Title
Pilipinas Bank vs. Court of Appeals
Case
G.R. No. 141060
Decision Date
Sep 29, 2000
Pilipinas Bank claimed insurance for a robbery loss under a policy with Meridian Assurance, denied due to policy exclusions. Court upheld denial, ruling parol evidence inadmissible as policy terms were clear and unambiguous.
insurance coverage
robbery
ambiguity
A

Case Summary (G.R. No. 141060)

Factual Background

Pilipinas Bank obtained the insurance policy from Meridian Assurance Corporation, and the policy covered the insured’s money and securities in transit on a money route, subject to the limits and conditions set out in the contract. Pilipinas Bank’s delivery activities were conducted using its armored vehicle, and the robbery occurred on November 25, 1985, at about 9:15 a.m., when two armed men wearing police uniforms robbed the armored vehicle while the authorized personnel and guards were on board.

After the heist, Pilipinas Bank filed a formal notice of claim on December 3, 1985, invoking the policy’s Section II—Money and Securities Outside Premises, which provided for indemnity against loss by any cause whatsoever occurring outside the premises of money and securities in the personal charge of a messenger in transit on a money route. Pilipinas Bank also relied on a warranty/rider attached to the policy that stated, in relation to Pilipinas Bank head office and its branches, that pick-up and/or deposits and withdrawals without the use of armored car, company car, or official’s car shall be covered by the policy.

Meridian Assurance Corporation denied Pilipinas Bank’s claim. Its denial was grounded on the position that the insurance did not cover the deliveries of the withdrawals to Pilipinas Bank’s clients, contrary to Pilipinas Bank’s reading of the coverage provisions and the attached warranty.

RTC Proceedings

Pilipinas Bank then filed a complaint against Meridian Assurance Corporation with the Regional Trial Court of Manila. Meridian Assurance Corporation filed a motion to dismiss, which the RTC granted. Pilipinas Bank sought reconsideration, but the RTC denied it. Pilipinas Bank responded by filing a petition for certiorari with the Court of Appeals challenging the RTC’s dismissal order. The Court of Appeals granted the petition and remanded the case to the RTC for further proceedings.

After remand, the RTC set the case for pre-trial. Pilipinas Bank filed its Pre-Trial Brief, and it identified Mr. Cesar R. Tubianosa as a witness. Pilipinas Bank indicated that his testimony would concern the existence and due execution of the insurance policy, including the negotiations held prior to the execution of the policy, particularly negotiations that led to the attachment of the warranties, to support Pilipinas Bank’s position that the loss was covered by the policy.

When Pilipinas Bank was about to present Mr. Tubianosa on September 18, 1991, Meridian Assurance Corporation objected. It argued that testimony about the negotiations on the terms and conditions of the policy would violate the best evidence rule. The RTC overruled the objection and allowed Tubianosa to testify. Meridian Assurance Corporation later renewed objections to questions relating to negotiations about the terms and conditions. The trial court sustained the objections in part, but allowed Pilipinas Bank to introduce evidence on negotiations other than what appeared in the insurance policy.

Tubianosa’s testimony was completed on that date. Later, on June 18, 1992, Pilipinas Bank filed a Motion to Recall Witness, asking that Tubianosa be recalled to testify on the negotiations pertaining to the terms and conditions before issuance of the policy, to determine the intention of the parties as to those terms and conditions. Meridian Assurance Corporation opposed the motion, invoking the parol evidence rule. The RTC denied the motion in an order dated July 24, 1999, ruling that recall would violate the parol evidence rule. Pilipinas Bank’s motion for reconsideration was likewise denied.

Court of Appeals Proceedings

Pilipinas Bank filed a petition for certiorari with the Court of Appeals assailing the RTC orders denying the motion to recall the witness and the subsequent denial of reconsideration. In its Decision dated July 30, 1999, the Court of Appeals dismissed the petition. It found no grave abuse of discretion by the RTC judge.

The Court of Appeals reasoned that there was no ambiguity in the insurance policy provisions that would necessitate the presentation of extrinsic evidence to clarify meaning. It further stated that Pilipinas Bank failed to set forth in its complaint a specific allegation of intrinsic ambiguity in the policy that would justify presentation of additional evidence to clarify the intent of the contracting parties. On that basis, the appellate court affirmed the disallowance of the recall of Tubianosa.

The Parties’ Contentions

In the Supreme Court, Pilipinas Bank maintained that the trial court should have allowed Tubianosa’s further testimony regarding pre-issuance negotiations to shed light on the true intent of the contracting parties and on the coverage issue. In its pre-trial presentation, Pilipinas Bank had indicated that Tubianosa would provide testimony not only on due execution but also on negotiations leading to attachment warranties and terms supportive of coverage.

The respondents, on the other hand, anchored their position on the rules governing evidence. They objected to the attempt to introduce negotiations and other extrinsic matters to alter, vary, or supplement the written policy terms, arguing that such testimony would violate the parol evidence rule and, earlier, the best evidence rule.

Supreme Court’s Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals. The Court held that there was no cogent reason to disturb the appellate court’s findings. It ruled that the disallowance of Tubianosa’s recall was consistent with the parol evidence and pleading requirements for admitting such extrinsic proof.

The Court emphasized that Pilipinas Bank’s complaint merely alleged entitlement to recover under the policy provisions because of the loss incurred during the heist. It did not allege that the policy terms were ambiguous or that they failed to express the true agreement between the parties. Because the issue of ambiguity, mistake, imperfection, or failure to express the true agreement was not put in issue through appropriate pleadings, Pilipinas Bank could not insist on presenting Tubianosa’s testimony to clarify the alleged true agreement.

The Supreme Court likewise relied on Section 9, Rule 130 of the Revised Rules of Court, which requires that, for parol evidence to be admissible to vary the terms of a written agreement (or to address mistake or imperfection, or failure of the writing to express the true agreement), the relevant ground must be put in issue by the pleadings. The Court found that Pilipinas Bank failed to raise in its complaint the existence of intrinsic ambiguity, mistake, imperfection, or failure of the policy to express the true intent and agreement of the parties.

Legal Basis and Reasoning

The Court’s reasoning centered on the rule that once parties have reduced their agreement to writing, the writing is treated as containing all the terms agreed upon. Thus, between the parties and their successors-in-interest, no evidence of other terms may be admitted other than the contents of the written agreement. In this case, the Supreme Court held that Pilipinas Bank could not overcome that rule by pointing to its pre-trial brief or by asserting that Tubianosa’s testimony would reveal the true agre

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