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Vitug v. CA ISSUE: W/N MICO should be liable because its agent Adora was
G.R. No. 82027, March 29, 1990 authorized to receive it
(1) All money deposited and to be deposited with the Bank in
their joint savings current account shall be both their property HELD: YES. petition is DENIED
and shall be payable to and collectible or withdrawable by either
or any of them during their lifetime; and
(2) After the death of one of them, the same shall belong to and SEC. 306. xxx xxx xxx
be the sole property of the surviving spouse
ISSUE: Whether or not the funds of the savings account subject of Any insurance company which delivers to an insurance agant or
the survivorship agreement were conjugal partnership properties insurance broker a policy or contract of insurance shall be
and part of the estate demmed to have authorized such agent or broker to receive on its
behalf payment of any premium which is due on such policy or
No. The Court ruled that a Survivorship Agreement contract of insurance at the time of its issuance or delivery or
aleatory contract whereby one or both of the parties reciprocally which becomes due thereon.
bind themselves to give or to do something in consideration of Payment to an agent having authority to receive or collect
what the other shall give or do upon the happening of an event payment is equivalent to payment to the principal himself; such
which is to occur at an indeterminate time or is uncertain, such as payment is complete when the money delivered is into the
death. agent's hands and is a discharge of the indebtedness owing to the
Consequently, the Court upheld the validity of the survivorship principal.
agreement entered into by the spouses Vitug. As such, Romarico, SEC. 64. No policy of insurance other than life shall be cancelled
being the surviving spouse, acquired a vested right over the by the insurer except upon prior
amounts under the savings account, which became his exclusive SEC. 65. All notices of cancellation mentioned in the preceding
property upon the death of his wife pursuant to the survivorship section shall be in writing,
Thus, the funds of the savings account are Incidentally, Adora had not been informed of the cancellation
not conjugal partnership properties and not part of the estate of either and saw no reason not to accept the said payment
the deceased Dolores Although Pinca's payment was remitted to MICO's by its agent on
Xxxxxxxxxxxxxxxxxxxxxxxx January 15, 1982,
Under Article 2010 of the Code:
ART. 2010. By an aleatory contract, one of the parties or both GREAT PACIFIC LIFE ASSURANCE COMPANY, petitioner,
reciprocally bind themselves to give or to do something in vs.
consideration of what the other shall give or do upon the HONORABLE COURT OF APPEALS,
happening of an event which is uncertain, or which is to occur at
an indeterminate time. The two above-entitled cases were ordered consolidated by the
Under the aforequoted provision, the fulfillment of an aleatory Resolution of this Court dated April 29, 1970, (Rollo, No. L-31878,
contract depends on either the happening of an event which is (1) p. 58), because the petitioners in both cases seek similar relief,
"uncertain," (2) "which is to occur at an indeterminate time." A through these petitions for certiorari by way of appeal, from the
survivorship agreement, the sale of a sweepstake ticket, a amended decision of respondent Court of Appeals which affirmed
transaction stipulating on the value of currency, and insurance in toto the decision of the Court of First Instance of Cebu,
have been held to fall under the first category, while a contract ordering "the defendants (herein petitioners Great Pacific Ligfe
for life annuity or pension under Article 2021, et sequentia, has Assurance Company and Mondragon) jointly and severally to pay
been categorized under the second. 25 In either case, the element plaintiff (herein private respondent Ngo Hing) the amount of
of risk is present. In the case at bar, the risk was the death of one P50,000.00 with interest at 6% from the date of the filing of the
party and survivorship of the other. complaint, and the sum of P1,077.75, without interest.
However, as we have warned: It appears that on March 14, 1957, private respondent Ngo Hing
xxx xxx xxx filed an application with the Great Pacific Life Assurance Company
But although the survivorship agreement is per se not contrary to (hereinafter referred to as Pacific Life) for a twenty-year
law its operation or effect may be violative of the law. For endownment policy in the amount of P50,000.00 on the life of his
instance, if it be shown in a given case that such agreement is a one-year old daughter Helen Go. Said respondent supplied the
mere cloak to hide an inofficious donation, to transfer property in essential data which petitioner Lapulapu D. Mondragon, Branch
fraud of creditors, or to defeat the legitime of a forced heir, it may Manager of the Pacific Life in Cebu City wrote on the
be assailed and annulled upon such grounds. No such vice has corresponding form in his own handwriting (Exhibit I-M).
been imputed and established against the agreement involved in Mondragon finally type-wrote the data on the application form
this case. 26 which was signed by private respondent Ngo Hing. The latter paid
xxx xxx xxx. the annual premuim the sum of P1,077.75 going over to the
Company, but he reatined the amount of P1,317.00 as his
commission for being a duly authorized agebt of Pacific Life. Upon
Malayan Insurance Co., Inc. V. Arnaldo (1987) the payment of the insurance premuim, the binding deposit
receipt (Exhibit E) was issued to private respondent Ngo Hing.
Authority to Receive Payment/Effect of Payment (Insurance) Likewise, petitioner Mondragon handwrote at the bottom of the
Laws Applicable: Article 64, Article 65, Section 77, Section 306 of back page of the application form his strong recommendation for
the Insurance Code the approval of the insurance application. Then on April 30, 1957,
Mondragon received a letter from Pacific Life disapproving the
FACTS: insurance application (Exhibit 3-M). 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
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consider the same under the Juvenile Triple Action Plan, and Since petitioner Pacific Life disapproved the insurance application
advised that if the offer is acceptable, the Juvenile Non-Medical of respondent Ngo Hing, the binding deposit receipt in question
Declaration be sent to the company. had never become in force at any time.
The non-acceptance of the insurance plan by Pacific Life was Upon this premise, the binding deposit receipt (Exhibit E) is,
allegedly not communicated by petitioner Mondragon to private manifestly, merely conditional and does not insure outright. As
respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote held by this Court, where an agreement is made between the
back Pacific Life again strongly recommending the approval of the applicant and the agent, no liability shall attach until the principal
20-year endowment insurance plan to children, pointing out that approves the risk and a receipt is given by the agent. The
since 1954 the customers, especially the Chinese, were asking for acceptance is merely conditional and is subordinated to the act of
such coverage (Exhibit 4-M). the company in approving or rejecting the application. Thus, in life
It was when things were in such state that on May 28, 1957 Helen insurance, a "binding slip" or "binding receipt" does not insure by
Go died of influenza with complication of bronchopneumonia. itself (De Lim vs. Sun Life Assurance Company of Canada, 41 Phil.
Thereupon, private respondent sought the payment of the 264).
proceeds of the insurance, but having failed in his effort, he filed It bears repeating that through the intra-company communication
the action for the recovery of the same before the Court of First of April 30, 1957 (Exhibit 3-M), Pacific Life disapproved the
Instance of Cebu, which rendered the adverse decision as earlier insurance application in question on the ground that it is not
refered to against both petitioners. offering the twenty-year endowment insurance policy to children
The decisive issues in these cases are: (1) whether the binding less than seven years of age. What it offered instead is another
deposit receipt (Exhibit E) constituted a temporary contract of the plan known as the Juvenile Triple Action, which private
life insurance in question; and (2) whether private respondent respondent failed to accept. In the absence of a meeting of the
Ngo Hing concealed the state of health and physical condition of minds between petitioner Pacific Life and private respondent Ngo
Helen Go, which rendered void the aforesaid Exhibit E. Hing over the 20-year endowment life insurance in the amount of
1. At the back of Exhibit E are condition precedents required P50,000.00 in favor of the latter's one-year old daughter, and with
before a deposit is considered a BINDING RECEIPT. These the non-compliance of the abovequoted conditions stated in the
conditions state that: disputed binding deposit receipt, there could have been no
A. If the Company or its agent, shan have received the premium insurance contract duly perfected between thenl Accordingly, the
deposit ... and the insurance application, ON or PRIOR to the date deposit paid by private respondent shall have to be refunded by
of medical examination ... said insurance shan be in force and in Pacific Life.
effect from the date of such medical examination, for such period As held in De Lim vs. Sun Life Assurance Company of
as is covered by the deposit ..., PROVIDED the company shall be Canada, supra, "a contract of insurance, like other contracts, must
satisfied that on said date the applicant was insurable on standard be assented to by both parties either in person or by their agents
rates under its rule for the amount of insurance and the kind of ... The contract, to be binding from the date of the application,
policy requested in the application. must have been a completed contract, one that leaves nothing to
D. If the Company does not accept the application on standard be dione, nothing to be completed, nothing to be passed upon, or
rate for the amount of insurance and/or the kind of policy determined, before it shall take effect. There can be no contract
requested in the application but issue, or offers to issue a policy of insurance unless the minds of the parties have met in
for a different plan and/or amount ..., the insurance shall not be in agreement."
force and in effect until the applicant shall have accepted the We are not impressed with private respondent's contention that
policy as issued or offered by the Company and shall have paid the failure of petitioner Mondragon to communicate to him the
full premium thereof. If the applicant does not accept the policy, rejection of the insurance application would not have any adverse
the deposit shall be refunded. effect on the allegedly perfected temporary contract
E. If the applicant shall not have been insurable under Condition A (Respondent's Brief, pp. 13-14). In this first place, there WAS NO
above, and the Company declines to approve the application the CONTRACT PERFECTED between the parties who had no meeting
insurance applied for shall not have been in force at any time and of their minds. Private respondet, being an authorized insurance
the sum paid be returned to the applicant upon the surrender of agent of Pacific Life at Cebu branch office, is indubitably aware
this receipt. (Emphasis Ours). that said company does not offer the life insurance applied for.
The aforequoted provisions printed on Exhibit E show that the When he filed the insurance application in dispute, private
binding deposit receipt is intended to be merely a provisional or respondent was, therefore, only taking the chance that Pacific Life
temporary insurance contract and only upon compliance of the will approve the recommendation of Mondragon for the
following conditions: (1) that the company shall be satisfied that acceptance and approval of the application in question along with
the applicant was insurable on standard rates; (2) that if the his proposal that the insurance company starts to offer the 20-
company does not accept the application and offers to issue a year endowment insurance plan for children less than seven
policy for a different plan, the insurance contract shall not be years. Nonetheless, the record discloses that Pacific Life had
binding until the applicant accepts the policy offered; otherwise, rejected the proposal and recommendation. Secondly, having an
the deposit shall be reftmded; and (3) that if the applicant is not insurable interest on the life of his one-year old daughter, aside
ble according to the standard rates, and the company disapproves from being an insurance agent and an offense associate of
the application, the insurance applied for shall not be in force at petitioner Mondragon, private respondent Ngo Hing must have
any time, and the premium paid shall be returned to the known and followed the progress on the processing of such
applicant. application and could not pretend ignorance of the Company's
Clearly implied from the aforesaid conditions is that the binding rejection of the 20-year endowment life insurance application.
deposit receipt in question is merely an acknowledgment, on At this juncture, We find it fit to quote with approval, the very apt
behalf of the company, that the latter's branch office had received observation of then Appellate Associate Justice Ruperto G. Martin
from the applicant the insurance premium and had accepted the who later came up to this Court, from his dissenting opinion to
application subject for processing by the insurance company; and the amended decision of the respondent court which completely
that the latter will either approve or reject the same on the basis reversed the original decision, the following:
of whether or not the applicant is "insurable on standard rates."
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Of course, there is the insinuation that neither the memorandum Fieldmen's Insurance v. vda. de Songco
of rejection (Exhibit 3-M) nor the reply thereto of appellant
Mondragon reiterating the desire for applicant's father to have FIELDMEN’S INSURANCE v. MERCEDES VARGAS vda. DE
the application considered as one for a 20-year endowment plan SONGCO, et al. and CA
was ever duly communicated to Ngo; Hing, father of the minor 1968 / Fernando / Review of CA decision
applicant. I am not quite conninced that this was so. Ngo Hing, as
father of the applicant herself, was precisely the "underwriter vehicle is an ‘owner’ private vehicle and not for passengers, but
who wrote this case" (Exhibit H-1). The unchallenged statement of agent Sambat said that they can insure whatever kind of vehicle
appellant Mondragon in his letter of May 6, 1957) (Exhibit 4-M), because their company is not owned by the government
specifically admits that said Ngo Hing was "our associate" and that
it was the latter who "insisted that the plan be placed on the 20- Songco paid an annual premium and he was issued a Common
year endowment plan." Under these circumstances, it is Carriers Accident Insurance Policy
inconceivable that the progress in the processing of the
application was not brought home to his knowledge. He must From Qua Chee Gan v. Law Union and Rock Insurance – Where
have been duly apprised of the rejection of the application for a inequitable conduct is shown by an insurance firm, it is estopped
20-year endowment plan otherwise Mondragon would not have from enforcing forfeitures in its favor, in order to forestall fraud
asserted that it was Ngo Hing himself who insisted on the or imposition on the insured. Estoppel is primarily based on the
application as originally filed, thereby implictly declining the offer doctrine of good faith and the avoidance of harm that will befall
to consider the application under the Juvenile Triple Action Plan. the innocent party due to its injurious reliance.
Besides, the associate of Mondragon that he was, Ngo Hing
should only be presumed to know what kind of policies are Fieldmen’s Insurance incurred legal liability under the
available in the company for minors below 7 years old. What he policy. Since some of the conditions in the policy were impossible
and Mondragon were apparently trying to do in the premises was to comply with under the existing conditions at the time and
merely to prod the company into going into the business of inconsistent with the known facts, the insurer is estopped from
issuing endowment policies for minors just as other insurance asserting breach of such conditions. Except for the fact that the
companies allegedly do. Until such a definite policy is however, passengers were not fare-paying, their status as beneficiaries
adopted by the company, it can hardly be said that it could have under the policy is recognized. Even if the be assumed that there
been bound at all under the binding slip for a plan of insurance was an ambiguity, such must be strictly interpreted against the
that it could not have, by then issued at all. (Amended Decision, party that caused them.
Rollo, pp- 52-53).
2. Relative to the second issue of alleged concealment. this Court The contract of insurance is one of perfect good faith (uberrima
is of the firm belief that private respondent had deliberately fides) not for the insured alone, but equally so for the insurer; in
concealed the state of health and piysical condition of his fact, it is more so for the latter, since its dominant bargaining
daughter Helen Go. Wher private regpondeit supplied the position carries with it stricter responsibility.
required essential data for the insurance application form, he was
fully aware that his one-year old daughter is typically a mongoloid
child. Such a congenital physical defect could never be ensconced White Gold Marine Services Inc. v Pioneer Insurance & Surety
nor disguished. Nonetheless, private respondent, in apparent bad Corporation (Insurance)
faith, withheld the fact materal to the risk to be assumed by the
insurance compary. As an insurance agent of Pacific Life, he ought When White Gold failed to fully pay its accounts, Steamship
to know, as he surely must have known. his duty and Mutual refused to renew the coverage.
responsibility to such a material fact. Had he diamond said Steamship Mutual thereafter filed a case against White Gold for
significant fact in the insurance application fom Pacific Life would collection of sum of money to recover the latter’s unpaid balance.
have verified the same and would have had no choice but to
disapprove the application outright. DECISION OF LOWER COURTS:
The contract of insurance is one of perfect good faith uberrima
fides meaning good faith, absolute and perfect candor or ISSUES:
openness and honesty; the absence of any concealment or (1) Is Steamship Mutual, a P & I Club, engaged in the insurance
demotion, however slight [Black's Law Dictionary, 2nd Edition], business in the Philippines? (2) Does Pioneer need a license as an
not for the alone but equally so for the insurer (Field man's insurance agent/broker for Steamship Mutual?
Insurance Co., Inc. vs. Vda de Songco, 25 SCRA 70). Concealment
is a neglect to communicate that which a partY knows aDd Ought RULING:
to communicate (Section 25, Act No. 2427). Whether intentional (1) Yes. To continue doing business here, Steamship Mutual or
or unintentional the concealment entitles the insurer to rescind through its agent Pioneer, must secure a license from the
the contract of insurance (Section 26, Id.: Yu Pang Cheng vs. Court Insurance Commission.
of Appeals, et al, 105 Phil 930; Satumino vs. Philippine American SINCE A CONTRACT OF INSURANCE INVOLVES PUBLIC INTEREST,
Life Insurance Company, 7 SCRA 316). Private respondent appears REGULATION BY THE STATE IS NECESSARY. Thus, no insurer or
guilty thereof. insurance company is allowed to engage in the insurance business
We are thus constrained to hold that no insurance contract was without a license or a certificate of authority from the Insurance
perfected between the parties with the noncompliance of the Commission.
conditions provided in the binding receipt, and concealment, as The parties admit that Steamship Mutual is a P & I Club.
legally defined, having been comraitted by herein private Steamship Mutual admits it does not have a license to do business
respondent. in the Philippines although Pioneer is its resident agent. This
relationship is reflected in the certifications issued by the
Insurance Commission.
Page 4 of 8

The test to determine if a contract is an insurance contract or not, 2. Notice;

depends on the nature of the promise, the act required to be 3. Must be in writing;
performed, and the exact nature of the agreement in the light of 4. Must state the grounds
the occurrence, contingency, or circumstances under which the When the terms of insurance contract contain limitations on
performance becomes requisite. It is not by what it is called. liability, courts should construe them in such a way as to preclude
Relatedly, a mutual insurance company is a cooperative the insurer from non-compliance with his obligation.
enterprise where the members are both the insurer and insured. Being a contract of adhesion, the terms of an insurance contract
are to be construed strictly against the party which prepared the
(2) Yes. Although Pioneer is already licensed as an insurance contract - the insurer.
company, it needs a separate license to act as insurance agent for 2. YES.
Steamship Mutual
Sec. 10. Every person has an insurable interest in the life and
Philamcare Health Systems, Inc. V. CA (2002) not the legal wife (deceased was previously married to another
woman who was still alive)
W/N the health care agreement is a contract of insurance. - YES health care agreement is in the nature of a contract of indemnity.
W/N the spouse being "not" legal wife can claim - YES payment should be made to the party who incurred the expenses

HELD: Petition is DENIED. CA AFFIRMED. Blue Cross v Olivares

1. YES. Issues:
1. Whether petitioner was able to prove that respondent Neomi's
stroke was caused by a pre-existing condition and therefore was
P.D. 612 Insurance Code excluded from the coverage of the health care agreement. - NO
Sec. 2 (1)
(1) A "contract of insurance" is an agreement whereby one Held: No. Yes. Petition dismissed.
undertakes for a consideration to indemnify another against loss,
damage or liability arising from an unknown or contingent event. Ratio:
Sec. 3 1. “Philamcare Health Systems, Inc. v. CA- a health care
Sec. 3. Any contingent or unknown event, whether past or future, agreement is in the nature of a non-life insurance. It is an
which may damnify a person having an insurable interest, or established rule in insurance contracts that when their terms
create a liability against him, may be insured against, subject to contain limitations on liability, they should be construed strictly
the provisions of this chapter. against the insurer. These are contracts of adhesion the terms of
which must be interpreted and enforced stringently against the
insurer which prepared the contract. This doctrine is equally
All rights, title and interest in the policy of insurance taken out by applicable to health care agreements.”
an original owner on the life or health of a minor shall The agreement defined a pre-existing condition as:
automatically vest in the minor upon the death of the original “a disability which existed before the commencement date of
owner, unless otherwise provided for in the policy. membership whose natural history can be clinically determined,
whether or not the Member was aware of such illness or
the INSURABLE INTEREST of respondent's husband in obtaining condition. Such conditions also include disabilities existing prior to
the health care agreement was his own health. reinstatement date in the case of lapse of an Agreement.”
in the nature of non-life insurance, which is primarily a contract of “Under this provision, disabilities which existed before the
indemnity commencement of the agreement are excluded from its coverage
Once the member incurs hospital, medical or any other expense if they become manifest within one year from its effectivity.”
arising from sickness, injury or other stipulated contingent, the Petitioners still averred that the non-disclosure of the pre-existing
health care provider must pay for the same to the extent agreed condition made a presumption in its favor. Respondents still
upon under the contract. maintained that the petitioner had the duty to prove its
answer in response to the question relating to the medical history Petitioner never presented evidence to prove its presumption
of the applicant largely depends on opinion rather than fact, that the Doctor’s report would work against Neomi. They only
especially coming from respondent's husband who was not a perceived that the invocation of the privilege made the report
medical doctor. adverse to Neomi and such was a disreputable presumption. They
Where matters of opinion or judgment are called for, answers should have made an independent assessment of Neomi’s
made in good faith and without intent to deceive will not avoid a condition when it failed to obtain the report. They shouldn’t have
policy even though they are untrue. waited for the attending physician’s report to come out.
The fraudulent intent on the part of the insured must be
established to warrant rescission of the insurance contract. Philippine Health Care Providers, Inc. V. CIR
Concealment as a defense for the health care provider or insurer Lessons Applicable: Elements (Insurance)
to avoid liability is an affirmative defense and the duty to
establish such defense by satisfactory and convincing evidence Philippine Health Care Providers, Inc. is a domestic corporation
rests upon the provider or insurer. whose primary purpose is "[t]o establish, maintain, conduct and
. operate a prepaid group practice health care delivery system or a
cancellation of health care agreements as in insurance policies health maintenance organization to take care of the sick and
require the concurrence of the following conditions: - none of disabled persons enrolled in the health care plan and to provide
these was made for the administrative, legal, and financial responsibilities of the
1. Prior notice of cancellation to insured; organization."
Page 5 of 8

ISSUE: that the cost of insurance claims might be higher than the
W/N the Philippine Health Care Providers, Inc (HMO) was engaged premiums paid.
in the business of insurance during the pertinent taxable years - PURPOSE PREVAILS
NO In our jurisdiction, a commentator of our insurance laws has
W/N the Philippine Health Care Providers, Inc enters into an pointed out that, even if a contract contains all the elements of an
insurance contract - NO insurance contract, if its primary purpose is the rendering of
service, it is not a contract of insurance. The primary purpose of
HELD: motion for reconsideration is GRANTED the parties in making the contract may negate the existence of an
insurance contract.
2. NO health care agreements are clearly not within the ambit of Section
MEDICAL SERVICE CORPORATIONS - undertake to provide prepaid 185 of the NIRC and there was never any legislative intent to
medical services through participating physicians, thus relieving impose the same on HMOs
subscribers of any further financial burden,


indemnify an insured for medical expenses up to, but not beyond, Perfection of the Contract of Insurance
the schedule of rates contained in the policy Issue:
Whether or not there was a perfected additional insurance
HMO, - More on Prevention not Indemnification contract.
- obligation to maintain the good health of its members
its undertaking under its agreements is not to indemnify its Held:
members against any loss or damage arising from a medical The contract was not perfected.
condition but, on the contrary, to provide the health and medical
services needed to prevent such loss or damage The perfection of the contract of insurance between the deceased
Overall, and respondent corporation was further conditioned upon
compliance with the following requisites stated in the application
HMO appears to provide insurance-type benefits to its members form:
(with respect to its curative medical services), but these are "there shall be no contract of insurance unless and until a policy is
incidental to the principal activity of providing them medical care. issued on this application and that the said policy shall not take
The "insurance-like" aspect of petitioner’s business is miniscule effect until the premium has been paid and the policy delivered to
compared to its noninsurance activities. Therefore, since it and accepted by me/us in person while I/We, am/are in good
substantially provides health care services rather than insurance health."
services, it cannot be considered as being in the insurance
business. - Consequently, there was absolutely no way the
acceptance of the application could have been
PRINCIPAL PURPOSE TEST communicated to the applicant for the latter to accept
purpose of determining what "doing an insurance business" inasmuch as the applicant at the time was already
means, we have to scrutinize the operations of the business as a dead.
whole and not its mere components
letter dated September 3, 2000, the Insurance Commissioner
confirmed that petitioner is not engaged in the insurance FILIPINAS COMPANIA DE SEGUROS V. CHRISTERN HUENEFELD
business. This determination of the commissioner must be
accorded great weight 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.
An insurance contract exists where the following elements ISSUES:
concur: - NOT present P-I-L-A-R
1. The insured has an insurable INTEREST; W/N Christern Huenefeld is a German subject because majority of
2. The insured is subject to a risk of LOSS by the happening of the its stockholders are under German jurisdiction, despite the fact
designed peril; that it was organized and created under Philippine laws
3. The insurer assumes the RISK; If so,
4. Such ASSUMPTION of risk is part of a general scheme to
distribute actual losses among a large group of persons bearing a W/N the fire insurance policy is enforceable against an enemy
similar risk and state
5. In consideration of the insurer’s promise, the insured pays a
Christern Huenefeld is an enemy corporation since majority of its
indemnity of the insured was not the focal point of the agreement stockholders are German subjects.
but the extension of medical services to the member at an
affordable cost, it did not partake of the nature of a contract of The Philippine Insurance Law provides that ANYONE, EXCEPT A
insurance PUBLIC ENEMY, MAY BE INSURED. It stands to reason that an
HMO, undertakes a business risk when it offers to provide health insurance policy ceases to be allowable as soon as the insured
services. But it is not the risk of the type peculiar only to insurance becomes a public enemy.
companies. Insurance risk, also known as actuarial risk, is the risk
Page 6 of 8

Since Christern Huenefeld became a public enemy on Dec. 10, case, the contract of insurance is a mere wager which is void
1941, then the policy has ceased to be enforcible and therefore under Section 25 of the Insurance Code.
Huenefeld is not entitled to indemnity. However, elementary SECTION 25. every policy executed by way of gaming or wagering,
rules of justice require that the premium paid from Dec. 11, 1941 is void
should be returned. Section 17. The measure of an insurable interest =extent to which
the insured might be damnified by loss of injury thereof
Thus, Filipinas Compania is allowed to recover the sum paid but
only its equivalent in actual Philippine currency, minus the The automatic assignment of the policy to CKS under the
premium that Huenefeld paid after Dec. 11. 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 spouse
Geagonia v CA

Issues: Gaisano Cagayan, Inc. V. Insurance Company Of North America

1. WON the petitioner had not disclosed the two insurance
policies when he obtained the fire insurance and thereby violated Lessons Applicable: Existing Interest (Insurance)
Condition 3 of the policy. Section 13 of Insurance Code
2. WON he is prohibited from recovering
Held: Yes. No. Petition Granted
ISSUE: W/N Insurance Company of North America can claim
Ratio: against Gaisano Cagayan for the debt that was isnured
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 HELD: YES.
the private respondent conclusively proves this knowledge. His
testimony to the contrary before the Insurance Commissioner and - insurance policy is clear that the subject of the insurance is the
which the latter relied upon cannot prevail over a written book debts and NOT goods .
admission made ante litem motam. It was, indeed, incredible that
he did not know about the prior policies since these policies were IMC and LSPI did not lose complete interest over the goods. They
not new or original. have an insurable interest until full payment of the value of the
2. Stated differently, PROVISIONS, CONDITIONS OR EXCEPTIONS in delivered goods.
policies which tend to work a forfeiture of insurance policies
should be construed most strictly against those for whose one's interest is not determined by concept of title, but whether
benefits they are inserted, and most favorably toward those insured has substantial economic interest in the property
against whom they are intended to operate.
Favored si dumadawat over humahatag! Section 13 of our Insurance Code defines insurable interest as
"every interest in property, whether real or personal, or any
Indeed, the rationale behind the incorporation of "other relation thereto, or liability in respect thereof, of such nature that
insurance" clause in fire policies is to prevent over-insurance and a contemplated peril might directly damnify the insured."
thus avert the perpetration of fraud. When a property owner Parenthetically, under Section 14 of the same Code, an insurable
obtains insurance policies from two or more insurers in a total interest in property may consist xxx
amount that exceeds the property's value, the insured may have
an inducement to destroy the property for the purpose of Anyone has an insurable interest in property who derives a
collecting the insurance. The public as well as the insurer is benefit from its existence or would suffer loss from its
interested in preventing a situation in which a fire would be destruction.
profitable to the insured.
SUFFICIENT that the insured is so situated with reference to the
property that he would be liable to loss should it be injured or
Cha V. CA destroyed by the peril against which it is insured

Effect of Lack of Insurable Interest (Insurance) not necessarily imply a property interest in, or a lien upon, or
ISSUE: W/N the CKS has insurable interest because the spouses possession of, the subject
Cha violated the stipulation= no
Sec. 18. No contract or policy of insurance on property shall be The SUBROGATION RECEIPT, by itself, is sufficient to establish not
enforceable except for the benefit of some person having an only the relationship of respondent as insurer and IMC as the
insurable interest in the property insured insured, but also the amount paid to settle the insurance claim
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 The Policy
must exist a t the time the insurance takes effect and at the time Primitivo died on November 25, 1987, his application papers
the loss occurs. The basis of such requirement of insurable for additional insurance coverage no way the acceptance of
interest in property insured is based on sound public policy: to the application could have been communicated.
prevent a person from taking out an insurance policy on property On the contrary, the health of the applicant Rather, the
upon which he has no insurable interest and collecting the condition is a suspensive one whereby the acquisition of
proceeds of said policy in case of loss of the property. In such a rights depends upon the happening of an event which
constitutes the condition. In this case, the suspensive
Page 7 of 8

Hence, the non-fulfillment of the condition resulted in the conditions, it is clear that the Coquias — who, admittedly,
non-perfection of the contract are the sole heirs of the deceased — have a direct cause of
True, rescission presupposes the existence of a valid action against the Company, and, since they could have
contract. A contract which is null and void is no contract at all maintained this action by themselves, without the assistance
and hence could not be the subject of rescission. of the insured it goes without saying that they could and did
properly join the latter in filing the complaint herein.
Gulf Resorts Inc. V. Philippine Charter Insurance Corp.

Lessons Applicable: Stipulations Cannot Be Segregated Great Pacific v CA 1999

ISSUE: W/N Gulf can claim for its properties aside from the Facts:
2 swimming pools A contract of group life insurance was executed between
petitioner Great Pacific and Development Bank Grepalife
HELD: YES. Affirmed. agreed to insure the lives of eligible housing loan mortgagors
It is basic that all the provisions of the insurance policy of DBP.
should be examined and interpreted in consonance with Wilfredo Leuterio, a physician and a housing debtor of DBP,
each other. applied for membership in the group life insurance plan. In
All its parts are reflective of the true intent of the parties. an application form, Dr. Leuterio answered questions
Insurance Code concerning his health condition as follows:
Section 2(1) “7. Have you ever had, or consulted, a physician for a heart
xx Applying the rule on construction, the SC held that each condition, high blood pressure, cancer, diabetes, lung,
of the provisions of the insurance policy must be interpreted kidney or stomach disorder or any other physical
in consonance with each other. A reading of the policy impairment?
including RIDERS AND CLAUSES taken all together show 8. Are you now, to the best of your knowledge, in good
that the intention of the parties is to extend the earthquake health?”
shock clause only to the two swimming pools. The evidence Grepalife issued a coverage to the value of P86,200.00
presented to the trial court readily showed that only the pesos.
swimming pools are intended to be covered by the Dr. Leuterio died due to “massive cerebral hemorrhage.”
earthquake shock clause. Aside from this, no premiums DBP submitted a death claim to Grepalife. Grepalife denied
were paid for other properties in consideration for the the claim alleging that Dr. Leuterio was not physically
earthquake shock clause other than for the two swimming healthy when he applied for an insurance
pools in violation of Sec 77 of the ICP. coverage. Grepalife insisted that Dr. Leuterio did not
disclose he had been suffering from hypertension, which
caused his death. Allegedly, such non-disclosure
Pacific Timber Export Corporation vs Court of Appeals constituted concealment that justified the denial of the claim.
The widow, respondent Medarda V. Leuterio, filed against
ISSUE: Whether or not a separate premium is needed for Grepalife.
cover notes. noooo The trial court rendered a decision in favor of respondent
widow and against Grepalife. The Court
HELD: As a logical consequence, no separate premiums are of Appeals sustained the trial court’s decision.
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 Issues:
called for by the statement issued by WIC after the issuance 1. Whether the Court of Appeals erred in holding petitioner
of the two regular marine insurance policies, thereby leaving liable to DBP as beneficiary in a group life insurance contract
no account unpaid by PTEC due on the insurance coverage, from a complaint filed by the widow of the
which must be deemed to include the Cover Note. If the decedent/mortgagor?
Note is to be treated as a separate policy instead of 2. Whether the Court of Appeals erred in not finding that Dr.
integrating it to the regular policies subsequently Leuterio concealed that he had hypertension, which would
issued, the purpose and function of the Cover Note vitiate the insurance contract?
would be set at naught or rendered meaningless, for it is 3. Whether the Court of Appeals erred in holding Grepalife
in a real sense a contract, not a mere application for liable in the amount of eighty six thousand, two hundred
insurance which is a mere offer. (P86,200.00) pesos without proof of the actual outstanding
mortgage payable by the mortgagor to DBP.

GREAT PASCIFIC LIFE ASSURANCE COMPANY V CA Held: No to all three. Petition dismissed.
1979- see other
Coquia v. Fieldmen’s Insurance 1. Petitioner alleges that the complaint was instituted by the
26 SCRA 172 widow of Dr. Leuterio, not the real party in interest, hence
the trial court acquired no jurisdiction over the
Issue:Whether or not plaintiffs have the right to collect on the case. It argues that when the Court of Appeals affirmed the
policy. trial court’s judgment, Grepalife was held liable to pay the
proceeds of insurance contract in favor of DBP, the
Held:YES. indispensable party who was not joined in the suit.
The insured private respondent did not cede to the
AIn the case at bar, the policy under consideration is typical mortgagee all his rights or interests in the insurance, the
of contracts pour autrui this character being made more policy stating that: “In the event of the debtor’s death before
manifest by the fact that the deceased driver paid fifty his indebtedness with the Creditor [DBP] shall have been
percent (50%) of the corresponding premiums, which were fully paid, an amount to pay the outstanding indebtedness
deducted from his weekly commissions. Under these shall first be paid to the creditor and the balance of sum
Page 8 of 8

assured, if there is any, shall then be paid to the

beneficiary/ies designated by the debtor.” When DBP’s claim Espinas & Associates Law Office for Private
was denied, it collected the debt from the mortgagor and Respondent.
took the necessary action of foreclosure on the residential lot
of private respondent.
Gonzales vs. Yek Tong Lin- Insured, being the person with SYLLABUS
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 1. MERCANTILE LAW; INSURANCE; RECOVERY OF
person named or unnamed, and although it is expressly DAMAGES DUE TO LOSS OR INJURY; ONE-YEAR
made payable to another as his interest may appear or PRESCRIPTIVE PERIOD COUNTED FROM DATE OF
otherwise. Although a policy issued to a mortgagor is taken REJECTION; REASON. — The one-year period under
out for the benefit of the mortgagee and is made payable to Section 384 should be counted not from the date of the
him, yet the mortgagor may sue thereon in his own name, accident but from the date of the rejection of the claim by
especially where the mortgagee’s interest is less than the full The insurer. The Court further held that it is only from the
amount recoverable under the policy. Insured may be rejection of the claim by the insurer that the insured’s cause
regarded as the real party in interest, although he has of action accrued since a cause of action does not accrue
assigned the policy for the purpose of collection, or has until the party obligated refuse, expressly or impliedly, to
assigned as collateral security any judgment he may obtain. comply with its duty.
And since a policy of insurance upon life or health may pass
by transfer, will or succession to any person, whether he has 2. ID.; ID.; ID.; CLAIM MUST BE FILED WITHIN ONE YEAR
an insurable interest or not, and such person may recover it FROM DATE OF ACCIDENT; REASON BEHIND. — The
whatever the insured might have recovered,[14] the widow of requirement that any claim or action for recovery of damage
the decedent Dr. Leuterio may file the suit against the under an insurance policy must be brought within one year
insurer, Grepalife. from the date of the accident was intended to ensure that
2. The medical findings were not conclusive because Dr. suits be brought by the insured while evidence as to the
Mejia did not conduct an autopsy on the body of the origin and cause of destruction have not yet disappeared.
decedent. The medical certificate stated that hypertension
was “the possible cause of death.” Hence, the statement of 3. ID.; ID.; ID.; ACTION NO YET PRESCRIBED WHERE
the physician was properly considered by the trial court as THE DELAY WAS ATTRIBUTABLE TO THE INSURER. —
hearsay. Where the delay in bringing the suit against the insurance
Contrary to appellant’s allegations, there was no sufficient company was not caused by the insured or its subrogee but
proof that the insured had suffered from hypertension. Aside by the insurance company itself, it is unfair to penalize the
from the statement of the insured’s widow who was not even insured or its subrogee by dismissing its action against the
sure if the medicines taken by Dr. Leuterio were for insurance company on the ground of prescription. The latter
hypertension, the appellant had not proven nor produced should bear the consequences of its failure to act promptly
any witness who could attest to Dr. Leuterio’s medical on the insured’s claim.
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 debtor’s 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
DBP foreclosed one of the deceased person’s lots to satisfy
the mortgage. Hence, the insurance proceeds shall inure to
the benefit of the heirs of the deceased person or his


Country Bankers Insurance & Surety Co.
APPEALS, Respondents.

Romeo G. Velasquez for Petitioner.