INSURANCE DOCTRINES

1. PAN MALAYAN VS CA (1990) - SUBROGATION

RIGHT OF SUBROGATION. An insurer after paying the insured, can claim from the one who caused the
damage.

If the insured property is destroyed or damaged through the fault or negligence of a party other than the
assured, then the insurer, upon payment to the assured, will be subrogated to the rights of the assured to
recover from the wrongdoer to the extent that the insurer has been obligated to pay.

2. MALAYAN INSURANCE v ALBERTO (2012) - SUBROGATION

Subrogation is the substitution of one person by another with reference to a lawful claim or right, so that
he who is substituted succeeds to the rights of the other in relation to a debt or claim, including its
remedies or securities. It contemplates full substitution such that it places the party subrogated in the
shoes of the creditor, and he may use all means that the creditor could employ to enforce payment.

Malayan should be subrogated since Alberrto failed to object to the claim check voucher and the Release
of Claim and Subrogation Receipt presented by it before the trial court.

3. TIBAY V CA (1996) – PARTIAL PAYMENT

Partial payment of insurance premiums will not allow the insured to recover from the insurance
policy. It is deemed lapsed and be forfeited by its own term. Sec 77 of the Insurance Code and as may be
provided under the policy.

4. EMILIO TAN vs CA – EVEN IF DEAD CAN STILL CONTEST

As long as within the contestability period of an insurance policy, even if the insured is already
dead, the insurer is not precluded from contesting the policy by reason of concealment or fraud.

The insurer has two years from the date of issuance of the insurance contract or of its last reinstatement
within which to contest the policy, whether or not, the insured still lives within such period. After two
years, the defenses of concealment or misrepresentation, no matter how patent or well founded, no longer
lie.

5. BPI v POSADAS – PAID FROM CONJUGAL/EXCLUSIVE

When an insurance premium is paid from the exclusive funds of a spouse, the amount of the proceeds
shall belong to the estate of that spouse. However, when premiums are paid from the conjugal funds,
proceeds thereof belongs to the community property.

6. MARAMAG vs MARAMAG – ILLEGITIMATE HEIRS AS BENEFICIARIES

Designation of illegitimate heirs as beneficiary must be respected despite the fact that there are legal heirs
who survived the insured.
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.

7. PHILAMCARE vs CA - HMO

A health care agreement (HMO) is not an insurance contract hence the incontestability clause under the
insurance code does not apply.

8. DBP v CA (DBP MRI POOL) – INSURER WAS NOT LIABLE; AGENT HELD LIABLE

When there is no perfected contract of insurance, an insurer cannot be held liable under a contract that
does not exist. The insurance agent who facilitated the application may be held liable if the applicant was
made to believe that he was covered by the insurance he applied for.

9. WHITE GOLD vs PIONEER – SEPRATE LICENSE TO ACT AS INSURANCE AGENT

A licensed insurance company needs a separate license to act as an insurance agent for another.

10. VERENDIA vs CA – FALSE DECLARATION WILL AVOID A POLICY/UBERRIMAE

FIDAE PRINCIPLE

When an insured presents false declaration to support his claim under the policy, he effectively forfeits
the policy. This violates the uberrimae fidae principle where parties are required to observe utmost
good faith in an insurance policy

11. VDA DE CONSUEGRA vs GSIS – LIFE AND RETIREMENT INSURANCE/ 2 INSURANCE

When the insured failed to designate beneficiaries in his retirement insurance, the beneficiaries named in
the life insurance cannot be automatically considered as beneficiaries to receive the retirement insurance
benefits to the exclusion of other beneficiaries.

There was 2 insurance in this case. Life and Retirement insurance.

12. PHILLIPINE AMERICAN INSURANCE vs PINEDA – BENEFICIARIES CANNOT BE

CHANGED

The beneficiary designated in a life insurance contract cannot be changed without the consent of the
beneficiary because he has a vested interest in the policy.

Similarly, the alleged acquiescence of the six (6) children beneficiaries of the policy (the beneficiary-wife
predeceased the insured) cannot be considered an effective ratification to the change of the beneficiaries
from irrevocable to revocable.

13. LALICAN vs The Insular Life Assurance Company – REINSTATEMENT THROUGH AGENT
INPOPERATIVE IF NOT AUTHORIZED

An insurance policy shall not be considered reinstated when the applicant paid the agent of the insurer,
who was not authorized, and died subsequently without the application reaching the insurer before his
death.
 14. GAISANO vs Insurance Company - NEED NOT BE A PROPERTY INTEREST OR LIEN

An insurable interest in property does not necessarily imply a property interest in, or a lien upon, or
possession of, the subject matter of the insurance, and neither the title nor a beneficial interest is
requisite to the existence of such an interest, it is sufficient that the insured is so situated with
reference to the property that he would be liable to loss should it be injured or destroyed by the
peril against which it is insured.

15. CANILANG vs CA – CONCEALMENT INTENTIONAL OR NOT WILL AVOID;GOOD

FAITH NOT A DEFENSE

Concealment of a material information in an insurance contract, will avoid the insured from
recovering from the policy. The Court ruled that it should be any kind of concealment since removing
the words unintentional or intentional would mean that the plain word “concealment”is left. Hence,
it can be any kind of concealment without nay qualification.

16. SUNLIFE INSURANCE vs CA – DEATH DUE TO ACCIDENT

Non-disclosure of health problems will avoid the insurance policy even if the cause of death was due to
an accident and thus giving the insurer the right to rescind the contract. 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 must be communicated to the insurer.

17. SUNLIFE v SIBYA – CONTESTABILITY PERIOD

Failure of the insurer to exercise due diligence in ascertaining the real condition of an insured within
the two year contestability period will not avoid the policy even if there was fraud or misrepresentation.

18. MANILA BANK LIFE vs Aban – INCONTESTABILITY PERIOD

After 2 year contestability period, the insurer can no longer rescind an insurance policy on the ground of
fraud. Especially when it continued to receive premiums only to later on deny a claim on the policy due
to specious claims of fraudulent concealment. Insurer must conduct an investigation on the circumstance
surrounding the insurance policy within the two year contestability period. Section 48 of the Insurance
Code regulates the actions of both the insurer and the insured.

19. RIZAL SURETY vs CA – CONSTRUED LIBERALLY IN FAVOR OF INSURED

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.

20. INSULAR LIFE vs Khu - REINSTATEMENT

The reinstatement of the insured’s policy is to be reckoned from the date when the application was
processed and approved by the insurer.
Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as
to preclude the insurer from noncompliance with its obligations.

21. UCPB v MASAGANA – PAYMENT OF PREMIUM: GR

No policy or contract of insurance issued by an insurance company is valid and binding unless and until
the premium thereof has been paid except there is an acknowledgment in a policy or contract of insurance
of the receipt of premium. It is considered as conclusive evidence of its payment, so far as to make the
policy binding, notwithstanding any stipulation therein that it shall not be binding until premium is
actually paid.

22. MAKATI TUSCANY vs CA – CREDIT EXTENSIONS FOR PAYMENT OF PREMIUM

The Tuscany case has provided another exception to Section 77 that the insurer may grant
credit extension for the payment of the premium. If the insurer has granted the insured a credit term
for the payment of the premium and loss occurs before the expiration of the term, recovery on the
policy should be allowed even though the premium is paid after the loss but within the credit term.

23. MALAYAN INSURANCE vs ARNALDO (1987) – VALID CANCELLATION; AGENT-

PRINCIPAL; ACKNOWLEDGEMENT OF AN AGENT

For a valid cancellation of an insurance policy,

(1) There must be prior notice of cancellation to the insured; 17

(2) The notice must be based on the occurrence, after the effective date of the policy, of one or more of
the grounds mentioned;18

(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address
shown in the policy; 19

(4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written
request of the insured, the insurer will furnish the facts on which the cancellation is based. 20

MICO's acknowledgment of Adora as its agent defeats its contention that he was not authorized to
receive the premium payment on its behalf.

24. STOKES vs MALAYAN INSURANCE – CONDITIONS OF THE CONTRACT; PAYMENT

OF PREMIUMS DOES NOT PRECLUDE VALID DEFENSES

If the insured cannot bring himself within the terms and conditions of the contract, he is not entitled as
a rule to recover for the loss or damage suffered. For the terms of the contract constitute the measure of
the insurer’s liability, and compliance therewith is a condition precedent to the right of recovery.

Acceptance of premium within the stipulated period for payment thereof, including the agreed period of
grace, merely assures continued effectivity of the insurance policy in accordance with its terms. Such
acceptance does not estopped the insurer from interposing any valid defense under the terms of the
insurance policy.
 25. GEAGONIA vs CA – NO DOUBLE INSURANCE

When insurance policies do not cover the same interest, no double insurance may arise. The non-
disclosure then of the former policies was not fatal to the petitioner’s right to recover on the private
respondent’s policy.

26. PHILAMLIFE vs Auditor General

Treaties are contracts for insurance; reinsurance policies or cessions are contracts of insurance.

It is only after a reinsurance cession is made that payment of reinsurance premium may be exacted,
as it is only after PHILAM seeks to remit that reinsurance premium that the obligation to pay the margin
fee arises.

27. RCBC v CA

A 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.