White Gold v Pioneer G.R. No. 154514.

July 28, 2005

464 SCRA 448 Insurance Code Protection and Indemnity Club Mutual
Insurance Company Certificate of Authority

White Gold Marine Services, Inc. owns several shipping vessels.

Steamship Mutual Underwriting Association, Ltd. (based in Bermuda) is a
protection and indemnity club which is an association composed of
shipowners in general who band together for the specific purpose of
providing insurance cover on a mutual basis against liabilities incidental to
shipowning that the members incur in favor of third parties. White Gold,
through Pioneer Insurance (agent of Steamship Mutual here), procured a
protection and indemnity coverage from Steamship Mutual. Steamship
Mutual does not have authority from the Insurance Commission to
conduct insurance business in the Philippines but its collection agent here
(Pioneer Insurance) has been licensed to conduct insurance business.

Later, Steamship Mutual filed a case for collection of sum of money

against White Gold due to the latters failure to pay its balance with the
former. White Gold averred that Steamship Mutual has no license [hence it
cannot collect]. Nor can it collect through Pioneer Insurance because,
though Pioneer Insurance is licensed as an insurance company, it is not
licensed to be an insurance broker/agent. Steamship Mutual insisted it is
not conducting insurance business here and is merely a protection and
indemnity club. The Insurance Commission as well as the Court of Appeals
ruled against White Gold.

ISSUE: Whether or not Steamship Mutual needs a license to operate in

the Philippines.

HELD: 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. If it is a contract of
indemnity, it must be a contract of insurance. In fact, a protection and
indemnity club is a form of insurance where the members are both the
insurers and the insured. It is a mutual insurance company. The club
indemnifies the member for whatever risks it may incur against a third
party where the third party is other than the club and the members.
Hence, Steamship Mutual needs to procure a license from the Insurance
Commission in order to continue operating here.

Pioneer Insurance also needs to secure another license as an insurance

broker/agent of Steamship Mutual pursuant to Section 299 of the
Insurance Code.
Verendia v. CA - Insurance Policy
217 SCRA 1993
G.R. No. 75605 January 22, 1993

FACTS: Rafael (Rex) Verendia's residential building was insured with Fidelity and
Surety Insurance Company, Country Bankers Insurance and Development
Insurance with Monte de Piedad & Savings Bank as beneficiary
December 28, 1980 early morning: the building was completely destroyed
by fire
Fidelity refused the claim stating that there was
a misrepresentation since the lessee was not Roberto Garcia but Marcelo
Garcia
trial court: favored Fidelity
CA: reversed

ISSUE: W/N there was false declaration which would forfeit his benefits under
Section 13 of the policy

HELD: YES.
Basically a contract of indemnity, an insurance contract is the law between
the parties. Its terms and conditions constitute the measure of the insurer's
liability and compliance therewith is a condition precedent to the insured's right
to recovery from the. As it is also a contract of adhesion, an insurance contract
should be liberally construed in favor of the insured and strictly against the
insurer company which usually prepares it

Section 13 thereof which is expressed in terms that are clear and

unambiguous, that all benefits under the policy shall be forfeited "If the claim
be in any respect fraudulent, or if any false declaration be made or used in
support thereof, or if any fraudulent means or devises are used by the
Insured or anyone acting in his behalf to obtain any benefit under the policy"
Robert Garcia then executed an affidavit before the National Intelligence
and Security Authority (NISA) to the effect that he was not the lessee of
Verendia's house and that his signature on the contract of lease was a
complete forgery.
Worse yet, by presenting a false lease contract, Verendia,
reprehensibly disregarded the principle that insurance contracts
are uberrimae fidae and demand the most abundant good faith

Rizal Surety v CA G.R. No. 112360. July 18, 2000

J. Purisima

Facts:
Rizal Surety issued a 1 million peso fire insurance policy with Transworld. This was
increased to 1.5 million. A four span building was part of the policy. A fire broke out and
gutted the building, together with a two storey building behind it were gaming machines were
stored. The company filed its claims but to no avail. Hence, it brought a suit in court. It aimed
to make Rizal pay for almost 3 million including legal interest and damages.
Rizal claimed that the policy only covered damage on the four span building and not the two
storey building. The trial court ruled in Transworlds favor and ordered Rizal to pay actual
damages only. The court of appeals increased the damages. The insurance company filed a
MFR. The CA answered by modifying the imposition of interest. Not satisfied, the insurance
company petitioned to the Supreme Court.

Issue: WON Rizal Surety is liable for loss of the two-storey building considering that the
fire insurance policy sued upon covered only the contents of the four-span building.

Held: Yes. Petition dismissed.

Ratio:
The policy had clauses on the building coverage that read:
"contained and/or stored during the currency of this Policy in the premises occupied by them
forming part of the buildings situated within own Compound"
"First, said properties must be contained and/or stored in the areas occupied by Transworld
and second, said areas must form part of the building described in the policy xxx"
This generally means that the policy didnt limit its coverage to what was stored in the four-
span building.
As to questions of fact, both the trial court and the Court of Appeals found that the so called
"annex " was not an annex building but an integral part of the four-span building described in
the policy and consequently, the machines and spare parts stored were covered by the fire
insurance.
A report said: "Two-storey building constructed of partly timber and partly concrete hollow
blocks under g.i. roof which is adjoining and intercommunicating with the repair of the
first right span of the lofty storey building and thence by property fence wall."
"Art.1377. The interpretation of obscure words or stipulations in a contract shall not favor the
party who caused the obscurity"
Landicho v GSIS- the 'terms in an insurance policy, which are ambiguous, equivocal, or
uncertain are to be construed strictly and most strongly against the insurer, and liberally in
favor of the insured so as to effect the dominant purpose of indemnity or payment to
the insured
The issue of whether or not Transworld has an insurable interest in the fun and amusement
machines and spare parts, which entitles it to be indemnified for the loss thereof, had been
settled in another SC case.

PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT

OF APPEALS G.R. No. 125678, March 18, 2002
FACTS: Ernani Trinos applied for a health care coverage with Philamcare Health Systems, Inc. To
the 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?, Ernani
answered No. Under the agreement, Ernani is entitled to avail of hospitalization benefits and out-
patient benefits. The coverage was approved for a period of one year from March 1, 1988 to
March 1, 1989. The agreement was however extended yearly until June 1, 1990 which increased
the amount of coverage to a maximum sum of P75,000 per disability.
 During the period of said coverage, Ernani suffered a heart attack and was confined at
the Manila Medical Center (MMC) for one month. While in the hospital, his wife Julita tried to
claim the benefits under the health care agreement. However, the Philamcare denied her claim
alleging that the agreement was void because Ernani concealed his 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. Thus, Julita paid for all the
hospitalization expenses.

After Ernani was discharged from the MMC, he was attended by a physical therapist at home.
Later, he was admitted at the Chinese General Hospital. Due to financial difficulties, however,
respondent brought her husband home again. In the morning of April 13, 1990, Ernani had fever
and was feeling very weak. Respondent was constrained to bring him back to the Chinese
General Hospital where he died on the same day.

Julita filed an action for damages and reimbursement of her expenses plus moral damages
attorneys fees against Philamcare and its president, Dr. Benito Reverente. The Regional Trial
court or Manila rendered judgment in favor of Julita. On appeal, the decision of the trial court was
affirmed but deleted all awards for damages and absolved petitioner Reverente. Hence, this
petition for review raising the primary argument that a health care agreement is not an insurance
contract; hence the incontestability clause under the Insurance Code does not apply.

ISSUES: (1) Whether or not the health care agreement is not an insurance contract (2) Whether
or not there is concealment of material fact made by Ernani

HELD: (1)YES. Section2 (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 of the Insurance Code
states that any contingent or unknown event, whether past or future, which my damnify a person
having an insurable against him, may be insured against. Every person has an insurable interest
in the life and health of himself. Section 10 provides that every person has an insurable interest in
the life and health (1) of himself, of his spouse and of his children.

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) NO. 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 I good faith and without intent to deceive will not avoid a policy even
though they are untrue.

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 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 wherever he avails of the covered benefits which
he has prepaid. Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract the insurer. By reason of the
exclusive control of the insurance company over the terms and phraseology of the insurance
contract, ambiguity must be strictly interpreted against the insurer and liberally in favor of the
insured, especially to avoid forfeiture. This is equally applicable to Health Care Agreements.

Insurance Case Digest: Fortune Insurance And Surety Co., Inc. V. CA (1995)
G.R. No. 115278 May 23, 1995
Lessons Applicable: Stipulations Cannot Be Segregated (Insurance)

FACTS:
Producers Bank of the Philippines insured with Fortune Insurance
and Surety Co. P725,000 which was lost during a robbery of
Producer's armored vehicle while it was in transit from Pasay City
City to its Makati head office.
The armored car was driven by Benjamin Magalong Y de Vera,
escorted by Security Guard Saturnino Atiga Y Rosete.
After an investigation conducted by the Pasay police authorities,
the driver Magalong and guard Atiga were charged, together with
Edelmer Bantigue Y Eulalio, Reynaldo Aquino and John Doe, with
violation of P.D. 532 (Anti-Highway Robbery Law)
Upon claiming, Fortune refused stating that it is not liable since
under the general exceptions of the policy:
any loss caused by any dishonest, fraudulent or criminal
act of the insured or any officer, employee, partner, director, trustee
or authorized representative of the Insured whether acting alone or
in conjunction with others. . . .
RTC: favored Producers Bank since Driver and Security Guard
were merely assigned
CA: Affirmed RTC

ISSUE: W/N the driver and security guard are employees under the general
exception

HELD: YES. Petition is granted.

It is clear to us that insofar as Fortune is concerned, it was its
intention to exclude and exempt from protection and coverage
losses arising from dishonest, fraudulent, or criminal acts of
persons granted or having unrestricted access to Producers' money
or payroll. When it used then the term "employee," it must have
had in mind any person who qualifies as such as generally and
universally understood, or jurisprudentially established in the light
of the four standards in the determination of the employer-
employee relationship, 21 or as statutorily declared even in a
limited sense as in the case of Article 106 of the Labor Code which
considers the employees under a "labor-only" contract as
 employees of the party employing them and not of the party who
supplied them to the employer
Producers entrusted the three with the specific duty to safely
transfer the money to its head office, with Alampay to be
responsible for its custody in transit; Magalong to drive the armored
vehicle which would carry the money; and Atiga to provide the
needed security for the money, the vehicle, and his two other
companions.
A "representative" is defined as one who represents or stands in
the place of another; one who represents others or another in a
special capacity, as an agent, and is interchangeable with "agent."

Gulf Resorts Inc. vs. Philippine Charter Insurance

Corporation [G.R. No. 156167 May 16, 2005]

Facts: Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union
and had its properties in said resort insured originally with the American Home
Assurance Company (AHAC). In the first 4 policies issued, the risks of loss from
earthquake shock was extended only to petitioners two swimming pools. Gulf
Resortsagreed to insure with Phil Charter the properties covered by the AHAC
policy provided that the policy wording and rates in said policy be copied in the
policy to be issued by Phil Charter. Phil Charter issued Policy No. 31944 to Gulf
Resorts covering the period of March 14, 1990 to March 14, 1991 for
P10,700,600.00 for a total premium of P45,159.92. the break-down of premiums
shows that Gulf Resorts paid only P393.00 as premium against earthquake
shock (ES). In Policy No. 31944 issued by defendant, the shock endorsement
provided that In consideration of the payment by the insured to the company of
the sum included additional premium the Company agrees, notwithstanding what
is stated in the printed conditions of this policy due to the contrary, that this
insurance covers loss or damage to shock to any of the property insured by this
Policy occasioned by or through or in consequence of earthquake (Exhs. "1-D",
"2-D", "3-A", "4-B", "5-A", "6-D" and "7-C"). In Exhibit "7-C" the word "included"
above the underlined portion was deleted. On July 16, 1990 an earthquake
struck Central Luzon and Northern Luzon and plaintiffs properties covered by
Policy No. 31944 issued by defendant, including the two swimming pools in its
Agoo Playa Resort were damaged.

Petitioner advised respondent that it would be making a claim under its Insurance
Policy 31944 for damages on its properties. Respondent denied
petitioners claim on the ground that its insurance policy only afforded earthquake
shock coverage to the two swimming pools of the resort. The trial court ruled in
favor of respondent. In its ruling, the schedule clearly shows that petitioner paid
only a premium of P393.00 against the peril of earthquake shock, the same
premium it had paid against earthquake shock only on the two swimming pools in
all the policies issued by AHAC.

Issue: Whether or not the policy covers only the two swimming pools owned by
Gulf Resorts and does not extend to all properties damaged therein

Held: YES. All the provisions and riders taken and interpreted together,
indubitably show the intention of the parties to extend earthquake shock
coverage to the two swimming pools only. An insurance premium is the
consideration paid an insurer for undertaking to indemnify the insured against a
specified peril. In fire, casualty and marine insurance, the premium becomes a
debt as soon as the risk attaches. In the subject policy, no premium payments
were made with regard to earthquake shock coverage except on the two
swimming pools. There is no mention of any premium payable for the other resort
properties with regard to earthquake shock. This is consistent with the history of
petitioners insurance policies with AHAC.

MANILA MAHOGANY MANUFACTURING CORPORATION vs. COURT OF

APPEALS ANDZENITH INSURANCE CORPORATION (G.R. No. L-52756
(October 12, 1987)
FACTS: Petitioner Manila Mahogany Manufacturing Corporation insured its
Mercedes Benz 4-door sedan with respondent Zenith Insurance Corporation. The
insured vehicle was bumped and damaged by a truck owned by San Miguel
Corporation. For the damage caused, respondent company paid petitioner five
thousand pesos(P5,000.00) in amicable settlement. Petitioner's general manager
executed a Release of Claim, subrogating respondent company to all its right to
action against San Miguel Corporation. Thereafter, respondent company wrote
Insurance Adjusters, Inc. to demand reimbursement from San Miguel Corporation
of the amount it had paid petitioner. Insurance Adjusters, Inc. refused
reimbursement, alleging that San Miguel Corporation had already paid petitioner
P4,500.00 for the damages to petitioner's motor vehicle, as evidenced by a cash
voucher and a Release of Claim executed by the General Manager of petitioner
discharging San Miguel Corporation from "all actions, claims, demands the rights
of action that now exist or hereafter develop arising out of or as a consequence
of the accident." Respondent insurance company thus demanded from petitioner
reimbursement of the sum of P4,500.00 paid by San Miguel Corporation.
Petitioner refused; hence, the instant case.

ISSUE: Whether or not the respondent insurance company is subrogated to the

rights of the petitioner against San Miguel Corporation.

HELD: YES
RULING:
The Supreme Court held that if a property is insured and the owner receives the
indemnity from the insurer, it is provided in [Article 2207 of the New Civil Code]
that the insurer is deemed subrogated to the rights of the insured against the
wrongdoer and if the amount paid by the insurer does not fully cover the loss
then the aggrieved party is the one entitled to recover the deficiency. Under this
legal provision, the real party in interest with regard to the portion of the
indemnity paid is the insurer and not the insured.
Hence, petitioner is entitled to keep the sum of P4,500.00 paid by San
Miguel Corporation under its clear right to file a deficiency claim for damages
incurred, against the wrongdoer, should the insurance company not fully pay for
the injury caused (Article 2207, New Civil Code). However, when petitioner
released San Miguel Corporation from any liability, petitioner's right to retain the
sum of P5,000.00 no longer existed, thereby entitling private respondent to
recover the same. The right of subrogation can only exist after the insurer has
paid the insured otherwise the insured will be deprived of his right to full
indemnity. If the insurance proceeds are not sufficient to cover the damages
suffered by the insured, then he may sue the party responsible for the damage
for the remainder. To the extent of the amount he has already received from, the
insurer enjoys the right of subrogation. Since the insurer can be subrogated to
only such rights as the insured may have, should the insured, after receiving
payment from the insurer, release the wrongdoer who caused the loss, the
insurer loses his rights against the latter. But in such a case, the insurer will be
entitled to recover from the insured whatever it has paid to the latter, unless the
release was made with the consent of the insurer

[G.R. No. 150094. August 18, 2004]

FEDERAL EXPRESS CORPORATION, petitioner, vs. AMERICAN HOME ASSURANCE
COMPANY and PHILAM INSURANCE COMPANY, INC.,respondents.

Facts: On January 26, 1994, SMITHKLINE Beecham (SMITHKLINE) delivered to Burlington

Air
Express (BURLINGTON), an agent of FedEx, a shipment of 109 cartons of veterinary
biologicals for delivery to consignee SMITHKLINE and French Overseas Company in Makati
City, Metro Manila. The shipment was with the words, REFRIGERATE WHEN NOT IN
TRANSIT and PERISHABLE stamp marked on its face. Burlington insured the cargoes in the
amount of $39,339.00 with AHAC. The following day, Burlington turned over the custody of
said cargoes to Federal Express which transported the same to Manila. The first shipment,
consisting of 92 cartons arrived in Manila on January 29, 1994 , the second, consisting of 17
cartons, came in two (2) days later, or on January 31, 1994 which was immediately stored at
Cargohaus warehouse.
On February 10, 1994, DARIO C. DIONEDA (DIONEDA), found out, while he was
about to cause the release of the said cargoes, that the same were stored only in a room.
Thereafter, DIONEDA, upon instructions from GETC, did not proceed with the withdrawal of
the vaccines and instead, samples of the same were taken and brought to the Bureau of
Animal Industry of the Department of Agriculture in the Philippines by SMITHKLINE for
examination. As a consequence of the foregoing result of the veterinary biologics test,
SMITHKLINE abandoned the shipment and, declaring total loss for the unusable shipment,
filed a claim with AHAC through its representative in the Philippines, the Philam Insurance
Co., Inc. (PHILAM) which recompensed SMITHKLINE for the whole insured amount
$39,339.00.
Thereafter, respondents filed an action for damages against the petitioner imputing
negligence on either or both of them in the handling of the cargo.

Issue: WON FedEx is liable for Damage or loss of the insured goods

Held: Yes. The Certificate specifies that loss of or damage to the insured cargo is payable to
order upon surrender of this Certificate. Since the Certificate was in the possession of
Smithkline, the latter had the right of collecting or of being indemnified for loss of or damage
to the insured shipment, as fully as if the property were covered by a special policy in the
name of the holder. Hence, being the holder of the Certificate and having an insurable
interest in the goods, Smithkline was the proper payee of the insurance proceeds. The
consignee (Smithkline) had a legal right to receive the goods in the same condition it was
delivered for transport to petitioner. If that right was violated, the consignee would have a
cause of action against the person responsible therefor.

Eternal Gardens Memorial Park Corp. V. Philippine American Life Insurance Corp.
(2008) G.R. No. 166245 April 9, 2008
FACTS:
December 10, 1980: Philippine American Life Insurance
Company (Philamlife) entered into an agreement denominated as
Creditor Group Life Policy No. P-19202 with Eternal Gardens
Memorial Park Corporation (Eternal)
Under the policy (renewable annually), the clients of
Eternal who purchased burial lots from it on installment basis would
be insured by Philamlife
amount of insurance coverage depended upon the
existing balance
Eternal complied by submitting a letter dated December 29,
1982, a list of insurable balances of its lot buyers for October 1982
which includes John Chuang which was stamped as received by
Philam Life
August 2, 1984, Chuang died with a balance of 100,000 php
April 25, 1986: Philamlife had not furnished Eternal with any
reply on its insurance claim so its demanded its claim
According to Philam Life, since the application was submitted
only on November 15, 1984, after his death, Mr. John Uy Chuang
was not covered under the Policy since his application was not
approved. Moreover, the acceptance of the premiums are only in
trust for and not a sign of approval.
RTC: favored Eternal
CA: Reversed RTC
ISSUE: W/N Philam's inaction or non-approval meant the perfection of the
insurance contract.

HELD: YES. CA reversed

construed in favor of the insured and in favor of the effectivity of
the insurance contract
Upon a partys purchase of a memorial lot on installment from
Eternal, an insurance contract covering the lot purchaser is created
and the same is effective, valid, and binding until terminated by
Philamlife by disapproving the insurance application
Moreover, the mere inaction of the insurer on the insurance
application must not work to prejudice the insured
The termination of the insurance contract by the insurer must be
explicit and unambiguous
Enriquez vs. Sun Life Assurance Co. [GR No. 15895; November
29, 1920]

Facts: Plaintiff is estate administrator for late Joaquin Herrer. Herrer has
pending application with defendant Sun Life Assurance Co (sun Life)
evidenced by a provisional receipt. The provisional receipt reads
payment of Php6, 000 for life annuity received 26 September 1917.
The application was received by Sun Life head office a month after. 04
December 1917, the policy was issued in Montreal. A petition for
withdrawal of application was filed by Herrers lawyer 18 December
1917. Herrer died 20 December. A letter from Sun Life was received 21
December stating policy was issued and reminds the party of a
notification of acceptance of the application dated 26 November.
Plaintiff testified that he had found no letter of notification from the
Sun Life. Lower Court decides in favor of respondent. Appeal was
taken.

Issue: Whether or not the there has been a valid offer and
acceptance??

Held: None. The Civil Code provides that the acceptance made by
letter binds the person making the offer only from the date it has came
to its knowledge. The contract of life annuity was not perfected. There
was no satisfactory evidence that the application acceptance came to
the knowledge of Herrer.

Article 16 of the civil code provides that any deficiency in the special
law shall be supplied by the Code. The Insurance Code does not
provide for law on the principle of acceptance, thus the Civil Code shall
govern.

Article 1262 provides that consent is shown by concurrence of offer

and acceptance with the thing and the consideration to the contract.
The acceptance by letter shall not bind the person making the offer
except from the time It came to his knowledge.

American Courts held that acceptance of offer not actually

communicated does not complete the contract but the mailing of the
acceptance. Locus Poenitrntiae is ended when acceptance has passed
beyond partys control.

Furthermore, the provisional receipt provides for conditions before a

contract is deemed final. 1. Medical examination. 2. Approval by head
office of the application. 3. the company communicates approval to the
applicant.

In the case, there was no letter of notification. No evidence of

knowledge. Judgment reversed. Php6000 with interest is to be
returned.

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner vs. Court

of Appeals and the ESTATE OF THE LATE JUAN B. DANS,
represented by CANDIDA G. DANS, and the DBP MORTGAGE
REDEMPTION INSURANCE POOL, respondents. G.R. NO. 109937

FACTS: Juan B. Dans, 76 years of age, together with his family, applied
for a loan worth Php 500, 000 at the Development Bank of the
Philipppines on May 1987. The loan was approved by the bank dated
August 4, 1987 but in the reduced amount of Php 300, 000. Mr. Dans
was advised by DBP to obtain a mortgage redemption insurance at
DBP MRI pool. DBP deducted the amount to be paid for MRI Premium
that is worth Php 1476.00. The insurance of Mr. Dans, less the DBP
service fee of 10%, was credited by DBP to the savings account of DBP
MRI-Pool. Accordingly, the DBP MRI Pool was advised of the credit.
On September 3, 1987, Mr. Dans died of cardiac arrest. DBP
MRI notified DBP was not eligible for the coverage of insurance for he
was beyond the maximum age of 60. The wife, Candida, filed a
complaint to the Regional Trial Court Branch I Basilan against DBP and
DBP MRI pool for Collection of Sum of Money with Damages. Prior to
that, DBP offered the administratrix (Mrs. Dans) a refund of the MRI
payment but she refused for insisting that the family of the deceased
must receive the amount equivalent of the loan. DBP also offered and
ex gratia for settlement worth Php 30, 000. Mrs. Dans refused to take
the offer. The decision of the RTC rendered in favor of the family of the
deceased and against DBP. However, DBP appealed to the court.

ISSUE: Whether or not the DBP MRI Pool should be held liable on the
ground that the contract was already perfected.

HELD: No. DBP MRI Pool is not liable. Though the power to approve the
insurance is lodged to the pool, the DBP MRI Pool did not approve the
application of the deceased. There was no perfected contract between
the insurance pool and Mr. Dans.
DBP was wearing two legal hats: as a lender and insurance
agent. As an insurance agent, DBP made believed that the family
already fulfilled the requirements for the said insurance although DBP
had a full knowledge that the application would never be approved.
DBP acted beyond the scope of its authority for accepting applications
for MRI. If the third person who contracted is unaware of the authority
conferred by the principal on the agent and he has been deceived, the
latter is liable for damages. The limits of the agency carries with it the
implication that a deception was perpetratedArticles 19-21 come into
play.

However, DBP is not entitled to compensate the family of the

deceased with the entire value of the insurance policy. Speculative
damages are too remote to be included in the cost of damages. Mr.
Dans is entitled only to moral damages. Such damages do not need a
proof of pecuniary loss for assessment. The court granted only moral
damages (Php 50, 000) plus attorney feess (Php 10, 000) and the
reimbursement of the MRI fees with legal interest from the date of the
filing of the complaint until fully paid.

Great Pacific v CA G.R. No. L-31845 April 30, 1979

Facts:
Ngo Hing filed an application with the Great Pacific for a twenty-year endowment policy in
the amount of P50,000.00 on the life of his one-year old daughter Helen. He supplied the
essential data which petitioner Mondragon, the Branch Manager, wrote on the form. The
latter paid the annual premium the sum of P1,077.75 going over to the Company, but he
retained the amount of P1,317.00 as his commission for being a duly authorized agent of
Pacific Life.
Upon the payment of the insurance premium, the binding deposit receipt was issued
Ngo Hing. Likewise, petitioner Mondragon handwrote at the bottom of the back page of
the application form his strong recommendation for the approval of the insurance application.
Then Mondragon received a letter from Pacific Life disapproving the insurance application.
The letter stated that the said life insurance application for 20-year endowment plan is
not available for minors below seven years old, but Pacific Life can consider the same under
the Juvenile Triple Action Plan, and advised that if the offer is acceptable, the Juvenile Non-
Medical Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was allegedly not
communicated by petitioner Mondragon to private respondent Ngo Hing. Instead, on May 6,
1957, Mondragon wrote back Pacific Life again strongly recommending the approval of the
20-year endowment insurance plan to children, pointing out that since the customers were
asking for such coverage.
Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the
insurance, but having failed in his effort, he filed the action for the recovery before the Court
of First Instance of Cebu, which ruled against him.

Issues:
Whether Ngo Hing concealed the state of health and physical condition of Helen Go, which
rendered void the policy

Held: Yes.
Ratio: Ngo Hing had deliberately concealed the state of health of his daughter Helen Go.
When he supplied data, he was fully aware that his one-year old daughter is typically a
mongoloid child. He withheld the fact material to the risk insured.
The contract of insurance is one of perfect good faith uberrima fides meaning good faith,
absolute and perfect candor or openness and honesty; the absence of any concealment or
demotion, however slight. The concealment entitles the insurer to rescind the contract of
insurance.

Cha V. CA (1997) G.R. No. 124520 August 18, 1997

FACTS:

Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation
entered a 1 year lease contract with a stipulation not to insure against fire
the chattels, merchandise, textiles, goods and effects placed at any stall or
store or space in the leased premises without first obtaining the written
consent and approval of the lessor. But it insured against loss by fire their
merchandise inside the leased premises for P500,000 with the United
Insurance Co., Inc. without the written consent of CKS
On the day the lease contract was to expire, fire broke out inside the
leased premises and CKS learning that the spouses procured an insurance
wrote to United to have the proceeds be paid directly to them. But United
refused so CKS filed against Spouses Cha and United.
RTC: United to pay CKS the amount of P335,063.11 and Spouses Cha to
pay P50,000 as exemplary damages, P20,000 as attorneys fees and costs of
suit
CA: deleted exemplary damages and attorneys fees

ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the
stipulation

HELD: NO. CA set aside. Awarding the proceeds to spouses Cha.

Sec. 18. No contract or policy of insurance on property shall be

enforceable except for the benefit of some person having an insurable
interest in the property insured
A non-life insurance policy such as the fire insurance policy taken by
petitioner-spouses over their merchandise is primarily a contract of
indemnity. Insurable interest in the property insured must exist a t the time
the insurance takes effect and at the time the loss occurs. The basis of such
requirement of insurable interest in property insured is based on sound public
policy: to prevent a person from taking out an insurance policy on property
upon which he has no insurable interest and collecting the proceeds of said
policy in case of loss of the property. In such a case, the contract of
insurance is a mere wager which is void under Section 25 of the Insurance
Code.
 SECTION 25. Every stipulation in a policy of Insurance for the payment of
loss, whether the person insured has or has not any interest in the property
insured, or that the policy shall be received as proof of such interest, and
every policy executed by way of gaming or wagering, is void
Section 17. The measure of an insurable interest in property is the extent
to which the insured might be damnified by loss of injury thereof
The automatic assignment of the policy to CKS under the provision of the
lease contract previously quoted is void for being contrary to law and/or
public policy. The proceeds of the fire insurance policy thus rightfully belong
to the spouses. The liability of the Cha spouses to CKS for violating their
lease contract in that Cha spouses obtained a fire insurance policy over their
own merchandise, without the consent of CKS, is a separate and distinct
issue which we do not resolve in this case.

Geagonia v CA G.R. No. 114427 February 6, 1995

Facts:

Geagonia, owner of a store, obtained from Country Bankers fire

insurance policy for P100,000.00. The 1 year policy and covered the
stock trading of dry goods. The policy noted the requirement that "3.
The insured shall give notice to the Company of any insurance or
insurances already effected, or which may subsequently be effected,
covering any of the property or properties consisting of stocks in trade,
goods in process and/or inventories only hereby insured, and unless
notice be given and the particulars of such insurance or insurances be
stated therein or endorsed in this policy pursuant to Section 50 of the
Insurance Code, by or on behalf of the Company before the occurrence
of any loss or damage, all benefits under this policy shall be deemed
forfeited, provided however, that this condition shall not apply when
the total insurance or insurances in force at the time of the loss or
damage is not more than P200,000.00." The petitioners stocks were
destroyed by fire. He then filed a claim which was subsequently denied
because the petitioners stocks were covered by two other fire
insurance policies for Php 200,000 issued by PFIC. The basis of the
private respondent's denial was the petitioner's alleged violation of
Condition 3 of the policy.
Geagonia then filed a complaint against the private respondent
in the Insurance Commission for the recovery of P100,000.00 under fire
insurance policy and damages. He claimed that he knew the existence
of the other two policies. But, he said that he had no knowledge of the
provision in the private respondent's policy requiring him to inform it of
the prior policies and this requirement was not mentioned to him by
the private respondent's agent. The Insurance Commission found that
the petitioner did not violate Condition 3 as he had no knowledge of
the existence of the two fire insurance policies obtained from the PFIC;
that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o
informing him or securing his consent; and that Cebu Tesing Textile, as
his creditor, had insurable interest on the stocks. The Insurance
Commission then ordered the respondent company to pay complainant
the sum of P100,000.00 with interest and attorneys fees. CA reversed
the decision of the Insurance Commission because it found that the
petitioner knew of the existence of the two other policies issued by the
PFIC.

Issues:
1. WON the petitioner had not disclosed the two insurance policies
when he obtained the fire insurance and thereby violated Condition 3
of the policy.
2. WON he is prohibited from recovering

Held: Yes. No. Petition Granted

Ratio: 1. The court agreed with the CA that the petitioner knew of the
prior policies issued by the PFIC. His letter of 18 January 1991 to the
private respondent conclusively proves this knowledge. His testimony
to the contrary before the Insurance Commissioner and which the
latter relied upon cannot prevail over a written admission made ante
litem motam. It was, indeed, incredible that he did not know about the
prior policies since these policies were not new or original.

2. Stated differently, provisions, conditions or exceptions in policies

which tend to work a forfeiture of insurance policies should be
construed most strictly against those for whose benefits they are
inserted, and most favorably toward those against whom they are
intended to operate. With these principles in mind, Condition 3 of the
subject policy is not totally free from ambiguity and must be
meticulously analyzed. Such analysis leads us to conclude that (a) the
prohibition applies only to double insurance, and (b) the nullity of the
policy shall only be to the extent exceeding P200,000.00 of the total
policies obtained. Furthermore, by stating within Condition 3 itself that
such condition shall not apply if the total insurance in force at the time
of loss does not exceed P200,000.00, the private respondent was
amenable to assume a co-insurer's liability up to a loss not exceeding
P200,000.00.
What it had in mind was to discourage over-insurance. Indeed,
the rationale behind the incorporation of "other insurance" clause in
fire policies is to prevent over-insurance and thus avert the
perpetration of fraud. When a property owner obtains insurance
policies from two or more insurers in a total amount that exceeds the
property's value, the insured may have an inducement to destroy the
property for the purpose of collecting the insurance. The public as well
as the insurer is interested in preventing a situation in which a fire
would be profitable to the insured.

Insurance Case Digest: Rizal Commercial Banking Corporation V. CA

(1998)G.R. No. 128833, 128834, 128866 April 20, 1998

FACTS:

RCBC Binondo Branch initially granted a credit facility of P30M to Goyu &
Sons, Inc. GOYUs applied again and through Binondo Branch key officer's
Uys and Laos recommendation, RCBCs executive committee increased its
credit facility to P50M to P90M and finally to P117M.
As security, GOYU executed 2 real estate mortgages and 2 chattel
mortgages in favor of RCBC.
GOYU obtained in its name 10 insurance policy on the mortgaged
properties from Malayan Insurance Company, Inc. (MICO). In February 1992,
he was issued 8 insurance policies in favor of RCBC.
April 27, 1992: One of GOYUs factory buildings was burned so he claimed
against MICO for the loss who denied contending that the insurance policies
were either attached pursuant to writs of attachments/garnishments or that
creditors are claiming to have a better right
GOYU filed a complaint for specific performance and damages at the RTC
RCBC, one of GOYUs creditors, also filed with MICO its formal claim over
the proceeds of the insurance policies, but said claims were also denied for
the same reasons that MICO denied GOYUs claims
RTC: Confirmed GOYUs other creditors (Urban Bank, Alfredo Sebastian,
and Philippine Trust Company) obtained their writs of attachment covering an
aggregate amount of P14,938,080.23 and ordered that 10 insurance policies
be deposited with the court minus the said amount so MICO
deposited P50,505,594.60.
Another Garnishment of P8,696,838.75 was handed down
RTC: favored GOYU against MICO for the claim, RCBC for damages and to
pay RCBC its loan
CA: Modified by increasing the damages in favor of GOYU
In G.R. No. 128834, RCBC seeks right to intervene in the action between
Alfredo C. Sebastian (the creditor) and GOYU (the debtor), where the subject
insurance policies were attached in favor of Sebastian
RTC and CA: endorsements do not bear the signature of any officer of
GOYU concluded that the endorsements favoring RCBC as defective.

ISSUE: W/N RCBC as mortgagee, has any right over the insurance policies taken
by GOYU, the mortgagor, in case of the occurrence of loss

HELD: YES.
 mortgagor and a mortgagee have separate and distinct insurable interests
in the same mortgaged property, such that each one of them may insure the
same property for his own sole benefit
although it appears that GOYU obtained the subject insurance policies
naming itself as the sole payee, the intentions of the parties as shown by
their contemporaneous acts, must be given due consideration in order to
better serve the interest of justice and equity
8 endorsement documents were prepared by Alchester in favor of
RCBC
MICO, a sister company of RCBC
GOYU continued to enjoy the benefits of the credit facilities
extended to it by RCBC.
GOYU is at the very least estopped from assailing their
operative effects.
The two courts below erred in failing to see that the promissory notes
which they ruled should be excluded for bearing dates which are after that of
the fire, are mere renewals of previous ones
RCBC has the right to claim the insurance proceeds, in
substitution of the property lost in the fire. Having assigned its
rights, GOYU lost its standing as the beneficiary of the said
insurance policies
insurance company to be held liable for unreasonably delaying
and withholding payment of insurance proceeds, the delay must be
wanton, oppressive, or malevolent - not shown
Sebastians right as attaching creditor must yield to the
preferential rights of RCBC over the Malayan insurance policies as
first mortgagee.

GAISANOCAGAYANv.INSURANCECO.OFNORTHAMERICAGRNo.
147839June08,2006

FACTSIntercapitolMarketingCorporation(IMC)isthemakerofWranglerBlueJeans.
WhileLeviStrauss(Phils.)Inc.(LSPI)isthelocaldistributorofproductsbearing
trademarksownedbyLeviStrauss&Co.IMCandLSPIseparatelyobtainedfrom
respondentInsuranceCompanyofNorthAmerica(ICNA)fireinsurancepoliciesfortheir
bookdebtendorsementsrelatedtotheirreadymadeclothingmaterialswhichhavebeen
soldordeliveredtovariouscustomersanddealersoftheInsuredanywhereinthe
Philippineswhichareunpaid45daysafterthetimeoftheloss.
PetitionerGaisanoCagayan,Inc.isacustomeranddealerofIMCandLSPI
products.ItownstheGaisanoSuperstoreComplexwhichwasconsumedbyfirein1991.
Includedintheitemsdestroyedinthefirewerestocksofreadymadeclothingmaterials
soldanddeliveredbyIMCandLSPI.Respondentfiledacomplaintfordamagesagainst
GaisanoCagayan,Inc.allegingthatIMCandLSPIfiledtheirclaimsundertheir
respectivefireinsurancepolicieswhichitpaid,thusitwassubrogatedtotheirrights.
Petitioneraverreditnotbeheldliablebecausetheitemsweredestroyedduetofortuitous
eventorforcemajeure.
TheRTCruledthatIMCandLSPIretainedownershipofthedeliveredgoods
untilfullypaid,itmustbeartheloss(resperitdomino).TheCAruledotherwiseand
orderedpetitionertopayrespondentPhp2,119,205.60andPhp535,613.00theamount
paidbythelattertoIMCandLSPI,respectively.

ISSUEWONrespondentmayclaimagainstpetitionerfortheinsureddebt.

HELDYes,buttheordertopayPhp535,613isdeletedforlackoffactualbasis.
Theinsurancepolicyisclearthatthesubjectoftheinsuranceisthebookdebtsandnot
goodssoldanddeliveredtothecustomersanddealersoftheinsured.UnderArt.1504of
theCivilcode,unlessotherwiseagreed,thegoodsremainattheseller'sriskuntilthe
ownershipthereinistransferredtothebuyer,butwhentheownershipthereinis
transferredtothebuyerthegoodsareatthebuyer'sriskwhetheractualdeliveryhasbeen
madeornot;exceptwheredeliveryofthegoodshasbeenmadetothebuyerortoabailee
forthebuyer,inpursuanceofthecontractandtheownershipinthegoodshasbeen
retainedbythesellermerelytosecureperformancebythebuyerofhisobligationsunder
thecontract,thegoodsareatthebuyer'sriskfromthetimeofsuchdelivery.
IMCandLSPIdidnotlosecompleteinterestoverthegoods.Theyhavean
insurableinterestuntilfullpaymentofthevalueofthedeliveredgoods.Unlikethecivil
lawconceptofresperitdomino,whereownershipisthebasisforconsiderationofwho
bearstheriskofloss,inpropertyinsurance,one'sinterestisnotdeterminedbyconceptof
title,butwhetherinsuredhassubstantialeconomicinterestintheproperty.Section13of
ourInsuranceCodedefinesinsurableinterestas"everyinterestinproperty,whetherreal
orpersonal,oranyrelationthereto,orliabilityinrespectthereof,ofsuchnaturethata
contemplatedperilmightdirectlydamnifytheinsured."
Parenthetically,underSection14ofthesameCode,aninsurableinterestin
propertymayconsistin:(a)anexistinginterest;(b)aninchoateinterestfoundedon
existinginterest;or(c)anexpectancy,coupledwithanexistinginterestinthatoutof
whichtheexpectancyarises.Anyonewhoderivesabenefitfromitsexistenceorwould
sufferlossfromitsdestructionhasaninsurableinterestinthesaidproperty.Therationale
thatanobligorshouldbeheldexemptfromliabilitywhenthelossoccursthruafortuitous
eventonlyholdstruewhentheobligationconsistsinthedeliveryofadeterminatething
andthereisnostipulationholdinghimliableevenincaseoffortuitousevent.Itdoesnot
applywhentheobligationispecuniaryinnature.

Great Pacific v CA G.R. No. 113899. October 13, 1999

J. Quisimbing

Facts:
A contract of group life insurance was executed between petitioner Great Pacific and
Development Bank Grepalife agreed to insure the lives of eligible housing loan mortgagors of
DBP.
Wilfredo Leuterio, a physician and a housing debtor of DBP, applied for membership in the
group life insurance plan. In an application form, Dr. Leuterio
answered questions concerning his health condition as follows:

7. Have you ever had, or consulted, a physician for a heart condition, high blood pressure,
cancer, diabetes, lung, kidney or stomach disorder or any other physical impairment?

8. Are you now, to the best of your knowledge, in good health?

Grepalife issued a coverage to the value of P86,200.00 pesos.

Dr. Leuterio died due to massive cerebral hemorrhage. DBP submitted a death claim to
Grepalife. Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy
when he applied for an insurance coverage. Grepalife insisted that Dr. Leuterio did not
disclose he had been suffering from hypertension, which caused his death. Allegedly, such
non-disclosure constituted concealment that justified the denial of the claim.

The widow, respondent Medarda V. Leuterio, filed against Grepalife. The trial court rendered
a decision in favor of respondent widow and against Grepalife. The Court of Appeals
sustained the trial courts decision.

Issues:
1. Whether the Court of Appeals erred in holding petitioner liable to DBP as beneficiary in a
group life insurance contract from a complaint filed by the widow of the decedent/mortgagor?
2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he had
hypertension, which would vitiate the insurance contract?
3. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty six
thousand, two hundred (P86,200.00) pesos without proof of the actual outstanding mortgage
payable by the mortgagor to DBP.

Held: No to all three. Petition dismissed.

Ratio:
1. Petitioner alleges that the complaint was instituted by the widow of Dr. Leuterio, not the
real party in interest, hence the trial court acquired no jurisdiction over the case. It argues
that when the Court of Appeals affirmed the trial courts judgment, Grepalife was held liable
to pay the proceeds of insurance contract in favor of DBP, the indispensable party who was
not joined in the suit.
The insured private respondent did not cede to the mortgagee all his rights or interests in the
insurance, the policy stating that: In the event of the debtors death before his indebtedness
with the Creditor [DBP] shall have been fully paid, an amount to pay the outstanding
indebtedness shall first be paid to the creditor and the balance of sum assured, if there is
any, shall then be paid to the beneficiary/ies designated by the debtor. When
DBPs claim was denied, it collected the debt from the mortgagor and took the necessary
action of foreclosure on the residential lot of private respondent.

Gonzales vs. Yek Tong Lin- Insured, being the person with whom the contract was made, is
primarily the proper person to bring suit thereon. Insured may thus sue, although the policy
is taken wholly or in part for the benefit of another person named or unnamed, and although
it is expressly made payable to another as his interest may appear or otherwise. Although a
policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made
payable to him, yet the mortgagor may sue thereon in his own name, especially where the
mortgagees interest is less than the full amount recoverable under the policy. Insured may
be regarded as the real party in interest, although he has assigned the policy for the purpose
of collection, or has assigned as collateral security any judgment he may obtain.
And since a policy of insurance upon life or health may pass by transfer, will or succession to
any person, whether he has an insurable interest or not, and such person may recover it
whatever the insured might have recovered,[14] the widow of the decedent Dr. Leuterio
may file the suit against the insurer, Grepalife.

2. The medical findings were not conclusive because Dr. Mejia did not conduct an autopsy
on the body of the decedent. The medical certificate stated that hypertension was the
possible cause of death. Hence, the statement of the physician was properly considered by
the trial court as hearsay.
Contrary to appellants allegations, there was no sufficient proof that the insured had suffered
from hypertension. Aside from the statement of the insureds widow who was not even sure
if the medicines taken by Dr. Leuterio were for hypertension, the appellant had not proven
nor produced any witness who could attest to Dr. Leuterios medical history.
Appellant insurance company had failed to establish that there was concealment made by
the insured, hence, it cannot refuse payment of the claim.
The fraudulent intent on the part of the insured must be established to entitle the insurer to
rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is
an affirmative defense and the duty to establish such defense by satisfactory and convincing
evidence rests upon the insurer.

3. A life insurance policy is a valued policy. Unless the interest of a person insured is
susceptible of exact pecuniary measurement, the measure of indemnity under a policy of
insurance upon life or health is the sum fixed in the policy. The mortgagor paid the premium
according to the coverage of his insurance.
In the event of the debtors death before his indebtedness with the creditor shall have been
fully paid, an amount to pay the outstanding indebtedness shall first be paid to the creditor.
DBP foreclosed one of the deceased persons lots to satisfy the mortgage. Hence, the
insurance proceeds shall inure to the benefit of the heirs of the deceased person or his
beneficiaries.

Sun Life v. CA - Concealment in Insurance 245 SCRA 268 (1995)

Facts:
> On April 15, 1986, Bacani procured a life insurance contract for himself from
Sun Life. He was issued a life insurance policy with double indemnity in case of
accidental death. The designated beneficiary was his mother, Bernarda.

> On June 26, 1987, the insured died in a plane crash. Bernarda Bacani filed a
claim with Sun Life, seeking the benefits of the insurance. Sun Life conducted an
investigation and its findings prompted it to reject the claim.
> Sun Life discovered that 2 weeks prior to his application, Bacani was examined
and confined at the Lung Center of the Philippines, where he was diagnosed for
renal failure. During his confinement, the deceased was subjected to urinalysis,
ultra-sonography and hematology tests. He did not reveal such fact in his
application.

> In its letter, Sun Life informed Berarda, that the insured did not disclosed
material facts relevant to the issuance of the policy, thus rendering the contract
of insurance voidable. A check representing the total premiums paid in the
amount of P10,172.00 was attached to said letter.

> Bernarda and her husband, filed an action for specific performance against
Sun Life. RTC ruled for Bernarda holding that the facts concealed by the insured
were made in good faith and under the belief that they need not be disclosed.
Moreover, it held that the health history of the insured was immaterial since the
insurance policy was "non-medical." CA affirmed.

Issue:
Whether or not the beneficiary can claim despite the concealment.

Held:
NOPE.

Section 26 of the Insurance Code is explicit in requiring a party to a contract of

insurance to communicate to the other, in good faith, all facts within his
knowledge which are material to the contract and as to which he makes no
warranty, and which the other has no means of ascertaining.

Materiality is to be determined not by the event, but solely by the probable and
reasonable influence of the facts upon the party to whom communication is due,
in forming his estimate of the disadvantages of the proposed contract or in
making his inquiries (The Insurance Code, Sec 31)

The terms of the contract are clear. The insured is specifically required to disclose
to the insurer matters relating to his health. The information which the insured
failed to disclose were material and relevant to the approval and the issuance of
the insurance policy. The matters concealed would have definitely affected
petitioner's action on his application, either by approving it with the
corresponding adjustment for a higher premium or rejecting the same. Moreover,
a disclosure may have warranted a medical examination of the insured by
petitioner in order for it to reasonably assess the risk involved in accepting the
application.

Thus, "good faith" is no defense in concealment. The insured's failure to disclose

the fact that he was hospitalized for two weeks prior to filing his application for
insurance, raises grave doubts about his bonafides. It appears that such
concealment was deliberate on his part.

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.

Vda Canilang v CA G.R. No. 92492 June 17, 1993

J. Feliciano

Facts: Canilang was found to have suffered from sinus tachycardia then bronchitis after
a check-up from his doctor. The next day, he applied for a "non-medical" insurance policy
with respondent Grepalife naming his wife, Thelma Canilang, as his beneficiary. This was to
the value of P19,700.
He died of "congestive heart failure," "anemia," and "chronic anemia." The widow filed
a claim with Great Pacific which the insurer denied on the ground that the insured had
concealed material information from it. Petitioner then filed a complaint against Great Pacific
for recovery of the insurance proceeds. Petitioner testified that she was not aware of any
serious illness suffered by her late husband and her husband had died because of a kidney
disorder. The doctor who gave the check up stated that he treated the deceased for sinus
tachycardia and "acute bronchitis."
Great Pacific presented a physician who testified that the deceased's
insurance application had been approved on the basis of his medical declaration. She
explained that as a rule, medical examinations are required only in cases where
the applicanthas indicated in his application for insurance coverage that he has previously
undergone medical consultation and hospitalization.
The Insurance Commissioner ordered Great Pacific to pay P19,700 plus legal
interest and P2,000.00 as attorney's fees. On appeal by Great Pacific, the Court of Appeals
reversed. It found that the failure of Jaime Canilang to disclose previous medical consultation
and treatment constituted material information which should have been communicated to
Great Pacific to enable the latter to make proper inquiries.
Hence this petition by the widow.

Issue: Won Canilang was guilty of misrepresentation

Held: Yes. Petition denied.

Ratio:
There was a right of the insurance company to rescind the contract if it was proven that the
insured committed fraud in not affirming that he was treated for heart condition and other
ailments stipulated.
Apart from certifying that he didnt suffer from such a condition, Canilang also failed
to disclose in the that he had twice consulted a doctor who had found him to be suffering
from "sinus tachycardia" and "acute bronchitis."
Under the Insurance Code:
Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is
called a concealment.
Sec. 28. Each party to a contract of insurance must communicate to the other, in good faith,
all factors within his knowledge which are material to the contract and as to which he makes
no warranty, and which the other has not the means of ascertaining.
The information concealed must be information which the concealing party knew and
should have communicated. The test of materiality of such information is contained in
Section 31:
Sec. 31. Materiality is to be determined not by the event, but solely by the probable
and reasonable influence of the facts upon the party to whom the communication is due, in
forming his estimate of the disadvantages of the proposed contract, or in making his
inquiries.
The information which Jaime Canilang failed to disclose was material to the ability of
Great Pacific to estimate the probable risk he presented as a subject of life insurance. Had
he disclosed his visits to his doctor, the diagnosis made and medicines prescribed by such
doctor, in the insurance application, it may be reasonably assumed that Great Pacific would
have made further inquiries and would have probably refused to issue a non-medical
insurance policy.
Materiality relates rather to the "probable and reasonable influence of the facts" upon
the party to whom the communication should have been made, in assessing the risk involved
in making or omitting to make further inquiries and in accepting the application for insurance;
that "probable and reasonable influence of the facts" concealed must, of course, be
determined objectively, by the judge ultimately.
The Insurance Commissioner had also ruled that the failure of Great Pacific to
convey certain information to the insurer was not "intentional" in nature, for the reason that
Canilang believed that he was suffering from minor ailment like a common cold. Section 27
stated that:
Sec. 27. A concealment whether intentional or unintentional entitles the injured party to
rescind a contract of insurance.
The failure to communicate must have been intentional rather than inadvertent.
Canilang could not have been unaware that his heart beat would at times rise to high and
alarming levels and that he had consulted a doctor twice in the two (2) months before
applying for non-medical insurance. Indeed, the last medical consultation took place just the
day before the insurance application was filed. In all probability, Jaime Canilang went to visit
his doctor precisely because of the ailment.
Canilang's failure to set out answers to some of the questions in the
insurance application constituted concealment.

EMILIO TAN vs. COURT OF APPEALS G.R. No. 48049, 29 June 1989

FACTS: Tan Lee Siong, father of herein petitioners, applied for life insurance in the
amount of P80,000.00 with respondent company Philippine American Life Insurance
Company. Said application was approved and a corresponding policy was issued effective
November 5, 1973, with petitioners as the beneficiaries. On April 26, 1975, Tan Lee Siong
died of hepatoma. Hence, petitioners filed with respondent company their claim for the
proceeds of the life insurance policy. However, the insurance company denied the said claim
and rescinded the policy by reason of the alleged misrepresentation and concealment of
material facts made by the deceased Tan Lee Siong in his application for insurance. The
premiums paid on the policy were thereupon refunded. The petitioners contend that the
respondent company no longer had the right to rescind the contract of insurance as
rescission must allegedly be done during the lifetime of the insured within two years and
prior to the commencement of action.

ISSUE: Whether or not the insurance company has the right to rescind the contract
of insurance despite the presence of an incontestability clause

HELD: YES. The so-called incontestability clause precludes the insurer from raising
the defenses of false representations or concealment of material facts insofar as health and
previous diseases are concerned if the insurance has been in force for at least two years
during the insureds lifetime. The phrase during the lifetime found in Section 48 of the
Insurance Law simply means that the policy is no longer considered in force after the insured
has died. The key phrase in the second paragraph of Section 48 is for a period of two
years. The policy was issued on November 6, 1973 and the insured died on April 26, 1975.
The policy was thus in force for a period of only one year and five months. Considering that
the insured died before the two-year period has lapsed, respondent company is not,
therefore, barred from proving that the policy is void ab initio by reason of the insureds
fraudulent concealment or misrepresentation. Moreover, respondent company rescinded the
contract of insurance and refunded the premiums paid on November 11, 1975, previous to
the commencement of this action on November 27, 1975. WHEREFORE, the petition is
hereby DENIED for lack of merit. The questioned decision of the Court of Appeals is
AFFIRMED.

PrudentialGuaranteeAssuranceInc.vs.TransAsiaShippingLinesG.R.No.
151890June20,2006
 Facts:TransAsiaistheownerofthevesselM/VAsiaKorea.Prudential
GuaranteeandAssuranceInc.insuredsaidvesselforloss/damageofthehulland
machineryarisingfromperilsoffireandexplosionbeginningfromtheperiodofJuly1,
1993untilJuly1,1994.Whilethepolicywasinforce,afirebrokeout.TransAsiafileits
noticeofclaimfordamagessustainedbythevessel.Italsoreserveditsrightto
subsequentlynotifyPrudentialastothefullamountoftheclaimuponfinalsurveyand
determinationbytheaverageadjusterRichardHoggInternationalofthedamage
sustainedbythereasonoffire.
TransAsiaexecutedadocumentdenominated"LoanandTrustReceipt"
amountingtoPhp3,000,000.PrudentialGuaranteeandAssuranceInc.deniedthe
former'sclaimandrequestedforthereturnofthesaidamount.Theinsurancecompany
contendsthattherewasabreachinthepolicyconditions,specifically,"WarrantedVessel
ClassedandClassMaintained".ThetrialcourtheldthatTransAsiafailedtoproveits
compliancewiththetermsofthewarranty.Itfurtherexplainedthattheconcealment
madebyTransAsiaissufficienttoavoidthepolicy.Prudential,astheinjuredparty,is
entitledtorescindtorescindthecontract.Thetrialcourtdismissedthecomplaintand
directedTransAsiatoreturnthe"loan"extendedbyPrudential.TheCourtofAppeals
reversedthedecisionofthetrialcourt.
ItcontendsthatPrudentialhadtheburdentoshowthattherewasabreachinthe
warrantyandwhichitfailedtodoso.TheCourtconsideredPrudential'sadmissionthat,
atthetimetheinsurancecontractwasenteredinto,thevesselwasproperlyclassedbythe
BureauVeritas,aclassificationrecignizedbytheindustry.Itfurthercontendsthatthen
subjectwarrantywasinaformofarider,hence,suchcontractshouldbecounstrued
againstPrudential.Finally,itinterpretedthetransactionbetweenthepartiesasoneof
subrogation,insteadofaloan.Thus,theamountgiventoTransAsiawasconsideredtobe
apartialpaymenttoitsclaimunderthepolicy.
Issue/s:1.)WONtherewasabreachinthewarrantyofthecontract.

Held:TheSupremeCourtheldthat:1.)PrudentialfailedtoestablishthatTrans
Asiahadviolatedandbreachedthepolicyconditionprovidedintheinsurancecontract.
Thelatterwasabletoestablishproofoflossandcoverageoftheloss.Prudentialalso
madeacategoricaladmissionatthetimeoftheprocurementoftheinsurancecontractthat
thevesselwasproperlyclassifiedbytheBureauVeritas.
Assumingthattherewasabreachinthepolicy,therenewaloftheinsurance
policyfortwoconsecutiveyearsafterthelossisdeemedasawaiveronthepartof
Prudential.Breachofawarrantyorofaconditionrendersthecontractdefeasibleatthe
optionoftheinsurer;butifhesoelects,hemaywaivehisprivilegeandpowertorescind
bythemereexpressionofanintentionsotodo.

Pacific Timber v CA G.R. No. L-38613 February 25,

1982
In 1963, Pacific Timber Export Corporation (PTEC) applied for a temporary
marine insurance from Workmens Insurance Company (WIC) in order for
the latter to insure 1,250,000 board feet of logs to be exported to Japan.
In March 1963, WIC issued a cover note to PTEC for the said logs. On April
2, 1963, WIC issued two policies for the logs. However, the total board
feet covered this time is only 1,195,498. On April 4, 1963, while the logs
were in transit to Japan, bad weather prevailed and this caused the loss of
32 pieces of logs.
WIC then asked an adjuster to investigate the loss. The adjuster submitted
that the logs lost were not covered by the two policies issued on April 2,
1963 but said logs were included in the cover note earlier issued.
WIC however denied the insurance claim of PTEC as it averred that the
cover note became null and void when the two policies were subsequently
issued. The Court of Appeals ruled that the cover note is void for lack of
valuable consideration as it appeared that no premium payment therefor
was made by PTEC.
ISSUE: Whether or not a separate premium is needed for cover notes.
HELD: No. The Cover Note was not without consideration for which the
Court of Appeals held the Cover Note as null and void, and denied
recovery therefrom. The fact that no separate premium was paid on the
Cover Note before the loss insured against occurred, does not militate
against the validity of PTECs contention, for no such premium could have
been paid, since by the nature of the Cover Note, it did not contain, as all
Cover Notes do not contain particulars of the shipment that would serve
as basis for the computation of the premiums. As a logical consequence,
no separate premiums are intended or required to be paid on a Cover
Note.
At any rate, it is not disputed that PTEC paid in full all the premiums as
called for by the statement issued by WIC after the issuance of the two
regular marine insurance policies, thereby leaving no account unpaid by
PTEC due on the insurance coverage, which must be deemed to include
the Cover Note. If the Note is to be treated as a separate policy instead of
integrating it to the regular policies subsequently issued, the purpose and
function of the Cover Note would be set at naught or rendered
meaningless, for it is in a real sense a contract, not a mere application for
insurance which is a mere offer.

Great Pacific v CA G.R. No. L-31845 April 30, 1979

Facts:
Ngo Hing filed an application with the Great Pacific for a twenty-year endowment policy in
the amount of P50,000.00 on the life of his one-year old daughter Helen. He supplied the
essential data which petitioner Mondragon, the Branch Manager, wrote on the form. The
latter paid the annual premium the sum of P1,077.75 going over to the Company, but he
retained the amount of P1,317.00 as his commission for being a duly authorized agent of
Pacific Life.
Upon the payment of the insurance premium, the binding deposit receipt was issued
Ngo Hing. Likewise, petitioner Mondragon handwrote at the bottom of the back page of
the application form his strong recommendation for the approval of the insurance application.
Then Mondragon received a letter from Pacific Life disapproving the insurance application.
The letter stated that the said life insurance application for 20-year endowment plan is
not available for minors below seven years old, but Pacific Life can consider the same under
the Juvenile Triple Action Plan, and advised that if the offer is acceptable, the Juvenile Non-
Medical Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was allegedly not
communicated by petitioner Mondragon to private respondent Ngo Hing. Instead, on May 6,
1957, Mondragon wrote back Pacific Life again strongly recommending the approval of the
20-year endowment insurance plan to children, pointing out that since the customers were
asking for such coverage.
Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the
insurance, but having failed in his effort, he filed the action for the recovery before the Court
of First Instance of Cebu, which ruled against him.

Issues:
1. Whether the binding deposit receipt constituted a temporary contract of the life insurance
in question

Held: No..

Ratio:
The receipt was intended to be merely a provisional insurance contract. Its perfection
was subject to compliance of the following conditions: (1) that the company shall be satisfied
that the applicant was insurable on standard rates; (2) that if the company does not accept
the application and offers to issue a policy for a different plan, the insurance contract shall
not be binding until the applicant accepts the policy offered; otherwise, the deposit shall be
refunded; and (3) that if the company disapproves the application, the insurance applied for
shall not be in force at any time, and the premium paid shall be returned to the applicant.
The receipt is merely an acknowledgment that the latter's branch office had received from
the applicant the insurance premium and had accepted the application subject for processing
by the insurance company. There was still approval or rejection the same on the basis of
whether or not the applicant is "insurable on standard rates." Since Pacific Life disapproved
the insurance application of respondent Ngo Hing, the binding deposit receipt in question
had never become in force at any time. The binding deposit receipt is conditional and does
not insure outright. This was held in Lim v Sun.
The deposit paid by private respondent shall have to be refunded by Pacific Life.
FINMAN GENERAL ASSURANCE CORPORATION vs. THE
HONORABLE COURT OF APPEALS 213 SCRA 493, September 2,
1992 NOCON, J.:

FACTS: On October 22, 1986, deceased, Carlie Surposa was insured

with petitioner Finman General Assurance Corporation with his parents,
spouses Julia and Carlos Surposa, and brothers Christopher, Charles,
Chester and Clifton, all surnamed, Surposa, as beneficiaries. While said
insurance policy was in full force and effect, the insured, Carlie
Surposa, died on October 18, 1988 as a result of a stab wound inflicted
by one of the three (3) unidentified men. Private respondent and the
other beneficiaries of said insurance policy filed a written notice of
claim with the petitioner insurance company which denied said claim
contending that murder and assault are not within the scope of the
coverage of the insurance policy. Private respondent filed a complaint
with the Insurance Commission which rendered a favorable response
for the respondent. The appellate court ruled likewise. Petitioner filed
this petition alleging grave abuse of discretion on the part of the
appellate court in applying the principle of "expresso unius exclusio
alterius" in a personal accident insurance policy, since death resulting
from murder and/or assault are impliedly excluded in said insurance
policy considering that the cause of death of the insured was not
accidental but rather a deliberate and intentional act of the assailant.
Therefore, said death was committed with deliberate intent which, by
the very nature of a personal accident insurance policy, cannot be
indemnified.

ISSUE: Whether or not the insurer is liable for the payment of the
insurance premiums

HELD: Yes, the insurer is still liable. Contracts of insurance are to be

construed liberally in favor of the insured and strictly against the
insurer. Thus ambiguity in the words of an insurance contract should be
interpreted in favor of its beneficiary. The terms "accident" and
"accidental" as used in insurance contracts have not acquired any
technical meaning, and are construed by the courts in their ordinary
and common acceptation. Thus, the terms have been taken to mean
that which happen by chance or fortuitously, without intention and
design, and which is unexpected, unusual, and unforeseen. Where the
death or injury is not the natural or probable result of the insured's
voluntary act, or if something unforeseen occurs in the doing of the act
which produces the injury, the resulting death is within the protection
of the policies insuring against death or injury from accident. In the
case at bar, it cannot be pretended that Carlie Surposa died in the
course of an assault or murder as a result of his voluntary act
considering the very nature of these crimes. Neither can it be said that
where was a capricious desire on the part of the accused to expose his
life to danger considering that he was just going home after attending
a festival. Furthermore, the personal accident insurance policy involved
herein specifically enumerated only ten (10) circumstances wherein no
liability attaches to petitioner insurance company for any injury,
disability or loss suffered by the insured as a result of any of the
stimulated causes. The principle of " expresso unius exclusio alterius"
the mention of one thing implies the exclusion of another thing is
therefore applicable in the instant case since murder and assault, not
having been expressly included in the enumeration of the
circumstances that would negate liability in said insurance policy
cannot be considered by implication to discharge the petitioner
insurance company from liability for, any injury, disability or loss
suffered by the insured. Thus, the failure of the petitioner insurance
company to include death resulting from murder or assault among the
prohibited risks leads inevitably to the conclusion that it did not intend
to limit or exempt itself from liability for such death.

Sun v CA G.R. No. 92383 July 17, 1992

J. Cruz

Facts:
Lim accidentally killed himself with his gun after removing the magazine, showing off,
pointing the gun at his secretary, and pointing the gun at his temple. The widow, the
beneficiary, sued the petitioner and won 200,000 as indemnity with additional amounts for
other damages and attorneys fees. This was sustained in the Court of Appeals then sent to
the Supreme court by the insurance company.

Issue:
1. Was Lims widow eligible to receive the benefits?
2. Were the other damages valid?

Held:
1. Yes 2. No

Ratio: 1. There was an accident.

De la Cruz v. Capital Insurance says that "there is no accident when a deliberate act is
performed unless some additional, unexpected, independent and unforeseen happening
occurs which produces or brings about their injury or death." This was true when he fired the
gun. Under the insurance contract, the company wasnt liable for bodily injury caused by
attempted suicide or by one needlessly exposing himself to danger except to save anothers
life. Lim wasnt thought to needlessly expose himself to danger due to the witness testimony
that he took steps to ensure that the gun wasnt loaded. He even assured his secretary that
the gun was loaded. There is nothing in the policy that relieves the insurer of the
responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to
his own accident.

2. In order that a person may be made liable to the payment of moral damages,
the law requires that his act be wrongful. The adverse result of an action does not per se
make the act wrongful and subject the act or to the payment of moral damages.
The law could not have meant to impose a penalty on the right to litigate; such right is so
precious that moral damages may not be charged on those who may exercise it erroneously.
For these the law taxes costs.
If a party wins, he cannot, as a rule, recover attorney's fees and litigation expenses, since it
is not the fact of winning alone that entitles him to recover such damages of the exceptional
circumstances enumerated in Art. 2208. Otherwise, every time a defendant wins,
automatically the plaintiff must pay attorney's fees thereby putting a premium on the right to
litigate which should not be so. For those expenses, the law deems the award of costs as
sufficient.

Biagtan vs. The Insular Life Assurance Company, LTD|

Makalintal, J. March 29, 1972|
FACTS
- Juan Biagtan was insured with Insular for P5k and a
supplementary contract Accidental Death Benefit clause for another
P5k if "the death of the Insured resulted directly from bodily injury
effected solely through external and violent means sustained in an
accident . . . and independently of all other causes." The clause,
however, expressly provided that it would not apply where death
resulted from an injury "intentionally inflicted by a third party."
 - One night, a band of robbers entered their house. Juan went out
of his room and he was met with 9 knife stabs. He died. The robbers
were convicted of robbery with homicide.
- The family was claiming the additional P5k from Insular under
the Accidental Death Benefit clause. Insular refused on the ground that
the death resulted from injuries intentionally inflicted by 3rd parties
and was therefore not covered.
- Biagtans filed against Insular. CFI ruled in favor of Biagtans.

ISSUES & ARGUMENTS WON the injuries were intentionally inflicted by

a third party? Yes

RATIONALE
- Whether the robbers had the intent to kill or merely to scare the
victim or
to ward off any defense he might offer, it cannot be denied that the act
itself of inflicting the injuries was intentional.
- The exception in the accidental benefit clause invoked by the
appellant does not speak of the purpose whether homicidal or not
of a third party in causing the injuries, but only of the fact that such
injuries have been "intentionally" inflicted this obviously to
distinguish them from injuries which, although received at the hands of
a third party, are purely accidental.
- Examples of unintentional:
>> A gun which discharges while being cleaned and kills a bystander;
>> a hunter who shoots at his prey and hits a person instead;
>> an athlete in a competitive game involving physical effort who
collides with an opponent and fatally injures him as a result.
- In Calanoc vs. CA: Where a shot was fired and it turned out
afterwards that the watchman was hit in the abdomen, the wound
causing his death, the Court held that it could not be said that the
killing was intentional for there was the possibility that the malefactor
had fired the shot to scare the people around for his own protection
and not necessarily to kill or hit the victim. A similar possibility is
clearly ruled out by the facts in this case. For while a single shot fired
from a distance, and by a person who was not even seen aiming at the
victim, could indeed have been fired without intent to kill or injure, nine
wounds inflicted with bladed weapons at close range cannot
conceivably be considered as innocent insofar as such intent is
concerned.
- In Hucthcraft's Ex'r vs. Travelers' Ins. Co. (US case): where the
insured was waylaid and assassinated for the purpose of robbery, the
court rendered judgment for the insurance company and held that
while the assassination of the insured was as to him an unforeseen
event and therefore accidental, "the clause of the proviso that excludes
the (insurer's) liability, in case death or injury is intentionally inflicted
by any other person, applies to this case."

TEEHANKEE [dissent]
- Calanoc v. CA is controlling in this case because the insurance
company wasnt able to prove that the killing was intentional. (Burden
of proof is with the insurance company)
- Insurance, being contracts of adhesion, must be construed
strictly against insurance company in cases of ambiguity.
- The supplementary contract enumerated exceptions. The only
exception which is not susceptible of classification is that provided in
par 5(e), the very exception herein involved, which would also except
injuries "inflicted intentionally by a third party, either with or without
provocation on the part of the insured, and whether or not the attack
or the defense by the third party was caused by a violation of the law
by the insured."
- This ambiguous clause conflicts with all the other 4 exceptions
in the same par 5 particularly that immediately preceding it in item (d)
which excepts injuries received where the insured has violated the law
or provoked the injury, while this clause, construed as the insurance
company now claims, would seemingly except also all other injuries,
intentionally inflicted by a third party, regardless of any violation of law
or provocation by the insured, and defeat the very purpose of the
policy of giving the insured double indemnity in case of accidental
death by "external and violent means" in the very language of the
policy.'
- It is obvious from the very classification of the exceptions and
applying the rule of noscitus a sociis, that the double-indemnity policy
covers the insured against accidental death, whether caused by fault,
negligence or intent of a third party which is unforeseen and
unexpected by the insured. All the associated words and concepts in
the policy plainly exclude the accidental death from the coverage of
the policy only where the injuries are self-inflicted or attended by some
proscribed act of the insured or are incurred in some expressly
excluded calamity such as riot, war or atomic explosion.

Vda. De Gabriel v. CA
G.R. No. 103883 November 14, 1996
Vitug, J.

FACTS:

Marcelino Gabriel was employed by Emerald Construction & Development

Corporation (Emerald Construction for brevity) at its construction project in Iraq. He
was covered by a personal accident insurance in the amount of P100,000.00 under a
group policy procured from Fortune Insurance & Surety Company (Fortune Insurance
for brevity) by Emerald Construction for its overseas workers. The insured risk was for
bodily injury caused by violent accidental external and visible means which injury
would solely and independently of any other cause result in death or disability.

On 22 May 1982, within the life of the policy, Gabriel died in Iraq. On 12 July
1983, Emerald Construction reported Gabriels death to Fortune Insurance by
telephone. Among the documents thereafter submitted to Fortune Insurance were a
copy of the death certificate issued by the Ministry of Health of the Republic of Iraq
which stated that an autopsy report by the National Bureau of Investigation was
conducted to the effect that due to advanced state of postmortem decomposition,
the cause of death of Gabriel could not be determined (emphasis added).

Because of this development Fortune Insurance ultimately denied the claim of

Emerald Construction on the ground of prescription. Gabriels widow, Jacqueline
Jimenez, went to the to the lower court. In her complaint against Emerald
Construction and Fortune Insurance, she averred that her husband died of
electrocution while in the performance of his work.

Fortune Insurance alleged that since both the death certificate issued by the
Iraqi Ministry of Health and the autopsy report of the NBI failed to disclose the cause
of Gabriels death, it denied liability under the policy. In addition, private respondent
raised the defense of prescription, invoking Section 384 of the Insurance Code.

ISSUE:

WON Jacqueline Jimenez vda. de Gabriels claim against Fortune Insurance

should be denied on the ground of prescription

HELD:

Yes. Section 384 of the Insurance Code provides:

Sec. 384. Any person having any claim upon the policy issued
pursuant to this chapter shall, without any unnecessary delay,
present to the insurance company concerned a written notice of
claim setting forth the nature, extent and duration of the
injuries sustained as certified by a duly licensed physician.
Notice of claim must be filed within six months from date of the
accident, otherwise, the claim shall be deemed waived. Action
or suit for recovery of damage due to loss or injury must be
brought, in proper cases, with the Commissioner or the Courts
within one year from denial of the claim, otherwise, the
claimants right of action shall prescribe.

The notice of death was given to Fortune Insurance, concededly, more than a
year after the death of vda. de Gabriels husband. Fortune Insurance, in invoking
prescription, was not referring to the one-year period from the denial of the claim
within which to file an action against an insurer but obviously to the written notice of
claim that had to be submitted within six months from the time of the accident.

Vda. de Gabriel argues that Fortune Insurance must be deemed to have

waived its right to show that the cause of death is an excepted peril, by failing to
have its answers duly verified. It is true that a matter of which a written request for
admission is made shall be deemed impliedly admitted unless, within a period
designated in the request, which shall not be less than 10 days after service thereof,
or within such further time as the court may allow on motion and notice, the party to
whom the request is directed serves upon the party requesting the admission a
sworn statement either denying specifically the matters of which an admission is
requested or setting forth in detail the reasons why he cannot truthfully either admit
or deny those matters; however, the verification, like in most cases required by the
rules of procedure, is a formal, not jurisdictional, requirement, and mainly intended to
secure an assurance that matters which are alleged are done in good faith or are true
and correct and not of mere speculation. When circumstances warrant, the court may
simply order the correction of unverified pleadings or act on it and waive strict
compliance with the rules in order that the ends of justice may thereby be served. In
the case of answers to written requests for admission particularly, the court can allow
the party making the admission, whether made expressly or deemed to have been
made impliedly, to withdraw or amend it upon such terms as may be just.

The insurance policy expressly provided that to be compensable, the injury or

death should be caused by violent accidental external and visible means. In
attempting to prove the cause of her husbands death, all that vda. de Gabriel could
submit were a letter sent to her by her husbands co-worker, stating that Gabriel died
when he tried to haul water out of a tank while its submerged motor was still
functioning, and vda. de Gabriels sworn affidavit. The said affidavit, however, suffers
from procedural infirmity as it was not even testified to or identified by vda. de
Gabriel herself. This affidavit therefore is a mere hearsay under the law.

In like manner, the letter allegedly written by the deceaseds co-worker which
was never identified to in court by the supposed author, suffers from the same defect
as the affidavit of vda. de Gabriel. Not one of the other documents submitted, to wit,
the POEA decision, the death certificate issued by the Ministry of Health of Iraq and
the NBI autopsy report, could give any probative value to vda. de Gabriels claim. The
POEA decision did not make any categorical holding on the specific cause of Gabriels
death.

In summary, evidence is utterly wanting to establish that the insured suffered

from an accidental death, the risk covered by the policy.

VDA. DE MAGLANA VS. HON. CONSOLACION

G.R. NO. 60506 6 AUGUST 1992
FACTS: Lope Maglana was on his way to his work station, driving
a motorcycle. He met an accident that resulted in his death. The PUJ
jeep that bumped the deceased was driven by Pepito Into, operated
and owned by defendant Destrajo. The PUJ jeep was overtaking
another passenger jeep that was going towards the city poblacion.
While overtaking, the PUJ jeep of defendant Destrajo running abreast
with the overtaken jeep, bumped the motorcycle driven by the
deceased who was going towards the direction of Lasa, Davao City. The
point of impact was on the lane of the motorcycle and the deceased
was thrown from the road and met his untimely death. The heirs of the
deceased filed an action against Destrajo and the Afisco Insurance
Corpotation (AFISCO) for damges and attorneys fees.
The lower court rendered a decision finding that Destrajo had not
exercised sufficient diligence as the operator of the jeepney and
ordered him to pay for the damages. The second paragraph of the
decision also ordered AFISCO to reimburse Destrajo whatever amounts
the latter shall have paid only up to the extent of its insurance
coverage, signifying only secondary liability. The heirs filed a motion
for reconsideration of said second paragraph arguing that AFISCO
should not merely be held secondarily liable because the Insurance
Code provides that the insurers liability is direct and primary and/or
jointly and severally with the operator of the vehicle, although only up
to the extent of the insurance coverage.

ISSUE: Whether or not AFISCOs liability is direct and primary

and/or solidarily with Destrajo.

RULING: In ruling in the XXX, the Supreme Court held that the
insurance policy clearly provides that AFISCO can be held directly liable
by petitioners on the basis of the insurance contract. However, it may
not be held to be solidarily liable with Destrajo since their respective
liabilities are based on different grounds. The liability of the insurer is
based on contract; that of the insured is based on tort. As such,
petitioners have the option either to claim from AFISCO to the extent
agreed upon in the contract and the balance from Destrajo or enforce
the entire judgment from Destrajo subject to reimbursement from
AFISCO to the extent of the insurance coverage.

WILLIAM TIU V. PEDRO ARRIESGADO et al., G.R. No.

138060 (2004)
FACTS: On March 15, 1987, a truck owned by Condor was
travelling along Poblacion, Compostela, Cebu blew one of its rear tires.
1. The truck driver parked the truck on the right side of the
highway to get assistance
2. Thereafter, DRough Riders passenger bus was cruising along
the highway in the same direction.
3. Its driver saw the stalled truck 25 meters away but it was too
late. The bus rammed on the rear part of the truck resulting in the
injury of its passengers, including Arriesgado and his wife (died from
her injuries)
4. Arriesgado filed a complaint for breach of contract of carriage
against DRough Riders and its driver.
5. For its part, Tiu (owner of DRough Riders) filed a third party
complaint against its insurer, PPSII, the owner of the truck and its
driver. He claimed that PPSII, as insurer, should be held solidarily liable
with Tiu
6. The trial court held in favor of Arriesgado but it made no
mention of CA affirmed the trial courts ruling and cited that as a
common carrier, Tiu must exercise extraordinary diligence in
transporting its passengers, which it failed to do
 7. As to the liability of PPSII: CA held that no evidence was
presented against PPSII so it cannot be held liable for Arriesgados
claim
8. PPSIIs argument: There is a contract of insurance (TPL) but it
had already settled the claims of those injured in the incident

ISSUE: In third-party liability insurance, would it be possible for a

third party to sue the insurer directly?
HELD: Yes. This is an exception to the rule on mutuality of
contract. Whenever a contract contains stipulation for the benefit of a
third person and the moment the third person communicates his
assent thereto, the contract becomes binding upon him. The fact that a
third person demands fulfillment of the insurance policy may be
reasonably construed as an assent on his part to the benefit provided
in the policy. This provision arms him with the requisite legal
personality to bring an action on the insurance policy. (stipulation pour
atrui).

ISSUE: In a TPL insurance, is the insurer solidarily liable with the

insured?

HELD: No. Although the victim may proceed directly against the
insurer for indemnity, the third party liability is only up to the extent of
the insurance policy and those required by law. While it is true that
where the insurance contract provides for indemnity against liability to
third persons, and such persons can directly sue the insurer, the direct
liability of the insurer under indemnity contracts against third party
liability does not mean that the insurer can be held liable in solidum
with the insured and/or the other parties found at fault. For the liability
of the insurer is based on contract; that of the insured carrier or vehicle
owner is based on tort.
The respondent PPSII could not then just deny petitioner Tiu's
claim; it should have paid P12,000 for the death of Felisa Arriesgado,
and respondent Arriesgado's hospitalization expenses of P1,113.80,
which the trial court found to have been duly supported by receipts.
The total amount of the claims, even when added to that of the other
injured passengers which the respondent PPSII claimed to have settled,
would not exceed the P50,000 limit under the insurance agreement.

Tio Khe Chio v. CA

GR No. 76101-02 September 30, 1991

Facts: Petitioner shipped bags of imported fishmeals and insured the
same with respondent insurance company Eastern Assurance & Surety
Corp (EASCO). During transit, the bags were found out to be damaged
thus rendering the fishmeals useless. Petitioner filed a claim before the
EASCO which denied the same, prompting the former to sue the latter
at CFI Cebu who ordered EASCO to pay the petitioner's claim for
insurance with damages. Upon execution, respondent filed a petition
for certiorari with the CA who set aside the lower court's decision
arguing that the latter has erred in fixing the legal interest on 12% per
annum rather than the mandated 6%.

Issue: What should the legal interest be for damages arising from loss
of property?

Held: The applicable law is Article 2209 of the Civil Code which reads
that if the obligation consists in the payment of a sum of money and
the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of interest agreed
upon, and in the absence of stipulation, the legal interest which is 6%
per annum.

The adjusted rate mentioned in the Circular No. 416, from which the
CFI based its decision, refers only to loans or forbearances of money,
goods or credits and court judgments thereon but not to court
judgments for damages arising from injury to persons and loss of
property which does not involve a loan.

Tio Khe Chio vs. Court of Appeals

(202 SCRA 119)Circular No. 416 of the Central Bank which took effect
on July 29, 1974 pursuant to Presidential Decree No. 116 (Usury Law)
raised the legal rate of interest from six (6%) percent to twelve (12%)
percent. The adjusted rate mentioned in the circular refers only to
loans or forbearances of money, goods or credits and court judgments
thereon but not to court judgments for damages arising from injury to
persons and loss of property which does not involve a loan. In the case
of Philippine Rabbit Bus Lines, Inc. vs. Cruz
,G.R. No. 71017, July 28, 1986, 143 SCRA 158, the Court declared that
the legal rate of interest is six (6%) percent per annum and not twelve
(12%) percent, where a judgment award is based on an action for
damages for personal injury, not use or forbearance of money, goods
or credit. In the same vein, the Court held in GSIS vs. Court of Appeals
G.R. No. 52478, October30, 1986, 145 SCRA 311, that the rates under
the Usury Law(amended by P. D. 116) are applicable only to interest by
way of compensation for the use or forbearance of money; interest by
way of damages is governed by Article 2209 of the Civil Code.

PrudentialGuaranteeAssuranceInc.vs.TransAsiaShippingLinesG.R.No.
151890June20,2006
 Facts:TransAsiaistheownerofthevesselM/VAsiaKorea.Prudential
GuaranteeandAssuranceInc.insuredsaidvesselforloss/damageofthehulland
machineryarisingfromperilsoffireandexplosionbeginningfromtheperiodofJuly1,
1993untilJuly1,1994.Whilethepolicywasinforce,afirebrokeout.TransAsiafileits
noticeofclaimfordamagessustainedbythevessel.Italsoreserveditsrightto
subsequentlynotifyPrudentialastothefullamountoftheclaimuponfinalsurveyand
determinationbytheaverageadjusterRichardHoggInternationalofthedamage
sustainedbythereasonoffire.
TransAsiaexecutedadocumentdenominated"LoanandTrustReceipt"
amountingtoPhp3,000,000.PrudentialGuaranteeandAssuranceInc.deniedthe
former'sclaimandrequestedforthereturnofthesaidamount.Theinsurancecompany
contendsthattherewasabreachinthepolicyconditions,specifically,"WarrantedVessel
ClassedandClassMaintained".ThetrialcourtheldthatTransAsiafailedtoproveits
compliancewiththetermsofthewarranty.Itfurtherexplainedthattheconcealment
madebyTransAsiaissufficienttoavoidthepolicy.Prudential,astheinjuredparty,is
entitledtorescindtorescindthecontract.Thetrialcourtdismissedthecomplaintand
directedTransAsiatoreturnthe"loan"extendedbyPrudential.TheCourtofAppeals
reversedthedecisionofthetrialcourt.
ItcontendsthatPrudentialhadtheburdentoshowthattherewasabreachinthe
warrantyandwhichitfailedtodoso.TheCourtconsideredPrudential'sadmissionthat,
atthetimetheinsurancecontractwasenteredinto,thevesselwasproperlyclassedbythe
BureauVeritas,aclassificationrecignizedbytheindustry.Itfurthercontendsthatthen
subjectwarrantywasinaformofarider,hence,suchcontractshouldbecounstrued
againstPrudential.Finally,itinterpretedthetransactionbetweenthepartiesasoneof
subrogation,insteadofaloan.Thus,theamountgiventoTransAsiawasconsideredtobe
apartialpaymenttoitsclaimunderthepolicy.

Issue/s:1.)2.)WONsuchcontractpartakesthenatureofaloan.

Held:2.)theamountgrantedbyPrudentialtoTransAsia,evidencedbyadocument
denominatedasa"LoanandTrustReceipt",constituedpartialpaymentonthepolicy.
Undersaidagreement,PrudentialisobligatedtohandovertoTransAsia"whatever
recoverythelattermaymake"andthelattertodelivertotheformer"alldocument
necessarytoproveitsinterestinthesaidproperty."Prudentialwasgiventherightof
subrogationtowhatevernetrecoveryTransAsiamayobtainfromthirdpartiesresulting
fromthefire.