Pilipinas Bank v. CA

PILIPINAS BANK v. CA and FLORENCIO REYES

1994 / Puno / Petition for review of a CA decision

The cause > Different categories > Proximate

Florencio Reyes issued postdated checks to Winner Industrial Corporation (20k~) and Vincent Tui (11k~) as payments for the purchased shoe materials and rubber shoes. To cover the face value of the checks, Reyes requested PCIB Money Shop’s manager to effect the withdrawal of 32k from his savings account and have it deposited with his current account with Pilipinas Bank. Roberto Santos was requested to make the deposit.

In depositing in the name of Reyes, Santos inquired from the teller Reyes’ current account number to complete the deposit slip he was accomplishing. He was informed that it was “815” so that was the number he placed on the slip. Noting that the account number coincided with the name “Florencio,” Efren Alagasi [Pilipinas Bank Current Account Bookkeeper] thought it was for Florencio Amador, so he posted the deposit in the account of Amador.

The check in favor of Winner was presented for payment. Since Reyes’ ledger indicated that his account only had 4k~ balance, the check was dishonored. This check was redeposited 4 days later but it was dishonored again. This also happened with the check issued in Tui’s favor. Tui returned the check to Reyes and demanded a cash payment of its face value.

Furious over the incident, Reyes proceeded to Pilipinas Bank and urged an immediate verification of his account. It was then that the bank noticed the error. The 32k posted in Amador’s account was transferred to Reyes’ account upon being cleared by the former that he did not effect a deposit of 32k. The bank then honored the check.

RTC ordered Pilipinas Bank to pay damages to Reyes, and the CA affirmed the RTC.

PROXIMATE CAUSE OF INJURY: ALAGASI’S NEGLIGENCE IN ERRONEOUSLY POSTING REYES’ CASH DEPOSIT IN THE NAME OF ANOTHER DEPOSITOR HAVING THE SAME FIRST NAME

• For NCC 2179 to apply, it must be established that Reyes’ own negligence was the immediate and proximate cause of his injury.
• Proximate cause – any cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the result complained of and without which would not have occurred and from which it ought to have been foreseen or reasonably anticipated by a person of ordinary case that the injury complained of or some similar injury, would result therefrom as a natural and probable consequence.

Alagasi failed to exercise degree of care required in the performance of his duties

• He posted the cash deposit in Amador’s account from the assumption that the name Florencio appearing on the ledger without going through the full name, is the same Florencio stated in the deposit slip
• He should have continuously gone beyond mere assumption and proceeded with clear certainty, considering the amount involved and the repercussions it would create --> checks issued by Reyes were dishonored because his ledger indicated an insufficient balance

Mercury Drug v. Baking

MERCURY DRUG CORPORATION v. SEBASTIAN BAKING

2007 / Sandoval-Gutierrez / Petition for review on certiorari of CA decision and resolution

The cause > Different categories > Proximate

Sebastian Baking went to Dr. Cesar Sy’s clinic for a medical check-up. The next day, after undergoing several tests, Dr. Sy found that Baking’s blood sugar and triglyceride levels were above normal, so he gave him 2 medical prescriptions—Diamicron (blood sugar) and Benalize (triglyceride). Baking went to Mercury Drug Alabang branch to buy the medicines. However, the saleslady misread the prescription as Dormicum, a potent sleeping tablet, so that was what was sold to Baking. Unaware that he was given the wrong medicine, Baking took one Dormicum pill a day for 3 days.

On the 3^rd day of taking the medicine, Baking figured in a vehicular accident, as his car collided with Josie Peralta’s car. Baking fell asleep while driving, and he could not remember anything about the collision nor felt its impact. Suspecting that the tablet he took may have a bearing on his state at the time of the collision, he returned to Dr. Sy, who was shocked to find that what was sold to Baking was Dormicum.

Baking filed a complaint for damages against Mercury Drug. RTC rendered its decision in favor of Baking. CA affirmed RTC.

MERCURY DRUG EMPLOYEE GROSSLY NEGLIGENT IN SELLING DORMICUM

To sustain a claim based on NCC 2176, the following requisites must concur:

• Damage suffered by plaintiff
• Fault or negligence of defendant
• Connection of cause and effect between A & B

The drugstore business is imbued with public interest. The health and safety of the people will be put into jeopardy if drugstore employees will not exercise the highest degree of care and diligence in selling medicines. The care required must be commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands.

            Considering that a fatal mistake could be a matter of life and death for a buying patient, the employee should have been very cautious in dispensing medicines. She should have verified WON the medicine she gave was what was prescribed by Dr. Sy.

MERCURY DRUG ALSO LIABLE UNDER NCC 2180

It failed to prove that it exercised the due diligence of a good father of a family in the selection and supervision of the employee

PROXIMATE CAUSE OF THE ACCIDENT – NEGLIGENCE OF DRUGSTORE EMPLOYEE

• Proximate cause – any cause that produces injury in a natural and continuous sequence, unbroken by any efficient intervening cause, such that the result would not have occurred otherwise; determined from the facts of each case, upon a combined consideration of logic, common sense, policy and precedent
• Vehicular accident could not have occurred had the drugstore employee been careful in reading the prescription; without the potent effects of Dormicum, a sleeping tablet, it was unlikely that Baking would fall asleep while driving his car, resulting in a collision

AWARD – 50k moral damages, 25k exemplary damages

Nikko Hotel v. Reyes

NIKKO HOTEL MANILA GARDEN and RUBY LIM v. ROBERTO REYES

2005 / Chico-Nazario / Petition for review on certiorari of CA decision and resolution

Defenses against charge of negligence > Plaintiff’s assumption of risk / volenti non fit injuria

Cause of action was one for damages brought under the human relations provisions of NCC.

Roberto Reyes[1] said he was spotted by his friend Dr. Violeta Filart in the hotel lobby who approached him. She invited him to join her in the GM’s birthday party at the penthouse. He carried Filart’s present—a basket of fruits. When dinner was ready, Reyes lined up at the table but to his embarrassment, he was stopped by Ruby Lim (Hotel Executive Secretary). In a loud voice and within the presence and hearing of other guests, Lim told him to leave—huwag ka nang kumain, hindi ka imbitado, bumaba ka na lang. Reyes tried to explain that he was invited by Dr. Filart, but the latter ignored him. He was escorted out by a police officer.

                Ruby Lim said she was the hotel’s executive secretary for 20 years, and that she was tasked to organize the GM’s birthday party. Mindful of the GM’s request to keep the party intimate, she requested 2 people to tell Reyes to leave, but Reyes still lingered. She had the chance to talk to Reyes when he was starting to eat, so she told him, Alam ninyo, hindi ho kayo dapat nandito. Pero total nakakuha na ho kayo ng pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na kayo. Reyes made a scene by screaming and he threatened to dump food on her.

                Dr. Filart said Reyes volunteered to carry the basket of fruits as he was going to the elevator as well. When they reached the penthouse, she told him to go down as he was not invited. She thought Reyes already left but she saw him at the bar. When there was a commotion, she saw Reyes shouting, and she ignored him, as she did not want the GM to think that she invited him.

                Reyes claimed damages (1M actual damages, 1M moral and/or exemplary damages, 200k attorney’s fees). RTC dismissed the complaint, giving more credence to Lim’s testimony. RTC also said that Reyes assumed the risk of being thrown out of the party as he was not invited. CA reversed RTC, believing Reyes’ version of the facts.    Lim and Hotel Nikko contend that they cannot be made liable for damages under the doctrine of volenti non fit injuria as Reyes assumed the risk of being asked to leave (and being embarrassed and humiliated in the process) as he was a “gate-crasher.”

DOCTRINE OF VOLENTI NON FIT INJURIA DOES NOT FIND APPLICATION IN THIS CASE

• Volenti non fit injuria (to which a person assents is not esteemed in law as injury)—Self-inflicted injury or consent to injury which precludes the recovery of damages by one who has knowingly and voluntarily exposed himself to danger, even if he is not negligent in doing so
• Even if Reyes assumed the risk of being asked to leave the party, petitioners were still under obligation to treat him fairly in order not to expose him to unnecessary ridicule and shame. [NCC 19, 21]

SC FINDS RTC’S FINDINGS OF FACT MORE CREDIBLE—Lim did not abuse her right to ask Reyes to leave the party as she talked to him politely and discreetly

• Lim, mindful of GM’s instruction to keep the party intimate, would naturally want to get rid of Reyes in the most hush-hush manner so as not to call attention
• Reyes was not able to explain why Lim would make a scene; Reyes admitted that when Lim talked to him, she was so close enough for him to kiss à unlikely that she would shout at him at such a close distance (SC also noted the fact that she has been in the hotel business long enough as to imbibe virtues of politeness and discreteness)
• Reyes was not able to present witnesses to back up his story; all his witnesses proved only that Filart invited him to the party

LIM AND HOTEL NIKKO NOT LIABLE TO PAY FOR DAMAGES UNDER NCC 19 AND 21

• NCC 19 (principle of abuse of rights) is not a panacea for all human hurts and social grievances; NCC 19’s object is to set certain standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties; its elements are the following:
• Legal right or duty
• Exercised in bad faith
• For the sole intent of prejudicing or injuring another
• NCC 21 refers to acts contra bonus mores and has the following elements:
• There is an act which is legal
• But it is contrary to morals, good custom, public order, public policy
• And it is done with intent to injure
• Common theme running through NCC 19 and 21–act must be INTENTIONAL
• Reyes has not shown that Lim was driven by animosity against him; he had a lame argument: Lim, being single at 44, had a very strong bias and prejudice against him possibly influenced by her associates in her work at the hotel with foreign businessmen
• Manner by which Lim asked Reyes to leave was acceptable and humane

Any damage which Reyes might have suffered through Lim’s exercise of a legitimate right done within the bounds of propriety and good faith must be his to bear alone.

---

[1] Actor of long standing; co-host of radio program; board member of Music Singer Composer chaired by Imelda Papin; showbiz coordinator of Citizen Crime Watch; 1992 official candidate for Bohol governor

Qua Chee Gan v. Law Union and Rock Insurance

QUA CHEE GAN v. LAW UNION AND ROCK INSURANCE

1955 / JBL Reyes / Appeal from CFI judgment

Qua Chee Gan owned 4 warehouses or bodegas used for the storage of copra and hemp, which were insured with Law Union, and the lose made payable to PNB as mortgage of the hemp and copra. Fire broke out and destroyed bodegas 1, 3 ad 4. QCG informed LU by telegram, and the next day, fire adjusters arrived to conduct an investigation. LU resisted payment, claiming violation of warranties and conditions, filing of fraudulent claims, and that the fire had been deliberately caused by QCG or by other persons in connivance with him.

            QCG, his brother, and some employees were indicted and tried for arson, but they were acquitted. Thereafter, the civil suit to collect the insurance money proceeded to its trial. CFI rendered a decision in QCG’s favor.

CFI AFFIRMED; LAW UNION LIABLE

On false and fraudulent claims

CFI found that the discrepancies were a result of QCG’s erroneous interpretation of the provisions of the insurance policies and claim forms, caused by his imperfect English, and that the misstatements were innocently made and without intent to defraud. The rule is that to avoid a policy, the false swearing must be willful and with intent to defraud which was not the cause.

On the storage of gasoline

Ambiguities or obscurities must be strictly interpreted against the party that caused them. This rigid application of the rule has become necessary in view of current business practices. In contrast to contracts entered into by parties bargaining on an equal footing, a contract of insurance calls for greater strictness and vigilance on the part of courts of justice with a view to protect the weaker party from abuses and imposition, and prevent their becoming traps for the unwary. The contract of insurance is one of perfect good faith (uferrimal fidei) not for the insured alone, but equally so for the insurer; in fact, it is more so for the latter, since its dominant bargaining position carries with it stricter responsibility.

            QCG admitted that there were 36 cans of gasoline in Bodega 2. Gasoline is not specifically mentioned among the prohibited articles listed in the hemp warranty. The cause relied upon LU speaks of oils. In ordinary parlance, “oils” means “lubricants” and not gasoline or kerosene. The prohibition of keeping gasoline could have been expressed clearly and unmistakably.

On fire hydrants warranty

LU is estopped from claiming that there was a violation of such warranty, since it knew that from the start, the number of hydrants it demanded never existed, yet it issued policies and received premiums.

vda. de Canilang v. CA

THELMA vda. de CANILANG v. CA and GREAT PACIFIC LIFE ASSURANCE

1993 / Feliciano / Petition for review on certiorari of CA decision

On June 1982, Jaime Canilang was diagnosed as suffering from sinus tachycardia. Two months later, he was found to have acute bronchitis. The next day, he applied for a “non-medical” insurance policy with Great Pacific and named his wife Thelma as his beneficiary. A year later, he died of congestive heart failure, anemia, and chronic anemia. When Thelma filed a claim with Great Pacific, it was denied on the ground that Jaime concealed material information.

            Thelma filed a complaint against Great Pacific with the Insurance Commission for recovery of the insurance proceeds. She testified that she was not aware of any serious illness suffered by Jaime, and that what she knew was that he died because of a kidney disorder. Great Pacific presented a physician who explained that Jaime’s application had been approved based on his medical declaration, and that medical examinations are required only in cases where applicant indicated that he has undergone medical consultation and hospitalization.

The Insurance Commission held that there was no intentional concealment on Jaime’s part. It also held that Great Pacific waived its right to inquire into Jaime’s health condition by issuing the policy despite the lack of answers to some of the pertinent questions in the application. It said BP 874, which voids an insurance contract WON concealment was made intentionally, was not applicable since the law became effective only on 1985.

CA reversed IC. CA said that the issue is WON there was material concealment, and not WON Canilang ‘intentionally’ made material concealment. It held that Jaime’s failure to disclose previous medical consultation and treatment constituted material information.

CANILANG FAILED TO DISCLOSE MATERIAL INFORMATION

The applicable law at that time was PD 1460 (Insurance Code of 1978). Under said law, the information concealed must be such which the concealing party knew and ought to have communicated—those which are material to the contract. The test of materiality is determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.

Canilang failed to disclose material information when he did not indicate under the caption ‘Exceptions’ that he twice consulted a doctor who found him to be suffering from sinus tachycardia and acute bronchitis. This failure to communicate must have been intentional, since Jaime could have been aware that his heartbeat would rise to high levels and that he consulted a doctor twice before applying for insurance.

The preceding statute, Act 2427, provided that a concealment, whether intentional or unintentional, entitles the injured party to rescind a contract of insurance. However, in PD 1460, this phrase was not present. [The current law, BP 874, has the phrase.] SC rejected the IC’s unspoken theory that the deletion of the phrase intended to limit the kinds of concealment to intentional concealments. The provision is properly read as referring to ANY concealment [“intentional” and “unintentional” cancel each other out].

CA AFFIRMED; PETITION DENIED

Fieldmen's Insurance v. vda. de Songco

FIELDMEN’S INSURANCE v. MERCEDES VARGAS vda. DE SONGCO, et al. and CA

1968 / Fernando / Review of CA decision

Federico Songco, a man of scant education [first grader], owned a private jeepney. He was induced by Fieldmen’s Insurance agent Benjamin Sambat to apply for a Common Carrier’s Liability Insurance Policy covering his motor vehicle. [As testified by Songco’s son Amor later,] Federico said that his vehicle is an ‘owner’ private vehicle and not for passengers, but agent Sambat said that they can insure whatever kind of vehicle because their company is not owned by the government, so they could do what they please whenever they believe a vehicle is insurable. Songco paid an annual premium and he was issued a Common Carriers Accident Insurance Policy. After the policy expired, he renewed the policy. During the effectivity of the renewed policy, the insured vehicle while being driven by Rodolfo Songco [duly licensed driver and Federico’s son] collided with a car. As a result, Federico and Rodolfo died, while Carlos (another son) and his wife Angelita, and a family friend sustained physical injuries.

            The lower court held that Fieldmen’s Insurance cannot escape liability under a common carrier insurance policy on the pretext that what was insured was a private vehicle and not a common carrier, the policy being issued upon the agent’s insistence. CA affirmed the lower court.

CA DECISION AFFIRMED; FIELDMEN’S INSURANCE IS LIABLE

From Qua Chee Gan v. Law Union and Rock Insurance – Where inequitable conduct is shown by an insurance firm, it is estopped from enforcing forfeitures in its favor, in order to forestall fraud or imposition on the insured. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall the innocent party due to its injurious reliance.

Fieldmen’s Insurance incurred legal liability under the policy. Since some of the conditions in the policy were impossible to comply with under the existing conditions at the time and inconsistent with the known facts, the insurer is estopped from asserting breach of such conditions. Except for the fact that the passengers were not fare-paying, their status as beneficiaries under the policy is recognized. Even if the be assumed that there was an ambiguity, such must be strictly interpreted against the party that caused them.

The contract of insurance is one of perfect good faith (uberrima fides) not for the insured alone, but equally so for the insurer; in fact, it is more so for the latter, since its dominant bargaining position carries with it stricter responsibility.

Sunlife Assurance v. CA

SUNLIFE ASSURANCE v. CA and SPS. ROLANDO and BERNARDA BACANI

1995 / Quiason / Petition for review on certiorari of a CA decision

FACTS

On April 1986, Robert John Bacani procured for himself a life insurance contract from Sunlife. He was issued a policy valued at 100k with double indemnity in case of accidental death, and his beneficiary was his mother, Bernarda. On June 1987, Robert died in a plane crash.

Bernarda filed a claim with Sunlife, seeking the benefits of her son’s insurance policy. The findings of the investigation conducted by Sunlife prompted it to reject the claim. Sunlife informed Bernarda that Robert did not disclose material facts relevant to the policy issuance, thus rendering the contract voidable. Sunlife claimed that Robert gave false statements in his application when he answered questions regarding consulting doctors [re: urine, kidney, bladder disorder], submitting to medical exams, and being admitted to a hospital within the past 5 years. Robert only said that he consulted a doctor for cough and flu complications. Sunlife discovered that 2 weeks prior to Robert’s application for insurance, he was examined and confined at the Lung Center where he was diagnosed for renal failure. A check representing the premiums paid was attached to the letter.

Sps. Bacani filed an action for specific performance against Sunlife. RTC ruled in favor of Sps. Bacani, saying that the facts concealed by Robert were made in good faith and under a belief that they need not be disclosed. It also held that Robert’s health history was immaterial since the insurance policy was “non-medical.” CA affirmed RTC.

SUNLIFE PROPERLY EXERCISED ITS RIGHT TO RESCIND THE CONTRACT BY REASON OF ROBERT’S CONCEALMENT

RATIO

“Good faith” is no defense in concealment. Materiality is to be determined solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries. Materiality does not depend on the insured’s state of mind, nor does it depend on the actual or physical events that ensue.

            The matters concealed would have affected Sunlife’s action on Robert’s application, as it would have approved it with the corresponding adjustment for a higher premium or it would have rejected it. A disclosure may have warranted a medical examination by Sunlife in order for it to assess the risk involved in accepting the application. In addition, Robert’s failure to disclose his hospitalization raises grave doubts about his good faith.

The argument that Sunlife’s waiver of the medical examination debunks the materiality of the facts concealed is untenable. The waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant, for such information constitutes an important factor which the insurer takes into consideration in deciding WON to issue the policy. Moreover, this argument by Sps. Bacani would make ineffective the provision that allows rescission where there is concealment.

The insured need not die of the disease he had failed to disclose. It is sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries.

CA DECISION REVERSED; SUNLIFE’S PETITION GRANTED