White Gold Marine Services vs Pioneer Insurance (2005) Facts: White Gold procured a protection and indemnity coverage

for its vessels from Steamship Mutual through Pioneer Insurance. Subsequently, White Gold was issued a Certificate of Entry and Acceptance. Pioneer also issued receipts evidencing payments for the coverage. When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage. - Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latters unpaid balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code, while Pioneer violated Sections 299, 300 and 301 in relation to Sections 302 and 303, thereof. - The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business. It explained that Steamship Mutual was a Protection and Indemnity Club (P & I Club). Likewise, Pioneer need not obtain another license as insurance agent and/or a broker for Steamship Mutual because Steamship Mutual was not engaged in the insurance business. Moreover, Pioneer was already licensed, hence, a separate license solely as agent/broker of Steamship Mutual was already superfluous. - The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision, the appellate court distinguished between P & I Clubs vis--visconventional insurance. The appellate court also held that Pioneer merely acted as a collection agent of Steamship Mutual. Issues: 1. WON Steamship Mutual, a P & I Club, is engaged in the insurance business in the Philippines 2. WON Pioneer needs a license as an insurance agent/broker for Steamship Mutual HELD 1. YES - The test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by what it is called. Basically, an insurance contract is a contract of indemnity. In it, one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. - In particular, a marine insurance undertakes to indemnify the assured against marine losses, such as the losses incident to a marine adventure. Section 99 of the Insurance Code enumerates the coverage of marine insurance. - Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it, the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the profits are divided among themselves, in

proportion to their interest. Additionally, mutual insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense costs. - A P & I Club is a form of insurance against third party liability, where the third party is anyone other than the P & I Club and the members. By definition then, Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business. - The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 187 of the Insurance Code. It maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. Thus, to continue doing business here, Steamship Mutual or through its agent Pioneer, must secure a license from the Insurance Commission. - Since a contract of insurance involves public interest, regulation by the State is necessary. Thus, no insurer or insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance Commission. 2. YES - SEC. 299 . . . - No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof, without first procuring a license so to act from the Commissioner, which must be renewed annually on the first day of January, or within six months thereafter. White Gold Marine Services vs Pioneer Insurance Facts: Petitioner White Gold bought a protection and indemnity coverage for its ships from Steamship Mutual through Respondent Pioneer. Certificates and receipts thus were given. However, Petitioner failed to fulfill its payments thus Steamship refused to renew its coverage. Steamship then filed for collection against Petitioner for recovery of unpaid balance. Thereafter, Petitioner also filed a complaint against Steamship and Respondent before the Insurance Commission for violations (186,187 for Steamship and 299,300,301 in relation to 302 and 303 for Respondent) of the Insurance Code-license requirements as an Insurance company for the former and as insurance agent for the latter. Said commission dismissed the complaint which decision was affirmed by the CA. Issue: Whether or not Steamship insurance business in the Philippines Mutual is a Protection and Indemnity Club engaged in the

Held: Steamship Mutual as a P & I Club is a mutual insurance company engaged in the marine insurance business. An insurance contract is a contract of indemnity. This means that one party undertakes for a consideration to indemnify another party against loss, damage, or liability arising from an unknown or contingent event. While to determine if a contract is an insurance contract we can look at the nature of the promise, the act to be performed, exact nature of the agreement in view of the entire occurrence, contingency or circumstance

where the performance is mandated. The label is not controlling. While under Section 2(2) ofthe Insurance Code the phrase doing an insurance business constitutes the following: 1) making or proposing to make, as insurer, any insurance contract; 2) making or proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to any other legitimate business or activity of the surety; 3) doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of this code; 4) doing or proposing to do any business in substance to any of the foregoing in a manner designed to evade the provision of this code. Taking all of these in to consideration, Steamship Mutual engaged inmarine insurance business undertook to indemnify Petitioner White Gold against marine losses as enumerated under sec. 99 of the Insurance Code. It is immaterial whether profit is derived from makinginsurance contract and that no separate or direct consideration is received since these does not preclude the existence of an insurance business. NOTES: *Mutual Insurance company- cooperative enterprise where the members are both the insurer and insured. *Protection and Indemnity Club- a form of insurance against third party liability where the third party is anyone other than the P & I Club and its members. PHILIPPINE HEALTH CARE PROVIDERS v. CIR

June 12, 2008

SUMMARY: Petitioner, a health maintenance organization, was assessed by the CIR with tax deficiencies, which include the DST for the years 1996 and 1997. The DST was imposed on petitioners health care agreements with its members, which were considered by the CIR as insurance contracts. Petitioner argues that such agreements are not contracts of insurance but contracts for the provision on a prepaid basis of medical services, and thus, not subject to DST. DOCTRINE: Under the law, a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability from an unknown or contingent event. Contracts between companies like petitioner and the beneficiaries under the plans are treated as insurance contracts. FACTS: Petitioner is a domestic corporation whose primary purpose is to establish, maintain, conduct and operate a prepaid group practice health care delivery system or a health maintenance organization to take care of the sick and disabled persons enrolled in the health care plan and to provide for the administrative, legal, and financial responsibilities of the organization. For an annual membership fee, individual members are entitled to various preventive, diagnostic, and curative medical services provided by the licensed physicians of the petitioner corporation. On January 2000, respondent Commission on Internal Revenue (CIR) sent a formal demand letter to petitioner and the corresponding assessment notices demanding the payment of deficiency taxes (VAT and DST) for 1996 and 1997. The deficiency DDST assessment was imposed on petitioners health care agreements with the members of its health care program pursuant to Section 185 of the 1997 Tax Code. Petitioner protested the assessment, but since respondent did not act, petitioner filed a petition for review in the Court of Tax Appeals (CTA) seeking the cancellation of the deficiency assessments. The CTA

ordered petitioner to pay a reduced deficiency VAT but cancelled the deficiency DST assessment for 1996 and 1997. Respondent appealed, claiming that petitioners health care agreement was a contract of insurance subject to DST. In 2004, the Court of Appeals held that petitioners health care agreements was in the nature of non-life insurance contracts subject to DST. Petitioner argued that its health care agreement is not a contract of insurance but a contract for the provision on a prepaid basis of medical services. It said that it is a health maintenance organization regulated by the Department of Health, not an insurance company under the jurisdiction of the Insurance Commission. ISSUE: Is a health care agreement in the nature of an insurance contract and therefore subject to the documentary stamp tax (DST) imposed under Section 185 of RA 8424 (Tax Code of 1997)? RATIO: YES. - Under the law, a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability from an unknown or contingent event. - Petitioners health care agreement is primarily a contract of indemnity. Blue Cross Healthcare Inc., vs. Olivares holds that a healthcare agreement is in the nature of a non-life insurance policy. - The term loss or damage is broad enough to cover the monetary expense or liability a member will incur in case of illness or injury. Also in case of exposure of a member to liability, he would be entitled to indemnification by petitioner. Furthermore, the fact that petitioner must relieve its member form liability by paying for expenses arising from the stipulated contingencies belies its claim that its services are prepaid. - Petitioner does not bear the costs alone but distributes or spreads them out among a large group of persons bearing a similar risk, that is, among all the other members of the health care program. This is insurance. - The case of Philamcare Health Systems, Inc. v CA also holds that the health care agreement was in the nature of a non-life insurance, which is primarily a contract of indemnity. - Petitioners contention that it is a health maintenance organization and not a n insurance company is irrelevant. Contracts between companies like petitioner and the beneficiaries under the plans are treated as insurance contracts. - The DST is not a tax on the business transacted but an excise on the privilege, opportunity, or facility offered at exchanges for the transaction of the business. PHILIPPINE HEALTH CARE PROVIDERS v. CIR

September 18, 2009 Corona, J.

SUMMARY: This case is a resolution on the motion for reconsideration filed by petitioner in the 2008 case. DOCTRINE: Principal object and purpose test: whether the assumption of risk and indemnification of loss are the principal object and purpose of the organization or whether they are merely incidental to its business. If these are the principal objects, the business is that of insurance. But if they are merely incidental and service is the principal purpose, then the business is not insurance. In our jurisdiction, even if a contract contains all the elements of an insurance contract, if its primary purpose is the rendering of service, it is not a contract of insurance. FACTS: (same facts as the 2008 case) ISSUE: Is a health care agreement in the nature of an insurance contract and therefore subject to the documentary stamp tax (DST) imposed under Section 185 of RA 8424 (Tax Code of 1997)?

RATIO: NO. - Health maintenance organizations are not engaged in the insurance business o It is a cardinal rule of statutory construction that no word, clause, sentence, provision or part of a statute shall be considered surplusage or superfluous, meaningless, void and insignificant. From the language of Section 185, two requisites must concur before the DST can apply: (1) the document must be a policy of insurance or an obligation in the nature of indemnity and (2) the maker should be transacting the business of insurance. o Petitioner is an HMO, an entity that provides, offers or arranges for coverage of designated health services needed by plan members for a fixed prepaid premium. The payments do not vary with the extent, frequency or type of service provided. Petitioner, as an HMO, was not engaged in the business of insurance during 1996 and 1997. o Section 2(2) of the Insurance Code enumerates what constitutes doing an insurance business: (1) Making or proposing to make, as insurer, any insurance contract (2) Making or proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to any other legitimate business or activity of the sirety (3) Doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of this Code (4) Doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this Code o US courts: HMOs are not in the insurance business. o Principal object and purpose test: whether the assumption of risk and indemnification of loss are the principal object and purpose of the organization or whether they are merely incidental to its business. If these are the principal objects, the business is that of insurance. But if they are merely incidental and service is the principal purpose, then the business is not insurance. o US Courts: the main difference between an HMO and an insurance company is that HMOs undertake to provide or arrange for the provision of medical services through participating physicians while insurance companies simply undertake to indemnify the insured for medical expenses incurred up to a pre-agreed limit. o For the purposes of determining what doing an insurance business means, was have to scrutinize the operations of the business as a whole and not its mere components. - A health case agreement is not an insurance contract contemplated under Section 185 of the 1997 Tax Code o Section 185 of the 1997 Tax Code, as a tax statute, must be strictly construed against the taxing authority. o Since the Blue Cross and Philamcare cases cited in the 2008 decisions did not involve the interpretation of tax provisions, they are not applicable in the case at bar. o Section 2(1) of the Insurance Code defines a contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage, or liability arising from an unknown or contingent event. The following are its elements: 1. The insured has an insurable interest 2. The insured is subject to a risk of loss by the happening of the designed peril 3. The insurer assumes the risk 4. Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk 5. In consideration of the insurers promise, the insured pays a premium. o Not all the necessary elements of a contract of insurance are present in petitioners agreements. There is no loss, damage or liability on the part of the member that should be indemnified by petitioner as HMO. o Although risk is a primary element of an insurance contract, it is not necessarily true that risk alone is sufficient to establish it. Almost anyone who undertakes a contractual obligation always bears a certain degree of financial risk. Insurance risk, or actuarial risk, is the risk that the cost of insurance claims might be higher than the premiums paid.

In our jurisdiction, even if a contract contains all the elements of an insurance contract, if its primary purpose is the rendering of service, it is not a contract of insurance. There was no legislative intent to impose DST on health care agreements of HMOs o The DST history and the HMO history clearly show that when the law imposing the DST was first passed, HMOs were unknown in the Philippines. However, when the various amendments to the DST law were enacted, they were already in existence in the Philippines. If it had been the intent of the legislature to impose DST on health care agreements, it could have done so in clear and categorical terms. It had many opportunities to do so. But it did not. Petitioners tax liability was extinguished under RA 9840, by their availing of the tax amnesty thru payment of 5% of their net worth as of the year 2005. o

Philamcare v CA G.R. No. 125678. March 18, 2002 J. Ynares-Santiago Facts: Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he or his family members were treated to heart trouble, asthma, diabetes, etc. The application was approved for 1 year. He was also given hospitalization benefits and out-patient benefits. After the period expired, he was given an expanded coverage for Php 75,000. During the period, he suffered from heart attack and was confined at MMC. The wife tried to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed away. She filed a case in the trial court for the collection of the amount plus damages. She was awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but deleted awards for damages. Hence, this appeal. Issue: WON a health care agreement is not an insurance contract; hence the incontestability clause under the Insurance Code does not apply. Held: No. Petition dismissed. Ratio: Petitioner claimed that it granted benefits only when the insured is alive during the one-year duration. It contended that there was no indemnification unlike in insurance contracts. It supported this claim by saying that it is a health maintenance organization covered by the DOH and not the Insurance Commission. Lastly, it claimed that the Incontestability clause didnt apply because two-year and not one-year effectivity periods were required. Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. Section 3 states: every person has an insurable interest in the life and health: (1) of himself, of his spouse and of his children.

In this case, the husbands health was the insurable interest. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. The provider must pay for the medical expenses resulting from sickness or injury. While petitioner contended that the husband concealed materialfact of his sickness, the contract stated that:

that any physician is, by these presents, expressly authorized to disclose or give testimony at anytime relative to any information acquired by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members. This meant that the petitioners required him to sign authorization to furnish reports about his medical condition. The contract also authorized Philam to inquire directly to his medical history. Hence, the contention of concealment isnt valid. They cant also invoke the Invalidation of agreement clause where failure of the insured to disclose information was a grounds for revocation simply because the answer assailed by the company was the heart condition question based on the insureds opinion. He wasnt a medical doctor, so he cant accurately gauge his condition. Henrick v Fire- in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider. Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the extent agreed upon. In the end, the liability of the health care provider attaches once the member is hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid. Section 27 of the Insurance Code- a concealment entitles the injured party to rescind a contract of insurance. As to cancellation procedure- Cancellation requires certain conditions: 1. Prior notice of cancellation to insured;

2. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned; 3. Must be in writing, mailed or delivered to the insured at the address shown in the policy;

4. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based None were fulfilled by the provider. As to incontestability- The trial court said that under the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The periods having expired, the defense of concealment or misrepresentation no longer lie.

PHILAMCARE HEALTH SYSTEMS, INC., vs. COURT OF APPEALS and JULITA TRINOS G.R. No. 125678 March 18, 2002 Facts: ErnaniTrinos, deceased husband of JulitaTrinos, applied for a health care coverage withPhilamcare Health Systems, Inc. In the standard application form, he answered NO to the following question:

Have you or any of your family members ever consulted or been treated for high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give details).
Coverage of the health care agreement (HCA): approved for a period of one year, Renewed 3 times yearly: March 1, 1988 - March 1, 1990; March 1, 1990 June 1, 1990. The amount of coverage was increased to a maximum sum of P75,000.00 per disability. Ernanis entitlement under HCA: hospitalization benefits, whether ordinary or emergency, listed therein out-patient benefits" such as annual physical examinations, preventive health care and other outpatient services. Ernaniwas subsequently confined. HISTORY (everything happened within the period of coverage): 1. Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month beginning March 9, 1990. 2. Julita tried to claim the benefits under the health care agreement. 3. Philamdenied her claim saying that the Health Care Agreement was void. there was a concealment regarding Ernanis medical history. Doctors at the MMC allegedly discovered at the time of Ernanis confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. 4. Julita paid the hospitalization expenses herself, amounting to about P76,000.00 5. Ernani was discharged at MMC 6. He was attended by a physical therapist at home. 7. Again he was admitted at the Chinese General Hospital. 8. Julita brought her husband home again due to financial difficulties. 9. In the morning of April 13, 1990, Ernani had fever and was feeling very weak. 10. Julita was constrained to bring him back to the Chinese General Hospital where he died on the same day. On July 24, 1990, respondent instituted with the Regional Trial Court of Manila, Branch 44, an action for damages against Philam and its president, Dr. Benito Reverente, She asked for reimbursement of her expenses plus moral damages and attorneys fees. After trial, the lower court ruled against Philam, ordered: 1. Defendants to pay and reimburse the medical and hospital coverage of the late ErnaniTrinos in the amount of P76,000.00 plus interest, until the amount is fully paid to plaintiff who paid the same; 2. Defendants to pay the reduced amount of moral damages of P10,000.00 to plaintiff; 3. Defendants to pay the reduced amount ofP10,000.00 as exemplary damages to plaintiff; 4. Defendants to pay attorneys fees of P20,000.00, plus costs of suit. CA: affirmed the decision of the trial court but deleted all awards for damages and absolved petitioner Reverente.Denied MR. Issues: 1. Whether health care agreements are considered insurance contracts. 2. Whether there was concealment of material facts on the part of Ernani that rendered the HCA void by virtue of the "Invalidation of agreement" contained in the contract. 3. Suppose there was concealment, what are the steps Philam should have done? Ruling: 1. YES, it is an insurance contract. Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. An insurance contract exists where the following elements concur: (1) The insured has an insurable interest;

(2) The insured is subject to a risk of loss by the happening of the designated peril; (3) The insurer assumes the risk; (4) Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk; and (5) In consideration of the insurers promise, the insured pays a premium. Section 3 of the Insurance Code states that any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest against him, may be insured against. Every person has an insurable interest in the life and health of himself. Section 10 provides: Every person has an insurable interest in the life and health: (1) of himself, of his spouse and of his children; (2) of any person on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest; (3) of any person under a legal obligation to him for the payment of money, respecting property or service, of which death or illness might delay or prevent the performance; and (4) of any person upon whose life any estate or interest vested in him depends. In the case at bar, the insurable interest of respondents husband in obtaining the health care agreement was his own health. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract. 2. NONE, there was no concealment of material facts. Petitioner cannot rely on the stipulation regarding "Invalidation of agreement" which reads:

Failure to disclose or misrepresentation of any material information by the member in the application or medical examination, whether intentional or unintentional, shall automatically invalidate the Agreement from the very beginning and liability of Philamcare shall be limited to return of all Membership Fees paid. An undisclosed or misrepresented information is deemed material if its revelation would have resulted in the declination of the applicant by Philamcare or the assessment of a higher Membership Fee for the benefit or benefits applied for.
The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondents husband who was not a medical doctor. Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. Thus,

(A)lthough false, a representation of the expectation, intention, belief, opinion, or judgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower rate of premium, and this is likewise the rule although the statement is material to the risk, if the statement is obviously of the foregoing character, since in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is shown by the facts within his knowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud. (Underscoring ours)
The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract. Concealment as a defense for the health care provider or insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer. In any case, with or without the authority to investigate, petitioner is liable for claims made under the contract. Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the extent agreed upon. In the end, the liability of the health care provider attaches once the

member is hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid. 3. Philamshloud have followed Section 27 of the Insurance Code: "a concealment entitles the injured party to rescind a contract of insurance." The right to rescind should be exercised previous to the commencement of an action on the contract.In this case, no rescission was made. Besides, the cancellation of health care agreements as in insurance policies require the concurrence of the following conditions: a. Prior notice of cancellation to insured; b. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned; c. Must be in writing, mailed or delivered to the insured at the address shown in the policy; d. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based. None of the above pre-conditions was fulfilled in this case. Anent the incontestability of the membership of respondents husband, we quote with approval the following findings of the trial court: (U)nder the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The periods having expired, the defense of concealment or misrepresentation no longer lie.

Del Rosario v Equitable G.R. No. L-16215 June 29, 1963 Facts: Equitables insurance policy covered indemnities for bodily injuries and deaths, however, it never specificed an amount to be given in case of a persons death by drowning. It specified amounts from 1,000 to 3,000 for other causes of death, however. Francisico del Rosario died from drowning after jumping from a sinking ship. The insurer, Equitable, agreed to pay Php 1,000 as the claim for an accident. His attorney, howvever, contended that he amount should be greater under section 2, Php 1500. The issue was resolved in the Insurance Commison, where it was held that Section 1, under the provisions applied. (Php 1,000 as indemnity) The lawyer still didint agree and instituted a suit. The trail court held that the company had the discretion to pay from Php 1,000 to 3,000 for death by drowning since there was no fixed amount for this type of death. The amended decision ordered the company to pay Php 2,000 Issue: What should the amount be? Held: Judgment affirmed. Still 2,000. Ratio: The interpretation of obscure stipulations in a contract should not favor the party who cause the obscurity. Ambigious terms in a policy are to be construed strictly against, the insurer, and liberally in favor of the insured for the payment of indemnity where forfeiture is involved. The company takes great care in the wording and has legal advisers who create the contracts to the benefit of the company.

Trial court ruling are well considered because they are supported by doctrines on insurance resolving cases against the party who caused the ambiguity in the wording of the contracts terms. This was also due to the fact that the insured didnt have much of a say in formulating the contract.

FILIPINAS COMPAIA DE SEGUROS, petitioner, vs. CHRISTERN HUENEFELD and CO., INC., respondent. G.R. No. L-2294 May 25, 1951 FACTS: Christern Huenefeld Corporation bought a fire insurance policy from Filipinas Compania de Seguros to cover merchandise contained in a building. During the Japanese military occupation, this same merchandise and the building were burned, so Huenefeld filed a claim under the policy. However, Filipinas Compania de Seguros refused to pay alleging that the policy had ceased to be in force when the United States declared war against Germany. Filipinas Compania contended that although organized and created under Philippine laws, Huenefeld is a German subject, and hence, a public enemy, since majority of its stockholders are Germans. On the other hand, Filipinas Compania is under American jurisdiction. The Director of Bureau of Financing, Philippine Executive Commission ordered Filipinas Compania to pay, so Filipinas Compania did pay. The case at bar is about the recovery of that sum paid. ISSUES: 1. Whether or not Christern Huenefeld is a German subject. 2. Whether the fire insurance policy is enforceable against an enemy state. HELD: 1. There is no question that majority of the stockholders of the respondent corporation were German subjects. This being so, we have to rule that said respondent became an enemy corporation upon the outbreak of the war between the United States and Germany.

2. The Philippine Insurance Law (Act No. 2427, as amended,) in section 8, provides that "anyone except a public enemy may be insured." It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy. The respondent having become an enemy corporation on December 10, 1941, the insurance policy issued in its favor on October 1, 1941, by the petitioner (a Philippine corporation) had ceased to be valid and enforcible, and since the insured goods were burned after December 10, 1941, and during the war, the respondent was not entitled to any indemnity under said policy from the petitioner. However, elementary rules of justice (in the absence of specific provision in the Insurance Law) require that the premium paid by the respondent for the period covered by its policy from December 11, 1941, should be returned by the petitioner.