G.R. No. 156956 October 9, 2006REPUBLIC OF THE PHILIPPINES, by EU!RO T. "!LINIS, #$ H#% C&'&c#ty &% I$%(r&$ce Co))#%%#o$er,petitioner, vs.EL "ONTE "OTORS, INC., respondent.D E C I S I O NPANGANIBAN, CJ.*The securities required by the Insurance Code to be deposited with the Insurance Commissioner are intended to answer for the caims of all poicy hoders in the event that the depositin! insurance company becomes insovent or otherwise unabe to satisfy their caims. The security deposit must be rataby distributed amon! a the insured who are entited to their respective shares" it cannot be !arnished or evied upon by a sin!e caimant, to the detriment of the others.T+e C&%e#efore us is a $etition for %eview& under %ue '( of the %ues of Court, see)in! to reverse the *anuary &+, ,--. Order, of the %e!iona Court /%TC0 of 1ue2on City /#ranch ,,&0 in Civi Case No. 13453.-'&,. The %TC found Insurance Commissioner Eduardo T. 6ainis !uity of indirect contempt for refusin! to compy with the December &7, ,--, %esoution. of the ower court. The *anuary &+, ,--. Order states in fu89On *anuary 7, ,--., :respondent; fied a 6otion to Cite Commissioner Eduardo T. 6ainis of the Office of the Insurance Commission in Contempt of Court because of his faiure and refusa to obey the awfu order of this court embodied in a %esoution dated December &7, ,--, directin! him to aow the withdrawa of the security deposit of Capita Insurance and Surety Co. /CISCO0 in the amount of $&&,7.(,.5(.(- to be paid to Sheriff 6anue $a!uyo in the satisfaction of the Notice of owever, Commissioner 6ainis fied on *anuary &(, ,--. a written Comment reiteratin! the same !rounds aready passed upon and re?ected by this Court. This Court finds no awfu ?ustification or e=cuse for Commissioner 6ainis@ refusa to impement the awfu orders of this Court.9Aherefore, premises considered and after due hearin!, Commissioner Eduardo T. 6ainis is hereby decared !uity of Indirect Contempt of Court pursuant to Section . :of; %ue 5& of the &445 %ues of Civi $rocedure for wifuy disobeyin! and refusin! to impement and obey a awfu order of this Court.9'T+e F&ct%On *anuary &(, ,--,, the %TC rendered a Decision in Civi Case No. 13453.-'&,, findin! the defendants /Bifran Ciner, Inc., >iaria Bie!as and 6aura Bie!as0 ?ointy and severay iabe to pay De 6onte 6otors, Inc.,$&&,7.(,.5(.(- representin! the baance of Bifran Ciner@s service contracts with respondent. The tria court further ordered the e=ecution of the Decision a!ainst the counterbond posted by Bifran Ciner on *une &-, &445, and issued by Capita Insurance and Surety Co., Inc. /CISCO0.On Dpri &7, ,--,, CISCO opposed the 6otion for E=ecution fied by respondent, caimin! that the atter had no record or document re!ardin! the ae!ed issuance of the counterbond" thus, the bond was not vaid and enforceabe.On *une &., ,--,, the %TC !ranted the 6otion for E=ecution and issued the correspondin! Arit. Drmed with this Arit, Sheriff 6anue S. $a!uyo proceeded to evy on the properties of CISCO. >e aso issued a Notice of e aso as)ed that the amounts of such char!es and fees aready deducted and coected by $hiamife in connection therewith be reimbursed to the a!ents, with interest at the prevaiin! rate rec)oned from the date when they were deducted.%espondent Commissioner furnished petitioner De os %eyes with a copy of private respondent@s etter of *uy .&, &47+, and requested his answer thereto.$etitioner De os %eyes submitted an Dnswer dated September 7, &47+, statin! inter alia that8/&0 $rivate respondent@s etter of Du!ust &&, &47+ does not contain any of the particuar information which $hiamife was see)in! from him and which he promised to submit./,0 That since the Commission@s quasi3?udicia power was bein! invo)ed with re!ard to the compaint, private respondent must fie a verified forma compaint before any further proceedin!s.In his etter dated September 4, &47+, private respondent as)ed for the resumption of the hearin!s on his compaint.On October &, private respondent e=ecuted an affidavit, verifyin! his etters of Dpri &5, &47+, and *uy .&, &47+.In a etter dated October &', &47+, 6anue Orte!a, $hiamife@s Senior Dssistant Bice3$resident and E=ecutive Dssistant tothe $resident, as)ed that respondent Commission first rue on the questions of the ?urisdiction of the Insurance Commissioner over the sub?ect matter of the etters3compaint and the e!a standin! of private respondent.On October ,5, respondent Commissioner notified both parties of the hearin! of the case on November (, &47+.On November ., 6anue Orte!a fied a 6otion to 1uash SubpoenaGNotice on the foowin! !rounds"&. The SubpoenaGNotice has no e!a basis and is premature because8/&0 No compaint sufficient in form and contents has been fied"/,0 No summons has been issued nor received by the respondent De os %eyes, and hence, no ?urisdiction hasbeen acquired over his person"/.0 No answer has been fied, and hence, the hearin! schedued on November (, &47+ in the SubpoenaGNotice, and wherein the respondent is required to appear, is premature and ac)s e!a basis.II. The Insurance Commission has no ?urisdiction over"/&0 the sub?ect matter or nature of the action" and/,0 over the parties invoved /$ollo, p. &-,0.In the Order dated November +, &47+, respondent Commissioner denied the 6otion to 1uash. The dispositive portion of said Order reads8NOA, T>E%EEO%E, findin! the position of compainant thru counse tenabe and considerin! the fact that the instant case is an informa administrative iti!ation fain! outside the operation of the aforecited memorandum circuar but co!ni2abe by this Commission, the hearin! officer, in open session rued as it is hereby rued to deny the 6otion to 1uash SubpoenaGNotice for ac) of merit /$ollo, p. &-40.>ence, this petition.IIThe main issue to be resoved is whether or not the resoution of the e!aity of the Contract of D!ency fas within the ?urisdiction of the Insurance Commissioner.$rivate respondent contends that the Insurance Commissioner has ?urisdiction to ta)e co!ni2ance of the compaint in the e=ercise of its quasi3?udicia powers. The Soicitor E%EEO%E, the petition is ICD6 Dssurance Company" and$&',('&.45 from $>ICD6 owever, we cannot entirey faut the Court of Dppeas or petitioner. Even if the percenta!e ta= on endin! investorswas the soe issue before it, the CTD ordered petitioner to refund to the $>ICD6 companies Ithe fi=ed and percenta!eta=es :t;henpaidbypetitionersasendin!investor.J:&'; Dthou!htheamountsfor refundconsistedonyof whatrespondents paid as percenta!e ta=es, the CTD Decision aso ordered the refund to respondents of the fi=ed ta= onendin! investors.%espondents in their peadin!s deny any iabiity under Section &7,/D0/.0/dd0, on the same !roundthat they are not endin! investors.The question of whether respondents shoud pay the fi=ed ta= under Section &7,/D0/.0/dd0 revoves around thesame issue of whether respondents are ta=abe as endin! investors.In simiar circumstances, the Court has hed thatan appeate court may consider an unassi!ned error if it is cosey reated to an error that was propery assi!ned.:&(; Thisrue propery appies to the present case. Thus, we sha consider and rue on the issue of whether respondents aresub?ect to the fi=ed ta= under Section &7,/D0/.0/dd0.+"et"er Insur!nce Comp!nies !re'!x!*#e !s en$in& InvestorsInvo)in! Sections &4(3D and &7,/D0/.0/dd0 in reation to Section &4'/u0 of CD '++, petitioner ar!ues that insurancecompanies are sub?ect to two fi=ed ta=es and two percenta!e ta=es.$etitioner ae!es that8Ds a endin! investor, an insurance company is sub?ect to an annua fi=ed ta= of $(--.-- and another $(--.-- under Section &7, /D0/.0/dd0 and /!!0 of the Ta= Code.Ds an underwriter, an insurance company is sub?ect to the .K ta= of the tota premiums coected and another .K on the !ross receipts as a endin! investor under Sections ,(( and &4(3D,respectivey of the same Code. ===:&+;$etitioner aso contends that the refund !ranted to respondents is in the nature of a ta= e=emption, and cannot beaowed uness !ranted e=picity and cate!oricay.The rue that ta= e=emptions shoud be construed stricty a!ainst the ta=payer presupposes that the ta=payer isceary sub?ect to the ta= bein! evied a!ainst him. Hness a statute imposes a ta= ceary, e=pressy andunambi!uousy, what appies is the equay we3setted rue that the imposition of a ta= cannot be presumed.:&5; Aherethereisdoubt, ta=awsmust beconstruedstrictya!ainst the!overnment andinfavorof theta=payer.:&7; Thisisbecause ta=es are burdens on the ta=payer, and shoud not be unduy imposed or presumed beyond what the statutese=pressy and ceary import.:&4;Section &7,/D0/.0/dd0 of CD '++ aso provides8Sec. &7,. 2i/ed ta/es. O /D0 On business ======/.0 &ther fi/ed ta/es. O The foowin! fi=ed ta=es sha be coected as foows, the amount stated bein! for the whoe year, when not otherwise specified"===/dd0 Cendin! investors O&. In chartered cities and first cass municipaities, five hundred pesos",. In second and third cass municipaities, two hundred and fifty pesos".. In fourth and fifth cass municipaities and municipa districts, one hundred and twenty3five pesos"$rovided, That endin! investors who do business as such in more than one province sha pay a ta= of five hundred pesos.Section &4(3D of CD '++ provides8Sec. &4(3D. Percentage ta/ on dealers in securities, lending investors. O Deaers in securities and endin! investors sha pay a ta= equivaent to three per centum on their !ross income.Neither Section &7,/D0/.0/dd0 nor Section &4(3D mentions insurance companies.Section &7,/D0/.0/dd0 provides forthe ta=ation of endin! investors in different ocaities.Section &4(3D refers to deaers in securities and endin! investors. The burden is thus on petitioner to show that insurance companies are endin! investors for purposes of ta=ation.In this case, petitioner does not dispute that respondents are in the insurance business.$etitioner merey ae!esthat the definition of endin! investors under CD '++ is broad enou!h to encompass insurance companies.$etitionerinsists that because of Section &4'/u0, the two principa activities of the insurance business, namey, underwritin! andinvestment, are separatey ta=abe.:,-;Section &4'/u0 of CD '++ states8/u0 ICendin! investorJ incudes a persons who ma)e a practice of endin! money for themseves or others at interest.===Ds can be seen, Section &4'/u0 does not ta= the practice of endin! per se.It merey defines what endin! investorsare.The question is whether the endin! activities of insurance companies ma)e them endin! investors for purposes ofta=ation.Ae a!ree with the CTD and Court of Dppeas that it does not. Insurance companies cannot be considered endin!investors under CD '++, as amended.Definition of en$in&Investors un$er CA ,-- DoesNot Inc#u$e Insur!nceComp!nies.The definition in Section &4'/u0 of CD '++ is not broad enou!h to incude the business of insurance companies. TheInsuranceCodeof &457:,&; isverycear onwhat constitutesaninsurancecompany. It providesthat aninsurer orinsurance company Isha incude a individuas, partnerships, associations or corporations === en!a!ed as principas inthe insurance business, e=ceptin! mutua benefit associations.J:,,; 6ore specificay, respondents fa under the cate!ory ofinsurance corporations as defined in Section &7( of the Insurance Code, thus8SECTION &7(. Corporations formed or or!ani2ed to save any person or persons or other corporations harmess from oss, dama!e, or iabiity arisin! from any un)nown or future or contin!ent event, or to indemnify or to compensate any person or persons or other corporations for any such oss, dama!e, or iabiity, or to !uarantee the performance of or compiance with contractua obi!ations or the payment of debts of others sha be )nown as Iinsurance corporations.J$ainy, insurance companies and endin! investors are different enterprises in the eyes of the aw. Cendin! investorscannot, for a consideration, hod anyone harmess from oss, dama!e or iabiity, nor provide compensation or indemnityfor oss.The underwritin! of ris)s is the prero!ative of insurers, the !reat ma?ority of which are incorporated insurancecompanies:,.; i)e respondents.Gr&$t#$- o. "ort-&-e &$0ot+er Lo&$% &re I$2e%t)e$tPr&ct#ce% t+&t &re P&rt o. t+eI$%(r&$ce B(%#$e%%.True, respondents!rantedmort!a!eandother )indsof oans. >owever, thiswasnot doneindependentyofrespondentsL insurancebusiness. The!rantin!of certainoansisoneof severa meansof investment aowedtoinsurance companies.No ess than the Insurance Code mandates and re!uates this practice.:,';Hni)e the practice of endin! investors, the endin! activities of insurance companies are circumscribed and strictyre!uated by the State.Insurance companies cannot freey end to Ithemseves or othersJ as endin! investors can,:,(; norcan insurance companies !rant simpy any )ind of oan.Even prior to &457, the Insurance Code prescribed strict rues forthe!rantin!of oansbyinsurancecompanies.:,+; Theseprovisionsonmort!a!e, coatera andpoicy oans werereiterated in the Insurance Code of &457 and are sti in force today.$etitioner concedes that respondentsL investment practices are as much a part of the insurance business as the tas)of underwritin!.Nevertheess, petitioner ar!ues that such investment practices are separatey ta=abe under CD '++.The CTD and the Court of Dppeas found that the investment of premiums and other funds received by respondents Othrou!h the !rantin! of mort!a!e and other oans O was necessary to respondentsL business and hence, shoud not beta=ed separatey.Insurance companies are required by aw to possess and maintain substantia e!a reserves to meet their obi!ationsto poicyhoders.:,5; This obviousy cannot be accompished throu!h the coection of premiums aone, as the e!a reservesand capita and surpus insurance companies are obi!ated to maintain run into miions of pesos. Ds such, the creation ofIinvestment incomeJ has on! been hed to be !eneray, if not necessariy, e%%e$t#&, to the business of insurance.:,7;The creation of investment income in the manner sanctioned by the aws on insurance is thus part of the business ofinsurance, and the fruits of these investments are essentiay income from the insurance business. This is particuary trueif theinvestedassets arehed eitherasreservedfunds toprovideforpoicyobi!ationsor ascapitaand surpustoprovide an e=tra mar!in of safety which wi be attractive to insurance buyers.:,4;The Court has asohed that when acompanyista=ed onitsmainbusiness, itis no on!erta=abefurtherforen!a!in!inanactivity or wor) whichis merey apart of, incidenta toandis necessary toits mainbusiness.:.-; %espondents aready paid percenta!e and fi=ed ta=es on their insurance business. To require them to pay percenta!eand fi=ed ta=es a!ain for an activity which is necessariy a part of the same business, the aw must e=pressy require suchadditiona payment of ta=. There is, however, no provision of aw requirin! such additiona payment of ta=.Sections &4(3D and &7,/D0/.0/dd0 of CD '++ do not require insurance companies to pay doube percenta!e and fi=edta=es.They merey ta= endin! investors, not endin! activities.%espondents were not transformed into endin! investorsby the mere fact that they !ranted oans, as these investments were part of, incidenta and necessary to their insurancebusiness.#..ere$t T&= Tre&t)e$t o.I$%(r&$ce Co)'&$#e% &$0Le$0#$- I$2e%tor%.Section &7,/D0/.0 of CD '++ accorded different ta= treatments to endin! investors and insurance companies. Thereevant portions of Section &7, state8Sec. &7,. 2i/ed ta/es. 3 *A+ &n business ////.0 &ther fi/ed ta/es. O The foowin! fi=ed ta=es sha be coected as foows, the amount stated bein! for the whoe year, when not otherwise specified"===/dd0 Le$0#$- #$2e%tor% O&. In chartered cities and first cass municipaities, five hundred pesos",. In second and third cass municipaities, two hundred and fifty pesos".. In fourth and fifth cass municipaities and municipa districts, one hundred and twenty3five pesos"$rovided, That endin! investors who do business as such in more than one province sha pay a ta= of five hundred pesos.===/!!0 #an)s, insurance companies, finance and investment companies doin! business in the $hiippines and franchise !rantees, five hundred pesos.=== /Emphasis suppied.0Theseparateprovisionsonendin!investorsandinsurancecompaniesdemonstrateanintentiontotreat thesebusinesses differenty. If Con!ress intended insurance companies to be ta=ed as endin! investors, there woud be noneedfor Section&7,/D0/.0/!!0. Section&7,/D0/.0/dd0 woudhavebeensufficient. That insurancecompanieswereincuded with ban)s, finance and investment companies aso supports the CTDLs concusion that insurance companieshad more in common with the atter enterprises than with endin! investors.Ds the CTD pointed out, ban)s aso re!uaryend money at interest, but are not ta=abe as endin! investors.Ae find no merit in petitionerLs contention that Con!ress intended to sub?ect respondents to two percenta!e ta=esand two fi=ed ta=es.$etitionerLs ar!ument !oes a!ainst the doctrine of strict interpretation of ta= impositions.$etitionerLs ar!ument is i)ewise not in accord with e=istin! ?urisprudence.In Commissioner of Intern!# Revenuev. .ic"e# J. "ui##ier P!wns"op, Inc.,:.&; the Court rued that the different ta= treatment accorded to pawnshops andendin! investors in the NI%C of &455 and the NI%C of &47+ showed Ithe intent of Con!ress to dea with both sub?ectsdifferenty.JThe same reasonin! appies squarey to the present case.Even the current ta= aw does not treat insurance companies as endin! investors. Hnder Section &-7/D0:.,; of theNI%C of &445, endin! investors and non3ife insurance companies, e=cept for their crop insurances, are sub?ect to vaue3added ta= /IBDTJ0.Cife insurance companies are e=empt from BDT, but are sub?ect to percenta!e ta= under Section &,.of the NI%C of &445.Indeed, the fact that Sections &4(3D and &7,/D0/.0/dd0 of CD '++ faied to mention insurance companies areadyimpies the atterLs e=cusion from the covera!e of these provisions.Ahen a statute enumerates the thin!s upon which itis to operate, everythin! ese by impication must be e=cuded from its operation and effect.:..;e.#$#t#o$ o. Le$0#$-I$2e%tor% #$ C! 566 #% NotNe>.$etitioner does not dispute that it issued a ruin! in &4,- to the effect that the endin! of money at interest was anecessary incident of the insurance business, and that insurance companies were thus not sub?ect to the ta= on moneyenders.$etitioner ar!ues ony that the &4,- ruin! does not appy to the instant case because %D +&&- introduced thedefinition of endin! investors to CD '++ ony in &4+4.The sub?ect definition was actuay introduced much earier, at a time when endin! investors were sti referred to asmoney enders.Sections '( and '+ of the Interna %evenue Caw of &4&':.'; /I&4&' Ta= CodeJ0 state8SECTION '(.Dmount of Ta= on #usiness. P Ei=ed ta=es on business sha be coected as foows, the amount stated bein! for the whoe year, when not otherwise specified8===/=0 6oney enders, ei!hty pesos"===SECTION '+. Aords and $hrases Defined. P In appyin! the provisions of the precedin! section words and phrases sha be ta)en in the sense and e=tension indicated beow8===?"o$ey ,e$0er@ incudes &,, 'er%o$% >+o )&Ae & 'r&ct#ce o. ,e$0#$- )o$ey .or t+e)%e,2e% or ot+er% &t #$tere%t./Emphasis suppied0Ds can be seen, the definitions of Imoney enderJ under the &4&' Ta= Code and Iendin! investorJ under CD '++ areidentica.The term Imoney enderJ was merey chan!ed to Iendin! investorJ when Dct No. .4+. amended the %evisedDdministrative Code in &4.,.:.(; This same definition of endin! investor has since appeared in Section &4'/u0 of CD '++and ater ta= aws.Note that insurance companies were not incuded amon! the businesses sub?ect to an annua fi=ed ta= under the&4&' Ta= Code.:.+;That Con!ress ater saw the need to introduce Section &7,/D0/.0/!!0 in CD '++ bosters our view thatthere was no e!isative intent to ta= insurance companies as endin! investors.If insurance companies were areadyta=edasendin!investors, therewoudhavebeennoneedforaseparateprovisionspecificayrequirin!insurancecompanies to pay fi=ed ta=es.T+e Co(rt !ccor0% Gre&tBe#-+t to t+e F&ct(&, F#$0#$-%o. t+e CT!.Dedicatede=cusiveytothestudyandconsiderationof ta=probems, theCTDhasnecessariydeveopedane=pertise in the sub?ect of ta=ation that this Court has reco!ni2ed time and a!ain.Eor this reason, the findin!s of fact ofthe CTD, particuary when affirmed by the Court of Dppeas, are !eneray concusive on this Court absent !rave abuse ofdiscretion or papabe error,:.5; which are not present in this case.BHEREFORE, we DENN the instant petition and DEEI%6 the Decision of 5 *anuary ,--- of the Court of Dppeas inCD3OHSDND /$(-,---.--0 $ESOS, as and for e=empary dama!es"d0 Dnd the sum of ONE >HND%ED T>OHSDND /$&--,---.--0 $ESOS, as and for attorneyLs fees"+.Dnd O%DE%IN< defendant Deveopment #an) of the $hiippines to reimburse and pay to defendant D!ripina Capera the sum of ONE 6ICCION EIBE >HND%ED T>I%TN3TAO T>OHSDND SIM >HND%ED TEN $ESOS DND SEBENTN3EIBE CENTDBOS /$&,(.,,+&-.5(0 representin! the amounts paid by defendant D!ripina Capera to defendant Deveopment #an) of the $hiippines under their Deed of Conditiona Sae.CH#D andD#$ interposedseparateappeasfromthedecisiontotheCourt ofDppeas.Theformer sou!ht anincrease in the amount of dama!es, whie the atter questioned the findin!s of fact and aw of the ower court.In its decision :(; of ,( 6ay &44', the Court of Dppeas rued that /&0the tria court erred in decarin! that the deed ofassi!nment was nu and void and that defendant Capera coud not vaidy acquire the easehod ri!hts from D#$" /,0contrarytothecaimof D#$,theassi!nment wasnot acessionunder Drtice&,((of theCivi CodebecauseD#$appearedtobethesoecreditor toCH#D3 cessionpresupposespuraityof debtsandcreditors" /.0 thedeedsofassi!nment representedthevountaryact of CH#D inassi!nin!her propertyri!htsinpayment of her debts, whichamountedtoanovationof thepromissorynotese=ecutedbyCH#D infavorof D#$" /'0CH#D wasestoppedfromquestionin!theassi!nment of theeasehodri!hts, sinceshea!reedtorepurchasethesaidri!htsunderadeedofconditiona sae" and /(0 condition no. &, of the deed of assi!nment was an e=press authority from CH#D for D#$ to sewhatever ri!ht she had over the fishpond.It aso rued that CH#D was not entited to oss of profits for ac) ofevidence,but a!reed with the triacourt as to the actuadama!es of$&,-+5,(--. It, however, deeted the amount of e=emparydama!esandreducedtheawardof mora dama!esfrom $&--,---to $(-,---andattorneyLsfees, from $&--,---to $(-,---.The Court of Dppeas thus decared as vaid the foowin!8 /&0 the act of D#$ in appropriatin! CubaLs easehod ri!htsand interest under Eishpond Cease D!reement No. ,-7."/,0 the deeds of assi!nment e=ecuted by Cuba in favor of D#$"/.0 the deed of conditiona sae between CH#D and D#$" and /'0 the deed of conditiona sae between D#$ and Capera,the Eishpond Cease D!reement in favor of Capera, and the assi!nment of easehod ri!htse=ecuted by Capera in favorof D#$.It then ordered D#$ to turn over possession of the property to Capera as awfu hoder of the easehod ri!htsand to pay CH#D the foowin! amounts8 /a0 $&,-+5,(-- as actua dama!es" $(-,--- as mora dama!es" and $(-,--- asattorneyLs fees.Since their motions for reconsideration were denied,:+; D#$ and CH#D fied separate petitions for review.In its petition /E%EDS, the Bendor :D#$; by virtue of a deed of assi!nment e=ecuted in its favor by the herein vendees :Cuba spouses; the former acquired a the ri!hts and interest of the atter over the above3described property"SThe tite to the rea estate property :sic; and a improvements thereon sha remain in the name of the Bendor unti after the purchase price, advances and interest sha have been fuy paid./Emphasis suppied0.It isobviousfromtheabove3quotedpara!raphsthat D#$hadappropriatedandta)enownershipof CH#DLseasehod ri!hts merey on the stren!th of the deed of assi!nment.D#$ cannot ta)e refu!e in condition no. &, of the deed of assi!nment to ?ustify its act of appropriatin! the easehodri!hts.Ds stated earier, condition no. &, did not provide that CH#DLs defaut woud operate to vest in D#$ ownership ofthe said ri!hts.#esides, an assi!nment to !uarantee an obi!ation, as in the present case, is virtuay a mort!a!e and notan absoute conveyance of tite which confers ownership on the assi!nee.:&,;Dt any rate, D#$Ls act of appropriatin! CH#DLs easehod ri!hts was vioative of Drtice ,-77 of the Civi Code, whichforbids a creditor from appropriatin!, or disposin! of, the thin! !iven as security for the payment of a debt.Thefact that CH#Dofferedanda!reedtorepurchaseher easehodri!htsfromD#$didnot estopher fromquestionin!D#$Lsact of appropriation.Estoppe isunavaiin!inthiscase. DshedbythisCourt insomecases,:&.; estoppe cannot !ive vaidity to an act that is prohibited by aw or a!ainst pubic poicy.>ence, the appropriation of theeasehod ri!hts, bein! contrary to Drtice ,-77 of the CiviCode and to pubic poicy, cannot be deemed vaidated byestoppe.Instead of ta)in! ownership of the questioned rea ri!hts upon defaut by CH#D, D#$ shoud have forecosed themort!a!e, as has been stipuated in condition no. ,, of the deed of assi!nment. #ut, as admitted by D#$, there was nosuch forecosure.Net, in its etter dated ,+ October &454, addressed to the 6inister of D!ricuture and Natura %esourcesand coursed throu!h the Director of the #ureau of Eisheries and Dquatic %esources, D#$ decared that it Ihad forecosedthemort!a!eandenforced theassi!nment of easehodri!htson6arch,&,&454 forfaiureof saidspouses :Cubaspouces; to pay their oan amorti2ations.J:&'; This ony !oes to show that D#$ was aware of the necessity of forecosureproceedin!s.In viewof thefaserepresentation of D#$ thatit hadaready forecosed themort!a!e, the#ureauof EisheriescanceedCH#DLsori!ina easepermit, approvedthedeedof conditiona sae, andissuedanewpermit infavorofCH#D.Said acts which were predicated on such fase representation, as we as the subsequent acts emanatin! fromD#$Lsappropriationof theeasehodri!hts, shoudthereforebeset aside.Tovaidatetheseactswoudopenthefood!ates to circumvention of Drtice ,-77 of the Civi Code.Evenincaseswhereforecosureproceedin!swerehad, thisCourt hadnot hesitatedtonuifytheconsequentauction sae for faiure to compy with the requirements aid down by aw, such as Dct No. .&.(, as amended.:&(; Aith morereason that the sae of property !iven as security for the payment of a debt be set aside if there was no prior forecosureproceedin!.>ence, D#$ shoud render an accountin! of the income derived from the operation of the fishpond in question andappythesaidincomeinaccordancewithconditionno. &,of thedeedof assi!nment whichprovided8 IDnyamountreceived from rents, administration, S may be appied to the payment of repairs, improvements, ta=es, assessment, andother incidenta e=penses and obi!ations and the baance, if any, to the payment of interest and then on the capita of theindebtednessS.JAe sha now ta)e up the issue of dama!es.Drtice ,&44 provides8E=cept asprovided by aw or by stipuation, one is entited to an adequate compensation ony for such pecuniary oss suffered by him as he has duy proved.Such compensation is referred to as actua or compensatory dama!es.Dctua or compensatory dama!es cannot be presumed, but must be proved with reasonabe de!ree of certainty.:&+; Dcourt cannot rey on specuations, con?ectures, or !uesswor) as to the fact and amount of dama!es, but must dependupon competent proof that they have been suffered by the in?ured party and on the best obtainabe evidence of the actuaamount thereof.:&5; It must point out specific facts which coud afford a basis for measurin! whatever compensatory oractua dama!es are borne.:&7;In the present case, the tria court awarded in favor of CH#D $&,-+5,(-- as actua dama!es consistin! of $((-,---whichrepresentedthevaueof theae!edost articesof CH#D and $(&5,(--whichrepresentedthevaueof the,.-,--- pieces of ban!us ae!edy stoc)ed in &454 when D#$ first e?ected CH#D from the fishpond and the ad?oinin!house.This award was affirmed by the Court of Dppeas.Ae find that the ae!ed oss of persona beon!in!s and equipment was not proved by cear evidence. Other thanthe testimony of CH#D and her careta)er, there was no proof as to the e=istence of those items before D#$ too) over thefishpond in question.Ds pointed out by D#$, there was not Iinventory of the ae!ed ost items before the oss which isnorma in a pro?ect which sometimes, if not most often, is eft to the care of other persons.JNeither was a sin!e receipt orrecord of acquisition presented.Curiousy, in her compaint dated &5 6ay &47(, CH#D incuded Iosses of propertyJ as amon! the dama!es resutin!from D#$Ls ta)e3over of the fishpond.Net, it was ony in September &47( when her son and a careta)er went to thefishpond and the ad?oinin! house that she came to )now of the ae!ed oss of severa artices. Such caim for Iosses ofproperty,J havin! been made before )nowed!e of the ae!ed actua oss, was therefore specuative. The ae!ed osscoud have been a mere afterthou!ht or subterfu!e to ?ustify her caim for actua dama!es.Aith re!ard to the award of $(&5,--- representin! the vaue of the ae!ed ,.-,--- pieces of ban!us which diedwhen D#$ too) possession of the fishpond in 6arch &454, the same was not caed for.Such oss was not duy proved"besides, the caim therefor was deayed unreasonaby.Erom &454 unti after the fiin! of her compaint in court in 6ay&47(, CH#D did not brin! to the attention of D#$ the ae!ed oss.In fact, in her etter dated ,' October &454,:&4; shedecared8&.That from Eebruary to 6ay &457, I was then seriousy i in 6ania and within the same period I ne!ected the mana!ement and supervision of the cutivation and harvest of the produce of the aforesaid fishpond thereby resutin! to the irreparabe oss in the produce of the same in the amount of about $(--,---.-- to my !reat dama!e and pre?udice due to frauduent acts of some of my fishpond wor)ers.Nowhere in the said etter, which was written seven months after D#$ too) possession of the fishpond, did CH#Dintimate that upon D#$Ls ta)e3over there was a tota of ,.-,--- pieces of ban!us, but a of which died because of D#$Lsrepresentatives prevented her men from feedin! the fish.The award of actua dama!es shoud, therefore, be struc) down for ac) of sufficient basis.In view, however, of D#$Ls act of appropriatin! CH#DLs easehod ri!hts which was contrary to aw and pubic poicy,as we as its fase representation to the then 6inistry of D!ricuture and Natura %esources that it had Iforecosed themort!a!e,J an award of mora dama!es in the amount of $(-,--- is in order conformaby with Drtice ,,&4/&-0, in reationto Drtice ,&, of the Civi Code.E=empary or corrective dama!es in the amount of $,(,--- shoud i)ewise be awardedby way of e=ampe or correction for the pubic !ood.:,-; There bein! an award of e=empary dama!es, attorneyLs fees areaso recoverabe.:,&;BHEREFORE, the ,( 6ay &44' Decision of the Court of Dppeas in CD3OGE3,+'-7 coverin! ris)s from *anuary &,, &474 to *anuary &,, &44- was issued to Intratrade $his. /6asa!ana@s sister company0 dated December &-, &477 but premium therefor was paid ony on Eebruary &(, &474 under O.%. No. .7-5( /E=hs. 9##9 and 9##3&90.Eire Insurance $oicy No. ,4&,7 was issued on 6ay ,,, &474 but premium was paid ony on *uy ,(, &474 under O.%. No. '-7-- for insurance covera!e from 6ay ,,, &474 to 6ay ,,, &44- /E=hs. 9CC9 and 9CC3&90.Eire Insurance $oicy No. ,4&,5 was issued on 6ay ,,, &474 but premium was paid ony on *uy &5, &474 under O.%. No. '-+7, for insurance ris) covera!e from 6ay ,,, &474 to 6ay ,,, &44- /E=hs. 9DD9 and 9DD3&90.Eire Insurance $oicy No. >OGE3,4.+, was issued on *une &(, &474 but premium was paid ony on Eebruary &., &44- under O.%. No. .4,.. for insurance covera!e from 6ay ,,, &474 to 6ay ,,, &44- /E=hs. 9EE9 and 9EE3&90.Eire Insurance $oicy No. ,+.-. was issued on November ,,, &477 but premium therefor was coected ony on 6arch &(, &474 under O.%. NO. .7(5. for insurance ris)s covera!e from December &(, &477 to December &(, &474 /E=hs. 9EE9 and 9EE3&90.6oreover, accordin! to the Court of Dppeas the foowin! circumstances constitute preponderant proof that no timeynotice of non3renewa was made by $etitioner8/&0Defendant3appeant received the confirmation /E=hibit I&&J, %ecord, p. .(-0 from Htramar %einsurance #ro)ers that paintiffLs reinsurance faciity had been confirmed up to +5.(K ony on Dpri &(, &44, as indicated on E=hibit I&&J.Dpparenty, the notice of non3renewa /E=hibit I5,J %ecord, p. .,-0 was sent not earier than said date, or within '( days from the e=piry dates of the poicies as provided under $oicy Condition No. ,+"/,0 Defendant insurer unconditionay accepted, and issued an officia receipt for, the premium payment on *uy &:.;, &44, which indicates defendant@s wiin!ness to assume the ris) despite ony a +5.(K reinsurance cover:a!e;" and /.0 Defendant insurer appointed Esteban Dd?usters and Bauers to investi!ate paintiffLs caim as shown by the etter dated *uy &5, &44, /E=hibit I&&J, %ecord, p. ,('0.In our decision of &( *une &444, we defined the main issue to be Iwhether the fire insurance poicies issued bypetitioner to the respondent coverin! the period from6ay ,,, &44& to 6ay ,,, &44,S had been e=tended or renewed byan impied credit arran!ement thou!h actua payment of premium was tendered on a ater date and after the occurrenceof the /fire0 ris) insured a!ainst.JAe resoved this issue in the ne!ative in view of Section 55 of the Insurance Code andour decisionsin :alen-uelav. Court of Appeals:,;" SouthSeaSuretyand1nsuranceCo., 1nc. v.Court of Appeals:.;"and ibay v. Court of Appeals.:'; Dccordin!y, we reversed and set aside the decision of the Court of Dppeas.%espondent seasonaby fied a motion for the reconsideration of the adverse verdict. It ae!es in the motion that wehad made in the decision our own findin!s of facts, which are not in accord with those of the tria court and the Court ofDppeas.The courts beow correcty found that no notice of non3renewa was made within '( days before ,, 6ay &44,,or before the e=piration date of the fire insurance poicies.Thus, the poicies in question were renewed by operation ofaw and were effective and vaid on .- *une &44, when the fire occurred, since the premiums were paid within the +-3 to4-3day credit term.%espondent i)ewise disa!rees with our ruin! that parties may neither a!ree e=pressy or impiedy on the e=tensionofcreditor time topay the premiumnor considera poicy bindin! beforeactua payment.It ur!es theCourt to ta)e?udicia notice of the fact that despite the e=press provision of Section 55 of the Insurance Code, e=tension of credit termsin premiumpayment hasbeentheprevaentpractice intheinsurance industry.6ost insurance companies,incudin!$etitioner, e=tend credit terms because Section 55 of the Insurance Code is not a prohibitive in?unction but is mereydesi!ned for the protection of the parties to an insurance contract.The Code itsef, in Section 57, authori2es the vaidityof a poicy notwithstandin! non3payment of premiums.%espondent aso asserts that the principe of estoppeappies to $etitioner. Despite its awareness of Section 55$etitioner persuaded and induced %espondent to beieve that payment of premium on the +-3 to 4-3day credit term wasperfecty ari!ht" in fact it accepted payments within +- to 4- days after the due dates.#y e=tendin! credit and habituayacceptin! payments +- to 4- days from the effective dates of the poicies, it has impicity a!reed to modify the tenor of theinsurance poicy and in effect waived the provision therein that it woud pay ony for the oss or dama!e in case the sameoccurred after payment of the premium.$etitioner fied an opposition to the %espondentLs motion for reconsideration.It ar!ues that both the tria court andthe Court of Dppeas overoo)ed the fact that on + Dpri &44, $etitioner sent by ordinary mai to %espondent a notice ofnon3renewa and sent by persona deivery a copy thereof to %espondentLs bro)er, Tuei!.#oth courts i)ewise i!noredthe fact that %espondent was fuy aware of the notice of non3renewa.D readin! of Section ++ of the Insurance Codereadiy shows that in order for an insured to be entited to a renewa of a non3ife poicy, payment of the premium due onthe effective date of renewa shoud first be made.%espondentLs ar!ument that Section 55 is not a prohibitive provisionfinds no authoritative support.Hpon a meticuous review of the records and reevauation of the issues raised in the motion for reconsideration andthe peadin!s fied thereafter by the parties, we resoved to !rant the motion for reconsideration. The foowin! facts, asfound by the tria court and the Court of Dppeas, are indeed duy estabished8&.Eoryears, $etitionerhadbeenissuin!firepoiciestothe%espondent,andthesepoicies wereannuayrenewed.,.$etitioner had been !rantin! %espondent a +-3 to 4-3day credit term within which to pay the premiums onthe renewed poicies...There was no vaid notice of non3renewa of the poicies in question, as there is no proof at a that the noticesent by ordinary mai was received by %espondent, and the copy thereof ae!edy sent to Tuei! was evertransmitted to %espondent.'.The premiums for the poicies in question in the a!!re!ate amount of $,,(,5(..4( were paid by %espondentwithin the +-3 to 4-3day credit term and were duy accepted and received by $etitionerLs cashier.The instant case has to rise or fa on the core issue of whether Section 55 of the Insurance Code of &457 /$.D. No.&'+-0 must be stricty appied to $etitionerLs advanta!e despite its practice of !rantin! a +-3 to 4-3day credit term for thepayment of premiums.Section 55 of the Insurance Code of &457 provides8SEC. 55.Dn insurer is entited to payment of the premium as soon as the thin! insured is e=posed to the peri insured a!ainst.Notwithstandin! any a!reement to the contrary, no poicy or contract of insurance issued by an insurance company is vaid and bindin! uness and unti the premium thereof has been paid, e=cept in the case of a ife or an industria ife poicy whenever the !race period provision appies.This Section is a reproduction of Section 55 of $.D. No. +&, /The Insurance Code0 promu!ated on &7 December&45'.Inturn, thisSectionhasitssourceinSection5,ofDct No. ,',5otherwise)nownastheInsurance Dct asamended by %.D. No. .('-, approved on ,& *une &4+., which read8SEC. 5,.Dn insurer is entited to payment of premium as soon as the thin! insured is e=posed to the peri insured a!ainst, uness there is cear a!reement to !rant the insured credit e=tension of the premium due.No poicy issued by an insurance company is vaid and bindin! uness and unti the premium thereof has been paid. /Hnderscorin! suppied0It can be seen at once that Section 55 does not restate the portion of Section 5, e=pressy permittin! an a!reementto e=tend the period to pay the premium.#ut are there e=ceptions to Section 55RThe answer is in the affirmative.The first e=ception is provided by Section 55 itsef, and that is, in case of a ife or industria ife poicy whenever the!race period provision appies.The second is that covered by Section 57 of the Insurance Code, which provides8SEC. 57.Dny ac)nowed!ment in a poicy or contract of insurance of the receipt of premium is concusive evidence of its payment, so far as to ma)e the poicy bindin!, notwithstandin! any stipuation therein that it sha not be bindin! unti premium is actuay paid.D third e=ception was aid down in %a"atiuscanyCondominium Corporation vs. Courtof Appeals,:(; whereinwerued that Section 55 may not appy if the parties have a!reed to the payment in instaments of the premium and partiapayment has been made at the time of oss.Ae said therein, thus8Ae hod that the sub?ect poicies are vaid even if the premiums were paid on instaments.The records ceary show that the petitioners and private respondent intended sub?ect insurance poicies to be bindin! and effective notwithstandin! the sta!!ered payment of the premiums.The initia insurance contract entered into in &47, was renewed in &47., then in &47'.In those three years, the insurer accepted a the instament payments.Such acceptance of payments spea)s oudy of the insurerLs intention to honor the poicies it issued to petitioner.Certainy, basic principes of equity and fairness woud not aow the insurer to continue coectin! and acceptin! the premiums, athou!h paid on instaments, andater deny iabiity on the ame e=cuse that the premiums were not prepaid in fu.Not ony that.In uscany, we aso quoted with approva the foowin! pronouncement of the Court of Dppeas in its%esoution denyin! the motion for reconsideration of its decision8Ahie the import of Section 55 is that prepayment of premiums is stricty required as a condition to the vaidity of the contract, Ae are not prepared to rue that the request to ma)e instament payments duy approved by the insurer woud prevent the entire contract of insurance from !oin! into effect despite payment and acceptance of the initia premium or first instament.Section 57 of the Insurance Code in effect aows waiver by the insurer of the condition of prepayment by ma)in! an ac)nowed!ment in the insurance poicy of receipt of premium as concusive evidence of payment so far as to ma)e the poicy bindin! despite the fact that premium is actuay unpaid.Section 55 merey precudes the parties from stipuatin! that the poicy is vaid even if premiums are not paid, but does not e=pressy prohibit an a!reement !rantin! credit e=tension, and such an a!reement is not contrary to moras, !ood customs, pubic order or pubic poicy /De Ceon, The Insurance Code, p. &5(0.So is an understandin! to aow insured to pay premiums in instaments not so prescribed.Dt the very east, both parties shoud be deemed in estoppe to question the arran!ement they have vountariy accepted.#y the approva of the aforequoted findin!s and concusion of the Court of Dppeas, uscany has provided a fourthe=ception to Section 55, namey, that the insurer may !rant credit e=tension for the payment of the premium. This simpymeans that if the insurer has !ranted the insured a credit term for the payment of the premium and oss occurs before thee=piration of the term, recovery on the poicy shoud be aowed even thou!h the premium is paid after the oss but withinthe credit term.6oreover, there is nothin! in Section 55 which prohibits the parties in an insurance contract to provide a credit termwithin which to pay the premiums.That a!reement is not a!ainst the aw, moras, !ood customs, pubic order or pubicpoicy.The a!reement binds the parties.Drtice &.-+ of the Civi Code provides8D%T. &.-+.The contractin! parties may estabish such stipuations causes, terms and conditions as they may deem convenient, provided they are not contrary to aw, moras, !ood customs, pubic order, or pubic poicy. Einay in the instant case, it woud be un?ust and inequitabe if recovery on the poicy woud not be permitted a!ainst$etitioner, whichhadconsistenty!ranteda+-3 to4-3daycredit termfor thepayment of premiumsdespiteitsfuawareness of Section 55.Estoppe bars it from ta)in! refu!e under said Section, since %espondent reied in !ood faith onsuch practice.Estoppe then is the fifth e=ception to Section 55.BHEREFORE, the Decision in this case of &( *une &444 is RECONSIERE and SET !SIE, and a new one isherebyentered EN7ING theinstant petitionfor faiureof $etitioner tosufficientyshowthat areversibeerror wascommitted by the Court of Dppeas in its chaen!ed decision, which is hereby !FFIR"E in toto.No pronouncement as to cost.SO ORERE.G.R. No. LG25:EE Se'te)ber 2E, 196:FIEL"EN/S INSUR!NCE CO., INC., petitioner, vs."ERCEES O3 ',(' ... the duration of which wibe for one /&0 year, effective September &(, &4+- to September &(, &4+&. On September ,,, &4+&, the defendant company, upon payment of the correspondin! premium, renewed the poicy by e=tendin! the covera!e from October &(, &4+& to October &(, &4+,. This time Eederico Son!co@s private ?eepney carried $ate No. *3+7&.+3$ampan!a3&4+&. ... OnOctober ,4, &4+&, durin! the effectivity of the renewed poicy, the insured vehice whie bein! driven by %odofo Son!co, aduy icensed driver and son of Eederico /the vehice owner0 coided with a car in the municipaity of Caumpit, province of #uacan, as a resut of which mishap Eederico Son!co /father0 and %odofo Son!co /son0 died, Caros Son!co /another son0, the atter@s wife, Dn!eita Son!co, and a famiy friend by the name of *ose 6anue sustained physica in?uries of varyin! de!ree.9 &It was further shown accordin! to the decision of respondent Court of Dppeas8 9Dmor Son!co, ',3year3od son of deceased Eederico Son!co, testifyin! as witness, decared that when insurance a!ent #en?amin Sambat was inducin! hisfather to insure his vehice, he butted in sayin!8 @That cannot be, 6r. Sambat, because our vehice is an 9owner9 private vehice and not for passen!ers,@ to which a!ent Sambat repied8 @whether our vehice was an 9owner9 type or for passen!ers it coud be insured because their company is not owned by the ospita fees, or Coss of Time, caused to the insured8. . . /h0 #y drownin! e=cept as a consequence of the wrec)in! or disabement in the $hiippine waters of a passen!er steam or motor vesse in which the Insured is travein! as a farepayin! passen!er" . . . .D rider to the $oicy contained the foowin!8IB. D%OANINDC TSN, November ,(, &44&pp. ,.3,+1. Eor the period from 6arch &', &477 up to 6arch &', &474, did you personay arran!e for the procurement of this poicyRD.Nes, sir.1. Did you aso do this throu!h your insurance a!encyRD.If you are referrin! to Eorte Insurance D!ency, yes.1. Is Eorte Insurance D!ency a department or division of your companyRD.No, sir.They are our insurance a!ency.1. Dnd they are independent of your company insofar as operations are concernedRD.Nes, sir, they are separate entity.1. #ut insofar as the procurement of the insurance poicy is concerned they are of course sub?ect to your instruction, is that not correctRD.Nes, sir.The fina action is sti with us athou!h they can recommend what insurance to ta)e.1. In the procurement of the insurance poice /sic0 from 6arch &', &477 to 6arch &', &474, did you !ive writteninstruction to Eorte Insurance D!ency advisin! it that the earthqua)e shoc) covera!e must e=tend to a properties of D!oo $aya %esort in Ca HnionRD.No, sir. Ae did not ma)e any written instruction, athou!h we made an ora instruction to that effect of e=tendin! the covera!e on /sic0 the other properties of the company.1. Dnd that instruction, accordin! to you, was very important because in Dpri &475 there was an earthqua)e tremor in Ca HnionRD.Nes, sir.1. Dnd you wanted to protect a your properties a!ainst simiar tremors in the :future;, is that correctRD.Nes, sir.1. Now, after this poicy was deivered to you did you bother to chec) the provisions with respect to your instructions that a properties must be covered a!ain by earthqua)e shoc) endorsementRD.Dre you referrin! to the insurance poicy issued by Dmerican >ome Dssurance Company mar)ed E=hibit I which you have pointed to durin! yourdirect3e=amination, the phrase IItem no. ( onyJ meanin! to /sic0 the two /,0 swimmin! poos was deeted from the poicies issued by DIH, is it notR= = =DTTN. DND%ES8Ds an insurance e=ecutive wi you not attach any si!nificance to the deetion of the quaifyin! phrase for the poiciesRAITNESS86y answer to that woud be, the deetion of that particuar phrase is inadvertent.#ein! a company underwriter, we do not cover. . it was inadvertent because of the previous poicies that we have issued with no specific attachments, premium rates and so on.It was inadvertent, sir.TheCourt asore?ectspetitionerLscontentionthat respondentLscontemporaneousandsubsequent actstotheissuanceof theinsurancepoicyfasey!avethepetitioner assurancethat thecovera!eof theearthqua)eshoc)endorsement incudeda itspropertiesintheresort. %espondent onyinsuredthepropertiesasintendedbythepetitioner. $etitionerLs own witness testified to this a!reement, vi-8C%OSS EMD6INDTION OE CEO$OCDO 6DNTO>DCTSN, *anuary &', &44,pp. '3(1. *ust to be cear about this particuar answer of yours 6r. Aitness, what e=acty did you te Dtty. Omas /sic0 to copy from E=hibit I>J for purposes of procurin! the poicy from $hiippine Charter Insurance CorporationRD.I tod him that the insurance that they wi have to !et wi have the same provisions as this Dmerican >ome Insurance $oicy No. ,-+3'(+7-+&34.1. Nou are referrin! to E=hibit I>J of courseRD.Nes, sir, to E=hibit I>J.1. So, a the provisions here wi be the same e=cept that of the premium ratesRD.Nes, sir.>e assured me that with re!ards to the insurance premium rates that they wi be char!in! wi be imited to this one.I /sic0 can even be esser.C%OSS EMD6INDTION OE CEO$OCDO 6DNTO>DCTSN, *anuary &', &44,pp. &,3&'Dtty. 6e?ia81. Ai it be correct to state:,; 6r. Aitness, that you made a comparison of the provisions and scope of covera!e of E=hibits IIJ and I>J sometime in the third wee) of 6arch, &44- or thereaboutRD.Nes, sir, about that time.1. Dnd at that time did you notice any discrepancy or difference between the poicy wordin!s as we as scope of covera!e of E=hibits IIJ and I>J respectiveyRD.No, sir, I did not discover any difference inasmuch /sic0 as I was assured aready that the poicy wordin!s and rates were copied from the insurance poicy I sent them but it was ony when this case erupted that we discovered some discrepancies.1. Aith respect to the items decared for insurance covera!e did you notice any discrepancy at any time between those indicated in E=hibit IIJ and those indicated in E=hibit I>J respectiveyRD.Aith re!ard to the wordin!s I did not notice any difference because it was e=acty the same $.4.,---.-- onthe two /,0 swimmin! poos ony a!ainst the peri of earthqua)e shoc) which I understood before that this provision wi have to be paced here because this particuar provision under the peri of earthqua)e shoc) ony is requested because this is an insurance poicy and therefore cannot be insured a!ainst fire, so this has to be paced.The verbaassurances ae!edy!iven byrespondentLs representative Dtty. Hmas were notproved.Dtty. Hmascate!oricay denied havin! !iven such assurances.Einay, petitioner puts much stress on the etter of respondentLs independent caims ad?uster, #ayne Dd?usters andSurveyors, Inc. #ut as testified to by the representative of #ayne Dd?usters and Surveyors, Inc., respondent never meantto ead petitioner to beieve that the endorsement for earthqua)e shoc) covered properties other than the two swimmin!poos, vi-8DI%ECT EMD6INDTION OE DC#E%TO DE CEON /#ayneDd?usters and Surveyors, Inc.0TSN, *anuary ,+, &44.pp. ,,3,+1. Do you reca the circumstances that ed to your discussion re!ardin! the e=tent of covera!e of the poicy issued by $hiippine Charter Insurance CorporationRD.I remember that when I returned to the office after the inspection, I !ot a photocopy of the insurance covera!e poicy and it was indicated under Item . specificay that the covera!e is ony for earthqua)e shoc).Then, I remember I had a ta) with Dtty. Hmas /sic0, and I reayed to him what I had found out in thepoicy and he confirmed to me indeed ony Item . which were the two swimmin! poos have covera!e for earthqua)e shoc).= = =1. Now, may we )now from you En!r. de Ceon your basis, if any, for statin! that e=cept for the swimmin! poosa affected items have no covera!e for earthqua)e shoc)R= = =D.I based my statement on my findin!s, because upon my e=amination of the poicy I found out that under Item . it was specific on the wordin!s that on the two swimmin! poos ony, then encosed in parenthesis /a!ainst the peri:s; of earthqua)e shoc) ony0, and secondy, when I e=amined the summary of premium payment ony Item . which refers to the swimmin! poos have a computation for premium payment for earthqua)e shoc) and a the other items have no computation for payment of premiums.In sum, there is no ambi!uity in the terms of the contract and its riders. $etitioner cannot rey on the !enera rue thatinsurancecontractsarecontracts of adhesionwhich shoudbeiberay construedinfavorof the insuredandstrictya!ainst theinsurer companywhichusuaypreparesit.:.&; Dcontract of adhesionisonewhereinaparty, usuayacorporation, prepares the stipuations in the contract, whie the other party merey affi=es his si!nature or his 9adhesion9thereto. Throu!h the years,the courtshave hedthatinthese typeof contracts, the parties donot bar!ainon equafootin!, the wea)er party@s participation bein! reduced to the aternative to ta)e it or eave it. Thus, these contracts areviewed as traps for the wea)er party whom the courts of ?ustice must protect.:.,; Consequenty, any ambi!uity therein isresoved a!ainst the insurer, or construed iberay in favor of the insured.:..;The case aw wi show that this Court wi ony rue out bind adherence to terms where facts and circumstances wishow that they are basicay one3sided.:.'; Thus, we have caed on ower courts to remain carefu in scrutini2in! the factuacircumstances behind each case to determine the efficacy of the caims of contendin! parties. In e2e,o')e$t B&$A o.t+e P+#,#''#$e% 2. N&t#o$&, "erc+&$0#%#$-Cor'or&t#o$, et &,.,:.(; the parties, who were acute businessmen ofe=perience, were presumed to have assented to the assaied documents with fu )nowed!e.Ae cannot appy the !enera rue on contracts of adhesion to the case at bar.$etitioner cannot caim it did not )nowthe provisions of the poicy.Erom the inception of the poicy, petitioner had required the respondent to copy verbatim theprovisions and terms of its atest insurance poicy from D>DC3DIH. The testimony of 6r. Ceopodo 6antohac, a directparticipant in securin! the insurance poicy of petitioner, is refective of petitionerLs )nowed!e, vi-8DI%ECT EMD6INDTION OE CEO$OCDO 6DNTO>DC:.+;TSN, September ,., &44&pp. ,-3,&1. Did you indicate to Dtty. Omas /sic0 what )ind of poicy you woud want for those faciities in D!oo $ayaRD.Nes, sir.I tod him that I wi a!ree to that renewa of this poicy under $hiippine Charter Insurance Corporation as on! as it wi foow the same or e=act provisions of the previous insurance poicy we had with Dmerican >ome Dssurance Corporation.1. Did you ta)e any step 6r. Aitness to ensure that the provisions which you wanted in the Dmerican >ome Insurance poicy are to be incorporated in the $CIC poicyRD.Nes, sir.1. Ahat steps did you ta)eRD.Ahen I e=amined the poicy of the $hiippine Charter Insurance Corporation I specificay tod him that the poicy and wordin!s sha be copied from the DIH $oicy No. ,-+3'(+7-+&34.%espondent, in compiance with the condition set by the petitioner, copied DIH $oicy No. ,-+3'(+7-+&34 in draftin!its Insurance $oicy No. .&4''. It is true that there was variance in some terms, specificay in the repacement costendorsement, but the principa provisions of the poicy remained essentiay simiar to D>DC3DIHLs poicy.Consequenty,we cannot appy the 9fine print9 or 9contract of adhesion9 rue in this case as the partiesL intent to imit the covera!e of thepoicy to the two swimmin! poos ony is not ambi!uous.:.5;IN