v. S%eet ines, Inc., 212 S(0A 194, A&&t 5,

1992 citin =iremans =und Insurance Company, Inc. v. Jamila + Company, Inc., 7 S(0A 323, Ap*il

7, 1978.

[14] Philippine American (eneral Insurance Co., Inc. v. S%eet ines, Inc., &p*a, p. 21, pe* 0eala#!,

J. citin ational Development Company v. Court o# Appeals, 184 S(0A 593, A&&t 19, 19.

[15] Philippine American (eneral Insurance Co., Inc. v. S%eet ines, Inc., supra.



http://sc.judiciary.gov.ph/jurisprudence/2004/aug2004/150094.htm#_ftnref1


































[18] xhiit B !$ *ep!n#ent; *ec!*#, p. 139-A. Thi ai*:a ill :a i&e# !n %an&a* 28, 1994.

[17] xhiit 5-a !$ +e#e*al xp*e; *ec!*#, p. 19-A.

[1] 51 </ 591-592, <ct!e* 1955.

[19] Philippine American (eneral Insurance Co., Inc. v. S%eet ines, Inc., supra.

[2] (overnment o# the Philippine Islands v. Inchausti + Co., 24 hil. 315, +e*&a* 14, 1913; )riton

Insurance Co. v. Jose, 33 hil. 194, %an&a* 14, 1918.

[21] Philippine American (eneral Insurance Co., Inc. v. S%eet ines, Inc., supra, p. 2, pe* 0eala#!,

J.

[22] =#. citin 14 A. %&*. 2#, (a**ie* 97; Roldan v. im Pon0o + Co., 37 hil. 25, Decee* 7, 1917;

Consun!i v. $anila Port Service, 11 hil. 231, !vee* 29, 198.

[23] Philippine American (eneral Insurance Co., Inc. v. S%eet ines, Inc., supra, pp. 2-29.

[24] Philippine American (eneral Insurance Co. Inc v. S%eet ines, Inc., supra.

[25] The in&*e# val&e !$ the !!# l!t.

[28] nt* !$ I&#ent in the S&p*ee (!&*t :a a#e !n a*ch 11, 23.

THIR I;ISION

EPPEL CEBU SHIP1AR, INC.,

etiti!ne*,

- ve*& -

PIONEER INSURANCE AN SURET1CORPORATION,

0ep!n#ent.

G - - - - - - - - - - - - - - - - - - - - - - - - - - - - G

PIONEER INSURANCE AN SURET1CORPORATION,

etiti!ne*,

G.R. Nos.

180880-81

G.R. Nos.

180896-97

*eent'

KA0S-SAT=A/<, J.,

Chairperson,

(>=(<-ACA0=<,

6@AS(<, %0.,












http://sc.judiciary.gov.ph/jurisprudence/2009/september2009/180880-81.htm#_ftn1















- ve*& -

EPPEL CEBU SHIP1AR, INC.,

0ep!n#ent.

A(>0A, an#

0A@TA, JJ.

*!&late#'

Septee* 25, 29

x------------------------------------------------------------------------------------x

ECISION

NACHURA, J .:

Be$!*e & a*e the c!n!li#ate# petiti!n $ile# the pa*tiei!nee* =n&*ance an# S&*et

(!*p!*ati!n[1] i!nee* an# Reppel (e& Shipa*#, =nc.[] R(S=t! *evie: !n

certiorari the Decii!n[!] #ate# Decee* 17, 24 an# the Aen#e# Decii!n["] #ate#

Decee* 2, 27 !$ the (!&*t !$ Appeal (A in (A-/.0. S !. 741 an# 73934.

<n %an&a* 28, 2, R(S= an# /NA %een Shipanaeent, =nc. /NA

exec&te# a Ship*epai* A*eeent[#] :he*ein R(S= :!&l# *en!vate an# *ec!nt*&ct

/NA F6 S&pe*$e** 3 &in it #* #!c?in $acilitie p&*&ant t! it *et*ictive

a$et an# ec&*it *&le an# *e&lati!n. *i!* t! the exec&ti!n !$ the Ship*epai*

A*eeent, S&pe*$e** 3 :a al*ea# in&*e# /NA :ith i!nee* $!*

SY,472,51.7. The Ship*epai* A*eeent *ea#

SHIPREPAIR A2REE/ENT[$]

(!pan' / N A %BSS S>=AA/T =(.

A##*e' >a*!&* (ente* ==, 0ail*!a# N (hica! St.

!*t A*ea, (it !$

e, / N A %BSS S>=/T. <:ne*F<pe*at!* !$ F6 S0+00K 3 an# EPPEL

CEBU SHIP1AR, INC. FCSI ente* int! an a*eeent that the D*#!c?in an# 0epai* !$ the

a!ve-nae# veel !*#e*e# the <:ne* A&th!*i)e# 0ep*eentative hall e ca**ie# !&t &n#e* the

Reppel (e& Shipa*# Stan#a*# (!n#iti!n !$ (!nt*act $!* Ship*epai*, &i#eline an# *e&lati!n !n

a$et an# ec&*it i&e# Reppel (e& Shipa*#. =n a##iti!n, the $!ll!:in a*e &t&all a*ee#

&p!n the pa*tie'















1. The <:ne* hall in$!* it in&*e* !$ (la&e 2[%] an# 22 a

[&] *e$e* at the ac? he*e!$ an# hall incl&#e Reppel (e& Shipa*#

a a c!-a&*e# in it in&*ance p!lic.

2. The <:ne* hall :aive it *iht t! clai $!* an l! !$ p*!$it

!* l! !$ &e !* #aae c!ne&ential !n &ch l! !$ &e *e&ltin

$*! the #ela in the *e#elive* !$ the a!ve veel.3. <:ne* &-c!nt*act!* !* :!*?e* a*e n!t pe*itte# t! :!*?

in the a*# :ith!&t the :*itten app*!val !$ the 6ice *ei#ent

<pe*ati!n.

4. =n c!ni#e*ati!n !$ Reppel (e& Shipa*# all!:in <:ne* t!

ca** !&t !:n *epai* !n!a*# the veel, the <:ne* hall in#eni$

an# h!l# Reppel (e& Shipa*# ha*le $*! an !* all clai,

#aae, !* liailitie a*iin $*! #eath !* !#il inI&*ie t!

<:ne* :!*?e*, !* #aae t! the veel !* !the* p*!pe*t h!:eve*

ca&e#.

5. <n a**ival, the <:ne* 0ep*eentative, (aptain, (hie$ <$$ice*

an# (hie$ ninee* :ill e invite# t! atten# a c!n$e*ence :ith !&*

*!#&cti!n, Sa$et an# Sec&*it pe*!nnel :he*e the :ill e

*ie$e# !n, an# iven c!pie !$ Shipa*# a$et *e&lati!n.

8. An a#e&ate n&e* !$ !$$ice* an# c*e: &t *eain !n

!a*# at all tie t! en&*e the a$et !$ the veel an# c!pliance !$

a$et *e&lati!n c*e: an# !:ne* epl!e# :!*?en.

7. The hip !$$ice*Fc*e: !* !:ne* app!inte# ec&*it pe*!nnel

hall aintain :atch aaint pil$e*ae an# act !$ a!tae.

. The a*# &t e in$!*e# an# int*&cte# t! p*!vi#e the

necea* ec&*it a**aneent c!ve*ae h!&l# the*e e ina#e&ate

!* n! c*e: !n !a*# t! p*!vi#e the exp*ee# a$et an# ec&*it

en$!*ceent.

9. The <:ne* hall e liale t! Reppel (e& Shipa*# $!* an

#eath an#F!* !#il inI&*ie $!* the [R]eppel (e& Shipa*#

epl!ee an#F!* c!nt*act :!*?e*; the$t an#F!* #aae t! Reppel

(e& Shipa*# p*!pe*tie an# !the* liailitie :hich a*e ca&e#

the :!*?e* !$ the <:ne*.

1. The inv!ice hall e ae# !n &!tati!n *e$e*ence 99-R(S=-211#ate# Decee* 2, 1999 ta*i$$ #ate# a*ch 15, 199.

11. aent te* hall e a $!ll!:'

12. The <:ne* an# Reppel (e& Shipa*# hall en#eav!* t! ettle

aical an #ip&te that a a*ie &n#e* thi A*eeent. Sh!&l# all

e$$!*t $!* an aicale ettleent $ail, the #ip&te hall e &itte#

$!* a*it*ati!n in et*! anila in acc!*#ance :ith p*!vii!n !$

xec&tive <*#e* !. 1 &n#e* the a&pice !$ the hilippine







A*it*ati!n (!ii!n.

Sine#

BA00K (>=A S<< ><(R XXXXXXXXXSine#XXXXXXXXXX

*inte# aeFSinat&*e A!ve ae *inte# aeFSinat&*e A!ve ae

6ice *ei#ent <pe*ati!n A&th!*i)e# 0ep*eentative

Reppel (e& Shipa*#, =nc. $!* an# in ehal$ !$'

/ N A %een Shipt.

%A. 28, 2 . XXXXXXXXXXXXXXXXXXXXXXXX

Date Date

<n +e*&a* , 2, in the c!&*e !$ it *epai*, F6 S&pe*$e** 3 :a &tte# $i*e.

(laiin that the extent !$ the #aae :a pe*vaive, /NA #ecla*e# the veel

#aae a a t!tal c!nt*&ctive l! an#, hence, $ile# an in&*ance clai :ith i!nee*.

<n %&ne 18, 2, i!nee* pai# the in&*ance clai !$ /NA in the a!&nt !$

SY,472,51.7. /NA, in t&*n, exec&te# a @! an# S&*!ati!n 0eceipt['] in $av!*

!$ i!nee*, t! :it'

LOSS AN SUBRO2ATION RECEIPT

18 %&ne 2

<&* (lai 0e$' >-=@->-99-1

US7,?65,473.67

------------------------------------------------

0(=6D $*! PIONEER INSURANCE = SURET1 CORPORATION the & !$ U.S.

OLLARS EI2HT /ILLION OUR HUNRE SE;ENT1-TO THOUSAN I;EHUNRE EI2HT1-ONE = 673@@ FUS 7,?65,473.67 e&ivalent t! PESOS THREE

HUNRE SIGT1 /ILLION = @@3@@ FP(p 8>@,@@@,@@@.@@, in $&ll ati$acti!n, c!p*!ie an#

#icha*e !$ all clai $!* l! an# expene &taine# t! the veel SUPERERR1 8 in&*e# &n#e*

!lic !. >->-99-18--D >N an# >->-99-189 =.6. *ea!n a $!ll!:'

ire on *ord t eppe# Ce*u S(ip'rd

on @7 e*rur' 5@@@





an# in c!ni#e*ati!n !$ :hich the &n#e*ine# he*e ain an# t*an$e* t! the ai# c!pan each

an# all clai an# #ean# aaint an pe*!n, pe*!n, c!*p!*ati!n !* p*!pe*t a*iin $*! !*

c!nnecte# :ith &ch l! !* #aae an# the ai# c!pan i &*!ate# in the place !$ an# t! the

clai an# #ean# !$ the &n#e*ine# aaint ai# pe*!n, pe*!n, c!*p!*ati!n !* p*!pe*t in the

p*eie t! the extent !$ the a!&nt a!ve-enti!ne#.

ILLIA/, 2OTHON2 = ABOITI, INC.

=OR ABOITI SHIPPIN2 CORP.

B' Sine#

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

itnee' Sine#


Sine#


A*e# :ith the &*!ati!n *eceipt, i!nee* t*ie# t! c!llect $*! R(S=, &t the latte*

#enie# an *ep!niilit $!* the l! !$ the &Iect veel. A R(S= c!ntin&!&l

*e$&e# t! pa #epite *epeate# #ean#, i!nee*, !n A&&t 7, 2, $ile# a 0e&et $!*

A*it*ati!n e$!*e the (!nt*&cti!n =n#&t* A*it*ati!n (!ii!n (=A( #!c?ete#

a (=A( (ae !. 21-2, ee?in the $!ll!:in *elie$'

1. T! pa t! the claiant i!nee* =n&*ance an# S&*et (!*p!*ati!n the & !$ .S.

Y,472,51.7 !* it e&ivalent a!&nt in hilippine (&**enc, pl& inte*et the*e!n c!p&te# $*! the

#ate !$ the @! an# S&*!ati!n 0eceipt !n 18 %&ne 2 !* $*! the #ate !$ $ilin !$ [the] 0e&et

$!* A*it*ati!n, a a e $!&n# p*!pe*;

2. T! pa t! claiant /NA, =(. an#F!* A!iti) Shippin (!*p!*ati!n an# /NA

%een Shipanaeent, =nc. the & !$ 5,,. pl& inte*et the*e!n $*! the #ate !$ $ilin

[!$ the] 0e&et $!* A*it*ati!n !* #ate !$ the a*it*al a:a*#, a a e $!&n# p*!pe*;

3. T! pa t! the claiant he*ein the & !$ 3,,. $!* an# a att!*ne $ee; pl&

!the* #aae a a e etalihe# #&*in the p*!cee#in, incl&#in a*it*ati!n $ee an# !the*

litiati!n expene, an# the c!t !$ &it.

=t i li?e:ie $&*the* p*ae# that (la&e 1 an# 2 !n the &nine# pae 1 !$ the Ship*epai* A*eeent

Annex A a :ell a the ha*#l leile (la&e 2 an# 22 a an# !the* iila* cla&e p*inte# in ve*

$ine p*int !n the &nine# #!*al pae the*e!$, e all #ecla*e# illeal an# v!i# ab initio an# :ith!&t an

leal e$$ect :hat!eve*.[1(]





R(S= an# /NA *eache# an aicale ettleent, lea#in the latte* t! $ile a !tice !$

ith#*a:al !$ (lai !n Ap*il 17, 21 :ith the (=A(. The (=A( *ante# the

:ith#*a:al !n <ct!e* 22, 21, the*e #iiin the clai !$ /NA aaint R(S=.

>ence, the a*it*ati!n p*!cee#e# :ith i!nee* a the *eainin claiant.

=n the c!&*e !$ the p*!cee#in, i!nee* an# R(S= tip&late#, a!n !the*, that' 1 !n

%an&a* 28, 2, F6 S&pe*$e** 3 a**ive# at R(S= in @ap&-@ap& (it, (e&, $!* #*

#!c?in an# *epai*; 2 !n the ae #ate, /NA ine# a hip *epai* a*eeent :ith

R(S=; an# 3 a $i*e *!?e !&t !n !a*# F6 S&pe*$e** 3 !n +e*&a* , 2, :hile

till #* #!c?e# in R(S= hipa*#.[11]

A *ea*# the #ip&te# $act, el!: a*e the *epective p!iti!n !$ the pa*tie, vi0.:

Pioneers T(eor' o" t(e Cse:

+i*t, i!nee* a (laiant i the *eal pa*t in inte*et in thi cae an# that i!nee* ha een &*!ate#

t! the clai !$ it a&*e#. The (laiant clai that it ha the p*ep!n#e*ance !$ evi#ence !ve* that !$

the 0ep!n#ent. (laiant cite# #!c&enta* *e$e*ence !n the Statutory Source o# the Principle o#

Subro-ation. (laiant then p*!cee#e# t! explain that the Ri-ht o# Subro-ation:

Is by ?peration o# a%

e*ists in Property Insurance

is not Dependent pon Privity o# Contract.

(laiant then a*&e# that Payment ?perates as 3uitable Assi-nment o# Ri-hts to Insurer an# that the

Ri-ht o# Subro-ation ntitles Insurer to Recover #rom the iable Party.

Sec!n#, 0ep!n#ent Reppel ha# c&t!# !$ an# c!nt*!l !ve* the F6 S&pe*$e** 3 :hile ai# veel

:a in 0ep!n#ent Reppel p*eie. =n it D*a$t Decii!n, (laiant tate#'

A. The evi#ence p*eente# #&*in the hea*in in#&ital p*!ve that *ep!n#ent n!t !nl

t!!? c&t!# &t a&e# *ep!niilit an# c!nt*!l !ve* F6 S&pe*$e** 3 in ca**in !&t the #*-

#!c?in an# *epai* !$ the veel.

B. The p*eence !n !a*# the F6 S&pe*$e** 3 !$ it !$$ice* an# c*e: #!e n!t *elieve the

*ep!n#ent !$ it *ep!niilit $!* ai# veel.

(. 0ep!n#ent Reppel a&e# *ep!niilit !ve* F6 S&pe*$e** 3 :hen it *!&ht the

veel ini#e it *avin #!c? an# applie# it !:n a$et *&le t! the #*-#!c?in an# *epai* !$ the

veel.





D. The p*actice !$ all!:in a hip!:ne* an# it &-c!nt*act!* t! pe*$!* aintenance

:!*? :hile the veel :a :ithin *ep!n#ent p*eie #!e n!t #et*act $*! the $act that c!nt*!l an#

c&t!# !ve* F6 S&pe*$e** 3 :a t*an$e**e# t! the a*#.

+*! the p*ece#in tateent, (laiant clai that Reppel i clea*l liale $!* the l! !$ F6

S&pe*$e** 3.

Thi*#, the 6eel Sa$et an&al cann!t e *elie# &p!n a p*!!$ !$ the ate* c!ntin&in c!nt*!l !ve*

the veel.

+!&*th, the 0ep!n#ent Ka*# i liale &n#e* the D!ct*ine !$ Res Ipsa o3uitur. Acc!*#in t! (laiant,

the Ka*# i liale &n#e* the *&lin lai# #!:n the S&p*ee (!&*t in the cae. (laiant ae*t that

ai# *&lin i applicale he*et! a )he a% o# the Case.

+i$th, the liailit !$ 0ep!n#ent #!e n!t a*ie e*el $*! the applicati!n !$ the D!ct*ine !$ Res Ipsa

o3uitur, &t $*! it ne-li-ence in thi cae.

Sixth, the 0ep!n#ent Ka*# :a the epl!e* *ep!nile $!* the nelient act !$ the :el#e*.

Acc!*#in t! (laiant;

=n c!nteplati!n !$ la:, SevilleI! :a n!t a l!ane# e*vantFepl!ee. The a*#, ein hi epl!e*, i

!lel an# excl&ivel liale $!* hi nelient act. (laiant p*!cee#e# t! en&e*ate it *ea!n'

A. The (!nt*!l Tet The a*# exe*cie# c!nt*!l !ve* SevilleI!. The p!:e* !$ c!nt*!l i n!t

#iinihe# the $ail&*e t! exe*cie c!nt*!l.

B. The*e :a n! in#epen#ent :!*? c!nt*act et:een %!nia an# SevilleI! %!nia :a n!t the

epl!e* !$ SevilleI!, a SevilleI! *eaine# an epl!ee !$ the a*# at the tie the l! !cc&**e#.

(. The e*e $act that D*. %!nia *e&ete# SevilleI! t! pe*$!* !e !$ the <:ne* h!t:!*? &n#e* the 28 %an&a* 2 :!*? !*#e* #i# n!t a?e D*. %!nia the epl!e* !$ SevilleI!.

(laiant p*!$$e* that D*. %!nia :a n!t a (!nt*act!* !$ the >!t !*? D!ne !n Dec? A. (laiant

a*&e# that'

A. The a*#, n!t D*. %!nia, ave the :el#e* thei* a*chin !*#e*, an#

B. D*. %!nia a&th!*it t! *e&et the exec&ti!n !$ !:ne* h!t :!*? in the paene* a*ea

:a exp*el *ec!ni)e# the Ka*# *!Iect S&pe*inten#ent <*c&ll!.

Seventh, the hip!:ne* ha# n! leal #&t t! appl $!* a h!t:!*? pe*it ince it :a n!t *e&i*e#

the a*#, an# the !:ne* h!t:!*? :e*e c!n#&cte# :el#e* :h! *eaine# epl!ee !$ the a*#.

(laiant c!nten# that the nee#, i$ an, $!* an !:ne* applicati!n $!* a h!t :!*? pe*it :a cancele#

!&t the a*# act&al ?n!:le#e !$ SevilleI! :he*ea!&t an# the $act that he :a in #ec? A #!in

!:ne* h!t:!*?.

iht[h], in &pplin :el#e* an# e&ipent a pe* )he 'or& ?rder Dated < January <888, the Ka*#

#i# ! at it !:n *i?, an# acte# a a ess )han Prudent Ship Repairer.



The (laiant then #ip&te# the tateent !$ an&el Aaila claiin that Aaila :a a

#i*&ntle# epl!ee. eve*thele, (laiant clai that Aaila a$$i*e# that the $ive a*# :el#e*

neve* ecae epl!ee !$ the !:ne* ! a t! !liate the latte* t! e *ep!nile $!* thei* c!n#&ct an#

pe*$!*ance.

(laiant en&e*ate# $&*the* bad-es o# yard ne-li-ence.

Acc!*#in t! (laiant'

A. Ka*# :ate* &ppl :a ina#e&ate.

B. Ka*# +i*e +ihtin $$!*t an# &ipent e*e =na#e&ate.

(. Ka*# Sa$et *actice an# *!ce#&*e e*e na$e !* =na#e&ate.

D. Ka*# Sa$et Aitant an# +i*e:atch-en :e*e <ve*:!*?e#.

+inall, (laiant #ip&te# the the!*ie p*!p!&n#e# the 0ep!n#ent The Ka*#. (laiant p*eente#

it cae aaint'

9i4 on5removal o# the li#e !ac&ets theory.

9ii4 Hole5in5theE5F#loor theory.

9iii4 eed #or a plan theory.

9iv4 )he unauthori0ed hot %or&s theory.

9v4 )he report theory.

The (laiant calle# the attenti!n !$ the T*i&nal (=A( !n the n!n-appea*ance !$ the :el#e* inv!lve#

in the ca&e !$ the $i*e, *. Seve*in! SevilleI!. (laiant clai that thi i &pp*ei!n !$ evi#ence 0ep!n#ent.

CSIs T(eor' o" t(e Cse

1. The (laiant ha n! tan#in t! $ile the 0e&et $!* A*it*ati!n an# the T*i&nal ha n!

I&*i#icti!n !ve* the cae'

a The*e i n! vali# a*it*ati!n a*eeent et:een the Ka*# an# the 6eel <:ne*. <n

%an&a* 28, 2, :hen the hip *epai* a*eeent :hich incl&#e the a*it*ati!n a*eeent :a

ine# /NA %een !n ehal$ !$ the 6eel, the ae :a till !:ne# A!iti) Shippin.

(!ne&entl, :hen an!the* $i*, /NA, a&th!*i)e# /NA %een t! anae the 6 S&pe*$e**3, it ha# n! a&th!*it t! #! !. The*e i, a a *e&lt, n! in#in a*it*ati!n a*eeent et:een the 6eel

<:ne* an# the Ka*# t! :hich the (laiant can clai t! e &*!ate# an# :hich can &pp!*t (=A(

I&*i#icti!n.

The (laiant i n!t a *eal pa*t in inte*et an# ha n! tan#in eca&e it ha n!t een

&*!ate# t! the 6eel <:ne*. +!* the *ea!n tate# a!ve, the in&*ance p!licie !n :hich the

(laiant ae it *iht !$ &*!ati!n :e*e n!t vali#l !taine#. =n an event, the (laiant ha n!t



een &*!ate# t! an *iht :hich the 6eel a have aaint the Ka*# eca&e'

i. The (laiant ha n!t p*!ve# paent !$ the p*!cee# !$ the p!licie t! an peci$ic

pa*t. A a c!ne&ence, it ha al! n!t p*!ve# paent t! the 6eel <:ne*.

ii. The (laiant ha# n! leall #ean#ale !liati!n t! pa &n#e* the p!licie an# #i# !

!nl v!l&nta*il. n#e* the p!licie, the (laiant an# the 6eel a*ee# that the*e i n! (!nt*&ctive

T!tal @! &nle the expene !$ *ec!ve*in an# *epai*in the veel :!&l# excee# the A*ee# 6al&e !$

38 illi!n aine# the pa*tie t! the 6eel, a th*eh!l# :hich the act&al *epai* c!t $!* the

6eel #i# n!t *each. Since the (laiant !pte# t! pa c!nt*a* t! the p*!vii!n !$ the p!licie, it

paent :a v!l&nta*, an# the*e :a n! *e&ltin &*!ati!n t! the 6eel.

iii. The*e :a al! n! &*!ati!n &n#e* A*ticle 1238 !$ the (ivil (!#e. +i*t, i$ the (laiant

ae*t a *iht !$ paent !nl vi*t&e !$ A*ticle 1238, then the*e i n! leal &*!ati!n &n#e*

A*ticle 227 an# it #!e n!t &ccee# t! the 6eel *iht &n#e* the Ship [0]epai* A*eeent an# the

a*it*ati!n a*eeent. =t #!e n!t have a *iht t! #ean# a*it*ati!n an# :ill have !nl a p&*el civil

la: clai $!* *ei&*eent t! the extent that it paent ene$ite# the Ka*# :hich h!&l# e $ile# inc!&*t. Sec!n#, ince the Ka*# i n!t liale $!* the $i*e an# the *e&ltin #aae t! the 6eel, then it

#e*ive# n! ene$it $*! the (laiant paent t! the 6eel <:ne*. Thi*#, in an event, the (laiant

ha n!t p*!ve# paent !$ the p*!cee# t! the 6eel <:ne*.

2. The Ship [0]epai* A*eeent :a n!t ip!e# &p!n the 6eel. The 6eel ?n!:inl an#

v!l&nta*il accepte# that a*eeent. !*e!ve*, the*e a*e n! inin !* !the* $!*al #e$ect that can

invali#ate the a*eeent.

3. The p*!xiate ca&e !$ the $i*e an# #aae t! the 6eel :a n!t an nelience c!itte#

Anelin! SevilleI! in c&ttin the &l?hea# #!!* !* an !the* h!*tc!in the Ka*#. <n the c!nt*a*,

the p*!xiate ca&e !$ the $i*e :a D*. %!nia an# the 6eel #elie*ate #ecii!n t! have Anelin!

SevilleI! &n#e*ta?e c&ttin :!*? in inhe*entl #ane*!& c!n#iti!n c*eate# the.

a The (laiant ate*ial :itnee lie# !n the *ec!*# an# the (laiant p*eente# n!

c*e#ile p*!!$ !$ an nelience Anelin! SevilleI!.

nc!nt*!ve*te# evi#ence p*!ve# that D*. %!nia nelecte# !* #eci#e# n!t t! !tain a h!t

:!*? pe*it $!* the &l?hea# c&ttin an# al! nelecte# !* *e$&e# t! have the ceilin an# the

$laale li$eIac?et *e!ve# $*! &n#e*neath the a*ea :he*e he int*&cte# Anelin! SevilleI! t! c&t

the &l?hea# #!!*. Thee #ecii!n !* !ve*iht &a*antee# that the c&ttin :!&l# e #!ne in

ext*eel ha)a*#!& c!n#iti!n an# :e*e the p*!xiate ca&e !$ the $i*e an# the *e&ltin #aae t!the 6eel.

c The Ka*# expe*t :itne, D*. *ic &llen ave the !nl c*e#ile acc!&nt !$ the ca&e an#

the echanic !$ initi!n !$ the $i*e. >e etalihe# that' i the $i*e ta*te# :hen the c&ttin !$ the

&l?hea# #!!* *e&lte# in pa*? !* h!t !lten la :hich $ell th*!&h p*e-exitin h!le !n the #ec?

$l!!* an# cae int! c!ntact :ith an# inite# the $laale li$eIac?et t!*e# in the ceilin v!i# #i*ectl

el!:; an# ii the !tt! level !$ the &l?hea# #!!* :a iate*ial, eca&e the pa*? an# la c!&l#



have c!e $*! the c&ttin !$ an !$ the i#e !$ the #!!*. (!ne&entl, the c&ttin itel$ !$ the

&l?hea# #!!* &n#e* the ha)a*#!& c!n#iti!n c*eate# D*. %!nia, *athe* than the p!iti!nin !$ the

#!!* !tt! e#e, :a the p*!xiate ca&e !$ the $i*e.

# The $anila cae i i**elevant t! thi #ip&te an# in an cae, #!e n!t etalih !ve*nin

p*ece#ent t! the e$$ect that :hen a hip i #aae# in #* #!c?, the hipa*# i p*e&e# at $a&lt. Apa*t

$*! the #i$$e*ence in the $act&al ettin !$ the t:! cae, the $anila City p*!n!&nceent *ea*#inthe *e ipa l!&it&* #!ct*ine a*e obiter dicta :ith!&t val&e a in#in p*ece#ent. +&*the*!*e, even i$

the p*inciple :e*e applie# t! c*eate a presumption !$ nelience the Ka*#, h!:eve*, that

p*e&pti!n i c!ncl&ivel *e&tte# the evi#ence !n *ec!*#.

e The 6eel #elie*ate act an# it nelience c*eate# the inhe*entl ha)a*#!& c!n#iti!n

in :hich the c&ttin :!*? that c!&l# !the*:ie e #!ne a$el en#e# &p ca&in a $i*e an# the #aae

t! the 6eel. The $i*e :a a #i*ect an# l!ical c!ne&ence !$ the 6eel #ecii!n t!' 1 ta?e

Anelin! SevilleI! a:a $*! hi :el#in :!*? at the *!ena#e Dec? *eta&*ant an# intea# t!

*e&i*e hi t! #! &na&th!*i)e# c&ttin :!*? in Dec? A; an# 2 t! have hi #! that :ith!&t ati$in

the *e&i*eent $!* an# !tainin a h!t :!*? pe*it in vi!lati!n !$ the Ka*# Sa$et 0&le an# :ith!&t

*e!vin the $laale ceilin an# li$e Iac?et el!:, c!nt*a* t! the *e&i*eent n!t !nl !$ the

Ka*# Sa$et 0&le &t al! !$ the #ean# !$ tan#a*# a$e p*actice an# the 6eel !:n explicit

a$et an# h!t :!*? p!licie.

$ The veel ha n!t p*eente# an p*!!$ t! h!: that the Ka*# :a *ei in it $i*e $ihtin

p*epa*ati!n !* in the act&al c!n#&ct !$ $ihtin the +e*&a* 2 $i*e. The Ka*# ha# the necea*

e&ipent an# t*aine# pe*!nnel an# epl!e# all th!e *e!&*ce ie#iatel an# $&ll t! p&ttin !&t

the +e*&a* 2 $i*e.

4. ven a&in that Anelin! SevilleI! c&t the &l?hea# #!!* cl!e t! the #ec? $l!!*, an# thatthi ci*c&tance *athe* than the ext*eel ha)a*#!& c!n#iti!n c*eate# D*. %!nia an# the 6eel

$!* that activit ca&e# the $i*e, the Ka*# a till n!t e hel# liale $!* the *e&ltin #aae.

a The Ka*# !nl c!nt*act&al !liati!n t! the 6eel in *epect !$ the 28 %an&a* 2 !*?

<*#e* :a t! &ppl :el#e* $!* the *!ena#e Dec? *eta&*ant :h! :!&l# then pe*$!* :el#in

:!*? pe* !:ne*[] int*&cti!n. (!ne&entl, !nce it ha# p*!vi#e# th!e :el#e*, incl&#in Anelin!

SevilleI!, it !liati!n t! the 6eel :a $&ll #icha*e# an# n! clai $!* c!nt*act&al *each, !* $!*

#aae !n acc!&nt the*e!$, a e *aie# aaint the Ka*#.

The Ka*# i al! n!t liale t! the 6eelF(laiant !n the ai !$ &ai-#elict.

i. The 6eel exe*cie# &pe*vii!n an# c!nt*!l

!ve* Anelin! SevilleI! :hen he :a #!in :!*? at the *!ena#e Dec? *eta&*ant an# epeciall

:hen he :a int*&cte# D*. %!nia t! c&t the &l?hea# #!!*. (!ne&entl, the 6eel :a the pa*t

:ith act&al c!nt*!l !ve* hi ta? an# i #eee# hi t*&e an# e$$ective epl!e* $!* p&*p!e !$

etalihin A*ticle 21 epl!e* liailit.

ii. ven a&in that the Ka*# :a Anelin!



SevilleI! epl!e*, the Ka*# a neve*thele n!t e hel# liale &n#e* A*ticle 21 eca&e Anelin!

SevilleI! :a actin e!n# the c!pe !$ hi ta? aine# the Ka*# :hich :a !nl t! #! :el#in

$!* the *!ena#e Dec? *eta&*ant :hen he c&t the &l?hea# #!!* p&*&ant t! int*&cti!n iven

the 6eel.

iii. The Ka*# i n!nethele n!t liale &n#e*

A*ticle 21 eca&e it exe*cie# #&e #ilience in the electi!n an# &pe*vii!n !$ Anelin! SevilleI!.

5. A&in that the Ka*# i liale, it cann!t e c!pelle# t! pa the $&ll a!&nt !$ 38 illi!n

pai# the (laiant.

a n#e* the la:, the Ka*# a n!t e hel# liale t! the (laiant, a &*!ee, $!* an a!&nt

*eate* than that :hich the 6eel c!&l# have *ec!ve*e#, even i$ the (laiant a have pai# a hihe*

a!&nt &n#e* it p!licie. =n t&*n, the *iht !$ the 6eel t! *ec!ve* i liite# t! act&al #aae t! the

6 S&pe*$e** 3, at the tie !$ the $i*e.

n#e* the Ship [0]epai* A*eeent, the liailit !$ the Ka*# i liite# t! 5 illi!n a

tip&lati!n :hich, &n#e* the la: an# #ecii!n !$ the S&p*ee (!&*t, i vali#, in#in an# en$!*ceale.

c The 6eel *eache# it !liati!n &n#e* (la&e 22 a !$ the Ka*# Stan#a*# Te* t!

nae the Ka*# a c!-a&*e# &n#e* the p!licie a *each :hich a?e the 6eel liale $!* #aae.

Thi liailit h!&l# in t&*n e et-!$$ aaint the (laiant clai $!* #aae.

The 0ep!n#ent lite# :hat it elieve the (laiant :ante# t! ip*e &p!n the T*i&nal. 0ep!n#ent

en&e*ate# an# #ip&te# thee a $!ll!:'

1. (laiant c!&nel c!nten# that the c&ttin !$ the &l?hea# #!!* :a c!ve*e# the 28

%an&a* 2 !*? <*#e*.

2. (laiant c!&nel c!nten# that D*. %!nia t!l# /e** <*c&ll! a!&t hi intenti!n t! have

Anelin! SevilleI! #! c&ttin :!*? at the Dec? A &l?hea# !n the !*nin !$ +e*&a* 2.

3. (laiant c!&nel c!nten# that &n#e* A*ticle 1727 !$ the (ivil (!#e, The c!nt*act!* i

*ep!nile $!* the :!*? #!ne pe*!n epl!e# hi.

4. (laiant c!&nel c!nten# that [t]he ec!n# *ea!n :h the*e :a n! I! pec !* I!

!*#e* $!* thi c&ttin :!*?, [i] the c&ttin :!*? :a ?n!:n t! the a*# an# c!!*#inate# :ith *. /e**

<*c&ll!, the a*# p*!Iect &pe*inten#ent.

5. (laiant c!&nel al! c!nten#, t! a?e the 6eel &na&th!*i)e# h!t :!*? activitie

ee le li?el, that the c!&l# eail e #etecte# eca&e *. Avelin! Ave, the Ka*# Sa$et

S&pe*inten#ent, a#itte# that ! h!t :!*? c!&l# *eall e hi##en $*! the Ka*#, !&* >!n!*,

eca&e the :el#in cale an# the a h!e eanatin $*! the #!c? :ill ive thee h!t:!*? a:a

apa*t $*! the ae*ti!n an# the $act that the*e :e*e al! a$et aitant &pp!e#l !in a*!&n# the

veel.

0ep!n#ent #ip&te# the a!ve p*eentin it !:n a*&ent in it +inal e!*an#&. [1]





<n <ct!e* 2, 22, the (=A( *en#e*e# it Decii!n [1!] #ecla*in !th /NA an#

R(S= &ilt !$ nelience, :ith the $!ll!:in $in#in an# c!ncl&i!n

The T*i&nal a*ee that the c!nt*act&al !liati!n !$ the Ka*# i t! p*!vi#e the :el#e* an# e&ipent

t! the p*!ena#e #ec?. [The] T*i&nal a*ee that the c&ttin !$ the &l?hea# #!!* :a n!t a

c!nt*act&al !liati!n !$ the Ka*#. >!:eve*, *e&i*in, acc!*#in t! it !:n *e&lati!n, that !nlKa*# :el#e* a*e t! &n#e*ta?e h!t:!*?, it $!ll!: that the*e a*e ce*tain &ali$icati!n !$ Ka*# :el#e*

that :!&l# e *e&iite !$ a*# :el#e* aaint th!e !$ the veel :el#e*. T! the T*i&nal, thi ean

that a*# :el#e* a*e a:a*e !$ the Ka*# a$et *&le an# *e&lati!n !n h!t:!*? &ch a applin $!* a

h!t:!*? pe*it, #ic&in the :!*? in a p*!#&cti!n eetin, an# c!plin :ith the c!n#iti!n !$ the

h!t:!*? pe*it p*i!* t! ipleentati!n. B the *e&i*eent that all h!t:!*? a*e t! e #!ne the

Ka*#, the T*i&nal $in# that SevilleI! *eain a a*# epl!ee. The act !$ SevilleI! i h!:eve*

itiate# in that he :a n!t even a $!*ean, an# that the int*&cti!n t! hi :a ic an a&th!*i)e#

pe*!n. The T*i&nal n!te that the h!t:!*? pe*it *e&i*e[] a *e&et at leat a $!*ean. The $act

that n! $!*ean :a incl&#e# in the $ive :el#e* i&e# t! the 6eel :a neve* *aie# in thi #ip&te.A #ic&e# ea*lie* the T*i&nal, :ith the $act that :hat :a a? ic !$ SevilleI! :a !&ti#e the

:!*? !*#e*, the 6eel i c!ni#e*e# e&all nelient. Thi T*i&nal $in# the c!nc&**ent nelience !$

the Ka*# th*!&h SevilleI! an# the 6eel th*!&h D*. %!nia a !th c!nt*i&t!* t! the ca&e !$ the

$i*e that #aae# the veel.[1"]

>!l#in that the liailit $!* #aae :a liite# t! 5,,., the (=A( !*#e*e#

R(S= t! pa i!nee* the a!&nt !$ 25,,., :ith inte*et at 8Q pe* ann& $*!

the tie !$ the $ilin !$ the cae &p t! the tie the #ecii!n i p*!&late#, an# 12Q

inte*et pe* ann& a##e# t! the a:a*#, !* an alance the*e!$, a$te* it ec!e $inal an#

exec&t!*. The (=A( $&*the* !*#e*e# that the a*it*ati!n c!t e ip!e# !n !th

pa*tie !n a pro rata ai.[1#]

i!nee* appeale# t! the (A an# it petiti!n :a #!c?ete# a (A-/.0. S !. 741.

R(S= li?e:ie $ile# it !:n appeal an# the ae :a #!c?ete# a (A-/.0. S !.

73934. The cae :e*e c!n!li#ate#.

<n Decee* 17, 24, the +!*e* +i$teenth Divii!n !$ the (A *en#e*e# it Decii!n,

#ip!in a $!ll!:'

>0+<0, p*eie c!ni#e*e#, the Petition !$ i!nee* (A-/.0. S !. 741 i D=S=SSD

:hile the Petition !$ the Ka*# (A-/.0. S !. 73934 i /0ATD, #iiin petiti!ne* clai in

it enti*et. ! c!t.









The Ka*# an# The /NA a*e he*e !*#e*e# t! pa the a*it*ati!n c!t p*!-*ata.

S< <0D0D.[1$]

A*ieve#, i!nee* !&ht *ec!ni#e*ati!n !$ the Decee* 17, 24 Decii!n, initin

that it &$$e*e# $*! e*i!& e**!* in the app*eciati!n !$ the evi#ence an# $*! *!

iapplicati!n !$ the la: an# I&*ip*&#ence !n nelience. R(S=, $!* it pa*t, $ile# a

!ti!n $!* pa*tial *ec!ni#e*ati!n !$ the ae Decii!n.

<n Decee* 2, 27, an Aen#e# Decii!n :a p*!&late# the Special Divii!n

!$ +ive +!*e* +i$teenth Divii!n !$ the (A in liht !$ the #ient !$ A!ciate %&tice

@&ca . Be*ain,[1%] I!ine# A!ciate %&tice %apa* B. Diaapa!. The #allo !$

the Aen#e# Decii!n *ea#

HEREORE, p*eie c!ni#e*e#, the (!&*t he*e #ec*ee that'

1. i!nee* $otion #or Reconsideration i PARTIALL1 2RANTE, !*#e*in The Ka*# t! pa

i!nee* 25 illi!n, :ith!&t leal inte*et, :ithin 15 #a $*! the $inalit !$ thi Amended Decision,

&Iect t! the $!ll!:in !#i$icati!n'

1.1 i!nee* Petition (A-/.0. S !. 741 i PARTIALL1 2RANTE a the Ka*# i he*e

!*#e*e# t! pa i!nee* 25 illi!n :ith!&t leal inte*et;

2. The Ka*# i he*e #ecla*e# a e&all nelient, th&, the t!tal /0AT=/ !$ it Petition (A-

/.0. S !. 73934 i n!: *e#&ce# t! PARTIALL1 2RANTE, in ! $a* a it i !*#e*e# t! pai!nee* 25 illi!n, :ith!&t leal inte*et, :ithin 15 #a $*! the $inalit !$ thi Amended Decision;

an#

3. The *et !$ the #ip!iti!n in the !*iinal Decii!n *eain the ae.

SO ORERE.[1&]

>ence, thee petiti!n. i!nee* ae it petiti!n !n the $!ll!:in *!&n#'

=

T> (<0T <+ AA@S 00D = BAS=/ =TS <0=/=A@ DCISI? < 0102F-C3S @AD=/ =T T< AR +A@S @/A@ (<(@S=<S; 0102F-C3S 0A= T<

=6A@=DAT T> A$DD DCISI? . T>=S A@S< 6=<@ATS S(T=< 14, A0T=(@ 6===

<+ T> (<ST=TT=<.

==

T> (<0T <+ AA@S 00D = @==T=/ T> @/A@ @=AB=@=TK <+ T> KA0D T<

T> S <+ 5,,., = T>AT'









A. S)AR DCISIS 0D0S =A@=(AB@ AK =6<(AT=< <+ @==TD @=AB=@=TK BK

T> KA0D.

B. T> @==TAT=< (@AS =S (<T0A0K T< B@=( <@=(K.

(. T> 6SS@ <0 D=D <T A/0 T>AT T> KA0DS @=AB=@=TK +<0 @<SS <0

DAA/ T< T> 6SS@ A0=S=/ +0< KA0DS /@=/( =S @==TD T< T> S

<+ 5,,. <@K.

D. =T =S ==M=T<S T< A@@< T> KA0D T< @==T @=AB=@=TK, = T>AT'

i T> KA0D >AD (ST<DK AD (<T0<@ <60 T> 6SS@ F6 S0+00K 3 <

+B0A0K 2 > =T AS /TTD BK +=0;

ii T> DAA/=/ +=0 =(=DT >AD = T> (<0S <+ T> 0A=0S

G(@S=6@K 0+<0D BK KA0D <0R0S.

===

T> (<0T <+ AA@S 00D = =TS 0@=/ T>AT /NA AS (<(00T@K

/@=/T, (<S=D0=/ T>AT'

A. D0. %<=/A, T> 6SS@S ASSA/ TA @AD0, D=D <T S06=S <0

(<T0<@ T> 0A=0S.

B. =T AS T> KA0D T>0</> =TS 0<%(T S0=TDT /0==A< <0(@@<

T>AT S06=SD AD (<T0<@@D T> 0A=0 <0RS.

(. S=( <@K KA0D @D0S (<@D 0+<0 ><T <0RS =T +<@@<S T>AT T>K

A@< (<@D B /=@TK <+ /@=/( = D<=/ T> SA.

D. T> KA0D AT><0=CD T> ><T <0R <+ KA0D @D0 A/@=< S6=@@%<.

. T> /@=/( <+ A/@=< S6=@@%< AS T> 0<G=AT (AS <+ T>

@<SS.

+. /NA AS <T /=@TK <+ /@=/(, B =T D=0(T <0 (<T0=BT<0K T< T>

@<SS.

=6

T> (<0T <+ AA@S (<00(T@K 0@D T>AT /NA S++0D A (<ST0(T=6

T<TA@ @<SS <+ =TS 6SS@ BT 00D BK <T ><@D=/ T>AT T> KA0D AS @=AB@

+<0 T> 6A@ <+ T> +@@ (<ST0(T=6 T<TA@ @<SS.

6

T> (<0T <+ AA@S 00D = <T ><@D=/ T> KA0D @=AB@ +<0 =T0ST.



6=

T> (<0T <+ AA@S 00D = <T ><@D=/ T> KA0D S<@@K @=AB@ +<0

A0B=T0AT=< (<STS.[1']

<n the !the* han#, R(S= cite the $!ll!:in *!&n# $!* the all!:ance !$ it petiti!n, t!

:it'

1. ABS( <+ KA0D 0S<S=B=@=TK

=T AS /0=6<S 00<0 +<0 T> (<0T <+ AA@S T< AD<T, =T><T

G@AAT=<, T> (=A(S 0@=/ T>AT T> KA0D AS MA@@K /@=/T

B(AS <+ =TS +A=@0 T< 0M=0 A ><T <0RS 0=T +<0 T> (TT=/ <0R

D< BK A/@=< S6=@@%<, A+T0 T> (<0T <+ AA@S =TS@+ >AD S><

T>AT 0@=/ T< B (<@T@K 0</ AD BAS@SS.

2. < (<ST0(T=6 T<TA@ @<SS

=T AS MA@@K /0=6<S 00<0 +<0 T> (<0T <+ AA@S T< 0@, =T><T

G@AAT=<, T>AT T> 6SS@ AS A (<ST0(T=6 T<TA@ @<SS A+T0 >A6=/

=TS@+ G@A=D >K T> 6SS@ (<@D <T B A (<ST0(T=6 T<TA@ @<SS.

3. +A=@0 <0 0+SA@ T< ADD0SS

R@S <T=< +<0 0(<S=D0AT=<

+=A@@K, =T AS A@S< /0=6<S 00<0 +<0 T> (<0T <+ AA@S T< >A6

++(T=6@K D=D, =T><T ADD0SS=/ =T AD A@S< =T><T G@AAT=<,

R@S A0T=A@ <T=< +<0 0(<S=D0AT=< <+ T> <0=/=A@ D(=S=<

>=(> S><D' 1 >K =<0 AS <T SB0</ATD T< T> 0=/>TS <+ T>

6SS@ <0 AD S< >AD < STAD=/ T< S T> KA0D; 2 >K R@ AK

<T B 0M=0D T< 0=B0S =<0S AKTS T< T> 6SS@ <0 =

6= <+ T> (<-=S0A( (@AS = T> S>=0A=0 A/0T; AD 3 >K

=<0 A@< S><@D BA0 T> (<STS <+ A0B=T0AT=<.

4. +A=@0 T< (0D=T +<0 SA@6A/ 0(<60K

6 =+ T> (<0T <+ AA@S 0@=/S < A@@ <+ T> +<0/<=/ =SSS 0

(<00(T AD T> KA0D AK 0<0@K B >@D MA@@K @=AB@ +<0 T>

DAA/ T< T> 6SS@ AD 0M=0D T< AK >A@+ <+ T> DAA/S AA0DD





25 =@@=<, T> (<0T <+ AA@S ST=@@ 00D = <T DD(T=/ T>

SA@6A/ 6A@ <+ T> 6SS@ 0(<60D AD 0(=6D BK T> =S00,

=<0, T< 0D( AK @=AB=@=TK < T> A0T <+ T> KA0D T< 9.74 =@@=<.

[(]

T! !&* in#, thee e**!* aine# !th i!nee* an# R(S= a e &e# &p in the

$!ll!:in c!*e i&e'

A. T! :h! a nelience !ve* the $i*e that *!?e !&t !n !a*# F6 S&pe*$e** 3 e ip&te#

B. = &*!ati!n p*!pe* =$ p*!pe*, t! :hat extent can &*!ati!n e a#e

(. Sh!&l# inte*et e ip!e# !n the a:a*# !$ #aae =$ !, h!: &ch

D. h! h!&l# ea* the c!t !$ the a*it*ati!n

T! *e!lve thee i&e, it i ipe*ative that :e #i*e $*! the ene*al *&le that in

petiti!n $!* *evie: &n#e* 0&le 45 !$ the 0&le !$ (!&*t, !nl &eti!n !$ la: hall e

ente*taine#. (!ni#e*in the #ipa*ate $in#in !$ $act !$ the (=A( an# the (A :hich

le# the t! #i$$e*ent c!ncl&i!n, :e a*e c!nt*aine# t! *eviit the $act&al ci*c&tance

&**!&n#in thi c!nt*!ve*.[1]







3)e Courts Rulin#

A. T(e issue o" ne$#i$en!e

n#enial, the ie#iate ca&e !$ the $i*e :a the h!t :!*? #!ne Anelin!

SevilleI! SevilleI! !n the acc!!#ati!n a*ea !$ the veel, peci$icall !n Dec? A.

A etalihe# e$!*e the (=A(

The $i*e *!?e !&t h!*tl a$te* 1'25 an# an ala* :a *aie# xh. 1-. Aini @in,[] p. 2.

Anelin! SevilleI! t*ie# t! p&t !&t the $i*e p!&*in the c!ntent !$ a $ive-lite* #*in?in :ate*

c!ntaine* !n it an# a he #i# !, !?e cae &p $*! &n#e* Dec? A. >e !t an!the* c!ntaine* !$ :ate*

:hich he al! p!&*e# :hence the !?e :a c!in. =n the eantie, !the* :!*?e* in the ie#iate

vicinit t*ie# t! $iht the $i*e &in $i*e extin&ihe* an# &c?et !$ :ate*. B&t eca&e the $i*e :a

ini#e the ceilin v!i#, it :a ext*eel #i$$ic&lt t! c!ntain !* extin&ih; an# it p*ea# *api#l eca&e

it :a n!t p!ile t! #i*ect :ate* Iet !* the $i*e extin&ihe* int! the pace at the !&*ce. +ihtin the$i*e :a ext*eel #i$$ic&lt eca&e the li$e Iac?et an# the c!nt*&cti!n ate*ial !$ the Dec? B ceilin

:e*e c!&tile an# pe*itte# the $i*e t! p*ea# :ithin the ceilin v!i#. +*! the*e, the $i*e #*!ppe#

int! the Dec? B acc!!#ati!n a*ea at va*i!& l!cati!n, :he*e the*e :e*e c!&tile ate*ial.

0ep!n#ent p!int t! can !$ paint an# thinne*, in a##iti!n t! the pl:!!# pa*titi!n an# $!a

att*ee !n #ec? B xh. 1-&llen,[!] pp. 7-, 1; xh. 2-&llen, pp. 11-12.["]

i!nee* c!nten# that R(S= h!&l# e hel# liale eca&e SevilleI! :a it epl!ee

:h!, at the tie the $i*e *!?e !&t, :a #!in hi aine# ta?, an# that R(S= :a

!lel *ep!nile $!* all the h!t :!*? #!ne !n !a*# the veel. R(S= clai

!the*:ie, tatin that the h!t :!*? #!ne :a e!n# the c!pe !$ SevilleI! aine#

ta?, the ae n!t havin een a&th!*i)e# &n#e* the !*? <*#e*[#] #ate# %an&a* 28,

2 !* &n#e* the Ship*epai* A*eeent. R(S= $&*the* p!it that /NA :a itel$

nelient, th*!&h it c*e:, pa*tic&la*l D*. 0a&n#! %!nia D*. %!nia, $!* $ailin t!

*e!ve the li$e Iac?et $*! the ceilin v!i#, ca&in the ie#iate p*ea# !$ the $i*e t!

the !the* a*ea !$ the hip.

e *&le in $av!* !$ i!nee*.

=irst. The Ship*epai* A*eeent i clea* that /NA, a !:ne* !$ F6 S&pe*$e** 3,

ente*e# int! a c!nt*act $!* the #* #!c?in an# *epai* !$ the veel &n#e* R(S=

Stan#a*# (!n#iti!n !$ (!nt*act $!* Ship*epai*, an# it &i#eline an# *e&lati!n !n













a$et an# ec&*it. Th&, the (A e**e# :hen it ai# that /NA :!&l# *en!vate an#

*ec!nt*&ct it !:n veel e*el &in the #* #!c?in $acilitie !$ R(S=.

Second. &*&ant t! R(S= *&le an# *e&lati!n !n a$et an# ec&*it, !nl epl!ee

!$ R(S= a &n#e*ta?e h!t :!*? !n the veel :hile it :a in the *avin #!c? in , .

Thi i &pp!*te# (la&e 3 !$ the Ship*epai* A*eeent *e&i*in the p*i!* :*itten

app*!val !$ R(S= 6ice *ei#ent $!* <pe*ati!n e$!*e /NA c!&l# e$$ect an :!*?

pe*$!*e# it !:n :!*?e* !* &-c!nt*act!*. =n the exe*cie !$ thi a&th!*it,

R(S= 6ice-*ei#ent $!* <pe*ati!n, in the lette* #ate# %an&a* 2, 1997, anne# an h!t

:!*? $*! ein #!ne except R(S= :!*?e*, vi0.:

The Ka*# :ill *et*ict all h!t :!*? in the enine *!!, acc!!#ati!n cain, an# $&el !il tan? t! e

ca**ie# !&t !nl hipa*# :!*?e* x x x.[$]

/NA *ec!ni)e# an# c!plie# :ith thi *et*ictive #i*ective &ch that, #&*in the

a**ival c!n$e*ence !n %an&a* 28, 2, D*. %!nia, the veel paae tea lea#e* in

cha*e !$ it h!tel #epa*tent, peci$icall *e&ete# R(S= t! $inih the h!t :!*?

ta*te# the veel c!nt*act!* !n the paene* acc!!#ati!n #ec?.[%] Thi :a

c!**!!*ate# the tateent !$ the veel h!tel anae* a*cel! 0ae [&] an# the

veel &alit c!nt*!l !$$ice* %!elit! tean.['] R(S= ?ne: !$ the &n$inihe# h!t

:!*? in the paene* acc!!#ati!n a*ea. =t a$et &pe*vi!* tean (aalh&

c!n$i*e# that R(S= :a a:a*e that the !:ne* !$ thi veel F6 S&pe*$e** 3 ha#

&n#e*ta?en thei* !:n h!t :!*? p*i!* t! a**ival al!ni#e ic !n 28th %an&a*, an#

that n! h!t :!*? pe*it c!&l# the*ea$te* e i&e# t! /NA !:n :!*?e* eca&e

thi :a n!t all!:e# $!* the S&pe*$e** 3.[!(] Thi h!: that D*. %!nia ha# a&th!*it

!nl t! *e&et the pe*$!*ance !$ h!t :!*? R(S= :el#e* a nee#e# in the *epai*

!$ the veel :hile !n #* #!c?.

)hird. R(S= :el#e* c!ve*e# the !*? <*#e* pe*$!*e# h!t :!*? !n va*i!& a*ea

!$ the F6 S&pe*$e** 3, ai#e $*! it p*!ena#e #ec?. Thi :a a *ec!niti!n !$ D*.

%!nia a&th!*it t! *e&et the c!n#&ct !$ h!t :!*? even !n the paene*













acc!!#ati!n #ec?, &Iect t! the p*!vii!n !$ the %an&a* 28, 2 !*? <*#e* that

R(S= :!&l# &ppl :el#e* $!* the p*!ena#e #ec? !$ the hip.

At the (=A( p*!cee#in, it :a a#e&atel h!:n that et:een +e*&a* 4 an# 8,

2, the :el#e* !$ R(S=' a #i# the :el#in :!*? !n the ceilin hane* in the l!

!$ Dec? A; #i# the :el#in an# c&ttin :!*? !n the #ec? ea t! acce ai*c!n

#&ct; an# c #i# the c&ttin an# :el#in :!*? !n the p*!tecti!n a* at the t!&*it

#inin al!n !$ Dec? B,[!1] at a *ate !$ 15.F:el#e*Fh!&*.[!] =n $act, <*c&ll!,

*!Iect S&pe*inten#ent !$ R(S=, a#itte# that a ea*l a +e*&a* 3, 2 $ive #a

e$!*e the $i*e [the Ka*#] ha# ac?n!:le#e# D*. %!nia a&th!*it t! !*#e* &ch :!*?

!* a##iti!nal I!.[!!]

=t i evi#ent, the*e$!*e, that alth!&h the %an&a* 28, 2 !*? <*#e* :a a pecial

!*#e* $!* the &ppl !$ R(S= :el#e* t! the p*!ena#e #ec?, it :a n!t *et*icte# t! the

p*!ena#e #ec? !nl. The !*? <*#e* :a !nl a pecial a**aneent et:een R(S=

an# /NA that eant a##iti!nal c!t t! the latte*.

=ourth. At the tie !$ the $i*e, SevilleI! :a an epl!ee !$ R(S= an# :a &Iect t!

the latte* #i*ect c!nt*!l an# &pe*vii!n.

=n#ee#, R(S= :a the epl!e* !$ SevilleI!pain hi ala*ie; *etainin the p!:e* an#

the *iht t! #icha*e !* &tit&te hi :ith an!the* :el#e*; p*!vi#in hi an# the !the*

:el#e* :ith it e&ipent; ivin hi an# the !the* :el#e* a*chin !*#e* t! :!*?

!n the veel; an# !nit!*in an# ?eepin t*ac? !$ hi an# the !the* :el#e* activitie

!n !a*#, in vie: !$ the #elicate nat&*e !$ thei* :!*?.[!"] Th&, a &ch epl!ee,

a:a*e !$ R(S= Sa$et 0e&lati!n !n 6eel A$l!atFD*, :hich peci$icall p*!vi#e

that n! h!t:!*? :el#inFc&ttin :!*? hall e #!ne !n !a*# [the] veel :ith!&t

[a] Sa$et e*it $*! R(S= Sa$et Secti!n,[!#] it :a inc&ent &p!n SevilleI! t!

!tain the *e&i*e# h!t :!*? a$et pe*it e$!*e ta*tin the :!*? he #i#, incl&#in that

#!ne !n Dec? A :he*e the $i*e ta*te#.













=i#th. The*e :a a lape in R(S= &pe*vii!n !$ SevilleI! :!*? at the tie the $i*e

*!?e !&t.

=t :a etalihe# that n! h!t :!*? c!&l# e hi##en $*! !* *eain &n#etecte#

R(S= eca&e the :el#in cale an# the a h!e eanatin $*! the #!c? :!&l# ive

the h!t :!*? a:a. !*e!ve*, R(S= ha# *!vin $i*e :atchen an# a$et aitant

:h! :e*e !vin a*!&n# the veel.[!$] Thi :a c!n$i*e# 0etit&t! 0eaca

0eaca, R(S= Sa$et S&pe*vi!*, :h! act&all p!tte# SevilleI! !n Dec? A, t:!

h!&* e$!*e the $i*e, #!in hi c&ttin :!*? :ith!&t a h!t :!*? pe*it, a $i*e :atchan,

!* a $i*e extin&ihe*. R(S= c!nten# that it #i# it #&t :hen it p*!hiite# SevilleI!

$*! c!ntin&in the h!t :!*?. >!:eve*, it i n!te:!*th that, a$te* p&*p!*te#l c!l#in

SevilleI! $!* :!*?in :ith!&t a pe*it an# tellin hi t! t!p &ntil the pe*it :a

ac&i*e# an# the !the* a$et ea&*e :e*e !e*ve#, 0eaca le$t :ith!&t p&llin

SevilleI! !&t !$ the :!*? a*ea !* a?in &*e that the latte* #i# a he :a t!l#.

n$!*t&natel $!* R(S=, SevilleI! *el&ctantl p*!cee#e# :ith hi c&ttin !$ the &l?hea#

#!!* at Dec? A a$te* 0eaca le$t, even #i*ea*#in the 4-inch a*?in et, th& c&ttin

the #!!* level :ith the #ec?, &ntil the $i*e *!?e !&t.

Thi c!ncl&i!n !n the $ail&*e !$ &pe*vii!n R(S= :a a!l&tel &pp!*te# D*.

*ic &llen !$ the D*. %.>. B&*!ne N a*tne* =nte*nati!nal @t#., Sinap!*e, R(S=

!:n $i*e expe*t, :h! !e*ve# that

4.3. The $!*e!in :!&l# e c!p!&n#e# Anelin! SevilleI! ein an elect*ic a*c :el#e*, n!t a

c&tte*. The #ane* !$ initi!n !cc&**in a a *e&lt !$ the t:! p*!cee a*e iila* in that !th elect*ic

a*c :el#in an# h!t c&ttin p*!#&ce heat at the :!*? a*ea an# pa*? an# incen#ive ate*ial that can

t*avel !e #itance $*! the :!*? a*ea. >ence, the a$et p*eca&ti!n that a*e expecte# t! e applie#

the &pe*vi!* a*e the ae $!* !th tpe !$ :!*?. >!:eve*, the &antit an# incen#ivit !$ thep*a $*! the h!t c&ttin a*e &ch *eate* than th!e !$ pa*? $*! elect*ic a*c :el#in, an# it %'

e## *e t(t An$e#ino Sevi##e&o ou#d not (ve "u## ppre!ition o" t(e dn$ers invo#ved. T(is

%de it ## t(e %ore i%portnt t(t t(e supervisor, (o s(ou#d (ve (d su!( n ppre!ition,

ensured t(t t(e pproprite s"et' pre!utions ere !rried out.[!%]







:!*?e*, $aile# t! c!pl :ith the t*ict a$et tan#a*# !$ R(S=, n!t !nl eca&e he

:!*?e# :ith!&t the *e&i*e# pe*it, $i*e :atch, $i*e &c?et, an# extin&ihe*, &t al!

eca&e he $aile# t! &n#e*ta?e !the* p*eca&ti!na* ea&*e $!* p*eventin the $i*e. +!*

intance, he c!&l# have, at the ve* leat, en&*e# that :hateve* c!&tile ate*ial

a have een in the vicinit :!&l# e p*!tecte# $*! the pa*? ca&e# the :el#in

t!*ch. >e c!&l# have eail *e!ve# the li$e Iac?et $*! the ceilin v!i#, a :ell a the

$!a att*ee, an# c!ve*e# an h!le :he*e the pa*? a ente*.

(!nI&nctivel, ince 0eaca :a al*ea# a:a*e !$ the ha)a*#, he h!&l# have ta?en all

p!ile p*eca&ti!na* ea&*e, incl&#in th!e a!ve enti!ne#, e$!*e all!:in

SevilleI! t! c!ntin&e :ith hi h!t :!*? !n Dec? A. =n a##iti!n t! c!l#in SevilleI!,

0eaca e*el chec?e# that n! $i*e ha# ta*te# et. !thin !*e. Al!, ina&ch a

R(S= ha# the p!:e* t! &tit&te SevilleI! :ith an!the* elect*ic a*c :el#e*, 0eaca

h!&l# have *eplace# hi.

The*e i nelience :hen an act i #!ne :ith!&t exe*ciin the c!petence that a

*ea!nale pe*!n in the p!iti!n !$ the act!* :!&l# *ec!ni)e a necea* t! p*event an

&n*ea!nale *i? !$ ha* t! an!the*. Th!e :h! &n#e*ta?e an :!*? callin $!* pecial

?ill a*e *e&i*e# t! exe*cie *ea!nale ca*e in :hat the #!. [!&] 6e*il, the*e i an

!liati!n all pe*!n have t! ta?e #&e ca*e :hich, &n#e* !*#ina* ci*c&tance !$ the

cae, a *ea!nale an# p*&#ent an :!&l# ta?e. The !ii!n !$ that ca*e c!ntit&te

nelience. /ene*all, the #e*ee !$ ca*e *e&i*e# i *a#&ate# acc!*#in t! the #ane* a

pe*!n !* p*!pe*t a e &Iecte# t!, a*iin $*! the activit that the act!* p&*&e !*

the int*&entalit that he &e. The *eate* the #ane*, the *eate* the #e*ee !$ ca*e

*e&i*e#. xt*a!*#ina* *i? #ean# ext*a!*#ina* ca*e. Siila*l, the !*e iinent

the #ane*, the hihe* #e*ee !$ ca*e :a**ante#.[!'] =n thi apect,







R(S= $aile# t! exe*cie the necea* #e*ee !$ ca&ti!n an# $!*eiht calle# $!* the

ci*c&tance.

e cann!t &c*ie t! R(S= p!iti!n that /NA, th*!&h D*. %!nia, :a nelient.

<n the !ne han#, a #ic&e# a!ve, D*. %!nia ha# a&th!*it t! *e&et the

pe*$!*ance !$ h!t :!*? in the !the* a*ea !$ the veel. Thee h!t :!*? :e*e #eee#

incl&#e# in the %an&a* 28, 2 !*? <*#e* an# the Ship*epai* A*eeent. =n the

exe*cie !$ thi a&th!*it, D*. %!nia a?e# SevilleI! t! #! the c&ttin !$ the &l?hea#

#!!* nea* the tai*cae !$ Dec? A. R(S= :a a:a*e !$ :hat SevilleI! :a #!in, &t

$aile# t! &pe*vie hi :ith the #e*ee !$ ca*e :a**ante# the atten#ant ci*c&tance.

eithe* can D*. %!nia e $a&lte# $!* n!t *e!vin the li$e Iac?et $*! the ceilin v!i#

$!* t:! *ea!n 1 the li$e Iac?et :e*e n!t even c!nt*i&t!* t! the !cc&**ence !$ the

$i*e; an# 2 it :a n!t inc&ent &p!n hi t! *e!ve the ae. =t :a h!:n #&*in the

hea*in e$!*e the (=A( that the *e!val !$ the li$e Iac?et :!&l# n!t have a#e &ch

!$ a #i$$e*ence. The $i*e :!&l# till have !cc&**e# #&e t! the p*eence !$ !the*

c!&tile ate*ial in the a*ea. Thi :a the &ni$!* c!ncl&i!n !$ !th /NA["(]

an# R(S=["1] $i*e expe*t. =t :a al! p*!ven #&*in the (=A( p*!cee#in that R(S=

#i# n!t ee the li$e Iac?et a ein in the :a !$ the h!t :!*?, th&, a?in thei*

*e!val $*! t!*ae &nnecea*.["]

Thee ci*c&tance, ta?en c!llectivel, iel# the inevitale c!ncl&i!n that

SevilleI! :a nelient in the pe*$!*ance !$ hi aine# ta?. >i nelience :a the

p*!xiate ca&e !$ the $i*e !n !a*# F6 S&pe*$e** 3. A he :a then #e$initel

enae# in the pe*$!*ance !$ hi aine# ta? a an epl!ee !$ R(S=, hi

nelience ave *ie t! the vica*i!& liailit !$ hi epl!e*["!] &n#e* A*ticle 21 !$

the (ivil (!#e, :hich p*!vi#e

A*t. 21. The !liati!n ip!e# a*ticle 2178 i #ean#ale n!t !nl $!* !ne !:n act !*

!ii!n, &t al! $!* th!e !$ pe*!n $!* :h! !ne i *ep!nile.

x x x x











pl!e* hall e liale $!* the #aae ca&e# thei* epl!ee an# h!&eh!l# helpe* actin

:ithin the c!pe !$ thei* aine# ta?, even th!&h the $!*e* a*e n!t enae# in an &ine !*

in#&t*.

x x x x

The *ep!niilit t*eate# !$ in thi a*ticle hall ceae :hen the pe*!n he*ein enti!ne# p*!ve that

the !e*ve# all the #ilience !$ a !!# $athe* !$ a $ail t! p*event #aae.

R(S= $aile# t! p*!ve that it exe*cie# the necea* #ilience inc&ent &p!n it t! *e&t

the leal p*e&pti!n !$ it nelience in &pe*viin SevilleI!.[""] (!ne&entl, it i

*ep!nile $!* the #aae ca&e# the nelient act !$ it epl!ee, an# it liailit

i p*ia* an# !li#a*. All that i nee#e# i p*!!$ that the epl!ee ha, hi

nelience, ca&e# #aae t! an!the* in !*#e* t! a?e the epl!e* *ep!nile $!* the

t!*t&!& act !$ the $!*e*.["#] +*! the $!*e!in #i&iiti!n, the*e i aple p*!!$ !$

the epl!ee nelience.

B. T(e ri$(t o" su*ro$tion

i!nee* aeve*ate that the*e exite# a t!tal c!nt*&ctive l! ! that it ha# t! pa

/NA the $&ll a!&nt !$ the in&*ance c!ve*ae an#, !pe*ati!n !$ la:, it :a

entitle# t! e &*!ate# t! the *iht !$ /NA t! clai the a!&nt !$ the l!. =t

$&*the* a*&e that the liitati!n !$ liailit cla&e $!&n# in the Ship*epai* A*eeent i

n&ll an# v!i# $!* ein ini&it!& an# aaint p&lic p!lic.

R(S= c!&nte* that a t!tal c!nt*&ctive l! :a n!t a#e&atel p*!ven i!nee*, an#

that the*e i n! p*!!$ !$ paent !$ the in&*ance p*!cee#. R(S= init !n the vali#it

!$ the liite#-liailit cla&e &p t! 5,,., eca&e /NA acce#e# t! the

p*!vii!n :hen it exec&te# the Ship*epai* A*eeent. R(S= al! clai that the alvae

val&e !$ the veel h!&l# e #e#&cte# $*! :hateve* a!&nt it :ill e a#e t! pa t!

i!nee*.

e $in# in $av!* !$ i!nee*, &Iect t! the clai !$ R(S= a t! the alvae val&e !$ F6

S&pe*$e** 3.

=n a*ine in&*ance, a c!nt*&ctive t!tal l! !cc&* &n#e* an !$ the c!n#iti!n et $!*th







in Secti!n 139 !$ the =n&*ance (!#e, :hich p*!vi#e

Sec. 139. A pe*!n in&*e# a c!nt*act !$ a*ine in&*ance a aan#!n the thin in&*e#, !* an

pa*tic&la* p!*ti!n he*e!$ epa*atel val&e# the p!lic, !* !the*:ie epa*atel in&*e#, an# *ec!ve*

$!* a t!tal l! the*e!$, :hen the ca&e !$ the l! i a pe*il in&*e# aaint'

a =$ !*e than th*ee-$!&*th the*e!$ in val&e i act&all l!t, !* :!&l# have t! e expen#e# t! *ec!ve*it $*! the pe*il;

=$ it i inI&*e# t! &ch an extent a t! *e#&ce it val&e !*e than th*ee-$!&*th; x x x.

=t appea*, h!:eve*, that in the exec&ti!n !$ the in&*ance p!licie !ve* F6 S&pe*$e**

3, /NA an# i!nee* inc!*p!*ate# *e$e*ence the Ae*ican =ntit&te >&ll (la&e

2F8F77, the T!tal @! *!vii!n !$ :hich *ea#

T!tal @!

=n ace*tainin :hethe* the 6eel i a c!nt*&ctive T!tal @! the A*ee# 6al&e hall e ta?en a the

*epai*e# val&e an# n!thin in *epect !$ the #aae# !* *ea?-&p val&e !$ the 6eel !* :*ec? hall e

ta?en int! acc!&nt.

The*e hall e n! *ec!ve* $!* a c!nt*&ctive T!tal @! he*e&n#e* &nle the expene !$ *ec!ve*in

an# *epai*in the 6eel :!&l# excee# the A*ee# 6al&e in p!licie !n an# achine*. =n a?in thi

#ete*inati!n, !nl expene inc&**e# !* t! e inc&**e# *ea!n !$ a inle acci#ent !* a e&ence !$

#aae a*iin $*! the ae acci#ent hall e ta?en int! acc!&nt, &t expene inc&**e# p*i!* t!

ten#e* !$ aan#!nent hall n!t e c!ni#e*e# i$ &ch a*e t! e claie# epa*atel &n#e* the S&e an#

@a!* cla&e. x x x.

=n the c!&*e !$ the a*it*ati!n p*!cee#in, i!nee* a##&ce# in evi#ence the etiate

a#e th*ee 3 #iinte*ete# an# &ali$ie# hipa*# $!* the c!t !$ the *epai* !$ the

veel, peci$icall' a 298,258,717., ae# !n the hilippine c&**enc e&ivalent !$

the &!tati!n #ate# Ap*il 17, 2 t&*ne# in T&neihi >eav =n#&t*ie (e& =nc.;

39,7,34.15, ae# !n the hilippine c&**enc e&ivalent !$ the &!tati!n !$

Sea:an Shipa*# te. @t#., ; an# c 31,39,974., ae# !n the hilippine

c&**enc e&ivalent !$ the &!tati!n !$ Sinap!*e Techn!l!ie a*ine @t#. All the

etiate h!:e# that the *epai* expene :!&l# excee# 27,,., the a!&nt

e&ivalent t! !$ the veel in&*e# val&e !$ 38,,.. Th&, /NA !pte# t!

aan#!n F6 S&pe*$e** 3 an# claie# $*! i!nee* the $&ll a!&nt !$ the p!licie.

i!nee* pai# /NA clai, an# n!: #ean# $*! R(S= the $&ll a!&nt !$



38,,., vi*t&e !$ &*!ati!n.

R(S= #enie the liailit eca&e, ai#e $*! it clai that it cann!t e hel# c&lpale $!*

nelience *e&ltin in the #et*&ctive $i*e, the*e :a n! c!nt*&ctive t!tal l!, a the

a!&nt !$ #aae :a !nl SY3,,. !* 17,811,28., the a!&nt !$ *epai*

expene &!te# Sip!n, Spence N K!&n.

=n the $ace !$ thi appa*ent c!n$lict, :e h!l# that Secti!n 139 !$ the =n&*ance (!#e

h!&l# !ve*n, eca&e 1 hilippine la: i #eee# inc!*p!*ate# in eve* l!call

exec&te# c!nt*act; an# 2 the a*ine in&*ance p!licie in &eti!n exp*el p*!vi#e#

the $!ll!:in'

=<0TAT

Thi in&*ance i &Iect t! nlih I&*i#icti!n, except in the event that l! !* l!e a*e paale in

the hilippine, in :hich cae i$ the ai# la: an# c&t! !$ nlan# hall e in c!n$lict :ith the la:

!$ the 0ep&lic !$ the hilippine, then the la: !$ the 0ep&lic !$ the hilippine hall !ve*n.

n#e*c!*in &pplie#.

The (A hel# that Secti!n 139 !$ the =n&*ance (!#e i e*el pe*iive !n acc!&nt !$

the :!*# a in the p*!vii!n. Thi i inc!**ect. *!pe*l c!ni#e*e#, the :!*# a in

the p*!vii!n i inten#e# t! *ant the in&*e# /NA the !pti!n !* #ic*eti!n t! ch!!e

the aan#!nent !$ the thin in&*e# F6 S&pe*$e** 3, !* an pa*tic&la* p!*ti!n

the*e!$ epa*atel val&e# the p!lic, !* !the*:ie epa*atel in&*e#, an# *ec!ve* $!*

a t!tal l! :hen the ca&e !$ the l! i a pe*il in&*e# aaint. Thi !pti!n !* #ic*eti!n

i exp*ee# a a *iht in Secti!n 131 !$ the ae (!#e, t! :it'

Sec. 131. A c!nt*&ctive t!tal l! i !ne :hich ive t! a pe*!n in&*e# a *iht t! aan#!n &n#e*

Secti!n !ne h&n#*e# thi*t-nine.



an# acceptale p*!!$ !$ the extent !$ the #aae &taine# the veel. =t i ini$icant

that thee etiate :e*e c!n$i*e# the A#I&tent 0ep!*t #ate# %&ne 5, 2

&itte# 0icha*# >! @in#le hil., =nc., the ave*ae a#I&te* that i!nee* ha#

enlite# t! ve*i$ an# c!n$i* the extent !$ the #aae. The A#I&tent 0ep!*t ve*i$ie#

an# c!n$i*e# that the #aae t! the veel a!&nte# t! a c!nt*&ctive t!tal l! an#

that the clai $!* 38,,. &n#e* the p!licie :a c!penale.["$] =t i al!

n!te:!*th that R(S= #i# n!t c*!-exaine >en!n @i, Di*ect!* !$ 0icha*# >!,

:h!e a$$i#avit-#i*ect teti!n &itte# t! the (=A( c!n$i*e# that the veel :a a

c!nt*&ctive t!tal l!.

(!ni#e*in the extent !$ the #aae, /NA !pte# t! aan#!n the hip an# claie#

the val&e !$ it p!licie. i!nee*, $in#in the clai c!penale, pai# the clai, :ith

/NA i&in a @! an# S&*!ati!n 0eceipt evi#encin *eceipt !$ the paent !$ the

in&*ance p*!cee# $*! i!nee*. <n thi n!te, :e $in# a &nacceptale the clai !$

R(S= that the*e :a n! aple p*!!$ !$ paent ipl eca&e the pe*!n :h! ine#

the 0eceipt appea*e# t! e an epl!ee !$ A!iti) Shippin (!*p!*ati!n.["%] The @!

an# S&*!ati!n 0eceipt i&e# /NA t! i!nee* i the et evi#ence !$ paent !$

the in&*ance p*!cee# t! the $!*e*, an# n! c!nt*!ve*tin evi#ence :a p*eente#

R(S= t! *e&t the p*e&e# a&th!*it !$ the inat!* t! *eceive &ch paent.

<n the atte* !$ &*!ati!n, A*ticle 227 !$ the (ivil (!#e p*!vi#e

A*t. 227. =$ the plainti$$ p*!pe*t ha een in&*e# an# he ha *eceive# in#enit $*! the in&*ance

c!pan $!* the inI&* !* l! a*iin !&t !$ the :*!n !* *each !$ c!nt*act c!plaine# !$, the

in&*ance c!pan hall e &*!ate# t! the *iht !$ the in&*e# aaint the :*!n#!e* !* the pe*!n

:h! ha vi!late# the c!nt*act. =$ the a!&nt pai# the in&*ance c!pan #!e n!t $&ll c!ve* the

inI&* !* l!, the a*ieve# pa*t hall e entitle# t! *ec!ve* the #e$icienc $*! the pe*!n ca&inthe l! !* inI&*.

S&*!ati!n i the &tit&ti!n !$ !ne pe*!n an!the* :ith *e$e*ence t! a la:$&l clai

!* *iht, ! that he :h! i &tit&te# &ccee# t! the *iht !$ the !the* in *elati!n t! a

#et !* clai, incl&#in it *ee#ie !* ec&*itie. The p*inciple c!ve* a it&ati!n

:he*ein an in&*e* ha pai# a l! &n#e* an in&*ance p!lic i entitle# t! all the *iht







an# *ee#ie el!nin t! the in&*e# aaint a thi*# pa*t :ith *epect t! an l!

c!ve*e# the p!lic. =t c!nteplate $&ll &tit&ti!n &ch that it place the pa*t

&*!ate# in the h!e !$ the c*e#it!*, an# he a &e all ean that the c*e#it!* c!&l#

epl! t! en$!*ce paent.["&]

e have hel# that paent the in&*e* t! the in&*e# !pe*ate a an e&itale

ainent t! the in&*e* !$ all the *ee#ie that the in&*e# a have aaint the thi*#

pa*t :h!e nelience !* :*!n$&l act ca&e# the l!. The *iht !$ &*!ati!n i n!t

#epen#ent &p!n, n!* #!e it *!: !&t !$, an p*ivit !$ c!nt*act. =t acc*&e ipl &p!n

paent the in&*ance c!pan !$ the in&*ance clai. The #!ct*ine !$ &*!ati!n

ha it *!!t in e&it. =t i #eine# t! p*!!te an# t! acc!plih I&tice; an# i the

!#e that e&it a#!pt t! c!pel the &ltiate paent !$ a #et !ne :h!, in I&tice,

e&it, an# !!# c!ncience, !&ht t! pa.["']

e cann!t accept R(S= initence !n &ph!l#in the vali#it (la&e 2, :hich p*!vi#e

that the liit !$ it liailit i !nl &p t! 5,,.; n!* !$ (la&e 22a, that R(S=

tan# a a c!-a&*e# in the in&*ance p!licie, a $!&n# in the Ship*epai* A*eeent.

(la&e 2 an# 22a !$ the Ship*epai* A*eeent a*e :ith!&t $act&al an# leal

$!&n#ati!n. The a*e &n$ai* an# ine&itale &n#e* the p*eie. =t :a etalihe#

#&*in a*it*ati!n that /NA #i# n!t v!l&nta*il an# exp*el a*ee t! thee

p*!vii!n. n*. lvin +. Bell!, /NA $leet anae*, teti$ie# that he #i# n!t in the

$ine-p*int p!*ti!n !$ the Ship*epai* A*eeent :he*e (la&e 2 an# 22a :e*e $!&n#,

eca&e he #i# n!t :ant /NA t! e !&n# the. >!:eve*, c!ni#e*in that it :a

!nl R(S= that ha# hipa*# $acilitie la*e en!&h t! acc!!#ate the #* #!c?in

an# *epai* !$ i veel !:ne# /NA, &ch a F6 S&pe*$e** 3, in , he ha# t!

in the $*!nt p!*ti!n !$ the Ship*epai* A*eeent; !the*:ie, the veel :!&l# n!t e

accepte# $!* #* #!c?in.[#(]









p*epa*e# !nl !ne pa*t, :hile the !the* pa*t e*el a$$ixe hi inat&*e ini$in

hi a#hei!n the*et!. Alth!&h n!t invali#, per se, a c!nt*act !$ a#hei!n i v!i# :hen

the :ea?e* pa*t i ip!e# &p!n in #ealin :ith the #!inant a*ainin pa*t, an# it

!pti!n i *e#&ce# t! the alte*native !$ ta?in it !* leavin it, c!pletel #ep*ivin &ch

pa*t !$ the !pp!*t&nit t! a*ain !n e&al $!!tin.[#1]

(la&e 2 i al! a v!i# an# ine$$ect&al :aive* !$ the *iht !$ /NA t! e c!penate#

$!* the $&ll in&*e# val&e !$ the veel !*, at the ve* leat, $!* it act&al a*?et val&e.

The*e :a clea*l n! intenti!n !n the pa*t !$ /NA t! *elin&ih &ch *iht. =t i an

eleenta* *&le that a :aive* &t e p!itivel p*!ve#, ince a :aive* iplicati!n i

n!t n!*all c!&ntenance#. The n!* i that a :aive* &t n!t !nl e v!l&nta*, &t

&t have een a#e ?n!:inl, intellientl, an# :ith &$$icient a:a*ene !$ the

*elevant ci*c&tance an# li?el c!ne&ence. The*e &t e pe*&aive evi#ence t!

h!: an act&al intenti!n t! *elin&ih the *iht.[#] Thi ha n!t een #e!nt*ate# in

thi cae.

@i?e:ie, (la&e 2 i a tip&lati!n that a e c!ni#e*e# c!nt*a* t! p&lic p!lic. T!

all!: R(S= t! liit it liailit t! !nl 5,,., n!t:ithtan#in the $act that

the*e :a a c!nt*&ctive t!tal l! in the a!&nt !$ 38,,., :!&l# ancti!n the

exe*cie !$ a #e*ee !$ #ilience h!*t !$ :hat i !*#ina*il *e&i*e#. =t :!&l# n!t e

#i$$ic&lt $!* a nelient pa*t t! ecape liailit the iple expe#ient !$ pain an

a!&nt ve* &ch l!:e* than the act&al #aae !* l! &taine# the !the*.[#!]

Al!n the ae vein, (la&e 22a cann!t e &phel#. The intenti!n !$ the pa*tie t!

a?e each !the* a c!-a&*e# &n#e* an in&*ance p!lic i t! e leane# p*incipall $*!

the in&*ance c!nt*act !* p!lic itel$ an# n!t $*! an !the* c!nt*act !* a*eeent,

eca&e the in&*ance p!lic #en!inate the a&*e# an# the ene$icia*ie !$ the

in&*ance c!nt*act. n#enial, the h&ll an# achine* in&*ance p*!c&*e# /NA

$*! i!nee* nae# !nl the $!*e* a the a&*e#. The*e :a n! ani$et intenti!n !n

the pa*t !$ /NA t! c!ntit&te R(S= a a c!-a&*e# &n#e* the p!licie. T! have









#eee# R(S= a a c!-a&*e# &n#e* the p!licie :!&l# have ha# the e$$ect !$ n&lli$in

an clai !$ /NA $*! i!nee* $!* an l! !* #aae ca&e# the nelience !$

R(S=. ! hip !:ne* :!&l# a*ee t! a?e a hip *epai*e* a c!-a&*e# &n#e* &ch

in&*ance p!lic. <the*:ie, an clai $!* l! !* #aae &n#e* the p!lic :!&l# e

*en#e*e# n&at!*. /NA c!&l# n!t have inten#e# &ch a *e&lt.[#"]

eve*thele, :e c!nc&* :ith the p!iti!n !$ R(S= that the alvae val&e !$ the

#aae# F6 S&pe*$e** 3 h!&l# e ta?en int! acc!&nt in the *ant !$ an a:a*#. =t

:a p*!ven e$!*e the (=A( that the achine* an# the h&ll !$ the veel :e*e

epa*atel !l# $!* 25,29,. !* SY48,333.33 an# SY383,29.5,

*epectivel. /NA clai $!* the &p?eep !$ the :*ec? &ntil the ae :e*e !l#

a!&nt t! ,521,737.75 !* SY157,9.98, t! e #e#&cte# $*! the p*!cee# !$ the

ale !$ the achine* an# the h&ll, $!* a net *ec!ve* !$ SY873,12.7, !* e&ivalent t!

3,252,84.9, at 44.977FY1, the p*evailin exchane *ate :hen the 0e&et $!*

A*it*ati!n :a $ile#. !t c!ni#e*in thi alvae val&e in the a:a*# :!&l# a!&nt t!

&nI&t en*ichent !n the pa*t !$ i!nee*.

C. On t(e i%position o" interest

&*&ant t! !&* *&lin in astern Shippin- ines, Inc. v. Court o# Appeals,[##] the a:a*#

in $av!* !$ i!nee* in the a!&nt !$ 35,148,78.9 h!&l# ea*n inte*et at 8Q per

annum $*! the $ilin !$ the cae &ntil the a:a*# ec!e $inal an# exec&t!*.

The*ea$te*, the *ate !$ inte*et hall e 12Q per annum $*! the #ate the a:a*# ec!e

$inal an# exec&t!* &ntil it $&ll ati$acti!n.

. On t(e p'%ent "or t(e !ost o" r*itrtion

=t i !nl $ittin that !th pa*tie h!&l# ha*e in the &*#en !$ the c!t !$ a*it*ati!n, !n

a pro rata ai. e $in# that i!nee* ha# a vali# *ea!n t! intit&te a &it aaint R(S=,

a it elieve# that it :a entitle# t! clai *ei&*eent !$ the a!&nt it pai# t!

/NA. >!:eve*, :e #ia*ee :ith i!nee* that !nl R(S= h!&l# h!&l#e* the







a*it*ati!n c!t. R(S= cann!t e $a&lte# $!* #e$en#in itel$ $!* pe*ceive# :*!n$&l act

an# c!n#iti!n. <the*:ie, :e :!&l# e p&ttin a p*ice !n the *iht t! litiate !n the pa*t

!$ i!nee*.

HEREORE, the etiti!n !$ i!nee* =n&*ance an# S&*et (!*p!*ati!n in /.0. !.

198-97 an# the etiti!n !$ Reppel (e& Shipa*#, =nc. in /.0. !. 1-1 a*e

PARTIALL1 2RANTE an# the Aen#e# Decii!n #ate# Decee* 2, 27 !$ the

(!&*t !$ Appeal i /OIIE. Acc!*#inl, R(S= i !*#e*e# t! pa i!nee* the

a!&nt !$ 38,,. le 3,252,84.9, e&ivalent t! the alvae val&e

*ec!ve*e# i!nee* $*! F6 S&pe*$e** 3, !* the net t!tal a!&nt !$

329,747,351.91, :ith ix pe*cent 8Q inte*et pe* ann& *ec?!ne# $*! the tie the

0e&et $!* A*it*ati!n :a $ile# &ntil thi Decii!n ec!e $inal an# exec&t!*, pl&

t:elve pe*cent 12Q inte*et pe* ann& !n the ai# a!&nt !* an alance the*e!$ $*!

the $inalit !$ the Decii!n &ntil the ae :ill have een $&ll pai#. The a*it*ati!n c!t

hall e !*ne !th pa*tie !n a pro rata ai. (!t aaint R(S=.

SO ORERE.

ANTONIO EDUARDO B. NACHURA

Associate Justice

E CONCUR:

CONSUELO 1NARES-SANTIA2O

Actin (hie$ %&tice

(hai*pe*!n

/INITA ;. CHICO-NAARIO

A!ciate %&tice

PRESBITERO 0. ;ELASCO, 0R.

A!ciate %&tice



IOSAO /. PERALTA

A!ciate %&tice

C E R T I I C A T I O N

&*&ant t! Secti!n 13, A*ticle 6=== !$ the (!ntit&ti!n, = ce*ti$ that the c!ncl&i!n in

the a!ve Decii!n ha# een *eache# in c!n&ltati!n e$!*e the cae :a aine# t! the

:*ite* !$ the !pini!n !$ the (!&*t Divii!n.

CONSUELO 1NARES-SANTIA2O

Actin (hie$ %&tice

J Actin (hie$ %&tice.

[1] Rollo /.0. !. 198-97, pp. 33-19.

[] Rollo /.0. !. 1-1, pp. 33-37.

[!] Rollo /.0. !. 198-97, pp. 118-144.

["] at 148-185.

[#] at 43-44.

[$] The Ship*epai* A*eeent :a #&l ac?n!:le#e# the pa*tie e$!*e a n!ta* p&lic.

[%] 2. The (!nt*act!* hall n!t e &n#e* an liailit t! the (&t!e* eithe* in c!nt*act !* !the*:ie

except $!* nelience an# &ch liailit hall itel$ e &Iect t! the $!ll!:in !ve**i#in liitati!n

an# excepti!n, nael

a The t!tal liailit !$ the (!nt*act!* t! the (&t!e* incl&#in the liailit t! *eplace &n#e* (la&e

17 !* !$ an S&-c!nt*act!* hall e liite# in *epect !$ an an#F!* #e$ect !* event t! the & !$

e! hilippine (&**enc +i$t illi!n !nl x x x.

[&] 22a The (&t!e* hall ?eep the veel a#e&atel in&*e# $!* the veel h&ll an# achine*, he*

c*e: an# the e&ipent !n !a*# an# !n !the* !!# !:ne# !* hel# the (&t!e* aaint an an#

all *i? an# liailitie an# en&*e that &ch in&*ance p!licie hall incl&#e the (!nt*act!* a a c!-

a&*e#.

['] Rollo /.0. !. 198-97, p. 528.

[1(] at 187.

[11] at 238.

[1] at 238-242.

[1!] at 229-32.

http://sc.judiciary.gov.ph/jurisprudence/2009/september2009/180880-81.htm#_ftnref1






























[1"] at 28.

[1#] at 319.

[1$] at 143-144.

[1%] !: a ee* !$ thi (!&*t.

[1&] at 183-184.

[1'] Rollo /.0. !. 198-97, pp. 48-4.

[(] Rollo /.0. !. 1-1, pp. 358-357.

[1] Prudential Shippin- and $ana-ement Corporation v. Sta. Rita, /.0. !. 1885, +e*&a* ,

27, 515 S(0A 157.

[] The $i*e expe*t p*eente# i!nee*.

[!] D*. *ic &llen, the $i*e expe*t p*eente# R(S=.

["] Rollo /.0. !. 198-97, p. 282.

[#] The !*? <*#e* #ate# %an&a* 28, 2 p*!vi#e# t!

1. S&ppl !$ 5 :el#e* N e&ipent a pe* <:ne* int*&cti!n t! p*!ena#e #ec?.

2. %<U 9F99 &ll-!&t N clean :F cheical !$ A&x. enine l!:e* N chane !th all ea*in 15

?:, 27 ap, 44 tt a *e&i*e#.

3. 0ene: leeve !n en#c!ve* !$ !t!* a *e&i*e#.

4. 0ene: #ete*i!*ate# i#e $*ae N $:# pl a *e&i*e#.

5. 0ene: #ete*i!*ate# ai* vent an# i#e pl a *e&i*e#.

[$] (=A( Decii!n, p. 2.

[%] D*. %!nia ave thi na**ati!n &n#e* !ath'

5. That at the a**ival c!n$e*ence !n %an&a* 28, 2, x x x :e #ic&e# the p*!Iecte# #* #!c?in

:!*? an# the hipa*# a$et *e&lati!n pa*tic&la*l the *et*icti!n that !nl hipa*# :!*?e* an#

:el#e* can pe*$!* h!t :!*? !n !a*# the veel.

D&*in the ai# c!n$e*ence, = *!&ht &p the nee# !$ the h!tel #epa*tent peci$icall $!* the a*# t!

p*!vi#e :el#e* t! the paene* acc!!#ati!n !n Dec? A, Dec? B an# Dec? (, acc!*#in t!

!:ne* int*&cti!n, eanin, the hip !:ne* th*!&h e a the !ne in cha*e !$ the h!tel #epa*tent

c!&l# *e&et aintenance :!*? in the paene* #ec? :hich a e #ete*ine# an# the nee# $!*

:hich a a*ie !nl in the c!&*e !$ the #* #!c?in an# :hich :ill *e&i*e h!t :!*? the a*#

:el#e* &Iect t! hipa*# a$et an# illin *e&lati!n.

a$!*eenti!ne# inp&t :a #&l ta?en n!te !$, an# !n that ae #ate, a !*? <*#e* #ate# %an&a*

28, 2 ine# the Ship S&pe*inten#ent an&el Aaila an# R(S= *!Iect S&pe*inten#ent /e**































<*c&ll! x x x. xhiit (-%!nia, p. 2

[&] 4. That &p!n *e&et !$ D*. %!nia #&*in ai# a**ival c!n$e*ence, a !*? <*#e* #ate# %an&a* 28,

2 :a ine# :he*e the hip !:ne* c!&l# *e&et $!* !e h!t :!*? in the paene* #ec? a pe*

<:ne* int*&cti!n :ith the hip h!tel #epa*tent in#icatin ce*tain aintenance !* *en!vati!n in the

c!&*e !$ the #* #!c?in &t it :ill e the a*# :hich :ill exec&te the h!t :!*? nee#e#. xhiit (-

0ae, p. 2.

['] 4. x x x = c!n$i* that ai# !*? <*#e* [!$ 28 %an&a* 2] *e&i*e# the Ka*#, an# the Ka*#

a*ee#, t! &ppl 5 :el#e* an# e&ipent a pe* !:ne* int*&cti!n t! p*!ena#e #ec?, eca&e D*.

%!nia :ante# that the &n$inihe# h!t :!*? in the p*!ena#e #ec? an# paene* a*ea that :e*e

ta*te# in anila h!&l# e $inihe#, !the*:ie the #* #!c?in :!&l# e &ele.

The place enti!ne# :a t! p*!ena#e #ec? eca&e the &l? !$ the :!*? :a in the p*!ena#e #ec?,

&t incl&#e# the &n$inihe# h!t :!*? in the t!&*it an# !the* paene* a*ea, :hich the Ka*# ?ne:

eca&e the inpecte# an# :ent a*!&n# the veel :hen :e a**ive# !n %an&a* 28, 2.

The &n$inihe# h!t :!*? in the paene* a*ea :e*e al! ?n!:n t! hipa*# p*!Iect &pe*inten#ent/e** <*c&ll!. ith!&t the Ka*# exp*e ?n!:le#e !* pe*ii!n, n! a*# :el#e* :ill I&t ! t!

!e pa*t !$ the veel an# #! !e ?in# !$ h!t :!*?. A = ai# !nl Ka*# :!*?e* pe*$!*e# h!t

:!*? !n !a*# the veel. xhiit A-tean, p. 2.

[!(] (aalh& a$$i#avit-#i*ect teti!n #ate# a 24, 21.

[!1] xhiit (-%!nia, pa*. 8; xhiit (-0ae, pa*. 4; xhiit A-tean, pa*. 7.

[!] e* the a$$i#avit !$ The Ka*# (!e*cial anae* Rhe: Rah Rhin :h! ai#, @ate* = a: a c!p

!$ the :!*? !*#e* $!* the &ppl !$ :el#e* t! the !:ne* t! ca** !&t the ae :!*? an# :a a?e# $!*

a &!tati!n $!* thi. = &!te# ve*all h15 pe* an pe* h!&*. Thi :a an &n&&al a**aneent an# =cann!t *ecall an !the* !ccai!n !n :hich the Ka*# :el#e* :e*e &pplie# in iila* ci*c&tance.

[!!] TS, /e** <*c&ll!, a 22, 22, pp. 187-17.

[!"] (=A( Decii!n, p. 5.

[!#] at 52.

[!$] TS, Avelin! Ave !n c*!-exainati!n.

[!%] xhiit 2-&llen S&ppleenta* 0ep!*t !n the $i*e !n !a*# S&pe*$e** 3.

[!&] =ar astern Shippin- Company v. CA, 357 hil. 73 199.

["(] . Aini @in, /NA $i*e expe*t, peci$icall teti$ie#'

Si*, i$ the*e i n! li$e Iac?et, !$ c!&*e, the*e i n! initi!n !$ li$e Iac?et. x x x

That #!ent ean that the ic iht n!t e a $i*e, !&* >!n!*, eca&e the*e a*e !the* c!&tile

ate*ial in the ceilin v!i#. TS, a 21, 22, pp. 319-32, a &!te# in the (=A( Decii!n, p.



























3.

["1] The pe*tinent teti!n !$ D*. *ic &llen, The Ka*# $i*e expe*t, i a $!ll!:'

ATTK. @<B<S'

!:, !& al! hea*# . @in a that even i$ he c!nce#e that the *e!val !$ the li$e Iac?et $*!

&n#e* the ceilin v!i# :!&l# have a#e the !t li?el !&*ce !$ the $i*e, ah, :!&l# have eliinate#the !t li?el !&*ce !$ the $i*e, he* !pini!n :a till that the*e :a a p!iilit !$ $i*e $*! a,

:i*e !* the ceilin ate*ial :hich :a pl:!!# he a !n t!p !$ the +!*ica. D! !& have an

vie: *ea*#in that

D0. @@'

=n ! $a* a echani, :hich = $i*l elieve t! e the cae that the ate*ial $ell th*!&h the

h!le, it :!&l# have a#e that &ch #i$$e*ence. Beca&e !& have the li$e Iac?et :!&l# inite eail,

the ceilin itel$ :!&l# inite eail eca&e the ate*ial that i $allin #!:n i ve* incen#ive ic an#

in !e cae ha $lae !n the. S!, it :!&l#nt have a#e that &ch #i$$e*ence ha# the li$e Iac?et

een *e!ve#, the*e :a till p!iilit $!* $i*e. TS, a 23, 22, pp. 132-133, a &!te# in the

(=A( Decii!n, p. 3-39.

["] Thi $act :a a#itte# #&*in c*!-exainati!n /e!$$ h!!n, The Ka*# p*ei#ent, :h!

teti$ie# in thi :ie'

ATTK. @='

M Di# !& *e&i*e the veel t! ta?e !&t the li$e Iac?et an# p&t the !e:he*e ele !* !e place

ele !n !a*# !* !n h!*e

0. ><<'

A e #!nt t!&ch the hip p*!pe*t.

M K!&, in $act, #i# n!t *e&i*e that

A =t el!n t! the hip, K!& a?e# e #! = *e&i*e, = ai# it el!n t! the hip.

M p t! n!: !& #! n!t *e&i*e #epite

A e #!nt t!&ch an ite &nle it i in the :a !$ the :!*?. TS, a 22, 22, pp. 54-55.

["!] (arcia, Jr. v. , /.0. !. 18512, a*ch 2, 27, 51 S(0A 58.

[""] apanday A-ricultural and Development Corporation 9ADC?4 v. An-ala, /.0. !. 15378,

%&ne 21, 27, 525 S(0A 229.

["#] $ercury Dru- Corporation v. Huan-, /.0. !. 172122, %&ne 22, 27, 525 S(0A 427.

["$] (=A( Decii!n, p. .

["%] R(S= etiti!n, pp. 31-32, Rollo /.0. !. 1-1, pp. 38-389.

















["&] oren0o Shippin- Corp. v. Chubb and Sons, Inc., /.0. !. 147724, %&ne , 24, 431 S(0A 288.

["'] PHIA$( v. Court o# Appeals, 339 hil. 455 1997.

[#(] xhiit -Bell!, pp. 3-4.

[#1] ACI Philippines, Inc. v. Co3uia, /.0. !. 174488, %&l 14, 2, 55 S(0A 3; Development

"an& o# the v. Pere0, /.0. !. 14541, !vee* 11, 24, 442 S(0A 23.

[#] Premiere Development "an& v. Central Surety + Insurance Company, Inc., /.0. !. 178248,

+e*&a* 13, 29.

[#!] Cebu Shipyard and n-ineerin- 'or&s, Inc. v. 'illiam ines, Inc., /.0. !. 13287, a 5, 1999,

38 S(0A 782, 71.

[#"] at 7.

[##] /.0. !. 97412, %&l 12, 1994, 234 S(0A 7.

0ep&lic !$ the

S0 (<0T

anila

T>=0D D=6=S=<

/ALA1AN INSURANCE CO., INC.,

etiti!ne*,

- ve*& -

ROELIO ALBERTO nd

ENRICO ALBERTO RE1ES,

0ep!n#ent.

2.R. No. 39?85@

*eent'

6@AS(<, %0., J ., (hai*pe*!n,

0A@TA,

D<CA,

0KS,J an#

0@AS-B0AB, JJ .

*!&late#'

+e*&a* 1, 212

x-----------------------------------------------------------------------------------------x









http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/194320.htm#_ftn1












E C I S I O N

;ELASCO, 0R., J .:

T(e Cse

Be$!*e i a etiti!n $!* 0evie: !n (e*ti!*a*i &n#e* 0&le 45, ee?in t! *eve*e an#

et ai#e the %&l 2, 21 Decii!n[1] !$ the (!&*t !$ Appeal (A an# it <ct!e* 29,

21 0e!l&ti!n[] #enin the !ti!n $!* *ec!ni#e*ati!n $ile# petiti!ne* alaan

=n&*ance (!., =nc. alaan =n&*ance. The %&l 2, 21 (A Decii!n *eve*e# an#

et ai#e the Decii!n[!] #ate# +e*&a* 2, 29 !$ the 0ei!nal T*ial (!&*t, B*anch 51

in .

T(e !ts

At a*!&n# 5 !cl!c? in the !*nin !$ Decee* 17, 1995, an acci#ent !cc&**e# at the

c!*ne* !$ DSA an# , (it, inv!lvin $!&* 4 vehicle, t! :it' 1 a ian B& !pe*ate#

Ala##in T*anit :ith plate n&e* KS 31; 2 an =&)& Tan?e* :ith plate n&e*

@0 84; 3 a +&)! (a*! T*&c? :ith plate n&e* D@ 297; an# 4 a it&ihi

/alant :ith plate n&e* T@ 732.["]

Bae# !n the !lice 0ep!*t i&e# the !n-the-p!t invetiat!*, Seni!* !lice <$$ice*

1 Al$*e#! . D&na S<1 D&na, the =&)& Tan?e* :a in $*!nt !$ the it&ihi

/alant :ith the ian B& !n thei* *iht i#e h!*tl e$!*e the vehic&la* inci#ent. All

th*ee 3 vehicle :e*e at a halt al!n DSA $acin the !&th #i*ecti!n :hen the +&)!

(a*! T*&c? i&ltane!&l &pe# the *ea* p!*ti!n !$ the it&ihi /alant an# the

*ea* le$t p!*ti!n !$ the ian B&. D&e t! the t*!n ipact, thee t:! vehicle :e*e

h!ve# $!*:a*# an# the $*!nt le$t p!*ti!n !$ the it&ihi /alant *ae# int! the *ea*

*iht p!*ti!n !$ the =&)& Tan?e*.[#]

*evi!&l, pa*tic&la*l !n Decee* 15, 1994, alaan =n&*ance i&e# (a* =n&*ance

!lic !. 6-25-22 in $av!* !$ +i*t alaan @eain an# +inance (!*p!*ati!n

the a&*e#, in&*in the a$!*eenti!ne# it&ihi /alant aaint thi*# pa*t liailit,

!:n #aae an# the$t, a!n !the*. >avin in&*e# the vehicle aaint &ch *i?,

alaan =n&*ance claie# in it (!plaint #ate# <ct!e* 1, 1999 that it pai# the













#aae &taine# the a&*e# a!&ntin t! h 7,.[$]

aintainin that it ha een &*!ate# t! the *iht an# inte*et !$ the a&*e#

!pe*ati!n !$ la: &p!n it paent t! the latte*, alaan =n&*ance ent eve*al #ean#

lette* t! *ep!n#ent 0!#eli! Ale*t! Ale*t! an# n*ic! Ale*t! 0ee 0ee, the

*eite*e# !:ne* an# the #*ive*, *epectivel, !$ the +&)! (a*! T*&c?, *e&i*in the t!

pa the a!&nt it ha# pai# t! the a&*e#. hen *ep!n#ent *e$&e# t! ettle thei*

liailit, alaan =n&*ance :a c!nt*aine# t! $ile a c!plaint $!* #aae $!* *!

nelience aaint *ep!n#ent.[%]

=n thei* An:e*, *ep!n#ent ae*te# that the cann!t e hel# liale $!* the vehic&la*

acci#ent, ince it p*!xiate ca&e :a the *ec?le #*ivin !$ the ian B& #*ive*.

The allee# that the pee#in &, c!in $*! the e*vice *!a# !$ DSA, ane&ve*e#

it :a t!:a*# the i##le lane :ith!&t #&e *ea*# t! 0ee *iht !$ :a. hen the

ian B& a*&ptl t!ppe#, 0ee teppe# ha*# !n the *a?e &t the *a?in acti!n

c!&l# n!t c!pe :ith the ine*tia an# $aile# t! ain &$$icient t*acti!n. A a c!ne&ence,

the +&)! (a*! T*&c? hit the *ea* en# !$ the it&ihi /alant, :hich, in t&*n, hit the

*ea* en# !$ the vehicle in $*!nt !$ it. The ian B&, !n the !the* han#, i#e:ipe# the

+&)! (a*! T*&c?, ca&in #aae t! the latte* in the a!&nt !$ h 2,.

0ep!n#ent al! c!nt*!ve*te# the *e&lt !$ the !lice 0ep!*t, ae*tin that it :a

ae# !lel !n the iae# na**ati!n !$ the ian B& #*ive*.[&]

A$te* the te*inati!n !$ the p*e-t*ial p*!cee#in, t*ial en&e#. alaan =n&*ance

p*eente# the teti!n !$ it l!ne :itne, a !t!* ca* clai a#I&te*, :h! attete# that

he p*!cee# the in&*ance clai !$ the a&*e# an# ve*i$ie# the #!c&ent &itte# t!

hi. 0ep!n#ent, !n the !the* han#, $aile# t! p*eent an evi#ence.

=n it Decii!n #ate# +e*&a* 2, 29, the t*ial c!&*t, in (ivil (ae !. 99-955, *&le#

in $av!* !$ alaan =n&*ance an# #ecla*e# *ep!n#ent liale $!* #aae. The

#ip!itive p!*ti!n *ea#'

4$%R%F1R%, I&#ent i he*e *en#e*e# in $av!* !$ the plainti$$ aaint #e$en#ant I!intl an#









i&e $!* <&* c!ni#e*ati!n'

=

>T>0 T> (A 00D = 0+S=/ AD=SS=B=@=TK <+ T> <@=( 0<0T S=(

T> <@=( =6ST=/AT<0 >< 0A0D T> SA D=D <T A(TA@@K TST=+K =

(<0T T>0<.

==

>T>0 T> SB0</AT=< <+ A@AKA =S0A( =S =A=0D ADF<0

D+=(=T.

<n the !the* han#, *ep!n#ent &it the $!ll!:in i&e in it e!*an#&[1#]

#ate# %&l 7, 211'

=

>T>0 T> (A =S (<00(T = D=S=SS=/ T> (<@A=T +<0 +A=@0 <+

A@AKA =S0A( T< <60(< T> B0D <+ 0<<+ 0M=0D T<

STAB@=S> T> /@=/( <+ 0S<DTS.

==

>T>0 T> =(S <+ 6=D( 0STD BK A@AKA =S0A( A0

S++=(=T T< (@A= +<0 T> A<T <+ DAA/S.

===

>T>0 T> SB0</AT=< <+ A@AKA =S0A( >AS ASSD (<@=A(

AD 0M=S=TS AS 0<6=DD D0 0T=T @AS.

entiall, the i&e !il #!:n t! the $!ll!:in' 1 the a#iiilit !$ the p!lice

*ep!*t; 2 the &$$icienc !$ the evi#ence t! &pp!*t a clai $!* *! nelience; an#

3 the vali#it !$ &*!ati!n in the intant cae.

Our Ru#in$

The petiti!n ha e*it.

Ad%issi*i#it' o" t(e Po#i!e Report

alaan =n&*ance c!nten# that, even :ith!&t the p*eentati!n !$ the p!lice

invetiat!* :h! p*epa*e# the p!lice *ep!*t, ai# *ep!*t i till a#iile in evi#ence,

epeciall ince *ep!n#ent $aile# t! a?e a tiel !Iecti!n t! it p*eentati!n in





evi#ence.[1$] 0ep!n#ent c!&nte* that ince the p!lice *ep!*t :a neve* c!n$i*e#

the invetiatin p!lice !$$ice*, it cann!t e c!ni#e*e# a pa*t !$ the evi#ence !n *ec!*#.

[1%]

=n#ee#, &n#e* the *&le !$ evi#ence, a :itne can teti$ !nl t! th!e $act :hich the

:itne ?n!: !$ hi !* he* pe*!nal ?n!:le#e, that i, :hich a*e #e*ive# $*! the

:itne !:n pe*cepti!n.[1&] (!nc!itantl, a :itne a n!t teti$ !n atte* :hich

he !* he e*el lea*ne# $*! !the* eithe* eca&e ai# :itne :a t!l# !* *ea# !*

hea*# th!e atte*.[1'] S&ch teti!n i c!ni#e*e# hea*a an# a n!t e *eceive#

a p*!!$ !$ the t*&th !$ :hat the :itne ha lea*ne#. Thi i ?n!:n a the hea*a *&le.

[(]

A #ic&e# in D.$. Consun!i, Inc. v. CA,[1] >ea*a i n!t liite# t! !*al teti!n

!* tateent; the ene*al *&le that excl&#e hea*a a evi#ence applie t! :*itten, a

:ell a !*al tateent.

The*e a*e eve*al excepti!n t! the hea*a *&le &n#e* the 0&le !$ (!&*t, a!n :hich

a*e ent*ie in !$$icial *ec!*#.[] Secti!n 44, 0&le 13 p*!vi#e'

nt*ie in !$$icial *ec!*# a#e in the pe*$!*ance !$ hi #&t a p&lic !$$ice* !$ the , !* a pe*!nin the pe*$!*ance !$ a #&t peciall enI!ine# la: a*e p*ia $acie evi#ence !$ the $act the*ein

tate#.

=n Alvare0 v. PIC?P Resources,[!] thi (!&*t *eite*ate# the *e&iite $!* the

a#iiilit in evi#ence, a an excepti!n t! the hea*a *&le !$ ent*ie in !$$icial

*ec!*#, th&' a that the ent* :a a#e a p&lic !$$ice* !* an!the* pe*!n

peciall enI!ine# la: t! #! !; that it :a a#e the p&lic !$$ice* in the

pe*$!*ance !$ hi !* he* #&tie, !* &ch !the* pe*!n in the pe*$!*ance !$ a #&t

peciall enI!ine# la:; an# c that the p&lic !$$ice* !* !the* pe*!n ha# &$$icient

?n!:le#e !$ the $act hi !* he* tate#, :hich &t have een ac&i*e# the

p&lic !$$ice* !* !the* pe*!n pe*!nall !* th*!&h !$$icial in$!*ati!n.

!tal, the p*eentati!n !$ the p!lice *ep!*t itel$ i a#iile a an excepti!n t! the



















hea*a *&le even i$ the p!lice invetiat!* :h! p*epa*e# it :a n!t p*eente# in c!&*t, a

l!n a the a!ve *e&iite c!&l# e a#e&atel p*!ve#.["]

>e*e, the*e i n! #ip&te that S<1 D&na, the !n-the-p!t invetiat!*, p*epa*e# the

*ep!*t, an# he #i# ! in the pe*$!*ance !$ hi #&t. >!:eve*, :hat i n!t clea* i

:hethe* S<1 D&na ha# &$$icient pe*!nal ?n!:le#e !$ the $act c!ntaine# in hi

*ep!*t. Th&, the thi*# *e&iite i lac?in.

0ep!n#ent $aile# t! a?e a tiel !Iecti!n t! the p!lice *ep!*t p*eentati!n in

evi#ence; th&, the a*e #eee# t! have :aive# thei* *iht t! #! !.[#] A a *e&lt, the

p!lice *ep!*t i till a#iile in evi#ence.

Su""i!ien!' o" Eviden!e

alaan =n&*ance c!nten# that ince 0ee, the #*ive* !$ the +&)! (a*! t*&c?,

&pe# the *ea* !$ the it&ihi /alant, he i p*e&e# t! e nelient &nle p*!ve#

!the*:ie. =t $&*the* c!nten# that *ep!n#ent $aile# t! p*eent an evi#ence t! !ve*t&*n

the p*e&pti!n !$ nelience.[$] (!nt*a*il, *ep!n#ent clai that ince alaan

=n&*ance #i# n!t p*eent an :itne :h! hall a$$i* an nelient act !$ 0ee in

#*ivin the +&)! (a*! t*&c? e$!*e an# a$te* the inci#ent, the*e i n! evi#ence :hich:!&l# h!: nelience !n the pa*t !$ *ep!n#ent.[%]

e a*ee :ith alaan =n&*ance. ven i$ e c!ni#e* the ina#iiilit !$ the p!lice

*ep!*t in evi#ence, till, *ep!n#ent cann!t eva#e liailit vi*t&e !$ the res ipsa

lo3uitur #!ct*ine. The D.$. Consun!i, Inc. cae i &ite el&ci#atin'

etiti!ne* c!ntenti!n, h!:eve*, l!e *elevance in the $ace !$ the applicati!n !$ res ipsa lo3uitur the

(A. The e$$ect !$ the #!ct*ine i t! :a**ant a p*e&pti!n !* in$e*ence that the e*e $all !$ the elevat!*:a a *e&lt !$ the pe*!n havin cha*e !$ the int*&entalit :a nelient. A a *&le !$ evi#ence, the

#!ct*ine !$ res ipsa lo3uitur i pec&lia* t! the la: !$ nelience :hich *ec!ni)e that prima #acie

nelience a e etalihe# :ith!&t #i*ect p*!!$ an# $&*nihe a &tit&te $!* peci$ic p*!!$ !$

nelience.

The c!ncept !$ res ipsa lo3uitur ha een explaine# in thi :ie'

hile nelience i n!t !*#ina*il in$e**e# !* p*e&e#, an# :hile the











e*e happenin !$ an acci#ent !* inI&* :ill n!t ene*all ive *ie t! an

in$e*ence !* p*e&pti!n that it :a #&e t! nelience !n #e$en#ant

pa*t, &n#e* the #!ct*ine !$ res ipsa lo3uitur, :hich ean, lite*all, the

thin !* t*anacti!n pea? $!* itel$, !* in !ne I&*i#icti!n, that the thin

!* int*&entalit pea? $!* itel$, the $act !* ci*c&tance

acc!panin an inI&* a e &ch a t! *aie a p*e&pti!n, !* at leatpe*it an in$e*ence !$ nelience !n the pa*t !$ the #e$en#ant, !* !e

!the* pe*!n :h! i cha*e# :ith nelience.

x x x :he*e it i h!:n that the thin !* int*&entalit :hich ca&e# the inI&* c!plaine# !$ :a

&n#e* the c!nt*!l !* anaeent !$ the #e$en#ant, an# that the !cc&**ence *e&ltin in the inI&* :a

&ch a in the !*#ina* c!&*e !$ thin :!&l# n!t happen i$ th!e :h! ha# it c!nt*!l !* anaeent

&e# p*!pe* ca*e, the*e i &$$icient evi#ence, !*, a !etie tate#, *ea!nale evi#ence, in the

aence !$ explanati!n the #e$en#ant, that the inI&* a*!e $*! !* :a ca&e# the #e$en#ant

:ant !$ ca*e.

<ne !$ the the!*etical ae $!* the #!ct*ine i it neceit, i.e., that

necea* evi#ence i aent !* n!t availale.

The res ipsa lo3uitur #!ct*ine i ae# in pa*t &p!n the the!* that the #e$en#ant in cha*e !$ the

int*&entalit :hich ca&e the inI&* eithe* ?n!: the ca&e !$ the acci#ent !* ha the et

!pp!*t&nit !$ ace*tainin it an# that the plainti$$ ha n! &ch ?n!:le#e, an# the*e$!*e i c!pelle#

t! allee nelience in ene*al te* an# t! *el &p!n the p*!!$ !$ the happenin !$ the acci#ent in

!*#e* t! etalih nelience. The in$e*ence :hich the #!ct*ine pe*it i *!&n#e# &p!n the $act that

the chie$ evi#ence !$ the t*&e ca&e, :hethe* c&lpale !* inn!cent, i p*acticall acceile t! the

#e$en#ant &t inacceile t! the inI&*e# pe*!n.

=t ha een ai# that the #!ct*ine !$ res ipsa lo3uitur $&*nihe a *i#e :hich a plainti$$, :ith!&t

?n!:le#e !$ the ca&e, *eache !ve* t! #e$en#ant :h! ?n!: !* h!&l# ?n!: the ca&e, $!* an

explanati!n !$ ca*e exe*cie# the #e$en#ant in *epect !$ the atte* !$ :hich the plainti$$ c!plain.

The res ipsa lo3uitur #!ct*ine, an!the* c!&*t ha ai#, i a *&le !$ neceit, in that it p*!cee# !n the

the!* that &n#e* the pec&lia* ci*c&tance in :hich the #!ct*ine i applicale, it i :ithin the p!:e*

!$ the #e$en#ant t! h!: that the*e :a n! nelience !n hi pa*t, an# #i*ect p*!!$ !$ #e$en#ant

nelience i e!n# plainti$$ p!:e*. Acc!*#inl, !e c!&*t a## t! the th*ee p*e*e&iite $!* the

applicati!n !$ the res ipsa lo3uitur #!ct*ine the $&*the* *e&i*eent that $!* the res ipsa lo3uitur

#!ct*ine t! appl, it &t appea* that the inI&*e# pa*t ha# n! ?n!:le#e !* ean !$ ?n!:le#e a t!the ca&e !$ the acci#ent, !* that the pa*t t! e cha*e# :ith nelience ha &pe*i!* ?n!:le#e !*

!pp!*t&nit $!* explanati!n !$ the acci#ent.

The (A hel# that all the *e&iite !$ res ipsa lo3uitur a*e p*eent in the cae at a*'

The*e i n! #ip&te that appellee h&an# $ell #!:n $*! the 14th $l!!* !$ a &il#in t! the aeent

:hile he :a :!*?in :ith appellant c!nt*&cti!n p*!Iect, *e&ltin t! hi #eath. The c!nt*&cti!n ite

i :ithin the excl&ive c!nt*!l an# anaeent !$ appellant. =t ha a a$et eninee*, a p*!Iect



&pe*inten#ent, a ca*pente* lea#an an# !the* :h! a*e in c!plete c!nt*!l !$ the it&ati!n the*ein.

The ci*c&tance !$ an acci#ent that :!&l# !cc&* the*ein a*e pec&lia*l :ithin the ?n!:le#e !$ the

appellant !* it epl!ee. <n the !the* han#, the appellee i n!t in a p!iti!n t! ?n!: :hat ca&e# the

acci#ent. Res ipsa lo3uitur i a *&le !$ neceit an# it applie :he*e evi#ence i aent !* n!t *ea#il

availale, p*!vi#e# the $!ll!:in *e&iite a*e p*eent' 1 the acci#ent :a !$ a ?in# :hich #!e n!t

!*#ina*il !cc&* &nle !e!ne i nelient; 2 the int*&entalit !* aenc :hich ca&e# the inI&*:a &n#e* the excl&ive c!nt*!l !$ the pe*!n cha*e# :ith nelience; an# 3 the inI&* &$$e*e# &t

n!t have een #&e t! an v!l&nta* acti!n !* c!nt*i&ti!n !n the pa*t !$ the pe*!n inI&*e#. x x x.

! :!*?e* i !in t! $all $*! the 14th $l!!* !$ a &il#in t! the aeent :hile pe*$!*in :!*? in a

c!nt*&cti!n ite &nle !e!ne i nelient[;] th&, the $i*t *e&iite $!* the applicati!n !$ the *&le !$

res ipsa lo3uitur i p*eent. A explaine# ea*lie*, the c!nt*&cti!n ite :ith all it pa*aphe*nalia an#

h&an *e!&*ce that li?el ca&e# the inI&* i &n#e* the excl&ive c!nt*!l an# anaeent !$

appellant[;] th&[,] the ec!n# *e&iite i al! p*eent. ! c!nt*i&t!* nelience :a att*i&te# t! the

appellee #eceae# h&an#[;] th&[,] the lat *e&iite i al! p*eent. All the *e&iite $!* the

applicati!n !$ the *&le !$ res ipsa lo3uitur a*e p*eent, th& a *ea!nale p*e&pti!n !* in$e*ence !$appellant nelience a*ie. x x x.

etiti!ne* #!e n!t #ip&te the exitence !$ the *e&iite $!* the applicati!n !$ res ipsa lo3uitur, &t

a*&e that the p*e&pti!n !* in$e*ence that it :a nelient #i# n!t a*ie ince it p*!ve# that it

exe*cie# #&e ca*e t! av!i# the acci#ent :hich e$ell *ep!n#ent h&an#.

etiti!ne* appa*entl iapp*ehen# the p*!ce#&*al e$$ect !$ the #!ct*ine. A tate# ea*lie*, the

#e$en#ant nelience i p*e&e# !* in$e**e# :hen the plainti$$ etalihe the *e&iite $!* the

applicati!n !$ res ipsa lo3uitur. <nce the plainti$$ a?e !&t a prima #acie cae !$ all the eleent, the

&*#en then hi$t t! #e$en#ant t! explain. The p*e&pti!n !* in$e*ence a e *e&tte# !* !ve*c!e

!the* evi#ence an#, &n#e* app*!p*iate ci*c&tance a #ip&tale p*e&pti!n, &ch a that !$ #&e

ca*e !* inn!cence, a !&t:eih the in$e*ence. =t i n!t $!* the #e$en#ant t! explain !* p*!ve it

#e$ene t! p*event the p*e&pti!n !* in$e*ence $*! a*iin. vi#ence the #e$en#ant !$ a, #&e

ca*e, c!e int! pla !nl a$te* the ci*c&tance $!* the applicati!n !$ the #!ct*ine ha een

etalihe#.[&]

=n the cae at a*, ai#e $*! the tateent in the p!lice *ep!*t, n!ne !$ the pa*tie

#ip&te the $act that the +&)! (a*! T*&c? hit the *ea* en# !$ the it&ihi /alant,

:hich, in t&*n, hit the *ea* en# !$ the vehicle in $*!nt !$ it. 0ep!n#ent, h!:eve*, p!intt! the *ec?le #*ivin !$ the ian B& #*ive* a the p*!xiate ca&e !$ the c!llii!n,

:hich alleati!n i t!tall &n&pp!*te# an evi#ence !n *ec!*#. An# a&in that

thi alleati!n i, in#ee#, t*&e, it i at!nihin that *ep!n#ent neve* even !the*e# t!

$ile a c*!-clai aaint the !:ne* !* #*ive* !$ the ian B&.





hat i at !nce evi#ent $*! the intant cae, h!:eve*, i the p*eence !$ all the

*e&iite $!* the applicati!n !$ the *&le !$ res ipsa lo3uitur. T! *eite*ate, res ipsa

lo3uitur i a *&le !$ neceit :hich applie :he*e evi#ence i aent !* n!t *ea#il

availale. A explaine# in D.$. Consun!i, Inc., it i pa*tl ae# &p!n the the!* that the

#e$en#ant in cha*e !$ the int*&entalit :hich ca&e the inI&* eithe* ?n!: the

ca&e !$ the acci#ent !* ha the et !pp!*t&nit !$ ace*tainin it an# that the plainti$$

ha n! &ch ?n!:le#e, an#, the*e$!*e, i c!pelle# t! allee nelience in ene*al

te* an# t! *el &p!n the p*!!$ !$ the happenin !$ the acci#ent in !*#e* t! etalih

nelience.

A enti!ne# a!ve, the *e&iite $!* the applicati!n !$ the res ipsa lo3uitur *&le a*e

the $!ll!:in' 1 the acci#ent :a !$ a ?in# :hich #!e n!t !*#ina*il !cc&* &nle

!e!ne i nelient; 2 the int*&entalit !* aenc :hich ca&e# the inI&* :a

&n#e* the excl&ive c!nt*!l !$ the pe*!n cha*e# :ith nelience; an# 3 the inI&*

&$$e*e# &t n!t have een #&e t! an v!l&nta* acti!n !* c!nt*i&ti!n !n the pa*t !$

the pe*!n inI&*e#.[']

=n the intant cae, the +&)! (a*! T*&c? :!&l# n!t have ha# hit the *ea* en# !$ the

it&ihi /alant &nle !e!ne i nelient. Al!, the +&)! (a*! T*&c? :a &n#e*

the excl&ive c!nt*!l !$ it #*ive*, 0ee. ven i$ *ep!n#ent ave*t liailit p&ttin

the lae !n the ian B& #*ive*, till, thi alleati!n :a el$-e*vin an# t!tall

&n$!&n#e#. +inall, n! c!nt*i&t!* nelience :a att*i&te# t! the #*ive* !$ the

it&ihi /alant. (!ne&entl, all the *e&iite $!* the applicati!n !$ the #!ct*ine !$

res ipsa lo3uitur a*e p*eent, the*e c*eatin a *ea!nale p*e&pti!n !$ nelience !n

the pa*t !$ *ep!n#ent.

=t i :!*th enti!nin that I&t li?e an !the* #ip&tale p*e&pti!n !* in$e*ence, the

p*e&pti!n !$ nelience a e *e&tte# !* !ve*c!e !the* evi#ence t! the

c!nt*a*. =t i &n$!*t&nate, h!:eve*, that *ep!n#ent $aile# t! p*eent an evi#ence

e$!*e the t*ial c!&*t. Th&, the p*e&pti!n !$ nelience *eain. (!ne&entl, the





(A e**e# in #iiin the c!plaint $!* alaan =n&*ance a#ve*te# $ail&*e t! p*!ve

nelience !n the pa*t !$ *ep!n#ent.

;#idit' o" Su*ro$tion

alaan =n&*ance c!nten# that the*e :a

a vali# &*!ati!n in the intant cae, a

evi#ence# the clai chec? v!&che*[!(]

an# the 0eleae !$ (lai an# S&*!ati!n

0eceipt[!1] p*eente# it e$!*e the t*ial

c!&*t. 0ep!n#ent, h!:eve*, clai that the

#!c&ent p*eente# alaan =n&*ance

#! n!t in#icate ce*tain ip!*tant #etail

that :!&l# h!: p*!pe* &*!ati!n.

A n!te# alaan =n&*ance, *ep!n#ent ha# all the !pp!*t&nit, &t $aile# t! !Iect

t! the p*eentati!n !$ it evi#ence. Th&, an# a e have enti!ne# ea*lie*, *ep!n#ent

a*e #eee# t! have :aive# thei* *iht t! a?e an !Iecti!n. A thi (!&*t hel# in Asian

Construction and Development Corporation v. C?$=AC Corporation'

T(e ru#e is t(t "i#ure to o*&e!t to t(e o""ered eviden!e renders it d%issi*#e, nd t(e !ourt

!nnot, on its on, disre$rd su!( eviden!e. e n!te that AS=AR<ST0(T c!&nel !$ *ec!*#

e$!*e the t*ial c!&*t, Att. Be*na*# D, :h! activel pa*ticipate# in the initial tae !$ the cae

t!ppe# atten#in the hea*in :hen (<+A( :a a!&t t! en# it p*eentati!n. Th&,

AS=AR<ST0(T c!&l# n!t !Iect t! (<+A( !$$e* !$ evi#ence n!* p*eent evi#ence in it

#e$ene; AS=AR<ST0(T :a #eee# the t*ial c!&*t t! have :aive# it chance t! #! !.

Note #so t(t (en prt' desires t(e !ourt to re&e!t t(e eviden!e o""ered, it %ust so stte in t(e

"or% o" ti%e#' o*&e!tion nd it !nnot rise t(e o*&e!tion to t(e eviden!e "or t(e "irst ti%e on

ppe#. Be!use o" prt's "i#ure to ti%e#' o*&e!t, t(e eviden!e *e!o%es prt o" t(e eviden!e in

t(e !se. T(ere"ter, ## t(e prties re !onsidered *ound *' n' out!o%e risin$ "ro% t(e o""er

o" eviden!e proper#' presented.[!] phai &pplie#.

Bea*in in in# that the clai chec? v!&che* an# the 0eleae !$ (lai an# S&*!ati!n

0eceipt p*eente# alaan =n&*ance a*e al*ea# pa*t !$ the evi#ence !n *ec!*#, an#

ince it i n!t #ip&te# that the in&*ance c!pan, in#ee#, pai# h 7, t! the









a&*e#, then the*e i a vali# &*!ati!n in the cae at a*. A explaine# in 1eppel Cebu

Shipyard, Inc. v. Pioneer Insurance and Surety Corporation'

S&*!ati!n i the &tit&ti!n !$ !ne pe*!n an!the* :ith *e$e*ence t! a la:$&l clai !* *iht, !

that he :h! i &tit&te# &ccee# t! the *iht !$ the !the* in *elati!n t! a #et !* clai, incl&#in it

*ee#ie !* ec&*itie. The p*inciple c!ve* a it&ati!n :he*ein an in&*e* ha pai# a l! &n#e* anin&*ance p!lic i entitle# t! all the *iht an# *ee#ie el!nin t! the in&*e# aaint a thi*# pa*t

:ith *epect t! an l! c!ve*e# the p!lic. =t c!nteplate $&ll &tit&ti!n &ch that it place the

pa*t &*!ate# in the h!e !$ the c*e#it!*, an# he a &e all ean that the c*e#it!* c!&l# epl!

t! en$!*ce paent.

e have hel# that paent the in&*e* t! the in&*e# !pe*ate a an e&itale ainent t! the

in&*e* !$ all the *ee#ie that the in&*e# a have aaint the thi*# pa*t :h!e nelience !*

:*!n$&l act ca&e# the l!. The *iht !$ &*!ati!n i n!t #epen#ent &p!n, n!* #!e it *!: !&t !$,

an p*ivit !$ c!nt*act. =t acc*&e ipl &p!n paent the in&*ance c!pan !$ the in&*ance

clai. The #!ct*ine !$ &*!ati!n ha it *!!t in e&it. =t i #eine# t! p*!!te an# t! acc!plih

I&tice; an# i the !#e that e&it a#!pt t! c!pel the &ltiate paent !$ a #et !ne :h!, in

I&tice, e&it, an# !!# c!ncience, !&ht t! pa.[!!]

(!ni#e*in the a!ve *&lin, it i !nl &t p*!pe* that alaan =n&*ance e &*!ate#

t! the *iht !$ the a&*e#.

HEREORE, the petiti!n i he*e 2RANTE. The (A %&l 2, 21 Decii!n

an# <ct!e* 29, 21 0e!l&ti!n in (A-/.0. (6 !. 93112 a*e he*e RE;ERSE

an# SET ASIE. The Decii!n #ate# +e*&a* 2, 29 i&e# the t*ial c!&*t in (ivil

(ae !. 99-955 i he*e REINSTATE.


SO ORDERED.


A!ciate %&tice

(<(0'

IOSAO /. PERALTA

A!ciate %&tice





0OSE CATRAL BIEN;ENIO L. RE1ES

A!ciate %&tice A!ciate %&tice

ESTELA /. PERLAS-BERNABE

A!ciate %&tice

A T T E S T A T I O N

= attet that the c!ncl&i!n in the a!ve Decii!n ha# een *eache# in c!n&ltati!n e$!*e

the cae :a aine# t! the :*ite* !$ the !pini!n !$ the (!&*t Divii!n.


A!ciate %&tice

(hai*pe*!n

C E R T I I C A T I O N

&*&ant t! Secti!n 13, A*ticle 6=== !$ the (!ntit&ti!n, an# the Divii!n

(hai*pe*!n Attetati!n, = ce*ti$ that the c!ncl&i!n in the a!ve Decii!n ha# een*eache# in c!n&ltati!n e$!*e the cae :a aine# t! the :*ite* !$ the !pini!n !$ the

(!&*t Divii!n.

RENATO C. CORONA

(hie$ %&tice

J A##iti!nal ee* pe* Special <*#e* !. 117 #ate# %an&a* 28, 212.

[1] Rollo, pp. 18-28. enne# A!ciate %&tice %!e$ina /&eva*a-Sal!na an# c!nc&**e# in

A!ciate %&tice a*i$l!* . &n)alan (atill! an# +*anchit! . Diaante.

[] at 29-3.

http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/194320.htm#_ftnref1








[!1] , xhiit .

[!] S&p*a n!te 25.

[!!] /.0. !. 1-1 N 198-97, Septee* 25, 29, 81 S(0A 98, 141-142.










SUPRE/E COURT

anila

+=0ST D=6=S=<2.R. No. 3749>? 0une 3>, 5@3?

ASIAN TER/INALS, INC., etiti!ne*,

v.

IRST LEPANTO-TAISHO INSURANCE CORPORATION, 0ep!n#ent.

D ( = S = <

RE1ES, J.:

Thi i a etiti!n $!* 0evie: !n (e*ti!*a*i1 &n#e* 0&le 45 !$ the 0&le !$ (!&*t ee?in t! ann&l an#

et ai#e the Decii!n2 #ate# <ct!e* 1, 2 !$ the (!&*t !$ Appeal (A in (A-/.0. S !. 9921

:hich a#I&#e# petiti!ne* Aian Te*inal, =nc. AT= liale t! pa the !ne clai !$ *ep!n#ent

+i*t @epant!-Taih! =n&*ance (!*p!*ati!n +=0ST @AT<.

The n#ip&te# +act

<n %&l 8, 1998,3 3, a !$ !#i& t*ip!lph!phate c!ntaine# in 1 plain I&! a c!plete

an# in !!# c!n#iti!n :e*e l!a#e# an# *eceive# !n !a*# F6 "Da +en" !:ne# (hina <cean

Shippin (!. (<S(< in $av!* !$ c!ninee, /*an# Aian Sale, =nc. /AS=. Bae# !n a (e*ti$icate

!$ =n&*ance4 #ate# A&&t 24, 1995, it appea* that the hipent :a in&*e# aaint all *i? /AS=

:ith +=0ST @AT< $!* 7,959,55.5 &n#e* a*ine <pen !lic !. 123.

The hipent a**ive# in anila !n %&l 1, 1998 an# :a #icha*e# int! the p!ei!n an# c&t!#

!$ AT=, a #!etic c!*p!*ati!n enae# in a**at*e &ine. The hipent *eaine# $!* &ite !e

tie at AT= t!*ae a*ea &ntil it :a :ith#*a:n *!?e*, *!ven (&t! B*!?e*ae (!*p!*ati!n

0<6, !n A&&t an# 9, 1998 $!* #elive* t! the c!ninee. p!n *eceipt !$ the hipent, 5

/AS= &Iecte# the ae t! inpecti!n an# $!&n# that the #elive*e# !!# inc&**e# h!*tae !$ ,8

?il!*a an# pillae !$ 3,315 ? $!* a t!tal !$11,915 ? !$ l!F#aae val&e# at 188,772.41.

/AS= !&ht *ec!pene $*! (<S(<, th*& it hilippine aent Sith Bell Shippin @ine, =nc.

S=T> B@@,8 AT=7 an# 0<6 &t :a #enie#. >ence, it p&*&e# in#eni$icati!n $*! thehipent in&*e*.9

A$te* the *e&iite invetiati!n an# a#I&tent, +=0ST @AT< pai# /AS= the a!&nt !$

185,772.4 a in&*ance in#enit.1

The*ea$te*, /AS= exec&te# a 0eleae !$ (lai11 #icha*in +=0ST @AT< $*! an an# all

liailitie pe*tainin t! the l!tF#aae# hipent an# &*!atin it t! all the *iht !$ *ec!ve* an#

clai the $!*e* a have aaint an pe*!n !* c!*p!*ati!n in *elati!n t! the l!tF#aae# hipent.

http://www.lawphil.net/judjuris/juri2014/jun2014/gr_185964_2014.html#fnt1

























c!*p!*ati!n. Al!, it cann!t en$!*ce I&#ent &p!n S=T> B@@ eca&e n! evi#ence :a p*eente#

etalihin that it i in#ee# the hilippine aent !$ (<S(<. The*e i al! n! evi#ence att*i&tin an

$a&lt t! S=T> B@@. (!ne&entl, the c!plaint :a #iie# in thi :ie'

>0+<0, in liht !$ the $!*e!in, I&#ent i he*e *en#e*e# D=S=SS=/ the intant cae

$!* $ail&*e !$ [+=0ST @AT<] t! &$$icientl etalih it ca&e ! $acti!n aaint [AT=, (<S(<,

S=T> B@@, an# 0<6].

The c!&nte*clai !$ [AT= an# 0<6] a*e li?e:ie #iie# $!* lac? !$ leal ai.


S< <0D0D.24

0&lin !$ the 0ei!nal T*ial (!&*t

<n appeal, the 0ei!nal T*ial (!&*t 0T( *eve*e# the eT( $in#in. =n it Decii!n25 #ate#

%an&a* 28, 27, the 0T( !$ anila, B*anch 21, in (ivil (ae !. 8-118237, *eIecte# the c!ntenti!n

!$ AT= &p!n it !e*vati!n that the ae i elie# it ve* !:n #!c&enta* evi#ence. The 0T(*ea*?e# that, i$, a allee# AT=, !ne I&! a :a al*ea# in a# !*#e* c!n#iti!n &p!n it *eceipt

!$ the hipent $*! (<S(< !n %&l 1, 1998, then h!: c!e that the 0e&et $!* Ba# <*#e* S&*ve

an# the T&*n <ve* S&*ve !$ Ba# <*#e* (a*! :e*e p*epa*e# !nl :ee? the*ea$te* !* !n A&&t 9,

1998 an# A&&t 8, 1998, *epectivel. AT= :a a#I&#e# &nale t! p*!ve that it exe*cie# #&e

#ilience :hile in c&t!# !$ the hipent an# hence, nelient an# h!&l# e hel# liale $!* the

#aae ca&e# t! /AS= :hich, in t&*n, i &*!ate# +=0ST @AT<.

The 0T( *eIecte# AT= c!ntenti!n that it liailit i liite# !nl t! 5,. pe* pac?ae eca&e it

anaeent (!nt*act :ith the hilippine !*t A&th!*it A p&*p!*te#l c!ntainin the ae :a

n!t p*eente# a evi#ence. !*e ip!*tantl, +=0ST @AT< !* /AS= cann!t e #eee# !&n#the*e eca&e the :e*e n!t pa*tie the*et!. @atl, the 0T( #i# n!t ive e*it t! AT= #e$ene that

an clai aaint it ha al*ea# p*ec*ie# eca&e /AS= $aile# t! $ile an clai :ithin the 15-#a

pe*i!# tate# in the ate pa i&e# AT= t! /AS= *!?e*, 0<6. Acc!*#inl, the 0T(

#ip!e# th&'

>0+<0, in liht !$ the $!*e!in, the I&#ent !n appeal i he*e 060SD.

[AT=] i he*e !*#e*e# t! *ei&*e [+=0ST @AT<] the a!&nt !$ []185,772.4 :ith leal

inte*et &ntil $&ll pai#, t! pa [+=0ST @AT<] 1Q !$ the a!&nt #&e the latte* a an# $!*

att!*ne $ee pl& the c!t !$ &it.

The c!plaint aaint [(<S(<FS=T> B@@ an# 0<6] a*e D=S=SSD $!* lac? !$ evi#ence

aaint the. The c!&nte*clai an# c*![-]clai !$ [AT=] a*e li?e:ie D=S=SSD $!* lac? !$ e*it.

S< <0D0D.28

0&lin !$ the (A

AT= !&ht *ec!&*e :ith the (A challenin the 0T( $in#in that +=0ST @AT< :a vali#l










&*!ate# t! the *iht !$ /AS= :ith *epect t! the l!tF#aae# hipent. AT= a*&e# that the*e :a

n! vali# &*!ati!n eca&e +=0ST@AT< $aile# t! p*eent a vali#, exitin an# en$!*ceale

a*ine <pen !lic !* in&*ance c!nt*act. AT= *ea!ne# that the (e*ti$icate !$ =n&*ance !* a*ine

(!ve* !te &itte# +=0ST @AT< a evi#ence i n!t the ae a an act&al in&*ance

c!nt*act.

=n it Decii!n27 #ate# <ct!e* 1, 2, the (A #iie# the appeal an# hel# that the 0eleae !$(lai an# the (e*ti$icate !$ =n&*ance p*eente# +=0ST @AT< &$$icientl etalihe# it

*elati!nhip :ith the c!ninee an# that &p!n p*!!$ !$ paent !$ the latte* clai $!* #aae,

+=0ST @AT< :a &*!ate# t! it *iht aaint th!e liale $!* the l!tF#aae# hipent.

The (A al! a$$i*e# the *&lin !$ the 0T( that the &Iect hipent :a #aae# :hile in the

c&t!# !$ AT=. Th&, the (A #ip!e# a $!ll!:'

>0+<0, p*eie c!ni#e*e#, the aaile# Decii!n i he*e A++=0D an# the intant

petiti!n i D=D $!* lac? !$ e*it.

S< <0D0D.2

AT= !ve# $!* *ec!ni#e*ati!n &t the !ti!n :a #enie# in the (A 0e!l&ti!n 29 #ate# %an&a* 12,

29. >ence, thi petiti!n a*&in that'

a The p*eentati!n !$ the in&*ance p!lic i in#ipenale in p*!vin the *iht !$ +=0ST @AT<

t! e &*!ate# t! the *iht !$ the c!ninee p&*&ant t! the *&lin in alle hilippine Shippin,

=nc. v. *&#ential /&a*antee an# A&*ance =nc.;3

AT= cann!t e a**e# $*! inv!?in the #e$ene !$ p*ec*ipti!n a p*!vi#e# $!* in the ate pae in

c!n!nance :ith the *&lin in =nte*nati!nal (!ntaine* Te*inal Se*vice, =nc. v. *&#ential /&a*antee

an# A&*ance (!, =nc.31

0&lin !$ the (!&*t

The (!&*t #enie the petiti!n.

AT= $aile# t! p*!ve that it exe*cie#

#&e ca*e an# #ilience :hile the

hipent :a &n#e* it c&t!#,

c!nt*!l an# p!ei!n a a**at*e

!pe*at!*.

=t &t e ephai)e# that $act&al &eti!n pe*tainin t! AT= liailit $!* the l!F#aae &taine#

/AS= ha al*ea# een ettle# in the &ni$!* $act&al $in#in !$ the 0T( an# the (A that' AT=

$aile# t! p*!ve p*ep!n#e*ance !$ evi#ence that it exe*cie# #&e #ilience in han#lin the hipent.

S&ch $in#in a*e in#in an# c!ncl&ive &p!n thi (!&*t ince a *evie: the*e!$ i p*!c*ie# the

nat&*e !$ the p*eent petiti!n. <nl &eti!n !$ la: a*e all!:e# in petiti!n $!* *evie: !n ce*ti!*a*i

&n#e* 0&le 45 !$ the 0&le !$ (!&*t. =t i n!t the (!&*t #&t t! *evie:, exaine, an# eval&ate !*

:eih all !ve* aain the p*!ative val&e !$ the evi#ence p*eente#, epeciall :he*e the $in#in !$ the













0T( a*e a$$i*e# the (A, a in thi cae.32

The*e a*e !nl peci$ic intance :hen the (!&*t #eviate $*! the *&le an# c!n#&ct a *evie: !$ the

c!&*t a &! $act&al $in#in, &ch a :hen' 1 the in$e*ence a#e i ani$etl ita?en, a&*# !*

ip!ile; 2 the*e i *ave a&e !$ #ic*eti!n;3 the $in#in a*e *!&n#e# enti*el !n pec&lati!n,

&*ie !* c!nIect&*e; 4 the I&#ent !$ the (A i ae# !n iapp*eheni!n !$ $act; 5 the (A,

in a?in it $in#in, :ent e!n# the i&e !$ the cae an# the ae i c!nt*a* t! the a#ii!n !$!th appellant an# appellee; 8 the $in#in !$ $act a*e c!ncl&i!n :ith!&t citati!n !$ peci$ic

evi#ence !n :hich the a*e ae#; 7 the (A ani$etl !ve*l!!?e# ce*tain *elevant $act n!t #ip&te#

the pa*tie an# :hich, i$ p*!pe*l c!ni#e*e#, :!&l# I&ti$ a #i$$e*ent c!ncl&i!n; an# the

$in#in !$ $act !$ the (A a*e p*eie# !n the aence !$ evi#ence an# a*e c!nt*a#icte# the evi#ence

!n *ec!*#.33

!ne !$ thee intance, h!:eve*, a*e p*eent in thi cae. !*e!ve*, it i &nita?ale that AT= ha

al*ea# c!nce#e# t! the $act&al $in#in !$ 0T( an# (A a#I&#in it liale $!* the hipent

l!F#aae c!ni#e*in the aence !$ a*&ent pe*tainin t! &ch i&e in the petiti!n at a*.

Thee n!t:ithtan#in, the (!&*t c*&tini)e# the *ec!*# !$ the cae an# $!&n# that in#ee#, AT= i liale

a the a**at*e !pe*at!* $!* the l!tF#aae# p!*ti!n !$ the hipent.

The *elati!nhip et:een the c!ninee an# the a**at*e !pe*at!* i a?in t! that exitin et:een the

c!ninee an#F!* the !:ne* !$ the hippe# !!# an# the c!!n ca**ie*, !* that et:een a #ep!it!*

an# a :a*eh!&ean. >ence, in the pe*$!*ance !$ it !liati!n, an a**at*e !pe*at!* h!&l# !e*ve

the ae #e*ee !$ #ilience a that *e&i*e# !$ a c!!n ca**ie* an# a :a*eh!&ean. Bein the

c&t!#ian !$ the !!# #icha*e# $*! a veel, an a**at*e !pe*at!* #&t i t! ta?e !!# ca*e !$ the

!!# an# t! t&*n the !ve* t! the pa*t entitle# t! thei* p!ei!n.34

=n a clai $!* l! $ile# the c!ninee !* the in&*e*, the &*#en !$ p*!!$ t! h!: c!pliance :ith

the !liati!n t! #elive* the !!# t! the app*!p*iate pa*t #ev!lve &p!n the a**at*e !pe*at!*. Since

the a$e?eepin !$ the !!# i it *ep!niilit, it &t p*!ve that the l!e :e*e n!t #&e t! it

nelience !* t! that !$ it epl!ee. T! av!i# liailit, the a**at*e !pe*at!* &t p*!ve that it

exe*cie# #ilience an# #&e ca*e in han#lin the hipent.35

AT= $aile# t! #icha*e it &*#en !$ p*!!$. =ntea#, it inite# !n hi$tin the lae t! (<S(< !n the

ai !$ the 0e&et $!* Ba# <*#e* S&*ve #ate# A&&t 9, 1998 p&*p!*te#l h!:in that :hen AT=

*eceive# the hipent, !ne I&! a the*e!$ :a al*ea# in #aae# c!n#iti!n.

The 0T( an# (A :e*e !th c!**ect in c!ncl&#in that AT= c!ntenti!n :a ip*!ale an# ill!ical.A I&#ici!&l #ice*ne# the c!&*t a &!, the #ate !$ the #!c&ent :a t!! #itant $*! the #ate

:hen the hipent :a act&all *eceive# AT= $*! (<S(< !n %&l 1, 1998. =n $act, :hat the

#!c&ent etalihe# i that :hen the l!F#aae :a #ic!ve*e#, the hipent ha een in AT=

c&t!# $!* at leat t:! :ee?. Thi ci*c&tance, c!&ple# :ith the &n#ip&te# #ecla*ati!n !$

0<6 :itnee that :hile the hipent :a in AT= c&t!#, it :a le$t in an !pen a*ea exp!e#

t! the eleent, thieve an# van#al,38 all ene*ate the c!ncl&i!n that AT= $aile# t! exe*cie #&e ca*e

an# #ilience :hile the &Iect hipent :a &n#e* it c&t!#, c!nt*!l an# p!ei!n a a**at*e















!pe*at!*.

T! p*!ve the exe*cie !$ #ilience in han#lin the &Iect ca*!e, an a**at*e !pe*at!* &t #! !*e

than e*el h!: the p!iilit that !e !the* pa*t c!&l# e *ep!nile $!* the l! !* the

#aae.37 =t &t p*!ve that it &e# all *ea!nale ean t! han#le an# t!*e the hipent :ith #&e

ca*e an# #ilience incl&#in a$e&a*#in it $*! :eathe* eleent, thieve !* van#al.

!n-p*eentati!n !$ the in&*ance

c!nt*act i n!t $atal t! +=0ST

@AT< ca&e !$ acti!n $!*

*ei&*eent a &*!ee.

=t i c!npic&!& $*! the *ec!*# that AT= p&t in i&e the &ii!n !$ the in&*ance c!nt*act $!* the

$i*t tie e$!*e the (A. Depite !pp!*t&nit t! t&# +=0ST @AT< c!plaint e$!*e the eT(,

AT= $aile# t! allee in it an:e* the neceit !$ the in&*ance c!nt*act. eithe* :a the ae

c!ni#e*e# #&*in p*e-t*ial a !ne !$ the #eciive atte* in the cae. +&*the*, AT= neve* challene# the

*elevanc !* ate*ialit !$ the (e*ti$icate !$ =n&*ance p*eente# +=0ST @AT< a evi#ence#&*in t*ial a p*!!$ !$ it *iht t! e &*!ate# in the c!ninee tea#. Since it :a n!t a*ee#

#&*in the p*e-t*ial p*!cee#in that +=0ST @AT< :ill have t! p*!ve it &*!ati!n *iht

p*eentin a c!p !$ the in&*ance c!nt*act, AT= i a**e# $*! plea#in the aence !$ &ch c!nt*act in

it appeal. =t i ipe*ative $!* the pa*tie t! #icl!e #&*in p*e-t*ial all i&e the inten# t! *aie

#&*in the t*ial eca&e, the a*e !&n# the #eliitati!n !$ &ch i&e. The #ete*inati!n !$ i&e

#&*in the p*e-t*ial c!n$e*ence a* the c!ni#e*ati!n !$ !the* &eti!n, :hethe* #&*in t*ial !* !n

appeal.3

A $aith$&l a#he*ence t! the *&le litiant i en&*e# the e&all ettle# p*inciple that a pa*t

cann!t chane hi the!* !n appeal a &ch act vi!late the aic *&#ient !$ $ai* pla an# #&ep*!ce. A t*ee# in %!e v. Al$&e*t!'39

[A] pa*t cann!t chane hi the!* !$the cae !* hi ca&e !$ acti!n !n appeal. !int !$ la:, the!*ie,

i&e an# a*&ent n!t *!&ht t! the attenti!n !$ the l!:e* c!&*t :ill n!t e c!ni#e*e# the

*evie:in c!&*t. The #e$ene n!t plea#e# in the an:e* cann!t, !n appeal, chane $&n#aentall the

nat&*e !$ the i&e in the cae. T! #! ! :!&l# e &n$ai* t! the a#ve*e pa*t, :h! ha# n! !pp!*t&nit t!

p*eent evi#ence in c!nnecti!n :ith the ne: the!*; thi :!&l# !$$en# the aic *&le !$ #&e p*!ce

an# $ai* pla.4 (itati!n !itte#

hile the (!&*t a a#!pt a lie*al tance an# *elax the *&le, n! *ea!nale explanati!n, h!:eve*, :a

int*!#&ce# t! I&ti$ AT= $ail&*e t! tiel &eti!n the ai !$ +=0ST @AT< *iht a a

&*!ee.

The $act that the (A t!!? c!ni)ance !$ an# *e!lve# the ai# i&e #i# n!t c&*e !* *ati$ AT= $a&x

pa. "[A] I&#ent that !e e!n# the i&e an# p&*p!*t t! a#I&#icate !ethin !n :hich the

c!&*t #i# n!t hea* the pa*tie, i n!t !nl i**e&la* &t al! ext*aI&#icial an# invali#."41 Th&, $!*

*e!lvin an i&e n!t $*ae# #&*in the p*e-t*ial an# !n :hich the pa*tie :e*e n!t hea*# #&*in the

t*ial, that p!*ti!n !$ the (A I&#ent #ic&in the neceit !$ p*eentin an in&*ance c!nt*act :a














e**!ne!&.

At an *ate, the n!n-p*eentati!n !$ the in&*ance c!nt*act i n!t $atal t! +=0ST @AT< *iht t!

c!llect *ei&*eent a the &*!ee !$ /AS=.

"S&*!ati!n i the &tit&ti!n !$ !ne pe*!n in the place !$ an!the* :ith *e$e*ence t! a la:$&l clai

!* *iht, ! that he :h! i &tit&te# &ccee# t! the *iht !$ the !the* in *elati!n t! a #et !* clai,

incl&#in it *ee#ie !* ec&*itie."42 The *iht !$ &*!ati!n p*in $*! A*ticle 227 !$ the (ivil

(!#e :hich tate'

A*t. 227. =$ the plainti$$ p*!pe*t ha een in&*e#, an# he ha *eceive# in#enit $*! the

in&*ance c!pan $!* the inI&* !* l! a*iin !&t !$ the :*!n !* *each !$ c!nt*act c!plaine# !$,

the in&*ance c!pan hall e &*!ate# t! the *iht !$ the in&*e# aaint the :*!n-#!e* !* the

pe*!n :h! ha vi!late# the c!nt*act. =$ the a!&nt pai# the in&*ance c!pan #!e n!t $&ll c!ve*

the inI&* !* l!, the a*ieve# pa*t hall e entitle# t! *ec!ve* the #e$icienc $*! the pe*!n

ca&in the l! !* inI&*.

A a ene*al *&le, the a*ine in&*ance p!lic nee# t! e p*eente# in evi#ence e$!*e the in&*e* a*ec!ve* the in&*e# val&e !$ the l!tF#aae# ca*! in the exe*cie !$ it &*!at!* *iht. =n alaan

=n&*ance (!., =nc. v.0ei B*!?e*ae (!*p.,43 the (!&*t tate# that the p*eentati!n !$ the c!nt*act

c!ntit&tive !$ the in&*ance *elati!nhip et:een the c!ninee an# in&*e* i c*itical eca&e it i the

leal ai !$ the latte* *iht t! &*!ati!n.44

=n >!e =n&*ance (!*p!*ati!n v. (A,45 the (!&*t al! hel# that the in&*ance c!nt*act :a necea*

t! p*!ve that it c!ve*e# the ha&lin p!*ti!n !$ the hipent an# :a n!t liite# t! the t*anp!*t !$ the

ca*! :hile at ea. The hipent in that cae pae# th*!&h ix tae :ith #i$$e*ent pa*tie inv!lve#

in each tae &ntil it *eache# the c!ninee. The in&*ance c!nt*act, :hich :a n!t p*eente# in

evi#ence, :a necea* t! #ete*ine the c!pe !$ the in&*e* liailit, i$ an, ince n! evi#ence :a

a##&ce# in#icatin at :hat tae in the han#lin p*!ce the #aae t! the ca*! :a &taine#. 48

An anal!!& #ip!iti!n :a a**ive# at in the alle47 cae cite# AT= :he*ein the (!&*t hel# that

the in&*ance c!nt*act &t e p*eente# in evi#ence in !*#e* t! #ete*ine the extent !$ it c!ve*ae. =t

:a $&*the* *&le# the*ein that the liailit !$ the ca**ie* $*! :h! *ei&*eent :a #ean#e# :a

n!t etalihe# :ith ce*taint eca&e the allee# h!*tae inc&**e# the ca*!e :a n!t #e$initivel

#ete*ine#.4

eve*thele, the *&le i n!t in$lexile. =n ce*tain intance, the (!&*t ha a#itte# excepti!n

#ecla*in that a a*ine in&*ance p!lic i #ipenale evi#ence in *ei&*eent clai intit&te# the in&*e*.

=n Delan T*anp!*t @ine, =nc. v. (A,49 the (!&*t *&le# that the *iht !$ &*!ati!n acc*&e ipl

&p!n paent the in&*ance c!pan !$ the in&*ance clai. >ence, p*eentati!n in evi#ence !$ the

a*ine in&*ance p!lic i n!t in#ipenale e$!*e the in&*e* a *ec!ve* $*! the c!!n ca**ie*

the in&*e# val&e !$ the l!t ca*! in the exe*cie !$ it &*!at!* *iht. The &*!ati!n *eceipt,

itel$, :a hel# &$$icient t! etalih n!t !nl the *elati!nhip et:een the in&*e* an# c!ninee, &t





















al! the a!&nt pai# t! ettle the in&*ance clai. The p*eentati!n !$ the in&*ance c!nt*act :a

#eee# n!t $atal t! the in&*e* ca&e !$ acti!n eca&e the l! !$ the ca*! &n#!&te#l !cc&**e#

:hile !n !a*# the petiti!ne* veel.5

The ae *ati!nale :a the ai !$ the I&#ent in =nte*nati!nal (!ntaine* Te*inal Se*vice, =nc. v.

+/ =n&*ance (!*p!*ati!n,51 :he*ein the a**at*e !pe*at!* :a $!&n# liale $!* the l!t hipent

#epite the $ail&*e !$ the in&*ance c!pan t! !$$e* in evi#ence the in&*ance c!nt*act !* p!lic. A inDelan, it :a ce*tain that the l! !$ the ca*! !cc&**e# :hile in the petiti!ne* c&t!#.52

Bae# !n the atten#ant $act !$ the intant cae, the applicati!n !$ the excepti!n i :a**ante#. ;G%phi;

A #ic&e# a!ve, it i al*ea# ettle# that the l!F#aae t! the /AS= hipent !cc&**e# :hile

the :e*e in AT= c&t!#, p!ei!n an# c!nt*!l a a**at*e !pe*at!*. 6e*il, the (e*ti$icate !$

=n&*ance53 an# the 0eleae !$ (lai54 p*eente# a evi#ence &$$icientl etalihe# +=0ST

@AT< *iht t! c!llect *ei&*eent a the &*!ee !$ the c!ninee, /AS=.

ith AT= liailit havin een p!itivel etalihe#, t! t*ictl *e&i*e the p*eentati!n !$ the

in&*ance c!nt*act :ill *&n c!&nte* t! the p*inciple !$ e&it &p!n :hich the #!ct*ine !$ &*!ati!n ip*eie#. S&*!ati!n i #eine# t! p*!!te an# t! acc!plih I&tice an# i the !#e :hich e&it

a#!pt t! c!pel the &ltiate paent !$ a #et !ne :h! in I&tice, e&it an# !!# c!ncience

!&ht t! pa.55

The paent the in&*e* t! the in&*e# !pe*ate a an e&itale ainent t! the in&*e* !$ all the

*ee#ie :hich the in&*e# a have aaint the thi*# pa*t :h!e nelience !* :*!n$&l act ca&e#

the l!. The *iht !$ &*!ati!n i n!t #epen#ent &p!n, n!* #!e it *!: !&t !$ an p*ivit !$ c!nt*act

!* &p!n paent the in&*ance c!pan !$ the in&*ance clai. =t acc*&e ipl &p!n paent

the in&*ance c!pan !$ the in&*ance clai.58

AT= cann!t inv!?e p*ec*ipti!n

AT= a*&e# that the c!ninee, th*& it in&*e*, +=0ST @AT< i a**e# $*! ee?in paent $!*

the l!tF#aae# hipent eca&e the clai lette* !$ /AS= t! AT= :a e*ve# !nl !n Septee* 27,

1998 !* !*e than !ne !nth $*! the #ate the hipent :a #elive*e# t! the c!ninee :a*eh!&e

!n A&&t 9, 1998. The clai !$ /AS= :a th& $ile# e!n# the 15-#a pe*i!# tate# in AT=

anaeent (!nt*act :ith A :hich in t&*n :a *ep*!#&ce# in the ate pae i&e# t! the

c!ninee *!?e*, 0<6, a $!ll!:'

=&ance !$ thi /ate a (!ntit&te #elive* t! an# *eceipt c!ninee !$ the !!# a #ec*ie#

a!ve in !!# !*#e* an# c!n#iti!n &nle an acc!panin x x x ce*ti$icate #&l i&e# an# n!te# !nthe $ace !$ thi /ate a appeal. [ic]

Thi /ate pa i &Iect t! all te* an# c!n#iti!n #e$ine# in the anaeent (!nt*act et:een the

hilippine !*t[] A&th!*it an# Aian Te*inal, =nc. an# aen#ent the*et! an# alte*ati!n the*e!$

pa*tic&la*l &t n!t liite# t! the [A]*ticle 6= the*e!$, liitin the c!nt*act!* liailit t! []5,.

pe* pac?ae &nle the ip!*tati!n i !the*:ie peci$ie# !* ani$ete# !* c!&nicate# in :*itin

t!ethe* :ith the inv!ice val&e an# &pp!*te# a ce*ti$ie# pac?in lit t! the c!nt*act!* the


















inte*ete# pa*t !* pa*tie e$!*e the #icha*e !$ the !!# an# c!**ep!n#in a**at*e cha*e have

een pai# p*!vi#in excepti!n !* *et*icti!n $*! liailit *eleain the c!nt*act!* $*! liailit

a!n !the* &nle a $!*al clai :ith the *e&i*e# annexe hall have een $ile# :ith the c!nt*act!*

:ithin $i$teen 15 #a $*! #ate !$ i&ance the c!nt*act!* !* ce*ti$icate !$ l!, #aae, inI&*,

!* (e*ti$icate !$ n!n-#elive*.57

The c!ntenti!n i e*e$t !$ e*it. A cla*i$ie# in =n&*ance (!pan !$ !*th Ae*ica v. AianTe*inal, =nc.,5 &tantial c!pliance :ith the 15-#a tie liitati!n i all!:e# p*!vi#e# that the

c!ninee ha a#e a p*!vii!nal clai th*& a *e&et $!* a# !*#e* &*ve !* exainati!n *ep!*t, vi)'

Alth!&h the $!*al clai :a $ile# e!n# the 15-#a pe*i!# $*! the i&ance !$ the exainati!n

*ep!*t !n the *e&et $!* a# !*#e* &*ve, the p&*p!e !$ the tie liitati!n $!* the $ilin !$ clai

ha# al*ea# een $&ll ati$ie# the *e&et !$ the c!ninee *!?e* $!* a a# !*#e* &*ve an#

the exainati!n *ep!*t !$ the a**at*e !pe*at!* !n the *e&lt the*e!$, a the a**at*e !pe*at!* ha# ec!e

a:a*e !$ an# ha# ve*i$ie# the $act ivin *ie t! it liailit. >ence, the a**at*e !pe*at!* &$$e*e# n!

p*eI&#ice the lac? !$ t*ict c!pliance :ith the 15-#a liitati!n t! $ile the $!*al c!plaint.59

(itati!n !itte#

=n the p*eent cae, AT= :a n!ti$ie# !$ the l!F#aae t! the &Iect hipent a ea*l a A&&t 9,

1998 th*& a 0e&et $!* Ba# <*#e* S&*ve8 I!intl p*epa*e# the c!ninee *!?e*, 0<6, an#

the *ep*eentative !$ AT=. +!* havin &itte# a p*!vii!nal clai, /AS= i th& #eee# t! have

&tantiall c!plie# :ith the n!tice *e&i*eent t! the a**at*e !pe*at!* n!t:ithtan#in that a

$!*al clai :a ent t! the latte* !nl !n Septee* 27, 1998. AT= :a n!t #ep*ive# the et

!pp!*t&nit t! p*!e ie#iatel the ve*acit !$ &ch clai. 6e*il then, /AS=, th*& it &*!ee

+=0ST @AT<, i n!t a**e# $ilin the he*ein acti!n in c!&*t.

AT= cann!t *el !n the *&lin in *&#entiat81 eca&e the c!ninee the*ein a#e n! p*!vii!nal claith*& *e&et $!* a# !*#e* &*ve an# intea# $ile# a clai $!* the $i*t tie a$te* $!&* !nth $*!

*eceipt !$ the hipent.

Att!*neE $ee an# inte*et

All t!l#, AT= i liale t! pa +=0ST @AT< the a!&nt !$ the l 85, 772.4 *ep*eentin the

in&*ance in#enit pai# the latte* t! /AS=. &*&ant t! aca* v. /alle* +*ae,82 the ai#

a!&nt hall ea*n a leal inte*et at the *ate !$ ix pe*cent 8Q pe* ann& $*! the #ate !$ $inalit !$

thi I&#ent &ntil it $&ll ati$acti!n.

A c!**ectl ip!e# the 0T( an# the (A, ten pe*cent 1Q !$ the I&#ent a:a*# i *ea!nalea an# $!* att!*neE $ee c!ni#e*in the lenth !$ tie that ha pae# in p*!ec&tin the clai. 83

>0+<0, p*eie c!ni#e*e#, the petiti!n i he*e D=D. The Decii!n #ate# <ct!e* 1,

2 !$ the (!&*t !$ Appeal in (A-/.0. S !. 9921 i he*e A++=0D in!$a* a it a#I&#e#

liale an# !*#e*e# Aian Te*inal, =nc., t! pa +i*t @epant!-Taih! =n&*ance (!*p., the a!&nt !$

185,772.4, ten pe*cent 1Q the*e!$ a an# $!* att!*neE $ee, pl& c!t !$ &it. The ai# a!&nt

hall ea*n leal inte*et at the *ate !$ ix pe*cent 8Q pe* ann& $*! the #ate !$ $inalit !$ thi



















I&#ent &ntil it $&ll ati$acti!n.

S< <0D0D.

BIEN;ENIO L. RE1ES

A!ciate %&tice

(<(0'


(hie$ %&tice

(hai*pe*!n

TERESITA 0. LEONARO-E CASTROA!ciate %&tice

LUCAS P. BERSA/INA!ciate %&tice

/ARTIN S. ;ILLARA/A, 0R.

A!ciate %&tice

( 0 T = + = ( A T = <

&*&ant t! Secti!n 13, A*ticle 6=== !$ the (!ntit&ti!n, = ce*ti$ that the c!ncl&i!n in the a!ve

Decii!n ha# een *eache# in c!n&ltati!n e$!*e the cae :a aine# t! the :*ite* !$ the !pini!n !$

the (!&*tE Divii!n.


(hie$ %&tice

ootnotes

1 0!ll!, pp. 13-37.

2 enne# A!ciate %&tice a*lene /!n)ale-Si!n, :ith A!ciate %&tice %&an M.

n*i&e), %*. an# =aia . Dic#ican, c!nc&**in; i#. at 41-51.

3 =#. at .

4 =#. at 317.

5 =#. at 92-11.

8 =#. at 14.

7 =#. at 13.

=#. at 115.

9 =#. at 12.

1 =#. at 118.

11 =#. at 114.

http://www.lawphil.net/judjuris/juri2014/jun2014/gr_185964_2014.html#rnt1
























12 =#. at 81-85.

13 =#. at 87-7.

14 =#. at 217.

15 =#. at 9.

18 =#. at 91.

17 =#. at 119-12.

1 =#. at 87-7.

19 =#. at 151-154.

2 e* the $in#in !$ the 0ei!nal T*ial (!&*t; i#. at 215.

21 +=0ST @AT< <ni& !ti!n #ate# %an&a* 18, 21, i#. at 72-74.

22 eT( <*#e* #ate# %&l 23, 21, i#. 75-78.23 =&e# *ei#in %&#e %&an <. Be*eI!, %*.; i#. at 155-182.

24 =#. at 182.

25 =&e# %&#e A!* A. 0ee; i#. at 213-21.

28 =#. at 21.

27 =#. at 41-51.

2 =#. at 5.

29 =#. at 53-54.

3 445 hil. 138 23.

31 377 hil. 12 1999.

32 Aian Te*inal, =nc. v. alaan =n&*ance (!., =nc., /.0. !. 17148, Ap*il 4, 211, 847

S(0A 111, 128.

33 =#. at 128-127.

34 Aian Te*inal, =nc. v. Daehan +i*e an# a*ine =n&*ance (!., @t#., /.0. !. 171194,

+e*&a* 4, 21, 811 S(0A 555, 582-583.

35 =#. at 583-584.

38 a*a*aph 12 !$ 0<6 e!*an#& e$!*e the eT(, *!ll!, p. 152.

37 S&p*a n!te 34, at 583-584.

3 S&p*a n!te 32, at 122.

























































39 /.0. !. 1893, !vee* 28, 212, 88 S(0A 323.

4 =#. at 34-341.

41(!ii!n !n =nte*nal 0even&e v. i*ant aila! (!*p!*ati!n, 535 hil. 41, 49 28.

42 @!a#ate* (&t! Se*vice, =nc. v. /l!#el B*!?e*ae (!*p!*ati!n, /.0. !. 179448,

%an&a* 1, 211, 839 S(0A 89, 7-79.

43 583 hil. 13 27.

44 =#. at 118.

45 /.0. !. 19293, A&&t 1, 1993, 225 S(0A 411.

48 =#. at 415-418.

47 S&p*a n!te 3.

4 =#. at 151-153.

49 42 hil. 24 21.

5 =#. at 35.

51 57 hil. 751 2.

52 =#. at 78.

53 0!ll!, p. 15.

54 =#. at 114.

































insurance 2nd cases

Documents