Essential Elements of Insurance: (IRDCR) 1. Insurable interest- interest in life or thing capable of pecuniaryestimation 2.

Risk of loss or damage- insured is subjected to risk through thedestruction orimpairment of that interest by the happening of designated peril 3. Designated peril as cause (riskcoverage/qualifiers)- cause of damage or loss must be caused by the Designated perils stated in the contract 4. Consideration: premium - insurer undertakes to assume the risk of loss for a consideration(premium) - premium is a ratable contribution to a general insurance fund 5. Risk distributing scheme (because of definition of insurance business) - not risk-transferring scheme, the assumption of risk is a part of the general schemes to distribute actual losses among a large group of persons bearing similar risks What is an incontestability clause? An incontestability clause makes a health or life insurance policy indisputable after a certain period of time (e.g., two or three years). It normally provides that, after the expiration of a certain period of time, the insurer may not set up matters that would have been a defense to a suit on the policy prior to the expiration of the period of time. Such matters that would have been a defense to the policy during the contestability period usually relate to misrepresentations made by the insured in his application for the policy. The purpose of an incontestability clause is to act as a type of statute of limitations to protect insureds from lawsuits or defenses by insurers after a certain point in time. 1. PHILAMCARE HEALTH SYSTEMS, INC., petitioner, vs. COURT OF APPEALS and JULITA TRINOS, respondents.

FACTS: Ernani Trinos, deceased husband of respondent Julita Trinos, applied for a health care coverage with petitioner Philamcare Health Systems, Inc. In the standard application form, he answered no to the following question: Have you or any of your family members ever consulted or been treated for high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give details). During the period of his coverage, Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC). While her husband was in the hospital, respondent tried to claim the benefits under the health care agreement. However, petitioner denied her claim saying that the Health Care Agreement was void. According to petitioner, there was a concealment regarding Ernanis medical history. Doctors at the MMC allegedly discovered at the time of Ernanis confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Julia instituted an action for damages with the RTC of Manila against the petitioner. She asked for reimbursement of her expenses and moral damages. After the trial, the lower court ruled in favor of Juliana. On Appeal, the Court of Appeals affirmed the appealed judgment but deleted the award of damages. ISSUE: 1. WON health care agreement is not an insurance contract. 2. WON there was concealment committed by the insured, Ernani Trinos. HELD: 1. NO. Insurance contract is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. One of the elements of insurance contract is that the insured must have an insurable interest. Section 10 of the Insurance Code provides that every person has an insurable interest in the life and health: (1) of himself, of his spouse and of his children; xxxxxxx In the case at bar, the insurable interest of respondents husband in obtaining the health care agreement was his own health. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract. 2. NO. The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondents

husband who was not a medical doctor. Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract. Under Section 27 of the Insurance Code, a concealment entitles the injured party to rescind a contract of insurance. The right to rescind should be exercised previous to the commencement of an action on the contract. In this case, no rescission was made. Besides, the cancellation of health care agreements as in insurance policies require the concurrence of the following conditions: 1. Prior notice of cancellation to insured; 2. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned; 3. Must be in writing, mailed or delivered to the insured at the address shown in the policy; 4. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based. None of the above pre-conditions was fulfilled in this case. When the terms of insurance contract contain limitations on liability, courts should construe them in such a way as to preclude the insurer from noncompliance with his obligation. 2. COUNTRY BANKERS INSURANCE CORPORATION, petitioner, vs. LIANGA BAY AND COMMUNITY MULTI-PURPOSE COOPERATIVE, INC., respondent.

FACTS: The petitioner is a domestic corporation principally engaged in the insurance business wherein it undertakes, for a consideration, to indemnify another against loss, damage or liability from an unknown or contingent event including fire while the respondent is a duly registered cooperative judicially declared insolvent and represented by the elected assignee, Cornelio Jamero. Sometime in 1989, the petitioner and the respondent entered into a contract of fire insurance. Under Fire Insurance Policy No. F-1397, the petitioner insured the respondents stocks-in-trade against fire loss, damage or liability during the period starting from June 20, 1989 at 4:00 p.m. to June 20, 1990 at 4:00 p.m., for the sum of P200,000.00. On July 1, 1989, at or about 12:40 a.m., the respondents building located at Barangay Diatagon, Lianga, Surigao del Sur was gutted by fire and reduced to ashes, resulting in the total loss of the respondents stocks-in-trade, pieces of furnitures and fixtures, equipments and records. Due to the loss, the respondent filed an insurance claim with the petitioner under its Fire Insurance Policy submitting: (a) the Spot Report of Pfc. Arturo V. Juarbal, INP Investigator, dated July 1, 1989; (b) the Sworn Statement of Jose Lomocso; and (c) the Sworn Statement of Ernesto Urbiztondo. The petitioner, however, denied the insurance claim on the ground that, based on the submitted documents, the building was set on fire by two NPA rebels who wanted to obtain canned goods, rice and medicines as provisions for their comrades in the forest, and that such loss was an excepted risk under paragraph No. 6 of the policy conditions of Fire Insurance Policy No. F-1397, which provides: This insurance does not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely: (d) Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or usurped power. Any loss or damage happening during the existence of abnormal conditions (whether physical or otherwise) which are occasioned by or through or in consequence, directly or indirectly, of any of said occurrences shall be deemed to be loss or damage which is not covered by this insurance, except to the extent that the Insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions. Finding the denial of its claim unacceptable, the respondent then instituted in the trial court the complaint for recovery of loss, damage or liability against petitioner. The petitioner answered the complaint and reiterated the ground it earlier cited to deny the insurance claim, that is, that the loss was due to NPA rebels, an excepted risk under the fire insurance policy. The trial court ruled against Country Bankers due to their defense being unimpressive and unconvincing. They were ordered to fully pay the insurance claim for the loss the insured-plaintiff sustained as a result of the fire under its Fire Insurance Policy No. F-1397 in its full face value of P200,000.00 with interest of 12% per annum from date of filing of the complaint until the same is fully paid as well as actual and exemplary damages, and litigation expenses, attorneys fees and the costs of the suit. On appeal, the Court of Appeals affirmed entirely the trial courts decision. Hence, this petition to the Supreme Court. ISSUE: Whether or not the fire which caused the loss on the part of respondent is an excepted risk under the insurance policy. HELD: No.

Where a risk is excepted by the terms of a policy which insures against other perils or hazards, loss from such a risk constitutes a defense which the insurer may urge, since it has not assumed that risk, and from this it follows that an insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation set up. If a proof is made of a loss apparently within a contract of insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a cause which limits its liability. Since the petitioner in this case is defending on the ground of non-coverage and relying upon an exemption or exception clause in the fire insurance policy, it has the burden of proving the facts upon which such excepted risk is based, by a preponderance of evidence. But petitioner failed to do so. The petitioner relies on the Sworn Statements of Jose Lomocso and Ernesto Urbiztondo as well as on the Spot Report of Pfc. Arturo V. Juarbal however, the Sworn Statements of Lomocso and Urbiztondo are inadmissible in evidence, for being hearsay, inasmuch as they did not take the witness stand and could not therefore be cross-examined. The Spot Report is admissible only insofar as it constitutes part of the testimony of Pfc. Arturo V. Juarbal since he himself took the witness stand and was available for crossexamination. The petitioners evidence to prove its defense is sadly wanting and thus, gives rise to its liability to the respondent under Fire Insurance Policy No. F-1397. Nonetheless, the Supreme Court lowered the interest to be paid by petitioner to 6% from the date of the filing of the complaint since the insurance claim in this case is evidently not a forbearance of money, goods or credit. The awards for damages, litigation expenses and attorneys fees were deleted because they were not proved and the court did not find any justification for their imposition.

3. PHIL HEALTH CARE vs CIR(2009) FACTS: Phil. Health Care Provider is engaged in business of providing prepaid group practice health care delivery. The Com. of Internal Revenue, on Jan 27,2000, demanded payment of 224,702,614 as documentary stamp tax imposed on petitioners agreement with its members. Phil Health protested before the CIR but Cir did not act upon the protest so Phil Health filed a petition for review before the Court of Tax Appeals. The CTA rendered a decision ordering Phil Health to pay 53M instead of 224M imposed by the CIR. The CTA also cancelled the documentary stamp tax deficiency. The CIR appealed the decision before the CA contending that Phil Cares healthcare agreement is a contract of insurance and is subject to documentary stamp tax (DST). The CA reversed its decision ordering Phil Care to pay 123M as DST. Phil Care appealed to the SC and it affirmed CAs decision. IT ruled that the petitioners healthcare agreement was in the nature of non-life insurance which is a contract of indemnity, contract between them and their beneficiaries under their plan is treated as insurance contract. Phil Care filed a motion for recon. CONTENTIONS: PHIL CARE: Their company is a health maintenance organization (HMO) and is a service provider, not an insurance company. ISSUE: WON health care agreement bet the company and its beneficiaries are contract of insurance. RULING: 4. PHIL HEALTH CARE vs CIR 2008 In a decision dated June 12, 2008, the Court denied the petition and affirmed the CAs decision. We held that petitioners health care agreement during the pertinent period was in the nature of non-life insurance which is a contract of indemnity, citing Blue Cross Healthcare, Inc. v. Olivares1[3] and Philamcare Health Systems, Inc. v. CA.2[4] We also ruled that petitioners

contention that it is a health maintenance organization (HMO) and not an insurance company is irrelevant because contracts between companies like petitioner and the beneficiaries under their plans are treated as insurance contracts. Moreover, DST is not a tax on the business transacted but an excise on the privilege, opportunity or facility offered at exchanges for the transaction of the business.)

SC ruled that it is not a contract of insurance. Based on the principal object and purpose test, HMO does not qualify as insurance. The test is based on Sec. 2 of the Insurance Code that an enterprise is considered engaged in an insurance business when the principal object is the assumption of risk and the indemnification of loss. If the company assumes risks and indemnifies the beneficiaries for their losses, then it is an insurance company. IN American courts, HMO undertake to provide for the provision of medical services through participating physicians while insurance company simply undertake to indemnify the insured for medical expenses incurred up to a pre-agreed limit. Phil Cares program is designed to prevent or minimize assumption of risk on its part thus; their agreement is not to indemnify but to provide medical services to prevent loss or damage. Phil Care appears to provide insurance-type benefits but only an incidental part to their main activity of providing medical care. Phil Care is not an insurance company because it is not supervised by the Insurance commission but by the Dept. of Health. The Insurance Commissioner also confirmed that it is not engaged in insurance business. IT is not liable for DST. Automatic Insurance Coverage 5. ETERNAL GARDENS MEMORIAL PARK CORPORATION vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY G.R. No. 166245, 9 April 2008 FACTS: Respondent insurance company entered into a Creditor Group Life Policy agreement with Eternal Gardens Memorial. Under said policy, the clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. The amount of insurance coverage depended upon the existing balance of the purchased burial lots. The policy was to be effective for a period of one year, renewable on a yearly basis. As required under the said policy, Eternal submitted a list of all new lot purchasers, including the application of each purchaser and their corresponding unpaid balances. Included in this list is a certain John Chuang. When Chuang died, Eternal sent a letter, together with the pertinent papers, to Philamlife which served as an insurance claim for Chuangs death. Philamlife required that Eternal submit certain documents relative to its insurance claim for Chuangs death. Eternal transmitted said documents which Philamlife was able to received. However, after more than one year, Philamlife did not anymore reply to Eternals insurance claim. This prompted Eternal to demand the insurance claims. However, Philamlife denied the said claim, prompting Eternal to file a case before the RTC of Makati. ISSUE: Whether or not Philamlife assumed the risk of loss withoutapproving the application. HELD: YES. An insurance contract covering the lot purchaser is created and the same is effective, valid, and binding until terminated by Philamlife by disapproving the insurance application. The second sentence of Creditor Group Life Policy No. P-1920 on the Effective Date of Benefit is in the nature of a resolutory condition which would lead to the cessation of the insurance contract. Moreover, the mere inaction of the insurer on the insurance application must not work to prejudice the insured; it cannot be interpreted as a termination of the insurance contract. The termination of the insurance contract by the insurer must be explicit and unambiguous. 5. GR 180880-81 (PIONEER INSURANCE AND SURETY CORPORATION vs. KEPPEL CEBU SHIPYARD, INC)

FACTS: WG & A JEBSENS SHIPMGMT. Owner/Operator of M/V "SUPERFERRY 3" and KEPPEL CEBUSHIPYARD, INC. (KCSI) enter into an agreement that the Dry docking and Repair of the above-named vessel ordered by the Owners Authorized Representative shall be carried out under the Keppel Cebu Shipyard Standard Conditions of Contract for Ship repair, guidelines and regulations on safety and security issued by Keppel Cebu Shipyard. In the course of its repair, M/V "Superferry 3" was gutted by fire. Claiming that the extent of the damage was pervasive, WG&A declared the vessels damage as a "total constructive loss" and, hence, filed an insurance claim with Pioneer.

Pioneer paid the insurance claim of WG&A, which in turn, executed a Loss and Subrogation Receipt in favor of Pioneer. Pioneer tried to collect from KCSI, but the latter denied any responsibility for the loss of the subject vessel. As KCSI continuously refused to pay despite repeated demands, Pioneer, filed a Request for Arbitration before the Construction Industry Arbitration Commission CIAC seeking for payment of U.S.$8,472,581.78 plus interest, among others. The CIAC rendered its Decision declaring both WG&A and KCSI guilty of negligence, the CIAC ordered KCSI to pay Pioneer the amount of P25,000,000.00, with interest at 6% per annum. Both Keppel and Pioneer appealed to the CA. The cases were consolidated in the CA. the CA rendered a decision dismissing petitioners claims in its entirety. Keppel was declared as equally negligent. ISSUE: To whom may negligence over the fire that broke out on board M/V "Superferry 3" be imputed? What is the extent of the damage, if any? RULING: 1.The issue of negligence. Undeniably, the immediate cause of the fire was the hot work done by Angelino Sevillejo (Sevillejo) on the accommodation area of the vessel, specifically on Deck A. As established before the CIAC Pioneer contends that KCSI should be held liable because Sevillejo was its employee who, at the time the fire broke out, was doing his assigned task, and that KCSI was solely responsible for all the hot works done on board the vessel. We rule in favor of Pioneer. At the time of the fire, Sevillejo was an employee of KCSI and was subject to the latters direct control and supervision. There was a lapse in KCSIs supervision of Sevillejos work at the time the fire broke out. KCSI failed to exercise the necessary degree of caution and foresight called for by the circumstances. The circumstances, taken collectively, yield the inevitable conclusion that Sevillejo was negligent in the performance of his assigned task. His negligence was the proximate cause of the fire on board M/V"Superferry 3." As he was then definitely engaged in the performance of his assigned tasks as an employee of KCSI, his negligence gave rise to the vicarious liability of his employer43 under Article 2180of the Civil Code. KCSI failed to prove that it exercised the necessary diligence incumbent upon it to rebut the legal presumption of its negligence in supervising Sevillejo.44 Consequently, it is responsible for the damages caused by the negligent act of its employee, and its liability is primary and solidary. 2. Damages In marine insurance, a constructive total loss occurs under any of the conditions set forth in Section 139of the Insurance Code, which provides Sec. 139. A person insured by a contract of marine insurance may abandon the thing insured, or any particular portion hereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril insured against:(a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from the peril;(b) If it is injured to such an extent as to reduce its value more than three-fourths; x x x. It cannot be denied that M/V "Superferry 3" suffered widespread damage from the fire that occurred on February 8, 2000, a covered peril under the marine insurance policies obtained by WG&A from Pioneer. The estimates given by the three disinterested and qualified shipyards show that the damage to the ship would exceed P270,000,000.00, or of the total value of the policies P360,000,000.00. These estimates constituted credible and acceptable proof of the extent of the damage sustained by the vessel. Considering the extent of the damage, WG&A opted to abandon the ship and claimed the value of its policies. Pioneer, finding the claim compensable, paid the claim, with WG&A issuing a Loss and Subrogation Receipt evidencing receipt of the payment of the insurance proceeds from Pioneer. The Loss and Subrogation Receipt issued by WG&A to Pioneer is the best evidence of payment of the insurance proceeds to the former, and no controverting evidence was presented by KCSI to rebut the presumed authority of the signatory to receive such payment. Interpretation of insurance contracts 7. VIOLETA LALICAN vs. THE INSULAR LIFE ASSURANCE COMPANY LIMITED G.R. No. 183526, August 25, 2009 FACTS: Eulogio, the husband of herein petitioner, applied for an insurance policy the value of which is 1,500,000.00. Under the policy terms, Eulogio is obliged to pay the premiums on a quarterly basis, until the end of the 20year period of the policy. It was likewise stated therein that the insured has 31-day grace period for the payment of each premium subsequent to the first and that default in any payment of said premiums shall result in the automatic lapse of the said policy. Eulogio failed to pay a premium even after the lapse of the 31-day grace period. Hence, the policy lapsed and became void. He filed an Application for Reinstatement of said policy and paying the amount of the premium due. However, Insular Life notified him that they could not fully process his application because the amount he paid is inadequate to cover the accrued interests. Hence, he again applied for the reinstatement of said policy this time, together with the required amount. The husband of the insurance agent was the one who received his application because the agent was away at that time. Within the same day, the insured died. This fact was unknown to the agent who then submitted Eulogios application for reinstatement to the Insular Life Regional Office. Violeta then filed a claim for payment of the full proceeds of the policy. However, the company said that she is not entitled to the insurance proceeds because they claimed that the policy was not reinstated during her husbands lifetime and good health.

ISSUE: Whether or not Eulogio was able to reinstate the lapsed insurance policy before his death HELD: NO. The Court agrees with the RTC that the conditions for reinstatement under the Policy Contract and Application for Reinstatement were written in clear and simple language, which could not admit of any meaning or interpretation other than those that they so obviously embody. Violeta did not adduce any evidence that Eulogio might have failed to fully understand the import and meaning of the provisions of his Policy Contract and/or Application for Reinstatement both of which he voluntarily signed. While it is a cardinal principle of insurance law that a policy or contract of insurance is to be construed liberally in favor of the insured and strictly as against the insurer company, yet, contracts of insurance, like other contracts are to be construed according to the sense and meaning of the terms, which the parties themselves have used, if such terms are clear and unambiguous, they must be taken and understood in their plain, ordinary and popular sense. Topic: Effect of Concealment FIELDMEN'S INSURANCE CO., INC. vs. MERCEDES VARGAS VDA. DE SONGCO, et al. and COURT OF APPEALS FACTS: Federico Songco, a man of scant education, was induced by Fieldmen's Insurance Company Pampanga agent Benjamin Sambat to apply for a Common Carrier's Liability Insurance Policy covering his private jeepney, the duration of which is one year. It was proven that Agent Sambat told Federico whether the vehicle was an 'owner' type or for passengers it could be insured because their company is not owned by the Government and the Government has nothing to do with their company. Thereafter, upon payment of the required premium, the policy was extended for another year. During the effectivity of the renewed policy the insured vehicle while being driven by Rodolfo duly licensed driver and son of Federico collided with a car, as a result of which mishap Federico and Rodolfo died, Carlos (another son), the latter's wife, Angelita Songco, and a family friend by the name of Jose Manuel sustained physical injuries of varying degrees. Fieldmens refuse to pay the premium on the ground that the vehicle insured is not a common carrier but a private carrier. ISSUE: WON FIELDMENS INSURANCE COMPANY CAN DENY LIABILITY. HELD: It was held in a previously decided case 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 petitioner Fieldmen's Insurance Co., Inc., had led the insured Federico Songco to believe that he could qualify under the common carrier liability insurance policy, and to enter into contract of insurance paying the premiums due, it could not, thereafter, in any litigation arising out of such representation, be permitted to change its stand to the detriment of the heirs of the insured. 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. "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." This is merely to stress that while the morality of the business world is not the morality of institutions of rectitude like the pulpit and the academe, it cannot descend so low as to be another name for guile or deception. Moreover, should it happen thus, no court of justice should allow itself to lend its approval and support. IGNACIO SATURNINO, ET AL. (appellants) vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY (appellee) FACTS: Estefania Saturnino applied for an insurance policy with the appellee. Such policy was one for a 20-year endowment nonmedical insurance. This kind of policy dispenses with the medical examination of the applicant usually required in ordinary life policies. However, detailed information is called for in the application concerning the applicant's health and medical history. The written application was submitted by Saturnino on November 16, 1957, witnessed by appellee's agent Edward Santos. The policy was issued on the same day, upon payment of the first year's premium. It appears that on September 9, 1957, Estefania was operated on for cancer, involving complete removal of the right breast. She stayed in the hospital for 8 days, after which she was discharged, although she could not be considered definitely cured, her ailment being of the malignant type. Notwithstanding the fact of her operation, Estefania did not make a disclosure thereof in her application for insurance. On the contrary, she stated therein that she did not have, nor had she ever had, among other ailments listed in the application, cancer or other tumors: that she had not consulted any physician, undergone any operation or suffered any injury within the preceding 5 years; and that she had never been treated for, nor did she ever have any illness or disease peculiar to her sex, particularly of the breast, ovaries, uterus, and menstrual disorders. The

application also recites that the foregoing declarations constituted "a further basis for the issuance of the policy." On September 19, 1958, Saturnino died of pneumonia, secondly to influenza. Ignacio, together with his children, demanded payment of the face value of the policy. The claim was rejected and so Ignacio and his children sued the appellee. The trial court dismissed the complaint and the appellees counterclaim but ordered the return of the premium already paid, plus interest at 6%. ISSUE: Whether or not the insured made such false representations of material facts as to avoid the policy. HELD: Yes. Sec. 30 of the Insurance Law provides that "materiality is to be determined not by the event, but solely by the probable and reasonable influence of the in forming his estimate of the proposed contract, or in facts upon the party to whom the communication is due, making his inquiries." It seems to be the contention of appellants that the facts subject of the representations were not material in view of the "non-medical" nature of the insurance applied for, which does away with the usual requirement of medical examination before the policy is issued. The contention is without merit. If anything, the waiver of medical examination renders even more material the information required of the applicant concerning previous condition of health and diseases suffered, for such information

Great Pacific Life Assurance Corp vs Court of Appeals

Facts: A contract of group life insurance was executed between Grepalife and DBP. The former agreed to insure the lives of eligible housing loan mortgagors of DBP. Dr. Leuterio applied membership in the group life insurance plan. He answered in the application form that he has never consulted a physician for heart condition, high blood pressure, cancer, diabetes, lung, kidney, or stomach disorder or any other physical impairment, and that to the best of his knowledge he is in good condition. During the subsistence of the insurance he died from massive cerebral hemorrhage. Grepalife denied the claim because of concealment since it was discovered that he had high blood. His widow filed a claim. Issue: Whether or not there was misrepresentaion so as to warrant denial of claim; Whether or not the widow of Leuterio is a real party in interest Held: The Supreme Court ruled that there was no sufficient proof that the insured suffered from hypertension. It is a well-settled ruled that the fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. As regards the second issue, the widow can be regarded as real party in interest because in mortgage redemption insurance the mortgagor and not the mortgagee is the contracting party. The mortgagor merely assigns the proceeds to the mortgagee. Therefore, since by principle of succession the widow may claim. UNION MANUFACTURING CO., INC VS. PHIL. GUARANTY CO, INC (47 SCRA 271) In a suit arising from a fire insurance policy, the insurer, Philippine Guaranty Co., Inc., was able to avoid liability upon proof that there was a violation of a warranty. There was no denial thereof from the insured, Union Manufacturing Co., Inc. With such a legally crippling blow, the effort of the Republic Bank, the main plaintiff and now the sole appellant, to recover on such policy as mortgagee, by virtue of the cover note in the insurance policy providing that it is entitled to the payment of loss or damages as its interest may appear, was in vain. The defect being legally incurable, its appeal is likewise futile. We affirm. FACTS: The Union Manufacturing Co., Inc. obtained certain loans from the Republic Bank in the total sum of P415,000.00 and to secure the payment, Union executed a real and chattel mortgages on certain properties. As additional condition of the mortgage contract, Union undertook to secure insurance coverage over the mortgaged properties for the same amount of P415,000.00. Union failed to secure insurance coverage, the Republic Bank procured from Philippine Guaranty Co., Inc. an insurance coverage on loss against fire for P500,000.00 over the properties of Union with the annotation that loss or damage, if any is payable to Republic Bank as its interest may appear, subject however to the printed conditions of said defendant's Fire Insurance Policy Form. Fire Insurance Policy No. 43170 was issued for the sum of P500,000.00 in favor of the assured, Union, for which the corresponding premium was paid by the Republic Bank to the defendant, Philippine Guaranty Co., Inc. The same was renewed by the Republic Bank upon expiration. A fire occurred in the premises of the Union and it filed its fire claim with the defendant Philippine Guaranty which was denied by said defendant and by the trial court on the ground that Policy Condition No. 3 and/or the 'Other Insurance Clause' of the policy was violated because you did not give ,notice to us the other insurance which you had taken from New India for P80,000.00, Sincere Insurance for P25,000.00 and Manila Insurance for P200,000.00 with the result that these insurances, of which we became aware of only after the fire, were not endorsed on our policy, while Policy No. 43170 was already in full force and effect, the Union without the consent of the Philippine Guaranty obtained other insurance policies totaling P305,000.00 over the same properties prior to the fire.

ISSUE: WON Republic Bank could recover. HELD: NO. Inasmuch as the Union Manufacturing has violated the condition of the policy to the effect that it did not reveal the existence of other insurance policies over the same properties, as required by the warranty appearing on the face of the policy issued by the defendant and that on the other hand said Union Manufacturing Co., Inc. represented that there were no other insurance policies at the time of the issuance of said defendant's policy, and it appearing furthermore that while the policy of the defendant was in full force and effect the Union Manufacturing Co., Inc. secured other fire insurance policies without the written consent of the defendant endorsed on the policy, the conclusion is inevitable that both the Republic Bank and Union Manufacturing Co., Inc. cannot recover from the same policy of the defendant because the same is null and void." "Without deciding whether notice of other insurance upon the same property must be given in writing, or whether a verbal notice is sufficient to render an insurance valid which requires such notice, whether oral or written, we hold that in the absolute absence of such notice when it is one of the conditions specified in the fire insurance policy, the policy is null and void." "It is admitted that the policy before us was accepted by the plaintiff. The receipt of this policy by the insured without objection binds both the acceptor and the insured to the terms thereof. The insured may not thereafter be heard to say that he did not read the policy or know its terms, since it is his duty to read his policy and it will be assumed that he did so." As a condition precedent to the right of recovery, there must be compliance on the part of the insured with the terms of the policy: "If the insured has violated or failed to perform the conditions of the contract, and such a violation or want of performance has not been waived by the insurer, then the insured cannot recover. Courts are not permitted to make contracts for the parties. The function and duty of the courts consist simply in enforcing and carrying out the contracts actually made. While it is true, as a general rule, that contracts of insurance are construed most favorably to the insured, yet contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties themselves have used. If such terms are clear and unambiguous they must be taken and understood in their plain, ordinary and popular sense." "The annotation then, must be deemed to be a warranty that the property was not insured by any other policy. Violation thereof entitles the insurer to rescind. (Sec. 69, Insurance Act) Such misrepresentation is fatal. The materiality of non-disclosure of other insurance policies is not open to doubt." "The insurance contract may be rather ponerous ('one sided', as the lower court put it), but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties."