FINMAN GENERAL ASSURANCE CORPORATION vs.

THE HONORABLE COURTOF

APPEALS
213 SCRA 493, September 2, 1992NOCON, J.:
FACTS:
On October 22, 1986, deceased, Carlie Surposa was insured with petitioner FinmanGeneral
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 uniusexclusioalterius" 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
RULING:
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.
GEAGONIA vs. CA, COUNTRY BANKERS INSURANCE CORP., G.R. 114427, 2/6/95
FACTS:
Armando Geagonia is the owner of Norman’s Mart and obtained from Country Bankers a fire ins
urance policy which covered Stock-in-trade consisting of RTW dry goods.
The policy contained a provision where the insured must give notice to the insurer of any insura
nce or insurances already affected or which may be subsequently be effected covering any of th
e property or properties consisting of stocks in trade, goods in process and/or inventories alread
y insured by such policy otherwise it shall be deemed forfeited, provided that such condition doe
s not apply when the total insurance or insurances in force at the time of the loss is not more tha
n 200k
Subsequently, a fire broke out and destroyed Geagonia’s stocks-in-trade. Country bankers deni
ed the claim because it was found that at the time of the loss, the stocks were likewise covered
by two other fire insurances for 100k each by PFIC. It had a mortgage clause which stated that l
oss, if any, shall be payable to Cebu Tesing Textiles.

ISSUE:
WON there was double insurance to justify denial of the claim

HELD:
NO (Country Bankers is liable).
It is a cardinal rule on insurance that a policy or insurance contract is to be interpreted liberally in
favor of the insured and strictly against the company, the reason being, undoubtedly, to afford t
he greatest protection which the insured was endeavoring to secure when he applied for insuran
ce. Provisions, conditions, or exceptions in policies which tend to work a forfeiture of insurance p
olicies 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.
The condition in the policy is commonly known as the additional or “other insurance” clause and
has been upheld as valid and as a warranty that no other insurance exists. Its violation would th
us avoid the policy. However, in order to constitute a violation, the other insurance must be upon
the same subject matter, the same insurable interest, and the same risk.
As to a mortgaged property, the mortgagor and the mortgagee have each an independent insura
ble interest therein and both interests may be one policy, or each may take out a separate policy
covering his interest, either at the same or separate times. The mortgagor’s insurable interest c
overs the full value of the mortgaged property, even though the mortgage debt is equivalent to th
e full value of the property. The mortgagee’s insurable interest is to the extent of the debt, since
the property is relied upon as security thereof, and in insuring he is not insuring the property but
his interest or lien thereon.
A double insurance exists where the same person is insured by several insurers separately in re
spect of the same subject and cover the same interest. Since the two policies of the PFIC do not
cover the same interest as that covered by the policy in issue, no double insurance exists. The
non-disclosure is not fatal.
11. Fortune Insurance and Surety Co., Inc. v. Court of Appeals
Facts:
On June 29, 1987, Producer’s Bank of the Philippines’ armored vehicle was robbed, in transit, of
seven hundred twenty-five thousand pesos (Php 725,000.00) that it was transferring from its
branch in Pasay to its main branch in Makati. To mitigate their loss, they claim the amount from
their insurer, namely Fortune Insurance and Surety Co.
Fortune Insurance, however, assails that the general exemption clause in the Casualty Insurance
coverage had a general exemption clause, to wit:

GENERAL EXCEPTIONS
The company shall not be liable under this policy in respect of
xxxxxxxxx
(b) 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. . . .
And, since the driver (Magalong) and security guard (Atiga) of the armored vehicle were charged
with three others as liable for the robbery, Fortune denies Producer’s Bank of its insurance claim.
The trial court and the court appeals ruled in favor of recovery, hence, the case at bar.

Issue:
Whether recovery is precluded under the general exemption clause.

Ruling:
Yes, recovery is precluded under the general exemption clause.
Howsoever viewed, 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 thearmored vehicle which would carry the money; and Atiga to provide the needed security
for the money, the vehicle, and his two other companions. In short, for these particular tasks, the
three acted as agents of Producers. 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."
In view of the foregoing, Fortune is exempt from liability under the general exceptions clause of
the insurance policy.
21. Enriquez v Sun Life of Canada 41 Phil 269

FACTS:
September 24, 1917: Joaquin Herrer made application to the Sun Life Assurance Company of
Canada through its office in Manila for a life annuity
2 days later: he paid P6,000 to the manager of the company's Manila office and was given a
receipt
According to the provisional receipt, 3 things had to be accomplished by the insurance company
before there was a contract:
(1) There had to be a medical examination of the applicant; -check
(2) there had to be approval of the application by the head office of the company; and - check
(3) thisapproval had in some way to be communicated by the company to the applicant
November 26, 1917: The head office at Montreal, Canada gave notice of acceptance by cable to
Manila but this was not mailed
December 4, 1917: policy was issued at Montreal
December 18, 1917: attorney Aurelio A. Torres wrote to the Manila office of the company stating
that Herrer desired to withdraw his application
December 19, 1917: local office replied to Mr. Torres, stating that the policy had been issued, and
called attention to the notification of November 26, 1917
December 21, 1917 morning: received by Mr. Torres
December 20, 1917: Mr. Herrer died
Rafael Enriquez, as administrator of the estate of the late Joaquin Ma.Herrer filed to recover from
Sun Life Assurance Company of Canada through its office in Manila for a life annuity
RTC: favored Sun Life Insurance

ISSUE:
WON Mr. Herrera received notice of acceptance of his application thereby perfecting his life
annuity

RULING:
NO. Not perfected because it has not been proved satisfactorily that the acceptance of the
application ever came to the knowledge of the applicant.
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to
his knowledge. The contract, in such a case, is presumed to have been entered into in the place
where the offer was made.
Judgment is reversed, and the Enriquez shall have and recover from the Sun Life the sum of
P6,000 with legal interest from November 20, 1918, until paid, without special finding as to costs
in either instance. So ordered.
Facts:
Primitivo B. Perez had been insured with the BF Lifeman Insurance Corporation for P20,000.00.
Sometime in October 1987, an agent of the insurance corporation, visited Perez in Quezon and
convinced him to apply for additional insurance coverage of P50,000.00. Virginia A. Perez,
Primitivo’s wife, paid P2,075.00 to the agent. The receipt issued indicated the amount received
was a "deposit." Unfortunately, the agent lost the application form accomplished by Perez and he
asked the latter to fill up another application form. The agent sent the application for additional
insurance of Perez to the Quezon office. Such was supposed to forwarded to the Manila office.
Perez drowned. His application papers for the additional insurance of P50,000.00 were still with
the Quezon. It was only after some time that the papers were brought to Manila. Without knowing
that Perez died, BF Lifeman Insurance Corporation approved the application and issued the
corresponding policy for the P50,000.00.
Petitioner Virginia Perez went to Manila to claim the benefits under the insurance policies of the
deceased. She was paid P40,000.00 under the first insurance policy for P20,000.00 but the
insurance company refused to pay the claim under the additional policy coverage of P50,000.00,
the proceeds of which amount to P150,000.00.
The insurance company maintained that the insurance for P50,000.00 had not been perfected at
the time of the death of Primitivo Perez. Consequently, the insurance company refunded the
amount paid.
BF Lifeman Insurance Corporation filed a complaint against Virginia Perez seeking the rescission
and declaration of nullity of the insurance contract in question.
Petitioner Virginia A. Perez, on the other hand, averred that the deceased had fulfilled all his
prestationsunder the contract and all the elements of a valid contract are present.
On October 25, 1991, the trial court rendered a decision in favor of petitioner ordering respondent
to pay 150,000 pesos. The Court of Appeals, however, reversed the decision of the trial court
saying that the insurance contract for P50,000.00 could not have been perfected since at the time
that the policy was issued, Primitivo was already dead.
Petitioner’s motion for reconsideration having been denied by respondent court, the instant
petition for certiorari was filed on the ground that there was a consummated contract of insurance
between the deceased and BF Lifeman Insurance Corporation.

Issue:
WON the widow can receive the proceeds of the 2nd insurance policy

Held:
No. Petition dismissed.
Ratio:
Perez’s application was subject to the acceptance of private respondent BF LifemanInsurance
Corporation. The perfection of the contract of insurance between the deceased and respondent
corporation was further conditioned with the following requisites stated in the application form:
"there shall be no contract of insurance unless and until a policy is issued on this application and
that the said policy shall not take effect until the premium has been paid and the policy delivered
to and accepted by me/us in person while I/We, am/are in good health."
BF Lifeman didn’t give its assent when it merely received the application form and all the requisite
supporting papers of the applicant. This happens only when it gives a policy.
It is not disputed, however, that when Primitivo died on November 25, 1987, his application
papersfor additional insurance coverage were still with the branch office of respondent corporation
in Quezon. Consequently, there was absolutely no way the acceptance of the application could
have been communicated to the applicant for the latter to accept inasmuch as the applicant at the
time was already dead.
Petitioner insists that the condition imposed by BF that a policy must have been delivered to and
accepted by the proposed insured in good health is potestative, being dependent upon the will of
the corporation and is therefore void. The court didn’t agree. A potestative condition depends upon
the exclusive will of one of the parties and is considered void. The Civil Code states: When the
fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall
be void.
The following conditions were imposed by the respondent company for the perfection of the
contract of insurance: a policy must have been issued, the premiums paid, and the policy must
have been delivered to and accepted by the applicant while he is in good health.
The third condition isn’t potestative, because the health of the applicant at the time of the
deliveryof the policy is beyond the control or will of the insurance company. Rather, the condition
is a suspensive one whereby the acquisition of rights depends upon the happening of an event
which constitutes the condition. In this case, the suspensive condition was the policy must have
been delivered and accepted by the applicant while he is in good health. There was non-fulfillment
of the condition, because the applicant was already dead at the time the policy was issued.
As stated above, a contract of insurance, like other contracts, must be assented to by both parties
either in person or by their agents. So long as an application for insurance has not been either
accepted or rejected, it is merely an offer or proposal to make a contract. The contract, to be
binding from the date of application, must have been a completed contract.
The insurance company wasn’t negligent because delay in acting on the application does not
constitute acceptance even after payment. The corporation may not be penalized for the delay in
the processing of the application papers due to the fact that process in a week wasn’t the usual
timeframe in fixing the application. Delay could not be deemed unreasonable so as to constitute
gross negligence.
66) THE INSULAR LIFE ASSURANCE COMPANY, LTD. vs. CARPONIA T. EBRADO and
PASCUALA VDA. DE EBRADO, G.R. No. L-44059, [October 28, 1977]

FACTS: On September 1, 1968, Buenaventura Cristor Ebrado was issued by the Insular Life
Assurance Co., Ltd., a policy on a whole-life plan for P5,882 with a rider for Accidental Death
Benefits for the same amount. He designated Carponia T. Ebrado as the revocable beneficiary in
his policy. He referred to her as his wife.

On October 21, 1969, Buenventura C. Ebrado died as a result of an accident when he was hit by
a falling branch of a tree. As the insurance policy was in force, The Insular Life Assurance Co.,
Ltd. stands liable to pay the coverage of the policy in an amount of P11,745.73, representing the
face value of the policy in the amount of P5,882.00 plus the additional benefits for accidental
death also in the amount of P5,882.00 and the refund of P18.00 paid for the premium due
November, 1969, minus the unpaid premiums and interest thereon due for January and February,
1969, in the sum of P36.27.

Carponia filed with the insurer a claim for the proceeds of the policy as the designated beneficiary
therein, although she admits that she and the insured Buenaventura were merely living as
husband and wife without the benefit of marriage. PascualaVda. de Ebrado also filed her claim
as the widow of the deceased insured. She asserts that she is the one entitled to the insurance
proceeds, not the common-law wife, Carponia.

ISSUE: Can the common-law wife, CarponiaEbrado, named as beneficiary in the life insurance
policy of a legally married man claim the proceeds thereof in case of death of the latter?

HELD: NO. The general rules of civil law should be applied to resolve matters not specifically
provided in the Insurance Law. Article 2011 of the New Civil Code states:
The contract of insurance is governed by special laws. Matters not expressly provided for in such
special laws shall be regulated by this Code.

And under Article 2012 of the same Code:

Any person who is forbidden from receiving any donation under Article 739 cannot be named
beneficiary of a fife insurance policy by the person who cannot make a donation to him.
Common-law spouses are, definitely, barred from receiving donations from each other. Also,
conviction for adultery or concubinage is not required as only preponderance of evidence is
necessary.
In essence, a life insurance policy is no different from a civil donation insofar as the beneficiary is
concerned. Both are founded upon the same consideration: liberality. A beneficiary is like a donee,
because the premiums of the policy which the insured pays out of liberality, the beneficiary will
receive the proceeds or profits of said insurance.
Calanoc vs. Court of Appeals, 98 Phil. 79 [1955]

Facts:
Facts:MelencioBasilio, a watchman and, secured a life insurance policy from the Philippine
American Insurance Company in the amount of P2,000 which had a supplemental contract
covering death by accident. He later died from a gunshot wound on the occasion of a robbery
committed;

his widow was paid P2,000 for the face value of the policy but the company refused to give the
other 2000 for the death by accident because the deceased died by murder during the robbery
and while making an arrest as an officer of the law which were expressly excluded in the contract.
The Court of Appeals upheld the Company and said that the circumstances surrounding Basilio’s
death was caused by one of the risks excluded by the supplementary contract which exempts the
company from liability.

Issue: Is the Philippine American Life Insurance Co. liable to the petitioner for the amount covered
by the supplemental contract?

Held: Yes.

The circumstances of Basilio’s death cannot be taken as purely intentional on the part of
Basilio to expose himself to the danger. No proof that his death was the result of intentional killing
because there is the possibility that the malefactor had fired the shot merely to scare away the
people around.

The terms and phraseology of the exception clause should be clearly expressed within the
understanding of the insured. Art. 1377 of the New Civil Code provides that in case ambiguity in
the terms of the contract, it will be construed against the party who caused such obscurity.

Therefore ambiguous or obscure terms in the insurance policy are to be construed strictly against
the insurer and liberally in favor of the insured party to ensure the protection of the insured since
these insurance contracts are usually arranged and employed by experts and legal advisers
acting exclusively in the interest of the insurance company.
 Heirs of Maramag v. Maramag
G.R. No. 181132 , June 5, 2009

FACTS:

The case stems from a petition filed against respondents with the RTC for revocation
and/or reduction of insurance proceeds for being void and/or inofficious. The petition
alleged that: (1) petitioners were the legitimate wife and children of Loreto Maramag
(Loreto), while respondents were Loreto’s illegitimate family; (2) Eva de Guzman
Maramag (Eva) was a concubine of Loreto and a suspect in the killing of the latter, thus,
she is disqualified to receive any proceeds from his insurance policies from Insular Life
Assurance Company, Ltd. (Insular) and Great Pacific Life Assurance Corporation
(Grepalife) (3) the illegitimate children of Loreto—Odessa, Karl Brian, and Trisha
Angelie—were entitled only to one-half of the legitime of the legitimate children, thus, the
proceeds released to Odessa and those to be released to Karl Brian and Trisha Angelie
were inofficious and should be reduced; and (4) petitioners could not be deprived of their
legitimes, which should be satisfied first. Insular admitted that Loreto misrepresented
Eva as his legitimate wife and Odessa, Karl Brian, and Trisha Angelie as his legitimate
children, and that they filed their claims for the insurance proceeds of the insurance
policies; that when it ascertained that Eva was not the legal wife of Loreto, it disqualified
her as a beneficiary and divided the proceeds among Odessa, Karl Brian, and Trisha
Angelie, as the remaining designated beneficiaries; and that it released Odessa’s share as
she was of age, but withheld the release of the shares of minors Karl Brian and Trisha
Angelie pending submission of letters of guardianship. Insular alleged that the complaint
or petition failed to state a cause of action insofar as it sought to declare as void
the designation of Eva as beneficiary, because Loreto revoked her designation as such in
Policy No. A001544070 and it disqualified her in Policy No. A001693029; and insofar as
it sought to declare as inofficious the shares of Odessa, Karl Brian, and Trisha Angelie,
considering that no settlement of Loreto’s estate had been filed nor had the respective
shares of the heirs been determined. Insular further claimed that it was bound to honor
the insurance policies designating the children of Loreto with Eva
as beneficiaries pursuant to Section 53 of the Insurance Code. Grepalife alleged that Eva
was not designated as an insurance policy beneficiary; that the claims filed by Odessa,
Karl Brian, and Trisha Angelie were denied because Loreto was ineligible for insurance
due to a misrepresentation in his application form that he was born on December 10, 1936
and, thus, not more than 65 years old when he signed it in September 2001; that the case
was premature, there being no claim filed by the legitimate family of Loreto; and that the
law on succession does not apply where the designation of insurance beneficiaries is
clear.

ISSUE:

Whether or not illegitimate children can be beneficiaries in an insurance contract.

RULING:
Yes. Section 53 of the Insurance Code states that the insurance proceeds shall be applied
exclusively to the proper interest of the person in whose name or for whose benefit it is
made unless otherwise specified in the policy. Pursuant thereto, it is obvious that the only
persons entitled to claim the insurance proceeds are either the insured, if still alive; or
the beneficiary, if the insured is already deceased, upon the maturation of the
policy.The exception to this rule is a situation where the insurance contract was intended
to benefit third persons who are not parties to the same in the form of favorable
stipulations or indemnity. In such a case, third parties may directly sue and claim from
the insurer.

Petitioners are third parties to the insurance contracts with Insular and Grepalife and,
thus, are not entitled to the proceeds thereof. Accordingly, respondents Insular
and Grepalife have no legal obligation to turn over the insurance proceeds to
petitioners. The revocation of Eva as a beneficiary in one policy and
her disqualification as such in another are of no moment considering that
the designation of the illegitimate children as beneficiaries in Loreto’s insurance policies
remains valid. Because no legal proscription exists in naming as beneficiaries the
children of illicit relationships by the insured, the shares of Eva in the insurance proceeds,
whether forfeited by the court in view of the prohibition on donations under Article 739
of the Civil Code or by the insurers themselves for reasons based on the insurance
contracts, must be awarded to the said illegitimate children, the designated beneficiaries,
to the exclusion of petitioners. It is only in cases where the insured has not designated
any beneficiary, or when the designated beneficiary is disqualified by law to receive the
proceeds, that the insurance policy proceeds shall redound to the benefit of the estate of
the insured.
Ang Giok Chip v Springfield G.R. No. L-33637 December
31, 1931
J. Malcolm

Facts:
Ang insured his warehouse for the total value of Php 60,000. One of these, amounting to
10,000, was with Springfield Insurance Company. His warehouse burned down, then he
attempted to recover 8,000 from Springfield for the indemnity. The insurance company
interposed its defense on a rider in the policy in the form of Warranty F, fixing the amount of
hazardous good that can be stored in a building to be covered by the insurance. They claimed
that Ang violated the 3 percent limit by placing hazardous goods to as high as 39 percent of all
the goods stored in the building. His suit to recover was granted by the trial court. Hence, this
appeal.

Issue: Whether a warranty referred to in the policy as forming part of the contract of insurance
and in the form of a rider to the insurance policy, is null and void because not complying with the
Philippine Insurance Act.

Held: No. The warranty is valid. Petition dismissed.

Ratio:
The Insurance Act, Section 65, taken from California law, states:
"Every express warranty, made at or before the execution of a policy, must be contained in the
policy itself, or in another instrument signed by the insured and referred to in the policy, as
making a part of it."
Warranty F, indemnifying for a value of Php 20,000 and pasted on the left margin of the policy
stated:
It is hereby declared and agreed that during the currency of this policy no hazardous goods be
stored in the Building to which this insurance applies or in any building communicating
therewith, provided, always, however, that the Insured be permitted to stored a small quantity of
the hazardous goods specified below, but not exceeding in all 3 per cent of the total value of the
whole of the goods or merchandise contained in said warehouse, viz; . . . .
Also, the court stated a book that said, "any express warranty or condition is always a part of
the policy, but, like any other part of an express contract, may be written in the margin, or
contained in proposals or documents expressly referred to in the policy, and so made a part of
it."
“It is well settled that a rider attached to a policy is a part of the contract, to the same extent and
with like effect as it actually embodied therein. In the second place, it is equally well settled that
an express warranty must appear upon the face of the policy, or be clearly incorporated therein
and made a part thereof by explicit reference, or by words clearly evidencing such intention.”
The court concluded that Warranty F is contained in the policy itself, because by the contract of
insurance agreed to by the parties it was made to be a part. It wasn’t aseparate instrument
agreed to by the parties.
The receipt of the policy by the insured without objection binds him. It was his duty to read the
policy and know its terms. He also never chose to accept a different policy by considering the
earlier one as a mistake. Hence, the rider is valid.
FIELDMEN'S INSURANCE CO., INC. vs. VDA. DE SONGCO, ET AL.
25 SCRA 70
[G.R. No. L-24833; September 23, 1968]
Nature of the Case:
The lower court held that Fieldmen’s Insurance Co., petitioner cannot escape
liability under a common carrier insurance policy on the pretext that what was insured was
a private vehicle and not a common carrier, the policy being issued upon the agent’s
insistence. CA affirmed the lower court. Petitioner files for the review of the above
decision of respondent Court of Appeals but the Supreme Court sustained the Court of
Appeals’ decision.
FACTS:
Federico Songco of Floridablanca, Pampanga, a man of scant education being only a first
grader, owned a private jeepney. He was induced by Fieldmen's Insurance Company
Pampanga agent Benjamin Sambat to apply for a Common Carrier's Liability Insurance Policy
covering his motor vehicle. Upon paying the annual premium, Fieldmen's Insurance
Company, Inc. issued a Common Carriers Accident Insurance Policy covering one year.
Federico said that his vehicle is an ‘owner’ private vehicle and not for passengers, despite
the latter being initially adamant, was made to believe that his vehicle qualifies under the
common carrier liability insurance policy. Songco paid an annual premium and he was issued
a Common Carriers Accident Insurance Policy.
After the lapse of one year, and upon payment of the corresponding premium, the policy was
renewed extending the coverage for another year During the effectivity of the renewed
policy, the insured vehicle while being driven by Rodolfo Songco [duly licensed driver and
Federico’s son collided with a car. As a result, Federico and Rodolfo died, while Carlos
(another son) and his wife Angelita, and a family friend sustained physical injuries.
The Court of Appeals rendered a decision in favor of the claimants. It held that where
inequitable conduct is shown by an insurance firm, it is estopped from enforcing forfeitures
in its favor, in order to forestall fraud or imposition on the insured. After Fieldmen's
Insurance Co. had led the insured Songco to believe that he could qualify under the common
carrier liability insurance policy, it could not, thereafter, be permitted to change its stand
to the detriment of the heirs of the insured. The failure to apply the Doctrine of Estoppel in
this case would result in a gross travesty of justice.
ISSUE:
Whether or not the insurance claim is proper?
RULING:

The Insurance claim is proper. The fact that the insured owned a private vehicle, not
a common carrier, was something which the company knew all along. In fact, it
exerted the utmost pressure on the insured, a man of scant education, to enter into
the contract of insurance. The Court of Appeals also held that since some of the conditions in
the policy were impossible to comply with under the existing conditions at the time and inconsistent with
the known
facts, the insurer is estopped from asserting breach of such conditions. Except for the fact that the
passengers were
not fare-paying, their status as beneficiaries under the policy is recognized. Even if the be assumed that
there was
an ambiguity, such must be strictly interpreted against the party that caused them

As estoppel is primarily based on the doctrine of good faith and the avoidance of
harm that will befall the innocent party due to its injurious reliance, the failure to
apply it in this case would result in a gross travesty of justice.
Citing the case of Qua Chee Gan vs. Law Union & Rock I n s u r a n c e "The contract
of insurance is one of perfect good faith (uberrima fides) not for the insured alone,
but equally so for the insurer; in fact, it is more so for the latter, since its dominant
bargaining position carries with it stricter responsibility."
: San Miguel Brewery v. Law Union and Rock
Insurance Co. (1920)
G.R. No. L-14300 January 19, 1920

Lessons Applicable:
 Mortgagor (Insurance)
 Measure of Insurable Interest (Insurance)
 Effect of Change of Interest in Thing Insured (Insurance)
 Effect of transfer of thing insured (Insurance)
Laws Applicable: sec. 16,sec. 19 (now sec. 20),sec. 50,sec.55 (now sec. 58) of the
Insurance Code (all old law)

FACTS:

 In the contract of mortgage, the owner P.D. Dunn had agreed, at his own
expense, to insure the mortgaged property for its full value and to indorse the
policies in such manner as to authorize the Brewery Company to receive the
proceeds in case of loss and to retain such part thereof as might be necessary to
satisfy the remainder then due upon the mortgage debt. Instead, however, of
effecting the insurance himself Dunn authorized and requested the Brewery
Company to procure insurance on the property in the amount of P15,000 at Dunn's
expense.
 San Miguel insured the property only as mortgagee.
 Dunn sold the propert to Henry Harding. The insurance was not assigned by
Dunn to Harding.
 When it was destroyed by fire, the two companies settled with San Miguelto
the extent of the mortgage credit.
 RTC: Absolved the 2 companies from the difference. Henry Harding is
not entitled to the difference between the mortgage credit and the face value of the
policies.
 Henry Harding appealed.
ISSUE:
1. W/N San Miguel has insurable interest as mortgagor only to the extent of the
mortgage credit - YES
2. W/N Harding has insurable interest as owner - NO

HELD: affirmed
 section 19 of the Insurance Act:
o a change of interest in any part of a thing insured unaccompanied by a
corresponding change of interest in the insurance, suspends the insurance to an
equivalent extent, until the interest in the thing and the interest in the insurance
are vested in the same person
 section 55:
o the mere transfer of a thing insured does not transfer the policy, but
suspends it until the same person becomes the owner of both the policy and the
thing insured
 Undoubtedly these policies of insurance might have been so framed as to
have been "payable to the San Miguel Brewery, mortgagee, as its interest may
appear, remainder to whomsoever, during the continuance of the risk, may become
the owner of the interest insured." (Sec 54, Act No. 2427.) Such a clause would
have proved an intention to insure the entire interest in the property, not merely
the insurable interest of the San Miguel Brewery, and would have shown exactly to
whom the money, in case of loss, should be paid. But the policies are not so
written.
 The blame for the situation thus created rests, however, with the Brewery
rather than with the insurance companies, and there is nothing in the record to
indicate that the insurance companies were requested to write insurance upon the
insurable interest of the owner or intended to make themselves liable to that extent
 If by inadvertence, accident, or mistake the terms of the contract were not
fully set forth in the policy, the parties are entitled to have it reformed. But to
justify the reformation of a contract, the proof must be of the most satisfactory
character, and it must clearly appear that the contract failed to express the real
agreement between the parties
 In the case now before us the proof is entirely insufficient to authorize
reformation.
 Filipinas Compania de Seguros v. Christern Huenefeld
on 11:33 PM in Case Digests, Commercial Law, Political Law
0

G.R. No. L-2294, May 25, 1951

o A corporation borrows its citizenship from the citizenship of majority of its stockholders,
regardless of the country under whose laws it was organized and created.

FACTS:

Christern Huenefeld Corporation bought a fire insurance policy from Filipinas Compania de
Seguros to cover merchandise contained in a building. During the Japanese military occupation,
this same merchandise and the building were burned, so Huenefeld filed a claim under the
policy.

Filipinas Compania refused to pay, alleging that the policy had ceased to be in force when the
US declared war against Germany. Filipinas Compania contended that Huenefeld, although
organized and created under Philippine laws, is a German subject, and hence, a public enemy,
since majority of its stockholders are Germans. On the other hand, Filipinas Compania is under
American jurisdiction.

However, the Director of Bureau of Financing, Philippine Executive Commission ordered

Filipinas Compania to pay, so Filipinas Compania did pay. The case at bar is about the recovery
of that sum paid.

ISSUES:

o W/N Christern Huenefeld is a German subject because majority of its stockholders are under
German jurisdiction, despite the fact that it was organized and created under Philippine laws
o If so, W/N the fire insurance policy is enforceable against an enemy state

HELD:

The Court of Appeals ruled that a private corporation is a citizen of the country or state by and
under the laws of which it was created or organized. It rejected the theory that nationality of a
private corporation is determined by the character or citizenship of its controlling stockholders.

But the Supreme Court held that Christern Huenefeld is an enemy corporation since majority of
its stockholders are German subjects. The two American cases relied up by the Court of
Appeals have lost their force in view of a newer case where the control test was adopted.
The Philippine Insurance Law provides that anyone, except a public enemy, may be insured. It
stands to reason that an insurance policy ceases to be allowable as soon as the insured
becomes a public enemy.

Since Christern Huenefeld became a public enemy on Dec. 10, 1941, then the policy has
ceased to be enforcible and therefore Huenefeld is not entitled to indemnity. However,
elementary rules of justice require that the premium paid from Dec. 11, 1941 should be
returned.

Thus, Filipinas Compania is allowed to recover the sum paid but only its equivalent in actual
Philippine currency, minus the premium that Huenefeld paid after Dec. 11
Palileo v. Cosio (1955)
G.R. No. L-7667 November 28, 1955

Lessons Applicable: Mortgagor (Insurance)

Laws Applicable:

FACTS:

 Cherie Palileo (debtor-mortgagor) filed a complaint against Beatriz Cosio (creditor-

mortgagee) praying that their transaction be one of a loan with an equitable mortgage to secure
the payment of the loan. The original counsel of Cosio Atty. Guerrero being appointed
Undersecretary of Foreign Affairs so she forgot the date of the trial and she was substituted.
 it is a loan of P12,000 secured by a "Conditional Sale of Residential Building" with right
to repurchase. After the execution of the contract, Cosio insured in her name the building
with Associated Insurance & Surety Co. against fire.
 The building was partly destroyed by fire so she claimed an indemnity of P13,107
 Palileo demanded that the amount of insurance proceeds be credited to her loan
 RTC: it is a loan with equitable mortgage so the insurance proceeds should be credited
to the loan and refund the overpayment.
ISSUE: W/N Cosio as mortgagee is entitled to the insurance proceeds for her own benefit

HELD: YES. Modify. collection of insurance proceeds shall not be deemed to have
compensated the obligation of the Palileo to Cosio, but bars the Cosio from claiming its payment
from the Palileo; and Cosio shall pay to Palileo P810 representing the overpayment made by
Palileo by way of interest on the loan.
 When the the mortgagee may insure his interest in the property independently of the
mortgagor , upon the destruction of the property the insurance money paid to the mortgagee will
not inure to the benefit of the mortgagor, and the amount due under the mortgage debt remains
unchanged. The mortgagee, however, is not allowed to retain his claim against the mortgagor,
but it passes by subrogation to the insurer, to the extent of the insurance money paid
 It is true that there are authorities which hold that "If a mortgagee procures insurance on
his separate interest at his own expense and for his own benefit, without any agreement with
the mortgagor with respect thereto, the mortgagor has no interest in the policy, and is not
entitled to have the insurance proceeds applied in reduction of the mortgage debt" But these
authorities merely represent the minority view